Recent Developments in the European Parliament and the EU
Bulletin No. 61: 31 January 2014
Prepared by Derek Dignam, Oireachtas National Parliament Representative,
Brussels
This report has been prepared for the benefit of Oireachtas Committee
Chairpersons, Members and officials as a synopsis of the main developments in the
EU over the period 1-31 Jan 2014. More detailed notes can be prepared on
individual items on request. Where appropriate, web links to the documents
referred to are also given. Attributions to various original source materials are
accurate at the time of the posting this report.
Recent Developments in the European Parliament and the EU: 31 Jan 2014
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Contents
European Parliament – Political and Legislative Highlights
European Maritime and Fisheries Fund
New periodic vehicle inspection rules
New rules for the audit sector
Against buying EU citizenship
New financial markets trading rules agreed
Inter-Parliamentary Activities
Activities for the Greek Presidency
European Commission Developments
Banking structural reform proposals
Energy and Climate goals for 2030
Ocean energy
Disenfranchisement: Commission acts to defend voting rights of EU citizens
Council of the European Union
Foreign Affairs
ECOFIN
20 January
28 January
Greek Presidency: forthcoming Council and Ministerial Meetings
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1. EUROPEAN PARLIAMENT – POLITICAL AND LEGISLATIVE
HIGHLIGHTS1
European Maritime and Fisheries Fund
Draft rules for allocating European Maritime and Fisheries Fund (EMFF) aid to help
fishermen comply with the new Common Fisheries Policy (CFP) requirements were
informally agreed on 29 January. The rules should now be approved at the first
reading before the end of this Parliament and will mean that there will be more
funding for data collection for better fisheries management. Parliament believes it
improved the Commission proposal, especially on collecting and managing fisheries
data, which are needed to set the Maximum Sustainable Yield required by the new
CFP rules (MSY means the largest catch that can be safely taken year after year and
which maintains the fish population size at maximum productivity). €520 million of
the EMFF budget will be earmarked for data collection.
Each member state with a significant small-scale coastal fishing fleet will be required
to table an action plan setting out a strategy for the development, competitiveness and
sustainability of these fisheries. The amended EMFF proposal allows fishermen
under 40 years old to be granted up to €75,000 in individual start-up support if they
buy a small-scale and coastal fishing vessel between 5 and 30 years old and have five
years' professional experience in the sector.
EMFF support was added for
withdrawing, replacing or modernising engines for vessels up to 24 metres long,
including a requirement for those of 12-24 metres that the new engine's power output
be less than that of the engine it replaces. An amendment to reintroduce fleet renewal
subsidies was rejected.
The EMFF will help fishermen to comply with the new CFP rules by supporting
investments in more selective fishing gear or equipment to facilitate handling, landing
and storage of unwanted catches. EMFF aid will also be used to improve safety and
working conditions, data collection and port infrastructure.
The agreement will now be put to a vote in the Fisheries Committee before seeking
final approval in plenary in April.
New periodic vehicle inspection rules
An informal agreement with EU member states on minimum common standards for
periodic vehicle inspections, vehicle registration documents and roadside inspections
of commercial vehicles was agreed by the Transport and Tourism Committee on 21
January. The revised rules would;
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
1
Introduce new EU-level standards for periodic technical inspections of
vehicles. Testing equipment would have to meet minimum technical standards
and inspectors carrying out periodic checks would have to satisfy minimum
competence and training requirements laid down in the new rules,
Test heavy motorcycles from 2022,
Check at least 5% of commercial vehicles on EU roads in each calendar year,
Summaries drawn as appropriate from EP documents
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Introduce a risk rating systems to target firms whose commercial vehicle fleets
have poor safety records and reduce the administrative burden on those with
good ones,
sets out cargo securing requirements
strengthen mutual recognition between Member States
The proposals are to be put to a vote by Parliament as a whole in March.
New rules for the audit sector
A draft agreement between Parliament and Council on legislation to open up the EU
audit services market beyond the dominant "Big Four" firms and remedy auditing
weaknesses revealed by the financial crisis was endorsed by the Legal Affairs
Committee on 21 January. The draft also aims to improve audit quality and
transparency and prevent conflicts of interest.
The text would require auditors in the EU to publish audit reports according to
international auditing standards. For auditors of public-interest entities (PIEs), such
as banks, insurance companies and listed companies, the agreed text would require
audit firms to provide shareholders and investors with a detailed understanding of
what the auditor did and an overall assurance of the accuracy of the company's
accounts. In addition, "Big 4-only" contractual clauses requiring that the audit be
done by one of these firms would be prohibited. PIEs would be obliged to issue a
call for tenders when selecting a new auditor. A “mandatory rotation” rule has been
proposed whereby an auditor can inspect a company's books for a maximum 10 years,
which may be increased to 10 additional years if new tenders are carried out, and by
up to 14 additional years in the case of joint audits, i.e. when a firm is being audited
by more than one audit firm. The Commission had proposed mandatory rotation after
6 years, but a majority in committee judged that this would be a costly and
unwelcome intervention in the audit market.
To preclude conflicts of interest and threats to independence, EU audit firms would be
required to abide by rules mirroring those in effect internationally and EU audit firms
would generally be prohibited from providing non-audit services to their clients,
including tax advisory services which directly affect the company's financial
statements. The agreed text will be put to a vote by Parliament as a whole, probably
in April.
Against buying EU citizenship
The European Parliament in a resolution adopted on 16 January ( by 560 votes to 22,
with 44 abstentions) underlined its concern about schemes established by various EU
member states and, in particular, Malta, which result in the sale of national, and hence
EU, citizenship. Parliament calls on the European Commission to state clearly
whether these schemes respect the letter and spirit of the EU treaties and the Schengen
Borders Code, as well as EU rules on non-discrimination. It asks the Commission to
issue recommendations to prevent such schemes from undermining the EU’s founding
values, as well as guidelines on granting access to EU citizenship via national
schemes.
Malta has recently taken steps to introduce a scheme for the outright sale of Maltese
citizenship, "which automatically entails the outright sale of EU citizenship as a
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whole without any residency requirement". The EP called on Malta to bring its
current citizenship scheme into line with EU values and states that other member
states that have introduced national schemes which allow the direct or indirect sale of
EU citizenship should do likewise.
New financial markets trading rules agreed
New rules to govern financial markets were agreed informally by Parliament and
Council on 14 January. The details of the agreement will be now fine-tuned in
technical meetings. The new rules will apply to investment firms, market operators
and services providing post-trade transparency information in the EU. They are set out
in two pieces of legislation, a directly applicable regulation dealing inter alia with
transparency and access to trading venues and a directive governing authorisation and
organisation of trading venues and investor protection.
In terms of market structure all systems enabling market players to buy and sell
financial instruments would have to operate as Regulated Markets (RMs) i.e. stock
exchanges, Multilateral Trading Facilities (MTFs) - such as NYSE EURONEXT or
Organised Trading Facilities (OTFs) designed to make sure that all trading venues are
captured by the Markets in Financial Instruments Directive (MiFID). Trading on
OTFs would be restricted to non-equities, such as interests in bonds, structured
finance products or derivatives. The trading obligation would ensure that investment
firms do their trades in shares on organised trading venues such as RMs or MTFs.
Transactions in derivatives subject to this obligation would have to be concluded on
RMs, MTFs, or OTFs.
To protect investors, the duty of firms providing investment services to act in clients’
best interests would also include designing investment products for specified groups
of clients according to their needs, withdrawing “toxic” products from trading and
ensuring that any marketing information is clearly identifiable as such and not
misleading. Clients should also be informed whether the advice offered is independent
or not and about the risks associated with proposed investment products and
strategies.
On commodities the competent authorities would be empowered to limit the size of a
net position which a person may hold in commodity derivatives, given their potential
impact on food and energy prices. Under the new rules, positions in commodity
derivatives (traded on trading venues and over the counter), would be limited, to
support orderly pricing and prevent market distorting positions and market abuse. The
European Securities and Markets Authority should determine the methodology for
calculating these limits, to be applied by the competent authorities. Position limits
would not apply to positions that are objectively measurable as reducing the risks
directly related to the commercial activity.
High-frequency algorithmic trading will also be subject to regulation. As defined by
these rules, such trading takes place where a computer algorithm automatically
determines individual parameters of orders, such as whether to initiate the order, the
timing, price or quantity. Any investment firm engaging in it would have to have
effective systems and controls in place, such as “circuit breakers” that stop trading if
price volatility gets too high. To minimize systemic risk, the algorithms used would
have to be tested on venues and authorized by regulators. Moreover; records of all
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placed orders and cancellations of orders would have to be stored and made available
to the competent authority upon request.
Third countries whose rules are equivalent to the new EU rules would be able to
benefit from the “EU passport” when providing services to professionals.
2. INTER-PARLIAMENTARY ACTIVITIES
Inter-Parliamentary programme of the Greek Presidency;
Date
Meeting
2014
Greek Presidency Jan - June 2014
Venue
16- 17 February
21 February
Meeting of Chairpersons of the Committees on
Justice and Home Affairs
Working Group on CFSP
16-17 March
Meeting of Chairpersons of the Committees on
Production, Trade and Maritime Affairs
Hellenic
Parliament
Hellenic
Parliament
Hellenic
Parliament
19 March
Joint Committee Meeting: "Priorities for 2014-2020
in the field of Civil Liberties, Justice and Home
Affairs"
European
Parliament
(Brussels)
Inter-parliamentary Conference for the Common
Foreign and Security Policy and the Common
Security and Defence Policy (CFSP/CSDP)
Athens
3-4 April
15-17 June
LI COSAC
Athens
2014
6 -7 April
Lithuanian Presidency
EU Speakers Conference
Vilnius
3. EUROPEAN COMMISSION DEVELOPMENTS2
Banking structural reform proposals
The Commission has published a proposal on structural reform of EU banks. It will
apply only to the largest and most complex EU banks with significant trading
activities i.e. the so-called banks that are too big to fail. It will aim to:
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. This
activity entails many risks but no tangible benefits for the bank's clients or the
wider economy.
2
Summaries drawn as appropriate from Commission documents
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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, the Commission has adopted accompanying measures aimed at increasing
transparency of certain transactions in the shadow banking sector. These measures
complement the overarching reforms already undertaken to strengthen the EU
financial sector.
Subject to agreement between the EP and Council the proprietary trading ban would
apply as of 1 January 2017 and the effective separation of other trading activities
would apply as of 1 July 2018.
The Commission's proposals follow on from the work of the Liikanen Group. The
Group started its work in February 2012 and presented its final report to the
Commission on 2 October 2012.
Energy and Climate goals for 2030
The Commission has proposed energy and climate objectives to be met by 2030. It
has issued a communication on the policy framework for energy and climate and on
energy prices and costs in Europe. The objectives set out below are intended to send a
strong signal to the market, to encourage private investment in new pipelines and
electricity networks or low-carbon technologies. The Commission believes that the
targets must be met if the EU is to keep its promise to cut its greenhouse gas
emissions by 80-95% by 2050. The objectives which have been set at EU level and
not Member State level are;
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

A 40% cut in greenhouse gas emissions (compared to 1990 levels)
To achieve at least a 27% share of renewable energy consumption
That Energy efficiency is to play a vital role, but with no specific target at this
point.
In the Commission's view, the key elements of a new 2030 climate and energy
framework should comprise a Greenhouse gas reduction target at EU level which is
shared equitably among the Member States in the form of binding national targets; a
reform of the Emissions Trading System; an EU level target for the share of
renewable energy and a new European governance process for energy and climate
policies based on Member State plans for competitive, secure and sustainable energy.
Energy efficiency will continue to play a significant role in delivering the Union's
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climate and energy objectives and this will be the subject of a review to be concluded
later in 2014.
In terms of a timeframe the Commission invites the Council and the European
Parliament to agree by the end of 2014 that the EU should pledge a greenhouse gas
emissions reduction of 40% by early 2015 as part of the negotiations which are due to
conclude in Paris in December 2015.
The Commission has invited the Council and the European Parliament to endorse an
EU level target of at least 27% as the share of renewable energy to be consumed in the
EU by 2030 to be delivered through clear commitments decided by the Member States
themselves, supported by strengthened EU level delivery mechanisms and indicators.
The Commission also invited the Council and the European Parliament to endorse the
Commission's approach to future climate and energy policies and its proposal to
establish a simplified but effective governance system for the delivery of climate and
energy objectives.
Ocean energy
The Commission has published two communications on Blue energy and on Blue
growth opportunities for the marine sector.
The communication on Blue energy outlines a two-phased action plan, building to the
greatest possible extent on existing projects and initiatives.
In the first phase (2014- 2016), an Ocean Energy Forum will be set up, bringing
together stakeholders in a series of workshops in order to develop a shared
understanding of the problems at hand and to collectively devise workable solutions.
The forum will also explore the synergies with other marine industries, particularly
offshore wind, in matters relating to supply chains, grid connection, operations and
maintenance, logistics and spatial planning.
Based on the outcomes of the Ocean Energy Forum, a second phase will commence
(2017 - 2020) in which a Strategic Roadmap will be developed setting out clear
targets for the industrial development of the sector as well as a timeframe for their
achievement. This roadmap will be elaborated jointly by industry, Member States,
interested regional authorities, NGOs and other relevant stakeholders through a
structured and participative process. Based on this roadmap and on the outcomes of
the Ocean Energy Forum, a European Industrial Initiative could be developed in a
later phase.
The Commission believes that the EU's blue economy represents 5.4 million jobs and
a gross added value of just under €500 billion per year. The Blue growth
communication has identified five areas where additional effort at EU level could
stimulate long-term growth and jobs in the blue economy, in line with the objectives
of the Europe 2020 strategy. These focus areas are; blue energy, aquaculture,
maritime, coastal and cruise tourism, marine mineral resources and blue
biotechnology. For each of the five focus areas the Commission will analyse policy
options and consider further initiatives.
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Disenfranchisement: Commission acts to defend voting rights of EU citizens
A new Commission communication states that five EU countries currently have
national rules leading to a loss of national voting rights as a result of periods spent
residing abroad (Denmark, Ireland, Cyprus, Malta and the United Kingdom) and sets
out the consequences. On foot of this the Commission has issued guidance [30
January] to the five as it believes that such disenfranchisement practices are also at
odds with the founding premise of EU citizenship which is meant to give citizens
additional rights, rather than depriving them of rights and can negatively affect EU
free movement rights.
The guidance in the form of recommendations issued by the Commission aims to
tackle the problem in a proportionate way by inviting Member States to:

Enable their nationals who make use of their right to free movement in the EU
to retain their right to vote in national elections if they demonstrate a
continuing interest in the political life of their country, including by applying
to remain on the electoral roll;

When allowing nationals resident in another Member State to apply to keep
their vote, ensure that they can do so electronically;

Inform citizens in a timely and appropriate way about the conditions and
practical arrangements for retaining their right to vote in national elections.
4. COUNCIL OF THE EUROPEAN UNION3
Foreign Affairs 20 January
With effect from 20 January the Council suspended certain EU restrictive measures
against Iran for a period of six months. By putting the sanctions relief in place, the
EU has implemented its part of the first step towards a comprehensive solution to
address concerns about the Iranian nuclear programme.
In relation to the Central African Republic (CAR) the Council commended the rapid
deployment by the African Union of the International Support Mission in the CAR
(MISCA) and the support given to it by France's Operation Sangaris and gave
political approval for a possible EU military operation and approved the related crisis
management concept. A donors' conference organized by the EU and the UN
collected € 366 million in pledges for humanitarian aid to the Central African
Republic.
Council discussed the crisis in Syria and fully supported the Geneva peace conference
on Syria on 22 January. It reiterated that the only solution to the conflict is a genuine
political transition, based on the full implementation of the Geneva Communiqué of
30 June 2012 and preserving the sovereignty, independence, unity and territorial
integrity of Syria.
3
Summaries drawn as appropriate from EU Council Secretariat documents
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ECOFIN 28 January
The Council adopted a decision establishing the existence of an excessive deficit in
Croatia. According to data notified by the Croatian authorities, Croatia's government
deficit for 2013 was significantly above the EU's 3 % of GDP reference value and is
set to increase in 2014 and 2015. The Commission's 2013 autumn forecast projects
the deficit to rise to above 6 % of GDP in the 2013-2015 period if corrective measures
are not taken. This is partly due to a severe economic downturn, with economic
activity estimated to have contracted by almost 12 % since the peak it reached in
2008. The Council considered that although the projected excess over the reference
value is exceptional, it cannot be considered temporary. The Commission's autumn
forecast projects Croatia's general government debt to have reached 59,7 % of GDP in
2013. In an unchanged policy scenario, it is expected in 2014 to rise above the EU's
60 % of GDP reference value for government debt. The Council issued a
recommendation to Croatia setting out the measures to be taken to correct the deficit
by 2016 and set a deadline of 30 April 2014 for Croatia to take effective action and to
report in detail on the consolidation strategy it envisages in order to achieve these
targets.
The Council adopted a directive aimed at creating a single market for mortgage
credits. This follows an agreement reached with the European Parliament at first
reading. Member states will have two years to transpose the directive into their
national laws, regulations and administrative provisions.
The Council was also briefed by the European Central Bank on implementation of the
EU's single supervisory mechanism (SSM) for banks. The ECB will take up
supervisory tasks under the SSM on 3 November 2014, subject to operational
arrangements. The regulations establishing the SSM were adopted on 15 October
2013.
Greek Presidency: forthcoming Council and Ministerial Meetings
Feb 2014
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Council
Foreign Affairs
General Affairs
Eurogroup
AGRIFISH
ECOFIN
Competitiveness
Education, Youth, Culture and Sport
Informal Defence
Informal FAC [trade]
For more information contact the Oireachtas National Parliament Office, Brussels
Contact: Derek Dignam
Email: derek.dignam@europarl.europa.eu
Phone: 0032 2 2842038
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