BRUSSELS, Feb. 5 (UPI) -- The European Parliament brought to an end Tuesday its long-running dispute with the commission over how to create a single EU stock market.
The solution, which meant accepting concessions offered by the European Commission, the EU executive, was carried by the parliament's three biggest political blocs, with only a few members of the Green party providing token opposition.
The deal will pave the way for key pieces of securities market legislation to be passed this year, including an EU insider trading (market abuse) law as well as the creation of a single EU prospectus for firms wanting to issue shares.
EU Parliament President Pat Cox welcomed the result, saying it underlined the assembly's new-found political will to reform and modernize Europe. It followed his decision Friday to overrule the EP's own Constitutional Committee in order to push through the EU Company Statute, which gives EU firms the right to set up shop in any EU state.
Cox called the vote "a significant boost to the Lisbon agenda," as the plan by leaders of the 15 EU member states to make the EU more competitive is known.
But there are still some wrinkles in the agreement, with leading Socialist members of the parliament, such as Robert Goebbels of Luxembourg and Germany's Christa Randzio-Plath still unhappy with the limited concessions granted by the Commission.
Under the so-called Lamfalussy program, named after its originator, EU stockmarket reforms will be accelerated by allowing parliament the right only to set the broad principles of laws in this field. The details of the legislation will be assigned to a new European Securities Committee, staffed by experts from national finance ministries and to a new European Securities Regulators Committee, which brings together representatives of national market regulators.
The parliament was, however, refused observer status on the all-powerful ESC which will be chaired by the commission and has yet to resolve the issue of exactly what happens when it rejects the work of the ESC.
There could also be future disputes over stock market reforms with many socialist MEPs now wanting to beef up regulations to protect savers and consumers, especially in the light of the collapse of U.S. energy giant Enron.
Socialists, like Goebbels, are already taking steps to ensure that the new EU insider trading law has as wide a scope as possible, a move that has enraged oil majors, like BP and Shell. They fear their routine operations could be undermined by the legislation.
U.K. center-right members of the parliament are also concerned at what they see as a "heavy handed" EU Commission proposals to require even small companies to submit massive prospectuses which could put the City of London's small companies market (AIM) out of business. But the commission sees the law as vital to protect the interests of investors. Commission President Romano Prodi said Tuesday that Enron had been a "wake-up call." "It gives us pause for thought," he said.
"You can't deny that the Enron case is a precise alarm signal which means we have to push for transparency and a mechanism that works," he added.
However, coming ahead of the Barcelona March EU leaders summit on economic reform, Tuesday's Lamfalussy deal provides a much needed fillip for the whole jaded economic reform effort in Europe.
For example, an EU patent proposal -- key to making Europe competitive in cutting edge sectors like high-tec and biotechnology -- is still languishing because member states cannot agree in which languages patent applications should be made.
The commission is due to make a new effort on an EU takeover law this year after a coalition of German members of the parliament and big businesses from that country blocked it at the last hurdle before Christmas.
Energy market liberalization will be among the major items to be approved at Barcelona, but with elections looming in Germany and France, agreement on politically sensitive areas looks tough indeed, despite the commitment of the Spanish EU presidency to make progress on reform.
The strength of that opposition was underlined again Tuesday when German Chancellor Gerhard Schroeder threatened to block a new commission proposal to open up auto retailing to the full force of competition. The proposal ends the so-called block exemption that gives manufacturers a practical stranglehold on their dealers. Under the new proposal, from EU Competition Czar Mario Monti, dealers will be able to offer more than one brand of car under the same show-room roof and will liberalize repair and servicing of cars.
At a news conference, Monti hinted that the European Commission favors establishing limited rights to set taxes in those areas where tax can affect the working of the EU single market. This controversial idea will displease most EU member states which, so far, have vehemently opposed handing tax raising powers to the commission or the elected European Parliament.
