# Official Journal C 54/2011

| | ISSN 1725-2423
  doi:10.3000/17252423.C_2011.054.eng |
| --- | --- |
| Official Journal
  of the European Union | C 54 |
| | |
| English edition | Information and Notices | Volume 5419 February 2011 |

ISSN 1725-2423

doi:10.3000/17252423.C_2011.054.eng

Official Journal

of the European Union

C 54

English edition

Information and Notices

Volume 5419 February 2011

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| Notice No | Contents | page |
| --- | --- | --- |
| | I   Resolutions, recommendations and opinions |
| | OPINIONS |
| | European Economic and Social Committee |
| | 467th plenary session held on 8 and 9 December 2010 |
| 2011/C 054/01 | Opinion of the European Economic and Social Committee on Energy Strategy for 2011-2020 | 1 |
| 2011/C 054/02 | Opinion of the European Economic and Social Committee on Iceland as a candidate country (exploratory opinion) | 8 |
| 2011/C 054/03 | Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation on State aid to facilitate the closure of uncompetitive coal mines (own-initiative opinion) | 15 |
| 2011/C 054/04 | Opinion of the European Economic and Social Committee on Security of supply in agriculture and the food sector in the EU (own-initiative opinion) | 20 |
| 2011/C 054/05 | Opinion of the European Economic and Social Committee on EU-Russia relations (own-initiative opinion) | 24 |

Notice No

Contents

page

I   Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

467th plenary session held on 8 and 9 December 2010

2011/C 054/01

Opinion of the European Economic and Social Committee on Energy Strategy for 2011-2020

1

2011/C 054/02

Opinion of the European Economic and Social Committee on Iceland as a candidate country (exploratory opinion)

8

2011/C 054/03

Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation on State aid to facilitate the closure of uncompetitive coal mines (own-initiative opinion)

15

2011/C 054/04

Opinion of the European Economic and Social Committee on Security of supply in agriculture and the food sector in the EU (own-initiative opinion)

20

2011/C 054/05

Opinion of the European Economic and Social Committee on EU-Russia relations (own-initiative opinion)

24

| | III   Preparatory acts |
| --- | --- |
| | European Economic and Social Committee |
| | 467th plenary session held on 8 and 9 December 2010 |
| 2011/C 054/06 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the approximation of the laws of the Member States relating to units of measurementCOM(2010) 507 final — 2010/0260 (COD) | 31 |
| 2011/C 054/07 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the permissible sound level and the exhaust system of motor vehiclesCOM(2010) 508 final — 2010/0261 (COD) | 32 |
| 2011/C 054/08 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on rear-mounted roll-over protection structures of narrow-track wheeled agricultural and forestry tractorsCOM(2010) 510 final — 2010/0264 (COD) | 33 |
| 2011/C 054/09 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on indications or marks identifying the lot to which a foodstuff belongsCOM(2010) 506 final — 2010/0259 (COD) | 34 |
| 2011/C 054/10 | Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 460/2004 establishing the European Network and Information Security Agency as regards its durationCOM(2010) 520 final — 2010/0274 (COD) | 35 |
| 2011/C 054/11 | Opinion of the European Economic and Social Committee on the Proposal for a Decision of the European Parliament and of the Council on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programmeCOM(2010) 550 final — 2010/0282 (COD) | 36 |
| 2011/C 054/12 | Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on amending Regulation (EC) No 1060/2009 on credit rating agenciesCOM(2010) 289 final — 2010/0160 (COD) | 37 |
| 2011/C 054/13 | Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council for the approval of agricultural and forestry vehiclesCOM(2010) 395 final — 2010/0212 (COD) | 42 |
| 2011/C 054/14 | Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositoriesCOM(2010) 484 final — 2010/0250 (COD) | 44 |
| 2011/C 054/15 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the right to information in criminal proceedingsCOM(2010) 392 final — 2010/0215 (COD) | 48 |
| 2011/C 054/16 | Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council amending Directive 2001/18/EC as regards the possibility for the Member States to restrict or prohibit the cultivation of GMOs in their territoryCOM(2010) 375 final — 2010/0208 (COD) | 51 |
| 2011/C 054/17 | 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 and the Committee of the Regions — A Digital Agenda for EuropeCOM(2010) 245 final | 58 |

III   Preparatory acts

European Economic and Social Committee

467th plenary session held on 8 and 9 December 2010

2011/C 054/06

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the approximation of the laws of the Member States relating to units of measurementCOM(2010) 507 final — 2010/0260 (COD)

COM(2010) 507 final — 2010/0260 (COD)

31

2011/C 054/07

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the permissible sound level and the exhaust system of motor vehiclesCOM(2010) 508 final — 2010/0261 (COD)

COM(2010) 508 final — 2010/0261 (COD)

32

2011/C 054/08

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on rear-mounted roll-over protection structures of narrow-track wheeled agricultural and forestry tractorsCOM(2010) 510 final — 2010/0264 (COD)

COM(2010) 510 final — 2010/0264 (COD)

33

2011/C 054/09

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on indications or marks identifying the lot to which a foodstuff belongsCOM(2010) 506 final — 2010/0259 (COD)

COM(2010) 506 final — 2010/0259 (COD)

34

2011/C 054/10

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 460/2004 establishing the European Network and Information Security Agency as regards its durationCOM(2010) 520 final — 2010/0274 (COD)

COM(2010) 520 final — 2010/0274 (COD)

35

2011/C 054/11

Opinion of the European Economic and Social Committee on the Proposal for a Decision of the European Parliament and of the Council on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programmeCOM(2010) 550 final — 2010/0282 (COD)

COM(2010) 550 final — 2010/0282 (COD)

36

2011/C 054/12

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on amending Regulation (EC) No 1060/2009 on credit rating agenciesCOM(2010) 289 final — 2010/0160 (COD)

COM(2010) 289 final — 2010/0160 (COD)

37

2011/C 054/13

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council for the approval of agricultural and forestry vehiclesCOM(2010) 395 final — 2010/0212 (COD)

COM(2010) 395 final — 2010/0212 (COD)

42

2011/C 054/14

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositoriesCOM(2010) 484 final — 2010/0250 (COD)

COM(2010) 484 final — 2010/0250 (COD)

44

2011/C 054/15

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the right to information in criminal proceedingsCOM(2010) 392 final — 2010/0215 (COD)

COM(2010) 392 final — 2010/0215 (COD)

48

2011/C 054/16

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council amending Directive 2001/18/EC as regards the possibility for the Member States to restrict or prohibit the cultivation of GMOs in their territoryCOM(2010) 375 final — 2010/0208 (COD)

COM(2010) 375 final — 2010/0208 (COD)

51

2011/C 054/17

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 and the Committee of the Regions — A Digital Agenda for EuropeCOM(2010) 245 final

COM(2010) 245 final

58

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EN

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I Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

467th plenary session held on 8 and 9 December 2010

| 19.2.2011 | EN | Official Journal of the European Union | C 54/1 |
| --- | --- | --- | --- |

19.2.2011

EN

Official Journal of the European Union

C 54/1

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467th PLENARY SESSION HELD ON 8 AND 9 DECEMBER 2010

Opinion of the European Economic and Social Committee on ‘Energy Strategy for 2011-2020’

(exploratory opinion)

(2011/C 54/01)

Rapporteur: Mr HERNÁNDEZ BATALLER

On 12 May 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

Energy Strategy for 2011-2020

(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 16 November 2010.

At its 467th plenary session, held on 8 and 9 December 2010 (meeting of 9 December 2010), the European Economic and Social Committee adopted the following opinion by 138 votes to 40 with 21 abstentions.

1.   Introduction and Summary

1.1   The European Commission intends to adopt an Energy Strategy for 2011-2020 and a Roadmap for low carbon energy system by 2050. It has asked the Committee to prepare exploratory opinions on these two topics as a contribution to their work.

1.2   The Committee is glad that these two topics are being developed together. Investment in the energy sector has a long life, and it is very important that the strategy for the next ten years should be working towards the longer term goals for 2050.

1.3   The Commission has published a stock-taking document ‘Towards a new Energy Strategy for Europe 2011-2020’ as a basis for consultation. In this opinion Section 1 summarises our views and recommendations. Section 2 outlines some general themes that should be covered in the strategy. Section 3 then comments on the particular issues raised for discussion in the Commission's stock-taking document.

1.4   Over the past 200 years the world has relied mainly on fossil fuels for energy and for transport. During this period abundant sources of fossil fuels have been available for extraction at comparatively cheap prices and have enabled the developed world to achieve an enormous increase in productivity and standards of living.

1.5   Over the next 40 years however most experts agree that supplies of oil and gas will become less abundant and there will be strong competition and higher prices for the resources that remain. Coal will probably remain relatively more abundant, and there will probably be less risk of serious supply constraints during the next century. But the world also urgently needs to reduce the level of CO2 emissions from the burning of fossil fuels in order to avoid catastrophic climate change; and this applies to coal just as much as to oil and gas.

1.6   The world therefore needs to transform its energy base and its use of energy by 2050. All the various possible alternative sources of energy need to be pressed forward as fast as possible. Where fossil fuels do continue to be used it will be necessary to capture most of their carbon emissions at source for storage or reuse so as to avoid release to the atmosphere. And in every sector energy needs to be used much more efficiently than it is today.

1.7   Managing this transformation effectively is one of the largest challenges facing society and governments in the 21st century. It will require a new approach to pricing energy and energy services to ensure in particular that the use of fossil fuels bears the full cost of the CO2 burden they impose on the world, massive investment in new technologies, strong new partnerships between industry and governments to create the necessary infrastructure, and a transformation of public attitudes to the use of energy and its cost.

1.8   Countries will need to work closely together to achieve the changes needed. At the same time the transformation process will itself be intensely competitive. There will be fierce competition for access to the remaining sources of oil and gas, at the same time as new areas for competition arise in the development of alternative sources of energy and in energy efficient products and services. Countries and regions which make early progress towards greater energy efficiency and effective deployment of alternative energy will strengthen their competitive position. Those which muddle along and delay the transformation will find that their competitive position is eroded.

1.9   Europe and the European Union now stand at a critical stage in this evolution. It has strong reasons to press ahead with the transformation because it is highly dependent on foreign imports of oil and gas and is vulnerable to any constraints that may emerge on these supplies. It has also been at the forefront of growing public and political awareness about the climate change threat, and has pioneered the development of some of the alternative sources of energy that will be needed, and measures to increase energy efficiency in some of the key sectors.

1.10   But Europe cannot afford to be complacent. The transformation process has not yet built up sufficient momentum to proceed under its own steam, and could easily be severely set back by current economic difficulties and the short-termism that they induce. Meanwhile other countries and regions such as China and the USA are gearing up for rapid action. China in particular is likely to become a very vigorous competitor in the development of alternative energy sources.

1.11   It is vitally important for Europe to develop a new dynamism for the energy transformation. The EU's new energy strategy could and should provide the framework for this to be established. It should map out goals and targets, and outline the measures and structures that will be needed to achieve it. The adoption of the strategy by the Council and the institutions needs to be the occasion for mobilising a united political, business and societal will for the changes needed. It is an opportunity that must not be missed or squandered.

2.   Key Elements of the strategy

2.1   The new Energy Strategy for Europe 2011-2020 must be based at least on three cornerstones: security of supply, low-carbon economy and energy competitiveness. The Committee supports the efforts made to trigger the transition towards a low-carbon economy and to improve its supply security, but regrets that the energy competitiveness issue has received much too little attention in the Commission May 2010 stocktaking document ‘Towards a new energy strategy 2011-2020’. In the medium term the achievement of the low carbon economy should itself make Europe more competitive in the world. But in the short term there is a real risk of carbon and job leakage caused by the cumulative cost of all energy policies, unless the appropriate measures are adopted with no delay.

2.2   In the EESC's view the key elements of the strategy could be summarised under the following heads:

| — | Getting the economic signals right |
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Getting the economic signals right

| — | Getting the right technologies |
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Getting the right technologies

| — | Mobilising the finance |
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Mobilising the finance

| — | Getting the right institutions and structures (public and private) |
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Getting the right institutions and structures (public and private)

| — | Securing the engagement of consumers and the public |
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Securing the engagement of consumers and the public

| — | Building a European alliance and partnerships for the transition and establishing general agreement on the goals, the pace of advance and specific targets to be achieved by specific dates. |
| --- | --- |

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Building a European alliance and partnerships for the transition and establishing general agreement on the goals, the pace of advance and specific targets to be achieved by specific dates.

2.3   Economic Signals. From an economist’s perspective the single most important means of bringing about the necessary transformation of the energy sector is to price energy properly, including all the externalities of its production and use. In particular the production and use of energy ought to bear the full cost of the global disbenefit that its production of CO2 causes.

2.4   At present this is very far from the case throughout the world. Energy production and use is far from bearing its full carbon cost, and in many places it even still receives perverse subsidies to lower its cost and encourage demand and the associated carbon production. In future policy ought to aim at ensuring that CO2 emissions from the burning of fossil fuels bear a full carbon price. Any remaining subsidies should be focused much more carefully on

| — | promoting R and D in new technologies, |
| --- | --- |

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promoting R and D in new technologies,

| — | supporting the uptake of emerging new low carbon technologies for limited periods until they can stand on their own feet in the market place, |
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supporting the uptake of emerging new low carbon technologies for limited periods until they can stand on their own feet in the market place,

| — | encouraging the uptake of energy efficiency measures and techniques, |
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encouraging the uptake of energy efficiency measures and techniques,

| — | and helping poorer or vulnerable households to secure the energy services they need. |
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and helping poorer or vulnerable households to secure the energy services they need.

2.5   Europe has made some progress in the direction of better pricing structures. But its present mix of many different fuel taxes in different countries, some residual production subsidies, an imperfect and volatile carbon trading system etc is far from giving the steady and consistent price signals that are needed to enable energy suppliers and consumers to plan ahead in confidence to make the necessary large and small-scale investments. The new energy strategy should set out clear goals and targets for

| — | the elimination of perverse subsidies throughout the energy and related sectors both on the production and on the consumption sides |
| --- | --- |

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the elimination of perverse subsidies throughout the energy and related sectors both on the production and on the consumption sides

| — | more harmonisation of taxation of all greenhouse gas producing fuels, processes and products |
| --- | --- |

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more harmonisation of taxation of all greenhouse gas producing fuels, processes and products

| — | the establishment of a proper carbon price in all sectors, whether through extension of the trading system and elimination of its loopholes or through other fiscal means |
| --- | --- |

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the establishment of a proper carbon price in all sectors, whether through extension of the trading system and elimination of its loopholes or through other fiscal means

| — | and the focusing of any remaining subsidies on the specific purposes mentioned above. |
| --- | --- |

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and the focusing of any remaining subsidies on the specific purposes mentioned above.

2.6   Energy prices are likely to remain higher than in the past (and supplies of some sources of Europe's energy supply could be constrained from time to time). Energy needs to be used as efficiently as possible in order to keep total energy consumption and the level of new investment needed down to manageable levels. Maximum effort needs to be put into promoting energy efficiency in all sectors.

2.7   Getting prices right is important but in the Committee's view it is by no means sufficient to get the momentum moving irreversibly in the direction of the low carbon economy. Many other measures and initiatives will be needed, particularly in the initial stages before the market itself can provide the main driver.

2.8   The Right Technologies. Major efforts still need to be made to promote the development and installation of alternative energy sources, including the whole range of renewable energy sources. When these alternatives are fully developed they should become fully competitive in the market place and will no longer need special support other than the differential in their favour implied by a proper carbon price. But up to 2020 many of these technologies are still in the development stage and are likely to need financial encouragement through R and D programmes, feed-in tariffs or other incentives for investment, and support for appropriate infrastructure development.

2.9   Many of the alternative sources of energy are likely to be most effectively used as the input for generation of electricity: In order to optimise their contribution and to make best use of existing power generation capacity the electricity network will need to be greatly strengthened and enlarged at local, national and European level, and to be ‘smartened’ so that it can accommodate variable inputs from many different sources at different scales as well as handling variable demand patterns.

2.10   Standby capacity or storage (together with an integrated grid) will have an even more important part to play in future than at present since it will have to cope with fluctuating patterns of supply from renewable sources such as wind and solar power as well as fluctuating demand patterns. Hydro plants, biomass fuelled plants, gas storage facilities and possibly large scale battery storage could have an increasingly important part to play for this purpose alongside remaining fossil fuel plants (particularly gas-powered plants) equipped with carbon capture systems.

2.11   Some commentators believe that a new generation of nuclear power plants will have to play a significant part in the new low carbon economy, and several countries both within and outside Europe are taking steps to prolong the life of existing plants and to plan for new ones: A majority of the Committee shares the view that nuclear will need to play a part in Europe's transition to a low carbon economy. But technology for conventional nuclear power generation is now well developed, and in the Committee's view any new nuclear power plant development should now be required to meet the full economic costs of operation, insurance and the eventual decommissioning and waste storage and disposal without any explicit or concealed subsidies.

2.12   Coal will clearly remain an important energy source, particularly for power generation, for some decades to come. To minimise its CO2 impact efforts to develop and install carbon capture and storage need to be pressed forward vigorously and timetables set for their fitting to all coal-fired power plants.

2.13   Energy efficiency and decarbonisation needs to be promoted more vigorously in all sectors, including in particular in transport, in housing and construction, in the power sector, and in energy intensive industries.

2.14   Mobilising the Finance. Implementing this transformation of the energy sector will require major investment to be undertaken over the next 20 years (at probably three or four times higher than the present levels of investment). In order to achieve this expansion an ambitious European strategy is needed to establish clear goals, and to create the right reliable and consistent framework of regulation, incentives and other support for the industries concerned to enable them to drive steadily towards the achievement of those goals:

2.15   The right Structures and Institutions. The transformation will also require a major strengthening of institutional arrangements to plan and guide the developments at the same time as continuing to encourage a dynamic and competitive market for undertaking the necessary investments. The planning of energy supply, the management of the grid, and the regulation of the energy market and its tariff structures all need to be reviewed and integrated or coordinated at a European level to ensure that they are consistent with the aims of the Energy Strategy for 2011-2020.

2.16   The changes that are needed will require rapid and substantial changes in patterns of production and consumption in the European economy. On the production side many new businesses and jobs should emerge in the energy field as renewable energy and energy efficient products and services develop; but others will be lost in the older parts of the energy sector. A major programme of awareness raising, training and retraining will be needed to manage this transition harmoniously.

2.17   There is a rapidly growing international market in the new technologies and solutions needed to transform the energy sector. Europe needs to expand its own R&D and encouragement of its own industries and businesses to secure a leading place in this dynamic and competitive market.

2.18   Engaging Consumers SMEs and the general public. On the demand side a major effort needs to be put into educating and incentivising domestic and business consumers so that they can play their part in the smart consumption that will be needed in the future. Consumers of all kinds (business and domestic) will need appropriate information about the opportunities available to them to use energy more efficiently and to assist in the transition to renewable sources of supply. In many cases they will also need incentives to undertake energy efficiency measures themselves or to install renewable energy sources.

2.19   Energy prices are likely to remain higher than in the past, and the impacts on poorer households and vulnerable people need to be carefully assessed and policies shaped accordingly. Such households should be priority candidates for assistance with installing energy efficiency measures, both because they may lack the resources to undertake such measures by themselves, and because higher energy prices will bear more heavily on them than on those that are better off.

2.20   A European Alliance for change. In order to bring about the massive and rapid transformation that is needed the EU and its Member States need to share their competences and to work closely together to establish the necessary technical and economic integration of the single energy market, and to engage the relevant industry sectors in working towards the transition. The EU Strategy needs to be jointly owned and jointly implemented.

2.21   Targets. In order to keep up the pace of change the Committee suggests that it would be useful for the EU strategy to establish a set of inter-related and consistent target dates for the completion of particular parts of the transition. Each target would then need its own set of implementation measures and investment plans worked out in cooperation with industry and other stakeholders. Examples could include:

| — | The targets already established for renewables for 2020, and further targets for 2030, 2040 and 2050 |
| --- | --- |

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The targets already established for renewables for 2020, and further targets for 2030, 2040 and 2050

| — | Once the techniques or technologies for capturing or removing carbon from fossil fuel power plants are proven require them to be incorporated from the outset in any new fossil fuel power plants and establish timetables for them to be applied to all existing plants |
| --- | --- |

—

Once the techniques or technologies for capturing or removing carbon from fossil fuel power plants are proven require them to be incorporated from the outset in any new fossil fuel power plants and establish timetables for them to be applied to all existing plants

| — | Target dates for requiring all new housing and other buildings to achieve zero carbon status, and for progressively retrofitting existing buildings |
| --- | --- |

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Target dates for requiring all new housing and other buildings to achieve zero carbon status, and for progressively retrofitting existing buildings

| — | Target dates for progressively increasing electrification of the vehicle fleet |
| --- | --- |

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Target dates for progressively increasing electrification of the vehicle fleet

| — | Indicative targets for eliminating all fossil fuel consumption in the home for heating and cooking. |
| --- | --- |

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Indicative targets for eliminating all fossil fuel consumption in the home for heating and cooking.

2.22   All of these separate targets and measures need to be integrated within the comprehensive strategy for reducing greenhouse gases, and made consistent with the overall target of 20 (or 30)% reduction in greenhouse gases for 2020.

3.   Priority areas for the new energy strategy identified in the Commission's Consultation Document

3.1   Modern integrated grids. The Committee agrees with the Commission that the development of a more robust, resilient, smarter and integrated grid infrastructure for Europe is of the highest importance. In order to secure the most efficient results from renewables there should be a preference for installing the different kinds of renewable energy in the locations that are optimal for each (wind energy where it is windiest, solar energy where it is sunniest etc), then relying on an efficient grid to transfer energy where it is needed. To achieve this optimisation on a European scale will ultimately mean regarding the whole of European electricity production as a single integrated system. A ‘Single European Grid’ has to be established as well as joint projects and structures to plan and manage it. The grid will need to be capable of smart management and operation at all levels so as to optimise the matching of supply and demand. Among other objectives the integrated grid will need to accommodate energy input from remote sources (e.g. offshore wind or desert solar installations); and the use of AC and DC in different parts of the network will need to be optimised so as to minimise energy loss in the whole network.

3.2   The Commission and Member States need to work more closely with each other and with all the ENTSOs to establish a coordinated structure for planning the development and management of the integrated network, including both the technical and financial parameters for its construction and operation.

3.3   The Committee agrees with the Commission that it will be important to introduce smart metering at all levels of consumption including individual homes. Consumers will need a great deal of help from fuel providers and from public bodies so that they can understand the information that smart meters will provide them and be given real choices as to how they can use that information to optimise their energy consumption patterns.

Progress towards a low-carbon energy system. The EU is already committed to reducing carbon emissions by 20 % by 2020, and by 30 % if other countries make comparable commitments. These targets are an important driver for many other policies and for the investment in the new energy systems that will flow from them. In the Committee's view it would be desirable for the EU to commit itself, in line with the proposal from the Environment Ministers of Germany, France and the UK, to an early tightening of its CO2 target for 2020 to achieve a 30 % reduction by that date instead of the present 20 % commitment if the economic and social conditions allow it without loss of competitiveness and provided that it is indeed coupled with the necessary measures and investment to achieve it.

3.4.1   The European Union is already well on the way to achieving the 20 % reduction by 2020, (17 % reduction already achieved by 2009) and could benefit from the stronger stimulus of a tighter reduction target to get the energy transformation moving more rapidly, the carbon trading market working more effectively, and improving Europe's longer term competitive position. But considered politically, and in terms of protecting shorter term competitiveness of European industry (particularly the energy intensive sectors), it would clearly be much easier to move to an early 30 % reduction if other industrialised countries commit to making comparable cuts, and the more advanced developing countries agree to make an adequate contribution to the global effort. This would mean that all major countries would share more equally in the investment costs and energy price burdens of managing the energy transition, and that ‘carbon leakage’ would be minimised.

3.4.2   Up to now the EU has tried to make the possibility of moving to a 30 % target for 2020 into a negotiating card to persuade other countries to make comparable commitments. But this has not proved to be an effective tactic either at Copenhagen or subsequently. Meanwhile the opportunity of using a stronger 2020 target as a means of speeding up the energy transformation within Europe itself is steadily being lost as time moves on.

3.4.3   In the continuing absence of a comprehensive global deal on climate change the EU should consider an early move towards a 25 % reduction by 2020, thus targeting the lower end of the reduction range that IPCC has recommended for that year for developed countries. This would also secure some of the transformational benefit of adopting a tighter target as soon as possible, while retaining the negotiating benefits of having a further 5 % still to offer to encourage other countries to do more in the next two years.

3.5   An early move in this direction would lead to tighter caps in the carbon emissions trading scheme and thus a higher and more effective price for carbon emissions. The Committee believes that if the trading system is to deliver genuine results a floor price of at least EUR 30 needs to be established, and there need to be arrangements to ensure that a higher proportion of carbon reductions are achieved within the EU itself by appropriate investments rather than being exported to other parts of the world through the Clean Development Mechanism (CDM). Even with these improvements however the Committee believes that it is important not to exaggerate the results that could be obtained by the trading system alone. Moreover it may prove politically and competitively unacceptable to strengthen the system substantially in the EU if other parts of the world continue to hold back on taking comparable action. Many other policies along the lines outlined in this opinion will need to be introduced under a comprehensive strategy if the energy transformation is to take place at the pace that is needed, and may need to be given greater emphasis in the future strategy if the trading system continues to be flawed in practice.

3.6   The EU has already made good progress in establishing minimum energy efficiency standards for buildings, vehicles, and a variety of other goods and services. But there is still further to go in extending and tightening these limits. And there is a lot further to go in ensuring that all these standards are implemented and complied with. The Commission will need to increase the pressure on Member States to develop adequate energy efficiency action plans and policies.

3.7   Leadership in technological innovation. Technological innovation will be crucial in the energy sector in developing new products and services, and bringing their prices down to more manageable levels. Europe is at risk of falling behind major global competitors in this sector, and needs to scale up the level of R&D (public and private) in the key new technologies. At European level the Strategic Energy Technology Plan (SET-Plan) should be implemented promptly.

3.8   Energy should have a higher priority in all relevant EU programmes, including in particular in the structural funds. Member States equally need to give higher priority to energy in their investment plans particularly in relation to energy efficiency and development of renewables. The EU and Member States also need to ensure that the private sector firms operating in energy supply and distribution and on energy efficiency products and services are given the right stable framework of regulation and incentives to enable them to play their part in the expansion of effort.

3.9   The Committee agrees that there is a particularly important role for local and regional authorities in promoting energy efficiency in their areas and in coordinating plans for the development of renewables. It recommends European support for the excellent initiatives that the Covenant of Mayors have been undertaking in the energy field, and that means should be sought to strengthen and extend this initiative.

3.10   Strong and coordinated external energy policy. The Committee agrees that the EU would benefit from a more coordinated policy on energy in relation to third countries. But however coordinated its policy Europe will remain vulnerable internationally if it remains heavily dependent on imports of fossil fuels from other parts of the world, particularly if these are concentrated in a few key countries. The faster the EU can move to greater efficiency, lower levels of overall consumption and lower levels of dependence on foreign imports of fossil fuels the more secure its position will be.

3.11   Protecting the EU citizens. The Committee agrees with the Commission that high priority should be given to measures to create a level playing field for energy operators throughout Europe, and promoting transparency for customers in relation to all aspects of the energy services they receive. Consumers of all kinds (business and domestic) will need to learn to pay much more attention to their patterns of energy consumption, and the opportunities that will be available to use less energy more efficiently.

3.12   Energy products and services are likely to become relatively more expensive which will provide an economic incentive in this direction. But consumers of all kinds will rightly expect more than price increases to help them move in the right direction. Information about the energy characteristics of goods and services will need to become much more widely available, together with specific information about the choices that will be available and assistance in making the change over (e.g. choice on improving the energy performance of homes and other buildings, greener transport choices, greener shopping and holiday choices etc.).

Brussels, 9 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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APPENDIX

The following Section Opinion text was modified in favour of an amendment adopted by the assembly but obtained at least one-quarter of the votes cast:

Point 3.4

‘Progress towards a low-carbon energy system. The EU is already committed to reducing carbon emissions by 20 % by 2020, and by 30 % if other countries make comparable commitments. These targets are an important driver for many other policies and for the investment in the new energy systems that will flow from them. In the Committee's view it would be desirable for the EU to commit itself, in line with the proposal from the Environment Ministers of Germany, France and the UK, to an early tightening of its CO2 target for 2020 to achieve a 30 % reduction by that date instead of the present 20 % commitment if the economic and social conditions allow it without loss of competitiveness and provided that it is indeed coupled with the necessary measures and investment to achieve it.

| Outcome of the vote on the amendment: | 88 votes in favour, 82 votes against and 26 abstentions. |
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Outcome of the vote on the amendment:

Outcome of the vote on the amendment:

88 votes in favour, 82 votes against and 26 abstentions.

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/8 |
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19.2.2011

EN

Official Journal of the European Union

C 54/8

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Opinion of the European Economic and Social Committee on ‘Iceland as a candidate country’

(exploratory opinion)

(2011/C 54/02)

Rapporteur: Ms CARR

By letter of April 28, 2010 Vice-President of the European Commission, Maroš Šefčovič and the member of the European Commission responsible for the enlargement process, Štefan Füle asked the EESC, under Article 304 of the Treaty on the Functioning of the European Union, to draw up an exploratory opinion on

Iceland as a candidate country.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 27 October 2010

At its 467th plenary session, held on 8-9 December 2010 (meeting of 9 December), the European Economic and Social Committee adopted the following opinion by 170 votes to one with no abstentions.

1.   Conclusions and Recommendations

1.1   At this point in time, as confirmed by the public hearing in Iceland in September 2010, there is a serious uphill struggle regarding the support of public opinion for Iceland’s EU membership application. While membership as such remains a debated issue, support for accession negotiations seems to have recently increased: 64 % prefer to continue the EU accession process, rather than withdraw the application. This is a considerable increase in support for the accession process as compared to earlier polls.

1.2   The Committee believes that it is time for pro-EU organisations to join the public debate to a greater extent to demonstrate the benefits of the EU membership to Iceland as well as to the EU. The EESC could take a lead and organise events focussing especially on the role of ‘various interests’ organisations.

1.3   The EESC strongly supports Iceland’s membership of the EU and emphasises the importance of the participation of Icelandic civil society in the accession negotiations. The social partners have traditionally had a strong role in the Icelandic policy process and already have ties with the EESC and European umbrella organisations.

1.4   As well as the social partners, the Committee underlines the need for broader civil society participation from various interest groups. It is necessary to ensure a ‘civil dialogue’ in addition to the more traditional social dialogue during the accession process.

1.5   The Committee recommends that a Joint Consultative Committee be set up for Iceland as quickly as possible, as has been done for other pre-accession states. The Committee believes that this will be a useful mechanism for exchanging views and information between the civil societies of Iceland and the EU Member States, for expressing joint recommendations and opinions to the negotiating parties, and particularly for strengthening the role of Group III organisations during the membership negotiations.

1.6   Due to its high political and economic development and its participation in the European Economic Area (EEA), Iceland is generally well prepared to assume the obligations of EU membership (despite the breakdown of the Icelandic economy in the recent crisis), particularly in the fields covered by the EEA Agreement. The EESC also believes that, as an EU Member State, Iceland could contribute to the development of various EU policies, for example with respect to sustainable fisheries, renewable energy and the Arctic dimension. Currently Iceland does not have a seat in EU decision-making institutions.

1.7   Although Iceland has already implemented the substantial amount of the EU acquis, challenges remain in certain key areas, primarily fisheries and agriculture. The EESC emphasises that civil society groups in these areas must play a key role in the accession process. It is also necessary to involve other relevant groups in the accession process to support the Icelandic government in their task of negotiating the country's accession to the EU.

1.8   There are some powerful CSOs that have already declared their opposition to Iceland’s membership bid. In such circumstances it is of the upmost importance that organisations positive towards membership start a public debate in the near future on the benefits of membership to Iceland as well as to the EU. The EESC believes that a broader debate at national and European levels would be beneficial, assisting organisations and the public in the process of forming their opinions through the democratic process, bearing in mind the consensual approach at the European level.

1.9   Negative public opinion in Iceland towards EU membership partly stems from the unresolved Icesave dispute. Therefore it is even more vital to engage civil society in a constructive dialogue over the question of EU membership. The EESC insists that the Icesave issue should be resolved outside the accession negotiations and must not be made into an obstacle in the way of Iceland’s accession process.

2.   Current state of play

2.1   Iceland applied for EU membership in July 2009 and on 24 February 2010 the Commission issued a positive opinion on Iceland’s application. On 17 June 2010 the European Council decided to open accession negotiations and invited the Council to adopt a general Negotiating Framework. The decision was endorsed by the European Parliament on 28 June 2010. The first meeting of the Intergovernmental Conference took place on 27 July 2010.

2.2   Iceland has already implemented a large portion of the EU acquis through the EEA Agreement and the Schengen Association Agreement; this will facilitate the screening process and subsequent chapter by chapter negotiations. However, challenges remain in some key areas such as agriculture, fisheries and monetary policy. The screening process has started and is scheduled to be concluded in June 2011.

2.3   Iceland complies fully with the political criteria for EU membership laid down by the Copenhagen European Council in 1993. It is a well developed representative democracy with strong institutions, an extensive system for the protection of fundamental and human rights and respect for the rule of law.

2.4   Its public administration is generally efficient and free from political interference. The recent financial turmoil has, however, been accompanied by political upheaval and a need for administrative reform. According to the Commission's opinion, the financial crisis has posed questions regarding potential conflicts of interests related to the close links between the political class and the business community, and further reforms will most likely be necessary. Public administration reform has already been initiated and has addressed some of the concerns raised by the Commission.

2.5   Despite the severe consequences of the economic crisis, Iceland is a functioning market economy and well able to cope with competitive pressures and market forces within the EU. To combat the crisis the Icelandic government has undertaken difficult austerity measures, proposed policies to diversify the economy and is hoping to return to positive growth by the end of 2010. The key aim of the current government is to rebalance the state budget by 2013 while creating jobs and promoting innovation to restore Iceland’s competitiveness by 2020.

2.6   Generally Iceland is seen as a natural candidate for membership; it has a well-developed democratic culture and a high level of alignment with the acquis, and could therefore complete the accession negotiations relatively fast, providing that it fully aligns its legislation with the acquis by the time of accession. If the negotiation process is successful and the Icelanders approve their country's membership in a referendum, Iceland would be the member state with the smallest population of some 317 000 inhabitants.

2.7   After Iceland applied for membership ten negotiating groups were set up to take charge of the negotiations in different areas. The social partners and other key organisations are well represented and have seats in relevant groups. Although officials are responsible for the negotiations, the groups most affected have been invited to take part in the preparatory work of the negotiation teams and participate directly in the process.

2.8   It is the policy of the Icelandic government to fully involve civil society in the accession process. When the Foreign Affairs Committee of the Icelandic Parliament drafted its opinion on EU membership, civil society organisations, individuals and institutions were invited to submit comments, which were taken into account. The Committee's conclusions noted that an extensive consultation forum would be established where the EU, the status of the accession negotiations and Iceland’s negotiating positions in individual areas would be discussed.

2.9   Despite all these positive signals regarding civil society involvement in the accession process, Iceland’s credibility has suffered within some EU member states due to the banking crisis and the Icesave dispute. The attitudes of Icelanders towards the EU are changeable. A Gallup poll in July 2010 showed that 60 % supported the withdrawal of the membership application but at the end of September another poll conducted by the newspaper Fréttablaðið showed that 64 % of respondents wanted the negotiations to be concluded so that the issue could be voted on in a referendum. While it is too early to say if the perception of the EU among Icelanders has changed, it is certain that there is an enormous demand for more factual information on the EU and EU membership. There seems to be mounting desire to learn more about the EU and the accession process in order to base future decisions on sound knowledge rather than myths and fears.

3.   Relations with the EU

3.1   Iceland has close ties with the European Union through the EEA Agreement that came into effect in 1994. The EEA Agreement provides for three EFTA States’ participation in the EU's Internal Market. After Iceland’s application for membership, the EU set up a representation in Iceland; previously Iceland was served from Oslo.

3.2   The EEA Agreement has required a high level of integration of the EU acquis into Iceland’s national legal system. Iceland has adopted most of the provisions relevant to the four freedoms. Few domestic policy sectors are unaffected by the EEA Agreement which, some might argue, entails a form of quasi-membership of the EU. The percentage of internal market legislation transposed into national legislation by July 2009 is at the same level as the average for EU Member States.

3.3   Although Justice, Freedom and Security is not part of the EEA Agreement, Iceland has also participated in this policy area through the Schengen Association Agreement. When the Nordic EU Member States applied to join Schengen, they did so on the condition that a solution would be found to maintain the Nordic Passport Union with Iceland and Norway. The two countries have therefore applied the Schengen acquis since March 2001.

3.4   Regarding participation in the EU decision-making process, the EEA Agreement mainly grants access to the Commission. According to Articles 99 and 100 of the EEA Agreement, EEA EFTA states can participate in the Commission's expert groups and the working groups of comitology committees. However, the EEA EFTA states do not have any formal access to the Council or to the European Parliament.

3.5   Icelandic social partners participate in the EEA Joint Consultative Committee with the EESC. At a political level Iceland participates in the EEA Joint Parliamentary Committee. Together with Norway, Iceland also participates in informal pre-Council Nordic/Baltic meetings where it has the opportunity to try to get its views across.

3.6   In addition to not having full participation in the EU decision-making process, the principal difference between Iceland’s status under the EEA Agreement and EU membership is that the EEA Agreement does not establish supranational institutions that have the power to enact laws that would be directly applicable in member states. Neither does the EEA Agreement entail conferral of judicial powers. At the same time EU membership would give Iceland representation in all EU institutions and decision-making bodies.

3.7   Despite having close relations with the EU, Iceland has until recently opted to remain outside the Union. This stance is generally traced to a variety of factors, most prominently to the desire to retain national control over fisheries resources. The Common Agricultural Policy is also unpopular among Icelandic farmers, who fear competition from cheaper products from the mainland. Nationalistic discourse is strong in certain segments of the population in Iceland and some decision-makers have generally been unwilling to promote anything that could be seen as compromising the country's sovereignty. Iceland’s geographical isolation, its special security relationship with the United States during the Cold War years, the small size of its administration and the electoral system’s bias in favour of rural areas are also sometimes named as potential causes for Iceland’s policy towards the EU. Finally, the EEA Agreement has, until the financial crisis, generally been thought to serve Iceland’s interests sufficiently.

3.8   Despite the above-mentioned factors, large parts of the population have been in favour of closer ties with the EU through the years. The collapse of the Icelandic financial system in October 2008 led to a further shift of opinion in favour of EU membership and the adoption of the Euro. In July 2009, the Icelandic Parliament voted in favour of applying for EU membership. However, public opinion and political parties in Iceland remain divided over the issue.

3.9   Iceland’s membership would benefit both the EU and Iceland. For the EU it would contribute to its geographical completeness, giving the EU a foothold in the Arctic and the possibility of participating in the Arctic Council. For Iceland the EU accession would strengthen its position in pursuing better forms of multilateral governance in the Arctic. Membership would also go some way to restoring Iceland’s international credibility and have a stabilising effect on its currency and economy as a whole. As an EU member, Iceland would have much to offer towards the Northern Dimension Policy, the development and harnessing of renewable energy resources and a greener economy in the EU.

3.10   Various challenges remain as many important areas fall outside the scope of the EEA or Schengen cooperation. Some of these will most likely present some difficulties during negotiations. Fisheries and agriculture are likely to be particular sticking points and civil society organisations in these areas will play a key role in the accession process. The accession process should be a voluntary consensual two-ways process where neither party feels under obligation from the other to undertake commitments they are not ready to make.

4.   The socio-economic situation

4.1   Iceland’s economy has traditionally been mainly based on fisheries, and fisheries still account for nearly half of Iceland’s merchandise exports. More recently, aluminium production and tourism have also become important industries. In the 1990s Iceland began a process of economic deregulation, liberalisation and diversification, establishing a large financial sector. As a result of over-exposure, lack of sufficient financial sector supervision and the large size of the banks in comparison to the national economy, the Icelandic banking sector collapsed in the wake of the global financial crisis. The combined liabilities of the banks were over ten times larger than Iceland’s GDP (1). This led to a deep recession with social as well as economic consequences.

4.2   The Icelandic Krona depreciated significantly causing high inflation, unemployment increased, asset prices declined, a large number of companies faced bankruptcy and private consumption decreased. Taxes (capital, income, excise duties and VAT rates) have also been increased, a new three-tier personal income tax system has been introduced, and various benefits such as maternity/paternity leave and child support benefits have been lowered. Public expenditure on education and healthcare has also been cut. Many Icelandic households have suffered as they have lost a large portion of their savings and/or income. However, to alleviate the severity of the crisis extensive debt restructuring is on-going for individuals as well as for business. For individuals there is a special out-of-court debt restructuring framework for households in serious difficulties (2).

4.3   The level of government debt multiplied in the wake of the crisis. A large portion of this debt is due to Icesave obligations. According to the Deposit Guarantee Scheme Directive (94/19/EC) Iceland is responsible for reimbursing depositors up to EUR 20 000 per account. Iceland has agreed to honour these obligations. However, the Icesave dispute that remains to be solved relates to the terms and conditions under which Iceland should repay the British and Dutch governments who have reimbursed their own depositors.

4.4   Iceland has invoked various measures in an effort to counter the crisis. The three main banks were nationalised, restructured and recapitalised. Balance of payments safeguards were implemented limiting international capital flows to prevent the outflow of foreign currency and further devaluation of the Icelandic Krona. The Central Bank began the gradual removal of these controls in October 2009. A new Ministry of Economic Affairs was established, the Central Bank's governance was changed and the role of the Financial Supervisory Authority was strengthened. The government also initiated a comprehensive investigation into the events that led to the crisis with the appointment of a Special Investigation Commission and a Special Prosecutor.

4.5   The government further sought the assistance of the international community, including the IMF. The IMF’s Stand-by Arrangement for Iceland is $2,1 billion and an additional $2,75 billion from the other Nordic countries, Poland and the Faroe Islands. The economic programme supported by the IMF entails measures aimed at stabilising the exchange rate and rebuilding confidence in monetary policy, revising fiscal policy and maintaining a manageable level of public sector debt, restructuring the financial sector and its regulatory framework and facilitating household and corporate debt restructuring. At the end of September 2010 the IMF approved its third review of Iceland’s Economic Recovery Programme.

4.6   Iceland’s macroeconomic stabilisation is not yet complete and fiscal consolidation remains a key challenge. To strengthen the fiscal framework a 4-year fiscal consolidation plan was adopted. There are already signs of improvement. The IMF estimates that the economy should experience positive growth by the second half of 2010, sustained by Iceland’s strong economic fundamentals (2). Inflation is decreasing and the exchange rate has been stabilised. The new commercial banks have been recapitalised and extensive reforms of financial market regulations have been completed. Unemployment rates have not reached predicted levels of over 10 %.

4.7   The social partners have played a key role in Iceland’s economic recovery plan. The government and social partners signed a ‘stability pact’ in June 2009 and the 2010 budget reflects this agreement. The Pact’s aim was to ensure social consensus for the necessary adjustment measures, however, as it primarily involved the social partners, some civil society organisations felt excluded from this process. In March 2010 the Icelandic Confederation of Employers withdrew from the pact claiming breaches of the pact and the inability of the government to keep its promises.

4.8   In the medium to long term Iceland has a relatively flexible labour market with high participation rates, a fairly young and well-educated working population and a robust resource base including rich fishing grounds and vast renewable energy sources. Therefore, it is likely that in time Iceland will recover fully from the current economic setbacks. Furthermore, the European Commission believes that if Iceland aligns with the acquis in the area of economic and monetary policy its participation in Economic and Monetary Union should not pose major problems.

5.   Civil society in Iceland

5.1   Iceland has a long history of active civil society participation. Due in particular to the small size of Icelandic society, interest groups have very close and often personal ties with the government and have actively participated in the policy process. Indeed some interest groups such as farmers’ and fisheries’ associations and trade unions have traditionally had very close links with particular political parties.

5.2   To counterbalance the limitations of a small administration the Icelandic government works closely with Icelandic interest groups that are active at EU level, and often relies on them to gather information and increase awareness of Icelandic concerns in Brussels. However, the interest groups play a larger role in terms of information gathering and strategy building rather than in influencing EU policy, except in areas of social policy, where the social partners are particularly active and have direct access to the policy formulation process.

5.3   According to Art 74 of the Constitution, as in other Nordic countries, all kinds of associations may be formed without prior permission and may not be dissolved by administrative decision. Associations must register with the office of the National Registrar to obtain a national registration number for tax purposes and must have a registered address. Trade union activities are regulated by the Act of Trade Unions and Industrial Disputes.

5.4   Many Icelandic organisations have long-standing and strong affinities with their Nordic counterparts. Such ties could help the Icelandic organisations to exchange best practices and learn from the experience of their partner organisations during the period of their country's accession to the EU.

5.5   However, the public hearing with civil society organisations in Iceland indicated that compared to the social partner organisations the other CSOs are predominantly inward looking. Through closer cooperation it should be possible to convince them to take a broader view of their role within Iceland, especially in relation to their role in the EU accession process, and it should also be possible for the EU organisations to learn from their Icelandic counterparts.

5.6   Iceland has applied the Nordic economic and social model, which is characterised by a large welfare state with generous benefit levels. The social partners on both sides of the labour market actively engage in social dialogue with the aim of exchanging information and resolving various important social and economic issues. Social regulations are generally defined in collective agreements rather than by law.

5.7   In Iceland developments largely mirrored those of the neighbouring Nordic countries, with increases in public spending. Urbanisation and changes in the structure of society led to the formation of various interest groups, primarily trade unions, cooperatives and farmers’ associations. In the early years, interest groups were few but powerful and had close ties to particular political parties that served their interests.

5.8   In the latter half of the 20th Century the number of groups grew as society became more diverse. With increasing diversity, the ties between particular political parties and powerful interest groups have been weakened. However, in a small society such as Iceland the channels between civil society and government are inevitably short.

5.9   While the Icelandic model is in many ways similar to that of its Nordic counterparts, it differs from the mainstream Nordic model in a few respects. Developments in Iceland were slower and welfare spending has traditionally been lower in Iceland than in the other Nordic countries. The policies of liberalisation and privatisation were prominent in the 1990s and in the wake of the financial crash the welfare system has been cut substantially. However, in the Nordic states, the welfare model is generally embraced by parties on the left and right of the political spectrum, and this is also true in Iceland despite the political scene being characterised predominantly by centre-right coalitions. The social partners have played a key role in the policy process.

5.10   The results of the public hearing indicated that civil society in Iceland is split on the question of EU membership. In particular, fisheries and farmers associations are opposed to EU membership while organisations such as the Confederation of Labour and the Federation of Industries are in favour. Many organisations in Iceland are also neutral on the question. While democracy is extremely strong in Iceland the representation of the broader civil society organisations is relatively weak and this leads to a less balanced voice from civil society.

6.   Key organisations and their position in the EU debate

6.1   Social partners

6.1.1   The Icelandic Confederation of Labour (ASI) is the main trade union organisation in Iceland, representing general workers, office and retail workers, seamen, construction and industrial workers, electrical workers and various other professions in the private sector and part of the public sector, although most public sector employees are represented by the Federation of State and Municipal Employees (BSRB). Both organisations are members of the ETUC. A third central organisation, Association of Academics (BHM), organises employees with university degrees both in public and private sector.

6.1.2   ASI's counterpart on the management side, and a member of BUSINESSEUROPE, is the Icelandic Confederation of Employers (SA). SA has eight member associations in diverse areas such as energy, tourism, finance and fisheries. These two organisations play a key role in the coordination of policies in the fields of employment, social affairs, environment and the labour market. Another organisation active at EU level and also belonging to BUSINESSEUROPE is the Federation of Icelandic Industries (SI). SI is a member of SA.

6.1.3   The Confederations of Employers and Labour participate in a number of committees and on the boards of public bodies where they protect the interests of their respective members during the preparation and implementation of legislation, e.g. Administration of Occupational Safety and Health in Iceland, the Equal Status Council, the Science and Technology Council. They are also in close contact with the government when it comes to preparing and renewing wage contracts. The social partners work in close collaboration regarding common interests in the fields of equality and work protection and information dissemination.

6.1.4   The social partners in Iceland are already fairly well integrated into the EU policy process. They follow the EU legislative procedure closely, as EU policies adopted through the EEA Agreement impact on them.

6.1.5   Representatives from labour and employers organisations in the EFTA states have links with the EESC through the EEA CC, which is part of the EEA institutional set-up. This forum serves as a link between the social partners in the EFTA states and civil society organisations in the EU. Unlike the EESC, members of the EFTA CC include only trade unions and employers’ organisations. This is a certain limitation as it does not encompass civil dialogue as a whole.

6.1.6   The social partners in Iceland have generally been fairly positive towards European integration, although opinions are divided. ASI was originally sceptical of Iceland’s membership of the EEA but revised its policy in 2000 having found the EEA to bring various benefits for Icelandic workers. ASI is now in favour of EU membership negotiations and the adoption of the Euro as it believes the interests of the Icelandic labour force and the general stability of the economy will be best guaranteed through full integration with the EU. It does, however, note that during the accession negotiations emphasis should be placed on maintaining full control over Iceland’s exclusive economic zone with respect to fisheries and that support for Icelandic agriculture should be guaranteed. BSRB, representing public sector employees, has not formed an official view on membership, although it welcomes open discussions related to the negotiations.

6.1.7   On the employers’ side, SA aims to follow the membership talks closely but has adopted a neutral stance on EU membership as its member associations are split on the issue. SI, for example, is in favour of membership, arguing that the Icelandic economy is unstable due to the fluctuating value of the currency and that integration with the EU and adoption of the Euro would enhance competitiveness and lead to better working conditions for Icelandic industries.

6.2   Fisheries sector

6.2.1   The Federations of Fishing Vessel Owners (LIU) and Fish Processing Plants, on the other hand, strongly oppose EU membership. Those who have a stake in the fishing industry are reluctant to join the Common Fisheries Policy (CFP) as it would allow foreign investment in the sector and mean that the total allowable catch quotas in Iceland’s 200 mile Exclusive Economic Zone would be determined in Brussels. Although as a member state Iceland would fully participate in the decision making process the CSO representatives believe that due to its size Iceland would not be able to sufficiently influence decision at EU level. Iceland would also relinquish its right to conclude its own agreements with third countries regarding fishing of straddling stocks which comprise 30 % of Iceland’s catches. LIU argues that discards and over-fishing are serious problems in the EU while in Iceland the fisheries sector is profitable. Furthermore, there is no guarantee that the principle of relative stability will be maintained in the EU.

6.2.2   However, in August 2010 the chairman of LIU said on Iceland Radio RÚV that Iceland must continue its EU accession talks and ‘the best deal possible’ must be sought in the talks, and that it made no sense to withdraw the EU application at this stage.

6.2.3   Finally, Iceland’s resumption of commercial whaling in 2006 is likely to be a thorny issue as it contradicts EU policy and, if a solution is not found, could become a serious obstacle on the way to Iceland’s accession.

6.2.4   The CFP is currently under review. Foreseeable changes will most likely bring it closer to the Icelandic model. Nevertheless Iceland’s membership negotiations would be based on the current acquis and so there are various potential points of conflict. Fisheries will most likely be the most important issue in Iceland’s accession negotiations. The fisheries lobby is highly influential in the policy process and is likely to play a key role in the debate over EU membership as the per capita income from fisheries in Iceland is far greater than in any EU Member State.

6.3   Agriculture sector

6.3.1   Another organisation that has a long history of political participation is the Farmers’ Association. Farmers have traditionally been a strong force in Iceland with close ties to government, although their influence has weakened over the years as the sector has decreased in size. Like LIU, the Farmers’ Association follows the EU legislative procedure closely. The Farmers’ Association is a partner organisation of COPA/COCEGA and therefore its participation there is limited to a certain extent. This European umbrella organisation focuses mainly on EU related matters.

6.3.2   The Farmers’ Association strongly opposes EU Membership, arguing that it would lead to a large-scale loss of jobs in agriculture and have a considerable negative impact on the food safety and food security of the country. The main reasoning behind this argument is that Iceland would have to allow unlimited imports of agricultural products from the EU, which would be difficult for Icelandic farmers to compete with. Nevertheless, the EU's Food Law assuring food safety (3) is already part of the EEA Agreement and will come into effect at the end of 2011. During the implementation of the Food Law package at the national level, the Farmers’ Association fought successfully to maintain a ban on imports of fresh meats in the Icelandic legislation, even though such a ban is arguably inconsistent with the aims of the EU legislation. Under Article 19 of the EEA Agreement, Iceland has also agreed on tariff free quotas and concessions for specific products, which is a concern for the Farmers’ Association.

6.3.3   Agriculture will be a key area during the accession negotiations and explicit support for dairy production, sheep breeding and other traditional farming will be one of Iceland’s objectives. A similar long-term national aid scheme to those for other EU regions situated north of the 62nd parallel could help sustain agricultural activity in these areas of low population density and difficult climate conditions.

6.4   Environmental sector

6.4.1   There are a number of active environmental groups in Iceland. Environmental groups in the EU generally follow EU environmental policy closely, are active at European level and members of umbrella organisations. This does not seem to have been as important for Icelandic environmental groups through the years, although a few of them do have some international affiliations.

6.4.2   There are a number of potential explanations for this. Firstly, anti-whaling policies are popular among European interest groups, which may mean that Icelandic environmental groups do not feel an affinity with their European counterparts. Secondly, Icelandic environmental groups, such as Landvernd, focus primarily on the problem of soil erosion and the conservation of natural habitats in Iceland, often in opposition to the construction of hydroelectric dams to increase the production of aluminium. Although most EU environmental policy falls under the EEA Agreement, this does not include legislation on the conservation of natural habitats. Finally, environmental groups in Iceland have suffered from a lack of funding and resources. Perhaps for these reasons Icelandic environmental groups have been less active than their European counterparts at EU level and have generally not been very active in the EU membership debate to date. Landvernd, for example, has not formed an official position on EU membership, although it generally feels that the impact of EU environmental legislation has been positive. Landvernd is also interested in clarifying the role it can play in the accession negotiations including further participation in EU programmes such as the nature conservation framework.

6.5   Consumer protection

6.5.1   The Consumers’ Association of Iceland (NS) is an independent, non-profit, non-governmental organisation founded in 1953, they are active at European level and are members of umbrella organisations. NS already works closely with ECC-Iceland, which is a part of the European Consumer Centre Network. NS has not taken a firm stand for or against Iceland joining the EU. However it has long been the opinion of NS that Iceland should look into all the pros and cons of joining the EU and the general assembly of NS held in 2008 concluded that Iceland should apply for EU membership to find out what the real issues were and so that the discussion on the EU could progress without prejudice and be based on facts. In 2008 NS also had a report made focusing on the pros and cons for consumers if Iceland joined the EU. So, without taking a firm stand or forming a policy for or against the EU, NS has always encouraged the application to the EU as such and tried to play its part in opening up discussions about the EU.

6.6   Other organisations

6.6.1   Other important organisations include the Organisation of Disabled Persons, the Chamber of Commerce, which is a member of EUROCHAMBERS, the Federation of Trade and Services, member of EUROCOMMERCE, the Federation of Icelandic Trade, and various other NGOs. At present these organisations have not yet formed official views on EU membership, although they are likely to mobilise in favour of or in opposition to certain European policies. There are also special pro- and anti-EU groups such as Evrópusamtökin and Heimssýn.

Brussels, 9 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Ministry for Foreign Affairs of Iceland, Background note, Iceland’s Economic Recovery Programme, June 2010 http://www.mfa.is/media/MFA_pdf/Factsheet--Iceland%27s-Economic-Recovery-Program-June.pdf.

1

(2)  http://www.mfa.is/media/MFA_pdf/Factsheet--Iceland%27s-Economic-Recovery-Program-June.pdf.

2

(3)  General Food Law Regulation (EC) No 178/2002 and related acts.

3

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/15 |
| --- | --- | --- | --- |

19.2.2011

EN

Official Journal of the European Union

C 54/15

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Regulation on State aid to facilitate the closure of uncompetitive coal mines’

(own-initiative opinion)

(2011/C 54/03)

Rapporteur-general: Mr PEZZINI

On 21 October 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

Proposal for a Council Regulation on State aid to facilitate the closure of uncompetitive coal mines.

On 20 October 2010 the Committee Bureau instructed the Consultative Commission on Industrial Change to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr Pezzini as rapporteur-general at its 467th plenary session held on 8 and 9 December 2010 (meeting of 8 December) and adopted the following opinion by 158 votes to 8 with 5 abstentions.

1.   Conclusions and recommendations

1.1   The EESC believes that a package of measures is needed to kick-start a sustainable energy model and to provide the sector with a clear, stable reference framework which includes energy planning that safeguards security of supply, respect for the social, territorial and environmental aspects and the 2020-2050 roadmap.

1.2   The Committee recommends extending the regulation on the coal industry currently in force (Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry) by a period equal to the duration of the regulation about to expire, without increasing the EU budget and without categorically forcing mines to close but with the possibility of granting state aid for investment, innovative clean coal (CC) technologies, and skilling to produce highly-trained staff in the strategic raw materials sector; the Committee calls strongly for the Commission proposal to be amended ‘to facilitate competitive restructuring of coal mines’ and for consolidation of a Community strategic reserve.

1.3   The EESC calls for a mid-term check on the competitiveness of clean coal (CC) compared to the levels of competitiveness of other EU indigenous energy resources in the 2020 perspective, the aid granted to other indigenous energy sources and aid supporting the use of coal on the global markets, the volatility of international fossil fuel prices and the added value for Europe of indigenous resources, as well as the costs of converting electric power stations and decommissioning disused mines.

1.4   The Committee believes that this check, planned for 2014, should be carried out with all due regard for the implementation of the provisions of the Lisbon Treaty on the new Community energy policy (see Article 194) and should be compatible with the EU strategy for energy security and access to resources and with the other Community policies, particularly industrial, trade, research and innovation policies.

1.5   The Committee calls for a mid-term report to be submitted in 2015 to the European Parliament, the Council and the Committee itself on the competitiveness of the European coal industry. This report must look beyond the exceptional circumstances of the current crisis, taking into account the parameters described above for defining the industry's characteristics, and highlight its strategic, economic, technological, social and environmental developments, as well as the decrease in energy dependence.

1.6   The Committee points out that the EU leads the field in the research and development of clean energy technologies, particularly CCS (carbon capture and storage), clean coal technologies, coal-based polygeneration and power generation for integrated zero emission solutions (1), which are an integral part of the European Union's FP7 for RTD 2007-2013.

1.7   The EESC underscores that there are no competition distortion issues in the European internal market in that, as pointed out by the Commission itself, there is no large-scale trading in coal between the Member States, not least because the technological plant in electricity power stations are calibrated for their own specific types of coal.

1.8   The EESC points out that the assertions of the Coal Regulation (Regulation (EC) No 1407/2002) are even more valid now than previously, particularly:

| — | ‘the competitive imbalance between Community coal and imported coal has forced the coal industry to embark on substantial restructuring measures involving major cutbacks in activity over the past few decades; |
| --- | --- |

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‘the competitive imbalance between Community coal and imported coal has forced the coal industry to embark on substantial restructuring measures involving major cutbacks in activity over the past few decades;

| — | the Community has become increasingly dependent on external supplies of primary energy sources; |
| --- | --- |

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the Community has become increasingly dependent on external supplies of primary energy sources;

| — | the world political situation brings an entirely new dimension to the assessment of geopolitical risks and security risks in the energy sector and gives a wider meaning to the concept of security of supplies.’ |
| --- | --- |

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the world political situation brings an entirely new dimension to the assessment of geopolitical risks and security risks in the energy sector and gives a wider meaning to the concept of security of supplies.’

1.9   For these reasons and in light of the strategic importance of energy resources, the Committee recommends an effective transition towards a new European sustainable energy model, with a diversified energy mix encompassing all energy sources, technology to cut emissions and realistic timeframes for implementing, introducing and maintaining factors lessening its dependence on external resources.

1.10   The Committee believes that with regard to energy efficiency, combating climate change and reducing emissions of CO2 and other pollutant substances, it is important to secure a strong, democratic consensus. Accordingly, it insists that all levels of sector-specific social dialogue in the coal industry must be reinforced and better structured in the framework of the EU's economic and social cohesion policy for coal-producing regions where, given the current global crisis, ceasing production would result in over 300 000 job losses in certain specific areas.

2.   Introduction

2.1   The EU currently accounts for approximately 288 million tonnes of coal equivalent (Mtce) of coal production (2), of which 122 Mtce is hard coal. Coal is typically used either for electricity generation, for heat generation or for steel production and other industrial processes. Poland and Germany are the largest coal producers in the EU.

2.2   Out of the ten hard coal-producing Member States, six countries grant at least some form of state aid: mainly Germany and Spain, and to a lesser extent also Hungary, Poland, Romania and Slovakia (Slovenia only provides aid to already closed mines).

2.3   The 1951 European Coal and Steel Community Treaty contained clear rules on whether or not it was permissible for Member States to grant aid to companies in the coal and steel industry: the following (is) recognised as incompatible with the common market for coal and steel and shall ... (be) prohibited within the Community, as provided in this Treaty: ... subsidies or aids granted by States ... in any form whatsoever. This ban on all support for companies from individual States, set out in Article 4(c), was a logical consequence of the removal of all national protection measures within the common market.

2.4   However, following the establishment of the common market, it soon became apparent that it would not be possible to secure Europe's energy supply. Article 95, the provision adopted to cover unforeseen circumstances once the treaty had been signed, was then used as the basis for permitting certain kinds of Community aid. It allowed for Community intervention where this was necessary to achieve one or more of the treaty's aims.

2.5   When the ECSC Treaty expired, the Council adopted Regulation (EC) 1407/2002 of 23 July 2002 on State aid to the coal industry, which expires on 31 December 2010. Between 2003 and 2008 over EUR 26 billion of aid for the sector was approved.

2.6   The Committee expressed its opinion on this aid scheme (3), supporting the view of the ECSC Consultative Committee that a regulation which aims to improve energy supply security and provide a solid primary energy base cannot at the same time require a ‘continuous reduction’ of all aid for coal.

2.7   The Committee was pleased that the Member States [were] to have the possibility of maintaining a stable minimum level of production of indigenous hard coal, which will make access to substantial deposits possible. This meant maintaining an operational infrastructure, a strong emphasis and specific measures in the sensitive area of workplace health and safety, sound professional qualifications and technological expertise.

2.8   However, the Committee stresses the importance of giving this specific sector in the context of indigenous strategic raw materials an active role in making Europe more attractive to investors and employers, boosting business competitiveness and social cohesion, encouraging research and innovation endeavours, and, lastly, promoting the introduction and dissemination of new skills and the training of human resources (4).

2.9   Similarly, the Committee has pointed out that the Commission should focus on state aid which has a significant effect on trade rather than wasting its resources analysing large numbers of cases of predominantly local concern, and that it should clarify the meaning and interpretation of the concept of ‘local concern’ (5).

2.10   The Committee has also pointed out that at present, the fossil fuels coal (6), oil and natural gas are the backbone of the European and global energy supply. Moreover, as they will continue to be important over the next few decades, they remain essential (7).

2.11   Making greater use of Europe's considerable coal deposits could help to mitigate this dependency. In the case of coal, of the estimated EUR of 3 400 billion tons of oil units, only around 3 % has yet been recovered. [...] The expected lifetime of world-wide resources and reserves of coal, oil and gas is dependent on several factors (economic growth, exploration and technological advances). It still extends over many decades (perhaps even centuries in the case of coal) ... (7).

2.12   According to the projections of the Joint Research Centre – JRC (8) – for 2030-2050, coal is to continue to play an integral part in meeting energy needs throughout the 21st century. Increasing attention on limiting greenhouse gas emissions means major investment in research and development of clean coal market technologies and increasingly effective carbon capture and storage technologies. At global level, coal will remain a significant energy source, supplying over 20 % of the world’s energy needs.

2.13   As the Committee previously highlighted (9), after an initial downturn, coal consumption is expected to rise again around 2015 as the result of its improved competitiveness in electricity production. Rising gas prices and the anticipated availability of advanced coal-to-electricity conversion technologies are the main reasons for this development.

2.14   China, the USA, India, Australia and Russia are the major producers worldwide, with China producing 2 761 Mt per year (47 % of world production), the USA 1 006 Mt (17 %) and Russia 247 Mt (4 %). The EU imports 180 Mt of hard coal per year, mainly from Russia (30 %), Colombia (17,8 %), South Africa (15,9 %) and the USA (12,8 %) (10).

3.   The proposal

3.1   In view of the expiry of Council Regulation EC/1407/2002 of 23 July 2002 on State aid to the coal industry, the Commission recently set out the following six options:

| — | Option 1: the Commission would not propose a new sector-specific legal instrument applicable after the expiry of the Coal Regulation; general state aid rules would apply; |
| --- | --- |

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Option 1: the Commission would not propose a new sector-specific legal instrument applicable after the expiry of the Coal Regulation; general state aid rules would apply;

| — | Option 2: the adoption of guidelines on the basis of Article 107(3)(c) TFEU, which would be similar to those adopted in the shipbuilding and steel sectors (aid to cover payments to workers made redundant or accepting early retirement due to mine closures, counselling and vocational retraining for such workers, and decommissioning sites); |
| --- | --- |

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Option 2: the adoption of guidelines on the basis of Article 107(3)(c) TFEU, which would be similar to those adopted in the shipbuilding and steel sectors (aid to cover payments to workers made redundant or accepting early retirement due to mine closures, counselling and vocational retraining for such workers, and decommissioning sites);

| — | Option 3: a regulation allowing time-limited operating aid (closure aid), degressive operating aid as long as it accompanies an orderly winding-down of mines and plants in the context of a well-defined mine closure plan; |
| --- | --- |

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Option 3: a regulation allowing time-limited operating aid (closure aid), degressive operating aid as long as it accompanies an orderly winding-down of mines and plants in the context of a well-defined mine closure plan;

| — | Option 4: a regulation allowing aid to cover exceptional costs (inherited social and environmental liabilities) linked to the closure of coal mines; |
| --- | --- |

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Option 4: a regulation allowing aid to cover exceptional costs (inherited social and environmental liabilities) linked to the closure of coal mines;

| — | Option 5: a regulation on the basis of Article 107(3)(e) TFEU, allowing Member States to grant both closure aid and aid to cover exceptional costs; or |
| --- | --- |

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Option 5: a regulation on the basis of Article 107(3)(e) TFEU, allowing Member States to grant both closure aid and aid to cover exceptional costs; or

| — | Option 6: prolonging the current Coal Regulation by a further 10 years, i.e. till the end of 2020, without the mine closure requirement and with the possibility of granting investment aid. |
| --- | --- |

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Option 6: prolonging the current Coal Regulation by a further 10 years, i.e. till the end of 2020, without the mine closure requirement and with the possibility of granting investment aid.

3.2   The Commission has decided to propose a new Council Regulation based on option 5, with an additional instrument for Member States to cushion the social and regional impact of mine closures and enhance the social cohesion of Europe's regions.

In addition to the possibilities offered by the general state aid rules – to reinforce businesses’ competitiveness and social cohesion, stimulate a willingness to engage in research and innovation and, lastly, to promote creation and dissemination of new knowledge and training of human resources – the Commission proposal would offer the possibility of declaring two types of aid to the hard coal industry as compatible with the internal market: aid for closure and to cover exceptional costs.

3.3.1   Specifically, granting coal mine operational aid is to be subject to the following conditions:

| — | a detailed plan must be drawn up for the definitive closure by 1 October 2014 of the uncompetitive coal mine, which must have been in activity on 31 December 2009; |
| --- | --- |

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a detailed plan must be drawn up for the definitive closure by 1 October 2014 of the uncompetitive coal mine, which must have been in activity on 31 December 2009;

| — | the aid must be sharply scaled back over time: i.e. aid reduced by 33 % after each 15-month period; |
| --- | --- |

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the aid must be sharply scaled back over time: i.e. aid reduced by 33 % after each 15-month period;

| — | if the mine is not closed by the date fixed, all aid granted must be recovered; and |
| --- | --- |

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if the mine is not closed by the date fixed, all aid granted must be recovered; and

| — | Member States must present a plan to take measures aimed at mitigating the environmental impact of the use of coal. |
| --- | --- |

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Member States must present a plan to take measures aimed at mitigating the environmental impact of the use of coal.

3.3.2   Aid for exceptional costs is to cover exceptional site restructuring and decommissioning costs not directly related to current production, as well as social and environmental inherited liabilities arising from mine closures, provided that they are the result purely of closure of coal mining units.

4.   General comments

4.1   The Committee regrets not having being consulted by the Council, particularly considering the remit of the Consultative Commission on Industrial Change (CCMI), which was incorporated into the Committee as a permanent working structure and took on the role of the European Coal and Steel Committee (ECSC) Consultative Committee.

4.2   First of all, the Committee claims its right to give its opinion on an issue which is of great importance in terms of industrial change in the EU, as the ECSC Consultative Committee stressed with regard to Regulation EC/1407/2002, advising that improving energy supply security and providing a solid primary energy base ‘cannot at the same time require a 'continuous reduction' of all aid for coal’.

4.3   The Committee points out that the European Council of 19 and 20 March 2009 supported the 2nd Strategic Energy Review issued on 13 November 2008 by the Commission, which stressed the necessity of ‘making the best use of the EU’s indigenous energy resources’ and ‘the need to make best use of its own energy resources, including renewables, fossil fuels and, in countries which choose to do so, nuclear energy’.

4.4   The Committee also points out that the objectives of the Sixth Environment Action Programme 2002–2012 include ‘encouraging renewable and lower carbon fossil fuels for power generation’, and that Article 1 of the current Regulation on aid to coal provides for ‘maintaining, as a precautionary measure, a minimum quantity of indigenous coal production to guarantee access to reserves’.

4.5   Lastly, the Committee points out that Community studies too, as carried out by the JRC's Institute for Energy in Petten, note that hard coal will continue to play an integral part in meeting energy needs throughout the 21st Century.

4.6   The Committee welcomes the measures proposed by the Commission, insofar as they meet the need for competitive development of the sector's businesses and are not based solely on a non-competitive approach (11), in a common reference framework, in order to:

| — | maintain a sufficient level of indigenous energy resources, to contribute to security of supply and reduce energy dependency; |
| --- | --- |

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maintain a sufficient level of indigenous energy resources, to contribute to security of supply and reduce energy dependency;

| — | maintain a European position of leadership in smart mining technologies and ‘clean coal’ and CCS (CO2 capture & storage) environmental technologies: wider use of CO2 capture & storage technology will only be possible after 2020 and then only if the necessary R&D is carried out successfully in time; |
| --- | --- |

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maintain a European position of leadership in smart mining technologies and ‘clean coal’ and CCS (CO2 capture & storage) environmental technologies: wider use of CO2 capture & storage technology will only be possible after 2020 and then only if the necessary R&D is carried out successfully in time;

| — | respond to market failures concerning investment in research, innovation and restructuring, to enable European coal undertakings to acquire new market technologies at reduced costs and become competitive; |
| --- | --- |

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respond to market failures concerning investment in research, innovation and restructuring, to enable European coal undertakings to acquire new market technologies at reduced costs and become competitive;

| — | meet social and environmental goals by generating area-based wealth and jobs associated with development of regions in which mining and extraction and related industries are the predominant or only industries; |
| --- | --- |

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meet social and environmental goals by generating area-based wealth and jobs associated with development of regions in which mining and extraction and related industries are the predominant or only industries;

| — | apply the concept of local concern to the sector, given that intra-Community trade has little or no impact on the sector and therefore does not significantly affect trade, and that the current system of aid has not led to any substantial distortion of trade; |
| --- | --- |

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apply the concept of local concern to the sector, given that intra-Community trade has little or no impact on the sector and therefore does not significantly affect trade, and that the current system of aid has not led to any substantial distortion of trade;

| — | enable electricity power stations to be modernised and ensure respect for national (12) sectoral restructuring timeframes and procedures, supporting networks of coalmining districts and centres of competence for mining and use of mineral resources and networks for training highly qualified managers; |
| --- | --- |

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enable electricity power stations to be modernised and ensure respect for national (12) sectoral restructuring timeframes and procedures, supporting networks of coalmining districts and centres of competence for mining and use of mineral resources and networks for training highly qualified managers;

| — | preserve the concept of a minimum strategic reserve of indigenous coal to fulfil the public sector's universal service obligation to ensure energy security under Article 106 TFEU (previously Article 86(2) of the TEC); |
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preserve the concept of a minimum strategic reserve of indigenous coal to fulfil the public sector's universal service obligation to ensure energy security under Article 106 TFEU (previously Article 86(2) of the TEC);

| — | provide guidance, training and vocational retraining services for workers and experts from uncompetitive mines; support for early retirement in the sector and related industries; |
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provide guidance, training and vocational retraining services for workers and experts from uncompetitive mines; support for early retirement in the sector and related industries;

| — | develop and support the European sectoral social dialogue for mining industries and organise technical network-based forums such as the Berlin Fossil Fuel Forum; |
| --- | --- |

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develop and support the European sectoral social dialogue for mining industries and organise technical network-based forums such as the Berlin Fossil Fuel Forum;

| — | support dissemination and exchange of best practices, particularly from a technical and environmental point of view, both to make cutting-edge coal production and its applications competitive and sustainable and to initiate restructuring, diversification and closure (and rehabilitation (13) of sites) where these processes are not viable. |
| --- | --- |

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support dissemination and exchange of best practices, particularly from a technical and environmental point of view, both to make cutting-edge coal production and its applications competitive and sustainable and to initiate restructuring, diversification and closure (and rehabilitation (13) of sites) where these processes are not viable.

4.7   The Committee believes that the timeframe specified by the Commission is too short and does not meet the sector's development needs: the period 2011-2018 would be more appropriate – in the same way as the period 2002-2010 – for ascertaining whether the sector's undertakings are competitive, in the light of market technology developments, as regards low-cost CCS, clean coal and mining techniques.

4.8   In the same way, the Committee believes that the rate of degressivity is too high and concentrated in timeframes that are too short for competitiveness to be recovered and for innovation in the area of production, clean coal and CCS. In addition, the aid should reward rather than punish (as the proposal does) undertakings which recoup their competitiveness margins.

4.9   With regard to unbalanced competition between an imported product and an indigenous product, before suggesting that this calls for limitation of the Community system, maybe the aid systems of the exporter countries need to be examined more clearly and with greater transparency. The Committee believes, moreover, that there should be more careful, consistent verification, when agreements are signed with third countries, that a requirement is included to respect relevant ILO social standards in order to prevent exploitation of miners and ensure optimum safety conditions and protection of workers from the often fatal accidents which occur in the largest world production sites.

4.10   Lastly, the Committee feels it is essential for the future of the coalmining and electricity generation sectors’ activities to provide European undertakings and the Member States with a clear, proactive framework for horizontal aid which can be activated for social and environmental purposes and for the purposes of RTD, innovation, training and vocational skilling in the sector.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  See the ZEP – Zero emissions platform, European Technology Platform for zero emission fossil, fuel, power – Implementation Plan 2010–2012, www.zeroemissionsplatform.eu/ccs-technology/capture.html, the Belgian Presidency's 2010 SET-Plan Conference (15 - 16 ... The European Technology Platform on zero emission fossil fuel power plants (ETP-ZEP) ..., http//setis.ec.europa.eu/technologies/Zero-emission-fossil.

1

The European Technology Platform on zero emission fossil fuel power plants (ETP-ZEP)

(2)  For the purposes of this opinion, as per Article 2 of Regulation (EC) 1407/2002, ‘coal’ refers to lignite and hard coal.

2

(3)  OJ C 48, 21.2.2002, p. 49.

3

(4)  OJ C 65, 17.3.2006, p. 1.

4

(5)  As footnote 2.

5

(6)  Lignite and hard coal.

6

(7)  OJ C 28, 3.2.2006, p. 5.

7

(8)  Coal of the future (supply prospects for thermal coal by 2030-2050) Directorate-General Joint Research Centre (DG JRC) Institute for Energy, Petten (The Netherlands), February 2007.

8

(9)  See footnote 9.

9

(10)  The USA is still playing an active role in the funding of coal plants – both domestically and internationally – which is contradictory to President Obama’s pledge to phase out fossil fuel subsidies with the G-20.

10

(11)  In this connection, as stated in all the Commission's energy policy papers – from the SET plan to the 2011/2020 energy strategy – various parameters need to be taken into account such as the competitiveness levels of the other indigenous EU energy resources in the 2020 perspective, the aid granted to other indigenous energy sources and aid supporting the use of coal on the global markets, the volatility of international fossil fuel prices and the added value for Europe of the energy security of indigenous strategic resources, particularly in the event of international tension and crises; the costs of converting coal-fired electricity power stations and decommissioning disused mines should also be considered.

11

(12)  See, for example, the German plan for coal mines up to 2018.

12

(13)  Decommissioning.

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/20 |
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19.2.2011

EN

Official Journal of the European Union

C 54/20

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Opinion of the European Economic and Social Committee on ‘Security of supply in agriculture and the food sector in the EU’

(own-initiative opinion)

(2011/C 54/04)

Rapporteur: Armands KRAUZE

On 18 February 2010, the European Economic and Social Committee, acting under Article 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on

Security of supply in agriculture and the food sector in the EU

(own-initiative opinion).

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 17 November 2010.

At its 467th plenary session, held on 8 and 9 December 2010 (meeting of 9 December), the European Economic and Social Committee adopted the following opinion by 133 votes to 3 with 7 abstentions.

1.   Conclusions and recommendations

1.1   Ensuring the availability of food supplies should remain one of the fundamental objectives of EU agricultural policy. Given the challenges and uncertainties associated with global food security, the post-2013 Common Agricultural Policy (CAP) should continue to ensure security of supply in agriculture and the food sector.

1.2   Sustainable agricultural production and smoothly functioning agricultural markets create the basis for security of food supply in the EU. The future CAP needs strong market management mechanisms to ensure the functioning of agricultural markets and price stability. The rules for agricultural trade should guarantee the security of supply in agriculture in all countries and in all circumstances.

1.3   To be able to respond to all future challenges and to ensure security of supply in agriculture and the food sector in all Member States, the EU needs a strong CAP. The CAP should continue to be one of the key policies in the EU in the future. Future funding for the CAP must be adequate.

1.4   The key to food security the world over is sustainable local food production. In the EU diversified agricultural production should be maintained and promoted across the EU. Special attention should be given to remote regions and areas with specific handicaps.

1.5   The EU must devote more effort to systematic planning for security of supply to ensure the viability of agricultural production and the entire food sector, even in crisis and emergency situations. Practical actions (stocks, agricultural infrastructure, training etc.) in this field should however remain the responsibility of Member States. New EU legislation in the field of security of supply in agriculture and the food sector is not necessary at the moment.

1.6   Member States can use the EU's rural development policy as a tool for promoting actions to support and improve security of supply in agriculture and the food sector. The Member States should take advantage of this possibility in their rural development programmes.

1.7   The agricultural sector could play a significant role in increasing secure and sustainable energy supply in the EU and reducing EU dependency on imported fossil fuels. At the agricultural holding level, own-energy production can make an important contribution to security of supply. To boost the use of bioenergy on agricultural holdings, bioenergy technologies should be further developed. Production of bioenergy should be sustainable and more emphasis should be given to making better use of by-products from agriculture and the food sector to reduce pollution and CO2 emissions.

2.   Introduction

2.1   Supply security in agriculture and the food sector means ensuring that food is available and that populations have economic access to it, and eliminating hunger. In many farming sectors across the EU there are sufficient production levels to feed the EU population, and this has been achieved through the CAP. Food security as a public good that is not rewarded by the market, but provided by agriculture and the food sector for the benefit of society, is going to be an important CAP objective after 2013 (1).

2.2   Food security will be the main challenge for the global agriculture and food sectors over the coming decades. As a result of the food and economic crises, over one billion people in the world are suffering from hunger.

2.3   Food security means having enough food available to live a healthy life, as well as having food that is safe and uncontaminated. It is a complicated subject which links in with other sectors such as oil production, logistics etc. Any logistical or production problems in the main production regions due to unexpected crises can affect food availability for millions of people, especially for those living in urban areas. The key to global food security is sustainable local food production (2).

3.   The challenges of global food production

3.1   According to a forecast made by the UN Food and Agriculture Organisation (FAO), the global population will reach almost 9,5 billion by 2050; to feed these people, global food production will have to double compared with the current levels. The population in cities in the developing world will grow especially rapidly. There will be heavy expectations on farmers and increased pressure to carry out more intensive farming. Agricultural productivity will have to increase in order to feed the world’s growing population. The possibility of expanding land use is limited due to non-agricultural demands on land and the lack of available suitable farmland.

3.2   Investment in agriculture will have to increase everywhere, but especially in developing countries, which have substantial potential to expand production. Rural infrastructure, access to modern input, sustainable soil management and access to water in particular, as well as education systems and the functioning of agricultural markets, must also be improved in developing countries. In the longer term, however, the main issue for food security will be food availability and access to food. The most effective means of ensuring food security will be general development and increasing income levels in the poorest countries. Agriculture plays a particularly important role in ensuring food security, but it is difficult to guarantee food security solely through agriculture (3).

3.3   In its final declaration, the 2009 FAO Food Summit recommends that food production be the responsibility of individual countries.

3.4   It is generally better understood now, owing to the food and economic crises and the changing global situation, that all countries and regions, including the less favoured ones, must have the right and even an obligation to produce their own food. It must be possible to produce more food in a more sustainable way.

3.5   Another key challenge for global food supply, in addition to population growth, is climate change and the associated constraints on natural resources. Climate change may have a substantial impact on food production, especially in developing countries, some of which are also least able to adapt to climate change. Agriculture must seek to reduce greenhouse gas emissions, but at the same time it can also provide part of the solution to the emissions problem through soil carbon sequestration. More efficient agricultural production must be achieved with fewer emissions. Agriculture must contribute to improving air and water quality, preserving natural diversity and preventing erosion. Ensuring that sufficient agricultural land and fresh water are available are also critical challenges for global food security.

3.6   Innovation in agriculture has a key role to play in meeting challenges relating to food security and climate change. The main innovations in these areas often relate to plant and animal breeding, irrigation techniques, flood control, resistance to the heat and cold, diversification of traditional farming methods, etc. One solution to future problems may also be to improve the efficiency of plant breeding methods, which has the potential to increase agricultural productivity substantially.

4.   Security of supply concept

4.1   Food security is a key strategic issue for all the world’s peoples. Access to food is one aspect of a broader security concept. Problems in accessing food very soon result in increased social instability and unrest. Ensuring access to food, even in crisis and emergency situations, is the responsibility of society.

4.2   Food security in a modern networked economy is dependent on many issues. Food security requires stable energy supplies (oil and electricity), IT, efficient logistics, good hygiene and a functioning rapid alert system to protect society from harmful food. Member States must ensure the protection of critical infrastructure in agriculture and the food sector and concrete action on the ground.

4.3   Societies must make provision for emergency food supply situations. This is referred to as ‘security of supply’. It is generally understood to mean ensuring flows of materials (e.g. emergency stockpiling), but security of supply is understood more broadly to mean the ability to maintain those basic economic activities of a society that are essential to the living conditions of the population, and to the functioning and security of society. Security of supply in relation to food availability therefore means the capacity to guarantee food production and the functioning of the whole food sector, even in crisis and emergency situations.

5.   EU agricultural policy and security of supply

5.1   The European Union is currently preparing for the next revision of the CAP, i.e. agricultural policy post-2013. The Commission published a Communication on the future policy in November 2010. It will probably issue the relevant legislative proposals in the latter part of 2011, and the decision of the Council and the European Parliament can be expected in 2012. In the EU, sufficient food production will continue to be achieved through the CAP.

5.2   The objectives of EU agricultural policy, as set out in the Treaty establishing the European Community and which were incorporated unchanged into the Lisbon Treaty ratified last year, are to:

| — | increase agricultural productivity; |
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increase agricultural productivity;

| — | ensure a fair standard of living for farmers; |
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ensure a fair standard of living for farmers;

| — | stabilise markets; |
| --- | --- |

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stabilise markets;

| — | ensure availability of food supplies; |
| --- | --- |

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ensure availability of food supplies;

| — | ensure reasonable prices of food for consumers. |
| --- | --- |

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ensure reasonable prices of food for consumers.

5.3   It is clear that global changes and the new challenges that these present will set other objectives for EU agricultural policy, but the primary objectives mentioned above continue to be necessary and relevant. Over the years, various criticisms have been levelled at the EU's agricultural policy, as well as in the trade negotiations. In fact, the CAP has been able to meet the objectives set for it more than satisfactorily. It has guaranteed food supply throughout the Union, despite fluctuating prices and during periods of crisis. The CAP has thus maintained security of supply in the EU although the EU is not fully self-sufficient for some agricultural products and inputs. In saying this, the EU must take account of the fact that countries at the periphery of the EU often face difficulties to secure their supplies during periods of heavy price fluctuations.

5.4   In the future, global markets will operate more openly. Any future trade agreements may allow agricultural products from non-EU countries to enter the EU more easily (subject to food safety criteria), but at the same time will open up opportunities for EU agricultural products to access other markets. World demography and markets are changing agricultural production priorities and food demand across the world. The interdependence of societies and economic zones is increasing. Climate change is producing more and more extreme weather conditions. Since increased international trade alone is not enough to ensure food supply, fluctuations in the prices of agricultural products and market instability will increase in the future. The future EU agricultural policy must provide for market-stabilising mechanisms. The EU must not create instability in global food markets but must actively contribute to eradicate it.

5.5   The European Union is a major global food producer and exporter. The best way for the EU to help maintain the stability of global food markets and avert food crises is to ensure that its own agricultural market remains in equilibrium and functions effectively. The EU should also play a significant role in maintaining global food security.

5.6   European consumers want to continue eating good-quality, nutritious, safe food. Future agricultural policy has to ensure that all production is carried out in a way which protects the environment (air, soil, water), and protects the welfare of farm animals. The fact that standards are higher in the EU than in the rest of the world increases costs for European producers, and EU agricultural policy must provide for instruments, in agriculture and in business, to create a level playing-field between production in the EU and other countries. The challenge for the EU is to employ current tools (e.g. trade agreements) and develop new ones that will push other food producing countries towards the food producing standards employed by EU food producers.

5.7   Rural development policy (pillar 2 of the CAP) will continue to be of great significance for the balanced development of rural areas in the future. Rural areas are an essential part of Europe. More than 60 % of the population of the present European Union of 27 Member States live in rural areas, and rural areas account for 90 % of the Union’s total land area. Rural development policy, which takes a greater account of the different circumstances of the Member States, could become even more important in the future. The role of rural development policy as an employer in rural communities and a diversifier of business opportunities will grow. Rural development policy could be used as a EU tool in promoting the security of supply in agriculture and the food sector.

5.8   The future EU agricultural policy must continue to pay attention to security of supply issues given the challenges and uncertainties associated with global food security. Ensuring the availability of food supplies is a fundamental objective of EU agricultural policy. The EU must devote more effort to systematic planning so as to ensure the viability of agricultural production and the entire food sector, even in crisis and emergency situations. The necessary mechanisms must be available to ensure that this can happen. One key objective of EU agricultural policy must be to maintain diversified agricultural production and promote it across the EU. Maintaining the rich diversity of high quality food from different rural areas throughout the Union for EU citizens will provide the right strategic solution for the EU food policy. This will also help to guarantee security of supply.

5.9   In the long term the security of supply in agriculture and the food sector requires that agricultural production should be sustainable. Besides environmental sustainability, the economic and social dimensions are also important. More emphasis should be given to the role of agriculture in adapting to and mitigating climate change. Agriculture and food sector also have a role to play in the production of bioenergy. The targets of the EU2020 strategy should be mainstreamed in agricultural policy.

5.10   Bioenergy production has made EU agriculture a significant player in the adoption of renewable energy technologies. The sustainable farming and food sector can make a great contribution to reducing EU dependency on imported fossil fuels and ensuring secure energy supply to EU consumers. Converting agricultural waste and by-products (manure, food industry waste etc.) into bioenergy will help to reduce pollution and CO2 emissions.

Brussels, 9 December 2010.

The president of the European Economic and Social Committee

Staffan NILSSON

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(1)  A seminar on ‘The security of supply in agriculture and in the food sector in the European Union’ was held in Helsinki on 31 May 2010 in connection with the drafting of the opinion.

1

(2)  As defined by the FAO Food Summit.

2

(3)  OJ C 100, 30.4.2009, p. 44.

3

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/24 |
| --- | --- | --- | --- |

19.2.2011

EN

Official Journal of the European Union

C 54/24

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Opinion of the European Economic and Social Committee on ‘EU-Russia relations’

(own-initiative opinion)

(2011/C 54/05)

Rapporteur: Mr VOLEŠ

At its plenary session held on 17 and 18 February 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

EU-Russia relations.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 23 November 2010.

At its 467th plenary session, held on 8-9 December 2010 (meeting of 9 December), the European Economic and Social Committee adopted the following opinion by 195 votes to none with eight abstentions.

1.   Recommendations

1.1   The EESC welcomes the Joint Statement on the Partnership for Modernisation (PfM) adopted at the EU-Russia summit in Rostov-on-Don (31 May – 1 June 2010), including an appeal to civil society to foster its participation in the EU-Russia cooperation through enhanced dialogue. EU-Russia relations have a strategic meaning for both sides and should be based on mutual trust. Civil societies in the EU and Russia should activate their cooperation and contribute to the implementation of the PfM initiative. The EESC is prepared to contribute actively to this.

1.2   Regarding the Common Spaces, the EESC supports the existing structure but calls for a greater involvement of civil society from both sides in presenting their views and initiatives in various fields of activity.

1.3   The EESC suggests involving more relevant stakeholders in the dialogue on economic and trade relations and that consideration be given to the establishment of a widely representative EU-Russia Business Forum.

1.4   The EESC supports efforts to quickly reach progress in the negotiations on simplification and liberalisation of the visa regime.

1.5   More non-state actors should be involved in EU-Russian human rights consultations. The EESC is prepared to join this platform.

1.6   There should be more platforms where civil society organisations from the EU and Russia could contribute to the follow-up and monitoring of EU-Russia relations. The EU-Russia Civil Society Forum similar to the Eastern Partnership CSF could become such a tool.

1.7   The EESC calls for an increase in people-to-people contacts and exchanges in the field of education and intercultural dialogue as a tool to improve mutual understanding and confidence.

1.8   The position of the Member States vis-à-vis Russia should be more coordinated so that the EU speaks with one voice with ambitious but at the same time realistic goals and with a sufficient flexibility.

1.9   The EESC regards Russian membership of the WTO as essential, fully supports this process and wishes to see its completion as soon as possible.

1.10   The EU should revise the rules of financial support to NGOs through the European Instrument for Democracy and Human Rights which foresees a high share of co-financing prohibiting many of the Russian NGOs from using these grants.

1.11   The EESC recommends seeking opportunities for the involvement of Russia in large regional projects that would be discussed with the Eastern Partnership (EaP) countries especially in the field of environment, public health, transport and energy efficiency. Russian civil society should be invited to attend the meetings of the different platforms of the EaP Civil Society forum where such projects of common interest between the EU, EaP and Russia would be discussed. Stronger engagement of civil society in the implementation of the Northern Dimension policy, Baltic Sea Strategy, Black Sea Synergy and other relevant initiatives is also recommended.

1.12   The EESC reiterates its proposal to incorporate the establishment of a joint civil society body between the EU and Russia in the forthcoming agreement.

1.13   The EESC will establish a contact group dedicated to EU-Russia relations and will continue to develop its interaction with the Civic Chamber of the Russian Federation (CCRF) proposing at the same time to enlarge the participation to other civil society organisations that are not represented in the CCRF in the common activities.

2.   EU-Russia relations: the state of affairs

2.1   EU-Russia relations have been experiencing several up-and-down periods over the last two decades. The Russia-Georgia military conflict in August 2008 and the Russia-Ukraine gas dispute in January 2009 had a negative effect on mutual relations. Nevertheless both sides have been continuing in their efforts to overcome the stalemate. The main goal of this opinion is to present the EESC recommendations how to improve EU-Russia relations, and how civil society from both the EU and the Russian Federation could contribute to this aim.

2.2   Talks on a new EU-Russia bilateral agreement that should replace the Partnership and Cooperation Agreement of 1994 were launched in Khanty-Mansiysk in June 2008 and formally opened in July 2008. Both sides approached the negotiation process with a different emphasis on the nature of the new agreement. The EU wants to conclude a comprehensive and detailed strategic agreement whereas the Russian side prefers the conclusion of a basic framework political agreement that would be followed by detailed sectoral agreements in the sectors of Russia's interests (1).

2.3   The 12th round of negotiations between the EU and the Russian Federation that run through the working groups mirroring the Common Spaces started in the middle of November 2010. The present results of the negotiations are viewed by the European Commission with a cautious optimism; however, it is still too early to predict when the talks on the new agreement could be completed.

2.4   The slow progress in the ongoing talks on a new Agreement reflects the different views of both parties on their mutual relations. The EU supports a complex societal, political and economic modernisation in line with the European acquis and institutions. Russia, on the other hand, wants to be treated as a sovereign global power with its own approach to democracy, human rights, economic and security interests (2). To play this role Russia is using all the available assets it has – supply of natural gas and oil, nuclear arms capacity, space programmes, etc., including its position within international organisations, e.g. UN Security Council, Shanghai Cooperation Organisation, CIS, G-20 etc. However, the international projection of the above ambitions is limited due to the weaknesses of the present socio-economic conditions in Russia (3).

2.5   The EU and Russia differ substantially when it comes to possible changes in the European security architecture. Russia wants to revise the European security architecture as was reflected in Russia's proposal to conclude a new European Security Pact voiced by President Dmitry Medvedev in June 2008.

2.6   Deep differences remain also in the field of energy security. Russia wants to achieve special treatment as the EU's main energy supplier of natural gas and oil, including preferential treatment of its energy companies and their access to the EU market, including recognition of its special position and interests in the energy sectors of Belarus and Ukraine (4). Russia withdrew from the Energy Charter Treaty (ECT) in August 2009. For its part the EU considers ECT a basis for any further liberalisation of its energy market, including its openness to Russian energy companies. The recent initiative of President Medvedev on concluding a new Global Energy Security Treaty that would replace ECT was addressed to the member states of G-20, not to the EU exclusively, even though the EU remains the key trade partner of Russia in the field of energy.

2.7   Russia attempts to manage its interests vis-à-vis the EU through developing special relations with the traditional ‘big’ European powers. Indeed, the EU Member States have their own bilateral relations with Russia reflecting their traditions and interests but it is essential that they work to ensure that their positions and activities should become more coordinated in terms of formulating an overall EU policy towards Russia. The new Lisbon Treaty enhanced the EU Common Security and Foreign Policy as well as gave new competences to the EU regarding energy security.

2.8   Russia and the EU are also in disagreement regarding the Eastern Partnership, which Russia sees as an attempt to expand the EU's sphere of influence. On its side the EU views the Eastern Partnership as a tool to share its common values and standards with its Eastern neighbours since their implementation leads to their economic and social modernisation and contributes to security and stability of the whole European continent.

2.9   EU-Russia cooperation has improved positively in the context of the joint EU-Russia-Norway-Iceland Northern Dimension Policy. Tangible results have been achieved in partnership projects in the field of environment, public health, culture, transport and infrastructure. The EESC has continuously contributed to the implementation of the policy, stressing the importance of engaging civil society therein in its opinion on the Northern Dimension policy (5).

2.10   Notwithstanding the existing misunderstandings and difficulties mentioned above, a general common understanding of the strategic importance of bilateral relationship prevails in both the EU and Russia. The political will to upgrade bilateral relations has been clearly demonstrated by the Conclusions of the EU-Russia summit in Rostov-on-Don (31 May-1 June 2010), including the Joint Statement on the Partnership for Modernisation initiative (6).

3.   Lessons learned from the Common Spaces

3.1   General Findings

3.1.1   The institutionalised dialogue under the umbrella of Common Spaces (7) allowed for the most intense dialogue the EU has ever had in the history of its external relations with any third country. For the negotiations of the new EU-Russia agreement the following lessons of the existing cooperation within the EU-Russia Common Spaces should be learned: (8)

| — | the Common Spaces (CS) structure is a well-established institutional framework to maintain a wide-ranging political and sectoral dialogue between the EU and Russia, and should be preserved; |
| --- | --- |

—

the Common Spaces (CS) structure is a well-established institutional framework to maintain a wide-ranging political and sectoral dialogue between the EU and Russia, and should be preserved;

| — | in spite of several positive samples of progress achieved on sectoral issues CS has brought rather modest outcomes in relation to the initial expectations of both sides; |
| --- | --- |

—

in spite of several positive samples of progress achieved on sectoral issues CS has brought rather modest outcomes in relation to the initial expectations of both sides;

| — | in order to improve the dialogue and cooperation more political will, mutual trust and the ability of both sides to agree on terms and values including the mutually agreed standards is needed. |
| --- | --- |

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in order to improve the dialogue and cooperation more political will, mutual trust and the ability of both sides to agree on terms and values including the mutually agreed standards is needed.

3.2   Common Economic Space

3.2.1   The EU objective for the establishment of the Common Economic Space (CES) was the creation of an open and integrated market between the EU and Russia. Progress towards achieving this goal is slow and a free trade area seems to be rather distant reality. It is essential that Russia becomes a member of the WTO and the EESC welcomes the wish of the Russian side to accomplish its accession to the WTO as soon as possible. However, the creation of the Customs Union with Kazakhstan and Belarus has raised questions how it will effect its negotiations with the WTO.

3.2.2   The CES dialogue in different areas is multileveled and it involves many aspects of the economic, trade, financial and industrial issues (9). The EESC recommends that the CES dialogue should cover also employment and social policy with the involvement of the social partners that are not yet included in the negotiating process, taking at the same time into consideration the limits of EU competences in these fields. Special attention should be devoted to public health issues including sanitary and phytosanitary measures and consumer protection.

3.2.3   The EU-Russia Industrialists Roundtable is the institutional platform for the involvement of the business in the CES. Besides the positive aspects of the strong support of the business communities from both sides to the deeper economic integration, some working groups established with the aim of facilitating the EU – Russia dialogue on regulatory and industrial issues are still not functional (10) and recommendations and proposals are not taken into account by politicians and state administration. Larger and more systematic involvement of relevant stakeholders in the negotiation process would contribute to the identification and removal of ‘artificial’ obstacles hindering the mutual trade and investment. Tools to support such involvement need to be put in place. A EU-Russia Business Forum representing the main economic and business actors could become such a tool.

3.2.4   The key issue for all the working groups within CES should be to remove obstacles to business and investment, to prevent protectionism, to ensure fair competition and to negotiate the harmonisation of legislation and standards. The EESC calls for a higher accountability of progress and strengthening of Russia's capacities to implement the changes to legislation and practice. Furthermore, the Lisbon Treaty gives the EU competence in relation to investments, in terms of both regulation and protection. Therefore, the EU should include substantial investment provisions in the new agreement replacing and updating the PCA, including provisions on fair and equal treatment and, in particular, credible and reliable arbitration clauses to safeguard investor-State relations.

3.2.5   EU financial tools assigned for the support of cooperation in this field should be more connected to policies and their use must be simplified as regards administrative procedures. The implementation and evaluation phases of the process must be strengthened. In particular, small projects trust funds should be established with simplified procedures, so that funds are available to broader target groups and institutions including women entrepreneurs, SMEs, the social economy and used for small but concrete and results-oriented projects (11). Eventual reduction of available funds should be compensated by higher co-financing on Russia's side which should have more impact on and ownership of programmes and projects.

3.3   Common Space on Freedom, Security and Justice

3.3.1   The area of freedom, security and justice is a very important one since it involves the issues of democracy, respect for human rights and fundamental freedoms. Both sides have a common interest in addressing challenges such as organised crime, terrorism, drugs and illegal migration.

3.3.2   One of the main subjects of the negotiations is a visa and readmission policy. The EESC requests that the views of civil society on the facilitation of issuing visas for businesses, civil society organisations, students, multiple visas for the inhabitants of border regions, the reduction or abolition of visa fees, registration for foreign citizens and its simplification, balanced and non-discriminatory implementation of the respective rules pertaining to work and residence permits are taken into consideration respecting the competences of the Member States in these matters. The EESC supports speedy simplification and liberalisation of the visa regime based on the implementation of mutually agreed commitments.

3.3.3   The EU has to continue its efforts aimed at involving other non-state actors in the EU-Russia human rights consultations.

3.4   Common Space on External Security

3.4.1   The joint EU-Russia endeavours in the area of external security are limited. The EU certainly should strive to engage Russia in joint activities aimed at maintaining security, following the positive experience from joint missions in the Western Balkans and Chad.

3.4.2   The EU was invited by Russia to mediate the conflict settlement with Georgia after the Russia-Georgia conflict in August 2008. Russia still needs to implement all obligations under the 12 August and 8 September 2008 Agreements. The European Union Monitoring Mission (EUMM) is an indispensable factor for the stabilisation efforts in Georgia. Access of EUMM to Abkhazia and South Ossetia remains a crucial yet unfulfilled part of its mandate. In this regard, Russia's cooperation is of utmost importance.

3.4.3   In spite of their different views on the security in Europe and in the world both sides should continue to maintain the bilateral security dialogue and dialogue through the existing international institutions that should be used to debate on EU-Russia relations: the UN, Council of Europe, the OSCE, and the NATO-Russia Council.

3.4.4   The EU cannot neglect the interests of its Eastern neighbours in its relations with Russia and vice-versa and it needs to stay firm in its commitment to facilitate the Eastern partners’ transformation.

3.4.5   Unity on key issues (relations with Russia; energy policy; relations with the Eastern partners) will strengthen the EU's position in dealing with the Russian Federation. The EU should first of all start speaking with one voice.

3.4.6   While official contacts take place, civil society organisations, research institutes and think tanks in the EU and Russia cooperate in a still small number of issues. Insufficient contacts and lack of cooperation result in a stereotyped perception of interests and intentions of ‘the other’ partner. Therefore, bilateral civil society dialogue should be a contribution to the search for new approach to the issues of mutual concern such as international terrorism and its roots.

3.5   Common Space on Research, Education, and Culture

3.5.1   This common space can serve as an example of the most successful EU-Russia cooperation with hard science projects strongly dominating.

3.5.2   The sign of success is both sides’ active engagement evidenced by the programmes and funds provided and the bottom-up approach that means letting the scientists structure their work and choose the most suitable forms (12).

3.5.3   On the other hand this success contrasts with the rather limited mobility in the education field, where some exchanges have been achieved, for instance through Tempus and Erasmus Mundus Programmes. There is also difficulty in getting further information on the functioning of working groups. More attention should be given to the youth movement and intercultural exchanges. Civil society should become more involved also in the negotiations and follow-up of the agreements in this common space in order to monitor the effects of research projects on the knowledge-based society.

4.   The state of civil society in Russia

4.1   The available information about the situation of Russian civil society and about the social and civil dialogue (13) indicates that it does not correspond yet fully to the European standards, nevertheless its position and influence has partially improved since our last evaluation of EU-Russia relations (14).

4.2   The Civic Chamber of the Russian Federation (CCRF) established in 2006 has become the official body representing the civil society in Russia. The Chamber was established by the decree of the President who nominates one third of its members. The Chamber has managed to become an instrument of expression of views of the civil society on important issues at the national and regional level where local chambers have been established in many regions. The Chamber presents its recommendations, comments on the draft legislation and does the analysis of the sectors and situation in regions. The positions of the Chamber are sometimes very open and critical towards governmental policies (15).

4.3   According to the Report on the situation of civil society in the Russian Federation in the year 2009 (16) published by the CCRF, the number of non-profit non-governmental organisations (NNGOs) registered in Russia reached 670 thousand legal entities. Between 2004 and 2009, their total number dropped by 17 %. The CCRF recommends changing the classification of NNGOs and using the UN method that does not regard the institutions established by the state authorities as NGOs.

4.4   By the field of their activities, the largest number of NGOs are involved in social affairs (54 %), followed by science and education (44 %), defence of rights (42 %), charity (39 %), tourism and sports (32 %), culture (30 %), information (27 %), health (22 %), environment (12 %), municipality (9 %), religion (9 %), economy (6 %), housing (5 %) and others (5 %).

4.5   The CCRF has established relations with foreign partner organisations including the EESC (Memorandum of Understanding in 2008) and became a member of the AICESIS and hosted its Board meeting in December 2009. EESC-CCRF relations have since then been strengthened via the organisation of joint workshops on topic of common interest and the adoption of joint conclusions as a result of these workshops (17).

4.6   The Russian leadership is becoming aware that without the involvement of civil society it would not be possible to realise the strategic goal of the modernisation of Russia. During the last year, several amendments to the existing legislation have been adopted in order to improve the state of civil society, including the easing of restrictions on the activities of NGOs funded from abroad.

4.7   In spite of the gradual growing of the understanding of the role of organised civil society for the modernisation of the Russian political system there is still a long way to go.

4.8   The social dialogue between social partners on the national level takes place in the Russian tripartite committee for the regulation of the social and labour relations. The general agreements are negotiated between the All-Russian trade unions and the employers’ association with the participation of the government. The collective agreements are usually concluded in the enterprises where there are trade union representatives; nevertheless sometimes the disputes lead to strikes. Russia has ratified most of the ILO conventions but it is essential that these conventions are fully respected.

4.9   The employers are represented by the Russian Union of Industrialists and Entrepreneurs (RSPP) as an independent non-governmental organisation. The Union represents over 120 regional alliances and industry associations of key industries of the economy and plays an active role as the social partner in the Russian tripartite committee. It can initiate new bill drafts and makes continuous efforts to improve the existing legislation related to the economy and entrepreneurship. The Union cooperates closely with BusinessEurope and supports the improvement of the business relations between Russia and the EU and its Member States.

4.10   Alongside the RSPP there are other organisations representing entrepreneurs and employers such as the Chamber of Commerce and Industry of the Russian Federation (18), Russian Managers Association, Opora Rossii (SMEs Association) and others. They are represented in the CCRF.

4.11   The trade unions are represented by two trade union organisations: the Federation of Independent Trade Unions of Russia (FNPR) and the Confederation of Labour of Russia (KTR). Both are members of the International Trade Union Confederation (ITUC) and its regional structure for Europe – the Pan-European Regional Council (PERC) (19).

4.12   The EESC is concerned about problems facing the trade unions in Russia which have intensified in recent years. The free trade unions consider the absence of respect of the basic worker rights for the association, collective bargaining and strike as the most acute problem. There are obvious cases of uncovered pressure on trade unions and their members and their leaders to hinder their legal activities and cases of discrimination. There is an absence of effective legal protection of workers from the government administration responsible for the enforcement of the law in the industrial relations.

4.13   There is a large variety of non-governmental organisations. Their field of interest is indicated in the point 4.4. The organisations for protection of human rights opposed to the government (20) face different kind of obstructions, pressures and threats. The grassroots’ NGOs representing consumers, environmentalists, social economy, youth etc. (21) face mostly funding problems. Besides the civil society organisations working on the federal level there are thousands of NGOs active on the regional and local level, some of which face boycott or an unfriendly attitude from the local authorities.

5.   EESC proposals for the improvement of EU-Russia relations

5.1   General suggestions

5.1.1   Establishment of mutual trust between Russia and the EU is strongly needed – this is a task, first of all for political leaders but also for civil societies on both sides, which must play a major supporting role in this process. Without trust, further progress in the EU-Russia negotiations of the new treaty and the development of dialogue within Common Spaces structure is hardly possible.

5.1.2   On the EU side, a common approach agreed among Member States, greater clarity of goals, realistic ambitions and more flexibility could help in progressing with EU-Russia relations in broad terms and specifically in the building of the four Common Spaces.

5.1.3   The EU-Russia relationship needs a new political momentum that would allow both sides to revive their cooperation and to regain a sense of strategic partnership. The agenda of the Partnership for Modernisation (PfM) as agreed at the Rostov on Don Summit on 1 June 2010 should be considered by the EU side as a future-oriented package of cooperation proposals. They should give a new momentum to EU-Russia relations based on lessons learned from the Common Spaces and at the same time complement the Eastern Partnership offer already made to six East European countries.

5.1.4   The EESC welcomes the fact that the Partnership for Modernisation agenda includes not only technological and economic aspects but also the promotion of people-to-people contacts and the enhancing of dialogue with civil society to foster the participation of individuals and business. We are convinced that the modernisation of Russian society cannot be achieved without special stress on issues like human rights, democracy, the fight against corruption, the rule of law, freedom of media, social dialogue, increasing the role of civil society in the preparation, implementation and follow-up of the necessary reforms.

5.1.5   In order to make EU assistance to the activities of Russian NGOs more accessible and operative, the EESC recommends that consideration be given to a possible reduction of the existing 20 percent co-financing requirement for Russian NGOs if they wish to apply for support within the European Initiative for Democracy and Human Rights grant scheme. The requested co-financing for EIDHR grants significantly limits the scope of Russian NGOs that might benefit from EU support.

5.1.6   Russia's concerns regarding the Eastern Partnership initiative should not mean that the EU cannot propose and seek cooperation and partnership with Russia in the concrete regions and regional projects under condition of the equal and constructive participation of their common neighbours. In this respect the recommendations from the EESC opinions on the Northern Dimension (5), the Baltic Sea Strategy (22), the Black Sea Synergy (23), the Eastern Partnership (24) and the Danube Strategy should be taken into consideration. It is important that the goals agreed by the European Union with the Eastern partners and Russia are as compatible as possible. The sectoral dialogues with the Russian Federation and the action plans agreed with the Eastern partners should essentially lead in the same direction, although they are most likely to differ in scope and ambition.

5.1.7   The EU, the Russian Federation and their common neighbours should develop overarching projects in areas such as energy policy, infrastructure development, border management, environmental issues and approximation of standards that would help to transcend the dividing lines that may eventually result from the implementation of the Eastern Partnership.

5.1.8   Civil society should be involved in identifying the projects of interest for the EU, the Eastern Partnership countries and Russia, and Russian civil society organisations should be invited to the respective working groups of the Eastern Partnership Civil Society Forum whenever they will be discussing the issues relevant for the whole region. The similar EU-Russia Civil Society Forum could become a tool for involving Russia's civil society organisations in the development of EU-Russia relations.

5.2   The role for EESC

5.2.1   EESC and the Russian independent civil society organisations should be invited to participate in the EU-Russia human rights consultations that have been taking place since 2005.

In order to strengthen interaction between European and Russian civil society the following steps should be taken:

5.2.2.1   To establish a new contact group within the EESC REX section that would be dealing with the EU-Russian relations.

5.2.2.2   To propose the establishment of a joint civil society body between the EESC and the Russian civil society as one of the points of the future EU-Russia Agreement. Its main goal should be a civil society contribution to the development of EU-Russia cooperation.

5.2.3   The interaction with the Civic Chamber of the Russian Federation and steps taken towards an enhanced dialogue should be continued and developed so that it becomes permanent and regular. At the same time the EESC should ask the Russian side to invite to the joint activities representatives of other civil society organisations which are currently not represented in the CCRF.

5.2.4   The EESC should, as well, continue to contribute to the existing contacts between European and Russian civil society in the context of the Northern Dimension Policy, the Baltic Sea Strategy, the Black Sea Synergy and other relevant regional initiatives.

Brussels, 9 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Meeting of EESC representatives with the Deputy Prime Minister of the Russian Federation, Mr Alexander Zhukov, 29 June 2010.

1

(2)  See – National Security Strategy of the Russian Federation to 2020 approved by Decree No 537 of the President of the Russian Federation on 12 May 2009.

2

(3)  National Security Strategy of the Russian Federation to 2020 approved by Decree no 537 of the President of the Russian Federation on 12 May 2009; see part 2. The modern world and Russia: the state of affairs and development trends, p. 4-8, and part 9. Strategic stability and equal strategic partnership, p. 29-31.

3

(4)  Energy Strategy of Russia for the Period up to 2030 approved by the Decree of the Government of the Russian Federation No 1715-r on 13 November 2009; see part 9: Foreign energy policy, p. 55-58.

4

(5)  OJ C 309, 16.12.2006, p. 91-95.

5

(6)  Priority areas of the Partnership for Modernisation will include: expanding opportunities for investment in key sectors driving growth and innovation, enhancing and deepening bilateral trade and economic relations, and promoting small and medium-sized enterprises; promoting alignment of technical regulations and standards, as well as a high level of enforcement of intellectual property rights; improving transport; promoting a sustainable low carbon economy and energy efficiency, as well as international negotiations on fighting climate change; enhancing cooperation in innovation, research and development, and space; ensuring balanced development by addressing the regional and social consequences of economic restructuring; ensuring the effective functioning of the judiciary and strengthening the fight against corruption; promoting people-to-people links; and enhancing dialogue with civil society to foster participation of individuals and business.

6

(7)  In May 2003 the EU and Russia agreed on a new structured format of cooperation within four Common Spaces: the Common Economic Space, the Common Space of Freedom, Security and Justice, the Common Space on External Security, and the Common Space on Research, Education and Culture. In May 2005 both sides negotiated a package of road maps to implement the Common Spaces. See also http://ec.europa.eu/external_relations/russia/docs/commonspaces_prog_report_2009_en.pdf.

7

(8)  See - Searching for New Momentum in EU-Russia Relations. Agenda, Tools and Institutions. Bratislava: Research Centre of the Slovak Foreign Policy Association, 2009.

8

(9)  There are the following main working groups within CES: Transport; Industrial and Enterprise Policy; Regulatory Dialogue on Industrial Products; Space; Information Society; Agriculture; Fisheries; Macro-economic Policy; Financial Services; Energy; Procurement; Environment; Trade Facilitation; IPR; Investment; Inter-regional cooperation; Statistics; Macroeconomic and Financial Issues.

9

(10)  Working Groups, including subgroups on Construction Products, Machinery and Electrical Equipment, Conformity Assessment and Standardisation, Aerospace, Competition, and Public Health.

10

(11)  World trade, fair trade, fair competition, access to justice, data protection and privacy, durability, energy efficiency, water supply, consumer education, e-commerce, food policy, group action, health, liability for defective products and services, financial issues, telecommunications, contract terms etc.

11

(12)  There are the following working groups in the areas of health, food, agriculture and biotechnology, nanotechnologies and new materials, energy, aeronautics and environment, nuclear fission and nuclear fusion, information and communication technologies and seven groups were established in the field of space cooperation.

12

(13)  The Report on the situation of the civil society in the RF published by the CCRF in 2009 http://www.oprf.ru/documents/1151/1256/, briefing paper of DG Relex for the European Parliament from February 2009.

13

(14)  OJ C 294, 25.11.2005, p. 33-37 .

14

(15)  See the web site of the Civic Chamber of the Russian Federation, including the list of documents (opinions, monitoring reports, interventions, etc.): http://www.oprf.ru. For major achievements in terms of successful interventions vis-à-vis state authorities on federal and regional level see the column ‘We did it!’: http://www.oprf.ru/ru/press/984/.

15

(16)  See footnote no 13.

16

(17)  Information about the Joint Workshops and the text of the joint conclusions can be found at: http://www.eesc.europa.eu/?i=portal.en.events-and-activities-eu-russia-june-2010

17

(18)  The Chamber of Commerce ad Industry of the Russian Federation is member of Eurochambers.

18

(19)  The President of the FNPR is the currently elected President of Pan-European Regional Council (PERC). According to its statutes the General Secretary of the European Trade Union Confederation (ETUC) serves as the General Secretary of the PERC.

19

(20)  Some of the most prominent are Centre for the Development of Democracy and Human Rights, Human Rights Institute Russia, Youth Human Rights Movement, Public Verdict, Glasnost Protection Foundation, Golos Association in Protection of Voters’ Rights, Human Rights Watch (Russian chapter), Memorial (human rights group), SOVA etc.

20

(21)  Such as Freedom of Choice, Interregional Organisation of Automobilists, Greenpeace Russia, Bellona (Environmental protection), Institute for Collective Action, Movement Against Illegal Migration, Pamyat (preservation of historical monuments and recording of history), Russian Orthodox Church, Russian-Chechen Friendship Society, SOVA Analytical-Information Centre, Union of the Committees of Soldiers’ Mothers, World Wildlife Fund (Russian chapter).

21

(22)  OJ C 277, 17.11.2009, p. 42-48.

22

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

23

(24)  OJ C 277, 17.11.2009, p. 30-36.

24

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III Preparatory acts

European Economic and Social Committee

467th plenary session held on 8 and 9 December 2010

| 19.2.2011 | EN | Official Journal of the European Union | C 54/31 |
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Official Journal of the European Union

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467th PLENARY SESSION HELD ON 8 AND 9 DECEMBER 2010

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on the approximation of the laws of the Member States relating to units of measurement’

COM(2010) 507 final — 2010/0260 (COD)

(2011/C 54/06)

On 7 October 2010, the European Parliament and, on 15 October 2010, the Council decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union (TFEU), on the

Proposal for a Directive of the European Parliament and of the Council on the approximation of the laws of the Member States relating to units of measurement

COM(2010) 507 final – 2010/0260 (COD).

Since the Committee unreservedly endorses the proposal and feels that it requires no comment on its part, it decided, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December), by 85 in favour, votes with one abstention, to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/32 |
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Official Journal of the European Union

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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 the permissible sound level and the exhaust system of motor vehicles’

COM(2010) 508 final — 2010/0261 (COD)

(2011/C 54/07)

On 15 and 7 October 2010 respectively the Council and 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 on the permissible sound level and the exhaust system of motor vehicles

COM(2010) 508 final – 2010/0261 (COD).

Since the Committee unreservedly endorses the content of the proposal and feels that it requires no comment on its part, it decided unanimously, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December 2010), to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/33 |
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Official Journal of the European Union

C 54/33

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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 rear-mounted roll-over protection structures of narrow-track wheeled agricultural and forestry tractors’

COM(2010) 510 final — 2010/0264 (COD)

(2011/C 54/08)

On 15 November 2010, the Council and, on 7 October 2010, 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 (TFEU), on the

Proposal for a Directive of the European Parliament and of the Council on rear-mounted roll-over protection structures of narrow-track wheeled agricultural and forestry tractors

COM(2010) 510 final – 2010/0264 (COD).

Since the Committee unreservedly endorses the proposal and feels that it requires no comment on its part, it decided unanimously, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December) to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/34 |
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Official Journal of the European Union

C 54/34

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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 indications or marks identifying the lot to which a foodstuff belongs’

COM(2010) 506 final — 2010/0259 (COD)

(2011/C 54/09)

On 7 October 2010, the European Parliament and, on 15 October 2010, the Council decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union (TFEU), on the

Proposal for a Directive of the European Parliament and of the Council on indications or marks identifying the lot to which a foodstuff belongs

COM(2010) 506 final – 2010/0259 (COD).

Since the Committee unreservedly endorses the proposal and feels that it requires no comment on its part, it decided, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December), by 88 votes in favour, with three abstentions, to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/35 |
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19.2.2011

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Official Journal of the European Union

C 54/35

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 460/2004 establishing the European Network and Information Security Agency as regards its duration’

COM(2010) 520 final — 2010/0274 (COD)

(2011/C 54/10)

The Council (on 19 October 2010) and the European Parliament (on 29 October 2010) decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union (TFEU), on the

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 460/2004 establishing the European Network and Information Security Agency as regards its duration

COM(2010) 520 final – 2010/0274 (COD).

Since the Committee unreservedly endorses the content of the proposal and feels that it requires no comment on its part, it decided, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December), by 101 votes to one, to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/36 |
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19.2.2011

EN

Official Journal of the European Union

C 54/36

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Decision of the European Parliament and of the Council on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programme’

COM(2010) 550 final — 2010/0282 (COD)

(2011/C 54/11)

On 29 October 2010 the Council decided to consult the European Economic and Social Committee, under Article 172 of the Treaty on the Functioning of the European Union, on the

Proposal for a decision of the European Parliament and of the Council on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programme

COM(2010) 550 – 2010/0282 (COD).

Since the Committee unreservedly endorses the content of the proposal and feels that it requires no comment on its part, it decided, at its 467th plenary session of 8 and 9 December 2010 (meeting of 8 December), by 97 votes in favour and three abstentions, to issue an opinion endorsing the proposed text.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/37 |
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19.2.2011

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Official Journal of the European Union

C 54/37

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Opinion of the European Economic and Social Committee 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’

COM(2010) 289 final — 2010/0160 (COD)

(2011/C 54/12)

Rapporteur: Mr CEDRONE

On 23 June and 13 July 2010 respectively, the European Parliament and the Council decided to consult the European Economic and Social Committee, under Articles 114 and 304 of the Treaty on the Functioning of the European Union, 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

COM(2010) 289 final – 2010/0160 (COD).

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 25 November 2010.

At its 467th plenary session, held on 8 and 9 December 2010 (meeting of 8 December), the European Economic and Social Committee adopted the following opinion by 172 votes to 12 with 9 abstentions.

1.   Conclusions and recommendations

1.1   This Opinion deals with the second phase of the Commission’s three phase approach to the regulation of Credit Rating Agencies (CRAs). The Committee considers that on this issue the EU has reacted actively, not least with the proposal in question, stimulating similar reactions at international level, when faced with a crucially important issue which has caused serious damage (with no end yet in sight) to its economy, its businesses and its people. The Committee calls for this work to be pursued steadily and consistently.

1.2   The Committee also considers that swift action is needed to end the differences between the level of integration of the financial market and that of financial supervision (still in the hands of the Member States), as these differences are one of the causes of the damage suffered. The Committee therefore welcomes this proposal, which provides for making the ESMA (1) responsible for supervision of CRAs. The effectiveness of this will depend on adaptation of the relevant national provisions and an end to the confusion that still remains, going further than the current proposals as some countries have requested.

1.3   The Committee welcomes the proposals contained in Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16/09/2009 on credit rating agencies (2), particularly as regards basic issues; these concern transparency and conflicts of interest, information, competition and foreign rating agencies. However, while mindful of the complexity of the subject, the Committee regrets the delay in entry into force of the regulation, which should already have provided for the changes now being proposed.

1.4   The EESC is also concerned about the specific nature of sovereign debt and, in particular, the failure to set up a European body for assessing sovereign debt. We look forward to the outcome of the public consultation which is now under way (3).

1.5   The Committee attaches great importance to making European subsidiaries of agencies whose parent company is outside the EU subject to the new supervision rules. In this context, the EESC welcomes the relevant provisions of the 2009 regulation. The best solution would be a G20 agreement to lay down global rules making the various jurisdictions consistent, creating international codes of conduct which all agencies should abide by, and entrusting supervision to the Financial Stability Board, which should also have the power to impose penalties, in agreement with the various countries’ bodies. The EESC is pleased that this process has already been launched at the instigation of the EU.

1.6   The Committee considers that the reform process, which has already been launched, must be concluded more swiftly.

1.7   Restoring consumer and investor confidence in the financial market is vital, and this can only be achieved if people can be sure that the matter is being taken seriously, adopting strict measures to deal with ‘players’ who do not abide by the rules.

1.8   Given the role played by rating agencies in the recent crisis on the securities and financial markets, the Committee welcomes the fact that a three-phase programme has been put in place to regulate the role which these agencies play on behalf of investors and consumers (see the Commission report on its public consultation on the subject). The role of the CRAs is very important for providing the requisite information and ensuring that credit operations do not incur excessive risks (in itself an important task for ensuring the stability and security of the financial markets), their credit rating activity seems more open to question when it comes to sovereign States. The EESC welcomes the inclusion of sovereign debt in the public consultation underway.

1.9   The reasons for looking at the oligopoly held by a few rating agencies in the assessment of risks deriving from the instruments and bonds held by investors, banks, insurance or national governments stem mainly from the premise that the information supplied by these agencies is a public good, so that they ultimately provide a service of general interest. The EESC welcomes the fact therefore, that several European companies new to the rating sector have been the first to apply to the ESMA for authorisation to operate as rating agencies.

1.10   When rating agencies judge the financial sustainability of a sovereign State (sovereign risk), as happened recently with the downgrading of the government debt of Greece and other EU Member States which had borrowed heavily on international markets, a problem immediately arises as to whether their action is in keeping with their aims (to provide transparent and responsible information for the market) and whether there might also be a conflict of interest between private international investors (who use the rating to assess the risks of their investment activity) and the general public/consumer in the country concerned, who suffer the consequences of any declaration of the likelihood of sovereign insolvency, notwithstanding the fact that the insolvency may have been caused by shortcomings and omissions on the part of politicians.

1.11   Rating agencies can carry out effective rating of sovereign debt provided they have the proper instruments and methods and observe the rules laid down by the relevant public authorities.

1.12   The EESC believes that the rating of sovereign debt is a matter of public interest. It welcomes the public consultation which the Commission has launched and looks forward to presenting its considered opinion in due course. However, it calls for sovereign debt to be rated by a dedicated independent international or European agency, to safeguard the public interest. This agency must act swiftly and transparently and use appropriate instruments.

1.13   It is vital to ensure that greater competition is achieved between credit rating agencies operating independently of each other and of third parties. The Committee also proposes that, in the event of delays or failure to reach agreement at international level, the case be considered for encouraging setting-up of a dedicated European agency for sovereign debt. The establishment of an authoritative European agency for ordinary credit ratings should also be encouraged, in order to help increase competition in the sector.

1.14   Alongside the proposal for European supervision of rating agencies, the Committee welcomes the fact that the main related issues (penalties, competition, conflicts of interest, information), have been addressed by the 2009 regulation (4).

1.15   The Committee welcomes the fact that the relevant legislation reduces Member States’ room for discretion. This will make it easier to exchange information and ensure consistency of different countries’ legislation, to prevent the effects of European supervision being cancelled out.

1.16   As occurred with the reform recently approved in the United States, the Committee proposes encouraging harmonisation of national legislation protecting users of products and financial services (consumers, businesses etc.). Provision could also be made for the presence of one or more consumer representatives, chosen by the social partners and consumer associations, at the European supervisory authorities (now the European System of Financial Supervision - ESFS).

1.17   The Committee proposes encouraging, in the wider sense of the term, the financial information production network, facilitating the inclusion of more players and the introduction of new rules intended to achieve more transparent, effective assessment methods, particularly as regards derivatives.

1.18   The Committee proposes moving on from the current system of self-regulation, also at international level. The process of coordinating the various competent authorities needs to be pursued, with strict rules to apply to all devised and the certainty that they will be enforced. The EU should make every effort to achieve this objective in international bodies.

1.19   Lastly, the Committee proposes simplifying the regulation and making it clearer so that it is easier to understand and apply; complicated rules are easier to evade.

1.20   The Committee calls for an end to the obligation for rating agencies to rate securities in order for them to be sold (as proposed also by the Financial Stability Board). Removing this condition for issuing securities on the market would avoid passive acceptance of financial instruments that are high risk, even if they score highly. The Committee shares the concern of the Larosière Group that the use of ratings for regulatory capital removes too much responsibility from financial institutions while at the same time embedding the CRA oligopoly. The EESC welcomes the fact that this issue forms part of the current public consultation.

2.   Introduction

2.1   As is well known, the serious shortcomings in the regulation and supervision of international finance were among the underlying causes of the recent crisis. The crisis also eloquently showed the contradictions between a financial system and banking groups which operate as global companies while being regulated and forced to go under as bodies covered by domestic law (Mervyn King, Governor of the Bank of England).

2.2   The same is true within the Union, where the crisis has further increased the urgent need to devise a European reference framework for both regulation and supervision. Faced with an increasingly integrated financial market, we have discovered that different Member States adopt very different rules and supervisory systems.

2.3   The European Commission has adopted a progressive approach to the regulation of Credit Rating Agencies (CRAs). In the immediate aftermath of the banking crisis, the focus was on regulation and supervision with particular emphasis on the rating of complex derivatives and the conflicts of interest involved. The failures in the rating of these instruments contributed materially to the crisis (5).

2.4   In parallel with the legislative progress which culminated in the 2009 regulation, the findings of the Larosière group led to the decision to completely overhaul financial regulation and supervision in the EU. A proposal has since been adopted to implement a two tier supervisory framework in the EU. There are three dedicated supervisory bodies in the lower tier and one of these, ESMA (European Securities and Markets Authority), is to be responsible for the supervision of CRAs. The proposal which is the subject of the present Opinion is solely concerned with the modifications necessary to embed the powers of ESMA into the provisions of the 2009 regulation.

2.5   As the bank based financial crisis has been overtaken by the sovereign debt crisis, a new set of questions have arisen about the role of credit rating agencies relative, inter alia, to sovereign debt. It is possible that this further phase of activity will result in a third regulation which for the moment only exists in the form of a public consultation document dated 5/11/2010. The chapter headings give an indication of the issues involved: reliance on credit ratings for regulatory capital, sovereign debt ratings, enhancement of competition in the credit rating industry, civil liability of CRAs and potential conflicts of interest. It is to be expected that the EESC will give a considered opinion in due course on these issues in the probable context of the new regulation which has been referred to.

2.6   Moreover, harmonised EU rules also leave plenty of room for discretion and national options, aside from the addition of national ‘interpretations’ during the transposition stage.

2.7   Larosière found that CRAs have shown serious limitations, particularly as regards complex derivatives, when the assessment methods used, the lack of information and transparency and the evident conflicts of interest are considered (4).

2.8   Furthermore, these agencies have a full scale oligopoly, since just three of them control some 90 % of the credit rating market: Moody’s, Standard & Poor’s and Fitch, which are largely American. They played an important role in the development of the world financial and economic crisis. While the ‘issuer pays’ formula works reasonably well for sovereign and corporate debt, it created a major conflict of interests for the rating of complex derivative instruments, establishing an unprecedented vicious circle to the detriment of the transparency of the transactions carried out.

2.9   But as if nothing had changed, the same agencies go on issuing assessments which are not necessarily objective. Indeed, on 26 April 2010, notwithstanding the EU's commitment of EUR 110 billion for Greece, Standard & Poor’s downgraded the Greek debt to the level of that of Azerbaijan.

2.10   It was only in the wake of these events and of criticisms from leading EU figures on the workings of the credit rating system that the European Council decided to launch the above-mentioned public consultation, which includes the issue of sovereign debt. Certain Member State governments hate the idea that markets can lay bare the mistakes and miscalculations of profligate governments, even though governments have defaulted on sovereign debt from time immemorial. In the meantime, this Opinion relates to the 2009 regulation.

2.11   In its Communication of 2 June 2010 (6), the Commission summed up progress to date (see appended tables) on setting up a ‘safer, more transparent and more responsible’ European financial system, serving the real economy and society as a whole.

2.12   Hence the call for centralised supervision of the rating agencies operating in the EU, handing over responsibility to the new European System of Financial Supervision, the three European supervisory authorities, while leaving the fundamental issues related thereto to a later date.

3.   Gist of the amendments to Regulation 1060/2009

3.1   Subject matter, scope and definitions (Amendments to Title I)

3.1.1   The key, most significant element is, as has been said, the move from supervision at national level to European supervision, with most of the supervisory power entrusted to ESMA in respect of agencies registered in Europe and agencies which belong to other countries but operate in Europe (European branches).

3.1.2   Article 4 lists managers of alternative investment funds in order to treat them in the same way as the other EU financial institutions with regard to the use of credit ratings. This means that where these funds use credit ratings, the ratings must have been issued by a CRA properly registered or certified under the new Regulation.

3.2   Issuing of credit ratings, access to information (Amendments to Title II)

3.2.1   Issuers of structured finance instruments or related third parties should be required to give access to the information which they have given to the CRA they are using to competing CRAs as well, which should not use it for any other purposes than for the rating. This should avoid conflicts of interest arising for the CRA paid by the issuer – the entity requesting the rating (sic) (issuer-pays model).

3.3   Registration procedure and surveillance of rating activities (Amendments to Title III)

3.3.1   With the introduction of the single European supervisory authority, existing provisions, which envisage a college type of supervisory coordination, are to be eliminated (abolishing colleges) in order to permit more effective oversight of CRAs operating in multiple jurisdictions. In addition ESMA may ask the Commission to regulate the registration procedure and standards on the information to be supplied. It is entitled to request information, investigate potential breaches of the regulation, conduct inspections, etc.

3.4   Cooperation between ESMA and competent authorities (Amendments to Title III)

3.4.1   National authorities keep oversight responsibility as regards the use of credit ratings by the supervised entities (such as banks, insurance or investment companies); they exchange information on CRAs, cooperate and assist ESMA.

3.4.2   ESMA may also delegate certain tasks to competent national authorities, including for reasons of cost. In particular, it may delegate tasks such as investigations and on-site inspections, assessment of applications for registration and any tasks related to supervision. In this connection specific guidelines should be issued by ESMA, which will retain responsibility.

3.5   Penalties, committee procedure (Amendments to Title IV, Chapter I)

3.5.1   ESMA may request that the Commission impose penalties on CRAs in order to put an end to an infringement with the issuing of a public notice, obtain information it has requested or subject a CRA to an investigation. Where the CRA has committed a breach of the regulation, ESMA may fine it, request temporary suspension of issue of new ratings, request that the infringement stop or, as a last resort, withdraw the registration.

3.5.2   The committee procedures have been aligned with the Lisbon Treaty.

3.6   Transitional and final provisions (Amendments to Title IV, Chapter II)

3.6.1   Once ESMA is operational, national authorities’ powers in the area will have to be terminated. Procedures will also have to be established for transmission of documents and information by national authorities.

3.7   The Committee believes that the conclusions of the public consultation on credit rating agencies recently launched by the Commission tally with those of this Opinion. The Committee reserves the right to further explore the issues addressed by the consultation, should it be necessary.

4.   General comments

4.1   The new Commission proposal takes the right approach as regards moving from supervision at national level to European supervision, a highly complex operation which must be more than just a collegial endeavour on the part of the Member States (7) as proposed by the previous regulation if it is to yield satisfactory results. Moreover, the proposal follows the opportune approach already recommended by the Larosière report (8). The regulation could be seen as a little too vague in that it does not always provide clear solutions.

4.2   However, beyond that, the current proposal does not significantly change the rules CRAs have to comply with under the previous regulation (September 2009), in order to be registered or to pursue their activities.

4.3   In any case, the most important question relates to CRAs operating outside Europe, which are not actually affected by the proposed changes: who is really affected by the European regulation? How can ratings issued, for example, by Moody’s, Standard & Poor’s and Fitch (still the CRAs with the greatest influence, despite the disasters they have caused) be neutralised? Will supervising their European branches be enough to bring their worldwide oligopoly to an end?

4.4   It is well known which are the principal CRAs operating at international level: Moody’s, Standard & Poor’s, Fitch ratings, Dun & Bradstreet, A. M. Best, Egan-Jones Rating Company (all US companies), Dominion Bond Rating (Canada), Baycorp Advantage (Australia), China Credit Information Service (China), Japan Credit Rating Agency (Japan), Rating Agency Malaysia (Malaysia), NKC Independent Economists (South Africa). Where is Europe here? The fact remains that Europe, the leading world economic power, has no CRA, not even for sovereign credit.

4.5   The Anglo-Saxon group of agencies reflect the previous dominance of Anglo-Saxon capitalism which was not disrupted by two world wars and the specific operational issues relating to Asian economies. It is surprising that no European agencies have emerged since the Common Market was established although Fitch, which is French owned, has based itself outside France. The failure of a CRA with a global reach to emerge in the EU since 1957 can be compared with the equally poor EU showing in hi-tech industries over the same period. The EU does not nurture entrepreneurs in modern industries. CRA will review competition in its consultation. The entrepreneurial deficit will need to be examined.

5.   Specific comments

5.1   The Committee welcomes the creation of a European supervisory authority for the financial markets; the proposal is without a doubt a step in the right direction, gearing the financial framework more to the needs which have emerged in an attempt to restore the confidence and security of markets, individuals and businesses. However, the proposal is still insufficient to achieve its goals.

5.2   The proposal to have rating of alternative investment funds, if required, carried out by a registered or certified agency is also to be welcomed.

5.3   It is more difficult, however, to make the ‘issuer pays’ model transparent, objective and competitive, as the system still contains a conflict of interest, yet CRAs in this situation should be prevented from issuing ratings on their members. It is encouraging that a process to standardise rules at international level has been launched, for example, as is happening in the US, Japan, etc.

5.4   The Committee welcomes – not least for reasons of cost - the fact that certain tasks are delegated to national authorities, provided that this is part of a clear division of responsibilities between European and national authorities. In particular, it is important to make good commitments and define measures regarding accuracy of information, registration and on-site inspections.

5.5   The Committee welcomes the introduction of the principle of penalties for CRAs which fail in their duties or do not respect the regulation.

5.6   The real challenge for policy-makers, given that we are not dealing with fresh-faced innocents here, is not just finding clear, extremely dissuasive rules but enforcing them. Penalties need to be laid down for directors and managers of the European and international market supervision authorities who fail to meet their obligations as well, given the harm that failure to act on their part causes to banks and healthy finance, as well as the economy, businesses and individuals. All they are doing is giving a great boost to speculation and all those behind it. They should at least pay a personal price for their failure to comply. The ‘ethics’ called for by many in this period of turbulence will be hard to achieve without accountability and, therefore, penalties.

5.7   In addition, the part relating to the international aspects is not wholly adequate. Issues relating to users of financial products, both businesses and, more importantly, individuals, need to be addressed.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  European Securities Market Authority.

1

(2)  Hereinafter referred to as the 2009 regulation.

2

(3)  Public consultation on Credit Rating Agencies of 5.11.2010.

3

(4)  See the EESC Opinion on Credit Rating Agencies, OJ C 277/25, 17.11.2009, p. 117.

4

(5)  A synopsis of the 2009 regulation can be found in section 3 of the EESC Opinion on Credit Rating Agencies, OJ C 277/25, 17.11.2009, p. 117.

5

(6)  COM(2010) 301 final: Regulating financial services for sustainable growth.

6

(7)  Regulation No 1060/2009 of the European Parliament and of the Council of 16 September 2009, on credit rating agencies.

7

(8)  Opinion of the European Economic and Social Committee on the following proposals: Proposal for a Regulation of the European Parliament and of the Council on Community macro prudential oversight of the financial system and establishing a European Systemic Risk Board, COM(2009) 499 final - 2009/0140 (COD); Proposal for a Regulation of the European Parliament and of the Council establishing a European Banking Authority, COM(2009) 501 final - 2009/0142 (COD); Proposal for a Regulation of the European Parliament and of the Council establishing a European Insurance and Occupational Pensions Authority, COM(2009) 502 final - 2009/0143 (COD); Proposal for a Regulation of the European Parliament and of the Council establishing a European Securities and Markets Authority, COM(2009) 503 final - 2009/0144 (COD), OJ C 339/08 of 14.12.2010, p. 34.

8

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C 54/42

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council for the approval of agricultural and forestry vehicles’

COM(2010) 395 final — 2010/0212 (COD)

(2011/C 54/13)

Rapporteur-general: Mr JÍROVEC

On 7 September 2010 the Council 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 Regulation (EU) No .../2010 of the European Parliament and of the Council for the approval of agricultural and forestry vehicles

COM(2010) 395 final – 2010/0212 (COD).

On 14 September 2010, the Committee Bureau instructed the Section for the Single Market, Production and Consumption to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee, under Rule 57 of its Rules of Procedure, appointed Mr Jírovec as rapporteur-general at its 467th plenary session, held on 8 and 9 December 2010 (meeting of 9 December), and adopted the following opinion by 142 votes to 2 with 9 abstentions.

1.   Introduction and gist of the proposal

1.1   The objective of the proposed regulation is to lay down harmonised rules on the manufacture of agricultural and forestry vehicles. Existing legislation will be replaced in order to align it with the principles of Better Regulation and Simplification. The proposal contributes to the competitiveness of the industry and to the functioning of the internal market.

1.2   Following the recommendation from the CARS 21 report, the proposal significantly simplifies the type-approval legislation by replacing 24 base Directives (and around 35 related amending Directives) in the field of agricultural and forestry vehicle technical requirements with one Council and Parliament Regulation.

1.3   The Committee considers that the codification of all existing texts in the form of a single Regulation would be a very useful exercise. The proposed codification includes an assurance that it will not introduce any significant changes and will only serve the purpose of presenting EU legislation in a clear and transparent manner. The Committee fully endorses this objective and welcomes the proposal in the light of this assurance.

2.   Comments

2.1   Type-approval procedure is time consuming and the EESC is concerned that it would delay the introduction of the new machinery which could be disastrous for small volume manufacturers. The new Regulation must therefore be flexible enough to permit continuous development of existing machines and permit the introduction of new types of machines.

2.2   For some types of tractors designed solely for off-road use, exemptions should be considered for those provisions that relate to road use. This is a particular problem in relation to specialist vehicles.

2.3   The EESC also believes that any regulations should be based on more speed classes than the present two. As technology improves the stability and braking power of tractors, the speed of fast road tractors will increase. Opportunities should be created for slower types of vehicles which will fall into the ‘agricultural or forestry category’. The EESC believes that the proposed Regulation would hinder the development of smaller tractors by increasing unnecessary compliance costs while at the same time not recognising the changes needed on vehicles that can operate up to 65 km/h and with the possibility of even greater speeds in the future.

2.4   The EESC would also like to see the Commission address the peripheral issues relating to the use of agricultural or forestry vehicles on roads. In particular, the EESC would encourage European standards for driving licences, inspection of vehicles and road use. This would help to ensure that the rules and regulations governing the use of tractors would be common across Europe rather than the present differing national rules.

2.5   The EESC recommends that manufacturers be able to meet the requirements for entry into force of the Regulation, including the technical. Where this is not the case, there should be appropriate exceptional or transitional arrangements.

2.6   The EESC considers it useful with respect to Article 8 ‘Requirements on occupational safety’ not to regulate further via a future type approval Directive, but rather by means of Directive 2006/42/EC on machinery.

Brussels, 9 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/44 |
| --- | --- | --- | --- |

19.2.2011

EN

Official Journal of the European Union

C 54/44

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories’

COM(2010) 484 final — 2010/0250 (COD)

(2011/C 54/14)

Rapporteur-general: Mr IOZIA

On 13 October 2010, the Council and, on 7 October 2010, 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 (TFEU), on the

Proposal for a Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories

COM((2010) 484 fin – 2010/0250 (COD).

On 20 October 2010, the Committee Bureau instructed the Section for the Single Market, Production and Consumption to prepare the Committee's work on the subject.

In view of the urgency of the matter, the European Economic and Social Committee, at its 467th plenary session, held on 8-9 December 2010 (meeting of 8 December), appointed Mr Iozia as rapporteur-general and adopted the following opinion by 144 votes to four with six abstentions.

1.   Observations and recommendations

1.1   At the end of 2009, the Bank for International Settlements (BIS) put the notional value of derivatives at around USD 615 trillion (615 000 000 000 000), more than ten times global GDP. In 2010, banks are set to net USD 150 billion from these derivatives, 40 % of this turnover coming from unregulated (OTC) markets. A recent study conducted by a large global banking group showed that the OTC reforms to be adopted in Europe and the US will cut revenues by at least fifteen billion dollars.

1.2   The EESC welcomes the proposal for a regulation on derivatives, unregulated markets, central counterparties and trade repositories and concurs with Commissioner Barnier's remarks: ‘No financial market can afford to remain a Wild West territory. OTC derivatives have a big impact on the real economy: from mortgages to food prices. The absence of any regulatory framework for OTC derivatives contributed to the financial crisis and the tremendous consequences we are all suffering from’.

1.3   The choice of a regulation to regulate the area is sound and meets the need to bring in general, uniform requirements for all operators in the sector.

1.4   The EESC agrees with the Commission's proposal to trade standard derivatives through central counterparties (CCPs) and to ensure that the CCPs, which will take on increasing risks, are subject to uniform prudential standards. In fact, the idea has already been expressed in an earlier EESC opinion: ‘OTC markets should not be open to bilateral transactions, but limited to central counterparty transactions, which by monitoring the overall level of risk can limit access to transactions for over-exposed parties. Such transactions should take place either on a single platform, or at least on a defined set of platforms, in order to increase market transparency’.

1.5   The EESC warmly welcomes the decision to make the national authorities and ESMA jointly responsible for overseeing OTC (over-the-counter) derivatives markets, for identifying the various forms of derivatives that must be dealt with centrally, for granting, revoking or modifying authorisation for CCPs and for performing a similar role with regard to trade repositories.

1.6   It is vital, the EESC believes, to improve cooperation between ESMA and national authorities, which will undoubtedly be called upon to contribute their experience and knowledge of local markets and will have to ease the process of gradually increasing the interoperability of CCPs and improving their level of expertise, internal organisation and capacity to shoulder risks. The decision to restrict interoperability to cash financial instruments would appear to be the right one for the time being.

1.7   The proposal for a regulation implements, in fact, the suggestions made by the Financial Stability Board to extend CCP services to standardised OTC derivatives. The G-20 has determined that by the end of 2012 these contracts must be traded on exchanges or electronic trading platforms and cleared through central counterparties (CCPs). Furthermore, OTC derivative contracts will have to be reported to trade repositories.

1.8   At international level, in February 2010 a joint CPSS-IOSCO task force launched a comprehensive review of standards for market infrastructures: payment systems, securities settlement systems and central counterparties. The aim is to set about updating and bolstering the present principles and recommendations in the light of the lessons drawn from the recent financial crisis. One important result was the May 2010 report on Considerations for trade repositories in OTC derivatives market. When it comes to the role of CCPs, on the other hand, some useful recommendations made by the technical committee as far back as March 2004 have been ignored.

1.9   The Commission proposal makes no mention of a specific standard for credit default swaps (CDSs). The EESC hopes that measures will soon be adopted on these, which will be tightened up, together with short selling, from 1 July 2012, while derivatives will be covered by the end of 2012.

1.10   In October 2009, the Commission issued a Communication on future action to be taken to regulate the derivatives market. The aim is to boost transparency, reduce operational risks through standardisation and develop standardised contract exchanges, amending the MiFID as required.

1.11   The EESC firmly believes that the measures proposed will a) boost market transparency by giving an increasingly important role to trade repositories, b) reduce counterparty risk as progressively more operations are regulated via CCPs, which in turn will be subject to more stringent standards in terms of governance, internal organisation and capital requirements, and c) reduce operational risk through the use of electronic procedures to validate the terms of OTC derivatives contracts.

1.12   The EESC agrees with both the proposal for central counterparties and the restrictions on short selling. Making transactions transparent, holding operators and counterparties accountable and avoiding excessive speculation: these are the necessary goals that the Commission is tackling effectively, putting in place measures to offset, at least in part, the absence of regulation that contributed to the financial crisis.

The EESC points out, however, that there are risks that must not be underestimated. They include the risk of overstressing the benefits that CCPs can bring to CDS markets in the short term. The competitive nature of the various CCPs in clearing and in the fragmentation of the entire process is another factor not to be taken lightly, as is the risk of limiting the array of instruments available and pushing up the transaction costs involved in financial activity.

1.13.1   In order to tackle such risks effectively, the issues of CCP interoperationality, confidential data exchange, concentration of data gathering and reporting with the central counterparty and customer involvement in CCP governance should be examined with particular care.

1.14   The EESC recommends that the European institutions:

| — | swiftly adopt the regulation on OTC derivatives markets, which will restore confidence and calm to the markets and protect savers; |
| --- | --- |

—

swiftly adopt the regulation on OTC derivatives markets, which will restore confidence and calm to the markets and protect savers;

| — | complete the new regulatory system on derivatives as envisaged by the Commission; |
| --- | --- |

—

complete the new regulatory system on derivatives as envisaged by the Commission;

| — | speed up completion of the whole institutional and regulatory architecture involved in reform of financial markets regulation. |
| --- | --- |

—

speed up completion of the whole institutional and regulatory architecture involved in reform of financial markets regulation.

2.   The Commission proposal

2.1   The G-20 has on a number of occasions reiterated its commitment to speeding up the adoption of stringent measures to improve transparency and redress the underregulation of OTC derivatives.

2.2   The proposal for a regulation refers to numerous measures suggested in the European Parliament resolution of 15 June 2010 (on Derivatives markets: future policy actions) and is in line with recently-adopted US legislation known as the Frank-Dodd Act.

2.3   When it comes to the clearing, reporting and mitigation of risks from OTC derivatives, clearing via CCPs is envisaged only for standardised OTC contracts. To ensure, therefore, that as many OTC derivatives as possible are covered by the mandatory clearing mechanism, the regulation provides for two approaches for deciding which contracts must be cleared.

2.4   The first is a ‘bottom-up’ approach, according to which a CCP decides to clear certain contracts and is authorised to do so by its competent authority, who is then obliged to inform ESMA, once it approves the CCP. ESMA will then have the powers to decide whether a clearing obligation should apply to all similar contracts in the EU.

2.5   The second is a ‘top-down’ approach under which those contracts that have not been cleared by a CCP can be identified. Under this approach, ESMA, together with the European Systemic Risk Board (ESRB), will determine which contracts should potentially be subject to the clearing obligation. Counterparties subject to the clearing obligation must use a CCP.

2.6   As regards non-financial (corporate) counterparties, they will in principle not be subject to the rules of the regulation, unless their OTC derivatives positions reach a certain threshold and are considered to be systemically important.

2.7   The regulation lays down a process for identifying non-financial institutions with systematically important positions in OTC derivatives and subjects them to specific requirements. The process is based on the definition of two thresholds: a) an information threshold, and b) a clearing threshold.

2.8   The regulation therefore requires the use of electronic means and the establishment of risk management procedures. Finally, financial and non-financial counterparties above the clearing threshold must report the details of any derivative contract and any subsequent modification thereof to a trade repository.

3.   Requirements applicable to CCPs

3.1   Given that CCPs have to take on additional risks, the regulation requires that, for security reasons, they are subjected to rigorous organisational conduct of business and prudential requirements (internal governance rules, increased capital requirements, and so on).

3.2   A CCP must have in place robust governance arrangements. These will respond to any potential conflicts of interest between owners, management, clearing members and indirect participants. The role of independent board members is particularly relevant. Secondly, to be authorised to exercise its activity, a CCP is required to have a minimum quantum of capital. The regulation will require a CCP to have a mutualised default fund to which its members will have to contribute.

4.   Authorisation and supervision of trade repositories

4.1   The regulation provides for a reporting requirement in respect of OTC derivative transactions to increase the transparency of this market. The information must be reported to trade repositories. The trade repositories will be registered with ESMA, which will also oversee them.

4.2   The regulation also contains provisions for trade repositories to guarantee their compliance with a set of standards. These are designed to ensure that the information that trade repositories maintain for regulatory purposes is reliable, secured and protected. In particular, trade repositories will be subject to organisational and operational requirements and ensure appropriate safeguarding.

5.   The EESC's comments

5.1   The infrastructure of the securities markets has displayed substantial shortcomings in terms of management of counterparty risk and transparency of trading on the over-the-counter (OTC) derivatives markets, in particular credit default swaps (CDSs), which have been identified as responsible for the ‘great recession’.

5.2   These ‘atypical’ contracts have been partially responsible for lowering perception of the risk and prolonging the current crisis, badly affecting the institutes which issued them and therefore end savers. Lastly, as regards issuers, speculation by banks, which have been selling naked CDSs (without the underlying credit), has led to increased rates and, therefore, higher financial burdens for issuers, even causing them to go bankrupt.

5.3   For these reasons, CDSs have been described as ‘lead parachutes’; in other words, they are a potential mortal danger to the world financial system. The only practical solution that has been adopted is not to allow institutes to go bankrupt, recapitalising them with public funds and hence nationalising them. This measure has simply led inevitably to an increase in public debt, thus shifting the problem and the risk from the banks to the country to which they belong, causing serious turbulence on the currency markets in the euro area and forcing all the countries to take severe austerity measures, which have been a factor in slowing down the weak economic recovery.

5.4   In the USA, the Depository Trust & Clearing Corporation (DTCC) has set up a special company (The Warehouse Trust Company LLC) authorised to operate as a trade repository for CDSs. The US Administration has launched a legislative reform of OTC derivatives trading, including a requirement to use central counterparties for standardised contracts and concentration of transactions in regulated markets or organised platforms.

5.5   In Europe, the Commission is working on a legislative proposal (European Market Infrastructures Legislation) intended to increase the transparency and stability of the OTC derivatives market. The measures planned are consistent with the US proposal and seek to avoid regulatory arbitrage, which is important.

5.6   The EESC also warns against a number of risks in terms of the measures planned relating to the derivatives market. The fact is that derivatives and the lack of central counterparties and bans on short selling are not wholly to blame for the collapse of the financial markets.

5.7   From the eighties onwards, increasingly sophisticated derivatives circulated on the financial markets, increasing their effectiveness and bringing them closer to the ideal of market completeness as described by economic theory. The complexity of regulatory activities, supervision and oversight increased accordingly and the reform packages being discussed all aimed at gaining greater control of the markets, often decreasing their efficiency.

5.8   The more the price (or yield) of a security reflects the information available, the more efficient a market is. To make a market more efficient, circulation of information should therefore be facilitated so that it can be incorporated as quickly as possible into security prices. It is important to know what the trade-offs are in terms of efficiency.

5.9   First and foremost, it may be that measures seeking to reduce the range of financial instruments available, such as those limiting naked CDSs or short selling activities, do not increase market efficiency. Indeed, limiting the instruments available reduces markets’ capacity to absorb and disseminate the information available to operators.

5.10   It is certainly possible to discuss the usefulness of naked CDS, the additional information they provide compared to other instruments, and how far they influence the cost of financing. However, banning them would not achieve a great deal in terms of efficiency. Limiting the possibility of short selling reduces the system’s liquidity and, therefore, capacity to react immediately to new information which becomes available. Furthermore, limiting OTC security transactions, requiring operators to trade all derivatives on regulated markets and using clearing houses, could have a dual effect.

5.11   On the one hand, it would help make the market more transparent (it would be easier, for example, to monitor the sums and risk of securities owned by operators) and would make it possible to limit, at least in part, potential sources of instability. However, in situations of financial stress, transparency alone may not be enough. The Commission proposal gives national regulators clear powers in exceptional situations to limit or lift ‘temporarily’ a ban on the short selling of any financial instrument, in coordination with ESMA, which will in any case be able to intervene directly on two conditions: that the smooth functioning or integrity of the markets is under threat and that national regulators have taken no or insufficient measures.

5.12   On the other hand, however, the risk is once again that limiting the range of instruments available will increase transaction costs associated with financial activities. The futures market is highly standardised and regulated (as it is important to be able to observe the security prices contracted); the market in forwards (which are conceptually similar instruments to futures), however, is geared to the needs of counterparties and permits operators to structure pay-offs flexibly. These securities are not very standardised and it would be difficult to place them in the context of a traditional regulated market without limiting the options available to investors.

5.13   CCPs are seen as the solution to managing systemic risk and the way to make OTC markets more efficient and transparent. CCPs are certainly a key factor in reducing risk and increasing market efficiency, and when it comes to the market for exchange-quoted derivatives they are an essential part of the infrastructure. Logically, therefore, CCPs should also contribute to the development of the OTC market. Many institutes and politicians are, however, placing too much emphasis on the benefits that CCPs will be able to offer the CDS markets in the short term.

5.14   In actual fact, CCPs must not be seen as the solution to counterparty risk and may not be able to make the market more efficient, given its current state. As things stand, with numerous CCPs in each region, of different kinds according to whether they deal with credit derivatives or interest rate swaps (IRS), the possibility of using collateral efficiently and reducing exposure to the counterparty is compromised. CCPs can clear exposure on a multilateral basis but only for the region, counterparties or suitable types of derivatives they cover. That means clearing between CDS positions and IRS positions is not possible.

5.15   Bilateral clearing of exposure to several types of OTC derivatives with a single counterparty outside the CCP can result in more efficient use of collateral. It should, moreover, be borne in mind that derivatives will always be innovative, made-to-measure instruments and that there will be a large number of contracts which are not suitable for clearing. These positions should be reconciled, taking into account the credit risk, through a suitable collateral management process which does not include CCPs.

5.16   CCPs help to add value and distribute and isolate risk associated with an individual operator. The EESC endorses this. Their popularity will increase and accelerate the maturing and transparency of the market, with a subsequent welcome expansion of OTC activity in the future.

5.17   However, CCPs are only one part of a sound risk management structure. The counterparty risk will not be eliminated and the bilateral risk will continue to have to be taken into consideration for positions outside the CCP.

5.18   Lastly, in addition to this, there are many companies which do not invest in systems to manage the risk associated with their derivatives portfolio. These companies may well continue to expect to be saved even when their risk management is completely inappropriate.

Brussels, 8 December 2010

The President of the European Economic and Social Committee

Staffan NILSSON

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/48 |
| --- | --- | --- | --- |

19.2.2011

EN

Official Journal of the European Union

C 54/48

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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 the right to information in criminal proceedings’

COM(2010) 392 final — 2010/0215 (COD)

(2011/C 54/15)

Rapporteur-General: Mr PEZZINI

On 29 September 2010 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 the right to information in criminal proceedings

COM(2010) 392 final - 2010/0215 (COD).

On 20 October 2010 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 Pezzini as rapporteur-general at its 467th plenary session, held on 8 and 9 December 2010 (meeting of 8 December 2010), and adopted the following opinion by 161 votes to none with three abstentions.

1.   Conclusions and recommendations

1.1   The EESC welcomes the work undertaken by the Commission to develop a comprehensive package of legislation to guarantee a common set of procedural rights in the criminal proceedings of Member States.

1.2   The right to timely and accurate information is part of the EU's legal heritage and is becoming even more important as EU citizens move within the European Union.

1.3   Non-EU citizens too, now entering the EU in growing numbers, should be able to identify, firstly, an EU legal culture and, secondly, clear procedures that reflect respect for individuals, even if facing criminal procedures.

1.4   The EESC believes that the approximation of national legislations, which underlies the Directive, should become the cornerstone of judicial cooperation, also in order to emphasise the Charter of Fundamental Rights, which has been incorporated in the Treaty on European Union (TFEU and TEU).

1.5   The EESC believes that safeguarding human rights through common and shared procedures undoubtedly plays a strong part in the cohesion and reinforcement of free movement within the EU.

2.   General considerations

2.1   In order to guarantee the right to ‘fair’ criminal proceedings, in compliance with the rule of law, the EU has undertaken specific action to strengthen the procedural rights of suspects or accused persons in criminal proceedings.

2.2   This action also includes the strengthening of the rights of the defence. This joint action must be treated as extremely important, especially, in order to increase confidence in the European area of justice, as well as to make the principle of mutual recognition of judicial decisions in criminal matters effective.

2.3   Indeed, the removal of internal borders and the increasing exercise of the rights to freedom of movement and residence have led to an increase in the number of people becoming involved in criminal proceedings in a Member State other than that of their residence.

2.4   Council Resolution 2009/C 295/01 of 30 November 2009, recalling:

| — | the conclusions of the 1999 Tampere European Council, |
| --- | --- |

—

the conclusions of the 1999 Tampere European Council,

| — | the 2004 Hague Programme, and |
| --- | --- |

—

the 2004 Hague Programme, and

| — | the December 2009 Stockholm programme for 2010-2014, |
| --- | --- |

—

the December 2009 Stockholm programme for 2010-2014,

proposes, in general, to ensure full implementation and respect – on a step-by-step basis – of the ‘right to a fair trial’.

2.4.1   This is in accordance with the principle set out in Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, which is thus taken as the common basis for the protection of the rights of suspected or accused persons in criminal proceedings.

2.5   Furthermore, the right to a fair trial and to a defence are enshrined in Articles 47 and 48 of the Charter of Fundamental Rights (1).

2.6   More specifically, the six-point roadmap set out in the abovementioned Council Resolution identifies the following priority measures:

| — | Measure A: since one needs to be aware of one's rights of defence in order to exercise them fully, a suspected or accused person who does not speak or understand the language that is used in the proceedings has the right to an interpreter and a translation of essential procedural documents (2); |
| --- | --- |

—

Measure A: since one needs to be aware of one's rights of defence in order to exercise them fully, a suspected or accused person who does not speak or understand the language that is used in the proceedings has the right to an interpreter and a translation of essential procedural documents (2);

| — | Measure B: it is stipulated that a person that is suspected or accused of a crime must be correctly informed of his/her basic rights orally or in writing (e.g. a Letter of Rights). Furthermore, the right of that person to receive information promptly about the nature and cause of the accusation against him or her and, at the appropriate time, to the information necessary for the preparation of his or her defence, is also established. |
| --- | --- |

—

Measure B: it is stipulated that a person that is suspected or accused of a crime must be correctly informed of his/her basic rights orally or in writing (e.g. a Letter of Rights). Furthermore, the right of that person to receive information promptly about the nature and cause of the accusation against him or her and, at the appropriate time, to the information necessary for the preparation of his or her defence, is also established.

3.   Gist of the Proposal

3.1   In line with the mandate set out in the abovementioned Council Resolution, the Commission drew up the Proposal for a Directive on the right to information in criminal proceedings (COM(2010) 392 final) of 27 July 2010.

3.2   The purpose of the Proposal for a Directive is to ensure the detailed implementation of Measure B of the abovementioned roadmap by setting common minimum standards as regards the right to information in criminal proceedings throughout the European Union.

3.3   As a result, under these rules, the prosecuting authority is required not only to make the necessary information available to the accused but also to proactively bring this information to the attention of the defence.

3.4   Furthermore, in practice, these positive and reasonable measures are expected to cut the length and cost of legal procedures by preventing judicial errors and reducing the number of appeals.

3.5   In this respect, there may be a positive ‘compensation’ for the added – albeit limited – financial burden that will undoubtedly be incurred by the development and practical implementation of the information measures.

4.   Specific comments

4.1   Recital 18: the phrase ‘should be given to all suspected and accused persons promptly at the outset’ could give rise to different interpretations, for which reason, the precise moment for giving oral or written notification of the charge should be specified.

4.2   Recital 19: in the first sentence, the phrase ‘information about these immediately relevant procedural rights’ seems inexplicit, for which reason, the nature and scope of these relevant procedural rights should be more clearly spelt out, as they are particularly important to the effectiveness of the defence.

4.3   Recital 21: in the last sentence, the phrase ‘poses a serious risk to [...] the internal
  security ...’ seems vague. Nevertheless, the adjective ‘serious’ should be considered as an immutable condition in order to avoid any future possibility of Member States exercising ‘political’ discretion on the grounds of ensuring ‘internal security’.

4.4   Recital 22: the phrase ‘a mechanism to verify that the suspected or accused person’ could be more clearly expressed for the purposes of transparency and scope by adding ‘through formal acts’ after ‘verify’.

4.5   Article 3(1): it would be helpful to replace the word ‘promptly’ with the expression ‘from the very first act’.

4.6   Article 3(2), last indent: [Translator's note: the rapporteur wishes to bring the Italian wording of the phrase ‘be brought promptly before’ into line with the wording of the Italian version of Article 5(3) ECHR. The English wording already matches that of the ECHR, so this point does not concern the English version].

4.7   Article 4(1): it would be helpful to replace the expression ‘promptly provided’ with the expression ‘provided from the very first act’.

4.8   Article 6: since the Directive also concerns the right to information about the charge not only during the trial but also during the ‘pre-trial’ phase, the Article should specify that information about the charge should also be provided during police investigations or at least in cases of delegation of judicial authority or when initial charges are brought.

4.9   Article 6(1): the wording should be amended to read as follows: ‘Member States should ensure that a suspected or accused person is provided with sufficient information about the charge and the grounds for this charge, to safeguard the fairness of the criminal proceedings’, thus reflecting the concept set out in the ECHR (Article 6(3)(a)), which refers specifically to the 'cause of the accusation'’.

4.10   Article 6(2): [Translator's note: the rapporteur wishes to bring the Italian wording of the phrase ‘delivered promptly’ into line with the wording used in the Italian version of the ECHR. The English wording already matches that of the ECHR, so this point does not concern the English version].

4.11   Article 6(3)(a): instead of ‘... circumstances in which the offence

  was

  committed ...’, this should read ‘... circumstances in which the offence

  is said to have been

  committed ...’, since at the time of the charge it has not yet even been established that an offence has actually been committed; such a conclusion is only possible after the trial.

4.12   Article 6(3)(a): the phrase ‘including the time, place and degree of participation in the offence’, would be more accurate if ‘degree of participation’ were replaced with ‘effective role played’.

4.13   Article 6(3): add three new points as follows:

| ‘c) | the extent of the penalty applying to the criminal offence described above; |
| --- | --- |

‘c)

the extent of the penalty applying to the criminal offence described above;

| d) | deadlines and means of defence and means of proof; |
| --- | --- |

d)

deadlines and means of defence and means of proof;

| e) | the relative extent to which any confession is taken into account’. |
| --- | --- |

e)

the relative extent to which any confession is taken into account’.

4.14   Article 7(2): when using secrecy orders as grounds for refusing access to certain documents after investigations have been concluded, it must be ensured that the judicial authorities are prevented from exercising undue discretion, bearing in mind that in any case, the conclusion of investigations generally means that the procedural acts are made available.

4.15   Article 7(3): it should be ensured that all language versions of the Directive refer to ‘preliminary enquiries’ (English version: pre-trial) and avoid expressions such as the Italian ‘fase istruttoria’ since many legal systems do not have an exact equivalent.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Article 5(2) of the ECHR (Right to liberty and security) provides, that ‘Everyone who is arrested shall be informed promptly, in a language which he understands, of the reasons for his arrest and of any charge against him’.

1

Article 5(2)

Right to liberty and security

Article 6(3) of the ECHR (Right to a fair trial) further provides that Everyone charged with a criminal offence has the following minimum rights: (a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him; (b) to have adequate time and facilities for the preparation of his defence; [...] (e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court.

Article 6(3)

Right to a fair trial

Article 111 of the Italian Constitution, as amended by Constitutional law No 2/1999, also expressly provides for these fair trial guarantees.

Article 111

(2)  Directive 2010/64/EU was published in OJ L 280, 26 October 2010 and came into force on 20 October 2010.

2

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/51 |
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19.2.2011

EN

Official Journal of the European Union

C 54/51

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Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council amending Directive 2001/18/EC as regards the possibility for the Member States to restrict or prohibit the cultivation of GMOs in their territory’

COM(2010) 375 final — 2010/0208 (COD)

(2011/C 54/16)

Rapporteur: Gerfried GRUBER

On 7 and 10 September 2010 respectively the European Parliament and the Council 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 Regulation of the European Parliament and of the Council amending Directive 2001/18/EC as regards the possibility for the Member States to restrict or prohibit the cultivation of GMOs in their territory

COM(2010) 375 final – 2010/0208 (COD).

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 17 November 2010.

At its 467th plenary session, held on 8 and 9 December 2010 (meeting of 9 December), the European Economic and Social Committee adopted the following opinion by 169 votes to 12 with 12 abstentions.

1.   Conclusions

1.1   The EESC acknowledges that the use of genetically modified organisms in European farming raises major concerns for a large section of the European public. The EESC therefore welcomes the European Commission's intention to address this sensitive issue of Member States' freedom to decide on GMO cultivation with a view to reaching a practicable solution and to endeavour to promote a European framework that is compatible with the smooth operation of the internal market. The EESC considers, however, that the draft proposal that has been submitted, mainly based on ethical and moral criteria, creates more vagueness than certainty and could in practice result in a proliferation of (legally unstable) measures being adopted by the States and regions, which could affect the operation of the EU's internal market, the legal security of operators and the credibility of the system as a whole.

1.2   However, the Committee thinks that the present proposal needs to be improved and made more specific, especially with regard to legal certainty for those concerned. In the opinion of the Committee, such legal certainty could be achieved by for example introducing a concrete and enforceable legal basis in secondary EU law, with specific grounds, conditions, and procedures applicable to national measures. More generally, the Committee urges for further clarification of the legal basis of the proposal and the compatibility of possible Member States bans on the basis of Article 26b with EU internal market rules and WTO trade law, and other international legal obligations.

1.3   The issue of national restrictions on GMO cultivation is highly intertwined with the issues of coexistence and liability for GMO damages and unintended admixture. The Committee believes that these dossiers should therefore be considered together or in parallel legislative proposals, as part of a more comprehensive review of the EU regulatory framework for agricultural biotechnology, also in line with the December 2008 Environment Council Conclusions.

1.4   Given the timing of the Commission's current proposal, ahead of the ongoing overall review of the current legal framework, it is impossible to render a definitive opinion on the proposal, since this can only be evaluated comprehensively in relation to the ongoing review of the authorisation system and overall legal framework. This should not, however, unduly delay the improvements of the current proposal.

2.   The proposal for a regulation and its background

2.1   The European Union (EU) has a comprehensive legal framework for the authorisation of Genetically Modified Organisms (GMOs). The rules on GMO cultivation are to be found in Directive 2001/18/EC (1) and Regulation (EC) No 1829/2003 (2). It is possible for Member States to impose restrictions on the cultivation of GMOs that have already been authorised using the safeguard measures under Article 23 of Directive 2001/18/EC, subject to the conditions set out therein, based on additional scientific information suggesting that a given GMO poses a risk to human health or the environment. In addition, they may also take appropriate measures under Article 26a to avoid the unintended presence of GMOs in other products (coexistence).

2.2   In March 2009, an application by the European Commission to lift existing national safeguard measures (in Austria and Hungary) due to a lack of scientific justification was rejected in the Council. Similar Council votes have followed the same pattern, leading to a political stalemate, similar to the situation with the authorization system. In June 2009, thirteen Member States (3) issued a joint declaration calling on the European Commission to draft proposals that would permit Member States to decide on GMO cultivation.

2.3   In a decision of 13 July 2010, the European Commission, following up on the political guidelines of Commission president Barroso, submitted a legislative proposal intended to enable the Member States to make their own minds up about GMO cultivation. The Commission's proposals consist of a communication on the freedom of the Member States to decide on the cultivation of genetically modified crops (4), and a proposal for a regulation to modify the legal framework accordingly (5).

2.4   In technical terms, a regulation is used to add a new Article 26b to Directive 2001/18/EC. This provision allows the Member States to adopt measures to restrict or prohibit on their territory or parts of it the cultivation of GMOs already allowed in the single market, provided the grounds adduced are not related to environmental or human health risks, which are already covered by the authorisation system in place and are in conformity with the Treaties.

2.5   The aim of the draft regulation is to give Member States more leeway to decide on GMO cultivation – in conformity with the subsidiarity principle – and to put in place the required legal certainty. The Commission believes that the proposal for a regulation complies with the rules of the single market and with international obligations. It also takes the view that the new rules are not at odds with the current authorisation system, but merely complement it.

2.6   On 5 November, the Council's legal services issued a legal opinion on the choice of legal basis, the national measures that could be adopted and the compatibility of the proposed measures with the GATT agreements. The legal service asserts that the legal basis selected is not valid, expresses serious doubts as to the compatibility with the treaties or with the GATT of the measures that Member States might adopt and emphasises that it would be extremely difficult, at the Court of Justice and at the WTO, to defend a measure adopted by a Member State or region on the basis of ethical or moral criteria. Furthermore, these concerns were partly confirmed by the legal service of the European Parliament, which in its opinion of 17 November 2010 raised similar concerns about the conformity of possible justifications for national restrictions, e.g. based on public morality, with EU internal market rules and WTO trade law.

3.   On the current GMO authorisation system

3.1   The aim of the authorisation procedure established at European level is to ensure a high degree of protection of human life and health, animal health and welfare, the environment and consumer interests, whilst ensuring the effective functioning of the internal market.

3.2   The current rules on the authorisation and use of GMOs rest on a string of key (legal) principles which the EESC thinks should be respected. These include, in particular:

| — | an independent, science-based authorisation procedure; |
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an independent, science-based authorisation procedure;

| — | a high level of protection for health and the environment, in keeping with the precautionary principle; |
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a high level of protection for health and the environment, in keeping with the precautionary principle;

| — | compatibility with the single market and international obligations; |
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compatibility with the single market and international obligations;

| — | freedom of choice and transparency along the entire food chain; |
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freedom of choice and transparency along the entire food chain;

| — | legal certainty; and |
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legal certainty; and

| — | subsidiarity and proportionality. |
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subsidiarity and proportionality.

3.3   The Commission's proposals should be seen in the context and timeframe of the implementation of the conclusions of the December 2008 Council. Among other things, these conclusions call for a review – scheduled for completion by the end of 2010 – of the authorisation system in place. The initiatives concerned here are, in particular: a revision of the EFSA guidelines on assessing potential risks for health and the environment (6), a Commission report on improving environmental monitoring after authorisation, and a study of the socio-economic and environmental impact of GMO cultivation. There is also a review of the legal framework for genetically modified food and feed and for GMO cultivation. A complete overhaul of the entire GMO authorisation system is set to follow by the end of 2012.

3.4   In addition, further light is to be shed on the relationship between national prohibitions or limits on cultivation and coexistence rules, since the two matters are intertwined and, here too, the Commission would like to give the Member States greater leeway. The Commission's observations in its report of 3 April 2009 on the implementation of the coexistence guidelines (7) are important in this context.

4.   General comments

4.1   Although the Committee has not yet, of course, expressed a view on the specifics of national prohibitions on cultivation, it has in the past commented on matters that bear upon the present proposal for a regulation and remain valid as input in to the discussion or as proposals.

4.2   In its own-initiative opinion of 16 December 2004 (8), for example, the Committee went into some detail on the coexistence of GMO, conventional and organic cultivation and put forward proposals regarding regulatory levels. One of the points it made there is that some measures to prevent cross-breeding according to particular regional conditions, as well as regional provisions on cultivation or a ban on cultivation, should be regulated at national level. In addition, it also emphasised the need for EU-level minimum norms for coexistence and liability.

4.3   Particular attention must be paid to measures to protect nature conservation and environmentally sensitive areas. There must also be measures to safeguard regional economic and cultural interests, and other social economical impacts.

4.4   The Committee also pointed out in that opinion that the conditions for coexistence depend on regional circumstances and that parallel cultivation of GMOs and non-GMOs, both conventional and organic, appears to be impracticable within regions, particularly those with small-scale agriculture.

4.5   The opinion also addressed the marketing opportunities that could come from using quality marks and guarantees of origin where – in line with consumer expectations – GMOs had not been used. Along the same lines, many regions have proclaimed themselves GMO-free, prompting the Committee to highlight the legal uncertainties that this entails and that need to be cleared up.

5.   Specific comments/unresolved issues

5.1   Criteria for a possible prohibition or restriction of cultivation

5.1.1   Directive 2001/18/EC harmonised the provisions on GMO authorisation, including the adoption of safeguard measures under Article 23 and coexistence under Article 26a. The basis is Article 114 TFEU (previously Article 95 TEU) on harmonising legal provisions to achieve the goals of the single market. The new Article 26b now provides for Member States to be able to ban GM cultivation notwithstanding EU level authorisation.

5.1.2   The question then arises of the extent to which a national ban can be exempted from the area of harmonised law and does not run counter to the general legal principles of the single market. Even more so, according to a recent opinion from the Council's legal service (9), the legal basis of Art. 114 TFEU appears invalid given the aims, content and scope of the proposal for Art. 26b. The EP's legal service, on the other hand, does not call Art. 114 TFEU into question as legal basis of the proposal, thereby showing that there are diverging legal interpretations at EU level on this issue, which must be clarified and resolved.

5.1.3   The proposal gives neither a comprehensive nor a partial list of grounds that Member States might invoke for imposing a ban. All that is said – in Article 26b – is that the grounds must be different from those examined in the authorisation procedure. It is not possible, therefore, to put forward reasons that were already used in the environmental and health risk assessment under the EU authorisation system or reasons related to these. In the opinion of the EESC, the legal certainty afforded by the proposal could be strengthened by including in Art. 26b itself, an indicative (though non-exhaustive) list of concrete grounds which Member States may invoke to restrict or prohibit GM crop cultivation. Such grounds might include, in addition to ethical, moral and religious arguments, also certain socio-economic concerns. Such clarification in secondary law would serve as a lex specialis viz. the grounds listed in Art. 36 TFEU and developed in ECJ case law, and would thereby improve the compatibility with the internal market rules and the Treaties.

5.2   Legal certainty

5.2.1   The Committee takes the view that a mere reference to primary legislation is not enough to provide legal certainty. It draws attention, for example, to ECJ judgment C-165/08 of 16 July 2009 (10), which found a national ban on the authorisation of GMO seeds to be incompatible with EU provisions. This ruling illustrates the difficulty for Member States in basing their case on reasons other than health and environmental protection aspects.

5.2.2   However, the EESC recognises that, given the current legal and political situation, the creation of a clear and solid legal basis could afford the Member States greater legal certainty than at present. Nevertheless, this is better accomplished through a concrete and detailed legal basis in secondary law (i.e. Directive 18/2001/EC) than through reference to the meagre and ill-defined room for manoeuvre afforded by the general rules of the single market.

5.3   Scope of EFSA testing/collaboration with the Member States

5.3.1   The science-based authorisation system should be protected by revising, subject to Member State consent, the EFSA guidelines on assessing potential risks to health and the environment to make them binding. In this connection, the EESC would like to see the system of science-based and independent examination in the authorisation procedure further elaborated in line with the precautionary principle.

5.3.2   The EESC wonders whether the Member States should not be drawn more closely into the EFSA scientific risk assessment procedure where special issues are involved. The EFSA was originally set up in Regulation (EC) No 178/2002 (11) to deliver scientific opinions on food and feed safety, also taking environmental risks into account. Obviously the environmental effects of GMOs are also monitored in the Member States. However, the Member States themselves can also more thoroughly examine the various environmentally related matters within their own sovereign territory, with the EFSA then acknowledging those findings.

5.3.3   Generally speaking, methodological criteria should be established that all scientific work for and by the EFSA must meet. This should extend to peer reviews and could help ensure better coordination between the EFSA and the Member States (12). The EESC is aware that the EFSA applies formally the highest possible, absolutely scientifically independent risk assessment criteria and that it is therefore also a highly respected EU body internationally. There should be closer cooperation on developing research methods between the EFSA and research institutes, universities and independent researchers involved in risk assessment in the Member States.

5.3.4   Nevertheless, in order to ensure that the scientific assessment of GMOs is a more transparent, better quality process, the EESC proposes that the EFSA be reformed so that all interest groups are represented on the GMO panel (consumers, industry, traders, organic farmers, consumer cooperatives, nutritionists, doctors, etc.) and not just researchers.

5.4   Internal Market

5.4.1   The European Commission takes the view that the possibility of imposing national bans does not disrupt the internal market for GMOs as seed, food or animal feed. This assumption is questionable, since trade in authorised GMO seed could be curtailed, at least in areas or Member States in which a ban has been applied, as ECJ rulings in cases of this kind would seem to suggest (13).

5.4.2   For the time being, it is difficult to say whether a ban could lead to distortions in competition. However, in the absence of (minimum) EU-level coexistence and liability norms, the level playing-field in the non-GMO agriculture sectors will likely be jeopardised. What is clear is that the measures needed to provide for coexistence entail financial and other outlay that must be anticipated whatever path is taken. On the other hand, GMO-free status could offer marketing advantages, with consumer behaviour governing pricing.

5.4.3   To some extent, genetically modified crops require different culture techniques and cultivation measures – such as different crop protection products – from conventional ones. This could give rise to problems of supply, since the internal market in such products is incomplete and inoperative. This is just one example of how varied the conditions are in which farmers have to make their decisions about what and how they produce.

5.5   Socio-economic consequences

5.5.1   A report on the socio-economic effects of GMO authorisation is expected from the Commission at the end of 2010. Its findings should be taken on board in assessing the present proposal, since it is probably the fallout on the economy, the social sphere and the environment that will loom largest in justifications of cultivation bans under Article 26b. Until this report has been completed, it is impossible to render a full opinion on the current proposal.

5.5.2   It is also worth noting that in some cases Regulation (EC) No 1829/2003 already permits other factors than those that pose a risk to health and the environment to be taken into account in individual risk-management assessments.

5.5.3   Since not enough is known about the economic impact and the impact on competition law, the proposal should include a clause providing for assessment, with the Commission carrying out a prior impact assessment of this kind.

5.6   International obligations

5.6.1   One important dimension, in the Committee's view, is clarification regarding the fulfilment of international obligations, especially those of the WTO/GATT and the Cartagena Protocol. Since Member States seeking to impose a ban can now be expected to also cite Article 26b, it is particularly important that decisions on this rest on a sound, internationally secure legal basis.

5.6.2   Given how important this is, the EESC would have welcomed more explanation from the Commission regarding conformity with the EU's international obligations. On the same point, the reports of the legal services of the EU institutions on WTO compatibility should also be heeded, in particular the recent opinion from the Council's legal service (9), which has voiced strong doubts about the compatibility with the Treaties or with the GATT of any measures the Member States might adopt in reliance upon the new article 26b, in the form as proposed by the Commission. Also, the legal service of the European Parliament expresses similar doubts about the conformity of possible justifications based on e.g. public morality under EU internal market rules and WTO trade law.

5.7   Freedom of choice throughout the food chain

5.7.1   It is equally important to ensure freedom of choice for both producers and retailers and consumers. Producers are entrepreneurs and should be allowed, as a matter of principle, to make their own choices about cultivation methods. Likewise, importers and traders should be able to carry out their lawful professional activities in spite of the proposed new Article 26b.

5.7.2   National restrictions or prohibitions on cultivation should therefore follow the general principles of the Treaties, especially those of subsidiarity and proportionality.

5.7.3   To provide consumers with a choice between GM and non-GM food, there should be not only a properly functioning traceability and labelling system, but also a range of products on offer that appeals to consumers. It is particularly important here to take account of regional availability of products. The EESC wishes to emphasise the need for European consumers to be fully aware that any ban on GMO cultivation in their region or country will not prevent GMOs from being marketed freely within the same borders and that mass imports of GMOs - for animal feed or human consumption from third countries providing dubious traceability - will continue.

5.8   Interaction with coexistence issues

5.8.1   The aim of coexistence is generally to avoid unintended mixing of conventional or organic products with generically modified ones so that, on the one hand, producers and consumers retain freedom of choice and, on the other, economic damage to businesses is averted.

5.8.2   The EESC sees the effective implementation and safeguarding of coexistence as an important factor in the whole question of GM use, noting that much still remains unclear and more knowledge – particularly about long-term consequences – has to be gleaned at all levels.

5.8.3   While the possibility of a ban on cultivation under the Commission proposal may diminish the problem of unintended mixing or cross-breeding in the areas concerned, this should not distract us from seeking to design rules for a long-term coexistence of the different forms of cultivation. As the Committee recommended in 2004 (14), a minimum-harmonisation at EU-level of coexistence and liability norms (or alternatively in Article 26a a legal requirement for Member States to adopt such rules at national or regional level), will be imperative to securing freedom of choice, a level playing field in the agriculture sector, and to control the socio-economic impacts of GMO cultivation. This will be particularly relevant for border-regions.

5.8.4   The more that coexistence rules are worked out at national and regional levels, the more important it will be to exchange knowledge and good practice. The work of the European Coexistence Bureau (ECoB) should therefore be focussed on this and stakeholders enlisted accordingly at all levels.

5.8.5   However, the question of a limit for GMOs in seed and for GMOs that are not authorised in the EU but are imported into it (primarily animal feed) also still remains unresolved. Either the European Commission has to answer these questions or a start needs to be made quickly on implementing the proposals it has put forward.

5.9   Cross-border and liability issues

5.9.1   Also still awaiting clarification are liability rules in the event of unintended mixing with GMOs, especially contamination across national borders. At present, neighbouring Member States are under no obligation to inform one another where GMOs are being cultivated. In many cases, such information is only exchanged through personal contacts.

5.9.2   One proposal could be for an obligation on Member States at whose borders GMOs are being cultivated to post a notification of this on the internet in the language of the neighbouring country. A measure of this kind could possibly give greater legal validity to claims beyond national borders in the event of unintended mixing with GMOs and resultant economic losses.

5.9.3   Improvement is at hand in the supplementary protocol to the Cartagena Protocol adopted on 12 October 2010 on common rules on liability and redress for damage to biological diversity resulting from transboundary movement. The obligations it provides for should be implemented without undue delay.

5.9.4   The EESC also calls for an examination of the extent to which binding EU minimum standards on coexistence and liability (or alternatively in Article 26a a legal requirement for Member States to adopt such rules at national or regional level) could be made compulsory at least for the border regions of Member States, and could reduce private law liability risks, as well as clarify cases of doubt between Member States. The Committee notes the urgency of such liability rules, given that at present the insurance industry continues to decline offering insurance coverage for GMO-related damages, and the present EU environmental liability regime under Directive 2004/35/EC provides insufficient coverage for this type of damage.

Brussels, 9 December 2010.

The president of the European Economic and Social Committee

Staffan NILSSON

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(1)  Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing Council Directive 90/220/EEC (OJ L 106, 17.4.2001, p. 1).

1

(2)  Regulation (EC) No 1829/2003 of the European Parliament and of the Council of 22 September 2003 on genetically modified food and feed; OJ L 268, 18.10.2003, p. 1.

2

(3)  AT, BG, IE, EL, CY, LV, LT, HU, LU, MT, NL, PL and SI.

3

(4)  COM(2010) 380 final.

4

(5)  COM(2010) 375 final.

5

(6)  See the launched public consultation on the EFSA-draft of 12 November, which will run until 24 January 2011,

6

website: www.efsa.europa.eu/en/press/news/gmo101112.htm.

(7)  COM(2009) 153 final.

7

(8)  OJ C 157, 28.6.2005, p. 155.

8

(9)  Opinion of the Legal Service of the Council, 5/11/2010, 2010/0208(COD), 15696/10.

9

(10)  Ruling of the European Court of Justice C-165/08 (European Commission v Republic of Poland) of 16 July 2009.

10

(11)  Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, OJ L 31, 1.2.2002, p. 1.

11

(12)  See Hungary's case against the European Commission regarding Amflora (case T-240/10).

12

(13)  See e.g. Cases C-110/05, Commission v. Italy; C-142/05, Mickelsson and Roos; C-188/04, Alfa Vita; and C-416/00, Morellato.

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(14)  OJ C 157, 28.6.2005, p. 155.

14

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APPENDIX

The following passage was deleted as a result of an amendment accepted at the plenary session, although more than one quarter of the votes was given in favour of maintaining the deleted text:

Point 5.8.5

The solution to low levels of unauthorised GMOs should be technical in nature, by setting a minimum threshold for such occurrences, covering both animal feed and the food.

| Result of the vote | For: 83 | Against: 79 | Abstentions: 29 |
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Result of the vote

For: 83

Against: 79

Abstentions: 29

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| 19.2.2011 | EN | Official Journal of the European Union | C 54/58 |
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19.2.2011

EN

Official Journal of the European Union

C 54/58

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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 — A Digital Agenda for Europe’

COM(2010) 245 final

(2011/C 54/17)

Rapporteur: Mr McDONOGH

On 19 May 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 A Digital Agenda for Europe

COM(2010) 245 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 16 November 2010.

At its 467th plenary session, held on 8 and 9 December 2010 (meeting of 8 December 2010), the European Economic and Social Committee adopted the following opinion by 83 votes. with 1 abstention.

1.   Conclusions

1.1   The Committee welcomes the Communication from the Commission on A Digital Agenda for Europe. The Committee shares the concern of the Commission regarding the damage done to European economic and social progress by the financial crisis. The Committee agrees that the great potential of information and communication technologies (ICT) can be harnessed to mobilise the digital economy to provide a critically needed stimulus to growth and increasing living standards for Europeans. Furthermore, the Committee agrees with the Commission that the diverse policy initiatives covering the field of ICT and the Digital Agenda need to be unified and managed under a coherent plan of action.

1.2   However, although some parts of the Communication are well written and clearly outline the policy initiatives to be taken, other parts - for example the section dealing with the ICT-enabled benefits for EU society and the section on the international aspects of the Digital Agenda - are still vague on the action plan. The Committee expects that there will be a proper elaboration of all elements of the Digital Agenda in due course and full consultation on the detailed initiatives, in which it will duly participate.

1.3   The Committee notes the problems identified by the Commission, which are inhibiting the development of a vibrant digital economy in Europe - in particular the problems of commercial, cultural, and legal fragmentation of a Union comprising 27 countries, and the persistent underinvestment in networks, ICT education and research & innovation.

1.4   However, these problems have been the focus of EU concerns for a long time and, despite years of policy focus and action plans, progress has been less than anticipated. Now, in 2010, it is unacceptable that 30 % EU households still do not have Internet access (1); and that in the midst of economic crisis, Europe is unable to rely sufficiently on growth in the digital economy to help us recover quickly.

1.5   Although Europe is one of the most networked regions in the world, the complexity, lack of accessibility and usability of many ICT-based products and services represents a major barrier to inclusion for many people, especially the elderly and those with a physical disability. Europe has to focus on how better design of ICT products and services can respond to the needs of an ageing society and people with disabilities, also taking into account the objectives of the respective United Nations Convention.

1.6   It is frustrating for the Committee to be continuously calling, to no avail, for the inclusion of Internet connectivity in the Universal Services obligation. If the EU is serious about the Digital Agenda and the principle of e-Inclusion then action needs to be taken quickly on this issue. The Committee recognises the funding challenges posed by this measure and we recommend that EU funding should be made available to infrastructure providers based on transparent, objective and proportionate criteria.

1.7   Everyday the EU is becoming less competitive than the US, Japan and South Korea in advanced ICT infrastructure, ICT R&D expenditure and citizen participation in the digital economy. This decline in global competitiveness has to be reversed by aggressive policy initiatives, effectively implemented.

1.8   The Committee believes that the unsatisfactory progress towards achieving European objectives regarding ICT and the digital economy is due primarily to inadequate execution of policy initiatives at European and national levels: we knew what had to be done but we didn't do it. The Committee calls on member states to implement directives and recommendations regarding the Digital Agenda with urgency.

1.9   The Committee believes that the market alone cannot properly regulate itself for the benefit of the public good. Therefore, a balanced regulatory framework is needed to promote the interests of the greater number of citizens, as intended by the 2020 strategy.

1.10   The Communication is a timely expression of much-needed leadership and a management approach to achieving the Digital Agenda for Europe as part of the Europe 2020 Strategy (2). The Committee compliments the Commission on the governance and stewardship provisions included in the Communication to ensure proper and timely implementation of this critical agenda. However, the Commission now needs to produce a detailed strategy implementation document for the Digital Agenda to focus on effective execution.

1.11   The Committee supports the ‘Seven pillar’ action plan outlined in the Communication and compliments the Commission on its work. Although the details will require much more elaboration for proper consideration, the Committee believes that the high-level plan is reasonably comprehensive and mostly correct.

1.12   However, the Committee is surprised that the Galileo programme, an important investment in Europe's ICT future, has been excluded from the Communication. The Committee calls upon the Commission to ensure that Galileo is explicitly included in the Digital Agenda action plan and refers the Commission to the opinions by the EESC concerning the programme (3).

1.13   The Committee looks forward to consultation, in due course, on the specific Communications from the Commission regarding each detailed aspect of the Digital Agenda.

In formulating those Communications, the Committee directs the attention of the Commission to numerous previous Opinions by the EESC (4) which commented on the need for a secure, vibrant information society, a strong European ICT industry and a productive, high growth digital economy.

2.   Recommendations

2.1   Ubiquitous high-speed connectivity must be included within the scope of the universal service definition (5), with suitable funding mechanisms.

2.2   Funding should be increased for ICT skills development and knowledge & awareness programmes for citizens and SMEs. Information and support functions should be established in member countries to help SMEs and citizens understand and participate in the digital economy.

2.3   Given the commitment to eInclusion in the Digital Agenda, the Council should support initiatives across the EU to introduce school children, older citizens, and socially disadvantaged citizens to the use of broadband technology (e.g. Web-based learning, video conferencing, on-line public services, etc). All education programmes should be based on best practices.

2.4   Special focus should be given under the FP7 ICT research programme to the development of a new generation of products and services that will meet the special needs of the elderly, people with disabilities and people with literacy problems.

2.5   The encouragement and support of open standards for ICT products and services in Europe should be an explicit component of the Digital Agenda. Open standards facilitate competition and enable SMEs to grow and compete globally.

2.6   In addition to increasing the flow of funds to ICT innovation and R&D, the Commission must ensure that there is proper accountability and value for the money invested. Proper investment management practices should apply: investments should be granted on the basis of expected economic and/or societal returns, and all investments should be subject to rigorous stewardship to ensure that projected benefits are delivered.

2.7   Governance of R&D investment must ensure that there is good coordination across programmes and projects to maximise benefits and avoid wastage through duplication of effort.

2.8   R&D efforts should put a high priority on sustainability by investing in technologies that break the link between economic growth and environmental damage.

2.9   Priority could be given to funding innovative technologies that would build on Europe's global lead in wireless and mobile communications, to provide universal high-speed Internet connectivity, possibly by using spectrum that becomes available as broadcasting and other activities reduce their demand for bandwidth (so-called ‘white-space’) (6).

2.10   The Committee calls on the Commission to explicitly include the Galileo programme in the objectives and resources of the Digital Agenda. Funding should also be made available to stimulate technology and applications that will be able to use the highly accurate location global navigation signals provided by Galileo's services (7).

2.11   The EU should continue to fund R&D around the Internet of Things (8), which will be manifested by technological advances in wireless technologies, the Internet and Galileo.

2.12   Investment in R&D related to Critical Information Infrastructure Protection (CIIP) issues should be increased significantly (9).

2.13   The European Union should vest responsibility in an appropriate regulatory authority, including members of the European Agency for Fundamental Rights, to implement effective protection for critical information infrastructures across the EU (10).

2.14   A strong information security industry, which is organised in a coherent and coordinated fashion, should be fostered in Europe to match the competency of the very well financed industry in the US (11).

2.15   The Commission must be mindful to protect the interests of the citizens when working with global ICT companies to implement the Digital Agenda.

2.16   As a general principle of policy, the public interest – the ‘public good’ – should be balanced with private and business interests.

2.17   The Commission should take any possible measures to ensure that Member States rigorously enforce the regulatory framework for electronic Communications (12) and that implementation is even, balanced and universal in all 27 member states.

2.18   To ensure proper compliance with regulations, the powers of communications regulators in the member states and at the EU-level, should be strengthened along similar lines to the powers and authority of the European Aviation Safety Agency (EASA) (13).

2.19   Considering the growing importance of mobile ICT, Europe should move quickly towards a more market-based approach to spectrum management, with more empowerment of market players and the introduction of more widespread spectrum trading, and with less national bureaucratic prescription on bandwidth allocation (14).

2.20   Member States should be encouraged by the Commission to assert their national interests in the development and use of trunk-level transmission and switching networks for the achievement of national policy objectives: like closing the broadband gap. This can be achieved by working with telecommunications companies in Public Private Partnerships (15).

2.21   In areas of high population density across the Union, incentives should be given to infrastructure providers to install fibre to the home (FTTH).

2.22   The availability of useful online content and services is a key driver of online activity. Governments, public authorities, utility companies and other businesses should accelerate their web developments and the migration of customers to an online relationship.

2.23   Innovative ways should be found to accelerate the provision of high quality online user experiences by businesses for their customers. In this regard, special attention should be given to developments in the use of online video content.

2.24   Investment should be targeted at finding innovative solutions to the challenges caused by language diversity in the EU. The US and other large economies with a lingua-franca have an advantage when it comes to developing a single, coherent online market for goods and service. Language diversity is a special challenge for the 2020 vision.

2.25   Consideration should be given to implementing a European electronic identity (eID) to each citizen which would facilitate the delivery of eServices and online commerce.

2.26   The Commission should implement an EU-wide certification and labelling scheme for e-traders so that consumers can have universal protection when buying goods and services on-line, regardless of national boundaries. Such a scheme would increase consumer confidence in e-commerce.

2.27   When making cross-border purchases citizens need confidence that their personal data and money is secure; privacy must be guaranteed and personal data must be stored safely.

2.28   The Commission needs to put a licensing system in place for call centres to ensure the protection of EU citizens private data and money when conducting business through call centres, particularly call centres located outside of the EU.

2.29   Consideration should be given to implementing protections for consumers who make a mistake when confirming an on-line purchase. It is too easy at present for consumers to make expensive errors when confirming an airline reservation or other purchase. Perhaps all such transactions should include an ‘undo’ button.

2.30   Special focus must be put on e-Commerce involving children, with appropriate rules and Codes of Conduct.

2.31   The EU should fund a strengthening of Europol’s capability to fight cybercrime. The EU needs to be vigorous in prosecuting cybercrime with strong uniform punitive measures across the Union for offenders.

2.32   The Commission should produce a strategy implementation document to elaborate on the ‘Implementation and Governance’ section of the communication. The Committee believes that without a detailed, coordinated implementation plan the objectives of the Digital Agenda will not be achieved.

2.33   The Commission should maximise the use of ICT governance tools to support the execution of the Digital Agenda.

2.34   The EESC will establish a standing group to focus continuously on the critically important development and execution of the Digital Agenda.

3.   Background

3.1   The Digital Agenda for Europe is one of the seven flagship initiatives of the Europe 2020 Strategy, set out to define the key enabling role that the use of Information and Communication Technologies (ICT) will have to play if Europe wants to succeed in its ambitions for 2020. This major policy initiative received the full backing of the ministers responsible for the Information Society Policy of the EU at the Informal Ministerial Meeting in Granada, Spain in April 2010 (16).

3.2   The Need for A Digital Agenda for Europe

3.2.1   The objective of the Digital Agenda is to chart a course to maximise the social and economic potential of ICT.

The great potential of ICT can be mobilised through a well-functioning virtuous cycle of activity, depicted in the outer ring of Figure 1 below.

Figure 1

Virtuous cycle of the digital economy

Image

3.2.3   But while the transformational power of ICT is clear, serious challenges must also be confronted in order to harness it. The Commission has identified the seven most significant obstacles. These are listed in the inner ring of Figure 1.

3.2.4   Because of these obstacles Europe is lagging behind its industrial partners: 30 % of Europeans have still never used the internet; Europe has only 1 % penetration of fibre-based high-speed networks whereas Japan is at 12 % and South Korea is at 15 %; and EU spending on ICT research and development stands at only 40 % of US levels.

3.3   The Digital Agenda proposes actions that need to be taken urgently to tackle the seven most significant problem areas affecting the transformational potential of ICT to get Europe on track for smart, sustainable and inclusive growth.

3.4   The policy initiative includes one hundred actions and 13 key performance targets to be progressed over the next ten years, including more than thirty legislative initiatives. The Agenda is organised into seven policy pillars and recognises the critical, global dimension to achieving its objectives.

3.5   Implementation and Governance

The following diagram depicts the governance structure proposed to manage the implementation of the Digital Agenda:

Figure 2

The European Digital Agenda Governance Cycle

Image

4.   Comments

4.1   Inadequate execution of policy initiatives have acerbated the inertia in the European digital economy caused by fragmentation and underinvestment. It is vital that the Commission uses the ‘flag-ship’ of the Digital Agenda to galvanise good leadership and management practice to deliver Europe the high-growth digital economy it needs.

4.2   As the scale and intensity of investment in ICT and the stimulation of the digital economy increases, it is important that EU spending plans are accompanied by better and more stringent stewardship and accountability.

4.3   Efficiency and effectiveness of EU R&D spending on ICT is of critical importance because we need to maximise the benefits received from the substantial investments that will be made It is important that R&D programmes and projects are distinct and not wastefully duplicated at national, international nor technology-sector levels.

4.4   Europe is too dependent on giant global ICT companies for software and services. Only one European company is in the global ICT top ten – Nokia – and only one European company is in the global software top ten – SAP.

Open standards have played a critical role in the development and success of the Internet. Europe should explicitly encourage open standards to facilitate competition and lower the barriers-to-entry into the market for start-ups, including private sector and social economy entrepreneurs. Strong support for open standards under the Interoperability and Standards action plan would also aid the development of European ICT companies that can compete globally.

4.5.1   The EU needs to create the economic environment in Europe that encourages the development of innovative and strong ICT companies which can eventually compete on a global stage.

4.5.2   A good ‘home market’ is critical to growing vibrant SMEs into the global giants of tomorrow; the problems of fragmented digital markets and lack of interoperability have to be tackled to support the latent potential of Europe's ICT companies.

4.6   The massive spending by the US on ICT is causing a brain-drain from Europe. The US Federal IT market is expected to have a cumulative value of $530bn from 2011-2015, reaching an annual spend of $115bn by 2015. Europe needs to aggressively target spending on ICT if it hopes to keep-up with the pace of development in the Digital Age.

With news of the Stuxnet virus attacking critical industrial control processes (17), the issue of cybersecurity and Critical Information Infrastructure Protection is high on government agendas.

4.7.1   Europe today is already heavily dependent on ICT for the creation of wealth and our quality of life. It is important that our growing dependence on ICT is matched by an increasing sophistication of security measures to protect critical information infrastructure (power, water, transport, security systems etc.) and to protect citizens from cybercrime.

4.7.2   The Committee refers the Commission to its opinion on the protection of Critical Information Infrastructure (18). In particular, the Committee believes that Europe needs strong leadership with power vested in an appropriate authority to adequately protect the EU from attacks.

4.8   The Commission's Green Paper on Demographic Change highlights the demographic shift in Europe to the rapid ageing of its citizens accompanied by a diminishing number of young people. Although this presents many challenges, there are also opportunities involving technological innovation that can enhance the quality of life for older and impaired people, mitigate the economic problems of an ageing population, and create new economic and business opportunities in Europe. It is assumed that new ICT for elderly people will play an important role in solving some future problems. Europe therefore has to plan how technology can respond to the needs of an ageing society, as ICT can help to improve their quality of life, stay healthier, live independently for longer and remain active at work or in their community. A wide range of services could be offered in the area of communication, shopping, safety and health to name a few.

4.9   Because the interests of European citizens and those of the global ICT companies are not always aligned, the interests of citizens must be balanced with those of business.

4.10   Language diversity is a special challenge for Europe when trying to create a vibrant single market for online goods and services. More investment is needed to create innovative solutions to this challenge.

4.11   The availability of high quality content and services on the web is a fundamental driver of user adoption. The roll-out of services by governments and public authorities across the EU is very patchy and more needs to be done to help those lagging behind to drive their programmes forward; in particular, much more could be done in the area of e-procurement for public goods and services.

4.12   Fostering a cross-border e-commerce economy in the EU is a highly complex process. To get beyond the ‘early adopters’, e-commerce must be easy and secure. Today the legal, linguistic, cultural and technological fragmentation between the 27 member states of the EU creates significant barriers to growing an open EU-wide e-commerce economy. These problems need to be tackled one-at-a-time, but the introduction of an e-ID for every citizen and the pan-EU certification of e-traders would go a long way to easing the problems.

4.13   A good example of e-trader certification exits in the Netherlands. The trade association of online sellers has set up a certification institute with an independent supervision board. All members of the association must follow a code of conduct and use a standard customer contract, agreed with Dutch Consumer Organisation - Consumentenbond. With certified e-traders the customers have recourse to a structured complaints procedure to resolve disputes. Awareness of the certification is high with, 83 % of online consumers recognising the certification label. The Committee expects that the Commission will take action to implement an EU-wide certification scheme for e-traders.

4.14   As people start using the web and the Internet for the first time, they are particularly vulnerable to cybercriminals and unscrupulous traders. Vulnerable users, whether adults or children, need to be given every protection that would help them enjoy a safe online environment (19).

4.15   The Commission could introduce a disability-specific section in its Annual Progress Report, in order to identify and measure the progress made in this respect under the Digital Agenda for Europe.

4.16   In a European online economy without borders it is important that Europol is equipped to police commercial and social activity to keep it safe for all.

Brussels, 8 December 2010.

The President of the European Economic and Social Committee

Staffan NILSSON

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(1)  Eurostat press release STAT/09/176.

1

(2)  EUROPE 2020 - A strategy for smart, sustainable and inclusive growth - COM(2010) 2020 final.

2

(3)  OJ C 256, 27.10.2007, p. 73; OJ C 324, 30.12.2006, p. 41; OJ C 324, 30.12.2006, p. 37; OJ C 318, 23.12.2006, p. 210; OJ C 221, 8.9.2005, p. 28; OJ C 302, 7.12.2004, p. 35;OJ C 48, 21.2.2002, p. 42.

3

(4)  Transforming the digital dividend into social benefits and economic growth, - Not yet published in OJ; OJ C 255, 22.9.2010, p. 116 and OJ C 77, 31.3.2009, p. 60; Improving ‘participative public–private partnership’ models in deploying ‘e services’ for all in the EU 27; Not yet published in OJ; OJ C 255, 22.9.2010, p. 98; OJ C 128, 18.5.2010, p. 69; OJ C 317, 23.12.2009, p. 84; OJ C 218, 11.9.2009, p. 36; OJ C 175, 28.7.2009, p. 8; OJ C 175, 28.7.2009, p. 92; OJ C 175, 28.7.2009, p. 87; OJ C 77, 31.3.2009, p. 63; OJ C 224, 30.8.2008, p. 61; OJ C 224, 30.8.2008, p. 50; OJ C 97, 28.4.2007, p. 27; OJ C 97, 28.4.2007, p. 21; OJ C 325, 30.12.2006, p. 78; OJ C 318, 23.12.2006, p. 222; OJ C 110, 9.5.2006, p. 83; OJ C 123, 25.4.2001, p. 36.

4

Transforming the digital dividend into social benefits and economic growth

Improving ‘participative public–private partnership’ models in deploying ‘e services’ for all in the EU 27

(5)  COM(2005) 203 final, and EP and Council Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services.

5

(6)  See opinion Transforming the digital dividend into social benefits and economic growth (not yet published in OJ) and http://www.economist.com/blogs/babbage/2010/09/white-space_wireless.

6

Transforming the digital dividend into social benefits and economic growth

(7)  Galileo's services will include: Open Access Navigation, Commercial Navigation, Safety of Life Navigation, Public Regulated Navigation and Search and Rescue.

7

(8)  See OJ C 255, 22.9.2010, p. 116 and OJ C 77, 31.3.2009, p. 60.

8

(9)  See OJ C 255, 22.9.2010, p. 98.

9

(10)  Ibid.

10

(11)  The cumulative market value of the US Federal Cybersecurity market is estimated at $55bn (2010-2015), a compound annual growth rate of 6,2 % over next 6 years - http://www.marketresearchmedia.com/2009/05/25/us-federal-cybersecurity-market-forecast-2010-2015/.

11

(12)  Directive 2002/21/EC on a common regulatory framework; Directive 2002/19/EC on access and interconnection; and Directive 2002/77/EC on competition in the markets for electronic communications services.

12

(13)  http://easa.europa.eu/.

13

(14)  See Transforming the digital dividend into social benefits and economic growth (not yet published in OJ); OJ C 97, 28.4.2007, p. 27; and OJ C 224, 30.8.2008, p. 50.

14

Transforming the digital dividend into social benefits and economic growth

(15)  See Improving ‘participative public–private partnership’ models in deploying ‘e services’ for all in the EU 27 (not yet published in OJ).

15

Improving ‘participative public–private partnership’ models in deploying ‘e services’ for all in the EU 27

(16)  http://www.eu2010.es/export/sites/presidencia/comun/descargas/Ministerios/en_declaracion_granada.pdf.

16

(17)  http://www.nytimes.com/2010/09/27/technology/27virus.html; and http://www.ft.com/cms/s/0/e9d3a662-c740-11df-aeb1-00144feab49a.html?ftcamp=rss.

17

(18)  OJ C 255, 22.9.2010, p. 98.

18

(19)  The EESC has issued several opinions on this subject during the last 15 years. For the two most recent ones see OJ C 128, 18.5.2010, p. 69 (Impact of social networking sites), and OJ C 224, 30.8.2008, p. 61 (Protecting children using the Internet).

19

Impact of social networking sites

Protecting children using the Internet

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