Issue 26 - 16 October 2014
This newsletter is published by SOMO
You can download this newsletter as a PDF (178KB) here
Subscribe to the EU Financial Reforms newsletter.
Neo-liberalism with a human face?
What to expect from the new European Commission
By Peter Wahl, WEED
The new European Commission (EC) will introduce a new level of hierarchy among the commissioners. The motive behind the changes is threefold: more centralisation and power for the EC President, an increase in efficiency and strengthening the Commission’s position in the power triangle with the Council and the Parliament, and the sophistication of neo-liberal policies and austerity. However, these changes and the Commission’s composition will make no substantial changes to the neo-liberal policies in Brussels.
Read the full article >
The tenacious struggle of the states against tax avoidance of companies
By Markus Henn, WEED
Last year, the G20 announced plans to put an end to the tax avoidance of multinational companies. But interim results of the work led by the OECD for the G20 show that national governments, despite advancement, have achieved very little progress, particularly on corporate transparency and on harmful tax laws granting inappropriate benefits to corporations. Furthermore, the interests of developing countries are not duly served.
Read the full article >
Brief Update: Financial services in CETA, TTIP and TiSA
The end of the negotiations for a Comprehensive Economic Trade Agreement (CETA) between Canada and the EU was officially announced in Ottawa (Canada) on 26 September and the negotiated text finally made public
(63 MB!). However, Germany raised objections, amongst others because government bonds could be subject to the investor-to-state dispute settlement (ISDS) if not well specified in the “Annex of the Financial Services Chapter”. This could prevent bond restructuring or non-payment, which is needed during a financial crisis to avoid a tax payers’ bail-out. Also controversial is that financial regulation will be subject to ISDS if no consensus has been reached in two committees that regulation is ‘prudential’. Moreover, there are many other limitations on how the financial sector can be regulated as explained in a-well document NGO analysis
(see page 18).
During the last round of negotiations between the United States and the EU on a trade and investment agreement (TTIP), negotiations on financial services were brought to a standstill, since the United States refuses to include regulatory cooperation on financial services (see also July 2014 Newsletter
) and therefore the EU refused to discuss further liberalisation of (non-discriminatory measures in) financial services. What both sides are arguing for is undermining strict financial regulation, EU and U.S. NGOs have warned in an open letter
and Finance Watch in a new position paper
In the meantime, negotiations continue in secret between the EU and 22 other WTO members, including Canada and the United States, for an agreement on trade in services (TiSA), including on financial services and financial regulation. Interestingly, it seems that the CETA text is more specific on protecting prudential financial regulation than a leaked TiSA text (see July 2014 Newsletter
). The latter is also different from a leaked TTIP text, so which treaty will prevail to protect financial regulation? Civil society organisations and trade unions are very actively protesting against the many deregulatory aspects of TiSA (see a new OWINFS briefing on financial services
and a new trade union report
Brief Update: Negotiations on Financial Transaction Tax Continue
In spite of some rumours spread by media with vested interests, the negotiations for the Financial Transaction Tax (FTT) in the framework of Enhanced Cooperation continue among the eleven participating countries (see March 2013 Newsletter
After France had asked – to the surprise of its partners – to exempt all derivatives last summer, when the then new Finance Minister Pierre Moscovici came into office, many people believed that the FTT would be dead. However, under pressure from Germany, Austria and others, Paris has meanwhile changed its position once again. France now accepts tax derivatives that are considered to be “speculative”, while arguing that derivatives that are viewed as serving hedging purposes in the real economy should be exempted. However, it is still controversial which derivatives fall precisely under which category.
In May, finance ministers of the eleven countries declared that they wanted to reach an agreement by the end of the year. Given the many technical issues, there is consensus that negotiations will take time. This is why there will be several stages for the FTT implementation. During the first stage, transactions of shares and derivatives on shares will be taxed. Governments say that a respective agreement can be reached by the end of December 2014.
As of early October 2014, the debate has focused on two issues: which other classes of derivatives should also be included, and how binding a second and perhaps a third stage would be. Most countries are in favour of a binding agreement on the subsequent stages, but legal arguments have been made against it. One model under discussion is for a tax rate of zero to be set for all derivatives, which after agreement at a later stage, could be expanded to different classes of derivatives.
While it is quite sure that a financial transaction tax will come, the question now is what the design will look like in detail. Therefore, the political battle against watering down the project continues between supportive governments and civil society on the one hand and more sceptical governments, like in France, on the other.
For background to the official agenda of European institutions, see the following websites:
The links below give the website with updates and overviews of documents and dates related to the EU decision making process
- 1, EC (Brussels): Beginning of new European Commission mandate
- 1, ESMA (Paris): Deadline for consultation on main indices and recognised exchanges under the Capital Requirements Retulation
- 3-4, ECON (Brussels): Meeting
- 4, EC (Brussels): Deadline for consultation on Insurance Block Exemption Regulation
- 5, Finance Watch (Brussels): Conference: "What finance for what growth"
- 5, Housing Europe (Brussels): Conference: "Housing Finance: Property Bubbles or Social & Ecological Resilience?"
- 6 EC (Brussels): Conference "Finance for Growth – Towards a Capital Markets Union"
- 6, ESMA (Paris): Deadline for consultation on clearing obligation under EMIR
- 9, Eurogroup (Brussels): Meeting
- 10, ECOFIN (Brussels): Meeting
- 10, EBA (London): Hearing on triggers for resolution
- 10, EBA (London): Hearing on triggers for early intervention
- 11, ECON (Brussels): Meeting
- 13-15, G20 (Brisbane, Australia): Deputy Finance Ministers and Central Banks meeting
- 15-16, G20 (Brisbane, Australia): Heads of State Summit
- 17, ECON (Brussels): Meeting
- 18, EC (Brussels): Conference on emerging challenges in retail finance and consumer policy
- 21, EBA (London): Hearing on payment commitments
- 25, EBA (London): Hearing on recovery Plan Indicators
- 24-27, EP (Strasbourg): Plenary
- 28, EBA (London): Hearing on resolution tools
- 28, EBA (London): Hearing on treatment of liabilities
- 1-2, ECON (Brussels): Meeting
- 1, (Turkey): Turkey begins G20 Presidency
- 4, FW/DGB/vzbv/WEED/FES (Berlin): Conference: “Financial markets and banks: safe and long term?”
- 8, ECON (Brussels): Meeting
- 8, EBA (London): Hearing on group financial support
- 10, ESMA (Paris): Deadline for consultation on implementation of the Regulations on EuSEF and EuVECA
- 13, Eurogroup (Brussels): Meeting
- 14, ECOFIN (Brussels): Meeting
- 15-18, EP (Strasbourg): Plenary
- 18-19, European Council (Brussels): Meeting
- 19, ESMA (Paris): Deadline for consultation on prospectus related issues under the Omnibus II Directive
- 22, EBA (London): Deadline for consultation on minimum list of services and facilities
- 22, EBA (London): Deadline for consultation on asset separation tool and on the sale of business tool
- 22, EBA (London): Deadline for consultation on triggers for use of early intervention measures
- 22, EBA (London): Deadline for consultation on circumstances when an institution shall be considered as failing or likely to fail