In this week’s edition, you will particularly read about how the EU institutions act to protect taxpayers’ money by progressing towards a banking union and increasing penalties for EU budget fraud, to ensure you have a right to drinking water, to make sure temporary workers receive adequate protection under domestic employment law, and more…
An agreement between the EP and the Council on the 2nd pillar of the banking union
The Single Resolution Mechanism, which aims at harmonising the way authorities deal with a failing bank, is the 2nd pillar of the banking union. After long negotiations, the EP and the Council reached a deal that should ensure the credibility of the system and prevent political meddling.
The Parliament underlines the following improvements to the original text: 1) a strengthened role for the ECB, which will be “the main ‘triggering’ authority” while the Resolution Board “may also play a role if the ECB is reluctant or hesitates to act”; 2) the Commission will “adopt draft resolution schemes” while the Council will intervene only at the Commission’s request; 3) the decision-making process is streamlined to allow for very quick intervention if an urgent bank resolution is needed; 4) during the transitory period, the bank-funded single resolution fund will be allowed to borrow money to increase its credibility; and 5) mutualisation of the “national compartments” of the resolution fund will be accelerated: 40% during the first year, 20% during the 2nd year, and 40% during the remaining 6 years.
Protecting taxpayers’ money: increased criminal penalties for EU budget fraud
MEPs from the Budgetary Control and Civil Liberties committees amended a draft law on anti-fraud measures to partly harmonise the fight against EU budget fraud, among others by defining more clearly offences that Member States should punish with criminal penalties: the list includes “fraud, passive and active corruption, money laundering or dishonest bidding for public procurement contracts.” The topic is important, because EU budget fraud costs yearly €600 million. Areas particularly vulnerable to fraud are the agriculture, regional development and public procurement.
Apart from determining the period during which a fraudulent act may be prosecuted, the draft rules also set maximum penalties, damage thresholds for prison sentences to be considered. MEPs rejected the inclusion of minimal penalties, as this would allegedly not take into account the variety of legal systems. In addition, MEPs agreed to include VAT fraud in the scope of the directive and expanded the notion of “EU financial interests”.
The whole EP will vote on the draft text in April. The next Parliament will then decide whether to continue on the basis of this text or not.
If you want to read more about the European Parliament’s activity each week, click here.
The Commission gives a positive response to the first successful ECI (Right2Water)
This European Citizens’ Initiative “called on the Commission to ensure that all EU citizens enjoy the right to water and sanitation, to exclude water supply and management of water resources from internal market rules and liberalisation, and to increase its efforts to achieve universal access to water and sanitation around the world.” The Commission reminded the work already done in matters of water and sanitation, including financing to improve infrastructure and the setting of ambitious standards. Regarding the way of operating water firms, the Commission reasserted that this was a Member States’ competence. Moreover, “Water distribution and supply, as well as wastewater services, are already expressly excluded from the application of the cross-border freedom to provide services” and from EU rules on the awarding of concession contracts. Finally, the EU already is the largest global donor “for Water Supply, Sanitation and Hygiene (WASH) programmes in developing countries.” That being said, the Commission acknowledged more can be done and committed itself to undertake the following actions:
- Better monitor the full implementation of EU water legislation?
- Consult with the public “to assess the need for improvements and how they could be achieved;”
- “Improve information for citizens […]”;
- “Explore the idea of benchmarking water quality” and cooperate “with existing initiatives to provide a wider set of benchmarks for water services;”
- Encourage stakeholders to improve transparency in the water sector;
- “Improving the transparency and accountability of water services providers […];”
- “Advocate universal access to safe drinking water and sanitation as a priority area for post-2015 Sustainable Development Goals;”
- “Finally, invite the Member States, acting within their own competences, to take account of the concerns raised by citizens through this initiative and encourage them to step up their efforts to guarantee the provision of safe, clean and affordable water to all.”
The Commission reviews the implementation of rules on Temporary Agency Work (TAW Directive 2008/104/EC)
Temporary agency workers are employed by an agency which, as part of services contracts with other undertakings, provides such workers to their co-contractors (client). The temp workers remain employed by the agency, but they work on the premises of the co-contracting firm, i.e., there is no direct relationship between the temp worker and the client. Although TAW is a growing phenomenon, it involves only 1.6% of the European total number of workers. TAW provides greater flexibility to firms.
The directive of 2008 aimed at granting better working conditions and the right to equal treatment to temp workers. After review, the Commission found that all Member States have adopted implementation measures and “have in general done so correctly and applied its provisions in practice.” Moreover, most States indicated the directive did not create significant costs for them and for the firms targeted of the rules. The Commission will further focus on the implementation of the rules rather than drafting a revision of the directive. The report highlighted two areas where progress is necessary:
- “Certain derogations from the principle of equal treatment allowed by the Directive may have been used in such a way as to prevent the application of the Directive from improving in practice the protection of agency workers.”
- “The review of restrictions and prohibitions on the use of temporary agency work – although Member States have reviewed them as required by the Directive, and a few restrictive measures have been removed, in most cases Member States have maintained the status quo. In a number of Member States, the further removal of some restrictions and prohibitions is still being considered.”
If you want to know more about the Commission’s action, click here.
Council / European Council
The main conclusions of the European Council (20-21 March 2014)
Ukraine was the main topic during the first day of discussions. The European leaders condemned the annexation of Crimea by Russia, decided to extend the list of Russian personalities punished with visa bans and asset freezes, signed the political part of the Association Agreement with Ukraine, and supported quick economic support to Ukraine until the 25th May presidential elections.
Moreover, it is traditional for the European Council’s spring meeting to discuss economic matters. So, the 28 Heads of State or Government talked about the European Semester. They insisted on “policies enhancing competitiveness, supporting job creation and fighting unemployment, particularly youth unemployment, and on the follow-up to reforms to improve the functioning of labour markets.” It also welcomed the deal between the EP and the Council on the 2nd pillar of the banking union (see above), as well as the progress of negotiations between the Commission and “European third countries (Switzerland, Liechtenstein, Monaco, Andorra and San Marino)” on savings taxation, to obtain the automatic exchange of information in conformity with the OECD standard. Furthermore, the European Council dealt with the “industrial competitiveness and policy”. The European leaders reaffirmed their commitment to “a strong and competitive industrial base” relying on a “stable, simple and predictable environment” (which requires, among others, “better regulation”). They also indicated that a stronger industrial base needed the full completion of the internal market (through infrastructures, the digital economy…). SMEs and entrepreneurship shall be particularly supported. In addition, the European Council recalled the various funding opportunities available to European firms and the need to further support the European businesses’ competitiveness on the international markets. Furthermore, the European leaders insisted on the need to provide current and future workers with the right skills: both the Commission and Member States should undertake actions to tackle skills shortages. Other issues addressed were the need to better encourage innovation by better protecting intellectual property and to develop key enabling technologies (KETs).
In relation to industrial competitiveness and to the crisis in Ukraine, European leaders also had the good idea to talk about climate and energy. The European policy “must ensure affordable energy prices, industrial competitiveness, security of supply and achievement of our climate and environmental objectives.” The European Council reaffirmed its commitment to ambitious targets for greenhouse gas emissions reductions. Moreover, it reasserted the need to improve the cross-border interconnections between domestic grids and electricity production facilities and to implement rules “regarding market integration and energy efficiency [while] striving for a level playing field for companies operating within the EU.” In addition, the 28 leaders declared that “efforts to reduce Europe’s high gas energy dependency rates should be intensified, especially for the most dependent Member States.” This requires enhancing energy efficiency to reduce energy demand, diversifying the (import) sources, increasing the EU’s bargaining power and improving interconnections (also with third countries). Financing for such measures should be “swiftly mobilised”. At the moment, the European Council continues respecting “national choices of energy mix,” but it insisted on further coordination and exchange of information.
The whole conclusions are available here.
Court of Justice of the European Union
Of the side of the steering-wheel in a car (Cases C-639/11 and C-61/12, Commission v Poland & Commission v Lithuania)
If you have a car with the steering-wheel on the right side (e.g., a British car) and you want to go to Poland or Lithuania with that car, this judgment might be of interest to you… The ECJ ruled that “the obligation imposed by Poland and Lithuania to reposition the steering-wheel of right-hand drive passenger vehicles to the left-hand side infringes EU law.” Both Member States invoked the argument of road safety, considering that cars with the steering-wheel on the right side are adapted to traffic on the left side of the road (like in the UK). But the ECJ considered the restriction was not necessary to reach its alleged goal. Indeed, the Court noted that the legislation did not apply to people travelling to Poland, respectively Lithuania, for a short period of time. So, maybe it was not that necessary after all… Moreover, the two governments did not show statistics indicating a particularly important involvement of cars with the steering-wheel on the right in road accidents. Finally, the Court declared that there were less restrictive measures which “are capable of significantly reducing the risk which could be created by the use of vehicles with the steering-wheel placed on the same side as the direction of the traffic.”
If you are interested in learning about more European Court’s judgments, click here.