Brussels Brief - March 30, 2007
March 30, 2007
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KEY DEVELOPMENTS
Air Transport: Council Approves Open Skies Deal
Philip Torbøl
The EU Council has approved the aviation agreement recently negotiated by the EU and US Administrations which removes a number of restrictions on the provision of transatlantic air services. Until the last minute, there was doubt whether the UK would back the deal that requires the opening up of the lucrative route between London's Heathrow Airport and the US to airlines other than British Airways, Virgin Atlantic, American Airlines and United. For technical reasons the Council has decided to postpone the application of the deal for five months until 30 March 2008. With this modification, the “open skies” agreement is now expected to be officially signed at the EU-US Summit on 30 April 2007.
Internal Market: EU Agrees to Simplify Cross-Border Payments
Andrea Hamilton
The EU Council has unanimously adopted amendments to the proposal for a payment services directive, with the aim of creating a single European retail payments area. Currently, Member States apply national rules to determine fees for retail payment services. However, since Member States’ rules vary widely, consumers and businesses face significant differences in the prices of retail payment services, particularly in cross-border transactions. The proposed directive would harmonise the Member States’ rules, aiming to eliminate differences between fees charged for intra-State retail transactions and cross-border transactions. The directive, if approved by the European Parliament, is ultimately expected to save consumers between EUR 50-100 billion per year and promote competition among retail payment providers.
Competition: Carmakers to Provide Independent Repair Shops With Information
Morten Nissen
Following an in-depth investigation by the European Commission, four carmakers, DaimlerChrysler, Toyota, General Motors and Fiat, have proposed commitments to give independent repair shops access to technical information. The proposal aims to address the Commission's preliminary concern that the carmakers appeared not to have provided independent repairers with adequate access to technical information. Lack of such access makes it more difficult for independent workshops to compete, thereby potentially limiting European consumers' choice of local repair shops. If the results of a market test are positive, the Commission intends to adopt decisions declaring the four sets of commitments binding, thereby bringing the proceedings in the four cases to an end. Interested parties can provide comments on the proposal.
Internal Market: Commission to take Spain to Court for Ban on Herbal Products
Bróna Heenan
Food supplements such as guaraná, ginseng, espirulina and passiflore, legally marketed in other Member States, are banned from being imported into Spain. The Spanish authorities consider these herbal or plant-based products as pharmaceuticals and systematically ban them unless authorised as medicinal products, which requires a long and detailed process. The European Commission considers that the absence of an adequate procedure for assessing the public health risks allegedly posed by such products is unjustified, infringes the free movement of goods in the Community and goes beyond that necessary in terms of the protection of public health.
Air Transport: Aviation Agreement between European Union and Malaysia
Sara Bacchio
On 22 March 2007, the European Union signed an Aviation Agreement with Malaysia aimed at removing nationality restrictions contained in the bilateral air services agreements between Malaysia and EU Member States. In fact, this “horizontal” Aviation Agreement does not replace the bilateral agreements between Member States and Malaysia, but brings them into line with EU law. According to this Agreement, European airlines have non-discriminatory access to the air transport market between the EU and Malaysia. Malaysia has bilateral air services agreements with 21 EU Member States.
Internal Market: Commission Takes Spain to ECJ for Failure to Implement Financial Transparency Directive
Jérôme Cloarec
The European Commission has taken Spain to the European Court of Justice (ECJ) for failing to implement the Directive on the Transparency of financial relations between Member States and public undertakings. This Directive lays down a general principle of financial transparency between public undertakings and authorities at both national and European levels. The Member States are obliged to send the Commission financial data of public undertakings active in the manufacturing sector. The Directive also gives the Commission a power of investigation regarding these transparency obligations. Spain should have implemented this Directive by 31 July 2001. In March 2005 it was formally requested to do so within a deadline of two months, which was not respected.
Internal Market: Taxation of Electricity – Infringement Procedure Against Poland
Michal Cieplinski
The European Commission has sent Poland a reasoned opinion, thus commencing a second stage of the infringement procedure against the Polish electricity taxation system. Under EU law, excise duty on electricity is chargeable at the time of supply by the distributor or redistributors, making them liable to pay the tax. In Poland, however, excise duty on electricity is charged to the producer at the time of supply. By not aligning its electricity taxation system by 1 January 2006, Poland failed to meet its obligations under the Energy Tax Directive (Directive 2003/96/EC). In November 2006, the Commission formally opened an infringement procedure against Poland by sending a letter of formal notice. Due to the fact that Poland’s reply was not satisfactory the Commission has issued Poland with a reasoned opinion. If Poland does not comply with this opinion, the Commission will place the matter before the European Court of Justice.
Internal Market: New Financial Rules Facilitate Use of EU Funds
Elena Kostadinova
The European Union has adopted a new set of financial rules concerning the use of EU funds for the 2007-2013 financial period designed to simplify access to funding. In particular, grants of up to EUR 25,000 will require less documentation. Financial guarantees required for grants below EUR 60,000 may be waived once the financial risk has been assessed. The threshold for award of public contracts using the simplified purchasing procedure will also be increased from EUR 50,000 to EUR 60,000. For the first time, the names of beneficiaries of (i) structural funds and external aid programmes, and (ii) agricultural subsidies, will have to be disclosed to the public as of 2008 and 2009 respectively.
Taxation: Infringement Procedures Against Italy and Sweden
Geert Dierickx
The European Commission has decided to bring Italy before the European Court of Justice for extending its tax amnesty, which the Commission already considered to be in breach of the Sixth VAT Directive. This tax amnesty allows taxpayers to regularise different unpaid taxes, including VAT. According to this arrangement, Italy waives its right to control VAT which was not paid. Italian taxpayers regularise this by simply paying a fixed sum, or a percentage (2 per cent) of the VAT that would have been payable in respect of goods and services supplied, even if it is proven that irregularities were committed. The Commission has also sent Sweden a formal request to amend its rules concerning the reduced VAT rate applied to supplies of audio books. Currently Sweden applies a rate of 6 per cent instead of the normal rate of 25 per cent. According to the Commission there is no legal base for applying such a reduced rate, as under the VAT Directive a reduced rate can only be applied to supplies of printed books.
Monday 2 April – Friday 6 April 2007
COUNCIL MEETINGS
No meetings scheduled for next week
COURT OF JUSTICE
Judicial vacation of the Court of Justice from 2 – 15 April inclusive
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 2 – 15 April inclusive
