After extensive consultation instigated through the Commission's Communication
on an Internal Market Strategy for Services issued in December
2000, the Commission published in July 2002 a Report on the State of
the Internal Market in Services, including an inventory of barriers (see IP/02/1180
and MEMO/02/178). The Report concluded that a decade after the Internal
Market was supposed to be completed, European
businesses and consumers felt that
they were still losing out because of the huge gap between
the vision of an integrated European economy and the day to day reality
they experienced. Therefore, a Directive covering the Internal Market
for services as a whole was required. For further details and explanations, see
also MEMO/04/3. The full texts of
the proposal and impact assessment are available at: http://www.europa.eu.int/comm/internal_market/en/services/services/index.htm
The
European Union is discussing plans to ensure all products manufactured in the EU
carry a "Made in the EU" label - a move that could end traditional
national origin marks. The European
Commission believes such a marking would promote the EU's image abroad, improve
consumer information and fight counterfeiting. But there is certain to be fierce
opposition from many member states and business groups that fear industry will
be saddled with more costs and bureaucracy and restricted in promoting products
on the basis of national origin. Brand experts have criticised the plans,
arguing that consumers have few positive associations with the EU. They say
national origin markings can be valuable in branding and promoting products, and
that it is unlikely that a "Made in the EU" marking would carry the
same cachet as a "Made in
I revealed that the 118
directory enquiries fiasco originated entirely from EC legislation. For
months this was denied by the relevant
The Commission proposes that the exemption shall be removed, and
proposes that VAT shall be charged at the
standard rate for all items of mail, over 2 Kg. in weight, while at the same
time giving Member States the option of applying a reduced rate of VAT to items
of addressed mail weighing less than 2 kilos. (Europarliament
15 December 2003
EU Directive 2001/29/EC on the
harmonisation of certain aspects of copyright came into force in June 2001
and should have been implemented by all member states by
When receivers went into the
Appledore Shipbuilding yard in
RED tape is costing small firms billions of
pounds in advice and fees. Small and medium
companies pay £96 billion each year to comply with a range of employment and
health and safety laws, according a survey by employment law firm
Europe's
big three, Germany, France and the UK, have secretly formed an "industry
alliance" to strengthen the interests of their industry
in future EU legislation, reports the German news magazine, Der Spiegel. The
countries, who have been working together for the past three months, want, in
the future, to introduce an "impact analysis" for all EU legislation
that affects businesses and companies. Among their other main goals is to
strengthen the Competition Council (they propose that EU competition ministers
should consult with each other on all legislative proposals) and a common
approach on as many industry-relevant political questions as possible. The
European Commission has yet to be formally informed of the trio's activities.
The proposed EU consumer
credit directive is aimed to cause the most damage to the
The Treasury is staging a
fight against European Union plans that it fears could force the government to abandon
its promise to introduce cheap, off-the-peg savings products this summer. Ministers
are concerned that the EU's proposed investment services directive would bar the
sale of any savings product without an adviser first having questioned the
potential investor in detail to check whether the product was suitable. This,
they fear, could clash with the government's promise to unveil a range of
simple, low-cost savings products that could be sold without advice and with a
minimum of paperwork. The Treasury
is soon due to publish its proposals for a range of products that would comply
with recommendations by Ron Sandler, author of the government's review of the
British savings industry. A core
principle of the Sandler products is that charges would be capped at 1 per cent
and investors would not have to pay for advice. Theresa
Villiers, the Conservative MEP, said: "The directive would threaten these
financial products. A suitability test would make stakeholder products
uneconomic. "It [the
directive] could spell the end of execution-only brokerage and simplified
products." (Financial Times
A draft law by the European
Union to address sex discrimination may force insurance companies to stop using
gender as a basis for calculating premiums, the Financial Times said today on
its Web site, citing the legislation. The law seeking to address sex bias
outside the workplace is in the final stages of preparation in the European
Commission, the EU's executive arm, the FT reported. Drawn up by Anna
Diamantopoulou, the EU social affairs commissioner, it would bar insurers from
calculating premiums or annuity rates on the basis of gender, the FT said. The
European insurance industry is lobbying against the law, it reported. The legislation
would ban stereotypical portrayals of men and women in advertisements and the
media, the paper reported. That would be open to interpretation by law
courts, the FT said. (Financial Times
EU
Commons debate Wednesday
Exports
to the EU from the
New figures released by German business consultancy Creditreform show the impact of the euro on business. There were approximately 39,000 business insolvencies in 2002 in France - an increase of nearly 11 percent on 2001. Germany was not far behind, with nearly 38,000 of its businesses becoming insolvent since the launch of euro notes and coins. Both countries suffered well over twice the number of bankruptcies as the UK, where 16,750 business went bust in 2002. If individual bankruptcies are also taken into account, Germany leads the way in the EU with 82,500. According to the Frankfurter Allgemeine Zeitung, almost 600,000 jobs were lost in Germany in 2002 due to insolvencies. Of the ten biggest company insolvencies in the EU in 2002 by turnover, seven were German. The Head of Creditreform said that he expects the situation to deteriorate further in Germany. He expects over 90,000 insolvencies in 2003, including over 42,000 businesses to go bust. Across the EU, the number of business insolvencies has increased by over 10 percent in 2002. Creditreform noted that more businesses went bust in the EU last year than actually exist in Norway. ("No" bulletin 13/2/03)
On Jan. 14, at the end of a two-day trade visit to Morocco, French Foreign Trade Minister Francois Loos chastised Rabat for seeking a free-trade deal with the United States, saying, "You cannot say you want a closer partnership with the EU and at the same time sign a free-trade agreement with the U.S., You have to decide which one you choose." Morocco is due to begin FTA negotiations with the United States on Jan. 21. For the most part, this statement is simple hypocrisy. The EU is a master of using trade access to extend its commercial and political reach. Trade links between the EU and the former colonies of its member states -- as enshrined in the 1975 Lome Accords -- successfully held 69 African, Caribbean and Pacific states in Europe's orbit for a generation. The EU regularly attempts to cement trade deals with states that Washington considers within its sphere of influence. Brussels penned a free-trade agreement with Mexico -- one of America's NAFTA partners -- in July 2000. The union also tried aggressively to complete a trade deal with Mercosur -- the Latin American customs union that includes Argentina, Brazil, Paraguay and Uruguay -- until the Argentine collapse in December 2001. ( Stratfor.com 16/1/03))
In the Economist's annual "The World in 2003" Britain still has the World's 4th largest GNP. Using forecast exchange rates for 2003, the figures are :-
|
Total Per capita |
|
$ bn $ |
|
1.United States 10,885 37,600 |
|
2.Japan 3,942 30,990 |
|
3.Germany 2,392 29,210 |
|
4.Britain 1,771 29,360 |
|
5.France 1,677 27,890 |
|
6.Italy 1,422 24,700 |
|
7.China 1,388 1,070 |
|
8.Canada 793 25,090 |
|
9.Spain 763 18,710 |
(30 Dec 2002)
The European Union has begun proceedings against member states which have agreed to co-operate with a controversial US proposal on container security. The Commission earlier this week announced that it would be taking action against the Netherlands, Germany, Italy and France for signing agreements concerning the US’ Container Security Initiative (CSI) . The US describes the CSI as being "designed to detect and deter terrorists from exploiting the vulnerabilities of containerised cargo" but has been heavily criticised by the Commission as having trade distorting influence. The US strongly disputed these claims, with US Customs Service Commissioner Robert C Bonner stating that he understood the EU’s worries but he added "there is no evidence, however, that CSI has caused any trade distortions." There are hopes in Washington that their announcement to expand CSI to all European ports that ship significant numbers of containers to the United States, by implementing CSI at 11 additional European ports, they will be able limit the political fallout. (EUOBSERVER 27.12.2002)
The CBI publishes a list of its "top 10" regulatory threats - the EU agency temps directive; EU chemical testing rules that will cost British firms £5 billion; the government's review of the employment relations act (note -heavily affected by EU); changes in business rates; EU restructuring and redundancy proposals; UK government proposals for elected (EU) regional assemblies; the EU prospectus directive; the EU transparency directive; British implementation of the EU information and consultation directive; and the EU general duty to trade fairly. (Sunday Times 24/11/02):
The proposed EU Consumer Credit Directive outlaws section 75 of our Consumer Credit Act, which allows consumers to demand redress from their credit card company if goods and services bought with their plastic are found to be faulty or otherwise unacceptable. (Sunday Telegraph 17/11/02)
More than a third of Europe's $4,000bn pension fund market is closed to fund managers. There are still many parts of Continental Europe - notably Germany and the Netherlands - where the running of pension assets by third party fund managers is not open to competition. (FT Fund Management 11/11/02)
THE London Stock Exchange (LSE) reasserted its dominance in Europe's financial markets, emerging as the exchange of choice for three out of four companies seeking a listing in the six months to the end of September. Although the number of IPOs fell 24 per cent during the period to just 128, as tumbling share prices deterred all but the bravest of potential issuers, the exchange increased its portion of the new issue market by 58 per cent. Clara Furse, chief executive, said the LSE had benefited from the UK's relatively light regulatory regime as well as an aggressive international marketing campaign intended to increase the profile of the junior AIM market for smaller companies. (The Times 8th November 2002)
UK Prime Minister Tony Blair and his Swedish counterpart Goran Persson this week wrote in a joint article in The Times of London that it takes 12 times longer to set up a business in the EU than it does in the United States -- and costs four times as much. The two prime ministers declared that if the EU could only match the United States on productivity and employment (there are 13 million jobless in the EU) then European citizens would be $7,000 a year better off. (CNN 18 Oct 2002)
Financial services companies are facing an increasing and expensive regulatory regime at a time when market turbulence is forcing them to cut costs, a senior industry leader warned yesterday. More than 40 changes to the industry's rules are to be introduced by 2005 as part of the European Union's single market drive, according to Angela Knight, the chief executive of the Association of Private Client Investment Managers and Stockbrokers. She told the association's annual meeting in Dublin: "Regulation is driving business; no longer is business driving regulation. Increasing regulation is resulting in costs being added to business at a time when the ability of any firm to generate income is dramatically reduced. I don't know of the [annual meeting] of a financial firm where the chairman has failed to complain about increasing regulation and its costs." Critics have described the EU drive as a "wall of regulation". Planned legislation spans rules on takeovers and prospectuses to the treatment of reporting of earnings and savings by firms with clients in a different EU country. (October 19, 2002 The Guardian)
Private sector interest in developing Britain's poorest areas has been undermined by the inadequacy of the government's response to a "disastrous" European Union decision to outlaw some types of regeneration funding, a Commons inquiry will today conclude. Inner-city regeneration in cities such as Manchester and Liverpool was kick-started in the 1990s by a government scheme that provided funding where development was considered commercially unviable without such aid. But the scheme, the partnership investment programme (Pip), was banned by the EU in 1999 as unlawful under competition rules on state aid. Since then, the government has tried to introduce schemes acceptable to the EU, including a new fund for housing, but momentum has been lost, according to the report by the Commons committee on transport, local government and the regions. The loss of the Pip scheme has had a "hugely damaging effect on regeneration", the committee says. "What we have now in its place is a real mess, and the department must accept some responsibility for that." The report adds: "Two and a half years of urban regeneration activity and outputs will have been lost by the time the new housing scheme is approved. This will be compounded by ...a loss of private sector interest and willingness to take part in regeneration, with many developers closing their regeneration arms." Developers are now less inclined to develop difficult sites, the report says. Private developers say that regeneration work, including the restoration of historic buildings in northern England and the Midlands in particular, has been in limbo since the EU ruling. (Financial Times Jul 31, 2002)
The Financial Services Authority and a leading shareholder group on Tuesday said it was not too late to save British corporate governance rules from being abolished by a European Commission plan. The City regulator and the Association of British Insurers, which represents many large investors, said they remained hopeful that Brussels officials could be persuaded to change the draft prospectus directive. The European plan would abolish rules such as disclosure of executive pay and the right of shareholders to vote on large share issues. "It is late in the day on the Commission's timetable," said Ken Rushton, director of listing at the FSA. "But I am always hopeful. Perhaps it wasn't on their radar screen before." The ABI on Tuesday wrote to the Commission in a last-ditch effort to change the directive. Peter Montagnon, head of investment affairs, said investors were hoping UK corporate governance rules could be extended across Europe. (Financial Times Jul 31, 2002)
In 1945, Nye Bevan said "This island is mainly made of coal, and surrounded by fish. Only an organising genius could produce a shortage of coal and fish at the same time". Organising genius? Step forward the EU. As a result of gaping holes in European state aid rules, that allow Germany to pay massive subsidies to its miners, Britain's remaining mines are uncompetitive, and we are now a major coal importer. And of course the Common Fisheries Policy (CFP) has allowed Spanish fishermen to hoover up all the fish in the North Sea, creating an ecological disaster area in what were once the world's richest fisheries -- and a prime British national asset. (R Helmer MEP newsletter 3/6/02)
EUROPE'S £8 billion-a-year art market has lost its supremacy to the United States because of high taxes and stifling European Union bureaucracy, according to a report published yesterday. Since 1998 America has increased its share of the international art market by seven per cent and last year overtook Europe with a lead of 47 per cent to 45 per cent. The British market, by far Europe's largest, has suffered badly. Its share dropped from 30 per cent in 1999 to 25 per cent last year. The survey is the most detailed study of Europe's lucrative art market. It was commissioned by The European Fine Art Foundation, a consortium of dealers which runs the world's most important art fair, which opens today in Maastricht, Holland. The report, produced by a firm of US analysts, condemns "the failure of the European Commission and many governments to recognise the art economy as a significant source of employment and export earnings". It says that last year the European market's sales totalled almost £8 billion, that it directly employed 73,600 people and indirectly created about 61,000 other jobs through spending £1 billion on ancillary services. Despite this, "European taxes and regulatory structures have led to a widely held perception that Europe is a complicated, costly place to do business". Because of this, trade is being lost to the US where taxes are lower, the general climate more favourable to business and where many wealthy art collectors live. The report is particularly critical of the introduction of droit de suite, a sliding-scale levy on modern art sales, which has been forced on Britain by the commission. It will be introduced throughout the EU by 2006. This drives business outside the EU to America and Switzerland, the report says, adding that art sales worth almost £300 million could have been lost if the levy had applied in Britain in 1998. The report also criticises the level of Vat payable on art and antiques in Europe and accuses the commission of ignoring its own study which concluded that this was driving business elsewhere. The paperwork on EU art taxes now costs dealers £40 a time, slows transactions and leads to deals being done in countries where the bureaucracy is less cumbersome. Anthony Browne, chairman of the British Art Market Federation, said: "The figures really do speak for themselves. They make it clear that Europe has shot itself in the foot." (Daily Telegraph 08/03/2002)
European business organisations are trying to block proposals circulating in the Commission which would limit companies' rights to make workers redundant and require job losses to be considered in merger cases. Digby Jones, Director-General of the CBI, said he had written to all 20 European Commissioners warning that the suggestions were "highly damaging". The paper, drawn up by Social affairs Commissioner Anna Diamantopolou questioned whether mergers and acquisitions are always justified, and argues that the social frameworks for dealing with them are inadequate. The paper suggests that companies would be forced to justify job cuts against alternative options such as cutting investment or profits (FT, 1 November 2000).
Under the EC proposal on competition, the ostensible aim of this regulation was to improve the enforcement of the EU rules on competition - in the context of the single market where all sorts of market abuses continue to exist. As it stands, enforcement of the competition rules is a Commission monopoly which - because Commission resources are limited - means that only a very few cases are processed. The intention is that some of the powers should be delegated to member states so that national competition authorities and national courts can deal with cases of anti-competitive behaviour. On the face of it, this looks like an admirable piece of decentralisation, and that is how the proposal was sold to the European parliament. But, as always, the devil was in the detail. In carrying out their duties, the Commission wants national competition authorities to form a 'network' which must work to Commission guidelines, must apply Community law and must obey European Court of Justice decisions - all under the supervision of the Commission which reserves the right to take over any investigation or re-locate it to another member state. By this means, the Commission will take over control of the civil servants in the different member states. They will be paid salaries by the member states, housed in government buildings paid for by the member states, and will use facilities provided by, and paid for by member state governments. They will work on competition issues, but not for the member states which finance them. Instead, they will be part of the 'network' working for the Commission, implementing Community law. Prodi is planning is the greater use of regulations as opposed to directives. It was, therefore, no coincidence that the proposals were in the form of regulations. The significance, of course, is that directives must be transposed into the national laws of each member states before they take effect while the regulations take effect the moment they are 'done' at Brussels. While the transposition process at least requires input from the legislatures and parliaments of the member states, the regulation process completely sidelines both, as EU regulations do not require the assent of either. The Commission is taking over the reins of the legislative process, making our parliament even more redundant. As to enforcement, this goes hand-in-hand with 'cooperation'. As with the competition proposal, enforcement authorities in each of the member states are to be re-orientated so that they no longer work for their employing nations but act as part of a 'network', directly under the control of the Commission, to whom they become responsible. (Letter from Strasburg RAENorth 10/9/01)
The UK's nominal GDP in 2000 was $1,434bn against Germany's $1,922bn – so they are one-third bigger than we are. GDP per head is higher in the UK, $24,034 against $22,263. Our population is smaller at just on 60 million against 82 million but our labour participation rate is a couple of percentage points higher at 76.2 per cent. Since we also have much lower unemployment, the proportion of people we have in jobs is 6-7 per cent higher. Our labour productivity is lower than Germany's and we do not have its success as an exporter. But while there is certainly a productivity problem in the UK, to some extent this is an inevitable result of higher employment levels. If you make the least productive 5 per cent of your workforce unemployed the average productivity level of the country rises. As for Germany's success as an exporter, that may be as much a curse as a blessing: exports account for 35 per cent of GDP now against 24.5 per cent as recently as 1995. But that is the result of stagnant demand at home. Given that German unemployment is now 9.6 per cent, and never fell below 8.6 per cent even at the peak of the last cycle, you can understand why German consumers are reluctant to spend. You could make a projection that the various structural weaknesses of the German economy suggest a potential growth rate of, say, 1.75 per cent against, say, 2.25 per cent for the UK. If that were right, given the gap at the moment, we would not overtake Germany until the middle of the century. If the gap were nearer 1 per cent we would pass them about 2020. Now try another approach: look at demography. The World Bank projected of the size of the German and British workforces over the next half-century. The German workforce is already declining, whereas ours grows for another decade. It is perfectly possible that we could have more people in jobs than Germany by 2030. What can Germany do about this? There is scope for structural reforms to the tax system and the labour market, and Tony Blair is urging this on Germany now. But they may not be enough if Germany persists with the wrong interest rates. Since the mid-1990s, when the Bundesbank started to align German interest rates with those of the rest of Europe, and particularly since the European Central Bank took over monetary policy, European interest rates have been too high for Germany. ABN Amro calculates that rates should be about 1.5 per cent now against the ECB rate of 3.25. (Independent News 03 March 2002)
Gerhard Schroeder has said that he will block further attempts to liberalise European takeover laws. Proposals for pan-EU regulations governing takeovers would challenge the so-called Volkswagen law in Germany, which protects the German carmaker from takeovers. Schroeder told a workers' gathering at a VW plant in Lower Saxony, "any efforts by the Commission in Brussels to smash the VW culture will meet the resistance of the federal government as long as we are in power" (Handelsblatt, 27 February). Yesterday, Walter Rieser, Germany's Labour Minister announced plans to make it harder for businesses in Germany to cut costs by outsourcing. The new law, which goes beyond EU guidelines, will give employees affected by outsourcing decisions the right to contest them for an unlimited period. ("No" bulletin 28/2/02)
Despite repeated claims that British manufacturing would be better in the euro, James Dyson this week announced plans to shift production of his vacuum cleaners not to the Eurozone, but to the Far East. He also admitted that, "I dare say we would have had to make the same move if we were in France or Germany." He went on, "All my competitors have operations in China and it is about the cheapest place on earth for manufacturing" Locking into the euro at the current rate of exchange would perpetuate the problems he complains about. (Times, 6 February 2002).
National and linguistic sensitivities were much in evidence as European Union internal market ministers failed again to reach agreement on the long-stalled community patent. Held up as one of the key elements of the EU's drive to become the world's most competitive economy by 2010, the creation of a one-stop shop for European inventors has fallen prey to the sort of arguments that make the achievement of economic reforms identified at last year's Lisbon summit seem a distant goal. The dispute over the patent serves as an example of the sort of difficulties the European Commission faces as it strives to persuade governments of the need for far-reaching structural reforms. There have been successes in achieving the much-heralded "Lisbon agenda", but delays in agreeing the patent, energy liberalisation and the 42-point financial services action plan mean that progress has been frustratingly slow. The philosophical differences between countries are often serious enough in themselves, without matters being complicated by sensitivities over the EU's 11 official languages. The irony of the patent dispute is that Spain has been the most vociferous opponent of the original plan to limit community patents to just English, French and German. Madrid has blocked all attempts at compromise while at the same time espousing the importance of the reform agenda. Besides narrow issues of national pride, Spain has been concerned to safeguard the lucrative market for Latin American patents. It had wanted a significant part of patent applications to be translated into all EU tongues, so its acceptance on Thursday of the Belgian compromise did mark a breakthrough. With Spain due to take over the chair of EU meetings next month, it will quickly become clear how attached it really is to the Belgians' most recent effort to break this embarrassing impasse. (Financial Times December 20 2001)
An analysis of British Trade by Roger Bootle, showing that 43 percent of our trade is with the Eurozone - and this proportion is likely to fall. The pro lobby's claims re trade suffered another setback in December with the publication of the latest figures from Customs and Excise showing that far more of our trade is done in dollars than euros. ("No" Bulletin 20/12/01)
There is strong industry opposition to a European Commission proposal to outlaw the distinction between A- and B-shares. The proposal, which could put ownership and control of industry under pressure, includes an end to companies dividing shares into heavy voting carrying A-shares and light voting carrying B-shares. "If the protection that exists within having A- and B-shares was removed, then I could imagine that there soon would be a hostile take-over bid for Novo Nordisk. We are extremely attractive to many of the big international pharmaceutical companies," said Lars Rebien Sorensen, executive director in Denmark of the largest pharmaceutical company Novo Nordisk, according to the Danish newspaper Jyllands Posten. The European Commission's proposal has been around for years, but until recently it was considered dead in the water. The proposal has now once more come about, despite a Commission directive on hostile take-overs earlier this summer being dropped after it failed to get European Parliament support. Despite this, the Commission set up a high level group of company law experts. The group is set to advise the Commission on a new directive on company take-overs and company law within the European Union. (EUobserver.com 19.11.2001)
Sir, We the undersigned, and a further 53 chairmen, chief executives and directors of smaller quoted UK companies, are deeply concerned about the European Commission proposals on the prospectus to be issued when securities are offered to the public or admitted to trading. As currently written, these proposals, which are being "fast-tracked" through a peremptory consultation process, would add an additional Pounds 150,000 each year at least to the costs of every one of our companies. At a time when businesses are struggling against difficult conditions, these ill-thought-through proposals will massively increase the burden of red tape. While the aim of creating a "single passport" prospectus for those companies wishing to raise money in more than one European Union country is a laudable one, these proposals in practice would be little short of disastrous. The directive would impose a uniform, higher level of regulation in a one-size-fits-all regime, which means more red tape and increased costs for all those companies, like ours, that have no interest in raising money outside our home market. Moreover, by insisting on a higher level of regulation across the board, these proposals would kill off those more lightly regulated markets, such as the Alternative Investment Market, that enable start-up businesses to grow and prosper into the successful giants of tomorrow. We call on the Commission to stop and think again. Such a "single passport prospectus" must be made optional, to be used by only those companies that need it. Bob Holt, Chairman, Mears Group Andrew Moore, Chairman, 10 Group Mike Mealey, Chairman, Pubs'n'Bars For a list of the 56 signatories, see the Quoted Companies Alliance website, www.qcanet.co.uk (Letter to: The Financial Times 16/11/01)
EADS is a microcosm of the problems faced by a European Union. The shine is wearing off Europe's most ambitious attempt to restructure and rationalise its defence and aeronautics industry. Deep cracks are appearing in the venture's management and financial prospects. This puts at risk the future of the project, at least in its present form. The European Aeronautic Defence and Space Company was born in July 2000, with great fanfare, France, Germany and Spain announced the merger of the dominant components of their defence and aerospace industries. EADS was supposed to rationalise military procurement and reduce its cost to Europe, while reinforcing Airbus, Europe's challenge to the US in the civil aircraft industry. Instead, the venture has exposed the obstacles, contradictions and vested national interests that so often dog European co-operation. EADS was unravelling even before the terror attacks on New York and Washington, which have had a dire effect on the world airline industry. With its joint Franco-German chairmen and joint chief executives, EADS "is a double-headed monster", says another French government official. The group's ownership also reflects this divide. The value of their investments has collapsed as EADS's share price has slumped this autumn on the Paris, Frankfurt and Madrid stock exchanges. Franco-German rivalry also occurs lower down the company, where merit was supposed to be the criterion for appointments. The difficulties extend to the day-to-day rhythm of business, too. Germans have found it difficult to deal with their French partners. For their part, the French blame the Germans for slow progress on important developments and in reacting to the current crisis." The Germans must accept European integration. They are still too nationalistic" explains a French government official. "The real issue is that both the French and Germans want to run the show," says a British aerospace official. Another senior EADS manager says nationalistic pressures have resulted in the loss of important contracts and disputes, delays and cancellations in promising programmes. Yet the French and German partners claim some notable achievements for the company. Without EADS, they say, Airbus could not have become an integrated company managed by a single chief executive. Europe's satellite activities have been strengthened around the Astrium consortium. The helicopter business has been successfully integrated through Eurocopter. So far, Airbus remains committed to its ambitious Dollars10.7bn programme to develop the A380 double-decker, designed to challenge Boeing's dominance of the jumbo airliner market. Mr Forgeard, the former head of Matra's defence business, warned in Dubai this month that Airbus "could be cash negative for a period" if the general situation did not improve. According to those present he even mentioned the word "bankruptcy". Even the A400M military transport hangs in the balance, with a risk that it attracts too few orders to generate a profit "We must arrive quickly at a single leadership and a strong independent corporate culture," stresses one senior insider. "I don't know exactly when this will happen but current events will accelerate the integration process. If not, the consequences will be dire." (The Financial Times 16/11/01)
GORDON BROWN could be heading for a serious row with senior City figures, including Clara Furse, chief executive of the London Stock Exchange, over an EU directive that threatens to abolish the Aim smaller companies market. The EU Prospectus Directive will harmonise listing rules across Europe so that any company can raise money on any stock exchange. But there are fears the additional red tape will add £80,000-£100,000 to the listing cost for each company. The directive will close the loopholes that make Aim (the Alternative Investment Market) attractive, including the nominated adviser system, whereby financial advisers are responsible for obeying the rules. Mrs Furse backs the directive for big companies, but does not see why it should apply to small companies, as they do not need to raise capital across Europe. This is a serious issue. Aim has been very successful and if it is abolished it will increase the costs of raising capital for small companies considerably. Small companies are the lifeblood of the economy." There was not much the Treasury could do as the directive can be approved by a majority in Brussels and the UK does not have a veto. (Daily Telegraph 03/09/2001) Money Telegraph
A battle over proposals for harmonising the capital markets in EU is emerging, as banks and securities firms across Europe accuse the European Commission of failing to consult them and of ignoring recommendations they were asked to submit. According to the Financial Times, banks and securities firms are building opposition to the directives seeking harmonisation of EU capital market regulation, released by the European Commission last week. Bankers say the market abuse directive, for instance, presents the risk of transferring powers to a new securities committee in Brussels, at the expense of national regulators, reports the Financial Times. They also point to the failure of the European Commission to comply with the Lamfalussy report on security markets. The report, presented earlier this year, called on the European Commission to set standards of transparency and consultation with banks and securities firms. (EUobserver.com 11.06.2001)
Since Denmark, on the 25 March, joined the Schengen agreement Danish export activities across the whole world have been severely inconvenienced by the new visa procedures, writes the Danish newspaper Jyske Vestkysten. Where previously company branches abroad could obtain visa for local employees for company visits to Denmark within a couple of hours or days it now can take up to 12 weeks. The reason for the delay is that Danish consulates no longer are allowed to issue visas. At the same time Danish embassies are forwarding visa application to the Danish Immigration authorities since they fear breaching Schengen rules. In the Danish Immigration Authority application forms are pilling up, according to Jyske Vestkysten. (EUobserver.com 13.08.2001)
Government plans to reinvigorate public services with private investment are under threat from a Brussels directive that will make the current Private Finance Initiative (PFI) illegal. The Government's flagship PFI scheme will be made unworkable if a European Union directive, designed to cut corruption in public contracts, becomes law in 2003. Britain's biggest contractors, including John Mowlem, are warning that the PFI scheme will be "brought to a halt" by the EU plans, which will make the PFI too expensive to operate. The UK's building companies have told the Government that they will be forced to add millions of extra pounds to pursue a PFI bid under the new EU rules, thereby making the scheme unviable financially. John Bromley, European affairs director of the Construction Confederation, said that the directive would deter many contractors from working on public-sector deals. "You couldn't risk losing £6m on a bid. This is a serious problem," he said. Next week, a delegation from the CBI will travel to Brussels to lobby against the directive, which is passing through the European Parliament and the Council. The extra costs created by the proposals will make the Government's calculations on investing £200bn on improving public services in the next 10 years unworkable. Under the current PFI rules costs are cut by negotiating the details of new hospitals, roads and prisons with one successful contractor. But the directive will mean that contractors will not be allowed to frame the design, building and running of a hospital, prison or road scheme in consultation with the Government after it has gained preferred bidder status. All bidders will have to produce complete schemes to "stop anti-competitive behaviour". (Independent 14 July 2001)
Cigarette companies have criticised an EU draft law which would ban almost all tobacco advertising. They say it would restrict their right to communicate with adult consumers. The EU Health Commissioner, David Byrne, said that, if approved by national governments, the measure would end tobacco advertising in newspapers and on the radio and internet, as was sponsorship. (Telegraph 2/6/01)
The European Commission, which drastically wants to reduce smoking with a new regulation, has proposed to substantially increase the support to tobacco growing within the EU. Euro commissioner Michaele Schreyer has reserved an amount of Hfl 2.2 billion (UKP 629 million) for the tobacco growers in the proposed budget, nearly as much as for the BSE crisis. Euro parliamentarian Albert-Jan Maat (European peoples party/CDA) doesn't accept the double-standard approach of the European commission. "It is like mopping up with the tap still open. We have laid down in the European parliament that every packet of cigarettes must carry "shocking" photo's. A couple of hours later, the commission proposes to award the highest subsidy per hectare that exists in the European union." (Dutch newspaper Algemeen Dagblad, 17 May 2001)
A report for the No campaign by David Lascelles, director of the Centre for the Study of Financial Innovation, says the City has extended its lead over Frankfurt and Paris since the euro's launch. New euro business had concentrated in the City, and the number of European Union financial institutions in London had risen by almost 50 per cent. It argues that success is determined not by proximity to markets but by the trading environment - the regulatory regime, infrastructure, the advantage of size, and a critical mass of skilled and qualified staff. Exporters are becoming less positive about the merits of joining the euro, according to a survey, which questioned 350 companies from manufacturing and services sectors. In the survey, organised by the NCM credit insurer and Leeds University Business School, 51 per cent of managers from exporting companies said they would reject joining the euro in a referendum. (Financial Times Jun 28, 2001)
The European Commission will propose legislation to streamline supervision of the EU banking and insurance sectors following the rapid pace of consolidation in the industry. But the proposals will be contested by the European banking industry which argues they will add a new layer of bureaucracy. "It is fairly clear to us that it will increase the administrative burden quite dramatically on some institutions but won't deliver any prudential benefits," said Mike Verknocke at the European Banking Federation in Brussels. The Commission says EU countries need to develop a more consistent approach to financial regulation as the financial services sector is consolidating rapidly. This leads to the creation of large groups with activities in banking, investment services and insurance that are often covered by separate regulators. Brussels says the new legislation, which still has to be approved by EU governments and the European parliament, will enhance financial stability. But the European Banking Federation says the directive has been rushed through and will take EU legislation a step further than its competitors in the US and Japan. (Financial Times 26/4/01)
Denmark is a country of small islands and small ferries. An EU directive aims at cheapening the running of public transport by inviting tenders, but no such results have emerged. On the contrary, the directive has burdened local authorities with extra costs. On each of the 23 ferry routes, the municipal authorities have spent between £4000 and £8000 on detailed descriptions of the routes according to the EU rules. This bill will be paid by the citizens, writes Politiken. On 20 out of the 23 routes, only one company gave a bid. And in no case were the alternative bidders able to compete with the local companies that were already running the ferries. "It is not possible to create competition in such a small area. The only result is more spending on administration," says Henry Larsen, president of the organization of small islands. And Jacob Buksti, Minister of Transport, says, "we have always said that there should be a limit to the size of routes that must be offered for tenders. An expert committee has now been established by the EU Commission in order to make an evaluation of the size of small ferry routes to be offered for tenders. Likewise, the EU directive dictating that enterprises for municipal authorities costing more than the equivalent of £1.000 should be offered for tenders has meant augmented costs without any cheapening of prices, writes Danish daily Politiken. (EUobserver.com 26/4/01)
BRITISH firms are struggling to cope with an avalanche of costly new regulations imposed by the European Union and now face extra demands for worker participation in management decisions. This contradicts Government claims that Europe is genuinely embracing the free market. Ruth Lea, the policy chief for the Institute of Directors, said: "We're in despair. We're seeing the re-regulation of the UK labour market, undoing all the gains of the last 20 years. It may be disguised right now because the economy is buoyant but, as the climate changes, we'll see the rocks underneath." (Daily Telegraph 16/3/01)
The next round of the World Trade Organisation's talks on creating a future where multinationals can profit with a minimum of accountability is beginning in Geneva. If the critics are even half-right, the negotiations for the General Agreement on Trade in Services (Gats) could not be more serious. They may well render fruitless what attempts there are in the third world to foster native industries and to protect the environment. There is at least a reasonable chance that Gats will enforce the privatisation of European schools, hospitals and social services. There is a liberal-leftish fantasy that the EU is a social-democratic utopia that will save us from American capitalism. The illusion can be sustained only by forgetting the enormous advantages of the single currency to corporations, and by passing over the fact that European-based multinationals are just as keen on Gats as their American counterparts. The WTO has expanded the definition of "services" with the rapacity of an imperial lexicographer to cover just about everything. Health, education, energy, food supply are no longer the basics of life in the WTO's dictionary. They are "services"; mere fripperies on a par with pastry chefs and hairdressers. Once a country agrees to liberalise any "service", it will have made an irrevocable commitment. In a few years, every voter in Britain may, for example, deplore the ability of US companies to take over British hospitals under WTO rules, but there will be nothing they or their elected representatives will be able to do about it. There is no doubt that American multi-nationals are driving the current push in Geneva to open up private and public sectors irreversibly and guarantee that, in the words of the WTO's statement of principle, democratic regulation can be allowed only if it is the "least trade restrictive" and "not more burdensome" than is necessary. Last year, it seemed evident that Europe was willing to give up public services in return for a free hand for its multinationals in the third world. Pascal Lamy said he believed that health and education were "ripe for liberalisation", while the European Commission dismissed concerns that Gats would prevent representative governments regulating by saying: "Gats is not something which exists between governments. It is first and foremost an instrument for the benefit of business." Although the citizens of the Union are not allowed to know what is being done in their name, the EU is being very free with their money: the Trade Directorate gave the European Services Forum a grant of 49,290 euros (£30,000) in November to meet the cost of a conference on Gats. ()New Statesman 7/4/01)
The only crumb of comfort was a Nice summit endorsement of the Lamfalussy report on the regulation of European securities markets. This was hailed as a landmark agreement to create a single financial market. In fact, it is no such thing. All the summit has approved is the establishment of two new committees that might speed up the legislative process and even that procedural change could come unstuck in the face of opposition from the European Parliament. The task of actually agreeing to market-opening measures in finance still has to be tackled; and the Lamfalussy report deals only with wholesale, not retail, finance. Genuine cross-border banking or insurance-selling remain years away. (Economist Mar 29th 2001)
The Candidlist web site has introduced a "Roll of Shame" listing companies that have donated money to organisations that campaign for the scrapping of the pound. It takes its inspiration from the anti-apartheid boycott of companies supporting racial segregation. (May 2001)
THE Franco-German alliance came back to life at the EU summit in Stockholm yesterday, dashing Tony Blair's hopes for a breakthrough on economic reform. Gerhard Schröder, the German Chancellor, threw his weight behind the French government in a dispute over deregulation of the energy sector and over French demands for emphasis on the "social dimension" of the European economy, arguing that it was unreasonable to expect France to make political concessions before elections next year. The only major success was a deal to push through an EU-wide financial services structure that will allow European companies to raise capital as efficiently as American competitors. But the proposals will require the backing of the European Parliament, which has already said that it cannot accept the current draft. Most of the free market proposals put forward by the European Commission for resolution at the summit remained deadlocked. These include proposals for a single EU-wide patent considered essential to save high technology start-up firms the costs of taking out 15 patents for each invention. The "open skies" proposal for a liberalisation of air travel is still blocked because of a secondary dispute between Britain and Spain over Gibraltar. Post Office liberalisation is also stalled, meaning that parcel and document delivery will continue to be less efficient in Europe than America. (Daily Telegraph 24 March 2001)
U.S. computer giant Microsoft has good reason to fear the European Commission; already embroiled in a nasty confrontation with the U.S. Justice Department, which is seeking to break the company in two, Microsoft now faces a bureaucratic mandate that could force it to hand its Windows source code to Sun a move not even the Clinton Justice Department would ever have contemplated. The European Commission's rationale: force Microsoft to hand over the code to its competitor so all servers not merely those running Windows can work with PCs. As Wired commented, "It would be like making Coke hand over its secret formula to Pepsi." A Microsoft insider told Wired that if the Commission orders his company to give Sun the code "Microsoft might well pull out of the server business in Europe." Although the stated aim of their anti-monopoly programs is to ensure free competition, the Eurocrats are the products of socialist governments and tend to adopt the coercive methods that are the modus operandi of Marxist regimes. Corruption, endemic in bureaucracies, is another problem: In 1999 the Commission was accused of fraud, nepotism and mismanagement. A 144-page report documented the charges, and the entire Commission got the boot. (www.newsmax.com , March 19, 2001) http://www.newsmax.com/archives/articles/2001/3/18/212525.shtml
For the despairing millions who cannot operate a video recorder nor assemble a flat-pack, help is finally at hand. New laws will allow consumers to get their money back and sue manufacturers for wasting their time if manuals are unable to be followed. A European Commission directive, which is due to become UK law on 1 January 2002, says "any installation instructions, intended for consumers, must be without shortcomings". (Independent 18 March 2001)
OECD figures for 2000 show UK GDP at $1,421bn (£972bn) France $1,294 bn. This puts UK 8.7% ahead of France whereas in 1999 it was only 0.7% ahead. The original 'overtaking' had much to do with the strength of sterling but the accelerated difference owes little to this. (Eurostat/Eurofaq posting 15/3/01)
A new "fast track" for EU legislation on control with the market for financial services will lead to a massive transfer of power from national parliaments and from the EU parliament to the EU Commission. It will be possible for the EU Commission to make decisions without the qualified majority of member countries and accept from the EU Parliament normally required, and EU laws in the area can be enforced without national legislation, according to Danish paper Politiken. The issue will be at the top of the Agenda for the EU Summit in Stockholm next week. But Danish Minister for Economic Affairs, Marianne Jelved, has already accepted. New laws can by passed by the Committee unless a qualified majority of member countries oppose them, and it will not be necessary to consult the EU Parliament at all. Furthermore, this legislation will be binding in all member countries to save the time it takes to convert EU decisions to national legislation. (EUobserver.com 13/3/01).
BRITAIN has struck a secret deal with Germany to prevent European plans for new workers' rights embarrassing Tony Blair before the election. Berlin has promised to delay backing a directive that would force firms to consult workers about decisions such as redundancies until after Britain goes to the polls. But it is then expected to agree to the proposal within days, leaving Britain powerless to stop it. Mr. Blair is further hoping to head off any confrontation with business leaders in the run-up to the election by meeting blue-chip company executives at Chequers today. But the Tories accused the Government of a "cover-up" and said the deal with Berlin was a sign of Mr. Blair's desperation to avoid Europe becoming a major campaign issue. "The Government knows that this is a very combustible issue and that Europe could lose it the election and so it will do anything to cover up the truth," David Heathcoat-Amory, the Shadow Trade and Industry Secretary, said. "This directive is very damaging and will badly hurt Britain's competitiveness. The Government itself has agreed that this directive is a step too far. Good employers will have to comply with this at very heavy costs and bad employers will simply not bother at all." (David Lister in Brussels The Times 15/2/01)
Concern is growing that a planned US-style tax credit for spending on R&D may fall foul of EU rules on state aid. The measure is set to be the most important for business in the Budget, expected on or around March 6. At today's Ecofin meeting of European finance ministers, Mr. Brown will call for a study of policies on R&D, including tax reliefs, across Europe. The EU spends only around 2 per cent of national income on R&D, compared with 3 per cent for the US. The British government wants to make the shortfall a principal item of the agenda at next month's Stockholm summit of EU leaders. The new tax credit is likely to be modeled on the US system, which has been studied by the Treasury. Businesses would be given a tax rebate on additional spending above what they spent in a pre-determined baseline period. Companies without sufficient profits to be able to use all of their tax rebate would be given a payment. Britain's proposed regional venture capital funds to help businesses to develop in poor areas are already the subject of a state aids inquiry by the European Commission. (Financial Times 12/2/01)
Writers and actors say they will be cheated of income under a European plan to allow broadcasters to pay minimal royalties for putting archive material on the internet or interactive TV services. The actors' union, Equity, and four other trade organisations stated yesterday it amounts to "legalised theft". Lobbying from the continental media has led to the proposal, which is being debated this week in the European parliament. It is part of a proposed directive on copyright law, which would also require film-makers to seek permission from architects and designers of public buildings or objects before picturing them. Another clause would give artists a mandatory share of profits in the sales and distribution of broadcast material. "There are quite a few barmy measures in this directive," one broadcaster said. Under one proposal broadcasters would be able to use archive material on their websites or for the new "TV on demand" services (allowing viewers to watch programmes whenever they wish) without permission of the creators and on payment of a sum termed "equitable remuneration". Artists urged Britain's MEPs to vote against the plan. Bernie Corbett, general secretary of the Writers' Guild, said: "This clause is very dangerous. Remuneration would appear to mean payment, but equitable is in the eye of the beholder." In a joint statement yesterday Equity, the Musicians' Union, the Writers' Guild, and the Directors' Guild claimed the measure was introduced at the behest of media corporations. (Guardian 13/2/01
Sir Anthony Bamford, JCB's chairman and part-owner, for 20 years has been a critic of what he sees as undue interference by the Commission in UK affairs. Sir Anthony told the annual conference of the Confederation of British Industry last month that the EU had ushered in "a mountain of regulations" and the "creeping sovereignty of a super-state". JCB, one of Britain's biggest privately owned manufacturers and among Europe's leading makers of construction equipment, was yesterday fined Euros 40m (Pounds 24m) by the European Commission for a breach of competition rules, in one of the toughest penalties imposed by Brussels on a single company. The Commission imposed the fine for JCB's restrictions on sales by its distributors outside their allotted areas in the UK, France, Italy and Ireland. The restrictions had been used to stop customers buying machines at lower prices in countries other than their own. JCB said it would appeal. Sir Anthony said: "JCB has been unfairly treated by the European Commission. We have always operated lawfully." He said the company had been penalised for implementing agreements that had been notified to the Commission in 1973 and had been accepted in 1976. Although 60 per cent of JCB's sales are in the EU, Sir Anthony has vowed never to open a plant in continental Europe because of what he sees as over-rigid labour regulations, instead opting to put JCB's first non-UK factory in the US last year. (Financial Times; Dec 22, 2000)
Germany has backed out of an agreement to establish a European Union corporate takeover code, out of fear it would become too easy for foreign predators to snap up German companies. The sudden change of heart puts at risk a code that has been under discussion for 12 years and which Brussels sees as vital to further integration and restructuring of European industry. The code would outlaw the use by targeted companies - without first gaining their shareholders' approval - of "poison pills". A poison pill is a financial arrangement - such as a conditional sale of a core asset at a cheap price - that would reduce the value of the target company in the event of a successful hostile bid. Its purpose is to deter the hostile bidder. German representatives told EU ambassadors last Friday they were breaking away from the common position on takeovers agreed by governments last June. EU governments generally present a united face once they have reached a common position. Berlin has been under pressure from some big companies to allow more room for manoeuvre on poison pills. But it is not clear what has led to its changed position, as the government is now drawing up its own takeover code that is broadly in line with the proposed EU rules. Sweden, which holds the EU's rotating presidency and has been trying to broker a deal with parliament, is understood to be worried that Germany will reach a political compromise with other countries, such as Britain, over the issue. The UK government has strongly resisted attempts to dilute the code's provisions but might be encouraged by a political trade-off on another issue. Klaus-Heiner Lehne, a German Christian Democrat MEP, has been pressing for companies to be allowed to fight off hostile takeover bids. By introducing amendments to the EU rules, he has pushed the directive into a conciliation process that has to reach agreement by early June. (Financial Times May 1 2001)
The German cabinet will approve a draft law regulating company takeovers and enabling managers to take defensive measures against hostile bids, writes the Financial Times. The decision comes just a week after German MEPs led a successful move in the European Parliament to block EU legislation that could have banned such defensive measures. (EUobserver.com 11-07-2001)
Employers' organisations have warned that the Works Councils Directive, proposed by the European Commission, would be a threat to jobs and competitiveness across Europe. The directive would force companies to consult on sales of subsidiaries and redundancies. ( This would contravene insider trading laws) The European employers' federation, UNICE, said this should not be a matter for European legislation. The CBI said it would be a recipe for delays and a "very bad measure for business". The European Parliament has voted to pass amendments to the Takeover Directive which would make hostile takeovers almost impossible in Europe. The amendments were proposed by a group of German MEPs concerned by the takeover of the German firm Mannesman by the British company Vodafone. The vote has been widely condemned by employers groups and the European Commission, on the grounds that takeovers should be a key means by which the European economy will modernise and adapt to economic change .(No-Campaign bulletin 17/12/00)
European Union e-business will be restricted by a law passed last week that allows consumers to sue companies in their own national courts. The Brussels regulation, a revision to the 1968 Brussels Convention, means European e-commerce companies must comply with local laws in any EU country they target good at. The Confederation of British Industry (CBI) has been lobbying the EU for a longer consultation period over the Brussels Regulation and expressed dismay at the law being signed off. 'I believe it will have a negative impact on the spread of e-business in the European Union causing legal confusion and leading to Internet traders to only accept orders in their own countries,' said Nigel Hickson, head of e-business at the CBI. Hickson said complying with 15 different sets of national laws will force some firms to opt out. (Computing 7th December 2000)
According to EU rules on public procurement all defence contracts must be advertised in the Official Journal. It is forbidden to confine such enquiries to firms with security clearance. However, when firms respond to such invitations to quote they are told that they cannot have the information because they do not have security clearance. (Private communication 19/10/00)
Fears of a heating oil shortage and plummeting temperatures on the continent provoked a rush of German buying, with refineries in southern Germany said to be barely coping with the renewed demand, despite running at full capacity. 'Heating oil stocks are at a thirty years low. I don't see any short term relief.' Said Peter Luxton, economic adviser at analysts Standard and Poor's MMS. (Business News D Telegraph August 30, 2000)
But while both the US and the euro-zone economies are expected to slow down later this year, the US is apparently slowing to a rate that will still be faster than Germany's growth at its peak. Why is Europe suffering more? In part, it is because the US is an oil producer as well a consumer. Western Europe's only oil producers of any size are Britain and Norway, neither of them in the euro-zone. (FT 25/8/00)
Eurosceptics will note that despite the birth of the single currency in January 1999, the UK's invisible surplus with Europe widened to £5bn in 1999, from a similar deficit four years. (Daily Mail15th August 2000)
ANYONE might think from headlines such as "Objective One millions just weeks away' "that Cornwall had just won the Lottery. These announcements greeted Brussels's confirmation that Cornwall, as one of the EU's poorest, most backward regions, is to receive €320 million in funding over the next seven years. There is even to be money to pay off fishermen driven out of business by the need to make room for the Spanish to fish off the Cornish coast, which may seem touching to those who used to associate Cornwall with its fishing boats. The Lib Dems and council officials, who are waxing, lyrical over all this benevolence, don't like to mention, of course, that, to get that €320 million, British taxpayers must hand over €640 million to Brussels in the first place. We must then stump up another €320 million in pound-for-pound co-founding". By the time interest is added, it will end up costing us well over €1 billion --just to give Brussels a propaganda coup for handing back some of our own money.( Sunday Telegraph London 6/8/2000)
New ONS figures show that the proportion of our exports going to the EU fell to 46.9%. May's exports reached a record £15.3bn (+3.5%) with a 6.1% gain outside the EU but only +1.3% to the EU. More significantly, over the past year exports to non-EU countries have risen by 17.9% while sales to the EU have increased by 10%. It would seem that industry has acted positively to the challenge of the weak euro and reoriented its exports accordingly. {Telegraph 26/7/00}
Shipbuilding unions say a leaked memo from the Italian Government proves that European yards are being subsidised by up to 25%. They have called on the European competition commissioner to intervene or to allow Britain to do the same. Jamie Webster, shop steward convener at the Govan shipyard on the Clyde, said it was time Britain stopped playing by the rules if everyone else was breaking them. The memo is said to have come from the transport and navigation ministry in Italy. It was leaked to an official of the GMB union and complained of unfair subsidies being given to yards in France, Denmark, Spain and Germany. It said those countries were all providing tax relief of up to a quarter of shipyard costs, compared with a British limit of 9%. The revelations come as 3,000 workers at the BAE Systems yard in Govan await a decision by the Ministry of Defence on a vital ferry contract. Local politicians and union officials complained about EU bidding rules which meant that the UK Government could not reserve some of the work for Govan. (BBC Online 2/8/00)
For six months the Government has managed to conceal that a ruling by the EC has left in total disarray its policy to save Britain's countryside from being covered by millions of new houses. Building on former industrial or 'brownfield' sites.. would be very costly but billions of pounds in grants would be available through a Partnership Investment Programme. However, on December 22 last year, the Commission ruled this would breach EU regulations on state subsidies. "When it comes to restoring polluted land in Britain", says Mr. Anthony Steen MP, "we are told this is illegal. It seems Mr. Prescott's officials are now having to crawl to Brussels to ask what they can do next." (Sunday Telegraph 30/7/00)
The EU may block plans to save rural post offices. Stephen Byers did not get EU approval before announcing his rescue plan and implied that approval would not be forthcoming because the Government proposed providing financial assistance, through a modern on-line computer system linking the 18,500 post offices, which offended against the EU rules against subsidies. (Daily Telegraph, 22nd July, 2000)
Changes to export procedures being planned by Customs and Excise will add millions of pounds to the costs of private sector express mail companies, forcing some to close, business leaders are warning. The Association of International Courier and Express Services says the government has ignored protests that the new rules will add £7m to operating costs in the first 12 months after they come into force next year. It says the extra costs would have to be passed on to exporters, but many smaller express companies would be unable to afford the computer systems and extra staff needed to comply and would cease trading. The association also says the changes will put private companies at a competitive disadvantage against international mail carried by the Post Office, which is not subject to the new rules. However, Dawn Primarolo, the Treasury minister responsible for Customs, says the changes are essential because existing procedures do not provide information required by European Union directives. Customs has spent nearly three years reviewing existing export procedures, under which goods not subject to licensing or controls are processed through a paper-based Simplified Clearing System. This allows express companies to send minimal data to Customs before shipment, followed by full details within 14 days. Companies like the system because it imposes few additional costs, and it allows express companies to avoid delays when information is not available until shortly before flights depart. Under the proposed system, details of all goods will have to be entered electronically into the Customs computer system three hours before flights leave. Companies say this will prevent them accepting many shipments for next day delivery. (Financial Times, Aug 28, 2000)
Mr. Richard Budge, chief executive of RJB Mining, said EU authorities recognised the logic of providing support for the low-cost British mining industry at a time when the German and Spanish governments were pumping $4bn a year into propping up their coal mining industries. He said, "we are operating pits at the lowest cost in Europe. They’re running high-cost pits. RJB is claiming £74m in aid to prevent further mine closures. (D Telegraph 6/4/00)
Electronics group TT says the DTI slavishly follows European regulations while our continental partners take a different view. Whitehall’s strict rules cost the group £10m last year. The bill would have been £15 if the Welsh Development Agency had not helped out. TT Plants in Germany receive grants which cover 15% of investment. Austria supplies cheap loans linked to exports. In France the authorities say they will not implement environmental regulations for seven years, ignoring EU rules. In Britain the rules are being enforced without delay. The dangers to TT’s British workforce are clear enough. More than half the cars made in Europe and the US contain electronics made by TT. (Daily Mail 4/4/00)
Mr. Steven Buyers, Trade and Industry Secretary, is to raise the turnover threshold for statutory audits from £350,000 to £4.8m in two stages. This is the limit allowed by European Union rules. (FT 4/4/00)
The proposed rules designed to implement the European Distance Selling Directive may stifle the development of e-commerce within the UK, said Orange the mobile network operator. When the directive was finalised in 1997, the focus was on mailshots and telephone sales – few considered the possibility of sales by mobile phone. The proposals will require suppliers to give consumers a raft of information before a sale is made, or the contract is unenforceable. While it may be easy to deliver such information by post or a web site, it could create considerable problems over a phone because of the small size of the screen. The rules also fail to detail whether the information has to be given for each individual sale. (FT 22/2/00)
The EU wishes to regulate the new iX stockmarket. The German Werner Seifert of Deutsche Börse who will run iX has gone in print to say that he wants one regulator even if the market covers more than one country. Regulation is the key. The iX is part of the present commission five-year plan to create one financial market, an extension of the Single market by the end of 2004. The directives are coming out thick and fast, all with no British veto. If the UK ever left the EU we would have the devil's own job restarting our independent market - just as the ex-Soviet republics have had the devil's own job of rebasing their industries and services which, as in the EU, were formerly deliberately split up across the USSR. (Eurofaq posting Lindsay Jenkins 11/7/00)
Countries outside the EU pay a tariff of 3.6 per cent on goods exported to the EU '15' as they do not pay the "club membership fee". Taking into account the UK net "membership fee" calculated in our goods exported to the EU, produces an effective tariff of 5.73 per cent. It cost 60 per cent more for the UK to be 'in' than it does Norway and Switzerland to be 'out'! (Eurofaq posting, letter to Western Gazette by H Randall 10/7/00)
At the summit in Tampere which concluded the Finnish presidency last December, the European Council decided that Europe’s e-commerce sector needed to be stimulated in order for European growth to catch up with America’s. An initiative called eEurope was launched, according to which the EU would pick likely winners and give them tax breaks. As one perceptive commentator remarked at the time, this was nonsense on stilts: the massive growth in America is due to the liberalisation of the economy in all sectors, not just in the e-commerce sector. It is also due to the highly liquid nature of the labour market which is so spectacularly exploited for all it is worth in Silicon Valley. But now the EU has decided to do something which is, in any case, the very opposite of what it said it would do in Tampere. It has decided to impose VAT on products sold over the Internet, i.e. to tax e-commerce. This is generally not payable in the USA (where sales tax is much lower anyway) even though the EU says it wants e-commerce to develop the way it has done in America. [Die Welt, 13th June 2000]
The French agenda for its EU presidency raises grave threats for businesses. The agenda of tax harmonisation, also supported by the European Commission and European Parliament, would remove one of Britain’s key competitive advantages. The "social agenda" risks worsening the structural rigidities of the Eurozone which, according to Otmar Issing, Chief Economist of the European Central Bank, pose an "almost lethal threat" to EMU itself. (Business for Sterling briefing note 12/5/00)
The biggest export markets for the Euroland countries were the United Kingdom (13.3 bn euros) and the United States (11 bn euros), exports to Switzerland were 4.3 bn euros and 2.7 bn for Sweden. [Handelsblatt, 3rd May 2000]
THE European
Commission today announced plans to break the monopoly of national postal
services, but dismissed claims of job losses and the disappearance of rural
deliveries. Frits Bolkestein, the single market commissioner, said that member
states will still be able to uphold an obligation on the post to provide
"universal services". He described his plans as part of a "step
by step" programme of liberalising the postal market in line with the
wishes of businesses and consumers. The proposals involve a drastic reduction in
the Royal Mail's guaranteed share of the market. If approved by EU ministers,
the measures would oblige member states to open postal service competition to
include all outgoing mail to other EU countries, all express mail and,
crucially, all letters weighing more than 50g, compared with a current limit of
350g. The plans provoked fierce debate within the Commission and mark the
start of a battle with Britain over jobs and the Royal Mail's future. Neil
Kinnock and a minority of the 20 Commissioners have warned that the plans could
damage public post offices' ability to meet the requirement to provide
"universal services" in rural areas. However, negotiations behind the
scenes in the days leading up to the decision have satisfied Mr Kinnock - a
Commission vice president overseeing administrative reform - that there are now
sufficient safeguards. (Daily Telegraph 30 May 2000)
The OECD is concerned with the problem of why the euro-zone has performed so badly by comparison with the US. One of the many meanings of productivity is output per hour worked. Here a surprising fact emerges. Output per hour in the euro-zone, which was just over 70 per cent of the US level in 1973, had risen by 1998 - the year before the euro was launched - to 94 per cent of that level. In other words, the productivity gap had almost been closed. The snag is that gross domestic product per head - the main determinant of living standards - was still one-third below that of the US. Shorter working hours reduced the comparative output per employee, and an even bigger reduction was due to a much smaller proportion of the euro-zone population being in employment. The UK picture was different. Output per hour in 1998 was only 82 per cent of the US level. As working hours were shorter in the UK, relative output per employee was lower still. Yet GDP per capita was roughly the same in the UK as in the euro-zone, and in both cases about a third below the US level. How could this be so? It was because higher output per person in the euro-zone than in the UK was more than offset by a smaller employment ratio. A lower proportion of the euro area population was in the labour force, and of those a smaller proportion had jobs. As the OECD states: "The problem of labour under-utilisation in the euro area is concentrated in much lower participation and employment rates of young and old workers of both genders and, to a lesser extent, of prime-age female workers." There would be no problem if the contrast were simply due to continental European workers wanting to enter the labour force later and retire earlier, and being willing to pay the cost for doing so. But if the lower employment ratio in the euro-zone reflects labour market institutions and other rigidities that price people out of work, it is the GDP per capita numbers that give a fairer picture of performance. On that basis the performance of euro-zone countries is not superior to British performance, whatever euro enthusiasts say. The main effect of their more centralised system of wage bargaining and greater labour market regulation has been a higher rate of unemployment and non-participation in the labour force. The OECD suggests that the contrasting performance of productivity and labour utilisation in the euro-zone may be because gains in productivity have been "partly achieved at the expense of employment... Skill-based technical changes may have led to higher unemployment in Europe because, in contrast to what has happened in countries with high employment rates, the adjustment could not be absorbed by the widening of the wage dispersion between the skilled and unskilled labour force. "Part of the overall productivity gains would then stem from the difficulty for the lower-skilled unemployed to price themselves into a job, a problem often accentuated by generous benefit schemes that lower the incentives to re-enter the labour market." Improvements in output per hour will only help to price euro-zone workers into jobs if the productivity gain is not all passed on in higher pay. Some incentive must be retained for employers to add to their local labour force. An improvement in recorded output per person can simply be the result of shutting down less profitable plants and switching new investment to emerging countries. The key to reducing structural unemployment is not just lower labour costs, but labour costs nearer to market-clearing levels. Meanwhile, the OECD warns that "a greater European-Union wide harmonisation of social policies" - on which Social Charter enthusiasts are so keen - may worsen the employment chances of less skilled workers. (Samuel Brittan FT 27/4/00) http://www.samuelbrittan.co.uk/text39_p.html
The European Commission and Parliament have expressed shock and concern at the granting of a patent to the University of Edinburgh, which includes a technique for genetic modification of human embryos that could be used for the cloning of human beings. The European Patent Office (EPO) approved the patent last December - despite the fact that such patents are not allowed under EU law. The patent was apparently granted as a result of a translation error. The European Patent office is not formally an EU institution and as such the European Commission does not have a direct responsibility to it. (EU Business 13/4/00)
The cumulative deficits on our trade with the EU between 1973-1998 have reached £195,114 million. Adjusted for inflation and expressed in 1998 Pounds that figure is £350,359 million. If one adds to that the direct payments to the EU itself and adjusts this for inflation too, the cost of that is £56,179 million. So the combined figure is no less than the staggering figure of no less than £406,538,000,000. For that sum of money we could have some proper defences, a decent railway system, a luxury health service - many of them at the same time! {Eurofacts 24/9/99}
For the first time in 30 years, the GDP of the United Kingdom is larger than that of France. This makes Britain the fourth largest economic power in the world, after the United States, Japan and Germany. The fall in the value of the euro and sterling's relative strength are the reasons for this. [Contre-courants, 10th March 2000]
The European Commission plans to collect sales taxes on music and software delivered over the World Wide Web , closing what EU bureaucrats claim is a loophole which benefits US companies (Herald Tribune 5/3/00)
The USA exports more to the other EU countries than does the UK. It achieves this through a tariff barrier of 3.6%. Although the UK's exports to the EU are ostensibly tariff-free, if the cost of membership, or NET budget contribution (£5.5bn), is averaged over the total value of our exports ($142bn) then it is equivalent to a tariff barrier of 5.7%. If the net budget cost were instead returned to UK companies as a tax reduction allowing our prices to drop then we would still be better off paying the 3.6% tariff. As a member of EFTA there would be free entry of our goods into the EU. We would also be able to negotiate favourable terms with the USA, our largest export customer, as a member of NAFTA. (Eurofacts 3/3/00)
Gordon Brown claimed that 750,000 British companies export to the EU on the Today programme this morning. Brown's appearance was part of Britain in Europe's Out of Europe Out of Work campaign. In fact the Institute of Export, based on Bank of England figures, has estimated that the number of British exporters in total is between 100,000 and 115,000. The number of exporters to the Eurozone is therefore likely to be around 50,000. (22 February 2000 Business for Sterling)
Companies applying to government offices for the main form of UK regional grant aid are being told that no firm offers can be made under the new assisted areas map because of a delay in its approval by the European commission. Approval by the commission is far from being a foregone conclusion. (Financial Times 8/1/00)
The vision of European Union countries outlining themselves at the forefront of the Internet revolution is exactly that, a vision. In fact, high-tech entrepreneurs are being left unfinanced, ideas are going begging and talent is going overseas. The amount of early stage capital available in the US and the EU was broadly similar, £5.83 billion. In the US 50% of this is allocated to the information technology sector. In the EU it is 7%. The difference in allocation is startling. The US has a head start, and in this business it is first come first served. Europe is risk perverse; and there are barriers to investment; and the seed capital market is immature, research is not being funded and the EU's place in the new economy is being undermined. The Commission was going about things completely the wrong way. Using public money or re-allocating EU spending were ideas that smacked of bureaucracy and centralised control. No Internet entrepreneur is going to try and access public money; it comes with too much baggage. The answer is to empower the private sector by reducing the tax on capital gains. In the US capital gains tax is 20%, much lower than any of the varying rates across Europe. In the UK the tax is 40%. (Financial Times 23/12/99)
The government has abandoned its plans to retain a traditional golden share a in the proposed £100 million the Port of Belfast flotation for fear of upsetting Brussels. It's climbdown comes amid a row with the European commission of its golden share are in airports operator BAA, fuelling speculation the government is ready to bow to Brussels over the issue. The EC issued a reasoned opinion in July that the golden share in BAA is incompatible community law on the free movement of capital. (Daily Telegraph Business News 24/12/99)
Trade marks, providing they are renewed, can be renewed indefinitely. You used to be able to renew them for 14 years but, under the new EU rules, you can now only renew them for 10 years at a time, and at greater expense than you could for 14. (Eurofaq posting Bill & Ann Woodhouse 20/12/99)
Europe's mobile phone operators are to complain to the European Commission about telecommunications regulations they say are stifling innovation in the industry and holding back development of electronic commerce. Mobile phone operators say that mobile companies are being unfairly included in rules aimed at liberalising EU telecoms markets. The problem, they say, is that the telecoms rules were draughted to force national phone monopolies to open up to competition but are now also being applied to the mobile phone companies as they grow large enough for them to apply. The law states that if a company has more than 25% market share it must open its network to rivals and base its prices for the service on costs. (FT 24/11/99)
An EU directive aimed to protect tourists from tour companies going bust and leaving them stranded has caught out hoteliers on the Isle of Wight. The directive applies where both a hotel and travel arrangements are included in the same deal. Most Isle of Wight hotels include the cost of the ferry in the charges. Now hotels have to pay extra to purchase a bond and set up a trust fund to comply with the directive. (The Times 11/6/98)
The EU directive on Unfair Terms in Consumer Contracts bans contracts that allow a unilateral change in the core terms and contracts that are "potentially" harmful. Lower start mortgages, or fixed-rate mortgages, which convert to variable rates in the future, are "potentially" harmful because the borrower does not know how the variable rate will be applied in the future. This ruling can affect over 10 million mortgages. An industry spokesman said that anyone who puts a borrower on other than the standard industry variable rate would get murdered in the market place. (The Times 19/9/98)
The government only allowed plant hire firms 4 months to convert equipment to comply with new EU safety directions on role-over bars. The cost to industry is £70 million. Many small businesses will fail to meet the deadline. (The Times 21/9/98)
The body that brought Europe the Late Payment Directive, the European Commission, is one of the worst culprits. Firms who complain get veiled hints that they could be excluded from shortlists for further work. (The Times 20/11/98)
European business leaders are mounting a vigorous campaign to thwart European Commission proposals to hand over most competition law enforcement to national authorities. They say the move would fragment the single market and hold up cross-border deals. The Commission wants to release resources for big investigations by withdrawing from day-to-day enforcement of Articles 81 and 82 of the European Union treaties, which outlaw price-fixing and abuse of market dominance. The Commission would give up its exclusive power to grant exemptions from competition law and would hand over enforcement to national authorities in all but the most serious cases. Unice, the confederation of European employers' groups, has told the Commission in an unpublished submission that its arguments for decentralisation "fail to come to grips with the risks of fragmentation of the internal market and degradation and re-nationalisation of competition law. Unice also criticises the absence of a clear appeals mechanism in the Commission's proposals, which could cause sufficient legal uncertainty to prevent some cross-border agreements going ahead. There is also concern about the human rights implications of Commission proposals to strengthen its investigative powers, including widening the scope of dawn raids and a new right to summon to Brussels anyone thought to have information that would assist its enquiries. The chairman of the CBI's competition panel has warned that the proposals could unleash a flood of frivolous litigation aimed at frustrating legitimate business plans that could swamp the European Court of Justice, the EU's final court of appeal. The CB1 foresees companies having to consult lawyers in each member state. (FT 13/12/99)
Stephen Byers, the trade and industry secretary, was accused of ignoring the interests of more than one million small businesses in his final proposals for implementing the European Union directive on parental leave. The director-general of the British Chambers of Commerce said Mr. Byers have failed to take advantage of a specific derogation in the EU directive on parental leave which allowed small companies to be excluded. He accused the government of giving companies too little time to implement legislation because it had failed to think through the impact of EU directives on its parliamentary timetable. He claims the government has made errors in timing the legislation similar to the fiasco over the implementation of the minimum wage and EU's working time directive, which Tony Blair admitted, was "over the top". The Federation of Small Business said the DTI proposals would leave companies worse off than small companies in the EU, such as Belgium. (FT 9/11/99)
The new European social affairs Commissioner intends to press ahead with a draft legally binding directive for the creation of worker's information and consultation committees in all companies in the European Union employing 50 or more workers. The decision dismayed the government and British industry, which opposes such a measure. (FT 10/11/99)
One of the things that really annoys business about Brussels red tape is at the UK tends to implement European Union directives promptly and strictly, while some other member states take a more relaxed approach. Nick Gibb, the Tory industry spokesman, picked one regulation at random - new rules relating to pressure equipment - to highlight the problem. But when he asked the Department of Trade and Industry how far other countries had got with implementing the regulations, it did not know. Mr. Gibb sees this is a serious abdication of responsibility. "The DTI should be making sure the other countries are implementing these directives so is not to put British business as a competitive disadvantage." he said. (FT 10/11/99)
The European Commission announced that legal action would be taken against France for failing to liberalise its electricity market. State owned EdF enjoys a monopoly in its home territory because France has failed to carry out the limited degree of liberalisation demanded by the European Union's 1996 electricity directive. The international expansion of EdF has been accompanied by a rising tide of resentment against the French failure to open up its own market. (Daily Telegraph 19/11/99)
EU governments are set to clash over the way they regulate the use of free gifts or "premiums" and competitions or lotteries by companies to promote their products. This reflects concern that many member states are flouting single market rules by preventing foreign firms from using the marketing methods which are legal in their home country, hampering their ability to sell across orders. In theory, the creation of the internal market means companies should be able to use the same strategy to market their goods in any member state, as long as the approach is legal in their home country. But in reality, they run up against a patchwork of national rules, with some governments citing consumer protection arguments. This has caused legal uncertainty and prompted a string of EU court cases launched by firms claiming the rules are being ignored. Belgium, France, Germany, Greece, Luxembourg and Portugal insist they must retain the right to enforce their own rules governing discounts, such as in Germany's ban on "two for the price of one" discounts. (European Voice 21/11/99). Germany has abolished the laws restricting discounting and special offers by retailers. (Financial Times 30/6/01)
A £200 million government scheme to support development of derelict industrial land is threatened by a European Commission ruling that it breaches EU rules on state aid. Brussels has concluded that grants to developers from English Partnerships, the regeneration agency, are distorting the international property development market and funneling unlawful subsidies to car manufacturers and other key industries. The Conservative environment spokesman said that the ruling undermined the government's claim that it had influence in Brussels. The if the scheme is deemed to be state aid it would have to be restricted parts of the country designated as assisted areas. It could also reduce other state aid budgets such as Regional Selective Assistance. (FT 87/10/99)
Duties on a range of goods made outside the EU are costing the average British consumer £1,000 a year, according to the Conservative leader. He called for the removal of EU tariff barriers, which cost the economy £300bn a year. Duties imposed on 15,600 non-EU goods - including biscuits, dolls, video recorders, pens and life jackets - should be scrapped. (FT 29/11/99)
Transatlantic Business Dialogue (TABD) Annual Conference 1999 - The cosy atmosphere in the Hotel Intercontinental was almost spoiled at a press conference when Guy de Jonquieres of the Financial Times asked WTO boss Mike Moore if his presence at this gathering of over 100 corporate executives did not confirm the impression that the World Trade Organisation is "simply a carve-up between multinationals". He also asked why the media were not allowed to attend the debates which Moore was part of. The journalists attending the TABD conferences could only go to the press conferences and the first and last plenary sessions, while the rest of the program was behind closed doors, only attended by business and government representatives. Commerce Secretary Daley quickly replied that "the Transatlantic Business dialogue is one of three dialogues: there is a consumers dialogue, there is a labour dialogue." TABD co-chair Monod explained that when the 'business communities' from the EU and US meet to develop recommendations, "which are given to the representatives of the governments as demands to be pushed through the administration, I think a little bit of discretion is needed." While Monod's response is at least honest, Daley's reference to the Transatlantic Labour Dialogue (TALD) and the Transatlantic Consumers Dialogue (TACD) ignores the fact that these parallel dialogues get an entirely different treatment than the TABD. The fundamental imbalance was