Saturday, 25 December 2010

What does the EU want from Liechtenstein?

Our latest blog entry on EU-Lichtenstein relations looked at what the web pages of the European External Action Service (EEAS) and the EU delegation to Switzerland and Liechtenstein offer interested citizens: 'EU communication on EEA and EFTA member Liechtenstein' (24 December 2010), with links to earlier blog posts.

We return to the conclusions from the General Affairs Council (GAC) of the European Union:

Council conclusions on EU relations with EFTA countries; 3060th GENERAL AFFAIRS Council meeting Brussels, 14 December 2010

Conclusions specific to Liechtenstein

In this blog entry we present the GAC conclusions specific to Liechtenstein (points 17 to 24):


17. Given its limited human resources, the swiftness shown by Liechtenstein in most areas in adopting European Union legislation and regularly updating its legislation in accordance with the evolving EU acquis is to be commended. The Council welcomes the positive report of the government of Liechtenstein published on the occasion of the 15th anniversary of membership in the EEA.

18. In the period 2008 to 2010, relations between the EU and Liechtenstein have substantially intensified and were marked by positive developments in a number of areas.

19. The Council welcomes the solidarity with the EU shown by the people of Liechtenstein when committing to continue and increase their contribution to the reduction of social and economic disparities in the EEA for the period 2009-2014.

20. Preparations for the association of Liechtenstein to the Schengen acquis are well advanced on both sides. The Council is looking forward to a rapid entry of Liechtenstein into the Schengen area.

21. With regard to cooperation and information exchange in tax matters and the fight against fraud and tax evasion and any other illegal activity to the detriment of the financial interests of the parties, the Council welcomes the commitments taken by the Principality to implement OECD standards on transparency and on tax information exchange and to fight against fraud, and calls on Liechtenstein to continue its efforts in this area. The Council expects a quick and consistent implementation of these commitments in the relationship between Liechtenstein and the EU and all its Member States.

22. Concerning the taxation of savings, the Council welcomes the openness of Liechtenstein to launch negotiations on a revision of the savings taxation agreement to reflect the evolution of the corresponding EU acquis, once the EU has agreed the final text for its review of the savings taxation directive.

23. Considering that the EFTA Surveillance Authority has taken in recent years several decisions relating to state aid granted by Liechtenstein, the Council reiterates its recommendation of 2008 that Liechtenstein assesses all measures applied to industry, services and trade with respect to the definition of state aid provided for in the EEA Agreement, particularly in finance. The Council welcomes the intention of Liechtenstein to reform its tax legislation and looks forward to a reform compatible with state aid legislation. The Council will closely follow the implementation of this reform.

24. With regard to harmful tax practices, the Council encourages the Principality to continue discussions with the EU on the application of the principles and criteria of the EU Code of Conduct on business taxation.

Sticking points

I would have hoped for more information on the web pages of the EU delegation (and links on the EEAS country page) about the entry of Liechtenstein into the Schengen area, as well as quality information about the EU's aims regarding more controversial issues, such as cooperation against fraud and tax evasion, the revision of the savings tax agreement, state aid reform and curtailing harmful tax practices.

In questions such as these the European Union needs to take a more open attitude towards specifying the problems (as it sees them), defining its objectives and publishing reports on progress (or lack of it) in negotiations.

We can also hope for the EU's counterparts to present their positions and arguments transparently, in this case the Principality of Liechtenstein.

Ralf Grahn

P.S. The joint statement by EU High Representative Catherine Ashton and US Secretary of State Hillary Clinton on the post-Presidential elections situation in Belarus (23 December 2010) is an important first call for the respect of democratic principles and human rights in Belarus, after the bankruptcy of the policy of 'constructive engagement' with the last dictator of Europe.