Review of Sustainable Development Policy

The European Commission has issued its 2009 review of the European Union strategy for sustainable development.

The main priorities outlined in the report are:

– contributing to a rapid shift to a low-carbon and low-input economy, based on energy and resource-efficient technologies and sustainable transport and shifts towards sustainable consumption behaviour;

– intensifying environmental efforts for the protection of biodiversity, water and other natural resources;

– promoting social inclusion;

– strengthening the international dimension of sustainable development and intensifying efforts to combat global poverty.

New EU Roaming Rules

Some popular EU legislation- the new EU roaming rules:

• Limit for the consumer price for sending a text message while abroad to €0.11 (excl. VAT );
• Mobile roaming calls caps – €0.43 for calls made and €0.19 for calls received abroad;
• Per-second billing after 30 seconds for roamed calls made and from the first second for calls received abroad;
• New wholesale cap for surfing the web of €1 per MB downloaded.

New Procedure on Infringements of Community Energy Legislation

The European Commission has started infringement procedures against 24 Member States for violations of different provisions of the existing community legislation on the internal electricity and gas market. The Commission has focused on provisions which guarantee fair competition in the interest of consumers.

The grounds for the infringement procedure against Bulgaria are similar to other member states: that the Transmission System Operators (TSOs) do not publish sufficient information for the available capacity and that congestion management has to be improved.

New EU Feed Regulation

The Council of the EU has adopted new feed regulation that should simplify and modernize procedures for labeling and marketing animal feed and pet food..

The main changes are:

• Responsibility of the feed business operators is expanded also to those dealing with pet food, an area in which the recent melamine incidents revealed a gap;
• New list with prohibited substances for feed use;
• “Bio-proteins” have to comply with the general provisions for feed materials;
• Mandatory labelling particulars for feed materials and mixed feed;
• Solution to the controversial issue of the declaration of feed materials in compound feed (so called “open declaration”) in a balanced way to allow innovation and, at the same time, appropriate information for the customers.
• Creation of a guide to good labelling for farm animal feed and one for pet food on the initiative of the stakeholders (feed manufacturers and users) and approved by the Commission (Co-regulation).
• Establishment of a Community Catalogue of feed materials in co-regulation.

List of Organs Qualified to File Consumers’ Protection Injunctions

The list of the entities being qualified to bring actions for an injunction under Article 2 of Directive 98/27/EC has been published in the Official Journal. This article allows for requiring the cessation or prohibition of any infringement of consumer rights.

Codified Directive on Consumer Injunctions

A new, codified Directive 2009/22/EC on injunctions for the protection of consumers’ interests has been published in the Official Journal.

The directive regulates actions for injunction where infringements of collective consumer interests occur.

RAPEX Report 2008 Shows Rise in Number of Detected Dangerous Products

The European Commission’s annual report on the Community rapid alert system for non-food dangerous products (“RAPEX”) reveals that the number of dangerous consumer products withdrawn from the EU market rose by 16% in 2008 compared to 2007.

Toys (498 notifications), electrical appliances (169 notifications) and motor vehicles (160 notifications) alone accounted for 53% of all notifications on products posing a serious risk in 2008.

The General Report on the EU’s Activities in 2008 is Now Available

The Commission has published the General Report on the activities of the European Union in 2008. The General Report covers the work of all the EU institutions and bodies and seeks to provide an overview of the notable events and key trends of EU life in 2008.

HLG on Financial Supervision: No Micro-Supervision for ECB

The High level Group on Financial Supervision in the EU has published its long-awaited report. The group is chaired by Jacques de Larosière, and includes Leszek Balcerowicz and Otmar Issing, among others.

The report first analyses the causes of the financial crisis. One of the main reasons in the report is that “very low US interest rates helped create a widespread housing bubble“.The report claims that “the credit expansion in the US was financed by massive capital inflows from the major emerging countries with external surpluses, notably China”.

The HLG believes that there have been fundamental failures in the assessment of risk, both by financial firms and by those who regulated and supervised them. The members of the group believe that insufficient attention was given to the liquidity of markets. An important point of the report is that regulators and supervisors focused on the micro-prudential supervision of individual financial institutions and not sufficiently on the macro-systemic risks of a contagion of correlated horizontal shocks.

The report suggests some counter-cyclical regulation measures:
- introducing dynamic provisioning or counter-cyclical reserves on banks in “good times” to limit credit expansion and so alleviate pro-cyclicality effects in the “bad times”;
- making rules on loans to value more restrictive;
- modifying tax rules that excessively stimulate the demand for assets.

The HLG believes that the Basel 2 framework nevertheless needs fundamental review. The report suggests that:
• the assets of the banking system should be examined in terms not only of their levels, but also of their quality;
• stricter rules should be applied for off-balance sheet vehicles;
• the EU should agree on a clear, common and comprehensive definition of own funds.

As for credit rating agencies (CRA), the report suggests a fundamental review of CRAs’ business model, its financing and of the scope for separating rating and advisory activities should be undertaken. More, the report demands that the use of ratings in financial regulations should be significantly reduced over time.
Some of the other important ideas include:
• at least one well-capitalised central clearing house for credit default swaps in the EU;
• the assessment of bonuses for should be set in a multi-year framework, spreading bonus payments over the cycle;
• Deposit Guarantee Schemes (DGS) in the EU should be harmonized and preferably be pre-funded by the private sector.

The HLG states that “while the Group supports an extended role for the ECB in macro-prudential oversight, it does not support any role for the ECB for micro-prudential supervision“. The report suggests a new group, replacing the current Banking Supervision Committee (BSC) of the ECB, called the European Systemic Risk Council (ESRC) should be set up under the auspices and with the logistical support of the ECB. Its task would be to form judgements and make recommendations on macroprudential policy, issue risk warnings, compare observations on macro-economic and prudential developments and give direction on these issues.