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Bulletin No Recent Developments in the European

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					Recent Developments in the European Parliament
                 and the EU




          Bulletin No. 31 : 29 October 2010




Prepared by the Oireachtas National Parliament Office, Brussels
         Recent Developments in the European Parliament and the EU: 29 October 2010
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Contents                                                                                                   Page



European Parliament – Political and Legislative Highlights ..............….......... 3
      Parliament and Commission sign revised Framework Agreement.......…… 3
      Parliament removes final obstacles to the establishment of the EEAS......... 3
      Support for Irish workers from EU Globalisation Fund......…………......... 4
      Parliament supports country-of-origin labelling on non-EU goods.............. 4
      Parliament seeks to extend paid maternity leave.......................................... 5
      Strasbourg sittings criticised......................................................................... 5
      Parliament and Council reach agreement on hedge funds directive............. 6
      Legal treatment of northern Cyprus for trade purposes questioned............. 7




Inter-Parliamentary Activities …………………………………... ..................... 7
       Inter-parliamentary meetings during the Hungarian Presidency.................. 7
       Upcoming inter-parliamentary events .......................................................... 8



European Commission News …………….......................………………………. 8
      Commission adopts work programme for 2011........................................... 8
      Commission framework for crisis management in the financial sector......... 9
      Irishman appointed to senior management position in the EEAS................. 10
      Commission to carry out in-depth review of restructuring of EBS........……11
      Strategy on implementation of EU Charter of Fundamental Rights........... 11
      Commission to propose suspension of animal cloning for food production..12
      Consultation on the European audit market................................................. 12


European Council / Presidency News …………………………….........………. 13
      Council unhappy with Framework Agreement between Parliament and
      Commission.................................................................................................. 13
      Task Force on Economic Governance......................................................... 14
      Franco/German proposals on economic governance and treaty change....... 15
      European Council – agreement on need for limited treaty change…........... 16
      No progress on EU Patent............................................................................. 16
      Forthcoming Council meetings.................................................... …..………17




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         Recent Developments in the European Parliament and the EU: 29 October 2010
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1. EUROPEAN PARLIAMENT – POLITICAL AND LEGISLATIVE
   HIGHLIGHTS


   Parliament and Commission sign revised Framework Agreement
   At the recent EP plenary session in Strasbourg, European Commission President
   José Barroso and European Parliament President Jerzy Buzek signed the revised
   Framework Agreement governing working relations between the two institutions,
   concluding a process that started almost one year ago with the entry into force of
   the Lisbon Treaty. The revised agreement supersedes the existing accord from
   2005 and reflects the increased competences of Parliament under the Lisbon
   Treaty. Among a number of improvements, the revised agreement sets out rules
   and a timetable for an intensified and structured dialogue between the two
   institutions that allows the Commission to benefit from Parliament's input when
   the Commission is preparing its Work Programme. It sets detailed rules for how
   the Commission will inform Parliament about the negotiation and conclusion of
   international agreements, and updates the rules for the provision of classified
   information to Parliament. It also sets out rules to enhance the information
   provided to Parliament in relation to the work of experts advising the Commission
   and will enhance dialogue and co-ordination with regard to planning of
   Parliament's plenary sessions.
   The agreement has been criticised by the Council and national parliaments for
   disturbing the institutional balance (see separate article).


   Parliament removes final obstacles to the establishment of the External Action
   Service
   The European Parliament has adopted changes to the EU financial regulation, the
   staff rules and the 2010 budget needed for the European External Action Service
   to be launched. High Representative Ashton is now expected move quickly to
   make some of the senior most appointments in the service, which should be up
   and running from 1 December. In budgetary terms, the EEAS will be treated as an
   EU institution, and will have its own section in the EU budget like other
   institutions. The budget will require a discharge from the European Parliament,
   while the Commission will remain in charge of the service's operational budget.
   The amended staff regulation specifies that recruitment for the EEAS should be on
   the broadest possible geographical basis from among nationals of Member States.
   To ensure a gender balance, appropriate measures will be taken to promote equal
   opportunities for the under-represented gender. By mid-2013, the High
   Representative will be required to table a report on the implementation of the staff
   regulation, with a particular emphasis on gender and geographical balance of staff.
   Until 30 June 2013, the EEAS will recruit officials from the Council's General
   Secretariat, the Commission or national diplomatic services. From 1 July 2013,
   access to EEAS posts should be opened up to officials from other EU institutions,
   such as the European Parliament. When the EEAS reaches its full capacity
   (estimated at 3,700 staff), EU officials should represent at least 60% of staff at
   administrator level and at least one-third of all EEAS staff should come from
   national diplomatic services. To date, the only appointments made have been a
   number of Heads of Delegation posts where applicants were drawn from the
   Commission, Council and Foreign Ministries of the Member States. In this recent


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   round of appointments, 3 of the Commission officials appointed as Head of
   Delegation are Irish.


   Support for Irish workers from EU Globalisation Fund
   An application from Ireland for EU funding for 850 workers who lost their jobs in
   the aircraft maintenance industry in and around Dublin was approved by the
   European Parliament's Budgets Committee. The assistance is in respect of
   redundancies in the company SR Technics Ireland Ltd, operating in the air
   transport sector in the Dublin region. Although there was a broad trend even
   before the financial and economic crisis for airlines to reduce their costs by
   outsourcing maintenance work to suppliers in lower-cost countries, these job
   losses were triggered by the onset of the crisis, which led airlines to pursue cost-
   cutting more vigorously. The package of EGF assistance will help 850 of the most
   disadvantaged workers back into employment by offering them guidance and
   training, both in and outside the workplace, education and promotion of
   entrepreneurship and self-employment. The total estimated cost of the package is
   almost €11.5 million, of which the EU has been asked to provide EGF assistance
   of €7.4 million. Following approval by the Committee, the full Parliament will
   vote on the proposals in November and the Council of Ministers then has to give
   its final approval.
   The European Globalisation Adjustment Fund (EGF) was established to provide
   additional support for workers made redundant as a result of major structural
   changes in world trade patterns due to globalisation or the financial crisis and to
   assist them with their reintegration into the labour market. The annual ceiling of
   the fund is €500 million.


   Parliament supports country-of-origin labelling on non-EU goods
   The European Parliament has supported a proposal requiring that goods imported
   from outside the EU should clearly state their country of origin. Under the
   proposed new rules, country-of-origin markings will have to appear on a wide
   range of products such as textiles, footwear, furniture and pharmaceutical
   products, but not on food products . It would apply only to goods destined for
   final consumers but not to products from the European Union, Turkey, Norway,
   Iceland or Liechtenstein. While many European companies have already been
   using "made in" indications voluntarily, the EU does not have harmonised rules on
   stating the origin of imported goods, except for certain cases in the agriculture
   sector. The argument behind the proposal is that if the country of origin is clear,
   consumers can make informed choices to help guard against health risks,
   counterfeiting and unfair competition. Parliament also believes that disparities
   between labelling practices within the EU are leading to a situation where third
   countries shift their exports towards particular European points of entry which suit
   them most.
   Prior to the final vote, MEPs had turned down a proposal to reject the proposal as
   a whole, by a show of hands. The draft proposal still needs to be approved by the
   Council, where some Member States are still opposed to the idea of a European
   "made in" law. The Irish position is that there is little demand for such legislation,
   which would create unwelcome additional administrative burdens for Irish
   industry, particularly the SME sector, as well as for national customs authorities.


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   The proposal could also be viewed as unhelpful at a time when the WTO and
   other G20 members are encouraging global traders to refrain from protectionism.


   Parliament seeks to extend paid maternity leave
   Draft legislation has been approved by the European Parliament which would see
   the minimum maternity leave in the EU extended from 14 to 20 weeks with full
   pay. Workers on maternity leave must be paid their full salary, which must be
   100% of their last monthly salary or their average monthly salary. Out of the total
   maternity leave, six weeks should be taken after childbirth. The Parliament also
   proposes to ban the dismissal of pregnant workers from the beginning of a
   pregnancy to at least 6 months following the end of the maternity leave. It also
   recommends that women must be entitled to return to their jobs or to equivalent
   posts, i.e. a position with the same pay, professional category and duties as before
   their maternity leave. Parliament added that workers must not be obliged to
   perform night work or work overtime during the 10 weeks prior to childbirth,
   during the remainder of the pregnancy in cases where the mother or the unborn
   child have health problems, and during the entire period of breastfeeding. An
   entitlement to paid paternity leave of at least two weeks was also approved
   Parliament. This proposal did not receive unanimous support however, and MEPs
   who opposed this provision argued that paternity leave lies outside the scope of
   this legislation, which deals with "health and safety of pregnant women".

   The proposal adopted by Parliament is unlikely to receive the support of the
   Council. A number of Member States, including Ireland, have concerns about the
   cost implication of the proposal in what is an economically difficult period for
   many countries in the EU.


   Strasbourg sittings criticised
   Following the wave of strikes across France in recent weeks, the requirement for
   the European Parliament to meet in Strasbourg has again been questioned. Access
   to Strasbourg for the most recent plenary session was affected by severe
   disruption to air and rail transport services. Local transport in Strasbourg,
   including links to the parliament were also disrupted. UK MEP and Parliament
   Vice President Edward McMillan Scott has now called for an objective
   examination of all the issues surrounding the question of the Seat(s) of the
   European Parliament. While there have been no debates or resolutions in recent
   years, the two-seat arrangement generates public scorn, especially at a time of
   economic stringency. In view of the political/country sensitivities, he is setting up
   a cross-party "Informal Seat Study Group" with the following terms of reference -

       "The examination of all relevant issues connected with the Seat(s) of the
       European Parliament, covering cost, environmental impact, history, treaties,
       efficiency, buildings, facilities, transport links, accommodation, security and
       will have input from Members, former Members, the Administration, other
       staff, assistants and external interested parties. We will also consider the
       interests of our current host countries."




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   Despite much discussion and media comment, few objective and up-to-date facts
   are known regarding the Strasbourg seat. The intention of the Seat Study is to
   correct that lack of information. Because the Parliament's Bureau is responsible
   for administrative and financial matters, MEP McMillan-Scott has proposed a
   comprehensive discussion there, based on objective and neutral information.
   Strasbourg hosts 12 plenary sessions of the Parliament each year (including 2 in
   September) . This requirement is enshrined in the EU Treaties, so any change
   could only be accomplished by consensus of all 27 Member States, including
   France, with Nicolas Sarkozy stating several times that Strasbourg is "not
   negotiable."

   In a separate development, a proposed vote at the last plenary session on the
   Parliament's calendar for 2012 was postponed. This followed the tabling of an
   amendment by UK MEP Ashley Fox to merge the two Strasbourg plenary
   sessions for September 2012 into one session. He gathered over 180 cross-party
   signatures in favour of his amendment. The vote was postponed at the request of
   the EPP, supported by the Socialists, on the grounds that the groups had not had
   enough time to internally discuss the tabled amendments. MEP Fox pointed out
   that the real reason behind the postponement was because there was a severe
   danger of losing the vote and the political groups needed time to apply pressure to
   their members.


   Parliament and Council reach agreement on hedge funds directive
   European Parliament and Council negotiators have reached an agreement on the
   Alternative Investment Fund (AIF) Managers Directive. The amended draft
   proposal, once formally adopted, will impose registration, reporting and initial
   capital requirements on a financial industry sector which until now has been
   subject only to "light touch" regulation. Alternative investment funds, notably
   hedge funds and private equity, will henceforth be subject to more substantial
   regulatory oversight, so as to enhance investor protection and financial stability.

   The proposal will enable non-EU AIF and AIF managers to market to investors
   across the EU without first having to seek permission from each Member State
   and comply with different national laws. Under a system to be managed by the
   European Securities and Markets Authority, AIF managers located outside the EU
   will obtain a marketing passport only if the country in which they are located
   meets minimum regulatory standards and has agreements in place with Member
   States to allow information sharing.

   The initial Commission proposal did not contain rules to deal with asset stripping,
   and Member States were for a long time reluctant to tackle the issue. The
   agreement now includes a number of provisions to this end, relating primarily to
   limits on the distribution of capital within the first years that a company is taken
   over by a private equity investor. This is intended to deter private equity investors
   from attempting to take control of a company solely in order to make a quick
   profit. The proposal will also contain strong information and disclosure
   requirements to be imposed on private equity investors, particularly regarding the
   information to be provided to employees and their representatives on the planned



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   strategy for the company. Again, the intention is to oblige these investors to
   develop longer-term strategies for the companies that they take over.

   Although the Commission's very first proposal had already dealt with regulating
   depositaries' liability, the proposal has been strengthened so that if a depositary
   legally delegates its tasks to others, then it must provide a contract which allows
   the fund or the fund manager to claim damages against the entity which received
   the delegation. This should ensure that at no point in the chain will liability be
   irretrievably lost. This much stricter liability imposed on depositaries had
   originally been strongly opposed by Member States.

   Remuneration had not been addressed in the Commission's initial proposal, but the
   amended proposal now stipulates that AIF managers must follow the same rules
   as those soon to exist for bank managers so as to remove the incentive for
   excessive risk taking.

   The agreed text will now be put to a vote of approval at the EP's plenary session
   on the 11th November. Following the directive's entry into force, Member States
   will have two years in which to transpose it into their national legislation. ESMA
   and the Commission will also have the considerable task of fleshing out the details
   of how the directive works, through guidelines and implementing legislation.


   Legal treatment of northern Cyprus for trade purposes questioned
   The EP's Legal Affairs Committee has reviewed the legal status of the northern
   part of Cyprus for trade purposes. The Committee is of the view that EU trade
   with the northern part of Cyprus should be governed directly by EU single market
   and customs union rules, and not by the EU's rules for international trade. Possible
   trade with the northern part of Cyprus based on article 207 of the Lisbon Treaty on
   international trade would wrongly imply that it is not part of the EU. The EU has
   always considered Cyprus to have joined the EU as a whole, but upon accession
   by Cyprus in 2004, EU legislation was "temporarily suspended" in the areas not
   under the effective control of the government of the Republic of Cyprus. The
   Legal Affairs Committee shared the opinion of the Parliament's legal service that
   the territory of Cyprus is fully part of EU customs territory. Lifting the temporary
   suspension of the EU legislation would require a new proposal, within a new
   legal framework. It would be a matter for the Council to decide, on the basis of a
   proposal by the European Commission, on the withdrawal of the suspension of the
   internal market and customs rules. The Council will need to act unanimously.


2. INTER-PARLIAMENTARY ACTIVITIES

   Inter-parliamentary meetings during the Hungarian Presidency
   The Hungarian National Assembly has announced details of the programme of
   inter-parliamentary meeting to be held during the Hungarian EU Presidency in the
   first half of next year. A total of 8 meetings will be held on topics linked to the
   Hungarian priorities for their presidency. A full list of meetings is set out below.
   In addition, a number of meetings will be organised together with the European



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   Parliament. Further details regarding these events will be announced at a later
   date.

   Date              Meeting

   10-11 February   COSAC Chairpersons' meeting
   24-25 February   Meeting Chairpersons of Finance Committees
   3-4 March        Joint Meeting of Chairpersons of Regional Development and
                    Sustainable Development Committees
   31 March-1 April Meeting of Chairpersons of Agriculture Committees
   14-15 April      Meeting of Chairpersons of Health Committees
   5-6 May          Conference of Foreign Affairs Committee Chairs (COFACC)
   19-20 May        Joint Meeting of Chairpersons of Education, Science and
                    Research, and Employment Committees
   29-31 May        Plenary meeting of European Affairs Committees (COSAC)



   Upcoming Inter-Parliamentary Events
    Joint Parliamentary Meeting, "Beyond the crisis: How should Europe respond
      to the challenges ahead?", 8-9 November 2010, European Parliament,
      Brussels.
    Meeting of Chairpersons of the Committees on Equal Opportunities, 22
      November, Federal Parliament, Brussels.
    Meeting of Chairpersons of the Committees on Infrastructure, 28-29
      November, Federal Parliament, Brussels.
    Meeting of Chairpersons of the Committees on Social Affairs, 6-7 December,
      Federal Parliament, Brussels.



3. EUROPEAN COMMISSION DEVELOPMENTS

   Commission adopts work programme for 2011
   Following consultation with the European Parliament (a requirement of the new
   Framework Agreement), the European Commission has adopted its work
   programme for 2011. The work programme sets out the Commission's priorities
   for 2011 under five main headings:

      Sustaining Europe's social market economy out of the crisis and beyond
       (examples include a legislative framework for bank crisis management,
       proposals to reinforce the protection of consumers of financial services and a
       regulation on credit rating agencies).
      Restoring growth for jobs (examples include new fiscal enforcement
       mechanisms, proposals to support the competitiveness of EU enterprises,
       especially SMEs, a European Energy Efficiency Plan, a Social Business
       initiative, legislative initiatives on posting of workers and working time,
       improvement of the frameworks for company taxation and VAT ).
      Pursuing the citizens' agenda: Rights, Freedom and Justice (examples include
       strengthening of consumer rights, a Common Framework Reference for


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       contract law, renewed Civil Protection Legislation, a Registered Travellers
       Programme and a new governance structure for OLAF, the EU's anti fraud
       office).
      Europe on the global stage (examples include supporting the new European
       External Action Service, projecting the 2020 growth objectives on the
       external scene and continuing to improve EU's development assistance to
       target those most in need)
      From input to impact: making the most of EU policies (examples include a
       proposal for the next Multi-annual Financial Framework, according a central
       importance to smart regulation).

   The programme provides details of 40 strategic initiatives which the Commission
   commits to deliver in 2011, a list of 89 other possible initiatives under preparation
   until the end of the mandate and a list of simplification proposals and withdrawals.
   The Commission will now work closely with the European Parliament and the
   Council, as well as national parliaments to ensure a broad ownership on the
   overall approach as well as on individual initiatives.


   Commission plans for a framework for crisis management in the financial
   sector
   The European Commission has set out its plans for an EU framework for crisis
   management in the financial sector [Communication - An EU Framework for
   Crisis Management in the Financial Sector COM(2010) 579]. There has been a
   number of high profile banking failures during the financial crisis (Fortis, Lehman
   Brothers, Icelandic banks, Anglo Irish Bank) which have revealed serious
   shortcomings in the existing arrangements. In the absence of mechanisms to
   organise an orderly wind down, EU Member States have had no choice other than
   to bail out their banking sector. Despite the recent introduction of a supervision
   package for the financial section, the Commission recognises that banks will still
   face difficulties in the future. A system is required to ensure that if a bank fails, it
   should not bring down the whole financial system. This Commission
   communication sets out a clear framework which should ensure that authorities
   throughout Europe are well prepared to deal with banks in difficulty and handle
   possible bank failures in an orderly manner. The new framework described in the
   Communication aims to equip the EU with common and effective tools and
   powers to tackle bank crises at the earliest possible moment, and avoid costs for
   taxpayers. The toolbox of measures will include:

      Preparatory and preventative measures such as a requirement for institutions
       and authorities to prepare recovery and resolution plans to ensure adequate
       planning for financial stress or failure, (such plans are called "living wills").
      Powers to take early action to remedy problems before they become severe,
       such as powers for supervisors to require the replacement of management, or
       to require an institution to implement a recovery plan or to divest itself of
       activities or business lines that pose an excessive risk to its financial
       soundness.
      Resolution tools, such as powers to effect the takeover of a failing bank or
       firm by a sound institution, or to transfer all or part of its business to a



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       temporary bridge bank, which would enable authorities to ensure the
       continuity of essential services and to manage the failure in an orderly way.

    The Commission is also proposing that national funds should be set up, on the
    basis of contributions paid by banks, to fund the cost of future resolution
    measures and ensure that resolving a bank is a credible option. At present, moral
    hazard is pervasive across the system as no alternative to government bail-outs
    exist. The existence of common financing mechanisms which avoid use of
    taxpayer funds should enhance cross-border cooperation and facilitate advance
    planning of how the costs of resolving a cross-border institution should be shared.
    Effective arrangements will also need to be introduced which ensure that
    authorities coordinate and cooperate as fully as possible in order to minimise any
    harmful effects of a cross-border bank failure. The Commission proposes to build
    on existing supervisory colleges (groups of national supervisors) to set up
    resolution colleges (where supervisors and national authorities in charge of
    resolution would meet), for the purposes of crisis preparation and management.

    The overriding objective of the crisis management framework will be to ensure
    that banks can fail without jeopardising wider financial stability, minimising the
    risk of contagion and ensure continuity of essential financial services, including
    continuous access for bank account holders to their accounts. The framework
    should provide a credible alternative to the expensive bank bail-outs the EU has
    seen in the last couple of years and ensure that taxpayers are no longer called on
    to pay the costs.


   Irishman appointed to senior management position in the External Action
   Service
   Catherine Ashton, the High Representative of the Union for Foreign Affairs and
   Security Policy has announced the appointment of Irishman David O’Sullivan as
   Chief Operating Officer of the new External Action Service, with responsibility
   for the day-to-day administrative management of the EEAS. Mr. O Sullivan
   currently holds the position of Director General of the Commissions Trade
   Directorate. He started his career at the Department of Foreign Affairs and went
   on to work for the European Commission in various posts, serving in the cabinets
   Commissioners Peter Sutherland and Pádraig Flynn and was head of the Cabinet
   of Commission President Romano Prodi, before eventually being appointed
   Secretary General of the European Commission. Mr. Pierre Vimont, currently
   France's Ambassador to the United States, will hold the post of Executive
   Secretary General.

   Ms. Ashton made the announcement of the first two members of her top
   management team after the General Affairs Council endorsed the final legal acts
   for the EEAS - the amendments to the Staff and Financial regulations, as well as
   to the EU Budget for 2010. The remaining vacant positions of the EAS
   management team will be filled in the coming weeks.




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   Commission to carry out in-depth review of restructuring of EBS
   The European Commission has opened an in-depth investigation into the proposed
   restructuring of the Educational Building Society, which has benefited from state
   support in various forms. After a preliminary assessment of the restructuring plan,
   submitted on 30 May, the Commission has concerns whether the distortions of
   competition caused by the aid to EBS are sufficiently addressed by the measures
   proposed in this plan. Therefore, the Commission considers appropriate to offer
   third parties, including competitors, an opportunity to comment on this issue. In
   addition, the Commission requires more information to underpin the claim that
   EBS will not need further state aid and will restore its viability on the basis of the
   current plan. Since the notification of the plan, the Irish Government has indicated
   that it is preparing the sale of EBS, which is only active in Ireland. The
   Commission will be giving interested third parties one month to comment.

   In June, the Commission temporarily authorised a €875 million capital injection in
   favour of EBS as an emergency measure. The recapitalisation resulted in the
   nationalisation of EBS, which has also received aid through asset purchases by the
   National Asset Management Agency (NAMA) as well as coverage under Ireland's
   extensive guarantee schemes.


   Commission adopts strategy on implementation of EU Charter of Fundamental
   Rights
   The European Commission has adopted a strategy to ensure that the EU Charter of
   Fundamental Rights is effectively implemented [Communication from the
   Commission - Strategy for the effective implementation of the Charter of
   Fundamental Rights COM(2010) 573]. With the entry into force of the Lisbon
   Treaty, the EU Charter of Fundamental Rights became legally binding on the EU's
   institutions and on Member States when they are implementing EU law. The
   Charter entrenches all the rights found in the European Convention on Human
   Rights as well as other rights and principles resulting from the common
   constitutional traditions of the EU Member States, the case law of the European
   Court of Justice and other international instruments. The Charter also includes
   "third generation" fundamental rights, such as data protection, guarantees on
   bioethics and transparent administration.

   The Commission will verify that all EU laws are in compliance with the Charter at
   each stage of the legislative process, from the early preparatory work in the
   Commission to the adoption of draft legislation by the European Parliament and
   the Council, and then in their application by EU Member States. The Commission
   will provide information to citizens on when it can intervene in fundamental rights
   issues and will publish an Annual Report on the Charter’s application to monitor
   the progress achieved.

   The Charter of Fundamental Rights of the European Union was initially solemnly
   proclaimed by the Presidents of the European Parliament, the Council and the
   Commission at the Nice European Council on 7 December 2000. At that time, it
   did not have binding legal effect. The Lisbon Treaty provides that the Charter is
   legally binding and has the same legal value as the Treaties. This means in
   particular that EU legislation that is in violation of fundamental rights guaranteed


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   by the Charter could be annulled by the Court of Justice of the European Union.
   For the first time, members of the College of Commissioners swore a solemn
   declaration to uphold the Charter as well as the Treaties in May this year .


   Commission to propose temporary suspension of animal cloning for food
   production
   The European Commission is to propose a temporary suspension of animal
   cloning for food production in the EU [Report from the Commission to the
   European Parliament and the Council on animal cloning for food production
   COM(2010)585]. The Commission Communication is a response to calls from the
   European Parliament and Member States to launch a specific EU policy on this
   sensitive issue.
   The communication presents an assessment of cloning technology in relation to
   food production and examines the relevant aspects of cloning in light of the
   existing legislative framework. It acknowledges the challenges posed by animal
   welfare issues and takes into consideration the ethical facet of cloning. It also
   notes that there is no scientific evidence confirming food safety concerns
   regarding foods obtained from cloned animals or their offspring. In the
   Commission's view, a selective mixture of measures, accompanied by a review
   clause after five years, is the best way forward to address the issue. These
   measures will sufficiently address animal welfare concerns without introducing
   unnecessary and unjustifiable restrictions. The proposal will not suspend cloning
   for uses other than food, such as research, conservation of endangered species or
   use of animals for the production of pharmaceuticals The establishment of a
   traceability system for imports of reproductive materials for clones, such as semen
   and embryos of clones is also envisaged. The system will allow farmers and
   industry to set up database with the animals that would emerge from these
   reproductive materials .

   According to the current EU Regulation, only food produced from clones is
   considered "novel food" as it is not produced via traditional breeding techniques.
   Therefore, such food falls under the scope of the Regulation on Novel foods,
   which is now under discussion at EU level. Novel foods are foods and food
   ingredients that have not been significantly used for human consumption within
   the EU before 15 May 1997.

   Denmark is the only Member State that has imposed a national ban on the use of
   animal cloning for commercial purposes.


   Commission consultation on the European audit market
   The European Commission has launched a broad consultation on the role of
   "statutory audit" as well the wider environment within which audits are conducted
   [Green Paper on Audit Policy: Lessons from the Crisis COM(2010) 561].
   Statutory audit denotes an audit of company accounts as required by EU law.
   Auditors are entrusted by law to conduct statutory audits. The aim of an audit is to
   offer an opinion on the truth and fairness of the financial statements of the
   companies, performed in complete independence of the audited company. To this
   extent, the independence of auditors should be the bedrock of the audit


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   environment. As a result of the banking crisis in particular, questions have arisen
   on whether the role of auditors can be enhanced to mitigate any new financial risk
   in the future. The aim of the Green Paper is to launch a wide consultation to
   determine what changes might be needed to audit policy. There are a number of
   areas which the Commission believes need to be explored further, in particular:

      the independence of auditors - it is unclear if auditors are truly detached and
       critical when examining the financial statements of a company when that
       same company is an existing or potential client for non audit services;
      the reliance stakeholders can place on audited financial statements;
      the potential for systemic risk because of the strong concentration in the audit
       sector (i.e. what consequences could there be for the wider financial system if
       one of the big audit firms closed down?);
      the role played by Supervisors, and whether national supervision is fully
       effective;
      the potential for a real internal market for audit and the removal of barriers
       which currently make audit a mainly national market;
      the specific needs of small businesses, such as the need to ensure proportional
       application of rules to SMEs.

   The deadline for responses to the consultation is 8 December 2010. On the basis
   of responses received, the Commission will decide on the need for any measures
   in the course of 2011. The Commission will also seek to cooperate and align its
   position with those of its main international partners within the Financial Stability
   Board and the G-20.


4. European Council

   Council unhappy with Framework Agreement between Parliament and
   Commission
   The Council has expressed its dissatisfaction with the Framework Agreement on
   relations between the European Parliament and the Commission, signed by the
   two Institutions on 20 October 2010. The Council was not party to the negotiating
   of the agreement. In a formal statement, it points out that compliance with the
   founding Treaties of the Union, in the terms in which they have been ratified by
   the Member States, is the fundamental principle governing the existence and the
   functioning of the Union. Those powers may not be modified or supplemented by
   the Institutions themselves either unilaterally or by agreement between them. The
   Council believes that the agreement modifies the balance between the Institutions
   that was established by the Treaties and accords the Parliament powers which are
   not conferred upon it by the Treaties and limits the autonomy of the Commission
   and its President. The Council is particularly concerned by the provisions on
   international agreements, infringement proceedings against Member States and
   transmission of classified information to the European Parliament. Accordingly,
   the Council has stated that it will "submit to the Court of Justice any act or action
   of the European Parliament or of the Commission performed in application of the
   provisions of the Framework Agreement that would have an effect contrary to the
   interests of the Council and the prerogatives conferred upon it by the Treaties".



                                          13
         Recent Developments in the European Parliament and the EU: 29 October 2010
___________________________________________________________________________________

   National parliaments has also criticised the agreement. The conclusions of the
   recent COSAC meeting in Brussels stated that COSAC "...stresses that the
   application of the framework agreement between the European Parliament and
   the Commission must be subject to constant legal monitoring."


   Task Force on Economic Governance
   The Task Force on Economic Governance, chaired by European Council President
   Herman Van Rompuy has finalised its work. The Commission, the Central Bank
   and the Ministers of Finance all contributed actively to the work of the Task Force
   and its report will now be considered by the European Council.
   The report makes a number of recommendations and concrete proposals regarding
   economic governance in the EU. On broader economic surveillance, the Task
   Force recommends the creation of a mechanism for macro-economic surveillance.
   An early warning system will detect the risk of real estate bubbles, of
   unsustainable patterns on the balance of payments, or strong divergences in
   competitiveness in Member States. These types of risks were neglected in the first
   decade of the euro. Ultimately this may result in sanctions for countries in the
   Eurozone only, but will strengthen the economic pillar of the Economic and
   Monetary Union.
   On greater fiscal discipline and a stronger Stability and Growth Pact, the Task
   Force recommends more "automaticity" in the decision making process where
   Member States do not follow the rules of the pact. The reversed majority rule will
   apply i.e. a Commission recommendations on sanctions will be adopted unless a
   qualified majority of Member States in the Council votes against them. The Task-
   Force also recommends deeper and broader coordination, notably through the
   "European Semester" which will apply from 2011. The Semester will increase the
   awareness that the decisions in one Member State potentially affect all. On a more
   robust framework for crisis management, the Task Force considers there is a need
   for a credible crisis resolution framework for the euro area in the medium term. It
   should be capable of addressing financial distress and preventing contagion from
   one country to another. However, it must avoid the moral hazard implicit in any
   rescue scheme. On the need for stronger institutions, the Task Force recommends
   the use or setting up of public institutions at the national level, to provide
   independent analysis and forecasts on domestic fiscal policy matters.
   President Van Rompuy commented that the Euro has been unique from the start,
   as a monetary union with a decentralised fiscal framework. Thanks to the Euro
   and the internal market, Member States are deeply integrated. During the financial
   crisis, it has become obvious that the decision of one Member States potentially
   affects all. While Member States are responsible for their own fiscal and economic
   policies and will remain so, the recommendations of the Task Force will ensure
   that that each Member State fully takes into account the impact of its economic
   and fiscal decisions on its partners, and on the stability of European Union as a
   whole. The recommendations will also strengthen the EU's capacity to react when
   policies in one Member State present a risk to the rest of the Union.
   President Van Rompuy will present the report to the European Council on 28/29
   October to get the political backing of the Heads of State and Government.
   Following this, political agreement will be translated into legislative form.




                                         14
         Recent Developments in the European Parliament and the EU: 29 October 2010
___________________________________________________________________________________

   Franco/German proposals on economic governance and treaty change
   At a recent meeting in the French city of Deauville, French President Nicolas
   Sarkozy and German Chancellor Angela Merkel reached an agreement on the
   reinforcement of economic governance in the EU. Both leaders emphasised that
   budgetary surveillance and economic policy coordination procedures should be
   strengthened and accelerated. This would include

      A wider range of sanctions to be applied progressively in both the preventive
       and corrective arm of the Pact. These sanctions should be more automatic,
       while respecting the role of the different institutions and the institutional
       balance.
      In enforcing the preventive arm of the Pact, the Council should be empowered
       to decide, acting by QMV, to impose progressively sanctions in the form of
       interest-bearing deposits on any Member State whose fiscal consolidation
       path deviates significantly from the adjustment path foreseen in the Stability
       and Growth Pact.
      As to the corrective arm, whenever the Council decides to open an excessive
       deficit procedure, there should be automatic sanctions for any Member States
       found by the Council, acting by QMV, to have failed to implement the
       necessary corrective measures within a 6-month time limit.
      Complementing the new legislative framework for the surveillance of
       economic imbalances, the case of any Member State with persistent
       imbalances under surveillance by the Council would be referred to the
       European Council for discussion.

   Both leaders were also of the view that an amendment of the Treaties is needed
   and that the President of the European Council should be asked to present, in close
   contact with the Members of the European Council, concrete options allowing the
   establishment of a robust crisis resolution framework before its meeting in March
   2011. The amendment of the Treaties would be restricted to the following issues:

      The establishment of a permanent and robust framework to ensure orderly
       crisis management in the future, providing the necessary arrangements for an
       adequate participation of private creditors and allowing Member States to take
       appropriate coordinated measures to safeguard financial stability of the Euro
       area as a whole.
      In case of a serious violation of basic principles of Economic and Monetary
       Union, and following appropriate procedures, the suspension of the voting
       rights of the Member State concerned.

   The necessary amendment to the Treaties should be adopted and ratified by
   Member States in accordance with their respective constitutional requirements in
   due time before 2013.

   The proposals came in for criticism in Brussels. EUObserver reported that
   Commissioner Vivienne Reding called the proposals irresponsible and stated that
   European decisions are not taken by two Member States alone, but by all member
   states based on solid proposals in the interest of all EU citizens. The
   Commissioner for Economic and Monetary Affairs Ollie Rehn, is quoted as



                                         15
         Recent Developments in the European Parliament and the EU: 29 October 2010
___________________________________________________________________________________

   saying that the suspension of voting rights of a Member State would not be in line
   with the idea of an ever-closer union.


   European Council – agreement on economic governance measures need for
   limited treaty change
   The European Council met on Brussels on 28/29 October, where the principal
   item on the agenda was the report of the Task Force on Economic Governance.
   The European Council endorsed the report and called for a fast track approach to
   be followed on the adoption of secondary legislation needed for the
   implementation of many of the reports recommendations. The objective is for the
   Council and the European Parliament to reach agreement by summer 2011 on the
   Commission's legislative proposals, taking account of the fact that the Task Force
   report does not cover all issues addressed in these proposals and vice-versa. This
   will ensure the effective implementation of the new surveillance arrangements as
   soon as possible, resulting in a substantial strengthening of the economic pillar of
   EMU.

   The meeting also agreed on the need for Member States to establish a permanent
   crisis mechanism to safeguard the financial stability of the euro area as a whole.
   The President of the European Council was invited to undertake consultations
   with the Members States on a limited treaty change required to that effect. The
   Commission will undertake, in close consultation with the President of the
   European Council, preparatory work on the general features of a future new
   mechanism. The European Council will discuss this issue again at its December
   meeting with a view to taking the final decision both on the outline of a crisis
   mechanism and on a limited treaty amendment so that any change can be ratified
   at the latest by mid-2013.

   Pension reform is a concern for several Member States. It was agreed that the
   Council would be invited to speed up work on how the impact of pension reform
   is accounted for in the implementation of the Stability and Growth Pact and report
   back to the European Council in December. A level playing field within the SGP
   should be ensured.


   No Progress on EU Patent
   The prospect of an EU patent seem no closer following the failure at the recent
   Competitiveness Council to reach and agreement on translation requirements. The
   Commission are anxious to find a common agreement as the modernisation of
   Europe's intellectual property regime is a key element of the Commission's
   "Innovation Union". Agreement on the EU Patent would save business €250
   million a year, according to the Commission. The Council also reiterated the
   importance of an enhanced patent system in Europe for boosting the
   competitiveness of the EU's innovative industry and in particular of SMEs. The
   Belgian presidency had sought to reach an agreement by suggesting a compromise
   whereby English would become the only language into which patents would be
   translated. This would be for a transitional period only until machine translation
   has reached a sufficient level. Patents from France and Germany could still be
   filed in these languages. A large majority of member States supported the


                                         16
         Recent Developments in the European Parliament and the EU: 29 October 2010
___________________________________________________________________________________

   compromise proposed by the Presidency. However, Italy and Spain are opposed
   to this regime, insisting that patents be translated into their respective languages.
   Several Member States raised the possibility of using the "enhanced cooperation"
   approach with like-minded Member States, but the Presidency's ambition remains
   to find an acceptable compromise for all 27 countries. The draft regulation is
   aimed at setting up the translation arrangements for the EU patent which are cost-
   effective (reducing the costs to ensure the accessibility to patent protection),
   simplified (less administrative burden and unnecessary complexity for the users)
   and ensure legal certainty (avoiding uncertainty caused by translations having
   legal effect), in order to stimulate innovation.


   Belgian Presidency: forthcoming Council and Ministerial Meetings

   November 8-9:      Justice and Home Affairs
   November 17:       ECOFIN
   November 19:       Education, Youth and Culture
   November 22:       General Affairs/Foreign Affairs
   November 25/26:    Competitiveness
   November 29/30:    Agriculture and Fisheries




_________________________________________________________________________________
Prepared by the Oireachtas National Parliament Office, Brussels
Contact: John Hamilton
Phone: 0032 2 2842038
Mobile: 0032 474 289925
Email: john.hamilton@europarl.europa.eu




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