Report to the European Council on the state of preparation for Stage III of EMU, in particular the external representation of the Community

Author:Secretariat General
Profession:Council of the European Union
Pages:245-248
SUMMARY

1. Representation at the G7 Finance Ministers' and Governors' Group 2. Representation at the International Monetary Fund 3. Composition of Ecofin/EUR-n delegations for missions to third countries

 
INDEX
CONTENT

Page 245

After several years of intense preparation, the European Union is ready to enter into Stage III of EMU on 1 January 1999. Eleven of its Member States will adopt the euro as their currency. Signicant work has been accomplished in reaching convergence. The Econ Council has also developed, for approval by the Heads of State or Government, the framework for a well functioning economic and monetary union, including the Stability and Growth Pact and procedures for economic policy coordination (see annex). The outstanding topic where decisions remain to be taken concerns the external representation of the Community. At the Luxembourg European Council of December 1997, the Heads of State or Government gave an important impetus to this work, and in Cardi, they asked 'the Council to take the necessary measures to ensure the external representation of the euro-area Member States in an eective manner'.

In its work on external representation, the Council has beneted from substantial help of the Commission and the ESCB/ECB in their respective elds of competence. In particular, it has been seized with a Commission proposal on 'the representation and position taking of the Community at international level in the context of Economic and Monetary Union'.

The external representation in Stage III of EMU will imply changes in the current organisation of international fora. Therefore, third countries and institutions will need to be persuaded to accept the solutions proposed by the European Union. The Council considers that a pragmatic approach might be the most successful which could minimise the adaptation of current rules and practices provided, of course, that such an approach resulted in an outcome which recognised properly the role of the euro.

It follows from the Treaty that a distinction has to be made between the representation:

- of the Community at international level as regards issues of particular rel evance to economic and monetary union (Article 109(4)), and

- on matters which do not belong to the Community competence, but on which it may be appropriate for Member States to express common under standings.

As regards the rst indent of paragraph 4 - the representation of the Community at international level as regards issues of particular relevance to EMU - the Council believes that, while trying to reach early solutions pragmatically with international partners, these solutions should be further developed over time adhering to the following principles:Page 246

- the Community must speak with one voice;

- the Community shall be represented at the Council / ministerial level and at the central banking level 92;

- the Commission 'will be involved in the Community external representa tion to the extent required to enable it to perform the role assigned to it by the Treaty' 93.

As regards the second indent - matters which do not belong to Community competence - the Council considered it useful to develop pragmatic solutions for the external representation.

In developing those pragmatic solutions, the Council concentrated its work on three important areas:

- representation at the G7 Finance Ministers' and Governors' Group;

- representation at the International Monetary Fund;

- composition of Econ delegations for missions to third countries.

1. Representation at the G7 Finance Ministers' and Governors' Group

Regarding the European Central Bank's participation in the representation of the Community at the G7 Finance Ministers' and Governors' Group, non European partners have already accepted that the President of the ECB attends meetings of the Group for the discussions which relate to EMU, e.g. multilateral surveillance, exchange rate issues, and for agreement of the relevant sections of the published Statement. Regarding the representation of the Community at ministerial level on EMU issues, the Council agreed to suggest to the other G7 partners to have the President of Econ, or if the President came from a non-euro area Member State, the President of the EUR-11 at the table. If the President came from a non G7 euro area state, he/she would attend in addition to the euro area Econ members already present.

In a transitional phase, one of the euro area ministers who are involved in the G7 Group on a permanent basis will, for the sake of greater continuity, provide support for the President of the Ecofin/EUR-11 on a rotating basis for a term of one year.Page 247

Regarding the Commission's participation in the representation of the Community, the Council agreed to suggest to the other G7 partners that a Commission representative shall be a member of the Community delegation in the capacity of providing assistance to the President of Ecofin/EUR-11.

In light of the decisions on the previous paragraphs, further consideration will be given to attendance at preparatory (Deputy)meetings. The Council agreed that as an integral part of Community representation at the G7 Group, there should be an informal preparation on EMU issues in the EUR-11 before meetings. The Council also outlined the need for an ecient communication network between its members.

To this end, the possibility to set up a modern network of communication tools (audio and video conferences) between the 15 Economic and Finance Ministries, the European Commission, the ECB and the Secretariat of the Economic and Financial Committee will be studied and carried forward urgently. This of course cannot be used for adoption of any legally binding legislative acts.

Solutions found for the G7 Finance Ministers' and Governors' Group will provide a basis for nding solutions for other groupings.

The Council recognised that the G7 Group quite often will discuss international issues which go beyond the competence of the Community and beyond the particular interest of the 11 euro area Member States, and concern all Member States. Even on these issues, which fall to Member State competence, it may be appropriate to formulate and present common understandings. The discussions and formulation of common understandings at recent Econ meetings on such topics as Russia and the international nancial system might serve as a model. Those common understandings shall in any case be the basis of positions to be taken in the G7 Group and other groups.

2. Representation at the International Monetary Fund

The Council considers that pragmatic solutions for presenting issues of particular relevance to EMU may have to be sought which do not require a change in the Articles of Agreement of the IMF:

- a rst necessary step has already been taken; the IMF Executive Board agreed to grant the ECB an observer position at that Board;

- secondly, the views of the European Community / EMU would be pre sented at the IMF Board by the relevant member of the Executive Director's oce of the Member State holding the EUR-11 Presidency, assisted by a representative from the Commission.Page 248

3. Composition of Ecofin/EUR-n delegations for missions to third countries

The composition of Ecofin/EUR-ii delegations for missions to third countries may vary with the circumstances and the objectives. It is the responsibility of the President of the Council/EUR-n to make the necessary arrangements.

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[92] Article 6.1 of the ESCB/ECB Protocol says that 'In the eld of international cooperation involving the tasks to the ESCB, the ECB shall decide how the ESCB shall be represented'. Article 6.3 adds: 'Article(s) 6.1 (...) shall be without prejudice to Article 109(4) of (the) Treaty.

[93] Paragraph 10, last sentence of the Luxembourg European Council Resolution.