France’s EU Council Presidency to focus on new growth model

France’s EU Council Presidency to focus on new growth model

Thu 10 Feb 2022

As part of its rotating Presidency of the EU Council for a six-month mandate, France chaired its first EU Council of Finance Ministers (ECOFIN) meeting on 18 January with a view to getting certain current legislative work finalised.

The ECOFIN meeting was mainly dedicated to introducing the Presidency’s roadmap for the months to come. Beyond Member States’ concerns on the evolution of the pandemic, supply chains disruptions, or higher inflation, the Presidency wants to learn lessons from the crisis to build a new growth model.

Three principles on economic and financial issues to underpin this future model are highlighted.

A sustainable growth model that supports the climate transition

First of all, the Presidency will actively work on the Carbon Border Adjustment Mechanism (CBAM) and the proposed Energy Taxation Directive (ETD) to avoid uneven competition from the importing goods not subject to EU green standards.

The Presidency will also seek to develop sustainable finance in support of the climate transition and make Europe a leader in sustainable finance, which calls for further progress to be made, such as adopting the green bond standard. In addition, the Presidency will prioritise work on a Corporate Sustainability Reporting Directive (CSRD), which will increase corporate transparency in environmental and social matters as well as in the areas of fundamental rights and anti-corruption (ESG). An ambitious implementation timeline will enable the EU to position itself as a forerunner in a robust normative competitive environment.

A fair growth model and digital regulation

The Presidency stresses that the EU has been at the forefront to get OECD agreement on minimum taxation with other major jurisdictions such as the US. This is a major condition for international competition to be fair, and the reason why it is a matter of utmost importance. To that respect, the Presidency will expect Member States to endorse the directive on the 15% minimum taxation, which faithfully transposes the international agreement at the next ECOFIN meeting in March.

Another significant milestone will be to reach an agreement on the proposed regulation of Big Techs, digital services and digital markets acts or “DSA DMA”.

An innovative growth model backed by a solid financial sector

Aware of the formidable cost required for green and digital transitions in the EU, the Presidency is discussing the deployment of new funding channels. The Eurogroup will be particularly involved in the technical discussions on deepening the banking and capital market unions to help make these transitions. Against the background of Germany’s new proposal for an EU deposit insurance scheme (EDIS), the Presidency will seek an agreement on the third pillar of the banking union. It will also focus on the negotiations regarding a single access point for financial and non-financial information, the long-term investment funds framework and the Alternative Investment Fund Managers Directive (AIFMD) review.

The Presidency is committed to guaranteeing the resilience and competitiveness of financial institutions. Therefore, it expects to be actively working on the Basel III banking package during the first weeks of the mandate with a view to reaching agreements on consensual elements of the package.

Finally, protecting financial transactions against cyber and criminal threats will be another key priority. Maximum possible progress on regulating digital finance, namely the Regulation on Markets in Crypto-Assets (MiCA) Digital Operational Resilience Act (DORA) and anti-money laundering and countering the financing of terrorism (AML/CFT) is expected to be reached.