Barroso draws Commission’s red lines ahead of summit

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In a letter sent to EU heads of state and government, European Commission President José Manuel Barroso has laid down his services' red lines regarding to the EU's priorities ahead of a summit on 23-24 June.

The letter, dated 17 June and made public yesterday (20 June), represents the Commission's input on the two biggest items on the summit agenda, economic policy and migration.

In the field of economic policy, Barroso calls for a financial transactions tax (FTT) to be introduced in Europe, despite the fact that the issue is not officially expected to be discussed during the summit.

The Commission is expected to unveil a blueprint for the EU's next long-term budget on 29 June. Barroso's announcement suggests that the EU executive may propose to introduce an FTT as a so-called 'own resources' stream of EU financing, likely to taxed at a level of 0.01-0.05% of the value of financial transactions.

Barroso argues that such an EU-wide tax would prevent the internal market for financial services from fragmenting as a result of uncoordinated national tax measures.

The Portuguese also stresses that financial institutions should make a fair and substantial contribution to recouping the costs of the recent crisis, apparently throwing his weight behind the idea of making banks and other financial institutions pay for the sector's failings through a levy on banks' liabilities.

Another highlight of Barroso's letter is his insistence that EU countries should not undermine the bloc's border-free Schengen area by deciding to re-introduce border controls at national level.

The Commission will not hesitate to act if these basic foundations of the European project are called into question, he underscores. According to Barroso, the Union should respond to critical situations via a coordinated, Community-based mechanism and a country should be allowed to reintroduce border checks only as a last resort.

Referring to the challenges posed by the Arab Spring, Barroso calls for the EU's recently adopted strategy, entitled 'A New Response to a Changing Neighbourhood', to be better coordinated among member states and their international partners.

The Commission president also announces decisions to appoint an EU Special Representative to the Southern Mediterranean – in the shape of Agostino Miozzo, a top official in the European External Action Service (EEAS) – and to set up a task force with representatives of member states, the European Investment Bank (EIB) and the and the European bank for Reconstruction and Development (EBRD) to better coordinate assistance in the region.

According to Barroso, these efforts are needed to prevent social unrest from derailing democratic developments in the countries of the Mediterranean neighbourhood.

In February, the European Commission launched a public consultation on taxation of the financial sector. 

A low-level Financial Transactions Tax (FTT) of around 0.01-0.05% would be capable of generating up to €200bn at EU level alone and €470bn at global level.

One of the obstacles to introducing a European FTT appears to be that it would put European business at a disadvantage at global level. But it seems highly unlikely that an FTT will be introduced at global level.

  • 23-24 June: Summit of EU leaders.

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