EU-US Talks Will Test Financial Markets Dialogue

Article excerpt

Byline: Patrick Blum in Brussels

The European Commission is preparing a fresh push to resolve disputes with the US that will test the EU-US financial markets' dialogue launched a year ago to discuss regulations and avoid conflicts.Two issues will dominate talks in Brussels and Washington after the summer: the impact of the US's Sarbanes-Oxley legislation and direct access to the US market for European stock exchanges.

These have been a big source of friction between the two, with the US resisting EU requests for changes to its legislation and recognition of equivalent EU measures to protect investors. Market participants say failure to make progress on these issues would leave the EU-US dialogue in shreds.

The EC believes co-operative arrangements can be found to break the deadlock and satisfy Washington's anxieties, in the wake of recent financial scandals.

Frits Bolkestein, the EU internal market commissioner, will visit the US capital in October to convey the growing frustration in Europe at the lack of progress in the talks.

The EU argues that recent experience demonstrates the potential for friction from divergent or insufficiently co-ordinated approaches to financial regulation. The dialogue is supposed to provide a mechanism for managing such tensions.

However, it has failed to resolve important issues, and market participants are putting pressure on the commission to take a tougher line. Without progress, it will become increasingly difficult for Brussels to resist calls for retaliation.

A serious irritant is a requirement under Sarbanes-Oxley that foreign audit firms must register with the US Public Company Accounting Oversight Board (PCAOB). …