aeip news sept 2010

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AEIP Newsletter • Week 35

30 – 03 September 2010

Table of ContentsTable of ContentsTable of ContentsTable of ContentsEU Financial Services...............................................................................2

I. Barnier favours “European approach” for commodities derivatives markets............. 2 II. Inter-institutional negotiations on “financial supervision” package ........................ 2 III. Green light to exchange of audit documents between Europeans and Americans ... 3 IV. Political agreement on supervision package....................................................... 3

EU Internal Market .................................................................................. 3 I. Single Market Act to set targets for 2020 ............................................................ 3

EU Health ................................................................................................ 4 I. New superbug presents real threat to public health in Europe ............................... 4

EU Social Affairs ...................................................................................... 5 I. Brussels tenders for interpreter pension scheme.................................................. 5 II. Prospect of further European Globalisation Adjustment Fund assistance forDenmark, Spain and Portugal ............................................................................... 5 III. Aon: Employers underestimating risk of poor DB data........................................ 5 IV. PricewaterhouseCoopers, Hewitt Associates, Pension Corporation ........................ 6

Economy..................................................................................................7 I. Economic governance and taxation of institutions and financial transactions onministers' agenda ............................................................................................... 7 II. Economic governance task-force gets back down to work .................................... 7

Events and Court Cases ........................................................................... 8 I. Upcoming Events............................................................................................. 8 II. European Court of Justice Calendar................................................................... 8

In Depth Analysis.................................................................................... 9 I. Prospect of further European Globalisation Adjustment Fund assistance for Denmark,Spain and Portugal.............................................................................................. 9 II. Political agreement on supervision package ......................................................10





EU Financial ServicesEU Financial ServicesEU Financial ServicesEU Financial Services

I. Barnier favours “European approach” for commodities derivativesmarkets

“I fully share the view of the French government on the importance of issue of markets inderivatives of raw materials and assimilated products, and the need for a coordinated Europeanapproach,” Internal Market Commissioner Michel Barnier told AFP on Tuesday 31 August 2010.He went on: “More particularly, at European level, the proposals on derivatives, including thoserelated to raw materials, that I will bring forward in mid-September will bring greatertransparency and discipline”. In a piece published by French press in mid-August, he stressedthat, in order to tackle speculation, transactions in, especially agricultural, raw materials had to beregulated. Following the comments of French President Nicolas Sarkozy, who wants theforthcoming French Presidency of the G20 to tackle raw material price volatility (see EUROPE10201), the French authorities sent Brussels a full document arguing for a European legislativeinitiative in this area, supplemented with sectoral measures. European legislation would bring increased transparency, over certain players, such as specialist traders, impose position limits andease the exchange of information between sectoral regulators and financial regulators. The wholerange of derivatives of raw materials (oil, electricity, gas, metals, agricultural products) would becovered, along with CO2 allowance markets. Failing a legislative initiative, the EuropeanCommission could bring forward a communication setting out the principles informing regulation of derivatives of raw materials markets as part of a review of European law (forexample, Directives 2003/6/EC on market abuse and 2004/39/EC on markets in financialinstruments). Derivative financial products are instruments which protect holders against the risk of underlying assets (for example, loans, exchange rates, raw materials, etc). They may be misusedfor speculative purposes. (31/08/2010 Agence Europe)

II. Inter-institutional negotiations on “financial supervision” packageInter-institutional negotiations on the “financial supervision” package resumed in Brussels on

Tuesday 31 August and will continue until this Thursday and next week, on the sidelines of theplenary session of the European Parliament. “The Council has moved”, said an EP expert. Themember states now agree that the future European financial supervision authorities (ESA) in thebanking, insurance and securities sectors will have binding powers over the national authorities,or over a financial institution, in the following three cases: - infringement of European legislation;- emergency situation; - disagreement between national supervisors. In order to be effective, thispower must be enshrined in the sectorial law in question, such as the directive on levels of own

funds for banks. The future ESA on the securities market will be authorised to ban certaintransactions or financial products in an emergency on the markets and if the sectorial legislationpermits this. As an executive agency cannot have discretionary powers, it would have to preparean act which the European Commission would adopt as its own. A safeguard clause forbids any decisions of an ESA to tread on the toes of national budgetary sovereignty. The procedure to befollowed if a member state invokes this clause, and which was designed by the Council, will notbe modified. The MEPs nonetheless managed to secure the introduction of a provision designedto avoid abusive use of the safeguard clause. Any member state may use it only if it notes that thedecision of an ESA will bring about an increase in its expenses. Any decrease of fiscal revenue

which may be the consequence of a decision of an ESA imposing more own funds on a financialinstitution, cannot be invoked when calling for the safeguard clause to be applied. Emergency

situation. The “financial supervision” package institutes the European Systematic Risk Committee (ESRC), which will alert and make recommendations on the macro-economic risks tofinancial stability. The MEPs want the presidencies of the European Central Bank and of the




30 – 03 September 2010ESRC to be filled by the same person. They continue to disagree with the memberstates over the appointment of the institutions which will be competent to declare an emergency situation. The member states take the view that this power should be solely a matter for theEcofin Council. The EP firmly opposes this. One idea which is making the rounds would be to

allow the Commission, Parliament and the three ESAs to make a public declaration on the gravity of a situation. (01/09/2010 Agence Europe)

III. Green light to exchange of audit documents between Europeans and Americans

On Wednesday 1 September, the European Commission adopted a decision noting theappropriateness of the American and Australian audit supervision systems with Europeanlegislation (Directive 2006/43/EC). This decision paves the way for the signature of mutualbilateral agreements between the member states and these two countries, which will allow theexchange of audit documents between supervisors whilst guaranteeing the confidentiality of theinformation exchanged. Equivalent to a previous decision regarding the audit supervision systems

in Canada, Japan and Switzerland (EUROPE 10072), it will promote international cooperation onthe supervision of the international audit networks. “This decision will allow the European auditsupervision bodies to cooperate with their American and Australian counterparts to monitor theglobal audit networks. The exchange of audit documents is an important stage towards ourultimate objective: the creation of equivalent and mutual confidence in each other's systems”, saidCommissioner Michel Barnier in a press release. Documents which may be exchanged relate tothe audits of companies quoted on the stock exchanges in both third countries or belonging to agroup which submits consolidated legal accounts in these countries. It is worth noting that forthe US, the decision will apply until the end of July 2013. The American supervisors (PCAOBand SEC) wish to continue an assessment of the audit supervision systems of the member statesbefore deciding whether to take as a basis the supervision carried out by their competent

authorities. (01/09/2010 Agence Europe)

IV. Political agreement on supervision package The European Parliament and the Council of Ministers reached agreement in principle in theearly evening of Thursday 2 September on the package of new financial supervision legislation,like the setting up in January 2011 of a European Systemic Risk Board (ESRB) and three EUsupervision authorities (ESAs), one for banking, one for insurance and one for securities. Theagreement now needs to be formally endorsed by both institutions, probably on Tuesday 7September at the meeting of EU finance ministers as far as the Council of Ministers is concerned(see related article) and at the end of September for the European Parliament (at the secondplenary of the month).In depth analysis page: 5

EU Internal MarketEU Internal MarketEU Internal MarketEU Internal Market

I. Single Market Act to set targets for 2020In October, EU Internal Market Commissioner Michel Barnier will unveil a new strategy for thesingle market, entitled the Single Market Act, comprising around 50 initiatives to be implementedby 2012. Following up on the Europe 2020 strategy, the Single Market Act aims to introducestructural reforms at EU level that the European Commission feels are necessary if the EU is toavoid weak growth and loss of competitiveness against a backdrop where the economic crisis has

put state coffers in a parlous state. The act will try to get Europeans to make peace with thesingle market, whose existence they often ignore or mistrust, as was shown in a report published




30 – 03 September 2010by Mario Monti in May (see EUROPE 10137). The European Commission hasannounced annual reports on implementation of the Single Market Act and hopes that theEuropean Council will give a positive signal about the strategy's political importance. An earlier

version of the Single Market Act has been obtained by this newsletter. It sets out around 50

initiatives for companies, small business and ordinary citizens. The strategy is accompanied by a working document from the Commission describing bottlenecks that prevent interested partiesfrom taking full advantage of the single market. To deal with the bottlenecks, some 130 differentareas of action are identified at EU level. (02/09/2010 Agence Europe)

EU HealthEU HealthEU HealthEU Health

I. New superbug presents real threat to public health in EuropeIf scientific experts have an aversion to the term “superbug” for multiple resistantEnterobacteriaceae NDM-1, it is largely for fear of trivialising the label which has already beenused in relation to other bacteria, such as MRSA (methicillin-resistent Staphylococcus aureus).

The new “superbug”, however, is far more dangerous than MRSA. NDM-1 (New Delhi metallo-â-lactamase 1), which was first detected in 2008, is an enzyme which neutralises the effects of

virtually all antibiotics. Production of this enzyme developed progressively among Enterobacteriaceae, especially Escherichia coli and Klebsiella pneumoniae. As the EuropeanCentre for Disease Prevention and Control (ECDC) notes in an epidemiological updatepublished on 17 August, these bacteria are part of normal human gut flora and commonly causeurinary tract infections, bloodstream infection or healthcare-associated infections. They haverapidly spread from India, Pakistan and Bangladesh, and have now reached Australia, Israel, theUnited States and Canada as well as Europe, especially the United Kingdom, Germany, theNetherlands and Belgium. In addition to the significant occurrence in the United Kingdom,

which can be explained by that country's historic links with India and Pakistan, a study publishedin the British medical journal The Lancet speaks of a “major problem” in Greece. While, for themoment, resistance relates mainly to Escherichia coli and Klebsiella pneumoniae, it is also to befound in other bacteria: Enterobacter cloacae, Proteus spp, Citrobacter freundii and Klebsellaoxytoca. Faced with this problem, the main measures that can be taken in hospitals areconfinement of patients and improved cleaning of wards and equipment. Only two antibiotics,colistin, use of which runs a high risk of kidney damage, and tigecycline, which is less consistently effective, can be used to combat the NDM-1 bacteria. These are Gram-negative bacteria for

which virtually no new antibiotics are currently being developed, as the joint ECDC-EMEAreport published last year revealed (see EUROPE 9982). According to The Lancet, it is likely tobe 10 to 20 years before therapeutic cover can be guaranteed by development of new activesubstances. The epidemiological study published by the journal also highlights the rapid spread of these multiple resistant bacteria which can travel easily in the gut flora of asymptomatic carriers.

The authors of the report say that the potential for the endemic spread of these multiple resistantbacteria is “clear and frightening”. The ECDC has initiated a risk assessment on the spread of carbapenemase-producing Enterobacteriaceae (including KPC-, NDM-1- and other metallo-â-lactamase-producing strains) through patient transfer between healthcare facilities, with specialemphasis on cross-border transfer. It is due to publish a new assessment of the epidemiologicalthreat shortly. (27/08/2010 Agence Europe)





EU Social AffairsEU Social AffairsEU Social AffairsEU Social Affairs

I. Brussels tenders for interpreter pension scheme The Directorate-General for Interpretation, the European Commission's interpreting service andconference organiser, is tendering for a company to run a group pension plan for conferenceinterpreting agents (ACIs). The five-year contract will be to provide pensions for interpreters

who have not nominated their pension provider. The Commission said the winning bidder wouldbecome the default provider responsible for managing individual accounts and all contributionspaid in. The winner will be also open for all ACIs who are members of other pension schemesand wish to change their pension provider. The Commission said, as at 1 August, approximately

€2.75m had been accumulated in unpaid pension contributions from interpreters who had notnominated a pension provider. "This amount," it said, "represents both the part withheld fromthe ACIs (8.25% of their daily fee and other allowances) and the contribution made by theinstitutions (16.5% of ACIs' daily fees and other allowances)." The Commission said the contract

would involve roughly 570 agents, living for the most part in the European Union. However,because the pension provider will be also open for newly accredited interpreters, as well as ACIs

who are members of other pension schemes and wish to change, the amount "may be higher andis not limited". Tenderers must be pension providers, including insurance companies, banks, assetmanagers or IORPs, having a registered office in an EU member state. (01/09/2010 IPE.com)

II. Prospect of further European Globalisation Adjustment Fund assistance for Denmark, Spain and Portugal

Brussels, 02/09/2010 (Agence Europe) - On Thursday 2 September, the European Commissionapproved applications for assistance under the European Globalisation Adjustment Fund (EGF)

from Denmark, Spain and Portugal. These applications are now being passed on to the EuropeanParliament and Council which are to endorse them. Funding requested by Denmark aims to help951 workers in the marine manufacturing sector back into employment. The Danish applicationis for a total of €7.5 million and concerns workers made redundant in 45 businesses in theDanish region of Nordjylland (North Jutland). The application for €2,752,935 from Spanishauthorities will help 1,429 redundant workers back into employment. Madrid submitted itsapplication after 2,330 employees were made redundant by 23 enterprises operating in theautomotive sector in Catalonia, in the north-east of Spain. The grant of €2,405,671 to Portugal

will help 839 workers in the semiconductor industry to find new jobs.In depth analysis page: 3

III. Aon: Employers underestimating risk of poor DB dataMost UK employers running defined benefit schemes are underestimating the risks associated

with poor-quality data, according to Aon Consulting's latest employer survey. More than three-quarters of employers view the quality of membership data as either of very low risk or low risk to their pension arrangements. Just over a third of employers (35%) consider future unknownliabilities of high, or very high, risk, while 46% perceive certainty of value placed on schemeliabilities as a high risk, or very high risk, to their business. Aon said uncertain scheme liabilities

were a major consequence of poor-quality membership data and that the results of the survey suggested employers were failing to understand the dangers involved. Other survey findings werethat nearly two-thirds of employers (60%) considered certainty of cash contributions to be of low to very low risk, while 30% perceived intervention by the Pensions Regulator to be of high to

very high risk to their business. Ian Bloxham, client relationships and development director at Aon Consulting, said data quality could have a "significant effect" on price. "Indeed," he added,




30 – 03 September 2010"effective management of your scheme data can potentially save many millions of pounds when sourcing a buy-in or buyout policy." (03/09/2010 IPE.com)

IV. PricewaterhouseCoopers, Hewitt Associates, Pension Corporation

Companies looking to repair defined benefit scheme deficits will be using assets – more than cashcontributions – over the next year, according to analysis by PricewaterhouseCoopers (PwC). Almost a fifth of FTSE100 companies have now used some form of asset to help plug pensionscheme deficits, whether paid directly into the pension scheme or held as security for contingentpayment on some future event. Assets including bonds, brand royalties, real estate, receivablesand subsidiaries have been used as security payable in the event of a default or insolvency or paiddirectly into pension schemes. Such asset deals were estimated to be worth £8bn over the lastyear, with a further 30 FTSE100 companies seriously considering them, compared with anestimated £12bn of direct cash contributions. PwC predicted asset deals would reach more than£10bn in the coming year, with annual deficit cash contributions falling back from their recentspike to less than £10bn. Raj Mody, pensions partner and chief actuary, said: "We have reached a

tipping point whereby asset deals are becoming a primary method of plugging pension schemedeficits. "Non-cash funding arrangements help bridge the gap between current funding levels andlonger-term funding targets, often in an accelerated way compared with more gradual or back-end loaded cash contribution schedules." But Adam Sutton, valuations director, warned the valueof a particular asset could be impacted by different economic circumstances and that it was of paramount importance that asset values be correctly assessed to protect the interests of allstakeholders in a company. Meanwhile, nearly two-thirds of UK employers will offer workersextra cash rather than pay higher pension contributions if the proposed changes to pension taxrelief are implemented, according to a Hewitt Associates survey. When Hewitt asked 160 of theUK's largest pension schemes how they would react to the proposed tax regime, 61% said they

would offer cash benefits above the new annual contribution allowance (expected to be £30,000-

£45,000), while 60% of small schemes said they would do nothing and let members pay the tax.Nearly half of respondents (46%) wanted the government to help individuals avoid one-off tax'spikes' by providing smoothing through the tax system, by spreading or by averaging the annualallowances over a period such as three years. Tony Baily, pension consultant at Hewitt

Associates, said: "Two themes dominate the finding – the [government's] desire for a reducedannual allowance to stay at the higher possible level and a minimising of the administrativeburden. "The need for simplicity is paramount, even if this means a moderately lower annualallowance is needed, and this has driven our response [to the government's consultation]." Andlastly, Pension Corporation is recommending that schemes considering buyouts act now beforethe economy deteriorates further, making buyouts even more expensive. The buyout firm arguedthat, for much of 2009, it made sense for scheme sponsors to hold off transferring pension risk

while expectations were that rising bond yields would improve investment returns, reduceliabilities and lower the cost of pension buyouts. But with yields falling since Easter and the paceof decline accelerating over the summer months, schemes may wish to reconsider whether they should act now, rather than risking a further rise in liabilities. David Collinson, pension partner atPension Corporation, said: "If, as some suggest, it is a 'race to 1%' as the US and UK ape Japan,it could yet get a whole lot worse – for both pension liabilities and for the strength of the sponsorcovenant, via reduced operating profitability. "The cost of pension risk transfer at today's prices

will seem a bargain if our economy does turn Japanese." (03/09/2010 IPE.com)





EconomyEconomyEconomyEconomy I. Economic governance and taxation of institutions and financial

transactions on ministers' agendaOn Tuesday 7 September, European finance ministers will discuss the ongoing reform of economic governance at EU level. They will deliberate on arrangements for introducing abanking levy in the European Union and will consider whether to tax international financialtransactions. In a break from tradition, euro area finance ministers will meet as the Eurogroupafter the ECOFIN Council meeting on Tuesday 7 September. In the late afternoon of theprevious day, Monday 6 September, the task-force on economic governance will hold its fourthmeeting since it was set up by the European Council of 25-26 March. European semester. TheCouncil will give its view on amendments to a code of conduct on implementation of the EU'sstability and growth pact (SGP), enabling a “European semester” to be introduced from January of next year. This multilateral budgetary surveillance innovation was suggested by the

Commission in its proposals of strengthening economic governance and supported by the task-force chaired by Council President Herman Van Rompuy. It seeks to improve coordination of member states' budgetary and macro-economic policies. With the European semester, memberstates will (in spring) simultaneously present their stability and convergence programmes andtheir national reform programmes for peer assessment. It will mean that there can be jointdiscussion of national budgets before they are approved. Bank levies. Ministers will hold anexchange of views on the possible introduction of national bank levies so that the industry makesa contribution to paying the costs of the financial crisis, the principle of such a tax in the EUhaving been agreed by the European Council. Consideration will be given to the tax base(taxation of assets and liabilities of banking establishments) and use of resources generated(contribution to the national budget or building a national fund for use in the event of future

bank failure). As a basis for discussions, a Commission note sets out the reasons why a Europeanapproach is needed. It recommends taxation of bank liabilities from which customer deposits would be deducted, customers being already protected by national guarantee funds. In order toavoid double taxation, each member state should impose the tax only on the financial institutions

which it supervises and subsidiaries of these institutions in other member states. Tax on financialtransactions. The ECOFIN Council will discuss the possible introduction in the EU of a tax onfinancial transactions. Unlike bank levies, taxation on financial transactions must necessarily operate at international level. If it operated only within Europe, the risk would be that financialactivities would be relocated outside the EU. In order to convince Europe's internationalpartners, a European agreement will have to be found on an “international tax base” astransactions are very mobile, a diplomat explained. A Commission note assesses the objectives of

this tax and considers two possible options: - a financial transactions tax, i.e. a turnover tax that would be levied on organised financial markets; - a financial activities tax, i.e. a tax applied on thesum of profit and remuneration of financial institutions. At the last G20 meeting in Toronto atthe end of June, the EU failed to convince its partners of the need to tax banks and financialtransactions. (03/09/2010 Agence Europe)

II. Economic governance task-force gets back down to work The task-force on economic governance will meet on Monday 6 September at 5.00pm, tocontinue discussions on certain aspects of strengthening budgetary surveillance. Progress wasmade in the previous meeting on putting in place the “European semester” and strengthening thepreventive section of the Stability and Growth Pact (SGP), but there has not yet been any

advance on sanctions and taking greater account of debt. At this point, arrangements for financialand non-financial sanctions are far from being determined, and the suggestion of any suspension




30 – 03 September 2010of voting rights does not necessarily have widespread support. The issue of debt as amonitoring criterion still has to be settled, notably the distinction between public and privatedebt, and taking account of pensions reforms. Monday's discussions are unlikely to lead to any firm decisions, with debate continuing on these points until October, when Herman Van

Rompuy will submit his report to heads of state and government. He will, however, provide anupdate on progress at the next European Council on 16 September. (03/09/2010 AgenceEurope)

Events and Court CasesEvents and Court CasesEvents and Court CasesEvents and Court Cases

I. Upcoming Events Tuesday 14 September - Wednesday 15 September Dolce Resort, Chaussée de Bruxelles 135,1310 La Hulpe, Belgium 09:30 - 14:30 Reinforced convergence of social policies - How should the co-ordination of social policies be reinforced in a Europe of 27 member states? Whilethe Union is launching a strategy for the next 10 years – EU 2020 – what are the processesalready in place and what will their future be ? To answer these questions, experts and nationaldelegations will present avenues of improvement based on the successes of the past. In order toensure the commitment of the political actors, of the social partners and of civil society.

Friday 17 September Palais d'Egmont. Salle Arenberg, petit sablon 8, 1000 Brussels, Belgium09:00 - 17:30 Europe 2020 Strategy and the role of the social partners - The NationalLabour Council, the Central Economic Council and the European Economic and SocialCommittee are organizing, under the Belgian Presidency of the EU, a seminar on the role of thesocial partners in achieving the European objectives for 2020.

II. European Court of Justice Calendar

Date Case Language Room

OpinionC-232/09

Danosa - Social policyCourt of Justice - Second Chamber

LV New GreatCourtroom

Thursday02/09/2010

09:30

Reference for a preliminary ruling – Augustākās tiesas Senāts – Interpretation of Art. 10 of Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnantworkers and workers who have recently given birth or are breastfeeding (tenth

individual Directive within the meaning of Article 16 (1) of Directive 89/391/EEC)(OJ 1992 L 348, p.1) – Definition of worker – Compatibility of the directive of national legislation authorising the dismissal of a member of the board of directorsof a capital company without any restriction taking account in particular of thatmember's pregnancy Advocate General : Bot

OpinionJoinedcases C-250/09C-268/09

Georgiev - Social policyCourt of Justice - Second Chamber

BG New GreatCourtroom

Thursday02/09/201009:30

Reference for a preliminary ruling – Rayonen sad Plovdiv – Interpretation of Article6(1) of Council Directive 2000/78/EC of 27 November 2000 establishing a generalframework for equal treatment in employment and occupation (OJ 2000 L 303, p.16) – National law permitting university professors who have reached the age of





65 to conclude an employment contract only for a fixed duration – National lawfixing 68 as the final retirement age for university professors – Justification fordifferences of treatment on grounds of age Advocate General : Bot

HearingC-356/09

Kleist - Social policyCourt of Justice - Second Chamber

DE New GreatCourtroom

Thursday02/09/201009:30

Reference for a preliminary ruling – Oberster Gerichtshof – Interpretation of Article3(1)(c) of Council Directive 76/207/EEC of 9 February 1976 on the implementationof the principle of equal treatment for men and women as regards access toemployment, vocational training and promotion, and working conditions (OJ 1976L 39, p. 40), as amended by Directive 2002/73/EC – National legislation settingthe retirement age at 60 years for women and 65 years for men and facilitatingthe dismissal of employees when they reach that age – Dismissal by a publicemployer of a woman aged 60 years and entitled to retire, on the grounds of adesire to promote the employment of younger people

Hearing

C-429/09

Fuß - Social policyCourt of Justice - Second Chambe

DE New Great

Courtroom

Thursday02/09/201010:30

Reference for a preliminary ruling – Verwaltungsgericht Halle – Interpretation of Council Directive 93/104/EC of 23 November 1993 (OJ 1993 L 307, p. 18) andDirective 2003/88/EC of the European Parliament and of the Council of 4November 2003 concerning certain aspects of the organisation of working time (OJ2003 L 299, p. 9) and, in particular, Article 6(b), Article 16(b) and the secondparagraph of Article 19 of Directive 2003/88/EC – National rules providing, incontravention of those directives, a working time exceeding 48 hours per week forofficials on operational duties in the professional fire service – Right of an officialwho has exceeded the maximum number of working hours to compensation in theform of time off in lieu or financial remuneration

In Depth AnalysisIn Depth AnalysisIn Depth AnalysisIn Depth Analysis

I. Prospect of further European Globalisation Adjustment Fund assistance for Denmark, Spain and Portugal

On Thursday 2 September, the European Commission approved applications for assistanceunder the European Globalisation Adjustment Fund (EGF) from Denmark, Spain and Portugal.

These applications are now being passed on to the European Parliament and Council which areto endorse them. Funding requested by Denmark aims to help 951 workers in the marinemanufacturing sector back into employment. The Danish application is for a total of €7.5 millionand concerns workers made redundant in 45 businesses in the Danish region of Nordjylland(North Jutland). The application for €2,752,935 from Spanish authorities will help 1,429redundant workers back into employment. Madrid submitted its application after 2,330employees were made redundant by 23 enterprises operating in the automotive sector inCatalonia, in the north-east of Spain. The grant of €2,405,671 to Portugal will help 839 workersin the semiconductor industry to find new jobs.

The Danish application concerns 1,122 redundancies in 45 enterprises most involved inproducing machinery and equipment for the shipbuilding sector and located in Nordjylland, inthe north of Denmark, where the population is sparse and particularly dependent on theshipbuilding industry, and where the levels of employment and income are lower than in the restof the country. Job losses occurred through a fall in shipbuilding requirements. The sector hasseen demand plummet due to a combination of factors, including the financial and economiccrisis that led to major reductions in shipbuilding activity. Redundancies set out in the




30 – 03 September 2010Nordjyulland application are all the more serious to the region as it is anticipated that,even after the end of the crisis, the sector will not revive. László Andor considers that theshipbuilding sector “will move to low cost areas, mainly in Asia, whose market share has beengrowing spectacularly in the years leading up to the crisis”. The European commissioner for

employment, social affairs and inclusion went on to specify “it is unlikely that the companiesconcerned by this application could potentially return to normal production at the end of thecrisis”. The EGF support mechanism for persons made redundant provides the following measures for helping 951 disadvantaged Danish redundant workers return to employment: -promotion of entrepreneurship, courses on location with companies, supplementary generaleducation, and supplementary industrial education in the maritime field, in renewable energy andenergy optimising. The total estimated cost of the package is almost €11.5 million, of which theEuropean Union has been asked to provide EGF assistance of €7.5 million.

The Spanish application relates to 2,330 redundancies in 23 enterprises operating in theautomotive sector. Dismissals were a consequence of the serious impact that the global financial

and economic crisis has had on demand for vehicles in Spain and in its export markets (in 2008,new car registrations in Spain declined by 28% compared to the previous year, with a sales dropof 9.6% for vehicles manufactured in Spain but sold outside the country. All redundanciescovered by the application occurred in the autonomous region of Catalonia, where dismissals inthe motor industry increased by 42% between 2007 and 2008, and by 157% between 2008 and2009. EGF assistance is intended for 1,429 out of the 2,330 redundant workers who have thebiggest difficulties for re-integration into the labour market. The package will help these workersby offering them guidance, preparation of personal pathways, training and on-the-job training,

workshops on entrepreneurship and entrepreneurship assistance, peer support and incentives forthe rapid reintegration into the labour market. The total estimated cost of the package is €4.2million, of which the EGF will pay €2.7 million.

The Portuguese application relates to 839 redundancies in Qimonda Portugal S.A., an enterprisein the semiconductors sector, which had applied for a state of insolvency as a result of the totalstoppage of production at the German Qimonda factory, which was the supplier of raw materialsto the Portuguese unit. The insolvency of the German multinational Qimonda AG was due tothe financial crisis. The several thousand people made redundant by Qimonda were in addition tothe job seekers in the northern region of Portugal, where the unemployment rate is already higherthan the country average. A request for EGF assistance in favour of this region had already beenapproved in June 2009. The EGF aid mechanism for those made redundant by QimondaPortugal S.A. will include skills recognition, vocational training, entrepreneurship training andsupport to business creation, support to self-placement and hiring incentives, and practice in the

workplace. The total estimated cost of this package is €3.7 million, of which the EuropeanGlobalisation Adjustment Fund has been asked to fund €2.4 million. Out of the 914 Portuguese workers made redundant, 839 will benefit from EGF assistance. (02/09/2010 Agence Europe)

II. Political agreement on supervision package The European Parliament and the Council of Ministers reached agreement in principle in theearly evening of Thursday 2 September on the package of new financial supervision legislation,like the setting up in January 2011 of a European Systemic Risk Board (ESRB) and three EUsupervision authorities (ESAs), one for banking, one for insurance and one for securities. Theagreement now needs to be formally endorsed by both institutions, probably on Tuesday 7September at the meeting of EU finance ministers as far as the Council of Ministers is concerned

(see related article) and at the end of September for the European Parliament (at the secondplenary of the month).





News of the agreement was hailed by the MEPs involved in the talks. “We have reached anambitious deal that will protect citizens' interests. (…) 'Main street' no longer pays for theirrational exuberance of financial entities”, said José Manuel García-Margallo y Marfil (EPP,

Spain). Three MEPs from the S&D Group, Udo Bullmann from Germany, Peter Skinner fromthe UK and Antolin Sanchez Presedo from Spain commented: “By designing this new architecture, the EU has made a huge step forward in avoiding any new financial crisis.Nevertheless, more needs to be done. We expect European leaders to show the same level of ambition in securing a deal to regulate hedge funds and private equity.”

In a joint statement, the coordinators of the main political parties at the EP's economic andmonetary affairs committee, Bullmann, Jean-Paul Gauzès (EPP, France), Sven Giegold(Greens/EFA, Germany) and Sylvie Goulard (ALDE, France), explain: “The agreement on thefinancial supervision package foresees that through future legislation, additional supervisory powers shall be conferred on the European Supervisory Authorities. In the common market

shared European infrastructures have to be subject to European supervision”. The EU internalmarket commissioner, Michel Barnier, is pleased that the agreement takes up most of what theEuropean Commission initially proposed: “When the crisis hit, we did not have effective tools toact. With the new supervisory framework that we are creating, we will be equipped to face thefuture: - we will have the control tower and the radar screens needed to identify risks, - the toolsto better control financial players, - and the means to act quickly, in a coordinated way, in a timely fashion”.

Emergencies. It will be the Council of Minsters' job to declare states of financial emergency inthe future. The ESRB will have the power to make a preliminary recommendation that a state of emergency be announced. The EP would have liked to have had its role set out on paper,

although there is not anything actually preventing it from making a political statement. Belgianand French Green MEPs Philippe Lamberts and Pascal Canfin regretted that the Council of Ministers had demanded the right to call a state of emergency. Quizzed by EUROPE, SylvieGoulard, the EP rapporteur on the setting up of the ESRB, explained that she too is unhappy about this because it is crucial that the Council of Minsters “is not the only key-holder”. This isone of the reasons why she has been fighting for the president of the European Central Bank, asthe least challenged authority, to chair the ESRB, at least for the first five years of the ESRB. TheCommission recognises the need to adjust the details of the agreement on the question of statesof emergency, a question that was not discussed on Thursday.

The European supervision authorities will replace the current committees of national regulators

(CESR, CEIOPS and CEBS). The ESAs will have binding powers over national authorities,including where a national authority fails to react directly to a financial institution. These powersover national authorities come into play in the following scenarios - the infringement of EUfinancial legislation (over banks' capital, for example); in a crisis; and in the event of disagreementamong national authorities at the College of Supervisors. In order to take effect, these powers

will have to be added to financial industry legislation. In the event of crisis, ESAs will temporarily have the power to ban toxic financial products and/or short selling. Here too, the financialindustry rules will have to be adjusted to make this possible. In order to ensure better applicationof EU rules, the ESAs will have the power to draw up technical standards. The EP would havethe right to scrutinise the standards before the Commission endorses them, a proceduredescribed by a Commission expert as “cumbersome”.

Over the next two or three years, the ESAs will recruit around a hundred members of staff. Theappointment of the chairs of the committees will be open, and the EP will have the power to




30 – 03 September 2010confirm appointment of the suggested candidate. Approved on an annual basis, some60% of the ESAs' budgets will come from the member states, and 40% from the EU budget.Giegold commented that it was regrettable that the Council of Ministers had insisted on theillogical and inefficient idea of having the three authorities located in different cities (London,

Paris and Frankfurt). The Commission is invited to examine the idea of having all three ESAs ina single location, and the idea of merging them into a single body. (03/09/2010 Agence Europe)