# Official Journal C 248/2011

| | ISSN 1725-2423
  doi:10.3000/17252423.C_2011.248.eng |
| --- | --- |
| Official Journal
  of the European Union | C 248 |
| | |
| English edition | Information and Notices | Volume 5425 August 2011 |

ISSN 1725-2423

doi:10.3000/17252423.C_2011.248.eng

Official Journal

of the European Union

C 248

English edition

Information and Notices

Volume 5425 August 2011

---

| Notice No | Contents | page |
| --- | --- | --- |
| | I   Resolutions, recommendations and opinions |
| | OPINIONS |
| | European Economic and Social Committee |
| | 472nd plenary session held on 15 and 16 June 2011 |
| 2011/C 248/01 | Opinion of the European Economic and Social Committee on The role and priorities of cohesion policy within the EU 2020 strategy (exploratory opinion at the request of the Hungarian presidency) | 1 |
| 2011/C 248/02 | Opinion of the European Economic and Social Committee on Smart fiscal policy consolidation strategies — challenges of identifying growth drivers for Europe. How to exploit fully the labour potential of our economies in parallel with the pressing need for fiscal adjustments (exploratory opinion at the request of the Hungarian presidency) | 8 |
| 2011/C 248/03 | Opinion of the European Economic and Social Committee on Societal empowerment and integration of Roma citizens in Europe (exploratory opinion at the request of the Hungarian presidency) | 16 |
| 2011/C 248/04 | Opinion of the European Economic and Social Committee on How EU policies have impacted on the job opportunities, the training needs and the working conditions of transport workers (exploratory opinion at the request of the Commission) | 22 |
| 2011/C 248/05 | Opinion of the European Economic and Social Committee on Sustainable development of the EU transport policy and planning for TEN-T (exploratory opinion at the request of the forthcoming Polish presidency) | 31 |
| 2011/C 248/06 | Opinion of the European Economic and Social Committee on The contribution of civil society to the Eastern Partnership (exploratory opinion at the request of the Hungarian presidency) | 37 |
| 2011/C 248/07 | Opinion of the European Economic and Social Committee on Integration of water policy into other EU policies (exploratory opinion at the request of the Hungarian presidency) | 43 |
| 2011/C 248/08 | Opinion of the European Economic and Social Committee on The EU’s role and relationship with Central Asia and the contribution of civil society (own-initiative opinion) | 49 |
| 2011/C 248/09 | Opinion of the European Economic and Social Committee on Towards an EU-Mercosur Association Agreement: civil society’s contribution (own-initiative opinion) | 55 |
| 2011/C 248/10 | Opinion of the European Economic and Social Committee on Intercultural dialogue and the Roma: the key role of women and education (additional opinion) | 60 |

Notice No

Contents

page

I   Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

472nd plenary session held on 15 and 16 June 2011

2011/C 248/01

Opinion of the European Economic and Social Committee on The role and priorities of cohesion policy within the EU 2020 strategy (exploratory opinion at the request of the Hungarian presidency)

1

2011/C 248/02

Opinion of the European Economic and Social Committee on Smart fiscal policy consolidation strategies — challenges of identifying growth drivers for Europe. How to exploit fully the labour potential of our economies in parallel with the pressing need for fiscal adjustments (exploratory opinion at the request of the Hungarian presidency)

8

2011/C 248/03

Opinion of the European Economic and Social Committee on Societal empowerment and integration of Roma citizens in Europe (exploratory opinion at the request of the Hungarian presidency)

16

2011/C 248/04

Opinion of the European Economic and Social Committee on How EU policies have impacted on the job opportunities, the training needs and the working conditions of transport workers (exploratory opinion at the request of the Commission)

22

2011/C 248/05

Opinion of the European Economic and Social Committee on Sustainable development of the EU transport policy and planning for TEN-T (exploratory opinion at the request of the forthcoming Polish presidency)

31

2011/C 248/06

Opinion of the European Economic and Social Committee on The contribution of civil society to the Eastern Partnership (exploratory opinion at the request of the Hungarian presidency)

37

2011/C 248/07

Opinion of the European Economic and Social Committee on Integration of water policy into other EU policies (exploratory opinion at the request of the Hungarian presidency)

43

2011/C 248/08

Opinion of the European Economic and Social Committee on The EU’s role and relationship with Central Asia and the contribution of civil society (own-initiative opinion)

49

2011/C 248/09

Opinion of the European Economic and Social Committee on Towards an EU-Mercosur Association Agreement: civil society’s contribution (own-initiative opinion)

55

2011/C 248/10

Opinion of the European Economic and Social Committee on Intercultural dialogue and the Roma: the key role of women and education (additional opinion)

60

| | III   Preparatory acts |
| --- | --- |
| | EUROPEAN ECONOMIC AND SOCIAL COMMITTEE |
| | 472nd plenary session held on 15 and 16 June 2011 |
| 2011/C 248/11 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Taxation of the Financial SectorCOM(2010) 549 final | 64 |
| 2011/C 248/12 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Conclusions of the fifth report on economic, social and territorial cohesion — the future of cohesion policyCOM(2010) 642 final | 68 |
| 2011/C 248/13 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the national parliaments — The EU Budget ReviewCOM(2010) 700 final | 75 |
| 2011/C 248/14 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — European Union Strategy for the Danube RegionCOM(2010) 715 final | 81 |
| 2011/C 248/15 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Smart Regulation in the European UnionCOM(2010) 543 final | 87 |
| 2011/C 248/16 | Opinion of the European Economic and Social Committee on the Green Paper – Audit Policy: Lessons from the CrisisCOM(2010) 561 final | 92 |
| 2011/C 248/17 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank — An EU Framework for Crisis Management in the Financial SectorCOM(2010) 579 final | 101 |
| 2011/C 248/18 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Reinforcing sanctioning regimes in the financial services sectorCOM(2010) 716 final | 108 |
| 2011/C 248/19 | Opinion of the European Economic and Social Committee on the Green Paper — Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status recordsCOM(2010) 747 final | 113 |
| 2011/C 248/20 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registersCOM(2011) 79 final — 2011/0038 (COD) | 118 |
| 2011/C 248/21 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions — A comprehensive approach on personal data protection in the European UnionCOM(2010) 609 final | 123 |
| 2011/C 248/22 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the European Platform against Poverty and Social Exclusion — A European framework for social and territorial cohesionCOM(2010) 758 final | 130 |
| 2011/C 248/23 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Communication on migrationCOM(2011) 248 final | 135 |
| 2011/C 248/24 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on control of major-accident hazards involving dangerous substancesCOM(2010) 781 final — 2010/0377 (COD) | 138 |
| 2011/C 248/25 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Opportunities and Challenges for European Cinema in the Digital EraCOM(2010) 487 final | 144 |
| 2011/C 248/26 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Reform of the EU State aid Rules on Services of General Economic InterestCOM(2011) 146 final | 149 |
| 2011/C 248/27 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council relating to tyres for motor vehicles and their trailers and to their fitting (Codification)COM(2011) 120 final — 2011/0053 (COD) | 153 |
| 2011/C 248/28 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the assessment of the effects of certain public and private projects on the environment (Codification)COM(2011) 189 final — 2011/0080 (COD) | 154 |

III   Preparatory acts

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

472nd plenary session held on 15 and 16 June 2011

2011/C 248/11

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Taxation of the Financial SectorCOM(2010) 549 final

COM(2010) 549 final

64

2011/C 248/12

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Conclusions of the fifth report on economic, social and territorial cohesion — the future of cohesion policyCOM(2010) 642 final

COM(2010) 642 final

68

2011/C 248/13

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the national parliaments — The EU Budget ReviewCOM(2010) 700 final

COM(2010) 700 final

75

2011/C 248/14

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — European Union Strategy for the Danube RegionCOM(2010) 715 final

COM(2010) 715 final

81

2011/C 248/15

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Smart Regulation in the European UnionCOM(2010) 543 final

COM(2010) 543 final

87

2011/C 248/16

Opinion of the European Economic and Social Committee on the Green Paper – Audit Policy: Lessons from the CrisisCOM(2010) 561 final

COM(2010) 561 final

92

2011/C 248/17

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank — An EU Framework for Crisis Management in the Financial SectorCOM(2010) 579 final

COM(2010) 579 final

101

2011/C 248/18

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Reinforcing sanctioning regimes in the financial services sectorCOM(2010) 716 final

COM(2010) 716 final

108

2011/C 248/19

Opinion of the European Economic and Social Committee on the Green Paper — Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status recordsCOM(2010) 747 final

COM(2010) 747 final

113

2011/C 248/20

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registersCOM(2011) 79 final — 2011/0038 (COD)

COM(2011) 79 final — 2011/0038 (COD)

118

2011/C 248/21

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions — A comprehensive approach on personal data protection in the European UnionCOM(2010) 609 final

COM(2010) 609 final

123

2011/C 248/22

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the European Platform against Poverty and Social Exclusion — A European framework for social and territorial cohesionCOM(2010) 758 final

COM(2010) 758 final

130

2011/C 248/23

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Communication on migrationCOM(2011) 248 final

COM(2011) 248 final

135

2011/C 248/24

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on control of major-accident hazards involving dangerous substancesCOM(2010) 781 final — 2010/0377 (COD)

COM(2010) 781 final — 2010/0377 (COD)

138

2011/C 248/25

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Opportunities and Challenges for European Cinema in the Digital EraCOM(2010) 487 final

COM(2010) 487 final

144

2011/C 248/26

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Reform of the EU State aid Rules on Services of General Economic InterestCOM(2011) 146 final

COM(2011) 146 final

149

2011/C 248/27

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council relating to tyres for motor vehicles and their trailers and to their fitting (Codification)COM(2011) 120 final — 2011/0053 (COD)

COM(2011) 120 final — 2011/0053 (COD)

153

2011/C 248/28

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the assessment of the effects of certain public and private projects on the environment (Codification)COM(2011) 189 final — 2011/0080 (COD)

COM(2011) 189 final — 2011/0080 (COD)

154

| EN | |
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EN

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I Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

472nd plenary session held on 15 and 16 June 2011

| 25.8.2011 | EN | Official Journal of the European Union | C 248/1 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/1

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Opinion of the European Economic and Social Committee on ‘The role and priorities of cohesion policy within the EU 2020 strategy’ (exploratory opinion at the request of the Hungarian presidency)

2011/C 248/01

Rapporteur: Mr BARÁTH

On 15 November 2010, Mr Péter GYÖRKÖS, permanent representative of Hungary to the European Union, asked the European Economic and Social Committee, on behalf of the future Hungarian Presidency, to draw up an exploratory opinion on:

The role and priorities of cohesion policy within the EU 2020 strategy.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June 2011), the European Economic and Social Committee adopted the following opinion by 141 votes to 9 with 22 abstentions.

1.   Recommendations and observations

1.1   Recommendations

1.1.1   The EESC believes that the European Union's response to the crisis, and thinking behind the Europe 2020 strategy, together with its objectives and flagship initiatives, are setting the right course; it also believes that the proposed measures and instruments are promising. The strategy – together with the Euro Plus Pact - concentrates on the indispensable qualitative changes needed and on the elements of potential growth.

1.1.2   The EU continues to deepen and strengthen the integration process. The EESC thinks that, if the European Union and its Members States want to strengthen integration, they will have to make decisive changes by 2020, particularly with regard to the quality of their institutions and legal and financial systems. This requires both sustainable (long-term) stability, competitiveness (growth potential) and stronger (economic, social and territorial) cohesion, all at the same time.

1.1.3   In several of its opinions, the EESC has emphasised that cohesion policy is a historic EU value, whose three objectives – convergence, enhanced regional competitiveness through job creation, and stronger territorial cooperation – should be preserved and strengthened. Indeed, the less developed European countries and regions need to increase investment in infrastructure and other capital which is essential to speed up potential growth.

1.1.4   Whilst the EESC is convinced that financial resources invested in support for cohesion policy have, to a large extent, delivered good results, it nevertheless believes that such funding can and should be further developed and restructured, and that particularly the effectiveness and efficiency of funding and spending could be improved. Cohesion policy instruments should be aligned with the Europe 2020 strategy in such a way as not to undermine European cohesion policy.

1.1.5   The EESC recommends that the review of current cohesion policy objectives and instruments look at the option of adapting them in line with elements of the Europe 2020 strategy, as follows:

1.1.5.1   Current cohesion policy objectives and instruments

| Cohesion Policy |
| --- |
| Objectives | Structural Funds and instruments |
| | |
| Convergence/sustainable growth | ERDF | ESF | Cohesion Fund |
| | | | |
| Regional competitiveness and employment | ERDF | ESF | |
| | | | |
| European Territorial Cooperation | ERDF | | |

Cohesion Policy

Objectives

Structural Funds and instruments

Convergence/sustainable growth

ERDF

ESF

Cohesion Fund

Regional competitiveness and employment

ERDF

ESF

European Territorial Cooperation

ERDF

1.1.5.2   Europe 2020: 3 interlinked priorities

| a) | Smart growth: developing an economy based on knowledge and innovation; |
| --- | --- |

a)

Smart growth: developing an economy based on knowledge and innovation;

| b) | Sustainable growth: promoting a more efficient, greener and more competitive economy; |
| --- | --- |

b)

Sustainable growth: promoting a more efficient, greener and more competitive economy;

| c) | Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion. |
| --- | --- |

c)

Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion.

1.1.5.3   The EESC suggests that cohesion policy must clearly emphasise societal, social, and solidarity objectives and the use of Structural Funds for investment purposes, in close cooperation with the other European funds. Failing this, the focus in Europe 2020 on strong economic growth, which is perfectly acceptable in itself, could overshadow social and territorial cohesion.

1.1.5.4   If the order of Structural Fund competitiveness and convergence objectives were to be changed, and if the ‘Multi-Fund’ concept were allowed to become the dominant factor, then the Europe 2020 and cohesion strategy objectives would become quite compatible, and the EU Structural Funds would contribute more effectively to boosting regional competitiveness.

| The EU 2020 Strategy | Cohesion Policy
  (Reformed structure) |
| --- | --- |
| Objectives/ instruments | Flagship initiatives | Objectives/ instruments | Structural Funds and instruments |
| | | | |
| Smart growth | A Digital Agenda for Europe, Innovation Union, Youth on the Move | Regional competitiveness and employment | | | |
| Research/innovation, Education, Digital society | Greater competitiveness/more attractive location, development of human capital/education etc., Innovation/knowledge society |
| Sustainable growth | Resource efficient Europe, An industrial policy for the globalisation era | Convergence | | | |
| Green energies/environmentally aware society, Networking/ small businesses | Growth-generating environmental and infrastructure development, institution building |
| Inclusive growth | An agenda for new skills and jobs, European platform against poverty | European Territorial Cooperation | | | |
| Equal access/more and better jobs | Local, regional and macro-regional cooperation |

The EU 2020 Strategy

Cohesion Policy

(Reformed structure)

Objectives/ instruments

Flagship initiatives

Objectives/ instruments

Structural Funds and instruments

Smart growth

A Digital Agenda for Europe, Innovation Union, Youth on the Move

Regional competitiveness and employment

Research/innovation, Education, Digital society

Greater competitiveness/more attractive location, development of human capital/education etc., Innovation/knowledge society

Sustainable growth

Resource efficient Europe, An industrial policy for the globalisation era

Convergence

Green energies/environmentally aware society, Networking/ small businesses

Growth-generating environmental and infrastructure development, institution building

Inclusive growth

An agenda for new skills and jobs, European platform against poverty

European Territorial Cooperation

Equal access/more and better jobs

Local, regional and macro-regional cooperation

1.1.6   The EESC recognises that the structural harmonisation outlined above would require radical changes, focussing on defining detailed objectives: among other things, there is a need to set complementary competitiveness objectives and to widen territorial cooperation to include supporting macro-regional developments. If there is no possibility for drawing up direct connections between the EU 2020 and the EU Cohesion policy, their goals and means as well as the efficiency of the implementation of the policies may decrease significantly.

1.1.7   Such structural harmonisation could happen if the EU were to acknowledge cohesion and cohesion policy in the broader sense as a priority being on an equal footing with competitiveness. This would have to be reflected in the funding earmarked for the two priorities. At the same time, this is not just a matter of continuing in future to spend money on cohesion, but of spending it more effectively.

1.1.7.1   The EESC urgently calls for the improvement of the proposals for the ex ante and ex post conditionality regime to be set up for monitoring efficiency and effectiveness of the Union's cohesion policy. This regime must not, however, undermine the simplification of cohesion instruments in their entirety; on the contrary, it should reduce implementation costs and enhance predictability. The EESC hopes that the institutional and administrative changes will bring about a simpler and more efficient system. There is a need to develop a model making it possible to assess the interactions at work in realising the objectives of the EU 2020 strategy, national reform programmes and cohesion policy on the basis of the particular circumstances of the various countries and regions benefiting from cohesion policy.

1.1.8   The EESC agrees that all EU policies should contribute to the success of the Europe 2020 strategy. The EU budget review outlined a new strategic programming approach for cohesion policy. The EESC fully endorses the development of a common strategic framework (CSF) by the European Commission, translating the targets and objectives of Europe 2020 into investment priorities. The framework would cover all EU funds and furthermore integrate all other EU financial instruments.

1.1.9   The EESC reiterates that the European Social Fund should, as an EU instrument promoting investment in human resources, support the three priorities of the Europe 2020 strategy i.e. growth which is smart, inclusive and sustainable. Employment, training, education, active inclusion and equal opportunity policies are all key factors here.

1.1.10   The EESC feels that achieving the enhanced objectives requires that the ESF's institutional structure be strengthened and its efficiency improved, without this leading to any increase in administrative burdens. It is important that the ESF play a leading role in improving the situation of particularly disadvantaged social groups (e.g. immigrants, minority groups, people with disabilities, or the Roma population) and in ensuring conditions conducive to their integration.

1.1.11   The EESC points out that the coordination of policies which are financed from different funds of the EU's cohesion policy and Europe 2020 instruments, may impact their original objectives and affect their territorial integrity which can result in changes to them; essential new perspectives can emerge in the course of their implementation. Iterative planning, managing and monitoring mechanisms must be put in place. The key notion of the iterative process is that in the ‘Partnership Agreement’ not only the preparative steps of development, but also the full implementation process, its conditions and measurements of efficacy must be defined; however, parties must be also open to the fact that the overall aims of managing committees might be amended based on the continuous monitoring of the beneficiaries.

1.1.12   The Committee stresses the need, from the point of view of achieving the objectives of the EU 2020 strategy, to enhance coordination in the management of each fund, above all the Cohesion Fund, the Structural Funds and innovation funds.

1.1.13   The EESC agrees that, in the long term, in order to avoid conflicts, there are many arguments in favour of integrating all components of the EU's structural policy (including e.g. Europe 2020, cohesion policy, the CAP or the EIB) in a fully coherent set of general community policies, which could be called EU 2050. This would enable closer policy and technical cooperation and coordination, without meaning the end of individual policies. Of course, this will be difficult to achieve as long as competences for the different parts of the relevant policies are divided between the EU and the Member States. Strengthening the regional dimension could be an appropriate means of gradually achieving the desired objective.

1.1.14   Developing a polycentric Europe comprising a network of ‘smart’ locations needs team work, which will only be possible in the context of cooperation between different stakeholders. Cooperation in transnational areas, as well as macro-regional development strategies that bring together stakeholders from different countries and sectors, can be one way forward.

1.2   Regions and cohesion

1.2.1   In the EESC's view, EU competitiveness depends, to a large extent, on stepping up regional competitiveness.

1.2.2   The EESC believes that emerging forms of macro-regional cooperation are crucial in many respects. As it has already stressed in several opinions (on the Baltic Sea and Danube regions), aid granted under the Structural Funds can make it possible to define strategies within the framework of both physical and non-physical trans-European networks which are needed by the European Union to consolidate its competitiveness and its attractiveness as a location.

1.2.3   The EESC considers that the future of the European Union and the consolidation of its political unity also depend on its capacity to transcend the statistics-based regional approach confined by national borders. It is clear that progress over the past few years towards a regional approach, complex programmes and horizontal links, as well as the consolidation of clusters, will enable the social and territorial dimensions of the European economy to flourish.

1.2.4   In the Committee's view, there is no point in implementing parallel and at times wholly identical objectives through different policy areas, nor in developing a different set of tools than the relatively well-established cohesion policy instruments.

1.2.4.1   Increasingly, the coming decade will have to be a decade of functional regions. Regions may have one or more centres, with cross-border horizontal regional and vertical economic links, supported by the legal, financial and institutional potential of ‘enhanced cooperation’. Thus a new meaning for the term ‘regional’ can bring a new dimension to a smart Europe. However, given that some regions lag behind – and will continue to do so – a programme is needed to help them catch up.

1.2.5   The EESC believes that transforming the European economy to be a successful global player, enhancing the potential of growth, reducing regional disparities, supporting micro-, small and medium-sized enterprises operating in peripheral areas, freeing up new resources, raising awareness about the environment and healthy lifestyles, improving the quality of education, motivating young people, promoting innovation, encouraging people to participate in the various processes and strengthening European identity are all areas which should be addressed.

1.3   Cities and conurbations

1.3.1   The EESC emphasises that Europe’s competitiveness depends greatly on its metropolitan cities and metropolitan regions, where enterprises can benefit from agglomeration economies and networks linking global market places. Urban areas can, in a general way, be engines of growth and hubs for creativity and innovation. Higher growth levels and new jobs can be created provided a critical mass of players like companies, universities and researchers is established. Urban problems, whether related to environmental degradation or to social exclusion, call for a specific response and for direct involvement of the level of government concerned.

1.3.2   In the EESC's view, an ambitious urban agenda should be developed where financial resources are identified more clearly to address urban issues and where urban authorities would play a stronger role in designing and implementing urban development strategies.

1.3.3   Urban systems are, depending on their geographical location, complemented by various catchment areas. The EESC cannot accept a continuation of the ‘traditional’ antagonism between town and country. The benefits that can be achieved by rural-urban partnerships are highly dependent on local, and ultimately unique, contextual factors.

1.4   Rural areas and agriculture

1.4.1   The EESC feels that in the context of the path being taken with the Europe 2020 strategy, cohesion policy on the one hand and the common agricultural policy on the other are pivotal, particularly when it comes to integrated territorial development. Farming, an important source of economic dynamism, continues to be a strategic sector for the EU, in terms both of food security and its potential when it comes to growth and employment in rural areas, and on account of its contribution to the battle against climate change.

1.4.2   In this light, these two policies must gear their combined efforts towards serving those common, cross-cutting objectives that aim to transform the EU into a smart, sustainable and inclusive economy, characterised by high levels of employment, productivity and social cohesion.

1.4.2.1   The EESC feels that smart and globally connected places in rural areas have a role to play in delivery of the recovery envisaged in Europe 2020. Just as in the urban areas, networks are a crucial organisational form for business and for regional development.

2.   Conclusions

2.1   The EESC approves the fact that policy references in the Europe 2020 strategy which refer to the need for innovation relating to climate change, energy efficiency, renewable energies, health and demographic change are structurally linked to cohesion objectives set in the areas of education, research and development and the digital society. These represent, not least in regional terms, a bridge between cohesion objectives and the Europe 2020 strategy.

2.1.1   The EESC also notes that there is a contradiction between the various theoretical approaches and the concepts used in practice. By giving territorial aspects a legitimate role in the cohesion process, the Lisbon Treaty has added a new dimension to the meaning of ‘regional’. The way that the ‘region’ will be defined in regional policy in the future is not a trifling matter. What is needed is a definition to find a common picture, whether from a regional and institutional point of view or from the perspective of the relevant legal and financial instruments in order to secure renewed, sustainable growth in Europe.

2.1.1.1   The EESC recognises that the emergence of macro-regional strategies is a very positive process, closely linked to the concept of territorial cohesion introduced by the Lisbon Treaty. Regional policies in the strict sense of the term need to effectively complement cooperation between regions which are larger or further apart from each other, but which have common interests in terms of cooperation.

2.2   The intersection between ‘groups’ of programmes defined inter alia in spatial (i.e. regional, territorial, interurban) terms reflects zones with development-encouraging activities which of course have one or more major urban centres, without necessarily excluding or marginalising others. European ‘centres of excellence’ which are defined on the basis of innovation skills, are characteristic of certain economic sectors are not a fortuitous accumulation of individual skills and abilities in a given urban centre, but are rather knowledge brought together by links which are clearly defined in physical space.

2.2.1   ‘Excellence’ is only possible thanks to quantitative developments expressed in the cohesion target system relating to the environment, infrastructure, education or training. What is characteristic of such areas is their openness. Participation is possible anywhere, but for reasons of quality, opportunities arise in the long term around centres of gravity. Predictability is rightly based on the historically predictable stability of regional multi-dimensional capacities.

2.3   For innovation to succeed, it is vital to support new forms of democracy. The usual forms of social consultation need to be developed and, with the help of tools based on participatory democracy, skills must be freed up to encourage organised civil society to be more inclined or ‘willing’ to be involved in accordance with the core principles of the EU Treaties.

2.4   Innovation is all about putting into practice new ideas and suggestions, anticipating competition, and getting ahead of foreseeable processes by making use of knowledge. Its complexity means that it is able to combine human skills, technical aptitude and economic relations in all their diversity. Naturally, urban centres, as hubs, provide the right conditions – the vital framework – without which everything remains mere theory.

2.5   This is why, based on territorial analyses, an integral part of financial support systems and policies must be to offer coordinated parallel support for innovation and measures for catching up.

2.6   Although it is true that the Europe 2020 strategy is a comprehensive programme for growth, competitiveness, sustainability and structural policy, from a wider, global perspective, it is also a programme for helping Europe to be competitive in the global market.

2.7   The objectives of both the Europe 2020 strategy and cohesion policy tie in with the above. However, with regard to Europe 2020, the institutional framework for their implementation lacks shared, new financial and legal elements whose interplay could enable them to become factors contributing to higher efficiency. There is a valid argument that reshaping and incorporating cohesion instruments would speed up the development of an innovation-oriented, ‘smart’ Europe, but only if the financial range of instruments were to be expanded, by drawing on the synergies created by the integration of different sources.

3.   Debate

3.1   European political and economic renewal has been accelerated by the crisis which started at the end of the last decade.

3.1.1   Partly because of the global crisis, the European Union needs stronger economic integration. In the Committee's view, this is a positive process in that it strengthens the EU, but a difficult one in that cooperation between 27 countries does not progress smoothly. In spite of all the accompanying problems, one of the main ideas underlying this stronger economic (and consequently political) integration is the development of an ‘EU economic policy’. There are three main aspects to it
   (1):

| a) | Stability

  By means of the Stability and Growth Pact, the EU is expanding the scope of common control on sectors involving stability risks and establishing a crisis management mechanism (EFSM and ESM). |
| --- | --- |

a)

Stability

By means of the Stability and Growth Pact, the EU is expanding the scope of common control on sectors involving stability risks and establishing a crisis management mechanism (EFSM and ESM).

| b) | Growth and competitiveness

  To this end, the EU has adopted the EU 2020 strategy and the Euro Plus Pact. |
| --- | --- |

b)

Growth and competitiveness

To this end, the EU has adopted the EU 2020 strategy and the Euro Plus Pact.

| c) | Cohesion

  The EU implements cohesion policy and the common agricultural policy in order to reduce social, economic and territorial disparities. |
| --- | --- |

c)

Cohesion

The EU implements cohesion policy and the common agricultural policy in order to reduce social, economic and territorial disparities.

3.2   The changes and basic documents and strategies which have been adopted set out a recipe for renewal, establishing conditions and tools which EU and national political leaders are jointly responsible for using. The various instruments are available, to be used together, to bring about stability, growth and competitiveness and to implement cohesion.

3.3   The very task of reconciling the EU 2020 and cohesion policy reflects a dichotomy. It gives an idea of the danger inherent in the opposition between market freedom and social/territorial levelling. Right now, at a time of limited funding, with support for one coming at the expense of the other, the danger is all the greater. Strengthening cohesion should be accomplished by improving the circumstances for growth and competitiveness. The less developed Member States or regions must not lose any more time in the current global context.

3.4   Public finances have been weakened on a lasting basis by the crisis in several Member States and will be hard to consolidate at a time when the costs of an ageing population will also be kicking in. In short, most EU countries face a difficult future.

3.5   The Europe 2020 strategy quite rightly refrains from drawing a distinction between structural reforms, which can only be implemented over the long term, and measures to promote short-term recovery.

3.6   The success of this strategy should not be dependent on short-term economic trends. It is precisely the resources invested in slow structural changes which ‘steer’ the sectors which in turn, thanks to their competitive innovation, are well-placed to renew the system itself.

3.7   Potential growth elements tie in with several of the strategy's objectives (and rightly so); however, there are several unintentional discrepancies.

3.7.1   Among the objectives of the Europe 2020 strategy – from the point of view of growth potential – higher employment rates and educational levels cover the quantitative and qualitative aspects of the work force. Research and development expenditure objectives, as well as energy and climate goals, are connected to the quality of capital invested and environmental sustainability. At the same time, the strategy lacks some of the factors determining the quantity and quality of capital (investments and their technical standards), as well as total factor productivity. The strategy attaches great importance to research and development expenditure, but does not deal adequately with innovation processes in companies or with economic and social innovation, which is not the same as research and development.

3.7.2   In view of the above, the Europe 2020 strategy reflects an economic approach which is in line with the needs and characteristics of slow-growing, developed economies with their significant research and development capacity and relatively low investment rates; over the long term even such low rates have proven sufficient for securing the requisite structural changes. In developed countries, there is no doubt that research, development and innovation have a key role to play in economic growth. When seen from this perspective, cohesion, though not necessarily in contradiction to competitiveness, does take second place to it.

3.7.3   However, for new EU Member States with lower levels of economic development to catch up, investment in infrastructure and other areas is needed. In such countries, research and development is less likely to be the main driver of growth than investment. Although the Commission document (2) mentions cohesion in this respect, the draft does not sufficiently emphasise helping the less developed countries to catch up.

3.8   The Europe 2020 strategy cannot be understood without knowing how funding is allocated. On the one hand, there is a ‘grey zone’ between 2010 and 2013, during which the current financial perspective continues to apply but not always in line with Europe 2020 goals (e.g. the digital agenda). On the other hand, the objectives adopted within the context of the Europe 2020 strategy largely determine expenditure in the next EU budget. In view of this it would be advisable to link the objectives of this strategy to the priorities of the financial framework.

3.9   Analyses show that energy invested in catching up is repaid many times over, alongside numerous other benefits:

| — | firstly: it can be shown that investments from the EU budget deliver higher than average growth in the financial results of the EU economy (GDP), thanks to advanced technological transfers, a high percentage of imports in investments, a skilled labour force, the benefits of a cheaper infrastructure, and investments benefiting from financial support and building on modern infrastructure; |
| --- | --- |

—

firstly: it can be shown that investments from the EU budget deliver higher than average growth in the financial results of the EU economy (GDP), thanks to advanced technological transfers, a high percentage of imports in investments, a skilled labour force, the benefits of a cheaper infrastructure, and investments benefiting from financial support and building on modern infrastructure;

| — | secondly: extension of the Single Market, more widespread service activities and growth in the knowledge base are all factors which in themselves already contribute substantially to innovation activities; |
| --- | --- |

—

secondly: extension of the Single Market, more widespread service activities and growth in the knowledge base are all factors which in themselves already contribute substantially to innovation activities;

| — | thirdly: for the SME sector, Structural Fund financing often means markets, access to markets or development funding; |
| --- | --- |

—

thirdly: for the SME sector, Structural Fund financing often means markets, access to markets or development funding;

| — | finally, the potential beneficial impact of integration and catching up for the most disadvantaged social groups, excluded from the labour market in various ways, is considerable. |
| --- | --- |

—

finally, the potential beneficial impact of integration and catching up for the most disadvantaged social groups, excluded from the labour market in various ways, is considerable.

3.10   The EESC regrets that the Commission has not set out a growth scenario that maximises the potential of the single market, but concentrates instead on drastic fiscal consolidation as the prerequisite for growth. Much more attention should be focused on growth drivers that will enable Member States to consolidate while being on a sustainable growth path. To do so, the Committee believes that a balanced macroeconomic policy that duly combines supply- and demand-side aspects must constitute an integral part of any future-oriented economic strategy.

3.11   It would be particularly good if programmes were determined by the existence of ‘financial hubs’ defined on the basis of expected results and risk analysis. This is certainly a necessary step, since globalisation goes far beyond territorial constraints, and the global spread of innovation ‘levers’ which are developing in certain areas, as well as their clustering function, will continue to strengthen.

3.11.1   Such areas need to have control over their own financial resources and be able to decide themselves what priority to give the various development factors in allocating these resources; by means of long-term involvement in innovative processes and by virtue of the added value generated, they need to be able to decide on whether to approve or withdraw financial support.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  See Art. 3.3 TEU and Art. 174 TFEU.

1

(2)  COM(2010) 2020 final.

2

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/8 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/8

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Opinion of the European Economic and Social Committee on ‘Smart fiscal policy consolidation strategies — challenges of identifying growth drivers for Europe. How to exploit fully the labour potential of our economies in parallel with the pressing need for fiscal adjustments’ (exploratory opinion at the request of the Hungarian presidency)

2011/C 248/02

Rapporteur: Mr DANTIN

On 15 November 2010, the Permanent Representative of the Republic of Hungary to the European Union, Peter GYÖRKÖS, asked the European Economic and Social Committee, on behalf of the forthcoming Hungarian Presidency, to draw up an exploratory opinion on:

Smart fiscal policy consolidation strategies — challenges of identifying growth drivers for Europe. How to exploit fully the labour potential of our economies in parallel with the pressing need for fiscal adjustments.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June 2011), the European Economic and Social Committee adopted the following opinion by 164 votes to 2 with 9 abstentions.

1.   Conclusions and recommendations

1.1   The economic and financial crisis, which started in 2007 and worsened in 2008, has had a serious impact on European countries' public finances, in particular worsening their fiscal situation.

1.2   The need now to relieve national budgets of the costs arising from all the various economic recovery plans, from support to banks – as has occurred in certain Member States – and from a failure to take sufficient account of weak growth in pre-crisis economic policy is leading many Member States to reduce public spending. There is a risk that this choice could result in Member States pulling back from their commitments and reduce the redistributive effect of collective solidarity systems, both in social protection and in public services.

1.3   This approach of a rapid return to a balanced budget, as well as giving rise to considerable social costs, could lead to long-term sluggish growth, largely due to a stifling of demand that will exacerbate budget deficits. These deficits will in turn reduce demand, causing a snowball effect that could push the European economy into an endless downward spiral.

1.3.1   A smart fiscal policy needs to break this spiral.

1.4   ‘Smart’ fiscal consolidation involves a ‘smart’ balance between income and expenditure and between supply and demand. Sustainable growth must therefore be the primary goal of economic policy and of all other policies.

1.4.1   Sustainable growth must therefore be one of the EU's top-priority objectives.

1.5   To achieve this, it would be good to:

| 1.5.1 | establish more ambitious and comprehensive financial market regulation in order to curb speculation. Otherwise, the continued existence of speculation will negate all the efforts made to achieve ‘smart fiscal consolidation’; |
| --- | --- |

1.5.1

establish more ambitious and comprehensive financial market regulation in order to curb speculation. Otherwise, the continued existence of speculation will negate all the efforts made to achieve ‘smart fiscal consolidation’;

| 1.5.2 | pursue a fiscal policy for growth, by:






  — | establishing a European bond to fund infrastructure projects by mobilising savings; |
| --- | --- | --- |

1.5.2

pursue a fiscal policy for growth, by:

—

establishing a European bond to fund infrastructure projects by mobilising savings;

| — | creating Eurobonds, inter alia to reduce debt refinancing costs for struggling eurozone countries; |
| --- | --- |

—

creating Eurobonds, inter alia to reduce debt refinancing costs for struggling eurozone countries;

| — | making the most of the flexible time frame for consolidation, as a ‘big bang’ would compromise growth prospects; |
| --- | --- |

—

making the most of the flexible time frame for consolidation, as a ‘big bang’ would compromise growth prospects;

| 1.5.3 | use tax policy to drive growth, by:






  — | making greater efforts to coordinate Member States' fiscal policies, in line with the EU treaties; |
| --- | --- | --- |

1.5.3

use tax policy to drive growth, by:

—

making greater efforts to coordinate Member States' fiscal policies, in line with the EU treaties;

| — | improving cooperation in combating tax fraud by making the best possible use of Eurofisc; |
| --- | --- |

—

improving cooperation in combating tax fraud by making the best possible use of Eurofisc;

| — | shifting the tax burden using new sources of revenue, such as financial transaction taxes, energy taxes, levies on financial institutions, levies on CO2 emissions (subject to reorganisation of the carbon trading market), etc.; |
| --- | --- |

—

shifting the tax burden using new sources of revenue, such as financial transaction taxes, energy taxes, levies on financial institutions, levies on CO2 emissions (subject to reorganisation of the carbon trading market), etc.;

| 1.5.4 | design taxes that internalise the externalities generated by the financial sector's behaviour such that they can help to create fairer conditions in the process of developing and harmonising the European internal market;






  1.5.4.1 | The Committee welcomes the European Commission's intention to undertake an impact assessment to establish the potential structure and implementation rules for this tax. In any event, no decision should be taken on this tax until the outcome of this assessment is known; |
| --- | --- | --- |

1.5.4

design taxes that internalise the externalities generated by the financial sector's behaviour such that they can help to create fairer conditions in the process of developing and harmonising the European internal market;

1.5.4.1

The Committee welcomes the European Commission's intention to undertake an impact assessment to establish the potential structure and implementation rules for this tax. In any event, no decision should be taken on this tax until the outcome of this assessment is known;

| 1.5.5 | create tomorrow's growth, by:






  — | implementing the 2020 strategy, which aims in particular to promote sustainable and inclusive growth on the basis of enhanced coordination of economic policies, by addressing the main bottlenecks constraining growth, including those related to the working of the internal market; |
| --- | --- | --- |

1.5.5

create tomorrow's growth, by:

—

implementing the 2020 strategy, which aims in particular to promote sustainable and inclusive growth on the basis of enhanced coordination of economic policies, by addressing the main bottlenecks constraining growth, including those related to the working of the internal market;

| — | developing and implementing an ambitious and efficient industrial policy that prioritises high value-added, high-tech and high growth-potential sectors, both in industry and in services; |
| --- | --- |

—

developing and implementing an ambitious and efficient industrial policy that prioritises high value-added, high-tech and high growth-potential sectors, both in industry and in services;

| — | creating a true European ‘Small Business Act’; |
| --- | --- |

—

creating a true European ‘Small Business Act’;

| — | focusing on the ‘magic triangle’ of growth – training, research and innovation. To this end, it would be worthwhile to:






  — | continue and step up investment in education and R&D, despite budget cuts, in order to avoid an inexorable impoverishment of the EU; |
| --- | --- | --- |

—

focusing on the ‘magic triangle’ of growth – training, research and innovation. To this end, it would be worthwhile to:

—

continue and step up investment in education and R&D, despite budget cuts, in order to avoid an inexorable impoverishment of the EU;

| — | ensure that the training and skills provided match up with the needs of the labour market; |
| --- | --- |

—

ensure that the training and skills provided match up with the needs of the labour market;

| — | amend tax legislation to encourage industry to increase investment in research, development and innovation; |
| --- | --- |

—

amend tax legislation to encourage industry to increase investment in research, development and innovation;

| — | make it easier for researchers and innovators to work and cooperate throughout the EU, by working to complete the European Research Area; |
| --- | --- |

—

make it easier for researchers and innovators to work and cooperate throughout the EU, by working to complete the European Research Area;

| — | reduce or eliminate multiple barriers: access to finance for SMEs, the costs of intellectual property rights, reaching agreement on introducing the European patent on the basis of closer cooperation as a matter of the greatest urgency; |
| --- | --- |

—

reduce or eliminate multiple barriers: access to finance for SMEs, the costs of intellectual property rights, reaching agreement on introducing the European patent on the basis of closer cooperation as a matter of the greatest urgency;

| — | expand ‘competitive clusters’ and increase their resources and remit. To this end, establishing a European network could improve the link between research and innovation. |
| --- | --- |

—

expand ‘competitive clusters’ and increase their resources and remit. To this end, establishing a European network could improve the link between research and innovation.

1.6   In putting these policies into practice, where they depend solely on the decisions of each individual Member State, account must be taken of the wide variation in economic performance across the 27 Member States. GDP growth rates, unemployment levels and trends, levels of national debt and spending on R&D all vary widely, although there are discernable patterns.

2.   Introduction

2.1   The Hungarian Presidency has asked the European Economic and Social Committee to draw up an exploratory opinion on ‘Smart fiscal policy consolidation strategies – challenges of identifying growth drivers for Europe. How to exploit fully the labour potential of our economies in parallel with the pressing need for fiscal adjustments’.

2.2   The Committee welcomes this request.

2.3   The issue that it brings to the EESC's attention is one that is already of concern to the Committee and that has featured in its work since the start of the financial crisis.

2.4   This opinion is an opportunity to update the EESC's previous comments, which will form a basis for drafting this contribution, the aim of which will be to expand those comments to respond to the subject of the referral (1).

2.5   To this end, we will start with a brief analysis of the reasons for the crisis, and then look at its consequences and at the economic and social risks of an ‘unintelligent’ approach to fiscal consolidation, and will ultimately make proposals for promoting the development of sustainable growth, which is the only way of relaunching Europe's economy.

3.   The crisis and its impact

3.1   The economic and financial crisis, which started in 2007 and worsened in 2008, has had a serious impact on European countries' public finances. Many governments took action to save the financial system, and they also took significant fiscal measures to limit the depth of the recession as much as possible, via their recovery plans. These recovery plans helped the automatic stabilisers to prevent a collapse in economic activity, but also worsened the budgetary situation in numerous countries.

3.2   Although massive public spending during the financial crisis made it possible to maintain market liquidity, the need to relieve national budgets of the costs arising from support to banks – as has occurred in certain Member States – and discretionary measures has led to a situation in which rising unemployment and the additional austerity measures adopted in several countries together pose a threat to economic growth.

3.3   This has resulted in the public deficit in the European Union rising significantly: according to Eurostat projections, it will have risen from 2.3 % of GDP in 2008 to 7.5 % in 2010 in the EU as a whole, and from 2 % to 6.3 % within the eurozone, while during the same period the debt-to-GDP ratio will have risen from 61.6 % to 80 % in the EU-27 and from 69.4 % to 78.7 % in the eurozone. Growth would be 0.7 % in 2010, and unemployment in the EU is expected to continue rising: having gone from 7.1 % in 2007 to 9.1 % in 2009, it is predicted to reach 10.3 % by the end of 2010, which amounts to almost 25 million people, so some 8 million will have lost their jobs as a result of the crisis.

3.4   There is also a risk that the actions taken in certain Member States – which essentially consist in cutting public spending in order to reduce the public debt and balance the budget as quickly as possible – could result in Member States pulling back from their commitment to redistribution under collective solidarity systems. It is therefore a matter of very considerable concern that social protection systems and public services are being degraded just at the time when their role as automatic stabilisers and in effectively absorbing the shock of the crisis has been unanimously welcomed.

3.4.1   In the Committee's view, it is vital to uphold Europe's social and natural capital, which are essential factors in increasing growth.

3.4.2   It would destroy the credibility of the EU (and of its Member States) if it were seen by its citizens as being determined to take strong measures to assist a financial and banking sector that bears responsibility for the current crisis, as has occurred in certain Member States, and if, at a time when we need to combat the slowdown in economic growth, the sharp rise in unemployment and increasing job insecurity, and guarantee solidarity via social protection systems and public services, its actions were seen to be ineffective and to penalise ordinary Europeans, who were not implicated in triggering the economic and financial crisis. Such a situation would only further widen the existing gap between the EU and its citizens.

3.5   This rapid return to a balanced primarily involves reducing public spending: quite apart from the social cost this entails, there is also a risk that such an approach will lead to long-term sluggish growth – largely due to a stifling of demand – accompanied by persistent or rising unemployment, and a consequent erosion of Europe's competitiveness at global level.

3.5.1   The risk with budgetary austerity is that it could reduce demand, leading to a recession that would generate further deficits and could push the European economy into a downward spiral.

3.5.2   This shrinking of demand would be particularly harsh given that the gap between rich and poor is getting wider (in France, for example, average earnings of the top 0.01 % best paid increased by 51 % between 1998 and 2005) and that households' purchasing power is automatically falling, partly because of the economic situation but also due to the significant drop in the contribution of wages to value added: the IMF calculated in 2007 that the share of wages and salaries in GDP fell in Europe from 73 % in 1980 to 64 % in 2005.

4.   Towards smart fiscal consolidation

4.1   The issue is not so much whether it is appropriate to return to a balanced budgetary position but how, who pays, and at what pace in order to facilitate stronger growth.

4.1.1   ‘Smart’ fiscal consolidation involves a ‘smart’ balance between income and expenditure and between supply and demand. To this end, we absolutely must get back on the path to growth, as part of an expansionary policy to create a favourable environment for consumption and investment, if we are to climb out of the crisis.

4.1.2   Fiscal consolidation is also a function of the demands of monetary policy, which must be pursued such that it can achieve its own objectives of price stability and market confidence whilst still creating the conditions for economic growth.

4.2   Fiscal policy for growth

4.2.1   Europe was experiencing insufficient growth well before the current crisis: the target of 3 % growth per year, which is essentially the basis of the Lisbon strategy, has only been hit twice. This lack of growth has in general not been adequately addressed in the economic and fiscal policies developed by governments, and has been compensated for by both public and private borrowing: the financial system must bear much of the responsibility for this borrowing, for example in the form of mortgages. Sustainable growth must therefore be the primary goal of economic policy and of all other policies. In this context, fiscal consolidation – including the efficient allocation of financial resources – could be a way of finding a path towards restoring balanced public budgets in the medium term without jeopardising the objective of strong growth.

4.2.2   The financial crisis and the EU economy's problems withstanding the shock demonstrate the need for a new macroeconomic approach. The EESC believes that a more balanced macroeconomic policy that blends supply- and demand-side approaches must constitute an integral part of the European strategy. In a ‘financialised’ world that favours short-term investments and therefore faces the risk of a slowdown in technological progress, we must move away from growth based largely on speculative bubbles and get back to growth based on consumption and investment, particularly in innovative sectors of the real economy (2) and with a focus on low-carbon production methods that are less destructive of natural resources.

4.2.3   The EU could issue a bond to fund European infrastructure projects. Such a bond would be a key instrument in attracting savings that are currently available and untapped to support the European economy. This must go hand in hand with a coordinated approach to industrial policy (3) that promotes competitiveness, along the lines set out in the Europe 2020 strategy (4). In this respect, the Committee welcomes the European Commission president's statement to Parliament on 14 December 2010 to the effect that he would push for plans to be put forward on introducing such project bonds; however, the introduction of project bonds must not be an alternative or substitute for the creation of Eurobonds.

4.2.4   The Committee supports the creation of Eurobonds because, as well as making it possible to fund major infrastructure projects that aim to modernise Europe by creating jobs and relaunching growth (as project bonds would do) they would reduce debt refinancing costs for struggling eurozone countries and give a European dimension to the public bond market. Issuing Eurobonds would be further evidence to the market, following the setting up of the European Financial Stability Facility, of the European Union's internal solidarity, and at the same time would demonstrate its political commitment to economic and monetary union and the irreversibility of the euro.

4.2.4.1   This is a common practice in the United States – via the Treasury – and was approved by the European Parliament and the IMF in 2009; it would allow struggling eurozone countries to reduce the cost of servicing their debt and thus give them more leeway to stimulate growth.

4.2.5   Member States with a current account surplus and/or low public debt should be pursuing an expansionary policy to stimulate demand, but they are generally not doing so, for fear of being penalised by the credit ratings agencies. Their role ‘is central [...] and, as such, cannot be left unsupervised’ (5). In this context, the EESC is concerned about ‘the failure to set up a European body for assessing sovereign debt’ (6).

4.3   Growth and taxation

4.3.1   Taxation is a factor in promoting growth, in so far as it contributes to the smooth operation of the internal market, to competitiveness, to alleviating the burden on public finances, and so on. The Committee finds it regrettable that when it comes to fiscal consolidation the Commission has focused almost entirely on spending, and has neglected revenue: this approach almost universally harms the most socially vulnerable, and hampers growth by stifling demand.

4.3.2   ‘In line with the EU Treaties, greater efforts should be made to achieve EU-wide coordination of Member States' tax policy (including harmonised tax bases and minimum rates), primarily in those areas in which the tax basis is internationally mobile and the risk of tax evasion and tax competition between Member States is greatest.’ The main aim of this EU-level coordination should be to safeguard and raise tax revenues (7).

4.3.3   Greater administrative cooperation is also one of the keys to success in combating tax fraud. The creation of Eurofisc, a decentralised network open to all Member States designed to facilitate swift, targeted action to combat VAT fraud, is a step in the right direction (8). In its opinion on this subject, the EESC highlighted the need to establish links and cooperation with other bodies engaged in the fight against organised crime and money laundering (9).

4.3.4   The tax burden should be shifted towards new sources of revenue, such as financial transaction taxes, energy taxes, levies on financial institutions, levies on CO2 emissions (10) (subject to reorganisation of the carbon trading market), etc. Taxing in this way could yield a double dividend: in the short to medium term easing pressure on public budgets and in the longer term helping to redirect resources towards sustainable investment in the real economy in general and in green technologies and sectors in particular (11). It could also help in providing new own resources for the European Union budget (12).

4.4   Taxation of the financial sector

4.4.1   In practical terms, taxation of the financial sector should increase the stability and efficiency of the financial markets by reducing their volatility and the harmful effects of excessive risk-taking (13). It therefore seems reasonable to design taxes that internalise the externalities generated by this sector's behaviour such that they can help to create fairer conditions in the process of developing and harmonising the European internal market.

4.4.2   Financial transaction taxes

4.4.2.1   The EESC endorsed the principle of a financial transaction tax in its opinion on the report of the de Larosière group (14): ‘The EESC believes that there is need for a transition from a short-term to a long-term horizon, with bonuses not linked to speculative activities. In this spirit, the EESC supports the idea of a tax on financial transactions. [...] The ... objective of [this tax] is to raise public money. This new source of revenue could be used to support economic development in developing countries, to finance climate policies in developing countries or to alleviate the burden on public finances. The last of these also implies that the financial sector will pay back public subsidies. In the long-term, revenues should provide a new general source for public income’ (15). A financial transaction tax would also have a welcome leverage effect, leading to changes in the behaviour of market participants.

4.4.2.2   It is interesting to note that the President of the European Commission made a statement on 8 September 2010 in which he endorsed the principle of a tax on financial activities.

4.4.2.3   The EESC feels, in line with its previous opinions, that the EU and the Member States now need an FTT in order to raise money to address budgetary imbalances, fund economic stimulus to promote growth and combat purely speculative activities.

4.4.3   Financial activities tax

4.4.3.1   In its broadest form (addition method), a financial activities tax (16) is designed to be charged on all profits and wages from the business activities of financial institutions, irrespective of the products they sell.

4.4.3.2   It could be seen as a tax on the value-added generated by companies in the financial sector. This could offset the current low level of this sector's tax contribution, which is due to the fact that many of its operations are exempt from VAT.

4.4.3.3   The revenue produced at European level could be used for fiscal consolidation in the Member States.

4.4.4   The Committee welcomes the European Commission's intention to undertake an impact assessment to establish the potential structure and implementation rules for this tax and to evaluate the range of new financial sector reforms relating to the deposit guarantee scheme, the new capital and liquidity requirements, and so on. This should be used as a basis to strike the right balance between the objective of addressing budgetary imbalances and that of maintaining the banking sector's ability to issue loans and contribute to economic growth and job creation. In any event, no decision should be taken on this tax until the outcome of this assessment is known.

5.   Creating tomorrow's growth

5.1   Europe is facing some serious threats. These include:

| — | a ‘financialised’ world that eludes democratic political control, is in some degree detached from the real economy and favours short-term investment that might slow technological progress. A shift away from real investment towards financial investment also hinders progress in jobs, revenue, demand and public budgets; |
| --- | --- |

—

a ‘financialised’ world that eludes democratic political control, is in some degree detached from the real economy and favours short-term investment that might slow technological progress. A shift away from real investment towards financial investment also hinders progress in jobs, revenue, demand and public budgets;

| — | the breakdown of existing social models combined with the risks of a private understanding between the United States and the major emerging nations that would exclude Europe and would undermine the labour market. In order to meet today's challenges, we need to identify the policy directions that will create tomorrow's growth. |
| --- | --- |

—

the breakdown of existing social models combined with the risks of a private understanding between the United States and the major emerging nations that would exclude Europe and would undermine the labour market. In order to meet today's challenges, we need to identify the policy directions that will create tomorrow's growth.

5.2   The EU created the Europe 2020 strategy with the aim of returning to smart, sustainable and inclusive growth. Based on enhanced coordination of economic policies, the new strategy aims to address the main bottlenecks constraining growth at EU level, including those related to the working of the internal market and infrastructure, as well as the need for a common energy policy and a new, ambitious industrial policy. The EU Council has insisted that all common policies, including the common agricultural policy and cohesion policy, should support this strategy and that the strategy should include a strong external dimension (17).

5.3   The EESC has set up a steering committee that works closely with the sections, the CCMI, the national ESCs and the observatories on implementation of the strategy, and more specifically on the seven flagship initiatives that are intended to promote progress in terms of growth and jobs. The Committee will issue opinions on the flagship initiatives for achieving the strategy's five headline targets. There needs to be an in-depth examination of the priority actions, and sectors and stakeholders in order to identify how to implement this new strategy.

5.4   Priority sectors. Below is a non-exhaustive list of sectors that are already driving (in some cases) or have the potential to drive (in most cases) this growth, because they are high-tech, provide high value-added and have high growth potential; it includes, of course, both industries and services:

| — | decarbonised energy, green transport and buildings, etc., which will create ‘green jobs’ (18) |
| --- | --- |

—

decarbonised energy, green transport and buildings, etc., which will create ‘green jobs’ (18)

| — | the ‘silver economy’: bioengineering in healthcare, life sciences, etc. (19) |
| --- | --- |

—

the ‘silver economy’: bioengineering in healthcare, life sciences, etc. (19)

| — | biotechnology (20) |
| --- | --- |

—

biotechnology (20)

| — | digital society, nanotechnology (21), robotics, etc. |
| --- | --- |

—

digital society, nanotechnology (21), robotics, etc.

| — | agronomy and hydraulic engineering to address the shortage of arable land, redesigning manufacturing processes to reduce waste of raw materials, rare earths processing, etc. |
| --- | --- |

—

agronomy and hydraulic engineering to address the shortage of arable land, redesigning manufacturing processes to reduce waste of raw materials, rare earths processing, etc.

| — | research in all industrial sectors into more carbon-efficient processes and development methods, creating a new industrial policy concept |
| --- | --- |

—

research in all industrial sectors into more carbon-efficient processes and development methods, creating a new industrial policy concept

| — | etc. |
| --- | --- |

—

etc.

5.4.1   Education must also be a priority sector that underpins all the others: it is one of the key elements of growth, promoting the creation of human capital that is vital to development. From this perspective, it should be ensured that the skills imparted match up with the needs of the labour market.

5.5   Priority actions for growth

5.5.1   Consolidating the single European market must be a top priority for the European Union, as part of the Europe 2020 strategy. In the EESC's opinion, it is the only way of making significant progress – in terms of strong, sustained, fairer economic growth – in Member States' development.

5.5.2   Implementing an efficient industrial policy

5.5.2.1   The definition of ‘industrial policy’ has changed significantly over the years, and it is therefore important to pick out the principles on which to base a precise definition that is appropriate to today.

| — | The first task is to specify which sectors should be given priority (22). Implementation methods will then necessarily be extremely diverse: in some cases, such as energy, major European projects will be needed; other cases will involve capital funding; start-ups and growing companies, in turn, will need support in developing new technologies. Industrial policy must, in any event, be designed to target both the internal market and exports. |
| --- | --- |

—

The first task is to specify which sectors should be given priority (22). Implementation methods will then necessarily be extremely diverse: in some cases, such as energy, major European projects will be needed; other cases will involve capital funding; start-ups and growing companies, in turn, will need support in developing new technologies. Industrial policy must, in any event, be designed to target both the internal market and exports.

| — | Ultimately, the key constraint is the need to find ways of funding this industrial policy and the long-term growth that it could generate during a period of fiscal adjustment. One method would be to direct European savings on a massive scale towards long-term productive investments (23) that are economically and socially viable, i.e. that have significant job creation potential. There could be a problem with significant risk aversion, but this could be overcome using mechanisms for risk-sharing between public authorities and private investors, so that the public authorities would bear the bulk of the long-term risk in the manner of a reinsurer. Another possible approach would be to issue a major European bond (24). |
| --- | --- |

—

Ultimately, the key constraint is the need to find ways of funding this industrial policy and the long-term growth that it could generate during a period of fiscal adjustment. One method would be to direct European savings on a massive scale towards long-term productive investments (23) that are economically and socially viable, i.e. that have significant job creation potential. There could be a problem with significant risk aversion, but this could be overcome using mechanisms for risk-sharing between public authorities and private investors, so that the public authorities would bear the bulk of the long-term risk in the manner of a reinsurer. Another possible approach would be to issue a major European bond (24).

5.5.2.2   However, developing a balanced, strong production system will mean deploying two major policies: fiscal and employment. Fiscal policy is covered in point 4.3.1; as regards employment policy, the main challenge will be to unlock people's potential for labour-market participation, and thus also to achieve large-scale inclusion in the labour market of young people and older people. At the same time, a wide range of high-quality childcare services should be provided in order to help parents in their working lives (25).

5.5.3   Towards a European ‘Small Business Act’

5.5.3.1   This proposal has been put forward many times but never fully implemented; it is nonetheless necessary. The American SBA, for example, is a highly effective tool because it facilitates funding both for innovation and for traditional investment and gives SMEs guaranteed access to public procurement contracts. The SBA concerns both start-ups and rapidly growing companies. The European SBA, like its counterpart, must use a wide spectrum of tools for both public procurement contracts and financing. The Committee therefore proposes an ambitious SBAE (26).

5.5.4   Towards an education, R&D and innovation policy

5.5.4.1   A large number of EESC opinions can be cited on this subject (27). Essentially, the Committee has consistently stated that R&D and innovation are key activities, since Europe's future position in the world will be determined by the priority and resources it allocates to them.

5.5.4.2   In these times of fiscal constraint, the EU and Member States need to continue investing in education, R&D, and innovation. Such investment should where possible not only be protected from budget cuts, but should be stepped up (28). Failure to do so could result in an inexorable impoverishment of the EU, with job losses and lower living conditions for its citizens.

5.5.4.3   The EU should ensure that tax legislation is better geared to providing incentives for industry to increase its investment in research and development (29). This adjustment would make it possible to support the development of R&D-focused SMEs during the early years of their existence. Given the strategic role of SMEs in the EU economy, the EESC recommends that each Member State use an optimum mix of possible tax incentives to facilitate the survival and growth of SMEs in its economy (30). At the same time, it would also be advisable to promote or deepen joint projects between research organisations and SMEs, for example under the auspices of national or European public research agencies, in order to bolster cooperation between these stakeholders.

5.5.4.4   In order for R&D to be effective, researchers and innovators must be able to work and cooperate across the EU as easily as within national borders. To this end, the European Research Area (31), which should be complete within the next four years, will need to put in place the framework for truly free movement of knowledge, which is the real added value that the EU can bring to national research sectors.

5.5.4.5   Many barriers also need to be reduced, or eliminated: access to finance must be improved, particularly for SMEs; intellectual property rights must be affordable; more ambitious targets must be set; and large procurement budgets must be deployed strategically. Agreement should now be reached on the EU patent as a matter of the utmost urgency. Greater cooperation in this area could be a possible interim solution.

5.5.4.6   The Lisbon strategy stated that the EU should devote 3 % of its GDP to R&D, with two thirds of that amount coming from the private sector. We are nowhere near that target, but it is of vital importance that we reach it, because it would enable us to create 3.7 million jobs by 2020 and to increase annual GDP by almost EUR 800 billion by 2027 (32). It is now more important than ever for this target to be the EU's top priority.

5.5.4.7   Finally, setting up competitive clusters has proved a very positive initiative in some European countries. A European network could be created to expand these clusters and increase their resources and remit; this is probably also the best way of improving the link between research and innovation, given that all stakeholders are involved in running them.

6.   Civil society

6.1   It should be stressed that the wide-ranging impact that fiscal adjustment and the search for paths to growth have on people's daily lives means that social dialogue and civil dialogue need to be absolutely exemplary at both Member State and European Union level.

6.2   Civil society, especially the national ESCs and bodies acting in a similar capacity, must be consulted and involved before decisions are made. A high degree of social partnership is required, because viable and successful choices can be made in such a sensitive area in the medium to long term only if reforms are acceptable to the general public.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  See EESC opinion on The financial crisis and its impact on the real economy, OJ C 255, 22.9.2010, p. 10, and EESC opinion on The Economic recovery: state of play and practical initiatives, OJ C 48, 15.2.2011, p. 57.

1

The financial crisis and its impact on the real economy

The Economic recovery: state of play and practical initiatives

(2)  See EESC opinion on The post-2010 Lisbon Strategy, OJ C 128, 18.5.2010, p. 3.

2

The post-2010 Lisbon Strategy

(3)  See point 5.5.1.

3

(4)  See letter from the EESC president to the Commission president dated 31 March 2010.

4

(5)  See point 1.1 of the EESC opinion on Credit Rating Agencies, OJ C 277, 17.11.2009, p. 117.

5

Credit Rating Agencies

(6)  See point 1.4 of the EESC opinion on the Proposal for a Regulation of the European Parliament and of the Council on amending Regulation (EC) No 1060/2009 on credit rating agencies, OJ C 54, 19.2.2011, p. 37.

6

Proposal for a Regulation of the European Parliament and of the Council on amending Regulation (EC) No 1060/2009 on credit rating agencies

(7)  See footnote 2.

7

(8)  Council Regulation (EU) No 904/2010 on Administrative cooperation and combating fraud in the field of value added tax (recast). OJ L 268, 12.10.2010, p. 1.

8

Administrative cooperation and combating fraud in the field of value added tax

(9)  See point 1.10 in the EESC opinion on the Proposal for a Council Regulation on administrative cooperation and combating fraud in the field of value added tax (recast), OJ C 347, 18.12.2010, p. 74.

9

e Proposal for a Council Regulation on administrative cooperation and combating fraud in the field of value added tax

(10)  See footnote 2.

10

(11)  See footnote 4.

11

(12)  The EU Budget Review, COM(2010) 700 final, 19.10.2010.

12

The EU Budget Review

(13)  See the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Taxation of the financial sector, COM(2010) 549 final.

13

Taxation of the financial sector

(14)  See EESC opinion on The Report of the de Larosière Group, OJ C 318, 23.12.2009, p. 57.

14

The Report of the de Larosière Group

(15)  See point 1.10, ‘Summary and conclusions’, in the EESC opinion on A financial transaction tax, OJ C 44, 11.2.2011, p. 81.

15

A financial transaction tax

(16)  Proposal by the International Monetary Fund.

16

(17)  See the Conclusions of the European Council of 25 and 26 March 2010 and the Conclusions of the European Council of 17 June 2010.

17

(18)  See EESC opinion on Promoting sustainable green jobs for the EU energy and climate change package, OJ C 44, 11.2.2011, p. 110.

18

Promoting sustainable green jobs for the EU energy and climate change package

(19)  See EESC opinion on Life sciences and biotechnology: a strategy for Europe. Progress report and future orientations, OJ C 234, 30.9.2003, p. 13.

19

Life sciences and biotechnology: a strategy for Europe. Progress report and future orientations

(20)  See EESC opinion on the Communication from the Commission – Towards a strategic vision of life sciences and biotechnology: consultation document, OJ C 94, 18.4.2002, p. 23.

20

Towards

strategic vision of life sciences and biotechnology: consultation document

(21)  See EESC opinion on Nanosciences and nanotechnologies: an action plan for Europe 2005-2009, OJ C 185, 8.8.2006, p. 1.

21

Nanosciences and nanotechnologies: an action plan for Europe 2005-2009

(22)  See point 5.4.

22

(23)  See point 4.2.3.

23

(24)  See footnote 19.

24

(25)  See point 4.2 of the EESC opinion on the Annual Growth Survey: advancing the EU's comprehensive response to the crisis, OJ C 132, 3.5.2011, p. 26.

25

Annual Growth Survey: advancing the EU's comprehensive response to the crisis

(26)  See EESC opinion Think Small First: A Small Business Act for Europe, OJ C 182, 4.8.2009, p. 30.

26

Think Small First: A Small Business Act for Europe

(27)  In particular those relating to the 7th R&D Framework Programme, e.g. the opinion on The proposal for a Decision of the European Parliament and of the Council establishing a Competitiveness and Innovation Framework Programme (2007-2013),
  OJ C 65, 17.3.2006, p. 22.

27

The proposal for a Decision of the European Parliament and of the Council establishing a Competitiveness and Innovation Framework Programme (2007-2013),

(28)  Europe 2020 Flagship Initiative: Innovation Union, COM(2010) 546 final, 6.10.2010.

28

Europe 2020 Flagship Initiative: Innovation Union

(29)  See EESC opinion on Towards a more effective use of tax incentives in favour of R&D, OJ C 10 of 15.1.2008, p. 83.

29

Towards

more effective use of tax incentives in favour of R&D

(30)  See point 3.5 of the EESC opinion on Unlocking and strengthening Europe's potential for research, development and innovation, OJ C 325, 30.12.2006, p. 16.

30

Unlocking and strengthening Europe's potential for research, development and innovation

(31)  See EESC opinion on Researchers in the European Research Area: one profession, multiple careers, OJ C 110, 30.4.2004, p. 3, and EESC opinion on The Green Paper on the European Research Area – New Perspectives, OJ C 44, 16.2.2008, p. 1.

31

Researchers in the European Research Area: one profession, multiple careers

The Green Paper on the European Research Area – New Perspectives

(32)  See P. Zagamé (2010): The costs of a non-innovative Europe.

32

The costs of a non-innovative Europe

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/16 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/16

---

Opinion of the European Economic and Social Committee on ‘Societal empowerment and integration of Roma citizens in Europe’ (exploratory opinion at the request of the Hungarian presidency)

2011/C 248/03

Rapporteur: Mr TOPOLÁNSZKY

In a letter dated 15 November 2010, and in accordance with Article 304 TFEU, Mr Péter GYÖRKÖS, Ambassador, asked the European Economic and Social Committee, on behalf of the Hungarian Presidency, to draw up an exploratory opinion on the

Societal empowerment and integration of Roma citizens in Europe

(exploratory opinion).

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June 2011), the European Economic and Social Committee adopted the following opinion by 138 votes to 3 with no abstentions.

1.   Summary and recommendations

THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE:

1.1   thoroughly welcomes and appreciates all the efforts made hitherto by the European Union to reduce the segregation of the Roma (1) and promote their social integration through resolutions and legislation drawn up by its institutions, structures established for cooperation, and funding from the Structural Funds and other financial instruments;

1.2   at the same time, points out that these combined efforts have not helped in any decisive way to remedy the discrimination experienced by many Roma, nor to improve their quality of life or the opportunities open to them; in some respects, their situation has deteriorated even further;

1.3   emphasises that it will only be possible to improve this difficult situation by means of an integrated, coordinated and coherent Europe-wide strategy and a determined, systematic action programme that covers all policy areas and is implemented at national level, thus equipping the individuals and communities concerned with the powers and authority they need to shape their own destinies (empowerment). It must be possible to put this action programme into practice at local authority level (subsidiarity);

1.4   therefore welcomes the proposals set out in the European Commission's communication (2) on a European Framework for National Roma Integration Strategies up to 2020, and attaches great importance to their consistent implementation at both national and EU level; wishes to be a committed partner in this process;

1.5   nonetheless feels that this long-awaited strategy has not lived up to the expectations it raised; it could have been more ambitious, more specific and better structured;

1.6   considers that the following elements could be suggested to the Member States as the three pillars – to be implemented in coordination – of a realistic, feasible policy to integrate the Roma that specifically but not exclusively reflects the nature of the problems and the strategic priorities for tackling them:

| a) | a race- and ethnicity-neutral inclusive policy – addressing the concentration of social problems and reducing extreme poverty and deprivation; |
| --- | --- |

a)

a race- and ethnicity-neutral inclusive policy – addressing the concentration of social problems and reducing extreme poverty and deprivation;

| b) | a policy to support empowerment of those who regard themselves as members of any Roma community and the celebration of social inclusion they have achieved; |
| --- | --- |

b)

a policy to support empowerment of those who regard themselves as members of any Roma community and the celebration of social inclusion they have achieved;

| c) | general policies and publicity to combat racism; |
| --- | --- |

c)

general policies and publicity to combat racism;

1.7   emphasises the need to involve local civil society representatives, scientific specialists and the social partners in policy consultation, formulation and implementation, and stresses the vital need to actively involve representatives and members of the Roma people and communities in both planning and implementation at every level (EU, national, regional and local) – in line with the intention of the adopted Commission Communication;

1.8   emphasises the need for firm representation of the public interest, and therefore calls for systematic planning and implementation, and also for policy coordination; it likewise stresses the importance of local policy-framing and differentiated approaches based on genuine needs, as well as a presentation of the facts of the situation, and consistent evaluation on a permanent, systematic basis.

1.9   draws the Council's attention to the need to find a way of giving back proof of nationality to those Roma who do not dispose of one any more for some reason, so that they have a guarantee of entitlement to European citizenship without discrimination, and to keep this injustice at the top of the agenda for as long as it remains unresolved;

2.   Introduction

THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE:

2.1   agrees with the assessment of the situation in the European Commission's report on Roma in Europe
   (3), and with the proposals set out in the Communication on The social and economic integration of the Roma
   (4);

2.2   endorses the Committee of the Regions' opinion on The social and economic integration of the Roma in Europe
   (5) calling for recognition and support for the strategic role of local authorities and communities and for integrated regional policies;

2.3   reiterates the proposal set out in the European Economic and Social Committee's exploratory opinion on the Integration of minorities – Roma
   (6) and in particular the proposal to extend use of the processes set out in the open method of coordination; also confirms its stance set out in the Resolution on The situation of the Roma in the European Union
   (7) concerning the defence of the fundamental rights of all Europeans and combating discrimination, racism and xenophobia in all countries;

2.4   reiterates the message of its opinion on Integration and the Social Agenda that efforts to combat discrimination must be stepped up by implementing existing legislative instruments and strengthening public policies and social commitments to integration (8);

2.5   very much agrees with the analysis of the situation and proposals set out in the European Parliament's report on an EU strategy on Roma inclusion
   (9);

2.6   fully accepts and shares the values of non-discrimination and inclusion of excluded persons, enshrined in the Lisbon strategy and the EU Charter of Fundamental Rights;

2.7   supports the ten Common Basic Principles formulated in the course of cooperation on the ‘Integrated European Platform for Roma Inclusion’, which have already achieved widespread acceptance, and calls attention to the need to apply them, not least at national level (10);

2.8   very much appreciates the fact that the Structural Funds and other national, regional and local financing instruments (11) have been made available to support the implementation of policies to include Roma people, and suggests that, in the interest of social empowerment, funding for these policies be guaranteed using adjusted procedures and providing adequate technical assistance which take into consideration the multifaceted nature of the issue, such as access to health care, vocational training, jobs and housing;

2.9   welcomes the proposals set out in the European Commission's document on a European Framework for National Roma Integration Strategies up to 2020, and attaches great importance to their consistent implementation at both national and EU level; wishes to be a committed partner in this process;

2.10   nonetheless feels that, although the document has been a long time coming, it has not fully met the expectations it raised. The EESC believes that the system of goals needs to be better defined and more explicit in terms of the tasks ahead of us, and points out the importance of an open Europe-wide social discussion on this issue. With a view to ensuring its success, the EESC stresses the vital need for evaluation mechanisms and performance indicators. It therefore sees the conclusions that the Council has adopted in May and that the European Council is set to endorse in June as a particularly important factor in both social and operational terms;

2.11   points out that exclusion of and discrimination against the Roma result in significant social costs and government expenditure, whereas inclusion clearly brings economic benefits (12);

2.12   supports and participates in the activities of the EU Roma Network, the Decade of Roma Inclusion, the European Summit on Roma Inclusion, the Equality Summit, the Integrated European Platform for Roma Inclusion, the European Platform against Poverty and Social Exclusion, and numerous other forms of cooperation, where it represents the values of civil society in the broad sense of the term;

2.13   emphasises that the European Union and its institutions have already made significant efforts in terms of regulation, guidance and funding, with a view to framing, adopting and implementing inclusive policies targeting the Roma;

2.14   at the same time, is concerned to note that these combined efforts have not helped in any decisive way to remedy the discrimination experienced by many Roma, nor to improve their quality of life or the opportunities open to them - in some respects, their situation has even deteriorated further. Even though a large majority of Roma are EU citizens, with exactly the same rights and obligations as any other citizens of the Member States, it has to be recognised that they still face constant, serious discrimination on labour markets, in education, housing, healthcare, access to public services and in their freedom of movement;

2.15   is aware that there are significant differences in the situations of different groups of Roma: while many are well integrated into the areas where they live, be they urban or rural, others live in poverty and extreme deprivation and experience permanent exclusion. Finally, a small number follow a distinctive nomadic lifestyle, which bothers those with whom they come into contact;

2.16   maintains that it is essential to empower people living in poverty and experiencing discrimination. Fully-fledged self-determination requires freedom of choice. In general, a decisive factor in the implementation of integration policies is that individuals must have the strength, tools and authority to shape their own destinies. This is why the policy as a whole, together with its individual areas of action, must help those concerned to develop the ability to decide on their own destinies, within the constraints of the rule of law;

2.17   firmly believes that Roma should not be given special rights but that it is necessary to fully respect their European citizenship, while also guaranteeing them all fundamental EU rights as well as all citizens' rights, to ensure that those rights are respected and to penalise any failure to do so, particularly where people responsible for law enforcement act in an unfair and discriminatory way;

2.18   points out that among the Roma themselves women, children, the elderly and the disabled are disproportionately affected by exclusion, and that the social and economic crisis can only aggravate these negative phenomena;

2.19   is convinced that it will only be possible to remedy these problems by means of an integrated, coordinated and coherent strategic programme and by following a firm, systematic approach in all policy areas; is pleased that EU institutions and bodies (not least the EESC) are working together with the Hungarian government, currently holding the Council presidency, to put in place the conditions for dealing with the problem, and recommends that in the period of the Polish presidency, a Ministerial Conference be held to discuss the experiences and the results achieved.

3.   Policy recommendations
   (13)

THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE:

3.1   notes that the traditional approach to defining the Roma target group is based on majority perceptions of who the Roma are. Although such an approach may be useful from, for example, a research perspective, and may be an effective way of assessing the nature of social exclusion, any method identifying the Roma on the basis of external racial features violates fundamental human rights, particularly the right to define one's own identity, besides being pointless and politically untenable;

3.2   recommends that, contrary to the traditional approaches, Member States respect the fundamental values of the adopted strategic framework and, at the same time, meet the ‘explicit but not exclusive’ requirement of the ten basic principles adopted by the Platform for Roma Inclusion. In line with the four areas of action highlighted in the Commission Communication (education, employment, health and housing), they should bring together three strategic policy angles that reveal the nature of the problems and the options for action, and that together form the three pillars of a realistic, feasible policy to integrate the Roma:

| a) | a race- and ethnicity-neutral inclusive policy – addressing the concentration of social problems and reducing extreme poverty and deprivation; |
| --- | --- |

a)

a race- and ethnicity-neutral inclusive policy – addressing the concentration of social problems and reducing extreme poverty and deprivation;

| b) | a policy to support empowerment of those who regard themselves as members of any Roma community and the celebration of social inclusion they have achieved; |
| --- | --- |

b)

a policy to support empowerment of those who regard themselves as members of any Roma community and the celebration of social inclusion they have achieved;

| c) | general policies and publicity to combat racism; |
| --- | --- |

c)

general policies and publicity to combat racism;

3.3   a race- and ethnicity-neutral inclusive policy – universal access, addressing the concentration of exclusion and reducing extreme poverty and deprivation:

| 3.3.1 | instead of focussing on ethnic and racial features, a non-discriminatory integration policy must tackle problems linked to social exclusion, irrespective of racial features, such as those in the fields of education, employment (including different forms of employment, such as entrepreneurship, self-employment, etc.), health and housing, as indicated in the Commission Communication. It must take account of the geographical concentration of socio-economic disadvantages, regardless of the make-up (ethnic or otherwise) of the group of people excluded and, along the lines of the Europe 2020 strategy, give priority to solving two specific problems; |
| --- | --- |

3.3.1

instead of focussing on ethnic and racial features, a non-discriminatory integration policy must tackle problems linked to social exclusion, irrespective of racial features, such as those in the fields of education, employment (including different forms of employment, such as entrepreneurship, self-employment, etc.), health and housing, as indicated in the Commission Communication. It must take account of the geographical concentration of socio-economic disadvantages, regardless of the make-up (ethnic or otherwise) of the group of people excluded and, along the lines of the Europe 2020 strategy, give priority to solving two specific problems;

| 3.3.2 | the first of these priorities is consistent implementation of the ‘full access’ criterion. Apart from overcoming discriminatory effects in legal terms, ‘full access’ also encompasses requirements for physical accessibility and usability, adjustment to needs, affordability, and quality in line with standards. Besides removing legal obstacles, the aim is to bring public services closer to residential areas where the Roma population is highly concentrated, and to improve transport connections to institutions and to services that they have a right to access due to their circumstances; |
| --- | --- |

3.3.2

the first of these priorities is consistent implementation of the ‘full access’ criterion. Apart from overcoming discriminatory effects in legal terms, ‘full access’ also encompasses requirements for physical accessibility and usability, adjustment to needs, affordability, and quality in line with standards. Besides removing legal obstacles, the aim is to bring public services closer to residential areas where the Roma population is highly concentrated, and to improve transport connections to institutions and to services that they have a right to access due to their circumstances;

| 3.3.3 | there are two main ways in which exclusion can be concentrated: 1) in geographical and residential terms, and 2) in institutional terms, where service providers (including public service providers) deal with socially excluded clients (the institutional segregation effect); |
| --- | --- |

3.3.3

there are two main ways in which exclusion can be concentrated: 1) in geographical and residential terms, and 2) in institutional terms, where service providers (including public service providers) deal with socially excluded clients (the institutional segregation effect);

| 3.3.4 | it is possible to dilute the concentration of exclusion, firstly by focussing on targeted improvements to institutional conditions and to the poorest and most sub-standard residential areas, and secondly by reducing cases of isolation through reforms promoting institutional integration and deliberately setting out to boost intermingling and interaction; |
| --- | --- |

3.3.4

it is possible to dilute the concentration of exclusion, firstly by focussing on targeted improvements to institutional conditions and to the poorest and most sub-standard residential areas, and secondly by reducing cases of isolation through reforms promoting institutional integration and deliberately setting out to boost intermingling and interaction;

| 3.3.5 | full access is a key aspect of the basic fundamental objectives of the Lisbon strategy: hence, activities relating to the labour market and other social aspects, as well as greater mobility and education, continue to be priorities. Strategic documents in the last few years have included a renewed, stronger focus on health, in particular public health, as well as on housing and urban development policies, with an emphasis on getting rid of isolated housing, camps, and other places of segregation, while developing local economies, community-based initiatives, micro (self-employed), small and medium sized businesses, and publicly or privately (NGO) managed municipal services. Alignment of strategies to combat child poverty with Roma strategies is a priority issue (supporting mothers' access to employment by strengthening municipal responsibility for child education; ensuring fuller access to pre-school and early learning facilities, while keeping in mind subsidies and incentives for the education and further education of children whose parents live in poverty); |
| --- | --- |

3.3.5

full access is a key aspect of the basic fundamental objectives of the Lisbon strategy: hence, activities relating to the labour market and other social aspects, as well as greater mobility and education, continue to be priorities. Strategic documents in the last few years have included a renewed, stronger focus on health, in particular public health, as well as on housing and urban development policies, with an emphasis on getting rid of isolated housing, camps, and other places of segregation, while developing local economies, community-based initiatives, micro (self-employed), small and medium sized businesses, and publicly or privately (NGO) managed municipal services. Alignment of strategies to combat child poverty with Roma strategies is a priority issue (supporting mothers' access to employment by strengthening municipal responsibility for child education; ensuring fuller access to pre-school and early learning facilities, while keeping in mind subsidies and incentives for the education and further education of children whose parents live in poverty);

3.4   a policy to support empowerment of those who regard themselves as members of any Roma community and the celebration of social inclusion they have achieved;

| 3.4.1 | it is absolutely vital for those claiming to share the same identity to be able, on their own initiative and together with their chosen peers and as a community, to choose their own path and preserve the language, culture, customs etc. constituting the basis of their identities. This is why the national Roma integration strategy has to pave the way to enabling those who claim Roma identity to develop their own communities, and their own public forums (media), and organisations, and to make them work as well as in case of any other minority groups suffered by social exclusion. It is equally important for government and non-government autonomous Roma organisations to have the same organisational scope as other ethnic minorities and, where appropriate, in proportion to their numbers, the same financial support as other ethnic minorities; |
| --- | --- |

3.4.1

it is absolutely vital for those claiming to share the same identity to be able, on their own initiative and together with their chosen peers and as a community, to choose their own path and preserve the language, culture, customs etc. constituting the basis of their identities. This is why the national Roma integration strategy has to pave the way to enabling those who claim Roma identity to develop their own communities, and their own public forums (media), and organisations, and to make them work as well as in case of any other minority groups suffered by social exclusion. It is equally important for government and non-government autonomous Roma organisations to have the same organisational scope as other ethnic minorities and, where appropriate, in proportion to their numbers, the same financial support as other ethnic minorities;

| 3.4.2 | for this to happen, interculturalism, a vivid, two-way interaction and communication, and integration - in terms of principles, theory and good Community and institutional practices in Europe - must become a real factor for action and part of everyday life; |
| --- | --- |

3.4.2

for this to happen, interculturalism, a vivid, two-way interaction and communication, and integration - in terms of principles, theory and good Community and institutional practices in Europe - must become a real factor for action and part of everyday life;

| 3.4.3 | the key element of affirmative policies is to enable people belonging to a minority to make their voice heard and have their interests represented. We need to support tools and approaches helping them highlight their social handicaps and a political struggle to overcome these handicaps; |
| --- | --- |

3.4.3

the key element of affirmative policies is to enable people belonging to a minority to make their voice heard and have their interests represented. We need to support tools and approaches helping them highlight their social handicaps and a political struggle to overcome these handicaps;

| 3.4.4 | empowerment policies should endorse affirmative actions to promote labour market entry for Roma people, including their elevation to high-ranking positions in business, public administration, politics, media, sciences and the arts, while also helping them to start their own small and medium sized businesses. |
| --- | --- |

3.4.4

empowerment policies should endorse affirmative actions to promote labour market entry for Roma people, including their elevation to high-ranking positions in business, public administration, politics, media, sciences and the arts, while also helping them to start their own small and medium sized businesses.

3.5   Anti-racism policy

3.5.1   The target group of an anti-racism strategy is society as a whole; the political dimension of such a strategy is driven by the belief that in a dynamic, developing, fair and human world, people's social position should be essentially achieved on the basis of skills and talents, and not based on of birth-related advantages or handicaps which determine their chances of doing well in life. Equally, they should not have to suffer the fallout of the exclusion they undergo. Inherited, non-changeable features such as gender, origin and religion should not constitute grounds for discrimination. Anti-discrimination law offers the most powerful range of instruments to ensure that these principles are put into practice. It would also be helpful if European anti-discrimination legislation were implemented in full at national level in the various fields of action and in the regulatory systems. Such legislation is, however, effective not simply because of the penalties it applies and their deterrent effect, but also because law-abiding citizens, who make up the majority in a democratic society, endeavour to live in compliance with the letter and spirit of the law.

3.5.2   Given that it is more difficult to ‘dissuade’ people or to wean them off their prejudices and racism through rational arguments, anti-racism policies are mostly based on behavioural models and communication patterns disseminating a positive image of non-violent models of communication, cooperation and problem-solving, based on rational interests; at the same time, they condemn aggressive and racist types of behaviour based on prejudice and hate. In this respect, opinion shapers, the political and media elite in particular, have a special responsibility to bear.

3.6   Strengthening the ‘evidence-based’ nature of the strategy

3.6.1   Over the past two decades the EU has achieved significant progress in various policy areas in terms of the objective evaluation of social exclusion and the fight against exclusion, incorporating the results of such evaluation in social policies. The availability of data is an essential prerequisite for applying and evaluating suitable policies. In spite of efforts made to date, there is still not much data on either the overall population or the target groups. Given the goals of the strategy, progress is needed in the following areas:

3.6.2   ‘Race-/ethnicity-neutral inclusion policy’: in further developing methods to evaluate various forms of poverty and deprivation, work is needed to measure the extent to which exclusion is concentrated, and to highlight the impact of measures taken on the basis of the relevant policies; The Committee recommends that Eurostat and the Member States' statistical services add indicators of extreme poverty and exclusion to their exclusion indicators, and that they develop the principles of a statistical quantification and processing method to measure extreme poverty and deprivation.

3.6.3   On this basis, the Member States should identify, within their strategies, territorial units (urban areas, shanty towns, inner cities, camps, isolated districts, rural settlements, etc.) characterised by a particularly high concentration of exclusion and extreme exclusion in inhabited areas, irrespective of whether or not public opinion sees these areas as being populated by Roma. The Committee recommends that the Member States draft urban planning strategies to do away with these areas or to make them inhabitable, establishing mechanisms based on the evidence needed to monitor these strategies.

3.6.4   ‘Roma empowerment policy’: handicaps and disadvantages can only be identified if those claiming ethnic identity ask to be recorded in public registers as members of a given minority. However, in the absence of such a request, we need to categorically and resolutely ban any reference to race based on racial features in national registers; given that data on ethnic minorities is particularly sensitive, we need to guarantee, by all possible means, maximum protection for personal data, while at the same time ensuring maximum publicity for aggregated data on minorities.

3.6.5   In parallel with reducing exclusion and poverty and alleviating their most extreme forms, the Committee suggests that support be given to linguistic, cultural, educational and community programmes for developing the Roma community, where they are truly able to reach their fellow Roma.

3.6.6   ‘Anti-racism policy’: based on research at both EU and national level, it should be made possible to monitor changes in prejudices towards the Roma, the extent of such prejudices among various social groups, and the impact of policies on the development of ethnic prejudices and racism. We need to establish awareness-raising campaigns targeting the public at large, that aim to combat the exclusionary attitudes and racist prejudices that can be seen in the population. We should also ensure that they are monitored on a regular basis.

3.6.7   We strongly recommend monitoring not only the trends of prejudices and racism, but also the positive impacts and social benefits of public and civic society initiatives, good practices aiming to reduce anti-Roma prejudices and xenophobia and improving intercultural inclusive integration.

3.7   Aspects of general interest in implementation at national level

3.7.1   Complexity: the Committee would point out that, in a wide variety of areas, we need to devise measures to strengthen the positive role played by the Roma in society, improve their living conditions and promote their integration; these measures should stepped up to the level of systematic policies. For this to happen, we need firstly to tie elements of different policy areas in with one another, secondly to organise cross-sectoral good governance relations, and thirdly to begin systematic implementation at political level. This requires a unified, concerted approach by all parties involved in implementation.

3.7.2   All parts of the programmes must be coherently interlinked (coherence) and integrated (consistency). A third key aspect of implementation is planning and the establishment of priorities (sequential action): in other words, realistic goals can only achieved by progressing through well-planned stages and successive components. This requires a properly functioning coordinating authority with the requisite competences.

3.7.3   Integration policies must be planned and implemented with a focus on real needs, in a differentiated, flexible manner, enabling specific local (regional) features to be taken into account in the best way possible. Integration strategies should be planned and implemented as ‘two-way streets’, on the basis of reciprocal efforts and influences, and aimed at mutual benefits for all.

3.7.4   An essential prerequisite for using calls for expressions of interest and EU funds is simplification of the conditions for tendering and reporting. Carefully designed implementation should give due focus to capacity building, appropriate coordination and the support of engaged political will; the involvement of stakeholders' representatives in the planning process is also crucial.

3.7.5   Evidence-based implementation – indicators: policies must clearly show their effectiveness in a verifiable fashion, i.e. they must be shown to be effective in relation to the original objectives. Policies must not expose us to greater damage and risks than those from which they were designed to protect us, nor must they be unnecessarily costly. This is why significant - but insufficient - work has been done to make this policy more strongly evidence-based. In efforts to integrate the Roma, it is particularly important for us to be able to evaluate not just the programmes, but also the policy as a whole: we therefore need, at both national and EU level, to promote a culture of evaluation, a stronger system of requirements, the standardised establishment of socio-economic and social statistics performance indicators, always referring to the appropriate target group, and the organisation of a scientifically-based institutional evaluation facility. Adequate funding for this purpose must be addressed.

3.7.6   The EESC supports the implementation of the EU's Framework for National Roma Integration Strategies up to 2020 and of the national policies that contribute to it, but would like to participate in evaluating these policies on the basis of its mandate from civil society and of the inherent links between it and civil society organisations in the Member States. It aims to be involved in mediating between the EU institutions and organised civil society and to be an active partner in the European Platform for Roma Inclusion and other forms of structured dialogue.

3.7.7   Participation and representation: no integration policy can make sense either in theory or in practice unless those concerned are closely involved. We therefore need to avoid paternalistic procedures which restrict rights; at the same time, it is appropriate to secure the closest and most diverse involvement possible of Roma grass-root organisations, local civil society representatives, scientific specialists and social partners in decision-making, implementation and monitoring as stated clearly in the Commission Communication and other relevant documents. In the target areas, it is particularly vital to take positive measures to ensure that especially disadvantaged groups (women, single mothers, people with a foreign mother tongue, disabled people, etc.) can participate in politics.

3.7.8   The validity, credibility and effectiveness of policies are essentially linked to close involvement and ownership by their primary beneficiaries. This is why we need to involve representatives of the Roma community at European, national and, of course, local level in framing and implementing policies to promote their integration (inclusion through participation).

3.7.9   Social exclusion and its extreme forms often go hand in hand – in different ways in different Member States – with behaviours, lifestyles and habits that are different from those of the majority of the population (e.g. travelling, specific activities such as collecting and selling second-hand goods, or specific craft trades). Particular attention should be paid to these specific characteristics when drawing up national strategies. However, in some cases the attitudes attributed to the ethnic group are downright deviant and criminal. Ensuring peaceful cohabitation of opposing cultural norms, while constantly striving to keep the tensions and antagonisms caused by differences in attitudes and behaviour within the limits of the legal framework, should be goals that define the specific inclusive nature of national strategies and, at the same time, the particular challenge they need to meet. To this end, it is important to provide opportunities for open communication and procedures that are also accessible to the main parties concerned, in which context multiculturalism experts – including people of Roma origin or identity – and social workers will have a primary role to play in terms of both public services and community programmes (mediation, prevention, reconciliation services, etc.) – as indicated in the Commission Communication.

3.8   Prospects for the future

3.8.1   The EESC believes that, thanks to the combined efforts of the EU institutions, governments, Member States and local authorities and communities, the EU may now be at a historic turning point: it may finally produce a policy to benefit the EU's most excluded and disadvantaged ethnic group, based on a common approach that is likely to end not in costly failure but in intelligent, humane results. The Committee wishes to give its full support to this process and its implementation.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  This document is based on the definition set out in the CoR opinion on The social and economic integration of the Roma in Europe (OJ C 42, 10.2.2011, p. 23): ‘(...) the term “Roma” used in the present opinion is an umbrella term which includes other population groups (the Sinti, Gypsies, Travellers, Kale, Camminanti, Ashkali, etc.) with similar cultural characteristics and a history of social marginalisation and exclusion within European society’.

1

The social and economic integration of the Roma in Europe

(2)  COM(2011) 173 final.

2

(3)  SEC(2010) 400 final.

3

(4)  COM(2010) 133 final.

4

(5)  Opinion of the Committee of the Regions on The social and economic integration of the Roma in Europe (OJ C 42, 10.2.2011, p. 23).

5

The social and economic integration of the Roma in Europe

(6)  OJ C 27, 3.2.2009, p. 88–94.

6

(7)  OJ C 48, 15.2.2011, p. 1.

7

(8)  OJ C 347, 18.12.2010, p. 19–27.

8

(9)  European Parliament, INI/2010/2276, 24.11.2010.

9

(10)  Especially with regard to ‘explicit, but not exclusive targeting’, an ‘inter-cultural approach’, and ‘aiming for the mainstream’.

10

(11)  European Social Fund, European Regional Development Fund, Instrument for Pre-Accession Assistance, European Agricultural Fund for Rural Development / World Bank, United Nations Development Programme.

11

(12)  ‘The vast majority of working-age Roma lack sufficient education to participate successfully in the labor market. (...) As a result, European countries are losing hundreds of millions of Euros annually in productivity and in fiscal contributions to the governments. (...) The annual fiscal gains from bridging the employment gap are much higher than the total cost of investing in public education for all Roma children (...) The share of Roma among the working-age populations will rise as majority populations in Eastern and Central Europe are aging rapidly. Equal labor participation among the Roma is essential to shoulder the nationally rising costs of pensions, health and other costs of aging.’ Economic costs of Roma exclusion, World Bank, 2010.

12

(13)  This section makes recommendations concerning the policies in general or their context, but, for reasons of space, cannot go into detail on issues relating to each policy.

13

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/22 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/22

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Opinion of the European Economic and Social Committee on ‘How EU policies have impacted on the job opportunities, the training needs and the working conditions of transport workers’ (exploratory opinion at the request of the Commission)

2011/C 248/04

Rapporteur: Mr MORDANT

On 17 November 2010, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on

How EU policies have impacted on the job opportunities, the training needs and the working conditions of transport workers

(exploratory opinion).

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 24 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 150 votes to 2, with 8 abstentions.

The transport sector will face a number of challenges in the near future, such as scarcity of petrol resources and the possible increase in petrol prices, the need for progress in terms of energy efficiency, the requirement to contribute towards fighting climate change and the shift to a low carbon economy, as well as the aging of the population with its impact on availability of qualified personnel on the one hand and different mobility needs on the other hand. These developments are taken into account in the EESC opinion.

1.   Recommendations and conclusions

1.1   The EESC points out that the transport sector, being an important source of employment which accounts for 4.4 % of the total EU workforce, offers major employment potential for Europe in the future. It is also vital to the economic development of Europe, citizens' mobility, social inclusion and for European social and economic cohesion.

1.2   The EESC recommends attracting women and young workers to employment opportunities in the transport sector with measures which improve employment quality across all modes of transport, working conditions, training and Lifelong Learning (LLL), career opportunities, operational and occupational health and safety and which contribute to a better work-life-balance.

1.3   The EESC recommends that – with the support of the European Commission – all modes of transport take stock of existing training opportunities and analyse the need for training in the future at national, regional and company level. A focus on continuous training (LLL) is important.

1.4   The EESC is of the opinion that a sufficient supply of high-quality training in training institutes and/or in-house must be ensured, requiring cooperation between social partners, regions and training institutes in all transport modes. Cooperation between training centres at a European level is strongly recommended by the EESC. The EESC is of the opinion that the trainees should not bear the cost of any vocational training. This is particularly relevant for the objective of promoting a career in the transport sector.

1.5   The EESC recommends the introduction of EU legislation on certification and licensing of on-board personnel in trains and cabin crew in aircrafts as a means for ensuring quality employment, quality of services, safety and facilitating worker mobility across Europe.

1.6   The EESC considers Directive 2003/59/EC to be a positive example and asks the European Commission to consider further legislation on compulsory training and continuous training for other modes of transport.

1.7   In order to promote transport as a profession, the EESC recommends coordinated actions at national, regional and local level, which explain the transport sector and promote its various professions, for example in schools.

1.8   The EESC emphasises that success in attracting women to a profession in transport is highly dependent on incentives which will adapt the transport industry to the specific needs of female workers. It recommends that the transport sector and its various companies should develop policies that encourage women to work in the sector.

1.9   In view of demographic change and the ageing work force the EESC recommends that the sector and its companies should analyse the age structure of their personnel and their future employment needs in order to develop training, work organisation and measures for improving occupational health which are adapted to the needs of different age groups.

1.9.1   The EESC also recommends placing stronger emphasis on offering career opportunities to workers within the transport sector in order to make the sector attractive to young people.

1.9.2   The EESC recommends that the maritime sector should promote the move from rating positions to officer status.

1.9.3   The EESC recommends that the public transport sector should make greater efforts to offer career opportunities for bus drivers, such as team leader positions and traffic planning positions.

1.10   The EESC considers the personal safety of transport workers and passengers and the prevention of physical attacks and violence to be a major challenge and strongly recommends a zero tolerance policy against violence.

1.10.1   The EESC recommends the establishment of preventive measures in the field of infrastructure, such as sufficient, affordable and safe parking areas in road freight transport and good quality rail, metro, tram and bus stations. The EU should provide financial support for these infrastructure measures.

1.10.2   The EESC recommends employing sufficient numbers of properly qualified and trained personnel in stations and on board public transport as a preventive measure against violence.

1.10.3   The EESC recommends the establishment of a Road Safety Agency.

1.11   Taking into account Article 9 of the Lisbon Treaty and the Charter of Fundamental Social Rights, the European Commission should favour a social policy for transport. The EESC is of the opinion that further steps towards liberalisation, if any, should be proposed only after serious analysis of the social consequences of previous liberalisation steps, a meaningful social impact assessment and with an inbuilt guarantee that competition is not based on cheaper labour costs but on the quality of the services.

1.11.1   The EESC recommends, in the case of competitive tenders such as for airport ground handling services or all kinds of public transport services, guaranteeing employment security via a compulsory transfer of staff to new operators and safeguarding the level of working conditions and pay by maintaining the application of the collective agreement provisions that are in place where the service is delivered (1). In order to do this, the EESC recommends the introduction of a social clause.

1.11.2   Regarding the implementation of the Single European Sky, including Functional Airspace Blocks and SESAR, the EESC calls for the Member States to enter into meaningful consultation with the social partners and all other stakeholders in order to take balanced measures to achieve these goals while avoiding job losses.

1.12   The EESC is of the opinion that social legislation in transport must be effectively monitored, enforced and infringements effectively sanctioned by means of harmonised rules. The capacities of the relevant enforcement authorities must be strengthened and better coordination and cooperation is needed.

1.13   The EESC recommends introducing EU legislation for the regular checking of working and rest time for mobile railway workers engaged in cross-border transport services. The EESC underlines the need for better enforcement of the provisions of the posted workers' directive in particular in the case of road transport cabotage.

1.14   The EESC recommends paying special attention to factors which promote a better work-life balance for mobile workers in the transport industry. Social legislation for the transport industry should be improved with regard to working time.

1.14.1   The EESC recommends introducing additional legislative measures on manning standards on board maritime and inland waterway vessels in order to guarantee quality and safety.

1.14.2   The EESC recommends a better and stricter use of State Aid Guidelines (SAG) schemes in the maritime sector, strengthening the link between the granting of public subsidies or tax exemptions and employment guarantees and training obligations.

1.14.3   The EESC is of the opinion that the EU institutions and the EASA should increase cooperation with stakeholders in achieving safety-oriented and science-based Flight Time Limit rules for air crew.

1.14.4   The EESC recommends sector-specific health and safety legislation for the different transport modes, since general EU health and safety legislation often does not take into account the special conditions in the transport sector.

1.14.5   The EESC is of the opinion that proper legislation is needed in order to avoid ‘flagging-out’ of work contracts.

1.15   The EESC strongly supports social dialogue. At European level, the various sectoral Social Dialogue Committees must play a more important role in assessing the social impact of Commission proposals at an early stage and make their own remarks and proposals for the various modes of transport.

1.15.1   The EESC recommends that the European Commission, via DG Move, should cooperate more effectively with the sectoral Social Dialogue Committees and takes the expertise of the social partners into consideration at the earliest stages.

1.16   The EESC is of the opinion that the European institutions and the European social partners do not have sufficient statistics and comparative analyses on employment and working conditions for the various modes of transport at their disposal. Therefore the EESC supports the establishment of a Social, Employment and Training Observatory in the transport sector, which should provide substantial information for a better assessment and ex-post evaluation of the social impact of transport policy measures, in order to support the European social partners in sectoral European social dialogue.

2.   The transport sector is an important source of employment for the European Union.

2.1   From a quantitative point of view, employment in the transport market is substantial, accounting for some 9.2 million workers and 4.4 % of the total EU work force in 2007. These figures include pipelines, travel agencies/tour operators and auxiliary transport services such as cargo handling, storage and warehousing.

2.2   The various modes of transport employ around 2.9 million workers in road freight transport, 1.9 million workers in road passenger transport, 864 000 on the railways 43 400 on the inland waterways, 184 000 in sea shipping and 409 000 in aviation. Transport auxiliary services employ about 2.3 million workers (2).

2.3   Between 2004 and 2007 the total number of transport workers steadily increased from 8.6 to 9.2 million workers in the EU's 27 Member States. The increase took place mainly in the road freight and passenger sectors and auxiliary services. Employment in the railway sector decreased sharply by 117 000 workers from 981 848 workers in 2004 to 864 000 in 2007 (3).

2.4   Transport employment in was severely affected by the economic crisis in 2008 and 2009, particularly in the freight sector.

2.5   Future employment trends in transport depend on a number of factors such as the development of trade and economic activities, an ageing population and people's mobility patterns, technological developments, energy availability and prices, measures towards sustainable transport (modal shift, i.e. using public transport instead of a private car, avoiding transport) (4), alternative transport modes such as cycling (5).

3.   Characteristics of employment in the transport sector: low attractiveness - a problem for the future

3.1   The transport sector does not enjoy a spotless reputation as an employment sector and jobs in it are considered rather unattractive. Sector analyses undertaken by the European Working Conditions Surveys 2000 and 2005 of the European Foundation for the Improvement on Working and Living Conditions both confirmed that the transport sector belongs to the least favourable sectors with regard to indicators on working conditions.

3.2   Indicators which were evaluated as less favourable in the 3rd Survey 2000 were ambient conditions, ergonomics, non-standard working hours, long working hours, high job demands, no job control, unskilled work, low task flexibility, discrimination.

3.3   Indicators in the 4th Survey 2005: (only land transport) were working hours, non-standard working hours, balance between working hours and family/social commitments, job control, skilled work, violence, stress, musculoskeletal problems (6).

3.4   The majority of work in the transport sector involves mobility (drivers, pilots, on-board crew of the various sectors) or concerns jobs directly linked to traffic such as traffic control. ‘Drivers and mobile plant operators represent the largest share of employees in the EU (45 % in 2006)’ (7). The regular and often very long absences from home, in addition to regular shift work, operate to the detriment of workers' increasing demands for a better work-life-balance. Additionally, pay is low in most of these professions and occupations.

3.4.1   The EESC considers that we cannot be satisfied with uncomfortable rest periods. On the contrary, we must endeavour to ensure, in all cases, that satisfactory conditions for rest are met for the staff of all transport modes.

3.5   The sector is largely male-dominated and amongst the sectors with the highest gender segregation employing only 21.1 % women (82.2 % male workers in land transport). Research has shown that increasing female employment often results in an improvement of working conditions for both genders.

3.6   Transport is with reason considered a dangerous activity. Operational and occupational safety are closely linked, in particular for drivers. Fatal accidents are also an issue for maintenance workers (e.g. track maintenance in the rail sector), train-shunting and accidents on-board vessels. Furthermore, there is a problem of violence and physical attack (the stealing of cargo in road transport, physical attacks on public passenger transport on the roads and by rail, and even piracy in the maritime transport sector).

3.7   The demographic pattern in transport is worrying. The average age of workers in transport is high. Many will retire within the coming 10 to 20 years. Only 17.5 % of the workforce is in the 15 to 29 age group and 57.5 % of the workforce in the sector aged 30 to 49 (2006) (8).

3.8   Many sectors already report serious labour shortages, in particular for mobile jobs. In view of the ageing population in Europe and competition among sectors and companies to attract (young) workers, this will cause serious problems for the transport sector in the future. Attractiveness must be increased by providing attractive training provision, career opportunities within the same sector and the improvement of working conditions. The transport sector must aim to meet the needs of young workers and women for a better work-life balance. Women could be better integrated into the transport sector through affirmative action, which requires at least new sanitary infrastructure, dressing rooms and accommodation and a more reasonable assessment of continuous working time, stress and fatigue in relation to each transport mode.

4.   Qualification and training needs – but also career opportunities

4.1   Employees with medium-level qualifications account for the highest share in the transport and logistics sector. Across the EU, they represent 58 %. Low-qualified workers represent 28 % of workers across the EU as a whole. In the new Member States, the qualification level is higher with 81 % of transport workers in possession of medium-level qualifications and only 7 % with low qualifications. 14 % of all EU employees in the transport and logistics sector have higher qualifications (2006). ‘However, looking at the changes from 2000 to 2006, it can be seen that the qualification requirements are rising across the sector. The share of people with low qualifications has declined in every occupation’ (9).

4.2   Technological developments and the increased use of ICT in all sectors of transport require higher education and more continuous training. Lifelong learning is of little relevance to most employees in the transport professions with medium and low levels of education. A more customer-orientated approach requires skills that were previously not part of basic training in the more technically oriented transport professions. Operational and occupational safety and ‘eco-driving’, for example, require continuous training.

4.3   The demographic development and the disadvantageous age structure in the transport sector require – besides new concepts for work organisation – more investment in adapted continuous training for the ageing work force. In particular, the job of driver is an occupation which often cannot be continued until retirement age because of occupational health problems.

4.4   Attractive training provision and better career opportunities within the sector and/or companies are important ways of attracting young people into the transport sector. For example, the move from rating positions to officer status must be promoted in the maritime sector. Bus drivers in local public transport should have better opportunities for moving to traffic planning or team leader positions. Training must be considered as an investment in the future.

5.   Working conditions – mobile workers in transport are ... mobile

5.1   A major problem in transport, arising with the establishment of the Internal Transport Market and the deregulation of the transport sectors, is the – by definition – high mobility of mobile workers, which facilitates delocalisation of transport jobs and social dumping practices to a higher degree than in other sectors. Insufficient attention was paid to social legislation, accompanying social measures and measures to safeguard and avoid social dumping practices.

5.2   Freedom of establishment and open transport markets are often used in inland waterways, road transport or the maritime sector for instance, to establish companies in EU countries with lower labour costs, lower social security contributions and/or tax advantages without offering services in these countries. They exploit social and wage differences between countries for competitive advantage. This results in difficulties in tracing work contracts, ensuring social security schemes, and controlling and enforcing health and safety rules. In order to avoid social dumping it is necessary to ensure that the host country principle is applied, which means the application of the social conditions of the country in which the service is carried out.

5.3   The discussion on sustainable transport and the internalisation of external (environmental) costs puts the question of a fair price for transport on the agenda. A fair price for transport should also include, however, a fair price for quality employment in the sector. This is essential for:

| — | Quality services |
| --- | --- |

—

Quality services

| — | Safety |
| --- | --- |

—

Safety

| — | Attractiveness of the transport sector. |
| --- | --- |

—

Attractiveness of the transport sector.

5.4   A fair social price for quality employment in transport should be ensured via regulatory measures and social dialogue.

5.5   Passengers in public passenger transport and private passenger transport also demand quality services, safe journeys and protection from aggression and violence.

6.   Activities of the Commission in the social field of transport

6.1   In the 2006 Communication ‘Keep Europe moving’, the Commission formulates the following as one of the objectives of the Community's transport policy: ‘In the social area, the EU policy promotes employment quality improvement and better qualifications for European transport workers’ (10).

6.2   The evaluation study on the performance of the Common Transport Policy (11), in particular Task 1.6 ‘Social aspects’ gives a list of Commission legislative initiatives and policy documents in the social field of transport. They are partly based on negotiations and initiatives of the European social partners. However, the report states that an assessment is difficult because of lack of data or because the measures have only been recently introduced and are thus not yet effective.

6.3   We may conclude that:

| 6.3.1 | The Commission's impact assessment studies give high priority to economic evaluation and are underdeveloped as regards the social impact assessment of Community initiatives. It is difficult to reverse the situation after changes have been implemented. |
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6.3.1

The Commission's impact assessment studies give high priority to economic evaluation and are underdeveloped as regards the social impact assessment of Community initiatives. It is difficult to reverse the situation after changes have been implemented.

| 6.3.2 | The Commission should carefully analyse the social consequences of its proposals in advance and propose accompanying social measures when making proposals on further liberalisation of the transport market. |
| --- | --- |

6.3.2

The Commission should carefully analyse the social consequences of its proposals in advance and propose accompanying social measures when making proposals on further liberalisation of the transport market.

| 6.3.3 | Reliable European data and information about the transport labour market and the actual working conditions in the different transport sectors are lacking; the NACE statistical information on employment is too general for a proper analysis of the different sectors; the few comparative studies on certain sector aspects date quickly: a social observatory in transport is needed, which should have systematic access to data from labour inspectorates in the Member States. |
| --- | --- |

6.3.3

Reliable European data and information about the transport labour market and the actual working conditions in the different transport sectors are lacking; the NACE statistical information on employment is too general for a proper analysis of the different sectors; the few comparative studies on certain sector aspects date quickly: a social observatory in transport is needed, which should have systematic access to data from labour inspectorates in the Member States.

| 6.3.4 | There is still a need for further legislative initiatives in order to tackle existing problems. Close cooperation with the different European Sectoral Social Dialogues is essential and the Commission should in any case evaluate and use the expertise resulting from the social dialogue and involve the social partners at an early stage. |
| --- | --- |

6.3.4

There is still a need for further legislative initiatives in order to tackle existing problems. Close cooperation with the different European Sectoral Social Dialogues is essential and the Commission should in any case evaluate and use the expertise resulting from the social dialogue and involve the social partners at an early stage.

7.   Employment opportunities, training needs and working conditions – The different transport sectors

7.1   Road transport sector

7.1.1   The sector is experiencing increasing difficulties in recruiting drivers. This is the biggest challenge facing the road transport sector. One cannot ignore that fact that this is the result of the conditions within which drivers and industry have to operate. From the drivers' perspective, high work pressure, unfriendly working hours and below-average remuneration make road transport a sector with a poor social record. On the other hand, operators – particularly the small and medium-sized enterprises – must cope in an environment dominated by fierce intra-sector competition, to which one has to add the impact of external factors such as the economic crisis and high fuel prices.

7.1.2   Directive 2003/59/EC introduces compulsory initial and continuous training for professional drivers. The Directive came into force in September 2009 for passenger transport and for freight transport in September 2010. The objective is not only improved road safety but also the enhancement of the quality of the profession. This is a good example of a regulatory measure that will have a further positive impact on the status of the driver ultimately helping to make the profession more attractive, especially as substantial technological progress in this sector requires highly skilled professional drivers. However, all now depends on the Member States' implementation of the directive. The challenge consists in establishing sufficient, high-quality training provision, a quality training curriculum and the funding of initial and continuous training. With regard to the latter, practices have emerged whereby costs of the initial and/or continuous training are imposed on the driver, which will only render, in the mid-term, recruitment problems in the sector more severe.

7.1.3   The road transport sector benefits from its own social legislation. The chief problem is the failure to enforce working, driving and rest time regulations, although legislation has been improved and more checks are carried out. The same is true for the application of the posted workers' directive for road transport workers engaged in cabotage services.

7.1.4   EU road transport legislation is to apply without exceptions throughout the sector, ensuring a level playing field for fair competition, road safety and occupational health and safety.

7.1.5   For EU policy makers to undertake measures that lead to true sustainability in the sector – incentives for operators to invest in new fleets and technology; better capacity in Member States to enforce road transport legislation; measures to make the profession of driver highly skilled, which will automatically lead to improving the image of the profession.

7.1.6   Improvement of road infrastructure, in particular the provision of safe and affordable parking areas and rest facilities; part of the revenues obtained from the ‘Eurovignette’ could be used to improve the quality of parking areas and rest facilities – this would benefit both business (safety of cargo) and professional drivers.

7.1.7   The establishment of a European Road Safety Agency with the task of safeguarding the above needs and requirements (12).

7.2   Urban public transport

7.2.1   In the EU about 1 million workers are employed in urban public transport (UITP figures). Depending on policies to promote collective transport in agglomerations, cities and rural areas employment opportunities are potentially high.

7.2.2   However, local public transport is also facing recruitment problems and public transport is confronted with the problem of an ageing work force. The majority of public transport workers are drivers. Good working conditions, a better work-life balance and career opportunities are elements which will attract women and young people to the sector.

7.2.3   The ‘drivers' training directive’ 2003/59/EC applies to public transport by bus.

7.2.4   Besides financing, a major challenge for public transport is providing good quality services. The relation between quality at work (good working conditions) and quality of services is the subject of the sectoral European Social Dialogue.

7.2.5   Additionally, violence and aggression constitute a serious problem in public passenger transport. A policy based on zero tolerance against violence protects passengers and workers and helps to make public transport more attractive.

7.3   Railway sector

7.3.1   The railway sector is undergoing continuous restructuring with productivity increases and employment reduction: e.g. sales personnel in train stations, on-board personnel in regional passenger transport, reduction in the use of labour-intensive single wagons, with less labour-intensive complete trains being used in freight transport instead. New technologies like ERTMS or automatic shunting systems are labour rationalisation technologies, which mainly affect traffic control personnel or shunting professions. Unlike the current trend, promoting single wagon load transport allows a credible environmental alternative to road and generates employment (13).

7.3.2   New market entrants in the rail freight business concentrate on full train services with low labour intensity, while investment in the development of new infrastructure and the improvement of existing networks will create jobs in maintenance and support services for this new infrastructure.

7.3.3   In this case, job opportunities due to increased rail transport/modal shift will not only benefit drivers. However, the rail sector is also facing recruitment problems at the level of higher education (engineers) and companies face a disadvantageous demographic structure.

7.3.4   Training needs:

| — | Increased cross-border traffic requires increased training in national safety regulations and in language skills for both, drivers and on-board personnel. |
| --- | --- |

—

Increased cross-border traffic requires increased training in national safety regulations and in language skills for both, drivers and on-board personnel.

| — | A high level of safety and high quality services must be ensured by the certification of on-board personnel. |
| --- | --- |

—

A high level of safety and high quality services must be ensured by the certification of on-board personnel.

| — | The introduction of new technologies like ERTMS changes the profile of drivers and traffic control personnel increasing the need for IT training. |
| --- | --- |

—

The introduction of new technologies like ERTMS changes the profile of drivers and traffic control personnel increasing the need for IT training.

| — | The tendency to multi-skilling in the rail freight sector requires the definition of new professions and appropriate training courses. |
| --- | --- |

—

The tendency to multi-skilling in the rail freight sector requires the definition of new professions and appropriate training courses.

| — | The restructuring of the sector goes hand in hand with a multitude of actors and of new interfaces. More personnel will be needed at the administrative managerial level. The progressive ageing of the existing rail personnel and increasing recruitment problems require adequate training and lifelong learning programmes for different age groups of employees to be developed. |
| --- | --- |

—

The restructuring of the sector goes hand in hand with a multitude of actors and of new interfaces. More personnel will be needed at the administrative managerial level. The progressive ageing of the existing rail personnel and increasing recruitment problems require adequate training and lifelong learning programmes for different age groups of employees to be developed.

7.3.5   Working conditions:

| — | The continual pressure for productivity increases and cost-cutting within the sector is resulting in a decline in working conditions and a two-tier work force. With the opening of markets and increased cross-border services, the monitoring and enforcement of working, driving and rest times as well as of drivers' qualification levels is necessary. |
| --- | --- |

—

The continual pressure for productivity increases and cost-cutting within the sector is resulting in a decline in working conditions and a two-tier work force. With the opening of markets and increased cross-border services, the monitoring and enforcement of working, driving and rest times as well as of drivers' qualification levels is necessary.

7.4   Inland waterway transport (IWT)

7.4.1   IWT is considered as an environmentally-friendly mode of transport whose potential is as yet under-used. However, water levels are currently dropping on major rivers, which is a major challenge for the sector. New vessel concepts are being researched as well as new delivery systems (floating stocks).

7.4.2   There is a serious labour shortage in IWT (both on the Rhine and Danube) in both freight and passenger transport. The younger generation is not interested in the sector because of the unfavourable work/family life balance, long working hours and unattractive working conditions (in particular the long periods away from home). A real legislative/regulatory framework is lacking resulting in delocalisation to countries which exploit fiscal differences between countries and less favourable social and wage conditions for competitive advantages, e.g. within EU, to Malta and Cyprus.

7.4.3   These problems are being addressed via social dialogue and at EU-level through several initiatives:

| — | PLATINA = action platform of NAIADES – several work packages address bottlenecks in the industry; |
| --- | --- |

—

PLATINA = action platform of NAIADES – several work packages address bottlenecks in the industry;

| — | jobs and skills = EU work package to make the sector more attractive; |
| --- | --- |

—

jobs and skills = EU work package to make the sector more attractive;

| — | EDINNA (Education Inland Navigation) = a European platform for all educational training centres has been established; |
| --- | --- |

—

EDINNA (Education Inland Navigation) = a European platform for all educational training centres has been established;

| — | work is ongoing on EU harmonised job profiles (skipper and sailor) – this will be the formal basis for unified minimum training standards in EU IWT; |
| --- | --- |

—

work is ongoing on EU harmonised job profiles (skipper and sailor) – this will be the formal basis for unified minimum training standards in EU IWT;

| — | work is ongoing on STCIN = European standards on training and certification in Inland Navigation. |
| --- | --- |

—

work is ongoing on STCIN = European standards on training and certification in Inland Navigation.

7.4.4   The CCNR (Central Commission for Navigation on the Rhine) functions as the knowledge centre for IWT in Europe and, in cooperation with the European Commission, is harmonising the boatmasters' certificate via the mutual recognition system. The CCNR is commissioned by the EC to research and publish six-monthly market observations which include social and economic data so that reliable information is available. In cooperation with the CCNR a unique identification system is being researched and developed: not only will it show workers' identity, but it will also monitor/map working/resting and free time and education/training/certification.

7.5   Aviation sector

7.5.1   Aviation is an essential service to the EU economy and its continuance is core to supporting social cohesion and regional development. The competitiveness of the European air transport industry internationally can be strengthened by using all the advantages conferred by the European Social Model. Companies shall ensure the proper application of Community and national social legislation as well as collective agreements in order to protect employment and avoid social dumping. Special efforts to undertake social dialogue at company and national level shall be undertaken to find solutions to tackle current civil aviation challenges.

7.5.2   To deliver safety, security, efficiency and service quality, in a spirit of public service obligations, an atmosphere of trust, responsibility and cooperation between employers and employees at the appropriate level(s) is needed. The core objective should be to set up a socially and ecologically sustainable civil aviation industry.

7.5.3   The Economic and Social Committee wishes to take into consideration the implementation of the Single European Sky, including Functional Airspace Blocks and SESAR, in which the human factor and the social dialogue are paramount to the success of the sector. The Member States should enter into meaningful consultation with the social partners and all other stakeholders in order to take balanced measures to achieve these goals and avoid job losses (14).

7.5.4   All civil aviation employees, and especially the ground handling workers, must be treated as favourably as other European employees. This is not currently the case: where there are calls for tenders, employees must, in all cases, benefit from the protection of transfer rights, for example.

7.5.5   The EU must support measures which recognise and validate qualifications in the sector. All players should act together, including through negotiations, and invest in vocational training and qualification. In a phased approach, and through agreements, the best standards of training at European level can be achieved, allowing more specific rules to be set up at all other levels and further work on the validation of vocational training and the involvement of other related parties (European institutions, national authorities, etc).

7.5.6   Finally, in the light of the above, it is also crucial that air safety remains the most important priority in guiding European legislative action. As regards the latter, the EU Institutions and the EASA should consult stakeholders in order to achieve safety-oriented and science-based Flight Time Limitations and Rest Requirements for air crew that successfully mitigate fatigue due to long working hours, changing shift patterns and time zone transitions. Fatigue is a threat to aviation safety because it results in reduced alertness and performance. Fatigue is a normal response to many conditions common to flight operations because of sleep loss, shift work, and long duty cycles.

7.6   Maritime transport sector

7.6.1   The major challenge in the maritime transport sector is the long-term decline in the employment of European seafarers with the associated loss of European maritime know-how. Flags of convenience (FOCs) and low-cost crews from developing countries are still being used. International trade by European-owned and controlled vessels is dominated by an almost entirely non-domiciled crew, particularly for ratings. The EESC Conference on the ‘Attractiveness of maritime professions’ (11 March 2010) addressed all the reasons why maritime professions are unattractive, highlighted the need to upgrade maritime education and promoted EU action in this respect.

7.6.2   The maritime transport sector is also characterised by an ageing workforce. The retention of officers beyond the age of retirement is mainly caused by the current shortage of officers and companies' unwillingness to promote from ratings' positions to officers' level.

7.6.3   A project carried out in the framework of the European Social Dialogue proved however, that the problem is not a shortage of young European trainees ready to enter a career at sea but rather a shortage of job opportunities and training positions onboard. There is a clear need to create an environment which facilitates the recruitment and training of European seafarers and the progression from rating to officer. This could be encouraged through a better and stricter use of State Aid Guidelines (SAG) schemes, in particular by strengthening the link between the granting of public subsidies or tax exemptions and both employment guarantees and training obligations.

7.6.4   Shipowners are shifting business away from Europe and investing more and more in training centres and maritime academies in third countries, especially in the Far East. There is a need to develop a network of Training and Education Institutes in Europe in order to create maritime education systems that both reflect and adapt to new emerging skills needs. As regards this latter aspect in particular, there is a strong case for looking into more flexible and blended modes of learning for both initial education and Lifelong Learning. The education system and the labour market should respond to the need for a more flexible career path (transition from sea to land or the other way-round), including management, business and commercial modules of education and training on top of sector-specific skills.

7.6.5   As regards working conditions, problems arise from the casualisation of jobs, the increasing use of manning agencies and the lack of a direct or only a remote employment relationship with the shipping companies. Often, working and living conditions onboard are poor and accommodation on board inadequate, especially for women and cadets, and communication facilities are lacking. Furthermore, inadequate manning levels increase fatigue and put the safe operation of vessels at risk. The problem of piracy and criminalisation of seafarers have contributed to a deterioration in the image of the industry and the willingness to consider a career at sea.

7.6.6   In relation to sea connections between the European mainland and the islands, and between islands, the EESC believes that public service obligations should be strengthened in order to promote economic, social and territorial cohesion, while ensuring that the regulation of State aid does not jeopardise the provision of services of general economic interest.

7.6.7   Some urgent and pending initiatives would be:

| — | to assess the feasibility of a new Community initiative, covering intra-EU trade in the form of a revamped legislative proposal on manning conditions; |
| --- | --- |

—

to assess the feasibility of a new Community initiative, covering intra-EU trade in the form of a revamped legislative proposal on manning conditions;

| — | to assess the feasibility of revising SAG by closing loopholes in order to ensure that EU taxpayers' money is primarily spent on supporting the employment of EU seafarers, their employment, training and inclusion in all social legislation from which they are currently excluded; |
| --- | --- |

—

to assess the feasibility of revising SAG by closing loopholes in order to ensure that EU taxpayers' money is primarily spent on supporting the employment of EU seafarers, their employment, training and inclusion in all social legislation from which they are currently excluded;

| — | ratification of the ILO MLC 2006 and enforcement via effective Port State Control; |
| --- | --- |

—

ratification of the ILO MLC 2006 and enforcement via effective Port State Control;

| — | a uniform and consistent EU methodology for collecting data on seafarers' employment. |
| --- | --- |

—

a uniform and consistent EU methodology for collecting data on seafarers' employment.

7.7   Port sector

7.7.1   As in other transport sectors, port employment analyses also suffer from a lack of statistics and quantitative data. Recognising this problem, DG MOVE has recently commissioned a study on port employment. However this may not be sufficient to fill the gap in a systematic way, and both Eurostat and the Member States should be invited to contribute to this exercise. The definition of what a port worker is, is a key problem. Historically, a port worker was a stevedore – loading and unloading cargoes using his physical strength – but containerisation and technological improvements resulted in a diversification of port work which makes a definition more difficult. This is complicated further by the fact that more and more logistics workers operate within the port area but often work in vastly varying conditions. The EESC considers an imposed liberalisation of port services to be unacceptable.

7.7.2   Training needs: training provisions and requirements for port workers vary across Europe, with some countries having developed extensive training systems and others which offer very poor training. Most major companies have developed their own training schemes and most of the big ports have their own training centres. However, small companies and small ports suffer from a lack of adequate training with negative consequences for safety. A major challenge for training in ports is the need to adapt existing schemes to rapid technological change and even to anticipate them.

7.7.3   Creating a common framework for training (identifying elements and modules that should be present in each training programme and allowing countries with less effective schemes to improve their training programmes) should be considered. In general, more training is needed to improve the competitiveness of EU ports and to make EU ports safer workplaces. Another factor is the link between training and better jobs: port workers are professional workers and training provisions should be designed in such a way as to ensure a professional path and allow workers to accumulate multiple skills. Port training should be managed jointly by the social partners and public authorities, as is the case in many ports already.

7.7.4   Working conditions: safety is still a major issue in ports, particularly with regard to containers. Accident reporting needs to be improved, and to include better data on accidents and more details (causes, places, etc.). Accident reporting should be standardised across Europe (a common definition of what an accident is should be agreed, etc.).

7.7.5   The failure to enforce occupational Health & Safety legislation is a further issue. There is currently no specific EU legislation on Health & Safety in ports, and the general framework directive applies. The need to table sector-specific regulation in this area should be carefully assessed. Furthermore, improving working conditions in ports must be implemented via improved social dialogue at local, national and European level. In the particular context of industrial changes (e.g. port privatisation), this dialogue should result in negotiated solutions aimed at preventing any adverse consequences with regard to working conditions.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  See also Recital 17 in combination with articles 4(5) and 4(6) in the EU's Regulation (EC) No 1370/2007 on public passenger transport by road and rail.

1

(2)  DG Move Statistical pocketbook 2010.

2

(3)  DG TREN Statistical pocketbooks 2006, 2007/2008, 2009, 2010.

3

(4)  The DG EMPL commissioned study on ‘ Investing in the Future of Jobs and Skills’ analyses some scenarios.

4

(5)  Scenario based TRANSVISION study (transport developments until 2050) without estimates on employment development. http://ec.europa.eu/transport/strategies/studies/doc/future_of_transport/2009_02_transvisions_report.pdf.

5

(6)  3rd and 4th Survey on Working Conditions in Europe of the European Foundation on the Improvement of Living and Working Conditions; sector analyses 2002 and 2009; http://www.eurofound.europa.eu/surveys/index.htm.

6

(7)  See footnote 2.

7

(8)  The DG EMPL commissioned study on ‘Investing in the Future of Jobs and Skills – Scenarios, implications and options in anticipation’.

8

(9)  See footnote 5.

9

(10)  Communication COM(2006) 314 ‘Keep Europe moving’, page 3.

10

(11)  Evaluation of the Common Transport Policy (CTP) from 2000 to 2008: http://ec.europa.eu/transport/strategies/studies/strategies_en.htm.

11

(12)  OJ C 132, 3.5.2011, p.94.

12

(13)  OJ C 255, 22.9.2010, p. 92.

13

(14)  OJ C 182, 4.8.2009, p. 50.

14

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/31 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/31

---

Opinion of the European Economic and Social Committee on ‘Sustainable development of the EU transport policy and planning for TEN-T’ (exploratory opinion at the request of the forthcoming Polish presidency)

2011/C 248/05

Rapporteur: Mr KRAWCZYK

On 30 November 2010 the forthcoming Polish presidency of the European Union decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on

Sustainable development of the EU transport policy and planning for TEN-T

(exploratory opinion).

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 24 May 2011.

At its 472nd plenary session, held on 15 and 16 June (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 154 votes with 7 abstentions.

1.   Conclusions and recommendations

| 1.1 | The EESC has always supported the trans-European transport networks program and it reaffirms its support for this program again. However it notes that the needs of the enlarged Europe in the field of transport infrastructure have grown and some thought has to be given to the matter of how to adapt existing policy and instruments of its implementation to the forthcoming challenges. |
| --- | --- |

1.1

The EESC has always supported the trans-European transport networks program and it reaffirms its support for this program again. However it notes that the needs of the enlarged Europe in the field of transport infrastructure have grown and some thought has to be given to the matter of how to adapt existing policy and instruments of its implementation to the forthcoming challenges.

| 1.2 | According to the Committee the ultimate goal is the formulation of a transport policy that, when it is implemented, a social and economic cohesion is achieved, by combining the ambitions of economic growth in the form of increased transport, (according to the Commission traffic will grow by about 20 % between 2005 and 2020), cohesion, job creation and sustainable development with restricted financial sources. |
| --- | --- |

1.2

According to the Committee the ultimate goal is the formulation of a transport policy that, when it is implemented, a social and economic cohesion is achieved, by combining the ambitions of economic growth in the form of increased transport, (according to the Commission traffic will grow by about 20 % between 2005 and 2020), cohesion, job creation and sustainable development with restricted financial sources.

| 1.3 | But in practice the Committee has to conclude that, regrettable, from the 92 projects that were selected under the 2007 call for proposals fitting in the Mid-term review of the 2007-2013 multi-annual work programme., accounting for approximately two-thirds of the total TEN-T budget (EUR 5.3 billion out of EUR 8.0 billion), only a small number are located in the new Member States. |
| --- | --- |

1.3

But in practice the Committee has to conclude that, regrettable, from the 92 projects that were selected under the 2007 call for proposals fitting in the Mid-term review of the 2007-2013 multi-annual work programme., accounting for approximately two-thirds of the total TEN-T budget (EUR 5.3 billion out of EUR 8.0 billion), only a small number are located in the new Member States.

| 1.4 | The Committee would like to stress, that if the purpose of the EU is to create a real integrated single transport market in Europe and to continue cohesion policy, a radical change is necessary in the choice of the networks. Member States should propose networks for TEN-T on the basis of clear criteria set up by the Commission. |
| --- | --- |

1.4

The Committee would like to stress, that if the purpose of the EU is to create a real integrated single transport market in Europe and to continue cohesion policy, a radical change is necessary in the choice of the networks. Member States should propose networks for TEN-T on the basis of clear criteria set up by the Commission.

| 1.5 | The Committee recommends that, because of the transport sector’s current dependence on fossil fuels, the future European transport policy must pursue the following four main objectives:






  — | the promotion of low-carbon modes of transport, |
| --- | --- | --- |

1.5

The Committee recommends that, because of the transport sector’s current dependence on fossil fuels, the future European transport policy must pursue the following four main objectives:

—

the promotion of low-carbon modes of transport,

| — | energy efficiency, |
| --- | --- |

—

energy efficiency,

| — | security, complexity and independence of supply, and |
| --- | --- |

—

security, complexity and independence of supply, and

| — | the reduction of traffic congestion. |
| --- | --- |

—

the reduction of traffic congestion.

| 1.6 | In this respect the Committee advises selecting the greenest and best renewable fuels, which bring down CO2 exhaust, making use of co-modality, introducing the concept of internalisation of external costs for all modes of transport. The EESC is concerned about the financial restraints for the TEN-T projects on European level which might create insufficient incentives for Member States to engage in these projects. Therefore the EESC refers to its opinions in which it expresses that new sources of public income should be explored (1). |
| --- | --- |

1.6

In this respect the Committee advises selecting the greenest and best renewable fuels, which bring down CO2 exhaust, making use of co-modality, introducing the concept of internalisation of external costs for all modes of transport. The EESC is concerned about the financial restraints for the TEN-T projects on European level which might create insufficient incentives for Member States to engage in these projects. Therefore the EESC refers to its opinions in which it expresses that new sources of public income should be explored (1).

| 1.7 | As well the EESC recommends careful and selective use of Public Private Partnerships (PPP) in the funding of TEN-T financing, taking into account the different level of experiences among the Member States in using PPP and recognising the need to mobilise EU financial instruments (e.g. structural and cohesion funds, TENs, EIB) as part of a consistent funding strategy, that pulls together EU, national public and private funding. In order to give a free choice for the public authorities to engage in PPPs, the EESC refers to its opinion that the definition of PPPs in Eurostat procedures on public debt should be revised (2). |
| --- | --- |

1.7

As well the EESC recommends careful and selective use of Public Private Partnerships (PPP) in the funding of TEN-T financing, taking into account the different level of experiences among the Member States in using PPP and recognising the need to mobilise EU financial instruments (e.g. structural and cohesion funds, TENs, EIB) as part of a consistent funding strategy, that pulls together EU, national public and private funding. In order to give a free choice for the public authorities to engage in PPPs, the EESC refers to its opinion that the definition of PPPs in Eurostat procedures on public debt should be revised (2).

| 1.8 | The Committee recommends that the revision of the TEN-T guidelines also should regard bottlenecks and missing links in order to encourage a balanced transport infrastructure development in all parts of the Union, especially in the Eastern part to be able to achieve social and economic cohesion. Thus the EESC welcomes the Commission White Paper ‘Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system’ (White Paper), which refers to this particular issue with great deal of attention and draws conclusion for concrete actions to be undertaken in the coming years. |
| --- | --- |

1.8

The Committee recommends that the revision of the TEN-T guidelines also should regard bottlenecks and missing links in order to encourage a balanced transport infrastructure development in all parts of the Union, especially in the Eastern part to be able to achieve social and economic cohesion. Thus the EESC welcomes the Commission White Paper ‘Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system’ (White Paper), which refers to this particular issue with great deal of attention and draws conclusion for concrete actions to be undertaken in the coming years.

| 1.9 | Special attention should be paid to the so called neighbourhood policy, i.e. connections to the north, east and the south of the EU, focusing above all on the network, rather than on individual infrastructure projects. |
| --- | --- |

1.9

Special attention should be paid to the so called neighbourhood policy, i.e. connections to the north, east and the south of the EU, focusing above all on the network, rather than on individual infrastructure projects.

| 1.10 | The Committee suggests that ‘programme contracts’ should be signed between the EU and each Member State on the basis of a redefined TEN-T, setting out mutual commitments regarding financing and timetables for completion. The Committee believes that civil society should be involved in the process of preparation of such ‘programme contracts’ in order to improve efficiency of further implementation of projects agreed. |
| --- | --- |

1.10

The Committee suggests that ‘programme contracts’ should be signed between the EU and each Member State on the basis of a redefined TEN-T, setting out mutual commitments regarding financing and timetables for completion. The Committee believes that civil society should be involved in the process of preparation of such ‘programme contracts’ in order to improve efficiency of further implementation of projects agreed.

| 1.11 | The Committee believes that the sustainable development of the EU’s transport policy can be significantly supported through the action of Social Dialogue and/or Stakeholders Dialogue structures at trans-European transport corridors in operation or under construction. The EESC calls for these types of structures to be re-activated. |
| --- | --- |

1.11

The Committee believes that the sustainable development of the EU’s transport policy can be significantly supported through the action of Social Dialogue and/or Stakeholders Dialogue structures at trans-European transport corridors in operation or under construction. The EESC calls for these types of structures to be re-activated.

| 1.12 | The Committee recommends clarifying what is meant with the concept of sustainability. In the view of the Committee it includes – apart from fundamental contribution to the economic growth not only environmental goals as climate protection, noise and air pollution and resource conservation, but also social issues in transport such as employee rights, working conditions, affordable access to public transport for all citizens, including older people and people with disabilities, taking into account their right to mobility as well as equal access to physical facilities and information. It should also take into account the neighbourhood policy with respect to transport infrastructure development. |
| --- | --- |

1.12

The Committee recommends clarifying what is meant with the concept of sustainability. In the view of the Committee it includes – apart from fundamental contribution to the economic growth not only environmental goals as climate protection, noise and air pollution and resource conservation, but also social issues in transport such as employee rights, working conditions, affordable access to public transport for all citizens, including older people and people with disabilities, taking into account their right to mobility as well as equal access to physical facilities and information. It should also take into account the neighbourhood policy with respect to transport infrastructure development.

| 1.13 | The Committee considers a strategy, based on innovation, incentives and infrastructure (3 ‘I’ strategy) the most cost-effective way to achieve sustainable development. |
| --- | --- |

1.13

The Committee considers a strategy, based on innovation, incentives and infrastructure (3 ‘I’ strategy) the most cost-effective way to achieve sustainable development.

| 1.14 | In the framework of a sustainable development of the EU-transport policy and planning for the TEN-T the Committee recommends to undertake analysis of the possibilities of lifting unjustified existing barriers for the transport modes so that the capacity can fully be used. Better mobility planning should be encouraged in order to promote behaviour compatible with sustainable development. The challenge is to influence mobility and transport intensity in our economies. |
| --- | --- |

1.14

In the framework of a sustainable development of the EU-transport policy and planning for the TEN-T the Committee recommends to undertake analysis of the possibilities of lifting unjustified existing barriers for the transport modes so that the capacity can fully be used. Better mobility planning should be encouraged in order to promote behaviour compatible with sustainable development. The challenge is to influence mobility and transport intensity in our economies.

| 1.15 | The Committee fully supports the Commission approach presented in the White Paper as far as more European coordination is concerned. To achieve the ambitious targets set out in the field of TEN-T development, having serious financial constrains, will require much more integrated European infrastructural policy properly coordinated from strategic planning to the final implementation of individual projects. It is the time now to deliver results. |
| --- | --- |

1.15

The Committee fully supports the Commission approach presented in the White Paper as far as more European coordination is concerned. To achieve the ambitious targets set out in the field of TEN-T development, having serious financial constrains, will require much more integrated European infrastructural policy properly coordinated from strategic planning to the final implementation of individual projects. It is the time now to deliver results.

2.   Introduction

| 2.1 | In the framework of the forthcoming Polish presidency of the Council of the European Union in the second half of 2011, the EESC has been requested to draw up, amongst other subjects, an exploratory opinion on the topic ‘sustainable development of the EU transport policy and planning for the TEN-T’. |
| --- | --- |

2.1

In the framework of the forthcoming Polish presidency of the Council of the European Union in the second half of 2011, the EESC has been requested to draw up, amongst other subjects, an exploratory opinion on the topic ‘sustainable development of the EU transport policy and planning for the TEN-T’.

| 2.2 | Considering the importance of the subject, the necessity to fulfil the fundamental right to benefit from mobility and bearing in mind that the transport sector generates 10 % of EU wealth in terms of GDP and provides more than 10 million jobs, while at the same time the constant growth in mobility puts severe restraints on transport systems, resulting in congestion, accidents and pollution, the EESC accepted with great understanding the request of the forthcoming Polish presidency. |
| --- | --- |

2.2

Considering the importance of the subject, the necessity to fulfil the fundamental right to benefit from mobility and bearing in mind that the transport sector generates 10 % of EU wealth in terms of GDP and provides more than 10 million jobs, while at the same time the constant growth in mobility puts severe restraints on transport systems, resulting in congestion, accidents and pollution, the EESC accepted with great understanding the request of the forthcoming Polish presidency.

| 2.3 | The European Commission prepared a new White Paper on transport, which lays down the plans of the European Commission for the next decade, envisaging a different transport system by 2020, with a single European transport area, open markets, greener infrastructure and low carbon technologies. |
| --- | --- |

2.3

The European Commission prepared a new White Paper on transport, which lays down the plans of the European Commission for the next decade, envisaging a different transport system by 2020, with a single European transport area, open markets, greener infrastructure and low carbon technologies.

| 2.4 | An important element of this new transport system is the TEN-T network. That is the reason why so much attention should be paid to the revision of the EU guidelines on the TEN-T network. |
| --- | --- |

2.4

An important element of this new transport system is the TEN-T network. That is the reason why so much attention should be paid to the revision of the EU guidelines on the TEN-T network.

| 2.5 | As part of the revision of the TEN-T guidelines, the Commission is proposing to develop a so called core network, overlaying basic coherent comprehensive transport networks and covering nodes and strategic links. |
| --- | --- |

2.5

As part of the revision of the TEN-T guidelines, the Commission is proposing to develop a so called core network, overlaying basic coherent comprehensive transport networks and covering nodes and strategic links.

| 2.6 | The Commission argues that this backbone of a European integrated transport system would help to address consistent problems with TEN-T planning. Solving these problems is urgent because of the growth in traffic between Member States, expected to double by 2020. |
| --- | --- |

2.6

The Commission argues that this backbone of a European integrated transport system would help to address consistent problems with TEN-T planning. Solving these problems is urgent because of the growth in traffic between Member States, expected to double by 2020.

| 2.7 | The challenge for the EU is to formulate a policy that, when it is implemented, can combine the ambitions of economic growth in the form of increased transport, cohesion, job creation and sustainable development. |
| --- | --- |

2.7

The challenge for the EU is to formulate a policy that, when it is implemented, can combine the ambitions of economic growth in the form of increased transport, cohesion, job creation and sustainable development.

| 2.8 | To meet this challenge it is useful to look at the reasons why projects that have been chosen in the past were not as successful as expected. |
| --- | --- |

2.8

To meet this challenge it is useful to look at the reasons why projects that have been chosen in the past were not as successful as expected.

| 2.9 | Broadly speaking, the Committee, taking into account the key role of the TEN-T in the creation of efficient transport policy and a coherent infrastructure network within the European Union, agrees with the Commission that the following reasons are relevant:






  — | today’s TEN-T consists of an assembly of national sections that are poorly interlinked; cross border sections and severe bottlenecks constitute missing infrastructure links in the infrastructure network; |
| --- | --- | --- |

2.9

Broadly speaking, the Committee, taking into account the key role of the TEN-T in the creation of efficient transport policy and a coherent infrastructure network within the European Union, agrees with the Commission that the following reasons are relevant:

—

today’s TEN-T consists of an assembly of national sections that are poorly interlinked; cross border sections and severe bottlenecks constitute missing infrastructure links in the infrastructure network;

| — | the lack of interoperable, coherent networks, in all the EU Member States specially in the railway sector and in the application of intelligent transport systems for all modes of transport; |
| --- | --- |

—

the lack of interoperable, coherent networks, in all the EU Member States specially in the railway sector and in the application of intelligent transport systems for all modes of transport;

| — | the tradition in the Member States in using operational rules and standards based on longstanding traditions and legislation that hampers the effectiveness of huge investments in infrastructure. The Committee suggests that these rules and standards should be defined on a high level of security and quality; |
| --- | --- |

—

the tradition in the Member States in using operational rules and standards based on longstanding traditions and legislation that hampers the effectiveness of huge investments in infrastructure. The Committee suggests that these rules and standards should be defined on a high level of security and quality;

| — | the lack of intermodal integration, for example the absence of integrated physical networks and well-functioning intermodal transshipment points cause that capacities for allowing intermodal transport operations are insufficient; |
| --- | --- |

—

the lack of intermodal integration, for example the absence of integrated physical networks and well-functioning intermodal transshipment points cause that capacities for allowing intermodal transport operations are insufficient;

| — | the still existing discrepancies in the development of the transport infrastructure between various EU Member States; |
| --- | --- |

—

the still existing discrepancies in the development of the transport infrastructure between various EU Member States;

| — | the lack of sufficient transport accessibility in some of the European regions. |
| --- | --- |

—

the lack of sufficient transport accessibility in some of the European regions.

| 2.10 | To take into account the shortcomings of the past, the main issues to be addressed in order to benefit from a functional, interoperable and intermodal TEN-T, are clear, namely: realise a high quality network in all Member States paying particular attention to cross-border sections, bottlenecks and nodes, facilitating co-modal operations through the integration of all transport modes and a smooth functioning through the harmonisation of operational rules, that should assure a high level of security and quality. |
| --- | --- |

2.10

To take into account the shortcomings of the past, the main issues to be addressed in order to benefit from a functional, interoperable and intermodal TEN-T, are clear, namely: realise a high quality network in all Member States paying particular attention to cross-border sections, bottlenecks and nodes, facilitating co-modal operations through the integration of all transport modes and a smooth functioning through the harmonisation of operational rules, that should assure a high level of security and quality.

| 2.11 | An approach along these lines would also address wider transport policy objectives and supporting Europe’s resource efficiency and climate challenges. |
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2.11

An approach along these lines would also address wider transport policy objectives and supporting Europe’s resource efficiency and climate challenges.

3.   General remarks

| 3.1 | The EESC welcomes the fact that the Commission is working on a new Trans-European Transport Network Policy which would provide the opportunity to achieve a social and economic cohesion between all regions of the EU territory, including peripheral ones and that this can only be achieved with efficient transport infrastructure that connects them with each other. |
| --- | --- |

3.1

The EESC welcomes the fact that the Commission is working on a new Trans-European Transport Network Policy which would provide the opportunity to achieve a social and economic cohesion between all regions of the EU territory, including peripheral ones and that this can only be achieved with efficient transport infrastructure that connects them with each other.

| 3.2 | Keeping this in mind the Committee is convinced that the development and progressive completion of a Trans-European network, as the infrastructure basis for the flows of goods and the free movement of people in the Internal market, remains a vital policy objective for the EU that will bring the Western and Eastern part of the Union together and so creating the future Single European Transport Area. |
| --- | --- |

3.2

Keeping this in mind the Committee is convinced that the development and progressive completion of a Trans-European network, as the infrastructure basis for the flows of goods and the free movement of people in the Internal market, remains a vital policy objective for the EU that will bring the Western and Eastern part of the Union together and so creating the future Single European Transport Area.

| 3.3 | The latest official published document with respect to the execution of the TEN-T programme is the Mid-Term Review of the 2007-2013 TEN-T MAP, published in October 2010. It contains a review of 92 projects that account for approximately two-thirds of the total TEN T budget (EUR 5.3 billion out of a total of EUR 8.0 billion). Looking at the location of these projects, the Committee regrets that only a very small part of them is located in the Eastern part of the Union. |
| --- | --- |

3.3

The latest official published document with respect to the execution of the TEN-T programme is the Mid-Term Review of the 2007-2013 TEN-T MAP, published in October 2010. It contains a review of 92 projects that account for approximately two-thirds of the total TEN T budget (EUR 5.3 billion out of a total of EUR 8.0 billion). Looking at the location of these projects, the Committee regrets that only a very small part of them is located in the Eastern part of the Union.

| 3.4 | One of the reasons for this is the lack of sufficient financial resources in the new Member States. Another reason is the different conditions that have to be met by using Cohesion and Social Funds in comparison with TEN-T funding. The Committee recommends undertaking an analysis of the delay in the development of the infrastructure in the new member states as well as with respect to the low level of application and execution of TEN-T funding by new Member States. |
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3.4

One of the reasons for this is the lack of sufficient financial resources in the new Member States. Another reason is the different conditions that have to be met by using Cohesion and Social Funds in comparison with TEN-T funding. The Committee recommends undertaking an analysis of the delay in the development of the infrastructure in the new member states as well as with respect to the low level of application and execution of TEN-T funding by new Member States.

| 3.5 | The Committee stresses that, if the purpose of the EU is to create a real integrated single transport market in Europe, a radical change is necessary in the financial structure and the choice of the TEN-T network projects. The challenge is to influence mobility and transport intensity in our economies. |
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3.5

The Committee stresses that, if the purpose of the EU is to create a real integrated single transport market in Europe, a radical change is necessary in the financial structure and the choice of the TEN-T network projects. The challenge is to influence mobility and transport intensity in our economies.

| 3.6 | The Committee is aware that, within the framework of the 2020 Strategy, the development of the Trans-European Transport Network needs to be geared at the emergence of a resource efficient transport system that is constructed on innovation and addresses climate change, social sustainability and environmental challenges. |
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3.6

The Committee is aware that, within the framework of the 2020 Strategy, the development of the Trans-European Transport Network needs to be geared at the emergence of a resource efficient transport system that is constructed on innovation and addresses climate change, social sustainability and environmental challenges.

| 3.7 | In this respect the Committee wants to point out that it drafted many opinions in the past years on this subjects, such as the opinions on TEN-T: a policy review
   (3); A sustainable future for transport-European transport policy after 2010
   (4); The Greening of Maritime Transport and Inland Waterway Transport
   (5); Road Transport in 2020
   (6); A rail network giving priority to freight
   (7); Facilitating cross-border enforcement in the field of road safety
   (8); The strategy for the internalisation of external costs
   (9); Promotion of inland waterway transport ‘NAIADES’
   (10); European transport policy/Lisbon Strategy and sustainable development
   (11). |
| --- | --- |

3.7

In this respect the Committee wants to point out that it drafted many opinions in the past years on this subjects, such as the opinions on TEN-T: a policy review
   (3); A sustainable future for transport-European transport policy after 2010
   (4); The Greening of Maritime Transport and Inland Waterway Transport
   (5); Road Transport in 2020
   (6); A rail network giving priority to freight
   (7); Facilitating cross-border enforcement in the field of road safety
   (8); The strategy for the internalisation of external costs
   (9); Promotion of inland waterway transport ‘NAIADES’
   (10); European transport policy/Lisbon Strategy and sustainable development
   (11).

| 3.8 | In its opinion TEN-T: a policy review, the Committee concluded that ‘Given the problem of increasing CO2 emissions, and infrastructure and organisational gaps in relation to goods transport, the Committee concurs with the Commission in its search for co-modal solutions for freight transport so as to create synergies for users’. |
| --- | --- |

3.8

In its opinion TEN-T: a policy review, the Committee concluded that ‘Given the problem of increasing CO2 emissions, and infrastructure and organisational gaps in relation to goods transport, the Committee concurs with the Commission in its search for co-modal solutions for freight transport so as to create synergies for users’.

| 3.9 | In its opinion European transport policy/Lisbon Strategy and sustainable development the EESC considers that, because of the transport sector’s dependence on fossil fuels and the fact that these are limited, future European transport policy, maintaining the sector’s competitiveness as part of the strategy for 2020 must pursue four main objectives:






  — | the promotion of low-carbon modes of transport; |
| --- | --- | --- |

3.9

In its opinion European transport policy/Lisbon Strategy and sustainable development the EESC considers that, because of the transport sector’s dependence on fossil fuels and the fact that these are limited, future European transport policy, maintaining the sector’s competitiveness as part of the strategy for 2020 must pursue four main objectives:

—

the promotion of low-carbon modes of transport;

| — | energy efficiency; |
| --- | --- |

—

energy efficiency;

| — | security and independence of supply; and |
| --- | --- |

—

security and independence of supply; and

| — | the reduction in traffic congestion. |
| --- | --- |

—

the reduction in traffic congestion.

| 3.10 | It is clear that Europe is on the horns of a dilemma: at the one hand it wants to create a single integrated transport market for all 27 Member States, which makes it necessary to invest huge amounts of money in infrastructure, because infrastructure is the basis for solidarity, at the other hand there are restraints in the form of budget shortages and targets to curb emissions of greenhouse gases and other pollutant substances. |
| --- | --- |

3.10

It is clear that Europe is on the horns of a dilemma: at the one hand it wants to create a single integrated transport market for all 27 Member States, which makes it necessary to invest huge amounts of money in infrastructure, because infrastructure is the basis for solidarity, at the other hand there are restraints in the form of budget shortages and targets to curb emissions of greenhouse gases and other pollutant substances.

| 3.11 | The EESC already made suggestions to overcome this dilemma which also have a direct and tangible effect on costs in several of the before mentioned opinions: selecting the greenest and best renewable fuels, which brings down CO2 exhaust in a considerable way, making use of co-modality, introducing the concept of internalisation of external costs for all modes of transport and last but not least, introducing other financial instruments such as careful and selected use of Public Private Partnership in the funding of TEN-T financing taking into account the different levels of experiences among the Member States in using PPP and recognising the need to mobilise EU Financial Instruments (e.g. structural and cohesion funds, TENs, EIB) as part of a consistent funding strategy that pools together EU, national public and private funding. In order to give a free choice for the public authorities to engage in PPPs, the EESC refers to its opinion that the definition of PPPs in Eurostat procedures on public debt should be revised (12). |
| --- | --- |

3.11

The EESC already made suggestions to overcome this dilemma which also have a direct and tangible effect on costs in several of the before mentioned opinions: selecting the greenest and best renewable fuels, which brings down CO2 exhaust in a considerable way, making use of co-modality, introducing the concept of internalisation of external costs for all modes of transport and last but not least, introducing other financial instruments such as careful and selected use of Public Private Partnership in the funding of TEN-T financing taking into account the different levels of experiences among the Member States in using PPP and recognising the need to mobilise EU Financial Instruments (e.g. structural and cohesion funds, TENs, EIB) as part of a consistent funding strategy that pools together EU, national public and private funding. In order to give a free choice for the public authorities to engage in PPPs, the EESC refers to its opinion that the definition of PPPs in Eurostat procedures on public debt should be revised (12).

| 3.12 | The EESC is concerned about the financial restraints for the TEN-T projects on European level which might create insufficient incentives for Member States to engage in these projects. Therefore the EESC refers to its opinions that new sources of public income should be explored (13). |
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3.12

The EESC is concerned about the financial restraints for the TEN-T projects on European level which might create insufficient incentives for Member States to engage in these projects. Therefore the EESC refers to its opinions that new sources of public income should be explored (13).

| 3.13 | With respect to CO2 emissions, whereas transport constitutes a significant share (24 %) of EU CO2 output, the Committee wants to point out that special attention should be paid to the urban dimension of transport. Cities account for more than 70 % of the population in the EU and they are responsible for one quarter of all transport CO2 emissions and their weight is still increasing. In order to make transport more sustainable, it is clear that cities have to take their responsibility supported on regional, national and international level. Long distance freight transport on the other hand is to a large degree in EU carried out along important co-modal corridors. To make these transport corridors more effective and sustainable must therefore be a priority. Better mobility organisation should be encouraged in order to promote behaviour compatible with sustainable development. |
| --- | --- |

3.13

With respect to CO2 emissions, whereas transport constitutes a significant share (24 %) of EU CO2 output, the Committee wants to point out that special attention should be paid to the urban dimension of transport. Cities account for more than 70 % of the population in the EU and they are responsible for one quarter of all transport CO2 emissions and their weight is still increasing. In order to make transport more sustainable, it is clear that cities have to take their responsibility supported on regional, national and international level. Long distance freight transport on the other hand is to a large degree in EU carried out along important co-modal corridors. To make these transport corridors more effective and sustainable must therefore be a priority. Better mobility organisation should be encouraged in order to promote behaviour compatible with sustainable development.

| 3.14 | Despite the fact that EU does have funding problems, that the local acceptance for new infrastructure is low often, and despite the environmental impact of such investments, new infrastructure is nevertheless needed, to fill gaps and solve bottlenecks in the existing network. Especially the new Member States still have many of these gaps and bottlenecks. |
| --- | --- |

3.14

Despite the fact that EU does have funding problems, that the local acceptance for new infrastructure is low often, and despite the environmental impact of such investments, new infrastructure is nevertheless needed, to fill gaps and solve bottlenecks in the existing network. Especially the new Member States still have many of these gaps and bottlenecks.

| 3.15 | The Committee is convinced, that apart from that and to improve co-modality, activities and money should generally be concentrated on the nodes of the transport system such as transshipment platforms, because they are increasingly becoming bottlenecks and therefore deserve particular attention, and to the corridors between them. Technology and intelligent transport systems can be of great help, especially in the cities. One of the challenges is to deploy them and integrate them across different modes of transport. |
| --- | --- |

3.15

The Committee is convinced, that apart from that and to improve co-modality, activities and money should generally be concentrated on the nodes of the transport system such as transshipment platforms, because they are increasingly becoming bottlenecks and therefore deserve particular attention, and to the corridors between them. Technology and intelligent transport systems can be of great help, especially in the cities. One of the challenges is to deploy them and integrate them across different modes of transport.

| 3.16 | The revision of the TEN-T guidelines will also have to tackle the bottlenecks and missing links with the aim to encourage a balanced and sustainable transport infrastructure development in all parts of the Union, specially in its eastern part, where a shortage of high-standard rail and road links exist, co-modal solutions for a number of important bottlenecks on existing links and nodes are still necessary. |
| --- | --- |

3.16

The revision of the TEN-T guidelines will also have to tackle the bottlenecks and missing links with the aim to encourage a balanced and sustainable transport infrastructure development in all parts of the Union, specially in its eastern part, where a shortage of high-standard rail and road links exist, co-modal solutions for a number of important bottlenecks on existing links and nodes are still necessary.

| 3.17 | Although the Committee endorses the idea of the Commission of a core network strategy for the most important cross-border corridors, it also endorses to continue to make EU funding available to develop the comprehensive network in the future, in particular in Member States eligible for Cohesion Fund, on similar terms as in the present financial perspective. |
| --- | --- |

3.17

Although the Committee endorses the idea of the Commission of a core network strategy for the most important cross-border corridors, it also endorses to continue to make EU funding available to develop the comprehensive network in the future, in particular in Member States eligible for Cohesion Fund, on similar terms as in the present financial perspective.

| 3.18 | It fits in the idea that social and economic cohesion cannot be achieved without the construction of all the missing elements of the complete TEN-T network and improving in a sustainable way the existing and future network elements that are in a poor condition. |
| --- | --- |

3.18

It fits in the idea that social and economic cohesion cannot be achieved without the construction of all the missing elements of the complete TEN-T network and improving in a sustainable way the existing and future network elements that are in a poor condition.

| 3.19 | With a view to safety, the Committee would like to draw special attention to the improvement of the design of infrastructure including tunnels. |
| --- | --- |

3.19

With a view to safety, the Committee would like to draw special attention to the improvement of the design of infrastructure including tunnels.

| 3.20 | The EESC believes that a greater emphasis should be placed on the transparency of execution of TEN-T projects, not only during consultations or the selection, but also during the work realisation stages. While recognising that the main responsibility in this respect belongs to the national governments, the EESC encourages the Commission to be more forthcoming in its dialogue with national partners, imposing higher standards of transparency in the project execution, with more information on the physical and financial state of individual projects disclosed to the public on a regular basis. |
| --- | --- |

3.20

The EESC believes that a greater emphasis should be placed on the transparency of execution of TEN-T projects, not only during consultations or the selection, but also during the work realisation stages. While recognising that the main responsibility in this respect belongs to the national governments, the EESC encourages the Commission to be more forthcoming in its dialogue with national partners, imposing higher standards of transparency in the project execution, with more information on the physical and financial state of individual projects disclosed to the public on a regular basis.

4.   Specific remarks

| 4.1 | The Committee believes that the sustainable development of the EU’s transport policy can be significantly supported through the action of Social Dialogue and/or Stakeholders Dialogue structures at trans-European transport corridors in operation or under construction. The EESC calls for these types of structures to be re-activated. |
| --- | --- |

4.1

The Committee believes that the sustainable development of the EU’s transport policy can be significantly supported through the action of Social Dialogue and/or Stakeholders Dialogue structures at trans-European transport corridors in operation or under construction. The EESC calls for these types of structures to be re-activated.

| 4.2 | In the framework of a new TEN-T, the Committee recommends that ‘it wants to see explicit consideration given to so-called neighbourhood policy, i.e. connections to the north, east and south of the EU, although the Commission and the Member States should focus above all on the network rather than on individual infrastructure projects’. This also promotes solidarity between the Member States. |
| --- | --- |

4.2

In the framework of a new TEN-T, the Committee recommends that ‘it wants to see explicit consideration given to so-called neighbourhood policy, i.e. connections to the north, east and south of the EU, although the Commission and the Member States should focus above all on the network rather than on individual infrastructure projects’. This also promotes solidarity between the Member States.

| 4.3 | As regards future planning of the TEN-T, the Committee endorses in its opinion TEN-T: a policy review
   (14) the Commission’s approach as set out in its Green Paper, based on the principle that each mode of transport should be used according to its comparative advantages within co-modal transport chains and that each mode thus plays an important role in achieving the Community’s climate change objectives. The objective must still be to shift towards the most environment-friendly transport chain. |
| --- | --- |

4.3

As regards future planning of the TEN-T, the Committee endorses in its opinion TEN-T: a policy review
   (14) the Commission’s approach as set out in its Green Paper, based on the principle that each mode of transport should be used according to its comparative advantages within co-modal transport chains and that each mode thus plays an important role in achieving the Community’s climate change objectives. The objective must still be to shift towards the most environment-friendly transport chain.

| 4.4 | The Committee in this respect wants to remind of the concept of ‘Green Corridors’ that was introduced by the Commission in the Freight Transport Action plan in 2007. This concept aims at creating sustainable co-modal logistics solutions with documented reductions of environmental and climate impact, high safety and quality and strong efficiency through demonstration platforms along international corridors with concentrated flows of goods. The Committee wants to link this concept to the high standard co-modal core network corridors of TEN-T that could be well suited for such development in cooperation between public and private partners. |
| --- | --- |

4.4

The Committee in this respect wants to remind of the concept of ‘Green Corridors’ that was introduced by the Commission in the Freight Transport Action plan in 2007. This concept aims at creating sustainable co-modal logistics solutions with documented reductions of environmental and climate impact, high safety and quality and strong efficiency through demonstration platforms along international corridors with concentrated flows of goods. The Committee wants to link this concept to the high standard co-modal core network corridors of TEN-T that could be well suited for such development in cooperation between public and private partners.

| 4.5 | The Commission stated that the present system radically should be changed. New Member States do not benefit from EU-funding in the same way as the ‘old’ Member States. In order to realise a level playing field, new ways of funding will have to be developed. |
| --- | --- |

4.5

The Commission stated that the present system radically should be changed. New Member States do not benefit from EU-funding in the same way as the ‘old’ Member States. In order to realise a level playing field, new ways of funding will have to be developed.

| 4.6 | The Committee doubts whether the arguments, used by the Commission to justify the choices of the projects for funding are valid. The Commission argues that ‘these projects helping us to prepare for future transport priorities: notably making transport greener, connecting Europe’s east and west, and providing support to public-private partnerships’. At least question marks can be set at the improvement of the connection between east and west, while the Committee also wants to take into account other funding possibilities than PPPs. |
| --- | --- |

4.6

The Committee doubts whether the arguments, used by the Commission to justify the choices of the projects for funding are valid. The Commission argues that ‘these projects helping us to prepare for future transport priorities: notably making transport greener, connecting Europe’s east and west, and providing support to public-private partnerships’. At least question marks can be set at the improvement of the connection between east and west, while the Committee also wants to take into account other funding possibilities than PPPs.

| 4.7 | The idea of the Commission by nominating European Coordinators to enhance the international cooperation in combination with the focus on long term support for the most critical infrastructure projects and the implementation of an executive agency should have contributed to more transparency and should have positively contributed to the development of TEN-T. But, as well the analysis of the European Coordinators, as the results of the multi-annual portfolio review confirm that the progress achieved so far has been fragmented because of the lack of cooperation and coordination amongst Member States. |
| --- | --- |

4.7

The idea of the Commission by nominating European Coordinators to enhance the international cooperation in combination with the focus on long term support for the most critical infrastructure projects and the implementation of an executive agency should have contributed to more transparency and should have positively contributed to the development of TEN-T. But, as well the analysis of the European Coordinators, as the results of the multi-annual portfolio review confirm that the progress achieved so far has been fragmented because of the lack of cooperation and coordination amongst Member States.

| 4.8 | The Committee suggests that on the basis of a redefined TEN-T, so called ‘programme contracts’ between the EU and each Member State should be signed, setting out mutual commitments regarding financing and timetables for completion. These programme contracts should cover not only the infrastructure that is part of TEN-T, but also secondary infrastructure that States would commit to completing in order to secure the smooth running of the principal networks, to bring a better service to the population. The Committee believes that civil society should be involved in the process of preparation of such ‘programme contracts’ in order to improve efficiency of further implementation of projects agreed. |
| --- | --- |

4.8

The Committee suggests that on the basis of a redefined TEN-T, so called ‘programme contracts’ between the EU and each Member State should be signed, setting out mutual commitments regarding financing and timetables for completion. These programme contracts should cover not only the infrastructure that is part of TEN-T, but also secondary infrastructure that States would commit to completing in order to secure the smooth running of the principal networks, to bring a better service to the population. The Committee believes that civil society should be involved in the process of preparation of such ‘programme contracts’ in order to improve efficiency of further implementation of projects agreed.

| 4.9 | In its Mid-Term Review of the 2007-2013 TEN-T Map Project Portfolio, the Commission concludes that of the 92 projects comprising the portfolio 21 are cross-border projects, of which the mode of transport receiving the most support is rail, followed by inland waterways, while the Commission concludes in its document ‘The New Trans-European Transport Network Policy’ that in the overall picture projects in road and air and to a lesser extent maritime transport are performing rather well in comparison with rail and inland waterways. |
| --- | --- |

4.9

In its Mid-Term Review of the 2007-2013 TEN-T Map Project Portfolio, the Commission concludes that of the 92 projects comprising the portfolio 21 are cross-border projects, of which the mode of transport receiving the most support is rail, followed by inland waterways, while the Commission concludes in its document ‘The New Trans-European Transport Network Policy’ that in the overall picture projects in road and air and to a lesser extent maritime transport are performing rather well in comparison with rail and inland waterways.

| 4.10 | The Committee advises the Commission to clarify what is meant with the concept of sustainability. In order to be able to judge if a proposed project meets the requirements of ‘sustainability’ it must be clear what the contents is of this concept, preferably in quantitative terms. |
| --- | --- |

4.10

The Committee advises the Commission to clarify what is meant with the concept of sustainability. In order to be able to judge if a proposed project meets the requirements of ‘sustainability’ it must be clear what the contents is of this concept, preferably in quantitative terms.

| 4.11 | Keeping this in mind, the Committee would like to stress that sustainability includes – apart from fundamental contribution to the economic growth – not only environmental goals as climate protection, noise and air pollution, resource conservation, but also social issues in the transport field as employee rights, working conditions, affordable access to public transport in general, but especially for older people and people with disabilities, also taking into account accessibility for people with disabilities to physical facilities and information. |
| --- | --- |

4.11

Keeping this in mind, the Committee would like to stress that sustainability includes – apart from fundamental contribution to the economic growth – not only environmental goals as climate protection, noise and air pollution, resource conservation, but also social issues in the transport field as employee rights, working conditions, affordable access to public transport in general, but especially for older people and people with disabilities, also taking into account accessibility for people with disabilities to physical facilities and information.

| 4.12 | The Committee would like to put forward that it supports a strategy based on innovation, incentives and infrastructure (the so called 3 ‘I’ strategy) as the most cost-effective way to achieve sustainable development:






  — | innovation: to develop and implement even more ‘at source’ technical measures and operating practices to reduce transport environmental impact; |
| --- | --- | --- |

4.12

The Committee would like to put forward that it supports a strategy based on innovation, incentives and infrastructure (the so called 3 ‘I’ strategy) as the most cost-effective way to achieve sustainable development:

—

innovation: to develop and implement even more ‘at source’ technical measures and operating practices to reduce transport environmental impact;

| — | incentives: to encourage a rapid introduction by all modes of transport of the best available technology and practices; |
| --- | --- |

—

incentives: to encourage a rapid introduction by all modes of transport of the best available technology and practices;

| — | infrastructure: to ensure free-flowing safe traffic and efficiency by making use of existing infrastructure combined with adequate investment in new infrastructure to remove bottlenecks and missing links. |
| --- | --- |

—

infrastructure: to ensure free-flowing safe traffic and efficiency by making use of existing infrastructure combined with adequate investment in new infrastructure to remove bottlenecks and missing links.

| 4.13 | The EESC notes that one way of achieving the goal of sustainable development of the European Union is an integrated approach to trans-European networks (TENs). The EESC is convinced that an integrated approach can speed up the implementation of planned trans-European networks and reduce associated construction costs, unlike an approach that does not take account of the effects of possible synergy between different kinds of network (15). |
| --- | --- |

4.13

The EESC notes that one way of achieving the goal of sustainable development of the European Union is an integrated approach to trans-European networks (TENs). The EESC is convinced that an integrated approach can speed up the implementation of planned trans-European networks and reduce associated construction costs, unlike an approach that does not take account of the effects of possible synergy between different kinds of network (15).

| 4.14 | The Committee considers that, looking at the economic crises in Europe and the restricted available budget for TEN-T, cooperation and coordination between the different financial instruments funding TEN-T is necessary as well as to find new financial sources and credit mechanisms. |
| --- | --- |

4.14

The Committee considers that, looking at the economic crises in Europe and the restricted available budget for TEN-T, cooperation and coordination between the different financial instruments funding TEN-T is necessary as well as to find new financial sources and credit mechanisms.

| 4.15 | The Committee fully supports the Commission approach presented in the White Paper as far as more European coordination is concerned. To achieve the ambitious targets set out for TEN-T, having serious financial constrains, will require much more integrated European infrastructural policy properly coordinated at the European level from strategic planning to the final implementation of individual projects. |
| --- | --- |

4.15

The Committee fully supports the Commission approach presented in the White Paper as far as more European coordination is concerned. To achieve the ambitious targets set out for TEN-T, having serious financial constrains, will require much more integrated European infrastructural policy properly coordinated at the European level from strategic planning to the final implementation of individual projects.

| 4.16 | According to the EESC, the White Paper comes out at the very right time - it should enable a strong political message to be formulated in the context of the forthcoming EU Budget Review. Future financing of EU transport infrastructure development has to address realistic ambitions to create a single European transport area within the shortest possible time frame. |
| --- | --- |

4.16

According to the EESC, the White Paper comes out at the very right time - it should enable a strong political message to be formulated in the context of the forthcoming EU Budget Review. Future financing of EU transport infrastructure development has to address realistic ambitions to create a single European transport area within the shortest possible time frame.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  OJ C 48, 15.2.2011, p. 57-64 (Opinion of the European Economic and Social Committee on The Economic recovery: state of play and practical initiatives and OJ C 132, 3.5.2011, p. 99-107 (Opinion of the European Economic and Social Committee on the Proposal for a directive of the European Parliament and of the Council establishing a Single European Railway Area and the Communication from the Commission concerning the development of a Single European Railway Area).

1

(2)  OJ C 51, 17.2.2011, p. 59–66. (Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships).

2

(3)  OJ C 318, 23.12.2009, p. 101.

3

(4)  OJ C 255, 22.9.2010, p. 110.

4

(5)  OJ C 277, 17.11.2009, p. 20.

5

(6)  OJ C 277, 17.11.2009, p. 25.

6

(7)  OJ C 27, 3.2.2009, p. 41.

7

(8)  OJ C 77, 31.3.2009, p. 70.

8

(9)  OJ C 317, 23.12.2009, p. 80.

9

(10)  OJ C 318, 23.12.2006, p. 218.

10

(11)  OJ C 354, 28.12.2010, p. 23.

11

(12)  OJ C 51, 17.2.2011, p. 59–66. (Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships).

12

(13)  OJ C 48, 15.2.2011, p. 57-64 (Opinion of the European Economic and Social Committee on The Economic recovery: state of play and practical initiatives and OJ C 132, 3.5.2011, p. 99-107 (Opinion of the European Economic and Social Committee on the Proposal for a directive of the European Parliament and of the Council establishing a Single European Railway Area and the Communication from the Commission concerning the development of a Single European Railway Area).

13

(14)  OJ C 318, 23.12.2009, p. 101.

14

(15)  OJ C 204, 9.8.2008, p. 25 (Opinion of the European Economic and Social Committee on the Communication from the Commission - Trans-European networks: Towards an integrated approach).

15

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/37 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/37

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Opinion of the European Economic and Social Committee on ‘The contribution of civil society to the Eastern Partnership’ (exploratory opinion at the request of the Hungarian presidency)

2011/C 248/06

Rapporteur: Mr MORKIS

In a letter dated 15 November 2010, the Council of the European Union asked the European Economic and Social Committee, under Article 304 TFEU, to draw up an exploratory opinion on:

The contribution of civil society to the Eastern Partnership.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 25 May 2011.

At its 472nd plenary session (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 133 votes to 1 with 1abstentions:

1.   Conclusions and Recommendations

1.1   The European Economic and Social Committee (EESC) attaches great importance to the Eastern Partnership (EaP) as a strategic necessity and political investment on the EU's part that will be of future benefit to citizens of the European Union and of its partner countries. The events in the Mediterranean region have proved that civil society's role remains pivotal in the transition to democracy, in constitutional reform and institution building. Therefore, the contribution of civil society to the Eastern Partnership should be supported and duly taken into account in order to ensure the success of this process.

1.2   The EESC welcomes the progress made in implementing the Eastern Partnership initiative, which was officially launched in May 2009. All the Eastern Partnership countries have improved and intensified their relations with the EU through dialogue on association agreements, free trade areas, relaxation of visa requirements and cooperation on security of energy supply and other issues. (Unfortunately, following the events after the presidential elections in December 2010, Belarus has taken a big step back in its relations with the EU.)

1.3   Contribution of civil society to the multilateral track of the Eastern Partnership

1.3.1   Participation in EaP intergovernmental thematic platforms

1.3.1.1   The EESC has been invited to participate in three of the four established intergovernmental thematic platforms of the EaP and it is able to express the views of civil society in these platforms. However, the EESC calls on the Commission to invite it to participate and collaborate in thematic platform 3 for security of energy supply, given its expertise on this issue.

1.3.1.2   The Committee considers that representatives of the relevant working groups of the EaP Civil Society Forum (EaP CSF) should be allowed to participate in the meetings of intergovernmental thematic platforms.

1.3.2   The EaP Civil Society Forum

1.3.2.1   The Committee also welcomes the setting up of the Eastern Partnership Civil Society Forum in November 2009. The Committee considers the national platforms of the EaP Civil Society Forum to be an eminently suitable instrument for implementing the Eastern Partnership in the partner countries in a way that involves civil society, but regrets that employers, trade unions and other socio-economic organisations (farmers, consumers) at national level are involved little if at all in the activities of the national platforms.

1.3.2.2   As the social partners are not at present adequately represented in the EaP CSF, the Committee calls for a revision of the Forum's rules of procedure, in particular those related to the selection procedure, so as to give significantly more prominence to participation in the Forum by employers' and employees' representatives, as well as those of other interest groups both from the EU and from the partner countries.

1.3.2.3   The Committee calls to review the setup of the Forum with a view to it operating more efficiently whilst at the same time using effectively the available funding. The emphasis could be shifted to continuous and project oriented action (in the context of the Forum's working groups and national platforms).

1.3.2.4   The Committee suggests that the number of representatives from the EU should increase in order to stimulate exchange of experiences and promote convergence with European values. The European Economic and Social Committee, with its 344 members representing the organised civil society of the EU is very well qualified to play an active role in the implementation of the EaP goals within the CSF if the rules of the CSF provide for its increased and permanent involvement both in the CSF and SC.

1.3.2.5   Given the growing scope of the Civil Society Forum's impact, and in particular the remit of the national platforms, the Committee is ready to contribute to the better functioning of the Forum. It also considers that it has become necessary to set up a secretariat, not least in the context of the work of the Steering Committee.

1.3.2.6   If the operation of the Forum would not eliminate its structural inadequacy, the Committee would consider another ways of mobilisation of the socio-economic players of the EaP countries for the implementation of the goals of the EaP.

1.4   Consolidation of civil society in partner countries and contribution to the bilateral track of the Eastern Partnership

1.4.1   The Committee is following the events in the southern Mediterranean closely. It firmly believes that the EU should support the process of democratisation and stabilisation in that region. At the same time, the EESC calls for a long-term, balanced approach to the EU's southern and eastern neighbours, including as regards financial aid for political and economic reforms, adaptation to EU standards and strengthening civil society.

1.4.2   The Committee considers that inadequate funding may lead to the expectations of the Eastern Partnership, as an important instrument to promote convergence with European values, not being met. In this respect, the EESC broadly welcomes the Commission's proposal to review the European Neighbourhood Policy but regrets that the Communication on ‘A new response for a changing neighbourhood’ does not insist on creation of mechanisms for civil society consultations in the countries of the European Neighbourhood and makes absolutely no link to the EU's own Civil Society Institution and the role that the EESC can play in this process.

1.4.3   The EESC would welcome a proposal to create a European Endowment for Democracy and a Civil Society Facility. However, the EESC calls on the Commission to learn from the experience gained with the Civil Society Facility for the Western Balkans in order to avoid some shortcomings.

1.4.4   The Committee feels that it is extremely important to work together with independent organisations in the partner countries. Nevertheless, there is also a need to cooperate with existing organisations dependent on the Governments whilst at the same time supporting establishment of independent trade unions and employers' organisations that would be able to participate in a real social dialogue, disseminate ideas of democracy and of human and labour rights, and pursue the Eastern Partnership initiative's other goals.

1.4.5   The EESC considers that strengthening of dialogue between governments and civil society at national level is a prerequisite for the democratisation of societies in the Eastern Neighbourhood and for their convergence with European values. There is a particular need for strengthening the role of civil society in drawing up and implementing the ENP Action Plans.

1.4.6   The Committee calls for the establishment of mechanism of civil society consultation in all Eastern Partnership countries, such as Economic and Social Councils or similar organisations, taking into consideration the specific conditions of each partner country. In some EaP countries, the existing national platforms of the Eastern Partnership Civil Society Forum could be a good basis for this process. The EESC is ready to share its experience with civil society in the EaP countries.

1.4.7   The Committee takes the view that the association agreements being negotiated between the EU and the partner countries should include provisions on the establishment of joint civil society bodies, in charge of monitoring the implementation of these agreements.

1.4.8   Regarding the negotiations and conclusions of the Deep and Comprehensive Free Trade Agreement (DCFTA), the Committee considers that civil society from both the EU and partner countries should be involved in drawing up a Sustainability Impact Assessment prior to the negotiations, and that civil society mechanisms should be included in the future DCFTA in order to monitor the implementation of provisions related to sustainable development.

1.5   The Committee hopes that 2011 will be a decisive year for the Eastern Partnership, as the Hungarian and, in particular, Polish, presidencies of the Council are expected to give the initiative new impetus.

1.6   The Committee addresses these recommendations to the heads of state or government and hopes that the Eastern Partnership Summit in Poland in autumn 2011 will give appropriate recognition to the contribution of civil society over the last two years and the progress made, but also make a critical evaluation of the shortcomings, related to poor involvement of social partners and inadequacy of CSF.

2.   Contribution of civil society to the multilateral track of the Eastern Partnership

2.1   It is of vital importance to the European Union for its neighbours to the east to be stable and to have good governance and predictable policies, and for their economies to grow. The countries of Eastern Europe and the Southern Caucasus, for their part, are also keen to have a closer and more active relationship with the EU. The key factor in these countries making progress in aligning themselves with the EU lies in values and in the convergence of legislation and regulations. The Eastern Partnership should therefore be seen as a political investment by the European Union that will benefit EU citizens and foster general progress in the partner countries.

2.2   Participation in EaP intergovernmental thematic platforms

2.2.1   The European Commission's communication on the Eastern Partnership noted that civil society involvement should be given a particular role. The EESC has been invited to participate in three of the four established intergovernmental thematic platforms (platform 1 - Democracy, good governance and stability; platform 2 - Economic integration and convergence with EU sectoral policies; and platform 4 - contact between people) and it is able to express the views of civil society in these platforms. Nevertheless, despite its deep involvement in energy issues, the Committee has not been invited to participate in the important thematic platform on ‘Energy security’.

2.2.2   The EESC considers that the platforms have made progress towards the achievement of the goals of Eastern Partnership initiative but regrets that the participation of civil society is limited. The Committee considers that representatives of the relevant working groups of the EaP CSF should be allowed to participate in the meetings of intergovernmental platforms. This will enable civil society to be informed about the work of the platforms and to produce more workable and concrete recommendations. The Committee calls on the Commission to engage in negotiations with partner countries with a view to introducing changes in the Rules of Procedure of intergovernmental platforms to grant permanent participant status to the Forum in those Platforms.

2.2.3   The Committee considers that the platforms could be related to projects which are of interest for civil society. One pertinent example of the involvement of business associations in the Eastern Partnership could be the EAST-INVEST programme, a joint venture between Eurochambres and partners in the Eastern Partnership states. This is a new three-year project geared to the Eastern Partnership aiming to facilitate trade in the region of the eastern neighbours and promote economic development and investment. 21 chambers from EU countries got involved in the project, implementing the objectives of intergovernmental platform 2 on economic integration and convergence with EU policy. The total budget of the project is EUR 8.75 million, 7 million of which come from the European Commission. It is to be hoped that this project will achieve its stated aims and make a real contribution to making the Eastern Partnership's goals a reality. This example could be used for concrete projects between EU and partner country organisations in other sectors such as farmers, consumers, environmentalists' organisations, etc.

2.2.4   The Committee considers also that solid involvement of companies, into the SME flagship initiative under platform 2 and organised business to business meetings could lead to the organisation of an EaP Business Forum which will increase the support from business organisations to the negotiations of the DCFTAs.

2.2.5   The Committee points out that social dialogue is not included in the work of any platform, although it is part of the Community acquis.

2.3   EaP Civil Society Forum

2.3.1   The Commission's proposal to establish a Civil Society Forum was met with wide support.

2.3.2   Nevertheless, most of the members of the Eastern Partnership Civil Society Forum are think tanks and non-governmental organisations that do not represent the full variety of the civil society. Very few of the partner countries organisations represent the interests of business people and employees, as well as the social partners, i.e. business associations and trade unions or other socio-economic interests (farmers, consumers, science and academia, etc).

2.3.3   In the Steering Committee of 17 members, social partners from partner countries are not represented at all.

2.3.4   Over the past year and a half, national platforms of the Eastern Partnership Civil Society Forum have been established in all the partner countries, so that the civil society organisations in each country can come together to implement the partnership's goals.

2.3.5   The Committee wholeheartedly approves the establishment of national platforms of the Eastern Partnership Civil Society Forum and the contribution they have made to the Eastern Partnership Process. Several examples are worth mentioning:

| — | the Belarusian platform set up ‘Road maps under the Eastern Partnership for Belarus’ in July 2010; |
| --- | --- |

—

the Belarusian platform set up ‘Road maps under the Eastern Partnership for Belarus’ in July 2010;

| — | the Azeri platform has given rise to numerous events on issues of relevance to the government and civil society, e.g. Azerbaijan's accession to the WTO, alternative and renewable energy sources, energy efficiency, and the situation of small and medium-sized enterprises; |
| --- | --- |

—

the Azeri platform has given rise to numerous events on issues of relevance to the government and civil society, e.g. Azerbaijan's accession to the WTO, alternative and renewable energy sources, energy efficiency, and the situation of small and medium-sized enterprises;

| — | the National Participation Council, which served as the Moldovan National platform before such a platform was formally established, was able to take part in all of the meetings of Moldova's cabinet of ministers to put forward the Council's position on government decisions and proposed policy measures. |
| --- | --- |

—

the National Participation Council, which served as the Moldovan National platform before such a platform was formally established, was able to take part in all of the meetings of Moldova's cabinet of ministers to put forward the Council's position on government decisions and proposed policy measures.

The Committee regrets, however, the fact that in these platforms, too, the social partners have only limited, if any, involvement at national level in the activities of the national platforms and due to this fact they do not cover the issue of social rights.

2.3.6   The Committee has identified several shortcomings in the functioning of the Forum and proposed to work with the Steering Committee to improve the Forum's performance.

2.3.7   The current composition of the Forum does not correspond to the Commission concept paper stating ‘Membership in the EaP Civil Society Forum should be open to civil society organisations i.e. grass roots organisations, trade unions, employers' organisations, professional associations, NGOs, think tanks, non-profit foundations, national and international CSOs/networks and other relevant Civil Society actors from EaP countries, but also EU Member States and international organisations/networks. CSOs from third countries may also be invited. The EESC and its equivalents in partner countries should play a key role, especially regarding business, employment, labour and social issues’. The main European employees' and employers' organisations expressed their concern over this situation on 19 May 2010 in a letter to the members of the Forum. High-ranking representatives of the EESC and the European Commission have discussed the composition of the Forum and the fact that some of the objectives of the Eastern Partnership, especially those related to economic integration, could be achieved only if all relevant partners are involved in the work of the Forum.

2.3.8   The Committee considers also that the role of the EU civil society organisations in the Forum should be strongly enhanced. Their representation is so far limited not only due to the relatively small numbers assigned to the EU participants in the Forum (from 230 organisations invited to Berlin CSF only 80 were from the EU) and in the SC (seven places from 17). The EU civil society participation is also limited from the territorial point of view. The organisations from some member states close to the Eastern borders prevail. There are only few EU civil society organisations that have special projects or programmes for the EaP partners.

2.3.9   The Committee is ready to use its capacities, experience, know-how and contacts to contribute to the correction of existing imbalances in the CSF. The 344 members of the Committee represent a vast potential that can be used to enhance the cause of the EaP in the EU institutions, all member states and all spheres of the civil society including especially the social partners.

2.3.10   To enable the Committee to play this role it must be duly represented in the CSF structures. The standing rules do not provide the perspective of permanent and efficient involvement of the EESC in the CSF and should therefore be changed to allow the permanent and increased EESC participation in the Forum.

2.3.10.1   Enhanced participation of the EESC and other socio-economic actors could contribute also to achieving a more balanced participation in the working groups of CSF. Currently most of the organisations are involved in the working groups on ‘Democracy, good governance and stability’ and on ‘Contacts between people’. Meanwhile the working groups on ‘Economic integration and convergence with EU policies’ and on ‘Environment, climate change and energy security’ do not have sufficient number of participants that is in contradiction with the importance of the subjects covered by them to the successful implementation of the EaP. The Committee would be capable in this regard to bring its contribution.

2.3.10.2   The EESC considers that the Forum's work needs to be more project-oriented. Some working groups such as that on ‘Economic integration and convergence with EU policies’ have tried to develop specific projects but have not succeeded for lack of financing and a sufficient number of partners. The potential and the administrative capacity of the EESC could be useful for the development of concrete projects. Jointly drawn-up studies and projects could also help strengthen the contribution of civil society to the EaP.

2.3.10.3   The EESC suggests that the Steering Committee be elected for two years in order to improve its efficiency and to give it sufficient time to implement projects and ideas. In addition, the Committee also considers that it has become necessary to set up a secretariat for the Steering Committee.

2.3.11   If the operation of the Forum remains unsatisfactory, the Committee would consider another ways of mobilisation of the socio-economic players for the implementation of the goals of the EaP.

3.   Consolidation of civil society in partner countries and contribution to the bilateral track of the Eastern Partnership

3.1   Recent events in North Africa and the Middle East have made it clear that regimes can fall, even though they play a key role in the region's security and stability and receive financial support from western democracies, if they neglect the population's economic and social situation and abuse human rights and freedoms. The global community can now only watch political developments in the region with concern and speculate on the global consequences. Recent events in the region need to be analysed carefully, and the lessons learned should be examined and conclusions drawn.

3.1.1   There are significant differences between the countries in the Eastern Partnership in terms of political circumstances and the situation for civil society organisations. They are at varying levels of development with regard to democracy, human rights and civil liberties; their levels of economic and social development and even their geopolitical outlooks differ. There are equally significant differences between these countries' efforts to align themselves with the EU and between their aims in participating in the Eastern Partnership. Neither does civil society in the various partner countries have the same opportunities to take part in the partnership. The partner countries therefore need to be examined individually before it will be possible to assess the progress they have made, the extent to which civil society is involved in this initiative and what options are open to it.

3.2   Out of the partner countries, it is Ukraine, Moldova and Georgia that have really learned to tap into the potential of the Eastern Partnership in particular areas. If the gap between these three countries and the remaining Eastern Partnership states continues to grow, however, the long-term future of the Eastern Partnership as a regional project in Eastern Europe may be undermined. In view of this, the European Commission and civil society in the remaining three countries have an important part to play in ensuring that the gap does not widen further. Belarus certainly presents the greatest problems, but its membership of the Eastern Partnership should not be challenged, particularly in view of its particular domestic political situation.

3.3   The Committee acknowledges that it will only be conceivable for the Eastern Partnership to undertake activities in the fields of regional security, stability, economic integration, environmental protection, energy security, contacts between people, etc., once the partner countries respect human rights and freedom of association and once true social and civil dialogue is taking place. Greater attention should therefore be paid to these issues, particularly in the case of Belarus, though the other partner countries also have problems in this regard.

3.4   It is quite clear that the Eastern Partnership States do not have genuine social dialogue and mechanisms of consultation with civil society: often, only organisations established and run by the governments are counted as partners for social and civil dialogue. The Committee understands that it is extremely important to work together with independent organisations in the partner countries. However, there is also a need to cooperate with existing organisations recognised and sometimes dependent on the Government supporting them in the way of evolution and at the same time establishment of the independent trade unions and employers' organisations where they still do not exist to enable them to participate in a real social dialogue, disseminate ideas of democracy, human and labour rights, and pursue the Eastern Partnership initiative's other goals.

3.5   More active involvement of civil society could help to speed up implementation of the Eastern Partnership's goals in the partner countries; moreover, the Eastern Partnership and the involvement of civil society in it could help to strengthen civil society. When programmes are being developed to boost administrative capacity, the public sector must be made aware of the importance of civil society and the social partners, and of the experience that the EU and its Member States have in ways of involving civil society in the decision making. The experiences of organisations in the countries of central Europe could prove extremely useful in building the capacities of governmental and non-governmental organisations in the Eastern Partnership countries. The EESC is also ready to provide its know-how to the Eastern Partnership governments aiming to create a suitable legislative framework for social and civil dialogue.

3.6   In this respect, the EESC broadly welcomes the Commission's proposal to review the European Neighbourhood Policy but regrets that the Communication on ‘A new response for a changing neighbourhood’ does not insist on creation of mechanisms for civil society consultations in the countries of the European Neighbourhood Policy and makes absolutely no link to the EU's own Civil Society Institutions and the role that the EESC can play in this process.

3.7   The EESC also welcomes the proposal to create a European Endowment for Democracy and a Civil Society Facility, as this will no doubt help boost civil society's participation in political life. At the same time, however, we call on the Commission to learn from the experience gained with the Civil Society Facility and other forms of support to civil society under pre-accession assistance. In the EESC's contribution to the Commission's ongoing ‘Review of the EU's support to civil society in the Western Balkans and Turkey’, we emphasised that more attention needed to be paid to the social partners, especially trade unions, who in some cases have been almost completely ignored. In concrete terms, this means focusing not just on projects but also on institutional development and the overall sustainability of organisations.

3.8   In order to investigate the extent to which civil society organisations are involved in the Eastern Partnership and in the ongoing dialogue with national governments, the EESC asked these organisations to fill in a short questionnaire. The results of the survey show that there is a lack of dialogue between national governments and civil society organisations, not least in relation to Association Agreements and the implementation of ENP action plans. Governments do not sufficiently consult organisations about issues relating to the Eastern Partnership. The main information sources in this area are the delegations of the European Commission in each country and the media. Of course, the situation varies from country to country. Dialogue between the authorities and civil society is most advanced in the Republic of Moldova, whereas the most difficult situation in this respect is that in Belarus. The Committee calls for the establishment of mechanism of civil society consultation in all Eastern Partnership countries, such as Economic and Social Councils or similar organisations. The existing national platforms of the Eastern Partnership Civil Society Forum could be involved in this process. The EESC is ready to support civil society in the partner countries in setting up institutions for civil dialogue by using the experience it has gained from recent enlargements.

3.9   The Committee takes the view that the association agreements being negotiated between the EU and the partner countries (currently negotiations with all partner countries except Belarus are ongoing) should include in their institutional provisions the establishment of joint civil society bodies, in order to allow civil society to monitor the implementation of these agreements. These bodies could be consulted by the Association Councils created by the Association Agreements or make recommendations on their own initiative. Ideally, they would take part as observers in the meetings of the Association Councils. They should be composed of representatives of civil society and should include socio-economic partners and NGOs. The EESC should be represented in an adequate manner.

3.10   The European Commission has already started negotiations on a Deep and Comprehensive Free Trade Agreement (DCFTA) with Ukraine and foresees the negotiations with Georgia, Armenia and Moldova when the conditions for such negotiations are met. The DGFTA could have significant impact on business climate and social conditions in partner countries. Therefore the permanent dialogue with civil society during the negotiation process is of foremost importance.

3.11   Regarding the negotiations and conclusions of the DCFTA, the Committee considers that civil society should be involved in drawing up a Sustainability Impact Assessment prior to the negotiations. This involvement will help to raise public awareness of the benefits of the DCFTA. In addition, civil society mechanisms should be included in the future DCFTA in order to monitor the implementation of provisions related to sustainable development.

3.12   Nearly two years after the establishment of the Eastern Partnership it remains unclear how it is supposed to tie in with the regional Black Sea Synergy initiative (2007), with mostly the same partner countries participating in both initiatives. At civil society level, cooperation between the Eastern Partnership Civil Society Forum and the Black Sea NGOs Forum could be established.

3.13   The contribution of the European Economic and Social Committee to the Eastern Partnership

3.13.1   The EESC regards the Eastern Partnership as extremely important, as a strategic necessity and political investment on the EU's part that will be of future benefit to citizens of the European Union and of its partner countries.

3.13.2   The EESC has been concerning itself for five years now with the state of civil society in all the partner countries from a number of angles, including freedom of association, registration requirements, tax laws and procedures, freedom of expression and the operation of tripartite consultations. It has drafted relevant opinions and made a variety of recommendations on the following subjects: ‘Wider Europe - Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours’ (1), ‘Belarus Civil Society’ (2), ‘The EU's relations with Moldova: What role for organised civil society?’ (3), ‘EU-Ukraine: a new dynamic role for Civil Society’ (4), ‘Setting up civil society organisations networks in the Black Sea region’ (5), and ‘Civil society involvement in implementing the ENP Action Plans in the countries of the Southern Caucasus’ (6). On the request of the Czech Presidency the Committee drew up an exploratory opinion on ‘Involvement of civil society in the Eastern Partnership’.

3.13.3   The EESC has developed contacts with civil society organisations in the EaP countries and has organised a number of seminars on importance of social dialogue and consultation with civil society. During these seminars the EESC has also insisted on the necessity of civil society involvement in implementing the ENP Action Plans.

3.13.4   The EESC organises annual seminars in Ukraine in conjunction with the Ukrainian National Tripartite Social and Economic Council on subject of common interest and hopes that such annual events could be set up in the coming years also with the other EaP countries. The EESC is ready to facilitate the organisation of annual review seminars of civil society in all EaP countries aimed at assessing the progress made with the implementation of the ENP Action Plans.

3.13.5   The EESC supports the priority given to the Eastern Partnership by the current Hungarian presidency and the future Polish Presidency of the Council and is contributing with two other opinions, namely Energy security: what kind of Neighbourhood Policy do we need to ensure security of supply for the EU?, and Eastern Partnership and the Eastern Dimension of EU policies, with particular emphasis on EU agricultural policy. The EESC hopes that its three opinions on the Eastern partnership will receive wide support and will contribute to the achievement of some of the EaP goals and objectives.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  OJ C 80, 30.3.2004, p. 148-155

1

(2)  OJ C 318, 23.12.2006, p. 123-127

2

(3)  OJ C 120, 16.05.2008, p. 89-95

3

(4)  OJ C 77, 31.3.2009, p. 157-163

4

(5)  OJ C 27, 3.2.2009, p. 144-151

5

(6)  OJ C 277, 17.11.2009, p. 37-41

6

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/43 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/43

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Opinion of the European Economic and Social Committee on ‘Integration of water policy into other EU policies’ (exploratory opinion at the request of the Hungarian presidency)

2011/C 248/07

Rapporteur: Ms LE NOUAIL-MARLIÈRE

On 13 November 2010 the future Hungarian presidency of the EU decided to consult the European Economic and Social Committee on

Integration of water policy into other EU policies.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 20 May 2011. The rapporteur was Ms LE NOUAIL-MARLIÈRE.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 106 votes to 26 with 8 abstentions.

1.   Conclusions

1.1   Drawing on its expertise in the fields of the environment and agriculture, the challenges relating to the impact of climate change in Europe - alternating periods of flooding and drought, with consequent deteriorations in water resources, land and infrastructure and economic and social activities - the EESC advocates a consolidated and crosscutting approach to environmental, economic and social issues.

1.2   The EESC considers it extremely important for the EU to adopt a European policy on water through the Water Framework Directive and encourages Member States and EU institutions to consolidate this policy, bearing in mind that water is of primary importance to people, industries, farming, and local authorities, not only because it is vital for life but also for the economy, social life and the environment.

1.3   It therefore advocates giving it central importance through all other EU policies.

1.4   Focusing on the specific needs and commitments of rural and farming communities during the discussion phase of the post-2013 CAP, the EESC recommends making funds under the first pillar more conditional upon water policies through the application of ‘environmental cross-compliance’ (1) and increasing agri-environmental measures under the second pillar together with subsidies earmarked for water protection, up to levels that will attract the support of farmers.

1.5   Since there are numerous homeless or poorly-housed Europeans who still have no free access to running and/or drinking water, the EESC links challenges associated with water with measures to fight poverty and the goal of eradicating it.

1.6   The EESC highlights the international and extra-European dimension of EU environmental policy, through the EU's strategy, and its approach to trade, as well as to the environment and development, and its involvement in international environment strategies in Europe (cross-border catchment areas) and in its external policies (2).

1.7   The EESC calls on Member States to ratify the 1997 UN Convention (3).

1.8   Where the internal market is concerned, fundamental rights, social integration and cohesion, and health all call for a thorough-going study of the impact and cost of any water policy that does not integrate social, environmental and economic considerations.

1.9   This integration requires that the ongoing strategies be made consistent with the various regional interests in Member States and among the sectors (employment, health, the environment, intensive or organic farming, energy, spatial planning, public policy funding, etc) and stakeholders (users and consumers), which are all generally concerned.

1.10   Traditionally, water resource management across Europe has focused on supply and distribution. The EU now needs to develop new early warning measures to respond to natural or anthropogenic disasters that endanger and damage water resources in the short term.

1.11   Recalling the fundamental role of soil and vegetation, which act as a rainfall buffer, the Committee calls on the Council to seek once again to have the Soil Directive adopted, insofar as it is essential to an effective water policy (4).

1.12   The EU also needs to develop a sustainable approach to water management, by focusing on more economical demand in order to conserve this resource by using it more efficiently: reorganising abstraction and using new technologies.

1.13   Although water cycles are still largely natural, new technologies have allowed the introduction of artificial phases. This must not lead to misconceptions about the need to give democratic thought to choice. Indeed, the EU needs to develop a fairer approach to water abstraction, which responds to needs and to competition between economic and energy sectors, as well as to the need to conserve fresh water ecosystems and fulfil a fundamental citizens' right.

1.14   Integrated river basin management is crucial to water conservation and management. It facilitates stakeholder involvement in identifying and implementing regionally-differentiated measures, which often call for trade-offs between different interests and sectors (urban planning, flood plains, land use, especially for farming and the industrial and energy sectors).

1.15   The EESC emphasises that scope could be defined for EU and national subsidies and funds could be allocated and/or increased to include support aimed at preserving regional public community interests, such as wetland rehabilitation and biodiversity conservation, particularly when looking at the reform of EU state aid rules on services of general economic interest (5).

1.16   In order to secure the fundamental right of adequate water supplies for all citizens, the EESC urges Member States and regional and local authorities to be vigilant and to improve transparency requirements and reversibility conditions in the delegation of public services of general interest, in legal as well as economic spheres: public ownership, leasing, pricing, reinvestment, maintenance of works.

1.17   The EESC warns of the need for equally integrated human and social resource management: initial and lifelong training; a framework for certification and the recognition of qualifications; comprehensive and integrated forward management to facilitate professional and geographical mobility integrating gender issues; and a database.

1.18   The EESC advocates integrating social dialogue, which will contribute to ensuring all missions, in all their diversity, at all levels of water services and treatment, with respect to workers' statutes and staff and public safety.

1.19   With regard to user information and consultation, economic and social councils are a valuable consultation resource wherever they exist because they are representative and independent, and have the experience and capacity to hold public hearings.

2.   Legislation on water policy

2.1   Several issues are raised by water policy: the management and conservation of the resource, its use, water-related disaster management, natural habitat protection, and public health.

2.2   Below is a list of the most relevant EU legislation and policy development in the field of water management:

| — | 1970s: Early initiatives






  — | 1976 Bathing Water Directive |
| --- | --- | --- |

—

1970s: Early initiatives

—

1976 Bathing Water Directive

| — | 1980 Drinking Water Directive |
| --- | --- |

—

1980 Drinking Water Directive

| — | 1990s: Addressing key sources of pollution at source






  — | 1991 Urban Waste Water Treatment |
| --- | --- | --- |

—

1990s: Addressing key sources of pollution at source

—

1991 Urban Waste Water Treatment

| — | 1991 Nitrates Pollution from Agriculture |
| --- | --- |

—

1991 Nitrates Pollution from Agriculture

| — | 1996 Integrated Prevention and Control of Pollution IPPC |
| --- | --- |

—

1996 Integrated Prevention and Control of Pollution IPPC

| — | Since 2000: Expansion, coherence, streamlining






  — | 2000 Water Framework Directive and daughter Directives in 2006 and 2008 on groundwater and priority substances |
| --- | --- | --- |

—

Since 2000: Expansion, coherence, streamlining

—

2000 Water Framework Directive and daughter Directives in 2006 and 2008 on groundwater and priority substances

| — | 2007 Floods Directive |
| --- | --- |

—

2007 Floods Directive

| — | 2007 Water Scarcity and Droughts Communication. |
| --- | --- |

—

2007 Water Scarcity and Droughts Communication.

2.2.1   The Water Framework Directive (Directive 2000/60/EC) calls for the ‘day-to-day’ integrated management of bodies of water for the purposes of water conservation by introducing the concept of river basins. It also allows for the integrated management of inland waterways and coastal waters.

2.2.2   By adopting programmes of measures that are coordinated for the whole of a river basin district, the WFD requires good status of water to be achieved by 2015 (but allows justified derogations) and the prevention of its future deterioration:

| — | preventing and reducing pollution, |
| --- | --- |

—

preventing and reducing pollution,

| — | promoting sustainable water use, |
| --- | --- |

—

promoting sustainable water use,

| — | protecting the environment, |
| --- | --- |

—

protecting the environment,

| — | enhancing the status of aquatic ecosystems, and mitigating the effects of floods and droughts. |
| --- | --- |

—

enhancing the status of aquatic ecosystems, and mitigating the effects of floods and droughts.

2.2.3   It requires Member States to identify and classify the bodies of water in their countries, analyse their characteristics, identify at-risk bodies of water and study the impact of human activity on bodies of water. Management plans are set up for surface waters, groundwater as well as protected areas in order to prevent their deterioration and pollution, and to restore them. It also seeks to reduce pollution caused by the disposal or emission of hazardous substances. In this respect, the WFD is complemented by the 2008 Directive on Priority Substances.

2.2.4   Temporary deterioration in the status of bodies of water is subject to many exceptions. It is not considered to be in breach of this Directive if this is the result of exceptional or unforeseeable circumstances, such as an accident, natural cause or force majeure. Member States must explain and substantiate the reasons for these exceptions to the Commission.

2.2.5   The Directive requires Member States to ensure, as of 2010, that water-pricing policies put pressure on users (households, farming, industry, etc.) by applying proportionate principles regarding the volume of abstraction, polluter, payer, and cost recovery.

2.2.6   Member States are required to determine penalties applicable to breaches of the Directive. Furthermore, the Commission can institute infringement proceedings, accompanied by penalties, in case of non-compliance. Nevertheless, the complex procedures relating to breaches do not allow a strict application of penalties and are not sufficiently dissuasive. An exponential fine for repeat offences would be welcomed (the fine would double for each repeat offence).

2.2.7   The work carried out under REACH (the regulation that deals with the registration, evaluation and authorisation of chemical substances, and sets out a list of pollutants constituting a serious risk) helps to reduce the use of persistent water pollutants, protect aquatic ecosystems, and therefore mitigates public health risks.

2.3   The Commission is addressing water issues through the Common Agricultural Policy ‘Health Check’.

2.3.1   The ‘Health Check’ introduces the requirement to establish ‘buffer strips’ along watercourses, where the use of pesticides is restricted and to allocate a portion of the funds to mitigating water scarcity. The application of these measures needs to be ensured. It also seems important to carry out impact assessments on the amount of water used in biofuel and biomass production.

2.4   The Directive on the management of flood risks seeks to protect the resource in the context of natural disasters
   (6)

2.4.1   Directive 2007/60/EC of the European Parliament and of the Council on the assessment and management of flood risks requires Member States to establish flood hazard and risk maps and flood risk management plans in order to reduce these risks. The Directive also calls for cross-border cooperation and the exchange of information on cross-border river basin districts throughout its implementation.

2.5   The European Union Solidarity Fund compensates the victims of natural disasters

2.5.1   An EESC opinion (7) has drawn attention to areas where the functioning of the Fund could be improved. Indeed, the criteria for operations eligible for funds under Article 4 are too restrictive and do not take certain types of damage into account. The opinion stresses the importance of including disasters caused by cumulative effects or consequences of long-term situations. Disasters of this type, such as droughts or heat waves, are the outcome of environmental trends for which all EU Member States are responsible. The opinion considers that the provision of water and the functioning of infrastructures should be covered by the EUSF even if the disaster is not caused by a rapid event.

2.6   Directive 2008/1/EC concerning integrated pollution prevention and control (the IPPC Directive) sets out a framework for the installation of industrial and agri-industrial production units
   (8)

2.6.1   In theory, this Directive requires industrial plants to use the best technology available. It is by no means a key EU water policy instrument. Nevertheless, the recent red sludge spill in Hungary, which caused ground and river pollution in the Akja region and reached the Danube, has drawn attention to a number of issues concerning the environment and the protection of watercourses, not to mention the treatment and compensation of disaster victims and the level of vigilance required in the implementation of water resources. There are however, for example, still some 150 plants flanking the 3 019 kilometres of the Danube's banks (9), which the WWF defines as ‘time bombs’. Thus, the red sludge residue from alumina production had not been treated, despite the fact that the technology exists and is used elsewhere. This technology allows a significant reduction of the 96 % of the caustic soda left over in residues. Many industrialists simply store their waste in tailing ponds rather than employ real depollution methods. Indeed, the storage capacity of their tailing ponds is often not enough for their production (10). This new requirement to use the best performing treatment techniques available should significantly enhance a higher and safer standard of better proportioned storage infrastructure.

2.7   Directive on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (90/531/EEC and 93/38 EEC) provides a framework for the use of water resources by public or private undertakings and sets the conditions for public procurement

2.7.1   During the pre-accession period, acceding States were asked to bring their industries up to European standards. Some countries had amended legislation, but by lowering certain thresholds and minimising environmental problems.

2.7.2   As a result, it is imperative for the EU and its Member States to strengthen the means to implement EU legislation in order to increase public information and safety regarding access to water and water treatment.

2.8   Climate change and flooding

2.8.1   Following recent floods across Europe, numerous questions were raised concerning flood prevention. The European Union has funds to contain natural disasters but, paradoxically, not to prevent and foresee the risk of disasters caused by human intent or negligence. To be fully effective, flood prevention policies need to be integrated with policies of broader scope covering spatial planning, infrastructure, the protection of eco-systems, and action against climate change (11).

2.9   Cross-border cooperation: the example of the Saarland and Lorraine in the ‘lower Blies’ river basin

2.9.1   Interregional cooperation was set up between operators in order to establish a cross-border flood risk management partnership under the Interreg IV-A Programme ‘FLOW-MS Flood and Low Water Mosel/Saar Interreg project’. The agreement brought together CIPMS/IKSMS (International Commissions for the Protection of the Mosel and the Saar), the Saarland MUEV (Ministry for the Environment, Energy and Transport of Saarland), the prefecture of the Lorraine region and the sub-prefecture of Sarreguemines, four German Councils and five French municipalities. The objective is to manage flooding through joint prevention and regular experience sharing. This consists in improving the coordination of early warning and action plans and to adapt municipal flood protection plans.

2.9.2   The purpose of cross-border cooperation in the lower Blies river basin is to encourage the development of flood hazard and flood risk maps, assess flood risks and draw up recommendations to be consolidated as flood risk management plans.

2.9.3   Rivers do not stop at borders. Local initiatives in the upstream management of resources are essential, as can be seen from a number of examples. Cross-border cooperation is being established in river basins such as the Rhine, the Oder, the Meuse, the Danube, the Saar, the Mosel and the Elbe. The countries along these rivers are setting up institutions to ensure a coordinated approach to flood risk management and cross-border protection plans.

2.9.4   The basin of the Semois (a tributary of the Meuse), which is shared by Belgium and France, is one such example. Despite differences in prevention measures and legislation, a joint action plan has been in place since 2002 to counter upstream (Belgium) and downstream (France) flooding. The France-Wallonia-Flanders Interreg III financial programme (2002-2006) for promoting trans-European cooperation has made it possible to organise joint flood prevention measures through ‘river contracts’ (joint water management tools) undertaken on either side of the border.

2.9.5   Other projects, such as EUROTAS or cross-border strategies for the Danube or the Baltic Sea, seek to develop shared methodologies between several countries for long-term flood risk management, real-time flood forecasting, and conservation of freshwater sources.

2.9.6   It therefore seems possible, necessary and appropriate for cooperation initiatives to be defined at the level of local authorities and to then receive political and financial backing from the European Union.

3.   The place and role of the local authorities and civil society

There are various areas where EU citizens are directly concerned by the integration of EU water policy:

3.1   The impact of water and disaster management on the public

3.1.1   Growing water scarcity and alternating periods of prolonged drought, flooding or water pollution have grave consequences in economic and social terms. They can lead to the disappearance of economic activities (such as farming), job losses, with the result that regions are abandoned and their viability undermined.

3.1.2   Action against the chemical pollution of water is vital. It is a matter of animal and human health, not to mention chemical residues entering the food chain. It is important to revise the list of prohibited or controlled pollutants on a regular basis, as laid down in the Directive on Priority Substances. We therefore need to work in partnership with farmers, industrialists and environmental associations to monitor the use of new products and set thresholds for their use, as stated in earlier EESC opinions (12).

3.2   The different uses of water

3.2.1   The industrial, tourism and agricultural sectors are all concerned by water consumption and pollution. The rampant urbanisation of river and coastal areas also puts pressure on this fragile environment. In the European Union, energy production accounts for 44 % of total water abstraction, primarily serving as cooling water. Twenty-four per cent of abstracted water is used in agriculture, 21 % for public water supply and 11 % for industrial purposes. These figures mask regional differences in use. In southern Europe, for example, agriculture accounts for more than half of total abstraction, rising to more than 80 % in some regions, while in western Europe more than half of water abstracted goes to energy production as cooling water (13).

3.2.2   The interdependence of water management and electricity production is clear and needs to be studied by the European Union. Very little of the water used in energy production is consumed; most of it is discharged at a higher temperature. The stakes involved in the conservation of aquatic systems are high. We have the technology to reduce the amount of water required to generate electricity or to collect water efficiently but it is not necessarily used because it raises costs. We therefore need not only to encourage investment in R&D in this field and the use of these new technologies but also to link discussions on investment and the sustainability of its yield with environmental, social and economic concerns.

3.2.3   Practices in farmland use and development planning could have a major impact on water scarcity. Uncontrolled use exacerbates groundwater or surface water exploitation and can cause irreversible environmental damage and establish a cycle of unsustainable socio-economic developments – putting food and energy security and social stability at risk. Many important wetlands, forests and floodplains in Europe have been drained and dammed, and regulation facilities and channels have been constructed to support urbanisation, agriculture, energy demand and flood protection from floods (14). Future spatial planning policies need to accommodate water-related constraints.

3.3   Managing demand and offering a sustainable supply

3.3.1   A range of factors influence household water demand, including population and household size, urbanisation, tourism, income, technology, and consumer behaviour. In addition, ‘leakage’ in the distribution and supply networks plays a key role in determining the amount of water reaching end users. Leakage should be reduced wherever possible. There is a need to invest in the maintenance and development of distribution networks and in wastewater treatment infrastructures. Ten percent of the population in EU25 was not always connected to a wastewater collection system in 2006, with substantial differences between countries (15).

3.3.2   Tourism can markedly increase water use, particularly during the peak summer holiday months and especially in southern European coastal regions already subject to considerable water stress. Raising user awareness is essentially complementary to other water conservation measures.

3.3.3   Rules and independence: the re-use of waste water for agricultural purposes can play a significant part in sustainable water management and should be made safe in terms of public health like other sources, by setting and monitoring health standards. The transparency of these standards should be ensured by the legislator and monitored independently by certified or public control bodies.

3.4   Civil society and EU water policies

3.4.1   On 22 March 2010, prior to the resolution of the United Nations General Assembly of 26 July 2010 (16), the Council of the European Union announced that the 27 EU Member States recognised the right to water and sanitation, reaffirming that ‘all States bear human rights obligations regarding access to safe drinking water’, and that ‘the human rights obligations regarding access to safe drinking water and to sanitation are closely related with individual human rights – as the rights to housing, food and health’.

3.4.2   The right of civil society to information on water data is essential. In 1999, Land Berlin privatised its water management companies to the advantage of Veolia and the German conglomerate RWE, thereby raising prices for users. Delegated contracts and the terms agreed among the parties were not disclosed. A citizens' initiative launched by the Greens led to the Berliner Wassertisch movement, which succeeded in collecting enough signatures to trigger a referendum. Ninety-eight percent of the twenty-seven percent of the population who participated in the referendum voted for the undisclosed contracts to be published and then annulled. Following this initiative, published extracts from these contracts revealed that the profits of the shareholders of these two companies had been guaranteed under a compensatory system. This meant that Land Berlin was (with public funds) ensuring the profits of these companies in years when they failed to make the sums stipulated in the undisclosed terms. More and more European local authorities are using the expiry of these delegated contracts to ‘take back control’ for water services. Nevertheless, a number of them, and not only the smallest, found that they were trapped in earlier contracts concluded under such initial and legally unequal terms, and were forced to retain the participating private operators (17). We could take steps to improve transparency when delegating public services of general interest and regarding their reversibility, more specifically by studying the following issues:

| — | the management of water: reinvesting profits in the maintenance and modernisation of networks; |
| --- | --- |

—

the management of water: reinvesting profits in the maintenance and modernisation of networks;

| — | the nature and high levels of investment impact on access to private as well as public markets and should not result in monopolies and/or cartels; |
| --- | --- |

—

the nature and high levels of investment impact on access to private as well as public markets and should not result in monopolies and/or cartels;

| — | the largest private water companies are predominantly financed by public funds (18); |
| --- | --- |

—

the largest private water companies are predominantly financed by public funds (18);

| — | working and employment conditions and safety for staff: sufficient numbers of trained and qualified women and men, covered by a single public statute for employees working in the water sector, i.e. in the spheres of water treatment, monitoring, deterring infringements, research, etc., are and will continue to be required in the framework of a workers' statute in order to ensure all missions, in all their diversity at all levels; and |
| --- | --- |

—

working and employment conditions and safety for staff: sufficient numbers of trained and qualified women and men, covered by a single public statute for employees working in the water sector, i.e. in the spheres of water treatment, monitoring, deterring infringements, research, etc., are and will continue to be required in the framework of a workers' statute in order to ensure all missions, in all their diversity at all levels; and

| — | user information and consultation: Economic and Social Councils, are a valuable consultation resource wherever they exist because they are representative and independent, and have the experience and capacity to hold public hearings. |
| --- | --- |

—

user information and consultation: Economic and Social Councils, are a valuable consultation resource wherever they exist because they are representative and independent, and have the experience and capacity to hold public hearings.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Subsidies would have to be paid back in case of non-compliance with the relevant EU legislation (WFD) and national transposing legislation on nitrates pollution, water quality and the Water Framework Directive, in accordance with the polluter pays principle, etc.

1

(2)  Information Report on Decent work and sustainable development around the Mediterranean: the fresh water, sea water and sanitation sectors

2

Decent work and sustainable development around the Mediterranean: the fresh water, sea water and sanitation sectors

(3)  1997 United Nations Convention on the Law of the Non-Navigational Uses of International Watercourses http://untreaty.un.org/ilc/texts/instruments/english/conventions/8_3_1997.pdf.

3

(4)  COM(2006) 232 final – 2006/0086 (COD); COM(2009) 665 final.

4

(5)  COM(2011) 146 final, EESC opinion ‘Reform of the EU State Aid Rules on Services of General Economic Interest’ (See page 149 of this Official Journal).

5

Reform of the EU State Aid Rules on Services of General Economic Interest

(6)  OJ C 195, 18.8.2006, p. 20.

6

(7)  OJ C 28, 3.2.2006, p. 69

7

(8)  OJ C 182, 4.8.2009, p. 46; OJ C 97, 28.4.2007, p. 12; OJ C 80, 30.3.2004, p. 29.

8

(9)  WWF/Usine Nouvelle, 21.10.2010

9

Usine Nouvelle

(10)  For years, SANOFI AVENTIS, based in Ivry (France), spilt pollutants, including the highly carcinogenic benzene, into SIAAP's water treatment networks, because its tailing ponds lacked capacity.

10

(11)  OJ C 195, 18.8.2006, p. 20.

11

(12)  OJ C 97, 28.4.2007, p. 3.

12

(13)  Water resources across Europe — confronting water scarcity and drought, European Environment Agency Report, ISSN 1725-9177, February 2009.

13

Water resources across Europe — confronting water scarcity and drought

(14)  The European environment – state and outlook 2010, European Environment Agency, SOER 2010.

14

The European environment – state and outlook 2010

(15)  SOER p. 103 + EEA report p.5 + Eurostat press release of 2006.

15

(16)  United Nations General Assembly Resolution: ‘The human right to water and sanitation’, 26/7/2010, A/64/L.63/Rev.1, see: http://www.internationalwaterlaw.org/documents/intldocs/UNGA_Resolution_HR_to_Water.pdf.

16

(17)  Veolia Environnement: A Corporate Profile. A special report by Public Citizens' Water for All program http://documents.foodandwaterwatch.org/Vivendi05.pdf.

17

Veolia Environnement: A Corporate Profile. A special report by Public Citizens' Water for All program

Berlin's secret water privatisation contract was exposed in the Saturday 30 October 2010 edition of the Berlin daily newspaper, Tageszeitung (TAZ) http://www.taz.de/1/zukunft/wirtschaft/artikel/1/die-raeuberische-wasser-privatisierung/.

Tageszeitung

(18)  http://www.psiru.org/reports/2010-W-EWCS.doc.

18

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/49 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/49

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Opinion of the European Economic and Social Committee on ‘The EU’s role and relationship with Central Asia and the contribution of civil society’ (own-initiative opinion)

2011/C 248/08

Rapporteur: Mr PEEL

At its plenary session held on 15-16 September 2010 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on:

The EU's role and relationship with Central Asia and the contribution of civil society.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 25 May 2011.

At its 472nd plenary session, held on 15 and 16 June (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 112 ... votes to 5 with 12 abstentions.

1.   Conclusions and Recommendations

1.1   There is no real sense of regional affinity among the five Central Asian states, unlike Europe. The Committee urges the Commission and other EU Institutions to continue to work for a much deeper sense of regional identity and integration, encouraging each state to work more closely with its neighbours, to diminish ethnic and border problems as well as open the way for greater and more sustainable economic and social development.

1.1.1   The Committee firmly believes there is an overwhelming need for a comprehensive, cohesive and co-ordinated EU strategy for developing and building effective contact between EU civil society and that in Central Asia. Currently there is very little such contact. A much greater level of EU diplomatic representation is necessary as a start.

1.1.2   It is important to maximise the use of all expertise available across the EU institutions, not least in the spirit of Article 11 of the Lisbon Treaty, and therefore we call upon the EEAS to involve this Committee wherever possible, not least in capacity building, based on our experience elsewhere (e.g. the Balkans, Latin America).

1.1.3   We therefore recommend a formal mechanism be set up through the EEAS, involving the EESC, first to enable clearer identification of existing major civil society interlocutors in each state, including effective independent business and trade union partners, and secondly to help identify new, emerging civil society organisations and support these as they develop. To further these aims, a small EESC delegation should visit Central Asia.

1.1.4   The Committee strongly supports the well-structured EU Human Rights Dialogue Process, as an early, positive result of the EU's Central Asia Strategy, but expresses its deep disappointment at the failure so far to be included. This must be rectified as a top priority.

1.1.5   Such efforts to build far stronger people to people contact must include deeper youth and educational links, the majority of the population being under 25, and increase faster the use of the Erasmus Mundus Programme by both sides. This should include visa facilitation for educational purposes, fee-waivers for Central Asia's most gifted students, promotion of English language textbooks, Summer Schools, and partnerships at university as well as at secondary school level.

1.2   Closely connected with promoting greater civil society involvement is the wider issue of Human Rights. This is a key area where Europe can and is effectively offering assistance as the countries of Central Asia continue their independent course. However, the actual focuses of attention must be a matter of negotiation and cultural sensitivity. Despite the continuing problems, each of the five states have ratified the eight core ILO conventions (with two exceptions, outlined in 5.4.1). Identifying how and where Europe may assist Central Asia to fulfil these and other commitments offers a practical way to build mutual trust.

1.2.1   The Committee also strongly supports moves towards eventual trade related agreements with each of the five States. In line with other recent EU trade agreements, we would in that context urge the introduction of Civil Society Forum in each case, to include Sustainable Development, again to enable the sharing of the Committee's expertise.

1.3   Of particular importance here are the linked but difficult issues of food security, water security and energy supply. We recommend that the EU play a greater role in encouraging the five states to work together to tackle these serious problems holistically. The Commission must clarify the extent to which these are interlinked. Both in water and food security, Europe has positive experience in helping other countries and this should be fully utilised here to build further confidence and trust.

1.4   The Committee recommends that, as previously urged (1) for future trade negotiations, the Commission uses the 27 conventions listed by its GSP Plus system as a basis for developing wider, non-energy related trade with Central Asia, together with Trade Related Technical Assistance (TRTA) measures as appropriate.

1.5   The Committee recommends that development of EU links with Central Asia must be closely and mutually informed with EU involvement with Russia, China and Turkey, but not Iran whilst sanctions remain in effect.

1.6   The countries of Central Asia contain considerable potential energy reserves that offer Europe additional and complementary (as opposed to alternative) sources of energy, although complicated by issues of transit and transport. It is important that the viability of such links is based on practical and economic reasons.

1.7   Central Asia should not be a terminus for Europe's transport/ transit links but should better be seen as a through station to China and beyond. China's and the EU's proposed transport corridors need to be aligned. The old ‘Silk Road’ should be developed as a commercial and energy highway.

2.   Introduction

2.1   Although Kazakhstan is the ninth largest country by area, the five countries in Central Asia (Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tajikistan) have between them only a population of some 61m people – the same size as the UK, France or Italy alone.

2.2   It is essential to realise that effectively these are new states still largely in formation. Though independent and fully recognised, they area result of the disintegration of the USSR. There was no significant ‘national liberation movement’ in any of them. In each the previous soviet political elite took over as the new independent elite. However, this shared background remains a positive factor in encouraging regional cohesion, which is poor and far from the extent found across Europe, a concept that the EU is starting to foster here.

2.3   Further, they are operating within boundaries not of their own choosing nor based on natural borders. They were defined by outsiders, formed into constituent republics of the USSR, in turn bringing ethnic tensions, most recently seen in Kyrgyzstan where the minority Uzbek community came under pressure. This offers a major opportunity for the EU to bring to bear its experience in helping resolve national tensions.

2.4   These states also inherited command economies: models convenient for the present ruling elites to maintain. This underlying sclerosis has been complicated by the revival of old international strategic rivalries (not least due to proximity to Afghanistan and Iran), but which crucially are now also economic due to the discovery of as yet unquantified natural energy resources, notably in oil and gas, especially gas in Turkmenistan.

2.4.1   Already we have seen the emergence of questions involving power passing from one generation of a family to another in the area (viz Kazakhstan). The old Soviet Nomenklatura administrative infrastructure may be better described now as a clan/family nomenklatura. Here too supporting the fostering of a more neutral civil service is another potential area for the EU to assist in its civil society and governance programmes.

2.5   Before coming under Russian domination in the nineteenth century, Central Asia comprised a collection of fiercely independent Muslim Khanates and Emirates, with exotic names, including Bokhara and Khiva, but they were also remote due to the vast areas of desert that surrounded them. Tamurlane built his huge empire based on Samarkand, whilst the population is also descended in part from the armies of Gengkhiz Khan, and the ‘Golden Horde’. Also noteworthy is the strong scientific tradition in this area, notably in astronomy, dating from the Observatory founded by Ulugh Beg, grandson of Tamurlane, in the 1420s. Kazakhstan today remains heavily involved with the space programme.

3.   A new Great Game?

3.1   Despite its inhospitable location, Central Asia as stated has become of major strategic importance. Echoing the nineteenth century ‘Great Game’ (when it was the scene of rivalries between British and Russian ambitions), once again this is, apart from East Asia, probably the main area in the world where so many major interests threaten to collide.

3.2   Having been under Russian domination for over a century there remains very strong Russian influence in the area. Russian is the common language, economic ties remain strong and Russia believes that this area naturally falls within its sphere of influence. Kazakhstan entered a Customs Union with Russia (and Belarus) in 2010 and others showed some interest. For Kyrgyzstan, as the only WTO Member this would be a problem. Uzbekistan and Turkmenistan however are notably more wary of rebuilding ties with Russia than the others.

3.3   China is also heavily involved developmentally, finding formal expression through its membership of the Shanghai Co-operation Organisation (which also involves Russia and Iran). China has strategic energy interests – in 2010 they brought on stream in record time a gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan, to be fully linked into their internal energy network. China is also deeply interested in building strategic rail and road corridors to the West through Central Asia, but as yet these are not aligned with European transport corridors to the East. This needs to be rectified. The old ‘Silk Road’, already a tourist itinerary, could also be profitably developed as a commercial and energy highway.

3.4   Iran and Afghanistan are intimately involved, as close neighbours, Farsi-related language speaking like Tajikistan, and with recent histories of Islamic fundamentalism. Religious fervour is currently kept firmly in check by each Central Asian State, but it is growing. Islamic insurgency was a factor in the 1990s Tajik civil war, which many fear could reoccur. For Iran, with sanctions over the nuclear issue, links with Turkmenistan are particularly significant, also building a new strategic gas pipeline. Drugs traffic out of Afghanistan is a growing issue, but that is more a problem about end-use in the West: curtailing and curbing the illegal market in Europe (and the US) must also be part of the solution in addition to exhorting poor and corruptible local officials to clamp down on the drugs traffic.

3.5   Turkey also enjoys strong influence in the area, not least as all but the Tajiks are Turkic people with interconnected languages. Turkey was heavily involved soon after the break-up of the Soviet Union but, after initial set-backs, is again increasing its voice. Turkey will also be a key staging post for energy pipelines to the West.

3.6   The USA is also heavily involved in the region, not least due to the war in Afghanistan.

3.7   So all this questions how far the EU needs to be involved, noting too that there is no EU Member State colonial legacy here. Europe's needs should be looked at long-term, and with wider EU relationships fully factored in.

3.7.1   The EU is already conducting major negotiations with both Russia and China, with whom the EU enjoys a Strategic Partnership. Accession talks are under way with Turkey, even if progress is extremely slow. The impression nevertheless remains that EU links with the Central Asian states are dealt with totally independently to these other countries. This does not make sense. Development of EU links with Central Asia need to be closely and mutually informed with EU involvement with Russia, China and Turkey; equally our relations with Central Asia should not be developed in a way that would jeopardise our strategic relations with any of these key partners. Whilst sanctions are being used against Iran it would be premature to involve it, but the Iran/Central Asia equation needs to be kept under review.

4.   EU involvement in Central Asia

4.1   The EU launched its own Central Asia Strategy in July 2007, inspired by the German Presidency. This reads rather paternalistically, and yet the very low levels of trade have yet to pick up. Apart from Kazakhstan, which in 2009 (as in 2007) accounted for 0.9 % of the EU's imports, and 0.5 % of exports, none of the others exceeded 0.1 % of EU trade. Despite these figures, the EU remains a major trading partner for each state, especially for Kazakhstan, for whom in terms of trade volume the EU is a bigger trade partner than either Russia or China.

4.2   It makes considerable sense for the EU to show close interest in Central Asia, especially in the light of its Eastern Partnership Programme and the Black Sea Strategy. These effectively involve (together with Turkey) all the other countries of the former USSR, except Russia with which the EU is negotiating a separate, new Strategic Relationship. Some EU Member States, notably Lithuania and increasingly Germany, already have strong ties with Central Asia. In addition, Azerbaijan is seen by many to be more closely connected with Central Asia than the Caucasus, not least for reasons of energy and religion.

4.2.1   A key issue is energy. The countries of Central Asia contain considerable potential energy reserves that offer Europe additional and complementary sources of energy although this is complicated by issues of transit and transport. It is essential that the EU remains realistic about the potential of energy supply from the region and that the viability of such links is based on practical and economic reasons. Important too for the host states, these sources of natural energy are better seen as complementary to and existing supplies and not as a possible alternative supply, nor as a pawn to be used in influencing relationships with other countries in the region.

4.3   Despite the upbeat tone of the Progress Report last June, EU links with the five states of Central Asia are remarkably weak. There is only a full EU Mission in Kazakhstan whilst EU delegations opened recently in Kyrgyzstan and Tajikistan. For Uzbekistan and Turkmenistan, the EU is only represented through ‘Europa Houses’ mainly staffed by contracted consultants. According to CEPS (2), 18 Member States have embassies in Kazakhstan, ten in Uzbekistan and only a few elsewhere. Germany and France alone have embassies in all five states, the UK in four. Nine Member States have no representation at all. The EU Central Asia Strategy will depend on a far greater level of EU representation if it is to succeed, which will provide an early searching test for the new European External Action Service, despite its severe budgetary limitations. Joint action through the EEAS on key issues such as Visas (at least for Schengen states) will be one such test.

4.4   The EU has negotiated Partnership and Cooperation Agreements (PCAs) with all five states. Those with Kazakhstan, Kyrgyzstan and Uzbekistan came into effect in 1999, although the PCA with Uzbekistan was later partially suspended from 2005 to 2008 following the Andijan massacre. That with Tajikistan (delayed due to the civil war) was only ratified in 2009, whilst that with Turkmenistan has yet to be ratified at all, due to Human Rights issues.

4.5   Kazakhstan in particular is emerging as a key player in the region, where the EU's relations are progressing strongly, bolstered by growing interest in the relationship from both sides. Kazakhstan is clearly the most approachable state for the EU and by its active and successful canvassing for the Chairmanship of the OSCE (3) gave an unambiguous signal of its desire to play a key role. Further evidence of Kazakhstan's wish for increasing involvement in wider affairs is its joining the Customs Union with Russia and Belarus, and its evident interest in achieving WTO Membership, possibly alongside Russia. Another sign is the growth of a notable young entrepreneurial class, which is both willing and encouraged to be educated abroad, together with a growing civil society ethos and involvement.

4.6   A similar wish for increased international visibility is not yet found in Uzbekistan, which retains a more closed and authoritarian approach, as does Turkmenistan. Uzbekistan originally looked most likely to build closer links with Europe, but that faded, notably following Andijan, as Kazakhstan opened up.

4.7   Kyrgyzstan, with major concerns following the ethnic unrest in 2010, is nevertheless a more open society with greater civil society involvement. This is also the case with Tajikistan, where current EU links are notably weak. Tajikistan is more fragile, it suffered a major civil war in the 1990s which could reoccur and it faces a food crisis.

5.   The role of Civil Society, and Human Rights

5.1   The role of civil society is both intermittent and varies widely between the five states. Kyrgyzstan enjoys the greatest level of civil society involvement, whilst Kazakhstan and Tajikistan have a developing civil society ethos.

5.1.1   However, civil society has played a clear role in the well-structured EU Human Rights Dialogue Process, one of the first results of the EU's Central Asia Strategy, in these three countries. This has seen the development of annual meetings at official level, with separate civil society seminars involving human rights lawyers and local NGOs, with EU officials present, and a standardised agenda, but as yet no effective benchmarking to measure results.

5.1.2   The Committee strongly supports this Process but is deeply disappointed that the EEAS has not yet seen fit to include the EESC within this. We urge the EEAS to rectify this as soon as possible, not least as we are a proven dialogue partner and conduit to wider civil society, with deep, practical knowledge and a widely recognised expertise.

5.2   This level of civil society input is not echoed in either Uzbekistan (where government organised NGOs were put forward) or Turkmenistan, where there is effectively no independent civil society.

5.2.1   It is important to recall that before independence there was no tradition or understanding of civil society as an intermediary between the state and the citizen, nor any concept of NGOs. Trade unions, community, youth and professional associations were all part of the state structure, with little contact with outside influences to shape new, post-independence institutions. However, many have since developed along more independent lines along with privatised state enterprises, independent trade unions and professional associations, notably in Kazakhstan and Kyrgyzstan and to a lesser extent Tajikistan.

5.2.2   Local rural community-based initiatives and self-help groups emerged in the 1990s, based on traditional local community and kinship self-help hashar/ashar groups, not least to respond to the break-up of soviet social welfare systems, but these are very different to NGOs as internationally recognised. Such NGOs also emerged, but were largely confined to the major urban areas and often dependent on significant external financial support (including US). Each country developed differently with varying problems but after the ‘colour’ revolutions in Georgia, Ukraine and Kyrgyzstan, NGOs (seen by many as alien, and overpaid when compared locally) were severely restricted in Uzbekistan, and effectively disappeared in Turkmenistan. Recently there has been a growing increase in the urban-rural divide, as well as in Islamic based influence and activity.

5.3   Between EU civil society and that in Central Asia there would appear to be little formal input or in depth contact, hardly surprising given the very poor state of people to people contacts between Europe and Central Asia. Before we can expect civil society in Central Asia to share or even identify with our values, these have to be made known first, and then be widely understood, but not imposed. Kazakhstan can offer a bridge here, not least with its better inter-business and union contacts.

5.3.1   The Committee believes there is an overwhelming need for a comprehensive, cohesive and co-ordinated EU strategy in developing civil society contact with Central Asia. The Committee itself is well placed to take this forward, the key question being how best to contribute to encouraging far greater dialogue and people to people contacts, identify topics of mutual interest and emerging civil society groups, and promoting best practice, so as to lead to the establishment of a more formal mechanism for nurturing effective civil society contact.

5.3.2   The current work of the External Action Service (EEAS) in the region is to be welcomed. However, it is essential to maximise the use of all expertise available across the EU institutions and therefore, as with the Human Rights Dialogue Process, we call upon the EEAS to involve this Committee wherever possible, not least to support capacity building based on our key experience elsewhere.

5.3.3   There would appear to be three avenues for this. First the Committee itself, with the aid of the EEAS, needs to identify clearly who its current main interlocutors should be. Effective independent business and independent trade union partners must be identified and links fully established in all five states, together with other relevant civil society partners. The International Organisation of Employers (OIE) has no members listed for Central Asia, although it has contacts in Kazakhstan. To this end it is recommended that a small EESC delegation visit Central Asia (as well as to promote this opinion).

5.3.4   Next it is essential that other, developing civil society organisations should be identified, encouraged and given support on the ground as they develop. Here again we look to the EEAS to involve the Committee whenever and wherever this is appropriate.

5.3.5   The Committee also strongly supports moves towards eventual trade related agreements with each of the five States. In line with other recent EU trade agreements, we would in that context recommend the introduction of Civil Society Forum with each state, to bring greater formalisation to links with civil society in the region, which would also enable the Committee's expertise on Sustainable Development to be shared with the relevant civil society representatives.

5.3.6   Thirdly, greater encouragement must be given to wider youth contact and exchanges and to even greater utilisation of the Erasmus Mundus Programme to encourage deeper educational links and mobility by both sides. This should include, visa facilitation for educational purposes, fee-waivers for Central Asia's most gifted students, promotion of English language textbooks, Summer Schools, and partnerships at university as well as at secondary school level. We welcome the doubling of the budget here to EUR10m pa, but as the Progress Report points out, the majority of the population in Central Asia is under 25 (so will not recall soviet times).

5.3.7   Civil society has a key role to play in encouraging greater regional cohesion and integration - important in building up an economic and social environment where markets can operate effectively, promoting the creation of decent jobs, developing SMEs, strengthening local infrastructure and helping poverty reduction, backed by robust institutions with clear terms of reference. The experience of civil society in the Baltic States among others will be particularly useful here.

5.3.8   That in turn needs to be underpinned by political commitment, peace and security, rule of law, greater democracy, good governance and macroeconomic stability.

5.4   However, closely connected with promoting greater civil society involvement, especially in Uzbekistan and Turkmenistan, is Human Rights, where progress is painstakingly slow. With a long history of autocratic rule and lack of any tradition of human rights, these must play a increasing role if the EU - and EU civil society - is to develop an effective working relationship with Central Asia. Human Rights help define Europe and its history: a key area where Europe rightly feels it can offer assistance.

5.4.1   However, the actual focuses of attention must be a matter of negotiation and cultural sensitivity. Each of these states have voluntarily subscribed to Universal Human Rights by the adherence to the United Nations and associated institutions (e.g. ILO). Unlike many other EU trading partners, each Central Asian state has already ratified the8 core ILO conventions, with the exceptions of Freedom of Association (no 87) by Uzbekistan, and Minimum Age (no 138) by Turkmenistan. The latter only signed that on Child Labour (no 182) in November 2010, and Uzbekistan that on Minimum Age in 2009. Enforcement is another matter. We therefore urge the Commission, in conjunction with the ILO, to put greater emphasis on identifying how and where Europe may best assist Central Asia to fulfil these commitments.

5.4.2   This offers a practical way forward to build mutual trust. Whilst it is arguable that no human rights are more fundamental than others, real issues remain with those involving basic human freedoms, the rule of law and the freedoms of assembly, association and expression. The EU has already established a good record through positively handling issues such as disability.

5.4.3   Nevertheless major concerns and problems remain, and recent events in North Africa are a reminder both of the importance of building active civil society participation and of the urgency in dealing with these underlying issues in a positive way. The Committee wishes to develop strong and effective contact and good working relationships with civil society in Central Asia. Boycotts or imposing very strict conditions based on progress are not a realistic option. The situations here have been compared with that in Belarus, where in January 2011, following disturbances after the Presidential election, 158 leading office holders were banned from travelling to the EU and their EU bank accounts frozen, an example that all five states need to keep clearly in mind.

5.4.4   In its Opinion on ‘Global Europe’ (4), the Committee urged that as a foundation for future EU trade agreements, the Commission uses the 27 conventions (including the eight core ILO conventions) listed by its GSP Plus system. This goal needs to be repeated here as a basis for developing wider, non-energy related trade with Central Asia, together with Trade Related Technical Assistance (TRTA) measures as appropriate, whilst encouraging WTO membership at the same time. Only Kyrgyzstan is a WTO Member but its entry in 1998 is now widely seen as premature.

5.5   Appendix A includes a brief summary of current Human Rights issues in each of the five states.

6.   Environmental issues

6.1   GSP Plus includes key environmental Conventions. Of particular relevance to Central Asia are the linked issues of food security, water security and energy supply, where a key role for the EU will be in encouraging the five to work together to tackle these holistically. It is not clear from the EU Strategy just how far these are interlinked, water being covered separately both as part of energy and under environmental sustainability, and food security as a major problem in its own right.

6.2   Tajikistan was listed by FAO in 2008 as one of 17 countries ‘in food crisis’ – the only one in Asia. Water security is also a fundamentally important issue for the region as a whole, as witnessed by the severe shrinkage of the Aral Sea, the growing problems of disappearing rivers, and the fact that cotton is a particularly water intensive crop. The EU's experience in helping others here should also help to build further confidence and trust within Central Asia.

6.2.1   Tajikistan, along with Kyrgyzstan, has a supply of water at most times of the year (although poor management and damaged distribution systems have led to notably high levels of wastage and consequent shortages), whereas its neighbours suffer from water scarcities, in particular Uzbekistan (which relies heavily on water from elsewhere for its water-thirsty crops of rice and cotton, and for drinking). Tajikistan in turn suffers from very limited resources of other forms of energy, but above all from food insecurity. It is largely dependent on its neighbours for both energy and food supplies.

6.2.2   In 2008 over two million people (over a third of the population) there were considered to be food insecure and 0.75 million as ‘severely food insecure’. 64 % of the population is below the poverty line; only 7 % of its land is suitable for agriculture.

6.2.3   Unfortunately Uzbekistan and Tajikistan have not been good neighbours, which led to a vicious circle of deprivation and counter-deprivation as in turn export bans on energy and water were imposed, the latter not least to generate domestic supplies of electricity, which was still only available in Dushanbe for two hours a day at a time of severe cold.

6.3   That crisis demonstrated just how important a holistic strategy, covering environmentally sound usage of natural resources, poverty alleviation and above all food security, is to promote the sustainable economic growth of Central Asia as a whole. Nevertheless the Committee welcomes the fact that the EU is already very heavily involved in helping Tajikistan and its neighbours to meet such crises.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  OJ C 211, 19.8.2008, p. 82.

1

(2)  Centre for European Policy Studies.

2

(3)  Organisation for Security and Co-operation in Europe, the only international political and institutional link that couples Europe with all of the former USSR.

3

(4)  COM(2006) 763 final.

4

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/55 |
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25.8.2011

EN

Official Journal of the European Union

C 248/55

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Opinion of the European Economic and Social Committee on ‘Towards an EU-Mercosur Association Agreement: civil society’s contribution’ (own-initiative opinion)

2011/C 248/09

Rapporteur: Mr ZUFIAUR

On 16 September 2010 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on

Towards an EU-Mercosur Association Agreement: the contribution of organised civil society.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 25 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 89 votes to 1, with 3 abstentions.

1.   Summary and recommendations

1.1   The EESC believes that an Association Agreement (AA) between Mercosur and the EU - if the current stumbling blocks in areas such as agriculture, intellectual property and sustainable development are overcome - would bring immense opportunities and benefits of all kinds for both parties, at a time when enormous changes are taking place in terms of the roles of global players and when we are facing global challenges of a geo-strategic, environmental and social nature and challenges regarding energy and governance, and in view of the need urgently to implement in-depth reforms of the economic model, as the means of overcoming a systemic crisis unparalleled since the 1930s.

1.2   The EESC believes that an agreement will only be possible if it is balanced, if it benefits both parties and if it does not sacrifice any sector (such as the agricultural or industrial sectors), region or country. Under no circumstances must the AA be based on a bad agreement. The Committee therefore calls upon the negotiating parties to show the political will required to make an Association Agreement possible and to make the utmost effort to overcome the differences which relate, in particular, to the fundamental pillar of the AA, i.e. trade issues. It therefore urges that all possible formulae and mechanisms be used to that end: the recognition of disparities, flanking and countervailing measures, the establishment of exceptions, development plans to support the sectors most affected, the promotion of investments, innovation policies and countervailing, transitional and future-developments clauses. Furthermore, the flanking measures should involve all EU policies.

1.3   The EESC calls upon the negotiating parties, and the European Union in particular, to consider the high political and economic cost of not reaching an agreement and the missed opportunity that this would represent.

1.4   The EESC believes that it is crucial that the AA be ambitious and deal with all aspects of the EU's relations with Mercosur. It is therefore important to deal with the genuine obstacles facing companies by harmonising regulation and the impact on non-trade barriers. Specifically, the AA should have a social, labour and environmental dimension that pervades the entire Agreement. This dimension should guarantee economic relations in line with the social and environmental objectives of the agreement, without prejudice to the rules and guarantees governing sustainable development. It should also enshrine the parties' commitment to fundamental standards regarding social and labour rights, including international declarations, such as those of the ILO, which stipulate that the violation of fundamental principles and rights at work cannot be used as a legitimate comparative advantage in international trade.

1.5   The EESC calls for Mercosur's Economic and Social Consultation Forum (FCES) and the EESC itself – as the bodies representing civil society in the two regions – to be involved in the negotiations, in the impact assessments of the AA and in the proposals arising therefrom (the EESC considers it crucial to analyse a priori the impact of a potential AA and establish mechanisms for the ex-post verification of compliance and the development of the issues agreed upon), in drawing up a specific chapter in the agreement focusing on the social, labour and environmental dimension, and to be able to participate in the eventual agreement through the creation of a Joint Consultative Committee made up of the two bodies representing the parties' organised civil societies (1).

2.   Introduction

2.1   The negotiations between the EU and Mercosur on an Association Agreement (AA) stalled in 2004 due to significant differences between the parties regarding access to the markets and their expectations for the outcome of the Doha Development Round (DDR). Informal contacts in 2009 showed that the parties' positions had changed, enabling them to conclude that there were new opportunities to reach agreement, and hence the EU-LAC Summit of May 2010 decided that negotiations should be resumed. It needed to be an ambitious AA, the trade dimension of which would include not just trade in goods, but also services, investments, public procurement, intellectual property (including denominations of origin), trade facilitation, health and plant-health measures, trade and sustainable development, competition and trade-protection instruments.

3.   Potential and opportunities arising from the AA

3.1   With a combined population of over 700 million and trade worth more than EUR 84 billion annually, the conclusion of an AA between the EU and Mercosur would make it possible to create a large area of economic integration, which could have beneficial effects for both parties and create positive spill-overs, particularly for the rest of Latin America.

3.2   The EU, taken as a whole, is the world's largest economy, and the Mercosur bloc is amongst the world's six largest economies. It is also an extremely dynamic region, which has enjoyed high annual economic growth rates in recent years, up to 7 % in Brazil and 9 % in Argentina, Uruguay and Paraguay. Mercosur is also developing a more diversified economic base, with a major agri-food component, but also with a growing industrial base with considerable technology and energy-related resources.

3.3   The European Union is Mercosur's largest trading partner, followed by the United States. In 2010, the EU's imports from Mercosur totalled around EUR 44 billion and its exports more than EUR 40 billion. It should be stressed that EU exports to Mercosur already equal those to India and exceed those to Canada and South Korea. Furthermore, EU investments in Mercosur are higher than its investments in China, India and Russia put together.

3.4   To a large extent, the economies of the EU and Mercosur complement one another, as is clearly reflected in the profile of the trade between them, with the EU essentially exporting manufactured goods, capital goods, transport equipment and chemical products, and importing food and energy products. However, trading patterns are changing rapidly on both sides. For example, the EU has considerably increased its exports of processed agricultural products and in turn Brazilian companies invested more in Europe in 2007-2008 than European companies did in Brazil. Securing an Association Agreement would therefore have enormous potential for wealth creation.

3.5   An AA with Mercosur would enable the EU to strengthen its economic and geopolitical ties with a strategic partner. By means of a bi-regional agreement, the EU would move ahead of other international competitors such as the USA and China. Furthermore, the AA would bolster the Strategic Partnership with Brazil – which does not cover trade – a country of particular importance in the geopolitical framework of international relations, since it is a member of the two key mechanisms coordinating the interests of the emerging economies – BRIC and IBSA (2). All of this would lead to greater integration, firstly of South America and then of Latin America as a whole, a continent with crucial reserves of energy, food and water, three resources which will be vital in the 21st century. All in all, the AA could help to mitigate the economic and geopolitical decline of the Atlantic compared to the Pacific.

4.   Obstacles and weaknesses in the Association Agreement

4.1   Despite the unquestionable advantages of an AA between the EU and Mercosur, there are however difficulties with an agreement of this kind, which can be summed up as follows: 1) the complexity of the negotiating agenda, i.e. the trade content of the agreement; 2) the structural weaknesses affecting Mercosur's integration and hence free trade; 3) the social and environmental dimension of the AA; 4) the degree of political will amongst the parties to reach an agreement and hence the willingness to discuss all possible uses of compensatory mechanisms, inside and outside of the agreement, in order to be able reach it. The last two subjects are discussed in points 5 and 7 of this opinion respectively.

4.1.1   In terms of trade issues, the difficulties are well known. From the European point of view, they relate mainly to the Mercosur countries' agri-food sectors, as shown in the Commission's recent impact assessments (3). In particular, a serious negative impact is feared in sectors such as sugar, beef, chicken and pork, fruit and vegetables. There is still believed to be excessive protectionism in relation to industrial goods (automobiles, chemical products) and some processed agricultural products (including wine); a risk of non-compliance with rules on the protection of designations of origin; a relatively low level of enforcement of food safety and environmental rules and a lack of full transparency in public contracts. Following the latest negotiation rounds, the parties' positions are more favourable to an agreement on issues such as trade and sustainable development and issues relating to rules of origin.

4.1.2   From Mercosur's point of view too, agriculture is the most important issue. In 2004, Europe was offering – once the transitional periods were over – to liberalise 86.25 % of total imports of agricultural goods. It is likely that the threshold for negotiation will be higher on this occasion. The possibility of setting quotas makes negotiations easier. The risks pointed out by the European agricultural sectors could be alleviated if the negotiation of the AA includes a demand for reasonable compliance with the same standards – environmental, food safety, animal welfare etc. – for European products and for products imported from Mercosur. Furthermore, the AA should not increase food dependency in the EU and should provide for the instruments required to prevent an intensive and unsustainable agricultural model. With regard to industrial products, where the barriers are less significant, agreement seems to be more likely, as in the case of the EU's agreement with Korea on the automobile industry, for example. Finally, other issues, such as intellectual property, which are particularly sensitive for certain Mercosur countries such as Brazil, could be subject to future-developments clauses or transitional clauses, on the basis of the agreement in the WTO. In this regard, the EESC believes that, amongst other initiatives, an industrial property programme could be drawn up, to promote technology transfer and to establish a viable system of patents between the EU and Mercosur, which could be extended to the whole of Latin America.

4.1.3   The EESC believes that, despite the difficulties, conditions are better than have previously been the case for achieving, overall, a balanced agreement which benefits both parties and is not at the expense of any sector, region or country (4).

4.2   Mercosur's structural weaknesses have historically been a major stumbling block for the AA. These include, in particular, its insufficient common networks and structures, in an area three times the size of the EU; the low level of intra-regional trade (15 % in Mercosur, 45 % in NAFTA, 66 % in the EU) and the predominance of extra-regional trade; an incomplete customs union; the limited coordination of macroeconomic policies and the weakness of regional institutions.

4.2.1   Over recent years, particularly since 2003 - as a result of the impetus provided by what appeared to be the imminent conclusion of an agreement between the EU and Mercosur - there has been considerable revitalisation of Mercosur's regional integration process, with initiatives such as the establishment of common policies in areas such as energy, the exploitation of oil and gas resources and the creation of communications infrastructures, the conclusion of a common automotive policy between Argentina and Brazil and the creation of Mercosur's Structural Convergence Fund (FOCEM). A strategic plan for overcoming asymmetries in the internal market has also been adopted and preferential and differentiated treatment measures have been established for Paraguay and Uruguay.

4.2.2   Furthermore, in 2000 the Mercosur governments set up the Macroeconomic Monitoring Group to monitor a range of macroeconomic convergence parameters and to draw up common methodologies for using them.

4.2.3   All of this has helped to expand intra-regional trade, improve the quality of production and attract new flows of foreign direct investment.

4.2.4   Mercosur has also been acquiring a stronger political dimension in recent years. It has created arbitration and review courts, it has progressed from being an administrative secretariat to a technical secretariat, it has signed a human rights protocol and has created a Mercosur Parliament (Parlasur) and it has appointed its first High Representative-General. However, the economic integration process is still weak, there are many trade disputes taking place and it is still at a very early stage from an institutional point of view.

4.2.5   Worthy of particular note is the fact that, in August 2010, Mercosur finally adopted a new Common Customs Code (containing almost 200 articles), which includes the removal of the double common external tariff (CET) paid for products moving from one country to another. This requires the adoption of a common trade policy and the harmonisation of other elements such as special import arrangements and trade protection instruments. Customs management IT systems will also have to be interconnected and a mechanism for gathering and distributing CET revenue will have to be created. This progress on customs union is an extremely important factor in terms of facilitating EU-Mercosur negotiations.

4.2.6   The conclusion of an AA could speed up Mercosur's whole process of economic integration, internal market regulation and institutional consolidation.

5.   Impact of the Association Agreement and countervailing measures

5.1   A study commissioned by the European Commission has examined the impact of trade liberalisation between the EU and Mercosur, both in relation to the AA as a whole and in relation to three specific sectors: agriculture, automobiles and forestry. The study analyses the potential positive and negative impact of the AA and proposes measures and recommendations to enhance the former and to prevent or mitigate the latter, in relation to the agreement as a whole and in relation to the sectors analysed.

5.2   The EESC recommends that the negotiating parties take account of these flanking measures both in the commercial content of the agreement and by means of the cooperation component and the joint programmes between the EU and Mercosur. It also believes that these elements should be included amongst the demands of Mercosur's Economic and Social Consultation Forum (FCES) and the EESC during the AA negotiations.

5.3   The EESC believes that, in order to facilitate the AA, the agreement could include future-developments clauses so that certain aspects of the bi-regional agreement can be expanded upon at later stages.

5.4   The EESC believes that impact assessments should attach more importance, firstly, to the participation of experts and organisations from the partner country in the agreement and, secondly, to the identification of social and environmental risks, which are currently seen merely as a supplement to the economic assessment (5), including the issue of the concentration of the wealth generated by the agreement and its uneven distribution.

6.   Sustainable development in the Association Agreement

6.1   The EESC believes that running through the entire Association Agreement between the EU and Mercosur should be a social, labour and environmental dimension, as an integral part of an agreement aimed at promoting sustainable development for both blocs. This dimension should complement the economic and commercial dimension of the AA.

6.1.1   This is in line with the official positions of the governing bodies of the EU and Mercosur (6) which are in favour of trade liberalisation being accompanied by social and environmental commitments and actions.

6.1.2   Accordingly, the EESC wants the AA to include the social and environmental requirements to be met in order to ensure that the trade and economic relationship promotes economic and social cohesion, is consistent with a sustainable development strategy and enhances the competitiveness of the local productive fabric (SMEs, the social economy and microenterprises) in view of its capacity to generate employment.

6.1.3   The EESC believes that the social and environmental dimension affects the whole of the AA. It believes that the trade component should include aspects relating to the protection of human rights and of labour, social and environmental rights, and that a specific section should be dedicated to issues relating to ‘trade and sustainable development’, which would include:

| — | excluding illegally obtained products (such as fish and wood) from commercial flows; |
| --- | --- |

—

excluding illegally obtained products (such as fish and wood) from commercial flows;

| — | including fair trade and corporate social responsibility initiatives in trade and investment programmes; |
| --- | --- |

—

including fair trade and corporate social responsibility initiatives in trade and investment programmes;

| — | giving a commitment to the periodic monitoring of the impact of trade relations on social and environmental issues; |
| --- | --- |

—

giving a commitment to the periodic monitoring of the impact of trade relations on social and environmental issues;

| — | not allowing derogation from social or environmental protection laws, in order to prevent unfair advantages in international trade; |
| --- | --- |

—

not allowing derogation from social or environmental protection laws, in order to prevent unfair advantages in international trade;

| — | preventing deforestation. |
| --- | --- |

—

preventing deforestation.

7.   The strategic components of the EU-Mercosur Association Agreement

7.1   Decisive political will is crucial: firstly, in drawing up and boosting an AA which is not just a free trade agreement but also an overall strategic agreement that provides long-term benefits for both sides in terms of development, security, migration and environmental challenges; secondly, to use all existing mechanisms to take account of the disparities between the two regions, to reduce the negative impact of liberalisation on certain sectors, to bring Mercosur's integration process back up to speed and to establish social participation and transparency as key factors in the bi-regional negotiations.

7.2   The AA provides a great opportunity to progress towards overall strategic objectives of interest to both regions.

7.3   Firstly, it would provide a means for maintaining an international economic and political presence at a time when economic and political power is shifting from the Atlantic to the Pacific. Mercosur does not have agreements with the United States or with the big Asian powers, although it has signed free trade agreements with Chile and with members of the Andean Community. Furthermore, Venezuela is in the process of being incorporated into the bloc. Outside South America, it has signed agreements, including free trade agreements, with South Africa, India, Pakistan, Turkey, Egypt, Morocco and Israel. For its part, the EU has bilateral agreements with Mexico, Chile, Central America, Peru, Colombia, South Africa, the Caribbean and South Korea. In short, an AA between the EU and Mercosur would lead to the creation of a bi-regional bloc with considerable clout on the new world stage.

7.3.1   The AA would also be very important in terms of moving towards greater integration of the whole Latin American region. The agreement would be highly likely to attract other Latin American and Caribbean sub-regional groupings, as well as countries such as Mexico and Chile. A ‘strategic alliance’ between the two regions - between the 27 Member States of the EU and the 33 countries of Latin America and the Caribbean - would carry significant weight within multilateral bodies. It would lead to greater influence in the G-20, of which three Latin American countries (Brazil, Mexico and Argentina) and five European countries (Germany, France, the United Kingdom, Italy and Spain), as well as the EU itself, are members.

7.3.2   Finally, the Association Agreement with Mercosur could provide the EU with a strategic ally in its aim of becoming a global advocate of a protected environment. The environment is now one of the issues of greatest concern to the Member States, the public at large and the multilateral system. The EU is a pioneer of green policies and technologies. Natural resources are one of the main strengths of Latin America, and of Mercosur specifically, but this is also one of the regions most threatened by climate change, as a result of certain intensive farming practices, amongst other things.

7.3.3   If this objective is to receive sufficient support, significant content should be included in relation to ‘energy, the environment, science and technology and innovation’. These issues should be priorities in the component dealing with development cooperation. The EU's sixth framework programme for research and technological development has already carried out numerous projects with members of Mercosur. That cooperation should now be an integral part of the AA. The considerable funds available under the 7th framework programme – EUR 50 billion – could make an enormous contribution to this.

8.   Civil society and the Association Agreement

8.1   The EESC believes that the inter-regional nature of the negotiations and the content of the AA is a fundamental and distinctive element of these negotiations and provides a benchmark for economic relations in a world which is increasingly open to trade.

8.2   The EESC re-affirms its commitment to the principles of transparency and participation, both in the negotiation process and in the implementation of the AA. To this end, it wishes to be kept fully informed during the negotiation process and to have access to the negotiators in order to communicate the proposals of the FCES and the EESC.

8.3   The EESC also asks to be involved in drawing up impact assessments so that it can make recommendations on measures aimed at preventing or reducing the negative impact of the trade liberalisation process and calls for a monitoring centre of a technical nature to be established, once the agreement has been signed, to constantly assess the economic, social and environmental impact of the Association Agreement and to propose tangible measures.

8.4   In accordance with the joint positions of the EESC and the FCES – and pre-agreements reached during the negotiations prior to 2004 – we call for the creation of a Joint civil society Consultative Committee under the Association Agreement, with membership being divided equally between the EESC and the FCES and with obligatory consultative responsibilities covering all areas of the AA, including the trade chapter and the monitoring of sustainable development issues.

8.5   The EESC deems it essential that the AA include a social dimension, consistent with an AA that goes beyond commercial aspects and is ultimately intended to increase social cohesion. In particular, this should cover the agreement's impact on employment, the protection of the interests of local populations and the most disadvantaged groups, the promotion of and respect for human rights, environmental protection and the rights of immigrants and of workers in general. In this regard, it should include international declarations, such as those of the ILO, which stipulate that breaches of fundamental labour principles and rights must not be invoked or used to gain legitimate comparative advantage in international trade. The future agreement must therefore generate high-quality jobs, improve the social conditions of workers and make a significant contribution to a more even distribution of wealth.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  See the Asunción Declaration on negotiations for an EU-Mercosur Association Agreement signed by the FCES and the EESC on 22 March 2011, http://www.eesc.europa.eu/resources/docs/2011_decl_en.pdf.

1

(2)  BRIC: Brazil, Russia, India, China. IBSA: India, Brazil, South Africa.

2

(3)  European Commission Directorate-General for Agriculture and Joint Research Centre of April 2011.

3

(4)  As indicated by the Heads of State and Government at the EU-Mercosur Summit in May 2010.

4

(5)  Sustainability impact assessments (SIA) and EU trade policy. E. Pichenot (OJ C 218, 23.7.2011, p. 14-18).

5

(6)  Buenos Aires Declaration of Mercosur Social Affairs Ministers, July 2006. European Councils of February 2005 and 2006.

6

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/60 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/60

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Opinion of the European Economic and Social Committee on ‘Intercultural dialogue and the Roma: the key role of women and education’ (additional opinion)

2011/C 248/10

Rapporteur: Ms SIGMUND

On 24 February 2009 the European Economic and Social Committee, acting under Rule 29(A) of the Implementing Provisions of the Rules of Procedure, decided to draw up an additional opinion on

Intercultural dialogue and the Roma: the key role of women and education.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 127 votes to 2.

1.   Conclusions and recommendations

| 1.1 | With regard to the following proposals, the Committee takes the final sentence of the Commission's Communication of 5 April 2011 (1) as its principle for action. |
| --- | --- |

1.1

With regard to the following proposals, the Committee takes the final sentence of the Commission's Communication of 5 April 2011 (1) as its principle for action.

| 1.2 | It emphasises that from now, instead of developing strategies for the Roma and carrying out analyses on them, specific measures must be developed together with the Roma and the organisations representing them. |
| --- | --- |

1.2

It emphasises that from now, instead of developing strategies for the Roma and carrying out analyses on them, specific measures must be developed together with the Roma and the organisations representing them.

| 1.3 | Within the limits of its competences, the Committee is ready to participate in such measures or, as previously, to take its own initiatives in close cooperation with Roma organisations (e.g. hearings, conferences). |
| --- | --- |

1.3

Within the limits of its competences, the Committee is ready to participate in such measures or, as previously, to take its own initiatives in close cooperation with Roma organisations (e.g. hearings, conferences).

| 1.4 | The Committee will develop its relations with institutions, organisations and other bodies active in this field and work towards joint action (2). |
| --- | --- |

1.4

The Committee will develop its relations with institutions, organisations and other bodies active in this field and work towards joint action (2).

| 1.5 | The Committee sees intercultural dialogue as a suitable instrument to achieve integration, or inclusion, of the Roma, with regard both to the role played by Roma women in this process and to education. |
| --- | --- |

1.5

The Committee sees intercultural dialogue as a suitable instrument to achieve integration, or inclusion, of the Roma, with regard both to the role played by Roma women in this process and to education.

| 1.6 | Where possible, the Committee will endeavour to participate in local initiatives - not least through its existing networks - or to launch them itself. |
| --- | --- |

1.6

Where possible, the Committee will endeavour to participate in local initiatives - not least through its existing networks - or to launch them itself.

2.   Background and approach

| 2.1 | In its exploratory opinion of 9 July 2008 (3), the EESC made a number of recommendations on how to step up the integration of the Roma minority in Europe. A two-track approach to the education of Roma children, coordinated between EU and national levels, was recommended, and the Commission was urged to implement an overall strategy and fund awareness-raising campaigns. Active involvement of Roma representatives in the process was recognised as the only way forward. |
| --- | --- |

2.1

In its exploratory opinion of 9 July 2008 (3), the EESC made a number of recommendations on how to step up the integration of the Roma minority in Europe. A two-track approach to the education of Roma children, coordinated between EU and national levels, was recommended, and the Commission was urged to implement an overall strategy and fund awareness-raising campaigns. Active involvement of Roma representatives in the process was recognised as the only way forward.

| 2.2 | The European Commission (4) took up this recommendation, noting that the EESC (5) had identified ‘the mainstreaming of Roma issues into all relevant European and national policies ... [as] the most promising way to achieve inclusion.’ |
| --- | --- |

2.2

The European Commission (4) took up this recommendation, noting that the EESC (5) had identified ‘the mainstreaming of Roma issues into all relevant European and national policies ... [as] the most promising way to achieve inclusion.’

| 2.3 | The principle behind the present additional opinion is that of intercultural dialogue, based on the view that both parties – in this case the Roma minority and the non-Roma population in Europe – should engage voluntarily in impartial dialogue. Such intercultural dialogue requires us to look at both similarities and differences in traditions and lifestyles, in order to better understand what exactly is happening and to design workable solutions. |
| --- | --- |

2.3

The principle behind the present additional opinion is that of intercultural dialogue, based on the view that both parties – in this case the Roma minority and the non-Roma population in Europe – should engage voluntarily in impartial dialogue. Such intercultural dialogue requires us to look at both similarities and differences in traditions and lifestyles, in order to better understand what exactly is happening and to design workable solutions.

| 2.4 | In terms of content, this opinion focuses on education, the first pillar of integration (6), and the one which the EESC sees as being the most important; in the same context, it also discusses the particular role of women in integration of the Roma. |
| --- | --- |

2.4

In terms of content, this opinion focuses on education, the first pillar of integration (6), and the one which the EESC sees as being the most important; in the same context, it also discusses the particular role of women in integration of the Roma.

| 2.5 | The Committee supports the European Platform for Roma Inclusion strategy, and in particular the ten Common Basic Principles on Roma Inclusion established by the 2009 platform (7). |
| --- | --- |

2.5

The Committee supports the European Platform for Roma Inclusion strategy, and in particular the ten Common Basic Principles on Roma Inclusion established by the 2009 platform (7).

3.   General comments

| 3.1 | One of the slogans commonly used to describe the European integration project is ‘unity in diversity’. In this context the Roma are an impressive example of European cultural diversity, an aspect which is further enriched by the fact that the Roma (8) themselves embody diverse cultural identities (9). |
| --- | --- |

3.1

One of the slogans commonly used to describe the European integration project is ‘unity in diversity’. In this context the Roma are an impressive example of European cultural diversity, an aspect which is further enriched by the fact that the Roma (8) themselves embody diverse cultural identities (9).

| 3.2 | Since 1999 (10) the Committee has taken a broader view of culture, as embracing not only art, tradition and cultural heritage, but also - for example - education, science and research. Seen in this light, education is also of particular relevance to intercultural dialogue, especially with the Roma. |
| --- | --- |

3.2

Since 1999 (10) the Committee has taken a broader view of culture, as embracing not only art, tradition and cultural heritage, but also - for example - education, science and research. Seen in this light, education is also of particular relevance to intercultural dialogue, especially with the Roma.

| 3.3 | The Committee refutes arguments against multiculturalism (11); although some of the points made are valid, they are open to misunderstanding given that they do not apply to a European community held together by a shared ‘core culture’ (12). |
| --- | --- |

3.3

The Committee refutes arguments against multiculturalism (11); although some of the points made are valid, they are open to misunderstanding given that they do not apply to a European community held together by a shared ‘core culture’ (12).

| 3.4 | In line with this view of culture as an acknowledgement of shared values, we might well conclude that European identity has primarily to do with cultural identity, as confirmed by Article 2 of the Treaty on European Union, which sets out the EU's values. Intercultural dialogue is therefore an appropriate means of making a long-term contribution to integration in general and the Roma in particular. The Committee sees tolerance as being of particular importance. |
| --- | --- |

3.4

In line with this view of culture as an acknowledgement of shared values, we might well conclude that European identity has primarily to do with cultural identity, as confirmed by Article 2 of the Treaty on European Union, which sets out the EU's values. Intercultural dialogue is therefore an appropriate means of making a long-term contribution to integration in general and the Roma in particular. The Committee sees tolerance as being of particular importance.

| 3.5 | Tolerance means other people's right to be different, both in terms of exercise and acceptance of this right. This applies equally to Roma and non-Roma. However, in intercultural dialogue, there is yet another fundamental dimension to tolerance: it is not just about resolving potential conflicts between differing standards, but it also requires sensitivity to other ways of life, thus creating the empathy which is needed for coexistence. |
| --- | --- |

3.5

Tolerance means other people's right to be different, both in terms of exercise and acceptance of this right. This applies equally to Roma and non-Roma. However, in intercultural dialogue, there is yet another fundamental dimension to tolerance: it is not just about resolving potential conflicts between differing standards, but it also requires sensitivity to other ways of life, thus creating the empathy which is needed for coexistence.

| 3.6 | The initiatives by the European Commission and Parliament to improve the situation of the Roma (13) are an excellent means of creating the legislative and political framework for specific measures and programmes; however they are intrinsically top-down measures which will not achieve the desired outcomes unless accompanied by corresponding bottom-up initiatives by civil society, if need be with support from public bodies at national, regional and local level. |
| --- | --- |

3.6

The initiatives by the European Commission and Parliament to improve the situation of the Roma (13) are an excellent means of creating the legislative and political framework for specific measures and programmes; however they are intrinsically top-down measures which will not achieve the desired outcomes unless accompanied by corresponding bottom-up initiatives by civil society, if need be with support from public bodies at national, regional and local level.

| 3.7 | In view of this, the Committee welcomes the Commission's latest communication, and in particular supports its view that action is now needed; this concerns not only public authorities at national, regional and local level, but also and above all civil society stakeholders on both sides. |
| --- | --- |

3.7

In view of this, the Committee welcomes the Commission's latest communication, and in particular supports its view that action is now needed; this concerns not only public authorities at national, regional and local level, but also and above all civil society stakeholders on both sides.

| 3.8 | At both Community and international levels, considerable sums have been spent on the integration of the Roma; however the results have not been by any means proportionate to the amounts invested so far. In the Committee's view, this has to do partly with the fact that although numerous initiatives, conferences and meetings have taken place and continue to take place at Community level, many of them are unsatisfactory with respect to implementation of the measures which they propose, despite being valid in terms of content; among other things, this is due to a lack of involvement at local level of the Roma concerned and their representative organisations. |
| --- | --- |

3.8

At both Community and international levels, considerable sums have been spent on the integration of the Roma; however the results have not been by any means proportionate to the amounts invested so far. In the Committee's view, this has to do partly with the fact that although numerous initiatives, conferences and meetings have taken place and continue to take place at Community level, many of them are unsatisfactory with respect to implementation of the measures which they propose, despite being valid in terms of content; among other things, this is due to a lack of involvement at local level of the Roma concerned and their representative organisations.

| 3.9 | Acting within its competences, the Committee would like to help remedy this mismatch between good strategic proposals and inadequate tactical implementing measures. It will therefore endeavour to capitalise on its role as a bridge to European citizens and use its networks and the organisations represented by its members in local events to help ensure that there is greater willingness to accept available services and meet commitments. |
| --- | --- |

3.9

Acting within its competences, the Committee would like to help remedy this mismatch between good strategic proposals and inadequate tactical implementing measures. It will therefore endeavour to capitalise on its role as a bridge to European citizens and use its networks and the organisations represented by its members in local events to help ensure that there is greater willingness to accept available services and meet commitments.

4.   The role of Roma women

| 4.1 | Various reports show that in Roma families women generally do most of the child-rearing before school (14), whereas fathers are also involved once children start school. Bringing up girls, even after they have started school, tends to remain the responsibility of mothers. However, since children's most formative years are the pre-school years, it is important for all children to already be prepared for school at home. Measures are therefore needed to persuade mothers of the importance of their children's - especially daughters' - education and encourage them to give their children specific preparation for school. |
| --- | --- |

4.1

Various reports show that in Roma families women generally do most of the child-rearing before school (14), whereas fathers are also involved once children start school. Bringing up girls, even after they have started school, tends to remain the responsibility of mothers. However, since children's most formative years are the pre-school years, it is important for all children to already be prepared for school at home. Measures are therefore needed to persuade mothers of the importance of their children's - especially daughters' - education and encourage them to give their children specific preparation for school.

| 4.2 | However, these measures are only likely to succeed if services are available (especially at local level) that take the various traditions into account. In this context, public authorities have a duty to provide appropriate training programmes and prevent segregation. |
| --- | --- |

4.2

However, these measures are only likely to succeed if services are available (especially at local level) that take the various traditions into account. In this context, public authorities have a duty to provide appropriate training programmes and prevent segregation.

| 4.3 | In addition, capacity-building programmes to promote skills and knowledge transfer are needed in order to equip Roma women so that they are in a real position to play this key role. |
| --- | --- |

4.3

In addition, capacity-building programmes to promote skills and knowledge transfer are needed in order to equip Roma women so that they are in a real position to play this key role.

| 4.4 | In traditional Roma families several generations live together under one roof; in such households, grandparents are also influential in child-rearing - sometimes more so than parents - and it is therefore important to involve grandparents too, since they serve as an example to the next generations. |
| --- | --- |

4.4

In traditional Roma families several generations live together under one roof; in such households, grandparents are also influential in child-rearing - sometimes more so than parents - and it is therefore important to involve grandparents too, since they serve as an example to the next generations.

| 4.5 | If such specific measures and initiatives succeed in mobilising the capacity of Roma women to shape the future of their children, one additional benefit will be that they help to overcome stereotypes about Roma women. Too often, Roma women are characterised as having a submissive role, whether as victims of discrimination, domestic violence, or other forms of abuse or disrespect. Of course, such perceptions are important and should not be ignored. And of course appropriate steps must be taken to remedy these problems. However, the Committee feels it is also important to highlight the active role of Roma women in their communities and their importance as active players outside their communities, through their participation in intercultural dialogue. |
| --- | --- |

4.5

If such specific measures and initiatives succeed in mobilising the capacity of Roma women to shape the future of their children, one additional benefit will be that they help to overcome stereotypes about Roma women. Too often, Roma women are characterised as having a submissive role, whether as victims of discrimination, domestic violence, or other forms of abuse or disrespect. Of course, such perceptions are important and should not be ignored. And of course appropriate steps must be taken to remedy these problems. However, the Committee feels it is also important to highlight the active role of Roma women in their communities and their importance as active players outside their communities, through their participation in intercultural dialogue.

| 4.6 | The Committee will support initiatives to support Roma women's own awareness of this identity, and work within its capacity to ensure that Roma women have access to information or means that help them play their part in their families' integration. |
| --- | --- |

4.6

The Committee will support initiatives to support Roma women's own awareness of this identity, and work within its capacity to ensure that Roma women have access to information or means that help them play their part in their families' integration.

| 4.7 | Thus where it can, the Committee will take part in local events to seek ways not only of promoting the dissemination of specific information, but also of encouraging participation. |
| --- | --- |

4.7

Thus where it can, the Committee will take part in local events to seek ways not only of promoting the dissemination of specific information, but also of encouraging participation.

5.   Education

| 5.1 | The goal is to secure social inclusion of the disadvantaged groups of the Roma community, without the loss of their Roma cultural identity. Good education is of utmost importance, for two reasons. Firstly, education can and should provide citizens with a set of basic common values that enable different ethnic groups to live successfully alongside one another. One such value is openness towards other cultures. Secondly, education can be an important integration tool in itself, as it ideally implies interaction between different cultures. Although it is never too late to acquire new knowledge and new skills, it is important that good education should start as early in life as possible. A child's strong self-image and awareness of his or her role in a bigger group and ultimately in society are key to success later on in life. |
| --- | --- |

5.1

The goal is to secure social inclusion of the disadvantaged groups of the Roma community, without the loss of their Roma cultural identity. Good education is of utmost importance, for two reasons. Firstly, education can and should provide citizens with a set of basic common values that enable different ethnic groups to live successfully alongside one another. One such value is openness towards other cultures. Secondly, education can be an important integration tool in itself, as it ideally implies interaction between different cultures. Although it is never too late to acquire new knowledge and new skills, it is important that good education should start as early in life as possible. A child's strong self-image and awareness of his or her role in a bigger group and ultimately in society are key to success later on in life.

| 5.2 | Policies should aim at providing and guaranteeing equal access to quality education for both Roma and all other minority groups, as the ultimate goal must be to equip them with skills, including social competences, for the labour market. People must be put in a position to take control of their own lives and to function as responsible citizens who are aware of their rights and duties and are able to exercise them. |
| --- | --- |

5.2

Policies should aim at providing and guaranteeing equal access to quality education for both Roma and all other minority groups, as the ultimate goal must be to equip them with skills, including social competences, for the labour market. People must be put in a position to take control of their own lives and to function as responsible citizens who are aware of their rights and duties and are able to exercise them.

| 5.3 | As well as being a social problem, inadequate participation in the labour market also has a significant financial impact. In view of this, while spending on education does represent a cost, in essence it must be seen not just as expenditure but primarily as a worthwhile investment in the future. |
| --- | --- |

5.3

As well as being a social problem, inadequate participation in the labour market also has a significant financial impact. In view of this, while spending on education does represent a cost, in essence it must be seen not just as expenditure but primarily as a worthwhile investment in the future.

| 5.4 | The Council of Europe's Education of Roma Children initiative includes a training programme for mediators and school assistants which the Commission is also involved in. The Committee is willing to act as an intermediary, as part of future institutional cooperation in this field. For example, it could use its existing channels of communication to help publicise the programme and its achievements or to present examples of best practice from the programme in countries not yet covered by the Council of Europe's project. |
| --- | --- |

5.4

The Council of Europe's Education of Roma Children initiative includes a training programme for mediators and school assistants which the Commission is also involved in. The Committee is willing to act as an intermediary, as part of future institutional cooperation in this field. For example, it could use its existing channels of communication to help publicise the programme and its achievements or to present examples of best practice from the programme in countries not yet covered by the Council of Europe's project.

| 5.5 | There is known to be a disproportionate number of early school-leavers among the Roma compared with non-Roma students (15); we therefore need to consider steps that can be taken to improve the situation, in cooperation with the relevant authorities. |
| --- | --- |

5.5

There is known to be a disproportionate number of early school-leavers among the Roma compared with non-Roma students (15); we therefore need to consider steps that can be taken to improve the situation, in cooperation with the relevant authorities.

6.   Education: examples at national level

| 6.1 | Most EU Member States have adopted strong anti-discrimination and equality legislation in order to comply with European standards. Unfortunately, discrimination is still practised and experienced at the local level, and national legislation often lacks mechanisms for bringing complaints and abolishing discriminatory practices where individuals feel they have been subjected to discrimination. It should also be noted that weak monitoring means that countries can get away with cosmetic changes that just worsen patterns of segregation. |
| --- | --- |

6.1

Most EU Member States have adopted strong anti-discrimination and equality legislation in order to comply with European standards. Unfortunately, discrimination is still practised and experienced at the local level, and national legislation often lacks mechanisms for bringing complaints and abolishing discriminatory practices where individuals feel they have been subjected to discrimination. It should also be noted that weak monitoring means that countries can get away with cosmetic changes that just worsen patterns of segregation.

| 6.2 | This is not to say that no EU country is committed to improving the availability of certain fundamental rights, including the right to education, to their Roma citizens or that no domestic judicial system is capable of upholding their rights. Certain local or national courts have ruled that segregatory practices against Roma children violate national anti-discrimination laws. As early as 2004 – before Bulgaria's accession to the EU – Bulgaria's Sofia District Court ruled against the Ministry of Education and the municipal administration, as well as school officials, for depriving Roma children of their right to equal education by practising segregation (16). However, such rulings are only in response to specific incidents and will not necessarily compel local authorities to alter discriminatory practices that in many European countries seem to be endemic features of the education system. |
| --- | --- |

6.2

This is not to say that no EU country is committed to improving the availability of certain fundamental rights, including the right to education, to their Roma citizens or that no domestic judicial system is capable of upholding their rights. Certain local or national courts have ruled that segregatory practices against Roma children violate national anti-discrimination laws. As early as 2004 – before Bulgaria's accession to the EU – Bulgaria's Sofia District Court ruled against the Ministry of Education and the municipal administration, as well as school officials, for depriving Roma children of their right to equal education by practising segregation (16). However, such rulings are only in response to specific incidents and will not necessarily compel local authorities to alter discriminatory practices that in many European countries seem to be endemic features of the education system.

| 6.3 | Hungary has mobilised considerable political commitment and resources to support measures for improving the socio-economic circumstances and participation of its Roma citizens, with education as a central concern (17). An important feature of Hungary's integration initiatives was that they were enacted within the framework of general educational policies. This is in contrast to other countries such as Romania and Bulgaria which have approached integration in a more ad hoc and patchy manner (18). Hungary's approach has flaws, however, as conflicts exist within education policy measures and between education policy and health, social, and housing policies, which has consequences for education; the potential for such conflicts should be noted and taken into account by all countries. |
| --- | --- |

6.3

Hungary has mobilised considerable political commitment and resources to support measures for improving the socio-economic circumstances and participation of its Roma citizens, with education as a central concern (17). An important feature of Hungary's integration initiatives was that they were enacted within the framework of general educational policies. This is in contrast to other countries such as Romania and Bulgaria which have approached integration in a more ad hoc and patchy manner (18). Hungary's approach has flaws, however, as conflicts exist within education policy measures and between education policy and health, social, and housing policies, which has consequences for education; the potential for such conflicts should be noted and taken into account by all countries.

| 6.4 | In this connection, the German model of intercultural education and learning should be given particular attention (joint learning by people from different ethnic backgrounds) (19). |
| --- | --- |

6.4

In this connection, the German model of intercultural education and learning should be given particular attention (joint learning by people from different ethnic backgrounds) (19).

7.   Summary

| 7.1 | In the context of efforts to ensure better integration of the Roma, it is regrettable that the Community's approach to integration is limited to third-country nationals, and is not applicable to the Roma, who are indeed generally EU citizens. |
| --- | --- |

7.1

In the context of efforts to ensure better integration of the Roma, it is regrettable that the Community's approach to integration is limited to third-country nationals, and is not applicable to the Roma, who are indeed generally EU citizens.

| 7.2 | It is all the more important to keep pointing out that the Roma - in theory at least – are entitled to enjoy all the rights and fundamental rights associated with EU citizenship. Obviously, the Roma have to meet their obligations as EU citizens, and failure to do so has legal consequences; at the same time, the system of penalties provided for should take effect in cases where they are denied the above-mentioned rights. |
| --- | --- |

7.2

It is all the more important to keep pointing out that the Roma - in theory at least – are entitled to enjoy all the rights and fundamental rights associated with EU citizenship. Obviously, the Roma have to meet their obligations as EU citizens, and failure to do so has legal consequences; at the same time, the system of penalties provided for should take effect in cases where they are denied the above-mentioned rights.

| 7.3 | The Committee once again emphasises its view that it is crucial to engage in intercultural dialogue with the Roma. By its very nature dialogue is always an interactive process which is based on equality between parties and allows participation. Intercultural dialogue can help to reduce prejudices and build trust. The Committee feels that overcoming prejudices and stereotypes on both sides is an essential prerequisite for specific steps to ensure more harmonious coexistence and genuinely equal opportunities. The Lisbon treaty has opened up new possibilities for the Committee in terms of developing structures for civil dialogue. In doing this work, the Committee will also strongly endeavour to put intercultural dialogue with the Roma on the right track. |
| --- | --- |

7.3

The Committee once again emphasises its view that it is crucial to engage in intercultural dialogue with the Roma. By its very nature dialogue is always an interactive process which is based on equality between parties and allows participation. Intercultural dialogue can help to reduce prejudices and build trust. The Committee feels that overcoming prejudices and stereotypes on both sides is an essential prerequisite for specific steps to ensure more harmonious coexistence and genuinely equal opportunities. The Lisbon treaty has opened up new possibilities for the Committee in terms of developing structures for civil dialogue. In doing this work, the Committee will also strongly endeavour to put intercultural dialogue with the Roma on the right track.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  ‘Now is the time to change good intentions into more concrete actions.’ (Commission Communication on An EU Framework for National Roma Integration Strategies up to 2020, COM(2011) 173 final).

1

An EU Framework for National Roma Integration Strategies up to 2020

(2)  See Appendix: ‘Initiatives, Programmes, Studies’ (http://www.eesc.europa.eu/resources/docs/SOC337_additional-info.pdf).

2

(3)  EESC exploratory opinion on Integration of minorities – Roma, point 5.3, (OJ C 27, 3.2.2009, p. 88).

3

Integration of minorities – Roma

(4)  Communication on The social and economic integration of the Roma in Europe, COM(2010) 133 final.

4

The social and economic integration of the Roma in Europe

(5)  EESC exploratory opinion on Integration of minorities – Roma, point 5.3, (OJ C 27, 3.2.2009, p. 88).

5

Integration of minorities – Roma

(6)  In connection with the four integration objectives set by the Commission: access to education, the right to employment, access to healthcare, and the right to housing together with associated basic residential services.

6

(7)

7

| 1. | Constructive, pragmatic and non-discriminatory policies |
| --- | --- |

1.

Constructive, pragmatic and non-discriminatory policies

| 2. | Explicit but not exclusive targeting |
| --- | --- |

2.

Explicit but not exclusive targeting

| 3. | Intercultural approach |
| --- | --- |

3.

Intercultural approach

| 4. | Aiming for the mainstream |
| --- | --- |

4.

Aiming for the mainstream

| 5. | Awareness of the gender dimension |
| --- | --- |

5.

Awareness of the gender dimension

| 6. | Transfer of evidence-based policies |
| --- | --- |

6.

Transfer of evidence-based policies

| 7. | Use of Community instruments |
| --- | --- |

7.

Use of Community instruments

| 8. | Involvement of regional and local authorities |
| --- | --- |

8.

Involvement of regional and local authorities

| 9. | Involvement of civil society |
| --- | --- |

9.

Involvement of civil society

| 10. | Active participation of the Roma. |
| --- | --- |

10.

Active participation of the Roma.

(8)  The term Roma is used here to refer to Roma, Sinti, travellers, Kalé, etc.

8

(9)  See also Committee of the Regions opinion CdR 178/2010 fin.

9

(10)  ESC Opinion on The role and contribution of civil society organisations in the building of Europe, OJ C 329, 17.11.1999, point 5.2.1.

10

The role and contribution of civil society organisations in the building of Europe

(11)  The multicultural society model is not characterised by binding common values and is essentially an agglomeration of coexisting groups.

11

(12)  See Europa ohne Identität? Die Krise der multikulturellen Gesellschaft, Goldmann Verlag, p. 181 by Bassam Tibi, Professor Emeritus, University of Göttingen.

12

Europa ohne Identität? Die Krise der multikulturellen Gesellschaft

(13)  See Appendix: ‘Initiatives, Programmes, Studies’ (http://www.eesc.europa.eu/resources/docs/SOC337_additional-info.pdf); Commission communication on An EU Framework for National Roma Integration Strategies up to 2020 (COM(2011) 173 final), and the report by MEP Lívia Járóka on The EU strategy on Roma inclusion (2010/2276(INI)),

13

An EU Framework for National Roma Integration Strategies up to 2020

The EU strategy on Roma inclusion

(http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+REPORT+A7-2011-0043+0+DOC+XML+V0//EN&language=EN).

(14)  See ‘I am a European Roma woman’ conference, held in Athens on 11 and 12 January 2010.

14

(15)  Roma Education Fund, Country assessments; http://www.romaeducationfund.hu/publications/country-assessments

15

Open Society Institute, No Data—No Progress, Country Findings, August 2010;

http://www.romadecade.org/files/downloads/General%20Resources/No%20Data%20No%20Progress%20Country%20Findings.pdf.

(16)  See: http://www.errc.org/cikk.php?cikk=2411&archiv=1.

16

(17)  See: Kezdi, G. & Suranyi, E., ‘A Successful School Integration Program’ Roma Education Fund Working Paper No 2, 2009. At: http://www.romaeducationfund.hu/sites/default/files/publications/a_succesful_school_integration_kezdi_suranyi.pdf.

17

(18)  See: European Roma Rights Centre, ‘The Impact of Legislation and Policies on School Segregation of Romani Children: A Study of Anti-Discrimination Law and Government Measures to Eliminate Segregation in Education in Bulgaria, Czech Republic, Hungary, Romania and Slovakia’ ERRC Report, February 2007. At: http://www.errc.org/en-research-and-advocacy-reports-intro-details.php?article_id=2743.

18

(19)  See Hanna Kiper, ‘Interkulturelle Pädagogik’ 1992, p. 161; Franz Hamburger, ‘Die Vielfalt der Kulturen als Herausforderung für den Bildungsauftrag der Schule’, Frankfurt/Main 1989.

19

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III Preparatory acts

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

472nd plenary session held on 15 and 16 June 2011

| 25.8.2011 | EN | Official Journal of the European Union | C 248/64 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/64

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Taxation of the Financial Sector’

COM(2010) 549 final

2011/C 248/11

Rapporteur: Mr Stasys KROPAS

On 7 October 2010, the Commission decided to consult the European Economic and Social Committee, under Article 113 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Taxation of the Financial Sector

COM(2010) 549 final.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June 2011), the European Economic and Social Committee adopted the following opinion by 102 votes to 16 with 28 abstentions.

1.   Conclusions and recommendations

1.1   The EESC welcomes the Commission's overall initiatives aiming to help restore growth, resilience and financial stability. The stability and effectiveness of the financial sector and thus the limitation of excessive risk taking, as well as the creation of right incentives for the financial sector institutions should be ensured by appropriate regulation and supervision. In this respect, the EESC has recently expressed its support to the development of a Bank Resolution Fund scheme as part of the framework for crisis management.

1.2   In the aftermath of the crisis, governments had to engage in fiscal consolidation efforts so as to be able to face the costs of the crisis and wider social and economic consequences. The EESC is of the opinion that the financial sector should contribute to these efforts in a fair and substantial way.

1.3   As emphasised in the Commission's Communication, an increasing number of Member States have already taken unilateral measures with regard to financial sector taxation. They have adopted different taxation schemes, with different tax bases, different effective tax rates and different scopes of application. The EESC believes that the tax base for such fiscal mechanisms should be harmonised and that double taxation relief measures should be coordinated. If the Commission adopted initiatives in this way, it should take into account the divergent impacts they may have on each individual Member State, the importance and robustness of domestic financial markets, the existing domestic tax frame and the new tax this Member State may have imposed on its financial sector in the aftermath of the crisis.

1.4   New levies, requirements and regulations could have a wide range of effects on the financial system and the whole economy. Therefore, their impact on the capital base and on the capacity of banks and financial institutions to play their role in the financing of the economy and SMEs in particular should be carefully evaluated. The total tax contribution of the EU financial sector should be compared to other sectors. The effects of additional taxes on the global competitive position of EU financial institutions have to be taken into consideration.

1.5   Since tensions on liquidity and solvency were pivotal elements in the run-up to the crisis the EESC recommends that any new tax on financial institutions should be designed in a way that takes into account the institutions' ability to pay and their ability to comply with new capital requirements.

1.6   In its impact study, the Commission should pay particular attention to the proportionality principle. This means that the administrative burden imposed on market operators and financial institutions as a result of compliance requirements should be maintained proportional to the underlying objective of this new tax. If the Commission envisaged introducing a new tax under the Financial Transaction Tax (FTT) model, then it should seek consistency with the policy it has developed in recent years to simplify tax procedures that are considered hurdles to post-trading. If it envisaged introducing a Financial Activities Tax (FAT), then the tax base should be designed in a way that is compatible with the information that is readily available to financial institutions in the existing financial reporting framework.

1.7   Whilst confirming the conclusions and recommendations presented in its opinion of 15 July 2010 in favour of the introduction of a financial transaction tax (FTT) (1), the EESC would like to emphasise that, given the risk of fostering the relocation of financial activities in non-EU financial centres, the introduction of a FTT at global level should be preferred over an EU-wide FTT. However, if it emerges that the adoption of a FTT at global level is not feasible, then the EESC would envisage the adoption of an EU FTT, taking into account the outcome of the European Commission impact assessment.

1.8   A Financial Activities Tax (FAT) may have similar shortcomings as the FTT, including a shifting effect. Investigations of this concern should be part of a preliminary Commission's impact study.

1.9   The introduction of a new tax based on cash flows and designed outside the scope of VAT, keeping unchanged the unsatisfactory VAT exemption regime, may create a very complex tax system for financial institutions. Therefore, subject to the outcome of the impact study to be carried out by the Commission, the EESC believes that, if a new financial sector tax were based on cash flows or based on similar factors, then the Commission should assess the merits of designing it within the VAT framework, so as to ensure an administratively easier approach for the sector and to alleviate the pain of irrecoverable VAT. Attention must also be paid to the unintended consequences the introduction of a tax on the financial sector may have, more particularly the development of alternative systems that are not subject to regulation, supervision or control and which, in turn, may cause major problems.

1.10   The competitive implications of new taxes on the banking industry, both with regard to the competitiveness of the banking sector with the non-banking sector, and the ability of the banking industry to continue to meet the financial needs of the real economy should not be ignored. This is particularly important as the economy seeks to emerge from the recession.

2.   Context

2.1   In the aftermath of the crisis, national governments around the world are facing a major two-fold problem. First, they urgently have to reform the financial and banking system. Second, they need new sources of revenue.

2.2   Multiple tax objectives are under consideration, including the reduction of negative externalities, consolidation of public finance, contribution of the financial sector to costs repayments, honouring of the commitments to the developing world and to combating climate change, and, assuming that the financial sector is under-taxed, making the financial sector contribute in a fair and substantial way to public budgets. So far, the aim of the financial sector taxes remains quite broad, and the nature and mechanisms of these taxes are still under examination.

2.3   On 7 October 2010, the European Commission issued a Communication on the future taxation of the financial sector (2), underscored by a Staff Working Document (3), in which two instruments are envisaged:

| — | A Financial Activities Tax (FAT) should be put in place at EU level in order to generate revenues for Member States' budgets and at the same time to help ensure greater stability of financial markets. It considers that if carefully designed and implemented such a FAT would not pose an undue risk to EU competitiveness. |
| --- | --- |

—

A Financial Activities Tax (FAT) should be put in place at EU level in order to generate revenues for Member States' budgets and at the same time to help ensure greater stability of financial markets. It considers that if carefully designed and implemented such a FAT would not pose an undue risk to EU competitiveness.

| — | At global level, the Commission supports the idea of a FTT which in its view could help fund international challenges such as development or climate change. |
| --- | --- |

—

At global level, the Commission supports the idea of a FTT which in its view could help fund international challenges such as development or climate change.

2.4   Considering the global and systemic nature of the financial crisis, the Commission also suggests that the bank tax may have a deterrent effect against excessive risk-taking. In its view, it would adequately complement the regulatory and supervisory reforms by enhancing the efficiency, resilience and stability of financial markets and reducing their volatility.

2.5   As a part of the framework for crisis management, the Commission has also proposed initiatives including the implementation of a Bank Resolution Fund (BRF) (4) which has already been the subject of an EESC opinion (5).

3.   Fair and substantial contribution of the financial sector to public finance

3.1   Due to the role that actors of the financial sector had in the run-up to the crisis, during which governments had to bail out financial institutions, the view is widespread that the related costs should not be borne by citizens or other sectors. This view is translated in the objective of ‘making the financial sector contribute in a fair and substantial way to public budgets’. In this context, the Commission envisages including in its economic study an in-depth impact assessment in which various taxation options are analysed in order to produce a balanced proposal.

The EESC recommends that the Commission conduct a survey on the total tax contribution of the financial services sector in the EU, measuring all the different taxes that financial services companies already pay. This study may pick up the big picture of corporate tax payments, irrecoverable VAT and the employment taxes supported by banks as employers. Separately, the employee-based taxes should be incorporated as a measure of the wider economic contribution. Then the idea may be to verify whether there is symmetry between taxation of the banking sector and its value added and whether the overall tax contribution of the banking sector is lower or higher compared to other key sectors. Finally, an aggregation of the new bank tax with the current total tax contribution could be estimated.

3.2   The EESC believes that if a financial sector tax were to be introduced, such study would help calibrate its magnitude both in terms of scope of application and effective tax rate. It should carefully examine the banks' capacity to rebuild and strengthen their capital base and the banks' capacity to finance households and businesses, in particular SMEs, in the EU.

3.3   In the EESC's view, the proposals related to how the financial sector industry might contribute to the costs of any possible future crisis cannot be separated from the debate taking place on wider changes to the regulatory system and the vast array of measures aimed at reducing both the likelihood and impact of financial failure.

3.3.1   An optimal financial sector taxation system would be one that met the dual purpose of generating tax revenues and curtailing risk-taking in equal measure.

4.   Financial transactions tax (FTT)

4.1   The FFT is intended to fulfil multiple purposes, in particular: to dampen unproductive activity on the financial markets by reducing speculation and volatility and at the same time to bring government money back home.

4.2   The European Parliament adopted a Resolution on the transaction taxes in March 2010 and a Report on innovative financing at global and European levels (6) in March 2011.

4.3   By applying the FTT, the authorities seek to diminish the number of risky, speculative (‘socially useless’) (7) financial transactions. They may also see it as helping to prevent banks from growing too big, or them undertaking too many too risky transactions in future.

4.4   The EESC expressed views on the FTT in its own initiative opinion on Financial Transaction Tax, including the following conclusions and recommendations:

| — | The primary objective of an FTT should be to change behaviour in the financial sector by reducing short-term speculative financial transactions. In this way the activities in the financial sector can work through the price mechanism of the market. The desired effect could be reached as the FTT hits the most frequent transactions the hardest. |
| --- | --- |

—

The primary objective of an FTT should be to change behaviour in the financial sector by reducing short-term speculative financial transactions. In this way the activities in the financial sector can work through the price mechanism of the market. The desired effect could be reached as the FTT hits the most frequent transactions the hardest.

| — | The second objective of an FTT is to raise public money. This new source of revenue could be used to support economic development in developing countries, to finance climate policies in developing countries or to alleviate the burden on public finances. The latter also implies that the financial sector will pay back public subsidies. In the long-term, revenues should provide a new general source for public income. |
| --- | --- |

—

The second objective of an FTT is to raise public money. This new source of revenue could be used to support economic development in developing countries, to finance climate policies in developing countries or to alleviate the burden on public finances. The latter also implies that the financial sector will pay back public subsidies. In the long-term, revenues should provide a new general source for public income.

4.5   Since concerns have been expressed in many quarters about the risk of shift effects if the tax were introduced only locally, an FTT should first be envisaged at global level, as advocated by the Commission. However, if that proves impossible, the EESC would favour the adoption of an FTT at EU level taking into account the outcome of the European Commission impact assessment.

4.6   The EESC considers that a FTT should be designed in a way that makes its collection by central depositary systems easily applicable. Issues and costs associated with enforcing collection and compliance of a broad-based FTT should be taken into consideration, as well as legal uncertainty for presumed collectors of the tax for over-the-counter (OTC) transactions of non exchange traded securities and derivatives.

4.7   Finally, the EESC would point out that there are still many jurisdictions which constitute off-shore financial centres, whose opacity relates to their banking secrecy and their low or non-existent taxation. Given the ease with which it is possible to set up financial branches and operate via the internet in these locations, it is essential that, in parallel with the adoption of an FTT, improving transparency and effective judicial and fiscal cooperation is made obligatory.

5.   Financial Activities Tax

5.1   The main features of the FAT when compared to an FTT are that it taxes corporations of the financial sector, whilst the FTT taxes financial market participants. Furthermore, while the FTT falls on trading activities, which are concentrated in a few financial centres, the FAT focuses on the profits and remunerations of the financial sector, which are distributed more evenly.

5.2   Referring to the IMF Report, the Commission considers that another potential instrument aimed at improving taxation of the financial sector and at reducing potentially negative externalities may be the Financial Activities Tax (FAT).

5.3   When designing a FAT, the Commission may define a tax base by reference to the financial statement.

5.4   The concepts used should be understandable in the existing accounting frameworks, whether International Financial Reporting Standards (IFRS) or local Generally Accepted Accounting Principles (local GAAP), since financial institutions may not apply IFRS.

5.5   If designed based on cash-flows, the introduction of a FAT may impact liquidity and make cash flows more expensive, whereas tensions on liquidity were a pivotal element in the run-up to the crisis. It is therefore advisable, when defining the tax base of the FAT, to pay particularly attention to the institutions' ability to pay and to their ability to comply with new capital requirements, as well as to the FAT-VAT interaction.

6.   VAT

6.1   In the Commission's view, the introduction of a new tax is underpinned inter alia by the VAT exemption of financial services under the Council Directive 2006/112/EC on the common system of value added tax (‘the VAT Directive’).

6.2   The EESC would like to emphasise that the primary reason for the exemption is the conceptual and practical difficulty in measuring the value related to financial services rendered by banks. This is especially the case for the traditional financial intermediation services of deposits and loans. The consideration for these services is in the form of the spread between the interest charged on loans and the interest paid on deposits. This margin is a global composite measure of intermediation services rendered by a bank to both depositors and borrowers, which cannot be readily measured for individual transactions with the aim to apply VAT or any other form of transaction-based consumption tax. It has been difficult to develop a methodology for allocating this margin to individual transactions for VAT purposes under an invoice-based method. Similar issues arise in the taxation of insurance and other types of financial services, e.g. currency exchange and trading in securities.

6.3   The VAT exemption of financial services is associated in the VAT legislation with no right – or limited right – to deduct input VAT. This means that financial institutions cannot fully deduct the VAT incurred on own expenses, which therefore is a pure cost. The amount of this ‘hidden VAT cost’ may be significant as outsourced services and intra-group transactions suffer a cascading effect of the tax.

6.4   The Commission issued in 2007 a proposed Directive to reform the VAT treatment of financial services based on three pillars, including the proposal for an option to tax financial services. The EESC believes that the debate on the financial sector tax should not be separated from the proposed VAT reform (8).

6.5   The EESC is also concerned about the scope of the FAT and the cumulative burden of this tax with the amounts of irrecoverable VAT. Whilst it can be designed to specifically target economic rents and/or risk, the FAT falls on total profit and wages in its most extensive form (addition-method FAT). The EESC believes that if a new tax were based on cash flows or on similar factors, the Commission should assess the merits of designing it in the scope of VAT, so as to alleviate the impact caused by irrecoverable VAT, hence avoiding an increase of the economic cost for all economic operators in Europe.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  EESC opinion on Financial transaction tax, OJ C 44 of 11.2.2011, p.81.

1

(2)  COM(2010) 549/5.

2

(3)  SEC(2010) 1166/3.

3

(4)  COM(2010) 254 final.

4

(5)  EESC opinion on Bank Resolution Funds; OJ C 107 of 6.4.2011, p. 16.

5

(6)  European Parliament resolution of 10 March 2010 on financial transaction taxes – making them work and Draft Report on innovative financing at global and European level (2010/2105(INI)).

6

(7)  Taxing the Speculators, http://www.nytimes.com/2009/11/27/opinion/27krugman.html.

7

Taxing the Speculators

(8)  COM(2007) 746 and 747 final.

8

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/68 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/68

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Conclusions of the fifth report on economic, social and territorial cohesion — the future of cohesion policy’

COM(2010) 642 final

2011/C 248/12

Rapporteur: Mr CEDRONE

On 9 November 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions and the European Investment Bank – Conclusions of the fifth report on economic, social and territorial cohesion: the future of cohesion policy

COM(2010) 642 final.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 133 votes to 7 with 14 abstentions.

1.   Conclusions

1.1   In brief, the EESC supports the key points for cohesion policy set by the European Commission:

| — | enhancing European added value; |
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enhancing European added value;

| — | strengthening governance; |
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strengthening governance;

| — | streamlining and simplifying management procedures; |
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streamlining and simplifying management procedures;

| — | improving organisation. |
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improving organisation.

1.2   The EESC believes these objectives to be achievable if at the same time:

| — | strategic programming is enhanced, to help Member States to complete the institutional reforms required to make administrations more functional; |
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strategic programming is enhanced, to help Member States to complete the institutional reforms required to make administrations more functional;

| — | EU resources are focused on a few priority objectives; |
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EU resources are focused on a few priority objectives;

| — | social and economic mobilisation and the participation of socio-economic partners in the implementation of cohesion policy is broadened; |
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social and economic mobilisation and the participation of socio-economic partners in the implementation of cohesion policy is broadened;

| — | reforms are made to the principles of additionality and co-financing; |
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reforms are made to the principles of additionality and co-financing;

| — | impact assessments are made obligatory. |
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impact assessments are made obligatory.

1.3   It should not be forgotten that cohesion policy, together with development and reducing disparities between the regions, must make an active contribution to improving citizens' services and economic and social conditions.

1.4   It is easier for this to happen if the overarching economic fabric and the conditions for companies, their productivity and competitiveness, are improved, particularly in the case of SMEs, micro enterprises and craft enterprises. Organisations representing companies of a territorial nature, particularly those in the EU's priority sectors, together with trade unions and civil society, must therefore be directly involved.

1.5   A useful approach, in terms of territorial cohesion, as well as infra-territorial, infra-regional and infra-sectoral cohesion, could be to prioritise the development (under objective 3) of cross-border, inter-regional cooperation, devoting more resources to the territorial cohesion of the regions and the macro-regional strategy of the Euro-regions (the Baltic, the Mediterranean, the Adriatic, Adrian Alps-Danube, Atlantic Axis).

1.6   The EESC believes that the greatest possible effort should be made by the Commission and the Member States to promote the exchange of information on best practices and assistance for local authorities in the management of programmes, including through internal reform processes as well as reform of the sectors in question.

1.7   Only through greater knowledge of the results of investments, which is currently insufficient, and through specific impact assessments, will it be possible to identify the priorities to be set in relation to the Europe 2020 strategy and to ensure that the objective of thematic concentration is achieved.

1.8   The EESC also agrees that account should be taken of the distribution of high-growth sectors in all European regions, sub-divided into convergence objective regions, transition regions and competitiveness and employment objective regions. However, the problem of the distribution of resources between poor regions (80 % of the funds) and others (the remaining 20 %) has yet to resolved, even though this would help solve the problem of co-financing.

1.9   The EESC believes coordination between all of the proposals and policies mentioned by the Commission to be essential, i.e. the Europe 2020 strategy, cohesion policy, the CAP, energy policy, transport, the environment, research etc., particularly between the actions funded by the ESF and the ERDF, and also because the ESF should focus on the European employment strategy, the implementation of the Social Agenda, high-quality training, initiatives for young people and European training for cohesion policy operators.

2.   Proposals

2.1   Policy proposals

2.1.1   Europe 2020 strategy: in the EESC's view, cohesion policy must not be the tool of the Europe 2020 strategy alone; on the contrary, to be credible, cohesion policy should secure its own financing by means of the issue of Eurobonds.

2.1.2   Cohesion policy must hold onto its fundamental objectives, such as solidarity between peoples and territories, and development.

2.1.3   European summit: cohesion policy and all the funds earmarked for it should be discussed and studied on an annual basis in the context of a dedicated European summit. This should be done both because of the strategic importance of economic and social cohesion and because of its connection with macroeconomic policy, in the context of European economic and social governance.

2.1.4   Stability pact and sanctions: in the EESC's view, the focus should be more on incentives and less on sanctions, so as not to penalise still further those regions that are more heavily in debt and thus at greater risk. On the contrary, the hope is that, in the context of the current draft reform of the stability and growth pact, investments in research, education and training which are not to be considered current expenditure will be excluded from the budget. The poorer regions, which are most in need of EU aid, should not be penalised.

2.1.5   The priorities chosen should be limited in number, taking into account what was intended by the various funds' objectives and by the 2020 strategy. In particular, reference should be made to policies aimed at the completion of the single market, something cohesion policy should be aiming towards. Priorities should be decided upon by a European summit, preceded by a consultation between public stakeholders and socio-economic partners at all levels.

2.1.6   Socio-economic partnership, with the dissemination of best practice, in parallel or in combination with agreements among public entities, should become an ordinary and compulsory procedure, accompanying all processes to define, implement and assess cohesion policy. As such, it should be directly linked with conditionality. The EESC would like to see the principle laid down in Article 11 of the general regulation, stipulating the partnership rules, extended to all of the structural funds.

2.2   Technical operational proposals

2.2.1   The rules on co-financing should be tailored in accordance with the development conditions and available financial and social resources of zones and areas concerned by cohesion policy, particularly on the basis of regions' income, the calculation criteria for which should be appropriately revised (1), and their budget.

2.2.2   Ex-ante conditionality should be aimed at improving the quality of spending, in connection with achieving objectives, thus rendering the authorities concerned more efficient and maximising the utilisation of the funds, taking care not to penalise the most indebted regions for instance.

2.2.2.1   The Member States should be encouraged to carry out the institutional reforms required to ensure structural adjustment, the promotion of innovation and the creation of jobs, with a view to reducing social exclusion. The EESC also considers it to be crucial that this policy is implemented in coordination with socio-economic partners at all levels, as a condition for the granting of funding.

2.2.3   Traditional indicators for selecting areas of intervention should be combined with other parameters, such as employment, poverty and school attendance rates, and levels of education, vocational training, services and environmental sustainability.

2.2.4   Impact assessments must become a central element of cohesion policy, not only as a form of ex-ante conditionality, in order to assess effectiveness and the degree to which objectives have been achieved. This should be done by means of common parameters defined at EU level and made compulsory throughout European territory.

2.2.4.1   Result-based analysis: while this is of much greater value than an analysis based on the control of financial management, its practical implementation will require lengthy preparation and precise criteria. The results of an action can only be measured over time, particularly in the case of actions of an intangible nature, such as training or investments in development. In order to move to a results-based analysis, project promoters and administrative authorities will require prior training, and the EESC proposes that this formula should be tried out during 2011-2013 in certain regions selected according to the quality of existing partnership-based governance.

2.2.5   Simplification should become cohesion policy's main objective. This could be pursued by cutting down on administrative and accounting procedures, improving and strengthening monitoring and evaluation criteria and pruning the number of procedures involved in the presentation of plans and/or projects. The revision of accounting procedures could be achieved amongst all stakeholders, working in partnership with the Court of Auditors.

2.2.5.1   More specifically, the ‘one stop shop’ principle should be applied in both the project submission phase, merging official procedures for the various funds, and the auditing phase, harmonising the financial rules and those for the different programmes, and carrying out a single check to be valid for all the bodies concerned.

2.2.5.2   Synergy amongst the different programmes: for the sake of clarity, simplicity and efficiency, maximum complementarity must be sought amongst all programmes involving the same actors in the same territory, both between European, national and regional programmes and between the different Community funds. Lack of synergy is one of the reasons for the under-use or low impact of structural funds and EU programmes as a whole.

2.3   Training: this is another fundamental tool that is necessary in order to achieve the objectives of cohesion, including that of the better utilisation of funds.

3.   Introduction

3.1   The principles of cohesion and solidarity are two of the fundamental pillars of the Treaty, Article 174 of which states: ‘In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion’.

3.2   There is another particularly important point in view of the two recent enlargements: ‘In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions’.

3.3   These two principles, which form the basis for the integration of the European peoples and regions, must never be forgotten, particularly by those who act on behalf of the EU.

3.4   Next year, the European Commission will present a proposal on the future European budget after 2013 (a communication in this regard was published on 19 October 2010), but the call by certain governments to the Council (December 2010) not to increase the EU budget does not bode well, even though it will be accompanied by a legislative proposal on the Structural Funds.

3.5   The European Commission's fifth report on cohesion policy, and its conclusions, drawn up using a new kind of language, falls within this context and is closely linked to the Europe 2020 strategy.

4.   Communication from the Commission: summary

4.1   In its conclusions to the fifth report, the European Commission deals with various issues, taking a rather unusual approach, and seeks to provide responses and recommendations, while awaiting the conclusion of the consultation which it has launched by means of 13 questions set out in the communication.

4.2   The following key issues are discussed:

4.2.1   Enhancing the European added value of cohesion policy

4.2.1.1   The Commission proposes achieving this objective by:

| — | reinforcing strategic programming; |
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reinforcing strategic programming;

| — | increasing thematic concentration of resources; |
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increasing thematic concentration of resources;

| — | strengthening performance through conditionality and incentives, including co-financing and the stability pact; |
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strengthening performance through conditionality and incentives, including co-financing and the stability pact;

| — | improving evaluation, performance and results; |
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improving evaluation, performance and results;

| — | the use of new financial instruments.
  (See the Commission's first five questions.) |
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the use of new financial instruments.

(See the Commission's first five questions.)

4.2.2   Strengthening governance

4.2.2.1   This objective can be achieved by:

| — | introducing a third dimension: territorial cohesion; |
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introducing a third dimension: territorial cohesion;

| — | reinforcing partnership (public and private).
  (See the sixth and seventh questions.) |
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reinforcing partnership (public and private).

(See the sixth and seventh questions.)

4.2.3   Streamlining and simplifying management procedures

4.2.4   This can be achieved through:

| — | financial management; |
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financial management;

| — | reducing the administrative burden; |
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reducing the administrative burden;

| — | financial discipline; |
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financial discipline;

| — | financial control.
  (See questions 8, 9, 10 and 11.) |
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financial control.

(See questions 8, 9, 10 and 11.)

4.2.5   The architecture of cohesion policy

(See questions 12 and 13.)

4.3   Next steps

4.3.1   The Commission says that it may fine-tune the proposals in the fifth report on the basis of the replies to the questions.

5.   The European Commission's Communication: general comments
   (2)

5.1   With a view to increasing the added value of cohesion policy, the Commission's fifth report proposes a series of very ambitious reforms aimed at improving the efficiency of Member States' spending and simplifying its management. The EESC agrees with the Commission's general approach in the proposed reforms.

5.2   This effort should be welcomed and built upon, but there is a danger that it may be insufficient if certain proposals presented timidly are not turned into practical decisions and actions, particularly in terms of the close, and almost unique, link between the Structural Funds and the Europe 2020 strategy.

5.3   Despite this effort, the analysis of the situation is not realistic, although it is subject to a (somewhat generic) consultation, which relegates the key problems to second place.

5.4   For example, to entrust solely to cohesion policy the ‘mission’ of being the main driver of growth seems a very ambitious and laudable project, provided that there is a radical overhaul of cohesion policy and a lasting follow-up policy to support its implementation. Furthermore, the Union needs a common economic policy.

5.4.1   If this does not happen, the proposal risks being illusory, or at least limited in its effect. Therefore, in order to facilitate the achievement of this objective and not abandon the principle of cohesion, the Europe 2020 strategy needs its own funds, including by means of a European loan, and must be guided by that principle. Furthermore, all of the EU's other policies, including the CAP, would have to be involved, on an equal footing. Only in that way can the Structural Funds maintain their original ‘vocation’, as instruments for regional development. The EESC regrets that the fifth report does not mention rural policy, just as the CAP does not mention cohesion policy.

5.5   The Commission quite rightly notes in its communication that the added value of cohesion policies has repeatedly been a matter of debate between academics, whose empirical analyses quite often reveal that their impact is difficult to measure. One of the reasons for this may be the not always appropriate indicators chosen for territorial cohesion. The Committee thinks more attention will have to be paid to this matter than hitherto.

6.   Specific comments (regarding the four objectives set by the Commission)

6.1   With regard to the objective of reinforcing strategic programming, to be achieved within the context of a strategic framework, the innovation in the Commission's proposal is essentially to ensure coherence and to create a more functional link between the objectives of the Europe 2020 strategy and the actions drawn up at national level through operational programmes.

6.2   The EESC welcomes this innovation, but believes that the main problem to be resolved concerns the link between the annual plans drawn up by the Member States and agreed with the EU for stabilising public finances (National Reform Plans) and cohesion policy. This is a highly topical issue, given the differences between the administrative systems in force in the different countries of the EU and their differing levels of public debt.

6.3   Furthermore, it has yet to be decided whether cohesion policy should remain essentially an independent policy in terms of choosing priorities and future actions, or whether it should be kept subordinate to the economic policy decisions taken at national level for controlling public debt. The EESC believes that the main EU institutions (the European Parliament, the Commission and the Council) and the national institutions must pay very close attention to this problem, with a view to finding ways to maintain coherence between the objectives of the Europe 2020 strategy and the new governance of cohesion policy, which must not however be subordinate to the former.

6.4   A second important aspect, relating to strategic programming, concerns the Commission's proposal to introduce a new system of ex-ante conditionality aimed at defining the principles which Member States must follow and apply in order to increase the efficiency of cohesion policy. In view of the criticisms from many countries, it is clear that the Commission has made an effort to set conditions that can ensure greater efficiency of investments. However, the procedures must not become burdensome and regions must not be ‘punished’ for things which are not their fault (the deficits of national States).

6.5   The EESC welcomes the Commission's mention of minimum conditions for access to funding and ensuring the governance of resources, as well as the provision of incentives for Member States to carry out the necessary reforms. The EESC also believes that the Commission and the Member States' main effort should be directed above all to introducing internal reform processes for the institutions and sectors most closely affected by cohesion policy (environment, labour market, vocational training, innovation).

6.6   The use of sanctions or similar measures by the Commission against a Member State, resulting in the suspension or repayment of EU funding, should only be considered in the most serious cases of irregularity and/or non-compliance with the principles and provisions of cohesion policy.

6.7   Another positive aspect is the proposal, backed by the Commission and the Member States, to direct cohesion policy resources towards a limited number of priorities (see also opinion ECO/230) since cohesion policy does not have sufficient resources to fund the many requirements of the least-developed regions. The EESC believes that cohesion policy can be more effective if it is geared towards supporting tangible and intangible initiatives of high economic, social and territorial impact.

6.8   However, defining priorities and keeping down the number of initiatives to be funded represent one of the most difficult problems to resolve, given the many calls from regional and national authorities to move in the entirely opposite direction.

6.9   Partnership, as the EESC has frequently said before (3), can provide true added value in this regard. It therefore welcomes the Commission's suggestion, provided that we are not just talking about public partnership, but also, in particular, economic, social and civil partnership, with the concrete involvement of interested social and civil partners, with voting rights, at all stages and at all levels. Furthermore, partners should be provided with funding for technical assistance.

6.10   The EESC agrees on the need to reform the principle of additionality and co-financing, for which reforms are proposed to link them both to the need to provide for levels of financial participation which are differentiated ‘to reflect better the level of development, EU added value, types of action and beneficiaries’.

6.11   It also welcomes the proposal to establish a third level of regions, comprising regions whose current economic situation places them above 75 % of the EU average but still below 100 % (90 %), because this could simplify the verification and implementation of the principle of co-financing, given the possibility of extending the use of resources to all regions, though at lower levels.

6.12   With regard to the principle of additionality, the types of action for which national funding is requested should be better identified, specifying what they offer in terms of added value, impact on employment and stimulation of growth. Reducing the number of priorities and actions to be funded in the Member States should facilitate the application of the principle of additionality, making it more flexible.

6.13   With regard to the second principle, various co-financing levels could be set, lower in the case of regions furthest from the EU average, with the clear aim of facilitating the funding of specific local development actions, and higher for regions which are closer to the EU average.

6.14   The third key objective concerns the simplification of the procedures for the management of common programmes. There is a consensus on this issue in all Member States and the EESC has always advocated it in its opinions, with a view to facilitating the implementation of cohesion policy programmes. This objective would take account of the different rules - administrative, accounting, etc. - amongst the different States and regions, while aware that constant changes, particularly when they overlap, create obstacles and delays.

6.15   The EESC believes that the proposal to ask authorities responsible for managing programmes to present annual accounts of expenditure that is co-financed by the EU (together with independent audit opinions) is entirely inappropriate and would be difficult to implement, in view of the methods and timescales currently demanded for carrying out the procedures for awarding EU contracts.

6.16   If however the intention is to ‘reinforce’ the responsibilities of national and regional authorities, in particular those which have the greatest difficulties and/or delays in implementation, the verification of results could be entrusted to independent bodies accredited at European level, after at least two years from the beginning of the programming period. In the event of administrative liabilities or significant divergence from the expected results, the Commission could decide, according to the seriousness of the irregularities found, to close the programme, to suspend payments or to demand the repayment of amounts paid.

6.17   National and regional administrations must provide evidence of their capacity to plan and manage co-financed expenditure efficiently. This result can be achieved not by stepping up the frequency of verification of spending periods (demanding annual accounts) but by verifying that the quality of the investments carried out, or to be carried out, is assured, that the timescales for implementing actions are met, and that effective evaluation and control procedures have been applied.

6.18   There are other important innovations which the EESC also supports. In particular:

| — | the development of new financial engineering instruments to be developed and extended to sectors which do not currently benefit from them (urban transport, research and development, energy and the environment, telecommunications, etc.); |
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the development of new financial engineering instruments to be developed and extended to sectors which do not currently benefit from them (urban transport, research and development, energy and the environment, telecommunications, etc.);

| — | the introduction of new forms of public-private partnership; |
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the introduction of new forms of public-private partnership;

| — | the review of the strategies of each Structural Fund, on the basis of the ESF and the contribution which it could make to the implementation of the European employment strategy; |
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the review of the strategies of each Structural Fund, on the basis of the ESF and the contribution which it could make to the implementation of the European employment strategy;

| — | greater focus on urban areas; |
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greater focus on urban areas;

| — | the introduction of incentives to promote reforms helping Members States and regions to make more efficient use of EU resources; |
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the introduction of incentives to promote reforms helping Members States and regions to make more efficient use of EU resources;

| — | the establishment of a reserve, from the cohesion budget, to be allocated to the regions which have achieved the best results in pursuit of the objectives set in the European strategy. |
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the establishment of a reserve, from the cohesion budget, to be allocated to the regions which have achieved the best results in pursuit of the objectives set in the European strategy.

6.18.1   The EESC believes that, for each of these innovations, the objectives should be carefully defined, the available resources assessed and the implementation methods and timescales stipulated, on an individual basis.

6.18.2   The coherence and sustainability of these proposals should be carefully assessed in the light of the four main objectives of the policy reform and their applicability in the regions and territories which are still far below the EU averages in terms of economic development, efficiency of production, social inclusiveness and quality of life.

6.19   For the new Financial Perspectives, the Commission proposes again applying the criterion of 75 % of average GDP per capita at PPP in order to determine the eligibility of these regions, applying the convergence criterion. The EESC proposes that the possibility of introducing other parameters be considered, in order better to reflect the objective situation of the EU's individual regions and territories.

7.   The EU budget, cohesion policy and the Europe 2020 strategy

7.1   The outlook for the EU budget after 2013 is not encouraging. This was made perfectly clear at the Summit at the end of 2010. Some States (only some?), citing the austerity resulting from the crisis, give justifications for not making more resources available, except symbolically, forgetting that cohesion policy takes up less than 1 % of GDP, when certain Member States have spent some 24 % of GDP on saving the banks!

7.2   The EESC considers the Europe 2020 strategy, on which the Union appears to be placing all of its hopes, to be important. However, there is a risk that it may fail unless there is sufficient direct funding. This should preferably be by means of European bonds. A degree of flexibility should also be maintained for the weaker cohesion regions, according to their specific characteristics, in order to promote integration between the two policies.

7.3   This integration could be facilitated through greater knowledge of the territorial needs and priorities which may be covered by the Europe 2020 strategy in order to achieve the objective of thematic concentration.

8.   The future of cohesion policy after 2013: strategic points

8.1   The proposals on the future of cohesion policy presented by the Commission for the next programming period, combined with the objectives of the 2020 strategy plot a positive pathway that the EESC, as already stated, endorses for the most part, inasmuch as it is geared towards making one of the EU's most important economic redistribution policies more effective. Nevertheless, if these objectives are to be achieved, a number of fundamental strategic conditions, in addition to those already mentioned, will have to be met.

8.2   First: the EESC would argue that the commitments required of the Commission and of the Member States could lead to real results providing this plan is combined internally with a more general review of the architecture of European economic governance and of the objectives that the EU intends to pursue at both European and international levels. This review is all the more necessary in the light of the crisis and attacks on sovereign debt, which are obliging the EU to update its monetary policy as well; a policy that has until now been geared towards the richer areas (stability) to the detriment of less developed areas that need to grow (growth).

8.3   The second concerns one of the central points of the plan to revise cohesion policy, the need, in other words, to establish functional and strategic coordination between the various Structural Funds, which is at present practically non-existent. For this reason, the selection and related financing of measures at regional level should take place as part of a dialogue and working methodology, put together not only with the Member States (partnership contracts) and socio-economic partners, but also with the technical support and resources of the five Structural Funds, in order to form a single authority for the coordination and management of the various funds.

8.4   The third refers to the establishment of coordination and synergy between the various cohesion policy measures and the other connected policies (sectoral environmental and energy policies, research and innovation policies, employment policies, etc.) and, therefore, the EU's other financing instruments (EIB, financing for innovation, for infrastructure networks, for the development of telecommunications, etc.). Cohesion policy must become the tool for a broader plan to encourage the all-round development of the regions and territories and to activate a range of sector-based measures and financing, not least from the private sector, tailored to regions' specific needs.

8.5   The fourth concerns the possibility, as part of this new approach to European economic governance, of developing forms of strengthened cooperation on shared objectives regarding a specific sector or macro-region or the development of activities considered by the Member States to be of strategic importance. This instrument, as yet under-utilised despite being provided for in the Treaty, would facilitate the decision-making process and make it possible to achieve better results much more quickly, owing to the synergistic effects and economies of scale that could be achieved among participating States.

8.6   The fifth, still relating to coordination, refers to the need to launch inter-institutional coordination (between the Commission, the European Parliament, the Council and the consultative bodies: the EESC and the CoR and socio-economic partners) as soon as possible, i.e. before the start of the new cohesion policy programming cycle. The aim should be to facilitate discussion and the comparing of notes between the EU institutions on the future of cohesion policy, before the final draft proposals are submitted to the appropriate bodies for approval. This coordination must be ongoing and accompany programme implementation and results evaluation.

8.7   The EESC calls for the (re)establishment of Community initiative programmes as soon as the mid-term review of the structural policies takes place. The dropping of programmes which have proved their effectiveness like URBAN, EQUAL, Interprise and others has been a loss for thematic territorial cooperation and for social innovation, as this role has not been taken over in the mainstreaming of funds or anywhere else.

8.8   The EESC nevertheless hopes that, on the basis of what has already been put in hand with the conclusions appended to the fifth report, the Commission, with a view to the forthcoming reform, will submit even bolder proposals that will represent real change compared to the past.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  EESC opinion on the Proposal for a Regulation of the European Parliament and of the Council establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination, OJ C 318, 23.12.2006, p. 45.

1

Proposal for a Regulation of the European Parliament and of the Council establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination

(2)  COM(2010) 642 final.

2

(3)  See the following EESC opinions: Results of the negotiations concerning cohesion policy strategies and programmes for the programming period 2007-2013, OJ C 228, 22.9.2009, p. 141, How to foster efficient partnership in the management of cohesion policy programmes, based on good practices from the 2007-2013 cycle, OJ C 44 of 11.2.2011, p. 1; and Regional policy contributing to smart growth in Europe 2020.

3

Results of the negotiations concerning cohesion policy strategies and programmes for the programming period 2007-2013

How to foster efficient partnership in the management of cohesion policy programmes, based on good practices from the 2007-2013 cycle

Regional policy contributing to smart growth in Europe 2020

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/75 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/75

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the national parliaments — The EU Budget Review’

COM(2010) 700 final

2011/C 248/13

Rapporteur: Mr MALOSSE

Co-rapporteur: Mr DANTIN

On 19 October 2010, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the national parliaments - The EU Budget Review

COM(2010) 700 final.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June 2011), the European Economic and Social Committee adopted the following opinion by 175 votes to 2, with 5 abstentions.

1.   Conclusions and recommendations

1.1   The EU budget review is not a question of figures but rather a tool serving a political project. Today the European Union does not have the budgetary means to implement either its political strategy or the commitments deriving from the new Lisbon Treaty.

1.2   The economic and financial crisis, which began in the United States, has severely affected Europe and caused a cascade of growing deficits in most Member States. This situation inevitably has repercussions for the preparation of the 2014/2020 financial perspective but the European Union must not be the victim of this.

1.3   We therefore have to have the imagination to draw up a ‘smart’ European budget which will provide the EU with the means to achieve its objectives without increasing the overall tax burden on the public and on businesses.

1.4   The ‘juste retour’ principle must be abandoned as it is contrary to the values of solidarity and mutual benefit which underpin European integration. Rather, the subsidiarity principle needs to be applied by transferring to European level that which has lost its meaning and effectiveness at national level. The EESC congratulates the European Commission on proposing a return to the principle of own resources which can be newly created or substituted for national taxes.

1.5   The European budget must be strengthened and have a leverage effect. The EESC maintains that national and European budgets should complement each other, which will make it possible to achieve economies of scale with a view to meeting the EU's major political objectives. The effectiveness of EU action will also be strengthened by more systematic recourse to EIB loans, public-private partnerships and the creation of Eurobonds for investment.

1.6   In order to show that a euro can be better at used at European level, the EU must embark on a real revolution in procedures, which today are much too cumbersome, and concentrate its action on projects with a high public profile.

1.7   The only way to make a success of an ambitious budget is to win the battle of public opinion. That is why the EESC would like studies to be carried out and published on the cost of non-Europe, highlighting duplication in national budgets. In this way the EESC is supporting the European Parliament's initiative, to which it will make its contribution.

1.8   In order to be credible vis-à-vis European citizens, the EU budget must be a model of governance, effectiveness, transparency and control of administrative expenditure.

2.   In search of a new objective

2.1   In its communication, the Commission does not hide its desire to set out an ambitious approach for establishing the EU's post-2013 financial perspective. The EESC welcomes this since the Treaty of Lisbon has opened the way towards a strong political identity for the European Union.

2.2   The EESC agrees with the Commission that the concept of ‘juste retour’ is even less appropriate today than it was at the start of the European venture. This concept, which has too often distorted European integration and derailed debates, is in large measure responsible for the shortcomings, delays and failures of the integration process. It runs counter to the spirit of a union of states and peoples and defies rational economic argument. The advantages and added value of an economic, monetary and political union should, by their very nature, be of benefit to everyone. The progress made by the European Union is all based on the multiplier effect of joint efforts, the polar opposite of the ‘juste retour’.

2.3   On the basis of these considerations, the Committee was of the view as early as 2008 that ‘There is a fundamental choice to be made when shaping budget policy: federalism or an intergovernmental system. Clearly, the arrangements for financing the budget are one measure of the level of advancement of European integration (1)’.

2.4   In this connection, the Committee would also like all lessons to be drawn from an objective analysis of the way in which the budget currently functions. The Commission rightly points the finger at delays in the launch of programmes, the complexities inherent in the system and decentralised implementation, which has not yielded positive results. These shortcomings must be analysed in depth with the participation of all stakeholders in order to learn the necessary lessons to correct them.

2.5   The EESC supports the four core principles set out by the Commission: delivering key policy priorities, strengthening added value, the obligation to ensure results and maximising the mutual benefits of solidarity. The EESC wishes to add one further requirement, visibility:

2.5.1   The current impact of the EU's budgetary measures is not satisfactory from this point of view. This shortcoming is an obstacle to European integration since it makes it more difficult to achieve genuine public support and provides Member States with arguments to curb the growth of the European budget. This should be rectified from the point of view both of the budgetary procedure, which seems very opaque to the public, and of operational expenditure, which too often is confidential, scattered over minuscule projects or concealed within the framework of complex co-financing.

2.6   For the EESC, such changes to the EU's budget policy should contribute directly to the objective of renewing the Community method, which the Committee explicitly called for in its opinion of October 2010, adopted by a very large majority (2).

3.   In search of greater complementarity between the national and European levels

3.1   The EESC cannot accept the process of European integration, which depends on the budgetary resources it is granted, being taken hostage by the question of reducing public deficits. This would jeopardise the political ambitions of the European Union stemming from the Lisbon Treaty and the Europe 2020 strategy.

3.2   The EESC proposes complementarity between national budgets and the European budget on common objectives, for example via partnership contracts for the 2020 strategy's development and investment. It would also involve the ‘smart’ aggregation of national and European resources in order to achieve economies of scale and a leverage effect and reduce national budget deficits as a result of the positive effects of pooling of resources.

3.3   To this end, the Committee calls on the Commission to provide the necessary funds to update without any further delay the evaluation of the cost of non-Europe, which has not been calculated since the Cecchini report (3) 23 years ago. The Committee welcomes the intention expressed by the European Parliament to undertake an initiative in this area. The Committee itself intends to participate fully in work in this area and to make an active contribution.

3.3.1   European citizens and taxpayers should be aware of the size of the bill they are now forced to pay as a result of the unnecessary duplicate costs of persistent barriers in both administrative and economic areas. They should be informed of the ‘economies of scale’ from which European public policies could benefit through further integration. For example, the public pays every day for the absence of a European transport system, although enshrined in the Treaty of Rome, in terms of delays and disruptions and a certain lack of productivity for businesses. The same applies to the inadequate opening up of public procurement, although the Cecchini report estimated that opening up European public procurement could generate two million new jobs.

3.4   The EESC stresses in particular the knock-on economic effect that one would rightly expect from an increase in the European budget based on such economies of scale. By offsetting the negative impact of severe corrective measures in national public finances through productivity gains, the need for budgetary discipline to deal with deficits could be reconciled with economic and social recovery to help Europe emerge from the crisis and ‘weak’ growth.

3.5   This kind of support for the economy would in turn have a positive impact on tax revenues and thus on balancing public accounts. A smart increase in the European budget should make it possible to initiate and sustain a virtuous economic and budgetary circle by exploiting areas of mutual complementarity. Sustainable consolidation of growth and employment in Europe requires that these complementaries between the national and European levels be exploited.

4.   Seeking greater budgetary autonomy

4.1   The EESC believes that increasing the European budget is not only desirable but necessary, given the scale of the new challenges requiring a joint response.

4.2   To this end, it supports the European Commission's proposal concerning the primacy of a system based on own resources, with revenues going directly into the EU budget without passing via the national level. The EESC considers that there will be no effective reform of the European budget without restoring well targeted, sustainable and autonomous own resources, in place of national contributions which were introduced from 1980 with a special rebate for the United Kingdom, and which were made permanent by the 1984 Fontainebleau Agreement, perpetuating the erroneous concept of the ‘juste retour’.

4.3   The Committee appreciates the diversity of the proposals for new resources put forward by the Commission in its communication, particularly those regarding financial transactions and CO2. Without wishing to comment at this stage on the nature of the new own resources, the EESC stresses the need to submit all proposals in this area to an impact analysis, which will permit a more effective assessment. The Committee would also like the possibility to be explored of transferring taxes or a proportion of existing national-level taxes to the European level, using VAT as a model. One possibility here would be to transfer a proportion of corporation tax if there were a common base, as proposed by the European Commission.

4.4   The EESC expects that such a reform would potentially remove national corrective mechanisms over the long term which would no longer be justified in a reformed European budget providing extra added value for all Member States.

4.5   The EESC also stresses three principles which it believes are key to the success of any reform of the European budget's resources:

| 4.5.1 | The tax burden in Europe must not rise as a result of the reform of own resources. |
| --- | --- |

4.5.1

The tax burden in Europe must not rise as a result of the reform of own resources.

| 4.5.2 | The possible new European levies must not have an excessive discriminatory impact on certain countries on grounds of their specific national features or hamper the activities of businesses established in the European Union. Nor should they have an excessive impact on citizens, especially the most disadvantaged, as is the case with VAT. |
| --- | --- |

4.5.2

The possible new European levies must not have an excessive discriminatory impact on certain countries on grounds of their specific national features or hamper the activities of businesses established in the European Union. Nor should they have an excessive impact on citizens, especially the most disadvantaged, as is the case with VAT.

| 4.5.3 | The reorganisation should contribute to rationalisation and better balancing of the overall tax burden, in line with the Union's competitiveness and employment objectives. European expenditure should also be focused more on the EU's priorities and areas where economies of scale can be achieved. For the EESC this is a necessary precondition for any significant increase in the European budget. |
| --- | --- |

4.5.3

The reorganisation should contribute to rationalisation and better balancing of the overall tax burden, in line with the Union's competitiveness and employment objectives. European expenditure should also be focused more on the EU's priorities and areas where economies of scale can be achieved. For the EESC this is a necessary precondition for any significant increase in the European budget.

4.6   Finally, the EESC believes that it could be possible, pending further EU integration, to adopt innovative approaches bringing together, through specialised agencies or some other route, national budgets and the European budget in areas such as research and development, innovation, development aid, and financing of major infrastructure. Such an approach would make it possible to achieve real integration of priorities and means, while ensuring monitoring capacity at each political level of responsibility, both national and European.

5.   In favour of measures geared more towards European added value

5.1   The Committee stresses the need to ensure that the European budget matches the objectives and commitments of the Europe 2020 strategy. Apart from the corresponding budgetary resources, this also requires visible links between the budgetary activities planned and the various pillars of the Europe 2020 strategy.

5.2   The Committee particularly stresses the need for effective use of the budget in areas where the European Union has direct responsibility: first and foremost consolidating economic and monetary union, strengthening solidarity among EU Member States and implementing new policies stemming from the Lisbon Treaty: energy and climate, justice and home affairs and external policy.

5.3   The recent crises in the euro area have underscored the need to promote solidarity within the framework of economic and monetary union in particular. The means available under the European budget have themselves provided useful, urgently needed support, anticipating the creation of the stabilisation fund. The decision to incorporate this stabilisation mechanism into the Treaty is a new stage in European solidarity and in meeting the objective of political and economic integration, with a view to sustainable consolidation of the economic and monetary union which has been a key element of progress in the European venture and the economic and social cohesion of the single market. It is for example urgent to relaunch the economic union which has lagged behind monetary union, thus weakening it. The Europe 2020 strategy will have little prospect of success unless this gap is closed. This prospect should have been examined in greater depth in the Commission document.

5.4   The other major priority for the European budget is, as rightly stressed by the Commission, strengthening the policies of the ‘magic triangle’ of research, innovation and education, which are at the heart of the challenge of globalisation.

5.4.1   However, with a budget representing just 4 % of that of public research in Europe, it will not be possible to change the situation fundamentally in the face of global challenges. The means must be found, especially financial means, to transform European programmes into useful tools to make European industry more competitive.

5.4.2   Integrating national programmes and the European research framework programme in one way or another is vital in order to achieve economies of scale and critical mass. It will also be essential to ensure that the focus is on key sectors, to take account of specific national points of departure and to correct any shortcomings identified, especially administrative practices which weigh or slow down proceedings.

5.4.3   The European innovation policy should form a fundamental basis at the heart of research in Europe, whereas to date it has been treated by the Commission merely as a by-product of research measures. The European Commission was due to propose a major change and this is what it did in its recent communication Europe 2020 Flagship Initiative – Innovation Union (COM(2010) 546 final).

5.4.4   The EESC reiterates in particular its calls for a far more ambitious policy linking support for entrepreneurship, the removal of barriers between national networks supporting and promoting innovation and a European ‘clusters’ policy, in order to allow ‘European champions’ to emerge in place of ‘national champions’. The Committee welcomes the decision taken to introduce reinforced coordination with a view to creating a Community patent. This should be put into effect as soon as possible in order to end a situation which has been a serious handicap to EU competitiveness for decades.

5.4.5   In the area of education, the EESC has called for more ambitious initiatives and in particular the launch of new ‘European schools’, open to all, as a tangible sign of a stronger European identity, the emergence of genuine European universities (4) as well as a European policy of new skills for new jobs (5).

5.4.6   The European Commission should pay greater attention to objective analyses of the effects of EU policies and to ensuring precise correlation between the information included in the annexes and the main document.

5.5   The economic, social and territorial cohesion policy also contributes directly to development of European solidarity. The EESC will oppose any dismantling of this policy, which is the symbol of a union of peoples. However, the EESC calls for it to be overhauled to make it more effective, especially by simplifying the way it is managed, focussing more on flagship projects linked to European priorities and ensuring that economic and social stakeholders are involved more closely. With this in mind, the EU must tackle the exclusion of the most vulnerable sections of the population and support the countries and regions which are the most remote and disadvantaged on account of their specific characteristics in order to allow them to participate fully in economic and social progress. From this point of view, and with regard to the employment situation, the European Social Fund should be the preferred instrument, particularly in view of its financing, for the implementation of the European Employment Strategy. This should be at the centre of the ‘inclusive growth’ strategy of Europe 2020.

5.6   A major priority of the Community budget, which is directly linked to the objective of a more effective and cohesive EU, which is closer to the grass roots, should be to invest more in European public goods. This priority is rightly mentioned by the Commission. However, it should be spelt out and stated in practical terms. For its part, the EESC intends to explore the matter in greater depth in conjunction with economic and social stakeholders with a view to clarifying needs and objectives. The EESC would stress a number of requirements in this connection:

5.6.1   The EESC stresses first and foremost the need to develop genuine services of general interest at European level, complementing national administrations and in partnership with European users, in order to ensure the sound organisation and security of the EU in areas coming under its collective responsibility.

5.6.1.1   This concerns in particular the organisation of the internal market and customs, but also new areas where the Member States have decided to transfer powers: immigration and asylum policy, justice and home affairs, the establishment of the European diplomatic and external action service as well as guarding external borders.

5.6.2   The EESC also stresses the need to increase trans-European infrastructure investment, inter alia, in order to support these European services of general interest and to ensure that they function correctly. There have been too many delays since Jacques Delors presented the Commission's White Paper in 1993, whose proposals and methodology have hardly been followed up by action. A large area of Europe, especially in the countries which have recently joined the EU, remains excluded from major trade patterns on account of these shortcomings. Among the infrastructure priorities to be met, the EESC stresses structural projects, such as the specifications of the Single European Sky (6), high-speed train lines and networks of navigable canals. Large-scale investment with a European dimension is also required in the field of energy policy in order to ensure greater independence of supply and in order to invest in security, efficiency and renewable energies.

5.6.3   There is also a need for common innovative investment to deal with the new challenges of competitiveness and security in the area of telecommunications, the environment and civil protection.

5.7   As regards the common agricultural policy (CAP), the EESC reiterates its support (7) for an overhaul of the policy. It is a question of reform in order to adapt to the new challenges without renationalising or abandoning the principles which are its strengths: internal and external solidarity, quality of food production, Community preference, territorial cohesion to promote rural areas, especially upland and island areas. Indeed, one of the CAP's main tasks is to upgrade the role of farmers. It is also required to contribute to the sustainable management of natural resources, making it possible to respond in specific ways to the major challenges of combating climate change, protecting the environment and biodiversity (8).

5.8   In respect of external policy and development aid for third countries, the EESC reiterates its support for streamlining the representations of the EU and Members States, as well as making European aid more effective, complementing national aid and in closer partnership with the economic and social stakeholders directly concerned.

5.9   With regard to development aid, where traceability of use has to be ensured, the EESC considers that it would be appropriate to combine the national and European programmes, both in the interests of effectiveness and coherence and in order to make European support more visible. In this connection, the EESC points out that the clause in the Cotonou agreements reserving 15 % of EDF aid for activities by non-state actors was introduced on its initiative. It proposes that this principle be applied and extended to all development programmes.

6.   In search of effectiveness

6.1   At this difficult time for European public finances, the European budget should set an example of good governance. Without resorting to facile demagogy about the administrative costs of the European institutions, which are proportionately much less expensive than national administrations (for example, the European Commission employs no more staff than the city of Paris!), the EESC recommends that measures be taken to highlight the participation of the European institutions in the administrative economies being undertaken by the Member States. At the same time, the institutions, including the EESC, should be mindful of the principles of equal opportunities and non-discrimination enshrined in the Treaty during recruitment and promotion procedures. The EESC stresses, however, that good governance also requires giving European civil society the means to participate fully in the European debate.

6.2   The support provided through the European budget to Member States should itself be subject to greater conditionality; in particular beneficiaries should respect Community rules and ECJ rulings and it should be ensured that Community support is compatible with competition rules.

6.3   Faced with the challenges of converging economic policies within the framework of EMU, support should be geared more towards ensuring conformity with the requirements of the Euro Plus Pact.

6.4   The financial support granted to third countries should be dependent on the traceability of its use, respect for their commitments, especially as regards economic and social reforms geared towards openness, mutual partnerships, and participation of socio-occupational stakeholders from civil society.

6.5   The development of the euro and the need to consolidate the cohesion of the euro area vis à vis the markets also provides untapped possibilities for innovative borrowing and lending policies at European level, multiplying the impact of support from the European budget. First of all, the EESC calls for greater coordination between the ECB, the Eurogroup and the EIB. It welcomes the encouraging results of the first Eurobonds and is keen for them to be extended to the areas of training, research, industry and European infrastructure. At the same time, provided that strict conditions and requirements are met, the establishment of this ‘European treasury’ could be used to pool a significant proportion of the Member States' debts. These instruments would be further evidence of the European Union's internal solidarity, and its political commitment to the irreversibility of the euro.

6.6   The EESC advocates better identification of projects supported by the European Union with a view to focusing on that which offers the greatest European added value. The EESC therefore calls for greater flexibility in the ‘additionality’ rule, which should no longer be judged on a project-by-project basis but rather in a global manner in the framework of strategic partnerships with Member States.

6.7   Accelerating the procedures for defining priorities and allocating funds may also make it possible to respond to certain needs. The EESC has already recommended exploring more widespread use of either specialised agencies or global subsidies to grassroots bodies, such as regions or civil society organisations. The latter technique, which the EESC prefers, has worked well for regional policy and could be extended to all the EU's financial measures.

6.8   For major investment projects the use of EIB loans and private financing must also be encouraged, with a legal framework such as the one formulated in a recent EESC opinion (9). Developing this on a new scale would make it possible to make up the European delays in infrastructure construction and to finance the major technological projects which will determine our competitiveness against a background of globalisation.

6.8.1   Furthermore, the EESC believes that more flexibility and better adapted mechanisms may be required for emergency situations, following the example of the Globalisation Adjustment Fund (10).

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  EESC opinion, EU budget reform and future financing, OJ C 204, 9.8.2008, p. 113.

1

(2)  EESC opinion, Renewal of the Community method (guidelines), OJ C 51, 17.2.2011, p. 29.

2

(3)  Cecchini report on The Cost of Non-Europe, Paolo Cecchini, 1988.

3

(4)  EESC opinion, Universities for Europe, OJ C 128, 18.5.2010, p. 48.

4

(5)  EESC opinion, New skills for new jobs, OJ C 128, 18.5.2010, p. 74.

5

(6)  EESC opinion, Single European Sky, OJ C 182, 4.8.2009, p. 50.

6

(7)  EESC opinion, Strengthening the European agri-food model, OJ C 18, 19.1.2011, p. 1.

7

(8)  EESC opinion, The future of the CAP, OJ C 132, 3.5.2011, p. 63.

8

(9)  EESC opinion, Private and public investment, OJ C 51, 17.2.2011, p. 59.

9

(10)  EESC opinion, EU budget reform and future financing, OJ C 204, 9.8.2008, p. 113.

10

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/81 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/81

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — European Union Strategy for the Danube Region’

COM(2010) 715 final

2011/C 248/14

Co-rapporteur: Mr BARÁTH

Co-rapporteur: Mr MANOLIU

On 8 December 2010, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: European Union Strategy for the Danube Region

COM(2010) 715 final.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 31 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June 2011), the European Economic and Social Committee adopted the following opinion by 150 votes to 3 with 20 abstentions.

1.   Conclusions and recommendations

| 1.1 | The European Economic and Social Committee strongly supports the new approach to the European Union's macro-regional policy and, as part of this, the formulation of the strategy for the Danube region. As the institutional representative of European organised civil society, the EESC would very much like to play a key role in shaping and implementing this strategy, not least through the civil society forum envisaged in the Action Plan for the Strategy. |
| --- | --- |

1.1

The European Economic and Social Committee strongly supports the new approach to the European Union's macro-regional policy and, as part of this, the formulation of the strategy for the Danube region. As the institutional representative of European organised civil society, the EESC would very much like to play a key role in shaping and implementing this strategy, not least through the civil society forum envisaged in the Action Plan for the Strategy.

| 1.2 | The EESC's interest in and commitment to Danube-related issues is not new. The EESC's interest in and commitment to issues relating to the Danube region are not new. Over the years, the Committee has adopted many documents on topics such as transport and environmental protection, including opinion ECO/277 which clearly demonstrates why the EESC attaches such importance to defining a strategy for the Danube region. |
| --- | --- |

1.2

The EESC's interest in and commitment to Danube-related issues is not new. The EESC's interest in and commitment to issues relating to the Danube region are not new. Over the years, the Committee has adopted many documents on topics such as transport and environmental protection, including opinion ECO/277 which clearly demonstrates why the EESC attaches such importance to defining a strategy for the Danube region.

| 1.3 | The EESC believes that when formulating the strategy for the Danube, account should be taken of the role played by the Danube River in forming a common Danube consciousness and identity, in which intercultural dialogue and solidarity are key features. This is a regional contribution to the formation of a common European consciousness. |
| --- | --- |

1.3

The EESC believes that when formulating the strategy for the Danube, account should be taken of the role played by the Danube River in forming a common Danube consciousness and identity, in which intercultural dialogue and solidarity are key features. This is a regional contribution to the formation of a common European consciousness.

| 1.4 | The EESC hopes that its recommendations accurately reflect the strong commitment to and support for this strategy felt by the Committee and organised civil society. The EESC expects that this strategy, as a result of the implementation of the strategy itself and of the action plan supported by the management system, will help raise the living and working conditions of all inhabitants of the Danube region, which it considers to be the mirror of Europe, and shrink the gap between this region and the most developed regions in the EU._The Committee also expects that the implementation of the strategy will take account of the demands of environmental protection, conserve water resources and boost the protection of the region's cultural assets. |
| --- | --- |

1.4

The EESC hopes that its recommendations accurately reflect the strong commitment to and support for this strategy felt by the Committee and organised civil society. The EESC expects that this strategy, as a result of the implementation of the strategy itself and of the action plan supported by the management system, will help raise the living and working conditions of all inhabitants of the Danube region, which it considers to be the mirror of Europe, and shrink the gap between this region and the most developed regions in the EU._The Committee also expects that the implementation of the strategy will take account of the demands of environmental protection, conserve water resources and boost the protection of the region's cultural assets.

| 1.5 | It should be pointed out that in the wake of the recent EU accessions the Union's geographical centre has clearly shifted to the east, while Western Europe continues to be the economic centre of gravity. Economic, social and territorial cohesion, the cornerstone of the strategy for the Danube region and the action plan, together with the ideas underlying the practical implementation of the strategy will help smooth out this imbalance. The EESC feels that the new macro-regional approach could serve as a model for several other EU regions. |
| --- | --- |

1.5

It should be pointed out that in the wake of the recent EU accessions the Union's geographical centre has clearly shifted to the east, while Western Europe continues to be the economic centre of gravity. Economic, social and territorial cohesion, the cornerstone of the strategy for the Danube region and the action plan, together with the ideas underlying the practical implementation of the strategy will help smooth out this imbalance. The EESC feels that the new macro-regional approach could serve as a model for several other EU regions.

| 1.6 | The EESC considers that the strategy and the action plan are receptive, and thus inclusive and responsive to social, economic and environmental concerns, and that they reflect the recommendations of civil society organisations. The strategy will be effective if it takes an integrated and sustainable approach rather than a sectoral one. The EESC recommends that the strategy should help to ensure special treatment of the most socially disadvantaged groups while incorporating tools to combat poverty. |
| --- | --- |

1.6

The EESC considers that the strategy and the action plan are receptive, and thus inclusive and responsive to social, economic and environmental concerns, and that they reflect the recommendations of civil society organisations. The strategy will be effective if it takes an integrated and sustainable approach rather than a sectoral one. The EESC recommends that the strategy should help to ensure special treatment of the most socially disadvantaged groups while incorporating tools to combat poverty.

| 1.7 | The EESC believes that the strategy reflects the EU's new policy at macro-regional level, which is currently being framed, and that therefore it will help harmonise the actions of the cooperation systems which have already been set up in the region and which operate at different levels and in different areas, making them more effective and avoiding overlapping. However, the strategy must be aligned more closely with new developments in cohesion policy. |
| --- | --- |

1.7

The EESC believes that the strategy reflects the EU's new policy at macro-regional level, which is currently being framed, and that therefore it will help harmonise the actions of the cooperation systems which have already been set up in the region and which operate at different levels and in different areas, making them more effective and avoiding overlapping. However, the strategy must be aligned more closely with new developments in cohesion policy.

| 1.8 | The EESC calls for a clear, simple and transparent system of governance for the strategy's implementation, making it possible to advance successfully towards the goals set. The EESC intends to contribute to the full exploitation of the possibilities opened up by the Lisbon Treaty, acting in accordance with the principle of participatory democracy and making an effective contribution to the implementation of the action plan. Success is partly dependent on stakeholders becoming actively involved and participating, while ensuring flexibility and carrying out regular reviews. In view of this, the EESC welcomes the establishment of a Civil Society Forum for the Danube; the Action Plan envisages a key role for the Committee and its national counterparts in this body. |
| --- | --- |

1.8

The EESC calls for a clear, simple and transparent system of governance for the strategy's implementation, making it possible to advance successfully towards the goals set. The EESC intends to contribute to the full exploitation of the possibilities opened up by the Lisbon Treaty, acting in accordance with the principle of participatory democracy and making an effective contribution to the implementation of the action plan. Success is partly dependent on stakeholders becoming actively involved and participating, while ensuring flexibility and carrying out regular reviews. In view of this, the EESC welcomes the establishment of a Civil Society Forum for the Danube; the Action Plan envisages a key role for the Committee and its national counterparts in this body.

| 1.9 | The EESC considers that as a macro-regional development policy the strategy will contribute to deepening the process of European integration, particularly in the context of the Europe 2020 strategy for smart, sustainable and inclusive growth; it will also bring the six states in the region which are not Member States closer to the EU, encouraging them along the road to accession. |
| --- | --- |

1.9

The EESC considers that as a macro-regional development policy the strategy will contribute to deepening the process of European integration, particularly in the context of the Europe 2020 strategy for smart, sustainable and inclusive growth; it will also bring the six states in the region which are not Member States closer to the EU, encouraging them along the road to accession.

| 1.10 | The Commission is drawing up the strategy, but it should be emphasised that this, while it may represent progress in the EU's macro-regional policy, does not mean special treatment for the region. In view of this, the strategy does not have to be one of ‘three nos’, even though:






  1) | it provides no new EU funds. There could be additional international, national, regional or private funds, although better use of existing funds is emphasised; |
| --- | --- | --- |

1.10

The Commission is drawing up the strategy, but it should be emphasised that this, while it may represent progress in the EU's macro-regional policy, does not mean special treatment for the region. In view of this, the strategy does not have to be one of ‘three nos’, even though:

1)

it provides no new EU funds. There could be additional international, national, regional or private funds, although better use of existing funds is emphasised;

| 2) | the EESC views coordinating financial resources in order to achieve the objectives set to be an improvement which, thanks to constant review, will make it possible to identify new funding options. It advocates setting up a specific fund; |
| --- | --- |

2)

the EESC views coordinating financial resources in order to achieve the objectives set to be an improvement which, thanks to constant review, will make it possible to identify new funding options. It advocates setting up a specific fund;

| 3) | it requires no changes to EU legislation, since the EU legislates for the EU27 and not for a macro-region alone; however, the EESC, as in its opinion on the Strategy for the Baltic Sea Region (1), suggests giving Commission departments more resources in order to ensure that the Strategy is properly followed up; |
| --- | --- |

3)

it requires no changes to EU legislation, since the EU legislates for the EU27 and not for a macro-region alone; however, the EESC, as in its opinion on the Strategy for the Baltic Sea Region (1), suggests giving Commission departments more resources in order to ensure that the Strategy is properly followed up;

| 4) | in the EESC's view, changes could, if agreed by actors in the reinforced territorial cooperation, be made at regional, national or other levels, in order to address specific objectives; |
| --- | --- |

4)

in the EESC's view, changes could, if agreed by actors in the reinforced territorial cooperation, be made at regional, national or other levels, in order to address specific objectives;

| 5) | it creates no additional structures which are fundamentally different from those already existing in current EU practice. The strategy will be implemented using coordination structures which are new for the region and existing bodies, whose complementarity must be maximised; |
| --- | --- |

5)

it creates no additional structures which are fundamentally different from those already existing in current EU practice. The strategy will be implemented using coordination structures which are new for the region and existing bodies, whose complementarity must be maximised;

| 6) | the EESC feels that bureaucratic constraints should be minimised, and that a research group should be set up to scientifically analyse and discuss questions relating to the Danube strategy; a scholarship programme should contribute to the work of this group. |
| --- | --- |

6)

the EESC feels that bureaucratic constraints should be minimised, and that a research group should be set up to scientifically analyse and discuss questions relating to the Danube strategy; a scholarship programme should contribute to the work of this group.

2.   European Union Strategy for the Danube region: general comments

| 2.1 | The EESC notes that the Danube region has changed significantly, and the river basin is now largely a European Union space. There are new opportunities for responding to challenges and exploiting the region's potential. Socio-economic development, competitiveness, environmental management and energy-efficient growth can be improved, and security and transport corridors modernised. |
| --- | --- |

2.1

The EESC notes that the Danube region has changed significantly, and the river basin is now largely a European Union space. There are new opportunities for responding to challenges and exploiting the region's potential. Socio-economic development, competitiveness, environmental management and energy-efficient growth can be improved, and security and transport corridors modernised.

| 2.2 | By establishing a framework for long-term cooperation on a wide range of issues, the strategy (2) aims to develop the social culture and vast economic potential of the region and to improve environmental conditions there. |
| --- | --- |

2.2

By establishing a framework for long-term cooperation on a wide range of issues, the strategy (2) aims to develop the social culture and vast economic potential of the region and to improve environmental conditions there.

| 2.3 | The EESC believes that the European Union Strategy for the Danube region will play a key role in improving sustainable transport, linking up energy networks, protecting the environment, preserving water resources and stimulating the business climate. The EESC agrees that the strategy will provide new added value, ensuring consistency between policy fields and greater coordination between participating states and devising an integrated approach to sustainable development. |
| --- | --- |

2.3

The EESC believes that the European Union Strategy for the Danube region will play a key role in improving sustainable transport, linking up energy networks, protecting the environment, preserving water resources and stimulating the business climate. The EESC agrees that the strategy will provide new added value, ensuring consistency between policy fields and greater coordination between participating states and devising an integrated approach to sustainable development.

| 2.4 | The Danube region is a historical, social, economic and functional area defined by its river basin. The strategy expands on this approach: for priorities to be tackled in an integrated way, the people living in this region and their opinions and needs must be linked up. By 2020, every inhabitant of this region must have better local prospects of higher education, jobs and prosperity. With its focus on sustainable growth, the strategy will be in a position to make a major contribution to the achievement of the Europe 2020 strategy objectives. |
| --- | --- |

2.4

The Danube region is a historical, social, economic and functional area defined by its river basin. The strategy expands on this approach: for priorities to be tackled in an integrated way, the people living in this region and their opinions and needs must be linked up. By 2020, every inhabitant of this region must have better local prospects of higher education, jobs and prosperity. With its focus on sustainable growth, the strategy will be in a position to make a major contribution to the achievement of the Europe 2020 strategy objectives.

| 2.5 | The EESC hopes that during the current financial year when no further funds will be allocated for the strategy's implementation, improved harmonisation of the programmes adopted by Danube region countries will enhance the impact of the EUR 100 billion available for the region, bolstered by synergies and trade-offs (for instance, developing cutting-edge green technologies, working towards better alignment of policies and funding to improve impact on the ground, and overcoming fragmentation). |
| --- | --- |

2.5

The EESC hopes that during the current financial year when no further funds will be allocated for the strategy's implementation, improved harmonisation of the programmes adopted by Danube region countries will enhance the impact of the EUR 100 billion available for the region, bolstered by synergies and trade-offs (for instance, developing cutting-edge green technologies, working towards better alignment of policies and funding to improve impact on the ground, and overcoming fragmentation).

| 2.6 | The EESC points out that in view of the current economic circumstances a limited number of projects should be selected in the interests of rationalisation, and an analysis should be carried out to ensure efficiency. In order to strengthen financial and economic cooperation, practical steps are needed together with the development of appropriate guarantees between stakeholders. |
| --- | --- |

2.6

The EESC points out that in view of the current economic circumstances a limited number of projects should be selected in the interests of rationalisation, and an analysis should be carried out to ensure efficiency. In order to strengthen financial and economic cooperation, practical steps are needed together with the development of appropriate guarantees between stakeholders.

| 2.7 | The EESC does not exclude the possibility that at political level, the envisaged strategy for the Danube may have to be implemented in the form of a process which, during the implementation process, will require flexibility, regular reviews and, where appropriate, budgetary resources and other additional support. |
| --- | --- |

2.7

The EESC does not exclude the possibility that at political level, the envisaged strategy for the Danube may have to be implemented in the form of a process which, during the implementation process, will require flexibility, regular reviews and, where appropriate, budgetary resources and other additional support.

| 2.8 | The EESC considers that consistency with EU legislation and policies is at the core of the strategy. Continuous efforts must be made to address implementation gaps and practical or organisational difficulties leading to lack of results. The reinforced territorial dimension will contribute to coordinated cooperation, the emergence of principles for organising coordination in EU regulations and the implementation of the EU's legal obligations, especially in relation to the Single Market and the environment. It could prepare the way for the establishment of enhanced cooperation. |
| --- | --- |

2.8

The EESC considers that consistency with EU legislation and policies is at the core of the strategy. Continuous efforts must be made to address implementation gaps and practical or organisational difficulties leading to lack of results. The reinforced territorial dimension will contribute to coordinated cooperation, the emergence of principles for organising coordination in EU regulations and the implementation of the EU's legal obligations, especially in relation to the Single Market and the environment. It could prepare the way for the establishment of enhanced cooperation.

| 2.9 | The EESC calls for the strategy for the Danube region to become part of the Europe 2020 strategy, the key EU commitment to innovative, sustainable and inclusive growth. This could constitute a precedent for other regional strategies. |
| --- | --- |

2.9

The EESC calls for the strategy for the Danube region to become part of the Europe 2020 strategy, the key EU commitment to innovative, sustainable and inclusive growth. This could constitute a precedent for other regional strategies.

| 2.10 | The EESC agrees that regional cooperation in the Danube region contributes to the five headline targets of the Europe 2020 strategy: promoting employment; improving the conditions for innovation, research and development - especially in relation to promoting emerging technologies; meeting climate change and energy objectives; improving education levels; and promoting social inclusion primarily by reducing poverty and addressing the challenges of ageing. |
| --- | --- |

2.10

The EESC agrees that regional cooperation in the Danube region contributes to the five headline targets of the Europe 2020 strategy: promoting employment; improving the conditions for innovation, research and development - especially in relation to promoting emerging technologies; meeting climate change and energy objectives; improving education levels; and promoting social inclusion primarily by reducing poverty and addressing the challenges of ageing.

3.   European Union Strategy for the Danube region: messages, challenges and problems

| 3.1 | In Central Europe, the dramatic events of 1989 engendered a process of complete social transformation. Particular attention is needed since the Danube region includes Member States which joined at different times, candidate countries and third countries. The EESC considers that most face similar problems, but with different resources available. Exchange of good administrative practice is important to make the region more secure and to reinforce its integration into the EU. |
| --- | --- |

3.1

In Central Europe, the dramatic events of 1989 engendered a process of complete social transformation. Particular attention is needed since the Danube region includes Member States which joined at different times, candidate countries and third countries. The EESC considers that most face similar problems, but with different resources available. Exchange of good administrative practice is important to make the region more secure and to reinforce its integration into the EU.

| 3.2 | The EESC is closely monitoring the extreme economic, social and territorial disparities which can be observed in the Danube region: from highly competitive regions to extremely poor regions, from the highest to the lowest levels of education, from very high to very low living standards, the differences are striking. |
| --- | --- |

3.2

The EESC is closely monitoring the extreme economic, social and territorial disparities which can be observed in the Danube region: from highly competitive regions to extremely poor regions, from the highest to the lowest levels of education, from very high to very low living standards, the differences are striking.

| 3.3 | Marginalised communities in particular (notably Roma, most of whom live in this region) should benefit from the possibilities offered by the Europe 2020 strategy. Disparities in education and employment can be overcome and the region can be made a secure area, where conflict, marginalisation and crime are properly addressed. People living in the region and their ideas and needs must be linked up. In its opinion on ‘The European Union strategy for the Danube region’ (3) the EESC recommended setting up a ‘Danube Business Forum’, which would include social and economic actors, and which could be an important tool for cooperation and economic, social and territorial cohesion in the Danube region. |
| --- | --- |

3.3

Marginalised communities in particular (notably Roma, most of whom live in this region) should benefit from the possibilities offered by the Europe 2020 strategy. Disparities in education and employment can be overcome and the region can be made a secure area, where conflict, marginalisation and crime are properly addressed. People living in the region and their ideas and needs must be linked up. In its opinion on ‘The European Union strategy for the Danube region’ (3) the EESC recommended setting up a ‘Danube Business Forum’, which would include social and economic actors, and which could be an important tool for cooperation and economic, social and territorial cohesion in the Danube region.

| 3.4 | The proposal for an EU strategy for the Danube region sets out the following key messages:






  1) | the strategy is a welcome initiative aimed at reinforcing the integration of the region into the EU; |
| --- | --- | --- |

3.4

The proposal for an EU strategy for the Danube region sets out the following key messages:

1)

the strategy is a welcome initiative aimed at reinforcing the integration of the region into the EU;

| 2) | Member States and third countries (including candidate and potential candidate countries) commit themselves at the highest political level; |
| --- | --- |

2)

Member States and third countries (including candidate and potential candidate countries) commit themselves at the highest political level;

| 3) | the Commission plays a key role in facilitating the process; |
| --- | --- |

3)

the Commission plays a key role in facilitating the process;

| 4) | existing resources can be much better used for strategy objectives; and |
| --- | --- |

4)

existing resources can be much better used for strategy objectives; and

| 5) | the strategy must deliver visible, tangible improvements for the region and its people. |
| --- | --- |

5)

the strategy must deliver visible, tangible improvements for the region and its people.

| 3.5 | The EESC agrees that the strategy for the Danube region should address the major challenges which have arisen:
  —   Mobility: the Danube itself is a major TEN-T corridor used way below its full capacity. Further consideration should be given to how_the known physical and organisational bottlenecks relating to the Danube (including the Belgrade Convention) can be cleared, taking account of national decisions_and imperatives regarding environmental and nature protection._There is also a particular need for greater multi-modality, and for modernising and extending infrastructure in transport nodes such as inland ports. The EESC feels that it is of great importance to improve conditions for employees' mobility and to ensure the free movement of services.
  —   Energy: prices are relatively high in the region: fragmented markets lead to higher costs and reduced competition. The region has low energy security. Improved efficiency, including energy saving and more use of renewable sources, is crucial. The countries participating in implementation of the strategy should play a proactive role in developing European neighbourhood policy favouring energy security.
  —   Environment: the Danube Region is a major international hydrological basin and ecological corridor. This requires a regional, holistic approach to nature conservation, spatial planning and water management. Social demands and the environmental impact of transport networks, tourist developments or new energy plants must also be considered. It is vital to take the Natura 2000 programme into consideration. Water sports and sustainable water-based tourism, together with the teaching of respect for water and nature, are key elements to take into account when designing green corridors. The risks are substantial: prevention, preparedness and effective reaction capacity require a high degree of cooperation and information sharing as long as flooding, droughts and industrial pollution on varying scales are frequent occurrences.
  —   Socio-economic factors: the Danube region has a rich and diverse cultural and linguistic heritage, but it also has very wide economic and social disparities. It has some of the most successful but also some of the poorest regions in the EU. Contacts and effective cooperation are often lacking, both financially and institutionally. The share of highly educated people in the Danube region is lower than the EU27 average and there is high mobility, with the best people often leaving the area in search of better economic and social conditions.
  —   Security, serious and organised crime: significant problems persist. Trafficking in human beings and smuggling of goods are particular problems in several countries. Corruption undermines public confidence and hampers economic and social development. |
| --- | --- |

3.5

The EESC agrees that the strategy for the Danube region should address the major challenges which have arisen:

—   Mobility: the Danube itself is a major TEN-T corridor used way below its full capacity. Further consideration should be given to how_the known physical and organisational bottlenecks relating to the Danube (including the Belgrade Convention) can be cleared, taking account of national decisions_and imperatives regarding environmental and nature protection._There is also a particular need for greater multi-modality, and for modernising and extending infrastructure in transport nodes such as inland ports. The EESC feels that it is of great importance to improve conditions for employees' mobility and to ensure the free movement of services.

—   Energy: prices are relatively high in the region: fragmented markets lead to higher costs and reduced competition. The region has low energy security. Improved efficiency, including energy saving and more use of renewable sources, is crucial. The countries participating in implementation of the strategy should play a proactive role in developing European neighbourhood policy favouring energy security.

—   Environment: the Danube Region is a major international hydrological basin and ecological corridor. This requires a regional, holistic approach to nature conservation, spatial planning and water management. Social demands and the environmental impact of transport networks, tourist developments or new energy plants must also be considered. It is vital to take the Natura 2000 programme into consideration. Water sports and sustainable water-based tourism, together with the teaching of respect for water and nature, are key elements to take into account when designing green corridors. The risks are substantial: prevention, preparedness and effective reaction capacity require a high degree of cooperation and information sharing as long as flooding, droughts and industrial pollution on varying scales are frequent occurrences.

—   Socio-economic factors: the Danube region has a rich and diverse cultural and linguistic heritage, but it also has very wide economic and social disparities. It has some of the most successful but also some of the poorest regions in the EU. Contacts and effective cooperation are often lacking, both financially and institutionally. The share of highly educated people in the Danube region is lower than the EU27 average and there is high mobility, with the best people often leaving the area in search of better economic and social conditions.

—   Security, serious and organised crime: significant problems persist. Trafficking in human beings and smuggling of goods are particular problems in several countries. Corruption undermines public confidence and hampers economic and social development.

| 3.6 | The EESC also believes that the Danube region has remarkable prospects as regards trade relations, the development capacity of the education system which is based on sound municipal infrastructure and which will respond to future labour market needs, and mining the vast potential of the region's cultural, ethnic and social wealth. No other river runs through so many marvellous capital cities. The region has exceptional tourist attractions. The same applies to the use of renewable energy. The rich environmental heritage of the Danube region means that sustainability must be made a core criterion in all development projects. |
| --- | --- |

3.6

The EESC also believes that the Danube region has remarkable prospects as regards trade relations, the development capacity of the education system which is based on sound municipal infrastructure and which will respond to future labour market needs, and mining the vast potential of the region's cultural, ethnic and social wealth. No other river runs through so many marvellous capital cities. The region has exceptional tourist attractions. The same applies to the use of renewable energy. The rich environmental heritage of the Danube region means that sustainability must be made a core criterion in all development projects.

| 3.7 | Work on innovation, tourism, the information society, institutional capacity and marginalised communities will be beneficial if it is done jointly. The EESC has no doubt that tangible improvements require communication, transparency and coordinated planning, funding and implementation. |
| --- | --- |

3.7

Work on innovation, tourism, the information society, institutional capacity and marginalised communities will be beneficial if it is done jointly. The EESC has no doubt that tangible improvements require communication, transparency and coordinated planning, funding and implementation.

| 3.8 | Market failures, due to external factors, are strikingly evident in the lack of cross-border investment. Large projects need to be identified and implemented sustainably and efficiently, with shared costs and benefits. |
| --- | --- |

3.8

Market failures, due to external factors, are strikingly evident in the lack of cross-border investment. Large projects need to be identified and implemented sustainably and efficiently, with shared costs and benefits.

| 3.9 | Good connections are key for the Danube region, both internally or with other European and global regions. No area should remain peripheral. Improving the North – South axes of the EU and the access of landlocked countries to the Mediterranean basin will strengthen cooperation between EU and non-EU states. The EESC reiterates earlier calls to this effect by the Joint Consultative Committees with Romania (2002, 2005) and FYROM (2010). Transport and energy infrastructures still have many gaps and deficiencies, due to insufficient capacity or quality or poor maintenance. Better connections between people are also needed, especially through culture and tourism. |
| --- | --- |

3.9

Good connections are key for the Danube region, both internally or with other European and global regions. No area should remain peripheral. Improving the North – South axes of the EU and the access of landlocked countries to the Mediterranean basin will strengthen cooperation between EU and non-EU states. The EESC reiterates earlier calls to this effect by the Joint Consultative Committees with Romania (2002, 2005) and FYROM (2010). Transport and energy infrastructures still have many gaps and deficiencies, due to insufficient capacity or quality or poor maintenance. Better connections between people are also needed, especially through culture and tourism.

| 3.10 | Environmental resources are shared across borders and go beyond national interests. These are under growing pressure from human activity. Cooperation is crucial, as otherwise good work in one place is quickly undone by neglect elsewhere. Existing cooperation structures should be reinforced. |
| --- | --- |

3.10

Environmental resources are shared across borders and go beyond national interests. These are under growing pressure from human activity. Cooperation is crucial, as otherwise good work in one place is quickly undone by neglect elsewhere. Existing cooperation structures should be reinforced.

| 3.11 | The strategy (4) proposes an action plan
   (5), which requires a strong commitment by the countries and stakeholders concerned. The strategy places an emphasis on an integrated and place-based approach and good links between urban and rural areas. Fair access to infrastructures and services, and comparable living conditions will promote territorial cohesion, now an explicit EU objective. |
| --- | --- |

3.11

The strategy (4) proposes an action plan
   (5), which requires a strong commitment by the countries and stakeholders concerned. The strategy places an emphasis on an integrated and place-based approach and good links between urban and rural areas. Fair access to infrastructures and services, and comparable living conditions will promote territorial cohesion, now an explicit EU objective.

| 3.12 | As part of the action plan, the Commission, in partnership with Member States, regions and other stakeholders, has selected projects (6) which demonstrate immediate and visible benefits for the people of the region and have an impact on the macro-region (or a significant part of it). |
| --- | --- |

3.12

As part of the action plan, the Commission, in partnership with Member States, regions and other stakeholders, has selected projects (6) which demonstrate immediate and visible benefits for the people of the region and have an impact on the macro-region (or a significant part of it).

| 3.13 | The EESC feels that projects should therefore promote sustainable development and cover several regions and countries. They should be consistent and mutually supportive, creating win-win solutions, and should be realistic (technically feasible and with credible funding). |
| --- | --- |

3.13

The EESC feels that projects should therefore promote sustainable development and cover several regions and countries. They should be consistent and mutually supportive, creating win-win solutions, and should be realistic (technically feasible and with credible funding).

| 3.14 | The EESC agrees that four pillars address the major issues. Each comprises Priority Areas, distinct fields of action. These are as follows:






  1) | Connecting the Danube region by: improving mobility and multimodality, inland waterways and road, rail and air links in order to encourage more sustainable energy and to promote culture, tourism and people-to-people contacts; |
| --- | --- | --- |

3.14

The EESC agrees that four pillars address the major issues. Each comprises Priority Areas, distinct fields of action. These are as follows:

1)

Connecting the Danube region by: improving mobility and multimodality, inland waterways and road, rail and air links in order to encourage more sustainable energy and to promote culture, tourism and people-to-people contacts;

| 2) | Protecting the environment in the Danube region by: restoring and maintaining water quality, managing environmental risks, preserving biodiversity, landscapes and air and soil quality; |
| --- | --- |

2)

Protecting the environment in the Danube region by: restoring and maintaining water quality, managing environmental risks, preserving biodiversity, landscapes and air and soil quality;

| 3) | Building prosperity in the Danube region by: developing the knowledge society through research, education and information technologies, supporting the competitiveness of enterprises, including cluster development, and investing in people and skills; |
| --- | --- |

3)

Building prosperity in the Danube region by: developing the knowledge society through research, education and information technologies, supporting the competitiveness of enterprises, including cluster development, and investing in people and skills;

| 4) | Strengthening the Danube region by: stepping up institutional capacity and cooperation and working together to promote security and tackle organised and serious crime. |
| --- | --- |

4)

Strengthening the Danube region by: stepping up institutional capacity and cooperation and working together to promote security and tackle organised and serious crime.

| 3.15 | The EESC feels that the Danube region, a region which is developing and becoming more prosperous, needs above all to ensure coordinated development of - currently lacking - North-South transport and energy infrastructures and of interconnected networks; macro-regional interests can be invoked to justify these developments. However, the EESC recommends putting in place a plan to safeguard catchment areas and tributaries of the Danube if the river itself is to be developed as a transport route. The strategy also sets out to bring together entrepreneurs from SMEs in the participating countries in the Danube region; it sets the objective of dismantling barriers to cooperation based on the green economy, research networks, and education, including vocational education. |
| --- | --- |

3.15

The EESC feels that the Danube region, a region which is developing and becoming more prosperous, needs above all to ensure coordinated development of - currently lacking - North-South transport and energy infrastructures and of interconnected networks; macro-regional interests can be invoked to justify these developments. However, the EESC recommends putting in place a plan to safeguard catchment areas and tributaries of the Danube if the river itself is to be developed as a transport route. The strategy also sets out to bring together entrepreneurs from SMEs in the participating countries in the Danube region; it sets the objective of dismantling barriers to cooperation based on the green economy, research networks, and education, including vocational education.

4.   Funding, EU legislation and EU institutional structures

| 4.1 | The strategy seeks to make best use of what is available by aligning efforts, specifically areas of action and funding. Actions are complementary. All stakeholders must take responsibility. A reinforced territorial dimension will provide an integrated approach, and encourage better coordination of sectoral policies. It will also contribute to the establishment and development on a macro-regional scale of European groupings of territorial cooperation (EGTCs). |
| --- | --- |

4.1

The strategy seeks to make best use of what is available by aligning efforts, specifically areas of action and funding. Actions are complementary. All stakeholders must take responsibility. A reinforced territorial dimension will provide an integrated approach, and encourage better coordination of sectoral policies. It will also contribute to the establishment and development on a macro-regional scale of European groupings of territorial cooperation (EGTCs).

| 4.2 | The EESC considers that the high-level group which will be set up to decide on regulation and identify the main issues, along with the coordinators responsible for the various topics, can embody this new form of institutionalised cooperation at macro-regional level, which may also be supported by the legislative changes which will be formulated in the region where appropriate. |
| --- | --- |

4.2

The EESC considers that the high-level group which will be set up to decide on regulation and identify the main issues, along with the coordinators responsible for the various topics, can embody this new form of institutionalised cooperation at macro-regional level, which may also be supported by the legislative changes which will be formulated in the region where appropriate.

| 4.3 | The strategy will be implemented by mobilising and aligning existing funding to its objectives, where appropriate and in line with overall frameworks. Indeed, much is already available via numerous EU programmes (e.g. EUR 100 billion from the Structural Funds 2007-2013, as well as significant Instrument for Pre-accession Assistance (IPA) and European Neighbourhood and Partnership Instrument (ENPI) funds). |
| --- | --- |

4.3

The strategy will be implemented by mobilising and aligning existing funding to its objectives, where appropriate and in line with overall frameworks. Indeed, much is already available via numerous EU programmes (e.g. EUR 100 billion from the Structural Funds 2007-2013, as well as significant Instrument for Pre-accession Assistance (IPA) and European Neighbourhood and Partnership Instrument (ENPI) funds).

| 4.4 | The EESC draws attention to the fact that resources should only be redeployed on the basis of a performance analysis testifying that the resources diverted from other areas benefit society as a whole. |
| --- | --- |

4.4

The EESC draws attention to the fact that resources should only be redeployed on the basis of a performance analysis testifying that the resources diverted from other areas benefit society as a whole.

| 4.5 | The EESC believes that attention should be paid to combining grants and loans. National, regional and local resources can also be used. Having access to funding from different sources, especially from public and private sources below EU level, is important. At the same time as improving efficiency, financing should pay attention to risk-sharing. |
| --- | --- |

4.5

The EESC believes that attention should be paid to combining grants and loans. National, regional and local resources can also be used. Having access to funding from different sources, especially from public and private sources below EU level, is important. At the same time as improving efficiency, financing should pay attention to risk-sharing.

| 4.6 | The EESC considers that the coordination of areas of action is the responsibility of the Commission, while the coordination of each priority area is the task of the Member States, in consultation with the Commission and relevant regional agencies and bodies. |
| --- | --- |

4.6

The EESC considers that the coordination of areas of action is the responsibility of the Commission, while the coordination of each priority area is the task of the Member States, in consultation with the Commission and relevant regional agencies and bodies.

| 4.7 | The EESC believes strongly that implementation of actions is the responsibility of all, at national, regional, municipal and local level. Actions (which state the objectives to be reached) must be transformed into practical projects (which are detailed and require a project leader, a timeframe and financing). |
| --- | --- |

4.7

The EESC believes strongly that implementation of actions is the responsibility of all, at national, regional, municipal and local level. Actions (which state the objectives to be reached) must be transformed into practical projects (which are detailed and require a project leader, a timeframe and financing).

| 4.8 | The EESC hopes that the strategy will provide a sustainable framework for strategic integration and coherent development of the Danube region, setting out priority actions to make it an EU region for the 21st century. It must be accompanied by hard work and sufficient information and publicity to ensure that its objectives are widely known and put into practice. |
| --- | --- |

4.8

The EESC hopes that the strategy will provide a sustainable framework for strategic integration and coherent development of the Danube region, setting out priority actions to make it an EU region for the 21st century. It must be accompanied by hard work and sufficient information and publicity to ensure that its objectives are widely known and put into practice.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  JO C 339/07, 14.12.2010, p. 29.

1

(2)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - European Union Strategy for the Danube region (SEC(2010) 1489 final), (SEC(2010) 1490 final), (SEC(2010) 1491 final).

2

(3)  JO C 48/02, 15.02.2011, p. 2.

3

(4)  The EU Strategy for the Danube Region is described in two documents: (1) a Communication from the European Commission to the other EU Institutions, and (2) an accompanying action plan which complements the Communication.

4

(5)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - European Union Strategy for the Danube Region, (COM(2010) 715 final), (SEC(2010) 1489 final), (SEC(2010) 1490 final), (SEC(2010) 1491 final).

5

(6)  Promoting the idea of a Danube Civil Forum as a pillar of civil society participation in the Strategy.

6

---

APPENDIX

to the Opinion of the European Economic and Social Committee

The following amendment was rejected by the plenary session but received at least one-quarter of the votes cast:

Point 3.8 —   Amendment 4 tabled by Mr Ribbe

Amend point 3.8 as follows:

Market failures, due to external factors, are strikingly evident in the lack of cross-border investment.

Reason

| 1.) | ‘Large projects’ are no doubt also urgently needed in the Danube region, but it is not clear what is meant by large projects. Since such a large - indeed mega - project is specifically mentioned in point 3.9, the EESC should be wary of creating the impression that it believes major projects like that described drive development. Small and medium-sized projects are far more suited to generating new jobs while being compatible with sustainability and environment goals. Thus in Bulgaria, where restrictions have been introduced on extending renewable energy owing to inadequate energy networks, investment in implementing new energy concepts would be helpful. But this is probably not what is meant here. |
| --- | --- |

1.)

‘Large projects’ are no doubt also urgently needed in the Danube region, but it is not clear what is meant by large projects. Since such a large - indeed mega - project is specifically mentioned in point 3.9, the EESC should be wary of creating the impression that it believes major projects like that described drive development. Small and medium-sized projects are far more suited to generating new jobs while being compatible with sustainability and environment goals. Thus in Bulgaria, where restrictions have been introduced on extending renewable energy owing to inadequate energy networks, investment in implementing new energy concepts would be helpful. But this is probably not what is meant here.

| 2.) | It is not clear what the co-rapporteurs mean by sharing costs and benefits: who is to pay for large projects, and who is to share out the profits and how? |
| --- | --- |

2.)

It is not clear what the co-rapporteurs mean by sharing costs and benefits: who is to pay for large projects, and who is to share out the profits and how?

Outcome of the vote:

| For | : | 68 |
| --- | --- | --- |
| Against | : | 71 |
| Abstentions | : | 26 |

For

:

68

Against

:

71

Abstentions

:

26

---

| 25.8.2011 | EN | Official Journal of the European Union | C 248/87 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/87

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Smart Regulation in the European Union’

COM(2010) 543 final

2011/C 248/15

Rapporteur: Mr PEGADO LIZ

On 8 October 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Smart Regulation in the European Union

COM(2010) 543 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 128 votes to 1, with 5 abstentions.

1.   Conclusions and recommendations

| 1.1 | The EESC welcomes the interest the Commission has shown, not only in this communication but also in its documents on the 2020 Strategy and the Single Market Act, on strengthening political, legislative and administrative procedures to ensure that Community law is devised and applied in a more rational, appropriate manner throughout the policy cycle, from design to implementation by the competent Member State bodies and the final evaluation of compliance with such law by its ultimate beneficiaries. |
| --- | --- |

1.1

The EESC welcomes the interest the Commission has shown, not only in this communication but also in its documents on the 2020 Strategy and the Single Market Act, on strengthening political, legislative and administrative procedures to ensure that Community law is devised and applied in a more rational, appropriate manner throughout the policy cycle, from design to implementation by the competent Member State bodies and the final evaluation of compliance with such law by its ultimate beneficiaries.

| 1.2 | The Committee fails, however, to understand the need for the new term used to replace ‘Better lawmaking’; unless it is because the communication under consideration is merely a policy document. |
| --- | --- |

1.2

The Committee fails, however, to understand the need for the new term used to replace ‘Better lawmaking’; unless it is because the communication under consideration is merely a policy document.

| 1.3 | The EESC is pleased to see that a number of the suggestions it has made in its opinions on the matter have been taken on board and consequently welcomes the stated intentions to improve monitoring of subsidiarity and proportionality, make impact studies more rigorous, ensure ex-post assessments are to be more strategic and integrated and involve the Member States and their parliaments more actively, giving them greater responsibility and offering support for their own work on the legislative arena. The Committee is particularly satisfied to note the proposal to ensure greater participation by the public and other stakeholders in drafting, transposing and implementing Community legislation, specifically by extending public consultation periods and by streamlining infringement proceedings and making them more effective. |
| --- | --- |

1.3

The EESC is pleased to see that a number of the suggestions it has made in its opinions on the matter have been taken on board and consequently welcomes the stated intentions to improve monitoring of subsidiarity and proportionality, make impact studies more rigorous, ensure ex-post assessments are to be more strategic and integrated and involve the Member States and their parliaments more actively, giving them greater responsibility and offering support for their own work on the legislative arena. The Committee is particularly satisfied to note the proposal to ensure greater participation by the public and other stakeholders in drafting, transposing and implementing Community legislation, specifically by extending public consultation periods and by streamlining infringement proceedings and making them more effective.

| 1.4 | The Committee considers, however, that the communication falls short of what might be hoped for in terms of providing an adequate means of formalising the legislative aspects of implementing the 2020 Strategy, or simply of applying the measures that are priorities under the Single Market Act. |
| --- | --- |

1.4

The Committee considers, however, that the communication falls short of what might be hoped for in terms of providing an adequate means of formalising the legislative aspects of implementing the 2020 Strategy, or simply of applying the measures that are priorities under the Single Market Act.

| 1.5 | The EESC deems it crucial that the communication be followed up by a genuine action plan that sets objectives, puts forward measures, identifies instruments, assesses impact, defines options and establishes the cost/benefit ratio, which will require extensive prior discussion with civil society at Community, national, regional and local levels. |
| --- | --- |

1.5

The EESC deems it crucial that the communication be followed up by a genuine action plan that sets objectives, puts forward measures, identifies instruments, assesses impact, defines options and establishes the cost/benefit ratio, which will require extensive prior discussion with civil society at Community, national, regional and local levels.

| 1.6 | The Committee therefore urges the Commission, in future versions of the communication, to take particular account of the general guidelines set out in this opinion and justify the positions it has held in this area for some years now. |
| --- | --- |

1.6

The Committee therefore urges the Commission, in future versions of the communication, to take particular account of the general guidelines set out in this opinion and justify the positions it has held in this area for some years now.

| 1.7 | In particular, the EESC considers that aspects such as the way in which ex ante impact assessments are carried out by all Community institutions responsible for implementing them, the nature and membership of the body responsible for monitoring impact assessments, the parameters used, especially as regards the impact on fundamental rights, and the ways and means of ensuring greater transparency, should be more clearly defined. The financial, health and social security sectors should also be addressed on a more detailed, sector-specific basis and the criteria for deciding on priorities, the mechanisms for evaluating and processing complaints, the instruments for automatically detecting infringements and the means of improving the workings of national courts and other complementary instruments also need to be more clearly defined. |
| --- | --- |

1.7

In particular, the EESC considers that aspects such as the way in which ex ante impact assessments are carried out by all Community institutions responsible for implementing them, the nature and membership of the body responsible for monitoring impact assessments, the parameters used, especially as regards the impact on fundamental rights, and the ways and means of ensuring greater transparency, should be more clearly defined. The financial, health and social security sectors should also be addressed on a more detailed, sector-specific basis and the criteria for deciding on priorities, the mechanisms for evaluating and processing complaints, the instruments for automatically detecting infringements and the means of improving the workings of national courts and other complementary instruments also need to be more clearly defined.

| 1.8 | Lastly, the Committee takes the view that the Commission has overlooked a number of important aspects and calls for these to be properly discussed and specifically included. This applies to: the indices and parameters for gauging the quality of legal texts; practical measures for simplifying legislation; the inexplicable failure to opt clearly for ‘regulation’ instruments, especially for achieving full harmonisation in matters relating to the completion of the internal market; the unforgiveable omission of the option of optional schemes; the role of self-regulation and co-regulation; the surprising omission of any reference to the extremely important work carried out under the CFR; and the proposals currently under discussion on greater harmonisation of European contract law. |
| --- | --- |

1.8

Lastly, the Committee takes the view that the Commission has overlooked a number of important aspects and calls for these to be properly discussed and specifically included. This applies to: the indices and parameters for gauging the quality of legal texts; practical measures for simplifying legislation; the inexplicable failure to opt clearly for ‘regulation’ instruments, especially for achieving full harmonisation in matters relating to the completion of the internal market; the unforgiveable omission of the option of optional schemes; the role of self-regulation and co-regulation; the surprising omission of any reference to the extremely important work carried out under the CFR; and the proposals currently under discussion on greater harmonisation of European contract law.

| 1.9 | The area where the EESC considers the communication to be weakest, however, concerns the proper application of Community legislation. The Committee therefore urges the Commission to examine closely the root causes of the universally poor application of the Community acquis, which is confirmed anew every year in the reports on this issue. The EESC would also like the Commission to take due account of the numerous contributions and recommendations made by the Committee in different opinions and carry out a systematic study of the measures needed to effect a sea-change in the current situation. |
| --- | --- |

1.9

The area where the EESC considers the communication to be weakest, however, concerns the proper application of Community legislation. The Committee therefore urges the Commission to examine closely the root causes of the universally poor application of the Community acquis, which is confirmed anew every year in the reports on this issue. The EESC would also like the Commission to take due account of the numerous contributions and recommendations made by the Committee in different opinions and carry out a systematic study of the measures needed to effect a sea-change in the current situation.

2.   Introduction: concept and background

| 2.1 | According to the communication under consideration, ‘smart regulation’ should be understood to mean regulation:






  — | that is about the whole policy cycle - from the design of a piece of legislation, to implementation, enforcement, evaluation and revision; |
| --- | --- | --- |

2.1

According to the communication under consideration, ‘smart regulation’ should be understood to mean regulation:

—

that is about the whole policy cycle - from the design of a piece of legislation, to implementation, enforcement, evaluation and revision;

| — | that must remain a shared responsibility of the European institutions and of Member States; |
| --- | --- |

—

that must remain a shared responsibility of the European institutions and of Member States;

| — | in which the views of those most affected by regulation have a key role to play, requiring the voice of citizens and stakeholders to be further strengthened. |
| --- | --- |

—

in which the views of those most affected by regulation have a key role to play, requiring the voice of citizens and stakeholders to be further strengthened.

| 2.2 | The Commission considers that, as repeatedly and insistently stated by its representative at the preparatory meetings for this EESC opinion, this is merely a policy document and not a technical one, which means that it is pointless to expect it to provide a firm definition of ‘smart regulation’. |
| --- | --- |

2.2

The Commission considers that, as repeatedly and insistently stated by its representative at the preparatory meetings for this EESC opinion, this is merely a policy document and not a technical one, which means that it is pointless to expect it to provide a firm definition of ‘smart regulation’.

| 2.3 | The current initiative on ‘smart regulation’ is the successor, however, to the ‘better regulation’ exercise, to which the Community institutions in general and the Commission in particular have, with marked success, devoted considerable efforts in the last 10 years, as has the EESC, which has always supported and encouraged the initiative, as clearly demonstrated in a number of opinions (1). |
| --- | --- |

2.3

The current initiative on ‘smart regulation’ is the successor, however, to the ‘better regulation’ exercise, to which the Community institutions in general and the Commission in particular have, with marked success, devoted considerable efforts in the last 10 years, as has the EESC, which has always supported and encouraged the initiative, as clearly demonstrated in a number of opinions (1).

3.   General comments

| 3.1 | The current Community legislative landscape requires an in-depth consideration of the design, drafting, transposal and implementation of laws, and the same consideration should be given to revision and streamlining. |
| --- | --- |

3.1

The current Community legislative landscape requires an in-depth consideration of the design, drafting, transposal and implementation of laws, and the same consideration should be given to revision and streamlining.

| 3.2 | The EESC therefore considers that the issue warrants in-depth discussion, involving civil society, not only because the consequences of Community legislation impact on civil society, but also because its involvement could make a decisive contribution to the improvement in the existing regulatory framework that everyone wishes to see. |
| --- | --- |

3.2

The EESC therefore considers that the issue warrants in-depth discussion, involving civil society, not only because the consequences of Community legislation impact on civil society, but also because its involvement could make a decisive contribution to the improvement in the existing regulatory framework that everyone wishes to see.

| 3.3 | Against such a backdrop, the Communication, being merely a policy document, appears to fall short of what is required. Whilst it offers more than enough fine proposals and good intentions, it lacks tangible measures and effective instruments. |
| --- | --- |

3.3

Against such a backdrop, the Communication, being merely a policy document, appears to fall short of what is required. Whilst it offers more than enough fine proposals and good intentions, it lacks tangible measures and effective instruments.

| 3.4 | Broadly speaking, it could be said that, because this is merely a policy document, it will need to be complemented by a real programme that states the aims, gives form to the measures proposed, identifies the instruments needed and assesses the potential impacts. The programme should set out the options and establish the cost/benefit ratio. |
| --- | --- |

3.4

Broadly speaking, it could be said that, because this is merely a policy document, it will need to be complemented by a real programme that states the aims, gives form to the measures proposed, identifies the instruments needed and assesses the potential impacts. The programme should set out the options and establish the cost/benefit ratio.

| 3.5 | The EESC roundly welcomes the analysis underpinning the Communication and the objectives it proposes. Unless it is because this is merely a policy document, the EESC fails to understand why the term ‘better regulation’ should be changed to ‘smart regulation’. |
| --- | --- |

3.5

The EESC roundly welcomes the analysis underpinning the Communication and the objectives it proposes. Unless it is because this is merely a policy document, the EESC fails to understand why the term ‘better regulation’ should be changed to ‘smart regulation’.

| 3.6 | The EESC therefore considers it useful to restate the positions it has put forward on this subject:






  a) | a stricter application of the ‘better regulation’ principles; |
| --- | --- | --- |

3.6

The EESC therefore considers it useful to restate the positions it has put forward on this subject:

a)

a stricter application of the ‘better regulation’ principles;

| b) | greater transparency at all levels of drafting legislation; |
| --- | --- |

b)

greater transparency at all levels of drafting legislation;

| c) | a better selection of legal instruments, including mechanisms for self-regulation and co-regulation; |
| --- | --- |

c)

a better selection of legal instruments, including mechanisms for self-regulation and co-regulation;

| d) | the development of a more systematic monitoring system for the transposal of directives at national level; |
| --- | --- |

d)

the development of a more systematic monitoring system for the transposal of directives at national level;

| e) | the new role and greater powers of national parliaments conferred by the Treaty of Lisbon should not be overlooked; |
| --- | --- |

e)

the new role and greater powers of national parliaments conferred by the Treaty of Lisbon should not be overlooked;

| f) | the Commission should also make more regular use of its interpretative communications; |
| --- | --- |

f)

the Commission should also make more regular use of its interpretative communications;

| g) | greater efforts will also be needed in terms of streamlining and codifying legislation. |
| --- | --- |

g)

greater efforts will also be needed in terms of streamlining and codifying legislation.

4.   Specific comments

A.   Aspects to be welcomed

| 4.1 | The specific comments must highlight a number of positive aspects of the Communication, which are to be welcomed and supported. |
| --- | --- |

4.1

The specific comments must highlight a number of positive aspects of the Communication, which are to be welcomed and supported.

| 4.2 | There is primarily the proposal to monitor subsidiarity and proportionality more closely and to improve the quality of legal texts, specifically through more rigorous impact assessments. |
| --- | --- |

4.2

There is primarily the proposal to monitor subsidiarity and proportionality more closely and to improve the quality of legal texts, specifically through more rigorous impact assessments.

| 4.3 | There are also the intentions to continue with programmes to streamline legislation and reduce unnecessary administrative burden by at least 25 %. |
| --- | --- |

4.3

There are also the intentions to continue with programmes to streamline legislation and reduce unnecessary administrative burden by at least 25 %.

| 4.4 | The idea of a more strategic and integrated ex-post assessment is also to be welcomed, which takes account not only of the existing legislative framework but also of the relevant economic, social and environmental implications and is not simply carried out on a case-by-case and isolated basis for each legislative initiative. |
| --- | --- |

4.4

The idea of a more strategic and integrated ex-post assessment is also to be welcomed, which takes account not only of the existing legislative framework but also of the relevant economic, social and environmental implications and is not simply carried out on a case-by-case and isolated basis for each legislative initiative.

| 4.5 | Especially to be welcomed are all initiatives aimed at encouraging the Member States to shoulder their responsibilities in the legislative process, involving national parliaments, in line with the new powers conferred on them by the TFEU, in preparing legal texts and, in particular, as regards the provisions of Articles 8 and 13 thereof. |
| --- | --- |

4.5

Especially to be welcomed are all initiatives aimed at encouraging the Member States to shoulder their responsibilities in the legislative process, involving national parliaments, in line with the new powers conferred on them by the TFEU, in preparing legal texts and, in particular, as regards the provisions of Articles 8 and 13 thereof.

| 4.6 | The EESC therefore welcomes the fact that the Commission is prepared not only to offer support to the various Member State bodies involved in transposing and implementing the Community acquis, but also to ensure the participation of the public and other stakeholders in the discussions that should take place in every Member State as part of the process of preparing Community legislation, and in transposing these laws and fitting them into national legislation. |
| --- | --- |

4.6

The EESC therefore welcomes the fact that the Commission is prepared not only to offer support to the various Member State bodies involved in transposing and implementing the Community acquis, but also to ensure the participation of the public and other stakeholders in the discussions that should take place in every Member State as part of the process of preparing Community legislation, and in transposing these laws and fitting them into national legislation.

| 4.7 | Particularly welcome is the Commission's determination to streamline infringement procedures and to set priorities, whilst continuing to make use of SOLVIT, given the need for a new boost and greater dissemination and credibility amongst stakeholders. |
| --- | --- |

4.7

Particularly welcome is the Commission's determination to streamline infringement procedures and to set priorities, whilst continuing to make use of SOLVIT, given the need for a new boost and greater dissemination and credibility amongst stakeholders.

| 4.8 | Also praiseworthy is the extension of the time limit for public consultation from 8 to 12 weeks, ‘to strengthen the voice of citizens and stakeholders further’. The EESC considers that this measure cannot be separated from what is now contained in Article 11 of the Treaty of Lisbon, as a contribution to achieving participatory democracy in the EU. |
| --- | --- |

4.8

Also praiseworthy is the extension of the time limit for public consultation from 8 to 12 weeks, ‘to strengthen the voice of citizens and stakeholders further’. The EESC considers that this measure cannot be separated from what is now contained in Article 11 of the Treaty of Lisbon, as a contribution to achieving participatory democracy in the EU.

B.   What could be improved

| 4.9 | The EESC understands why the Commission takes the view that monitoring of impact assessments should continue to be carried out by the internal committee responsible for the matter. Nevertheless, account should also be taken of the views expressed in the public consultation process to the effect that monitoring should be carried out by an independent external body. Alternatively, an internal body could be set up, with representatives from all the Member States. In any event, the Impact Assessment Board's mandate needs to be strengthened through a mechanism requiring impact assessments to be carried out. Moreover, the Impact Assessment Board does not have the power to put the impact assessment report and de facto the related legislative proposal on hold should its analysis disclose major shortcomings in the research work carried out. These are issues that require more in-depth discussion, given that, as the Commission acknowledges, they are a ‘key element of this system’. |
| --- | --- |

4.9

The EESC understands why the Commission takes the view that monitoring of impact assessments should continue to be carried out by the internal committee responsible for the matter. Nevertheless, account should also be taken of the views expressed in the public consultation process to the effect that monitoring should be carried out by an independent external body. Alternatively, an internal body could be set up, with representatives from all the Member States. In any event, the Impact Assessment Board's mandate needs to be strengthened through a mechanism requiring impact assessments to be carried out. Moreover, the Impact Assessment Board does not have the power to put the impact assessment report and de facto the related legislative proposal on hold should its analysis disclose major shortcomings in the research work carried out. These are issues that require more in-depth discussion, given that, as the Commission acknowledges, they are a ‘key element of this system’.

| 4.10 | Furthermore, a recent report carried out by the European Court of Auditors concludes that the European Commission does not consider it necessary to consult on draft impact assessments, despite the frequent requests by stakeholders. Consultation on the draft impact assessment reports would help improve the process from the stakeholders' point of view, thus ensuring that the ‘best product’ would then feed into the co-legislative process involving the Council of Ministers and the European Parliament. |
| --- | --- |

4.10

Furthermore, a recent report carried out by the European Court of Auditors concludes that the European Commission does not consider it necessary to consult on draft impact assessments, despite the frequent requests by stakeholders. Consultation on the draft impact assessment reports would help improve the process from the stakeholders' point of view, thus ensuring that the ‘best product’ would then feed into the co-legislative process involving the Council of Ministers and the European Parliament.

| 4.11 | The same Court of Auditors' report clearly highlighted one of the main weaknesses in the EU impact assessment system as the fact that neither the European Parliament nor the Council systematically analyse the impact of their own amendments. The EESC asks the Council and the European Parliament to produce and publish reader-friendly summaries of their own impact assessments and to adhere to the Interinstitutional Agreement (2). |
| --- | --- |

4.11

The same Court of Auditors' report clearly highlighted one of the main weaknesses in the EU impact assessment system as the fact that neither the European Parliament nor the Council systematically analyse the impact of their own amendments. The EESC asks the Council and the European Parliament to produce and publish reader-friendly summaries of their own impact assessments and to adhere to the Interinstitutional Agreement (2).

| 4.12 | The communication does not detail the parameters that might be used in the impact assessments it wishes to carry out (3). |
| --- | --- |

4.12

The communication does not detail the parameters that might be used in the impact assessments it wishes to carry out (3).

| 4.13 | As regards improving the system's transparency, the Commission should state how and with what means it intends to achieve this. |
| --- | --- |

4.13

As regards improving the system's transparency, the Commission should state how and with what means it intends to achieve this.

| 4.14 | In terms of assessing the impact on fundamental rights, it would be useful for the Commission to specify how and with what means it intends to achieve this too. |
| --- | --- |

4.14

In terms of assessing the impact on fundamental rights, it would be useful for the Commission to specify how and with what means it intends to achieve this too.

| 4.15 | The current economic crisis has demonstrated that the role of regulation of market players needs to be rethought, and the new exercise of ‘smart regulation’ should consequently be addressed on both a sector-by-sector and cross-sectoral basis, with the communication needing to pay particular attention to the sectors of finance, health and social security. |
| --- | --- |

4.15

The current economic crisis has demonstrated that the role of regulation of market players needs to be rethought, and the new exercise of ‘smart regulation’ should consequently be addressed on both a sector-by-sector and cross-sectoral basis, with the communication needing to pay particular attention to the sectors of finance, health and social security.

| 4.16 | As regards how it exercises its powers concerning infringements, especially ‘internal organisation measures to allow it to carry out its task effectively and impartially, in accordance with the Treaty.’ (4), it is suggested that the Commission detail priority criteria, assessment mechanisms, examination of complaints, specific instruments to detect infringements unofficially, means to improve the action of national courts and other complementary instruments (SOLVIT, FIN-NET, ECC-NET, alternative and extra-judicial means). |
| --- | --- |

4.16

As regards how it exercises its powers concerning infringements, especially ‘internal organisation measures to allow it to carry out its task effectively and impartially, in accordance with the Treaty.’ (4), it is suggested that the Commission detail priority criteria, assessment mechanisms, examination of complaints, specific instruments to detect infringements unofficially, means to improve the action of national courts and other complementary instruments (SOLVIT, FIN-NET, ECC-NET, alternative and extra-judicial means).

C.   What is missing

| 4.17 | As for improving the quality of legal texts, no indication is given of the factors and parameters that would be used to assess this process. |
| --- | --- |

4.17

As for improving the quality of legal texts, no indication is given of the factors and parameters that would be used to assess this process.

| 4.18 | As regards the issue of streamlining legislation, no reference is made to the seemingly obvious requirement for tangible measures, such as:






  — | work on genuine and thorough codification, and not simply a compilation of texts; |
| --- | --- | --- |

4.18

As regards the issue of streamlining legislation, no reference is made to the seemingly obvious requirement for tangible measures, such as:

—

work on genuine and thorough codification, and not simply a compilation of texts;

| — | publication of the complete texts when they have been revised and amended, instead of merely ‘collating’ them and referring to articles from different pieces of legislation. |
| --- | --- |

—

publication of the complete texts when they have been revised and amended, instead of merely ‘collating’ them and referring to articles from different pieces of legislation.

| 4.19 | No clear acknowledgement is given of the option for the ‘regulation’ instrument as opposed to the use of directives, despite this approach forming part of the 2020 Strategy. |
| --- | --- |

4.19

No clear acknowledgement is given of the option for the ‘regulation’ instrument as opposed to the use of directives, despite this approach forming part of the 2020 Strategy.

| 4.20 | No link is established with the extremely important work that has been carried out on the Common Frame of Reference (CFR) or with the Commission's recent proposals under discussion to further harmonise European contract law (5). |
| --- | --- |

4.20

No link is established with the extremely important work that has been carried out on the Common Frame of Reference (CFR) or with the Commission's recent proposals under discussion to further harmonise European contract law (5).

| 4.21 | No reference is made to the need for systematic consideration to be given to the option of a ‘28th regime’, for initiatives covered by ‘Better regulation’ (6). |
| --- | --- |

4.21

No reference is made to the need for systematic consideration to be given to the option of a ‘28th regime’, for initiatives covered by ‘Better regulation’ (6).

| 4.22 | It is also surprising that the communication is silent on the role of self-regulation and co-regulation and on the prior consideration needed on what could usefully be resolved under so-called ‘soft law’, instead of using regulation. |
| --- | --- |

4.22

It is also surprising that the communication is silent on the role of self-regulation and co-regulation and on the prior consideration needed on what could usefully be resolved under so-called ‘soft law’, instead of using regulation.

| 4.23 | The area where the communication proves weakest, however, is that of the implementation of Community law. In this regard, the EESC wishes to draw attention to its opinions on the matter (7) and to the conclusions of the recent conference held by the Belgian presidency on the issue (8). |
| --- | --- |

4.23

The area where the communication proves weakest, however, is that of the implementation of Community law. In this regard, the EESC wishes to draw attention to its opinions on the matter (7) and to the conclusions of the recent conference held by the Belgian presidency on the issue (8).

| 4.24 | Particularly significant in this regard is the Commission report of 1 October 2010 (9) on the application of EU law, which shows that, despite the fact there was a smaller improvement than in the previous year, an average of 51 % of required transposition measures were late and the average time taken to complete infringement proceedings was 24 months. |
| --- | --- |

4.24

Particularly significant in this regard is the Commission report of 1 October 2010 (9) on the application of EU law, which shows that, despite the fact there was a smaller improvement than in the previous year, an average of 51 % of required transposition measures were late and the average time taken to complete infringement proceedings was 24 months.

| 4.25 | In this regard, the Commission fails to mention any of the root causes of the widespread inadequate implementation of the Community acquis in the Member States, a matter on which the EESC has commented on many occasions, which can only be explained by the fact that this is merely a policy document. Nevertheless, because of its importance within the framework of smarter regulation, it is worth highlighting the following aspects:






  a) | the incorrect or incomplete incorporation of Community rules into national legislation, where they are often deemed to be undesirable or to run contrary to national customs and interests; |
| --- | --- | --- |

4.25

In this regard, the Commission fails to mention any of the root causes of the widespread inadequate implementation of the Community acquis in the Member States, a matter on which the EESC has commented on many occasions, which can only be explained by the fact that this is merely a policy document. Nevertheless, because of its importance within the framework of smarter regulation, it is worth highlighting the following aspects:

a)

the incorrect or incomplete incorporation of Community rules into national legislation, where they are often deemed to be undesirable or to run contrary to national customs and interests;

| b) | the lack of political will on the part of national authorities to comply and ensure compliance with rules which are not seen as fitting in with the body of national law and national traditions; |
| --- | --- |

b)

the lack of political will on the part of national authorities to comply and ensure compliance with rules which are not seen as fitting in with the body of national law and national traditions;

| c) | the persistent tendency to add new, unnecessary regulatory mechanisms to Community rules or to choose only some parts of these rules (gold-plating and cherry-picking) even making it advisable, in addition to the ‘correlation tables’ that the Member States have to produce, as set out in the Interinstitutional Agreement (10) and the Framework Agreement between the Commission and the European Parliament, for Member States also to be required to specify what provisions of their transposed legislation constitute over-regulation; |
| --- | --- |

c)

the persistent tendency to add new, unnecessary regulatory mechanisms to Community rules or to choose only some parts of these rules (gold-plating and cherry-picking) even making it advisable, in addition to the ‘correlation tables’ that the Member States have to produce, as set out in the Interinstitutional Agreement (10) and the Framework Agreement between the Commission and the European Parliament, for Member States also to be required to specify what provisions of their transposed legislation constitute over-regulation;

| d) | a degree of inadequate specific preparation on the part of national authorities in order to understand and ensure application of the Community acquis; |
| --- | --- |

d)

a degree of inadequate specific preparation on the part of national authorities in order to understand and ensure application of the Community acquis;

| e) | the sometimes insufficiently specific training of some judges and other players in the judicial system (lawyers, court officials, etc), in certain areas of Community law, which sometimes leads to erroneous application or lack of application of transposed laws and to the application of parallel rules under national legislation; |
| --- | --- |

e)

the sometimes insufficiently specific training of some judges and other players in the judicial system (lawyers, court officials, etc), in certain areas of Community law, which sometimes leads to erroneous application or lack of application of transposed laws and to the application of parallel rules under national legislation;

| f) | the need to extend administrative cooperation measures to involve civil society organisations, particularly consumer protection associations; |
| --- | --- |

f)

the need to extend administrative cooperation measures to involve civil society organisations, particularly consumer protection associations;

| g) | the lack of foresight and harmonisation of punitive law, which has been left up to Member States. |
| --- | --- |

g)

the lack of foresight and harmonisation of punitive law, which has been left up to Member States.

| 4.26 | Commission action should also, as a priority, target information and training for national public authorities, in particular those with direct responsibilities for the application of Community law in the Member States. Here, better information and training should be provided for judges and other public prosecutors in general, whose responsibility it is ultimately to interpret and apply the law to specific cases which are the subject of dispute. |
| --- | --- |

4.26

Commission action should also, as a priority, target information and training for national public authorities, in particular those with direct responsibilities for the application of Community law in the Member States. Here, better information and training should be provided for judges and other public prosecutors in general, whose responsibility it is ultimately to interpret and apply the law to specific cases which are the subject of dispute.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  OJ C 48, 15.2.2011, p. 107 and OJ C 175, 28.7.2009, p. 26.

1

(2)  OJ C 321, 31.12.2003, p. 1.

2

(3)  OJ C 44, 11.02.2011, p. 23.

3

(4)  COM(2002) 725 final.

4

(5)  Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses (COM(2010) 348 final).

5

(6)  See the EESC own-initiative opinion on the ‘28th regime’ (OJ C 21, 21.01.2011, p.26) and the references made to this method in recent key reports such as the Monti report entitled A new strategy for the single market, of 9.5.2010, the report by Felipe González entitled Project Europe 2030, of 8.5.2010, and the Lamassoure report on The citizen and the application of Community law, of 8.6.2008.

6

(7)  OJ C 24, 31.1.2006, p. 52, and OJ C 18, 19.01.2011, p. 100.

7

(8)  High Level Conference: European consumer protection enforcement day (Brussels, 22.09.2010).

8

(9)  See COM (2010) 538 Final, 27th Annual Report on Monitoring the Application of EU Law (2009).

9

(10)  OJ C 321, 31.12.2003, p. 1.

10

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/92 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/92

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Opinion of the European Economic and Social Committee on the ‘Green Paper – Audit Policy: Lessons from the Crisis’

COM(2010) 561 final

2011/C 248/16

Rapporteur: Mr MORGAN

On 13 October 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the EU, on the

Green Paper - Audit Policy: Lessons from the Crisis

COM(2010) 561 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 153 votes to 1 with 7 abstentions.

1.   Conclusions and recommendations

1.1   Overview

1.1.1   The Green Paper is entitled ‘Audit Policy – Lessons from the Crisis’. The EESC believes the scale of the crisis was due to the fact that none of the parties involved performed as they should have, least of all the boards of many banks. Given the failure of bank boards, regulators, supervisors and statutory auditors (SA) should have detected the problems which caused the crisis. This they failed to do. The EU has already addressed the issues of regulation and supervision. A review of the role of SA is clearly necessary – indeed, the EESC called for just such a review in its 2009 opinion on the De Larosiere Report (1). The Green Paper goes beyond the role of audit to consider matters such as governance, supervision and concentration. The EESC agrees that these issues do have a bearing on the performance of auditors during the crisis.

1.1.2   The Green Paper asks 38 questions. Three questions deal with very contentious issues: question 18, mandatory tendering, question 28, joint audit and question 32, reversing big four consolidation. In each case, whatever policy the Commission is minded to adopt, the EESC urges that a rigorous impact assessment is conducted before arriving at any decision.

1.2   Role of the auditor

1.2.1   The role of the SA as presently defined and practiced is not fit for purpose. The Audit or Supervisory committee is the essential counterpart to the SA.

Greater independence for the SA and a reformation of the audit or supervisory committee are central to the proposals in this opinion.

1.2.2   The EESC proposes that the 2006 Audit Directive be amended in order to enhance the role of the audit or supervisory committee:

| — | A majority of committee members and the committee chairman must be independent. |
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A majority of committee members and the committee chairman must be independent.

| — | The competence of some Committee members must be relevant to the sectoral characteristics of the company involved, especially in the banking sector. |
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The competence of some Committee members must be relevant to the sectoral characteristics of the company involved, especially in the banking sector.

| — | The audit or supervisory committee should not only monitor, but actually take responsibility for the integrity of the audit process. |
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The audit or supervisory committee should not only monitor, but actually take responsibility for the integrity of the audit process.

1.2.3   In respect of dual management systems which have both a management board and a supervisory board, the EESC favours strengthening the link between the SA and the supervisory board.

1.2.4   In general, the EESC sees a need for the following improvements:

| — | clarification of the SA's remit and corresponding responsibility; |
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clarification of the SA's remit and corresponding responsibility;

| — | greater clarity and intelligibility in the SA's reporting, especially in respect of existing risks; |
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greater clarity and intelligibility in the SA's reporting, especially in respect of existing risks;

| — | making the audit more of a company health check by a commentary on the analysis prepared by the main or supervisory board of the viability of the business model, its financial strength and the visibility of and approach to business risks; |
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making the audit more of a company health check by a commentary on the analysis prepared by the main or supervisory board of the viability of the business model, its financial strength and the visibility of and approach to business risks;

| — | better communication between the SA and the company's supervisory bodies during the year, while the audit is still ongoing. |
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better communication between the SA and the company's supervisory bodies during the year, while the audit is still ongoing.

1.3   Governance and independence

The EESC does not support the mandatory rotation of SA engagements but it agrees that the continuous engagement of SA firms should be limited by mandatory re-tendering the audit contract every six to eight years. The provision of non audit services by SA to their clients should be strictly controlled by the express approval of the audit or supervisory committee while for larger companies the provision by the SA of risk advice and internal audit services should be banned because of the conflict of interest involved. Provision of tax advice should be curtailed whenever a material SA conflict of interest could be involved.

1.4   Supervision

There should be a statutory obligation for SA and supervisors to meet regularly. This is particularly necessary in the case of systemically important banks.

1.5   Concentration

The concentration of most of the large company audit market in the hands of the Big Four firms is an oligopoly. There were five firms until Arthur Anderson failed. Another failure would be unthinkable. The EESC recommends short term action via living wills to mitigate the effect of a possible firm failure. For the longer term, the Committee considers that a reconfiguration of the market will be necessary. To this end it recommends referral of the oligopoly to Member State competition authorities starting with Germany, the Netherlands and the UK.

1.6   European market

The creation of an effective European market for statutory audit is a desirable goal, but differences in tax, law and language remain formidable obstacles. Some rationalisation is possible.

1.7   Simplification for SMEs

SMEs come in all shapes and sizes. If there are external investments and or important bank facilities and or major customers and suppliers concerned about the integrity of their value chains, it is difficult to envisage many short cuts.

1.8   International cooperation

The EESC considers this to be mandatory. This requires initiatives with the FSB and the G20 but the most immediate efforts should be with the USA via the G8

1.9   Corporate Governance

The EESC regrets that the Audit Policy Green Paper does not include a chapter on corporate governance. A new Green Paper on Corporate Governance (COM (2011) 164 final) has just been published. It is imperative that the Commission integrates its proposals on corporate governance with its proposals on audit policy. These issues are inextricably linked in so far as the veracity of company accounts is concerned.

2.   Introduction

2.1   Under existing legislation, it is the responsibility of the board of directors to keep the accounts of the company and to present a true and fair view of a company's affairs. Large companies are obliged to use the IFRS accounting convention. It is the responsibility of the SA to give an opinion as to whether a true and fair view has been presented by the board and as to whether the IFRS convention has been followed. The report of the directors and the opinion of the SA are both published in the Annual Report and Accounts of companies. Pre-crisis annual reports prepared by bank directors gave no warning of the coming crisis while SA continued to give those reports a clean bill of health. The main lesson from the crisis is that this state of affairs needs to change. It is the view of the EESC that the focus of that change should be on the audit or supervisory committee and safeguarding the independence of the SA.

2.2   The status quo is reflected in the statements by directors and SA published in Annual Reports. The Committee has also examined statutory audit reports from France, Germany, Spain and the UK. In all Member States, the focus of the SA is on procedure and process. Reference to IFRS conformance is repeated by SA throughout the EU. Concerns are now being expressed that box ticking IFRS conformity is removing judgement from some aspects of accounting and auditing.

2.3   An examination of audit opinions in Germany by one of the Big 4 firms on the 2009 accounts of Deutsche Bank, Munich Re and BMW inter alia reveals, in the English translation, almost identical wording, although the three businesses are very different. This tendency to use stylised text hides the substance of the audit from the user. The SA confirms that appropriate procedures have been followed, but there is no evidence of the richness of the audit. The EESC believes that changes are needed to ensure that audit reports put substance ahead of form.

2.4   External auditors largely rely on the internal control systems of their clients, with a great part of the audit focus being on the integrity of these systems. Larger companies have formal internal audit functions which are independent of the finance function and report directly to the audit committee. Internal audit is responsible for verifying the integrity of internal control systems. Some companies sub-contract internal audit to a third party. Where this is the case, the sub-contract services should never be provided by the appointed SA firm. It is the responsibility of the audit or supervisory committee to ensure the independence of the internal audit function and, by extension, the integrity of the system of internal controls.

2.5   While the audit will provide assurance of the financial information contained in the annual accounts, currently no specific opinion is given on the business decisions taken by the Company. One of the lessons from this crisis is that directors should identify in their reports the underlying state of affairs, including an assessment of the ‘risks’, and that that SA should provide a level of assurance on these statements. For this reason, SA should not advise their clients on risk assessment and risk management (2).

2.6   After considering the deficiencies and failures of the present system of reporting to shareholders and stakeholders and especially in the light of the fate of certain banks during the crisis, there has been widespread support for expanding the role of the audit or supervisory committee. For example, the UK Financial Reporting Council has proposed the following principles as a basis for the reform of reporting:

| — | higher quality narrative reporting, particularly on business strategy and risk management; |
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higher quality narrative reporting, particularly on business strategy and risk management;

| — | more widespread recognition of the importance of Audit Committees and, therefore, greater emphasis on their contribution to the integrity of financial reporting; |
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more widespread recognition of the importance of Audit Committees and, therefore, greater emphasis on their contribution to the integrity of financial reporting;

| — | greater transparency of the way that Audit Committees discharge their responsibilities in relation to the integrity of the Annual Report, including oversight of the external auditors; |
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greater transparency of the way that Audit Committees discharge their responsibilities in relation to the integrity of the Annual Report, including oversight of the external auditors;

| — | more information about the audit process, both for Audit Committees and for investors and a broadening of the scope of the auditor's responsibilities; and |
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more information about the audit process, both for Audit Committees and for investors and a broadening of the scope of the auditor's responsibilities; and

| — | more accessible Annual Reports through the use of technology. |
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more accessible Annual Reports through the use of technology.

2.7   The EESC endorses these principles. The implications are as follows:

| 1. | Directors will need to describe in more detail the steps that they take to ensure both the reliability of the information on which both the management of a company and the directors' stewardship of the company is based; and provide more transparency about the activities of the business and any associated risks. |
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1.

Directors will need to describe in more detail the steps that they take to ensure both the reliability of the information on which both the management of a company and the directors' stewardship of the company is based; and provide more transparency about the activities of the business and any associated risks.

| 2. | Statutory Auditors will need to provide reports that includes a section on the completeness and reasonableness of the Audit Committee report and identifies any matters in the Annual Report that the SA believe are incorrect or inconsistent with the information contained in the financial statements or obtained in the course of their audit. |
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2.

Statutory Auditors will need to provide reports that includes a section on the completeness and reasonableness of the Audit Committee report and identifies any matters in the Annual Report that the SA believe are incorrect or inconsistent with the information contained in the financial statements or obtained in the course of their audit.

| 3. | The growing strength of Audit or Supervisory Committees in holding management and SA to account should be reinforced by greater transparency through fuller reports by these committees explaining, in particular, how they discharged their responsibilities for the integrity of the Annual Report and other aspects of their remit such as their oversight of the external audit process and appointment of SA. |
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3.

The growing strength of Audit or Supervisory Committees in holding management and SA to account should be reinforced by greater transparency through fuller reports by these committees explaining, in particular, how they discharged their responsibilities for the integrity of the Annual Report and other aspects of their remit such as their oversight of the external audit process and appointment of SA.

2.8   The 2006 EU Directive on Statutory Audit contains the following instructions in respect of audit committees:

Each public-interest entity shall have an audit committee. The Member State shall determine whether audit committees are to be composed of non-executive members of the administrative body and/or members of the supervisory body of the audited entity and/or members appointed by the general meeting of shareholders of the audited entity. At least one member of the audit committee shall be independent and shall have competence in accounting and/or auditing.

Without prejudice to the responsibility of the members of the administrative, management or supervisory bodies, or of other members who are appointed by the general meeting of shareholders of the audited entity, the audit committee shall, inter alia, monitor:

| 1. | the financial reporting process; |
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1.

the financial reporting process;

| 2. | the effectiveness of the company's internal control, internal audit where applicable, and risk management systems; |
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2.

the effectiveness of the company's internal control, internal audit where applicable, and risk management systems;

| 3. | the statutory audit of the annual and consolidated accounts. |
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3.

the statutory audit of the annual and consolidated accounts.

2.8.1   In order to give effect to the principles and precepts detailed in paragraphs 2.6 and 2.7 above, the EESC believes that this instruction must be modified while the existing rules on co-determination are retained, to require that a majority of committee members and the committee chairman should be independent.

2.8.2   A simple requirement of competence in accounting and/or auditing is insufficient. The competence of some Committee members must be relevant to the sectoral characteristics of the company involved, especially in the banking sector.

2.8.3   The EESC believes that the audit or supervisory committee should not just monitor, but actually take responsibility for the integrity of these processes, in line with the principles and precepts detailed in paragraphs 2.6 and 2.7 above.

2.9   If it is given that the directors are responsible for the accounts, consideration should be given to the roles and responsibilities of directors in respect of the veracity of the accounts. For example, directors certify that they have made all the necessary enquiries to enable them to stand behind the accounts with good conscience. Can we believe that banking boards were making the necessary enquiries in the pre-crisis period? Did they have any comprehension of their liquidity risks, the poor quality of their mortgage related assets and of the risks embedded in their loan books? In future, banks and other companies will need to ensure that the independent directors appointed to the board come with an appropriate skill set and a better understanding of their role and responsibilities.

2.10   The principles detailed in paragraph 2.6 above will require a more general review of corporate governance if they are to be successfully implemented. It is essential that the conclusions from both Corporate Governance and Audit Policy Green Papers are integrated so that there are no gaps between them.

2.11   In summary, while directors are responsible for presenting a true and fair view of the business, the SA have to be sure that a true and fair view has been presented. Limitation of liability is an extraordinary privilege enjoyed by public limited companies. The statutory audit is designed to ensure that privilege is not abused. Shareholders, bondholders, bankers and other creditors have a direct financial exposure. They depend directly on the veracity of financial statements. The livelihood of other stakeholders – whether employees, customers or suppliers - depends on the company continuing as a going concern. In the banking crisis statutory auditors failed, as did all the other responsible parties. Audit cannot be immune from the reform and supervision being introduced elsewhere in the financial system. The status quo is not an option.

3.   Questions

3.1   Introduction

| 1) | Do you have general remarks on the approach and purposes of this Green Paper?
  Please refer to section 1 of this opinion. |
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1)

Please refer to section 1 of this opinion.

| 2) | Do you believe that there is a need to better set out the societal role of the audit with regard to the veracity of financial statements?
  The veracity of financial statements is the sine qua non of a society which depends largely on the performance of public limited liability companies in a market economy. The public interest requires that companies survive and thrive. There is a complex multiplicity of dependent interests: shareholders, bondholders, banks and other creditors who depend on the statements to judge the safety of their investments and loans; employees who depend on the statements to judge the safety of their jobs and wages; other stakeholders who depend on the statements to judge the security of the company as an employer, supplier or customer; local communities and local and national governments which rely on the accounts as a measure of the company's contribution to society, as well as its taxpaying capacity.
  Apart from these considerations, banks and other credit institutions play a fundamental role in the operation of the market economy. During the financial crisis banks failed to fulfil their role of moving money around the economy. As a result, the veracity of their financial statements prior to the crisis has been rightly called into question. True and fair financial statements are the bedrock of EU political, social and economic organisation. Firms which undertake statutory audits are responsible for protecting the public interest. |
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2)

The veracity of financial statements is the sine qua non of a society which depends largely on the performance of public limited liability companies in a market economy. The public interest requires that companies survive and thrive. There is a complex multiplicity of dependent interests: shareholders, bondholders, banks and other creditors who depend on the statements to judge the safety of their investments and loans; employees who depend on the statements to judge the safety of their jobs and wages; other stakeholders who depend on the statements to judge the security of the company as an employer, supplier or customer; local communities and local and national governments which rely on the accounts as a measure of the company's contribution to society, as well as its taxpaying capacity.

Apart from these considerations, banks and other credit institutions play a fundamental role in the operation of the market economy. During the financial crisis banks failed to fulfil their role of moving money around the economy. As a result, the veracity of their financial statements prior to the crisis has been rightly called into question. True and fair financial statements are the bedrock of EU political, social and economic organisation. Firms which undertake statutory audits are responsible for protecting the public interest.

| 3) | Do you believe that the general level of ‘audit quality’ could be further enhanced?
  Yes, audit reports are not meaningful. They do not reflect the work of the SA. With the advent of IFRS, the audited accounts may also be less meaningful, particularly in the case of the banks. |
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3)

Yes, audit reports are not meaningful. They do not reflect the work of the SA. With the advent of IFRS, the audited accounts may also be less meaningful, particularly in the case of the banks.

3.2   Role of the Auditor

| 4) | Do you believe that audits should provide comfort on the financial health of companies? Are audits fit for such a purpose?
  As they stand, audits are not fit for such a purpose. The on-going financial health of a company is a function of the resilience of its business model. Testing the model is mainly the role of institutions and analysts, not the SA. Even so, changes must be made. In their reports, directors need to be more transparent about the actual health of the company. Providing external assurance on these disclosures should then be a function for the SA. To do this, SA will need sector specific understanding of inherent risks which appears to have been lacking as the complexity of banking assets increased. In this context, there should also be an explanation of the judgements made to confirm the going concern. |
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4)

As they stand, audits are not fit for such a purpose. The on-going financial health of a company is a function of the resilience of its business model. Testing the model is mainly the role of institutions and analysts, not the SA. Even so, changes must be made. In their reports, directors need to be more transparent about the actual health of the company. Providing external assurance on these disclosures should then be a function for the SA. To do this, SA will need sector specific understanding of inherent risks which appears to have been lacking as the complexity of banking assets increased. In this context, there should also be an explanation of the judgements made to confirm the going concern.

| 5) | To bridge the expectation gap and in order to clarify the role of audits, should the audit methodology employed be better explained to users?
  Yes. SAs make brief statements in the Report and Accounts but these are process oriented and reveal nothing of their findings, concerns or judgements. It is not just a question of explaining methodology. The directors must explain their judgements and decisions and then the SA should explain the process by which they conclude that the accounts do give a true and fair view. In doing this, it will be important to ensure that SA do not once again revert to boiler plate language. |
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5)

Yes. SAs make brief statements in the Report and Accounts but these are process oriented and reveal nothing of their findings, concerns or judgements. It is not just a question of explaining methodology. The directors must explain their judgements and decisions and then the SA should explain the process by which they conclude that the accounts do give a true and fair view. In doing this, it will be important to ensure that SA do not once again revert to boiler plate language.

| 6) | Should ‘professional scepticism’ be reinforced? How could this be achieved?
  Professional scepticism can be reinforced by training, non-audit experience, peer review of audit findings and the leadership of audit partners. In addition, the greater transparency required of the auditors under the proposals in section 2 will require SA to exercise professional scepticism more rigorously than heretofore. The establishment of a professional disciplinary body in each Member State would reinforce scepticism.
  It is likely that professional scepticism would be further enhanced by economic independence. The scale of non-audit services supplied to audit clients should be reviewed and critically assessed by the audit or supervisory committee so as to restrict any conflict of interest between the exercise of professional scepticism and the retention of important client revenues. It is also possible that scepticism would be reinforced if mandatory tendering (question 18) reduced the probability of extended tenure by the incumbent audit firm. |
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6)

Professional scepticism can be reinforced by training, non-audit experience, peer review of audit findings and the leadership of audit partners. In addition, the greater transparency required of the auditors under the proposals in section 2 will require SA to exercise professional scepticism more rigorously than heretofore. The establishment of a professional disciplinary body in each Member State would reinforce scepticism.

It is likely that professional scepticism would be further enhanced by economic independence. The scale of non-audit services supplied to audit clients should be reviewed and critically assessed by the audit or supervisory committee so as to restrict any conflict of interest between the exercise of professional scepticism and the retention of important client revenues. It is also possible that scepticism would be reinforced if mandatory tendering (question 18) reduced the probability of extended tenure by the incumbent audit firm.

| 7) | Should the negative perception attached to qualifications in audit reports be reconsidered? If so, how?
  No. Shareholders and stakeholders should be concerned if the report of the directors needs to be qualified by the SA. However, greater transparency in the reporting by the Directors and/or the Audit or Supervisory Committee may provide greater clarity to shareholders as to the reasons why an SA has qualified an audit report.
  In the case of banks, a qualification can create a crisis of confidence with potential systemic implications. Therefore any SA concerns should be reported as soon as possible to regulators and supervisors so that potential issues are speedily addressed. |
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7)

No. Shareholders and stakeholders should be concerned if the report of the directors needs to be qualified by the SA. However, greater transparency in the reporting by the Directors and/or the Audit or Supervisory Committee may provide greater clarity to shareholders as to the reasons why an SA has qualified an audit report.

In the case of banks, a qualification can create a crisis of confidence with potential systemic implications. Therefore any SA concerns should be reported as soon as possible to regulators and supervisors so that potential issues are speedily addressed.

| 8) | What additional information should be provided to external stakeholders and how?
  SA have a responsibility to shareholders and by extension to employees and other stakeholders. They do not report separately to stakeholders. The company is responsible for information provided to stakeholders. As proposed in section 2, more information should be provided to the company's supervisory bodies, shareholders employees and other stakeholders by both directors and SA, and with greater transparency.
  In addition, the EESC urges that in those audit reports made to main and supervisory board, the SA comments clearly on risks ascertained. The SA should be a source of information that brings to light potential risks to the company's viability. This information should provide a commentary on possible risk scenarios, potential damage levels and their probability. The effects of accounting policies on the company's assets, finances and profits should be assessed in a more transparent way. |
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8)

SA have a responsibility to shareholders and by extension to employees and other stakeholders. They do not report separately to stakeholders. The company is responsible for information provided to stakeholders. As proposed in section 2, more information should be provided to the company's supervisory bodies, shareholders employees and other stakeholders by both directors and SA, and with greater transparency.

In addition, the EESC urges that in those audit reports made to main and supervisory board, the SA comments clearly on risks ascertained. The SA should be a source of information that brings to light potential risks to the company's viability. This information should provide a commentary on possible risk scenarios, potential damage levels and their probability. The effects of accounting policies on the company's assets, finances and profits should be assessed in a more transparent way.

| 9) | Is there adequate and regular dialogue between the external auditors, internal auditors and the Audit Committee? If not, how can this communication be improved?
  The banking crisis would suggest regular and adequate dialogue did not take place in all cases, but in many cases it will have. An enhanced role for the audit committee would result in improved communications. |
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9)

The banking crisis would suggest regular and adequate dialogue did not take place in all cases, but in many cases it will have. An enhanced role for the audit committee would result in improved communications.

| 10) | Do you think auditors should play a role in ensuring the reliability of the information companies are reporting in the field of CSR?
  Possibly, but not before there is EU agreement on what the reporting standards might be. |
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10)

Possibly, but not before there is EU agreement on what the reporting standards might be.

| 11) | Should there be more regular communication by the auditor to stakeholders? Also, should the time gap between the year end and the date of the audit opinion be reduced?
  Stakeholders are covered at Q8 above. Timing is not an issue. |
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11)

Stakeholders are covered at Q8 above. Timing is not an issue.

| 12) | What other measures could be envisaged to enhance the value of audits?
  The Commission should review of the impact of the introduction of IFRS, particularly in respect of their application to banks. There is a concern that critical concepts like prudence and accounting conservatism have been superseded in IFRS by process and compliance to standards. There is evidence that, by limiting auditors' scope to exercise prudent judgment, IFRS offers less assurance. IFRS also has specific defects, such as its inability to account for expected losses.
  Oral evidence given to the UK House of Lords enquiry into audit market concentration showed that the weaknesses of IFRS are especially serious in relation to bank audits (3). |
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12)

The Commission should review of the impact of the introduction of IFRS, particularly in respect of their application to banks. There is a concern that critical concepts like prudence and accounting conservatism have been superseded in IFRS by process and compliance to standards. There is evidence that, by limiting auditors' scope to exercise prudent judgment, IFRS offers less assurance. IFRS also has specific defects, such as its inability to account for expected losses.

Oral evidence given to the UK House of Lords enquiry into audit market concentration showed that the weaknesses of IFRS are especially serious in relation to bank audits (3).

International Standards on Auditing (ISAs)

| 13) | What are your views on the introduction of ISAs in the EU?
  Supportive. However strict neutrality vis-à-vis the respective national legal systems must be respected. |
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13)

Supportive. However strict neutrality vis-à-vis the respective national legal systems must be respected.

| 14) | Should ISAs be made legally binding throughout the EU? If so, should a similar endorsement approach be chosen to the one existing for the endorsement of International Financial reporting Standards (IFRS)? Alternatively, and given the current widespread use of ISAs in the EU, should the use of ISAs be further encouraged through non-binding legal instruments (Recommendation, Code of Conduct)?
  Yes, possibly by regulation. |
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14)

Yes, possibly by regulation.

| 15) | Should ISAs be further adapted to meet the needs of SMEs and SMPs?
  Not necessary. |
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15)

Not necessary.

3.3   Governance and Independence of Audit Firms

| 16) | Is there a conflict in the auditor being appointed and remunerated by the audited entity? What alternative arrangements would you recommend in this context?
  There is a potential conflict, but it is manageable. Greater transparency in relation to the appointment and re-appointment of SA is needed, and this is included in the proposals outlined in section 2. Appointment by the Company (Audit or Supervisory Committee and shareholders) allows for an SA to be appointed that is best able to meet the particular requirements of that company, for example knowledge of the business sector and requisite international reach. |
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16)

There is a potential conflict, but it is manageable. Greater transparency in relation to the appointment and re-appointment of SA is needed, and this is included in the proposals outlined in section 2. Appointment by the Company (Audit or Supervisory Committee and shareholders) allows for an SA to be appointed that is best able to meet the particular requirements of that company, for example knowledge of the business sector and requisite international reach.

| 17) | Would the appointment by a third party be justified in certain cases?
  Not in normal circumstances. However, the question might arise in relation to systemically significant (SS) institutions such as large banks. If supervisors are in regular contact with the SA of SS institutions, and they are dissatisfied by their performance or their independence, the supervisor should have the power to require the institution to make a change. This need only be a reserve power, since a company aware of supervisory concern would be likely to make the change itself. |
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17)

Not in normal circumstances. However, the question might arise in relation to systemically significant (SS) institutions such as large banks. If supervisors are in regular contact with the SA of SS institutions, and they are dissatisfied by their performance or their independence, the supervisor should have the power to require the institution to make a change. This need only be a reserve power, since a company aware of supervisory concern would be likely to make the change itself.

| 18) | Should the continuous engagement of audit firms be limited in time? If so, what should be the maximum length of an audit firm engagement?
  In responding to this question, the EESC first of all expresses a caveat: any proposed change to the status quo should be subject to a rigorous impact assessment.
  The rotation of audit teams and leaders and normal life cycles of Chairmen, CEOs and CFOs mean that at an individual level there is a more than adequate sequence of revolving relationships. The issue is corporate to corporate: the SA need to keep its clients and the client's willingness to keep an auditor with which it feels comfortable. These long term relationships are a potential threat to independence and professional scepticism.
  The EESC does not support the limitation of SA engagement through mandatory rotation but it does recommend that large companies carry out a mandatory tender of their statutory audit contract every six to eight years. The invitation to tender should be sent to at least one firm outside the big four. Such an exercise will not necessarily lead to a change of SA. Therefore the process needs to be transparent. The Audit Committee should explain the basis of its tender and of its decision. It should also hold a meeting with its principal shareholders in this context. |
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18)

In responding to this question, the EESC first of all expresses a caveat: any proposed change to the status quo should be subject to a rigorous impact assessment.

The rotation of audit teams and leaders and normal life cycles of Chairmen, CEOs and CFOs mean that at an individual level there is a more than adequate sequence of revolving relationships. The issue is corporate to corporate: the SA need to keep its clients and the client's willingness to keep an auditor with which it feels comfortable. These long term relationships are a potential threat to independence and professional scepticism.

The EESC does not support the limitation of SA engagement through mandatory rotation but it does recommend that large companies carry out a mandatory tender of their statutory audit contract every six to eight years. The invitation to tender should be sent to at least one firm outside the big four. Such an exercise will not necessarily lead to a change of SA. Therefore the process needs to be transparent. The Audit Committee should explain the basis of its tender and of its decision. It should also hold a meeting with its principal shareholders in this context.

| 19) | Should the provision of non-audit services by audit firms be prohibited? Should any such prohibition be applied to all firms and their clients or should this be the case for certain types of institutions, such as systemic financial institutions?
  There should be no restriction on SA firms supplying non-audit services to companies other than their statutory audit clients but such services should only be provided to statutory audit clients with the express approval of the audit or supervisory committee. To enhance the independence of the statutory audit of large companies, the SA should not provide risk advice to the client, nor should it be the internal auditor. The provision of tax advice should be curtailed whenever a material conflict of interest could be involved. Broadly speaking, non-audit services involve either consulting or accountancy. Consultancy is less likely than accountancy to raise conflict of interest issues vis a vis the statutory audit. Audit committees should approve all non audit services provided by the SA and avoid conflicts of interest. Committees should also monitor the total value of these non audit services and this figure should be published in the Annual Report.
  In the case of SMEs, a more relaxed regime may be envisaged. SMEs come in all shapes and sizes. In many cases, it would make sense for taxation and risk advice to be provided by the SA firm. |
| --- | --- |

19)

There should be no restriction on SA firms supplying non-audit services to companies other than their statutory audit clients but such services should only be provided to statutory audit clients with the express approval of the audit or supervisory committee. To enhance the independence of the statutory audit of large companies, the SA should not provide risk advice to the client, nor should it be the internal auditor. The provision of tax advice should be curtailed whenever a material conflict of interest could be involved. Broadly speaking, non-audit services involve either consulting or accountancy. Consultancy is less likely than accountancy to raise conflict of interest issues vis a vis the statutory audit. Audit committees should approve all non audit services provided by the SA and avoid conflicts of interest. Committees should also monitor the total value of these non audit services and this figure should be published in the Annual Report.

In the case of SMEs, a more relaxed regime may be envisaged. SMEs come in all shapes and sizes. In many cases, it would make sense for taxation and risk advice to be provided by the SA firm.

| 20) | Should the maximum level of fees an audit firm can receive from a single client be regulated?
  This can only be answered in the context of each audit firm's total revenues at the national level. The current threshold of 15 % of a national firm's fees resulting from one client, as contained in the IESBA Code of ethics, is sensible to recognise that audit fees are a function of the scale and complexity of the audited company. Clients are relentless in driving these fees down. Fees for non audit work paid to the audit firm should be reported separately. |
| --- | --- |

20)

This can only be answered in the context of each audit firm's total revenues at the national level. The current threshold of 15 % of a national firm's fees resulting from one client, as contained in the IESBA Code of ethics, is sensible to recognise that audit fees are a function of the scale and complexity of the audited company. Clients are relentless in driving these fees down. Fees for non audit work paid to the audit firm should be reported separately.

| 21) | Should new rules be introduced regarding the transparency of the financial statements of audit firms?
  Yes, but these rules need to recognise that Big Four networks comprise separate national firms rather than being one entity. Audit firms should publish their accounts, just like the companies they audit. |
| --- | --- |

21)

Yes, but these rules need to recognise that Big Four networks comprise separate national firms rather than being one entity. Audit firms should publish their accounts, just like the companies they audit.

| 22) | What further measures could be envisaged in the governance of audit firms to enhance the independence of auditors?
  In some jurisdictions, auditors give a formal annual confirmation of independence. In one Member State they follow a governance code for audit firms. Where a conflict of interests arises, they must withdraw from one or other engagement. In addition, audit firms should employ independent directors and advisors. |
| --- | --- |

22)

In some jurisdictions, auditors give a formal annual confirmation of independence. In one Member State they follow a governance code for audit firms. Where a conflict of interests arises, they must withdraw from one or other engagement. In addition, audit firms should employ independent directors and advisors.

| 23) | Should alternative structures be explored to allow audit firms to raise capital from external sources?
  The limited liability partnership is an attractive structure for audit firms. The comparator is the public company structure of credit rating agencies which undoubtedly had some bearing on the disastrous rating decisions which led to the financial crisis. If not faced with the threat of unlimited liability in Member State courts, the partnership arrangement should be sufficiently robust. Nevertheless, if other forms of incorporation help to widen the market, they should be encouraged. Limitation of liability could have the double benefit of encouraging the entry of new capital as well as incentivising mid range audit firms to bid aggressively for large company mandates. |
| --- | --- |

23)

The limited liability partnership is an attractive structure for audit firms. The comparator is the public company structure of credit rating agencies which undoubtedly had some bearing on the disastrous rating decisions which led to the financial crisis. If not faced with the threat of unlimited liability in Member State courts, the partnership arrangement should be sufficiently robust. Nevertheless, if other forms of incorporation help to widen the market, they should be encouraged. Limitation of liability could have the double benefit of encouraging the entry of new capital as well as incentivising mid range audit firms to bid aggressively for large company mandates.

| 24) | Do you support the suggestions regarding Group Auditors? Do you have any further ideas on the matter?
  Group auditors should certainly have the necessary authority and access to fully discharge their responsibilities towards group shareholders. |
| --- | --- |

24)

Group auditors should certainly have the necessary authority and access to fully discharge their responsibilities towards group shareholders.

3.4   Supervision

| 25) | Which measures should be envisaged to improve further the integration and cooperation on audit firm supervision at EU level?
  There is an international dimension relating to such issues as standards, passports and the international networks of audit firms. Nevertheless, SA firms operate through national units under Member State supervision. The EESC would support a college of national supervisors linked to the new EU framework for financial supervision. |
| --- | --- |

25)

There is an international dimension relating to such issues as standards, passports and the international networks of audit firms. Nevertheless, SA firms operate through national units under Member State supervision. The EESC would support a college of national supervisors linked to the new EU framework for financial supervision.

| 26) | How could increased consultation and communication between the auditor of large listed companies and the regulator be achieved?
  There are already certain statutory requirements, although there is evidence that in the years prior to the crisis, SA / supervisor dialogue had broken down in certain Member States. The EESC recommends that the new European Banking Authority should define banking specific requirements. Furthermore, regulators should hold the chairman and the board responsible for communication with them, with sanctions available if the company fails to communicate key issues. |
| --- | --- |

26)

There are already certain statutory requirements, although there is evidence that in the years prior to the crisis, SA / supervisor dialogue had broken down in certain Member States. The EESC recommends that the new European Banking Authority should define banking specific requirements. Furthermore, regulators should hold the chairman and the board responsible for communication with them, with sanctions available if the company fails to communicate key issues.

3.5   Concentration and Market Structure

| 27) | Could the current configuration of the audit market present a systemic risk?
  We consider that there is a real risk of disruption of the market. We do not believe that the failure of any one SA firm presents an immediate systemic risk to the market. However, from the point of view of independence and market, dominance by just three firms would be utterly unacceptable. The recent financial and economic crisis has highlighted the fact that in risk management, every eventuality should be covered. |
| --- | --- |

27)

We consider that there is a real risk of disruption of the market. We do not believe that the failure of any one SA firm presents an immediate systemic risk to the market. However, from the point of view of independence and market, dominance by just three firms would be utterly unacceptable. The recent financial and economic crisis has highlighted the fact that in risk management, every eventuality should be covered.

| 28) | Do you believe that the mandatory formation of an audit firm consortium with the inclusion of at least one smaller, non systemic audit firm could act as a catalyst for dynamising the audit market and allowing small and medium-sized firms to participate more substantially in the segment of larger audits?
  The legal requirement that companies should be audited by a consortium of at least two firms exists in France. Similar provisions used to be in place in Denmark but were found to be no longer needed. In France this requirement has applied to listed companies since 1966. It was extended to companies obliged to publish consolidated accounts in 1984 at a time when the Anglo American audit firms were rapidly increasing their market share. To an extent, the policy has succeeded. In a 2006 study (4) of 468 French companies based on 2003 data, 54 were audited by two Big Four auditors, 241 (51.5 %) by one Big Four and one French firm while the balance of 173 were covered by various combinations of large and small French firms.
  The shape of the audit market in France is not just a function of legislative intervention. Company ownership in France is much more concentrated than in Anglo-Saxon countries and this affects the audit requirement. Using the same sample, the single largest investor owns 25 % or more of 73 % of French companies. The largest ownership groups are other companies (34 %), family ownership (25 %) and the general public (21 %) while international investors hold just 8.5 %.
  The study found that ‘In particular, the use of Big 4 auditors increases when the ownership structure is less concentrated by a single large block holder, and has more international and public investors; while the use of Big 4 auditors is less likely when there is large family ownership. In addition, a Big 4 auditor is more likely as institutional ownership (banks and pension funds) increases. Importantly, there is evidence that some of these ownership characteristics are also associated with the use of two rather than one Big 4 auditor’.

  Given this linkage between ownership and audit, these findings suggest that it is unsafe to conclude that the French legal environment is the sole determinant of the audit market structure in France. However, in this regard, it should be noted that contrary to what the Commission is proposing, under French law there is no obligation to involve a ‘smaller’ firm alongside a ‘larger’ one in the joint audit. As the Commission has acknowledged, the responses to the Green Paper consultation on this question were mixed, particularly as regards whether joint audits would deliver better accounts or add bureaucracy and cost.
  In answer to the question, joint audit would increase the involvement of smaller firms in the large company market. As to whether this would actually reduce concentration, and over what timescale the EESC urges the Commission to undertake a profound impact assessment before coming to any conclusion on this point. The EESC believes that competition law can provide an additional way of dealing with the oligopoly. |
| --- | --- |

28)

The legal requirement that companies should be audited by a consortium of at least two firms exists in France. Similar provisions used to be in place in Denmark but were found to be no longer needed. In France this requirement has applied to listed companies since 1966. It was extended to companies obliged to publish consolidated accounts in 1984 at a time when the Anglo American audit firms were rapidly increasing their market share. To an extent, the policy has succeeded. In a 2006 study (4) of 468 French companies based on 2003 data, 54 were audited by two Big Four auditors, 241 (51.5 %) by one Big Four and one French firm while the balance of 173 were covered by various combinations of large and small French firms.

The shape of the audit market in France is not just a function of legislative intervention. Company ownership in France is much more concentrated than in Anglo-Saxon countries and this affects the audit requirement. Using the same sample, the single largest investor owns 25 % or more of 73 % of French companies. The largest ownership groups are other companies (34 %), family ownership (25 %) and the general public (21 %) while international investors hold just 8.5 %.

The study found that ‘In particular, the use of Big 4 auditors increases when the ownership structure is less concentrated by a single large block holder, and has more international and public investors; while the use of Big 4 auditors is less likely when there is large family ownership. In addition, a Big 4 auditor is more likely as institutional ownership (banks and pension funds) increases. Importantly, there is evidence that some of these ownership characteristics are also associated with the use of two rather than one Big 4 auditor’.

Given this linkage between ownership and audit, these findings suggest that it is unsafe to conclude that the French legal environment is the sole determinant of the audit market structure in France. However, in this regard, it should be noted that contrary to what the Commission is proposing, under French law there is no obligation to involve a ‘smaller’ firm alongside a ‘larger’ one in the joint audit. As the Commission has acknowledged, the responses to the Green Paper consultation on this question were mixed, particularly as regards whether joint audits would deliver better accounts or add bureaucracy and cost.

In answer to the question, joint audit would increase the involvement of smaller firms in the large company market. As to whether this would actually reduce concentration, and over what timescale the EESC urges the Commission to undertake a profound impact assessment before coming to any conclusion on this point. The EESC believes that competition law can provide an additional way of dealing with the oligopoly.

| 29) | From the viewpoint of enhancing the structure of audit markets, do you agree to mandatory rotation and tendering after a fixed period? What should be the length of such a period?
  The EESC does not support mandatory rotation. As regards mandatory tendering please refer to our response to Question 18. |
| --- | --- |

29)

The EESC does not support mandatory rotation. As regards mandatory tendering please refer to our response to Question 18.

| 30) | How should the ‘Big Four bias’ be addressed?
  The EESC supports the abolition of any artificial bias towards the ‘Big four’ firms, such as banking covenants. Mandatory assignment of tasks only to the Big Four should be prohibited. The Commission may consider introducing a scheme to certify the large company audit competence of the next rank of audit firms. |
| --- | --- |

30)

The EESC supports the abolition of any artificial bias towards the ‘Big four’ firms, such as banking covenants. Mandatory assignment of tasks only to the Big Four should be prohibited. The Commission may consider introducing a scheme to certify the large company audit competence of the next rank of audit firms.

| 31) | Do you agree that contingency plans, including living wills, could be key in addressing systemic risks and the risks of firm failure?
  There should be contingency plans for both Audit firms and national regulators. Audit firms are international networks. The best strategy would be to focus on containing any failure at the Member State level while maintaining the integrity of the rest of the network. Living wills would be the key to any containment strategy. Early warning of potential problems would facilitate the implementation of contingency plans. |
| --- | --- |

31)

There should be contingency plans for both Audit firms and national regulators. Audit firms are international networks. The best strategy would be to focus on containing any failure at the Member State level while maintaining the integrity of the rest of the network. Living wills would be the key to any containment strategy. Early warning of potential problems would facilitate the implementation of contingency plans.

| 32) | Is the broader rationale for consolidation of large audit firms over the past two decades (i.e. global offer, synergies) still valid? In which circumstances, could a reversal be envisaged?
  As in our response to Q 18, the EESC is adamant that any action contemplated in this area be subject to a profound impact assessment. As the future Asian superpowers expand worldwide, it is likely that their audit firms will follow their clients. Any government mandated action to force a change in the market for audit should be considered in a 20 year time frame. In addition, the potential impact of the law of unintended consequences should be seriously considered.
  It is difficult to envisage a reversal, but the important thing is to enforce competition law in the audit market. The EESC would favour references to Member State competition authorities starting in Germany, the Netherlands and the UK. Competition authorities should also carefully scrutinise any proposed acquisitions by Big Four firms. |
| --- | --- |

32)

As in our response to Q 18, the EESC is adamant that any action contemplated in this area be subject to a profound impact assessment. As the future Asian superpowers expand worldwide, it is likely that their audit firms will follow their clients. Any government mandated action to force a change in the market for audit should be considered in a 20 year time frame. In addition, the potential impact of the law of unintended consequences should be seriously considered.

It is difficult to envisage a reversal, but the important thing is to enforce competition law in the audit market. The EESC would favour references to Member State competition authorities starting in Germany, the Netherlands and the UK. Competition authorities should also carefully scrutinise any proposed acquisitions by Big Four firms.

3.6   Creation of a European market

| 33) | What in your view is the best manner to enhance cross border mobility of audit professionals?
  Harmonisation of regulations and applicable laws would be a starting point. Introduction of ISA would also help. The variety of the tax, law and language in the 27 Member States is undoubtedly a barrier to full scale cross border mobility. |
| --- | --- |

33)

Harmonisation of regulations and applicable laws would be a starting point. Introduction of ISA would also help. The variety of the tax, law and language in the 27 Member States is undoubtedly a barrier to full scale cross border mobility.

| 34) | Do you agree with ‘maximum harmonisation’ combined with a single European passport for auditors and audit firms? Do you believe this should also apply for smaller firms?
  Yes, but we should not underestimate the difficulties involved. It would be conceivable to have a European auditor passport for the area of statutory IFRS financial reporting. The decision as to which auditor or SA firm could receive such a passport must therefore be based on whether the auditing practice can or will carry out audits of IFRS financial statements. |
| --- | --- |

34)

Yes, but we should not underestimate the difficulties involved. It would be conceivable to have a European auditor passport for the area of statutory IFRS financial reporting. The decision as to which auditor or SA firm could receive such a passport must therefore be based on whether the auditing practice can or will carry out audits of IFRS financial statements.

3.7   Simplification: Small and Medium Sized Enterprises and Practitioners

| 35) | Would you favour a lower level of service than an audit, a so called ‘limited audit’ or ‘statutory review’ for the financial statements of SMEs instead of a statutory audit? Should such a service be conditional depending on whether a suitably qualified (internal or external) accountant prepared the accounts?
  SMEs come in all shapes and sizes. If there are external investments and or important bank facilities and or major customers and suppliers concerned about the integrity of their value chains, it is difficult to envisage many short cuts. The work of a certified accountant could be adequate for a self financed micro enterprise. |
| --- | --- |

35)

SMEs come in all shapes and sizes. If there are external investments and or important bank facilities and or major customers and suppliers concerned about the integrity of their value chains, it is difficult to envisage many short cuts. The work of a certified accountant could be adequate for a self financed micro enterprise.

| 36) | Should there be a ‘safe harbour’ regarding any potential future prohibition of non-audit services when servicing SME clients?
  Yes, but the case for prohibition is not made. |
| --- | --- |

36)

Yes, but the case for prohibition is not made.

| 37) | Should a ‘limited audit’ or ‘statutory review’ be accompanied by less burdensome internal quality control rules and oversight by supervisors? Could you suggest examples of how this could be done in practice?
  See question 35. Small companies have small simple audits anyway. |
| --- | --- |

37)

See question 35. Small companies have small simple audits anyway.

3.8   International cooperation

| 38) | What measures could in your view enhance the quality of the oversight of global audit players through international cooperation?
  Involvement with the G20 and the FSB but, to start with, the most important measure would be cooperation at the G8 level, with particular focus on close links with regulatory bodies in the USA. |
| --- | --- |

38)

Involvement with the G20 and the FSB but, to start with, the most important measure would be cooperation at the G8 level, with particular focus on close links with regulatory bodies in the USA.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  OJ C 318, 23.12.2009, p. 57.

1

(2)  Risk management involves the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. The strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk; source: Wikipedia.org.

2

(3)  House of Lords report published on 15 March 2011, ‘Auditors: Market concentration and their role’, volume 1, page 32. http://www.parliament.uk/hleconomicaffairs.

3

(4)  Assessing France's Joint Audit Requirement: Are Two Heads Better than One? by Jere R. Francis, University of Missouri-Columbia and Chrystelle Richard, Université Paris Dauphine and Ann Vanstraelen, Universiteit Antwerpen and Universiteit Maastricht.

4

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/101 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/101

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank — An EU Framework for Crisis Management in the Financial Sector’

COM(2010) 579 final

2011/C 248/17

Rapporteur: Ms ROUSSENOVA

On 20 October 2010, the Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank - An EU framework for Crisis Management in the Financial Sector

COM(2010) 579 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 132 votes to 13 with 20 abstentions.

1.   Conclusions and recommendations

1.1   The EESC shares the Commission's concerns that the support of failing financial institutions at the costs of public finances and the level playing field within the internal market is no longer acceptable in the future and supports in principle the proposed comprehensive EU framework. Its implementation will require from national authorities, as well as from banks, additional costs, professional skills and human resources, together with reforms of Member States' legislative frameworks and regimes. The EESC hopes that, taking into consideration the results of the public consultation, the Commission will conduct a thorough impact assessment of the costs, human resources and legislative reforms needed. A realistic proposal should be accompanied by a timeframe of hiring human resources, taking into account that the latter might not be immediately available in the market.

1.2   The Committee recommends a holistic approach and encourages the Commission to assess the cumulative effects of the crisis management framework together with the effects of all new regulatory requirements, new financial sector taxes and bank levies on banks’ ability to provide lending to households and businesses at reasonable lending rates without jeopardising economic growth and job creation (1).

1.3   The EESC recommends the Commission to envisage appropriate measures for achieving coordination between the chosen resolution authority, the central bank and the ministry of finance (when none of the last two is chosen to be a resolution authority in the Member State) before conducting a resolution operation. In order to protect the sector from possible contagion and confidence crisis such coordination would be essential in cases of resolution of large and systemically significant institutions as well as in cases of simultaneous resolution of several institutions.

1.4   In addition to the proposed stress testing to be conducted by supervisors under preparatory and preventive measures, the EESC recommends the Commission to make compulsory for all Member States (MS) the IMF/World Bank Financial Sector Assessment Programmes (FSAP) as proposed by the De Larosière Report (2). The analysis and stress testing conducted under FSAP link macroeconomic developments and imbalances in MS with their macro-financial stability and micro-prudential risks, which makes them useful and highly appropriate analytical tools for supervisors.

1.5   The EESC welcomes the Commission's proposal for asset transferability as a preventive measure but warns that the provision of any financial support to other group entities should not be imposed by supervisory authorities but should remain voluntary, and that equal treatment of both parent and host MS is key to maintaining financial stability. Group financial support should be provided only under a group financial agreement and if a number of conditions are met:

| — | The main condition should require that the financial support may only be granted if the entity providing it complies and will continue complying at all times and under any circumstances with the prudential requirements of Directive 2006/48/EC or any higher national capital requirement in the transferor's country. The EESC recommends that this condition is respected by all supervisors and mediators, including EBA in cases of disagreements among members of the college. |
| --- | --- |

—

The main condition should require that the financial support may only be granted if the entity providing it complies and will continue complying at all times and under any circumstances with the prudential requirements of Directive 2006/48/EC or any higher national capital requirement in the transferor's country. The EESC recommends that this condition is respected by all supervisors and mediators, including EBA in cases of disagreements among members of the college.

| — | The EESC believes that as a safeguard for the macro-financial stability in the transferor's country the transferor's supervisor should have the power to prohibit or restrict a transfer of assets under a group financial support agreement if it threatens the liquidity, solvency and financial stability of the transferor and the financial sector in its country. |
| --- | --- |

—

The EESC believes that as a safeguard for the macro-financial stability in the transferor's country the transferor's supervisor should have the power to prohibit or restrict a transfer of assets under a group financial support agreement if it threatens the liquidity, solvency and financial stability of the transferor and the financial sector in its country.

1.6   The appointment of a special manager is a signal that the bank is experiencing problems, which may undermine depositors' trust and trigger bank runs. When special managers are appointed for a number of institutions within the same period of time, serious disruptions might ensue; in such a case, additional precautionary measures should be introduced in order to protect the banks concerned and the sector as a whole from possible contagion and confidence crisis developments.

1.7   The EESC recommends the Commission to assess the impact of the bail-in instruments on the banking sector and financial markets as well as to conduct a feasibility and cost-benefit analyses of different bail-in instruments regarding their cross-border implications, marketability and transparency.

1.8   In response to regulatory tightening and introduction of additional crisis management measures and instruments, the shadow banking system could further develop significantly. The Commission should make sure that regulators and supervisors would be able to limit contagion risks to banks coming from outside the banking sector. Shadow banking entities should also be subject to stricter regulatory standards and should be enabled to bear losses.

2.   Introduction

2.1   During the financial crisis, governments did not allow banks and other systemic financial institutions to fail. A wide variety of measure was adopted: in some cases, banks needed capital injections at a huge cost for public finances (hopefully to be recovered in the future), in others they needed liquidity support and/or guarantees on their liabilities. In all cases, this induced a stress on financial markets and a significant distortion in the level playing field within the internal market and worldwide.

2.2   In response to the already existing consensus that this must never happen again, the Commission has adopted several Communications related to crisis management and resolution. The first, in October 2009 (3), considered what changes were needed to make possible effective crisis management and resolution or orderly winding up of a failing cross-border bank. The second Communication published in May 2010 (4) explored the financing of resolution in a way which minimises moral hazard and protects public funds (5). Communication (2010) 579 final sets out a comprehensive EU framework for troubled and failing banks and the policy orientations the Commission intends to pursue. A public consultation on the technical details of the legislative framework under consideration was launched in December 2010.

2.3   The Commission intends to proceed gradually towards the EU crisis management regime. As a first step, it intended to adopt before the summer 2011 a legislative proposal for a harmonised EU regime for crisis prevention and bank recovery and resolution, which would include a common set of resolution tools and reinforcement of cooperation between national authorities when dealing with cross border failures of banks. As a second step, the Commission will examine the need for further harmonisation of bank insolvency regimes. Finally, a third step should include the creation of an integrated resolution regime, possibly based on a single European Resolution Authority, by 2014.

3.   Comments

3.1   Scope and Objectives

3.1.1   The Commission's communication proposes a crisis management framework for ‘all cross-border and domestic credit institutions and some investment firms’‘of any type and size, and in particular systemically important institutions’. In a footnote, the Commission explains that its policy aim is to ‘cover those investment firms the failure of which risks causing systemic instability, and is considering options as to how that category might be defined’. In fact, many parts of the Communication refer not only to credit institutions but also to investment firms without having that category clearly defined. The EESC expects the Commission to clearly define the categories of investment firms and investment funds with potential systemic ramification taking into consideration the results of the public consultation initiated in December 2010. The Committee encourages the Commission also to assess whether the resolution tools and powers suggested by COM(2010) 579 final would be sufficient to address adequately all specific problems related to the failure of an investment firm and investment fund.

3.1.2   The framework for prevention, crisis management and resolution is based on seven principles and objectives, expected to ensure that banks in difficulties exit the market without jeopardising financial stability. The EESC supports most of them but the fourth and the last ones deserve some comments and clarifications:

| — | We support the Commission's views on the importance of reducing moral hazard by ensuring that shareholders and creditors suffer a fair and appropriate amount of losses in bank resolution, but only if they receive the treatment that reflects the normal order of ranking and is similar to what they would have received if the bank had been wound up. In this process creditors usually receive a treatment different from that of shareholders. The proposal to allocate losses both to shareholders and creditors may raise some concerns of legal nature and needs further explanations as to the proportional allocation of losses and the criteria for including creditors among contributors: when, and to what extent? Allocation of losses to shareholders is certainly a correct principle but some concerns arise when creditors are expected to share the losses, without clarifying this concept. When, and to what extent, one specific creditor is to be called to bear the losses? Should we consider making a distinction between ‘guilty’ or ‘imprudent’ creditors and others? In addition, on what basis, and under what circumstances, would the losses be covered by the whole banking industry? |
| --- | --- |

—

We support the Commission's views on the importance of reducing moral hazard by ensuring that shareholders and creditors suffer a fair and appropriate amount of losses in bank resolution, but only if they receive the treatment that reflects the normal order of ranking and is similar to what they would have received if the bank had been wound up. In this process creditors usually receive a treatment different from that of shareholders. The proposal to allocate losses both to shareholders and creditors may raise some concerns of legal nature and needs further explanations as to the proportional allocation of losses and the criteria for including creditors among contributors: when, and to what extent? Allocation of losses to shareholders is certainly a correct principle but some concerns arise when creditors are expected to share the losses, without clarifying this concept. When, and to what extent, one specific creditor is to be called to bear the losses? Should we consider making a distinction between ‘guilty’ or ‘imprudent’ creditors and others? In addition, on what basis, and under what circumstances, would the losses be covered by the whole banking industry?

| — | On the last bullet point: we do agree on the need to avoid worse disasters but saying that one of the objectives of the suggested framework is ‘limiting distortions of competition’ is just paying lip service to the principle, as the fact that an ailing or, worse, nearly failed institution needs some help at the cost of third parties is per se a distortion of competition. |
| --- | --- |

—

On the last bullet point: we do agree on the need to avoid worse disasters but saying that one of the objectives of the suggested framework is ‘limiting distortions of competition’ is just paying lip service to the principle, as the fact that an ailing or, worse, nearly failed institution needs some help at the cost of third parties is per se a distortion of competition.

3.1.3   In response to regulatory tightening and introduction of additional crisis management measures and instruments, the shadow banking system might further develop. The EESC recommends that regulators and supervisors try to limit contagion risks to banks coming from outside the banking sector and enable shadow banking entities to bear losses and be subject to appropriate regulatory standards.

3.2   Principal Elements of the Framework

3.2.1   The framework outlined by the Commission is conceptually correct and the EESC approves the proposed three classes of measures:

| i. | preparatory and preventative, |
| --- | --- |

i.

preparatory and preventative,

| ii. | early supervisory intervention and, |
| --- | --- |

ii.

early supervisory intervention and,

| iii. | resolution. |
| --- | --- |

iii.

resolution.

Implementation of this framework will be far from simple, and the EESC welcomes the intention to ensure a gradual and smooth transition from the existing national arrangements to the proposed framework. The numerous initiatives proposed by some national authorities as well as the different national legislations on property rights, bankruptcy, administrative and penal responsibilities of the administrators create a lot of obstacles to a fast transition to the outlined framework. The Committee hopes that the ‘wide range of options’ would not be misused in political, economic and social emergencies but will be taken advantage of in order to ensure flexibility in adapting the national rules to the European legislation and promote effective coordination and cooperation of cross-border crisis management and resolution for all types of credit institutions irrespective of their size and interconnectedness.

3.2.2   Authorities responsible for crisis management

The Commission's communication explicitly states that powers of early intervention will continue to be exercised by prudential supervision under the Capital Requirement Directive (CRD), while as far as the resolution powers are concerned, each Member State will have to identify a resolution authority to exercise them. The EESC approves the Commission's recommendation that the resolution authority should be administrative rather than judicial but is aware of the obstacles and difficulties that will accompany its implementation. The Committee also expects that national ex-ante Bank Resolution Funds (BRFs) proposed by COM(2010) 254 final and COM(2010) 579 final would have their own share in exercising resolution powers if set up according to the recommendations in the quoted Communications. Even if the choice of resolution authorities is left to national discretion they should act in accordance with common rules and principles, specified by an EU framework.

3.2.2.1   The EESC also believes that a successful execution of a resolution operation will require good coordination between the chosen resolution authority, the central bank and the ministry of finance when none of the last two is among the chosen resolution authority in the MS. This is essential in cases of resolution of large and systemically significant institutions as well as in cases of simultaneous resolution of several financial institutions.

3.2.3   Preparatory and preventive measures

All measures and initiatives proposed in this section are conceptually correct, and no doubt they are necessary to ensure an effective implementation of the Commission's framework. However, there are some questions which cannot be swept under the carpet:

| — | How much would they cost and who would ultimately bear the costs? |
| --- | --- |

—

How much would they cost and who would ultimately bear the costs?

| — | Would authorities and financial institutions be able to find the professional resources to meet the needs of the proposed measures? |
| --- | --- |

—

Would authorities and financial institutions be able to find the professional resources to meet the needs of the proposed measures?

| — | How long will it take before a fully-operational European system is in place? |
| --- | --- |

—

How long will it take before a fully-operational European system is in place?

3.2.3.1   More specifically, supervisors are required to introduce reinforced supervision, to assess and supervise recovery and resolution planning, to adopt preventive measures (Section 3.2, COM(2010) 579 final), to intervene in the resolution of a firm in cooperation with, resolution authorities, etc. In practice, supervisors become super-managers of the institutions.

In addition to standard reporting financial institutions are required to prepare, and submit to authorities, recovery and resolution plans, to be kept constantly updated. Furthermore, Member States are required to create resolution authorities, or to enlarge the mission of existing authorities to include the resolution of financial institutions.

3.2.3.1.1   All these actions are no doubt necessary in view of creating sound, secure financial markets; the problem is to determine how much they will cost
   (6) and to make sure that both authorities and financial institutions will be able to find enough highly-skilled human resources prepared to carry on the new tasks. The importance of the final goal may justify the high costs of the plan, but the scarcity of human resources might constitute a huge obstacle. The Commission is aware of that and in its Consultation document it invited MS to estimate the costs (including human costs) that are likely to be incurred in carrying out the proposed activities related to enhanced supervision, recovery planning, resolution plans. A realistic proposal by the Commission should be accompanied by an impact assessment of costs and a timeframe of hiring human resources, taking into account that the latter might not be immediately available on the market.

3.2.3.2   In addition to the proposed stress testing to be conducted by supervisors, the EESC recommends the Commission to make compulsory for all MS the IMF/World Bank Financial Sector Assessment Programmes (FSAP) (7) as proposed by the De Larosière Report (8). Currently FSAP is mandatory for 25 IMF member countries, out of which only 11 are EUMS. The analysis and stress testing conducted under FSAP link macroeconomic developments and imbalances in MS with their macro-financial stability and micro-prudential risks which makes them useful and highly appropriate analytical tools for supervisors.

3.2.3.3   The EESC welcomes the Commission's proposal for asset transferability as a preventive measure in situations when group entities are experiencing liquidity stress. The Committee is convinced that to preserve the subsidiary business model, the provision of any financial support to other group entities should continue to be voluntary and not imposed by supervisory authorities. In order to prevent spreading liquidity problems, the Committee recommends the Commission to specify carefully the circumstances and conditions under which assets could be transferred, and underlines that equal treatment across all MS - both parent and host, is key to avoiding contagion and maintaining financial stability.

3.2.3.3.1   Group financial support should be provided only under a group financial agreement and if a number of capital and liquidity conditions are met. The key condition should require that the financial support may only be granted if the entity providing it complies and will continue complying at all times and under any circumstances with the prudential requirements of Directive 2006/48/EC or any higher capital requirement typical for the transferor’s country. The EESC recommends that this condition is respected by all supervisors and mediators, including EBA in cases of disagreement among members of the college or if an agreement is not achieved. We also believe that group financial support should be subject to approval by supervisors only after risk assessment and stress testing and the market should be informed about any provision of group financial support.

3.2.3.3.2   As a safeguard for the macro-financial stability in the transferor's country, the supervisor of the transferor should have the power to prohibit or restrict a transfer of assets under a group financial support agreement if it threatens the liquidity, solvency and financial stability of the transferor and its country.

3.2.4   Triggers for early intervention and resolution

3.2.4.1   The whole of this chapter seems to be correct and generally acceptable. Supervisors are entrusted with the difficult, delicate task of detecting, not only the circumstances where the requirements of the CRD are not met, but also the signals of a possible failure to meet such requirements. This implies the need of sophisticated tools and professional abilities, and an accrued attention to the market.

3.2.4.2   The tasks concerning the decisions of intervention, as well as the actions described in section 3.4, require a high degree of subjective judgment which, although well-grounded and professionally justified, might be challenged, in court or otherwise, by third parties or even by the institution itself. For supervisory authorities this implies liabilities and/or responsibilities which they should be prepared to face. Perhaps, a couple of clear cut quantitative triggers would help supervisors make decisions on early intervention with reduced reliance on subjective judgement and exposure to legal uncertainty. On triggers for resolution the Committee welcomes the Commission's ideas and recognises the need to combine and appropriately balance quantitative and qualitative triggers. We also recommend the Commission to pay special attention to those resolution triggers that are expected to signal the exact moment when the bail-in instruments are to be applied.

3.2.5   Early intervention

The measures which the Commission envisages seem to be correct and acceptable but the appointment of a special manager needs some attention. Earlier legal studies have recognised that the concept ‘early intervention’ has different meanings in different MS and the powers of the supervisory authorities to appoint a special manager may differ too. In some MS the national laws may allow the appointment of special managers and may need only minor amendments. In a number of MS the legal basis for appointing special managers exists thanks to provisions triggering early intervention measures when a bank is failing to meet the capital requirement. In other MS the national company law may forbid the appointment of a special manager by an entity other than the company's board or general assembly and only a new law can change or modify the existing legislation.

3.2.5.1   On the subject of liabilities, the Commission states that the appointment of a special manager should not imply a state guarantee, nor expose supervisors to liabilities. This is hardly acceptable from a purely legal point of view: a general principle is that whoever takes a decision, or an action, is responsible for its consequences. Any exception to such a principle not supported by law is likely to be challenged in court.

3.2.5.2   The EESC recommends that the appointment of a special manger should be possible on the basis of a clearly defined trigger when the supervisor, exercising the powers under Article 136 CRD is convinced that the management of the credit institution is not willing or not able to undertake the required measures. The Committee is convinced that if under a group treatment the decision to appoint a special manger is to be legally binding, it should be taken by the consolidating supervisor but in consultation and close coordination with the host supervisors.

3.2.5.3   The appointment of a special manager is a signal that the bank is experiencing problems, which may undermine depositors' trust and trigger bank runs. The EESC expresses concerns that when special managers are appointed for a number of institutions within the same period of time, this may cause serious disruptions and additional precautionary measures should be introduced in order to protect the banks concerned and the sector as a whole from possible contagion and confidence crisis developments.

3.2.6   Resolution

3.2.6.1   The actions provided for in this chapter are all well-conceived, but the Commission itself recognises that a reform of bank insolvency laws might be necessary and that an investigation would be considered (p. 8-9 of the Communication). In fact, the whole of the proposed actions can be considered as a near-bankruptcy procedure, parallel but separate from the normal ones. Rather than a reform, a new legislation is likely to be needed in most MS.

3.2.6.2   The main difference between resolution and bankruptcy is that after resolution the institution, or a part of it, will remain alive, a fact justifying the guidance and involvement of supervision and resolution authorities in the whole procedure. But these authorities are not invested with judicial powers, which complicate the attribution of powers and responsibilities, not to say liabilities. Commission seems to be well aware of such a problem: when dealing with safeguards for counterparties and market arrangements, a judicial review is evoked, ‘to ensure that affected parties have appropriate rights to challenge the actions of authorities and seek financial redress’.

3.2.6.3   Here authorities could face a delicate and risky situation: an ‘affected’ party wishing to challenge the decision of the authorities could seek judicial redress and the court might decide to block the whole procedure. Under the existing legislations this risk exists and it is more than likely to arise; all efforts should be done in order to avoid the possibility that resolution procedures be delayed or blocked. Such procedures need to be timely and fast; as any delay or block could nullify the authorities' initiatives and trigger negative market reaction. A change in legislations and judicial procedures in most MS is no doubt necessary but since the insolvency frameworks and judicial procedures vary substantially in some of them the required changes will be significant.

3.2.7   Debt write down

The EESC welcomes the Commission's effort to analyse the challenges of resolving large, complex financial institutions (LCFIs) and the specific issues related to the debt write down tool. The Committee encourages the Commission to develop a framework where that tool effectively contributes to resolution of all institutions within the regime, including LCFIs, and underlines the importance of a common international framework. We hope that the Commission would therefore consider the agreement by the Basel Committee that systemically important financial institutions should have loss absorbing capacity beyond the minimum standards. The Committee stresses that bail-in tools could be recognised as a means to increase the loss absorbing capacity of financial institutions, including the systemically important ones, and welcomes their application as an alternative to bail-out with public money. However, the EESC expresses a number of concerns regarding the design and application of the bail-in instruments and encourages the Commission to study and address them with enhanced caution.

3.2.7.1   The EESC believes that when designing and exercising the debt-write-down power the usual ranking of claims established by insolvency law should be respected as much as possible. Any departure from it in exceptional circumstances should be established ex ante and preannounced.

3.2.7.2   The Commission should make sure that the regime is credible and spill-over effects will be avoided in cases when the main investors in a bank's bail-in instruments are other banks with interconnected businesses. The effectiveness of the bail-in instruments in periods of systemic crises and the effects of their simultaneous activation by many financial institutions should be considered carefully and additional measures should be proposed to avoid possible serious problems.

3.2.7.3   The Commission should analyse carefully the potential pro-cyclical behaviour and volatility of bail-in instruments in periods of crises and should consider when and to what extent they could be relied upon under such circumstances.

3.2.7.4   The EESC expects the Commission to conduct an impact assessment of the different bail-in-able instruments on the overall resilience of the banking sector and financial markets.

3.3   Coordination of Cross-border Crisis Management

3.3.1   Coordinated resolution of EU banking groups

3.3.1.1   The EESC welcomes the Commission's concern about achieving adequate cross-border coordination in crisis management and insists that the arrangements should ensure equal treatment of creditors and shareholders across home and host MS, protect against contagion in a crisis period and maintain financial stability in all MS.

3.3.1.2   Quite correctly, in Section 4 the Commission states that in the event of a failure a coordinated action is necessary, and that ‘the measures outlined in Section 2 will ensure that the resolution authorities have the same tools and powers’. Such a statement, however, seems to fly in the face of another statement at the beginning of Section 3: ‘the framework will not be prescriptive as to which measures are used in a particular case’.

3.3.1.3   A coordinated action needs then a common willingness to adopt the same measures, a condition which, in the light of past experiences, is far from likely to happen. True, when drafting Section 3 the Commission probably referred to national cases only, whereas Section 4 refers to cross-border crisis, where the competence is transferred to a European Supervisory Authority (ESA). But the comment is not misplaced: if each national authority is free to choose its own procedures, those imposed by an ESA might be different, or in conflict, with the national ones. In such a case, the procedures concerning creditors of national branches of a foreign bank could be different from the procedures concerning creditors of a national bank. This might arise some concern as to parity of rights for creditors and, possibly, to cases of conflict of rules in the internal market. Some of these issues are addressed in detail by the consultation document and we hope that the consultation will help resolve most of them.

3.3.1.4   We are well conscious that MS would resist to the idea of prescriptive rules and that the opposite position may not be realistic; but leaving too much freedom of choice to national authorities would lead to difficulties when international crisis concerning groups arise. Probably, a coordination of some major aspects of the procedures (eventually under the umbrella of ESA) would be necessary before adopting national rules.

3.3.1.5   As to the coordination framework, the Commission considers two reforms: one based on resolution colleges, the other on group resolution authorities. The latter seems more rational, flexible and effective, since the leading role would be for the resolution authorities with the involvement of the European Banking Authority (EBA) as an observer. The other, consisting in an enlargement of the existing supervisory colleges with the addition of the resolution authorities, might have difficulties in reaching rapid decisions, due to supervision and resolution concerns.

3.3.1.6   One major concern: a group resolution scheme

  would not be binding
  . National authorities which disagree with the scheme would have the freedom to take ‘independent action’, albeit ‘being required’ to give some consideration to the impact of their decision on other Member States, ‘give reasons for their decisions’ to the resolution colleges, and ‘discuss’ their reasons with the other members of the college. Again, past experiences give some ground to a negative comment: when national interests are at stake, there is a high probability that each national authority will protect them before any other concern. The proposed procedure is too clumsy, time consuming and inapplicable in cases when the national authorities will have to act immediately. Expecting national authorities to wait and refrain from adopting national measures until the group level resolution authorities make a decision is unrealistic especially in cases when the subsidiaries are too big for the local market.

3.3.1.7   The EESC recommends the Commission to simplify the procedure under which MS that disagree with the proposed plan can express their views.

3.4   Financing resolution

The EESC has already commented on this subject by Opinion on ‘Banks Resolutions Funds’ (9). The Committee would like to re-emphasise, that any draft legislative provision in this field should be accompanied by an in-depth analysis and impact assessment, taking fully into account the implementation of bank levies or taxes in some Member States.

3.4.1   Resolution funds and Deposit Guarantee Schemes (DGS)

The EESC has already expressed its views on BRF and DGS in a recent Opinion (10).

3.4.2   Design of resolution funds

3.4.2.1   There is some concern regarding an apparently innocent final sentence: ‘... and costs exceeding the capacity of the fund are subsequently recovered by the banking sector.’ Calling the whole of a profession to cover the losses originated by one of their members is not an unusual policy, but for doing so the conditions should be strictly defined and preceded by an in-depth analysis of the consequences. An appropriate legal basis is needed. Imposing contributions to a fund by a regulation is an accepted procedure, but a law is required if losses are to be covered directly by third parties.

3.4.2.2   As for the basis for contributions an acceptable harmonised approach might be based on the total of liabilities after their qualitative evaluation or on liabilities excluding guaranteed deposits. But again, the flexibility devil is here: each Member State would be able to decide in a different way, ‘provided that this would not result in distortions of the Internal Market’. Different criteria lead to different contribution systems and to different levels of costs for each national industry: a distortion is the unavoidable result of flexibility.

3.4.2.3   A lot of MS have already introduced taxes and levies for which the parameters (base, rate and scope) differ considerably. Regarding these differences, the Committee would like to underline the importance of ensuring an appropriate coordination in the short term by introducing practical solutions, including bilateral agreements where appropriate. In addition, we would like to stress again the significance of built-in flexibilities in the national systems of levies in the short run in view of the ongoing changes in the regulatory area and developments towards an appropriate EU-wide solution in the medium term.

3.4.3   Size of funds

The EESC has already commented on this in a recent Opinion (11). Again, the need for a quantitative impact assessment is required, as well as an evaluation of the impact of a further drain of funds from the credit-available resources of the financial sector, together with the effects of the CRD.

3.5   Next steps and future work

3.5.1   Next steps: a coordination framework

No doubt, national insolvency laws will have to be modified to accommodate the new rules concerning resolution, but how and how long it will take is open to speculation. Modifying a law needs the involvement of governments and parliaments: a usually lengthy procedure, more so when sensitive issues are concerned. Before adopting a new regulation, the Commission should try to avoid clashes with established principles in some MS.

3.5.2   An insolvency framework (medium term)

Administrative liquidation is not an unknown procedure, but in most MS it is usually done by a liquidator appointed by a tribunal and under its supervision. Liquidation of banks entrusted to, and under the authority of, administrative banking entities would mean the transfer of powers from judicial to administrative authorities: something which might conflict with national laws, or even constitutions.

3.5.3   The EU crisis management framework proposed by the Commission for the financial sector differs from the crisis management approach applied recently in some MS under the EU/IMF-supported programmes (12). They envisage bank recapitalisation with public funds, including from the EU-IMF financing which may continue in the next couple of years exactly at the time when the new European crisis management framework and bank resolution funds (BRF) are to be implemented in the rest of the EU. The EESC expects the Commission to propose appropriate transition measures within a realistic timeframe which will enable such MS to organise a fast, smooth and complete transition to the proposed EU crisis management framework and BRF, compatible with the need to avoid weakening their banking sectors.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  See also OJ C 107, 6.4.2011, p. 16 where we discussed in detail the costs related to the crisis management framework and BRF in particular, as well as their implications for the financial sector and the broader economy.

1

(2)  The High-level Group on Financial Supervision in EU Chaired by Jacques de Larosière, Report, 25 February 2009, Brussels, p. 64.

2

(3)  COM(2009) 561.

3

(4)  COM(2010) 254.

4

(5)  See http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm.

5

(6)  On financing the costs see section 3.4 of COM(2010) 579 final and Opinion OJ C 107, 6.4.2011, p. 16.

6

(7)  See IMF, Financial Sector Assessment program, 2011, www.imf.org.

7

(8)  The High-level Group on Financial Supervision in EU Chaired by Jacques de Larosiere, Report, 25 February 2009, Brussels, p. 64.

8

(9)  OJ C 107, 6.4.2011, p. 16.

9

(10)  See footnote 9.

10

(11)  See footnote 9.

11

(12)  See IMF Country Reports for Greece (No 1168) and Ireland (No 10366 and No 1147).

12

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/108 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/108

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Reinforcing sanctioning regimes in the financial services sector’

COM(2010) 716 final

2011/C 248/18

Rapporteur: Mr HERNÁNDEZ BATALLER

On 8 December 2010 the Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Reinforcing sanctioning regimes in the financial services sector

COM(2010) 716 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June), the European Economic and Social Committee adopted the following opinion by 105 votes to 2 with 4 abstentions.

1.   Conclusions and recommendations

1.1   The EESC welcomes the creation of a supranational system of sanctions that are truly effective, dissuasive and proportionate. It supports the approach taken by the Commission communication to provide common criteria that Member States should meet as a minimum requirement when establishing administrative sanctions for the infringement of financial services legislation.

1.2   The regulatory framework aims to facilitate the implementation of legal principles which have already been applied successfully by the EU such as the ‘polluter pays’ principle which is used here to impose proportionate penalties for the damage caused and to set an example in the case of financial violations, or the ‘leniency’ policy which is used in procedures for investigating and curbing anti-competitive practices. These are particularly relevant here, given the unique role that staff working at financial institutions can play in reporting violations.

1.3   The EESC agrees with the Commission's approach on referring to ‘sanctions’ as a broad notion which encompasses tax-related administrative measures, restoration of legality, confiscation, the disqualification of managers, withdrawing privileges (such as the withdrawal of licences), pecuniary sanctions, fines which act as a deterrent, and other similar measures.

1.4   The EESC calls on the Commission to investigate ways of preventing fraudulent financial operations that originate in or are directed towards tax havens and financial havens and that involve capital movements which have an impact on the internal market.

1.5   The confiscation of unlawful profits and punitive damages should be used in addition to the sanction imposed. The EESC has already suggested (1) that the proceeds should be paid into a ‘support fund for collective action’ to make it easier for consumers' associations to take collective action seeking compensation or redress. The EESC (2) therefore reminds the Commission that it has already expressed its views on several occasions regarding the need to adopt a supranational regulatory framework to harmonise collective action.

1.6   The EESC calls on the Commission to take into consideration the need for the EU to sign international agreements with third countries in order to reinforce the extra-territorial impact of current legislation on financial sanctions, ensuring that it is able to deal effectively and dissuasively with infringements of financial services legislation.

2.   Introduction

2.1   The financial crisis has put into doubt whether financial market rules are always respected and applied as they should be across the Union. Lack of enforcement of the rules in one Member State may have significant implications for the stability and functioning of the financial system in another Member State.

2.2   The ECOFIN Council asked the Commission and the three Committees of Supervisors (Committee of European Banking Supervisors - CEBS, Committee of European Insurance and Occupational Pensions Supervisors - CEIOPS and Committee of European Securities Regulators - CESR) to conduct a cross-sectoral stocktaking exercise of the coherence, equivalence and actual use of sanctioning powers in the Member States.

2.3   At international level, strengthening sanctioning regimes is one of the elements required for the reform of the financial sector, as agreed by G20 leaders at the summit held in Washington on 15 November 2008. The Dodd-Frank Wall Street Reform and Consumer Protection Act (July 2010) provides a comprehensive reform of the American financial system.

3.   The Commission Communication

3.1   This Communication is based on the studies of the Committees of Supervisors and discussions with Member States. The document presents areas for potential improvement, and suggests possible EU actions to achieve greater convergence and efficiency of national sanctioning regimes. In the financial sector, efficient sanctioning regimes are a key element of a supervisory regime which should ensure sound and stable financial markets and the protection of consumers and investors.

3.2   In order to ensure full application of EU law, sanctions must be effective, proportionate and dissuasive. Sanctions can be considered effective when they are capable of ensuring compliance with EU law, proportionate when they adequately reflect the gravity of the offence and do not go beyond what is necessary for the objectives pursued, and dissuasive when they are sufficiently serious to deter the authors of violations from repeating the same offence, and put off other potential offenders.

3.3   Under the existing legal framework, Member States enjoy considerable autonomy in terms of choice and application of national sanctions. However, this autonomy should be balanced with the need for effective and consistent application of European law.

3.4   The European directives and regulations currently in place in the area of financial services contain four groups of provisions on sanctions:

| — | coordination of the power to impose sanctions between several Member States; |
| --- | --- |

—

coordination of the power to impose sanctions between several Member States;

| — | obligation for Member States to provide for the application of appropriate administrative sanctions and measures and to ensure that they are effective, proportionate and dissuasive. Most existing Directives do not differentiate between investigative, preventive and punitive measures; |
| --- | --- |

—

obligation for Member States to provide for the application of appropriate administrative sanctions and measures and to ensure that they are effective, proportionate and dissuasive. Most existing Directives do not differentiate between investigative, preventive and punitive measures;

| — | another group concerns sanctions for specific infringements; |
| --- | --- |

—

another group concerns sanctions for specific infringements;

| — | a fourth group makes provision for the authorities to publish the measures and sanctions under certain circumstances. |
| --- | --- |

—

a fourth group makes provision for the authorities to publish the measures and sanctions under certain circumstances.

3.5   The review of sanctioning regimes shows divergences across Member States which may stem from many factors including differences in national legal systems, constitutional requirements, the functioning of national administrations and the role of courts (administrative or criminal).

3.6   The Commission has found the following divergences and weaknesses in national sanctioning regimes:

| — | some competent authorities do not have at their disposal important types of sanctioning powers for certain violations; |
| --- | --- |

—

some competent authorities do not have at their disposal important types of sanctioning powers for certain violations;

| — | the levels of administrative pecuniary sanctions (fines) vary widely across Member States and are too low in some Member States; |
| --- | --- |

—

the levels of administrative pecuniary sanctions (fines) vary widely across Member States and are too low in some Member States;

| — | divergence exists in the nature (administrative or criminal) of sanctions provided for in national legislation; |
| --- | --- |

—

divergence exists in the nature (administrative or criminal) of sanctions provided for in national legislation;

| — | the level of application of sanctions varies across Member States. |
| --- | --- |

—

the level of application of sanctions varies across Member States.

3.7   According to the Commission, the fact that national sanctioning regimes diverge on key aspects can result in the following: lack of compliance with EU financial services rules; risk of undermining consumer protection and market integrity; distortions of competition in the internal market; a negative impact on financial supervision; risk of undermining confidence in the financial sector.

3.8   The Commission considers that further convergence and reinforcement of sanctioning regimes is essential to prevent risk of improper functioning of financial markets. It therefore suggests that a minimum common standard could be set to ensure a minimum approximation of national sanctioning regimes. This approximation should address the following key issues:

| — | appropriate types of administrative sanctions for the violation of key provisions; |
| --- | --- |

—

appropriate types of administrative sanctions for the violation of key provisions;

| — | publication of sanctions; |
| --- | --- |

—

publication of sanctions;

| — | a sufficiently high level of administrative fines; |
| --- | --- |

—

a sufficiently high level of administrative fines;

| — | sanctions provided for both individuals and financial institutions; |
| --- | --- |

—

sanctions provided for both individuals and financial institutions;

| — | appropriate criteria to be taken into account when applying sanctions; |
| --- | --- |

—

appropriate criteria to be taken into account when applying sanctions;

| — | possible introduction of criminal sanctions for the most serious violations; |
| --- | --- |

—

possible introduction of criminal sanctions for the most serious violations;

| — | appropriate mechanisms supporting effective application of sanctions. |
| --- | --- |

—

appropriate mechanisms supporting effective application of sanctions.

4.   General comments

4.1   The EESC's view

4.1.1   The Committee takes a very positive view of the Commission Communication. As part of the process of re-defining international rules on capital markets, the Communication proposes developing a more efficient supranational regulatory framework to crack down on violations carried out by financial institutions and operators.

4.1.2   In fact, the Communication embodies the spirit of political positions which were consolidated at the G-20 summits, particularly at those held in Washington (2008), London (2009) and Seoul (2010), together with the EU's own positions which were agreed at the highest level (e.g. the establishment of Financial Supervisory Authorities, the reform of the Markets in Financial Instruments Directive, the agreement on high-risk investment funds such as hedge funds, etc.).

4.2   Subsidiarity principle

4.2.1   The Communication is clearly in line with the subsidiarity principle. The document underlines the fact that the national authorities have primary responsibility to ensure that a coordinated, integrated approach is taken to consistently applying both the existing legal framework and the future framework of sanctions for violations in the financial services sector. In fact, the scope of the Communication is limited to the sanctions which are imposed by the competent authorities of Member States.

4.2.2   However, if ‘intra-European’ violations are committed – where the authors of the violation act in different Member States and have an impact on the whole of the single market – the following action should be taken:

| — | ensure that it is clear who is responsible for starting up the sanctions procedure. This should prevent forum shopping, where potential infringers shop around to decide which national authorities are most lenient in applying the sanctions legislation; |
| --- | --- |

—

ensure that it is clear who is responsible for starting up the sanctions procedure. This should prevent forum shopping, where potential infringers shop around to decide which national authorities are most lenient in applying the sanctions legislation;

| — | consider delegating the roles and responsibilities of the competent authorities under certain conditions; |
| --- | --- |

—

consider delegating the roles and responsibilities of the competent authorities under certain conditions;

| — | occasionally, under exceptional circumstances, give the European Supervisory Authorities responsibility for such cases, depending on the nature of the issue involved. |
| --- | --- |

—

occasionally, under exceptional circumstances, give the European Supervisory Authorities responsibility for such cases, depending on the nature of the issue involved.

4.2.3   Supranational action is justified by the need to ensure convergence of national sanctioning regimes (administrative or criminal). Currently, these regimes either have serious weaknesses or shortcomings which mean they cannot be harmonised, or they operate using completely different criteria. Each Member State would have to choose whether the route taken was administrative or criminal, while ensuring that the principles of equivalence and effectiveness were met, in line with ECJ case law.

4.2.4   The regulatory framework under discussion is in keeping with the principle of sharing responsibilities between different authorities and legal systems. The framework aims to facilitate the implementation of legal principles which the EU has already applied successfully, such as the ‘polluter pays’ principle which is used here to impose proportionate penalties for the damage caused and to set an example in the case of financial violations, or the ‘leniency’ policy which is used in procedures for investigating and curbing anti-competitive practices. These are particularly relevant here, given the unique role that staff working at financial institutions can play in reporting violations.

4.2.5   The sanctions and penalties that are applied to offenders must of course be severe in order to deter people from committing offences which cannot be tolerated in a democratic society. However, people who cooperate in the detection of offences should be treated more leniently, and have their sanctions or penalties substantially lowered or withdrawn.

4.2.6   The EESC considers that encouraging people to report violations – as set out in the Dodd Frank Act in the USA – could be a good way of cleaning up the internal market for financial services and improving the way it operates. This could be achieved by setting up a system providing financial and other incentives for people who report infringements of the legislation regulating these financial services to the Financial Supervisory Authorities.

4.2.7   In some Member States, it is not possible to report infringements due to legislative barriers which are still in place because of the supposed need to protect business secrets. These barriers therefore need to be removed, as do other confidentiality barriers that could act against the people who report infringements. In any case, employees need to be protected through programmes protecting their interests.

4.2.8   The existing Directive on money laundering already provides for favourable treatment for people who are employed by financial institutions and report suspicious operations, and ensures that they are protected from victimisation in the workplace or elsewhere.

4.3   Shortcomings in the Communication

4.3.1   It is clear that when the Commission Communication refers to violations, it is generally referring to the behaviour of individuals – natural or legal persons who can be pursued via administrative or criminal proceedings. The Communication does not therefore tackle fraud or reporting oversights carried out by state authorities, and notably those responsible for regulating and monitoring the financial markets: if these authorities are not operating as they should, there could be serious consequences for the internal market and the interests of consumers.

4.3.2   This is the case, for example, in the need to remove the ‘invisible barriers’ which are still insuperable obstacles to the exercise of fundamental economic freedoms (e.g. the abuse of discretional powers when determining the suitability of directors of a credit institution (3), or insurance institution; or the decision on the incompatibility of shareholders who have a ‘qualifying holding’ in the capital of a financial institution (4), etc.).

4.3.3   All Member States should ensure that they have domestic measures in place to highlight the accountability of the directors of those financial institutions which, because of their systemic character, could potentially cause incalculable damage to the stability of the financial markets, and to consumers, if they are managed imprudently or fraudulently.

4.3.4   Currently, anyone employed by a financial institution (even one which is too small to have an impact on the market) can be prosecuted if they commit a crime of corruption, fraud, or money laundering, while – as happens in some Member States – the managers of the institutions, who are responsible for the damage caused by violations, could potentially avoid administrative or criminal sanctions. This situation cannot be justified. One may conclude that there have been serious shortcomings in corporate governance.

4.4   Reciprocity

4.4.1   The Communication's perspective on the matter is too EU-focused. The Communication concentrates on intra-European scenarios, and fails to examine the actions of financial institutions in third countries, which could also have an impact on the internal market, given the opening of capital markets and the fact that it is relatively easy for these financial institutions to operate by way of freedom of establishment, through accepted techniques such as ‘joint ventures’ or ‘leap-frogging’.

4.4.2   Given that there is no common regime which would facilitate a policy of reciprocity with third states on financial services, it is all the more necessary for national authorities to provide supervisory and sanctioning mechanisms that are just as tough and effective for financial institutions from third countries.

4.4.3   The EESC calls on the Commission to investigate ways of preventing fraudulent financial operations that originate in or are directed towards tax havens and financial havens and that involve capital movements which have an impact on the internal market.

4.4.4   The EESC expresses concern at the Commission's failure to properly address aspects regarding the follow-up of actions penalised for non-compliance with financial legislation when these are perpetrated in third countries or when natural or legal persons residing in third countries are directly or indirectly responsible for them.

4.5   The following technical issues also need to be pointed out:

| 4.5.1 | The EESC agrees with the Commission's approach on referring to ‘sanctions’ as a broad notion which encompasses tax-related administrative measures, restoration of legality, confiscation, the disqualification of managers, withdrawing privileges (such as the withdrawal of licences), pecuniary sanctions, fines which act as a deterrent, and other similar measures. |
| --- | --- |

4.5.1

The EESC agrees with the Commission's approach on referring to ‘sanctions’ as a broad notion which encompasses tax-related administrative measures, restoration of legality, confiscation, the disqualification of managers, withdrawing privileges (such as the withdrawal of licences), pecuniary sanctions, fines which act as a deterrent, and other similar measures.

| 4.5.2 | All of the procedures for sanctions should be based, as a minimum, on the principles of legality, criminality, establishing guilt, ensuring sanctions do not have a retroactive effect, reformatio in peius, presuming someone is innocent until proven guilty, proportionality, the application of the principle of double jeopardy, time-barring and time limits, possibility of a provisional halt to proceedings, and the right to appeal in order to secure the right to an effective remedy before a court of law. |
| --- | --- |

4.5.2

All of the procedures for sanctions should be based, as a minimum, on the principles of legality, criminality, establishing guilt, ensuring sanctions do not have a retroactive effect, reformatio in peius, presuming someone is innocent until proven guilty, proportionality, the application of the principle of double jeopardy, time-barring and time limits, possibility of a provisional halt to proceedings, and the right to appeal in order to secure the right to an effective remedy before a court of law.

| 4.5.3 | It would also make sense to improve publicity and raise awareness on the sanctions imposed on the authors of violations. This information will naturally be published in domestic official journals, but depending on the seriousness of the offence, details could also be published in the Official Journal of the European Union, in print media, and on the Internet for example. The infringer should cover the costs of circulating the information. |
| --- | --- |

4.5.3

It would also make sense to improve publicity and raise awareness on the sanctions imposed on the authors of violations. This information will naturally be published in domestic official journals, but depending on the seriousness of the offence, details could also be published in the Official Journal of the European Union, in print media, and on the Internet for example. The infringer should cover the costs of circulating the information.

4.6   Issues regarding the legislative instrument

4.6.1   The EESC considers that it would be helpful to clarify the type of legislative instrument that the Commission is proposing to adopt. This should help to ensure that the objective is achieved: creating a sanctioning regime which acts as a deterrent and is based on the principles of effectiveness and proportionality.

4.6.2   Whilst the best solution would be a Regulation, there should be no margin of discretion in its application and it might not be the most suitable instrument to use at this stage in the evolution of Union law.

4.6.3   The EESC considers that it would be more appropriate to choose a framework Directive, even though the Commission considers that a minimum level of harmonisation needs to be achieved. If a framework Directive is used, the rules need to be sufficiently clear, with the precise, unconditional instructions required to ensure direct effect, in line with ECJ case law. The Directive should contain very detailed provisions in order to meet the general interest objectives being pursued.

4.6.4   At all events, the process of imposing financial sanctions must ensure that the infringer cannot obtain any benefit whatsoever from committing the infringement. Common methods should be established to calculate the drawback of any profit unlawfully acquired, in addition to the fine imposed.

4.6.5   The confiscation of unlawful profits and punitive damages should be used in addition to the sanction imposed. The EESC has already suggested (5) that the proceeds should be paid into a ‘support fund for collective action’, in accordance with the priorities of each Member State, to make it easier for consumers' associations and other organisations with a legitimate interest to take collective action seeking compensation. The EESC (6) therefore reminds the Commission of the need to adopt a supranational regulatory framework to harmonise collective action to ensure that there is a high level of protection for consumers' economic interests.

4.6.6   The following circumstances should also be taken into account when sanctions are imposed: the personal circumstances of the author of the violation, the seriousness of the infringement, the financial strength of the infringer, the cooperative behaviour of the author of the violation, the duration of the infringement, the effect of the infringement on the rights and legitimate interests of users and consumers and on other economic operators.

4.7   Lisbon Treaty and consumers

4.7.1   The Communication certainly does take into account the position of the consumers of financial services. The document mentions various options, including mainstreaming the procedures for collective redress. The EESC has already supported this proposal in a number of opinions. However, the Communication only takes a passive approach to the situation of consumers, based on consumer protection and punishing improper or criminal practices.

4.7.2   In the context of application of the Lisbon Treaty, which establishes participatory democracy as a key principle in the democratic life of the Union, it is necessary to involve consumers and their most representative associations.

4.7.3   The proposed sanctioning regime should establish measures to ensure that consumers' associations working in this area are strengthened. Permanent channels of communication should also be set up between the European Parliament, the Commission, the EESC and consumers' associations. Public funding should also be secured in order to ensure there is a more effective system in place for flagging up situations which could put the stability of financial markets at risk, and for ensuring that rules keep pace with changes in products and market practices, while also taking account of the impact which imposing penalties on financial institutions would have on clients.

4.7.4   Coupled with the focus on consumer protection and curbing the damage caused by infringements of sector rules, these measures would ensure a preventative approach is taken to the problem, which could prove far more effective.

4.7.5   The EESC considers that a European Agency for Consumer Financial Protection should be set up and repeats (7) the need to examine the possibility of providing an authority under European Law similar to that introduced by the Dodd-Frank Act (the Bureau of Consumer Financial Protection) in the United States.

4.7.6   The EESC therefore proposes that the Commission should use the time allotted for preparing the future proposal to conduct or review studies on European best practice with regard to protecting consumers of financial services, which can be used as a platform for designing legal instruments which will ensure a high level of protection for all users of financial services. Under the Charter of Fundamental Rights, all EU institutions are responsible for ensuring a high level of protection for users of financial services.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  OJ C 162, 25.6.2008, pp.1-19 and OJ C 175, 28.7.2009, pp.20-25.

1

(2)  OJ C 324, 30.12.2006, p.1.

2

(3)  Article 11 of Directive 2006/48/CE of the European Parliament and of the Council of 14.6.2006, OJ L 117, 30.6.2006, p.1.

3

(4)  Article 12 of Directive 2007/44/CE of the European Parliament and of the Council of 5.9.2007, OJ L 247, 21.9.2007, p.1.

4

(5)  See footnote 1.

5

(6)  See footnote 2.

6

(7)  OJ C 107, 6.4.2011, p. 21.

7

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/113 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/113

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Opinion of the European Economic and Social Committee on the ‘Green Paper — Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status records’

COM(2010) 747 final

2011/C 248/19

Rapporteur: Mr HERNÁNDEZ BATALLER

On 14 December 2010, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Green Paper — Less bureaucracy for citizens: promoting free movement of public documents and recognition of the effects of civil status records

COM(2010) 747 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 127 votes to two, with three abstentions.

1.   Conclusions and recommendations

1.1   The EESC welcomes the Commission's Green Paper and recognises the need to facilitate the movement of public documents throughout the European Union, insofar as it makes people's lives easier and helps them exercise their rights more effectively by removing the obstacles currently in place.

1.2   The EESC supports the Commission's initiatives to promote the free movement of public documents, since they contribute to the development of European citizenship by strengthening economic and social rights.

1.3   The EESC considers that, in connection with civil status records, the Commission should:

| — | establish a supranational optional system for the European civil status record, |
| --- | --- |

—

establish a supranational optional system for the European civil status record,

| — | start the work needed to harmonise rules concerning conflicts of law, and |
| --- | --- |

—

start the work needed to harmonise rules concerning conflicts of law, and

| — | while implementing the above measures, establish mutual recognition by identifying the minimum requirements to be met by civil status records and consensus on the presumption of their general validity within the EU, once it has been verified that the relevant authority has issued them lawfully. |
| --- | --- |

—

while implementing the above measures, establish mutual recognition by identifying the minimum requirements to be met by civil status records and consensus on the presumption of their general validity within the EU, once it has been verified that the relevant authority has issued them lawfully.

1.4   The EESC therefore calls on the other institutions and competent bodies of the EU to push forward the Commission's proposals in this area without delay so that, insofar as possible, supranational rules can be adopted during the current legislative period.

1.5   It therefore makes sense to call for the widespread use of administrative documents with standard and multi-lingual formats, which could be based on the models used by the CIEC. Among other advantages, this would eliminate the need for the document to be translated in the host country.

2.   Introduction

2.1   The administrative procedures which have to be carried out in order to use public documents outside of the Member State in which they were issued can involve significant costs in terms of time and money for the individual concerned, stemming essentially from the need to authenticate the documents or provide a certified translation thereof.

2.1.1   One reason for these problems is that citizens are required to present public records to the authorities of another Member State in order to provide the proof needed to benefit from a right or to comply with an obligation. These documents can take a number of different forms. They can be administrative documents, notarial acts, civil status records, miscellaneous contracts or court rulings.

2.1.2   In this connection, the traditional method of authenticating public documents intended to be used abroad is called ‘legalisation’ and, under the ordinary procedure, involves the legalisation of a document by the competent authorities of the country in which it was issued and later by the embassy or consulate of the country in which it is going to be used. The simplified form of this procedure is the ‘apostille’, where the country that issues the document also issues an authentication certificate.

2.1.3   Within the framework of the Stockholm programme (1), the European Council called on the Commission to press ahead with measures to guarantee full exercise of the right to freedom of movement and to this end the Stockholm programme action plan provides for two legislative proposals relating to:

| — | free movement of documents by eliminating legalisation formalities between Member States and; |
| --- | --- |

—

free movement of documents by eliminating legalisation formalities between Member States and;

| — | recognition of the effects of certain civil status records, so that legal status granted in one Member State can be recognised and have the same legal consequences in another. |
| --- | --- |

—

recognition of the effects of certain civil status records, so that legal status granted in one Member State can be recognised and have the same legal consequences in another.

3.   Commission Green Paper

3.1   The Commission is launching a consultation on matters concerning free movement of public documents and recognition of the effects of civil status records.

3.2   Public documents

3.2.1   The Commission would like to launch a debate on all public documents for which administrative procedures must be carried out so that they can be used outside of the country in which they were issued. These procedures include authenticating the documents or providing a certified translation thereof. The common function of all these documents is to establish evidence of facts recorded by a public authority.

3.2.2   At the moment, administrative formalities such as legalisation and the apostille in EU Member States are characterised by a legal framework that is fragmented because it is based on several sources:

| — | National laws that differ considerably from one another |
| --- | --- |

—

National laws that differ considerably from one another

| — | A number of international multilateral and bilateral conventions which have been ratified by a varied and limited number of countries and which are unsuitable when it comes to providing the solutions needed to ensure the free movement of Europeans |
| --- | --- |

—

A number of international multilateral and bilateral conventions which have been ratified by a varied and limited number of countries and which are unsuitable when it comes to providing the solutions needed to ensure the free movement of Europeans

| — | Fragmented EU law which deals only with certain limited aspects of the matters raised. |
| --- | --- |

—

Fragmented EU law which deals only with certain limited aspects of the matters raised.

3.3   Possible solutions to facilitate free movement of public documents among Member States

| 3.3.1 | Abolition of administrative formalities
  It is proposed that the apostille and legalisation for all public documents be abolished in order to ensure that they can circulate freely. |
| --- | --- |

3.3.1

Abolition of administrative formalities

It is proposed that the apostille and legalisation for all public documents be abolished in order to ensure that they can circulate freely.

| 3.3.2 | Cooperation between competent national authorities






  3.3.2.1 | In the event of serious doubt about the authenticity of a document or if a document does not exist in a Member State, the competent national authorities could exchange the necessary information and find an appropriate solution. |
| --- | --- | --- |

3.3.2

Cooperation between competent national authorities

3.3.2.1

In the event of serious doubt about the authenticity of a document or if a document does not exist in a Member State, the competent national authorities could exchange the necessary information and find an appropriate solution.

| 3.3.2.2 | The e-Justice portal could inform citizens of the existence of civil status records and their legal implications or arrangements could be made to allow citizens to apply for and obtain a civil status record online using a secure system. |
| --- | --- |

3.3.2.2

The e-Justice portal could inform citizens of the existence of civil status records and their legal implications or arrangements could be made to allow citizens to apply for and obtain a civil status record online using a secure system.

| 3.3.3 | Limiting translations of public documents
  Optional standard forms, at least for the most common public documents, could be introduced in a number of administrative sectors in order to cope with translation requests and avoid costs. |
| --- | --- |

3.3.3

Limiting translations of public documents

Optional standard forms, at least for the most common public documents, could be introduced in a number of administrative sectors in order to cope with translation requests and avoid costs.

| 3.3.4 | The European civil status certificate
  This would exist alongside Member States' national civil status records, since it would be optional, not compulsory. The format of the certificate and the information given on it must be standardised using a single support, the European certificate. |
| --- | --- |

3.3.4

The European civil status certificate

This would exist alongside Member States' national civil status records, since it would be optional, not compulsory. The format of the certificate and the information given on it must be standardised using a single support, the European certificate.

3.4   Mutual recognition of the effects of civil status records

| 3.4.1 | Civil status records are records executed by an authority in order to record the life events of each citizen such as birth or filiation. |
| --- | --- |

3.4.1

Civil status records are records executed by an authority in order to record the life events of each citizen such as birth or filiation.

| 3.4.2 | It should be possible to guarantee the continuity and permanence of a civil status situation to all European citizens exercising their right of freedom of movement and that the legal status recorded in a civil status record can produce the civil effects connected with the situation. |
| --- | --- |

3.4.2

It should be possible to guarantee the continuity and permanence of a civil status situation to all European citizens exercising their right of freedom of movement and that the legal status recorded in a civil status record can produce the civil effects connected with the situation.

| 3.4.3 | The question is whether there is a need for EU action to provide Europeans with greater legal certainty in relation to civil status matters and to remove the obstacles which they face when asking for a legal situation created in one Member State to be recognised in another. |
| --- | --- |

3.4.3

The question is whether there is a need for EU action to provide Europeans with greater legal certainty in relation to civil status matters and to remove the obstacles which they face when asking for a legal situation created in one Member State to be recognised in another.

| 3.4.4 | Secondary law (2) measures by the EU have to date remained very specific and there are no rules yet on recognition by a Member State of civil status-related situations created in another Member State. Furthermore, the EU has no competence to intervene in the substantive family law of Member States, since the Treaty on the Functioning of the European Union does not provide any legal basis for applying such a solution. |
| --- | --- |

3.4.4

Secondary law (2) measures by the EU have to date remained very specific and there are no rules yet on recognition by a Member State of civil status-related situations created in another Member State. Furthermore, the EU has no competence to intervene in the substantive family law of Member States, since the Treaty on the Functioning of the European Union does not provide any legal basis for applying such a solution.

| 3.4.5 | The Commission proposes three different solutions to these problems, namely:






  3.4.5.1 | Assisting national authorities in the quest for practical solutions
  The EU's primary role in this area would be to help national authorities to cooperate more effectively. |
| --- | --- | --- |

3.4.5

The Commission proposes three different solutions to these problems, namely:

3.4.5.1

Assisting national authorities in the quest for practical solutions

The EU's primary role in this area would be to help national authorities to cooperate more effectively.

| 3.4.5.2 | Automatic recognition
  Such recognition would not involve the harmonisation of existing rules and would leave Member States' legal systems unchanged, which would mean that each Member State would accept and recognise, on the basis of mutual trust, the effects of a legal situation created in another Member State. |
| --- | --- |

3.4.5.2

Automatic recognition

Such recognition would not involve the harmonisation of existing rules and would leave Member States' legal systems unchanged, which would mean that each Member State would accept and recognise, on the basis of mutual trust, the effects of a legal situation created in another Member State.

| 3.4.5.3 | Recognition based on the harmonisation of conflict-of-law rules
  A body of common rules would be created at EU level, enshrining the right which would be applicable to a cross-border situation when a civil status event takes place. |
| --- | --- |

3.4.5.3

Recognition based on the harmonisation of conflict-of-law rules

A body of common rules would be created at EU level, enshrining the right which would be applicable to a cross-border situation when a civil status event takes place.

4.   General comments

4.1   The European Commission's Green Paper is justified from a legislative point of view, given the need to optimise and enhance the way in which the Area of Freedom, Security and Justice operates and to forge stronger ties with the exercise of rights granted to individuals as EU citizens and in fundamental economic freedoms.

4.2   In this connection, the Committee welcomes the Commission's initiative which, in accordance with the constitutional principles and values and with the objectives of the European Union, as enshrined in the TEU and in the TFEU following the Lisbon Treaty, gives priority to the legal approach that strengthens the role of individuals within the European integration process.

4.3   It is therefore up to the institutions and bodies of the European Union to enable the citizens of its Member States and all individuals in general to exercise as far as possible the rights and freedoms of which they are the beneficiaries, within the scope of the treaties and the current legal framework.

4.3.1   This will promote more equal treatment, in accordance with the principle enshrined in Article 9 TEU, and help to eliminate obstacles to the exercise of these rights and freedoms which are not justified on grounds of public order and which often protect purely corporate interests (which means possible interference from bureaucrats, notaries, registrars, etc.) or conceal irrational fears linked to the sovereignty of the EU's Member States.

4.4   However, the adoption of future measures to eliminate obstacles stemming from administrative or linguistic formalities requires careful consideration of their material scope since, notwithstanding the benefits for the individual in terms of removing obstacles and administrative constraints as well as financial costs and reducing time-limits for the use of public documents by individuals outside of the country in which they were issued, there may be serious legal clashes over the effects of these documents in very sensitive areas such as civil status.

4.5   Following this assessment, it would be a good idea to conduct a separate analysis of the viability of such measures, looking at merely procedural and linguistic matters, on the one hand, and more substantive matters concerning the legal situation of individuals, on the other.

4.6   Full implementation of the rights of freedom of movement and residence, as well as the freedom of establishment, the freedom to provide services and the free movement of workers in the internal market, among other things, requires adoption of supranational mechanisms and legislative acts which eliminate or restrict to very specific cases the administrative formalities for authenticating public documents.

4.6.1   Interference by the authorities of Member States other than the one in which a public document was originally issued often conceals interests which are at odds with EU law and involves discriminatory treatment and unjustified burdens for the individuals concerned.

4.6.2   Obviously, public order and safeguarding the financial interests of Member States can be ensured in ways that are less burdensome for the individual and that, in any case, do not affect the rights conferred by EU law. In the event of serious doubt about the authenticity of a document or if a document does not exist in another Member State, the competent national authorities can exchange information and try to find a solution.

4.6.2.1   However, the Committee underlines its view that public authorities have an obligation to help people secure, using all possible means, the cross-border regularisation of all public documents attesting to a status or situations which are a condition or requirement for the exercise of rights and freedoms recognised by the EU.

4.6.3   This is evidenced by various experiences within the EU, such as:

| — | administrative cooperation among civil registrars promoted by the eleven Member States party to CIEC Convention No 3 (3). The satisfactory results of such cooperation provide sound justification for the Committee to call for all EU Member States to sign this convention in the run-up to the expected adoption of supranational rules in this area; |
| --- | --- |

—

administrative cooperation among civil registrars promoted by the eleven Member States party to CIEC Convention No 3 (3). The satisfactory results of such cooperation provide sound justification for the Committee to call for all EU Member States to sign this convention in the run-up to the expected adoption of supranational rules in this area;

| — | exchange of information on professional qualifications using the electronic Internal Market Information system (IMI); |
| --- | --- |

—

exchange of information on professional qualifications using the electronic Internal Market Information system (IMI);

| — | gradual automation and abolition of the ‘exequatur’ as part of the widespread use of electronic procedures, e-Justice, etc. |
| --- | --- |

—

gradual automation and abolition of the ‘exequatur’ as part of the widespread use of electronic procedures, e-Justice, etc.

4.6.3.1   In light of these experiences, it makes sense for the Commission to link its legislative proposal in the Green Paper on the free movement of public documents to other initiatives such as Digital Europe and e-2020. The EESC believes that this would be a good opportunity to promote the creation of a network of civil registers, which would facilitate application of the principle of presenting documents on just one occasion, thereby simplifying all administrative procedures.

4.6.3.2   The EESC believes that it might also be worth exploring the possibility of creating in the near future an electronic database containing models of the public documents most commonly issued by Member States. The database would be managed by the European Commission and would be aimed at facilitating the mutual recognition and automatic validation of such documents throughout the EU, with the corresponding versions in all official EU languages.

4.6.4   Similarly, experiences in other areas of EU policy show that it is possible to use documents drawn up using identical or similar formats, techniques and materials, such as the European passport (4) and the support documents provided for under Article 20(2)(c) TFEU; the model driving license for cars and motorcycles in its various forms, etc.

4.6.5   It therefore makes sense to call for the widespread use of administrative documents with standard and multi-lingual formats, which could be based on the models used by the CIEC. Among other advantages, this would eliminate the need for the document to be translated in the host country.

4.7   It goes without saying that closer administrative cooperation and the issuing of documents that are valid in all EU Member States are feasible objectives in an atmosphere of mutual trust, if not mutual respect, and are clearly desirable if the exercise of the abovementioned EU citizenship rights and fundamental economic rights is to be made easier. Adopting European rules which are fully applicable in all Member States is an institutional task which falls within the EU's remit and is necessary with a view to deepening the integration process.

4.8   However, the question of providing documentary evidence of civil status involves more complex issues which require the exploration of various alternatives under legislative policy.

4.8.1   What is important is to find a joint solution, perhaps the adoption of a European civil status certificate, to the current problem of civil status certificates issued by the competent authorities of Member States not recognising personal situations equally and their effects not being fully acknowledged in those countries.

4.8.2   The various legal, cultural and religious traditions of Member States create unequal elements in an individual's legal situation. This gives rise to a disparity, from ‘no impediment’ requirements in some countries as a precondition for marriage, through recognition of same-sex marriages, to the establishment of the order of surnames or establishment of gender following a sex change.

4.9   Given that it is currently the Member States that have powers in this area, that the Lisbon Treaty does not provide specific legal bases to promote supranational legislative harmonisation measures on the matter and that, contrary to the provisions of Article 77(3) TFEU regarding visas and other short-term residence permits, there is no clause compensating for the absence of clear jurisdiction, strict adherence to the subsidiarity principle is required.

4.10   Consequently, the hypothetical application of the principle of mutual recognition using any type of supranational legislation based on the general provisions of Article 81(1) TFEU, should be considered in light of the special legislative procedure under Article 81(3) TFEU which requires the participation of the Member States' national parliaments.

4.10.1   In this respect, it would not be a good idea to carry out a detailed examination or a biased assessment of the legal options to be pursued by the European Union depending on the type of civil status situation to be recognised, given that it would probably be more feasible to apply it to filiation, adoption or the order of an individual's surnames than to recognition of marriage.

4.10.2   In short, irrespective of the legislative option promoted by the European Union and the time required to adopt it, immediate support should be given to individuals requiring recognition of a legal situation or the effects of a civil status certificate by developing binding European rules or guidelines, which help the competent authorities of Member States to provide consistent, flexible solutions which do not discriminate on the basis of nationality.

4.11   Given the urgent need to facilitate the movement of public documents, the Members States and institutions of the EU should support the Commission's initiatives to promote the free movement of public documents and establish an optional supranational system for the European civil status certificate while starting the work needed to harmonise rules on conflicts of law. In the meantime, they should establish mutual recognition by identifying the minimum requirements to be met by civil status records and consensus on the presumption of their general validity within the EU, once it has been verified that the relevant authority has issued them lawfully.

4.12   With a view to ensuring that future measures adopted by the EU on the free movement of public documents are as effective as possible, the Committee calls on the Commission to consider the feasibility extending the scope, in its future legislative proposals, to cover citizens from the European Economic Area and from third countries with which the EU has signed association agreements currently in force (on a reciprocal basis with citizens from the Member States), and long-term residents from third countries who are legally established or domiciled in an EU Member State.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  COM(2004) 401 final.

1

(2)  Regulation (EC) No 2201/2003, Article 21(2).

2

(3)  According to this convention, when civil registrars make a record of marriage, they must give notice of this to the civil registrar for the place of birth of each one of the spouses, using a standard form.

3

(4)  OJ C 241 of 19.9.1981 and C 179 of 26.7.1982.

4

---

| 25.8.2011 | EN | Official Journal of the European Union | C 248/118 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/118

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registers’

COM(2011) 79 final — 2011/0038 (COD)

2011/C 248/20

Rapporteur: Miklós PÁSZTOR

On 8 March 2011 the European Parliament, and on 16 March 2011 the Council, decided to consult the European Economic and Social Committee, under Article 50(2)(g) of the Treaty on the Functioning of the European Union, on the

Proposal for a Directive of the European Parliament and of the Council amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and companies registers

COM(2011) 79 final – 2011/0038 (COD).

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 144 votes to two with four abstentions.

1.   Conclusions and recommendations

1.1   The EESC welcomes this directive which represents a major step forward in the development of the single market. The directive will enable achievement of the broader objectives of businesses, employees, consumers and European citizens, as envisaged by the Europe 2020 strategy and the Small Business Act. However, in its current form, which envisages standardising the most important identifiers and documents and replacing voluntary cooperation with a legal obligation that would apply throughout the EU, the proposal only meets some of the basic demands that have been expressed.

1.2   At the same time, the proposal contains numerous uncertainties as regards implementation, and responsibility for drawing up further rules to resolve many of the issues has been delegated to the Commission. The EESC hopes that it will also be involved in future legislative stages and that it will continue to act as partner in the framing of rules delegated to the Commission.

1.3   The EESC would have preferred for the proposal to consolidate the three amended directives and set out the EU's requirements in this field in a genuinely independent manner (1). With the changes and the delegated acts that will be adopted at a later date, implementation will become somewhat less clear. The EESC therefore maintains its views on these issues as expressed in connection with the Green Paper, and hopes that these views will be reflected in future legislation.

1.4   The Committee feels that failure in this legislation to regulate the issue of relocating registered offices - an issue which, as the Green Paper points out, is becoming increasingly crucial in a more closely integrated market - is a serious shortcoming. In the EESC's view, the fact that the legislator, despite referring to the directive on the transparency of securities, does not use it as a model represents a missed opportunity.

1.5   The EESC endorses the proposal's changes regarding Directives 89/666/EEC and 2005/56/EC.

1.6   With regard to amendment of Directive 2009/101/EC, the EESC feels that the following aspects are important:

| — | data should be published as soon as possible, taking into account legal and technical constraints, |
| --- | --- |

—

data should be published as soon as possible, taking into account legal and technical constraints,

| — | as the EESC has already recommended, requests for basic information through a unified European system should be free of charge, |
| --- | --- |

—

as the EESC has already recommended, requests for basic information through a unified European system should be free of charge,

| — | the costs of developing and operating the system have not yet been clarified. The Committee notes that the relevant impact assessments are lacking from the proposal, but still feels that EU funding must be set aside to cover such costs, |
| --- | --- |

—

the costs of developing and operating the system have not yet been clarified. The Committee notes that the relevant impact assessments are lacking from the proposal, but still feels that EU funding must be set aside to cover such costs,

| — | access to information via the system should be as direct as possible, while keeping paper-based information disclosure to a minimum. |
| --- | --- |

—

access to information via the system should be as direct as possible, while keeping paper-based information disclosure to a minimum.

1.7   The EESC accepts the deadline of 1 January 2014 for the EU and the Member States to implement the necessary legal acts. However, it feels that the EU needs an internal deadline for framing measures set out in the legal acts which are to be drawn up on the basis of delegation.

2.   Gist of the proposed directive

2.1   The aim of this directive is to improve the transparency of the legal and fiscal environment for businesses, which are increasingly taking advantage of the opportunities offered by the single market, and thus to increase confidence in the single market, in order to ensure that good use is made of the competitive advantages developed through relations between trading partners.

2.2   On the basis of this directive, Member States should take the necessary steps to provide members and third parties with easy access, throughout the EU, to the documents and particulars concerning companies and their relations with one another. To date there has been no real obligation or possibility for this to be done. The issue of transparency is especially acute and urgent in the case of mergers and break-ups of companies located on different sides of a border or of local branches of a company subject to the law of another Member State.

2.3   The solution proposed by the Commission is to amend earlier directives:

| — | Directive 89/666/EEC concerning disclosure requirements in respect of branches in another Member State (the Eleventh directive); |
| --- | --- |

—

Directive 89/666/EEC concerning disclosure requirements in respect of branches in another Member State (the Eleventh directive);

| — | Directive 2005/56/EC on cross-border mergers of limited liability companies; and |
| --- | --- |

—

Directive 2005/56/EC on cross-border mergers of limited liability companies; and

| — | Directive 2009/101/EC on coordination of safeguards for the protection of the interests of members and third parties (a new directive on business disclosure, replacing the first directive). |
| --- | --- |

—

Directive 2009/101/EC on coordination of safeguards for the protection of the interests of members and third parties (a new directive on business disclosure, replacing the first directive).

These directives were only partially meeting growing demands for information.

2.4   The changes made by the new directive extend, clarify and build on existing requirements and procedures and give the Commission the power to apply other specific details and extensions when implementing the directive. The main aim of this measure is to ensure that all companies, branches or groupings of economic operators can be identified clearly and as swiftly as possible and that any change is immediately registered and accessible. The best instrument for achieving this has proven to be the electronic storage and publication of documents and particulars, and Member States should guarantee the digitisation and accessibility of data through the planned single European platform.

2.5   Most of the amendments proposed by the European Commission target Directive 2009/101/EC:

| — | the deadline for publishing data is set at 15 calendar days; |
| --- | --- |

—

the deadline for publishing data is set at 15 calendar days;

| — | every company should have a unique identifier that allows for their unequivocal identification in the European economic area; |
| --- | --- |

—

every company should have a unique identifier that allows for their unequivocal identification in the European economic area;

| — | the procedures laid down by the Member States should be compatible with accessibility through a single European electronic platform; |
| --- | --- |

—

the procedures laid down by the Member States should be compatible with accessibility through a single European electronic platform;

| — | Member States must guarantee the credibility of documents and particulars; |
| --- | --- |

—

Member States must guarantee the credibility of documents and particulars;

| — | publication costs should not exceed the necessary administrative costs; |
| --- | --- |

—

publication costs should not exceed the necessary administrative costs;

| — | for the purpose of implementing these provisions, the European Commission may adopt delegated acts to lay down the technical arrangements for the management, security and creation of the single identifier, language use, the methods and technical standards for disclosure and potential penalties for non-compliance with the provisions. |
| --- | --- |

—

for the purpose of implementing these provisions, the European Commission may adopt delegated acts to lay down the technical arrangements for the management, security and creation of the single identifier, language use, the methods and technical standards for disclosure and potential penalties for non-compliance with the provisions.

2.6   Where the 1989 and 2005 directives are concerned, the changes relate to the unique identifier of branches or limited liability companies that have undergone a cross-border merger and to the requirement for the electronic compatibility of other registration activities.

2.7   Turning to the Member States, the directive then sets 1 January 2014 as the final deadline for their implementation of it; the directive itself will enter into force on the twentieth day following that of its publication.

3.   Legal background

3.1   The transparency of business registers is not only an important goal in itself; it is also a prerequisite for promoting the harmonisation of company law. The interoperability of national registers is essentially an information-related and economic issue, but the proposal must be published in a legal form, because legal requirements cannot be disregarded. In addition to the need to find the appropriate legal form, the legal background to harmonisation also warrants a detailed study.

3.1.1   Against this backdrop, the first question might be how to reconcile the interests of countries that are traditionally exporters of capital and those that are traditionally importers. The table below gives a broad outline of their main approaches. On the basis of these approaches, taking account of States' underlying interests in the longer term intrinsically limits the success of in-depth harmonisation, even if, in the context of the discussions, the issue of the interoperability of business registers, being of a technical nature, might appear less important.

| | Capital-exporting Member State | Capital-importing Member State |
| --- | --- | --- |
| 1. | Giving businesses legitimacy (legal personality) |

Capital-exporting Member State

Capital-importing Member State

1.

Giving businesses legitimacy (legal personality)

Fiction theory (universality)

Realism theory (specific approach)

| 2. | Identifiability of legal personality |
| --- | --- |

2.

Identifiability of legal personality

Place of incorporation

Effective place of management

| 3. | Jurisdiction |
| --- | --- |

3.

Jurisdiction

Personal scope

Territorial scope

| 4. | Principle of business law |
| --- | --- |

4.

Principle of business law

Legal certainty

Prevention of abuse of the law

| 5. | Principle of EU law (internal market policy) |
| --- | --- |

5.

Principle of EU law (internal market policy)

Prohibition on restricting fundamental freedoms

Prohibition on discriminatory treatment

3.2   Far fewer barriers to the national registration of businesses are imposed in some countries – those adhering to the fiction theory (in which recognition of businesses at the national level is in principle automatic, provided they meet certain formal requirements) – than in others (in which importance is also attached to protecting local communities of which the business forms part), because the business applying for registration holds greater responsibility than the State. In other words, where business registration is concerned, private law takes precedence over public law.

3.3   In some countries, the company statute simply cannot be changed, whereas in others, when the company's administrative seat is transferred, the identity that can be recognised by company law must be changed, and consequently the register. This has led to a number of problems on the internal market (see for example the Überseering case), excluding neither double identity nor the nightmare scenario of double non-identity (e.g. in the case of a German-Irish grouping).

3.4   Some countries see the world as a whole and take an overview of business activity, regardless of whether this is carried out within their borders or abroad (the personal scope of jurisdiction is applied). In other countries, jurisdiction is based on the principle of territoriality: what is important is where a business is located, and there is consequently a crucial difference between national territory and abroad. There is thus a real need for harmonisation. In the first case (personal scope of jurisdiction), the interoperability of business registers falls essentially under private law and company law deals with businesses' own interests. In the second case, public measures are necessary. In the first case, i.e. for capital-exporting countries, the BRITE project appears to be an example of a better solution than positive harmonisation.

3.5   Where registration is concerned, countries that traditionally issue capital are reluctant to change the identifier obtained under company law because they consider legal certainty to take precedence over any other factor. Other countries, however, consider that protecting the local communities of which the business forms part is the most important aspect and do not hesitate, where necessary, to challenge a business's legal status. This is why Article 11 of the first directive (Article 12 in the new one), which provides a detailed explanation of the grounds for a company's winding-up, can be implemented quite differently from one country to another, in line with that country's interpretation of how a company should be set up (see the Ubbink or Marleasing cases, for example).

3.6   Countries that do not in principle make any distinction between domestic and non-domestic activities generally take greater advantage of the possibilities offered by the internal market and businesses registered in such countries could easily complain that the measures adopted by the host State restrict fundamental Community freedoms. On the other hand, in the practices of States that recognise the realism theory, in other words territoriality, the emphasis is sometimes placed more on the issue of the discriminatory treatment of foreign businesses. It is clearly first and foremost capital-exporting countries that gain from the standardisation of business registers, whereas harmonisation in this field is more challenging for capital-importing States.

4.   General comments

4.1   The EESC welcomes this directive, which represents important progress in the development of the single market. Businesses, employees, consumers and European citizens will be able to achieve their broader objectives, as previously discussed by the EESC in connection with the Green Paper. The interconnection of business registers should reflect the goals of two strategic documents: the Europe 2020 strategy and the Small Business Act (SBA). ‘Interconnecting business registers should increase transparency and facilitate cooperation between businesses, as well as lower the barriers to cross-border business activities and reduce administrative burdens, particularly for SMEs. All of this is crucial to consolidating the single market and promoting balanced and sustainable economic and social progress, as highlighted in the Commission communication Think Small First: Priority to SMEs. A Small Business Act for Europe (COM(2008) 394 final)’ (2).

4.2   The Committee also notes that in its current form, the proposal only meets some of the basic demands that have been expressed, in that it provides for standardising the most important identifiers and documents and for replacing voluntary cooperation with a legal obligation that would apply throughout the EU. It also finds both the approach of the regulation to administrative costs and data protection acceptable, but many of the details need to be worked out.

4.3   It should be pointed out, however, that the proposal still contains a number of uncertainties as regards implementation. By and large, it leaves responsibility for detailed arrangements to future regulation. It would be useful to be informed at this stage about these arrangements. For example, the proposal could include more information on particular standards or content given that the Green Paper has referred to some of these issues and called for an answer. It should, therefore, have been possible to comment on their practical aspects. The EESC therefore maintains its views on these issues as expressed in connection with the Green Paper, and hopes that these views will be reflected in future legislation.

4.4   As mentioned in point 3, the EESC feels that the European Union has consequently missed an opportunity to take a greater step towards the closer harmonisation of company law. The Committee is aware of the fact that considerable legal and institutional differences make it difficult to make progress on the broader issues and that harmonising company law could take a decade. Nevertheless, registration is one part of the process and by neglecting to address this issue in detail, we have let slip an opportunity to find common formats and to open a debate on the matter. Furthermore, the BRITE programme clearly illustrates the fact that the stakeholders concerned can satisfactorily solve several issues concerning details through self-regulation.

4.5   The Committee feels that failure in this legislation to regulate the issue of relocating registered offices - an issue which, as the Green Paper points out, is becoming increasingly crucial in a more closely integrated market - is a serious shortcoming. In the EESC's view, the fact that the legislator, despite referring to the directive on the transparency of securities, does not use it as a model, represents a missed opportunity.

4.6   As part of this process, it might have been useful for the proposal to consolidate the three amended directives and set out the EU's requirements in this field in a genuinely independent manner (3). With the changes and the delegated acts that will be adopted at a later date, implementation will become somewhat less clear, especially since the proposal under consideration does not discuss in detail how to manage national business registers and cooperation between them.

4.7   The Committee takes the view that new problems will arise when implementing the objectives that have been set, because according to the wording of the proposal, and not – let us hope – according to the objective that had originally been intended, the bodies cooperating in the field of registration that have been active to date at the European level, whether official, working on a voluntary basis or set up by the market, will have no place under the new framework for cooperation. The EESC also agrees that the EU's single legal portal - the European e-Justice portal – should be the key access point for legal information; however, there should still be scope for other and possibly broader initiatives. The Committee also reiterates that it is ‘particularly important that national and European institutions cooperate with the social partners and civil society in this field’. (4) The EESC hopes that it will also be involved in future legislative stages and that it will continue to act as partner in the framing of rules delegated to the Commission.

5.   Specific comments

5.1   The EESC endorses the proposal's changes regarding Directives 89/666/EEC and 2005/56/EC.

5.2   The EESC feels that if Directive 2009/101/EC is amended, data should be published as soon as possible, taking into account legal and technical constraints. We believe that the proposed deadline could be drastically reduced in the short term. It wishes to point out, however, that even this deadline could prove to be too long in certain cases and that there is consequently a potential need for the declaration of changes to be made much more quickly, in other words through the single European platform in the form of a ‘disclosure’ taking place immediately after a local notification (5) and which could be certified at a later date. Current information technology makes this possible.

5.3   In terms of the costs arising from this information service, it should be clearly established whether all costs are to be covered by the amount paid by the notifying party or whether the party requesting information should also pay. There are differences in the systems currently in place in the Member States on this issue. Practice to date has been that the service only has to be paid for where information requested has to come from another country's trade register. The EESC reiterates its previous recommendation that requests for basic information through a unified European system should be free of charge (6).

5.3.1   The Committee feels that information on a company's registered office, owners and senior managers, the company's economic and legal situation, its strength, together with accurate accounting and balance sheet data, should be considered as basic information for partner companies, shareholders, creditors and employees.

5.3.2   In this connection, it should be emphasised that the costs of developing and operating the system have not yet been clarified. The Committee feels that the relevant impact assessments are lacking from the proposal, but still feels that EU funding must be set aside to cover such costs.

5.4   The EESC welcomes the fact that data will be available electronically. At the same time, access to information via the system should be as direct as possible. It is recognised that a balance must be struck here between the requirement for disclosure and a swift and secure operation. The Committee is convinced that a satisfactory compromise is possible, ultimately enabling improved disclosure. The Committee feels that an essential requirement of the system is to keep paper-based information disclosure to a minimum, thus also cutting costs.

5.4.1   The Committee draws attention to the possible contradiction between EU notification requirements and legal requirements at national level (e.g. the issue of document authenticity). In the long term, this is not a situation which can continue.

5.5   In the Committee's view, straightforward technical solutions also exist for language issues, provided that a considerable amount of preliminary work is carried out. Modern translation software makes it possible to publish standardised texts easily in any other language, provided that these texts are available and have been approved, following the appropriate consultation. This type of standardisation could be contemplated for basic information and accounting documents in particular.

5.6   Where data protection is concerned, the EESC believes it would be appropriate to apply the provisions of Directive 95/46/CE on the protection of personal data to the company register.

5.7   The EESC accepts the deadline of 1 January 2014 for the Member States to implement the necessary legal acts. However, it feels that the EU needs an internal deadline for framing measures set out in the legal acts which are to be drawn up on the basis of delegation. This will ensure that the body providing rapid and uniform access to company information is up and running as soon as possible throughout the EU.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  The first and eleventh directives can in fact easily be combined, as they address the same subject (company disclosure) whereas the directive on cross-border mergers is confined to one specific aspect, which is the clarity of trade registers as regards cross-border operations.

1

(2)  OJ C 48, 15.2.2011, p. 120. point 1.2.

2

(3)  The first and eleventh directives can in fact easily be combined, as they address the same subject (company disclosure) whereas the directive on cross-border mergers is confined to one specific aspect, which is the clarity of trade registers as regards cross-border operations.

3

(4)  See OJ C 48, 15.2.2011, p. 120, point 6.7.

4

(5)  This would take the form of messages or information published on the European electronic network and directly accessible to the interested parties.

5

(6)  See OJ C 48, 15.2.2011, p. 120, point 1.5.

6

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/123 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/123

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions — A comprehensive approach on personal data protection in the European Union’

COM(2010) 609 final

2011/C 248/21

Rapporteur: Mr MORGAN

On 4 November 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions – A comprehensive approach on personal data protection in the European Union

COM(2010) 609 final.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 16 June 2011), the European Economic and Social Committee adopted the following opinion by 155 votes to 9 with 12 abstentions.

1.   Conclusions and recommendations

1.1   EU Data Protection Law is based on the 1995 Directive (95/46 EC). It had two objectives, expressed as follows:

| (1) | Member States shall protect the fundamental rights and freedoms of natural persons and in particular their right to privacy with respect to the processing of personal data. |
| --- | --- |

(1)

Member States shall protect the fundamental rights and freedoms of natural persons and in particular their right to privacy with respect to the processing of personal data.

| (2) | Member States shall neither restrict nor prohibit the free flow of personal data between Member States for reasons connected with the protection afforded under paragraph (1). |
| --- | --- |

(2)

Member States shall neither restrict nor prohibit the free flow of personal data between Member States for reasons connected with the protection afforded under paragraph (1).

It is essential to achieve a balance between these objectives so that they are not in conflict. The main objective of new legislation must be to put in place a legal framework to help achieve both objectives.

1.2   The EESC welcomes this Communication which outlines the Commission's approach to updating the Data Protection Directive 95/46 EC. The explosive development of new technologies is causing an exponential increase in the amount of on-line data processing which requires a parallel increase in personal data protection if large scale intrusion into personal privacy is to be avoided. The collection, merging and management of data from multiple sources need to be carefully circumscribed. The public sector holds many different files on aspects of the relationship between citizens and the state. Data collected should be the minimum required for each purpose and there must be a ban on assembling these various data into a ‘big brother’ data base.

1.3   At the same time, the EESC urges caution. Legislation regulating business activity must remain stable and predictable. The EESC therefore supports an appropriate revision of the Data Protection Directive.

1.4   The Communication recognises that a main recurrent concern of stakeholders, particularly multinational companies, is the lack of sufficient harmonisation between Member States' legislation on data protection, in spite of a common EU legal framework. The EESC proposes that the new legislation provide more consistent protection of workers' personal data throughout the EU including a European framework to strengthen legal clarity and certainty. In this respect the EESC welcomes in particular the intention to make the appointment of an independent Company Data Protection Officer mandatory and to harmonize the rules related to their tasks and competences.

1.5   Given the possible conflict between the privacy of the individual and the commercial exploitation of data about that individual and the high stakes involved, people need to become increasingly aware of the purposes for which their data is collected and the powers they have to control it when it has been collected. Therefore the EESC believes that effective enforcement and redress are a sine qua non if this project is to be truly ‘comprehensive’. Furthermore, the cross border dimension must be covered.

1.6   As far as EU citizens are concerned, the relevant law within the European Union should be that of the Member State of the data controller, wherever the data is held. For people entitled to protection, especially employees and consumers, the data protection law of their usual place of residence should apply.

1.7   The reference to children is cursory. There needs to be a specific focus on child related privacy issues. The right to be forgotten could correct the record of childish foolishness and teenage misdemeanours but the right to be forgotten may not, in fact, be realisable.

1.8   The present definition of sensitive data needs to be clarified as the categories of electronic data about individuals continue to increase. The widespread and indiscriminate use of surveillance cameras is of concern to the EESC. It is essential to enforce the law restricting the misuse of these images. GPRS data relating to an individual's location is another contentious issue. The capture of biometric data is increasing. The definition should accommodate such new technologies and methodologies and it should allow for further technological developments. It may be necessary to establish principles related to contexts. The EESC is in favour of the appropriate use of these new technologies.

1.9   While acknowledging the sensitivities of inter-state police co-operation, the EESC believes that it is essential that fundamental rights, including personal data protection, receive maximum consideration at all times.

1.10   The EESC supports the Commission's general thrust to ensure a more consistent application of EU data protection rules across all Member States. The EESC is worried that all 12 NMS may not yet have completed full and effective implementation of Directive 95/46.

1.11   It is the opinion of the EESC that national data protection authorities are generally toothless and overworked and that their independence needs to be reinforced. Any new Directive should require that national authorities have the status, authority and resources to fulfil their role.

1.12   Based on its contribution so far to the protection of individuals with regard to the processing of personal data, the EESC believes that there is a valuable on-going role for the Article 29 Working Party.

1.13   In the context of the EU Digital Agenda, the EESC asks the Commission to consider the establishment of an EU Authority to consider the broader societal ramifications of the Internet on a 10 to 20 year timescale. Present provisions for personal data security and general cyber security are becoming increasingly inadequate. Society is playing catch-up. In the context of data protection, the EESC recommends the appointment of an EU-wide Data Protection Supervisor. The present EU Data Protection Supervisor is concerned only with EU Institutions. What is needed is a supervisor responsible for Member State co-ordination and operational standards. Such an appointment would, however, provide only one part of the overarching Authority envisaged by the Committee.

2.   Introduction

2.1   The EESC continues to support the principles on which the 1995 Directive was based. The following are simplified and unqualified extracts from the text of the Directive. They clearly express the principles involved:

| — | Article 6
  Member States shall provide that personal data must be:







  (a) | processed fairly and lawfully; |
| --- | --- | --- |

—

Article 6

Member States shall provide that personal data must be:

(a)

processed fairly and lawfully;

| (b) | collected for specified, explicit and legitimate purposes; |
| --- | --- |

(b)

collected for specified, explicit and legitimate purposes;

| (c) | adequate, relevant and not excessive in relation to the purposes for which they are collected and/or further processed; |
| --- | --- |

(c)

adequate, relevant and not excessive in relation to the purposes for which they are collected and/or further processed;

| (d) | accurate and, where necessary, kept up to date; |
| --- | --- |

(d)

accurate and, where necessary, kept up to date;

| (e) | kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the data were collected. |
| --- | --- |

(e)

kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the data were collected.

| — | Article 7
  Member States shall provide that personal data may be processed only if:







  (a) | the data subject has unambiguously given his consent; or |
| --- | --- | --- |

—

Article 7

Member States shall provide that personal data may be processed only if:

(a)

the data subject has unambiguously given his consent; or

| (b) | processing is necessary for the performance of a contract to which the data subject is party; or |
| --- | --- |

(b)

processing is necessary for the performance of a contract to which the data subject is party; or

| (c) | processing is necessary for compliance with a legal obligation to which the controller is subject; or |
| --- | --- |

(c)

processing is necessary for compliance with a legal obligation to which the controller is subject; or

| (d) | processing is necessary in order to protect the vital interests of the data subject; or |
| --- | --- |

(d)

processing is necessary in order to protect the vital interests of the data subject; or

| (e) | processing is necessary for the performance of a task carried out in the public interest; or |
| --- | --- |

(e)

processing is necessary for the performance of a task carried out in the public interest; or

| (f) | processing is necessary for the purposes of the legitimate interests pursued by the controller). |
| --- | --- |

(f)

processing is necessary for the purposes of the legitimate interests pursued by the controller).

| — | Article 8

  Member States shall prohibit the processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, and the processing of data concerning health or sex life. |
| --- | --- |

—

Article 8

Member States shall prohibit the processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, and the processing of data concerning health or sex life.

2.2   In the last decade, circumstances have changed significantly with new provisions in Article 16 of the Treaty of Lisbon and Article 8 of the Charter of Fundamental Rights.

2.3   This Communication intends to lay down the Commission's approach for modernising the EU legal system for the protection of personal data in all areas of the Union's activities, taking account, in particular, of the challenges resulting from globalisation and new technologies, so as to continue to guarantee a high level of protection of individuals with regard to the processing of personal data in all areas of the Union's activities.

2.4   Nowadays the exchange of information across the globe has become easier and faster. An individual's personal data – email, photos and electronic agendas – may be created in the UK using software hosted in Germany; processed in India; stored in Poland and accessed in Spain by an Italian citizen. This rapid increase in information flows around the world presents a big challenge for individuals' rights to personal data privacy. Data protection issues, including their cross-border dimension, affect people every day – at work, in dealing with public authorities, when buying goods or services, or when travelling or surfing the internet.

2.5   In 2011 the Commission will propose legislation aimed at revising the legal framework for data protection with the objective of strengthening the EU's stance in protecting the personal data of the individual in the context of all EU policies, including law enforcement and crime prevention, taking into account the specificities of these areas. Non-legislative measures, such as encouraging self-regulation and exploring the feasibility of EU privacy seals, will be pursued in parallel.

2.6   The Commission will also continue to ensure the proper monitoring of the correct implementation of Union law in this area, by pursuing an active infringement policy where EU rules on data protection are not correctly implemented and applied.

2.7   The comprehensive approach to data protection has the following key objectives:

| — | Strengthening individuals' rights; |
| --- | --- |

—

Strengthening individuals' rights;

| — | Enhancing the internal market dimension; |
| --- | --- |

—

Enhancing the internal market dimension;

| — | Revising the data protection rules in the area of police and judicial co-operation in criminal matters; |
| --- | --- |

—

Revising the data protection rules in the area of police and judicial co-operation in criminal matters;

| — | The global dimension of data protection; |
| --- | --- |

—

The global dimension of data protection;

| — | A stronger institutional arrangement for better enforcement of data protection rules. |
| --- | --- |

—

A stronger institutional arrangement for better enforcement of data protection rules.

Sections 3 to 7 below summarise these objectives and give the EESC perspective on the proposals. The headings in Bold follow the structure of the Communication. The text in italics is a synopsis of the text.

3.   Strengthening Individuals' Rights

3.1   Ensuring appropriate protection for individuals in all circumstances

The Charter of Fundamental Rights includes the right to the protection of personal data. The definition of personal data aims at covering all informational relating to an identified or identifiable person. Consideration will be given to means to ensure a coherent application of data protection rules, taking into account the impact of new technologies on individuals' rights and freedoms and the objective of ensuring the circulation of personal data within the internal market.

3.1.1   The free circulation of personal data within the internal market is necessary for a fully functioning market; however, it does pose a threat to the privacy of data held by companies about employees. Specific safeguards are needed, such as the accountability of data controllers for multi-national data exchange and the use of encryption for more sensitive data.

3.1.2   The EESC would like to stress that the employment sector is more or less excluded from not only in the current Communication but also from the whole debate on data-protection in Europe. The work already done at European level should be used as a starting point, in particular the proposals put forward by the Article 29 Working Party.

3.2   Increasing transparency for data subjects

Transparency is a fundamental condition for enabling individuals to exercise control over their own data and to ensure effective protection of personal data. Consideration will be given to a general principle of transparent processing, specific obligations for data controllers, particularly in relation to children, standard privacy information notices and a mandatory personal breach notification.

3.2.1   Standard notices are preferable since they obviate conflicts of interest. Their use should be voluntary.

3.2.2   Transparency does not necessarily address the issue of one sided contract terms. It is important to develop stricter rules to provide greater protection against unfair terms.

3.2.3   The reference to children is cursory. There needs to be a specific focus on child related privacy issues. The right to be forgotten could correct the record of childish foolishness and teenage misdemeanours but the right to be forgotten may not, in fact, be realisable. (3.3.2 below).

3.2.4   The new legislation must clarify the role of the person responsible for processing data and the person responsible for recording data so that there is no confusion about their identities and the obligations and rights that each of them has.

3.2.5   The EESC supports the proposal for mandatory breach notification but believes that it may not be applicable to all events in all sectors in all circumstances.

3.3   Enhancing control over one's own data

Important preconditions are limitations to data processing in relation to its purpose (principle of data minimisation) and effective control by data subjects over their own data. Consideration will be given to strengthening the principle of data minimisation, improving the modalities for exercising rights of access, rectification, erasure or blocking of data, clarifying the right to be forgotten and ensuring the explicit right of data portability.

3.3.1   In general the EESC supports every move to enhance personal privacy. Individuals should have a right of free access to any data collected about them. Free access to credit rating data would be a case in point. The withdrawing of consent without reason and an effective right to be forgotten are fundamental, but privacy would be further enhanced if less data were collected in the first place. Hence the EESC urges the Commission to give real effect to the proposal to strengthen the principle of data minimisation.

3.3.2   While the right to be forgotten is an attractive concept, it will be difficult to achieve, given the viral nature of data on the internet and technologies which delete but do not forget.

3.4   Raising awareness

Awareness raising activities should be encouraged, including the provision of information on web sites, clearly spelling out data subjects' rights and data controllers' responsibilities. Young people's lack of awareness is a particular concern.

3.4.1   It will be difficult to achieve the necessary behavioural change, especially in view of the fact that rapid development of social networks has not been accompanied by an increase in awareness amongst users of the implications of the quantities of data which they provide. While, in principle, mandatory awareness notices on every internet service would be nice to have, they could be problematical for business. Consideration should be given so awareness protocols by category of service – internet commerce, ISPs, Search Engines, Social Networks, etc.

3.4.2   The EESC welcomes the intention of the Commission to offer EU funding to support awareness raising activities. The EESC would like this to be extended to the co-funding of awareness raising activities by Social Partners and Civil Society Organisations at European and national level.

3.5   Ensuring informed and free consent

The Commission will examine ways of clarifying and strengthening the rules of consent.

3.5.1   The types of consent required should continue be linked to the type of data being processed and not the type of technology used. However, the EESC is concerned that in most cases, when consent is given in an internet environment, the application does not provide any confirmation of that agreement, nor are there effective mechanisms to record the withdrawal of consent. In addition, agreement may involve clicking a button to agree to reams of terms and conditions, of which consent may be a small element. It would make sense for consent relative to data control to be a simple and separate document so that it could be meaningful, informed and specific.

3.5.2   For organisations and businesses which carry out their activities on the Internet, the processing of personal information is vital. The default option is clearly advantageous to the operator but, if not fairly implemented, it may disadvantage the client. Its use should be circumscribed so that all operators are bound to offer privacy by default to their clients if the clients so wish.

3.5.3   For consent to be freely given, the contract must also be fair. Principles need to be established to avoid unfair commercial practices.

3.6   Protecting sensitive data

Consideration will be given to expanding the definition of ‘sensitive data’ to include, for example, genetic data and the further harmonisation of the conditions for processing sensitive data.

3.6.1   The present definition of sensitive data needs to be clarified as the categories of electronic data about individuals continue to increase. The widespread and indiscriminate use of surveillance cameras is of concern to the EESC. It is essential to enforce the law restricting the misuse of these images. GPRS data relating to an individual's location is another contentious issue. The capture of biometric data is increasing. The definition should accommodate such new technologies and methodologies and it should allow for further technological developments. It may be necessary to establish principles related to contexts. The EESC is in favour of the appropriate use of these new technologies.

3.6.2   Enhanced protection for sensitive data should also be provided. Encryption should be mandatory for certain sensitive data. The best available technologies should be applied. Controllers should be accountable for security breaches.

3.7   Making remedies and sanctions more effective

Consideration will be given to extending the powers to bring actions before national courts and the possible inclusion of criminal sanctions for serious violations.

3.7.1   Given the possible conflict between the privacy of the individual and the commercial exploitation of data about that individual and the high stakes involved, people need to become increasingly aware of the purposes for which their data is collected and the powers they have to control it when it has been collected. Therefore the EESC believes that effective enforcement and redress are a sine qua non if this project is to be truly ‘comprehensive’. Furthermore, the cross border dimension must be covered.

3.7.2   The case for collective redress should be examined as a remedy for extreme protection failures. Consideration should be given to the case for business and professional organizations and trade unions to represent individuals and bring an action before courts.

4.   Enhancing the Internal Market Dimension

4.1   Increasing legal certainty and providing a level playing field for data controllers

Data protection in the EU has a strong internal market dimension. Consideration will be given to the means to achieve further harmonisation of data protection rules at EU level.

4.1.1   The EESC is concerned that the scope of Member State decision making provided by the text of Directive 95/46 has created an implementation problem. A Regulation in this context might have provided more certainty. Harmonisation should be implemented around a body of standards sufficient to satisfy the requirements of the Directive.

4.1.2   Throughout the Communication, there is no reference to employees and the access to their personal data which is held by employers. In multinational firms which may centralise records within or even outside the EU, employees need clearly defined rights of access to be part of the new legislation.

4.2   Reducing the administrative burden for controllers

Different possibilities will be explored for the simplification and harmonisation of the current notification system, including the possible drawing up of a uniform EU-wide registration form. Notifications could be published on the internet.

4.2.1   The EESC would very much support these initiatives.

4.3   Clarifying the rules on applicable law and Member States' responsibility

It is not always clear to data controllers and data protection supervisory authorities which Member State is responsible and which law is applicable when several Member States are involved. Globalisation and technological developments are making this problem worse. Revision and clarification of the existing provisions on applicable law will be examined in order to improve legal certainty and clarify Member State responsibilities.

4.3.1   As far as EU citizens are concerned, the relevant law within the European Union should be that of the Member State of the data controller, wherever the data is held. For people entitled to protection, in particular employees and consumers in the EU, the provisions and procedures of data protection law of their usual place of residence should apply.

4.4   Enhancing data controllers' responsibility

The Commission will explore ways of ensuring that data controllers put in place effective policies and mechanisms to ensure compliance with data protection rules. Consideration will be given to making the appointment of a data protection officer mandatory and harmonising their rules of engagement, to create an obligation for data protection impact assessment. In addition, the Commission will further promote the use of Privacy Enhancing Technologies (PETs) and the implementation of the concept of ‘Privacy by Design’.

4.4.1   PETs and Privacy by Design have the potential to remove discretion from data controllers, who may otherwise be conflicted by the commercial priorities of their organisations. The EESC urges the Commission to initiate further study and development of these tools since they have the potential to enhance data protection while removing conflicts of interest. Ideally, these tools could become mandatory.

4.4.2   For the avoidance of doubt, data controllers should be accountable for all aspects of the processing of data for which they are responsible. Accordingly, where sub-contractors and or operations in other countries are involved, the personal privacy obligations should be fully spelled out in the contract.

4.4.3   The EESC believes that each Member State should establish a professional body to be responsible for the skills and certification of DPOs.

4.4.4   Implementation of provisions under this heading should be consistent with the goal of reducing the administrative burden of data controllers covered in point 4.2.

4.5   Encouraging self-regulatory initiatives and exploring EU certification schemes

The Commission will examine means to further encourage self-regulatory initiatives such as codes of conduct and explore the feasibility of EU certification schemes.

4.5.1   See 3.7.1 above: enforcement and redress are key concerns of the EESC. These proposals are attractive in as much as they may help to reduce the enormous burden of regulation born by business. A compendium or guide to best practice should be sponsored in each Member State.

5.   Revising the Data Protection Rules in the area of police and judicial co-operation in criminal matters

The EU instrument for the protection of personal data in the areas of police and judicial co-operation in criminal matters is a 2008 JHA Framework Decision. It has many shortcomings which may affect the possibilities for individuals to exercise their data protection rights in such areas as knowing what personal data are being processed and exchanged about them, by whom and for what purpose, and how to exercise their rights such as the right to access their data.

Consideration will be given to the extension of the application of general data protection rules to the areas of police and judicial co-operation in criminal matters, to the introduction of new provisions in domains such as the processing of genetic data, launching a consultation on the revision of supervision systems in this area and assessing the need for the long term alignment of various sector specific rules within the new general legal data protection framework.

5.1   While acknowledging the sensitivities of inter-state police co-operation, the EESC believes that it is essential that fundamental rights, including personal data protection, receive maximum consideration at all times. The EESC is afraid that security concerns, however spurious, are frequently causing fundamental rights to be over ridden. Individuals need to be better informed about the methods and purposes by and for which the authorities collect personal data from telephone billing, bank accounts, airport controls, etc.

6.   The global dimension of data protection

6.1   Clarifying and simplifying the rules for International data transfer

The Commission intends to examine how to

| — | improve and streamline current procedures for international data transfers to ensure a more uniform and coherent EU approach vis-à-vis third countries and international organisations, |
| --- | --- |

—

improve and streamline current procedures for international data transfers to ensure a more uniform and coherent EU approach vis-à-vis third countries and international organisations,

| — | better specify the criteria and requirements for assessing the level of data protection in a third country or international organisations, |
| --- | --- |

—

better specify the criteria and requirements for assessing the level of data protection in a third country or international organisations,

| — | define core EU data protection elements for use in international agreements. |
| --- | --- |

—

define core EU data protection elements for use in international agreements.

6.1.1   The EESC supports these worthwhile initiatives and hopes that the Commission can achieve the broad international agreement without which these proposals may be less than effective.

6.2   Promoting universal principles

The European Union must remain a driving force behind the development and promotion of international legal and technical standards for the protection of personal data. To this end the Commission will be active in the international standards arena and in co-operation with third countries and international organisations such as the OECD.

6.2.1   Again, the EESC is supportive. Given the global nature of the Internet it is essential that rules and guidelines are compatible between continents. Personal data must have cross border protection. We note that OECD guidelines already exist, as does the Council of Europe Convention 108. This latter Convention is in the process of being revised. The Commission should ensure that the Convention and the new Directive are compatible.

7.   A stronger institutional arrangement for better enforcement of data protection rules

The Commission will examine:

| — | how to strengthen, clarify and harmonise the status and the powers of the national data protection authorities; |
| --- | --- |

—

how to strengthen, clarify and harmonise the status and the powers of the national data protection authorities;

| — | ways to improve the co-operation and co-ordination between data protection authorities; |
| --- | --- |

—

ways to improve the co-operation and co-ordination between data protection authorities;

| — | how to ensure a more consistent application of EU data protection rules across the internal market. Measures could include:







  — | strengthening the role of national data protection supervisors; |
| --- | --- | --- |

—

how to ensure a more consistent application of EU data protection rules across the internal market. Measures could include:

—

strengthening the role of national data protection supervisors;

| — | better co-ordinating their work via the Article 29 working party; |
| --- | --- |

—

better co-ordinating their work via the Article 29 working party;

| — | creating a mechanism to ensure consistency under the authority of the European Commission. |
| --- | --- |

—

creating a mechanism to ensure consistency under the authority of the European Commission.

7.1   Given the EESC concerns about enforcement and redress, these proposals are key issues for the Committee. We endorse the phrases ‘strengthen, clarify and harmonise’ and ‘co-operation and co-ordination’ and we support the Commission's general thrust to ensure a more consistent application of EU data protection rules across all Member States. The EESC is worried that all 12 NMS may not yet have completed full and effective implementation of Directive 95/46.

7.2   It is the opinion of the EESC that national data protection authorities are generally toothless and overworked and that their independence needs to be reinforced. Any new Directive should require that national authorities have the status, authority and resources to fulfil their role. Their tasks and resources should be defined on a pan-EU basis. Consideration should be given to the appointment of an EU Data Protection Supervisor.

7.3   Based on its contribution so far to the protection of individuals with regard to the processing of personal data, the EESC believes that there is a valuable on-going role for the Article 29 Working Party.

Brussels, 16 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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APPENDIX

to the opinion of the European Economic and Social Committee

The following section opinion text was rejected in favour of amendments adopted by the assembly, although at least one-quarter of the votes cast were in favour of retention of the section opinion text:

Point 1.6

As far as EU citizens and EU employees are concerned, the relevant law within the European Union should be that of the Member State of the data controller, wherever the data is held.

Point 4.3.1

As far as EU citizens and EU employees are concerned, the relevant law within the European Union should be that of the Member State of the data controller, wherever the data is held.

Outcome

| | 86 votes for amending these paragraphs, |
| --- | --- |

86 votes for amending these paragraphs,

| | 72 against, |
| --- | --- |

72 against,

| | 19 abstentions. |
| --- | --- |

19 abstentions.

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/130 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/130

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the European Platform against Poverty and Social Exclusion — A European framework for social and territorial cohesion’

COM(2010) 758 final

2011/C 248/22

Rapporteur: Ms O'NEILL

On 16 December 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the European Platform against Poverty and Social Exclusion: A European framework for social and territorial cohesion

COM(2010) 758 final.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 May 2011.

At its 472nd plenary session plenary session, held on 15 and 16 June 2011 (meeting of 15 June 2011), the European Economic and Social Committee adopted the following opinion by 147 votes to 1 with 2 abstentions.

The EESC opinion on the European Platform against Poverty and Social Exclusion fits into the Europe 2020 Strategy for smart sustainable and inclusive growth. The opinion underlines the new holistic approach which closely connects it with the other flagship initiatives and the five EU headline targets. It also stresses the need for consistency between EU level and national policies as well as the involvement and key role of the non-governmental stakeholders (1).

1.   Recommendations

The EESC makes the following recommendations:

| — | As poverty represents a violation of human rights, governments, the social partners and civil society must take shared responsibility for its eradication. |
| --- | --- |

—

As poverty represents a violation of human rights, governments, the social partners and civil society must take shared responsibility for its eradication.

| — | There must be policy coherence between economic, financial, employment and social measures in the 2020 Strategy and all should contribute to social cohesion. |
| --- | --- |

—

There must be policy coherence between economic, financial, employment and social measures in the 2020 Strategy and all should contribute to social cohesion.

| — | Austerity measures should not increase the risk of poverty and an effective social impact assessment must be made and debated. |
| --- | --- |

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Austerity measures should not increase the risk of poverty and an effective social impact assessment must be made and debated.

| — | The Active Inclusion Strategy should be implemented as an integrated approach to ensure adequate income support, an inclusive labour market and access to quality work and services. |
| --- | --- |

—

The Active Inclusion Strategy should be implemented as an integrated approach to ensure adequate income support, an inclusive labour market and access to quality work and services.

| — | There must be a stronger emphasis on reducing inequalities and enforcing fundamental human rights, including through fairer income distribution and implementing the horizontal social clauses set out in the Lisbon Treaty. |
| --- | --- |

—

There must be a stronger emphasis on reducing inequalities and enforcing fundamental human rights, including through fairer income distribution and implementing the horizontal social clauses set out in the Lisbon Treaty.

| — | There should be increased emphasis on investing in human capital through lifelong learning in education and training, including improved skills training matched to needs in and outside the labour market. |
| --- | --- |

—

There should be increased emphasis on investing in human capital through lifelong learning in education and training, including improved skills training matched to needs in and outside the labour market.

| — | The participation of civil society stakeholders in the Platform, including people experiencing poverty, NGOs and social partners, should be reinforced through structured dialogue at EU and national level and supported through appropriate EU funding. The EESC should play an active and collaborative role in this dialogue and in the Annual Convention. |
| --- | --- |

—

The participation of civil society stakeholders in the Platform, including people experiencing poverty, NGOs and social partners, should be reinforced through structured dialogue at EU and national level and supported through appropriate EU funding. The EESC should play an active and collaborative role in this dialogue and in the Annual Convention.

| — | EU funding, particularly the Structural Funds, targeted at reducing poverty, needs to be increased and the emphasis given to simplifying procedures, increasing transparency and monitoring effective delivery. |
| --- | --- |

—

EU funding, particularly the Structural Funds, targeted at reducing poverty, needs to be increased and the emphasis given to simplifying procedures, increasing transparency and monitoring effective delivery.

| — | The Social Open Method of Coordination (OMC) must be strengthened, which includes the development of National Strategies for Social Protection and Social Inclusion and action plans at national and local level. Its link to the flagship initiative on poverty needs to be clarified. |
| --- | --- |

—

The Social Open Method of Coordination (OMC) must be strengthened, which includes the development of National Strategies for Social Protection and Social Inclusion and action plans at national and local level. Its link to the flagship initiative on poverty needs to be clarified.

2.   Background

‘People are said to be living in poverty if their income and resources are so inadequate as to preclude them from having a standard of living considered acceptable in the society in which they live. Because of their poverty they may experience multiple disadvantages through unemployment, low income, poor housing, inadequate health care and barriers to lifelong learning, culture, sport and recreation. They are often excluded and marginalised from participating in activities (economic, social and cultural) that are the norm for other people and their access to fundamental rights may be restricted’ (2).

2.1   More than 80 million people across the EU live below the poverty line (3) of which more than 50 % are women and 20 million are children. Whilst statistical data on material poverty is important, the existence of immaterial poverty, such as, for instance, illiteracy must also be recognised. The current economic crisis has hit the most vulnerable and disadvantaged members of our communities the hardest.

2.2   The EU Commission has put the reduction of poverty at the heart of its economic, employment and social agenda – The Europe 2020 Strategy (4). The Heads of State and Government reached political agreement on a common target to lift at least 20 million people out of poverty and social exclusion in the next decade. The flagship initiative of the Platform against Poverty forms an integral part of the strategy, together with Guideline 10, which will underpin the contribution of Member States to tackling poverty and social exclusion in the National Reform Programmes.

2.3   The European Year of Combating Poverty and Social Exclusion highlighted the complexity and multi-dimensional aspects of tackling poverty and the urgent need for action to counter poverty in the face of the economic crisis and austerity measures.

2.4   Young people, migrants and the low skilled face worsening unemployment. The ‘working poor’ unable to earn a sufficient wage to cover daily necessities as well as older people and families on reduced incomes face increasing material deprivation which affects 8 % of Europeans and up to 30 % in some Member States (5).

2.5   The European Council has agreed that the headline target for the reduction of poverty in the context of the 2020 Strategy should be based on three indicators: the at-risk-of poverty rate, severe material deprivation and the percentage of people living in households of people who are jobless. Poverty reduction targets should relate to local and regional priorities.

3.   The Platform against Poverty and Social Exclusion

3.1   The proposed Platform is one of the seven flagship initiatives for action in the Europe 2020 Strategy which has three priorities aimed at delivering high levels of employment, productivity and social cohesion:

| — | Smart growth |
| --- | --- |

—

Smart growth

| — | Sustainable growth |
| --- | --- |

—

Sustainable growth

| — | Inclusive growth. |
| --- | --- |

—

Inclusive growth.

3.2   The Platform aims at creating a joint commitment among the Member States, European Institutions and the key stakeholders to fight poverty and social exclusion by setting out a ‘dynamic framework for action’ for social and territorial cohesion to ensure that jobs, growth and social inclusion are shared more equally across the EU.

3.3   To achieve this, the Commission has identified the following areas for action:

| — | Delivering actions across the policy spectrum |
| --- | --- |

—

Delivering actions across the policy spectrum

| — | Greater and more effective use of EU funds to support social inclusion |
| --- | --- |

—

Greater and more effective use of EU funds to support social inclusion

| — | Promoting evidence-based social innovation |
| --- | --- |

—

Promoting evidence-based social innovation

| — | Working in partnership and harnessing the potential of the social economy |
| --- | --- |

—

Working in partnership and harnessing the potential of the social economy

| — | Enhanced policy coordination among the Member States. |
| --- | --- |

—

Enhanced policy coordination among the Member States.

4.   General comments

4.1   Poverty is unacceptable in 21st century Europe and represents a violation of human rights. The EESC welcomes the commitment to reduce poverty and the target of taking at least 20 million people out of poverty (6) together with the establishment of the Platform and the measures to reduce poverty, many of which reflect previous EESC opinions, but calls for more concrete actions to tackle the causes as well as the consequences of poverty and to implement human rights.

4.2   There is a lack of coherence between the economic, financial and social policies at EU level and the realities experienced at Member State level. The EESC emphasises the importance of a coherent and integrated approach and has a particular concern that the EU policies focusing on economic governance, growth and employment in the context of the crisis should not increase the risk of poverty. The EESC calls for an effective social impact assessment of these measures which should be fully debated.

4.3   In drawing up the opinion, the EESC has taken into account other effects of poverty in exacerbating economic and social migration while reducing investment returns in human capital at the level of individual Member States. People living in poverty who are less able to defend their interests could be in an even more difficult situation if the need to protect the poor is not taken into account when framing economic, fiscal, social, health and education reforms with a view to cutting government expenditure. A higher number of people living below the poverty threshold would make it all the more imperative to redistribute public money.

5.   Specific comments

5.1   Social protection

5.1.1   The EESC appreciates the importance of measures to increase employment and job creation but stresses that reinforcing social protection, not reducing welfare provision nor putting downward pressure on wages which disproportionately affect the poorest is crucial.

5.1.2   Social protection systems reduce the risk of poverty by one third (7) and are vital to guarantee human rights. They act as automatic economic stabilisers which alleviate poverty and promote economic and social cohesion, promote growth and are vital to ensure the support of public opinion for the European Project (8).

5.1.3   The EESC reinforces the Commission's concern to ensure the sustainability of Member States' social protection and pension systems to guarantee adequate income throughout the life cycle, including in old age (9).

5.2   Active inclusion strategies

5.2.1   There must be continuing and co-ordinated emphasis on an integrated active inclusion strategy embracing the three pillars of an inclusive labour market, access to quality services and adequate income support
   (10) in order to tackle the obstacles encountered by those experiencing poverty.

5.2.2   The EESC endorses a strong emphasis on both prevention and eradication through sustainable growth for combating poverty. Quality employment and modern, effective social protection systems in conjunction with addressing inequalities in income, wealth and access to services are essential. The Commission's Annual Progress Report (2011) highlighted the fact that ‘there can be no sustainable growth unless its benefits accrue to all segments of the society’ and that ‘growth and social cohesion go together’ (11).

5.2.3   Whilst it is critically important to establish policies at EU level, the role of Member States and in particular regional and local authorities must be reinforced to ensure that change is effected. The EESC would wish to collaborate on this with the Committee of the Regions.

5.2.4   The EESC emphasises the critical role that both social partners and social economy organisations, including co-operatives, should play in the development of the inclusive labour market and in the promotion of a fairer distribution of income as key contributions to the implementation of the 2020 Strategy.

5.2.5   The EESC calls for a stronger emphasis on the creation of quality, sustainable jobs and measures to counter in-work poverty encompassing living wages, good working conditions and minimising poverty traps in the transition between welfare and work.

5.2.6   Specific actions must be taken to create an inclusive labour market (12) to overcome the barriers to access for specific groups including young and older people, ethnic minorities including Roma, migrants, women, single parents and people with disabilities (13) as part of the EU Active Inclusion Strategy.

5.2.7   The EESC emphasises the importance of legal work for all and is concerned about the impact that undeclared work, tax evasion and avoidance has on the sustainable financing of social protection systems and on employment and social rights. Integrated action at EU level is necessary together with a mix of sanctions and effective inspections, as well as providing incentives for legal work.

5.2.8   The EESC calls for a detailed roadmap for the implementation of the active inclusion strategies at local level. It supports the European Parliament's call for the Commission to study the impact of a legislative proposal to introduce an adequate minimum income of at least 60 % of median income in each Member State.

5.2.9   The EESC urges the collection of comparable data and improved indicators in order to reflect the social and economic benefits of eradicating poverty as well as the costs of inaction.

5.3   Stakeholder involvement

5.3.1   The EESC considers the involvement of relevant stakeholders in regular structured dialogue, at EU and national level, to be essential in seeking effective solutions and in monitoring the implementation of the Platform's programme.

5.3.2   The EESC welcomes the Commission’s proposal to work with EU institutions, people experiencing poverty, NGOs, social economy organisations, the social partners and other civil society actors in an Annual Convention to take stock of progress, as part of the above mentioned structured dialogue at EU and national level. This must include a review of the social impact of the Annual Growth Survey and progress achieved.

5.3.3   The EESC would wish to see a strengthening of the role that the EU Parliament could play in ensuring the implementation of the Platform’s programme in the Member States. This is in accord with the proposals coming forward from the European Parliament’s Citizens' AGORA.

5.3.4   The EESC strongly supports the proposal in the flagship Platform for voluntary guidelines on stakeholder involvement at EU level and in the National Reform Programmes.

5.3.5   The EESC should be an active partner in delivering the Platform's objectives and play a key role in bringing together the interests of the social partners and civil society organisations. This could include:

| — | organising an annual hearing to reflect on progress towards the poverty target; |
| --- | --- |

—

organising an annual hearing to reflect on progress towards the poverty target;

| — | contributing to the mid-term review planned for 2014 in the context of Europe 2020; |
| --- | --- |

—

contributing to the mid-term review planned for 2014 in the context of Europe 2020;

| — | contributing to the Annual Convention; |
| --- | --- |

—

contributing to the Annual Convention;

| — | participating in regular dialogue with other stakeholders, including the Committee of the Regions, national ESCs, and producing opinions on key priorities. |
| --- | --- |

—

participating in regular dialogue with other stakeholders, including the Committee of the Regions, national ESCs, and producing opinions on key priorities.

5.4   Tackling inequalities

5.4.1   The EESC welcomes the emphasis placed on the Platform's work on anti-discrimination, equality and integration to ensure the inclusion of people with disabilities or mental health problems, young people, older people, and people from migrant and ethnic minority communities, including the Roma, and the development of gender equality (14). The EESC highlights the need to include a transversal reference to fundamental human rights and concrete proposals to implement the horizontal social clauses in Articles 5, 8, 9, and 10 (TFEU).

5.4.2   The EESC supports the priority given to combating housing exclusion and homelessness as well as energy poverty and financial exclusion. The EESC highlights the importance of promoting affordable access to quality services, including IT. These need to be developed through National Strategies for Social Protection and Social Inclusion as part of a reinforced Social OMC.

5.4.3   The EESC emphasises the need to invest in human capital and stresses the importance of education and training for employment skills, personal development and social inclusion. This should encompass the early years, school, further education, vocational and on the job training as part of a commitment to lifelong learning for all.

5.4.4   OECD and Commission reports highlight growing inequalities in income distribution and wealth, as well as unequal access to services, including health, within and between Member States. Moreover, poverty is one of the key social determinants of ill-health and the EU's policy should demonstrate a moral obligation to save lives. Compelling evidence emphasises that more equal societies almost always do better. The Platform must give priority to developing integrated strategies and concrete measures to close the gaps to create a fairer society (15).

5.4.5   The EESC supports the proposal by the Commission to create a comprehensive recommendation on child poverty that should contribute to preventing and alleviating child poverty through ensuring an adequate family income, investing in care and education, particularly during early years and empowering children, in line with fundamental rights and the UN Convention on the Rights of the Child. This must be developed in tandem with a coherent approach to family policy. On-going monitoring, exchange, research and peer reviews must be included to contribute to the achievement of the EU 2020 poverty target (16).

5.5   Making use of EU funds to deliver on the social inclusion and cohesion objectives

5.5.1   The EESC strongly welcomes proposals to use Structural Funds more effectively to reduce poverty and promote social cohesion but highlights the need to increase the amount of funding available, particularly for deprived communities. It is critical to invest in creating quality jobs and in effective approaches to support the access of excluded groups, including through the social economy. Funding should also enable improved access to quality services, including housing.

5.5.2   The EESC welcomes the proposals to simplify access to Structural Funds for local organisations, particularly through global grants, technical assistance, and capacity building, but highlights the need to:

| — | reduce bureaucracy by making the procedures to access funding more flexible; |
| --- | --- |

—

reduce bureaucracy by making the procedures to access funding more flexible;

| — | set minimum European standards for improving the transparency and efficiency of procedures, including simplified information (17). |
| --- | --- |

—

set minimum European standards for improving the transparency and efficiency of procedures, including simplified information (17).

The Commission should provide guidance, promote mutual learning and monitor delivery and in particular draw lessons from the use of Structural Funds during the crisis.

5.5.3   The EESC proposes that EU programmes, such as PROGRESS, be used to fund the development of national platforms to enable effective stakeholder engagement in the European Platform and enhance delivery of its priorities.

5.6   Social innovation and reforms

5.6.1   The EESC welcomes the recognition that is given to the role of the social economy and NGOs in the implementation of strategies to tackle poverty, foster job creation, and develop services which respond creatively to community needs. It also underlines the shared responsibility of all actors to work in tandem to develop effective solutions, including SMEs and entrepreneurs.

5.6.2   Volunteering plays a strong role in developing communities, acquiring skills, providing education both informal and non-formal and empowering individuals. The EESC is keen to promote the benefits of volunteering provided this does not undermine paid employment or public services.

5.6.3   The EESC welcomes increased support for evidence-based social innovation but stresses the importance of retaining and building on existing good practice and calls for continued funding.

5.7   Enhanced policy coordination

5.7.1   The National Reform Plans and the setting of national targets are a key element in rolling out the 2020 Strategy and in effecting policies to reduce poverty issues. However, it is vital to underpin this process with a strengthened Social Open Method of Coordination, based on integrated national strategies to provide a stronger basis on which to achieve the required social goals and to clarify its link to the European Platform against Poverty.

5.7.2   The EESC in its opinion on the OMC and the Social Clause welcomed the horizontal social clause, social impact assessment and a reinforced Social OMC as tools to ensure an integrated approach and the mainstreaming of social objectives. The EESC calls for this process to be made more visible and transparent, involving key EU institutions and stakeholders and emphasises the importance of developing strategies for social protection and social inclusion at EU, national, regional and local levels.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  Sentence added as recommended by the EESC Steering Committee on the Europe 2020 Strategy.

1

(2)  Joint Report by the European Commission and the European Council on Social Inclusion, March 2004.

2

(3)  The risk of poverty is set at 60 % of the national median equivalised disposable income after social transfers particular to each Member State.

3

(4)  2010 Update of the Joint Assessment by the Social Protection Committee (SPC) and the European Commission of the social impact of the economic crisis and of policy responses (Nov 2010). COM(2010) 2020 – Europe 2020 – A European strategy for smart, sustainable and inclusive growth.

4

(5)  Material deprivation is defined as experiencing at least four out of nine deprivations. People are not able to afford to: pay the rent or utility bills; keep their home adequately warm; face unexpected bills; eat fish, meat or protein or equivalent every second day; a week of holiday away from home once a year; a car; washing machine; colour TV or telephone.

5

(6)  See the EESC Statement to the European Council of 17 June 2010.

6

(7)  SPC Report on Social Assessment of Europe 2020 (Feb 2011).

7

(8)  OJ C 132/26 of 3.5.2011.

8

(9)  OJ C 84/38 of 17.3.2011.

9

(10)  Commission Recommendation on the active inclusion of people excluded from the labour market (2008.867/EC).

10

(11)  See ‘Progress Report on the Europe 2020’ (Annex 1 of the ‘Annual Growth Survey’ COM (2011) 11 – A1/2, pt. 2.5.

11

(12)  ETUC/Business Europe et al: Framework Agreement on Inclusive Labour Markets (March 2010).

12

(13)  OJ C 21/66 of 21.1.2011.

13

(14)  See the EESC message to the European Council of June 2010 emphasising the importance of tackling inequalities and fighting discrimination.

14

(15)  OECD (2008): Growing unequal: income distribution and poverty in OECD countries. EU Commission DG Research 2010, Why socio-economic inequalities increase: facts and policy papers in Europe EUR 24 471.

15

(16)  OJ C 44/34 of 11.2.2011.

16

(17)  OJ C 132/8 of 3.5.2011.

17

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/135 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/135

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Communication on migration’

COM(2011) 248 final

2011/C 248/23

Rapporteur-General: Mr PARIZA CASTAÑOS

On 4 May 2011, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Communication on migration

COM(2011) 248 final.

On 14 June 2011, the Committee Bureau instructed the Section for Employment, Social Affairs and Citizenship to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr PARIZA CASTAÑOS as rapporteur-general at its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), and adopted the following opinion by 109 votes to 2, with 6 abstentions.

1.   Introduction

1.1   The European Council plans to discuss a number of aspects of the common immigration policy at its June meeting. The President, Mr Van Rompuy, has proposed to focus the proceedings on:

| — | Free movement of persons within the EU. |
| --- | --- |

—

Free movement of persons within the EU.

| — | Rules on asylum. |
| --- | --- |

—

Rules on asylum.

| — | Building a partnership with the southern Mediterranean countries and control of external borders. |
| --- | --- |

—

Building a partnership with the southern Mediterranean countries and control of external borders.

1.2   On 4 May, the Commission published the Communication on migration (1) in order to contribute to the Council meeting.

2.   General comments

2.1   Through several opinions (see Appendix), the EESC has worked with the other institutions to give the EU a common policy and common legislation on asylum and immigration. In spite of the progress made, the situation is unsatisfactory. It is proving very difficult for common legislation on the admission of immigrants and the reception of persons requiring international protection to be adopted by the Council and Parliament.

2.2   Common immigration policy must have a shared focus encompassing a range of aspects including the demographic situation and the labour markets; respect for human rights; equal treatment and non-discrimination; legislation on the admission of new immigrants; the reception and protection of asylum-seekers; measures against criminal people-trafficking networks; cooperation with third countries; European solidarity; and social policy and integration.

2.3   Recent months have seen a series of events, declarations and political decisions that the Committee has watched with mounting concern, as an ancient and familiar disease among Europeans is on the rise – xenophobia and a form of nationalism that excludes others. Minorities and immigrants are belittled, insulted and targeted by aggressive, discriminatory policies.

2.4   In past years, xenophobia and populism were promoted by political groups that while extremist, were in the minority. Today, however, such policies are on the agenda and programmes of several European governments, who brandish anti-immigrant and minority policies as an electoral weapon. The EESC hopes that the June European Council will prevent the European agenda being polluted by xenophobia and populism.

2.5   In recent weeks a number of unacceptable situations have arisen and a serious political crisis has been triggered in Europe by a modest increase in arrivals of migrants in the Mediterranean. In previous times, when far more people were arriving, fleeing from war and poverty, Europe acted in a spirit of solidarity, ensuring that human rights were upheld and strengthening the values of European integration.

2.6   For the Committee and for most people in Europe, the creation of the Schengen area stands out as one of the most significant achievements of European integration. Some Member States, however, are imposing border controls within Europe that run counter to the Treaty.

2.7   The EESC is alarmed that a small migration emergency involving people requiring protection should be bringing the solidity of the values of some of those in government, and of the EU itself, into doubt.

2.8   The Committee would call for moderation in political discourse, restoring balance and renewing respect for the principles of democracy and free, open societies. European governments must remember that integrating immigrants is a two-way process which also requires compromises on the part of European host societies, who must adopt an integration-friendly attitude. A society which accepts that its leaders deploy populism and xenophobia against immigrants and minorities during election campaigns and in political decision-making is no friend of integration.

2.9   Europe needs a medium- and long-term vision. The Belgian EU Presidency asked the EESC to draw up an exploratory opinion (2) on the role of immigration in the demographic situation in Europe. The conclusions were clear: in the next few years, worker mobility within the EU must be increased, and immigration by workers and their families from third countries must also increase. This picture alerts us to new challenges in managing greater diversity in businesses and cities. The Committee urges the Commission to present the new European agenda for integration as soon as possible, taking account of the work of the European Integration Forum.

2.10   Recent events in the southern Mediterranean, and the debates and conflicts within the Union, offer an opportunity to strengthen the EU's values, principles and existing common rules, and to ensure ‘more Europe’ in European policies on borders, free movement, asylum and immigration.

3.   Specific comments

3.1   Free movement of persons – internal borders

3.1.1   The EESC sees the free movement of people as a principle and a fundamental right within the process of European integration, and one of the main pillars underpinning the area of freedom, security and justice. The EESC agrees with the Commission on the need to develop a clearer and more solid system of Schengen governance through an independent and objective European system to evaluate the application of the Borders Code by the Member States. This system should be directed and coordinated by the Commission, with input from external experts.

3.1.2   The Member States must meet their obligations under the Borders Code when reintroducing temporary controls at internal borders in exceptional cases where public policy considerations require immediate action, in particular the obligation to inform the Commission in advance, together with compliance with the procedural safeguards (indication of reasons) laid down in the Code and the principles of proportionality, solidarity and mutual trust.

3.1.3   The Committee accepts the establishment of a mechanism at European level for the coordinated reintroduction of internal border controls in the event of ‘truly critical situations’ or when the external borders are subjected to unexpected and powerful migratory pressures. The negotiations within the Council on such a mechanism should not provide governments with an opportunity to renegotiate and/or amend downwards the common procedural safeguards contained in the Schengen Code.

3.1.4   The EESC supports the European Parliament's proposal that the Commission should devise a new infringement mechanism (mechanisms for early detection of potential violations of fundamental rights and freedoms in the EU), the main function of which would be to freeze measures taken by Member States within the framework of European law that constitute violations of the fundamental rights and freedoms of individuals while their lawfulness is determined by means of accelerated procedures at the Luxembourg court (3).

3.2   External borders

3.2.1   The European Union needs a credible and effective external borders policy that is legitimate and subject to robust democratic scrutiny and independent evaluation. The Committee calls on the Council and the European Parliament to reach an agreement on the Commission's proposal of February 2010 strengthening the Frontex regulation.

3.2.2   The EESC is of the view that the Member States must give more operational powers and more autonomy to Frontex in terms of its work and resources (technical equipment). Joint operations coordinated by the Agency (and their repercussions on fundamental rights and administrative safeguards as laid down in the Borders Code) must, however, be subject to democratic scrutiny by Parliament and the European Union's Fundamental Rights Agency. This must be accompanied by ongoing evaluation, especially regarding Frontex's activities and agreements with third countries, the effectiveness of joint operations and the quality of its risk analyses.

3.2.3   The EESC considers it crucial that Frontex should fulfil its obligations concerning access to international protection, such as the principle of non-refoulement, independent monitoring of respect for fundamental rights and the development of a code of conduct in cases of forced return.

3.2.4   The Committee also agrees that a European border guard service should be developed in the future, comprising a European body of border guards set up by a future centralised European administration. Its principal function would be to apply the common rules laid down in the Borders Code.

3.3   Labour immigration

3.3.1   The EU needs to put its political weight behind a common policy on legal immigration and to facilitate mobility and fair treatment for third country nationals coming to work in Europe. In several Member States, and particularly in certain sectors and occupational categories, businesses need to recruit new immigrant workers, given their skills and qualifications. The EU must adopt a common European-level legal framework on labour immigration that is coherent, comprehensive, cross-sectoral and guided by respect for workers' rights, equal treatment and the needs of companies.

3.3.2   The EESC has previously drawn up opinions on the directives on seasonal workers, posted workers, highly-qualified workers and researchers. The EU must recruit the new skills it needs for a dynamic, innovative and competitive economy, in cooperation with the countries of origin in order to avoid a brain-drain.

3.3.3   The EESC believes there is a pressing need for the Council and Parliament to reach agreement on the directive on a common set of rights and a single permit (4). The differences between existing rights for various categories of third country worker across the EU must be ironed out. The current common legal framework is marked by its sector-based approach, fostering different and discriminatory treatment between different categories of immigrant worker in terms of entry and resident conditions and rights.

3.3.4   The EESC welcomes the European Commission's intention to bring forward a common immigration code in 2013. This code should consolidate legislation with a uniform and transparent framework of rights, safeguards and duties for immigrants. The code should be based on the principles of equality and fair treatment, and the EU should be more active in prompting the Member States to transpose international and European conventions and treaties adopted by organisations such as the UN, the Council of Europe and the ILO.

3.4   Dialogue and Mobility Partnerships with third countries

3.4.1   The EESC supports the general approach set out by the Commission in its Communication A dialogue for migration, mobility and security with the southern Mediterranean countries
   (5). The EU must continue to take a comprehensive view of migration, with the priority on facilitating legal channels for migration and mobility.

3.4.2   The EESC welcomes the initiative to establish Mobility Partnerships between the EU and Tunisia, Egypt and Libya. An independent study into the effectiveness and impact of existing Mobility Partnerships should, however, be carried out. The EESC supports the Commission's initiative to ensure that the Mobility Partnerships are equipped with an efficient evaluation mechanism. In addition, the Mobility Partnerships, which are joint policy declarations that are not legally binding upon the partner countries, should be converted into international agreements.

4.   International protection

4.1   The EESC expects that the Council and Parliament will in 2012 adopt the joint legislation that is needed to set up a common asylum system.

4.2   The Committee moreover considers that solidarity between the Member States needs to be enhanced with regard to the reception of people coming to Europe and requiring international protection. It also suggests that the EU might provide resettlement programmes, as proposed by the Commission.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  COM(2011) 248 final.

1

(2)  OJ C 48, 15.2.2011, p. 6.

2

(3)  European Parliament resolution of 15 December 2010 on the situation of fundamental rights in the European Union (2009) – effective implementation after the entry into force of the Treaty of Lisbon (2009/2161(INI)) - P7_TA(2010)0483, paragraph 39.

3

(4)  COM(2007) 638 final.

4

(5)  COM(2011) 292 final.

5

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/138 |
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25.8.2011

EN

Official Journal of the European Union

C 248/138

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on control of major-accident hazards involving dangerous substances’

COM(2010) 781 final — 2010/0377 (COD)

2011/C 248/24

Rapporteur: Mr SEARS

On 24 January 2011 the Council decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Proposal for a Directive of the European Parliament and of the Council on control of major-accident hazards involving dangerous substances

COM(2010) 781 final — 2010/0377 (COD).

The Section for Agriculture, Rural Development and the Environment which was responsible for preparing the Committee’s work on this subject, adopted its opinion on 20 May 2011. The rapporteur was Mr SEARS.

At its 472nd plenary session of 15 and 16 June 2011 (meeting of 15 June 2011), the European Economic and Social Committee (EESC) adopted the following opinion by 146 votes, with 6 abstentions and no votes against.

1.   Summary and recommendations

| 1.1 | The EESC has consistently supported Commission proposals for legislation aimed at reducing both the frequency and potential impact of major-accident hazards. Insofar as the scope of these Directives depends critically on other EU legislation in particular in respect of the classification and labelling of dangerous substances, the EESC agrees that a new Directive is now required following changes resulting from the recent adoption of a globally harmonised system (GHS) for classification and labelling developed and proposed by the UN. The difficulties of so doing, with few anticipated benefits other than in facilitating world trade, are recognised and have been discussed at length in a previous Opinion (1). |
| --- | --- |

1.1

The EESC has consistently supported Commission proposals for legislation aimed at reducing both the frequency and potential impact of major-accident hazards. Insofar as the scope of these Directives depends critically on other EU legislation in particular in respect of the classification and labelling of dangerous substances, the EESC agrees that a new Directive is now required following changes resulting from the recent adoption of a globally harmonised system (GHS) for classification and labelling developed and proposed by the UN. The difficulties of so doing, with few anticipated benefits other than in facilitating world trade, are recognised and have been discussed at length in a previous Opinion (1).

| 1.2 | The EESC also agrees fully with the stated view of the Commission and of the majority of interested parties that no other significant changes are required – and indeed that changes should be kept to the minimum to avoid any loss of focus on the key objectives of this long-established, effective and well-supported legislation. |
| --- | --- |

1.2

The EESC also agrees fully with the stated view of the Commission and of the majority of interested parties that no other significant changes are required – and indeed that changes should be kept to the minimum to avoid any loss of focus on the key objectives of this long-established, effective and well-supported legislation.

| 1.3 | The EESC therefore believes that every effort should be made to assess critically, if necessary on a product by product basis, whether or not the changes in classification are relevant to the likelihood of a major-accident occurring. If they are not, and/or if they would significantly increase the number of smaller, lower risk, establishments and SMEs affected, then care should be taken not to dilute the impact of the proposal. This is particularly true in the detergents sector where the new classifications bear little relationship to actual experiences of household products in regular daily use. In these cases, the threshold tonnages should also be considered carefully, in particular where there is little likelihood of fire or explosion and where the goods have been packaged in smaller quantities for retail sale. |
| --- | --- |

1.3

The EESC therefore believes that every effort should be made to assess critically, if necessary on a product by product basis, whether or not the changes in classification are relevant to the likelihood of a major-accident occurring. If they are not, and/or if they would significantly increase the number of smaller, lower risk, establishments and SMEs affected, then care should be taken not to dilute the impact of the proposal. This is particularly true in the detergents sector where the new classifications bear little relationship to actual experiences of household products in regular daily use. In these cases, the threshold tonnages should also be considered carefully, in particular where there is little likelihood of fire or explosion and where the goods have been packaged in smaller quantities for retail sale.

| 1.4 | Where raw materials, intermediates and finished products are subject to more than one piece of legislation undergoing revision on differing timetables, great care must be taken with the overlapping transition periods to ensure that overall costs for operators and for Member States are minimised and confusion reduced to a minimum for all concerned. |
| --- | --- |

1.4

Where raw materials, intermediates and finished products are subject to more than one piece of legislation undergoing revision on differing timetables, great care must be taken with the overlapping transition periods to ensure that overall costs for operators and for Member States are minimised and confusion reduced to a minimum for all concerned.

| 1.5 | Given that the general opinion of the competent authorities seems to be that the most important establishments are indeed already captured under this legislation, every effort should be made to improve the efficiency and effectiveness of controls and subsequent reporting on these and, where appropriate, adjacent sites. As far as possible this should not rely merely on increased demands for information to be gathered by Member States and passed to the Commission. The EESC notes that the system as currently structured is barely fit for purpose and welcomes efforts by the Commission to agree changes with the Member States upon whose open and timely inputs it depends. Changes proposed to the list of affected products and establishments should continue to receive scrutiny by the other EU institutions and advisory bodies of the EU before adoption. |
| --- | --- |

1.5

Given that the general opinion of the competent authorities seems to be that the most important establishments are indeed already captured under this legislation, every effort should be made to improve the efficiency and effectiveness of controls and subsequent reporting on these and, where appropriate, adjacent sites. As far as possible this should not rely merely on increased demands for information to be gathered by Member States and passed to the Commission. The EESC notes that the system as currently structured is barely fit for purpose and welcomes efforts by the Commission to agree changes with the Member States upon whose open and timely inputs it depends. Changes proposed to the list of affected products and establishments should continue to receive scrutiny by the other EU institutions and advisory bodies of the EU before adoption.

| 1.6 | The EESC strongly supports the provision of relevant, comprehensible and timely information to the general public. There will be a continuing need for hard copy, although other electronic means, including social networks, will be increasingly used, especially at the local level. All organisations representing civil society in the vicinity of a ‘Seveso’ (or any other manufacturing or storage) establishment have roles to play in both seeking to prevent and in responding to accidents of all kinds, including major-accident emergencies as defined in the Seveso Directive. |
| --- | --- |

1.6

The EESC strongly supports the provision of relevant, comprehensible and timely information to the general public. There will be a continuing need for hard copy, although other electronic means, including social networks, will be increasingly used, especially at the local level. All organisations representing civil society in the vicinity of a ‘Seveso’ (or any other manufacturing or storage) establishment have roles to play in both seeking to prevent and in responding to accidents of all kinds, including major-accident emergencies as defined in the Seveso Directive.

| 1.7 | New proposals relating to ‘environmental justice’ are relevant only if ‘environmental injustice’ in respect of major-accident hazards can be demonstrated. Given the rather low frequency of accidents reported under this Directive, in particular for Lower Tier establishments, it is difficult to see this as being the case. Any information provided should be made available to all elements of organised civil society. The EESC therefore believes that this requirement should be replaced by a more modern and more widely agreed approach to safety information management, properly supported by evidence and the required impact analysis. |
| --- | --- |

1.7

New proposals relating to ‘environmental justice’ are relevant only if ‘environmental injustice’ in respect of major-accident hazards can be demonstrated. Given the rather low frequency of accidents reported under this Directive, in particular for Lower Tier establishments, it is difficult to see this as being the case. Any information provided should be made available to all elements of organised civil society. The EESC therefore believes that this requirement should be replaced by a more modern and more widely agreed approach to safety information management, properly supported by evidence and the required impact analysis.

| 1.8 | The EESC notes that the EU lags behind the United States in recognising and rewarding good practice, in particular with respect to process and individual safety, and believes that this would bring better returns than some of the measures proposed here. |
| --- | --- |

1.8

The EESC notes that the EU lags behind the United States in recognising and rewarding good practice, in particular with respect to process and individual safety, and believes that this would bring better returns than some of the measures proposed here.

| 1.9 | The EESC therefore supports this proposal but suggest that a number of points are revisited to ensure that the well-established long term objectives of this legislation to reduce the frequency and impact of major-accident hazards are fully met. |
| --- | --- |

1.9

The EESC therefore supports this proposal but suggest that a number of points are revisited to ensure that the well-established long term objectives of this legislation to reduce the frequency and impact of major-accident hazards are fully met.

2.   Introduction

| 2.1 | The need to classify, label and package (CLP) ‘substances’ - initially at least, a finite list of elements and their compounds - defined to be ‘dangerous’ or ‘hazardous’, on a variety of scales affecting human health, safety and the environment, was recognised more than 40 years ago in the Dangerous Substances Directive 67/548/EEC. Just over 20 years later this was extended to cover ‘preparations’- a wider, and potentially infinite, list of deliberately produced mixtures of two or more substances in varying but defined proportions - in the Dangerous Preparations Directive 88/379/EEC. |
| --- | --- |

2.1

The need to classify, label and package (CLP) ‘substances’ - initially at least, a finite list of elements and their compounds - defined to be ‘dangerous’ or ‘hazardous’, on a variety of scales affecting human health, safety and the environment, was recognised more than 40 years ago in the Dangerous Substances Directive 67/548/EEC. Just over 20 years later this was extended to cover ‘preparations’- a wider, and potentially infinite, list of deliberately produced mixtures of two or more substances in varying but defined proportions - in the Dangerous Preparations Directive 88/379/EEC.

| 2.2 | These two Directives and their many amending Directives and adaptations to technical progress provide the backbone for a harmonised system of protection of workers, consumers, manufacturers, marketers, distributors and the environment. They also ensure a Single Market across the EU for the products that are affected, including raw materials, intermediate and waste streams, and finished products to be placed on the market. Furthermore, the Directives interact with and provide input to virtually all other EU legislation aimed at protecting human health, safety and the environment. Any changes to this underlying system are therefore likely to be complex and expensive for all concerned. |
| --- | --- |

2.2

These two Directives and their many amending Directives and adaptations to technical progress provide the backbone for a harmonised system of protection of workers, consumers, manufacturers, marketers, distributors and the environment. They also ensure a Single Market across the EU for the products that are affected, including raw materials, intermediate and waste streams, and finished products to be placed on the market. Furthermore, the Directives interact with and provide input to virtually all other EU legislation aimed at protecting human health, safety and the environment. Any changes to this underlying system are therefore likely to be complex and expensive for all concerned.

| 2.3 | In recent years, two such changes have been made. In 2006 the Council adopted Regulation (EC) 1907/2006 for the ‘registration, evaluation, authorisation and restriction of chemicals’, (REACH), together with an accompanying Directive 2006/121/EC to further amend Directive 67/548/EEC and to bring these two major pieces of legislation into line. In 2008 the Council and European Parliament adopted Regulation (EC) 1272/2008 to implement a new globally harmonised system (GHS) for the classification and labelling of chemicals, developed after many years of work by the United Nations. This would lead in many cases to changes in the names, pictograms and standard phrases attributed to various hazards and to classified ‘substances’ and ‘mixtures’. The actual risks for workers, distributors, consumers and the public at large from a given product or process would of course remain the same. |
| --- | --- |

2.3

In recent years, two such changes have been made. In 2006 the Council adopted Regulation (EC) 1907/2006 for the ‘registration, evaluation, authorisation and restriction of chemicals’, (REACH), together with an accompanying Directive 2006/121/EC to further amend Directive 67/548/EEC and to bring these two major pieces of legislation into line. In 2008 the Council and European Parliament adopted Regulation (EC) 1272/2008 to implement a new globally harmonised system (GHS) for the classification and labelling of chemicals, developed after many years of work by the United Nations. This would lead in many cases to changes in the names, pictograms and standard phrases attributed to various hazards and to classified ‘substances’ and ‘mixtures’. The actual risks for workers, distributors, consumers and the public at large from a given product or process would of course remain the same.

| 2.4 | It was recognised at the time that the benefits of replacing one well-established, fully functioning and effective system with another were likely to be slight, with some potential for reduced costs in international trade being more than offset by increased regulatory and compliance costs within the EU. The technical problems arising from the introduction of new classifications and end points would also be considerable, leading to increased costs of reformulation or changes to the range of products available to consumers – and with considerable potential for confusion both during and after the transition periods, for each piece of legislation affected. |
| --- | --- |

2.4

It was recognised at the time that the benefits of replacing one well-established, fully functioning and effective system with another were likely to be slight, with some potential for reduced costs in international trade being more than offset by increased regulatory and compliance costs within the EU. The technical problems arising from the introduction of new classifications and end points would also be considerable, leading to increased costs of reformulation or changes to the range of products available to consumers – and with considerable potential for confusion both during and after the transition periods, for each piece of legislation affected.

| 2.5 | These problems are now evident in, and are to some extent dealt with by, the Commission's proposal COM(2010) 781 final, otherwise known as Seveso III, for a Directive replacing existing legislation on the control of ‘major-accident hazards’, specifically involving ‘dangerous substances’, both as defined within this legislation. |
| --- | --- |

2.5

These problems are now evident in, and are to some extent dealt with by, the Commission's proposal COM(2010) 781 final, otherwise known as Seveso III, for a Directive replacing existing legislation on the control of ‘major-accident hazards’, specifically involving ‘dangerous substances’, both as defined within this legislation.

| 2.6 | This legislation was introduced in 1982 by Directive 82/501/EEC, following a major accident in Seveso (leading to widespread dioxin exposure) in 1976. It was amended following accidents in Bhopal (a major leak of methyl isocyanate) and Basel (a series of fires and toxic releases). It was replaced in 1996 by Council Directive 96/82/EC. Following major accidents in Toulouse (with ammonium nitrate), Baia Mare (a cyanide spill) and Enschede (an explosion in a fireworks factory), this Directive was subsequently amended by Directive 2003/105/EC, setting out a series of well-defined procedural and reporting obligations for manufacturers and the Member States. |
| --- | --- |

2.6

This legislation was introduced in 1982 by Directive 82/501/EEC, following a major accident in Seveso (leading to widespread dioxin exposure) in 1976. It was amended following accidents in Bhopal (a major leak of methyl isocyanate) and Basel (a series of fires and toxic releases). It was replaced in 1996 by Council Directive 96/82/EC. Following major accidents in Toulouse (with ammonium nitrate), Baia Mare (a cyanide spill) and Enschede (an explosion in a fireworks factory), this Directive was subsequently amended by Directive 2003/105/EC, setting out a series of well-defined procedural and reporting obligations for manufacturers and the Member States.

| 2.7 | This legislation is generally believed to have had a profound and positive effect on the safety and control of manufacturing plants where dangerous substances are used, manufactured or stored. Some 10 000 manufacturing establishments are now covered, of which around 4 500 are currently designated as being ‘Upper Tier’, i.e, requiring more stringent reporting and control than the 5 500‘Lower Tier’ establishments. Regular inspections are undertaken. National and EU-wide reporting systems are in place. The system is well supported and appreciated by all those involved. Accidents still occur – but hopefully fewer and with less impact on human health and the environment than otherwise would have been the case. |
| --- | --- |

2.7

This legislation is generally believed to have had a profound and positive effect on the safety and control of manufacturing plants where dangerous substances are used, manufactured or stored. Some 10 000 manufacturing establishments are now covered, of which around 4 500 are currently designated as being ‘Upper Tier’, i.e, requiring more stringent reporting and control than the 5 500‘Lower Tier’ establishments. Regular inspections are undertaken. National and EU-wide reporting systems are in place. The system is well supported and appreciated by all those involved. Accidents still occur – but hopefully fewer and with less impact on human health and the environment than otherwise would have been the case.

| 2.8 | According to on-line Commission statistics, 745 such accidents have been reported over the 30-year lifetime of the Directive. A further 42 accidents have been reported but not yet added to the publicly available eMARS database (2). Although the statistics are neither complete nor easily available, 80 % of these are believed to be on establishments designated as being Upper Tier, the remainder on establishments designated as being Lower Tier. 35 of the above were reported on a voluntary basis by OECD countries not in the EU. The number of accidents reported per year peaked in the period 1996-2003 and has declined sharply since. It is unclear whether this represents a real improvement in plant safety or merely the rather long delays in analysing and reporting accidents by the Member States and by translation delays thereafter. |
| --- | --- |

2.8

According to on-line Commission statistics, 745 such accidents have been reported over the 30-year lifetime of the Directive. A further 42 accidents have been reported but not yet added to the publicly available eMARS database (2). Although the statistics are neither complete nor easily available, 80 % of these are believed to be on establishments designated as being Upper Tier, the remainder on establishments designated as being Lower Tier. 35 of the above were reported on a voluntary basis by OECD countries not in the EU. The number of accidents reported per year peaked in the period 1996-2003 and has declined sharply since. It is unclear whether this represents a real improvement in plant safety or merely the rather long delays in analysing and reporting accidents by the Member States and by translation delays thereafter.

| 2.9 | Military establishments, and hazards created by ionising radiation, off-shore mineral and hydrocarbon exploitation, transportation and waste disposal sites, together with specific substances listed in Part 3 of Annex 1 of this Directive, are all excluded from these controls. |
| --- | --- |

2.9

Military establishments, and hazards created by ionising radiation, off-shore mineral and hydrocarbon exploitation, transportation and waste disposal sites, together with specific substances listed in Part 3 of Annex 1 of this Directive, are all excluded from these controls.

| 2.10 | Unfortunately, this legislation depends critically for its scope upon the CLP legislation described above for any dangerous substances involved. Whether or not, and to what extent, a specific site is required to comply with the Seveso controls is defined by the classifications and tonnages of the substances used, manufactured or stored on site. The controls are designed to avoid or minimise the effects of ‘major-accidents’ only, which are defined as those involving any one or more of the following: one or more deaths; injury and hospitalisation of six or more persons; damage to property in or outside the plant; a significant evacuation of personnel or plant neighbours; or long-term damage to the external environment. The truly ‘major-accidents’ noted in 2.6 above which led to changes in the legislation were of course on a larger scale altogether and are therefore not typical of the accidents generally reported. |
| --- | --- |

2.10

Unfortunately, this legislation depends critically for its scope upon the CLP legislation described above for any dangerous substances involved. Whether or not, and to what extent, a specific site is required to comply with the Seveso controls is defined by the classifications and tonnages of the substances used, manufactured or stored on site. The controls are designed to avoid or minimise the effects of ‘major-accidents’ only, which are defined as those involving any one or more of the following: one or more deaths; injury and hospitalisation of six or more persons; damage to property in or outside the plant; a significant evacuation of personnel or plant neighbours; or long-term damage to the external environment. The truly ‘major-accidents’ noted in 2.6 above which led to changes in the legislation were of course on a larger scale altogether and are therefore not typical of the accidents generally reported.

| 2.11 | The introduction of the GHS legislation now requires changes, in particular to the Annexes of the Directive where specific hazard classes and classified ‘substances’ and ‘mixtures’ thereof are named for inclusion or exclusion based on their revised hazard classifications. |
| --- | --- |

2.11

The introduction of the GHS legislation now requires changes, in particular to the Annexes of the Directive where specific hazard classes and classified ‘substances’ and ‘mixtures’ thereof are named for inclusion or exclusion based on their revised hazard classifications.

| 2.12 | Given that these are changes to definitions and not to actual risks, and the Commission does not intend to significantly amend or extend the scope of the current legislation, the actual benefits for process and worker or consumer safety or the environment are expected to be minimal. The need to control costs and other impacts for operators and the Member States is therefore obvious, as is the need to avoid any weakening of the current focus on major-accident hazards. |
| --- | --- |

2.12

Given that these are changes to definitions and not to actual risks, and the Commission does not intend to significantly amend or extend the scope of the current legislation, the actual benefits for process and worker or consumer safety or the environment are expected to be minimal. The need to control costs and other impacts for operators and the Member States is therefore obvious, as is the need to avoid any weakening of the current focus on major-accident hazards.

3.   Summary of the Commission's proposal

| 3.1 | The Commission's proposal for a new Directive is based on Article 191 TFEU. The Directive is addressed to Member States and will come into effect 20 days after publication in the Official Journal. Directive 96/82/EC will be repealed effective 1 June 2015. Stakeholders have been consulted. Overall there was agreement that no major changes were required, other than to align Annex 1 to Regulation (EC) 1272/2008. |
| --- | --- |

3.1

The Commission's proposal for a new Directive is based on Article 191 TFEU. The Directive is addressed to Member States and will come into effect 20 days after publication in the Official Journal. Directive 96/82/EC will be repealed effective 1 June 2015. Stakeholders have been consulted. Overall there was agreement that no major changes were required, other than to align Annex 1 to Regulation (EC) 1272/2008.

| 3.2 | The Commission does however seek to clarify and update some of the procedures and definitions, as well as to introduce new measures, in particular with respect to the frequency of inspections, the content of the operator's major-accident prevention policy (MAPP), requirements for a safety management system (SMS), the provision of information to the public, the rights of access to environmental justice, the provision of reports from Member States to the Commission, and to the process of amending the Annexes via delegated acts. |
| --- | --- |

3.2

The Commission does however seek to clarify and update some of the procedures and definitions, as well as to introduce new measures, in particular with respect to the frequency of inspections, the content of the operator's major-accident prevention policy (MAPP), requirements for a safety management system (SMS), the provision of information to the public, the rights of access to environmental justice, the provision of reports from Member States to the Commission, and to the process of amending the Annexes via delegated acts.

| 3.3 | The Commission recognises that the main difficulties lie in aligning the existing categories of ‘Very Toxic’ and ‘Toxic’ with the new categories ‘Acute Toxic 1, 2 and 3’, now split by exposure routes (oral, dermal and inhalation). There will be new and more specific categories for oxidising, explosive and flammable hazards, including ‘flammable aerosols’. A number of other products, including ammonium nitrate and heavy fuel oil, in general use despite their occasional use as explosives precursors, receive special mention. |
| --- | --- |

3.3

The Commission recognises that the main difficulties lie in aligning the existing categories of ‘Very Toxic’ and ‘Toxic’ with the new categories ‘Acute Toxic 1, 2 and 3’, now split by exposure routes (oral, dermal and inhalation). There will be new and more specific categories for oxidising, explosive and flammable hazards, including ‘flammable aerosols’. A number of other products, including ammonium nitrate and heavy fuel oil, in general use despite their occasional use as explosives precursors, receive special mention.

| 3.4 | The proposal is accompanied by a staff working paper and impact assessment, two external impact assessments prepared by COWI A/S (Denmark, international consulting group) on possible options for the overall proposal and for adapting Annex 1, and by a report from a JRC Technical Working Group (TWG) on classification criteria for the identification of Seveso establishments. Additional information on proposals for the reform of the eMARS database was provided on request. |
| --- | --- |

3.4

The proposal is accompanied by a staff working paper and impact assessment, two external impact assessments prepared by COWI A/S (Denmark, international consulting group) on possible options for the overall proposal and for adapting Annex 1, and by a report from a JRC Technical Working Group (TWG) on classification criteria for the identification of Seveso establishments. Additional information on proposals for the reform of the eMARS database was provided on request.

| 3.5 | Despite some accrual of powers and responsibilities to the Commission, there is said to be no impact on the Community budget. The impact assessment does not fully quantify the costs and benefits for Member States or operators – but suggests that both should be significantly lower than when the legislation was first introduced. It also notes that costs are generally minor compared to those incurred in an actual incident. The 2005 fire at the Buncefield terminal in the UK is quoted as an example. Some new proposals for communicating to the general public or for providing data to the Commission were not evaluated for cost or actual effectiveness. The application and presumed outcomes of the current legislation were examined in related documents but these were not included in the impact assessment. |
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3.5

Despite some accrual of powers and responsibilities to the Commission, there is said to be no impact on the Community budget. The impact assessment does not fully quantify the costs and benefits for Member States or operators – but suggests that both should be significantly lower than when the legislation was first introduced. It also notes that costs are generally minor compared to those incurred in an actual incident. The 2005 fire at the Buncefield terminal in the UK is quoted as an example. Some new proposals for communicating to the general public or for providing data to the Commission were not evaluated for cost or actual effectiveness. The application and presumed outcomes of the current legislation were examined in related documents but these were not included in the impact assessment.

4.   General comments

| 4.1 | The EESC has commented favourably via its Opinions on all the above Directives and has strongly supported the series of proposals seeking to minimise the frequency and impact of major-accident hazards under the general names of Seveso Directives I, II and now, III. It therefore supports the new proposal, its chosen legal basis and choice of instrument. Concerns however exist with respect to the proportionality and likely effect of the proposal, where some of the provisions clearly do go beyond what is strictly necessary to achieve the desired objectives. |
| --- | --- |

4.1

The EESC has commented favourably via its Opinions on all the above Directives and has strongly supported the series of proposals seeking to minimise the frequency and impact of major-accident hazards under the general names of Seveso Directives I, II and now, III. It therefore supports the new proposal, its chosen legal basis and choice of instrument. Concerns however exist with respect to the proportionality and likely effect of the proposal, where some of the provisions clearly do go beyond what is strictly necessary to achieve the desired objectives.

| 4.2 | The EESC also strongly supported the aim of a ‘globally harmonised system’(GHS) for the ‘classification, packaging and labelling of chemicals’, as set out by the United Nations, to support world trade and to assist less developed economies in their efforts to protect the safety and health of workers and consumers. |
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4.2

The EESC also strongly supported the aim of a ‘globally harmonised system’(GHS) for the ‘classification, packaging and labelling of chemicals’, as set out by the United Nations, to support world trade and to assist less developed economies in their efforts to protect the safety and health of workers and consumers.

| 4.3 | The EESC however set out a number of caveats on the above in a previous Opinion published in OJ C 204 p. 47 dated 9 August 2008. Many of these would apply in any process of trans-national or, in this case, global, harmonisation, however well-intentioned, where one well-functioning system is replaced by another in the name of some greater good, i.e. facilitating world trade. Bureaucracy and costs can escalate. Long established procedures and definitions can be weakened. Essential aims can be diluted. Manufacturing and marketing practices may require revision at considerable cost and with no benefit to workers or consumers. Confusion at all levels is likely both during and after the inevitable transition periods for each piece of legislation affected. Benefits, if measured, are likely to be low or non-existent and additional costs are hard to justify. |
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4.3

The EESC however set out a number of caveats on the above in a previous Opinion published in OJ C 204 p. 47 dated 9 August 2008. Many of these would apply in any process of trans-national or, in this case, global, harmonisation, however well-intentioned, where one well-functioning system is replaced by another in the name of some greater good, i.e. facilitating world trade. Bureaucracy and costs can escalate. Long established procedures and definitions can be weakened. Essential aims can be diluted. Manufacturing and marketing practices may require revision at considerable cost and with no benefit to workers or consumers. Confusion at all levels is likely both during and after the inevitable transition periods for each piece of legislation affected. Benefits, if measured, are likely to be low or non-existent and additional costs are hard to justify.

| 4.4 | Many of the above points were recognised in the preparation of this proposal, especially with the almost universal agreement that no major revisions were required to the focus, scope and general implementation of the existing legislation, other than to revise Annex 1 in line with the new definitions for the CLP of ‘dangerous substances’ upon which this legislation depends. |
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4.4

Many of the above points were recognised in the preparation of this proposal, especially with the almost universal agreement that no major revisions were required to the focus, scope and general implementation of the existing legislation, other than to revise Annex 1 in line with the new definitions for the CLP of ‘dangerous substances’ upon which this legislation depends.

| 4.5 | Sadly a number of problems remain. Some of these were raised during consultation, but not addressed in the current text. Other concerns of a general nature have been lost altogether. |
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4.5

Sadly a number of problems remain. Some of these were raised during consultation, but not addressed in the current text. Other concerns of a general nature have been lost altogether.

| 4.6 | The EESC particularly regrets that the adoption of a globally negotiated, essentially monolingual GHS has led to the loss of meaning of long established key words, such as ‘substance’, which can now include both ‘preparations’ and ‘mixtures’; and that these last two words are taken as meaning the same, which was not the case in the General Preparations Directive; and that still no effort has been made to confirm that the three terms - in English and in some other EU languages - ‘chemical’ (as a noun), ‘chemical substance’ and ‘substance’ are synonymous in EU legislation, despite different usages and attributed meanings. For some, it may be necessary to explain that there are no ‘non-chemical’ substances. References to ‘M-factors’ or ‘R & S Phrases’ again only make sense in one language and can present problems when translated into other languages. |
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4.6

The EESC particularly regrets that the adoption of a globally negotiated, essentially monolingual GHS has led to the loss of meaning of long established key words, such as ‘substance’, which can now include both ‘preparations’ and ‘mixtures’; and that these last two words are taken as meaning the same, which was not the case in the General Preparations Directive; and that still no effort has been made to confirm that the three terms - in English and in some other EU languages - ‘chemical’ (as a noun), ‘chemical substance’ and ‘substance’ are synonymous in EU legislation, despite different usages and attributed meanings. For some, it may be necessary to explain that there are no ‘non-chemical’ substances. References to ‘M-factors’ or ‘R & S Phrases’ again only make sense in one language and can present problems when translated into other languages.

| 4.7 | This is therefore a missed opportunity to establish a glossary of key terms, in all the languages of the EU, as previously suggested, which is essential as legislation moves into new areas affecting the same group of products – for instance for limiting the availability for use by terrorists as explosives precursors – as well as dealing with overlapping and interacting horizontal and vertical legislation, for instance REACH, Industrial Emissions, Water Quality and WEEE with product-specific legislation on solvents, detergents, cosmetics, aerosols, fertilizers and pesticides. |
| --- | --- |

4.7

This is therefore a missed opportunity to establish a glossary of key terms, in all the languages of the EU, as previously suggested, which is essential as legislation moves into new areas affecting the same group of products – for instance for limiting the availability for use by terrorists as explosives precursors – as well as dealing with overlapping and interacting horizontal and vertical legislation, for instance REACH, Industrial Emissions, Water Quality and WEEE with product-specific legislation on solvents, detergents, cosmetics, aerosols, fertilizers and pesticides.

| 4.8 | A similar point follows regarding the proposed process for amending the Annexes, which essentially serve to increase or decrease the number of products and therefore sites subject to this legislation, by the Commission acting alone by ‘delegated acts’. These will require clearly written guidelines, acceptable to all the affected parties. These have yet to be developed. The scientific bases for these decisions must be set out in full and all pre-agreed procedures closely followed. In the case of a challenge by the European Parliament or Council, a full review by the other EU institutions and advisory bodies should be mandatory. Provision should also be made for the lodging of objections by individual Member States or by other affected parties. |
| --- | --- |

4.8

A similar point follows regarding the proposed process for amending the Annexes, which essentially serve to increase or decrease the number of products and therefore sites subject to this legislation, by the Commission acting alone by ‘delegated acts’. These will require clearly written guidelines, acceptable to all the affected parties. These have yet to be developed. The scientific bases for these decisions must be set out in full and all pre-agreed procedures closely followed. In the case of a challenge by the European Parliament or Council, a full review by the other EU institutions and advisory bodies should be mandatory. Provision should also be made for the lodging of objections by individual Member States or by other affected parties.

| 4.9 | This is also relevant to the scope of application of the proposal. The Seveso II Directive applies to around 10 000 named establishments across the EU. Of these, around half are also covered by the newly adopted Industrial Emissions Directive, replacing IPPC, which will cover more than 50 000 sites in all. The so-called ‘Seveso establishments’ include chemicals manufacturing, petroleum refining, consumer products and other downstream manufacturing, and some waste processing sites. There seems to be agreement by the competent authorities in the Member States that the existing definitions capture reasonably well the sites at which a major-accident is at all possible. Certainly all major sites are listed. Any increases in the level of the product classifications to meet the requirements of the GHS without any changes to the actual underlying hazards will merely add smaller sites, with ever decreasing actual risks, or increase, with little justification, the number of sites classified as being of higher risk. There are specific concerns in the case of detergent raw materials where, due to changes in definition, a significant number of Lower Tier sites could be added. Given that, according to Commission statistics, as above, the 5 500 Lower Tier establishments account for no more than five to ten reported accidents per year, this does not seem to be a priority area for further regulatory attention. Indeed, for any one Lower Tier Seveso establishment, a reportable accident every 500-1 000 years (or even for a Higher Tier Seveso establishment, one accident every 100-200 years) suggests that greater personal hazards exist at home or are encountered on the way to work – although these of course rarely have a major consequential impact on others or are treated as being as serious by regulators or the public at large. Ensuring that the SMEs responsible know and comply with the law and that the sites are regularly inspected by the competent authorities brings rapidly diminishing returns. In times of reduced budgets and manpower restrictions, this could increase the likelihood of serious accidents occurring elsewhere. |
| --- | --- |

4.9

This is also relevant to the scope of application of the proposal. The Seveso II Directive applies to around 10 000 named establishments across the EU. Of these, around half are also covered by the newly adopted Industrial Emissions Directive, replacing IPPC, which will cover more than 50 000 sites in all. The so-called ‘Seveso establishments’ include chemicals manufacturing, petroleum refining, consumer products and other downstream manufacturing, and some waste processing sites. There seems to be agreement by the competent authorities in the Member States that the existing definitions capture reasonably well the sites at which a major-accident is at all possible. Certainly all major sites are listed. Any increases in the level of the product classifications to meet the requirements of the GHS without any changes to the actual underlying hazards will merely add smaller sites, with ever decreasing actual risks, or increase, with little justification, the number of sites classified as being of higher risk. There are specific concerns in the case of detergent raw materials where, due to changes in definition, a significant number of Lower Tier sites could be added. Given that, according to Commission statistics, as above, the 5 500 Lower Tier establishments account for no more than five to ten reported accidents per year, this does not seem to be a priority area for further regulatory attention. Indeed, for any one Lower Tier Seveso establishment, a reportable accident every 500-1 000 years (or even for a Higher Tier Seveso establishment, one accident every 100-200 years) suggests that greater personal hazards exist at home or are encountered on the way to work – although these of course rarely have a major consequential impact on others or are treated as being as serious by regulators or the public at large. Ensuring that the SMEs responsible know and comply with the law and that the sites are regularly inspected by the competent authorities brings rapidly diminishing returns. In times of reduced budgets and manpower restrictions, this could increase the likelihood of serious accidents occurring elsewhere.

| 4.10 | The EESC therefore strongly requests that the original focus of the Directives on avoiding or minimising the effects of major-accident hazards, as defined, should be maintained. Any decision to water down this effect, merely through the introduction of the new GHS for CLP, or through changes to the local and EU-wide reporting systems, should be strongly resisted. This requires careful consideration of not only the new classification limits but also of the threshold tonnages for products stored. Where this includes goods already packaged in smaller quantities for retail sale, and where there is little likelihood of fire or explosion, the risk of a major-accident as defined is greatly decreased. |
| --- | --- |

4.10

The EESC therefore strongly requests that the original focus of the Directives on avoiding or minimising the effects of major-accident hazards, as defined, should be maintained. Any decision to water down this effect, merely through the introduction of the new GHS for CLP, or through changes to the local and EU-wide reporting systems, should be strongly resisted. This requires careful consideration of not only the new classification limits but also of the threshold tonnages for products stored. Where this includes goods already packaged in smaller quantities for retail sale, and where there is little likelihood of fire or explosion, the risk of a major-accident as defined is greatly decreased.

| 4.11 | The EESC also notes that this proposal specifically and rightly excludes accidents such as the recent off-shore explosion on a drilling rig in the Gulf of Mexico, where new legislation may be required, and, more locally, the ‘red mud’ leak in Hungary which was covered, at least in theory, by the 2006 Mining Waste Directive (MWD). Proper implementation and inspection at national level is of course critical, whatever legislation is in place at EU level. |
| --- | --- |

4.11

The EESC also notes that this proposal specifically and rightly excludes accidents such as the recent off-shore explosion on a drilling rig in the Gulf of Mexico, where new legislation may be required, and, more locally, the ‘red mud’ leak in Hungary which was covered, at least in theory, by the 2006 Mining Waste Directive (MWD). Proper implementation and inspection at national level is of course critical, whatever legislation is in place at EU level.

5.   Specific comments

| 5.1 | The EESC notes that there are reporting requirements for manufacturers and Member States on differing timescales under many of the above-mentioned Directives. Adding to the frequency and depth of reporting under this one heading, without clear evidence of positive effect, adds to the burden of all those concerned. Accumulating data centrally, in Brussels or elsewhere, adds to the problems of maintaining both data quality and of confidentiality where appropriate. |
| --- | --- |

5.1

The EESC notes that there are reporting requirements for manufacturers and Member States on differing timescales under many of the above-mentioned Directives. Adding to the frequency and depth of reporting under this one heading, without clear evidence of positive effect, adds to the burden of all those concerned. Accumulating data centrally, in Brussels or elsewhere, adds to the problems of maintaining both data quality and of confidentiality where appropriate.

| 5.2 | This is also relevant to a new requirement for ‘establishments’ to provide details of their ‘neighbours’ to avoid ‘domino effects’ in adjoining sites which may or may not be covered by this legislation. It is unclear how this can be handled under EU competition law. It is however certainly relevant to the development of plans to respond to local emergencies and in this respect has the full support of the EESC. |
| --- | --- |

5.2

This is also relevant to a new requirement for ‘establishments’ to provide details of their ‘neighbours’ to avoid ‘domino effects’ in adjoining sites which may or may not be covered by this legislation. It is unclear how this can be handled under EU competition law. It is however certainly relevant to the development of plans to respond to local emergencies and in this respect has the full support of the EESC.

| 5.3 | The requirement for operators to draw up reports including evidence for the presence of a ‘safety culture’ follows accidents in the US with respect to the Space Shuttle disaster, and more recently to major-accidents in Texas and the Gulf of Mexico where such a culture was said, in retrospective reports, to be missing. These are however subjective comments which are hard to evaluate or quantify. Providing regular and meaningful assessments in advance would present problems for the competent authorities, as currently staffed, in most Member States. This proposal was therefore rejected at a meeting of safety experts in Ispra in 2010 and it is unclear why it has been reintroduced in the current proposal. |
| --- | --- |

5.3

The requirement for operators to draw up reports including evidence for the presence of a ‘safety culture’ follows accidents in the US with respect to the Space Shuttle disaster, and more recently to major-accidents in Texas and the Gulf of Mexico where such a culture was said, in retrospective reports, to be missing. These are however subjective comments which are hard to evaluate or quantify. Providing regular and meaningful assessments in advance would present problems for the competent authorities, as currently staffed, in most Member States. This proposal was therefore rejected at a meeting of safety experts in Ispra in 2010 and it is unclear why it has been reintroduced in the current proposal.

| 5.4 | Overall the EESC would prefer the reporting requirements to be kept at a realistic, meaningful, comparable and enforceable level across all Member States, with every effort to exchange best practice across borders. The EESC in particular regrets that the ‘lessons learned’ sections of the 745 on-line reports currently available in the eMARS database are typically blank and that the remainder of the ‘tick-boxes’ provide little useful information, despite being offered to the general public, as well as to safety experts, as a key source of relevant data. Some data, for instance on the distribution of accidents between Upper and Lower Tier establishments have apparently not been systematically collected, making it difficult to evaluate the effectiveness of the various components of the legislation and of the actions required at national level. The EESC therefore welcomes actions by the Commission to agree new reporting standards with the Member States and trusts that sufficient resources will be allocated to keep the system fit for its original purpose. |
| --- | --- |

5.4

Overall the EESC would prefer the reporting requirements to be kept at a realistic, meaningful, comparable and enforceable level across all Member States, with every effort to exchange best practice across borders. The EESC in particular regrets that the ‘lessons learned’ sections of the 745 on-line reports currently available in the eMARS database are typically blank and that the remainder of the ‘tick-boxes’ provide little useful information, despite being offered to the general public, as well as to safety experts, as a key source of relevant data. Some data, for instance on the distribution of accidents between Upper and Lower Tier establishments have apparently not been systematically collected, making it difficult to evaluate the effectiveness of the various components of the legislation and of the actions required at national level. The EESC therefore welcomes actions by the Commission to agree new reporting standards with the Member States and trusts that sufficient resources will be allocated to keep the system fit for its original purpose.

| 5.5 | The EESC also questions why the reporting requirements for the two Tiers of operators, defined by the tonnages and hazard classifications of the substances produced, used or stored on site, differ with respect to the need for a Major-Accident Prevention Policy (MAPP) and subsequent Safety Management System (SMS) and safety report. Given that the first (MAPP) has little value without the second (SMS), the EESC believes that this requirement should apply equally to all establishments listed under this Directive. However, the specific requirements for Lower Tier establishments should be more closely adapted to the much reduced risk of a major-accident actually occurring. |
| --- | --- |

5.5

The EESC also questions why the reporting requirements for the two Tiers of operators, defined by the tonnages and hazard classifications of the substances produced, used or stored on site, differ with respect to the need for a Major-Accident Prevention Policy (MAPP) and subsequent Safety Management System (SMS) and safety report. Given that the first (MAPP) has little value without the second (SMS), the EESC believes that this requirement should apply equally to all establishments listed under this Directive. However, the specific requirements for Lower Tier establishments should be more closely adapted to the much reduced risk of a major-accident actually occurring.

| 5.6 | The EESC notes that proposals to supply information to the public have been considerably extended, although it is not always clear why this has been done. ‘Schools and hospitals’ are specifically identified in one paragraph – but it is unclear whether they have been defined for educational purposes, as sites employing or containing large numbers of individuals requiring specific evacuation plans and training, or as key resources in the case of an emergency. This should be clarified so that the appropriate actions can be taken by those concerned. |
| --- | --- |

5.6

The EESC notes that proposals to supply information to the public have been considerably extended, although it is not always clear why this has been done. ‘Schools and hospitals’ are specifically identified in one paragraph – but it is unclear whether they have been defined for educational purposes, as sites employing or containing large numbers of individuals requiring specific evacuation plans and training, or as key resources in the case of an emergency. This should be clarified so that the appropriate actions can be taken by those concerned.

| 5.7 | In all such cases the requirement should be that the information supplied is relevant, comprehensible and timely for a particular purpose. Electronic delivery will serve some sectors of the community but not others. Hard copy information will be required for many years to come. Novel forms of communication such as the use of targeted emails, social networks and even Twitter® could be explored at local level within plans to deal with specific emergencies. |
| --- | --- |

5.7

In all such cases the requirement should be that the information supplied is relevant, comprehensible and timely for a particular purpose. Electronic delivery will serve some sectors of the community but not others. Hard copy information will be required for many years to come. Novel forms of communication such as the use of targeted emails, social networks and even Twitter® could be explored at local level within plans to deal with specific emergencies.

| 5.8 | Finally the Commission includes a new article to ensure ‘environmental justice’, a concept that emerged in the United States in the 1980s, based on the civil rights movement of 20 years earlier, where colour, poverty and lack of civil rights, and therefore an obvious lack of ‘justice’, were closely correlated. The same principles were incorporated in the Aarhus Convention of 1998. A Regulation setting out the obligations of the EU institutions was adopted in 2006. The accompanying Opinion of the EESC published in OJ C 117 p. 52, dated 30 April 2004, supported the proposal but expressed concern over the narrow definition of ‘organisations promoting environmental protection’ where ‘other non-profit organisations, such as trade unions, social economy and socio-occupational organisations, consumer associations, etc., also play an important role in protecting the environment at local, regional, national and European level.’ This point remains valid today, with all the elements of organised civil society quite properly involved in making informed judgements on the issues relevant to this legislation and in ensuring that the health and safety of workers and of the surrounding general public are properly protected in the event of a major-accident actually occurring. According to on-line Commission reports on the implementation of the 2006 Regulation, the rather few recorded information requests have been in support of on-going pan-European campaigns rather than on specific site issues. It is therefore unclear why this particular requirement has been added at this point, rather than, for instance, proposals to exchange, recognise and reward best practice. This is an area where the EU does lag significantly behind the United States and where real gains in process and personal safety could be achieved, in line with the declared objectives of this proposal. |
| --- | --- |

5.8

Finally the Commission includes a new article to ensure ‘environmental justice’, a concept that emerged in the United States in the 1980s, based on the civil rights movement of 20 years earlier, where colour, poverty and lack of civil rights, and therefore an obvious lack of ‘justice’, were closely correlated. The same principles were incorporated in the Aarhus Convention of 1998. A Regulation setting out the obligations of the EU institutions was adopted in 2006. The accompanying Opinion of the EESC published in OJ C 117 p. 52, dated 30 April 2004, supported the proposal but expressed concern over the narrow definition of ‘organisations promoting environmental protection’ where ‘other non-profit organisations, such as trade unions, social economy and socio-occupational organisations, consumer associations, etc., also play an important role in protecting the environment at local, regional, national and European level.’ This point remains valid today, with all the elements of organised civil society quite properly involved in making informed judgements on the issues relevant to this legislation and in ensuring that the health and safety of workers and of the surrounding general public are properly protected in the event of a major-accident actually occurring. According to on-line Commission reports on the implementation of the 2006 Regulation, the rather few recorded information requests have been in support of on-going pan-European campaigns rather than on specific site issues. It is therefore unclear why this particular requirement has been added at this point, rather than, for instance, proposals to exchange, recognise and reward best practice. This is an area where the EU does lag significantly behind the United States and where real gains in process and personal safety could be achieved, in line with the declared objectives of this proposal.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  OJ C 204, 9 August 2008.

1

(2)  http://emars.jrc.ec.europa.eu/.

2

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/144 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/144

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Opportunities and Challenges for European Cinema in the Digital Era’

COM(2010) 487 final

2011/C 248/25

Rapporteur: Mr Mircea Eugen BURADA

On 24 September 2010 the European Commission decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on opportunities and challenges for European cinema in the digital era

COM(2010) 487 final.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 24 May 2011.

At its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), the European Economic and Social Committee adopted the following opinion by 142 votes to 1 with 9 abstentions.

Motto

‘Europe must become a world player, never a subcontractor to globalisation’ (1).

FOREWORD

‘European cinema plays an important role in shaping European identities at the core of the European Agenda for Culture.’ This opening sentence from the Commission communication is a strong declaration of intent, clearly framing the subject from the outset and highlighting its major importance, with the absolute aim of achieving the goal of a united Europe, as imagined by its founders. Culture in all its facets, including cinema in this case, is the most important vector of communication, solidarity, democracy and in particular European cohesion. The real Holy Grail of life, cinema must be protected and considered with keen political and strategic interest. Digital cinema is an opportunity which must not be missed to give the European cinema industry the key role of transcendent communicator of ideas; it is also a unique and thus compulsory opportunity for the EU to equip itself with the tools needed to achieve European cohesion by shaping European identities. However, only art in general and cinema in particular can achieve this imperative. In economic terms, this means money, a huge financial push without which the future of the EU – a veritable 27-storey Tower of Babel – is in serious danger of falling apart because of the sensibilities of each Member State's identity.

1.   Conclusions and recommendations

1.1   The topic under consideration is complex, sensitive, serious and above all political:

| — | complex, because of the cultural plurality of Europe's identities; |
| --- | --- |

—

complex, because of the cultural plurality of Europe's identities;

| — | sensitive, because each Member State, proud of the wealth and variety of its cinematographic heritage, will view this new phase with great caution or even scepticism; |
| --- | --- |

—

sensitive, because each Member State, proud of the wealth and variety of its cinematographic heritage, will view this new phase with great caution or even scepticism;

| — | serious, because there is no real strategy at EU level and no definable results, which in the long term may endanger the EU's efforts to achieve integration by shaping and harmonising European identities; |
| --- | --- |

—

serious, because there is no real strategy at EU level and no definable results, which in the long term may endanger the EU's efforts to achieve integration by shaping and harmonising European identities;

| — | political, because although cinema, the ultimate cultural act, was initially a leisure activity, over time it has taken on new roles: moral support, communicator, historical imprint, subliminal, vector of propaganda, etc. |
| --- | --- |

—

political, because although cinema, the ultimate cultural act, was initially a leisure activity, over time it has taken on new roles: moral support, communicator, historical imprint, subliminal, vector of propaganda, etc.

1.2   The EESC recommends that all decision-makers involved in carrying forward this unique project should approach it with care and avoid the pitfall of comparisons tinged with cultural depression such as the American cinema industry rules the world or audiences prefer Americans. Competition must spur on European digital cinema. The audience wants to be engaged, amazed, convinced and entertained - to be invited into a cinema where they enter with their own ideas and leave with the ideas they have encountered on the screen. This is the key to success; this is why every effort must be made (self-confidence, determination, the ambition to bring people together) to find the means and the funds to ensure the success of this cultural and political engine, which is certainly one of the cornerstones of a united Europe.

1.3   The real digital revolution within European cinema will, via programmes, standards and legislation, shake up the ‘quiet life’ of many players in the sector, imposing on them a new way of working, a new pace of life and above all, a greater budget. It will be a new challenge, but one that brings the risk of closure for many small and medium-sized enterprises, as clearly explained in the Commission text. The EESC calls for and supports all useful EU measures and believes that every effort must be made to preserve small cinemas in rural areas and in large cities, which are so important both for social cohesion and for the ‘art-house’ niche film sector.

1.4   A great, innovative step forward, vital for the future of the EU, a key aspect of European culture, a solid bridge between peoples and cultures in the EU, helping them to meet and learn about each other and, if necessary, to appreciate how to live together with mutual respect and understanding, even admiration, digital cinema heralds a more social, competitive and cheaper life.

1.5   The EESC is in favour of establishing a specific, clear and stable legal framework at EU level. The Member States should specifically manage the campaign to draw back to the cinema the millions of cinemagoers who have given up on it. We must face up to one key fact: these days, watching a film at the cinema has become a luxury while watching a DVD on home cinema (with plasma screen of course) is a daily event.

1.6   It is important to approach this issue with the clear notion that ICT (new technologies, real-time information and direct communication without linguistic borders) brings a huge advantage when it comes to spreading Europe's diversity of cultural and creative values, without obstacles and as cheaply as possible. At the same time, it offers enhanced accessibility to people who are visually or hearing impaired.

1.7   However, nothing stable or sustainable can be achieved if the EU does not make available the financial resources needed to implement and properly support this unique multicultural project. Poor management of the programme will certainly result in costs which will be difficult to bear for small cinemas, some categories of employees in this field and particularly audiences, our target. Bearing in mind that there can be no ‘one-size-fits-all’ public support approach for each country and region in Europe, the EESC stresses the need for sufficient funding for the digitisation of small cinemas, specifically those in rural areas, as well as those in large cities. Structural Funds should be used, appropriate national co-funding secured and the Media Production Guarantee Fund should be made more accessible to exhibitors as a priority. Nevertheless, there can be no ‘one-size-fits-all’ public support approach for each country and region in Europe, and every country and region in Europe must be free to operate a scheme which works well in the prevailing markets.

1.8   It is recommended that film archives – whether documentaries, archive footage or classic films – be digitised so that future generations are not deprived of the treasures of European cinema, and to ensure that these resources can be accessed easily when the inevitable switch to digital technology occurs in the coming years.

1.9   The Communication concentrates narrowly on the digitisation of cinemas rather than more generally on European cinema and on audiovisual policy in a digital world. Digitisation is a far more complex phenomenon than the mere substitution of equipment. A more integrated approach that takes in cultural concerns and objectives – creativity – along with the technological/industrial will be required to make European cinema a key strategic component of the Digital Agenda for Europe. Access to digital film, be it for entertainment or information, should be a part of the Digital Agenda for Europe.

2.   Introduction

2.1   Digital cinema refers to the way a film is distributed and projected in cinemas, using digital technology. Digital technology comprises: digital recording, digital post-production, Digital Cinema Distribution Master (DCDM), digital projection of films (DCI) – this can be done using two definition levels: 2K and 4K. The digital cinema system must provide the highest fidelity pictures and sound.

2.2   The digital distribution of films brings massive savings to film distributors. Eighty minutes distributed on traditional film costs between USD 1 500 and USD 2 500. When millions of copies are made, this adds up to an astronomical sum. In digital format at a maximum of 250 MB per second, a standard film can be stored on a hard disk of only 300 GB for a much lower cost – not to mention the fact that the less voluminous digital medium is easy to handle, store and transport, and is also reusable (source: Wikipedia).

2.3   Digital distribution (digital cinema) would not exist without film production, which has lagged behind when it comes to retrofitting digital film equipment. A particular financial effort is needed to close the gap and make swift progress in the face of competition.

Today's situation is somewhat odd, in that we are preparing to create a digital cinema network while most film producers still use celluloid as the medium for distributing films.

The same applies to the 3D field where distributors or operators often charge European cinemagoers several euros more per ticket to view some pale imitation of lower quality than the digital norm. As long as the digital master is not filmed digitally, there can be no real digital projection. For example, the film Avatar was filmed in 3D, which is why it was such a hit with millions of cinemagoers.

3.   Prerequisites

3.1   The communication takes into account various key concepts that will promote a common cultural area in the EU. The digitisation process must therefore take place as follows, with the necessary financial support.

3.1.1   European Agenda for Culture: involved at the highest level when it comes to promoting European cinema, shaping European identities and bringing European cultures closer together.

3.1.2   Digital Agenda for Europe: one of the seven flagship initiatives of the Europe 2020 strategy for smart, sustainable and inclusive growth, in a digital Single Market.

3.1.3   The single market is a hub that, despite all its difficulties, makes it possible for cultural content, social relations and commercial services to flow across Europe's borders, enabling European citizens to fully enjoy the benefits of the digital era through the creation of a digital Single Market.

3.1.4   The Unesco convention ratified by the EU in 2006 calls for the diversity of cultural expression to be protected and promoted. This is key when identifying the essential actions to be carried out, an objective that the EU must meet when it comes to the digitisation of cinemas.

3.1.5   Green Paper - Unlocking the potential of cultural and creative industries. In addition to their direct contribution to GDP, creative and cultural industries are also important drivers of economic and social innovation in many other sectors.

3.1.6   Media 2007 is a vast programme, which also comprises a training scheme strand for European audiovisual professionals. It aims to help people in the field adapt to the European and international dimension of the audiovisual market, promoting vocational training and the use of new technologies.

3.1.7   Funding for the digitisation of cinema theatres, mainly those in rural areas, is lacking and needs to be provided using Structural Funds, appropriate national co-funding and by making the Media Production Guarantee Fund more accessible to exhibitors.

4.   Analysis of the situation

4.1   The digital revolution raises political issues at regional, national and European levels:

| — | competitiveness and circulation of European works; |
| --- | --- |

—

competitiveness and circulation of European works;

| — | pluralism and linguistic and cultural diversity. |
| --- | --- |

—

pluralism and linguistic and cultural diversity.

These problems must be analysed and resolved fairly and uniformly among all stakeholders in the EU.

4.2   With regard to the aid granted by government authorities in the Member States, support measures have until now been reserved for the creation and production of films. The EESC considers this to be commendable and indeed necessary for the promotion of cinema culture in the Member States, provided that it carries over into digital production.

4.3   The communication also highlights the need to provide additional funds for both digital masters and digital screens so that films can be distributed and viewed by a wide audience, provided that funding is provided to re-train those who have lost their job as a result of the retrofitting.

4.4   The text raises the issue of the wide scale involvement of film distributors and exhibitors, which is essential in order to guarantee the circulation of European works and the diversity of European cinema. The fact that the distributor is also the producer of the film is not cause for concern provided that the ticket price is not exorbitant. Their entrepreneurial mindset must be used to benefit national and EU digital cinema.

4.5   In spring 2008, the European Commission and the Member States embarked on a long-term initiative when they set up an experts' group on digital cinema. The discussions highlighted the need for an alternative to the existing VPF (Virtual Print Fee) model, stressing the need for EU and national public support in order to achieve digitisation.

4.6   ‘Intermediate investors’ advance the funds for all the digital equipment required by digital cinemas. From the time that the film is first screened, the distributor must repay the cost – via the VPF – which serves to pay for the digital equipment.

4.7   The communication gives some examples of funding, indicating that the digital juggernaut has started to move, but we do not have a clear picture of its speed, efficiency, the stability of its equipment or, above all, the scope of the broad digital cinema network, one of the pillars of the European venture to guarantee smart, sustainable, inclusive growth.

4.8   The public consultation launched by the Commission on 16 October 2009 on the opportunities and challenges for European cinema in the digital area met with over 300 replies from exhibitors, distributors, producers, sales agents, film agencies, professional agencies and digital service companies.

4.9   The EESC believes that, if the venture is to be a success, this ongoing monitoring process must be in line with the broad patchwork of European cultural content.

4.10   Over the years, the cinema has met with a host of challenges (silent movies, the Technicolor system, Dolby Sound, etc.), but the digital revolution is the biggest yet.

4.11   The EESC emphasises that digitisation also poses serious technical and financial challenges of storage, long-term preservation and access that not addressed in the Communication. There is no long-term plan for digital storage and no proven long term way to store digital content for later retrieval. Digital storage media has a shorter lifespan than film, the costs involved are much higher and digital content will be geometrically increasing. Parallel concerns of access, originality and authenticity are also raised.

4.12   The EESC recommends that these challenges be addressed by industry-wide cooperation involving all stakeholders to create appropriate storage and archiving systems, establish unified standards and decide on steady and reliable funding. Recommendations for a coherent digital storage/archiving framework include guaranteed access for 100 years; immunity from extended periods of neglect and financial hardship; ability to create duplicate copies to meet future distribution needs; picture/sound quality which meets or exceeds that of original; and safeguard against dependence on shifting technology platforms.

4.13   The communication points out the advantage of digital distribution: it ensures the survival of film archives and the subsequent wide scale distribution of classics that would otherwise risk being forgotten, due to outdated technology.

4.14   Another advantage is the lower production and post-production costs. A digital source master (DSM) can be used in many fields, including cinema, VOD, DVD and digital television.

4.15   Digital distribution also offers another great benefit: it makes it easier to cross physical, cultural and, above all, linguistic borders by simply presenting the original film translated in the language of the country in which it will be shown. There are increasing numbers of DVDs with subtitles in several languages.

4.16   This digital procedure enables the director to control, up until the last minute, the quality of the digital master, including the picture, special effects, brightness, music and sound effects.

4.17   The EESC welcomes the European Commission's efforts to encourage the Member States that support their national cinema industry to make the most of the advantages of digital distribution and, by taking part in this digital revolution, to meet the challenge of securing the future of digital cinema and making cultural diversity accessible to Europe's citizens.

4.18   The EESC underlines the potential for employment as well as the specificity of employment in the sector. Investing now in human resources is key to a successful digital cinema roll-out in Europe that will take into the future the quality and the specificity of European film-making. It is also important to reduce as much as possible (e.g. through appropriate training and replacement measures) the social cost connected to the digital transition, such as staff redundancy for projectionists and/or in cinema labs.

4.19   Article 3(1)(c) of the Media 2007 decision provides for vocational training that will include, upstream, digital technologies for production, post-production, distribution, marketing and archiving of European audiovisual programmes. The Media 2007 programme should be reviewed and enlarged to prioritise and meet new requirements beyond those already identified.

4.20   The programme also supports the other main aspect of digital cinema: distribution and dissemination (Article 5).

4.21   Another source of funding comes from State aid, in accordance with Article 107(3)(d) of the Treaty on the Functioning of the EU, the examples of which are numerous, as understood from the context.

4.22   Standardisation: in 2002, six major American studios established a specific technical language for digital cinema: the Digital Cinema Initiative (DCI).

4.23   In 2005, the Society of Motion Picture and Television Engineers (SMPTE) published the DCI specification, turning it into a standard of digital cinema which today has been adopted as an international standard by the International Organization for Standardization (ISO), Geneva. In 2011, the Commission put forward a much-anticipated recommendation on promoting specific EU standards for European digital cinema.

4.24   In Europe, compared to the USA, the percentage of film productions shot or post-produced digitally is worryingly low, meaning that we are lagging far behind our competitor. One example speaks volumes: of all the digital films projected in France (30 films in 2007 and 50 in 2008), 35 were North-American productions, 10 were European and 5 were produced independently.

4.25   Forging ahead with the development of digital cinemas without also supporting European digital film production would equate to hamstringing European cinematic creativity and capitulating in the face of foreign digital production.

4.26   Should this vast European programme fail, digital cinema would simply mark the death of the idea of European cohesion based on shaping EU multicultural content.

4.27   Moral: Digital cinema in Europe has a lot of catching up to do.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Meeting of 6 January 2011 between EESC president Staffan NILSSON and Commissioner Michel BARNIER.

1

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/149 |
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25.8.2011

EN

Official Journal of the European Union

C 248/149

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Reform of the EU State aid Rules on Services of General Economic Interest’

COM(2011) 146 final

2011/C 248/26

Rapporteur-General: Mr Raymond HENCKS

On 23 March 2011 the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Reform of the EU State Aid Rules on Services of General Economic Interest

COM(2011) 146 final.

On 3 May 2011 the Committee Bureau instructed the Section for Transport, Energy, Infrastructure and the Information Society to prepare the Committee's work on the subject.

Given the urgent nature of the work (Rule 59 of the Rules of Procedure), the European Economic and Social Committee appointed Mr HENCKS as rapporteur-general at its 472nd plenary session, held on 15 and 16 June 2011 (meeting of 15 June), and adopted the following opinion by 136 votes to 6, with 16 abstentions.

1.   Recommendations

| 1.1 | The EESC is pleased that, as part of its dialogue with stakeholders, the Commission has begun to discuss reviewing and clarifying the rules governing the financing of services of general economic interest. |
| --- | --- |

1.1

The EESC is pleased that, as part of its dialogue with stakeholders, the Commission has begun to discuss reviewing and clarifying the rules governing the financing of services of general economic interest.

| 1.2 | The EESC fully supports a new, more diversified and proportionate approach to the different types of public service and agrees with the notification exemption for small-scale public services and certain social services. |
| --- | --- |

1.2

The EESC fully supports a new, more diversified and proportionate approach to the different types of public service and agrees with the notification exemption for small-scale public services and certain social services.

| 1.3 | In this regard, the EESC urges the Commission to clarify, for each of the methods for financing compensation for public service obligations, whether they come under the Altmark criteria and in consequence are not subject to the ‘State aid’ rules. |
| --- | --- |

1.3

In this regard, the EESC urges the Commission to clarify, for each of the methods for financing compensation for public service obligations, whether they come under the Altmark criteria and in consequence are not subject to the ‘State aid’ rules.

| 1.4 | With a view to no longer having to depend on an exclusive case-by-case approach, whether legislative or judicial, the Commission's intention to clarify the distinction between services of general economic interest (SGEI) and non-economic services of general interest is to be welcomed. It should however be understood that the EESC remains convinced that, in view of the difficulty of defining the concept of economic/non-economic services of general interest, the focus should be placed not on their economic or non-economic nature, but rather on the particular tasks of the services concerned and on the public service obligations. |
| --- | --- |

1.4

With a view to no longer having to depend on an exclusive case-by-case approach, whether legislative or judicial, the Commission's intention to clarify the distinction between services of general economic interest (SGEI) and non-economic services of general interest is to be welcomed. It should however be understood that the EESC remains convinced that, in view of the difficulty of defining the concept of economic/non-economic services of general interest, the focus should be placed not on their economic or non-economic nature, but rather on the particular tasks of the services concerned and on the public service obligations.

| 1.5 | The EESC therefore considers that, in this context, the rules on compensation for public service obligations in connection with state aid could be more democratic for the tens of thousands of public authorities who will have to implement them if they were subject to the application of the ordinary legislative procedure under Article 14, providing this complies with the Treaty. |
| --- | --- |

1.5

The EESC therefore considers that, in this context, the rules on compensation for public service obligations in connection with state aid could be more democratic for the tens of thousands of public authorities who will have to implement them if they were subject to the application of the ordinary legislative procedure under Article 14, providing this complies with the Treaty.

| 1.6 | While the call to the Member States to gives greater weight to considerations of efficiency is highly laudable, it must not however focus on economic criteria alone, but also take account of the social, territorial and environmental aspects and consider criteria such as quality, results and sustainability. |
| --- | --- |

1.6

While the call to the Member States to gives greater weight to considerations of efficiency is highly laudable, it must not however focus on economic criteria alone, but also take account of the social, territorial and environmental aspects and consider criteria such as quality, results and sustainability.

| 1.7 | Indeed, the EESC is concerned that introducing the efficiency concept might amount to bringing the assessment criteria of the decision and the framework into line with the fourth criterion of the Altmark judgment. This could apply to all compensation, including that paid for public services which are exempt from notification. |
| --- | --- |

1.7

Indeed, the EESC is concerned that introducing the efficiency concept might amount to bringing the assessment criteria of the decision and the framework into line with the fourth criterion of the Altmark judgment. This could apply to all compensation, including that paid for public services which are exempt from notification.

| 1.8 | With regard to the Commission's intention to clarify the limits imposed on Member States when defining an activity as an SGEI, the EESC points out that for years it has been calling for clarification of the implementing conditions of Article 106(2), which is subject to divergent interpretations. |
| --- | --- |

1.8

With regard to the Commission's intention to clarify the limits imposed on Member States when defining an activity as an SGEI, the EESC points out that for years it has been calling for clarification of the implementing conditions of Article 106(2), which is subject to divergent interpretations.

2.   Introduction

| 2.1 | A diverse patchwork of public financial aids exists across the various Member States, ranging from State aids for employment, training, investment, research, environmental protection, small and medium-sized enterprises, rescue and restructuring of companies in trouble, families, individuals experiencing difficulties, right through to services of general interest (SGI). |
| --- | --- |

2.1

A diverse patchwork of public financial aids exists across the various Member States, ranging from State aids for employment, training, investment, research, environmental protection, small and medium-sized enterprises, rescue and restructuring of companies in trouble, families, individuals experiencing difficulties, right through to services of general interest (SGI).

| 2.2 | With regard to the rules governing competition and the internal market, the Treaty on the Functioning of the European Union considers State aid to be an advantage, of any form whatsoever, selectively granted to one or more undertaking by the national authorities. |
| --- | --- |

2.2

With regard to the rules governing competition and the internal market, the Treaty on the Functioning of the European Union considers State aid to be an advantage, of any form whatsoever, selectively granted to one or more undertaking by the national authorities.

| 2.3 | State aid is only considered as such if it meets all the following criteria:






  — | it entails a transfer of public resources by national, regional or local authorities, either directly or indirectly through a public or private body, of whatever form (aids, subsidies, loan guarantees, inputs of capital, other contributions, etc.); |
| --- | --- | --- |

2.3

State aid is only considered as such if it meets all the following criteria:

—

it entails a transfer of public resources by national, regional or local authorities, either directly or indirectly through a public or private body, of whatever form (aids, subsidies, loan guarantees, inputs of capital, other contributions, etc.);

| — | it does not fall within the scope of general measures, but remains selective and is discriminatory with regard to other undertakings or bodies; |
| --- | --- |

—

it does not fall within the scope of general measures, but remains selective and is discriminatory with regard to other undertakings or bodies;

| — | provides the recipient (private undertaking or public body, non-profit or otherwise) with an economic advantage that it would not have received in the normal scope of its economic activities; |
| --- | --- |

—

provides the recipient (private undertaking or public body, non-profit or otherwise) with an economic advantage that it would not have received in the normal scope of its economic activities;

| — | it has a potential effect on competition and trade between Member States. |
| --- | --- |

—

it has a potential effect on competition and trade between Member States.

| 2.4 | The State aids indicated above are, in principle, forbidden by the Treaty (TFEU Articles 107 and 108); some of them are nevertheless allowed when justified by objectives of common interest (services of general interest, social and regional cohesion, employment, research and development, sustainable development, promotion of cultural diversity, etc.) and in order to correct market failures, provided that they do not distort competition to an extent contrary to the EU interest. |
| --- | --- |

2.4

The State aids indicated above are, in principle, forbidden by the Treaty (TFEU Articles 107 and 108); some of them are nevertheless allowed when justified by objectives of common interest (services of general interest, social and regional cohesion, employment, research and development, sustainable development, promotion of cultural diversity, etc.) and in order to correct market failures, provided that they do not distort competition to an extent contrary to the EU interest.

| 2.5 | The possibility left to the Member States of allocating State aid has been hedged in by a series of legislative acts and a rich and developing body of European Court of Justice case-law, which have put in place strict rules for Member States wishing to introduce provisions of this kind. |
| --- | --- |

2.5

The possibility left to the Member States of allocating State aid has been hedged in by a series of legislative acts and a rich and developing body of European Court of Justice case-law, which have put in place strict rules for Member States wishing to introduce provisions of this kind.

| 2.6 | As a general rule, therefore, the Member States must, subject to certain exceptions (de minimis aid, aid below a given threshold, aid for specific sectors), follow a procedure for notifying the Commission of the aid they intend to grant. The aid can only be applied following official approval from the Commission. |
| --- | --- |

2.6

As a general rule, therefore, the Member States must, subject to certain exceptions (de minimis aid, aid below a given threshold, aid for specific sectors), follow a procedure for notifying the Commission of the aid they intend to grant. The aid can only be applied following official approval from the Commission.

| 2.7 | The Commission alone is empowered to judge whether State aid is compatible with the Treaty (although appeals may be lodged with the European Court of Justice), and consequently holds substantial powers to investigate, decide and impose penalties. |
| --- | --- |

2.7

The Commission alone is empowered to judge whether State aid is compatible with the Treaty (although appeals may be lodged with the European Court of Justice), and consequently holds substantial powers to investigate, decide and impose penalties.

| 2.8 | Non-economic services of general interest are not affected by legislation on State aids. |
| --- | --- |

2.8

Non-economic services of general interest are not affected by legislation on State aids.

| 2.9 | The question that arises for the public authorities regarding SGEI is to know if compensation for a public service obligation constitutes State aid that is compatible with the Treaty under the competition and internal market rules. |
| --- | --- |

2.9

The question that arises for the public authorities regarding SGEI is to know if compensation for a public service obligation constitutes State aid that is compatible with the Treaty under the competition and internal market rules.

| 2.10 | According to a judgment of the European Court of Justice (Case C-280/00 Altmark Trans GmbH), there is no State aid for a SGEI when the following conditions are met:






  1. | the public service obligations have been clearly defined; |
| --- | --- | --- |

2.10

According to a judgment of the European Court of Justice (Case C-280/00 Altmark Trans GmbH), there is no State aid for a SGEI when the following conditions are met:

1.

the public service obligations have been clearly defined;

| 2. | the parameters used to calculate the compensation have been established beforehand; |
| --- | --- |

2.

the parameters used to calculate the compensation have been established beforehand;

| 3. | compensation for the public service merely covers costs and a reasonable profit; |
| --- | --- |

3.

compensation for the public service merely covers costs and a reasonable profit;

| 4. | either the undertaking is chosen by a public procurement procedure allowing for the selection of the tenderer capable of providing those services at the least cost to the community, or the compensation is determined on the basis of an analysis of the costs of an average ‘well-run’ and adequately provided undertaking in the sector concerned. |
| --- | --- |

4.

either the undertaking is chosen by a public procurement procedure allowing for the selection of the tenderer capable of providing those services at the least cost to the community, or the compensation is determined on the basis of an analysis of the costs of an average ‘well-run’ and adequately provided undertaking in the sector concerned.

| 2.11 | Following the Altmark judgment, the Commission realised that few instances of compensation met these four conditions, and that in consequence all other compensation fell within the scope of ‘State aids’. It subsequently adopted the Monti-Kroes package, which specifies:






  1. | with a decision, what constitutes State aid, but for which notification is not however required (Decision 2005/842/EC on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest); |
| --- | --- | --- |

2.11

Following the Altmark judgment, the Commission realised that few instances of compensation met these four conditions, and that in consequence all other compensation fell within the scope of ‘State aids’. It subsequently adopted the Monti-Kroes package, which specifies:

1.

with a decision, what constitutes State aid, but for which notification is not however required (Decision 2005/842/EC on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest);

| 2. | and with a framework, the methods for assessing notified cases (Community framework 2005/C/297/4 for State aid in the form of public service compensation); |
| --- | --- |

2.

and with a framework, the methods for assessing notified cases (Community framework 2005/C/297/4 for State aid in the form of public service compensation);

| 3. | a new approach to the fourth Altmark criterion, under which the compensation is calculated on the basis of the additional costs generated by the particular tasks and not by comparison with an average well-run and adequately provided undertaking. |
| --- | --- |

3.

a new approach to the fourth Altmark criterion, under which the compensation is calculated on the basis of the additional costs generated by the particular tasks and not by comparison with an average well-run and adequately provided undertaking.

| 2.12 | This framework, which sets out to establish the rules and principles determining the conditions under which compensation for public service is compatible with the ‘common market’, on the basis of TFEU Article 106(2), will expire in November 2011. |
| --- | --- |

2.12

This framework, which sets out to establish the rules and principles determining the conditions under which compensation for public service is compatible with the ‘common market’, on the basis of TFEU Article 106(2), will expire in November 2011.

| 2.13 | Since, moreover, both the framework and the decision provide for an evaluation of the rules laid down by them, the Commission has commenced a review of the Monti-Kroes package. More specifically, in 2008/2009 it called on the Member States to submit a report on the application of the current package, and in 2010 it launched a public consultation on the question. |
| --- | --- |

2.13

Since, moreover, both the framework and the decision provide for an evaluation of the rules laid down by them, the Commission has commenced a review of the Monti-Kroes package. More specifically, in 2008/2009 it called on the Member States to submit a report on the application of the current package, and in 2010 it launched a public consultation on the question.

| 2.14 | On the basis of these two actions, the Commission has drawn up some general guidelines set out in the present communication. The aim is to open a preliminary discussion with the European institutions and other stakeholders by this coming July, prior to drawing up new draft texts. |
| --- | --- |

2.14

On the basis of these two actions, the Commission has drawn up some general guidelines set out in the present communication. The aim is to open a preliminary discussion with the European institutions and other stakeholders by this coming July, prior to drawing up new draft texts.

3.   Content of the communication

| 3.1 | With a view to the objective of drawing up clearer, simpler and more proportionate instruments, the communication sets out to:






  — | clarify






  — | the distinction between economic and non-economic activities, |
| --- | --- | --- | --- |

3.1

With a view to the objective of drawing up clearer, simpler and more proportionate instruments, the communication sets out to:

—

clarify

—

the distinction between economic and non-economic activities,

| — | the limits imposed on Member States under State aid rules when defining an economic activity as an SGEI, |
| --- | --- |

—

the limits imposed on Member States under State aid rules when defining an economic activity as an SGEI,

| — | their provision at the least cost , |
| --- | --- |

—

their provision at the least cost ,

| — | their interplay with sector-specific SGEI rules; |
| --- | --- |

—

their interplay with sector-specific SGEI rules;

| — | adopt a more diversified and proportionate approach to the different types of public services; |
| --- | --- |

—

adopt a more diversified and proportionate approach to the different types of public services;

| — | simplify the application of the rules for certain types of small-scale public services of a local nature with a limited impact on trade between Member States, and for certain types of social services; |
| --- | --- |

—

simplify the application of the rules for certain types of small-scale public services of a local nature with a limited impact on trade between Member States, and for certain types of social services;

| — | give greater weight to considerations of efficiency and competition regarding large-scale commercial services with a clear EU-wide dimension. |
| --- | --- |

—

give greater weight to considerations of efficiency and competition regarding large-scale commercial services with a clear EU-wide dimension.

4.   General comments

| 4.1 | The EESC backs the Member States and other direct stakeholders who have, either in the report on the application of the existing Monti-Kroes package, or during the public consultation on the question, called for the rules governing State aid applicable to SGEI to be reviewed, in order to remove legal uncertainties and strike a more harmonious balance between economic, social and environmental interests. |
| --- | --- |

4.1

The EESC backs the Member States and other direct stakeholders who have, either in the report on the application of the existing Monti-Kroes package, or during the public consultation on the question, called for the rules governing State aid applicable to SGEI to be reviewed, in order to remove legal uncertainties and strike a more harmonious balance between economic, social and environmental interests.

| 4.2 | The EESC fully supports a more diversified and proportionate approach to the different types of public service, that also seeks to clarify the financing rules. Similarly, it welcomes the exemption from notification for small-scale public services and certain social services which, however, are still to be defined. It is particularly important that existing exemptions in certain areas (i.e. employment of vulnerable groups such as people with disabilities) are maintained. |
| --- | --- |

4.2

The EESC fully supports a more diversified and proportionate approach to the different types of public service, that also seeks to clarify the financing rules. Similarly, it welcomes the exemption from notification for small-scale public services and certain social services which, however, are still to be defined. It is particularly important that existing exemptions in certain areas (i.e. employment of vulnerable groups such as people with disabilities) are maintained.

| 4.3 | The EESC wonders, in this regard, why the Commission has limited the notification exemption for small-scale services to those of a local nature: the condition of not affecting trade between Member States should be enough at local, regional and even national level. |
| --- | --- |

4.3

The EESC wonders, in this regard, why the Commission has limited the notification exemption for small-scale services to those of a local nature: the condition of not affecting trade between Member States should be enough at local, regional and even national level.

| 4.4 | According to the communication, the review of the package fits into the Commission's wider objectives in the field of public services, and in particular of its Communication Towards a Single Market Act, as well as the EU 2020 strategy. |
| --- | --- |

4.4

According to the communication, the review of the package fits into the Commission's wider objectives in the field of public services, and in particular of its Communication Towards a Single Market Act, as well as the EU 2020 strategy.

| 4.5 | In this context, the EESC recalls that, in its opinion on the Single Market Act (INT/548 of 15.3.2011), it maintained that ‘the aim of the Communication and other measures on public services should be to support Member States develop and improve their public services in line with the SGI protocol’. |
| --- | --- |

4.5

In this context, the EESC recalls that, in its opinion on the Single Market Act (INT/548 of 15.3.2011), it maintained that ‘the aim of the Communication and other measures on public services should be to support Member States develop and improve their public services in line with the SGI protocol’.

| 4.6 | The EESC therefore urges the Commission to clarify, for each of the methods for financing compensation for public service obligations, whether they come under the Altmark criteria and in consequence do not come under ‘State aid’. Currently there is a residual lack of awareness about the notification procedures and the various exemptions. This results in a reduced market, as organisations reliant on compensation to provide an effective service are unable to compete, directly impacting the lives of EU citizens who are deprived of quality and accessible services. |
| --- | --- |

4.6

The EESC therefore urges the Commission to clarify, for each of the methods for financing compensation for public service obligations, whether they come under the Altmark criteria and in consequence do not come under ‘State aid’. Currently there is a residual lack of awareness about the notification procedures and the various exemptions. This results in a reduced market, as organisations reliant on compensation to provide an effective service are unable to compete, directly impacting the lives of EU citizens who are deprived of quality and accessible services.

| 4.7 | In the EESC's view, the fact that a distinction between economic and non-economic services is mentioned in the SGI protocol – without however resolving the problem of how to distinguish between them – points clearly to the need to clarify the concepts and arrangements in question, including the role of non-profit organisations and the concept of a ‘reasonable profit’, so as no longer to have to depend on an exclusive case-by-case approach, whether legislative or judicial. Due to dual social and competition policy objectives there is a need for a clearer concept of ‘reasonable profit’. Therefore it would be more helpful if the European level could provide regulatory guidance and interpretation on relevant considerations. |
| --- | --- |

4.7

In the EESC's view, the fact that a distinction between economic and non-economic services is mentioned in the SGI protocol – without however resolving the problem of how to distinguish between them – points clearly to the need to clarify the concepts and arrangements in question, including the role of non-profit organisations and the concept of a ‘reasonable profit’, so as no longer to have to depend on an exclusive case-by-case approach, whether legislative or judicial. Due to dual social and competition policy objectives there is a need for a clearer concept of ‘reasonable profit’. Therefore it would be more helpful if the European level could provide regulatory guidance and interpretation on relevant considerations.

| 4.8 | The Commission's intention to clarify the distinction between SGEIs and non-economic services of general interest is therefore to be welcomed. As the EESC pointed out earlier in its opinion on The future of services of general interest (CESE 976/2006), the distinction between economic and non-economic services remains vague and uncertain. |
| --- | --- |

4.8

The Commission's intention to clarify the distinction between SGEIs and non-economic services of general interest is therefore to be welcomed. As the EESC pointed out earlier in its opinion on The future of services of general interest (CESE 976/2006), the distinction between economic and non-economic services remains vague and uncertain.

| 4.9 | The EESC remains convinced that in view, firstly, of the difficulty of defining the concept of economic/non-economic services of general interest exhaustively and, secondly, of the risk involved in a restrictive approach, the focus should be placed not on their economic or non-economic nature, but rather on the particular tasks of the services concerned and on the requirements (public service obligations) imposed upon them by a public authority in order to fulfil their mission and which must be clearly established. |
| --- | --- |

4.9

The EESC remains convinced that in view, firstly, of the difficulty of defining the concept of economic/non-economic services of general interest exhaustively and, secondly, of the risk involved in a restrictive approach, the focus should be placed not on their economic or non-economic nature, but rather on the particular tasks of the services concerned and on the requirements (public service obligations) imposed upon them by a public authority in order to fulfil their mission and which must be clearly established.

| 4.10 | With the SGI protocol, the Lisbon Treaty introduced a guide to the rules governing SGI, both economic and non-economic, but in Article 14 it also introduced a new legal basis for services of general economic interest, handing the Council and the European Parliament the responsibility for establishing the principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions, by means of regulations in accordance with the ordinary legislative procedure. |
| --- | --- |

4.10

With the SGI protocol, the Lisbon Treaty introduced a guide to the rules governing SGI, both economic and non-economic, but in Article 14 it also introduced a new legal basis for services of general economic interest, handing the Council and the European Parliament the responsibility for establishing the principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions, by means of regulations in accordance with the ordinary legislative procedure.

| 4.11 | The EESC therefore considers that, in this context, the rules on compensation for public service obligations in connection with state aid could be more democratic for the tens of thousands of public authorities who will have to implement them if they were subject to the application of the ordinary legislative procedure under Article 14, providing this complies with the Treaty. |
| --- | --- |

4.11

The EESC therefore considers that, in this context, the rules on compensation for public service obligations in connection with state aid could be more democratic for the tens of thousands of public authorities who will have to implement them if they were subject to the application of the ordinary legislative procedure under Article 14, providing this complies with the Treaty.

| 4.12 | The EESC endorses the Commission's intention to urge the Member States to give greater weight to considerations of efficiency. The Commission should not focus on economic criteria alone, but should take account of the social, territorial and environmental aspects, regarding the particular tasks of each SGEI that have been defined by the public authorities. The Commission should not restrict ‘efficiency’ criteria to short-term considerations but also consider the quality, results and sustainability of services, especially when providing social and health care services. In addition, the specificities of social economy enterprises (cooperatives, mutualities, associations and foundations) should also be taken into account. |
| --- | --- |

4.12

The EESC endorses the Commission's intention to urge the Member States to give greater weight to considerations of efficiency. The Commission should not focus on economic criteria alone, but should take account of the social, territorial and environmental aspects, regarding the particular tasks of each SGEI that have been defined by the public authorities. The Commission should not restrict ‘efficiency’ criteria to short-term considerations but also consider the quality, results and sustainability of services, especially when providing social and health care services. In addition, the specificities of social economy enterprises (cooperatives, mutualities, associations and foundations) should also be taken into account.

| 4.13 | A large proportion of services of general interest such as social or health services are therefore characterised by an asymmetric relation between providers and recipients, unlike a commercial relation of the supplier-consumer type. Services of general interest often provide individually-determined solutions reflecting the specific features of the situation and users' needs; they can only operate in accordance with the principle of solidarity and are highly dependent on public funding. The EESC would like to call on the Commission to launch a consultation to review which public services in the area of SSGI may qualify for block exemption since they do not significantly affect competition or offer cross-border opportunities. |
| --- | --- |

4.13

A large proportion of services of general interest such as social or health services are therefore characterised by an asymmetric relation between providers and recipients, unlike a commercial relation of the supplier-consumer type. Services of general interest often provide individually-determined solutions reflecting the specific features of the situation and users' needs; they can only operate in accordance with the principle of solidarity and are highly dependent on public funding. The EESC would like to call on the Commission to launch a consultation to review which public services in the area of SSGI may qualify for block exemption since they do not significantly affect competition or offer cross-border opportunities.

| 4.14 | With the efficiency criterion, the evaluation criteria of the decision and the framework would effectively be brought into line with the fourth criterion of the Altmark judgment. Moreover, this could be applied to all compensation, including compensation paid for small-scale public services provided at local level and with a limited impact on trade between Member States, and for certain social services of general interest, that the Commission nevertheless wishes to exempt from notification and consider as compatible with the internal market. This means in effect that these services remain subject to ex post control, or to further legal uncertainty. |
| --- | --- |

4.14

With the efficiency criterion, the evaluation criteria of the decision and the framework would effectively be brought into line with the fourth criterion of the Altmark judgment. Moreover, this could be applied to all compensation, including compensation paid for small-scale public services provided at local level and with a limited impact on trade between Member States, and for certain social services of general interest, that the Commission nevertheless wishes to exempt from notification and consider as compatible with the internal market. This means in effect that these services remain subject to ex post control, or to further legal uncertainty.

| 4.15 | Similar uncertainty also affects the Commission's self-attributed competence to evaluate efficiency, whereas the court, in the M6/TF1 case (T-568/08 and T-573/08), does not allow it this competence. |
| --- | --- |

4.15

Similar uncertainty also affects the Commission's self-attributed competence to evaluate efficiency, whereas the court, in the M6/TF1 case (T-568/08 and T-573/08), does not allow it this competence.

| 4.16 | With regard to the Commission's intention to clarify the limits imposed on Member States when defining an activity as an SGEI, the EESC has been calling for years for clarification of the implementing conditions of Article 106(2): this is subject to divergent interpretations insofar as, on the one hand, it is presented as a derogation or exception from the general Treaty rules (see the communication of 20 November 2007), while on the other, the 2004 white paper considers that ‘the effective performance of a general interest task prevails, in case of tension, over the application of Treaty rules’. |
| --- | --- |

4.16

With regard to the Commission's intention to clarify the limits imposed on Member States when defining an activity as an SGEI, the EESC has been calling for years for clarification of the implementing conditions of Article 106(2): this is subject to divergent interpretations insofar as, on the one hand, it is presented as a derogation or exception from the general Treaty rules (see the communication of 20 November 2007), while on the other, the 2004 white paper considers that ‘the effective performance of a general interest task prevails, in case of tension, over the application of Treaty rules’.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

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| 25.8.2011 | EN | Official Journal of the European Union | C 248/153 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/153

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council relating to tyres for motor vehicles and their trailers and to their fitting (Codification)’

COM(2011) 120 final — 2011/0053 (COD)

2011/C 248/27

On 1 April 2011, the Council and, on 24 March 2011, the European Parliament decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union, on the

Proposal for a Directive of the European Parliament and of the Council relating to tyres for motor vehicles and their trailers and to their fitting (Codification)

COM(2011) 120 final — 2011/0053 (COD).

Since the Committee endorses the content of the proposal and feels that it requires no comment on its part, it decided, at its 472nd plenary session of 15 and 16 June2011 (meeting of 15 June), by 157 votes to 1 with 8 abstentions, to issue an opinion endorsing the proposed text.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

| 25.8.2011 | EN | Official Journal of the European Union | C 248/154 |
| --- | --- | --- | --- |

25.8.2011

EN

Official Journal of the European Union

C 248/154

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on the assessment of the effects of certain public and private projects on the environment (Codification)’

COM(2011) 189 final — 2011/0080 (COD)

2011/C 248/28

On 10 May 2011 the European Parliament and on 3 May 2011 the Council decided to consult the European Economic and Social Committee, under Article 192, paragraph 1 of the Treaty on the Functioning of the European Union, on the

Proposal for a Directive of the European Parliament and of the Council on the assessment of the effects of certain public and private projects on the environment (Codification)

COM(2011)189 final — 2011/0080 COD.

Since the Committee endorses the contents of the proposal and has already set out its views on the subject in its earlier opinion CES 23/81 fin, adopted on 29 April 1981 (1), it decided, at its 472nd plenary session of 15 and 16 June 2011 (meeting of 15 June 2011), by 154 votes to 2 with 10 abstentions, to issue an opinion endorsing the proposed text and to refer to the position it had taken in the above-mentioned document.

Brussels, 15 June 2011.

The President of the European Economic and Social Committee

Staffan NILSSON

---

(1)  EESC opinion on the proposal for a Council Directive concerning the assessment of the environmental effects of certain public and private projects, OJ C 185, p. 8 of 27 July 1981.

1

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