PRESENTATION OF THE PRESIDENCY PROGRAMME

The meeting began with an open discussion on the Spanish Presidency's programme for economic and financial affairs.

The President first described the main thrust of this programme which, by highlighting the priority objectives of employment and preparations for the transition to a single currency, was directly in line with the Cannes European Council conclusions. The programme also made provision for work to continue on harmonizing taxation, consolidating the single financial market, measures for third countries and, lastly, for stepping up the fight against fraud.

The discussion provided the other Members of the Council with an opportunity to give their comments and observations on the Presidency's approach.

The President said that he would take account of Ministers' comments when presenting his programme to the European Parliament on 13 July.

FOLLOW-UP TO THE CANNES EUROPEAN COUNCIL

The Presidency indicated to the Council its intentions regarding the preparations for these subjects for the Madrid European Council.

For employment, the timetable and procedure for coordination between the ECOFIN and Social Affairs Councils and the Commission had to be determined for drawing up the first annual report on Member States' multiannual employment programmes as stipulated by the Essen European Council. To that end, Member States were asked to present their national programmes towards the end of September. The Presidency and the Commission agreed to

submit a report summarizing national programmes; it was agreed that preparatory work should be completed at the ECOFIN meeting on 27 November.

The Madrid European Council should also consider reports on the effects of tax and aid arrangements on employment supply and demand, relations between growth and the environment, as well as the mutually beneficial effect resulting from greater coordination of economic and structural policy.

For EMU, work had to be organized on the transition to a single currency: in particular, a scenario for its introduction had to be drawn up on which the Madrid European Council would have to state its views.

This subject was scheduled to be discussed for the first time at the informal ECOFIN meeting in Valencia on 29 and 30 September. Work would continue at the October and November ECOFIN meetings on the basis of the reports from the Commission, European Monetary Institute and Monetary Committee.

BROAD GUIDELINES OF THE ECONOMIC POLICIES OF THE MEMBER STATES AND OF THE COMMUNITY

The Council formally adopted the broad guidelines of the economic policies of the Member States and of the Community, approved by the Cannes European Council, as established by the ECOFIN Council on 19 June.

These guidelines will constitute a reference framework for the conduct of the economic policies of the Community and the Member States. They re-affirm the policy objectives set in the December 1993 and July 1994 guidelines: it is essential for the Community and the Member States to turn the present recovery into strong, sustainable, non-inflationary medium-term growth which respects the environment. Such growth is important in order to reduce unemployment substantially and to make possible the achievement of the necessary degree of convergence to facilitate the transition to stage III of EMU. Achievement of these objectives will continue to require a stable, investment-enhancing, short- and medium-term macroeconomic framework characterized by:

- a stability-oriented monetary policy whose task is not undermined by inappropriate budgetary and wage developments,

- sustained efforts to consolidate the public finances in most Member States consistent with the objectives of their convergence programmes,

- nominal wage trends consistent with the price stability objective; at the same time, real wage developments should be below the increase in productivity in order to strengthen the profitability of employment-creating investment.

An essential complement of this framework must be provided by structural reforms aimed at fostering the competitiveness of the economies of the Member States and at improving the functioning of their labour markets. The policies necessary for sustaining long-term growth, increasing employment, and strengthening convergence are mutually consistent.

In its communication the Commission had also highlighted two disturbing aspects of economic policy which were also mentioned in the introductory part of the guidelines: first, the favourable impact of economic growth could give rise to "structural adjustment neglect" in respect of the budgetary deficit or labour market imperfections; secondly, some of the recent exchange-rate fluctuations have contributed not only to greater risks of inflation dispersion but also to disturbances in the operation of the internal market which may thus threaten the beneficial achievements of economic integration.

EXCESSIVE GOVERNMENT DEFICIT PROCEDURE

After first adopting Decisions abrogating the Decision on the existence of an excessive deficit in Germany and noting the existence of such a deficit in the three new Member States - Austria, Finland and Sweden, the Council approved Recommendations for the 12 Member States in which an excessive deficit was noted to exist - nine from last year, plus three for the new Member States.

These Recommendations determine the measures which may put an end to the excessive deficit situation within a given period.

HARMONIZED INDICES OF CONSUMER PRICES

The Council noted that the work conducted by Coreper and by the technical experts on the proposal for a Regulation concerning indices of consumer prices had produced an agreement in principle on the text of this proposal for a Regulation pending the Opinion of the European Parliament due to be given at its part-session on 10 to 14 July.

This is an important text in the context of implementing EMU for evaluating, on a homogeneous basis, progress made by Member States in satisfying the criterion of a high degree of price stability.

CROSS-BORDER CREDIT TRANSFERS

The Council considered the main problem regarding this proposal for a Directive on cross­border credit transfers, i.e. defining the scope of the Directive.

This proposal was presented by the Commission in November 1994 after it had become apparent that the banking sector's "voluntary" approach had failed to produce progress towards a rapid and efficient system of transfers and the elimination of abusive charges. It was in line with both the completion of the internal market and the implementation of EMU, and was part of a broader policy advocated by the Commission to put the system of cross­border payments within the EU on a par with the best national systems.

The Directive's main provisions provide for:

- transparency: customer information, both beforehand on the conditions applying to cross­border transfers, and subsequently on the execution and receipt of a transfer;

- periods of time (if there is no agreement between the bank and the customer) within which the establishment making the transfer and the beneficiary's establishment are bound to make the payment (5 days and 1 day respectively);

- obligation to execute the transfer in accordance with the instructions in the payment order, particularly as regards the allocation of costs;

- obligation, in the event of non-execution of transfers, to refund the full amount plus interest and charges.

The question regarding the scope is whether to limit it by setting a ceiling for all provisions of the Directive. It proved impossible to find a solution on this basis in view of Member States' widely divergent positions. In these circumstances the Presidency proposed a dual-ceiling compromise, with a relatively modest amount for the guarantee required from banks for refunding customers in the event of non-execution of transfers and a substantially higher amount for the other obligations stemming from the Directive.

Some progress was made on this basis but no definitive outcome was reached. The Council concluded by instructing COREPER to continue work in order to submit a solution which might be adopted.

VAT

In January 1995 the Commission had submitted to the Council a report on the application of provisional VAT arrangements since 1993 in which it had concluded that they were operating satisfactorily and that no changes needed to be made at this juncture except in the particular case of taxation of agricultural outputs.

For the latter, the Commission proposed a Directive to allow all Member States henceforth the option - until the definitive VAT arrangements were introduced - of applying a reduced rate to supplies of live plants and other floricultural products and to supplies of wood.

The discussion on this proposal failed to yield a conclusion at this stage. The Council accordingly requested the Presidency and the Commission to pursue their contacts with Member States in order to find, if possible, a basis for a unanimous decision.

WTO: NEGOTIATIONS ON FINANCIAL SERVICES

The Council heard a statement by Sir Leon BRITTAN on the progress of the WTO negotiations on financial services following the decision taken in Geneva on 30 June to extend until 28 July the deadline for concluding those negotiations. A brief exchange of views took place.

OTHER DECISIONS

(Adopted without discussion.)

European Year of Life-long Education and Training

The Council approved two amendments proposed by the European Parliament to its common position of 20 April 1995 concerning the proposal for a Decision on this topic. It therefore amended its common position (See Press Release No 6123/95 - Presse 102) and adopted the Decision establishing 1996 as the "European Year of Life-long Education and Training".

Legal protection of databases

The Council adopted its common position, with the Portuguese delegation abstaining, on the legal protection of databases (See also Press Release No 7568/95 - Presse 162). This common position will now be forwarded to the European Parliament for the co-decision procedure to proceed.

Extension of the provisional anti-dumping duty on imports of disodium carbonate originating in the United States of America

Pending completion of the examination of the facts, the Council adopted the Regulation extending by two months at most the provisional anti-dumping duty on imports of disodium carbonate originating in the United States of America.

Programme to support artistic and cultural activities having a European dimension (KALEIDOSCOPE)

The Council adopted its common position on the proposal for a Decision establishing a programme to support artistic and cultural activities having a European dimension (KALEIDOSCOPE) for forwarding to the European Parliament under the codecision procedure (See also Press Release No 8130/95 - Presse 191).

MEDIA II Programme

Further to the political agreement reached at its meeting on 21 June, the Council adopted the Decision on the implementation of a programme encouraging the development and distribution of European audiovisual works (MEDIA II - Development and distribution).

At the request of the delegations concerned, it was agreed to make public the following statement relating to Article 3 of the Decision concerning companies which could benefit from the programme:

"The Netherlands delegation, supported by the German and United Kingdom delegations, accepted the text of Article 3 in the light of the cultural aims of the MEDIA II programme. It considers that this Article should not be a precedent for the drafting and application of EC legislation as regards making a distinction between ownership by EU nationals and companies and by non-EU nationals and companies."

The Council also adopted the common position on the proposal for a Decision on the implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA II - Training). This common position would be forwarded to the European Parliament under the cooperation procedure.

Both programmes are due to last for five years as from 1 January 1996. The financial reference amount adopted by the Council for the implementation of the programmes was ECU 265 million for development and distribution and ECU 45 million for training.

See also Press Release No 8130/95 (Presse 191).

Updating the European passport

The Representatives of the Governments of the Member States, meeting within the Council, approved the Resolution supplementary to the Resolutions of 23 June 1981, 30 June 1982 and 14 July 1986 concerning the introduction of a passport of uniform pattern.

This supplementary Resolution establishes certain adjustments to the European passport necessitated by the entry into force of the Treaty on European Union and the latest enlargement, dealing essentially with the introduction of the Union's new languages and the terms "European Union" instead of "European Community".

DECISIONS ADOPTED BY THE WRITTEN PROCEDURE

Appointment

On 5 July 1995 the Council adopted the Decision appointing Ms Kristiane WEBER­HASSEMER an alternate member of the Committee of the Regions in place of Ms HINZ for the remainder of the latter's term of office, i.e. until 25 January 1998.

Former Yugoslavia

Further to the adoption on 5 July 1995 by the United Nations Security Council of Resolution No 1003 (1995), on 7 July 1995 the Council adopted the common position on the extension of the suspension of certain restrictions on trade with the Federal Republic of Yugoslavia (Serbia and Montenegro), and the pertinent Regulation.

This Regulation amends Regulation (EC) No 2472/94 suspending certain elements of the embargo on trade with the FRY by extending its application until 18 September 1995.