The Governments of the Member States and the European Commission were represented as follows:

Belgium:

Denmark:

Mr Michael DITHMER State Secretary for Economic Affairs

Germany:

Greece:

Spain:

France:

Ireland:

Italy:

Mr Vincenzo VISCO Minister for Finance

Luxembourg:

Austria:

Netherlands:

Portugal:

Mr Fernando TEIXEIRA dos SANTOS State Secretary for the Treasury and Finance

Finland:

Sweden:

United Kingdom:

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Commission:

Mr Jacques SANTER President

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Other participants:

Sir Brian UNWIN President of the European Investment Bank

The Council held an orientation debate on key economic policy issues with a view to giving guidance to the Commission on the questions Ministers wish to be addressed in the broad economic policy guidelines 1998/99 for which the Commission will present its recommandation later in the Spring. It was noted that the forthcoming guidelines are of particular importance given the start of stage 3 of EMU.

The debate was based on an assessment of the economic situation and outlook in the Community carried out by the Commission and the Economic Policy and Monetary Committees.

The President concluded that there was general agreement for continued vigilance in relation to events in Asia and, regarding more specifically the Community's economic situation, that public finances will have to remain sound, inflation kept under control and that further reduction of budget deficits is essential. Ministers also agreed that more emphasis will have to be put on economic reform in the areas of labour markets (implementation of the national action plans to be presented at the European Council of Cardiff), product and service markets (completion of the Single Market and improvement of competitiveness) as well as capital markets (address specific needs of Small and Medium-sized Enterprises, public/private partnerships, especially in the area of networks). In this context the need for further deregulation and privatisation was also stressed.

The President informed his colleagues that he will attend the forthcoming EMI Council scheduled on 3 March in Frankfurt.

The Council held an orientation debate on the Commission's Communication setting out a possible Community framework allowing Member States to experiment with reduced VAT rates for labour-intensive services in order to boost employment in small businesses without distorting international competition.

This Communication was tabled by the Commission as a follow-up to the Employment European Council of last November in Luxembourg, which concluded that, in order to make the taxation system more employment-friendly, "Member States will examine, without obligation, the advisability of reducing the rate of VAT on labour-intensive services not exposed to cross-border competition".

In conclusion, the Council invited Coreper to examine the technical questions arising from today's debate and to report back to it with a view to deciding on a possible request to the Commission to submit a proposal in this area.

This technical examination should be carried out, taking into account the criteria indicated in the Commission's Communication for a reduced VAT rate, on the following questions :

Under "Other Business", the Council took note of the German request to examine the possibility of EIB lending to Bosnia-Herzegovina in the light of recent developments in the region.

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In the margins of today's session, the Ministers had an informal exchange of views, over lunch, with Mr Michel Camdessus, Managing Director of the IMF, on the financial crisis in Asia, its background and possible lessons to be drawn from it regarding the restructuring of the international financial system.

Discussions covered i.a. the need for a reform of banking supervision in certain regions as well as for a code of good conduct ensuring transparency and openness on economic and financial policies, the role of the private sector and the need to take into account social consequences.

It was understood that these matters will be considered further at the forthcoming G7/G8 meeting in London on 21/22 February 1998, at the ASEM II Summit in London at the beginning of April, as well as in the framework of the IMF Interim Committee.

Allocation of the financial intermediation services indirectly measured (FISIM) within the European System of Accounts *

Following political agreement reached on 19 January 1998 (see Press Release 5266/98 Presse 8), the Council formally adopted the regulation on the allocation of the financial intermediation services indirectly measured (FISIM) within the European System of national and regional Accounts (ESA).

This regulation will amend and complement regulation n. 2223/96 which sets up the European System of national and regional Accounts in the European Community. It establishes the principle for allocating FISIM - at present not allocated separately for statistical purposes - by using reliable methodology.

An initial trial period running until the year 2002 should identify the best method for allocating FISIM. At the end of this period, the Commission will assess the results of the trial period and decide, by means of a comitology procedure, on the final methodology to be applied. However, a unanimous decision by the Council would be needed in order to use the new methodology in budgetary calculations on other Community policies and notably concerning "own resources".

The allocation of FISIM, provided for by this regulation, should lead to a major improvement in the methodology of ESA and to a more accurate comparison of GNP levels within the EU.

The Council authorized the Kingdom of The Netherlands to apply a measure derogating from the sixth VAT directive 77/388/EEC in order to simplify the procedure for charging the tax and to prevent certain types of tax evasion and avoidance in connection with used and waste materials.

This derogation, authorized under the Article 27 procedure of the directive, is valid until 31 December 1999.

The Council adopted the Regulation imposing a definitive anti-dumping duty on imports of stainless steel fasteners and parts thereof originating in China (rates ranging between 13,6 and 74,7%), India (rates between 11,2 and 54%), Korea

(24 or 26,7%), Malaysia (5,7 or 7%), Taiwan (between 5,3 and 23,1%) and Thailand (2,7 or 8,4%).

In view of the magnitude of the dumping margins found for the exporting producers and in the light of the seriousness of the injury caused to the Community industry, the amounts secured by way of provisional anti-dumping duty (Regulation (EC) N°  1732/97) shall be collected at the rate of the definitive duty - amounts secured in excess of the definitive rate shall be released.

The Council adopted the Regulation imposing a definitive anti-dumping duty on imports of glyphosate originating in China. The rate of duty applicable to the net free-at-Community-frontier price before duty is set at 24%.

The amount secured by way of provisional anti-dumping duty (Regulation (EC) N°  1731/97) shall be definitively collected at the duty rate provisionally imposed.