CELEX: 51974PC0813
Language: en
Date: 1974-06-10
Title: Proposal for a COUNCIL REGULATION (EEC) amending Article 107 of Regulation (SEC) No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation (ESC) No 1408/71 on the application of social security schemes to employed persons ard their families moving within the Community (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74) 813
Vol. 1974/0125
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243,
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file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                             COM(74)813 final
                                            Brussels . 10 June 1974
                                 Proposal for a
                            COUNCIL REGULATION ( EEC )
     amending Article 107 of Regulation (SEC) No 574/72 of the Council
     of 21 March 1972 fixing the procedure for implementing Regulation
     (ESC ) N o 1408/71 on the application of social security schemes to
      employed persons ard their families moving within the Community
                 ( submitted to the Council "by the Commission)
   cai(74) 813 final
 ---pagebreak---                             EXPLANATORY MMORANDUM
           When "the proposal for Council Regulation (EEC ) No 574/72 was being
drafted , it was considered preferable , for the sake of clarity and to ensure
uniform implementation , to "bring together in one single article all questions
concerning the conversion of one currency into another for the calculation ,
payment or refund of "benefits .
           Thus , Article 107(l ) of Council Regulation (EEC ) No 574/72 lists
all the provisions of Council Regulation (EEC ) No 1408/71 and of Council
Regulation (EEC ) NO 574/72 for the purposes of which the conversion of
amounts shown in different national currencies is effected at the official
par values declared by the national monetary authorities and recognized by
the International Monetary Fund , Article 107(2) provides that in all other
cases the conversion is made at the rate of exchange actually used at the
time of payment .
           These mechanisms , taken over from the previous Regulations Nos 3
and 4 and the Decisions taken by the Administrative Commission in pursuance
of these Regulations , remained valid while these Regulations were in force .
           The international monetary system that existed when Article 107 was
being drafted was based on the Bretton Woods Agreement which provided for fixed but
adjustable gold parities and exchange rates with very narrow fluctuation
margins . However , this system has been drastically changed since the
Washington Agreements of 18 December 1971 • Apart from the official gold
parities – which no longer correspond to market exchange rates – each country
now notifies a "central rate " which is less legally binding and easier to
alter than official par values . Moreover , fluctuation margins have been
widened and , in some cases , abolished.
 ---pagebreak---            In order to maintain among them stable monetary relations , the
Member States introduced in April 1972 a Community exchange system with as
its prominent feature a narrowing of the fluctuation margins of Community
currencies ( 2.25 per cent instead of 4»5 Per cent under the Washington
Agreements ), However , the Pound Sterling ( United Kingdom and Ireland) began
to float on 23 June 1972 , followed by the Italian Lira on 13 February 1973
and the French Franc on 19 January 1974# In addition , the German Mark was
revalued on 11 March and again on 29 June 1973 and the Dutch Guilder on
17 September 1973 *
           As a result , Article 107 of Regulation No 574/72 had already been
overtaken by events when that Regulation was adopted . Social security benefits
in the different currencies ceased to be of equal value wherever conversions
were effected at par value and one or more currencies deviated substantially
on the market .
           In order to remedy the inconsistencies arising from this situation ,
the competent authorities of several Member States took the initiative of
applying transitional provisions pending a revision of Article 107 of Council
Regulation (EEC ) No 574/72 .
           The proposal for a Regulation presented herewith amends Article 107
in such a manner as to relate it closer to monetary realities .
           Where two currencies whose difference between the market exchange
rate and the rate that corresponds to their de facto parity ratio ( i.e. the
central rate or the par value declared to the International Monetary Fund)
may not exceed a margin of 2.25 per cent , the conversion is to be made by
reference to that de facto parity .
 ---pagebreak---            In the case of two currencies whose difference between the market
exchange rate and the rate that corresponds to their de facto      parity ratio
may exceed a margin of 2,25 Pe ** cent , the conversion is to be   made by
reference to an exchange rate calculated by the Commission on      the basis of
the arithmetic mean of the exchange rates of these currencies      recorded on
each of the two national foreign exchange markets .
           Article l ( 2 ) of the proposed Regulation , which lays down the
exchange rates to be used in the latter case , has in its entirety been taken
over from Article l(3 ) of Decision No 3542/7 3/EISCS of the Commission of
19 December 1973 » published in the Official Journal of the European Communities
No L 361 of 29 December 1973 »
           The rates to be used in the Member States for the purposes of the
provisions listed in paragraph 1 (which have been strictly confined to cases
involving calculation of benefits , excluding cases relating to reimbursement )
are to be based on rates recorded in April for those to be applied from 1 July
following , and on rates recorded in October for those taking effect on
1 January following .
           Whenever rates fixed in accordance with paragraph 1 fluctuate by
more than 10 per cent , the Administrative Commission will examine whether the
substantial fluctuations that have occurred are likely to persist or whether
they are merely accidental and , on that basis , decide whether the reference
period ought to be changed .
           The exchange rates to be used – that is , those calculated by the
Commission for the purposes of Article 107 of Regulation No 574/72 exclusively –
will be published in the Official Journal of the European Communities during
the last month but one preceding the month from the first day of which they
will be applicable . This will enable the social security institutions of the
Member States to make the necessary calculations and to issue the corresponding
orders for payment in time so as to ensure that the persons concerned will
receive them by the first days of the new period of application .
           Paragraph 6 is , as regards its substance , identical to the present
Article 107(2 ) of Regulation No 574/72 ,
           Paragraph 3 provides that the Administrative Commission is to fix
the dates to be taken into account for determining the exchange rates to be
used in the cases referred to in paragraph I5 these are administrative
implementing provisions similar to those which the Administrative Commission
adopted under the former Regulations Nos 3 and 4 »
 ---pagebreak---                                 Proposal for a
                           COUNCIL REGULATION ( EEC )
      amending Article 107 of Regulation ( EEC ) N O 574/72 of the Council
      of 21 March 1972 fixing the procedure for implementing Regulation
      (EEC ) N O 1408/71 on the application of social security schemes to
      employed persons and their families moving within the Community
THE COUNCIL OF TEE FJROFEAN COMMUNITIES ,
HAVING REGARD to the Treaty establishing the European Economic Community ,
and in particular Articles 2 , 7 and 51 thereof |
HAVING REGARD to Regulation (EEC ) No 1408/71 of the Council of 14 June 1971
on tn ^ application of social security . sohemes to employed persons ajid their
families moving within the Community1 '' , last amended by Regulation ( EJJC )
No             t and in particular Article 97 thereof |
HAVING REGARD to Regulation (EEC) No 574/72 of the Council of 21 March 19723^
fixing the procedure for implementing the aforementioned. Regulation (EEC )
No 1408/71 , last amended by Regulation ( EEC ) No
HAVING REGARD to the proposal from the Commission drawn up after consultation
with the Administrative Commission on Social Security for Migrant Workers 5
HAVING REGARD to the Opinion of the European Parliament ;
HAVING REGARD to the Opinion of the Economic and Social Committeef
WHEREAS the abovementioned Regulations ( EEC ) Nos I408/7I and 574/72 entered
into force on 1 October 1972 and have been applicable in the new Member
States since 1 April 1973 ?
IHEFIEAS the international monetary situation has changed since the afore­
mentioned Regulations were adopted ;
WHEREAS the determination of rates of conversion between currencies for the
purposes of Article 107(l ) of Regulation (EEC ) No 574/72 of 21 March 1$72
                   as closely as possible upon monetary realities 5 whereas Article
107 of the snid Regulation should therefore be amended ,
HAS ADOPTED THIS REGULATION ;
^OJ No L 149 , 5 July 1971 , P. 2.
2^0J No         ,
3W No L 74, 27 March 1972, p. 1.
 ---pagebreak---                                    Article 1
Article 107 of Regulation (EEC ) NO 574/72 shall be amended, as follows :
Currency conversion
1 . For the purposes of the provisions listed hereinafter , the rate of
    conversion into a national currency of amounts shown in another national
    currency shall be determined in accordance with the provisions of sub-
    paragraphs ( a), (b) , ( c) and ( d) below:
    provisions of the Regulation : Article 12(2 ), ( 3 ) and (4)1 "the last
    sentence of Article 19(l)(b ), the last sentence of Article 22(l)(ii ),
    the p.-ir, Jtimate sentence of Article 25(l)(b), Article 4l(l)(c ) and ( d),
    Article 46(3 ) and ( 4), Article 50 » "the last sentence of Article 52 ( b ),
    the last sentence of Article 55(l)(ii)j "the first subparagraph of
    Article 70(l ) and the penultimate sentence of Article 7l(l)(b)(ii )>
    provisions of the Implementing Regulation : Article 34(l ) and Article 119(2) «
    Methods of determining conversion rates :
a) in the case of two currencies whose difference between the market exchange
    rate and the rate that corresponds to their de facto parity ratio may not
    exceed a margin of 2.25 per cent , this de facto parity in force on the
    last business day of the reference period specified in subparagraph ( c )
    shall be usedj
b ) in the case of two currencies whose difference , between the market exohange
    rate and the rate that corresponds to their de facto parity ratio may
    exceed a margin of 2,25 per cent , an exchange rate shall be used calculated
    by the Commission on the basis of the arithmetic mean of the exchange rates
    of these currencies recorded on each of the two national foreign exchange
    markets during the reference period specified in subparagraph ( c )|
c ) the reference period shall be the month of April for exohange rates to be
    used from 1 July following , and the month of October for exchange rates
    to be used from 1 January following ^
d) the de facto parity , as currently understood , means the central rate or
    the par value declared to the International Monetary Fund ,
 ---pagebreak--- 2 . The exchange rates to be used for the purposes of subparagraph l("b) above
    shall be as follows :
    a) for the Belgian Franc and the Luxembourg Franc : the average official
        rates quoted on each business day on the Brussels exchange ;
    b) for the Deutsche Mark: the average official rates quoted on each
        business day on the Frankfurt exchange 5
    0) for the French Franc : the average official rates quoted on each
        business day. on the Paris exchange |
    d) for the Italian Lira: the average of the average official rates quoted
        on each business day on the Rome and Milan exchanges ;
    e ) for the Dutch Guilder : the average official rates quoted on each
        business day on the Amsterdam exchange ;
    f) for the United Kingdom Pound and the Irish Pound: the average rates
        on each business day at midday on the exchange markets of the two
        Member States concerned , in London and Dublin respectively !
    g) for the Danish Kroner : the average official rates quoted at midday
        at, the meeting presided over at Copenhagen on each business day by
        the National Bank of Denmark .
3 . The date to be taken into account for determining the exchange rates to
    bo used in the cases referred to in paragraph 1 shall be fixed by the
    Administrative Commission on a proposal from the. Audit Board .
4. Whenever the rates fixed in accordance with paragraph 1 fluctuate by more
    than 10 per cent , the Administrative Commission may alter the reference
    period specified in paragraph l(c).
5 . The exchange rates to be used for the purposes of the provisions of para­
    graph 1 shall be published in the Official Journal of the European
    Communities in the course of the last month but one preceding the month
    from the first day of which they are to take effect .
6 . In cases not covered by paragraph 1 , the conversion shall be made at the
    rate of exchange actually applicable at the time of payment , both when
    paying benefits and when making reimbursements .
                                  Article 2
This Regulation shall enter into force on the day of its publication in the
Official Journal of the European Communities .
It shall be applicable as from 1 July 1974 . It shall be binding in its
entirety and directly applicable in all liember States .
                          Done at  Brussels . on
                                                  For the Council ,