Credit rating agencies (debate)
The next item is the report by Mr Gauzès, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1060/2009 on credit rating agencies - C7-0143/2010 -.
Mr President, Mr Chastel, Commissioner, here we are in the third act of the financial legislation for 2010. Following supervision, following the directive on alternative investment fund managers, we are once again looking at credit rating agencies. I say 'once again' because Europe has not been slow in bringing in a regulation in this area which was conceived in 2009 and which is now taking effect.
Credit rating agencies, in general, issue opinions, literally in the form of ratings, on the creditworthiness of businesses and states and on complex financial products. The rating reflects an assessment of the risk of issuers of financial instruments not being able to honour their debts. These agencies have gradually become very important in the financial world, for a variety of reasons.
First, ratings are taken into account in banking regulations in order to determine the amounts of own funds that will be used to back investments. The second reason is that ratings have been a factor in the success of issues, since they have become a major indicator for investors.
Yet, although credit rating agencies were not the main cause of the recent financial crisis, they did have a harmful influence. Indeed, they underestimated the probability that issuers of certain complex financial instruments would default.
Faced with the need to restore confidence in the markets and to strengthen protection for investors, in 2009, the European Commission proposed a mechanism for monitoring and supervising credit rating agencies. Thus, in the same year, Regulation (EC) No 1060/2009 on credit rating agencies was adopted.
During the debates in the European Parliament preceding the adoption of this regulation, your rapporteur stressed the need for EU-wide joint oversight of credit rating agencies' products and integrated supervision of them. At the time, European supervision of this type was legally impossible. However, the Commission undertook to draft a legislative proposal along these lines, and you, Commissioner, kept this promise.
The agreement reached between the Council and the European Parliament on the architecture of European supervision, which will enter into force on 1 January 2011, now makes the effective implementation of rating agency supervision possible.
It is stressed in the Regulation establishing the European Securities and Markets Authority that this authority will exercise its own supervisory powers in relation, in particular, to credit rating agencies. That was the objective of the additional amending regulation on which we reached an agreement and on which we will vote tomorrow.
What I wanted - and my colleagues supported this request - was for the other issues relating to credit rating agencies, allocation of sovereign debt, remuneration schemes and competition, to be postponed and dealt with in a study taking the form of an own-initiative report, which will precede the legislative proposal that you are due to make in the first half of 2011 and for which you have launched a consultation.
I believe that, by establishing European supervision of credit agencies, we are taking a big step along the same lines as the supervision arrangements that have been implemented. I now want to thank the Belgian Presidency for its tireless efforts on the financial dossiers, you and your teams, Commissioner, and, obviously, my fellow Members in the European Parliament who participated in this study and who supported our positions.
Mr President, Commissioner, ladies and gentlemen, after Mr Gauzès and a report of this kind, it is clearly a pleasure to be among you on behalf of the Belgian Finance Minister, Didier Reynders, on the day of the debate concerning the amendment of the regulation on credit rating agencies.
Once again, as you have just said, we are talking about a measure relating to financial services on which the three institutions have just reached an agreement in record time.
We are also very pleased that this agreement will be voted on in Parliament tomorrow, as agreed, between the three institutions.
The regulation will therefore be modified to allocate additional powers to the European Securities and Markets Authority. This will allow the authority to exercise stricter supervision of the activities of credit rating agencies throughout the Union. This is an important step which we also think will contribute to improving the stability of the financial markets, and which will support the development of a much more effective supervisory framework.
Once the regulation enters into force, therefore, the authority will have powers concerning the registration and direct supervision of credit rating agencies. It will also have the power to determine that a credit rating agency has infringed the regulation in force and the power to impose appropriate penalties.
Of course, a framework will also be provided for cooperation between the competent authorities in the Member States and the European Securities and Markets Authority. However, we are prepared to have a more in-depth debate on the issue of regulating the credit rating agency sector itself once the Commission has provided us with its proposal on the comprehensive review of this sector, which is set for next year. While I am obviously hoping for a positive result from your vote tomorrow, I would particularly like to thank the Chair of the Committee on Economic and Monetary Affairs, Mrs Bowles, Parliament's rapporteur, Mr Gauzès, and its shadow rapporteurs, of course, as well as Commissioner Barnier, who, alongside the Belgian Finance Minister, Mr Reynders, carried out important work for six months, securing swift agreements that have been transformed in this very Parliament into real decisions in the financial sector. Anyway, thank you for your fruitful and effective collaboration in this area. I am sure that you will continue this work during the Presidencies to come.
Mr President, good afternoon to you all. You spoke very well, Mr Gauzès, as did Mr Chastel just now, on behalf of Mr Reynders, about the supervision and regulation of the large hedge fund and private equity sector, today, and about this second stage of credit rating agency regulation, tomorrow, which is clearly being undertaken with and thanks to you, ladies and gentlemen, and thanks to the Council and to the initial work of the Commission. On the subject of regulation, Europe is making concrete and effective progress, and it is learning the lessons of the crisis, as all taxpayers, who are also European citizens, are demanding.
Ladies and gentlemen, the agreement on the supervision of credit rating agencies is an important step, and I, too, would like to thank you, Mr Gauzès, and, of course, those working alongside you, the Committee Chair, Mrs Bowles, as well as the shadow rapporteurs, Mr Klinz, Mr Giegold, Mr Pittella and Mr Fox. In a few days' time, this Presidency will come to an end, having had much success and having made a lot of progress, and I want to give my sincere thanks to Mr Reynders and to his whole team for the good relations we have maintained throughout the last six months.
This is a good agreement, even though I have to say that it would have been excellent if, in the final compromise, we had taken up the rules that the Commission initially proposed for reinforced transparency regarding structured financial instruments. However, as was indicated in the recitals of the regulation, we will come back to this subject, if you wish, during the next revision of the regulation in 2011.
As Mr Chastel said just now, from July 2011, this amendment to the 2009 regulation will give ESMA, the new Securities and Markets Authority, the direct power to supervise credit rating agencies at European level. Ladies and gentlemen, the importance of this decision that you are taking today really must be understood. This is the first time that ESMA, this new European authority, will have the power to directly supervise financial institutions operating across Europe.
This amendment completes the new European supervision framework. It strengthens ESMA's powers considerably, as you explained very well, Mr Gauzès, and as Mr Giegold, who is here, was also anxious to point out during the debate on supervision. This is therefore a very important subject for you, and it is also a very important subject for us.
ESMA will become the institution responsible for registering rating agencies and supervising them throughout the Union, and it will exercise strict control. The legislation will grant it all the supervisory powers deemed necessary to force rating agencies to comply with the terms of the regulation.
ESMA will be able to exercise supervision - I am thinking here of requests for information and the power to carry out spot checks - and if it notices that a credit rating agency is committing a violation, it will have to take the measures necessary to force the agency to put a stop to that violation. ESMA will also have the power, strictly regulated by clear rules, to impose fines and penalties on rating agencies which do not respect the regulation. Clearly, this regulation also guarantees the rights of defence of rating agencies, in particular, the right to a hearing, access to documents and other procedural guarantees. Finally, when exercising a supervisory power, ESMA will respect the rights enshrined in the Charter of Fundamental Rights and the other principles and provisions of European Union law, including the proportionality principle.
The new regulation on rating agencies will also ensure a single point of contact for all rating agencies, a regulatory framework which is harmonised across the European Union, with equal treatment, and a more consistent application of the rules for agencies throughout the European Union.
I therefore think that this represents a considerable gain in efficiency, transparency and security within the general architecture that we are constructing week by week in order to achieve intelligent supervision and effective regulation.
Mr President, I do not want to speak at great length as I did just now, but I would perhaps like to expand on what Mr Chastel said and mention the next stage, since I myself said that we must go further to ensure the proper regulation of rating agencies, while noting that the agencies are not creating the problem and the turbulence on the financial markets. The thermometer does not cause the fever, but it still needs to work properly, which was not the case in the past, and that is what we want to remedy, so to speak, with these successive regulations.
The Commission is already considering the next stage: a public consultation was launched on 5 November 2010 to broaden this debate and to collect the points of view of all the parties concerned, and, as you know, there is nothing artificial about the debates regarding all these regulations. Ladies and gentlemen, I truly set great store by listening to every contribution, criticism or idea made in the context of these consultations.
We shall now consider, first, the consequences of the issuer-pays model, which is widespread among rating agencies; second, the dependence of the banks and other institutional investors on credit ratings; third, the rating of sovereign debt - which is not a straightforward matter; fourth, increasing transparency in order to manage conflicts of interest better; and fifth, creating more competition and diversity in this rating agencies market, which is currently concentrated in too few hands.
This consultation is open until next January and, on the basis of all the responses that we receive, and of Mr Klinz's own-initiative report, we will take a decision at some point in 2011, but not too late, regarding the measures that we want to implement in order to complete, through a third stage, these two regulations on rating agencies, which are now almost implemented.
rapporteur for the opinion of the Committee on Legal Affairs. - Mr President, as a Vice-Chair of the Committee on Legal Affairs, I would like to present some important aspects that were the subject of the debates and amendments tabled in this committee.
Firstly, at the present time, payment for the structured instruments evaluated by the agencies is made by the issuing company. There can be conflicts of interest because the rated companies are interested in having a good rating. Alternatively, it might be the users of ratings who pay. The users' interests are more diverse and therefore, there is not a single interest that can lead to a conflict of interest. There are users who prefer a good rating, for instance, when they want to sell shares, and those who prefer a bad rating, for instance when they want to buy shares.
Secondly, the regime for the rating agencies could profit from the rules that have been established for the auditors. The rating agencies and auditors have a lot of responsibility for the good reputation of companies and the proper functioning of the market. Auditors, however, seem to be subject to far stricter rules than the rating agencies.
Thirdly, the European Securities and Markets Authority, ESMA, should have supervisory competence over the credit rating agencies in order to verify possible material discrepancies between the ratings given by different agencies for the same structured financial instrument. ESMA should also have greater power of enforcement.
Fourthly, the directive introduces a new principle, taken from the latest US legislation. When an agency other than the one contracted to make the valuation can do its valuation for the same instrument, it is subject to the contracted valuation. For this, the first agency must disclose certain information regarding the valuated instrument. In such a way, two beneficial effects are obtained - firstly, there is a second opinion and, secondly, the liability that falls on the contracted agency is reduced.
Finally, I want to underline the fact that the provisions of this directive, which represents a new regulatory frame, should only apply to the structured financial instruments, credit rating agencies themselves being an important part of structured finance. The remainder of the financial instruments, 150 year-old common shares or plain bonds which do not pose a systemic risk should not be part of this directive if you want to be tight but not to over-regulate, if you want to be competitive but not expensive in administrative costs, and if you want to hold capital in Europe and not drive it away to the emerging markets abroad.
Mr President, ladies and gentlemen, thanks to our now tried-and-tested cooperation, we have worked productively with Mr Gauzès on this regulation to ensure some important advances in the rules governing one of the most controversial areas for the stability of the financial markets.
One such improvement is undoubtedly the plan for the newly formed European Securities and Markets Authority (ESMA) to be able to directly penalise credit rating agencies for misconduct. This was a point that I very much insisted on. Parliament is showing in this way that it is fighting for the creation of a strong European supervisory body that is equipped with real powers.
We are also aware that this regulation still does not tackle all the problems in a sector which, in recent years, has been seen to have exacerbated the crisis. The stumbling blocks to be overcome, which are the subject of a parliamentary report already being drafted by Mr Klinz, concern two issues in particular: the evaluation of Member States' sovereign debt and the general structure of a market characterised by an obvious oligopoly.
The European Union must have a clear objective in relation to these issues, namely, to make finance less dependent on ratings. The references currently contained in the laws and regulations on credit rating agencies must be superseded by alternative creditworthiness standards. The United States and the G20 have already gone in that direction.
At international level we need to have the courage and the ambition to change the rules underpinning Basel II, by which I mean the obligation to use ratings - a mechanism that has actually led the banking sector, in the past and still today, to completely give up on supervision, the consequences of which are plain to see.
I shall conclude with a brief reference to the issue of sovereign debt rating: this should no longer be the responsibility of credit rating agencies, because too often they have exasperated market sentiment with their ratings, fuelling speculation. We should give thought instead to the possibility of a European institution - perhaps an existing institution, such as the European Court of Auditors - playing a role in this area.
I really do hope that my suggestions will be endorsed by my fellow Members and will receive the full, authoritative support of Commissioner Barnier, for whom I wish to reiterate my high regard.
Mr President, Commissioner, ladies and gentlemen, in a few weeks' time, we will have a new supervisory structure in Europe, which has been shaped to a considerable extent by the European Parliament. Among these three new supervisory authorities will be one that is responsible for markets and securities: the European Securities and Markets Authority (ESMA).
ESMA will have the last word in connection with the registration and oversight of credit rating agencies and be responsible for ensuring that the credit rating agencies actually comply with the new regulations. If it so wishes, ESMA can delegate this cross-border responsibility to national supervisory authorities if these supervisory authorities are small and only operate nationally.
This proposal is therefore nothing more than an adaptation of the regulation of April 2009 to the new circumstances, but it strengthens the role of ESMA. It gives the new supervisory authority more powers and - something that is completely new - it gives ESMA the power to punish non-application of the regulation. I very much welcome this, because I believe that strengthening the position of a new supervisory authority of European mould will genuinely increase its credibility on the market.
I just have one point of criticism. When drawing up the regulation in April 2009, we took a political decision with regard to how we should deal with ratings from third countries in Europe. We said at that time that they can be used in Europe if they either comply with the equivalence procedure or are supported by a credit rating agency that is registered and approved in Europe, the so-called endorsement procedure.
The Commission has now changed this at level 2 and said that endorsement will no longer be possible. Therefore, only the equivalence procedure actually applies. I consider this - as it was undertaken unilaterally - to be an undemocratic way of going about things, and I believe that we should stick to the decision that we made at the time in April 2009.
As the Commissioner also mentioned, there are still a lot of outstanding issues where credit rating agencies are concerned, namely, the lack of competition, insufficient transparency, the business model as to whether the issuer or the investor should pay, which need to be looked at critically. There are questions with regard to the payment system and also with regard to excessive dependency, because in reality, it is the case that, as a result of regulatory provisions, many ratings agencies have become de facto regulatory certification authorities. I am taking this up in the own-initiative report, and I am pleased that the Commission is going to table a legislative proposal on this matter in the next year.
Mr President, Mr Chastel, Mr Barnier, Mr Gauzès, ladies and gentlemen and shadow rapporteurs, I am indeed pleased that we have now taken this step and that for the first time, a sector of the European financial system will be placed under direct European supervision. It is also a step towards a strong Europe in an internal market and the firm control of a sector that contributed to the crisis. I would like to make one more comment on this. Mr Barnier, the selection process is, of course, currently under way for the new authorities, and the new authorities are only as good as their staff. I can only hope that the staff will genuinely be selected on the basis of expertise, independence from the financial industry that they are to control and the clear desire to serve in the public interest, and that we will not see national quotas again in the selection process that disregard these important criteria.
In addition, we still have a great deal to do in the area of credit rating agencies. We still have no real transparency when it comes to the information with which the credit rating agencies work and there is far too great a use of regulatory ratings in the financial sector and in the regulations governing the financial industry. We have serious conflicts of interest, we quite clearly have a market power of three major providers and there is no liability for negligently issued ratings. Commissioner, it is good that the consultation is now under way and we await the results with interest. Civil society, in particular, should be involved in this consultation, but then you need to put forward a courageous proposal. I am already looking forward to your proposal. Please be as courageous as you have been up to now, and let us produce legislation together during the next year that solves the problems that are still present on the credit rating market in a genuinely European way. We owe this to our citizens.
Mr President, I would like to thank Mr Gauzès for his excellent work on this subject. I am pleased that Articles 8a and 8b were removed during the trialogue. Initially, the Commission's draft proposed creating secure websites. I was never convinced. We can see how the situation unfolds in the United States, and if the sites turn out to be useful, we can always introduce them here in Europe afterwards.
Mr President, I am delighted to inform you that my group will vote in favour of this report tomorrow, and I thank Mr Gauzès once again.
Mr President, Mr Chastel, Mr Barnier, ladies and gentlemen, the last few months since the beginning of this year have shown the damage that credit rating agencies can do. There is therefore an urgent need for action. I, too, therefore welcome the directive, in particular, the fact that the supervision and registration of credit rating agencies will be transferred to ESMA. That is an important and positive step in the right direction.
However, numerous good and progressive proposals fell by the wayside during the negotiations on the report. I would like to mention this once again. Thus, the appointment of ESMA remains the only real and positive change. The proposals for a public database for the issuing of credit ratings have been dropped, as has any reference to the establishment of a public credit rating agency. The consistent and continual examination of issued ratings by the supervisory authorities has also been forgotten about. Moreover, the Commission had proposed the promotion of unsolicited credit ratings in order to deal with the disastrous issuer instructions for the evaluation of financial market products. This, too, has come to nothing.
I hope that these aspects will be taken into consideration in the reports on this matter that are still to come and that were mentioned by Mr Gauzès and by you, Mr Barnier.
(DE) Mr President, Commissioner, we are nearing the time of fervent prayers in light of today's news, once again concerning the euro, for which we are grateful. I very much hope that, with your courageous approach, you will not be too far behind the times. I would like to endorse what the previous speaker said and ask you urgently to ensure, in your sphere of influence, that selections will not only be made on the basis of national quotas, but also that party political preferences will be put aside so that we can finally break with a very awkward tradition in connection with officials, which is specific to Europe, and actually bring in the best people.
My second request is for much greater transparency with regard to the competitors on the international market outside the EU, which have constantly made a political issue out of their ratings and have suggested that they have an omniscience that in no way corresponds to what is actually happening on the market or even their importance.
(HU) Mr President, Commissioner, Mr Gauzès, ladies and gentlemen, it is truly a great pleasure for me to note that Mr Gauzès has created such an excellent report. The topic is of extreme importance, and looking at the habits and operation of credit rating agencies, it always has relevance. The rapporteur's effort to ensure that credit rating agencies and their products are controlled in an integrated way, on the basis of uniform EU standards, deserves support. However, it is important to know what exactly is being rated and how. We must ask these questions, as it is common knowledge that prior to the crisis, these credit rating agencies gave excellent ratings to several thousand billion dollars worth of doubtful or bad securities, thereby unfortunately providing unlimited ground for speculation.
First of all, we must examine the issue of independence, because if it is true that banks and certain investor groups are financing the fees of the evaluations, we might ask the question whether the decisions of credit rating agencies are indeed free of external interests. The second issue is the methodology of ratings. The third issue is that with concerted downgrades and negative rumours, any country can be made insolvent, and in this way, it can be forced to take out new loans and thus remain an increasingly vulnerable client in the debtors' market. Small, open economies and Member States outside the euro area are particularly vulnerable.
I am therefore convinced that it is incorrect to accept that credit rating agencies are not responsible for the ratings they give. Ladies and gentlemen, let us put ratings in their appropriate place, and rely on them only to the extent of their credibility, and consider them as guidelines when establishing the regulatory framework. The report is more than worthy of support. The global economic crisis has shown that the regulation and EU level supervision of the operations of these institutions are necessary.
(DE) Mr President, Mr Chastel, Commissioner, credit rating agencies played, and are still playing, a dishonourable role in the financial crisis. There are too few of them, they are too powerful and too lacking in transparency, and their structure and importance is an example of how badly things have gone awry with our global financial system.
Confidence in credit rating agencies can only be restored by establishing new, sound rules for them. Tomorrow, we will vote on one step in this development, the necessary adaptation of credit rating agencies to the new European financial market supervisory structure and adaptation to the new comitology procedure, the delegated acts.
ESMA will be brought into being. It is authorised to permanently revise ratings, carry out a thorough inspection of credit rating agencies and also to impose penalties that are higher than the profit gained from breaking the law. All of these are new developments that are, as a minimum, absolutely necessary.
However, I would like to point out that the European Securities and Markets Authority should be staffed in such a way as to enable it to actually carry out its tasks efficiently and not by a relatively small staff of ESMA employees who are expected to perform almost superhuman tasks.
We should be completely open with regard to the forthcoming major reform of the credit rating agencies and today, we should discuss what seems to be almost impossible or hard to imagine. After all, special purpose entities in which banks deposited their junk bonds received the highest credit rating from the credit rating agencies. Thus, in the major revision, we should consider creating a European public rating agency and changing and examining the payment model. Finally, we should, of course, consider whether there is a need for a second rating. We need a serious, robust form of regulation so that it cannot happen again that three large agencies can bear so much of the responsibility for this current sorry financial situation.
Mr President, this reminds me of a phrase in Latin that goes quis custodiet custodes, who will guard the guards? The same is true here. Who is going to rate the credit agencies? Thankfully, we now have an instrument that will do that and, certainly, the credit rating agencies have brought no credit on themselves; rather; they have discredited themselves by their behaviour over the last couple of years and they have exacerbated the financial situation rather than alleviate it.
So I am delighted that the European Parliament and our authorities are taking control of the situation and I compliment Mr Gauzès, Mr Barnier and the Council for putting in place an instrument that will deal with this. I am certainly looking forward to tomorrow's vote on this and, if I am given the opportunity, I will vote three or four times to bring these vultures under control.
(LT) Firstly, I would like to congratulate the rapporteur on the preparation of this very important document. To date, much has been done as regards the creation of a system for financial control and its operation in the European Union. Credit rating agencies play a very important role as they have a direct impact on the operation of the financial system, its soundness and stability. I feel that one major problem is the fact that the EU financial supervisory authorities being set up do not yet have real powers which would enable them to have a direct impact and to take binding decisions. I therefore support the proposals giving one of the European supervisory authorities, in this case, the European Securities and Markets Authority, greater powers to ensure and monitor the transparency of the work of credit rating agencies certified by the EU in order to avoid distortions of the principles of the financial market and the single internal market.
(HU) Mr President, ladies and gentlemen, first of all, if we wish to be honest, we must unfortunately declare that credit rating agencies are essentially subsidiaries of the international plutocracy. Through the agencies, they put pressure on countries in an attempt to influence their decisions. The greatest problem with ratings is that they are almost entirely subjective and do not offer an accurate picture of the economic condition of the countries concerned at a given moment in time. These ratings, which are a far cry from reality, clearly hinder countries in recovering from the crisis.
Meanwhile, there are, of course, objective indicators, such as the general government deficit or external and internal indebtedness. On the other hand, the establishment of an organisation, a supervisory body, which essentially provides quality control for these institutions, and thereby prevents them from giving often erroneous ratings, is a big step towards a solution. However, I would, at any rate, like to address a question to Mr Barnier regarding the ESMA: we have talked much about how it would impose various sanctions, but when will we know what these sanctions will be, what their extent will be and when they can be introduced? I thank you in advance for your reply.
(RO) Mr President, the aim of the amendments suggested by Mr Gauzès's report is to provide additional details concerning ESMA's new powers in relation to national agencies. My view is that the remit should be defined very clearly. In addition, financial market participants should be able to identify the competent authority in the rating agencies sector.
I think that the new authority should have sole responsibility for registering and supervising existing rating agencies. They should have the opportunity to access information about the financial instruments being evaluated by competitors. At the same time, access to websites should only be given if the confidentiality of the information requested can be guaranteed.
Finally, I wish to stress the importance of a credit rating agency being registered by a competent authority and its validity throughout the whole EU.
Mr President, I am pleased that this is before us here this evening. I have to say that one of the points that is very rarely made is that, until recently, the public sector in Ireland was being regulated by the private sector; it was being regulated effectively by the credit rating agencies and the markets. I am one of those who welcome the fact that we got away from the private sector and, at least, we have the shield of the ECB, the EU and the IMF in the circumstances we are in.
I might not agree with the exact package but I think it is a better position for us to be in than to be at the mercy of the credit rating agencies and the markets. The markets are supposed to be free; I think that is something we might have a debate on some other day. But, in relation to the credit rating agencies, one of those agencies was getting USD 800 million a year for rating structured finances. Their impartiality really is being called into account and, when we look back on what they did in the past and even when we look back on what they do now, I think we will look back in dismay. It is time they were called to account and I am glad that there will be stronger supervision for these bodies.
Mr President, I would like to respond accurately, but succinctly to all those who have spoken, to whom I give my thanks.
First, Mr Bodu, I obviously share your point of view on the risks of the issuer-pays model. I made this point myself in my speech just now. It is therefore a subject which forms part of our consultation in the future proposal, the third stage. As I said to Mr Fox and Mrs Băsescu, we will indeed also return to the matter of structured products. Mr Fox, I listened carefully to your concerns about security as regards exchanges of information, and we will keep an eye on this; we will come back to this point. We will also continue to rely on the competence of ESMA in this area. For us, this is a question of efficiency.
Mr Pittella, thank you for your encouragement. I think that it is good that, like Mr Klute and Mrs Gáll-Pelcz, you emphasise the importance of this new supervisory authority.
There are still some difficult issues to be addressed, which we have identified, and you yourself quite rightly reminded us of them: the lack of competition in this sector, the issue of rating sovereign debt, which Mr Kelly mentioned just now, and which poses a particular problem. We will take these ideas into account in the new consultation phase.
I share Mr Klinz's view on the importance of penalties and the ability of ESMA to impose them. Mrs Regner also mentioned this point.
On the issue of third countries, Mr Klinz, the aim is to ensure that our requirements remain rigorous, and I say this also to Mr Mitchell, who mentioned Europe's credibility with respect to these decisions which must be taken.
I am grateful to Mr Giegold for his positive assessment of the progress that we have made together today. On the subject of recruiting people to manage the European authorities, I obviously cannot provide any specific information about names at the moment, but I would like to say to you, Mr Giegold, and also to Mr Martin, that the process is now under way, that it is being conducted completely objectively, and that, as far as I am concerned, the criteria according to which the choice must be made are competence and independence.
I would also say to Mrs Regner that the agencies will gain in power. From the very first teams, they will develop in accordance with the competences that they have been and will be given. We are anxious to ensure the credibility of the agencies' work in terms of methods and competences.
Mr Klute, thank you for your comments. You have clearly identified the problems which remain to be dealt with, and I am conscious, as I have said to several Members, that we will have to thoroughly examine these issues. That is why the idea of dealing with this issue of regulating the agencies in three stages seems to me to be constructive and positive.
Mr Balčytis, the agencies, as I have said myself, are not creating the problems. They just need to evaluate the problems properly and the thermometer needs to work properly. With regard to products, businesses and states, we have the right, considering the importance of these ratings, to expect and to take steps to obtain an evaluation or rating which is objective and credible. I think that from this point of view, Mr Balčytis, you should not underestimate the role that ESMA will play.
Finally, I would also say in response to Mr Szegedi that, regarding the level of the penalties, the specifications for ESMA in the text that you will be adopting go into detail on this, and that ESMA will apply these penalties in accordance with the proportionality principle.
Mr President, ladies and gentlemen, I thank you in advance for your vote of support for this new stage, which will show - I repeat once more - that Europe is making concrete and objective progress, that it is learning the lessons of the crisis, thanks to the support and the impetus given by the Belgian Presidency, and thanks to the support of all the groups in the European Parliament.
Mr President, ladies and gentlemen, first, I would like to come back to the fact that many good questions have been asked in this debate. Commissioner Barnier addressed them one by one. I would simply like to say to you that this modification, this amendment of the regulation, is a first step in granting the necessary supervisory powers to the European Securities and Markets Authority, and that, as has been said, other revisions of this regulation will take place shortly. I think that, on this issue, and on many other important issues raised today, this will truly be an opportunity to bring together the whole debate in the revision which the Commission is getting ready to propose to us.
On the same note, I would like to return for a few moments to the removal of the provisions on transparency of credit ratings and associated information, which Commissioner Barnier himself mentioned just now. I do not think that this in any way means that the European institutions do not support the idea of transparency of credit ratings - quite the contrary. However, at this stage, when a decision is being taken, the best solution was to coordinate ourselves in advance on the basis of developments on the international stage, in order not to affect the competitiveness of the European markets. For the moment, therefore, better solutions to this issue are still being researched, discussed and developed, and we think that the best political compromise is the one on which you will be voting tomorrow.
In conclusion, I would like to repeat that this is an important step, as many of you have stressed, which will help to improve the stability of the financial markets and which will support the development of a more effective supervisory framework.
Mr President, Mr Chastel, Mr Barnier, after the comments that you have heard, you can draw two conclusions.
The first is that Parliament will overwhelmingly support this report tomorrow, which will show once again that Parliament, or a large majority of it, appreciates the actions on regulation and supervision that are being taken by the Commission and which have been strongly supported by the Belgian Presidency.
The second conclusion that we can draw is that I will not come to a conclusion today, but that a new debate will open up, on the basis of this consultation, of Mr Klinz's own-initiative report, to examine all these difficult questions.
Thus, we cannot avoid the fact that in 2009, when we brought about the first regulation, we were already asking ourselves these questions. If we have not dealt with these questions, it is because we have not found an appropriate response. I hope, therefore, that, thanks to the thought that is being given to the matter with the submission of Mr Klinz's report, the discussion about consultation which is taking place will this time enable us to provide responses to complete the regulation on rating agencies.
In conclusion, however, if you will allow me, I will repeat a phrase by the President of the Securities and Markets Authority, who said that, at the very least, it would be good if the financial markets detoxified themselves of the rating agencies to allow investors to gain a greater personal appreciation of situations and risks. I think that that would also be a guarantee.
The debate is closed.
The vote will take place tomorrow (Wednesday, 15 December 2010).
Written statements (Rule 149)
As a result of underestimating the credit risk, credit rating agencies were one of the factors that triggered the global financial crisis. On the other hand, there is no real competition in the credit rating agency sector. This situation increases the danger of conflicts of interest and, by extension, of a lack of transparency and quality in terms of awarding ratings to the various financial instruments. On 1 January 2011, the regulation giving rise to the creation of the European Securities and Markets Authority will come into force. Its main power will be to supervise agencies of this kind. Introducing a mechanism for monitoring and supervising credit rating agencies at EU level is proving to be a necessity. I think that this new authority needs to exercise its mandate as soon as it is created. I would like to point out that the decision made by the United States to introduce tighter supervisory regulations has paved the way for global harmonisation.
The European Union has already implemented rules, which will come into force at the end of the year. The rules for credit rating agencies that wish to operate in the EU and thus obtain a licence include, among other things, the obligation to register themselves and to comply with specific transparency and 'good behaviour' rules. I do not believe that these rules are strict enough, and I welcome the further measure that we are discussing within the Committee on Economic and Monetary Affairs. These agencies currently have a great deal of power; they can plunge a State and/or even a system (downgrading countries and causing a chain reaction of fear on the world markets) into crisis with one of their ratings. Their work is important in terms of guaranteeing reliability and stability, but there are doubts as to the rules and the criteria on which their ratings are based. Mr Gauzès's report, which proposes bringing credit rating agencies under the supervision of the European Securities and Markets Authority, is therefore along the right lines.


Harmonised conditions for the marketing of construction products (debate)
The next item is the report by Mrs Neris, on behalf of the Committee on the Internal Market and Consumer Protection, on the proposal for a regulation of the European Parliament and of the Council laying down harmonised conditions for the marketing of construction products - C6-0203/2008 -.
Mr President, Commissioner, ladies and gentlemen, this evening we are coming to the end of the first phase of the work of examining the Commission proposal on the conditions for the marketing of construction products.
I wish, in this respect, to thank the Commission for its technical support, and I also wish to thank all of the shadow rapporteurs for their receptiveness and their willingness to engage in dialogue, which has enabled us gradually to arrive at the same positions and to reach agreement on major points of this issue.
Whilst it is true that we fully support the objectives of the reform, which are to improve the market's operation, to give credibility to the CE label and to simplify the system, and that we share the unquestionable interest in having a common technical language, a broad majority of the members of the Committee on Internal Market and Consumer Protection were anxious to air their doubts.
These doubts can be explained in the first place by our unanimous desire to avoid simplifying and relaxing procedures and thus curbing product control and declarations.
They also arise from the position of the Commission which, in our view, tends to be happy with a situation in which product assessment criteria are in part left up to the Member States, so that the real meaning of the CE label depends on the country in which the products are marketed, thus causing problems of credibility.
Our reservations are based finally on the fact that, at a time when we wish to take Europe down the road of a green economy, the text proposed to us deals neither with the energy performance of products nor with their partial harmfulness to users.
To answer these concerns, the Committee on the Internal Market and Consumer Protection has introduced a series of changes. I personally will mention five of them.
We propose, in the first place, to maintain the obligation for construction products placed on the market to have the CE label, in order to guarantee that everything sold in Europe has undergone the appropriate control procedures.
This choice must not contribute to creating extra burdens on the weakest companies, thus handicapping their activity. That is why we have defended maintaining simplified procedures for micro-enterprises and why we have introduced a measure exempting small-scale craftspeople from a compulsory CE label.
The second point concerns the simplified procedures to make access to the CE label easier. We have, however, decided to reserve access to these procedures to manufacturers of construction products, not to importers. This approach, which is aimed at improving the supervision of the market, will enable us to prevent low quality products from being imported by dubious import companies.
The third major change is the introduction of a minimum level of harmonisation as regards the criteria for assessing construction products in Europe. This is to ensure that the CE label has the same meaning in whichever country the product is marketed in.
Where possible, we would in fact like the requirements applied to product assessment in Europe to be the same in all the Member States. To this end, we have also introduced the option of creating new assessment criteria that are not merely technical, but can also be used to measure performance on subjects of general interest, such as the environment, safety and health risks.
To the same end - and this will be my fourth point - we have helped to significantly enhance the user information provided by manufacturers in the declaration of performance. Manufacturers will, in particular, have to declare any harmful substances appearing henceforth on an annexed list, which also includes the substances mentioned in the REACH Directive.
Finally, and this is my last point, the members of the Committee on Internal Market and Consumer Protection have tried to introduce more transparency in relation to the certification conditions for construction products, more transparency in relation to the companies' role in the certification process, and more transparency, too, in relation to the clarification of the conditions of access to the CE label, clearly distinguishing the access routes for products covered by a harmonised standard from the route reserved for products that are not and that are often referred to as innovative products.
This work is in fact coming to an end, but it has not reached the stage that we wanted. The difficulties faced in the Council as regards formulating a position meant that one could not be agreed, despite good cooperation from the French Presidency and the Czech Presidency.
Today, I regret this, although I am aware that the extra time allocated to us might allow us, at second reading, to achieve a much broader consensus and, above all, to have more meaningful discussions, where these positions for this sector will be voiced.
Vice-President of the Commission. - (DE) Mr President, honourable Members, I would like to thank the rapporteur, Mrs Neris, for her efforts in working on such a comprehensive and technically complicated proposal. This is a law-making process that has created great challenges for us all, but we must be clear that what we are talking about here is the future of an extraordinarily important sector.
Construction products alone already make up 3% of internal European products, and if we include construction activity, the construction sector amounts to 10% of the total economic output of the European Union. It is absolutely clear, therefore, that efforts to improve the competitiveness of this sector - especially in the current crisis - are particularly important.
With this proposal, we are aiming to create a solid basis for the consolidation of the internal market for construction products. Only in that way can we secure the necessary growth and jobs beyond the recovery phase. In order to achieve this goal, the current Construction Products Directive must be brought into line with the principles of better law-making.
I will now set out what we were trying to achieve. We wanted to clarify the basic concepts and the use of the CE mark, simplify the procedures in order to reduce costs for businesses, especially for small and medium-sized enterprises, and to raise the credibility of the entire system.
For me, it was about avoiding any unnecessary additional burdens for businesses, especially for the smallest companies. I therefore think it is important that no new administrative or assessment procedures are introduced, something that is of vital importance, above all, for the smallest local companies.
In accordance with the principles of the Small Business Act, which was, I would point out, given an extraordinarily warm welcome by this House not long ago, the Commission proposal puts forward simplified procedures for micro-businesses when it comes to products that do not give rise to any serious safety concerns. I do not want to see this approach changed - it is one of the key points of the proposal. This is because, in practice, it is the case for a number of families of construction products - such as windows, internal doors and floorings - that the existence of very small manufacturers is extremely important for the functioning of the market and is in the interests of consumers. The potential of these small manufacturers must be exploited efficiently for the benefit of the European construction industry.
I do not share the opinion that it is necessary to prescribe the declaration of hazardous substances going beyond the rules that we have already put in place under the REACH regulation. I assure you in all earnest that the rules laid down under the REACH regulations cover everything - there is nothing more that we would need to do for the construction sector - all the concerns that I have heard are comprehensively covered by the REACH regulation. I really do wonder what point there would be in having comprehensive, integrated legislation on chemicals if we were then to go and introduce new and deviating regulations for individual products. There is no way that the Commission would support such an idea.
Finally, I will deal with CE-marking and the abolition of national labelling. Let me be quite clear on this: where prescribed, national labelling adds additional testing requirements for construction products over and above the provisions of harmonised European standards, but it does not give any added value at all in terms of content. All it adds is more red tape and more work for the businesses in question. That is directly opposed to the main goal of the proposal.
The construction sector's situation is different from that of the traditional areas of what has been called our 'new approach law-making', which was recently the subject of the internal market package. We cannot simply copy the solutions implemented in the other sectors of 'new approach law-making' in the construction industry as it has a completely different structure and works with completely different materials.
For understandable reasons I have not gone into every amendment. We will inform Parliament's staff in writing of the Commission's position in relation to the rest of Parliament's amendments.
The proposal for a regulation on construction products is a very important proposal, in my view. I consider today's debate important and I share the view of the rapporteur that, with a little more time, we still have a good chance of achieving a result together and reaching a sound compromise.
rapporteur for the opinion of the Committee on Industry, Research and Energy. - Mr President, could I say that the Commissioner showed a good understanding of the construction industry. All I would say is that I think it represents a larger percentage of overall GDP, something like 12% or 13%, and of materials, say, 4 or 5%, so it is a very important sector.
I am a civil engineer by background and it was a privilege to do the opinion on behalf of the Committee on Industry, Research and Energy. I was delighted that at the end there was total, unanimous support for the opinion that we put down. We looked at the technical matters more than the marketing because, overall, it is really an internal market approach that we are discussing tonight.
The construction industry does need a regulation after 20 years of having the Directive in place. I would emphasise the need for more CE marking, which is absolutely essential. We do not want to see any more national standards and I wish this whole process every success for the future. It is a very important measure in a very important industry.
on behalf of the PPE-DE Group. - (SK) At present there are many differences in intra-state requirements for construction products and for installing them in buildings.
As construction is one of the sectors where the mutual recognition principle is most often breached, I welcome the proposed regulation on the marketing of construction products. It is a comprehensive piece of legislation which aims to update a 20 year old directive on construction products and several regulations. This regulation makes changes to the declaration of conformity requirement, harmonising the legal terminology and defining the exceptions for small and medium-sized enterprises. According to my information, producers of construction materials are very interested in the CE mark. Besides this, it should greatly simplify administration for exporters and importers and it has value from a marketing perspective.
Producers of lime, cement and bricks, for example, are already enjoying the benefits of the CE mark. In the construction sector the CE mark does not indicate safety and the national marks do not have additional value for users. Instead they represent a barrier to the internal market. National marks do not indicate that additional properties of a product have been tested, nor do they say anything about the quality of a construction product. Despite this, producers often have to pay for tests and for the right to label their products with national marks.
I have no objection to voluntary marking which has the purpose of testing the qualitative properties of products, such as ECO Design for example. I firmly believe that our aim must be to strengthen the CE mark and the obligation to use it. Commissioner Verheugen, I appreciate your opinion on the use of national marks for construction products, but as shadow rapporteur I support the original proposal of the Commission.
The harmonised standards are a more effective and appropriate instrument for producers on the construction products market and I am therefore proud of having drafted, here in the European Parliament, the framework for financing the European standards. I would like to thank the rapporteurs Mrs Neris, Mrs Fourtou and Mrs Rühle and their team for their excellent cooperation, as well as my colleagues Den Dover, Malcolm Harbour, Andreas Schwab and Tereza Pinto de Rezende for a great piece of work. I would also like to express my thanks to colleagues from the Commission and the Czech Presidency for their accommodating and constructive approach. I wish this legislation much success.
on behalf of the PSE Group. - (NL) Setting product standards is not simply a technical matter. Twenty years ago I was involved in the first standard-setting in a completely different area of responsibility, namely construction. I must say that I am pleased with the result that Mrs Neris has achieved.
That is, the performance of a construction product should be assessed not only in terms of its technical capabilities and essential characteristics but also in terms of the health and safety considerations of its use over its entire life cycle. Our group has therefore worked hard to include provisions that benefit both the safety and the security of employees and users as well as the environment. I thank the rapporteur for her support in this regard.
Our group is of the opinion that all information known to the manufacturer should be included in a declaration of performance, including information about hazardous substances. The Member States should ensure correct application of the legislation and provide for penalties for infringements, including criminal sanctions for serious infringements.
Mr President, when it comes to the harmonisation of products, the argument is all too often used that it is a technical matter that cannot be contaminated with social measures. I am pleased that, in this case, we have been able to resist this argument, and I hope that we can conclude this tomorrow.
Mr President, Commissioner, ladies and gentlemen, first of all, I wish to congratulate Mrs Neris on the work she has achieved on a technical issue that is particularly difficult for non-experts like us.
The aim of the regulation proposed by the Commission is to achieve a harmonised legislative framework, whilst retaining flexibility and reducing administrative overheads and costs. I do not know if we have always met this specification, but at least we have tried, with the rapporteur and the others shadow rapporteurs, to facilitate the work for second reading, since the Council has been unable to arrive at a common position.
I will not go into the details, but I will take advantage of the time that remains to describe the Group of the Alliance of Liberals and Democrats for Europe's position on the CE label, one of the crucial points of this report. On this issue, the ALDE Group is in full agreement with the Commission and has always opposed the proliferation of national labels.
We will therefore vote in favour of making the CE label exclusive, of simplifying the procedures for acquiring this label, and of facilitation for micro-enterprises.
(DE) Mr President, Commissioner, ladies and gentlemen, I, too, would certainly like to add my thanks to the rapporteur, the shadow rapporteur and, above all, to Mrs Pleštinská and I would like to continue where Mrs Fourtou left off.
We did, after all, agree the Goods Package a year ago, and we had to resolve the difficult issue of CE-marking at that time. Commissioner Verheugen, the decision by the Socialist Group in the European Parliament to drag the compromise agreed then into this directive also has to do with the fact that the study that you commissioned was possibly not effectively represented in all parts of this House. You have a clear opportunity here, Commissioner, to press the Socialist Group more strongly not to ignore the results of the study. Perhaps there may also be some more recognition of this by tomorrow's vote, particularly since the CE marking in this directive - in contrast to in the Goods Package - does not relate to consumer-relevant information but exclusively to product characteristics that really serve a different purpose in any case.
As a second point, the Construction Products Regulation has been very successful in helping push towards the completion of the internal market as, for one thing, we were able to successfully bring about the simplification of the regulations for small and medium-sized enterprises in many areas and, for another, we implemented the relaxations for microenterprises that were announced in the Small Business Act and which we had been asked for, explicitly and often, in various places.
I absolutely agree with the points that have been made in respect of the national standards institutes. We need a much stronger European internal market in this respect. It needs to be possible for a Spanish manufacturer to get a product authorised for Germany or Sweden by a standards institute in Spain rather than having to rely exclusively on the threading of the eye of a needle that is national approval by each national institute.
Furthermore, Commissioner, I warmly welcome what you had to say in respect of the regulation of chemicals. It took great efforts for us to bring about the REACH regulation, and we should not be adding new regulations on top of that for each new legislative proposal that relates to materials with one chemical connection or other.
There are a couple of points that we must deal with again when it comes to second reading. The first is the question of the regulations governing product claims. There must be more on this area, I would think, so that users genuinely obtain an effective insight. We must also prevent duplicate regulation. Annex 6, in my view, goes too far. The Low Voltage Directive and the Machinery Directive already cover many issues in this regard. There needs to be a careful reconsideration of whether there should be lex specialis regulations in this case. For the rest, Mrs Neris has produced a fundamentally sound basis for the vote at first reading.
Vice-President of the Commission. - (DE) Mr President, my thanks for giving me the floor again, but I do not need it. All that is left for me to say is thank you all for this constructive and useful debate.
Mr President, thank you, Commissioner, thank you, ladies and gentlemen, for having contributed so fully to this work.
I will make just one comment: I have indeed taken into account all that has been said because I think that this work should continue. For us, it is important for this sector to be a little more structured within the Community, but, above all, for the standard, which we would like to be a little more exhaustive as regards the CE label, to be much more consistent. In this respect, our wish is above all for further European integration for a better Europe, and, indeed, further integration for these sensitive sectors, because we know that they are at the heart of our economies and are also levers for economic recovery. There is also a need to address all the points that we have mentioned.
The last thing I wanted to say relates in fact to what Mr Schwab was saying about all the studies. We will take into account the studies that have been completed, of course, not just to confirm what we have done, but to make any reassessment that proves necessary. I believe that for us it is essential that we put our heads together in this sector, and we will do so.
Thank you, Commissioner, for holding these fruitful exchanges, and I hope in any case that, at second reading, this text will be both consistent with and adapted to the needs of our companies in particular.
The debate is closed.
The vote will take place tomorrow at 12 noon.


Airbus/Boeing WTO disputes (debate)
The next item is the debate on the oral question to the Commission on the Airbus/Boeing WTO disputes by Helmuth Markov, on behalf of the Committee on International Trade - B6-0155/2008).
author. - (DE) Madam President, Commissioner, ladies and gentlemen, the trade dispute between the European Union and the United States about large aircraft is no ordinary controversy like others that are taken to the WTO for resolution. This dispute has led to by far the largest and most complicated proceedings that have ever been instituted. It involves an enormous conflict of interest.
The United States has criticised the way in which the EU and the Member States involved in the EADS consortium have subsidised the introduction of new large aircraft over the last 20 years. For its part, the EU has accused the United States of granting hidden subsidies to Boeing as part of defence and aerospace projects in which it is involved. We do not yet know which way the WTO Dispute Settlement Body will decide. I assume that the decision will be that both parties have violated applicable WTO rules. Whatever the outcome of the case, it is still possible to make some recommendations.
Firstly, perhaps it is time both Boeing and Airbus relied much more on their own resources instead of being able to fall back on comprehensive state subsidies, then keeping the support and profit for themselves but avoiding risk by means of the company structure. Better functioning and greater transparency in the aviation sector would certainly benefit all aspects of the industry and also customers.
This does not mean that large aircraft manufacturers should no longer receive any financial support at all. I should simply like to emphasise that a balanced, appropriate system is needed that does not favour the interests of large companies but also takes into account important issues such as, for example, the creation of jobs and the protection of the environment, together with the improvement of passenger safety.
Secondly, in this regard it is significant that, in 2007, thousands of Airbus employees lost their jobs as a result of a restructuring that, in my opinion, was not necessary - after years of huge profits for this European consortium. This is not an appropriate way for management to deal with crises, especially as it was not the employees who were at fault but the managers, who had failed dismally.
Third, the existence of the WTO Dispute Settlement Body is a considerable step forward in the international trade regime, because it delivers reliable directions in the event that differences of opinion arise from different interpretations of the Uruguay Round agreements. We shall also be given its decision, but is that enough of a solution?
Fourth, it is regrettable that the 1992 EU-US Agreement on Large Civil Aircraft was not sufficient to achieve a negotiated solution instead of a court ruling.
Fifth, the aviation industry is currently being confronted with new challenges. The economic crisis and the rise in the price of oil are having more drastic effects on the air transport system than we have ever experienced before. A solution must be found quickly, and perhaps it is time to start thinking about cooperation instead of confrontation.
Sixth, as far as matters of public procurement are concerned, my personal opinion is that it would be more appropriate not to include this important sector of the economy fully in the WTO system. In almost all national economies, public procurement is an important catalyst for economic development. Politicians must also have a certain degree of influence in some areas key to shaping the way society develops.
Seventh: it is time the United States and the EU came to an understanding that it must remain possible to take measures for political management of developments in the national economy, including the awarding of public contracts and financial support. In addition, however, there is a need for transparency mechanisms and democratic control to ensure that everyone keeps to the existing rules.
Eighth: the Boeing case shows us that a government should avoid becoming entrenched behind the argument of alleged national defence interests in order to support its own national industry, or rather the interests of a few strong lobby groups with which it is closely associated.
Ninth: this controversy represents more than just a dispute between the EU and the United States. This is yet another case in which those who portray themselves as the champions of free trade give in to protectionist national temptations out of self-interest. We should distance ourselves from both, because that kind of behaviour does not lead to better conditions for our citizens but only to discrimination and unfair competition based on dumping.
Member of the Commission. - Madam President, I would like to reply and answer the oral question on behalf of Commissioner Mandelson, who was not able to attend today because he is in the process of deep bilateral negotiations on the Doha Round.
The US case against European support for Airbus and the European case against US subsidies to Boeing are currently at the WTO Panel stage and the European legal position has been defended. We are now expecting the interim reports in both cases in the fall or winter. The next steps will be determined by the outcome of the dispute and by the underlying interests which led to it.
On the question of how this affects the ability of the industry to compete, we would like to say that we see no reason why the pending EU and US litigation in the WTO over support to Airbus and Boeing should affect the ability of European industry to compete fairly and in public procurement competitions with the United States.
Government procurement is about providing the best equipment, at the best value for the taxpayers, in the tanker procurement. The US Air Force has determined that the plane offered by Northrop Grumman and the EADS is superior to the Boeing and is the best tanker to meet its needs. The question of support for Airbus is immaterial in this assessment. The WTO litigation and the procurement have nothing to do with each other.
On the United States Government Accountability Office reactions, we would like to say that the US Air Force's selection of the Northrop Grumman KC-45 remains in force. There is a misperception that Northrop Grumman and the EADS North America have somehow lost or that the Boeing award has been reversed. Northrop Grumman and EADS North America remain under contract, albeit under a stop-work order, which places on hold the work under contract.
The US Government Accountability Office reviewed the Air Force's evaluation process, not the capabilities of the aircraft. There is no requirement or direction from the Accountability Office to recompete the previous contract award. The Air Force and Department of Defense have indicated that the KC-45 best meets the USAF's requirements. The Accountability Office has requested the Air Force to respond regarding the steps it will take within 60 days of the 18 June announcement.
In general, the government support for aerospace meets the need that certain developments in the large civil aircraft industry require very high levels of investment. It is the Commission's view that any government support for aerospace on both sides of the Atlantic has to be balanced, in order to ensure that the conditions of competition are not distorted. If this is the case, such support can contribute to innovation, increase safety and improve environmental performance and efficiencies in air transportation. It is in the interests of airlines and consumers, as well as governments, to maintain a high level of healthy competition in the aircraft sector.
On the prospects of the bilateral agreements of 1992, we would like to inform you that, despite several good-faith attempts to solve the dispute amicably over the past years, the differences between the two sides - the US and the EU - have proven too big. The US has denied there are any subsidies to Boeing while at the same time demanding that the EU put an end to European support to Airbus. On this basis it has not been possible to establish a fair and balanced basis for a negotiated settlement yet.
On 18 October 2007 Boeing publicly rejected Airbus's offer to explore an amicable solution. We should also be aware that, with the current pre-electoral atmosphere in the US, it may not be easy at the present time to find a balanced settlement. We therefore do not expect that this dispute can be resolved in the near future, before the WTO has ruled on both the Airbus and Boeing cases.
I would like to take this opportunity to thank the honourable Member of the European Parliament for his interest in and support for this cause, as demonstrated in the oral question and resolution provided to us.
Madam President, Euro-Atlantic economic relations are exceptionally important to both sides. Any commercial disputes should be settled by seeking transparent, balanced solutions.
In this case, the desired objective is to secure a fair hearing for both sides, and a balanced approach to state aid for the aircraft industry. This financial aid is particularly important for promoting research, innovation and environmental management, and for improving the safety and efficiency of air transport.
The unilateral withdrawal of the United States from the bilateral agreement of 1992 is cause for concern, since European state aid is fully in accordance with the letter and spirit of that agreement.
The European side is justified in considering the financial resources invested in Airbus to be limited in extent, returnable and without competitive impact, in contrast with the prohibited and actionable non-returnable US subsidies.
As you know, the Union has made substantial efforts to achieve a bona fide settlement of the matter on the basis of negotiation. However, it has not yet met with a response. The European Commission is therefore called upon to maintain a robust negotiating stance for a long-term settlement of the matter, under terms of legitimate, balanced competition.
The US demand for an end to subsidies to Airbus, as a condition for holding negotiations, falls outside an acceptable framework for settling the dispute.
Madam President, Commissioner, ladies and gentlemen, there is only one reason why we wish to have a debate this evening and that is that the attacks from the American side, by both Boeing and many members of Congress, on the awarding of the contract to Northrop Grumman/EADS are very bitter and even go as far as to target individual Member States. That is the reason why we are holding a debate here and why there will also be a resolution, for which I am very thankful, because we in the committee have been trying for a long time to bring this resolution about.
The frustration is directed against the fact that Northrop Grumman/EADS presented a better offer, to which the US Air Force gave preference over a Boeing model in a public tender. That is the most natural thing in the world. We are dealing here with NATO partners and not with countries who do not work together regularly. We have the Transatlantic Partnership, which is reaffirmed at every summit meeting. In the three stated areas, Europe purchases four times as much from the Americans, and so, to that extent, we already have a very intensive mutual 'partnership'.
There is absolutely no reason for the Americans to be frustrated, and that is what we want to make clear here. We do not need to go into the details again - I am very grateful that the Commissioner and Mr Papastamkos have already done that. It is essentially a political protest that we want to voice today - and which, by the way, repeatedly influences the WTO discussion on the American side, because comments are constantly being made. The US Air Force cannot be permitted to award a contract to, among others, a European consortium, at the same time as a WTO case is being decided. This makes it plain that the two issues are interwoven politically, but the Commissioner is absolutely right when she points out that, in reality, they are not connected.
I should like personally to thank the Commission and the Member States for repeatedly setting great store by getting the facts right. I should also like to thank my fellow Members for the fact that we are finally having this discussion and can present the resolution. I hope this means that the Americans will give us a good hearing.
on behalf of the UEN Group. - (PL) Madam President, for some years now the market for the manufacture of large aircraft has been virtually bipolar. Airbus and Boeing rule the roost. For the last two years, though, we have been witnessing an investigation by the World Trade Organisation into the EU-US dispute over subsidies to these two heavyweight concerns. What is at stake here is a lot of money, and also - perhaps more importantly - ambitions to be leader in the field of state-of-the-art technology.
The United States is accusing Airbus of enjoying the advantage of large subsidies and beneficial credits from EU Member State governments. Meanwhile, from the European side, we also hear serious reservations regarding the vast amount of state aid given to Boeing in the form of tax breaks provided by the states of Illinois, Kansas and Washington, as well as aid from the army and NASA within the framework of public procurement.
We fear a Pyrrhic victory in this dispute. Both companies benefit from state aid of a debatable legitimacy. Let us not forget, however, that they are the world's only manufacturers of large passenger aircraft. They compete with each other, but they must also cooperate if they are to make use of the best solutions in their designs and technologies. All this has to be to the benefit of passengers.
It seems to me that what is needed here is more partnership and amicable negotiations, as there is room for both Airbus and Boeing in the world market. According to my calculations, over 15 years the world will require some 36 000 modern, safe civil aircraft. Perhaps 1 500 of these will be of the large type. It is hard to say for sure who will come out on top, Boeing or Airbus, but let us also bear in mind that Russia is starting to feature in this market, and Russia too practises government subvention.
Madam President, the WTO dispute between Airbus and Boeing is nothing more than a bad joke. The Americans are trying to oppose the superiority of Airbus by any means possible, even resorting to the courts. However, while Airbus has received repayable financing, Boeing is collapsing under the weight of funding from different countries, and particularly under the enormous weight of military research. This is why the Dreamliner is the most subsidised aeroplane in the world.
What is really behind the unfair competition in this case is the weak dollar. Unfortunately, the US is complicit in this matter with the European Central Bank. The real question, therefore, is whether or not Airbus will continue to design and manufacture its aircraft in the euro area. To say yes would mean the European Central Bank being at the beck and call of industry, rather than refinancing investment banks without any guarantee of repayment. To say yes would mean creating a sovereign European public fund, which would replace the private shareholders of EADS, who have shown their inability to develop a relevant industrial strategy, instead preferring to protect their dividends.
Replacing the A320 with an aircraft offering a 20% fuel saving will only be possible with the kind of investment that the shareholders are unwilling to make. Europe needs a strong EADS group that is 100% public-owned if it wants an industrial policy that is able to provide it with its own energy-efficient air transport.
Madam President, any fair-minded person who has followed the two cases at the WTO would really come to the conclusion that to use an English phrase 'it is a six of one and half a dozen of the other'. For example, Boeing receives US Federal and State Government support exceeding the 1992 EU-US agreement; Boeing receives subsidies from NASA and the Department of Defense programmes; Boeing benefits from non-competitive military contracts at inflated prices and Boeing benefits from the US foreign sales corporation tax breaks, infringing WTO law. Opposite to that, the US complains that Airbus receives launch aid relating to R&D; it receives grants for development and production sites; it receives loans on preferential terms; it receives debt forgiveness relating to large civil aircraft production and development financing; it receives R&D grants directly benefiting Airbus and it complains that it receives illegal export subsidies.
On a positive side, many EU airlines continue to order Boeing aircraft and the US Department of Defense did award the contract in the first place to the EADS Northrop Grumman tanker. Those are positive signs. While both sides have cause for complaint, I am afraid that what we find in this question is naked anti-Americanism and a petty, little European mentality.
Airbus is cast as the angelic saviour of European skies while Boeing is the evil American company seeking to unfairly dominate global aviation. I sincerely hope that my group, the EPP, does not see fit to support this resolution since it would really show my group at its very worst - anti-American, protectionist and anti-competitive. Maybe we are allowing ourselves to be overly influenced by the French presidency, but please let's not allow the initials EPP to stand for the European Protectionist Party.
(FR) Madam President, Commissioner, ladies and gentlemen, the resolution that we are going to vote on makes a number of recommendations to the Commission, reminding it that, on behalf of the EU, it defends the interests of the Member States and of the European large civil aircraft industry.
In view of the fact that the US Congress has already supported Boeing on numerous occasions, and bearing in mind that the infringement of the tanker agreement undermines the position of the European aircraft manufacturer, the unflagging support of the European Union as a whole - the Member States, the Commission and Parliament - is more crucial than ever. This much we know. EADS has been widely criticised and doubts have been raised as regards both its seriousness and its reliability.
The Commission must reaffirm two things today: on the one hand, that Boeing's appeal, in the context of the tanker procurement process, must in no way affect the quality of the proposal for the EADS/Northrop Grumman partnership, because only the selection process has been challenged by Boeing. A reversal of the US Air Force's decision would be unacceptable. The Commission must be clear in making this point.
The Commission must also remember that the attacks on Airbus before the WTO are unjustified. Not only is the system of repayable financing beyond reproach because, by definition, it is repaid, but the position of the United States is all the more surprising, since US aid is incompatible with WTO rules and with the binding agreements between Europe and the United States.
To avoid a sterile confrontation that would undermine the industrial interests of the parties concerned and EU/US relations, which we have to improve, the only possible solution for the future is a negotiated one. This must be preceded by a preliminary phase in which both parties demonstrate their goodwill.
One final question: does the new situation influence the decision that might be made during settlement of this dispute?
(DE) Madam President, I should like first to apologise on behalf of my colleague, Mr Sturdy, who has been delayed and cannot be here for the plenary session.
I should like to say in advance that both the United States and Europe - at least most of the Member States - are NATO partners. This is a conflict between groups that are on friendly terms. I would also say in advance that the United States and the EU signed an agreement on large civil aircraft in 1992. It actually functioned very well until the United States departed from the terms of the agreement by calling upon the WTO Dispute Settlement Body in 2004.
We know that, to a certain extent, State aid is common practice, particularly in this market for large commercial and military aircraft. Nevertheless, it is important that very strict controls and conditions be imposed on this State aid. The European Union has so far held strictly to these, and EADS Airbus, too, has paid back most of the subsidies or even paid back more than it received from public funds. We have documented this in detail. In contrast, the United States has still not come up with such documentation and it is not exactly clear to what extent Boeing has complied with these obligations.
Overall, I should like to say that, whilst the European Union naturally advocates free trade, this resolution should not result in us calling for anti-American rhetoric. It is important that we seek fair treatment for both partners, and I assume that the WTO body will take its decision in this spirit.
Straight anti-Americanism would be too narrow an approach, but we must still call upon the United States to keep to the rules that we all agreed upon.
Madam President, I will be supporting this resolution and the majority of the amendments that have been tabled to it, including those on behalf of my colleague Erika Mann.
In my constituency thousands of jobs depend on Airbus directly, particularly in the Filton area of Bristol, and of course across the United Kingdom and in the European Union tens of thousands of jobs depend on the success of Airbus.
I would have criticised Mr Kamall to his face for his approach, which is widely Eurosceptical and anti-European, but as he buggered off within about two minutes of speaking I will not have the opportunity to direct my criticism to himself. I hope it will be reported by one of his colleagues, who will tell him that normally we try and stay to the end of the debates we participate in, rather than call in, speak and then rush off to do your press release.
In 1992 there was an agreement between Boeing and Airbus - or rather between the European Union and the United States - to mutually desist from complaining, even though it was to the advantage of Boeing, who get direct subsidies from the US Government through NASA and the Department of Defense, whereas Airbus merely gets launch loans which have to be repaid with interest. Already EUR 7 billion have been repaid.
In 2004 the United States broke that agreement by referring the whole matter to the WTO. The union Unite and the management in the United Kingdom are united in insisting that we put as much pressure as possible on the United States over this matter.
The criticism from Boeing and from Congress needs to be resisted - and resisted strongly. If we are to lose our competitivity with respect to Airbus, leaving Boeing alone in the world with a monopoly position, then we will see a loss of contracts and a loss of jobs. A negotiated settlement is clearly the best solution and the best way forward - maybe 1992 plus. But, in its absence, we have no alternative but to vigorously defend our position and the interests of Europe's economy, competitivity and jobs.
I have received one motion for a resolution in accordance with Rule 108(5) of the Rules of Procedure.
The debate is closed.
The vote will take place on Wednesday 9 July 2008.
Written statements (Rule 142)
Following the debate that we had on this issue of the Boeing complaint against Airbus before the WTO, and in response to the US Senate resolution on the same subject, I am pleased to see that we are today defending a resolution that will ensure the European Parliament's support for Airbus.
Boeing's complaint against Airbus seems to have more to do with commercial interests than with actual compliance issues relating to competition rules.
It was only when Airbus won a series of aircraft orders that Boeing filed a complaint with the WTO. The US aircraft manufacturer is also in violation of the 1992 bilateral agreement, since it received subsidies that were prohibited under this agreement.
Yes, Airbus also received subsidies, but these consisted of repayable financing allowed under the rules. Not only was this financing fully repaid, but Airbus also paid back 40% on top of the amount lent to it by EU governments.
I support the resolution that we will be voting on tomorrow. The European Parliament must call for a fair and swift end to the dispute while making a public show of support for Airbus.