EU news focus

What has Europe done for you? 27 January – 2 February 2014

EU News Focus

In this week’s edition, you will particularly read about how the EU institutions act to make the financial system safer, to protect your environment and your health, to increase the quality of higher education, and to protect your consumer’s rights.

European Parliament

More efficient air navigation: towards a “Single European Sky”

This week, MEPs of the “Transport” commission voted on the Single European Sky (SES) 2+ package. This is supposed to be a new step in a process that started already in the 1990s. The new rules mainly aim at giving more independence to national regulators and more influence to the air transport industry “in designing more efficient airspace navigation”. Indeed, at the moment, “28 national air traffic control systems [manage] about 60 air traffic centres divided into more than 650 sectors”. This inefficiency has a cost of about €5 billion for passengers.

So, national aviation authorities (the regulators of the market) should become more independent from the market actors. Moreover, they need to cooperate more closely with each other “to coordinate airspace management more closely across Europe and make air traffic control less fragmented”. MEPs also underlined that this will require “adequate resources”.

Furthermore, “Functional Airspace Blocks (FABs), which allow air traffic control and navigation services to cooperate across national air space borders”, shall become more flexible, allowing for enhanced cooperation to increase the efficiency. So, for example, the 28 national air traffic blocks would be replaced by 9 (existing, but not yet operative) regional ones.

MEPs also back the creation of a European authority tasked with coordinating the efforts of the national aviation authorities to meet “performance targets”.

In addition, MEPs of the “Transport” commission voted to slow down the Commission’s attempt to enhance competition by separating support services (e.g., weather forecast) from core air navigation services: further impact assessments will have to be realised by 1 January 2016 before further action may be taken. However, MEPs also want competition between support service providers to be possible.

Finally, the division of tasks between the European Commission, the EASA (European Aviation Safety Authority) and Eurocontrol (European Organization for the safety of air navigation) shall be clarified.

The whole European Parliament will vote on the text during the March plenary.

Protecting the environment: plans to ban invasive alien species (IAS)

While this may not seem a topic of direct interest to most of us, it is nevertheless a very important one, as the development of invasive species can have serious economic and environmental costs (at least €12 billion a year, according to estimates of the current cost). This week, the “Environment” committee adopted the proposal that would require Member States “to carry out an analysis of the pathways of introduction and spread of invasive alien species (IAS) and set up surveillance systems and action plans.” In addition, EU borders would be better controlled. And for existing widespread IAS, Member States would have to come forward with management plans. However, the reform also aims at respecting transparency and the principle of subsidiarity. Therefore, according to the rapporteur on the text, “citizens and experts have to have their say when the target invasive species are defined and Member States have to have the possibility to adapt the legislation for their bio-geographical conditions.”

More concretely, the new text foresees that the species “deemed to be ‘of Union concern’” will have to be listed and “banned from being introduced, transported, placed on the market, offered, kept, grown or released in the environment.” The list shall be open to as many species as necessary and it may include species “that are native to one part of the EU but invasive in another.”

Member States will, however, be competent for setting the penalties for breaches of the legislation on IAS, and they will also be able to grant derogations to specialised establishments “provided they [the species benefiting from the derogation] are of high economic, social and environmental value.”

Following the vote of this report, the EP will open negotiations with the Council with a view to reaching an agreement on a common draft.

If you want to read more about the European Parliament’s activity each week, click here.

European Commission

A structural reform of the European banking sector

On Wednesday 29 January, the Commission proposed new rules to reduce the size of banks and build a thicker wall between trading activities for the benefit of clients and proprietary trading activities. In addition, the transparency of certain transactions would be increased. These new proposals are meant to complete the overhaul of the EU banking sector started in the aftermath of the global financial and economic crisis. The Commission hopes that these rules will prevent banks from becoming too-big-to-fail or, if they are deemed so, prevent them from undertaking risky transactions, the negative consequences of which might end up being paid by the taxpayer like during the crisis. Michel Barnier, the Commissioner responsible for the Internal Market and for Services, declared that the “proposals are carefully calibrated to ensure a delicate balance between financial stability and creating the right conditions for lending to the real economy, particularly important for competitiveness and growth.”

The new proposals concern only the biggest European banks with important trading activities. The commission highlights the following proposed measures:

“1. Ban proprietary trading in financial instruments and commodities, i.e. trading on own account for the sole purpose of making profit for the bank. […]

2. Grant supervisors the power and, in certain instances, the obligation to require the transfer of other high-risk trading activities (such as market-making, complex derivatives and securitisation operations) to separate legal trading entities within the group (“subsidiarisation”). This aims to avoid the risk that banks would get around the ban on the prohibition of certain trading activities by engaging in hidden proprietary trading activities which become too significant or highly leveraged and potentially put the whole bank and wider financial system at risk. Banks will have the possibility of not separating activities if they can show to the satisfaction of their supervisor that the risks generated are mitigated by other means.

3. Provide rules on the economic, legal, governance, and operational links between the separated trading entity and the rest of the banking group.”

In addition, to prevent banks from circumventing these rules (if they enter into force), rules increasing transparency in the shadow banking sector also form part of the package. These rules shall allow investors and regulators to better understand more complex transactions known under the same “securities financing transaction” (STFs). An FAQ on transparency rules is available here.

A call for improved quality checks in universities and vocational colleges

On Tuesday, the Commission issued two reports on quality assurance in higher education and vocational training. The increased quality checks shall ensure that teaching and training brings the skills required on the labour market and in the society. Some of the recommendations are that students shall have more say in decision-making, that universities / vocational colleges shall increase their international cooperation (to share best practices), that the use of ICT-technologies shall be improved, and that transparency should increase (e.g., by making quality assurance results available to the public) among others to facilitate the mutual recognition of qualifications.

If you want to know more about the Commission’s action, click here.

Council / European Council

Increasing consumer protection: the directive on mortgage credits

The ECOFIN composition of the Council adopted this week a directive which aims at “creating a single market for mortgage credits in the EU, with a high degree of consumer protection” and at promoting financial stability. The text was adopted following an agreement with the European Parliament. The 28 ministers hope that this text will force mortgage lenders to act more responsibly than during the years leading to the financial crisis (with a number of defaults and foreclosures). Until now, EU rules on consumer protection did not take into account the specificities of mortgage credits. Moreover, several mortgage lenders and mortgage loans were not covered by EU rules, and some regulation found its source in a voluntary code of conduct. Now, the directive sets rules requiring “a high degree of professionalism amongst creditors and credit intermediaries.” Moreover, mandatory rules are introduced regarding pre-contractual information, credit intermediaries and the borrowing rate. In addition, lenders will have to assess more thoroughly the creditworthiness of the potential borrower. The transposition period in domestic law is 2 years.

Compromise between the Council and the EP on reformed rules for the introduction of noise-related operating restrictions at EU airports

The compromise concerns a regulation which “harmonises and strengthens rules on how authorities take decisions to set operating restrictions at EU airports to limit nuisance from aircraft noise.” These rules rely on the internationally accepted principle of the “balanced approach to noise management” according to which “the most cost-efficient way of tackling aircraft noise at each individual airport” and the operating restrictions are only the measure of last resort. The purpose of the new rules is to ensure a “consistent application” of the balanced approach to guarantee that both the citizens’ quality of life and the interests of the air transport market actors are equally protected across the EU. Let us, however, note that specific noise limits thresholds will be set by national or local authorities.

According to the Council, the regulation “will make the noise assessment process more robust and put competent authorities in a better position to phase out the noisiest aircraft in the fleet.” However, it is worth noting that it will apply only to large airports (>50.000 civil aircraft movements a year). For these, the Commission will have a right of review on operating restrictions notified by the competent national authorities. The environmental noise directive will have to be respected. Furthermore, information on noise performance and on operating restrictions shall become more transparent. Finally, the noisier aircrafts will be progressively phased out. Before entering into force, this agreement needs to be formally adopted by the Council and by the European Parliament. Both are expected to be obtained this spring. Then, it would enter into force only 2 years after its publication, and there would be a transition period of 1 year.

More information about the Council’s work can be found here; for the European Council, click here).

Pierre-Antoine KLETHI

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