19.9.2013   

EN

Official Journal of the European Union

C 271/1

1.1

European Economic, Social and Political Union is still to be achieved. Monetary Union was launched with insufficient economic and social dimensions, but with considerable economic and social consequences. Moves towards financial, fiscal and banking union are now in motion, but without the consequent EU budgetary means for an accompanying policy to support economic growth and social cohesion. At the same time, progress towards social and political union remains blocked. However, Economic, Monetary and Social Union are all mutually dependent; they sustain and amplify each other. Together, they should offer a more tangible Europe rooted in real lives, to which citizens can relate and which investors, producers, workers and consumers can have confidence in and ownership of, a more dynamic Europe for leveraging up competitiveness, smart and inclusive growth, economic opportunity, employment and effective enjoyment of all social rights. Without such a balance, there will be no future for a Political Union.

1.2

Between 2008 and February 2013, the unemployment rate of the EU-27 has risen from 7 % to 10,9 %, a total of 26,4 million unemployed, while that of the eurozone has reached as high as 12 %; it has risen in 19 countries and fallen in 8; 5,7 million young people are now unemployed in the EU-27 (23,5 %), while at the beginning of 2013 the overall unemployment rate in the USA was 7,7 % and in Japan 4,2 % (1). These figures run entirely counter to the objectives of the Europe 2020 strategy and the EESC therefore believes that it is a matter of the utmost priority to tackle our declining competitiveness, to generate more growth, create new jobs and reduce poverty. It is essential to set up a strengthened surveillance mechanism on the impact of economic and monetary policies on the social situation and on the labour market in the Member States, and that social and employment policies should be added to the provisions subject to surveillance of national economic policies as part of the European Semester. The EESC believes that a similar approach is not just urgent in view of the these dramatic figures, but is also fully in compliance with Article 9 of the TFEU regarding the Union's social and sustainable development objectives. The social dimension of the EMU needs clear instruments, indicators and qualitative and quantitative objectives that are as effective as the economic and financial obligations of the EMU. More than anything else, it is for the EU leaders to bring the European ideal close to the people again.

1.3

A new European Social Action Programme should be launched to accompany moves towards closer financial, banking and fiscal union. The programme should set out clear tangible targets, both qualitative and quantitative, based on and improving those already set for Europe 2020, especially to support efforts to re-industrialise Europe, reduce and eradicate mass unemployment, ensure fundamental social rights, promote entrepreneurship and new jobs, combat poverty, sustain social inclusion, facilitate social investment, promote higher education and training, and develop social governance and participatory ownership of the European project. The new European Social Action Programme should be activated by non-legislative and legislative actions, whichever works best, throughout the EU or through enhanced cooperation. It should jointly encompass the European stimulus package, European Social Investment Package, European Social Impact Assessments, European Youth Guarantee and Single European Skills Passport, and ensure respect for the Horizontal Social Clause, fundamental social rights and civic participation. The programme should also explore and promote the right of European citizens to a minimum guaranteed income.

1.4

The EESC would propose two new exploratory initiatives: 1) the issuance of European Social Bonds for financially viable social investment projects, to be channelled through a European Social Action Fund, facilitated by the competent EU authorities, but financed, owned, managed and supervised transparently by civil society stakeholders (private, corporate and public); and 2) the setting-up of a European Education Network for Unemployed Workers, offering long-term, efficient, qualitative educational opportunities matching labour market needs, through the issuance of cross-border education vouchers and ERASMUS-type course credit exchange schemes to assist unemployed workers towards new educational horizons, to develop new cognitive and professional skills and to open new career paths and reinsertion in the European labour market. At the same time, a Europe of free movement requires a more secure and updated basis for mobility, (for example, proper rights on information and assistance for those working in other members states) in order to facilitate the movement of intra-community populations in search of work throughout the EU, ensuring a level playing field of fair competition and respect of basic social rights and collective agreements.

2.1

The European Economic and Social Committee is on record in calling for a comprehensive step-up towards Economic, Social and Political Union.

2.2

An Economic Union should include a financial and banking union, with a common deposit guarantee scheme, a common resolution fund and EU-wide supervision; and a fiscal union should be based on joint debt instruments, within a framework of budgetary discipline, fiscal consolidation and a more dynamic European growth model, to which citizens can relate and in which investors, producers, workers and consumers can have confidence. Continuing uncertainties on the integrity of the euro area should be overcome, as they are detrimental to people's trust and business confidence. The June 2012 summit, including the compact for growth and jobs and the planned leveraging of EUR 180 billion for this purpose, together with ECB announcements to do whatever it takes to break the viscous circle between weak banks, sovereign debt and unsustainable spreads, are reasons to have more confidence in the developing European economic framework. Europe needs a new investment programme (2) to leverage resources to support reindustrialisation, restore growth and tackle unemployment.

2.3

But this is only half the picture. At the same time, the consequences of austerity measures have had a devastating effect on social cohesion, social protection, an inclusive labour market and poverty levels. There are now 26 million unemployed and 120 million people experiencing poverty or social exclusion in the EU. The goals of economic revival, monetary stability, sustainable growth and competitiveness will not be achieved without a renewed social dimension. The European Spring Council meeting of 14-15 March 2013 at last recognised this reality and called on Member states to include ‘social policies as drivers of economic governance’, notably by changing the focus of the European Semester to support employment, social investments, social inclusion and the mainstreaming of social targets (3). The European Economic and Social Committee takes note of this new emphasis on social policy at national level, but considers that an EU-wide lead is also necessary in terms of social action, social investment and social benchmarking.

2.4

It is time, therefore, to build the social pillar of the EMU within the framework of a social Europe, without which citizens' adhesion to the European project as a whole will remain at risk. Indeed, the current ‘spreads’ in European social imbalances not only undermine sustainable solutions for economic growth and social cohesion, they also pose a fundamental challenge in the upcoming 2014 European elections between those who look towards a European dimension for recovery and those who fall back on national alternatives. The European elections will concentrate minds and votes; it is essential that these elections act as a springboard for, not as a brake on, more Europe, a Europe closer to its citizens, families and companies, a more social Europe.

2.5

Fundamental social rights are indivisible from civil and political rights, and there is a Treaty obligation to uphold and promote them. The Commission and the ECB, as members of the Troika, have to abide by fundamental social rights' obligations in all their activities. In the framework of the social dimension of EMU, the Commission should efficiently monitor, evaluate and ensure full compliance with these fundamental social rights' obligations.

3.1

In 2008, the European Economic and Social Committee adopted an exploratory opinion, requested by the French EU Presidency and proposing the need to launch a new European Social Action Programme. The opinion referred to the pioneer work of the Committee in helping to launch the Community Charter of Fundamental Social Rights of Workers, the 1989 European Social Action Programme and the resulting social acquis relating to the single market, the Treaty and EU activity in general. The opinion argued that a new European Social Action Programme was needed ‘so that EU social developments can keep pace with economic and market developments’. Sadly, despite the support registered at the informal Ministerial meeting for Employment and Social Affairs during the French EU Presidency, the Committee's proposal was soon eclipsed by the economic crisis and five frantic years in trying to save the EMU and forge closer economic cohesion in the eurozone. The time has surely come to revisit the idea of a new European Social Action Programme, in order to catch up with and sustain the new forms of economic governance with equivalent social cohesion and social policy action.

3.2

In its 2008 opinion, the Committee called for ‘multilevel governance’ of a new European Social Action Programme, based on legislative action, social dialogue, civil dialogue, co-regulation and self-regulation, open coordination, social policy mainstreaming, enhanced cooperation and the citizens' right of initiative. It placed no hierarchy in the form of action, only in the sense of what worked best, with the maintenance of the Community Method and with respect for the new horizontal social clause (Article 9, TFEU). It also called for financial commitment, for example through more focused and accessible use of the European Social Fund, a possible European Social Innovation Fund to support new social initiatives of an experimental character, and the idea of a ‘European wide loan facility for social infrastructural development’.

3.3

In the intervening period, the Committee has stepped up its calls to apply the Community Method and to respect the binding nature of the horizontal social clause. It has also specifically proposed the launching of a European Social Investment Pact to ensure that austerity measures and semi-automatic sanctions in the framework of economic governance and the implementation of the European semester are offset by social impact assessments, respect for fundamental social rights, real commitment to meeting the EU 2020 anti-poverty targets and the general development of European ‘social governance’.

3.4

The Committee is encouraged that the European Parliament recently stressed the need for a ‘social pact for Europe’, for ‘employment and social benchmarks’ in the ‘binding supervision of budgetary discipline’, for the Annual Growth Survey to take account of the ‘sustainability of the social model’ and for an ‘integrated employment and social policy framework’ as a ‘fifth building block’ in the EMU roadmap  (4). It also welcomes the European Council's objective to present measures and a time-bound roadmap for ‘the social dimension of EMU’ at its meeting in June 2013 (5). Commissioner Andor has likewise recently highlighted the need for a ‘monetary union with a human face’ and that in his view ‘the social dimension of the EMU must be understood as the ability of the EMU's rules, governance mechanisms, fiscal capacity and other policy instruments to ensure that economic efficiency and social equity are pursued at the same time  (6).’ The Committee is also encouraged by President Van Rompuy's conclusions at the 14 March Tripartite Social Summit that ‘the European social model remains an important asset and a global competitive advantage’ and that ‘we need to find mechanisms to help reduce social divergences in our Union  (7).’ The ‘Social Investment Package’, published by the Commission, setting out guidance to Member States to support social protection and social inclusion (8), goes in the direction of developing social dimension indicators. However, the Committee considers that a ‘scoreboard’ of employment and social imbalances in the EU also requires a more committed framework for EU-wide action. The Committee therefore reiterates the need for a comprehensive, pro-active European Social Action Programme with multilevel governance, including the competent European authorities, bodies and stakeholders concerned both in legislative and non-legislative action, and with the mission to at least meet and preferably improve on the social targets set out in the Europe 2020 strategy.

4.1

The European Semester exercise must include employment and social inclusion benchmarks within the same surveillance framework as that governing economic policy coordination and structural reforms. Quantifiable European employment and social targets must match and be integrated with stability and growth rules governing debt and deficit targets. Consequent adjustment mechanisms should be applied to reduce both macroeconomic and social imbalances, with the objective to promote smart, sustainable growth, quality jobs, access to high-quality affordable services of general interest and the reduction of social inequalities throughout the EU. Short-term economic efficiency must not be at the expense of longer-term investment in social capital. Fiscal consolidation measures must be evaluated by their effects on growth, employment and social inclusion. European solidarity mechanisms should accompany structural reforms. In order to ensure that a genuine economic and monetary union is supported by the EU citizens, national reform programmes need to be secured with proper social and civil dialogues and within a European social dimension dynamic which does not trigger a race to the bottom resulting in downwards competition, wage deflation and lower aggregate demand. Free and autonomous collective bargaining must be guaranteed. European social dialogue should play an essential role in the development and the practice of the new economic governance. EU-wide fundamental social rights must be better monitored and respected.

4.2

The European Social Fund and the European Globalisation Adjustment Fund must be raised to a level commensurate with what President Van Rompuy has termed the ‘human tragedy and social emergency’ (9) of the European employment and social situation. This will clearly require ‘a compulsory and comprehensive revision of the MFF’ as demanded by the EP resolution of 13 March (10). In the framework of the flexibility mechanisms mentioned therein, the ongoing negotiations between the EP and the Council and the highly desirable structural revision of the MFF after the election of the new European Parliament, the amounts in the European Commission's initial proposal must at least be re-established, including through more appropriate use of the EU own resources provided for, and significantly increasing the resources for the territorial cohesion fund, the social fund, resources for education and training and the globalisation adjustment fund.

4.3

At the same time, the EU should better assist socially responsible investment and the supportive role of the social economy, notably through the re-introduction of European statutes for associations and mutual societies, explicit inclusion in structural fund planning of programmes for starting up and developing social enterprises, facilitating social labelling and compensatory measures and public procurement facilities for enterprises with confirmed social value. A European Social Innovation Fund should also be created in order to restore valuable transnational pilot projects aimed at tackling discrimination and disadvantage in the labour market, which were undermined when the European Commission abandoned the Equal programme.

4.4

It is also crucial to take all the necessary actions and employment measures to re-industrialise Europe and achieve the target of 20 % of GDP in industry by 2020. The EESC stresses the importance of competitiveness for companies, which needs to be achieved through a coherent European framework.

4.5

The EU must get on the move for youth, or risk permanently alienating young people from the European project as a whole. The dramatic scale of the youth unemployment crisis in Europe requires a more credible EU budget than the inadequate EUR 6 billion proposed for the European Youth Employment Package and Guarantee for ensuring employment, training or education for unemployed young people especially where most needed. Without sufficient funding, the European Youth Guarantee risks being seen as a sham. A stronger EU lead should also be developed by single European skills passport, expanding on the European Qualifications Framework by combining all qualifications and skills in formal, informal and non-formal education. A European framework of partnerships between schools, businesses and the social partners is patently necessary, together with similar strategic synergies putting higher education and life-long learning at the centre of job creation, the resolution of skills' mismatches and the promotion of employability, innovation and entrepreneurship. The European Semester must ensure that public investment in education and training is not be jeopardised by measures to cut sovereign debt and national deficits.

4.6

Real jobs, decent work and portability of social rights must lie at the heart of a sustainable European recovery programme. The European social model is an asset for attracting inward investment and business development in Europe; it should be valued by encouraging fiscal support for employment-creating activities, including micro-businesses and genuine self-employment. Guaranteed social standards must be upheld in EU-wide employment and labour market policies. Competitiveness and flexibility must go hand in hand with decent work and wages that are not set at levels beneath the poverty thresholds. The European Social Partners have a special responsibility to tackle the problem of the working poor, within their working programme.

4.7

The EU must engage more seriously and tangibly in the reduction and eradication of poverty. Indeed, the economic and social benefits to Europe of actively reducing poverty are more cost-effective than the lasting economic and social damage caused by inaction or by measures actually making poverty worse. At the very least, in the framework of the European Semester, the Europe 2020 ‘flagship’ commitments to take 20 million people out of poverty must be actively pursued, not undermined by deficit reduction measures. In the first instance, this requires a better EU-wide set of indicators to measure the impact of poverty and to ensure proper monitoring and possible correction of National Reform Programmes and austerity measures that may actually exacerbate poverty and undermine recovery. The EESC is also conducting a review of guaranteed minimum income schemes in Member States, with the view to identifying and promoting good practice throughout the EU. It has also supported the EP's call to study and envisage a legislative proposal to introduce an adequate minimum income of at least 60 % of median income in each Member State (11). A dedicated European Anti-Poverty Solidarity Fund could be set up to facilitate such income support measures, as a European Semester social stabiliser adjustment mechanism. The Committee would also reiterate its proposal that 20 % of all ESF resources should be reserved for dealing with social inclusion and poverty.

4.8

A European Accessibility Act is essential to ensure persons with disabilities of their rights to freedom of movement and access to goods, services and the built environment. To this end, a European Mobility Card would be a concrete and effective and tool. The Commission should also develop an impact assessment tool on the United Nations ‘Convention on the Rights of Persons with Disabilities’ and factor this into the European Semester process.

4.9

Likewise, an EU methodology and framework of comparable and measurable indicators on health protection and reduction of health inequalities should be drawn up in order to audit the situation in Member States as part of the European Semester.

4.10

EU-wide societal benchmarks and good practice guidelines on the reconciliation of work and family life, access to child-care services, active ageing, volunteering, housing rights and combating homelessness should also be integrated within the social dimension of the European semester.

4.11

Immigrant workers are making a positive contribution to Europe's economic development and well-being. The EU's labour immigration procedures must be legal and transparent. Legislation on immigration must respect human rights and guarantee equal treatment. The EESC believes that the EU must strengthen integration policies and the fight against racism, xenophobia and discrimination towards immigrants and minorities.

4.12

Sustainable recovery requires more economic and monetary symmetry and more social cohesion throughout the EU as a whole. A European Social Action Programme including the specific objectives listed above would help establish a more coherent social basis for pulling together and reconnecting the EU with its citizens. A twin-track social rebalancing both of the EU and EMU is therefore preferable, respectful of subsidiarity in its dynamic sense. However, if there is insufficient consensus or political will for such a revitalised EU social dimension, the EESC would propose the option of enhanced cooperation within the EMU, with own financial resources, a supplementary Social Fund, a Social Progress Pact for Europe, based on the same democratically accountable and rigorous contractual arrangements governing economic and monetary convergence, and social standards, objectives and stabiliser mechanisms (there should be debate with social partners and civil society if and how an EMU unemployment insurance or unemployment benefit scheme as recently proposed by Commissioner Andor may be useful) matching the fiscal, budgetary and monetary stabiliser mechanisms of closer Economic and Monetary Union – EMU with a corresponding social dimension.

4.13

Contractual obligations for competitiveness and growth, which were discussed at the EU summit in December, have to be democratically accountable and should not undermine the European social market economy as set out in Article 3.3 of the TEU. It is also necessary to better define and stipulate the solidarity mechanisms to support the efforts of the States, which can gradually take the form of genuine financial transfers, with an initial specific budget of EUR 50-100 billion, to be funded by mechanisms similar to those of the European Stability Mechanism (ESM).

4.14

In order to achieve this greater balance and correspondence with the social market economy laid down in the Treaty, the increased role of the Commissioner responsible for economic and monetary affairs within the College must be accompanied by a strengthening of the role of the Commissioner responsible for employment and social affairs. The increasing role of the ECOFIN Council should be also balanced with a similar strengthening of the EPSCO Council.

4.15

It is also urgent, in this context of European economic and social governance, with particular reference to the European Semester and the Europe 2020 strategy, for the role of both the European Parliament and of national parliaments to be strengthened, and for the involvement of social partners and civil society organisations to be extended and guaranteed at all levels of political negotiation.

5.1.1

In parallel with the aforementioned proposals, perhaps more thought could be given to additional ways of involving European citizens, civil society and corporate stakeholders in the re-launch of European social action, namely through the mobilisation for, and issuance of, European Social Bonds. This would also make it possible, at a time of scant public resources, to mobilise additional resources for well-defined purposes from significant reserves of unused private savings.

5.1.2

This initiative would be separate to ongoing discussions on the EU issuance of stability bonds (to help mutualise debt) and recovery and growth bonds (as part of an EU economic stimulus package). Instead, European Social Bonds would not be paid for out of national exchequers or co-financed by EU budgetary mechanisms; they would be acquired and invested in by individual citizens, businesses, trade unions, and civil society groups willing to exercise individual and corporate social responsibility by participating in a European Social Action Fund, financed by themselves, managed by themselves, with reasonable interest rates and on a non-for-profit basis, supervised and regulated transparently, and facilitated and underwritten to the appropriate amount by the competent EU authorities.

5.1.3

The issuance of the bonds should be logistically facilitated by the competent EU authorities, popularly organised and mutually managed by the private, corporate and public stakeholders who choose to participate in the scheme and take responsibility for the European Social Action Fund. They would buy, collect and invest bonds in social programmes of their choosing, preferably in the framework of the proposed European Social Action Programme, with the technical help of appropriate EU institutional and advisory bodies, in order to verify their financial viability and potential social impact. Such social investments could include: social housing; co-operative ventures and social enterprise; support for self-help groups, mutual associations, community social and health services, educational, training and re-skilling networks, social innovation, research and development; loans and partnerships for infrastructural development, agri-tourism, travel exchanges, cultural activities; charitable actions, etc.

5.1.4

Subsequent more structured plans for developing these European social bonds could be examined, such as developing a range of such bonds, promoted and managed at local and/or national level by the actors mentioned. These bonds, conforming to the criteria of the general European scheme, both in terms of objectives and in terms of management methods, would obtain appropriate European certification for participation in the general scheme and, on that basis, also possible tax relief for subscribers.

5.1.5

The European Social Action Fund Management Board should be composed by the stakeholders involved in the scheme, represented proportionately, according to the level of their investments in European Social Bonds, and with logistical and advisory assistance from appropriate EU bodies (including the EESC).

5.2.1

Mass unemployment in Europe will not be resolved in the short to medium term, even if growth forecasts improve by 2014 and a Europe-wide stimulus were to start to take effect. The European labour market must become more relevant as a means for our workforce to move freely, to bring skills to where they are needed and learn skills to bring back and develop. It is essential that our workforce remains active, preferably in employment or possibly part-time employment, or, if not, in education, training and re-skilling. It is important to make sure that education is efficient, forward-looking, innovative and relevant to labour market needs. Many educational and training schemes tend to be short-term, often without sustainable job openings at the end. Older workers becoming unemployed are less likely to participate in such schemes. A longer-term approach with a European perspective could be explored, including on the basis of certain proven European best practices, such as the adult education programme carried out in Sweden from 1997 to 2002 or the dual training system in Germany and Austria. The EU could perhaps facilitate the setting up of a European Education Network for Unemployed Workers with the view to offering a comprehensive, two-year educational opportunity to change career path, participate in work, training or educational exchange experiences in other Member States through the issuance of cross-border education vouchers with course-credit transfers, and to obtain a mutually recognised professional qualification at the end.

5.2.2

This system, if provided with adequate resources and adopted widely by the Member States, in the context of precise contractual arrangements with workers joining such programmes on a voluntary basis, could make it possible to keep a significant number of long-term unemployed people in high-quality jobs who would surely not have found employment opportunities, and this would have positive effects both for the people concerned and for the overall social capital of the countries of Europe.

19.9.2013   

EN

Official Journal of the European Union

C 271/8

1.1

The EESC considers the establishment of the euro and Economic and Monetary Union (EMU) to be the most significant milestone in Europe's development. It was part of a strategic EU plan, framed within the vision inspired by the ECSC and the Treaty of Rome. It was a significant and courageous effort, a bid for the future, which had raised such high hopes that everybody believed that the strength of the single currency would overcome the continued resistance which had prevented the completion of EMU and total political union, as would have been required. The euro nevertheless remains the basis for all this.

1.2

We must however agree, a full twenty years down the line, that this is not the way things have turned out, possibly because the euro, throughout this period, was not subjected to any severe internal or external shocks, or possibly due to the lack of trust that persists between creditor and debtor countries in Europe. This in turn means lack of cohesion and trust vis-à-vis their governments. Thus everyone preferred to be lulled by the calm seas; it all seemed plain sailing, but it was a superficial calm. In fact, when the international economic and financial crisis struck, washing over the EU, it set alarm bells ringing and exposed the structural limitations and contradictions in EMU, depriving the euro of its propensity to attract. It was initially thought that all it would take to make EMU work was a set of ‘accountancy’ rules such as the stability pact, whereas the problem was not technical but economic and political.

1.3

The EESC recognises the importance of stability. Yet stability must not only concern prices or financial institutions, but also politics and social conditions. There is a legitimate public perception that they are paying the heaviest price for the crisis, that debt redemption is primarily being demanded of them rather than of the banks that caused the crisis, and that this is unjust. The EESC is convinced that austerity cannot be sustained politically for long. In fact, the line has already been crossed in some countries.

1.4

This is why the EESC believes that a single currency will be unsustainable unless we achieve convergence between the economic capacities of the euro area countries and improve overall competitiveness, objectives which require economic as well as political commitment. A little temporary maintenance is not enough. We therefore need to make a qualitative leap, bringing together not only the currency and the economy, but politics, sovereignty, people and the capacity for dialogue between European peoples. We need more political integration and less dirigisme and a social market economy to spread growth and employment and to restore perceptions of the euro as an advantage, and not the opposite.

1.5

This opinion makes it clear that the EESC's proposals are proactive whereas the Commission's and Council's responses to the crisis have been and remain predominantly reactive. For example, the Treaty on Stability, Coordination and Governance stresses stability without proposing joint financial instruments for recovery and employment, even if the agreement on a single supervisory mechanism (SSM) is a significant step forward, albeit in the absence of a credible and practical roadmap for political union. Europe needs to go back to generating wealth in order to redistribute it fairly. It is the best way to reduce protests. Austerity cannot be imposed on its own.

1.6

The EESC is now calling, as it has done for a ‘reality check’ on the euro and Europe in order to save them, on their political and economic limitations, on profits and losses, on who is responsible for getting us into this situation. Swift action is required. There is no more time for rhetoric, deception and illusions. It is the only way to prevent the dissolution of Europe, which has been in decline for some time. It would therefore be better to avoid accusing those protesting against the sacrifices of populism. Europe must learn to listen without arrogance. It cannot continue to turn a deaf ear.

1.7

The EESC believes that the best way to complete EMU, avoid recession, reduce national debts and stabilise budgets is to reverse the principle currently underpinning the EU's economic culture (stability for growth), and build on growth, not austerity, thereby making it the main objective, in order to facilitate a new pact for promoting (mutualising) growth, employment and stability, also by involving the social partners (growth for stability). The EESC is convinced of the following points:

1.8

Symmetrical policies are required to make the euro sustainable and reduce the differences between national economies through a solidarity-based plan that transfers investment resources to countries with weaker economies, through targeted projects, using fiscal displacement if necessary, and integrating the labour market and social policy. This means acting through symmetric adjustments: common funds to rescue failing banks, a European deposit insurance system, Union bonds, Eurobonds, common policies for reducing the EU's external deficit, etc. (creating common compensation or adjustment funds).

1.9

An EU economic governing body should be established to go further than the current method of policy coordination, which has not delivered good results, transforming the Eurogroup into a body that reaches majority decisions, making it the voice of the euro. It is no longer sustainable to have monetary and banking union and to keep economic policies separate. In contrast, joint governance (as occurred in the case of the fiscal compact) at the macro and micro level (with the launch of an industrial compact) might steer economic and fiscal policy in the direction of growth, employment and social inclusion.

1.10

A common budget, needless to say with common rules, must be created for the euro area, integrating trade policy and the balance of payments, whereas today the differentials are significant. Fiscal consolidation must be completed by taking action vis-à-vis the structure of multipliers, to free up resources for jobs and growth, and launch reforms that can increase the productivity of the weaker countries (2).

1.10.1

What is required, in any case, is to reduce and/or dilute current austerity measures for the most indebted countries and to boost demand in creditor countries. Member States need to take simultaneous action on debt and structural reforms while the EU needs to promote growth through a solidarity-based plan designed to increase employment and social justice. You cannot add austerity to recession, as the EU is doing. Superimposing further debt reduction on the credit crunch is harming the economy.

1.11

This is why we need a system that can absorb the mistakes and weaknesses of individual countries to run alongside the reform process and reduce economic differences and imbalances between the euro area countries, including through monetary policy.

1.12

The ECB has also been adversely affected by the limitations to EMU. Under the Treaty it has had to apply a single, quasi-federal, monetary policy even though the countries' economies were and are different and there are serious imbalances between them. As has been said, these therefore required, and still require corrective EU measures. This would avoid overexposure and enable the ECB to take more effective and even-handed action to stabilise prices, reducing existing distortions and imbalances, which could call into question the very existence of the single currency if they persist, as demonstrated by the most recent phase of the sovereign debt crisis, which was only avoided by a measure decided by the ECB President. This is necessary to promote economic integration, which is lagging behind monetary integration, at least until the ECB's current lack of a mandate and the EU's political deficit are bridged.

1.12.1

The ECB's role is currently over-exposed. In order to fill its role better and under equal conditions it should have the same functions and mandate as the Fed, including that of lender of last resort, in order to reduce the differences in interest rates. It should therefore have a full mandate that would even allow it to act as a growth driver if necessary.

1.12.2

A major debate is ongoing between the central banks about the strategies to use to restart growth. It is the age-old debate on the austerity-growth balance, i.e. inflation/growth and growth/employment. We have only to consider that the Fed, in order to fulfil its mandate, of reducing unemployment by 6 %, feeds USD 85 billion per month into the market (the Bank of England would also be prepared to apply a similar policy). This puts the ECB, which does not have a ‘parent government’ or a budget, in a weaker position than other central banks. This is a condition that also concerns control over relations between currencies. The ECB should also exercise a responsibility for exchange rate policy, subject only to the Council's right, under the Treaty, to conclude formal agreements on an exchange rate system for the euro in relation to the currencies of third states.

1.12.3

Debt: another important aspect of EMU. On this issue, the EESC has already made a specific recommendation to take 60 % of national debts out of the market in order to prevent the impact of market speculation on the euro area (3). It is clear that complete EMU and a common budget for the euro area would also make it possible to issue common bonds (needless to say, from within the common euro area budget).

1.13

With regard to the financial and banking system as a whole, the EESC believes that all aspects of the provisions laid down by the EU (4) must be completed within strictly required and necessarily short timeframes since these are among the most efficient instruments for completing EMU.

1.14

The EESC believes that the future of the EU and its institutional underpinning need to move away from schemas based on the ‘ideological model’ - even if the ‘federal’ model seems the most appropriate. It seems more appropriate to focus on the functional and substantive issues to ensure the survival of the very idea of Europe; a Europe where people and solidarity are central to its primary objective, with the economy revolving around them and not the other way round. The time has now come to restart work on political, social and economic union. The Council's laudable but hesitant and inadequate effort seems very little indeed to us. We need to abandon egoism, the ‘utopianism of interests’, which seems to have pervaded Europe, in favour of solidarity. Austerity policies should be called off or mitigated in order to relieve hardship, and jobs and growth should be put back at the heart of its initiatives.

1.15

Convergence towards social and political union is needed to complete EMU and achieve the abovementioned recommendations. The decision-making process must become more democratic (majority voting) and transparent in order to achieve positive, less uneven, integration, and to manage sovereignty jointly, thereby reducing differences in the integration process. This would also give the EU one voice within international organisations.

1.16

New treaty: the EESC maintains that most of the economic recommendations set out in this opinion can be applied without amending the Treaty. Where necessary, countries that agree with these recommendations could act together on the basis of strengthened cooperation (as in the case of the fiscal compact), also in order to make faster progress and to avoid the risk of the EU's dissolution in the face of renewed external attacks and continued austerity policies. Another scenario for deeper integration might involve giving the next European Parliament a constituent mandate. This could be put to a referendum at the same time in all countries concerned.

1.17

European events have international consequences and vice-versa. This is why more efficient international bodies with greater decision-making powers are needed to ensure greater global governance. In this sphere, the EU needs to have a single representation, at least for the euro area. In particular, the G20 should be able to set up an ‘Economic and Social Committee’ for international development, to take action through fiscal stimulus.

1.18

However, only a different, more cohesive and democratic, political framework, combined with better internal governance, will provide the EU with more efficient external governance, giving it one voice at the international level. This is particularly true with respect to the relationship between currencies, in order to avoid harming the EU economy, and the relationship between world economies, especially with developing countries

1.19

Briefly, these are the four recommendations for completing the euro framework:

2.1

The EU is going through a particularly difficult and dangerous period which could have negative consequences that go well beyond the economic and social ones already with us. This own-initiative opinion addresses a range of issues including the need to respect earlier Treaty commitments to economic and social cohesion for growth and jobs, to promote a new economic and monetary policy for growth and employment, more proactive innovation policies, a European Venture Capital Fund for small and medium enterprises, and finally to work for the future of the EU (5).

2.2

We are dealing with major economic interests, even in the EU, which instead of converging, are clashing. The euro is in no way responsible for what is happening (6). It is a currency which has long been left to take care of itself and is still waiting for the ‘contenders’ (the governments) to decide what to do.

2.3

The EESC has a duty to respond to these challenges in straightforward and clear language, and with farsightedness, knowing what is at stake and the level of confrontation, without hiding the facts. Through this opinion the EESC wishes to contribute actively, and unreservedly, to completing EMU and overcoming the crisis, in the interests of workers, businesses and citizens in the EU, especially the euro area, which is experiencing the ongoing crisis very keenly.

3.1.1

The adoption of the single currency would have been optimum for countries that are exposed to symmetric shocks or that have mechanisms to absorb asymmetric shocks. Empirical studies show that the likelihood of asymmetric shocks is higher in Europe than in the USA. Naturally, the ECB's common monetary policy, whose main objective is price stability in the monetary union, cannot react to asymmetric shocks in individual euro area countries. For this reason, another, sufficiently effective, mechanism is needed to cope with these shocks. The lower the mobility of production factors, openness of national economies, synchronisation of economic cycles, diversification of production and financial integration, and the lower the level of mutual trade, the more rigid the labour market and higher the inflationary differentials between Member States' economies, the less suitable the ECB common monetary policy is for euro area members. The worse the adaptive mechanisms perform in alleviating the adverse effects of asymmetric shocks (price and wage flexibility, mobility of labour and capital across borders of Member States, or fiscal federalism), the harder it will be for the country to deal with the loss of its own monetary policy.

3.1.2

EMU is possibly the main pillar of the Maastricht Treaty but not the only one. The reason which inspired it, after the Berlin Wall came down, was mainly political, as well as economic. Many countries looked on with surprise and indifference as the new framework took shape, even in the face of the almost immediate absorption of East Germany and the parity rating (1 = 1) guaranteed by the Deutsche Bundesbank for the Deutsche Mark and the East German Mark. Preference was given to delaying the decision to complete EMU, raising common, but ultimately vain, expectations that monetary union would bring political union in its wake and that the euro would give impetus to a federal Europe, but this was not what happened.

3.1.3

Union, in addition to giving the euro coverage and a single voice, should have provided everything that the euro lacked. It was thought, however, that a few rules, such as the stability pact, with arbitrary parameters, would be enough to make it work, self-referentiality was deemed infallible, but did not work as expected. Even the ECB's remit is one-way and more limited than that of other central banks. These contradictions were brought to a head by the financial crisis, which the EU was seriously slow to notice, and then the sovereign debt, which deprived the euro of the aura and miraculous powers it was represented as having when it was created. This reduced its propensity to attract to the point that it is now perceived as a threat, or as an insidious justification of austerity policies.

4.1.1

Until 2008, EMU worked quite well from a monetary perspective for the euro countries. It simplified trade, eliminated exchange rate risks and competitive devaluations, ensured price stability (average annual inflation of 2.03 % except for excessive hikes in some countries during the transition from the old system to the new), led to the reduction and convergence of debt rates (until 2009!), generated growth and employment (14.5 million new jobs) (7), kept all current accounts in balance, and debt-to-GDP ratios below Japan's and the USA's, and contained the exchange rate with the US dollar (around 30 % higher), due to the weaker economies.

4.1.2

This is the overall picture. It is different if you look at the situation in each country. The main advantages went mainly to the countries on whose economies the euro's original parameters had been based, boosting their growth and productivity and dramatically increasing exports (about 2 000 billion US dollars between 2000 and the present for Germany alone) and the corresponding balance of payments (8), whereas other countries benefitted in part and/or suffered real disadvantages, mainly due to asymmetries of the system associated with the single currency, to the point that countries with deficits are obliged to make corrections, while those with surpluses are not. The different reactions of countries to the situation created by the euro must also be considered.

4.2.1

The costs that must be taken into consideration are those associated with differences in the competitiveness of countries, loss of sovereignty in macroeconomic policy, the exchange rate, and competitive devaluations, etc.

4.2.2

The crisis, in the absence of adequate and complete EMU, has brought other costs, such as the transfer of bank liabilities to national budgets, increased debt, with greater difficulties for the countries that were already in greater debt. This has split the EU in two, with creditor countries on one side, and debtors on the other, and which, moreover, increasingly resemble third world countries. In fact, creditor countries are causing greater poverty in the South, and elsewhere, and greater wealth in the North. We need only think of the surpluses accumulated in Germany, not through internal euro area accounting, (in this case the EU budget would be in balance!) but through its surpluses vis-à-vis third countries, which are so substantial that in the long-term they could expose Germany itself to a financial risk which could damage its own economy.

4.3.1

Monetary policy is affected by various structural problems and weaknesses in the governance of the currency: the limits of the Stability and Growth Pact, which some countries tried to dismantle when it created problems for them (Germany, France and Italy); the lack of monitoring of productivity indicators; the lack of crisis management instruments; the costs of staying in the euro; systemic risk; economic imbalances between countries; maintenance of fiscal and budget sovereignty by national States.

4.3.2

Exchange rate risk and competitive devaluations were not, however, eliminated between euro-in and euro-out Member States, particularly the UK, and a significant depreciation in the sterling-euro exchange rate could occur in a relatively short space of time, thereby undermining the level playing field presumed to operate under the Single Market.

4.3.3

From an economic point of view, the greatest problem concerns economic imbalances dating back to before 2000. This situation has penalised the weaker countries, causing fully-fledged ‘asymmetric shocks’, also encouraged by massive capital flows towards Germany. At present, the ECB does not have the tools to address these asymmetric shocks. Another problem relates to the international context and was only brought to light following the financial crisis (9).

4.3.4

Yet the biggest mistake was to believe that you could have a single currency without limiting the Member States' sovereignty, and not just the budget, but separate debt management in particular, a banking and financial system that remained national, alongside the supervisory system.

4.3.5

Finally, the gravest mistake was to have created the euro without giving it a common home and a single voice, notwithstanding the ECB's sporadic efforts to fill this void. Thus the ECB has shifted from the autonomy ‘enshrined’ in the Treaty to a role of policy substitution, in order to prevent damage to the single currency and the EU itself (10), as has been revealed by the role of the strongest country.

4.3.6

The EESC nevertheless believes that the euro can be made more sustainable through the convergence of the euro area countries' economic performances, in order to encourage more uniform growth and a political union that would make these differences more acceptable because the problem is not about accounting, it is political. This includes the issue of democracy and therefore a fairer weighting of votes in the various decision-making bodies. We can no longer afford the illusion and the error of focusing entirely on the economy and on ‘accounting’.

5.1

Events in Europe have international consequences and vice-versa. There are very strong links between economies, the debt, finance, trade, relations between currencies, etc. In particular, we are thinking of the even closer links between the economies on both sides of the Atlantic. At least, this is how it used to be until 2009. However, at present, the US economy is recovering whereas Europe's is in recession, partly because there are two different schools of economic thought, not to mention the differences between the roles of the Fed and the ECB.

5.2

With regard to the global economy, however, more efficient international bodies with greater decision-making powers are needed to ensure greater global governance (IMF, World Bank, ILO and WTO). The G20 would need to be more structured in order to be able to take binding decisions. For example, it should set up an ‘Economic and Social Committee’ for international development, take action through fiscal stimulus, and govern relationships between currencies in order to reduce trade discrimination, also by increasing the ECB's scope of action.

5.3

Surplus global savings: indeed growth is vital also for the rest of the world economy. The IMF warning that Europe needs to couple debt and deficit reduction measures with measures to stimulate growth is timely and justified. There is a surplus of global savings that is not finding investment outlets. Almost USD 2 trillion-worth of private equity funds have been seeking outlets in vain (11). Norway's major sovereign wealth fund is reducing the proportion going to European investments from over half to two-fifths (12). Asia's biggest SWF, the China Investment Corporation, made a loss on its private equity investments in 2011, has cut its holdings of private securities to a quarter from a half, and is looking for longer term public rather than private sector investment outlets (13).

6.5.1

The ECB's objective is ‘to maintain price stability’ and in order to do this it must maintain its political independence, i.e., it cannot ‘seek or take instructions’ from governments or the EU. This status is appropriate even though the Treaty states that the Council ‘may conclude formal agreements on an exchange-rate system for the euro in relation to the currencies of third States’ (15). In the absence of any such agreements, or in intervening periods between them, the ECB should regard exchange rate policy as part of its responsibility. The ECB also has secondary objectives, such as, for instance, to contribute to financial stability, even if its measures during the crisis concerned the primary objective insofar as they were mainly dictated by the need to re-establish an effective transmission mechanism for monetary policy in order to maintain the financial stability of all euro countries.

6.5.2

With regard to price trends, the question necessarily arises whether it is right for the Maastricht inflation criterion to be based on the average inflation of the three most successful countries in the EU rather than in the euro area.

6.5.3

In general, the ECB's remit is more limited than that of other central banks. Firstly, the ECB has no mandate to support growth and employment, as the Fed does, although the monetary policies resemble each other. There are however fundamental differences between the USA (centralised fiscal system) and the EU in the implementation of budgetary policy. Moreover, at present, the ECB's role as a lender of last resort is restricted to the banking system and does not extend to governments (the EU government) as implied in ‘national’ contexts. This is something that should become possible in a situation of complete EMU. Furthermore, the ECB's single monetary policy is made more difficult by differences and imbalances between the economies of the euro area countries, in the absence of corrective EU measures.

6.5.4

It is positive, however, that the principle of the ‘singleness’ of the euro area has led the ECB to state that the euro is ‘irreversible’ and, as we have seen, has enabled it, after a hard struggle, to adopt measures to reduce the public debt spread of the relevant countries through the acquisition of bonds on the secondary market. This process requires, in parallel with a return to growth, a ‘European’ plan for emerging from debt to accompany those of the individual countries (16).

6.5.5

This at least serves to reduce the distortion of competition through debt and investment financing rates: even today this is an outright financial differential, which increases existing imbalances, including imbalances of payment.

6.5.6

Furthermore, the EESC believes that it is necessary to reconsider the conditions set by the ECB and the EU. It is unacceptable to provide banks with liquidity at very low interest rates with no strings attached, for example with regard to the use of the funds. Indeed, at least part of the funds should be geared to investment, whereas stringent conditions are being applied to countries for the acquisition of sovereign debt bonds by the ECB (OMT), even if this concerns another issue. These conditions are mainly justified by the need to respond to the rules of a distorted, unscrupulous, anonymous and extremely fast ‘market’, which actually bears little semblance to a market (17). The EU cannot lend itself to this game: extreme austerity and stringent rules for people and businesses at a time of crisis, and neutrality for investors/speculators, who hide behind business banks and international investment funds, except for the ECB President's steadfast defence of the euro at the most critical moments of the attack.

6.5.7

The ECB's action needs to be able to provide even-handed support for the economies of the relevant countries in order to reduce existing distortions and imbalances, with the current instruments, in order to move beyond the EU's current mandate and political deficit. For instance, the interbank market in some euro area countries could be boosted through negative rates for overnight deposits at the ECB.

6.5.8

The EESC is convinced of the need to solve the debt  (18) problem immediately, on the basis of its proposal, and that action by the ECB and the Council is essential to achieving this objective.

6.5.9

The Committee thinks it appropriate to give more transparency to ECB decisions. For instance, the voting results from ECB Governing Council meetings could be published, in the interests of raising the accountability of the governors of national central banks in monetary union members. That would encourage them to make decisions on the basis of overall economic conditions in the euro area rather than developments in their national economies.

6.5.10

Another problem worth remembering concerns the voting system of the ECB Governing Council (19), especially with respect to the disparity between the voting rights and financial contributions of the Member States. A problem which has already occurred in connection with the payment system within the European Stability Mechanism (ESM) and which could recur in the future, e.g. in the context of banking union.

7.1

The EESC sees the need for ecological and social investment led recovery  (20) since it is convinced that stability alone will not ensure recovery, which depends on business and consumer confidence. With private sector expectations low and spare capacity high, managers cannot count on future profits from current investment. In turn, if people are unsure that they can keep or find jobs, they prefer to save, or reduce personal debt rather than spend. While higher unemployment means that fewer people are in a position to spend.

7.2

Thus, for reasons of both business and public confidence, as in the US New Deal (21), recovery should be investment led. The key criteria for this are those adopted by the EIB as far back as the 1997 Amsterdam Special Action Programme – with a remit to promote cohesion and convergence in health, education, urban renewal and the environment – plus the trans-European networks.

7.3

Recycling excessive global savings is an attainable goal, as mentioned in point 5.3. In fact some investment funds are looking for long-term outlets for surplus global savings generated in other parts of the world. This presents mutual advantages for third-country investors and for the EU economy. A key role in this context can be played by both the sister institutions of the EIB and the EIF (European Investment Fund) in the European Investment Bank Group.

7.4

Thus, the increase in the subscribed capital of the EIB is to be welcomed. An important role in recovery also can be played by Project Bonds. But Eurobonds is a good name for the recycling of global surpluses into investments, even if markets are very likely to refer to them in shorthand as € bonds. The resistance of some governments to Eurobonds is well known, but this is because they wrongly assume that they would be mistaken for Union bonds, which are intended to address debt (22).

7.5

The EIF has always maintained that it could issue European bonds for long-term social investments (23), with an increase in its subscribed capital from its currently low level of EUR 3 billion, but without needing a Treaty revision (24). None of the major and other euro area Member States includes EIB finance in their national debt. The same should apply to EIF finance. EIF bonds, like EIB bonds, can be serviced by returns on project finance.

7.6

Product innovation and creating markets: We also submit that the Union should be less ‘arms length’ in terms of innovation policy. Industrial policies fell out of fashion in the 1970s on the grounds that governments could not ‘pick winners’ or ‘national champions’. But there are grounds for rethinking this (25).

7.7

Moreover, first, ‘arms length’ policies are not necessarily virtuous. In the past, they have led to misinvestments in the financial sector. Second, there needs to be even more decisive action to counter climate change. Third, too many of the technology projects submitted under the Framework Programmes are rejected not on merit, but for lack of own resources, which could be overcome by a bond-financed European Venture Capital Fund. Fourth, emerging economies have been able to promote a range of national champions with considerable success (26).

7.8

The investment finance generated by shifting surpluses into EU bonds should be available to all Member States and would have cumulative macroeconomic, social, employment and political gains, reinforcing the case for ‘more Europe’, on which electorates and some governments have become increasingly sceptical.

7.9

Growth can also reinforce stability. Based on the EIB precedent that bond finance need not count as national debt, Eurobond finance for recovery would make national debt reduction more feasible and release national fiscal revenues to reduce or maintain low deficits, while also protecting key social expenditures. To this end, common parameters and criteria would have to be defined by the countries and Eurostat for a fairer and better evaluation of data.

7.10

It also has been widely overlooked that the ‘crowding out’ hypothesis assumes full employment. With high current levels of unemployment in most Member States, either separate or joint EIB-EIF project bond finance could ‘crowd in’ rather than ‘crowd out’ private sector investment, income and jobs with investment multipliers of up to three, and positive fiscal multipliers in the sense of generating direct and indirect tax revenue (27).

7.11

In light of the difficulties facing some countries, and in particular Greece and Cyprus, the EESC suggests that short-term structural adjustment demanded by the troika should be reviewed in terms of the longer term prospects for these countries following the discovery that the eastern Mediterranean has huge, essentially untapped oil and gas reserves (28).

8.1

As a result, the EESC is convinced that it is not enough for the EU to carry out sporadic ‘maintenance work’. It cannot perpetuate the vacuum which has existed since Maastricht, without rising to the challenge that the euro presents, and which the crisis has brought to a head, revealing its major ‘deficits’, the first of which is democratic (29), and giving European integration a purpose again in order to keep the idea of Europe alive.

8.2

The EESC believes that a single currency will be sustainable if we achieve convergence between the economic capacities (performances) of the euro area countries, an objective which requires economic as well as political commitment. We therefore need a political union that makes differences acceptable and makes it possible to transfer part of the wealth of strong countries to the weak ones through a transparent decision-making process and a new form of solidarity between countries (30).

8.3

This crisis is reawakening Europe's ‘old differences’. The fault of looking inwards is back, digging up ghosts or preconceptions we thought had disappeared, as though austerity and debt were the product of misconduct rather than the errors of governments on both ‘sides’. Just as the countries in difficulty cannot foist their own responsibilities on the EU (or Germany), the richer countries cannot ignore the greater benefits the euro has brought them, partly at the cost of the others, due to existing economic imbalances. This is why we need a new capacity for political and cultural action and dialogue between Europeans, with unquestionable mutual advantages, as the German poet Holderlin suggested a long time ago (31), taking his inspiration from Greek civilisation.

8.4

We therefore need to make a qualitative leap, putting together not only the economy, but politics and the SOVEREIGNTY of all. There is no point in discussing what European ‘model’ to develop, but rather the instruments we need: efficient, democratic and transparent instruments to determine and achieve the common good; to unite the people of Europe, not divide them.

8.5

For the same reasons, the EESC believes that the question about whether or not to amend the Treaty is not the right one. This clearly depends on what needs to be done to complete EMU. However, most of the EESC's recommendations can be implemented without amending the Treaty (growth, debt etc.), while for others it might be enough to step up cooperation. In any case, the most important thing is the objective to be met for the good of the economy, the euro, and EU citizens. The Treaty is just the tool. This must be explained to citizens in the most appropriate way by involving them directly in decisions and/or through the EP and national parliaments.

8.6

The EESC believes that the euro area has the resources to plan its own future: more political integration and less dirigisme and a social market economy to spread growth and employment and to achieve political, economic and social union.

9.1

If we do not take this additional step, the crisis, as addressed thus far, could lead to the disintegration of the euro area, and consequently of the EU. The policy of austerity and cuts, such as debt reduction, cannot be applied alone, even when they are appropriate. Other instruments must be used (to increase demand in creditor countries) within a framework of solidarity. The citizens of the relevant countries must be made to understand that their surpluses derive from the debt of others, and that attacks on the euro have nothing to do with the level of debt (32), even if it has to be reduced. On the other hand, the citizens of the southern countries must put pressure on their governments to consolidate the debt and manage their countries' budgets more prudently; eliminate overspending and tax evasion; cut taxes; and increase growth, employment, productivity and the competitiveness of their systems, not only through a few reforms, but through greater solidarity and a different EU and ECB economic policy (33).

9.2

Otherwise, none of the countries will be able to reduce their debts and achieve fiscal consolidation. This is why we need to relax austerity and change economic policy. Unless we do, the risks could grow. This is where history could come to our aid (34). We need to affirm a new perspective for integration, i.e. positive integration, not negative, damaging and forced integration.

9.3

We need to consider that at present nobody in Europe is safe, out of danger, even if an anomalous situation has been created. In fact, the economic growth of some countries, fostered by the euro, and the weakness of the EU institutions, have led Germany, the strongest country, to take on a central role in Europe, often in opposition to the ‘peripheries’, especially, but not exclusively of the South. ‘This fuels the anxiety of others’ (Helmut Schmidt), particularly because of the way in which this role is perceived; hence the need for action to disprove this perception (35).

9.4

The EESC believes that Europe is currently dominated by egoism and national interests, as though we were faced with a ‘utopianism of interests’. The economistic approach has taken over and relegated to second place the values upon which Europe was founded and which are the basis for its existence. Europe emerges as egoistic and devoid of solidarity. Recent tensions carry the risk of a dangerous ‘psychological dissolution’ of the EU, affecting the public and governments, which needs to be addressed by listening without arrogance and providing concrete answers.

9.5

We are at a crossroads: the EESC cannot understand how the procrastination and indecision of Europe, the first economy in the world, are being allowed to risk strangling Greece, the mother of its principles and a minute entity in economic terms (36), requiring sacrifices from people and businesses, which do not go hand in hand with a plan to support growth, which is the only way to repay the debt, and a plan to relieve the serious social hardship of part of the population of Greece and Europe as a whole. What sort of Europe, we might ask, is this?

19.9.2013   

EN

Official Journal of the European Union

C 271/18

1.1

The EESC believes that developing an inclusive green economy will be Europe's main challenge in the coming years if it wants to remain a global economic power. At the Rio+20 conference, the EU pledged its commitment to the green economy as a form of sustainable development. Now is the time for the EU to take action. This is why we need an economic development model that prioritises public investment and draws up adequate incentives for private investment to develop ‘green’ infrastructure and R&D&I, with the dual purpose of promoting production in order to emerge quickly from the current recession and guiding our transition through this third industrial revolution from a leading economic and social position.

1.2

The EESC believes that the far-reaching and much-needed changes to production and consumption make it absolutely essential to involve civil society throughout the transition to an inclusive green economy at all levels, especially at the sectoral and territorial levels (European, national and regional). Participatory management is needed to minimise the resistance and detrimental effects that inevitably accompany change. It is this participation that will make sustainable progress possible on the economic, social and environmental aspects.

1.3

The EESC is concerned to note that green tax incentive policies have suffered a serious setback in recent years as a result of ‘fiscal austerity’, which is causing a severe contraction of economic activity and the job market. The IMF has recognised that the real economic contraction resulting from these policies has been far worse than estimated so far.

1.4

The EESC emphasises that developing an inclusive green economy will increase job creation opportunities. Green jobs should not be understood just as jobs in a few new emerging sectors, but all jobs created in connection with the ‘greening’ of production processes and products in all sectors. A fair transition to a green economy requires active employment policies that create decent jobs, including vocational training and lifelong learning for active workers. Employing women and young people in these sectors will be the key to this type of growth.

1.5

The EESC believes that an industrial policy that has been agreed by the social partners is vital in order to coordinate technological innovation efforts and to promote the changes required in the production infrastructures of many European sectors affected by the establishment of a low-carbon and resource-efficient economy. This will also entail substantial investment for businesses.

1.6

The EESC believes that the EU should incorporate the objectives of the sustainable development strategy in all its policies, primarily in the Europe 2020 Strategy and the seven flagship initiatives. The EU's various strategies need to be consistent with each other and the Commissioners should speak with one voice on this issue. Specifically the Commission should take the opportunity of a mid-term review of the 2020 Strategy to strengthen its sustainability aspects and integrate it completely with the European Sustainable Development Strategy. It will be necessary to define and use indicators relating to the quality of growth so that this can be monitored and evaluated.

1.7

The EESC emphasises the important role that the European semester and the annual growth survey play in ensuring the monitoring of sustainable development policies. The EESC considers it necessary to abandon subsidies that are harmful to the environment and to establish Member State specific recommendations regarding environmental taxation, as well as recommendations on waste water management and better recycling. Member States need to be ambitious and seek broader objectives in these areas.

1.8

The EESC is concerned by the fact that the EU's Multiannual Financial Framework for 2014-2020 contains a significant contradiction: the economic sectors with the highest CO2 emissions (housing, energy, industry and transport) are not the greatest beneficiaries of EU funding to facilitate the transition to a green economy, and this funding therefore needs to be increased substantially and its efficient and effective application ensured.

1.9

The EESC considers it particularly important to proceed with eco-taxation, including tax incentives for businesses that set up climate change investment funds, provided they are managed jointly with workers.

1.10

With regard to EU trade policy, the EESC believes that in order to avert the risk of industrial relocation, the establishment of tariffs equivalent to CO2 taxes should be considered for countries that refuse to comply with international agreements on reducing emissions.

2.1

In 2011 the OECD and the UNEP drew up comprehensive reports on the green economy. The ILO launched a Green Jobs Programme and one of the main themes of the Rio+20 conference in June 2012 was the Green economy in the context of sustainable development and poverty eradication.

2.2

In 2006, the EU renewed its sustainable development strategy and in 2009 it launched its energy and climate package to reduce greenhouse gas (GHG) emissions by 20 %, increase the use of renewable energy sources to 20 %, and improve energy efficiency by 20 % by 2020 (1). The EU should aim for further reductions by 2025 and 2030. In 2011, the Commission adopted flagship initiatives entitled A resource-efficient Europe  (2); A Roadmap for moving to a competitive low-carbon economy in 2050  (3); An EU biodiversity strategy to 2020 and the Roadmap to a Resource Efficient Europe  (4).

2.3

The EESC has always supported the idea of greening the economy as a contribution to sustainable development and the need for civil society recommendations on the transition to an inclusive green economy to be at the forefront of EU and national policy, emphasising the need for close collaboration with all social partners. As a result, many of its opinions have referred to its different aspects and the Commission's successive proposals. The EESC has emphasised that the improvement of the green economy and governance cannot be separated from promoting production, employment and sustainable consumption or from the strategy for equality between women and men and the package of EU climate change measures.

3.1

An inclusive green economy should strike a balance between economic prosperity, greater social cohesion and the conservation and rational use of natural resources, which ensure the wellbeing of current and future generations. It sets out to dematerialise production, which means decoupling economic growth from the use of natural resources and the generation of pollution and waste.

3.2

According to the ILO, green jobs are jobs that reduce the environmental impact of businesses and economic sectors to sustainable levels, thereby helping to reduce the consumption of energy, raw materials and water, and to a low-carbon economy and to reduced GHG emissions. The concept of ‘green jobs’ is fairly fluid since the boundaries between green jobs and non-green jobs depend on technological innovation processes. As a result, green jobs are not simply those associated with a few new emerging sectors, but include all jobs created in connection with the ‘greening’ of production processes and products in all sectors.

3.3

The development of the green economy is determined by two main vectors, one of which is driven by climate change policies, while the other derives from growing competition with emerging countries for resources that will continue to grow scarcer and more expensive.

3.4

The green economy is not just a matter of sectoral adjustment between emerging and other more traditional sectors (derived from the technological push towards a low-carbon economy). It includes an ecological modernisation of production and consumption to integrate the objectives of increasing the added value of businesses and environmental sustainability, in terms of resource conservation, energy efficiency and work organisation, not to mention worker-employer relations and the improved productivity of all factors.

3.5

In recent years, the limits of the earth's capacity have become clear, both from the perspective of natural resources available to meet growing demand, and the earth's capacity to absorb waste and pollution.

3.6

The health impacts of climate change should not be forgotten: a growing number of extreme weather events, increasing ozone levels and particles in the atmosphere and its toxicity as a result of higher temperatures and the re-emergence of previously eradicated contagious diseases in Europe.

3.7

Changes to the energy production and transport structure of the main developed economies, and a good number of emerging economies, will focus on the transition from a high-carbon economy to a new low-carbon economy where most energy comes from clean renewable sources, i.e. from sources that do not generate GHG emissions and other hazardous waste.

3.8

This profound overhaul of production, which some are calling a third industrial revolution, will not be neutral in terms of international competitiveness, especially for those countries, such as the majority of EU countries, that are net importers of energy and raw materials. As a result, as early as 2009, the governments of many OECD countries began to launch ambitious stimulus plans, where investment in green infrastructure and R&D&I played a fundamental role, with the dual purpose of promoting production to emerge quickly from the current recession to tackle ongoing production restructuring from a leading position.

3.9

Nevertheless, the financial development of these plans in many EU countries, like the EU budget, has been severely curtailed, partly as a result of ‘fiscal austerity’ policies. The IMF's chief economist has recognised that the contraction in production resulting from these policies has been far worse than estimated to date. According to a study carried out on 28 countries, since the crisis which began in 2008, the fiscal multiplier is between 0,8 and 1,7 % (5).

3.10

This loss of impetus for the green economy could create serious problems for many EU countries since the current technological differential between developed and emerging countries is far narrower and dynamic. European countries as a whole have no guarantee that they will be in the vanguard of developed countries with low-carbon economies, which in the long-term could lead to serious tensions in the EU since it would call into question its capacity to continue to develop an economically advanced and more socially cohesive and environmentally sustainable society. Nevertheless, it must be stressed that the EU holds a strong leadership position in term of technology and production in a number of industrial sectors that are clearly future-oriented.

3.11

Developing the green economy through the necessary investments and incentives will increase opportunities to create jobs in Europe. The areas of production that now currently form the economic foundation of EU countries cannot be forgotten. Many jobs in industries that are currently considered to be very polluting will become green jobs, insofar as they engage in processes that allow them to improve energy efficiency and reduce the consumption of raw materials and the pollution they generate. Examples of this in road transport include companies that develop and manufacture electric and hybrid vehicles and, not to mention public transport and civil engineering work to construct high-speed rail infrastructure, which results in significant energy savings per passenger compared to air and conventional rail transport. Examples in construction include energy efficiency improvements to energy inefficient housing stock. This has to take place as part of a broader process of developing and enhancing social dialogue and consultation, as well as collective bargaining, to ensure good final outcomes in terms of job creation (with regard to both quantity and quality) and equality (in both working conditions and salaries). Nevertheless, only eight EU countries have an official definition for green jobs. This gives rise to different calculations based on different definitions and methodologies.

4.1

An entirely new aspect of this third industrial revolution is the level of development achieved by the forces of production and the considerable civil society awareness and pressure surrounding issues of environmental sustainability. In Europe, the strong development of ecological organisations, consumer associations, unions, business organisations, and other civil society bodies is the factor that will allow the coming changes to generate an economy that ensures more manageable, sustainable, social and environment-friendly development. This was something inconceivable in previous processes, where technological and production changes were entirely dictated by micro-business decisions.

4.2

The ILO's Recovering from the crisis: A Global Jobs Pact, adopted in June 2009, explicitly states that ‘Social dialogue is an invaluable mechanism for the design of policies to fit national priorities. It is a strong basis for building the commitment of employers and workers to the joint action with governments needed to overcome the crisis and for sustainable recovery’. An industrial policy that has been agreed by the social partners is vital to coordinate technological innovation efforts and promote the changes required in the production infrastructures of many European sectors affected by the transition to a European low-carbon and resource-efficient economy.

4.3

Technological innovation is part and parcel of the green economy. As a result, the sectors, businesses and technologies that will drive the greening of the economy will receive more public and private financial backing since they will enhance the European economy's global competitiveness. As a result, in order to guide private investment, Deutsche Bank has identified the following sectors as climate change priorities:

4.4

Special attention should be paid to the difficulties European SMEs face in obtaining sufficient financing to make the investments required to achieve eco-innovation.

4.5

For innovation to have a competitive value, the business organisation model must incorporate practices that promote employee involvement. Optimising staff involvement in the organisation of work and business planning is an aspect that clearly allows the development of innovation and increases productivity. This presents a challenge to modernise labour relations and collective bargaining systems and their links with business management.

4.6

Staff participation in businesses is one key aspect that contributes to Europe's technological leadership in many sectors and helps it to maintain its export capacity. It should not be viewed simply from the perspective of wealth distribution; it is actually a decisive aspect of wealth generation, as acknowledged by businesses (6). To a large extent, the difficulties involved in innovation have a lot to do with rigid organisational structures that perceive employees as mere tools.

5.1

At the Rio+20 conference in June 2012, the EU advocated an inclusive green economy enabling progress towards sustainable development. The European Commission intends to promote sustainable and inclusive growth and put greening the economy at the centre of its follow-up activities to Rio+20. Governments should develop effective social dialogue to ensure the crucial involvement of civil society in this process.

5.2

In order to help implement the Commission's Flagship initiative and Roadmap to a Resource Efficient Europe the Commission established a European Resource Efficiency Platform in 2012, which will submit an intermediate report in 2013 and a final report in 2014, to work on concrete proposals for a transition to a green economy in the following fields: ‘Framework conditions for investment in RE’, ‘Setting objectives and measuring progress’. To this end, a robust set of indicators needs to be developed, in addition to GDP, to show the outcomes of these policies in the relevant sectors and society as a whole (competitive gains, improved working conditions for workers, recycling percentages, energy and resource efficiency, percentage of renewable energies, lower pollution) and ‘Circular economy/greening the economy’.

5.3

It is particularly important to proceed with eco-taxation and reductions in the high subsidies for fossil fuels in many EU countries since the prices of many products and services do not give a good indication of the total cost of production since the cost of pollution is externalised. Voluntary eco-labelling policies have proved inadequate, especially since in a crisis like this one, more and more consumers give priority to a product's price and not its environmental performance. In order to achieve a high level of social consensus for eco-taxation polices, their impact on the competitiveness of businesses and social impact on the public in terms of what we have come to call ‘energy poverty’ must be factored in and mitigated through complementary policies (industrial, trade, support for disadvantaged social groups). Tax incentives are also needed to reward businesses for investing their profits in reducing CO2 emissions (through climate change investment funds) and other adverse environmental impacts, provided that this is managed jointly with workers.

5.4

The Commission adopted its proposal for a 7th Environmental Action Programme which sets out the contribution of environment policy to a transition to a green economy. The European Parliament and the Council have to approve the programme and the EESC has contributed by drawing up a specific opinion on it (7). However, the EU Multiannual Financial Framework for 2014-2020 contains a significant contradiction: the economic sectors with the highest CO2 emissions (housing, energy, industry and transport) are not the greatest beneficiaries of EU funding.

5.5

With regard to EU trade policy, it should be borne in mind that, with a view to reducing the risk of relocation, the increase in carbon taxation should entail the establishment of equivalent tariffs for countries that refuse to comply with international agreements on reducing emissions. Although carbon tariffs are barriers to free trade, they have already been accepted by the international community in other cases. The Montreal Protocol on Substances that Deplete the Ozone Layer recognises the possibility of establishing trade restrictions to ensure its enforcement since free trade is not an end in itself but the means to sustainable wealth creation. There is no question that avoiding a global climate change-induced disaster is more important than keeping international markets open to GHG-intensive products.

19.9.2013   

EN

Official Journal of the European Union

C 271/23

1.1

The Commission communication makes a major contribution to the launch of a very necessary debate on the EU and represents considerable progress on past endeavours in the area of EMU in terms of both method and content. In addition, for the first time it addresses the EU's international role and political future. The EESC therefore welcomes the proposal, which may prove a historic turning point provided that the Council, after 20 years, finally musters the courage and the will to adopt and put into effect the provisions that will help to achieve the stated objectives and to implement the proposal swiftly.

1.2

With the decisions taken over 2011 and 2012, the European Council has launched a key, coordinated reform of European governance concerning surveillance of excessive macroeconomic imbalances, the tightening of budget rules and coordination of the euro area countries' economic policies. Unconventional measures for ‘conditional but unlimited’ purchase of government bonds from countries in difficulty, recently decided on by the ECB, the establishment of the Single Supervisory Mechanism, intended to provide stringent, impartial prudential supervision and to cut the tie between States and banks, and the resolution rules for banks are necessary tools in securing EMU stability.

1.3

The EESC supports the strategy for strengthening the euro area set out in the Commission communication and recently reiterated by the President of the European Council, Mr Van Rompuy. However, it feels that the strategy is not sufficient to ensure that Member States, citizens and businesses reap the full benefits of EMU, as the events of the past 10 years have shown. The Council has political responsibilities going back to the Maastricht Treaty that severely limited the EMU created. That is why the Commission now put forward a Blueprint for a deep and genuine EMU.

1.4

In order to be able to give EMU greater stability and ensure economic and employment growth in the euro area countries, more incisive measures such as a growth plan and bolder economic integration mechanisms are needed, starting right now rather than in the medium-to-long term, and they must be implemented simultaneously by the Council. What is needed, in other words, is a mix of macro- and microeconomic policies, a strong commitment, a sense of solidarity, trust and belonging among Member States and between the Member States and the EU, not forgetting that the primary goal of the measures being discussed must be to benefit all the people.

1.5

While the EESC welcomes the communication, it notes that, even if everything were to be made operational, any substantial effects would be unlikely, particularly as regards the decision-making method, as there is no tangible proposal on political union to give the euro a home. The same applies to debt, coping with asymmetric shocks, growth, competitiveness and employment (where impact studies should be systematic). These are all limitations in the present situation.

1.6

The EESC points out that it has already drawn up opinions and recommended solutions regarding most of the Commission's current proposals, particularly those relating to the limitations of EMU, the ECB, growth and sovereign debt (1). The steps forward taken by the Commission and the Council thus far are a good basis for pursuing the work in this area. Therefore, the EESC welcomes the fact that the Commission has decided to give guidance for the future on these issues, and hopes that this will prove the right time for the Council to take swift, tangible measures on debt and growth, thus achieving a genuine qualitative leap.

1.7

Whereas the most recent decisions taken by the EU, referred to in the communication, are – albeit only partially – appropriate for the macroeconomic framework, the microeconomic proposals regarding the production sectors, which are the only sectors that can relaunch growth, are inadequate. The Commission document seeks to open a debate on EMU, an issue that goes far beyond fiscal consolidation and macroeconomic policies. Microeconomic policies are also needed, such as, for example, a genuine industrial compact.

1.8

Moreover, the Commission proposal would receive a more resounding endorsement if, in the various phases set out for launching the measures needed to make EMU more stable and efficient, more explicit references were made to the need to pursue European policies that are in line with this aim, defining the envisaged areas for action and the new elements to be introduced to make European spending more streamlined and effective as well.

1.9

The Commission can and must help implement the reforms that are essential to increase the competitiveness of national production and administrative systems, adopting innovative criteria and methods for intervention in the area of the single market, Structural Fund management and the principal common policies. Moreover, it should take its cue from the innovations introduced by the ECB and propose equally substantial changes – as repeatedly called for by the EESC – to the implementation of the European policies that most affect the EU's most vulnerable areas, regions and sectors.

1.10

As regards the ECB, full use must be made of its structure to boost growth and employment and its role as lender of last resort. A demonstration that the euro area countries were intent on taking this path would help consolidate faith in the ECB and the euro and combat speculative attacks, particularly when it comes to those countries with the greatest budgetary difficulties.

1.11

The stability of the euro cannot be entrusted solely to the ECB and common monetary policy, leaving the Member States completely free to conduct their fiscal and budgetary policies. The EESC believes that fiscal union with a view to a single euro area budget cannot, as envisaged in the communication, be postponed to the longer term but must, along with the single currency and single banking supervision, become the other pillar on which to build EMU stability in the short and medium term, thus reassuring the markets of the coherence of the European project.

1.12

With regard to the institutional proposals, the Commission is making a considerable effort. The EESC believes it is useful that institutional considerations are on the agenda at last, as they underpin the Commission's innovative proposals, including political union; a completely new proposal. However, it feels that most of the proposals are rooted in the current framework, making very limited progress, and will therefore fail to resolve anything if the Council does not go further and treats the proposals simply as pointers for action.

1.13

They may constitute another intermediate stage, but, on the basis of what has already been proposed and approved, the EESC, which should be a part of this process, considers that the time for half-way measures on certain matters has passed and it is now time for a qualitative leap in terms of both policy content and the decision-making process for implementing these policies, with no more pretence so that the constant refrain that ‘genuine’ policies, ‘genuine EMU’, ‘genuine’ political union, etc. are needed does not strike up again afterwards. Action must be taken now, more resolutely and swiftly, both to halt the recession that has struck a large part of the EU and to fill the gaps that have been left unattended to for some time and which the international financial crisis has simply blown apart.

1.14

The EESC calls on the Council, taking its cue from the Commission proposals, to act more boldly and clearly in terms of respect for the agreements reached and of responsibilities to advance proposals to be adopted and implemented, more specifically, extending majority voting to all subject areas, starting with economic and employment policy, with a view to amending the Treaty.

1.15

Gist of the EESC proposals

1.15.1

Therefore, to achieve genuine EMU, the EESC believes it necessary in the immediate term (without amending the Treaty) to:

1.15.2

In the medium and/or long terms, possibly with changes to the Treaty, it is necessary to:

2.1

The Committee is aware that we are discussing one of the most complicated issues of the day. Europe is entering a new phase of closer integration and this entails a number of courageous steps. The EESC greatly welcomes the launch of a debate on the future of EMU as a first step in this direction and points out that the macroeconomic reality in the EMU is a result of microeconomic decisions. Macroeconomic and microeconomic policies should therefore be aligned towards achieving the same overall objectives.

2.2

Article 9 of the Treaty on the Functioning of the European Union, supplemented by Articles 151 and 153, essentially state that in defining its policies and activities the EU must take into account promotion of a high level of employment, improvement of living and working conditions and the fight against exclusion. The EESC is surprised to note that none of these requirements are addressed by the communication in question as being part of the goal of a ‘deep and genuine Economic and Monetary Union’. In addition to calling for explicit reference to these objectives, the EESC advocates greater monitoring (impact analyses) of the effects of economic and monetary policies on social situations and the labour market and measures to eliminate their potentially harmful economic and social consequences.

2.3

None of the Commission's proposals for more stable, credible EMU can actually come to fruition (in either the short or medium-long terms) unless the Member States, particularly the countries worst affected by the economic and financial crisis, start to experience growth once more, to find a solution to the issues of employment and unemployment (which is rising sharply, especially among young people) and to reduce the perennial disparities between countries. Equally, however, nothing will be achieved if the Council and the Eurogroup do not take on board the Commission's suggestions and progress with the reforms necessary to complete EMU, which have been due for 20 years, and if the Member States do not make every effort to achieve this aim and manage part of each country's sovereignty together, as is necessary to this end.

2.4

The Commission's main concern is to ensure coordination of the member countries' economic policies by means of a coordinated series of measures and instruments to increase convergence between budgetary policies and supervisory systems. This should serve to alleviate the most indebted countries' difficulties in financing public debt and complying with the rigorous plans for debt reduction and sustainability proposed by the Commission and recently approved by the member countries (Fiscal Compact). However, to restore the confidence of the public and the markets, the measures taken at national level must fit in with a common, European approach and produce tangible, positive effects for people and businesses; this means greater consistency between national-level macroeconomic policies and microeconomic policies (young people, labour market, social security, etc.).

2.5

A large number of the euro area countries have entered their fifth year of negative growth and the forecasts for the coming years predict only very slight improvements in terms of the principal macrovariables. The Commission's proposals on strengthening EMU call for other comments and/or measures if they are to be credible and form the basis of a large-scale, consensual debate on the future of EMU involving not just experts but the whole of European civil society.

2.6

In accordance with the commitments they have made with the EU, the euro area countries must continue with tough budgetary policies over the coming years, which could primarily be achieved through reforms aimed at streamlining the structure of national budgets, in terms both of spending and of public revenue, with all due regard for fair distribution and the effects of fiscal multipliers. That would allow budget-neutral efficiency gains without cuts being made in sectors where expenditure is essential for economic growth and social welfare such as health, social security systems, education, research and innovation, and infrastructure (2).

2.7

These national measures need to go hand in hand with European measures necessary for economic growth, employment and investment recovery such as: improving the operation of the national labour markets with a view to integrating them within the euro area, including through macroeconomic dialogue (3), partial mutualisation of public debt in order to curb speculation, the issuing of euro bonds by the EIB and the EIF to finance growth and attract global savings surpluses (4), the possibility of excluding from public debt certain structural investments necessary to set a virtuous growth cycle in motion, and, lastly, greater focus on industrial policy by both national governments and European policymakers.

2.8

Responsibility for implementing these policies lies with the Member States' governments, but, by virtue of its institutional prerogatives and its role managing EU budgetary resources, the Commission must ensure that they are implemented, thus helping to limit the disparities and imbalances that are still present between the various regions.

2.9

Moreover, the EESC would point out that the Commission's analysis of the historical aspects of EMU does not raise the genuine economic and political limitations that were inherent when the euro was created and that are the main cause of the crisis affecting the euro and the EU. It is equally strange for an EMU analysis not to mention or evaluate the Maastricht criteria, the ‘singleness’ of the monetary policy or the economic asymmetries between the countries concerned. Furthermore, it seems untenable to blame the 2008 crisis entirely on debt rather than on the political weakness of the EU and the national governments, particularly considering that right from the start of EMU the Member States have systematically refused to launch a debate on coordination of fiscal and budgetary policies.

2.10

There is a pressing need to achieve economic union with EU economic governance (together with or prior to a banking union, etc.) and the Commission communication lays the foundations for this.

3.1

In the short term , seven proposals are considered and described, some of which are not new as they refer to measures recently approved by the EU on the European semester, the ‘six-pack’ and ‘two-pack’ and ECB banking supervision. These are all major steps forward, which must be fully implemented in line with the relevant European legislation and country-specific recommendations adopted by the Council. The Commission proposals that the EESC considers to be most promising are the following.

3.1.1

The first is the introduction, following the Single Supervisory Mechanism (SSM), of a Single Resolution Mechanism (SRM) to solve the problems of banks in difficulty. The most innovative aspect here is that resolution costs are covered by shareholders and creditors; any ‘additional resources needed to finance the restructuring process’ are to be provided by the banking sector itself and no longer by the taxpayer (5).

3.1.2

The second is the introduction of a convergence and competitiveness instrument to support the implementation of structural reforms in euro area countries. This proposal gives a highly detailed description (Annex I to the communication) of the prescribed procedure for activating and complying with the arrangements underpinning this instrument. The degree of participation and the amount of financial support that member countries could receive is left unspecified. The latter are both decisive elements for ensuring the instrument's sustainability; the Commission does, however, reserve the right to issue a more detailed proposal on the implementing arrangements (page 25 of the communication). The EESC believes that this instrument should precede, or at least accompany, the structural reforms in order to temper their negative impact. In addition, the EESC stresses that the Convergence and Competitiveness Instrument can only be effective if, little by little, it is used in coordination with national measures and initiatives.

3.1.3

Moreover, the proposal on the Multiannual Financial Framework seems to be perceived as a punishment for those who do not comply with the ‘agreements between the Member States and the Commission’ rather than as an incentive for implementing European policies. The tough macro-economic conditions to which the Member States are made subject should be accompanied by a plan for growth and development of new job opportunities, particularly for young people, drawn up with the active involvement of the social partners and civil society players.

3.1.4

A more incisive role for the EU and the euro in the governance of international monetary bodies and the need to strengthen the euro's external representation capacity are two of the most important points raised by the Commission, as well as by numerous EESC opinions, to give the EU and the single currency more decision-making power and clout in international monetary governance. However, the Commission fails to spell out the difficulties of the proposal, both within and outside the euro area, given the clearly unfavourable attitude of the US (and also the UK) administrations towards an increase in the euro's weight (and corresponding fall in the weight of the dollar) and the differences that continue to remain between euro area countries as regards defending specific economic and political interests in many developing countries assisted by the IMF.

3.2

In the medium term , the proposals concern mainly the establishment of a redemption fund, subject to strict conditionality in order to limit moral hazard, and the creation of a new sovereign debt instrument for the euro area (eurobills). These proposals have been part of the debate between the principal EU institutions and the Member States for some time. In its opinions the EESC, too, has repeatedly stressed the need to employ European bonds to partially mutualise debt (Union bonds) as an additional instrument, both to make it easier in the euro area for the most indebted countries to have recourse to sovereign debt financing and to reduce the costs of debt servicing (6).

3.2.1

Although it can see the merits of the German Council of Economic Experts' proposal included in the Commission document, the EESC would therefore have preferred the Commission to have put forward its own proposal and/or referred to the EESC's previous proposals or to those of EU economic affairs ministers or others.

3.2.2

In any case, the emphasis placed on the redemption fund overlooks the fact that the success of sovereign debt reduction policy depends here to a large extent not just on progress made in reducing public spending but, first and foremost, on increasing revenue. This is the right path to take, and for much longer than the medium term, to bring the debt/GDP ratio back down below the Maastricht threshold. The best proposal may still be to introduce Union bonds, as the Committee has already illustrated in detail (7). Clearly, however, the problem is not what technical instrument to use but rather what solution to apply.

3.2.3

In addition, the proposal as a whole follows the rationale of the Stability Pact in terms of Member States' obligations, but fails to introduce any new element that would signify a change in the focus of these policies, which can no longer continue in the same direction.

3.3

As to the longer term , which is covered less fully in the Commission document, EMU is envisaged as evolving towards the completion of banking, fiscal and economic union. These are certainly goals which the EESC supports, provided that the arrangements necessary for their achievement are defined. The EESC agrees that full integration of Member States' economic policies must be achieved, particularly as regards fiscal and economic measures, along with a single EU budget with its own financial resources and autonomous fiscal capacity.

3.3.1

With regard to the institutional aspects, the communication confines itself to describing them, identifying the foundations on which it will be possible to build an Economic and Monetary Union that is stronger in terms of its legal framework and governance of the main economic policies, while making no mention of the macro- and microeconomic conditions required to secure the long-term viability of the proposals.

3.3.2

The EESC believes that with such an ambitious goal success can be achieved by implementing reinforced cooperation with the aim of moving towards political union. This process could be facilitated if the partially-implemented reforms in the international macroeconomic context concerning operating rules for the credit and financial markets, macro- and microprudential supervisory mechanisms and a reduction in the macroeconomic imbalances (starting with the US' deficits and China's surpluses) that have exacerbated the financial crisis were to be completed. Without considerable progress of this kind further economic and financial crises will be hard to prevent.

4.1.1

The EESC welcomes the Commission's attempt to address the EU's current democratic deficit, as well as the idea that the main problem is the transfer of sovereignty. It is thus launching a process to achieve political union whereby certain ‘sovereign’ policies that have remained the responsibility of the individual Member States are brought together and managed jointly by means of a more transparent, democratic decision-making process, in order to provide the euro with a single voice and European governance. This is EMU's missing link.

4.1.2

In this regard, the EESC believes that:

4.1.3

The issue therefore lies not in the difficulties of involving the European Parliament, but rather in establishing a common decision-making process for the euro area countries and involving the EP in relation to this. What is no longer acceptable is to maintain independent economic and industrial policies for each country alongside a common monetary policy that penalises the weakest countries' economies and lacks compensatory mechanisms.

4.2.1

The EESC is in favour of involving the EP in the discussion on the proposals for growth, as well as the national parliaments. They should also be consulted and not just ‘informed’ on the adjustment programmes. We are still, however, in the realm of artificial formalities, a far cry from the way the EU decision-making process ought to be conducted.

4.2.2

On the other hand, the proposals on the political parties are innovative, stating that they should become European in more than just name and act accordingly as single European structures rather than as the sum of so many national bodies, acting in line with the individual Member States or other associations (trade unions, employers associations, etc.).

4.2.3

It would be advisable for not just the parties, as proposed by the Commission, but also the other major European organisations (such as trade unions, employers' associations, etc.) of the euro area at least, to get themselves organised and adopt a common, European rather than national approach with a view to the 2014 elections. This would be a considerable step forwards, although not enough. In any case it would set a good example for all to follow.

4.2.4

It will be necessary, come the elections, to give the EP constituent power which would enable it (along with the Council) to provide for the transition to political union within a set timeframe, extending majority voting to all areas and giving the European Parliament the right to vote on growth and jobs as well.

4.3.1

The EESC is in favour of merging and unifying economic policies with employment policies, which are two sides of the same coin, although this is an economic rather than a legal issue. On the other hand, a joint decision-making process for all economic policies is needed, bringing together the Europe 2020 strategy, coordination of national budgets, macro- and microeconomic policies, euro area labour market policies, etc. in order to go beyond the current decision-making system. It will take more than the establishment of a special EP committee to transform EMU.

4.3.2

Moreover, it is clouding the issue to suggest that giving the Commission vice-president responsible for economic and monetary affairs the power to coordinate EMU, even together with the EP, could improve the current situation. The example of foreign policy should suffice to illustrate this. Genuine authority should, therefore, be give to the commissioner or possibly a minister.

4.3.3

Such a key issue cannot be resolved through artificial legal and parliamentary formalities if a decision is not first taken to transfer sovereignty in matters of economic, monetary and employment policy from national to European level, as the EESC has repeatedly suggested. ‘Economic governance’ of the euro area should be established, managed by the Euro Group with decision-making power and majority voting, together with the EP, with the appropriate changes to the Treaty, to be made at once, with the same urgency with which the Fiscal Compact was launched or the banking union addressed, etc. This would make it possible to establish a single market for economic, industrial, growth and employment policies, with countries forming a common vision and taking mutually-supportive decisions in the interests of EU citizens.

4.4.1

The EESC welcomes all the proposals on external representation of the euro area. This is a key point of the communication, given the international repercussions of the crisis and the relationship between currencies. At present the euro is like a sheep among wolves. The strategy outlined by the Commission to consolidate the euro area's presence in the IMF consists initially of giving it observer status and only subsequently requesting a single seat. This will take too long, to the detriment of the euro area, which should be given a single voice within the various bodies without delay, as the EESC has been pointing out for some time. Thus, the Commission's proposals may be realistic but they are also hesitant and insufficient in the short-to-medium term. Here, too, everything will hang on what the Council does.

4.5.1

The approach taken to the ECB is inadequate. Furthermore, the EESC disagrees with the statement that the Treaty must ‘strengthen democratic accountability’ of the ECB, as the ECB is a body where decisions are already taken by majority voting (unlike the Council). In addition, the problems and role of the ECB are of a different nature and supervision cannot be taken in isolation as the Commission communication seems to suggest. Issues include the extension of its remit to include growth and jobs, along with stability and inflation.

4.5.2

To this end, care must also be taken to ensure that the mechanisms for conveying the ECB's policies to the real economy work properly. The recent, unconventional measures taken by the ECB to make these mechanisms more effective, consisting of both injecting liquidity into the banking system (the CBPP and LTRO programmes) and buying government bonds on the secondary market (the SMP and OMT programmes), can be seen as an initial step in the right direction, but they do not as yet amount to the ECB acting as lender of last resort, able to take its own decisions autonomously where necessary, which (as all are aware) would require a Treaty change.

4.5.3

The decision-making autonomy of the ECB and the instruments it can use to act in its role of lender of last resort need to be strengthened, not in order to increase Member States' or the EU's indebtedness but to give the euro greater credibility and curb the speculative attacks on the sovereign debt of the most indebted countries. The EESC points out, with particular reference to the impact of ECB interventions on the sustainability of public debt, that the mere announcement of this manoeuvre helped to ease tensions on both the euro area government debt securities market and the financial and credit markets.

4.6.1

The EESC agrees that the role of the Court of Justice should be strengthened, but not in the area proposed by the communication (infringement proceedings for Member States). That would perpetuate the belief that the EU's economic problems, including debt, are technical, legal problems rather than political issues that need to be addressed by means of a democratic, transparent EU decision-making process over which the citizens have sovereignty.

19.9.2013   

EN

Official Journal of the European Union

C 271/31

1.1

The European Economic and Social Committee (EESC) welcomes the Commission's proposals on adapting the European regulatory framework to reflect changes made to international standards on preventing and combating money laundering and the financing of terrorism. The criminals abusing the financial system and the facilities provided by the internal market threaten the very foundations of our society. In the EESC's view, it is essential to equip the European Union and the Member States with effective means of bolstering the integrity and transparency of financial transactions. The Commission's proposals are certainly a step in the right direction in this respect.

1.2

The EESC welcomes the clarifications that have been made with regard to the customer due diligence requirements of professionals regarding beneficial owners; these will boost transparency when it comes to individuals using legal entities as screens and also in relation to people who are politically exposed and may be at greater risk of corruption owing to their functions. The EESC also approves of the inclusion of gambling service providers on the list of professionals subject to requirements, as this sector can be exploited for money laundering purposes.

1.3

The EESC welcomes the Commission's ambition for the European Union to lead the way in the global fight against money laundering and terrorism. The EESC considers that one of the ways of ensuring that the new European regulatory framework is effective and thus enables the EU to lead the way in fighting against money laundering is for all stakeholders to join forces. The EESC welcomes the clarifications added throughout the proposal to ensure proportionality with regards to SMEs. The EESC deems it appropriate to provide small entities with more technical and professional assistance via intermediate bodies such as professional chambers, associations and federations, enabling them to meet the obligations set out in the proposal.

1.4

The EESC applauds the Commission for attempting the delicate balancing act of reconciling the apparently conflicting interests of personal data protection and the fight against money laundering. The purpose of having a wide range of professionals collect and analyse information, including data of a personal nature, is solely to detect criminal activities. Professionals must therefore take care to protect the private lives of their customers as far as possible, while making it a priority to assist national authorities in the fight against crime.

1.5

The EESC welcomes the proposal to harmonise the sanctions applicable in the financial sector at European level. Crime prevention must be as effective as possible and professionals be subject to sanctions that are dissuasive and commensurate with the sums of money being laundered. The EESC therefore calls on the Commission and the Member States to ensure the consistent and correct application of the administrative sanctions and penalties.

2.1

Money laundering, the financing of terrorist activities and the proliferation of weapons of mass destruction are all threats to global security and the integrity of the financial system. The Financial Action Task Force (FATF) is the body mandated at international level to design measures, known as recommendations, to prevent and combat money laundering, the financing of terrorism and, as of recently, the financing of proliferation of weapons of mass destruction.

2.2

The FATF recommendations were revised over a period of close to three years with a view to strengthening preventive measures and securing the financial system greater protection, by equipping governments with sturdier tools with which to penalise serious offences. The FATF adopted its new recommendations in February 2012 (1).

2.3

The key changes introduced by the FATF's new recommendations are the following:

2.4

The FATF will begin a new round of mutual evaluation of its members from 2014, with a particular focus on how effectively its new recommendations are applied.

3.1

The proposals for (i) a fourth directive to combat ML/TF and (ii) a second regulation on the information accompanying the transfer of funds tie in with the updating of the European regulatory framework and reflect changes made to the FATF recommendations.

3.2

The main changes made by the proposals to the European regulatory framework are as follows:

3.3

The proposed changes are based in particular on the study (3) on the application of the third anti-money laundering directive conducted by an independent consultancy firm and also on the views collected by the Commission during its public consultation.

3.4

The proposed directive and regulation will replace the existing directive and regulation, which will be repealed.

4.1

The EESC agrees on the need to adapt the existing European regulatory framework with regard to combating ML/TF to reflect the changes at international level. The EESC is aware that the ML/TF phenomenon affects all sectors of the economy and that constant care must be taken to ensure that the regulatory framework is effective in preventing the use of the financial system for criminal ends.

4.2

The EESC welcomes the Commission's ambition for the European Union to lead the way in the fight against money laundering and terrorism. It recalls its position already set out in a previous opinion, welcoming ‘the further development of the rules to prevent money laundering and terrorist financing as a symbol of a European Union that is ensuring high standards of probity and conduct in public and private behaviour. The directive is both a practical step in the management of financial affairs and also a means of strengthening the European Union’ (4).

4.3

The EESC believes that reducing the threshold above which traders in goods must abide by the requirements of the directive from EUR 15 000 to EUR 7 500 represents a further step in the right direction to promote payments other than in cash. The EESC has already pointed out in a previous opinion (5) that cash is viewed as a factor that facilitates the underground economy and that payments other than in cash are more transparent in fiscal and financial terms and less costly for society as a whole, as well as being practical, safe and innovative.

4.4.1

The EESC welcomes the fact that letting agents and gambling service providers are to be subject to anti-ML/TF restrictions despite not being covered by the FATF recommendations.

4.4.2

The EESC welcomes the clarifications added throughout the proposal to ensure proportionality with regard to SMEs. To ensure that small entities are able to meet the obligations contained in the proposed directive, the EESC suggests involving intermediate bodies, such as professional chambers, associations or federations that represent small entities at national level, on a formal basis and task them with the provision of guidance, support and mediation services. Small entities must be given support so as to prevent them from becoming a prime target for money launderers.

4.5.1

The requirement regarding the identification of persons must involve their being physically present. If not, professionals must apply enhanced due diligence measures owing to the risk associated with transactions conducted at a distance. The EESC doubts whether this level of requirement is commensurate with society's shift towards a totally digital age.

4.5.2

The EESC calls on the Commission to devise measures that can reconcile customer identification requirements with the increasingly common use of electronic payments and communications.

4.6.1

The EESC highlights the importance of reconciling the interests of personal data protection with the need to safeguard the integrity of the financial system by combating ML/TF.

4.6.2

Inasmuch as the fight against ML/TF relies on a wide range of professionals collecting and analysing information, including personal data, the EESC believes that the proposals largely meet the requirements of both Member States and professionals so as to achieve a better balance between what are at the outset conflicting interests.

4.6.3

As regards the obligation set out in Article 39 of the proposed directive to destroy documents and information collected after a period of five or ten years after the end of the business relationship, the EESC urges Member States to ensure that their legislation provides for situations (such as criminal proceedings, bankruptcies or successions) in which this obligation should not apply, so as to prevent it from running counter to the general interest.

4.6.4

The EESC proposes that the directive make express provision for the obligation to keep the identity of people declaring suspicious transactions strictly confidential, unless these people have agreed that their identities may be divulged or it is essential that they be divulged in order to secure fair court proceedings in a criminal case.

4.7.1

The EESC notes that the European supervisory authorities will be involved at European level in ML/TF risk analysis and may issue guidelines and regulatory standards for the Member States and financial establishments. While the EESC would stress the importance of consultation and working together with the European supervisory authorities in the Europe-wide fight against ML/TF, it would nevertheless point out that their mandate in terms of representation and regulation is limited when it comes to the financial sector. However, a high proportion of the professionals subject to the obligations do not belong to the financial sector and are not therefore represented at European level. The EESC would therefore propose that the Commission take responsibility at European level for analysing the risks and providing guidance for non-financial professionals who find themselves subject to anti-ML/TF obligations.

4.7.2

The EESC is convinced of the need for EU-level harmonised interpretative recommendations and standards so as to secure more uniform application of anti-ML/TF rules in the Member States.

4.8.1

The proposals set out a list of administrative sanctions following on from the Commission Communication of 8 December 2010, Reinforcing sanctioning regimes in the financial sector, on which the EESC issued an opinion (6) and that can also be found in other recent Commission proposals (7).

4.8.2

The EESC is in favour of EU-level harmonisation of the penalties applicable in the financial sector. It cannot be denied that crime is a fact of life regardless of efforts to do away with it. It is therefore essential that crime prevention be as effective as possible and that professionals who do not comply with anti-ML/TF requirements be subject to sanctions that are dissuasive and commensurate with the sums of money being laundered.

4.8.3

The EESC nevertheless has doubts regarding the purely administrative nature of the sanctions proposed and fears that their severity might be brought into question with respect to the hierarchy of legal norms and the proportionality of criminal sanctions. Although the administrative sanctions foreseen are of a dissuasive nature and are designed with European harmonisation in mind, it remains the case that criminal penalties for money-laundering vary from one country to another. The EESC calls on the Commission and the Member States to ensure the consistent and correct application of the administrative sanctions imposed on professionals having failed to meet their obligations in the fight against ML/TF and the penalties applicable in cases of money laundering offences.

4.8.4

The EESC fears that compliance of the administrative sanction regime with Articles 6(1) and 7 of the European Convention on Human Rights might be brought into question, with certain administrative sanctions qualifying as criminal penalties that may only be issued by an independent court following a fair trial – conditions that the competent administrative authorities do not meet. The EESC calls on the Commission to seek appropriate legal solutions so as to ensure that the penalty system is beyond reproach.

4.8.5

The EESC believes that – in the proposal – the introduction of minimum principle-based rules for the application of administrative measures and penalties represents an approach that enhances the response of the EU as a whole.

5.1

The EESC recommends expanding the definition of terrorist financing given in Article 1(4) of the proposal for a directive to include ‘all other acts’ other than the offences targeted, in accordance with the wording of the fifth FATF recommendation.

5.2

The EESC points out that the annexes to the proposal for a directive provide a checklist of risk factors and types of evidence to be considered by professionals in connection with anti- ML/TF requirements. The EESC believes that the lists provided in the annexes are not exhaustive and that professionals should also consider, in accordance with the risk-based approach, other factors that are closely linked to the Member States and the differing circumstances of the transactions they complete.

5.3

The EESC believes that the key to solving the piracy problem lies in tracing and clamping down the involved financial flows. A blacklist of financial institutions involved in piracy money laundering should be established in the EU. The World Bank, Interpol and Europol can assist in the fight to chase ransoms, which should be traced and confiscated so that piracy is no longer an attractive business (8).

19.9.2013   

EN

Official Journal of the European Union

C 271/36

1.1

In line with the positions expressed by the European Parliament (1), and the Committee of the Regions (2) and consistently with its own previous opinions (3), the European Economic and Social Committee welcomes the proposal put forward by the Commission to introduce the world's first regional financial transaction tax (FTT).

1.2

While recalling that it had wished to see an FTT applied at global level, the Committee believes that its application at regional level (EU11+ zone) – with the involvement of eleven EU Member States (4) – could constitute an exceptional opportunity, which could lead to its future application worldwide.

1.3

The Committee reiterates the importance of the enhanced cooperation procedure as a tool that enables Member States to reach the widest possible agreement in certain policy areas laid down in the Treaties (5), thus neutralising the unanimity lock that has often led the EU into a political and economic gridlock.

1.4

The Committee feels that one of the strong points of the proposed FTT is the fact that it comprises a broad tax base and two low tax rates, which reduces its adverse distorting effects. The Committee believes that the introduction of this tax within the EU11+ will foster the establishment of a single financial market. It thus advocates the FTT coming into effect from 1 January 2014, and advises against phasing-in as inadequate.

1.5

The Committee believes that, in order to maximise the impact of the tax on economic growth, the revenue that it raises should be channelled into a programme of investment at national and EU levels capable of delivering economic recovery and jobs in the short term.

1.6

The Committee is pleased to point out that, in order to neutralise or at least reduce to a minimum the risk of financial activities being relocated, the Commission has – in the new FTT proposal – coupled the residence (or territorial) principle (proposed in the original version) with the issuance principle proposed by the European Parliament and strongly supported by the Committee in its previous opinion (6). The Committee draws attention to the fact that cumulative application of these principles could mean that, in some cases, financial institutions in non-participating Member States would also be subject to the tax. The Committee therefore considers that, in line with the European Parliament's proposals, further consideration and negotiations with third countries should be initiated with a view to facilitating FTT collection.

1.7

In line with the European Parliament, the EESC believes that it would make sense to complement the residence and issuance principles with the ‘ownership principle’. This would make FTT avoidance risky and expensive and secure better application.

1.8

The Committee welcomes the anti-avoidance and anti-evasion changes introduced by the Commission to enhance the administration of the tax. The Committee endorses the introduction of an exemption for primary market transactions involving UCITS (units of undertakings for collective investments in transferable securities) and alternative investment funds (AIFs) in order to foster company financing.

1.9

The Committee regrets that a review of the micro- and macroeconomic consequences of the FTT's application is not provided for until three years after the entry in force of the legislation under consideration. It calls for ongoing checks and controls (annual monitoring) to be carried out by the Commission. This would enable the effects of the FTT to be gauged from the outset and timely corrective action as regards its application to be proposed.

1.10

Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming. The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, by adapting them to evaluation of policy alternatives. In particular, the Committee calls on the Commission services to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made.

1.11

The Committee regrets that the fact that the FTT cannot be applied to all 27 EU Member States deprives the EU budget of a fundamental pillar for its system of own resources. This system was to restore to the EU the financial autonomy it needs, as originally set out in Article 201 of the Treaty of Rome.

1.12

The Committee emphasises that in applying the FTT, the relevant administrative bodies should minimise the risk of evasion and avoidance and reduce the administrative costs involved, by means of the requisite coordination between the Member States.

1.13

While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT.

1.14

In discharging its role as an advisory body to the Commission, the Parliament and the Council, the Committee reaffirms its commitment to the ongoing monitoring of the process by which the Commission's proposal is converted into legislation.

2.1

The proposed directive (7) mirrors the previous proposal drawn up in September 2011 (8). While not receiving unanimous support in the Council, this proposal did, however, spur 11 EU Member States to make an official request to the Commission on 28 September 2012 that the enhanced cooperation procedure be used to establish an FTT.

2.2

After assessing the feasibility of this request, and establishing that enhanced cooperation on FTT would not have an adverse effect on the internal market or on the competences, rights and obligations of non-participating Member States, the Commission drew up a decision in October 2012 authorising the enhanced cooperation, which was forwarded to the European Parliament in December 2012 and received the authorisation of the Ecofin Council in January 2013.

2.3

While this proposed directive essentially mirrors the Commission's original proposal, a number of changes have been included with the aim of: i) ensuring greater legal clarity; and ii) reinforcing anti-abuse and anti-avoidance provisions as requested by the 11 Member States.

2.3.1

The three original objectives are reaffirmed and bolstered: i) strengthening the single market by neutralising the divergent national approaches to financial transaction taxation; ii) ensuring that the financial sector makes a fair contribution to public finances on a par with other sectors; and iii) promoting investment by the financial system in the real economy.

2.3.2

As in the original proposal, the tax base is broad and the minimum rates are low: 0,1 % for financial transactions regarding shares, bonds, units in collective investment undertakings, money-market instruments, repurchase agreements and borrowing agreements; and 0,01 % for financial transactions involving derivative contracts.

2.3.3

In order not to hinder the normal course of the real economy, the FTT will not apply to: i) the day-to-day financial activities of citizens and businesses (loans, payments, insurance, deposits, etc.); ii) traditional investment banking activities in the context of the raising of capital, or financial transactions carried out as part of restructuring operations; iii) refinancing activities, monetary policies or public debt management; or iv) primary market transactions involving UCITS and AIFs. Therefore, transactions with the European Central Bank, the Member States' central banks, the European Financial Stability Facility, the European Stability Mechanism, and the EU are to be excluded from the scope of the directive.

2.3.4

The proposal retains the residence or territorial principle, under which if the financial institution involved in the transaction is established in the area of application of the FTT, or is acting for a body based in that area, the transaction is subject to the tax regardless of where it took place geographically.

2.3.5

To deter relocation outside the area of application of the FTT the issuance principle has been added, as requested by the European Parliament and supported by the Committee. Under this principle, a transaction is subject to the FTT if the financial product concerned is issued by one of the 11 Member States participating in the enhanced cooperation, even if the parties to the transaction are established outside the FTT's area of application or the place where the transaction took place.

2.3.6

The combined effect of the two principles (the residence principle and the issuance principle) will neutralise or at least significantly reduce the inclination to relocate outside the FTT area in order to avoid the tax. Indeed, in order to avoid the tax, a financial institution would have to abandon its clients based in the FTT area and cease trading in any financial products issued in that area. Moreover, it is worth bearing in mind that this zone accounts for no less than two-thirds of EU GDP and 90 % of euro-area GDP. This renders imprudent any strategy of non-engagement with this market, in which the uniformity of the taxation of the financial markets is set to contribute greatly to completing the single market.

2.3.7

According to the Commission's calculations, the revenue raised by the tax could amount to some EUR 30-35 billion per annum. This is about 60,0 % of the revenue that was previously estimated (EUR 57 billion) when it was planned that the scope of the tax would extend to all EU Member States. This revenue would break down as follows: EUR 13 billion from shares and securities and EUR 21 billion from derivatives.

3.1

Over the last few years, a number of EU Member States have approved the application of divergent forms of FTT, thus increasing the risk of diversified taxation harming the internal market (narrow tax bases, different forms of exemption). The introduction of a regional FTT would foster a truly unified financial market, free from the distortion of competition that ensues from inefficient tax systems.

3.1.1

For this reason, the Committee believes that the FTT should come into force in line with the Commission's timeframe, i.e. on 1 January 2014, without phasing-in, which, given the existing domestic legislation within the EU11+ Member States, could give rise to delays and technical problems.

3.2

As the introduction of an FTT across the 27 EU Member States, while desirable, has not proved possible, the application of such a tax through enhanced cooperation – without detrimental effects on the non-participating Member States – is the route that needs to be taken to ensure its future application EU-wide and globally.

3.3

The non-application of the tax in the EU Member States could, in some cases, lead to double taxation within non-participating countries. This would affect only a small proportion of transactions and could, in any case, by addressed by bilateral netting agreements.

4.1

The Committee highlights the fact that the initial estimate of the long-term macroeconomic effects (over 40 years) of the FTT on Europe's economy has been substantially revised by the Commission, rising from a negative figure of around – 1,76 % to a positive figure of around + 1,0 %.

4.1.1

The estimate that accompanied the initial proposal was modified, with the effects deriving from the effective rates proposed and the ‘mitigating’ effects incorporated into the assessment. This enabled the figure to rise from – 1,76 % to – 0,53 % of GDP (9).

4.1.2

The Commission subsequently further modified this assessment, considering that it did not take account of the specific features of the proposal and that it was based on unrealistic assumptions (for instance, that all new company investment was financed with instruments subject to the FTT). Following this correction, the effective long-term negative impact on GDP decreased further to an estimated – 0,28 %. As part of this analysis, the Commission carried out a further impact assessment focusing on the effects of using the FTT revenue as an alternative to other forms of taxation, and as a possible tool for public investment. Under this assessment, assuming revenue of 0,16 % of GDP, the FTT would now have a positive impact on GDP of between 0,2 % and 0,4 % (10).

4.1.3

This last hypothesis should, however, still be considered limiting in that, in terms of the total revenue, no account is taken of the element deriving from the tax on derivatives; this element is included in the Commission's proposal and would bring total revenue up from 0,16 % to 0,4 % of GDP, so the FTT would have a positive effect on GDP in the order of 1 % (11).

4.2

The Commission's analysis shows that the introduction of an FTT can have the most effective impact on the EU's economy where the revenue raised is used – be it at EU or national levels – for funding public investment that can bolster economic growth and employment.

4.3

Over the past five years, which have coincided with the crisis, the Committee has drawn up a series of opinions in which it has advocated the need to rebalance the EU's macroeconomic policies in favour of investment policies to support growth and jobs (12). If the route suggested by the Committee is taken, the revenue deriving from the application of an FTT could thus be most effective if it were indeed used to fund a major programme of investment at national and EU levels.

4.4

The Committee feels that one of the strong points of the FTT is the fact that it comprises a broad tax base and two low tax rates. These features can minimise the adverse effects of taxes whose narrower area of taxation and higher rates would cause severe market distortions. The Committee therefore stresses the need, on the one hand, to minimise exclusions from the tax base and exclusions of taxable persons and, on the other, to encourage the 11 participating Member States to adopt an approach which, by applying the rates of taxation proposed, will create a genuine single market.

4.5

The EESC is in favour of introducing the ‘ownership principle’, according to which a financial transaction in relation to which no FTT has been levied is not legally enforceable and does not result in a transfer of legal title of the financial instrument in question.

4.6

The Committee supports the idea of excluding from the tax base transactions involving UCITS and AIFs, as instruments directly linked to the financing of companies and in order to comply with Directive 2008/7/EC. It should be pointed out that the projected reduction in revenue arising from this exclusion would amount to EUR 4 billion.

4.7

While taking account of the need to keep under control any pressures on interest rates on public debt, the Committee endorses the proposal to maintain the exemption for public securities issued on the primary market, while taxing secondary trading in public securities; it would advocate an exemption on the secondary market only for institutions delegated by public authorities to engage in transactions related to the management of public debt.

4.8

As regards pension funds, the Committee has previously stressed the need for the effects of the FTT on such funds to be specifically monitored. The exclusion from the tax base of UCITS and AIFs, as well as of government securities in the primary market, is definitely a good thing for pension funds given the structure of their portfolios.

4.9

While reiterating the need for careful monitoring of the effects of this tax on pension funds and future pensioners, the Committee does not advocate their exclusion from the scope of the FTT.

4.10

The introduction of an FTT, without harming the system's liquidity, would steer pension funds towards long-term investment strategies, and reduce de-stabilising elements such as high frequency financial transactions (13).

4.11

In applying the new tax, there should be a particular focus on the administrative procedures involved, with a view to minimising both the risks of evasion and avoidance and the administrative costs for Member States and taxable persons. To this end, both the Member States and the Commission, when drawing up the implementing acts regarding the procedures for paying the tax and for checking compliance, should ensure that administrative costs are kept to a minimum and keep a close eye on their evolution. In view of the effects of the proposal, the Committee also urges the Commission to propose measures for ensuring cooperation between financial institutions in non-participating Member States and the Member States to whom the tax is due.

4.12

Having previously criticised the insufficient evaluation documentation that accompanied the original FTT proposal, the Committee welcomes the fact that the Commission acted to partially remedy this shortcoming by means of the seven explanatory notes that it provided to go with the impact assessment, in relation to the previous proposal (14) – to which must be added the impact assessment accompanying the present proposal (15). Nevertheless, the Committee points out that there is still a lack of analytical and illustrative documentation on the current state of play in financial market taxation and the revenue raised in the various countries, especially in the EU11+. In particular, there should be a broader assessment of the possible impact on savers and future pensioners, taking account of the various ways in which the tax could be passed on.

4.13

The Committee points out that, when it comes to assessing the effects of this proposal in quantitative terms, the Commission needs to improve the models currently available, adapting them to evaluation of policy alternatives. The Committee thus calls on the Commission to produce estimates, where possible, correlated to the actual characteristics of the specific proposals made.

19.9.2013   

EN

Official Journal of the European Union

C 271/42

1.1

The EESC does not agree with the arguments put forward by the Commission to justify this proposal. In the absence of scientific data to back up the assertion that disparities in sanctions for currency counterfeiting encourage ‘forum shopping’ on the part of counterfeiters, the Committee believes that revision of the 2000 framework decision to set a minimum penalty within the EU is not entirely justified, and feels that the expected ‘deterrent effect’ of such a measure is debatable.

1.2

The EESC would point out that the proposal for a directive actually establishes a comprehensive arsenal for enforcing legislation against counterfeiting, in the guise of minimum rules; this would appear to go beyond that which is authorised under Article 83(1) of the Treaty on the Functioning of the European Union (TFEU), particularly given that it also relates to jurisdiction and procedure.

1.3

The EESC questions the need for such an approach to law enforcement, which, by definition, runs the risk of prejudicing people's fundamental rights and freedoms; it also doubts that it would be effective inasmuch as, even if a minimum penalty were set, sentencing would still be subject to differences of interpretation depending on the legal traditions of Member States and judges' discretion.

1.4

In general, the EESC finds it regrettable that the proposal for a directive does not take sufficient account – as required under Article 82(2) TFEU – of the differences between legal traditions and systems, not least in terms of its impact on individual rights and freedoms.

1.5

The EESC, as the institutional representative of European civil society, would highlight the fact that offenders may be essentially law-abiding individuals who find themselves in the position of needing to get rid of counterfeit currency that they have unknowingly received. Given the risk of imposing disproportionate sanctions on such people who have turned from victims into unwilling ‘criminals’, the EESC feels that the intent behind the action is a key consideration that the proposal for a directive does not properly highlight in its recitals.

1.6

The EESC is concerned that, with regard to procedure, the draft directive does not provide for any graduation in the tools used by the investigating services according to the severity of the offence, as it does in the penalties imposed. The Committee therefore feels that the draft directive needs to specify that the investigative tools used for organised crime should be used only for the most serious offences.

2.1

The proposal for a directive strengthens the current framework for criminal prosecution for counterfeiting of the euro or other currencies. It supplements the provisions of the 1929 Geneva Convention – which it requires the Member States to be party to – within the EU, and replaces Council Framework Decision 2000/383/JHA, as amended by Council Framework Decision 2001/888/JHA, to which it adds certain key provisions.

2.2

It aims, among other things, to combat the phenomenon of forum shopping, which, according to the impact assessment, criminal gangs use to find the most lenient legislation. To this end, and on the basis of Article 83(1) TFEU, it establishes a common minimum penalty of six months of imprisonment for the production and distribution of counterfeit currency (with a value of at least EUR 10 000). In parallel, the maximum penalty of at least eight years of imprisonment already laid down for production is also extended to distribution (for a value of at least EUR 5 000).

2.3

Legal persons may be held liable for offences committed for their benefit, with penalties ranging from exclusion from entitlement to public benefits or aid to a winding-up order.

2.4

The proposal is also more severe than the current framework in terms of procedural law. Investigation and prosecution services may make use of investigative tools used in fighting organised crime or other forms of serious crime. The judicial authorities will also be required, in the course of proceedings, to send samples of counterfeit currency for technical analysis to aid the detection of counterfeits in circulation.

2.5

Finally, the proposal requires each Member State whose currency is the euro to exercise universal jurisdiction for offences related to the euro committed outside the European Union, if either the offender is on its territory or counterfeit euros related to the offence are detected there.

3.1

While the EESC acknowledges that counterfeiting of the euro, which is becoming increasingly complex and sophisticated, is a worrying phenomenon that needs to be combated effectively, it has serious concerns regarding the substance and even the basic premise of this initiative.

3.2

Given the lack of scientific data in the impact assessment, the EESC is unconvinced by the claim of ‘forum shopping’ that the Commission uses as an argument for drafting this proposal for a directive. In the Committee's view, it is not certain that disparities in levels of sanctions within the EU in any way explain the rise in counterfeiting, or that counterfeiters focus on national legislation regarding criminal enforcement when choosing where to operate. Other physical or logistical factors need to be taken into account to explain the location of illegal print shops.

3.3

Moreover, given the lack of a detailed analysis to substantiate the claim that disparities in enforcement within the EU are detrimental to judicial and law enforcement cooperation and to the effectiveness of efforts to combat counterfeiting in non-EU countries, the EESC even questions the grounds for this proposal for a directive.

3.4

The EESC is also keen to stress that the provisions laid down on the basis of these arguments result in a particularly onerous law enforcement tool. As well as defining all counterfeiting offences and setting minimum penalties – and also maximum penalties for distribution – the proposal for a directive also relates to aspects of jurisdiction and procedure.

3.5

The EESC has particular doubts about the inclusion of these provisions on jurisdiction and procedure, which go further than is claimed in the explanatory memorandum or permitted under Article 83(1) TFEU, i.e. establishing ‘minimum rules concerning the definition of criminal offences and sanctions’. This is especially worrying given that these provisions allowing for exceptional measures are very wide in scope with regard to enforcement, as they result in the establishment of universal jurisdiction – which by definition overrides general solutions – for counterfeiting offences involving the euro, and in the use of investigative tools applicable to organised crime.

3.6

In the EESC's view, it is the latter issue that is the most problematic: the proposal makes no distinction according to the severity of the offences defined in the proposal that would justify the use of investigative tools applicable to organised crime. The Committee feels that such provisions are liable to constitute a serious breach of the proportionality principle and of fundamental rights (1).

3.7

In the interests of avoiding certain abuses, the EESC would, indeed, remind the European legislator of the need to take account of all the Member States and their democratic traditions (whether long established or of more recent vintage) and sensitivity to respect for individual freedoms.

3.8

In more general terms, the EESC would point out that the creation of a European criminal law-enforcement area needs to go hand in hand with a strengthening of rights of defence, not least with respect to Eurojust and Europol, in order to satisfy the Treaty requirement that fundamental rights be upheld (Articles 67(1) and 83(3) TFEU).

3.9

The EESC, as the institutional representative of European civil society, would highlight the fact that offenders may be essentially law-abiding individuals who find themselves in the position of needing to get rid of counterfeit currency that they have unknowingly received. Given the risk of imposing disproportionate sanctions on such people who have turned from victims into unwilling ‘criminals’, the EESC feels that the intent behind the action is a key consideration that the proposal for a directive does not properly highlight in its recitals.

3.10

The EESC acknowledges that the sliding scale of penalties laid down in the proposal depending on the amount of money involved (cf. in particular Article 5(2)) allows for such cases to be taken into account in part. Nonetheless, the fact remains, in its view, that the proposal for a directive runs the risk of seriously jeopardising individual freedoms, as it does not appear to take account of the diversity of legal traditions and systems within the EU or, in particular, of the nature of inquisitorial systems in which the accused may be held by the police for a not insignificant length of time before appearing before a judge, even for minor offences.

4.1

With regard to the establishment of a minimum penalty of six months of imprisonment (Article 5(4) of the proposal), which is the proposal's key measure in response to the claim of ‘forum shopping’, the EESC questions how useful it will be given that a directive – which is, by definition, addressed to the legislator, not to the judge – cannot require this penalty to be imposed in practice. In this connection, the EESC is pleased to note that the explanatory memorandum refers to the principles that sentences must be tailored to individual circumstances – a principle enshrined by the Court of Justice of the European Union – and that the judge has full discretion.

4.2

The EESC would also add that setting a minimum penalty, even a voluntary one, is contrary to the legal traditions of certain Member States that do not set minimum sentences unless they are mandatory.

4.3

The wording of Article 9 of the proposal should be amended as follows: ‘For the most serious counterfeiting offences referred to in Articles 3 and 4, Member States shall take the necessary measures to ensure that effective investigative tools, such as those which are used in organised crime or other serious crime cases, are available to persons, units or services responsible for investigating or prosecuting offences’.

19.9.2013   

EN

Official Journal of the European Union

C 271/45

1.1

The Committee gives a guarded welcome to the two Communications from the Commission: Towards a Deep and Genuine Economic and Monetary Union, namely, The introduction of a Convergence and Competitiveness Instrument (CCI)  (1) and Ex ante coordination of plans for major economic policy reforms  (2). They continue the debate around two issues raised in A Blueprint for a deep and genuine economic and monetary union: Launching a European Debate  (3), namely, to complete the governance framework for economic policy coordination.

1.2

The Committee is disappointed that they provide little additional detail to the concepts already outlined in the blueprint, which therefore renders assessment difficult.

1.3

The Committee is concerned that a further complexity has been added to an already crowded agenda of economic governance instruments which include the Stability and Growth Pact (SGP), the fiscal compact, the six-pack, the two-pack, Europe 2020, the European Semester, the Annual Growth Survey (AGS), the Alert Mechanism Reports (AMRs) the National Reform Programmes (NRPs), the Stability and Convergence Programmes (SCPs), the Country Specific Recommendations (CSRs), the Excessive Deficit Procedure (EDP), the Macroeconomic Imbalance Procedure (MIP), etc., with relatively little added value.

1.4

While recognising that these two proposals could be a help to Member States in difficulty, the Committee has a concern that their impact on restoring growth and capacity to the most needy areas may be hampered or delayed because the focus of concern is that the measures taken must also be to the benefit of the euro area as a whole.

1.5

The Committee is sceptical that Member States would agree to introducing a new financial instrument to fund the CCI and is unclear what added value it brings over existing structural funds.

1.6

The Committee questions how much substance the proposed ex ante coordination will add to the European Semester and what additional burden of bureaucracy it will entail.

1.7

The Committee is concerned that the filters used for ex ante coordination could interfere with a Member State taking reform measures because they change relative competitiveness in another Member State.

1.8

The Committee believes that spillovers through financial markets have no place in ex ante coordination; every effort should be directed instead at establishing a Banking Union.

1.9

The Committee believes proposals aimed at deepening EMU are crucially important to the future of the European Union; the Committee, therefore wishes to continue the debate and make proposals at a future date as developments evolve.

2.1

Context: In this Communication, the Commission proposes that a mutually agreed contractual arrangement and solidarity mechanism would be available for euro area Member States under stress that require national structural reforms for competitiveness and growth but whose lack of implementation would have an adverse spill over effect on other Member State of the euro area. It would be a dedicated system of financial support, which would initially be funded by the Multiannual Financial Framework (MFF) and eventually through a new fund/financial instrument based on Gross National Income (GNI), which would build up fiscal capacity.

2.2

The Committee finds it hard to judge the merits of the proposed CCI without any quantification of the proposed size or any assessment of the acceptability of such a fund to the Member States. The proposal that the fund would come, in the first instance, from the MFF, suggests it would be small and have little impact.

2.3

Given the great difficulty in negotiating the MFF 2014-2020, the Committee is sceptical that Member States would agree to the aim of introducing a new financial instrument to move towards greater fiscal capacity based on GNI in order to fund the CCI.

2.4

The Committee agrees there is merit in a mutually beneficial and accelerating convergence mechanism, but questions the necessity of introducing a new instrument, the CCI, when it is not clear how it adds value to the already existing structural fund supports such as the Cohesion Fund or European Social Fund (ESF).

2.5

The contractual nature of the proposed instrument seems little different from the contractual nature that already exists in the disbursement of structural funds. Some concrete examples of what kind of projects with spill-over effects would qualify and how they might differ from projects funded already under other funds are needed. The EESC is concerned that a failure to deliver on selected projects under the CCI may have other consequences on the funding of projects agreed in the NRP. It is important that this proposed instrument would add demonstrable value and not result in an added layer of bureaucracy.

2.6

The CCI is envisaged as an instrument for the euro area, where greater economic convergence is essential for the functioning of the euro area. Given the likely small size of the fund, the Committee suggests that it would have to be aimed specifically at those Member States in the euro area in difficulty, without excluding the possibility of supporting projects with a particularly positive cross-border impact. It would especially need to be targeted at those countries whose economic imbalances are judged to be a particular danger to the functioning of the euro area. It is not clear why Member States in an adjustment programme would be excluded from this form of support, as they are, demonstrably, the ones most in need of financial assistance.

2.7

If the European Semester functions as envisaged and the Country Specific Recommendations become the subject of national parliamentary debate, measures will need to be taken to ensure that a national government that signs a contractual agreement under this proposed CCI first debates it in parliament according to the practice in that Member State, just as any structural fund programme may be debated. The Commission might be invited to debate or address national/local bodies. Civil society, including the social partners, should also be involved in the discussions, as in other joint EU/national government projects. Enough time must be allowed for parliaments and civil society, including the social partners, to take part in the process.

3.1

Context: In this communication, the Commission informs us that the concept of ex ante coordination of plans for major economic policy reforms was introduced in the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. The current EU economic surveillance framework includes a process for economic policy coordination, it does not provide a structured ex ante discussion and coordination of major economic reform plans. This Communication is a contribution to the debate between stakeholders, especially the European Parliament, Member States, and the national parliaments on ways of implementing ex ante coordination.

3.2

The Committee is of the opinion that any meaningful improvement in the coordination of economic policy is desirable and in the euro area it is a necessity. As such the Committee welcomes the communication, while recognising coordination of individual Member State policies is a far distance from genuine economic governance. A problem in assessing the proposals is that the Communication does not provide sufficient detail on what constitutes ‘major economic policy reform’. What is considered major, what is minor. The key reforms enumerated for consideration include almost every aspect of the Single Market, including financial and fiscal sustainability.

3.3

The Committee questions how this new initiative on coordinating major economic reforms will differ in substance from the European Semester components of National Reform Programmes (NRPs) and Country Specific Recommendations (CSRs). It must have demonstrable added value in what is an already crowded European Semester timetable. It would also be important from a transparency and simplicity perspective not to add another layer of oversight etc. The Committee believes this process must be incorporated into the European Semester and the NRPs, which need to be given more teeth; ex ante coordination could be a tangible way to achieve this.

3.4

The Committee accepts it may be beneficial under this new proposal, that following agreement with a Member State on its CSR, the Commission and Council could suggest modifications to the Member State’s reform plans if it was expected that such implementation would impact adversely on Economic and Monetary Union or other Member States. However, for democratic legitimacy, the process respects national decision making powers and the decision on the reform plan remains with the Member State itself. The option – and the necessary time – should be provided for national parliaments and civil society, including the social partners, to be involved in the consultations. It must also be ensured that the final decision on implementing the reforms is adopted by the national parliament. The Committee is concerned that this nod to democratic legitimacy is more apparent than real as elsewhere in the Excessive Imbalance Procedure, sanctions can be applied where the Council concludes that a Member State has not taken the corrective action recommended.

3.5

The purpose of the ex ante coordination is to maximise positive spillovers of major economic reform plans of one Member State to other Member States and minimise negative ones. It proposes a system of three filters based on the main channels through which spillovers are transmitted. They give rise to some concerns for the Committee.

3.6

The first filter is trade and competitiveness. If a Member State takes successful reform measures to improve its own competitive position, then it is not excluded that this improvement will be to the detriment of other Member States. The Communication must spell out in detail under what conditions the Commission would intervene to dissuade a Member State from pursuing such measures. Also, is this only a one-sided approach? Would the Commission make recommendations to a Member State which in the past had taken measures to improve its competitiveness which now result in strong surpluses that are detrimental to the euro area?

3.7

The second filter concerning spillovers through financial markets, the Committee doubts has any place here. The Committee believes it would be far more effective if all available resources were directed to proceeding on schedule with implementing the establishment of a functioning Banking Union.

3.8

The third filter, that of political economy considerations and ‘domestic opposition to reform’, requires explanation. The anticipated ‘mutual learning’ and ‘exchange of best practice’ – although valuable in themselves - are in danger of being as ineffective as the Lisbon Agenda.

3.9

The Committee believes it requires stronger argumentation that reforms covered in ex ante coordination should include areas where the EU does not have a competence. The defence offered for this, that the decision remains fully with the Member State, is shallow in the light of the MIP procedures mentioned above.

3.10

Within the framework of ex ante coordination, there should be a social dimension, especially directed towards the impacts of major economic reforms on the level of unemployment.

19.9.2013   

EN

Official Journal of the European Union

C 271/48

1.1

The Committee confirms and reiterates the points it made previously in its opinion (1) on the Green Paper on online gambling in the internal market (2) and regrets that the Commission has taken only some of its conclusions on board. In particular, it points out that stamping out illegal gambling, which is the primary threat in terms of consumer protection, is not the priority of the communication.

1.2

Among the priorities that the communication is seeking to address, the Committee calls on the Commission to give consideration to the creation of new jobs and the preservation of existing ones in the sector, their quality and the potential loss of jobs in the land based gambling sector to online gambling.

1.3

The gambling sector boosts Member States' tax revenue. The funding of good causes, through national lotteries and casinos, supports charitable, social and sporting activities, promotes tourism and safeguards cultural, artistic and archaeological heritage. The Committee believes that all action on gambling at EU level should aspire towards a European social model that enables people to enjoy themselves in a healthy and balanced way.

1.4

The Committee has major concerns regarding the considerable risks to public health posed by gambling. In this respect, it reiterates its request that the Commission conduct a research and monitoring exercise throughout the EU on online gambling-related addiction and illness, and recommends that Member States use some of the tax revenue generated to finance awareness-raising campaigns, preventive measures and treatments for gambling-related disorders.

1.5

The Committee welcomes the Commission's decision to improve administrative cooperation and the pooling of information, experience and best practice among Member States and regulators.

1.6

The Committee welcomes the Commission's objective that each Member State have its own regulatory authority with specific competences, to cooperate closely with their counterparts in other Member States.

1.7

The EESC considers it essential to strike a balance between the highly technological, and consequently cross-border, nature of the sector and the risks it poses in terms of public and social order, legality, transparency and public health by means of initiatives that are more binding than the recommendations proposed by the Commission.

1.8

The Committee notes that EU legislation specific to the online gambling sector is not currently an option. While supporting the initiatives proposed by the Commission for effective cooperation between Member States, the Committee would like to see more effective legislative instruments – preferably directives – being used in certain areas, where there is concurrent competence, to protect consumers and the most vulnerable groups, and to combat illegal operators and money laundering.

This would establish a minimum set of consumer protection standards. Member States must retain the right to choose whether to establish higher standards of consumer protection for their national markets, or continue to apply the more favourable standards that are already in place (3).

The Committee therefore calls on the Commission, the European Parliament and the Council to intervene, with due regard to the principle of subsidiarity, in the following areas:

1.9

The Committee welcomes the fact that the Commission heeded its request to extend the scope of the money laundering directive to all forms of gambling (4).

1.10

The Committee welcomes the Commission's plan to look into the opportunities supplied by the IMI Regulation (5) and hopes that it will serve to improve administrative cooperation between national regulators and the exchange of data between the relevant national and European bodies.

1.11

The Committee welcomes the Commission's plan to explore possibilities for the Member States to exchange personal data, as sharing the vast quantity of data recorded by operators will enable cross-referencing, assisting the relevant authorities in their controls.

1.12

The Committee deems it essential that the Member States, working with the regulators, launch awareness-raising and information campaigns for consumers, so as to steer demand towards online gambling that is legal. This action should be complemented by measures to combat illegal operators such as the publication of black and/or white lists drawn up by national regulatory authorities to enable consumers to distinguish more easily between authorised and illegal sites, by displaying the logo of the national regulatory authority on the homepage of betting sites.

1.13

To protect consumers, the Committee calls for minimum EU-wide certification for online gambling software to be carried out by specialised external bodies, applying uniform parameters and standards. It also invites the Commission and the Member States to adopt a minimum European standard for gambling-related computer platforms and calls on the Member States to implement measures to protect players' data and to authorise only those payment methods that offer the best guarantees in terms of the security and traceability of online-gambling-related transactions.

1.14

The Committee warmly welcomes the experiment launched by the Commission in establishing an expert group on online gambling, to exchange experience and good practice on cybercrime. Although still at an embryonic stage, this constitutes a useful tool for initiating effective cooperation between the Member States. The Committee would like to see this group go beyond its current informal format and develop into a body with clearly defined powers and tasks.

1.15

The Committee agrees with the Commission on the need for Member States to promote proper training for the judiciary regarding the issues inherent in fraud and money laundering through gambling.

1.16

The Committee calls on the Commission to update and review the rules it has set out in the areas of action identified in the communication in the light of developments as regards implementation of the rules by the Member States, which measures they have implemented and how, and the results achieved at national level.

1.17

The EESC calls on the Member States to give the Commission a mandate to negotiate and actively support the proposed international convention on protecting and promoting integrity in sport, on which negotiations are due to be launched under the auspices of the Council of Europe.

2.1

The communication addresses both the need to uphold European legislation on free service provision and the need to protect certain population groups.

2.2

The use of online technology with direct network access has enabled a massive increase in online gambling, which is in rapid expansion. In 2011, total revenues from online gambling in the EU-27 amounted to EUR 9,3 billion, 10,9 % of the overall EU gambling market, and it is estimated that this annual revenue will grow to EUR 13 billion by 2015.

2.3

The internet means effectively that European citizens are exposed to, and can access, from their own country of residence, illegal services provided by one or more licensed operators in another country, whether that country belongs to the EU or not. The extraterritorial and international factors mean that this situation cannot be addressed by individual Member States but requires a joined-up approach and greater cooperation. With a view to protecting citizens and consumers, it is vital to adopt a common definition of illegal gambling. It should be noted that the provision of gambling that is unauthorised in a player's country of residence, or the provision of gambling without the necessary national licence, is illegal, whether the service is provided by an operator based or licensed in an EU country, or by an operator from a third country (6). Operators that side-step all controls and are unregulated are also operating illegally.

2.4

As regards the distinction between non-authorised and illegal operators, reference should be made to Footnote 15 in the communication.

2.5

The Committee welcomes the fact that the Commission has set up a gambling expert group to enable Member States to pool experience and good practice, conduct research into the problems arising from illicit and illegal gambling, organise specific, up-to-date training for the judiciary, improve information for consumers and increase the availability of legal outlets.

2.6

These measures constitute a useful first step in tackling illegal operators involved in fraud, crime and money laundering.

3.1

The communication highlights the diversity of national laws and sets priorities for national and EU intervention and cooperation and collaboration between Member States, outlining possible measures and making recommendations, not least regarding administrative coordination and cooperation among Member States.

3.2

The primary objective is to ensure that European legislation is upheld and applied under national law, by means of direct actions and recommendations to the Member States. To this end, the Commission will:

3.3

The Commission argues that it is in the Member States' interests to establish an effective anti-fraud and money-laundering policy and to protect the integrity of sport from match-, event- and competition-fixing, in part by pooling experience in the area of cybercrime.

4.1.1

The Committee would firstly stress that it is extremely concerned about the accelerating spread of online gambling and the exponential increase in the amount of gambling available, which is seeing the participation of ever wider sections of society with serious consequences for household income. Effective curbs thus need to be placed on the various forms of gambling advertising, especially on television, online and on public transport.

4.1.2

The supply and use of transnational gambling services are economic activities that are covered by the free movement provisions of the internal market (Article 56 TFEU). However, Article 52(1) TFEU allows for restrictions to the free provision of services guaranteed by Article 56 on grounds of public policy, public security or public health.

4.1.3

The Committee points out that the Member States have primary responsibility for organising and regulating gambling in their countries. Gambling is potentially very dangerous for consumers and is equally susceptible to being used for criminal purposes, such as money laundering, if it is not properly regulated or if the rules are not rigorously enforced. Against this background, although gambling falls within the scope of free service provision, under Article 49 EC (7), EU legislation on online gambling cannot currently be envisaged given the divergences between national laws. While supporting the initiatives proposed by the Commission, especially as regards effective cooperation between Member States, the Committee would like to see more effective instruments – preferably directives – being used in certain areas (see point 1.8) to protect consumers and the most vulnerable groups, and to combat illegal operators and money laundering.

4.1.4

In line with the abundance of established case-law from the Court of Justice of the EU, restrictions on gambling activities may be justified by overriding requirements in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling (8). Member States may restrict or limit the crossborder provision of all or certain types of online gambling services by reason of public interest objectives designed to provide protection in relation to gambling (9).

4.1.5

Gambling services are not subject to uniform rules in the EU and national laws vary significantly for cultural, social and historical reasons specific to each country. Some Member States have outlawed online gambling, whereas others allow only certain games, and yet others have a monopolistic system managed exclusively by a public or private operator. In the absence of up-to-date data on the divergent situations at national level (10), the Committee calls on the Commission to undertake a mapping exercise with the Member States.

4.1.6

As clarified by CJEU case-law, Member States that opt for controlled liberalisation of the market may legitimately establish a permit scheme – subject to administrative authorisation – based on objective criteria that are non-discriminatory on grounds of nationality (11).

4.1.7

The fact that with online gambling there is no direct link between the consumer and the operator increases the danger of operator fraud at the consumer's expense (12). The availability of gambling that is illegal and thus uncontrolled poses a serious threat to consumers. Therefore, the rigorous implementation by Member States of the measures aimed at tackling illegal operators provides the primary guarantees and the best tool for the protection of consumers.

4.1.8

The Member States are free to set the objectives of their gambling policies and to define the level of protection. The restrictions they impose must, however, meet the conditions set out in CJEU case-law and must be proportionate, non-discriminatory and form part of a policy that is applied in a consistent and systematic manner.

4.1.9

Since legislation in individual Member States varies, and given that EU regulation of online gambling is as yet impossible, approximation of national laws is needed and Member States must be helped to enforce existing laws, in order to secure greater legal certainty in the areas of the protection of consumers, minors and vulnerable groups, advertising and the fight against money-laundering. The Member States should be encouraged to exchange best practice on combating illegal operators.

4.1.10

In line with the principle of subsidiarity, the EU should intervene where its action enhances the situation and adds value to the Member States' regulatory systems. In view of the specific features of this sector and the changes involved with internet use, the Committee believes that action by the EU should take the form of sustained cooperation between the Member States and the promotion of best practices in combating illegal operators, which requires transnational action.

4.2.1

The EU must bolster controls, administrative cooperation and the actual application of laws on online gambling and the Member States must work together to achieve this outcome.

4.2.2

It is important that the personal data registered by operators be made available and exchanged, so as to assist with controls, all the while ensuring data is protected. Administrative cooperation between Member States, with the exchange of general information and the use of best practice should be encouraged, so as to boost the sharing of know-how and experience and generate a sense of mutual trust and interest.

4.2.3

The certification at national level of remote internet gambling platforms would serve to secure oversight of the gambling market. It is important to establish better cooperation between the Member States and to set up a regulatory authority for online gambling in every Member State, with precise competences, to ensure close coordination at EU level.

4.2.4

There is a need to assess the degree to which national policies are coherent with EU legislation and case-law and ensure that their licensing systems are transparent and non-discriminatory. Cases of non-compliance should be subject to infringement procedures.

4.2.5

The Committee believes that the preventive and repressive measures adopted so far by the Member States to combat online gambling services provided by operators without a licence, i.e. illegal operators, are not sufficient to tackle the problem. It would therefore recommend that national regulatory frameworks of principles be designed that would guarantee the legality and transparency of sites, and would provide for: the identification and blacklisting of illegal sites; the identification and whitelisting of sites that are authorised under the domestic law of a Member State; the blocking, closing, seizure and taking-down of illegal sites (13); the blocking of financial flows to and from such sites; and the banning of commercial communications and advertising regarding illegal gambling.

4.3.1

The Committee regrets that its request to the Commission and the Member States for incisive measures to effectively combat illegal operators, which are the greatest threat to consumers, was not addressed in the Commission communication. It thus repeats its call for effective measures to be adopted as soon as possible in order to establish best practices in preventing and countering illegal gambling.

4.3.2

The Commission plans to adopt a recommendation on consumer protection and the responsible advertising of gambling in 2013 and pinpoints four areas of intervention: drawing consumers away from unregulated and potentially harmful services, preventing minors from accessing gambling facilities, safeguarding other vulnerable groups, and preventing the development of gambling-related disorders. As regard this recommendation, the Committee calls on the Commission to include best practices in combating and preventing illegal gambling, after carrying out an assessment in each Member State of the most harmful forms of gambling for consumers.

4.3.3

The Committee appreciates the attention given by the communication to consumer protection and to vulnerable groups, not least in connection with advertising and gambling addiction. It stresses the need to adopt measures here that ensure a high level of protection; it points out that the instruments envisaged are too feeble and thus suggests that more binding ones be adopted. Indeed, the provision of illegal gambling, which is inherently uncontrollable and dangerous, constitutes the greatest threat to consumers. Hence the need for robust measures to be pinpointed in each Member State to stamp out illegal operators that are in breach of national legislation, which is the primary and best guarantee for the protection of consumers.

4.3.4

The fundamental objectives of the Commission's action should be to ensure that the Member States exercise their full powers and responsibilities and to establish an EU-wide legislative framework for all operators authorised to provide this kind of service, so as to avoid problematic forms of gambling, introduce minimum age requirements for all games and outlaw gambling on credit – for the most dangerous forms of gambling and betting (online casinos, spread betting, betting exchanges) – and advertising geared towards minors and the most vulnerable groups.

4.3.5

The Committee calls on the Commission and the Member States to take effective and robust action within their respective remits to counter illegal gambling. It calls for the Member States to adopt measures such as blacklisting and blocking illegal sites, establishing secure and traceable payment methods, blocking financial transactions and placing an absolute ban on illegal advertising. It should be pointed out here that the effectiveness of these measures is largely dependent on their being part of a joint approach, which will strengthen their impact on illegal operators.

4.3.6

Ideally, a regulatory authority should be established in every Member State with specific responsibility for monitoring the situation and ensuring that European and national laws on consumer protection and combating illegal gambling are implemented. The existence of national regulators is a pre-requisite to implementing effective coordination and administrative cooperation. The Member States should see to it that their regulatory systems, designed in the light of their national specificities and legal framework, are capable of implementing this. The Committee would like to see each Member State task its regulator with establishing the criteria for the awarding of licences in its own market.

4.3.7

European consumers in every Member State should be enabled to distinguish between legal and illegal sites, not least so that they can make complaints. In this regard, the Committee recommends that the Member States require all operators authorised to provide online gambling services to display prominently and permanently on its website its authorisation number and a label from the national regulatory authority indicating that it is licensed in that Member State.

4.3.8

The Committee calls for the broadest possible legislative guarantees to protect minors, providing for appropriate tools for age checks and ensuring operators apply effective controls in this regard. Parents should be made aware of the risks of internet use and of how to set up filters at home. Appropriate guarantees should be adopted to protect vulnerable people who spend a lot of time at home: pensioners, housewives and the unemployed.

4.3.9

The current crisis is pushing ever more people to gamble online, unrealistically hoping to solve their financial problems with easy winnings. This carries major risks, however, in terms of psychological well-being as it leads to addiction and obsessive-compulsive behaviour. In order to address these disorders, the Committee recommends that part of the tax earnings from gambling be directed towards awareness raising campaigns and treatment to prevent and provide care for gambling addiction.

4.3.10

The Committee welcomes the Commission's plan to issue a recommendation – although it would prefer a more effective and binding instrument – on the responsible advertising of gambling to complement the Unfair Commercial Practices Directive, in order to ensure that consumers are provided with accurate information. The Committee stresses that action in this area should include measures to counter illegal operators such as banning advertising by operators that are providing services without a license from the national regulatory authority of the country where the consumer resides.

4.3.11

It is necessary to strike a balance between the requirement for controlled growth of authorised gambling, to make gambling services available through legal channels attractive to the public, and the need to minimise gambling addiction.

4.3.12

Advertising needs to be more responsible and better regulated, in particular to protect minors. This is not only because of the high risk to health, especially mental health, but also because of the distorted and misleading view of reality it encourages, leading the public to believe that online gambling is ‘normal’ and thus endorsing unhealthy social behaviour.

4.3.13

Despite the Alice Rap (14) project, the Committee notes that there are still no reliable data available on the extent and variety of gambling-related disorders. The Committee would highlight the need for on-going, constant monitoring of addiction and the related disorders in order to acquire satisfactory data that will enable national and EU legislators to adopt effective, targeted measures to combat and prevent this problem.

4.4.1

The problems associated with identifying individuals active in remote gambling who are either strongly winning or losing heavily and who could thus be masking money laundering activities should be addressed through the prior identification of individuals and the opening of specific gambling accounts for individual players.

4.4.2

Identity theft is a widespread problem, linked not only to online gambling but also to the entire data processing and exchange system associated with the internet and online technologies.

4.4.3

Random Number Generators must be heavily certified to ensure that they respond to the non-predictability principle while also offering certainty that the event being checked is the only one possible, and that interference is impossible. This would protect players and uphold the standards set by Member States in terms of winnings.

4.4.4

In order to make the software used for online gambling more secure, the Committee proposes that EU-wide minimum certification be carried out by specialised external bodies, adopting the same parameters and standards, not least to identify and prevent illegal off-shore gambling.

4.4.5

One way to protect access to gambling could be to identify Internet Protocol Addresses. In fact, it is technically possible for individuals accessing gambling systems using IP systems from other countries to be blocked from playing.

4.4.6

As online gambling is vulnerable to the problems of money laundering and fraud, the enormous volume of data and information registered by operators ought to be made available to public law enforcement authorities so that they can cross-reference it with other data, facilitating checks.

4.5.1

Betting on fixed matches, events and competitions is a specific form of fraud that runs counter to the interests of sports clubs, fans, consumers and legal gambling operators.

4.5.2

The Commission agrees with the suggestion made by the Committee, which has highlighted the need to define a framework to coordinate the efforts of all interested parties in order to address the problem comprehensively and avoid overlaps in resources. It highlights the need for greater cooperation between betting operators, sports bodies and the competent authorities, including national and international gambling regulators.

4.5.3

The Committee would reiterate its suggestion that a system be established not just to collect statements that report suspicions regarding a given sporting event, but also to take preventive and educational measures and impose sanctions that can effectively tackle the problem.

4.5.4

The Committee welcomes the Commission's plan to adopt by 2014 a recommendation on good practice in the prevention of and fight against betting on fixed matches, although it considers the chosen legislative instrument to be insufficient. Competition fixing violates the principle of fair sporting competition and constitutes a criminal offence in all the Member States. Nevertheless, there has been an increase in illegal or suspected illegal activities in this area. More incisive action is therefore needed to combat competition fixing, with the help of the instruments, skills and resources of the Member States, pooled together and used in synergy together with the EU.

4.5.5

The Committee calls on Member States that have not already done so to consider sport-related corruption, competition fixing and the manipulation of sports results as offences, and as such punishable, and asks the Commission to agree on a common definition of these criminal offences with the Member States.

19.9.2013   

EN

Official Journal of the European Union

C 271/55

1.1.1

Europe is currently experiencing a major economic and social crisis, which is affecting all parts of society.

1.1.2

Prioritising the survival of businesses is one of the measures that the European Union has identified as a means of getting back on track. Bankruptcies certainly have repercussions that go beyond damaging consequences for the companies concerned; they affect the entire economy of the Member States, especially the general public, in their capacity as taxpayers, employees and employers.

1.1.3

The EESC agrees with the goals set out in the Commission communication, while considering that the ‘second chance’ it refers to should benefit business operators who have learned from their previous failures and who can make a fresh start on the basis of a rethought business plan.

1.1.4

The Committee also supports the proposal for a regulation, but is disappointed that this is not more ambitious.

1.1.5

Indeed, much discussion and many practical measures are still needed in order to uphold creditors' rights, while seeking to ensure balance between the interests of entrepreneurs and employees, promote corporate restructuring, prevent forum shopping and improve the coordination of insolvency proceedings for groups of undertakings.

1.2.1

The EESC believes that the discussion of a substantial harmonisation of business insolvency law is interesting, but is disappointed that no effective response is provided to the economic and social crisis currently affecting European businesses and individuals.

1.2.2

The EESC prefers the notion of a ‘fresh start’ (a key concept in American insolvency law) to that of a ‘second chance’ advocated by the Commission. It also calls for discussion of the real contribution of this concept to European insolvency law.

1.2.3

The Committee also considers that employees should be better protected and should be treated as preferential creditors.

1.2.4

The issue of unfair assistance for failing companies should also be addressed. The EESC stresses in this respect that people other than banks can also be responsible for providing such assistance and therefore calls on the Commission to provide adequately for these parameters.

1.2.5

The EESC considers that making insolvency legislation part of criminal law is not desirable, as this would increase the judicialisation of insolvency proceedings and prolong investigation times.

1.2.6

The Committee does not believe that systematic recourse to a judge is the best solution and calls on the Commission to consider setting up new bodies, linked for example to the economic sector, with a multidisciplinary approach (economic, financial and legal) which makes them better equipped to understand and act quickly to help businesses to solve their financial problems.

1.2.7

Lastly, the EESC urges the Commission to consider the proposals on harmonising the status of liquidators, such as those put forward in the European Parliament resolution of 11 October 2011 (1).

1.3.1

The EESC supports the proposal for a regulation, even though it only addresses procedural rules and does not seek to harmonise national business insolvency legislation.

1.3.2

The Committee welcomes the obligation for Member States to improve publicity rules, making relevant decisions in cross-border insolvency cases publicly accessible in an electronic register, and the interconnection of national insolvency registers.

1.3.3

The Committee nevertheless calls on the Commission to ensure that the obligations, costs and deadlines of translations do not slow down insolvency proceedings, because speediness is a gauge of their success.

1.3.4

The EESC supports the integration of civil over-indebtedness procedures but this integration should not be unfavourable to individual debtors. A law drawn up for companies, intended to meet the requirements of commerce, is by its nature less protective than consumer law. The Committee would therefore urge the Commission to be particularly mindful of this.

1.3.5

Lastly, the Committee calls on the Commission to ensure that making use of the delegation procedure to amend the annexes to the regulation takes account of Article 290 TFEU and the case-law on the notion of ‘essential measures’.

2.1.1

The initiatives contained in this legislative package form part of the EU's response to the economic and social crisis currently affecting European businesses and individuals. The stated aim is to help businesses survive and to offer a second chance to entrepreneurs facing insolvency.

2.1.2

The European Commission's approach consists of amending Council Regulation (EC) No 1346/2000 (2) of 29 May 2000, known as the ‘Regulation on insolvency proceedings’, which essentially concerns the rules of private international law applicable to cross-border insolvency proceedings, and of holding a consultation on the basis of a communication entitled ‘A new European approach to business failure and insolvency’.

2.1.3

The EESC has decided to express its views on both documents in one opinion.

2.2.1

Considering the Regulation on insolvency proceedings of 29 March 2000 to be obsolete and identifying its five major shortcomings (4), the Commission proposes to revise it.

2.3.1

The document rightly states that the proposal for a regulation of 12 December 2012 confines itself to updating the Insolvency Regulation of 29 May 2000 and therefore simply acknowledges and coordinates the procedural rules applicable to national insolvency proceedings, without harmonising national business insolvency legislation.

2.3.2

It attempts to remedy this shortcoming by proposing avenues for discussion with a view to securing a substantial harmonisation of business insolvency law, on the understanding that only cross-border insolvency cases are covered.

3.1.1

This new approach is based on the need to offer entrepreneurs a second chance and to safeguard jobs.

3.1.2

The EESC believes that company bankruptcies, like the creation of companies, form part of the cycle of economic life and the dynamic of the market. It would therefore be wrong to view them as an evil to be prevented at all costs.

3.1.3

In line with this thinking, the EESC believes that the ‘second chance’ mentioned by the Commission should be enjoyed by entrepreneurs who have learnt from their previous failure and are able to start again on the basis of a revised business approach.

3.1.4

The EESC would also point out that while company bankruptcies may have internal causes, such as bad management, they may also have external causes resulting from excessive or inappropriate rules. The State is therefore to a certain degree responsible for bankruptcies, in its capacity as legislator, but also as contracting authority in public procurement (5).

3.1.5

The EESC prefers the notion of a ‘fresh start’ (a key concept in American insolvency law (6)) to that of a ‘second chance’ advocated by the Commission. Under the fresh start approach, a largely cultural rather than legal concept, debtors are relieved of their personal responsibility for their debts on certain conditions. The judicial decision stage declaring the company bankrupt is thereby avoided and the debtor can begin a new project, without being identified as bankrupt.

3.1.6

The communication gives the impression, however, that the second chance means a continuation of activity. The EESC believes that it would be counter-productive to keep businesses within the economic fabric artificially by giving them a second chance if the model chosen had proven not to be viable.

3.1.7

It would have a negative impact on the confidence of creditors and suppliers, and ultimately it would harm healthy competition between economic operators.

4.1.1

The differences in national insolvency legislation are a source of competitive disadvantage, especially for businesses operating across borders, which could hamper economic recovery.

4.1.2

These differences result in ‘forum shopping’ and consequently in a weaker internal market.

4.1.3

The EESC therefore agrees with the European Parliament (7), which expressed its hope for certain aspects of insolvency law to be harmonised.

4.1.4

Parliament also calls on the Commission to submit, on the basis of Article 50, Article 81(2) or Article 114 TFEU, one or more proposals for a genuine EU corporate insolvency framework, going beyond simply procedural rules under private international law.

4.1.5

The effects of insolvency cases go further than the negative consequences for the companies in question. They affect the economies of the Member States as a whole, particularly the citizens, as taxpayers, employees and employers.

4.2.1

Originally designed solely to meet the requirements of creditors, collective proceedings have gradually come to be aimed at ensuring the continuation of the business, maintaining employment and the payment of debts. More recently, the legislative tendency in Europe has been to prevent companies' problems before the suspension of payments.

4.2.2

Creditors are fearful of opening collective proceedings against the debtor since they do not know whether the amounts due will be paid. The first frustration is that the opening of collective proceedings often prohibits the debtor from being pursued for any claim arising before the decision to open proceedings and suspends any ongoing claims. Each creditor must therefore declare their claim within the legal time period (8).

4.2.3

The second frustration for the creditor is in the event of a shortfall in assets. In practice, it is often proposed to creditors during collective proceedings that they choose between an immediate payment but abandoning a considerable proportion of the claim, or spreading the debt over a given period of time.

4.2.4

For the creditor, therefore, any situation of insolvency should ideally be prevented, for example by securing certain operations on conclusion of the contract, demanding security from a third party (9) or demanding collateral, pledges or mortgages on the company's assets (10).

4.3.1

Employees are the first victims in the event of their company's bankruptcy. Their salaries are not always paid before the liquidation and their personal financial situations are difficult during this period of uncertainty.

4.3.2

Opening collective proceedings often involves the election of an employees' representative, whose task is to check on information regarding salaries owed. As well as the usual bodies representing employees within a company, this involves relaying information between staff, the tribunal and the parties involved in the proceedings.

4.3.3

Sums owed to employees before the opening of the collective proceedings must be included in the company's liabilities. However, this general measure is in reality very unclear, because of the differences between national legislations and practices. The lack of harmonisation with regard to the ranking of creditors therefore makes the issue of collective proceedings very uncertain for employees.

4.3.4

The EESC believes that employees should be better protected and be treated as preferential creditors and that harmonisation of their protection would be useful.

4.4.1

The commercial practices of certain financial institutions can lead to assistance being provided to a company when its situation is irreversibly compromised. Such practices create the impression that the company is solvent, which harms healthy competition and tarnishes the image of the banking sector.

4.4.2

The EESC highlights the fact that people other than banks, including States, can be responsible for the unfair assistance. Furthermore, national judges sometimes consider that certain suppliers or clients of the company can also be held responsible when, through their attitude, they provide unfair support for the activity of a company which they know to be irreversibly compromised.

4.4.3

These parameters should also be adequately provided for with a view to harmonising the law on company insolvency.

4.5.1

The majority of company bankruptcies happen for objective reasons, with no fraudulent behaviour on the part of directors.

4.5.2

However, the phenomenon of fraudulent bankruptcies should not be ignored. The Commission refers to it in its communication (11), and suggests that a distinction should be made between honest and dishonest bankruptcies. It states that wilful or irresponsible non-compliance with legal obligations by a debtor should be subject to civil penalties and, where appropriate, criminal liability. It also believes that ‘fast-track’ liquidation proceedings should be applied for honest bankruptcy.

4.5.3

The EESC is convinced that harmonising the discharge time and making it reasonably short would be appropriate, particularly in the interests of employees, but still has reservations regarding the differentiation between bankruptcy proceedings on the basis of the honesty of directors, since this would increase the judicialisation of insolvency proceedings, making them criminal in nature and prolonging investigation times.

4.5.4

This criminalisation of insolvency law is not desirable. The EESC takes the view that the fraudulent nature of the bankruptcy should be determined in proceedings other than insolvency proceedings.

5.1

The EESC welcomes the extension of the scope of the Regulation to include hybrid proceedings, pre-insolvency proceedings, debt discharge proceedings and other insolvency proceedings for natural persons.

5.2

It also welcomes the clarification of the circumstances in which the presumption that the centre of main interest is located at the place of its registered office can be rebutted.

5.3

Improving the procedures by stipulating jurisdiction for actions which derive directly from insolvency proceedings or are closely linked with them, such as avoidance actions, is also a positive step.

5.4

The fact that secondary procedures need not necessarily be winding-up proceedings and that their opening may be refused if it is not necessary to protect the interests of local creditors also helps to improve the regulation, as does the extension of the interaction between main and secondary proceedings.

5.5

The obligation for Member States to improve publicity rules, making relevant decisions in cross-border insolvency cases publicly accessible in an electronic register, and the interconnection of national insolvency registers, are also ideas to be welcomed.

5.6

However, the EESC has reservations regarding the burden, cost and timescales for translations, and points out that speed is a crucial measure of the success of the procedure.

5.7

Finally, the Committee welcomes the obligation for courts and liquidators to cooperate in insolvency proceedings concerning different members of the same group of companies, since this gives liquidators the means to act more efficiently.

6.1

The EESC questions the coordination with Regulation (EC) No 1215/2012 of 12 December 2012 (12), intended to replace Regulation (EC) No 44/2001 on the jurisdiction of national courts and the effects of judgements in the European Union, known as the Brussels I Regulation. The Committee questions whether Recital 6 in the proposed insolvency regulation sufficiently clarifies the criterion for the distribution of powers pursuant to the Gourdain case-law (13). This case-law appears to offer a rather restrictive interpretation, when certain actions covered by the Brussels I Regulation are decisive in terms of insolvency proceedings. For example, whether or not a retention of title clause is used is decisive in establishing the scale of the debtor's assets. This is important in terms of the stated objective of saving companies in difficulty, since re-establishing assets is key to the successful recovery of companies in difficulty.

6.2

With regard to cooperation between liquidators, the Commission could have proposed to amend the wording of Article 31 to further encourage the adoption of agreement protocols between liquidators. The differing status of liquidators amongst the Member States forms a barrier to their professional cooperation.

6.3

Exchanges between liquidators and courts should as a priority relate to the inventory, the debtor's estate, the declaration and verification of claims, and the coordinated collective settlement for creditors appearing in negotiated plans.

6.4

Finally, the EESC would stress that the Commission proposes making use of the delegation procedure to amend the annexes to the regulation, although these seem to involve essential measures, such as the notion of collective proceedings or the list of persons acting as liquidators.

7.1

Insolvency criteria need to be harmonised. In some Member States, insolvency proceedings can only be considered when the debtor is proven to be insolvent, whereas in other States, insolvency that is ‘probable within the near future’ constitutes sufficient grounds.

7.2

This disparity encourages forum shopping, and should therefore be eliminated.

7.3

Since legal certainty is essential, the rules on the lodging of claims should also be harmonised.

8.1

The EESC supports the Commission's proposed new recital 9 (14).

8.2

Recitals 9 and 10 of the Insolvency Regulation of 29 May 2000 are appropriate (15).

8.3

This integration should not, however, be unfavourable to individual debtors. A law drawn up for companies, intended to meet the requirements of commerce, is by its nature less protective than consumer law. The Committee would therefore urge the Commission to be particularly mindful of this.

8.4

The EESC also calls on the Commission to consider harmonisation of the insolvency law for individuals, taking into account the interests of consumers.

9.1

The differences in national rules governing the status and powers of liquidators affect the smooth operation of the internal market by complicating cross-border insolvency proceedings (16).

9.2

The Committee considers that it would benefit businesses and economic recovery for harmonisation of the general aspects of the requirements for the qualification and work of liquidators to take place quickly. The EESC would therefore join with the European Parliament (17) in making the following recommendations:

9.3

The Commission should therefore go further than it proposes in Article 31 of the proposal for a regulation, which does no more than explain practices and address cooperation between the administrators of the main and secondary proceedings.

10.1

Promoting negotiated procedures would make it possible to increase the speed and effectiveness of company restructuring plans.

10.2

The average time for such procedures and the success rate seen in the European Union make a good case for adopting this approach.

10.3

Furthermore, the EESC does not consider that systematic recourse to the courts is necessarily the best solution.

It therefore supports the idea of setting up new bodies, linked for example to the economic sector, with a multidisciplinary approach (economic, financial and legal) which makes them better equipped to act quickly to help businesses to solve their financial problems.

10.4

This system already exists in a number of countries and could be extended to other Member States.

10.5

Finally, it would be useful for the Commission to publish regular statistics on insolvency cases under the insolvency regulation so that the effectiveness of the system established can be assessed.

—

its limited scope;

—

the persistence of ‘forum shopping’ due to the inconsistent application of the concept of the ‘centre of a debtor's main interests’;

—

the lack of coordination between main and secondary insolvency proceedings;

—

inadequate publication of insolvency proceedings; and

—

the legal vacuum regarding the insolvency of multinational groups,

—

The Commission has made use of the 134 responses to a public consultation launched on 29 March 2012, the conclusions of a comparative law study carried out by the universities of Heidelberg and Vienna, and an impact assessment of the different scenarios for reform options to suggest remedying the five shortcomings referred to above, in a proposal for a Council Regulation on insolvency proceedings.

19.9.2013   

EN

Official Journal of the European Union

C 271/61

1.1

The EESC considers this Communication and its proposals to warrant particular attention and discussion.

1.2

The EESC supports the Commission's view that stricter regulation is required to effectively ban, and enforce exemplary and dissuasive sanctions against, certain aggressive directory company sales practices.

1.3

In view of the apparent urgency to take an immediate position on this issue and the estimated magnitude and seriousness of these practices in economic terms at the European level, the EESC accepts that the Commission should immediately present a specific legislative proposal on this issue, based on an impact assessment.

1.4

The EESC believes that to this end a framework regulation should be adopted, possibly developed through delegated acts, in order to ensure more uniform and effective enforcement across the Member States.

1.5

Given its nature, the EESC believes that the appropriate legal basis should include, but cannot be limited to, the Treaty's provisions on the internal market and its scope of application should not be restricted to cross-border transactions.

1.6

Furthermore, the EESC warns of the need to give attention to the trans-European nature of many of these practices, which requires coordinated international action.

1.7

However, the EESC believes that the best way to achieve coherent and consistent rules prohibiting misleading marketing practices would be a joint review of Directive 2006/114/EC and Directive 2005/29/EC to address business-to-business and business-to-consumer relations at the same time, preserving the specificities of each within a common framework, for which reason it urges the Commission to start action in the short term.

1.8

The EESC urges the Commission to develop and enforce complementary measures to improve information and dissemination; cooperation between administrative authorities, public-private platforms and stakeholder representative organisations; and rapid reaction mechanisms in order to put a stop to these practices and ensure damage compensation, namely through the immediate creation of a European judicial system for group action, which was announced over thirty years ago and then successively delayed.

1.9

The EESC expresses its willingness to involve its members in future work in this field, believing that it can contribute the experience of its members, who are particularly well-qualified civil society representatives of the three interest groups represented within the EESC.

2.1

In the area of business-to-business marketing communication there are basic rules that it is imperative to respect in order to ensure undistorted competition and a functioning market. And if they are not respected voluntarily, then they have to be made compulsory and enforced.

2.2

In this Communication, the Commission puts forward a set of measures to combat certain misleading marketing practices carried out by advertising companies, especially those arising from misleading directory company schemes.

2.3

The purpose is to provide better business protection, especially where SMEs are concerned, namely in relation to practices that consist in directory companies sending unwelcome and unsolicited requests inviting businesses to register or update their details in a business directory, seemingly for free, but in fact subject to subsequent annual charges, which had not been negotiated or previously accepted.

2.4

Having carried out a public consultation, the Commission has announced its intention to strengthen Directive 2006/114/EC concerning misleading and comparative advertising by explicitly banning practices such as concealing the commercial intent of an advertising communication and, at the same time, strengthening cross-border enforcement.

2.5

The Communication further mentions:

2.6

The Commission estimates the financial damage caused by this type of activity at between EUR 1 000 and 5 000 per year for each company concerned.

3.1.1

As it has already stated in a previous opinion, the EESC acknowledges that marketing communications in general and advertising in particular, in all its forms, play a major social and economic role, which has been well summarised by the International Advertising Association (IAA), whose viewpoint highlights in particular its role in disseminating innovation, encouraging creativity and entertainment, providing incentives for competition, and extending choice (1).

3.1.1.1

It is clear that some advertising companies act improperly in the way they publicise their products and try to attract their customers. Nevertheless, it is important that the Commission to stress the fact that, although many complaints about misleading practices involve companies carrying out this type of activity, this does not mean that. even in the particular case of directory companies, it is not a legitimate activity which is essential to the economic life of the companies that use them to advertise their activities.

3.1.2

The EESC recognises the relevance and timeliness of this Communication even though it focuses mainly on problems arising from the way directory companies attract customers.

3.1.3

The EESC observes that the Commission is right to emphasise the cross-border nature of this problem and to want to guarantee not only adequate but also efficiently implemented rules and practices that can be monitored, supervised and subject to penalties.

3.1.4

The EESC regrets that the Communication was not preceded by a proper impact assessment. This would have provided more forceful arguments for the options proposed since its cost and benefits have not in fact been clearly identified or evaluated.

3.1.4.1

Furthermore, the impact assessment already announced by the Commission at its stakeholder meeting on 1 March 2013 is belated and, even if at this stage its reach and overall content are unknown, not sufficiently decisive to allow an informed choice.

3.1.5

Furthermore, not only from the pure perspective of legal interpretation but also in terms of more efficient and effective business protection, the EESC is uncertain that the issue at the heart of the Commission's concerns can in fact be framed in the directive the Commission proposes to review.

3.1.5.1

In fact, the practice under consideration is commercial communication in the wider sense; it is not advertising but an aggressive and fraudulent sales tactic, which has to be situated in the much wider context of unfair or abusive trading practices, and even of criminal law.

3.1.5.2

The concept of advertising effectively excludes from its scope any type of communication where the promotion of specific goods or services is not intended or inferred, including communications occurring in commercial relations that do not seek to supply new goods or services.

3.1.5.3

According to Directive 2005/29/EC, a commercial practice is to be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause them to take a transactional decision that they would not have taken otherwise. In other words, the definition of misleading practices is not restricted to the promotion of products, and can be extended to situations where the promotion of a product is not inferred and to communications occurring in commercial relations.

3.1.6

Furthermore, in its Green Paper on unfair Trading Practices in the Business-To-Business Food and Non-Food Supply Chain in Europe  (2), the Commission rightly warns against the risk of conflict and overlap between multiple EU actions targeting the same groups and similar uncoordinated arrangements, generating further confusion during the transposition of legal acts by the Member States (3).

3.1.7

The EESC regrets that the European Commission has not yet held a discussion on the various options, and neither did it raise them during the public consultation, preferring instead to choose an option that could turn out to have fewer advantages for companies, especially SMEs. Since the Commission appears to have already decided which option it intends to adopt next October, as announced, it seems fairly pointless to present an impact assessment featuring five options, when the choice was a foregone conclusion from the start.

3.1.8

In view of the apparent urgency to take an immediate position on the central issue of directory companies, already displayed in earlier EP studies and resolutions, and the estimated magnitude and seriousness of these practices in economic terms at the European level (4), the EESC accepts that the Commission should immediately present a specific legislative proposal on this issue, in order to prevent situations were companies are besieged by constant threats of legal action in foreign jurisdictions, with growing ‘administrative costs’ and constant quasi-threatening telephone calls from debt recovery companies.

3.1.8.1

Furthermore, it is not just SMEs but also professionals, NGOs, libraries, private educational establishments and even some public authority departments who have been the targets of these practices. This is why they must, where appropriate, be included in its scope by extending the concept of ‘trader’ to cover all those who could be targeted by these practices and who are not protected by other legislative instruments.

3.1.9

However, the EESC believes that a more coherent approach would have extended the concept of unfair commercial practices, in the form of misleading and aggressive practices, together with the black list annexed to Directive 2005/29/EC, to business-to-business relations.

3.1.10

Broadening the scope of this directive would have the added advantage of securing better harmonisation since Member States would not have to create new legal or legislative acts to transpose the directive, but only to extend the scope of pre-existing domestic laws on unfair commercial practices. This would have ensured that EU legislation was applied correctly (5).

3.1.11

Furthermore, a mere amendment to Directive 2006/114/EC, along the ambiguous lines suggested by the Commission, will not ensure protection for SMEs in the situations mentioned in the Communication. Apart from the fact that these practices are aggressive and not misleading actions, within the meaning of Directive 2005/29/EC, they stem from previously established commercial relations, and therefore cannot be included in the framework for advertising.

3.1.12

This is why, without prejudice to the point raised in 3.1.8, the EESC argues that the Commission will have to take steps in the near future to adopt a horizontal approach, promoting more consistency in the rules relating to competition law and intellectual and industrial property and ensuring more uniform protection for all commercial practices in the retail market and in all contractual relations between traders, in line with the EP resolution on a more efficient and fairer retail market.

3.1.13

The EESC therefore stresses the need for greater coordination between DG JUST, DG COMP, DG MARKT and DG ENTR with regard to the actions that need to be taken in this area and in future policy and legislative proposals in the follow up to the policy priorities set out in the Small Business Act.

3.1.14

Notwithstanding the foregoing and were the Commission to choose another option, the EESC highlights the need for the concept of ‘most harmful’ misleading marketing practices to be defined in concrete terms and to be specific in its content so that it is clear which commercial practices are deemed to warrant more protection than the rest.

3.1.15

The EESC would equally like the Commission to give a clearer indication of the situations to be added to the ‘black list’, the existence of which it fully endorses, since the list of categorically banned practices should be as precise and as exhaustive as possible. The Commission may already find enough material to prepare the black list in the replies to its investigation and the input of various stakeholders at the meeting held on 1 March 2013 (6).

3.1.16

In this case, the EESC would also like the Commission to consider whether it would be good idea to draw up a grey list of practices that might be illegal under specific circumstances to be assessed in court on a case-by-case basis.

3.1.17

Similarly, the EESC believes that in addition to mere listings, it will also be necessary to strengthen and clarify the meaning of misleading advertising or illegal comparative advertising in a systematic approach in a broad legal framework that ensures that new unfair practices are covered by the revised legislation.

3.1.18

Notwithstanding the point made in 3.1.8, the EESC believes that the legal framework of Directive 2005/29/EC will have to be broadened in good time, mainly to ensure that current protection for consumers is extended and applied equally to some small and micro enterprises, under precise and rigorously defined conditions, when they are in comparable situations, as already happens in the legal systems of some Member States, and as associations and organisations representing these businesses quite rightly demand (7).

3.1.19

In fact, the EESC believes that these are two different aspects of a common situation and that we have every interest in revising Directive 2005/29/EC, in light of the recent assessment of this directive (8), simultaneously and in parallel with Directive 2006/114/EC since they are interconnected and complementary (9).

3.1.20

The nature of these practices and the dealings of offending companies demonstrate the need for a judicial instrument for collective group action, which guarantees efficient reactions and better protection for traders in the settlement of any disputes that could arise, not only to put a stop to these practices (10), but also to ensure adequate damage compensation.

3.2.1

The EESC believes that the Commission should clarify the legal basis for these measures at this stage and, more specifically, whether they are solely intended to support the completion of the internal market or for other purposes.

3.2.2

The EESC equally believes that the most appropriate legal instrument for achieving this would be a regulation, in order to ensure more legal certainty and effective harmonisation.

4.1

With regard to the proposed calendar, the EESC welcomes the steps set out by the Commission, namely the immediate establishment of a network of authorities to step up enforcement of the misleading and comparative advertising directive, and to share information.

4.2

The EESC also welcomes the establishment of an enforcement cooperation procedure, similar to the one foreseen in Regulation (EC) No 2006/2004 of the European Parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws, thereby introducing both mutual assistance obligations between Member States in this area and measures to indentify the enforcement authorities, without prejudice to options involving public-private platforms, such as occurs in the Netherlands, and the extension of cooperation to include stakeholder representative organisations.

4.3

As a result, the EESC suggests following practices in the area of consumer protection (11) and dispute settlement and setting up a European network to assist SMEs in the settlement of cross-border disputes by directing defrauded companies to the most appropriate legal mechanisms.

4.4

The EESC also believes that training, information and good practice sharing activities need to be established for all businesses to alert them to the inherent dangers.

4.5

Furthermore, and mindful of the fact that most misleading practices occur in a digital environment, the EESC believes that it is necessary to promote a more assertive and appropriate approach to the protection of SMEs, bearing in mind the practices of intermediary internet providers and contractual relations arising from platforms such as eBay or platforms designed specifically for commercial transactions between traders.

4.6

The EESC would also add that the Commission will have to take the international dimension of these practices into consideration in the context of its representation to the OECD (12). The EU and its Member States are encouraged to discuss with the OECD the extension of its Guidelines for Protecting Consumers from Fraudulent Commercial Practices Across Borders to include B2B.

The EESC suggests that EUROPOL sets up a research project concerning mass-marketing fraud in the EU: the dimension of the financial damages and the number of victims; the role of the biggest cross-border players and the possible investment of profits in other non-legal activities or ventures.

4.7

Lastly, the EESC draws attention to the need for the Commission to come forward with the financial package that is vital if the proposed measures are to be put into practice.

4.8

With regard to future work, the EESC would like to specifically mention its willingness to participate in this work through its representatives, believing that it can contribute the experience of its members, who are particularly well-qualified civil society representatives of the three interest groups represented within the EESC.

a)

Online transaction practices whereby information about the transaction is not provided in the same manner to all concerned, resulting in discrimination against some of the parties.