At the Economic and Financial Affairs (ECOFIN) Council meeting on Tuesday 3 June, ministers debated the issues of petrol companies' windfall profits and commodities futures markets, which are deemed to be at the root of rising fuel and food prices across the globe.
The debates were framed by protests staged by farmers, fishermen and truck drivers throughout Europe, who feel they have to bear the brunt of rising fuel prices, while petrol companies skim additional profits.
They were backed by Italy's Finance Minister Giulio Tremonti, who proposed a windfall tax for oil companies, arguing: "We live in extraordinary times that require extraordinary measures. There is a bottle of champagne on top of the petrol pump and it's called 'Speculation'."
Rising food prices, which are at the root of financial distress for Europe's poorer citizens and is making governments increasingly unpopular, are set to feature high on the agenda of the 19 June European Council meeting in Brussels. The EU's hands are tied, however, because commodity prices are largely driven by increased demand and speculation taking place outside its borders. The potential for macroeconomic measures is limited, because the current record inflation of 3.6% limits the ECB's leeway for any potential rate cuts.
According to UN estimates, combatting the global food crisis will cost up to €15bn a year, and global supplies will have to increase by 50 percent by 2030 to meet growing demand.
But at the Luxembourg meeting, UK Chief Secretary to the Treasury Yvette Cooper suggested that the EU should lower import tariffs on a range of foodstuffs, following a similar measure for cereals imposed earlier this year. "I do not see how Europe can justify keeping EU prices so much higher than world market levels when people across Europe are really feeling the pinch," Cooper said, according to the Financial Times.
Finance ministers encouraged the Commission "to further review commodity-related markets and to consider policy responses aimed at limiting price volatility".
