EUROGROUP,COUNCIL OF THE EU,update

 

Press material Tuesday 20 December 2022

● Eurogroup   20/12/2022 19:34 | Press release | Eurogroup statement on the updated draft budgetary plan of Italy   The Eurogroup welcomes the submission of the updated draft budgetary plan for 2023 of Italy on 24 November, as well as the Commission Opinion issued on 14 December 2022. We recall that the fiscal guidance for 2023 included in the Council recommendations of 12 July 2022 differentiated between member states with high debt levels and those with low/medium debt levels, depending on their fiscal and economic situation. Member States with high debt levels should pursue a prudent fiscal policy, in particular by limiting the growth of nationally financed primary current expenditure. According to the Commission assessment, the draft budgetary plan of Italy is in line with the fiscal guidance for 2023 contained in the Council recommendation to Italy. We agree with the Commission’s assessment and in particular welcome that the plan aims to preserve nationally financed investment in 2023. Investment will also be supported through the Recovery and Resilience Facility. We acknowledge that there is a need to accelerate fiscal-structural reforms, which would strengthen potential growth, competitiveness and debt sustainability. We will in 2023, for Italy, as well as for all euro area member states, examine the budgetary measures to mitigate the impact of high energy prices as outlined in our statement on the draft budgetary plans from 5 December 2022. The Eurogroup will continue to closely monitor economic developments in the euro area and commits to further reinforce policy coordination, in order to deliver a determined and agile policy response.

Press material Tuesday 20 December 2022

● Council of the EU   20/12/2022 13:47 | Press release | Council approves reinforced rules on granting trade preferences to developing countries   EU member states’ ambassadors today agreed the Council’s negotiating mandate on the revised Generalised Scheme of Preferences (GSP) regulation that grants trade preferences to developing countries. The new framework maintains the main features of the current system, but includes some improvements, such as stronger links to respect for human rights and the environment, and a better monitoring and transparency of the scheme. There will also be a new link between the trade preferences granted to beneficiary countries and their cooperation on migration and the readmission of own nationals illegally present in the EU. "The EU will continue supporting vulnerable countries by giving them preferential access to the single market. The objective of the reinforced regulation is to help these countries grow in a sustainable manner and to encourage good governance, including respect for human rights and the environment." Jozef Síkela, Minister of Industry and Trade of the Czech Republic The current GSP framework The EU's GSP, in place since 1971, is a unilateral trade and development policy instrument used to eliminate or reduce import tariffs for goods exported from developing countries. Lower duties facilitate access to the EU market and increase exports to the Union, which contribute to economic growth and job creation in the beneficiary countries. The EU's GSP supports sustainable development, as tariff preferences are conditional on respect for human rights, labour rights, environmental protection and good governance. The EU offers three GSP arrangements covering a total of 67 countries: - Standard GSP for low and lower-middle income countries, which are granted a partial or full removal of customs duties on two-thirds of the tariff lines. - GSP+, the special incentive arrangement for sustainable development and good governance, which slashes tariffs to 0 % for the same tariff lines as for those Standard GSP for Standard GSP beneficiaries which accept additional sustainability requirements (granted on the basis of an application). - EBA (Everything But Arms) for least developed countries (LDCs), which benefit from duty-free (0 % duties) and quota-free access to the EU market for all products except arms and ammunition. Improvements of the new framework The objective of the new legislation is to continue working for poverty eradication and to support sustainable development and good governance, without jeopardising EU interests. While maintaining the division into three strands - Everything But Arms, Standard GSP and GSP+ - some improvements were proposed by the Commission and accepted by the Council in order to increase efficiency and effectiveness of the new framework: Extends negative conditionality to prevent all beneficiaries from committing serious and systematic violations of environmental and good governance agreements, in addition to the core human and labour rights agreements; Facilitates access to the GSP+ arrangement for the growing number of least developed countries (LDCs) graduating from GSP’s EBA arrangement; Provides transitional arrangements for current GSP+ beneficiaries, which would have to reapply in order to fulfil new requirements for GSP+, such as ratifying the additional agreements, and adds a requirement for countries applying for GSP+ status to submit a plan of action to demonstrate their effective implementation of the relevant agreements; Extends the GSP reporting period from two to three years, in order to align it with the monitoring reports of the United Nations’ international bodies and organisations; Adds new international agreements to the list; Makes the preferences withdrawal process faster and more responsive in cases of exceptionally serious violations; When proposing a temporary withdrawal of GSP preferences, the Commission will consider the socio-economic impact of the withdrawal in the GSP beneficiary country; Introduces a withdrawal criterion related to the readmission of own nationals by beneficiary countries; Changes the calculation method for safeguard thresholds so that import values (rather than volumes) are used, in order to align it with the calculation method used for the graduation threshold; Introduces a specific process to ensure that the cumulation of rules of origin responds to the requesting country's development, financing and trade needs; Adjusts product graduation thresholds (that is, the temporary suspension of tariff preferences for highly competitive products) for the Standard GSP arrangement in order to focus better on preferences on less competitive products and create more opportunities for other GSP beneficiaries, in particular the LDCs; Improves the monitoring and implementation of GSP+ commitments; for instance, through increased transparency and participation of the relevant stakeholders, including through the recently created Single Entry Point (SEP) mechanism for non-compliance complaints. In addition, the Council has introduced a number of improvements in the Commission proposal: An enhanced engagement procedure between the EU and the beneficiary countries in order to address any concerns in a constructive manner; An improved system for the application of the general safeguards procedure when necessary; A stronger special surveillance mechanism for imports of agricultural products from GSP beneficiaries to the EU, which could, if necessary, lead to the withdrawal of tariff preferences; Increased transparency of the procedure to beneficiary countries, the creation of a structured dialogue with civil society and better communication between the Commission and the Council. Next steps Today's mandate was approved by the Council's Permanent Representatives Committee (Coreper). It will allow the Council presidency to start negotiations with the European Parliament. The new rules are intended to enter into force in January 2024, when the existing Regulation expires, and will cover the next decade. Commission proposal European Parliament position Legislative procedure (Legislative observatory, Œil)

Press material Tuesday 20 December 2022

● Council of the EU   20/12/2022 10:36 | Press release | Council agrees position on establishing a framework for the recovery and resolution of insurance and reinsurance undertakings (IRRD)   Today, member states' representatives agreed a negotiating mandate (general approach) on the Insurance Recovery and Resolution Directive (IRRD). This proposal will reinforce the Solvency II Directive, in the aim to make the insurance and reinsurance sector more resilient and enhance the protection of policyholders, taxpayers, the economy and financial stability within the EU. The Council’s position paves the way for negotiations with the European Parliament to start in the new year, in view of an agreement on the final text. "This is an important step forward to reduce risks for policyholders and taxpayers, and strengthen financial stability and trust in the internal market. The new directive will provide a framework for cases where the Solvency II regime does not prevent the failure of an insurance undertaking. The Solvency II framework generally works well, but approximately ten EU insurers fail every year, with significant impacts on policyholders. The Insurance Recovery and Resolution Directive (IRRD) will provide harmonised resolution procedures, making failures of insurance companies easier to handle, especially in a cross-border context." Zbyněk Stanjura, Minister for Finance of Czechia

Press material Tuesday 20 December 2022

● Council of the EU   20/12/2022 10:35 | Press release | Capital Markets Union: Council agrees negotiating mandate on proposal to strengthen market transparency   EU member states’ representatives today agreed a mandate for negotiations with the European Parliament on the proposed regulation reviewing the Markets in Financial Instruments Regulation (‘MIFIR’) and the second Markets in Financial Instruments Directive ('MiFID II'). The priorities for this review are to improve transparency and availability of market data, improve the level-playing field between execution venues and ensure that EU market infrastructures can remain competitive at international level. On the basis of this mandate, negotiations with the European Parliament can begin with a view to reaching a final agreement on the future legislation. "The MIFIR review is an important step to strengthen market transparency. It will empower in particular smaller investors, giving them easier access to the necessary data to invest in shares or bonds. A more transparent, accessible financial market will strengthen the overall integrity, competitiveness and efficiency of the single market, to the benefit of businesses and citizens." Zbyněk Stanjura, Minister for Finance of Czechia This proposal will make EU market infrastructures more robust. Proposed amendments will also increase market liquidity, making it easier for companies to get funding from capital markets. The draft regulation aims to establish a centralised database or ‘consolidated tape’, which will provide access to market data from trading venues as well as systematic internalisers and approved publication arrangements across the EU in a consolidated manner. This will improve the overall price transparency across trading venues and will provide investors with easier access to trading data. The text ensures that consolidated tape providers (‘CTP’) provide reliable consolidated data close-to-real time, noting that the CTP should publish the consolidated tape of executed trades together with best bids and offers available at the time of the particular trade as well as European best bid and offer available at the time of the trade from the most competitive markets. In addition, the draft regulation introduces a restriction of payments for routing client orders in the Union. The regulation leaves a discretion to Member States to allow this practice only in their territory. Furthermore, the draft regulation clarifies the limitation on the dark trading, lifting the complexity and the burden of the system. The current double volume cap establishes that the amount of dark trading on an individual venue may not exceed 4% of total trading and the amount of dark trading in an equity instrument in the EU may not exceed 8% of total trading. The new single volume cap set out in the draft regulation relies solely on the EU-wide threshold set at 10%. In addition, to ensure an adequate level of transparency, the text modifies the deferral times for the size and liquidity profile of transaction in bonds, structure products and emission allowances. Those deferrals should be based on the liquidity of a bond, structured finance product and emission allowance, and the size of transactions. For liquidity providers in bonds, masking price and volume of transactions for very large trades should not in any case exceed four weeks. For OTC derivatives, the duration of deferrals should be calibrated based on a more flexible basis because only adequate market data can determine the suitability of each period. ESMA will determine the duration of these deferrals. Through this update, certain provisions about the investment firms trading on their own account are also strengthened, as they provide liquidity to the parquet even during market stress conditions.

Press material Tuesday 20 December 2022

● Council of the EU   20/12/2022 10:11 | Press release | Financial markets: member states agree position to revise EU rules on central securities depositories   EU member states settled their negotiating position on a proposed update of the central securities depositories regulation (CSDR). The planned review will make EU securities settlement more efficient by simplifying requirements and clarifying authorisation processes among other things. Securities are tradable financial assets such as stocks or bonds. Central securities depositories (CSDs) play a crucial role in their registration and safekeeping, as well as, following a trade in securities, in ensuring its proper settlement, i.e. delivery of securities to the buyer against the delivery of cash to the seller. According to European Commission figures, transactions settled by EU central securities depositories in 2019 reached around €1,120 trillion. "Capital markets are the backbone of our economies. A real Capital Markets Union depends on safe and efficient settlement of transactions in securities. The Council wants to simplify the rules underpinning these settlements while preserving financial stability. This will make central securities depositories more efficient and competitive." Zbyněk Stanjura, Czech minister of finance commented Lowering barriers for cross-border settlement and improving supervision Because passporting requirements are burdensome, they hinder cross-border settlement, thus minimising competition and reducing choice. Passporting allows a financial firm to operate across the EU with one single licence. This regulation aims in particular to increase the provision of cross-border settlement by CSDs. The proposed new rules – if adopted – clarify that it is the home member state, i.e. where the CSD is authorised, that will ultimately decide on the CSD’s application to provide cross-border services. In the case where the CSD’s activities in at least two other member states are considered of substantial importance for the functioning of the securities markets and the protection of investors, a college of supervisors will be mandatorily set up. This will facilitate the exchange of information between supervisors and ease the cooperation between member state authorities. The timeframe of the passporting process will also be clarified and shortened, in order to facilitate the provision of a broader scope of services across the member states. The proposal also further streamlines rules on so-called “mandatory buy-in”: where a transaction has failed to settle at the end of a prescribed period, the buyer of the securities could be forced to repurchase them elsewhere. The failing party would then be required to meet any price differential between the original and new transaction and all costs of the mandatory buy-in. Mandatory buy-in would be a new measure of last resort, to be activated only in the case where the level of settlement fails would be substantial in the EU. The proposal also includes provisions on enabling CSDs’ access to banking-type ancillary services from other duly authorised CSDs, so as to facilitate settlement in non-domestic currencies. Furthermore, it also lays down rules ensuring that authorities in the EU have adequate powers and information to monitor risks in relation to both EU and third country CSDs, including by enhancing their supervisory cooperation. All these clarifications would thus bring the CSDR in line with other financial service legislation.

Press material Monday 19 December 2022

● Council of the EU   19/12/2022 20:04 | Press release | REPowerEU: Council agrees on accelerated permitting rules for renewables   The Council reached an agreement (general approach) on targeted amendments to the renewable energy directive, proposed under the REPowerEU plan. Member states will design dedicated ‘go-to areas' for renewables with shortened and simplified permitting processes in areas with lower environmental risks. "'This agreement is an important addition to the ongoing work on the renewable energy directive. Faster permitting in areas that can yield the best results without harming the environment will allow us to deploy renewable energy in our grids faster. This is the best way of becoming independent of Russian energy and it will also contribute considerably to our climate goals." Jozef SÍKELA, Czech minister of industry and trade The Council confirmed the target of at least 40% of the share of energy from renewable sources in 2030 in the Union’s gross final consumption, as set in its general approach on the revisions of renewable energy directive, adopted in June 2022. The Commission's proposal in REPowerEU was to increases the target to at least 45% in 2030. The current target in the 2018 renewable energy directive, is 32.5 % in 2030. Go-to areas The Council agreed that member states will map the areas necessary for national contributions towards the 2030 renewable energy target within 18 months after the entry into force of this directive. Member States will adopt a plan or plans designating 'renewables go-to areas' within 30 months after the entry into force of this directive. The renewables go-to areas would concern land, sea or inland waters and would be chosen because they are particularly suitable areas for specific renewable energy technologies and present lower risks for the environment. Protected areas should be avoided for example. In their plans designating renewables go-to areas, member states would also adopt mitigation measures that counter the potential adverse environmental consequences of development activities of the projects located in each go-to area. The whole plans would then be subject to a simplified environmental impacts assessment, instead of an assessment being carried out for each project, as is usually the case. The renewables go-to areas would also limit the grounds of legal objection to new installations by presuming they are of overriding public interest. The Council agreed on a shorter deadline of 6 months for areas already designated as suitable for an accelerated renewables deployment, if among other things they are not in Natura 2000 areas and have undergone an environmental assessment. Member states agreed that they would be allowed to exclude biomass combustion plants and hydropower plants from the designation of renewables go-to areas, because of their particularities. Faster permit-granting processes For renewable go-to areas, the Council agreed that permit-granting processes should not take longer than one year for renewables projects, and two years for offshore renewables projects. In duly justified extraordinary circumstances the period may be extended by up to six months. For the repowering of plants and for new installations with an electrical capacity of less than 150 kW, co-located energy storage facilities as well as their grid connection, the processes should be limited to six months, and one year if they concern offshore wind energy projects. In duly justified extraordinary circumstances, for example overriding safety reasons, the period may be extended by up to three months. For areas outside go-to areas the permit-granting processes should not exceed two years, and three years for offshore renewables projects. In duly justified extraordinary circumstances the period may be extended by up to six months. For the repowering of plants and for new installations with an electrical capacity of less than 150 kW, co-located energy storage facilities as well as their grid connection, the processes should not take longer than one year, and two years if they concern offshore wind energy projects. In duly justified extraordinary circumstances the period may be extended by up to three months. The Council agreed that the time during which the plants, their grid connections and the related necessary grid infrastructure are being built or repowered should not be counted within these deadlines. For solar equipment, member states agreed that the permit-granting process would not exceed three months. Member States may provide that the lack of reply within the set deadlines could be considered as a tacit agreement to intermediary steps but permits would need an explicit final decision on the outcome of the process. Member states also agreed that in order to facilitate the integration of renewable energy into the distribution and transmission grids, the screening or environmental impact assessment for grid reinforcements should be limited to the potential impacts stemming from the change to the grid infrastructure. Background On 18 May 2022, the European Commission presented its REPowerEU plan as a response to the hardships and global energy market disruption caused by Russia's invasion of Ukraine. The REPower EU plan seeks to both end the EU's dependence on Russian fossil fuels and make further advances in reaching the EU's climate objectives. As part of the REPowerEU plan, the Commission proposed a series of targeted amendments of existing legislation in the energy field, namely the Renewable Energy Directive (RED), the Energy Performance of Buildings Directive (EPBD), and the Energy Efficiency Directive (EED). All three directives are in the process of being revised as part of the 'Fit for 55' package, which was adopted by the Commission in 2021. The elements regarding the EED and EPBD have been already integrated into this process and the current proposal now only concerns renewable energy. The general approach sets the Council's position in view of negotiations with the European Parliament. The two institutions will now be able to factor their positions on the REPowerEU proposal into the ongoing negotiations on the renewable energy directive