Over the rainbow: Languages and law in the future of the European Union

Among the many problems that have grown over the years in the European Union, the linguistic regime is often mentioned, but rarely acknowledged as a major difficulty in its structure. Nor has language been seen as a significant problem in the interpretation of Community law contained in the rulings by the European Court of Justice. However, with the enlargement of the European Union by 10 members, which will mean the addition of another 9 or 10 languages, there is a growing awareness that this may well be about to change. This article sets out to explore the origins of the multilingual regime in the European Union, the efforts to come to grips with it and the attempts, none of them wholly successful, to restrict the growing number of languages claiming official status with increasing membership. The multilingualism of EU Institutions is in stark contrast to the problem in the European Court of Justice, where the prevailing language is French, in particular in the deliberations of the Court. Looking to the future, how is it possible to continue with the present regime at both ends of the spectrum?     

The Prudential Supervision of Financial Conglomerates in the European Union

Abstract

Around the world, the formation of financial conglomerates is gaining importance. In the United States, the provisional agreement between Congress and President Clinton’s administration to break down the barriers between banking, insurance, and securities firms by repealing the Glass-Steagall Act is no less than revolutionary. Meanwhile, in the European Union (EU), where the establishment of financial groups working in all three sectors has long been permitted, the Financial Services Action Plan (COM 1999),¹ as endorsed by European Heads of State at the Köln Council, identifies the further development of prudential rules for financial conglomerates as a top priority for EU financial services legislation in the coming years.

The focus of EU prudential legislation is on individual financial services undertakings, that is, on the bank, insurance company, or securities undertaking and not on the position and operation of the conglomerate as a whole. From this angle, the potential danger is one of a growing mismatch between the prudential approach, which looks at the individual legal undertakings separately, and the business approach, which manages and controls the conglomerate as a whole in different product and geographic areas. For this reason, the basic EU prudential framework has been supplemented to address the conglomerate dimension.

This paper presents an overview of financial services prudential legislation in the EU. It explains the role of the European Commission and gives a summary of the basic prudential framework for financial services, focusing on the single passport concept and the principle of mutual recognition. It examines the recent history of financial concentration and conglomeration in Europe and discusses general prudential issues arising from financial conglomerates. The paper also examines existing EU prudential legislation on financial conglomerates and how this might be developed in the future. Finally, some conclusions are drawn. It is hoped that this brief overview of how the European Union has tackled and is tackling the difficult issue of financial conglomerate supervision might be of interest to North American readers at a time when the United States is changing its prudential legislation to permit the development of financial conglomerates.     

The Development and Status of Enforcement in the European Union

Enforcement's task is to protect capital markets by ensuring proper application of accounting standards. This paper examines how this goal is pursued on a European level and explores the different structures and processes of the national enforcement agencies. Considerations will be presented for improving the effectiveness of enforcement in Europe.     

Financing Retirement in the European Union

This paper explores how EU countries can address various challenges (including the aging of the population) affecting their systems of old-age income support. It presents two scenarios illustrating the most important uncertainties surrounding the major developments that affect the pension systems of the EU. To diversify these risks, EU governments should act on several fronts. In addition to the formation of human capital (especially that of children), employment (especially that of older workers) should be boosted. This calls for social insurance reform with more emphasis on individual saving schemes. Pension schemes should be more explicit about how they share demographic and other risks. Countries that currently rely heavily on public pay-as-you-go (PAYG) schemes should stimulate private pensions by gradually reducing PAYG benefits collected by high-income earners, by issuing new financial instruments, and by conducting intergenerational risk sharing through the tax system.     

The Euro and inflation uncertainty in the European Monetary Union

This paper adopts a time-varying GARCH framework to estimate short-run and steady-state inflation uncertainty in 12 EMU countries, and then investigates their relationship with inflation. The effects of the Euro introduction in 1999 are examined by utilising a dummy variable. Tests for endogenously determined breaks are also employed. We find a considerable degree of heterogeneity across EMU countries in terms of average inflation, its degree of persistence, and both types of uncertainty, whilst the trend component of inflation is generally decreasing. Various breaks in the relationship between inflation and inflation uncertainty are found, frequently well before the Euro introduction.     

The distribution of earnings relative to targets in the European Union

This paper provides evidence on the distribution of reported earnings relative to targets in the Member States of the European Union (EU). For a large sample of over 60,000 firm-years between 1986 and 2001, we find that more firms than expected (i) report small positive earnings, (ii) report small positive earnings changes and (iii) have zero or small positive forecast errors. These discontinuities are much more pronounced in the EU compared to the US, and the distributions of reported earnings and earnings changes are characterised by lower dispersion and more clustering around zero, consistent with higher income smoothing in Europe. Across the EU, we find that the avoidance of a loss or an earnings decrease is more common in those Member States which do not have a long history of accounting standard setting, and particularly in those which, until recently, were almost entirely law-based. The earnings distributions and earnings change distributions of UK firms resemble more those of their counterparts in the US. and differ from the rest of the EU. despite the various EU harmonisation efforts that have taken place.     

The wealth effects of takeover bids regulation in the European Union

We investigate the wealth effects of the Takeover Bids Directive, enacted by the European Union (EU), on mergers and acquisitions. The directive aims at protecting target minority shareholders by restricting antitakeovers provisions and preventing managerial entrenchment. We test the regulation impact using a treatment sample of EU public acquisitions and a control sample from outside the EU. Our results suggest diverse effects of the regulation across treatment countries: acquirers from countries with better shareholder protection engage in more value-enhancing acquisitions postregulation that could otherwise be too costly. The regulation also increases the likelihood of firms becoming targets and raises market value.     

Company Tax Reform in the European Union

The European Commission recently proposed to move towards a consolidated tax base for European multinational companies, to be allocated across EU member states through a system of formula apportionment. This paper argues that while the Commission's blueprints for company tax reform may reduce existing problems of transfer pricing, they will also create new distortions as long as existing tax rate differentials are maintained. The paper also investigates the changes in international tax spillovers which will occur as a result of a switch from the current system of separate accounting to formula apportionment. The final part of the paper discusses whether more conventional corporate tax harmonization should still be a long term policy goal for the EU and presents quantitative estimates of the efficiency gains from harmonization.     

The future of European development aid

Development assistance represents one mechanism for the redistribution of global wealth. This article examines key external challenges that the development aid systems in the EU currently confront. Among the most important elements of the changing backdrop against which decisions on preparing EU development cooperation for the future will be made are the increasing differentiation of countries within the developing world and the rise of new global development actors, and the growing prominence of issue linkages between security and development and the environment and development. These challenges raise important questions for the EU concerning the future rationale and organization of development assistance.     

欧盟的税收情报交换

税收情报的国际交换是有关国家之间就税收的跨国征纳所进行的相互协助和为防止税收欺诈及偷漏税所进行的司法协助.税收情报的国际交换是在经济一体化、全球化和税收国际化的背景下,各国税务当局之间加强税务合作的一项重要内容,是国际税务协调的重要组成部分.目前欧盟在这一领域的实践最具有代表性.随着欧盟经济一体化程度不断深入,欧盟的税收情报交换机制也在日趋完善,并推动了欧盟的税收一体化进程.     

The Value Added Tax on Electronic Commerce in the European Union

This paper concludes that any failure to apply value-added tax (VAT) to electronic commerce crossing borders between EU Member States and other countries should not affect the VAT liability of registered traders, even if the reverse charge rule (taxation in the hands of recipients) is not applied. The only type of e-commerce that is problematic involves sales of digital content to consumers and unregistered traders. However, such sales constitute a minuscule fraction of purchases by households and unregistered traders (given the extremely low level of small-business exemptions). Thus, while many believe that the question of how to tax e-commerce under the VAT is urgent, how it is resolved may not be very important.     

Turkey's accession to the European Union

Turkey's accession to the European Union is often discussed by posing the simple question of whether it should be admitted. Polite legal discussions will quickly point to the Copenhagen criteria for admission of a state to the Union. Less polite discussion will raise issues regarding whether the whole state can be characterized as a religious state, and a Muslim state at that, whether there is independent government interest beyond the military and religious interests and whether more than 2 million Turks already living in the European Union give Europe any idea of what it might be like to have Turkey admitted in its entirety. In the end, this author concludes that given all of these obstacles, perhaps the most telling question to be asked is why Turkey has been invited in the first place.     

欧盟经济守望春天

2004年9月10日注定将是载入欧盟经济史册的一天，在荷兰海牙举行的欧元区12国财政部长每月例会上，大会同意设立“欧元集团主席”一职，并任命卢森堡首相兼财政大臣让－克洛德·容克首任这一职务，还有一项就是大会对欧盟委员会提出的对欧盟《稳定与增长公约》的修改表示了肯定     

Macroeconomic uncertainty and performance in the European Union

We use a very general bivariate GARCH-M model and monthly data on EU countries covering the 1962–2003 period to test for the impact of real (output growth) and nominal (inflation) macroeconomic uncertainty on inflation and output growth. Our evidence supports a number of important conclusions. First, in the majority of countries uncertainty regarding the output growth rate is related to the average growth rate and the effect in several countries is negative. Second, in half of the cases there is no significant relationship between inflation uncertainty and output growth performance. Third, inflation and output uncertainty have a mixed effect on inflation. Nevertheless, considerable evidence for the Cukierman–Meltzer hypothesis is obtained. Our conclusions are based on adopting both a structural and a reduced-form bivariate GARCH model. Finally, we also find statistically significant evidence of regime switching for both inflation and output growth volatility throughout the sample.