what single market (commission proposes enhanced co-operation with respect to financial transaction tax)? October 23, 2012Posted by Bradley in : eu , trackback
Despite industry opposition, the Commission has published a proposal for a Council Decision approving enhanced co-operation with respect to a financial transaction tax after it became clear that the EU as a whole would not adopt such a tax because of “fundamental and un-bridgeable differences amongst Member States” which meant that unanimous agreement (required for tax measures) could not be achieved. But the document recognises that the original proposal for an EU ftt was based on the idea that different approaches in different Member States would distort competition and fragment the market. Harmonized rules for a subset of EU states also risk distorting competition and fragmenting the market. The Commission says:
Risks of fragmentation of the internal market and of a distortion of competition will first of all be reduced and/or avoided within the scope of the FTT jurisdiction covered by enhanced cooperation. Compared to a situation without such cooperation, the functioning of the internal market, at the level of the 27 Member States, would be improved rather than undermined.
Enhanced co-operation must not “undermine the internal market or economic, social and territorial cohesion. It shall not constitute a barrier to or discrimination in trade between Member States, nor shall it distort competition between them” and Art 329 TFEU states that “[a]uthorisation to proceed with enhanced cooperation shall be granted by a decision of the Council acting unanimously.” So it isn’t obvious that this will happen. But alongside the uncertainties about the banking union/SSM the proposal raises new questions about whether the EU will in fact have a single market in financial services any time soon.