# Official Journal C 302/7 De

| | ISSN 1725-2423 |
| --- | --- |
| Official Journal
  of the European Union | C 302 |
| | |
| English edition | Information and Notices | Volume 477 December 2004 |

ISSN 1725-2423

Official Journal

of the European Union

C 302

English edition

Information and Notices

Volume 477 December 2004

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| Notice No | Contents | page |
| --- | --- | --- |
| | II   Preparatory Acts |
| | European Economic and Social Committee |
| | 410th plenary session of 30 June and 1 July 2004 |
| 2004/C 302/1 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — LeaderSHIP 2015 — Defining the Future of the European Shipbuilding and Repair Industry — Competitiveness through Excellence (COM(2003) 717 final) | 1 |
| 2004/C 302/2 | Opinion of the European Economic and Social Committee on the Proposal for a Decision of the European Parliament and of the Council amending Decision 2000/819/EC on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005) (COM(2003) 758 final - 2003/0292 (COD)) | 8 |
| 2004/C 302/3 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council and the European Parliament concerning a new legal framework for payments in the internal market (COM(2003) 718 final) | 12 |
| 2004/C 302/4 | Opinion of the European Economic and Social Committee on the Proposal for a Council Decision on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits (COM(2004) 159 final — 2004/0056 (CNS)) | 19 |
| 2004/C 302/5 | Opinion of the European Economic and Social Committee on the Proposal for a regulation of the European Parliament and of the Council on the implementation of the International Safety Management Code within the Community (COM(2003) 767 final — 2003/0291 (COD)) | 20 |
| 2004/C 302/6 | Opinion of the European Economic and Social Committee on the Proposal for a directive of the European Parliament and of the Council on enhancing port security (COM(2004) 76 final — 2004/0031 (COD)) | 23 |
| 2004/C 302/7 | Opinion of the European Economic and Social Committee on Fusion energy | 27 |
| 2004/C 302/8 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament and the Council — Progress report on the GALILEO research programme as at the beginning of 2004 (COM(2004) 112 final) | 35 |
| 2004/C 302/9 | Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the licensing of railway undertakings (codified version) (COM(2004) 232 final — 2004/0074 (COD)) | 38 |
| 2004/C 302/0 | 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 1228/2003 as regards the date of application of certain provisions to Slovenia (COM(2004) 309 final — 2004/0109 (COD)) | 39 |
| 2004/C 302/1 | Opinion of the European Economic and Social Committee on Industrial change and economic, social and territorial cohesion | 41 |
| 2004/C 302/2 | Opinion of the European Economic and Social Committee on the International Convention on Migrants | 49 |
| 2004/C 302/3 | Opinion of the European Economic and Social Committee on The CAP second pillar: outlook for change in development policy for rural areas (follow-up to the Salzburg conference) | 53 |
| 2004/C 302/4 | Opinion of the European Economic and Social Committee on the Third report on economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation (COM(2004) 107 final) | 60 |
| 2004/C 302/5 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee: Dividend taxation of individuals in the Internal Market (COM(2003) 810 final) | 70 |
| 2004/C 302/6 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions and the social partners at Community level concerning the re-exam of Directive 93/104/EC concerning certain aspects of the organisation of working time (COM(2003) 843 final) | 74 |
| 2004/C 302/7 | Opinion of the European Economic and Social Committee on EU-Turkey relations with a view to the European Council of December 2004 | 80 |
| 2004/C 302/8 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Modernising social protection for more and better jobs - a comprehensive approach contributing to making work pay (COM(2003) 842 final) | 86 |
| 2004/C 302/9 | Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: The future of the textiles and clothing sector in the enlarged European Union. (COM(2003) 649 final) | 90 |
| 2004/C 302/0 | Opinion of the European Economic and Social Committee on European Metropolitan Areas: socio-economic implications for Europe's future | 101 |

Notice No

Contents

page

II   Preparatory Acts

European Economic and Social Committee

410th plenary session of 30 June and 1 July 2004

2004/C 302/1

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — LeaderSHIP 2015 — Defining the Future of the European Shipbuilding and Repair Industry — Competitiveness through Excellence (COM(2003) 717 final)

1

2004/C 302/2

Opinion of the European Economic and Social Committee on the Proposal for a Decision of the European Parliament and of the Council amending Decision 2000/819/EC on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005) (COM(2003) 758 final - 2003/0292 (COD))

8

2004/C 302/3

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council and the European Parliament concerning a new legal framework for payments in the internal market (COM(2003) 718 final)

12

2004/C 302/4

Opinion of the European Economic and Social Committee on the Proposal for a Council Decision on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits (COM(2004) 159 final — 2004/0056 (CNS))

19

2004/C 302/5

Opinion of the European Economic and Social Committee on the Proposal for a regulation of the European Parliament and of the Council on the implementation of the International Safety Management Code within the Community (COM(2003) 767 final — 2003/0291 (COD))

20

2004/C 302/6

Opinion of the European Economic and Social Committee on the Proposal for a directive of the European Parliament and of the Council on enhancing port security (COM(2004) 76 final — 2004/0031 (COD))

23

2004/C 302/7

Opinion of the European Economic and Social Committee on Fusion energy

27

2004/C 302/8

Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament and the Council — Progress report on the GALILEO research programme as at the beginning of 2004 (COM(2004) 112 final)

35

2004/C 302/9

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the licensing of railway undertakings (codified version) (COM(2004) 232 final — 2004/0074 (COD))

38

2004/C 302/0

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 1228/2003 as regards the date of application of certain provisions to Slovenia (COM(2004) 309 final — 2004/0109 (COD))

39

2004/C 302/1

Opinion of the European Economic and Social Committee on Industrial change and economic, social and territorial cohesion

41

2004/C 302/2

Opinion of the European Economic and Social Committee on the International Convention on Migrants

49

2004/C 302/3

Opinion of the European Economic and Social Committee on The CAP second pillar: outlook for change in development policy for rural areas (follow-up to the Salzburg conference)

53

2004/C 302/4

Opinion of the European Economic and Social Committee on the Third report on economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation (COM(2004) 107 final)

60

2004/C 302/5

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee: Dividend taxation of individuals in the Internal Market (COM(2003) 810 final)

70

2004/C 302/6

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions and the social partners at Community level concerning the re-exam of Directive 93/104/EC concerning certain aspects of the organisation of working time (COM(2003) 843 final)

74

2004/C 302/7

Opinion of the European Economic and Social Committee on EU-Turkey relations with a view to the European Council of December 2004

80

2004/C 302/8

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Modernising social protection for more and better jobs - a comprehensive approach contributing to making work pay (COM(2003) 842 final)

86

2004/C 302/9

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: The future of the textiles and clothing sector in the enlarged European Union. (COM(2003) 649 final)

90

2004/C 302/0

Opinion of the European Economic and Social Committee on European Metropolitan Areas: socio-economic implications for Europe's future

101

| EN | |
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EN

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II Preparatory Acts

European Economic and Social Committee

410th plenary session of 30 June and 1 July 2004

| 7.12.2004 | EN | Official Journal of the European Union | C 302/1 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/1

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — LeaderSHIP 2015 — Defining the Future of the European Shipbuilding and Repair Industry — Competitiveness through Excellence’

(COM(2003) 717 final)

(2004/C 302/01)

On 21 November 2003, in accordance with Article 262 of the Treaty establishing the European Community, the Commission decided to consult the European Economic and Social Committee on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, responsible for preparing the Committee's work on the subject, adopted its opinion on 9 June 2004. The rapporteur was Mr Van Iersel.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 109 votes to three with one abstention.

1.   Executive summary

The Commission has devised a new policy framework in close cooperation with the European shipbuilding and repair industry. It is surprising that stakeholders have rapidly been involved in putting together a broad package of measures aimed at securing production and competitiveness in this sector. The EESC notes with approval the method used and the contents of LeaderShip 2015. All the parties involved recognise that a national approach no longer has any future and that only a European approach will provide sustainable solutions. In this approach the right choice has been made for a coherent package and for complying with market rules. The EESC would stress that the credibility of the proposals depends entirely on their implementation. Follow-up is therefore crucial. Participation, transparency and careful control of the various processes must be ensured. The EESC fully supports the proposals' objective of producing a competitive European level playing field. This in turn is a precondition for achieving a world playing field.

2.   Background

2.1   The shipbuilding market

| 2.1.1 | Strong continuous growth in the production of ships has been experienced for more than two decades. Rapid technological progress has led to considerable reduction of costs for waterborne transportation, providing an effective stimulus to global trade and making world-wide shipping the key driver of globalisation. |
| --- | --- |

2.1.1

Strong continuous growth in the production of ships has been experienced for more than two decades. Rapid technological progress has led to considerable reduction of costs for waterborne transportation, providing an effective stimulus to global trade and making world-wide shipping the key driver of globalisation.

| 2.1.2 | Ships, from an economic perspective, are mobile investment goods, which are not imported but registered under a flag, chosen by the ship-owner. As such, the product does not require extensive marketing efforts or dealer or maintenance networks. Naturally, transportation costs of vessels are also very low. With low transaction costs generally and no anti-dumping rules which apply, the shipbuilding market is heavily determined by offer prices. |
| --- | --- |

2.1.2

Ships, from an economic perspective, are mobile investment goods, which are not imported but registered under a flag, chosen by the ship-owner. As such, the product does not require extensive marketing efforts or dealer or maintenance networks. Naturally, transportation costs of vessels are also very low. With low transaction costs generally and no anti-dumping rules which apply, the shipbuilding market is heavily determined by offer prices.

| 2.1.3 | As a result of its crucial role in providing the essential means of transportation for global trade, building modern equipment for security and defence needs and developing advanced technologies with numerous spin-offs to other sectors, shipbuilding is regarded as a strategically important industry for most industrialised and industrialising countries. |
| --- | --- |

2.1.3

As a result of its crucial role in providing the essential means of transportation for global trade, building modern equipment for security and defence needs and developing advanced technologies with numerous spin-offs to other sectors, shipbuilding is regarded as a strategically important industry for most industrialised and industrialising countries.

| 2.1.4 | In Europe a diversified network of companies related to the production of ships, including shipyards, marine equipment manufacturers, and a variety of specialised service providers has developed, providing directly more than 350,000 jobs for a highly qualified workforce. The sector in the EU has a turnover of around EUR 34 billion (1). |
| --- | --- |

2.1.4

In Europe a diversified network of companies related to the production of ships, including shipyards, marine equipment manufacturers, and a variety of specialised service providers has developed, providing directly more than 350,000 jobs for a highly qualified workforce. The sector in the EU has a turnover of around EUR 34 billion (1).

| 2.1.5 | Commercial shipbuilding in the EU has however lost massive market share due to damaging business practices mainly from South Korea and faces serious difficulties. Since 2000 the market share for new orders (in compensated gross tonnes – cgt) has dropped by two thirds, from 19 % in 2000 to 6.5 % in 2003 (2). The situation worsened by mid-2003 with prices at their lowest level for 13 years together with a further strengthening of the euro exchange rates with respect to the shipping currency, the US dollar, as well as with respect to the currencies of the main Asian competitors. In particular in the last year international trade has increased dramatically, driven by the extraordinary strong growth of China's demand for energy and raw materials as well as the import and export of manufactured goods. This demand has led to a record of new orders, in the segments of oil tankers, bulk carriers and containerships. European shipbuilders benefited from this demand surge and have been able to almost double the order intake in 2003 compared to 2002. Nevertheless, their share of the world shipbuilding market continued to decrease. |
| --- | --- |

2.1.5

Commercial shipbuilding in the EU has however lost massive market share due to damaging business practices mainly from South Korea and faces serious difficulties. Since 2000 the market share for new orders (in compensated gross tonnes – cgt) has dropped by two thirds, from 19 % in 2000 to 6.5 % in 2003 (2). The situation worsened by mid-2003 with prices at their lowest level for 13 years together with a further strengthening of the euro exchange rates with respect to the shipping currency, the US dollar, as well as with respect to the currencies of the main Asian competitors. In particular in the last year international trade has increased dramatically, driven by the extraordinary strong growth of China's demand for energy and raw materials as well as the import and export of manufactured goods. This demand has led to a record of new orders, in the segments of oil tankers, bulk carriers and containerships. European shipbuilders benefited from this demand surge and have been able to almost double the order intake in 2003 compared to 2002. Nevertheless, their share of the world shipbuilding market continued to decrease.

| 2.1.6 | The dramatic trend until mid-2003 has levelled off to a certain extent in several Member States. However, the latest developments may not last and Europe should seek sustainable solutions for the shipbuilding industry in the near future. If not, Europe could run the serious danger of losing this vital high technology sector. Experience shows that once shipbuilding capabilities are lost, they are unlikely to be recovered. |
| --- | --- |

2.1.6

The dramatic trend until mid-2003 has levelled off to a certain extent in several Member States. However, the latest developments may not last and Europe should seek sustainable solutions for the shipbuilding industry in the near future. If not, Europe could run the serious danger of losing this vital high technology sector. Experience shows that once shipbuilding capabilities are lost, they are unlikely to be recovered.

2.2   Developments in shipbuilding policy

| 2.2.1 | As a strategically important sector, shipbuilding has traditionally been an industry with strong government intervention world-wide. In the European Community as well shipbuilding policy has, since the 1970s, focused on defining the conditions for state-aid systems. The authorised ceiling for operating aid was gradually reduced from 28 % of the contract value in 1987 to 9 % in 1992 and finally completely eliminated from 2000. |
| --- | --- |

2.2.1

As a strategically important sector, shipbuilding has traditionally been an industry with strong government intervention world-wide. In the European Community as well shipbuilding policy has, since the 1970s, focused on defining the conditions for state-aid systems. The authorised ceiling for operating aid was gradually reduced from 28 % of the contract value in 1987 to 9 % in 1992 and finally completely eliminated from 2000.

| 2.2.2 | In 1989 on an initiative of the USA, negotiations were started in the OECD context with the objective of putting in place a new international discipline for all government support to shipbuilding. These negotiations were successfully concluded in 1994 and the Final Act of the Agreement Respecting Normal Competitive Conditions in the Commercial Shipbuilding and Repair Industry was signed by the European Communities, Finland, Japan, the Republic of Korea, Norway, Sweden and the United States. However, since the United States failed to conclude their national ratification procedures, the Agreement never entered into force. |
| --- | --- |

2.2.2

In 1989 on an initiative of the USA, negotiations were started in the OECD context with the objective of putting in place a new international discipline for all government support to shipbuilding. These negotiations were successfully concluded in 1994 and the Final Act of the Agreement Respecting Normal Competitive Conditions in the Commercial Shipbuilding and Repair Industry was signed by the European Communities, Finland, Japan, the Republic of Korea, Norway, Sweden and the United States. However, since the United States failed to conclude their national ratification procedures, the Agreement never entered into force.

| 2.2.3 | In the absence of an international agreement, in 1998 the Council concluded a new shipbuilding regulation [EC 1540/98] establishing a new set of rules for state aid, including a full abolition on a unilateral bases of operating aid by the end of 2000. The regulation also required the Commission to monitor closely the world shipbuilding market and to appraise whether European yards were affected by anti-competitive practices. |
| --- | --- |

2.2.3

In the absence of an international agreement, in 1998 the Council concluded a new shipbuilding regulation [EC 1540/98] establishing a new set of rules for state aid, including a full abolition on a unilateral bases of operating aid by the end of 2000. The regulation also required the Commission to monitor closely the world shipbuilding market and to appraise whether European yards were affected by anti-competitive practices.

| 2.2.4 | Already in its first monitoring report to the Council issued in 1999, the Commission provided clear evidence of damaging business practices in particular from shipyards in South Korea that offered prices below cost. All the monitoring reports (seven in total until 2003) that followed confirmed the initial findings, providing more and more detailed evidence. |
| --- | --- |

2.2.4

Already in its first monitoring report to the Council issued in 1999, the Commission provided clear evidence of damaging business practices in particular from shipyards in South Korea that offered prices below cost. All the monitoring reports (seven in total until 2003) that followed confirmed the initial findings, providing more and more detailed evidence.

| 2.2.5 | Based on such convincing facts, the Council repeatedly expressed its serious concerns and initiated bilateral consultations with South Korea. After several rounds of talks, an agreement in the form of Agreed Minutes relating to the World Shipbuilding Market was signed in June 2000. However, in the subsequent talks the Korean Government proved unable to implement the principles laid down in the agreement. |
| --- | --- |

2.2.5

Based on such convincing facts, the Council repeatedly expressed its serious concerns and initiated bilateral consultations with South Korea. After several rounds of talks, an agreement in the form of Agreed Minutes relating to the World Shipbuilding Market was signed in June 2000. However, in the subsequent talks the Korean Government proved unable to implement the principles laid down in the agreement.

| 2.2.6 | Since the bilateral talks with Korea ended without results, the shipbuilding industry filed a complaint under the Trade Barriers Regulation (TBR – [EC 3286/94]) in October 2000. |
| --- | --- |

2.2.6

Since the bilateral talks with Korea ended without results, the shipbuilding industry filed a complaint under the Trade Barriers Regulation (TBR – [EC 3286/94]) in October 2000.

| 2.2.7 | The Commission remained firmly opposed to an extension of the operating aid at the end of 2000. However, the Commission did agree to bring the case to the WTO in order to seek remedy against unfair Korean practices if a negotiated solution with Korea satisfactory to the EU could not be achieved by May 2001. In addition the Commission proposed in parallel a defensive temporary support mechanism specifically designed to counter unfair Korean practices for the period necessary for the conclusion of the WTO procedure. |
| --- | --- |

2.2.7

The Commission remained firmly opposed to an extension of the operating aid at the end of 2000. However, the Commission did agree to bring the case to the WTO in order to seek remedy against unfair Korean practices if a negotiated solution with Korea satisfactory to the EU could not be achieved by May 2001. In addition the Commission proposed in parallel a defensive temporary support mechanism specifically designed to counter unfair Korean practices for the period necessary for the conclusion of the WTO procedure.

| 2.2.8 | The Community finally implemented this so-called twin-track policy in summer 2002, with the filing of a panel request to the WTO and the decision on the Temporary Defensive Mechanism (TDM – [EC 1177/02]). |
| --- | --- |

2.2.8

The Community finally implemented this so-called twin-track policy in summer 2002, with the filing of a panel request to the WTO and the decision on the Temporary Defensive Mechanism (TDM – [EC 1177/02]).

| 2.2.9 | Renewed efforts to achieve a world-wide level playing field in the shipbuilding sector were launched in 2002 also in the OECD framework context, this time without the participation of the USA. The OECD Council established a Special Negotiating Group, aiming to find a new and effective solution to the existing problem. Progress until now is regarded as being rather slow and it remains to be seen to what extent this approach will be feasible. |
| --- | --- |

2.2.9

Renewed efforts to achieve a world-wide level playing field in the shipbuilding sector were launched in 2002 also in the OECD framework context, this time without the participation of the USA. The OECD Council established a Special Negotiating Group, aiming to find a new and effective solution to the existing problem. Progress until now is regarded as being rather slow and it remains to be seen to what extent this approach will be feasible.

3.   A new approach

| 3.1 | As an overview, the steps towards LeaderSHIP 2015 are listed chronologically:






  February 2002: | the European Shipbuilding and Ship-repair Industry presents an outline proposal for an initiative under the title LeaderSHIP 2015 to Commissioner Liikanen; |
| --- | --- | --- |
| May 2002 | European Commission President Romano Prodi endorses the initiative and Commissioner Liikanen is asked to coordinate the follow up; |
| October 2002 | the industry hands over a road map to Commissioner Liikanen; |
| January 2003 | Commissioner Liikanen chairs the inaugural meeting of the LeaderSHIP 2015 High Level Advisory Group; |
| October 2003 | the High Level Advisory Group hands its report to the European Commission; |
| November 2003 | the European Commission releases the Communication on LeaderSHIP 2015; |
| November 2003 | the Competitiveness Council addresses LeaderSHIP 2015 in the context of industrial policy; |
| January 2004 | the new framework on State Aid to Shipbuilding is entering into force, taking already into account some of the key issues from LeaderSHIP 2015 and thereby implementing the first recommendations of the High Level Advisory Group. |

3.1

As an overview, the steps towards LeaderSHIP 2015 are listed chronologically:

February 2002:

the European Shipbuilding and Ship-repair Industry presents an outline proposal for an initiative under the title LeaderSHIP 2015 to Commissioner Liikanen;

May 2002

European Commission President Romano Prodi endorses the initiative and Commissioner Liikanen is asked to coordinate the follow up;

October 2002

the industry hands over a road map to Commissioner Liikanen;

January 2003

Commissioner Liikanen chairs the inaugural meeting of the LeaderSHIP 2015 High Level Advisory Group;

October 2003

the High Level Advisory Group hands its report to the European Commission;

November 2003

the European Commission releases the Communication on LeaderSHIP 2015;

November 2003

the Competitiveness Council addresses LeaderSHIP 2015 in the context of industrial policy;

January 2004

the new framework on State Aid to Shipbuilding is entering into force, taking already into account some of the key issues from LeaderSHIP 2015 and thereby implementing the first recommendations of the High Level Advisory Group.

3.2   Industry's Roadmap

| 3.2.1 | While the Community approach to the shipbuilding sector has mainly focused on competition and trade policy, the industry felt that a third corner stone - competitiveness policy and in particular a sound concertation of all three policy fields - was lacking. It also acknowledged its own shortcoming in bringing forward its own concerted response to the competitive challenges it was facing. |
| --- | --- |

3.2.1

While the Community approach to the shipbuilding sector has mainly focused on competition and trade policy, the industry felt that a third corner stone - competitiveness policy and in particular a sound concertation of all three policy fields - was lacking. It also acknowledged its own shortcoming in bringing forward its own concerted response to the competitive challenges it was facing.

| 3.2.2 | With the end of operating aid, the industry accepted that subsidies were not the way forward, nor was protectionism of the kind that resulted in uncompetitive industries in shipbuilding nations outside the European Community. However, the aggressive industrial policy in South Korea had to be challenged urgently. A new approach was therefore needed. |
| --- | --- |

3.2.2

With the end of operating aid, the industry accepted that subsidies were not the way forward, nor was protectionism of the kind that resulted in uncompetitive industries in shipbuilding nations outside the European Community. However, the aggressive industrial policy in South Korea had to be challenged urgently. A new approach was therefore needed.

| 3.2.3 | When the Committee of EU Shipbuilders' Associations (CESA) presented its outline proposal for the Leadership 2015 initiative to the European Commission in spring 2002, the value of the project as a sector specific response to the EU's longer term strategy as defined by the Lisbon Council was immediately recognised. LeaderSHIP 2015 did in fact address the key elements of the Lisbon strategy. |
| --- | --- |

3.2.3

When the Committee of EU Shipbuilders' Associations (CESA) presented its outline proposal for the Leadership 2015 initiative to the European Commission in spring 2002, the value of the project as a sector specific response to the EU's longer term strategy as defined by the Lisbon Council was immediately recognised. LeaderSHIP 2015 did in fact address the key elements of the Lisbon strategy.

| 3.2.4 | An overall-strategy had to be elaborated, based on elements of the existing approach but the new element being the invitation of the Commission to industry to formulate an integrated plan. In October 2002, CESA presented LeaderSHIP 2015, a Roadmap for the Future of the European Shipbuilding and Ship-Repair Industry. |
| --- | --- |

3.2.4

An overall-strategy had to be elaborated, based on elements of the existing approach but the new element being the invitation of the Commission to industry to formulate an integrated plan. In October 2002, CESA presented LeaderSHIP 2015, a Roadmap for the Future of the European Shipbuilding and Ship-Repair Industry.

| 3.2.5 | For the European shipbuilders, the objective is to improve leadership in selected market segments by strengthening competitiveness through innovation and selective R&D, greater customer focus, production optimisation and the improvement of the industry structure. According to the industry, objectives in which the EU should be directly involved include the promotion of advanced financing and guarantee schemes, higher safety and environmental standards in relation to new high quality vessel orders and the maintenance and enhancement of the protection of European intellectual property. |
| --- | --- |

3.2.5

For the European shipbuilders, the objective is to improve leadership in selected market segments by strengthening competitiveness through innovation and selective R&D, greater customer focus, production optimisation and the improvement of the industry structure. According to the industry, objectives in which the EU should be directly involved include the promotion of advanced financing and guarantee schemes, higher safety and environmental standards in relation to new high quality vessel orders and the maintenance and enhancement of the protection of European intellectual property.

| 3.2.6 | A European approach to naval defence needs implies a common policy on procurement of defence materials. |
| --- | --- |

3.2.6

A European approach to naval defence needs implies a common policy on procurement of defence materials.

| 3.2.7 | Macro trends up to 2015 in this sector imply in particular developments in relation to multi-modal transport, inland waterways and short sea shipping, reinforcement of innovation and R&D, EU enlargement, environmental and health regulations and a progress towards a Common Defence Policy. Because of the impact of government and EU policies in all these areas in the view of the industry the Commission should actively participate in the development of ideas in view of forthcoming policies. |
| --- | --- |

3.2.7

Macro trends up to 2015 in this sector imply in particular developments in relation to multi-modal transport, inland waterways and short sea shipping, reinforcement of innovation and R&D, EU enlargement, environmental and health regulations and a progress towards a Common Defence Policy. Because of the impact of government and EU policies in all these areas in the view of the industry the Commission should actively participate in the development of ideas in view of forthcoming policies.

| 3.2.8 | The shipbuilding sector itself accepts a big responsibility for bringing its own house in order. The Roadmap advocates therefore the development of new vessel types and new generations of marine equipment, combining efficiency, safety, comfort, environment and specialisation. |
| --- | --- |

3.2.8

The shipbuilding sector itself accepts a big responsibility for bringing its own house in order. The Roadmap advocates therefore the development of new vessel types and new generations of marine equipment, combining efficiency, safety, comfort, environment and specialisation.

| 3.2.9 | As far as the structure of the industry is concerned two complementary approaches involving the companies are foreseen:






  — | restructuring the industry to arrive at a limited number of large companies; |
| --- | --- | --- |

3.2.9

As far as the structure of the industry is concerned two complementary approaches involving the companies are foreseen:

—

restructuring the industry to arrive at a limited number of large companies;

| — | small, very flexible companies networking to serve smaller niche markets. |
| --- | --- |

—

small, very flexible companies networking to serve smaller niche markets.

3.3   The High Level Advisory Group

| 3.3.1 | At the beginning of 2003, a High Level Advisory Group, chaired by Commissioner Liikanen, started discussions on LeaderSHIP 2015 based on the CESA Roadmap. The Group included seven European Commissioners, two prominent Members of the European Parliament, the CEOs of the 10 major Shipyards, the Chairman of the marine equipment industry association and the General Secretary of the European Metalworkers Federation. |
| --- | --- |

3.3.1

At the beginning of 2003, a High Level Advisory Group, chaired by Commissioner Liikanen, started discussions on LeaderSHIP 2015 based on the CESA Roadmap. The Group included seven European Commissioners, two prominent Members of the European Parliament, the CEOs of the 10 major Shipyards, the Chairman of the marine equipment industry association and the General Secretary of the European Metalworkers Federation.

| 3.3.2 | The Advisory Group published its report LeaderSHIP 2015 in October 2003 (3). It embraces eight chapters, reflecting all the issues covered by the Industry roadmap plus a final chapter on needs of consolidation for the European shipbuilding industry. The overall conclusion of the Group is that ‘LeaderSHIP serves as a good example for an effective European industrial policy on sectoral level’. |
| --- | --- |

3.3.2

The Advisory Group published its report LeaderSHIP 2015 in October 2003 (3). It embraces eight chapters, reflecting all the issues covered by the Industry roadmap plus a final chapter on needs of consolidation for the European shipbuilding industry. The overall conclusion of the Group is that ‘LeaderSHIP serves as a good example for an effective European industrial policy on sectoral level’.

| 3.3.3 | In these eight chapters the Group identifies objectives for the shipbuilding sector and for the EU as such. First of all, it proposes the creation of a level playing field in world shipbuilding through the EU trade policy, enforcement of applicable WTO rules and enforceable OECD disciplines. |
| --- | --- |

3.3.3

In these eight chapters the Group identifies objectives for the shipbuilding sector and for the EU as such. First of all, it proposes the creation of a level playing field in world shipbuilding through the EU trade policy, enforcement of applicable WTO rules and enforceable OECD disciplines.

| 3.3.4 | On the central issue of R&D and innovation a close cooperation between the EU and the shipbuilding sector is needed. The relevant Community regulation did not fully take into consideration the specific needs of shipbuilding and its technology. |
| --- | --- |

3.3.4

On the central issue of R&D and innovation a close cooperation between the EU and the shipbuilding sector is needed. The relevant Community regulation did not fully take into consideration the specific needs of shipbuilding and its technology.

| 3.3.5 | This is also true for developing advanced financing and guarantee schemes. The present tools are not competitive on the world market. The possibility of establishing an EU-wide guarantee fund for pre- and post-delivery financing should be explored as well as an intensified cooperation with export credit insurance companies, covered by appropriate re-insurance. |
| --- | --- |

3.3.5

This is also true for developing advanced financing and guarantee schemes. The present tools are not competitive on the world market. The possibility of establishing an EU-wide guarantee fund for pre- and post-delivery financing should be explored as well as an intensified cooperation with export credit insurance companies, covered by appropriate re-insurance.

| 3.3.6 | Maritime environment protection is streamlined by the European Maritime Safety Agency. A joint expert committee of relevant maritime stakeholders who holds technical knowledge is to be established in order to provide both the Agency and the Commission with technical advice. Quality assessment improvement, safety and control on both shipbuilding and ship repair should be intensified in order to guarantee that appropriate quality standards are applied world-wide. |
| --- | --- |

3.3.6

Maritime environment protection is streamlined by the European Maritime Safety Agency. A joint expert committee of relevant maritime stakeholders who holds technical knowledge is to be established in order to provide both the Agency and the Commission with technical advice. Quality assessment improvement, safety and control on both shipbuilding and ship repair should be intensified in order to guarantee that appropriate quality standards are applied world-wide.

| 3.3.7 | The call of industry for more cooperation in the defence sector according to the Group can be supported at EU level by promoting industrial cooperation between yards and between yards and suppliers, access to export markets and consolidation of the industry. Common operational requirements of national navies and common rules for defence equipment are needed via the planned European Defence Agency. |
| --- | --- |

3.3.7

The call of industry for more cooperation in the defence sector according to the Group can be supported at EU level by promoting industrial cooperation between yards and between yards and suppliers, access to export markets and consolidation of the industry. Common operational requirements of national navies and common rules for defence equipment are needed via the planned European Defence Agency.

| 3.3.8 | Since European shipbuilders strongly depend on their technological leadership the existing instruments for protection of intellectual property rights have to be fully exploited. Knowledge data bases are required and international rules to protect patents have to be improved. |
| --- | --- |

3.3.8

Since European shipbuilders strongly depend on their technological leadership the existing instruments for protection of intellectual property rights have to be fully exploited. Knowledge data bases are required and international rules to protect patents have to be improved.

| 3.3.9 | The shipbuilding sector has formally established a committee for the sectoral social dialogue (the first of its kind within the metal trades), in which programmes for new skill requirements are to be analysed and addressed. |
| --- | --- |

3.3.9

The shipbuilding sector has formally established a committee for the sectoral social dialogue (the first of its kind within the metal trades), in which programmes for new skill requirements are to be analysed and addressed.

| 3.3.10 | An optimal industrial structure is needed to achieve the desired results. A dynamic development process is leading to new relationships and project partnerships between yards and suppliers, given that today suppliers account for 70-80 % of a yard's production. A consolidation process with special incentives should be facilitated, based on the concept of ‘aid for consolidation’. |
| --- | --- |

3.3.10

An optimal industrial structure is needed to achieve the desired results. A dynamic development process is leading to new relationships and project partnerships between yards and suppliers, given that today suppliers account for 70-80 % of a yard's production. A consolidation process with special incentives should be facilitated, based on the concept of ‘aid for consolidation’.

3.4   Commission Communication

| 3.4.1 | With its Communication on LeaderSHIP 2015 (4) the Commission transposes the work of the High Level Advisory Group into formal Community policy. It emphasises once again that a horizontal policy needs to be complemented with specific sectoral approaches. The Commission provides an assessment on each of the chapters and endorses the recommendations of the LeaderSHIP 2015 report. |
| --- | --- |

3.4.1

With its Communication on LeaderSHIP 2015 (4) the Commission transposes the work of the High Level Advisory Group into formal Community policy. It emphasises once again that a horizontal policy needs to be complemented with specific sectoral approaches. The Commission provides an assessment on each of the chapters and endorses the recommendations of the LeaderSHIP 2015 report.

| 3.4.2 | In the Communication, in which the strategic dimension of shipbuilding and ship repair is acknowledged, the Commission in line with the LeaderSHIP report confirms its responsibility and co-responsibility in the following areas covered by the eight chapters of the Advisory Group report:






  — | in the OECD Sector Understanding on export credits and related OECD agreements together with the promotion of a world level playing field via WTO; |
| --- | --- | --- |

3.4.2

In the Communication, in which the strategic dimension of shipbuilding and ship repair is acknowledged, the Commission in line with the LeaderSHIP report confirms its responsibility and co-responsibility in the following areas covered by the eight chapters of the Advisory Group report:

—

in the OECD Sector Understanding on export credits and related OECD agreements together with the promotion of a world level playing field via WTO;

| — | the Commission has adopted rules applicable to innovation aid and it will monitor the effects of Community-funded research; |
| --- | --- |

—

the Commission has adopted rules applicable to innovation aid and it will monitor the effects of Community-funded research;

| — | together with the industry the Commission will explore the possibilities of pre- and post-delivery financing in cooperation with the EIB; |
| --- | --- |

—

together with the industry the Commission will explore the possibilities of pre- and post-delivery financing in cooperation with the EIB;

| — | the Commission fully supports the recommendations of LeaderSHIP on the promotion of safer and more environmentally-friendly ships and on policies to exploit opportunities for Short Sea Shipping across Europe; |
| --- | --- |

—

the Commission fully supports the recommendations of LeaderSHIP on the promotion of safer and more environmentally-friendly ships and on policies to exploit opportunities for Short Sea Shipping across Europe;

| — | on naval shipbuilding the Commission supports the recommendations which are in line with its Defence Communication of March 2003 on preparations for a European Defence Agency in 2004 in order to strengthen the defence and technological base and competitiveness of the defence industry. With respect to consolidation among naval shipyards, it is worthwhile to note that privately owned yards point to the structural differences between European yards, claiming that ‘private ownership is a pre-requisite to succeed in any consolidation effort (5)’; |
| --- | --- |

—

on naval shipbuilding the Commission supports the recommendations which are in line with its Defence Communication of March 2003 on preparations for a European Defence Agency in 2004 in order to strengthen the defence and technological base and competitiveness of the defence industry. With respect to consolidation among naval shipyards, it is worthwhile to note that privately owned yards point to the structural differences between European yards, claiming that ‘private ownership is a pre-requisite to succeed in any consolidation effort (5)’;

| — | the Commission will cooperate with industry in exploiting the existing instruments for Intellectual Property Rights Protection and in setting up appropriate knowledge data bases; |
| --- | --- |

—

the Commission will cooperate with industry in exploiting the existing instruments for Intellectual Property Rights Protection and in setting up appropriate knowledge data bases;

| — | the Commission will cooperate with industry through an active social dialogue on new skill requirements, exchange of staff on all levels, special training courses and the support for a vital and sustainable shipbuilding industry; |
| --- | --- |

—

the Commission will cooperate with industry through an active social dialogue on new skill requirements, exchange of staff on all levels, special training courses and the support for a vital and sustainable shipbuilding industry;

| — | since a consolidation process is needed in commercial and naval shipbuilding, and ship repair, which are primarily the responsibility of industry and of the Member States, the Commission is ready to facilitate the process, respecting competition rules. |
| --- | --- |

—

since a consolidation process is needed in commercial and naval shipbuilding, and ship repair, which are primarily the responsibility of industry and of the Member States, the Commission is ready to facilitate the process, respecting competition rules.

3.5   Council Conclusions November 2003

| 3.5.1 | On 27 November 2003 the Competitiveness Council has discussed the Commission Communication on LeaderSHIP 2015 in the wider context of industrial policy (6). The Council recognised the importance of sectorial analysis to sharpen horizontal policies and invited the Member States and the Commission to strengthen industrial competitiveness, notably by taking into account the needs and specificities of individual sectors. |
| --- | --- |

3.5.1

On 27 November 2003 the Competitiveness Council has discussed the Commission Communication on LeaderSHIP 2015 in the wider context of industrial policy (6). The Council recognised the importance of sectorial analysis to sharpen horizontal policies and invited the Member States and the Commission to strengthen industrial competitiveness, notably by taking into account the needs and specificities of individual sectors.

| 3.5.2 | In relation to sectoral issues shipbuilding, aeronautics and textiles and clothing are specifically addressed. |
| --- | --- |

3.5.2

In relation to sectoral issues shipbuilding, aeronautics and textiles and clothing are specifically addressed.

| 3.5.3 | The views of the Council are inspired by the need of a fully integrated approach to enhance competitiveness. The same goes for LeaderSHIP 2015. |
| --- | --- |

3.5.3

The views of the Council are inspired by the need of a fully integrated approach to enhance competitiveness. The same goes for LeaderSHIP 2015.

| 3.5.4 | The objectives of the strategy of Lisbon require sectorial analyses, improvement of the framework conditions and an open and transparent consultation of all stakeholders, including a social dialogue. The Council emphasises continuing initiatives in this respect. |
| --- | --- |

3.5.4

The objectives of the strategy of Lisbon require sectorial analyses, improvement of the framework conditions and an open and transparent consultation of all stakeholders, including a social dialogue. The Council emphasises continuing initiatives in this respect.

| 3.5.5 | As regards LeaderSHIP 2015 the Council recommends particular efforts of industry and of public authorities relating to:






  — | EU state-aid rules on investment in innovation; |
| --- | --- | --- |

3.5.5

As regards LeaderSHIP 2015 the Council recommends particular efforts of industry and of public authorities relating to:

—

EU state-aid rules on investment in innovation;

| — | encouragement of research, development and innovation; |
| --- | --- |

—

encouragement of research, development and innovation;

| — | protection of intellectual property rights by Member States and industry; |
| --- | --- |

—

protection of intellectual property rights by Member States and industry;

| — | facilitating a consolidation process among European producers; |
| --- | --- |

—

facilitating a consolidation process among European producers;

| — | encouraging approaches designed to bring about greater cooperation between naval and shipbuilding resources in Europe; |
| --- | --- |

—

encouraging approaches designed to bring about greater cooperation between naval and shipbuilding resources in Europe;

| — | addressing new skill requirements, in the context of a social dialogue within the sector. |
| --- | --- |

—

addressing new skill requirements, in the context of a social dialogue within the sector.

| 3.5.6 | The Council wants to be informed regularly on the results of LeaderSHIP and on the implementation of its recommendations. |
| --- | --- |

3.5.6

The Council wants to be informed regularly on the results of LeaderSHIP and on the implementation of its recommendations.

4.   General remarks

| 4.1 | The EESC agrees that Europe needs a viable shipbuilding industry and that sector specific policies have to be foreseen. |
| --- | --- |

4.1

The EESC agrees that Europe needs a viable shipbuilding industry and that sector specific policies have to be foreseen.

| 4.2 | It is remarkable to note that industry has succeeded in defining a cohesive programme for the period to 2015. This model for a modern sectoral approach is correctly based on EU rules as regards market conformity and competition. |
| --- | --- |

4.2

It is remarkable to note that industry has succeeded in defining a cohesive programme for the period to 2015. This model for a modern sectoral approach is correctly based on EU rules as regards market conformity and competition.

| 4.3 | Equally remarkable is that industry itself and seven Commissioners have issued a common plan for the future: LeaderSHIP 2015. This reciprocal commitment has led to the approval of LeaderSHIP by the Commission. |
| --- | --- |

4.3

Equally remarkable is that industry itself and seven Commissioners have issued a common plan for the future: LeaderSHIP 2015. This reciprocal commitment has led to the approval of LeaderSHIP by the Commission.

| 4.4 | The EESC appreciates positively the new approach of the Competitiveness Council as regards horizontal and sectoral industrial policy. The case of LeaderSHIP shows how such industrial policy can fine-tune requirements resulting from sectoral aspects with horizontal approaches. |
| --- | --- |

4.4

The EESC appreciates positively the new approach of the Competitiveness Council as regards horizontal and sectoral industrial policy. The case of LeaderSHIP shows how such industrial policy can fine-tune requirements resulting from sectoral aspects with horizontal approaches.

| 4.5 | The EESC welcomes the specific recommendations of the Council concerning the shipbuilding and ship-repair sector. These correspond with the recommendations of the Commission and the sector itself in LeaderSHIP 2015. |
| --- | --- |

4.5

The EESC welcomes the specific recommendations of the Council concerning the shipbuilding and ship-repair sector. These correspond with the recommendations of the Commission and the sector itself in LeaderSHIP 2015.

| 4.6 | The EESC welcomes this change of perspective for shipbuilding policy as the fruit of both a new method of working and of a new approach to industrial policy on a sectoral level. These could serve as a model for similar initiatives in other sectors. |
| --- | --- |

4.6

The EESC welcomes this change of perspective for shipbuilding policy as the fruit of both a new method of working and of a new approach to industrial policy on a sectoral level. These could serve as a model for similar initiatives in other sectors.

| 4.7 | More specifically, the EESC is of the opinion that instead of the continuation of national policies, only shared views and principles and commonly agreed practices in the EU will create a sound base for a sustainable shipbuilding and repair industry in Europe. |
| --- | --- |

4.7

More specifically, the EESC is of the opinion that instead of the continuation of national policies, only shared views and principles and commonly agreed practices in the EU will create a sound base for a sustainable shipbuilding and repair industry in Europe.

| 4.8 | The enlargement of the European Union holds opportunities as it can add valuable assets, which allow a European presence in market segments not served any more by EU shipyards before Enlargement (7). Applicable Community rules must be fully respected. |
| --- | --- |

4.8

The enlargement of the European Union holds opportunities as it can add valuable assets, which allow a European presence in market segments not served any more by EU shipyards before Enlargement (7). Applicable Community rules must be fully respected.

| 4.9 | LeaderSHIP 2015 can only be successful, if action is undertaken simultaneously by all participating partners (industrial partners, the Commission and, in some cases, the Member States) on all chapters, each player acting in areas for which he is responsible. |
| --- | --- |

4.9

LeaderSHIP 2015 can only be successful, if action is undertaken simultaneously by all participating partners (industrial partners, the Commission and, in some cases, the Member States) on all chapters, each player acting in areas for which he is responsible.

5.   Conclusions and recommendations

| 5.1 | The credibility of the proposed policy depends on its implementation. Follow-up is crucial and this has to be a transparent process that is carefully monitored. Participation, transparency and adequate monitoring have to be safeguarded. In addition to the Conclusions of the Council the EESC is strongly in favour of a yearly progress report by the Commission to the Competitiveness Council. |
| --- | --- |

5.1

The credibility of the proposed policy depends on its implementation. Follow-up is crucial and this has to be a transparent process that is carefully monitored. Participation, transparency and adequate monitoring have to be safeguarded. In addition to the Conclusions of the Council the EESC is strongly in favour of a yearly progress report by the Commission to the Competitiveness Council.

| 5.2 | LeaderSHIP 2015 starts with the objective of a world-wide level playing field. The EESC underlines the importance of this policy area as a corner stone for the entire strategy. It fully supports the present EU trade policy approach, aiming at an effective international agreement which ensures tight disciplines world-wide. |
| --- | --- |

5.2

LeaderSHIP 2015 starts with the objective of a world-wide level playing field. The EESC underlines the importance of this policy area as a corner stone for the entire strategy. It fully supports the present EU trade policy approach, aiming at an effective international agreement which ensures tight disciplines world-wide.

| 5.3 | The EESC underlines that the impact of the unfair competition from some shipyards in Asia not only constitutes a considerable threat to the European shipyards, but should alarm also the European marine-equipment industry. The announcements in some of the leading Asian shipbuilding countries that they will concentrate on local content, for their supplies must be taken very seriously. |
| --- | --- |

5.3

The EESC underlines that the impact of the unfair competition from some shipyards in Asia not only constitutes a considerable threat to the European shipyards, but should alarm also the European marine-equipment industry. The announcements in some of the leading Asian shipbuilding countries that they will concentrate on local content, for their supplies must be taken very seriously.

| 5.4 | In the context of a level playing field, the sector discipline in the EU itself is not specifically mentioned, although there are still different levels and methods of support to shipbuilding by Member States. The internal level playing field and the transparency and monitoring of it are points of special concern. In order to promote the credibility of the process and trust in accordance with the agreed rules and objectives the EESC stresses the importance that the Commission monitors the application of state-aid rules and possible unfair practices. |
| --- | --- |

5.4

In the context of a level playing field, the sector discipline in the EU itself is not specifically mentioned, although there are still different levels and methods of support to shipbuilding by Member States. The internal level playing field and the transparency and monitoring of it are points of special concern. In order to promote the credibility of the process and trust in accordance with the agreed rules and objectives the EESC stresses the importance that the Commission monitors the application of state-aid rules and possible unfair practices.

| 5.5 | R&D and innovation are of paramount importance, because Europe is still the source of shipbuilding ideas for the world. This is therefore another key element to ensure success. It is therefore important that various instruments provide effective support and implemented in a practical manner. Industry can be helpful in providing policy-makers with concrete advice. In any case the application of innovation instruments must be transparent. |
| --- | --- |

5.5

R&D and innovation are of paramount importance, because Europe is still the source of shipbuilding ideas for the world. This is therefore another key element to ensure success. It is therefore important that various instruments provide effective support and implemented in a practical manner. Industry can be helpful in providing policy-makers with concrete advice. In any case the application of innovation instruments must be transparent.

| 5.6 | In order to streamline ship financing tools both at national and EU-level the EESC's view is that the European guarantee fund as suggested in LeaderSHIP should become operative as soon as possible. Its implementation should be a priority for the Commission. This fund can contribute to creating an effective level playing field in the EU itself. |
| --- | --- |

5.6

In order to streamline ship financing tools both at national and EU-level the EESC's view is that the European guarantee fund as suggested in LeaderSHIP should become operative as soon as possible. Its implementation should be a priority for the Commission. This fund can contribute to creating an effective level playing field in the EU itself.

| 5.7 | The EESC welcomes the agreement between industry and the Commission on the kind of environmental requirements and policies which are necessary in the sector. The EU should continue to take the lead in protecting the maritime environment and in pushing for strict implementation of relevant international rules. A coordinated European approach to the International Maritime Organisation can help to ensure a satisfactory level of effectiveness to support authority of the IMO to act exclusively in setting the global rules. |
| --- | --- |

5.7

The EESC welcomes the agreement between industry and the Commission on the kind of environmental requirements and policies which are necessary in the sector. The EU should continue to take the lead in protecting the maritime environment and in pushing for strict implementation of relevant international rules. A coordinated European approach to the International Maritime Organisation can help to ensure a satisfactory level of effectiveness to support authority of the IMO to act exclusively in setting the global rules.

| 5.8 | Considerable improvements in the legislation on safe shipping have been achieved in the EU over the last years. However, greater attention is required as regards appropriate standards for maintenance of ships, as suggested by LeaderSHIP. |
| --- | --- |

5.8

Considerable improvements in the legislation on safe shipping have been achieved in the EU over the last years. However, greater attention is required as regards appropriate standards for maintenance of ships, as suggested by LeaderSHIP.

| 5.9 | The EU still has considerable weaknesses concerning the enforcement of applicable rules on safety and security in shipping. The EESC therefore strongly advocates effective cooperation between European coastguards. |
| --- | --- |

5.9

The EU still has considerable weaknesses concerning the enforcement of applicable rules on safety and security in shipping. The EESC therefore strongly advocates effective cooperation between European coastguards.

| 5.10 | The strengthening of short sea shipping and the objective of moving traffic from road to sea are also important environmental goals. To achieve these goals modern infrastructure, including ports as well as ships, must be further improved. As far as public funding of this infrastructure is concerned, public authorities should safeguard that the investments are carried out to the benefit of EU producers. |
| --- | --- |

5.10

The strengthening of short sea shipping and the objective of moving traffic from road to sea are also important environmental goals. To achieve these goals modern infrastructure, including ports as well as ships, must be further improved. As far as public funding of this infrastructure is concerned, public authorities should safeguard that the investments are carried out to the benefit of EU producers.

| 5.11 | The human factor is an essential element and the EESC welcomes the intention to intensify the sectoral dialogue in which the Commission, employers and the trade unions each have their role to play. It is remarkable that it is in shipbuilding where the first formal Social Sectoral Dialogue Committee in any of the metal trades has been established; another indication for the innovative attitude of the sector. |
| --- | --- |

5.11

The human factor is an essential element and the EESC welcomes the intention to intensify the sectoral dialogue in which the Commission, employers and the trade unions each have their role to play. It is remarkable that it is in shipbuilding where the first formal Social Sectoral Dialogue Committee in any of the metal trades has been established; another indication for the innovative attitude of the sector.

| 5.12 | The Social Dialogue is already making valuable contributions to a broad range of social topics, including training, recruitment, life-long learning and adjustment to cyclical waves. To date two working groups have been established, one aiming to improve the image of the industry and the other to identify new skills required within the shipbuilding sector. |
| --- | --- |

5.12

The Social Dialogue is already making valuable contributions to a broad range of social topics, including training, recruitment, life-long learning and adjustment to cyclical waves. To date two working groups have been established, one aiming to improve the image of the industry and the other to identify new skills required within the shipbuilding sector.

| 5.13 | The Social Dialogue should also address the considerable differences in labour productivity world-wide. |
| --- | --- |

5.13

The Social Dialogue should also address the considerable differences in labour productivity world-wide.

| 5.14 | The EESC agrees with the increasing approach in Europe in favour of special segments of the manufacturing industry such as shipbuilding and aeronautics in relation to defence objectives, with an interaction between civil and defence industry. |
| --- | --- |

5.14

The EESC agrees with the increasing approach in Europe in favour of special segments of the manufacturing industry such as shipbuilding and aeronautics in relation to defence objectives, with an interaction between civil and defence industry.

| 5.15 | In this context it is pleasing that LeaderSHIP calls for European naval projects and cooperation between naval yards. National security considerations and divergent traditions have hampered these so far. But if the Europeans do not decide on closer cooperation, costs will continue to spiral upwards and endanger the lead in innovation and technology danger. |
| --- | --- |

5.15

In this context it is pleasing that LeaderSHIP calls for European naval projects and cooperation between naval yards. National security considerations and divergent traditions have hampered these so far. But if the Europeans do not decide on closer cooperation, costs will continue to spiral upwards and endanger the lead in innovation and technology danger.

| 5.16 | Successful cooperation projects already exist, such as those between Germany and the Netherlands on the building of frigates and between France and the United Kingdom concerning carriers. New projects may be planned in collaboration with the forthcoming European Armaments Procurement Agency. Optimum synergy between yards is very important for maintaining and improving knowledge and know-how. It is desirable that the Agency be asked for an inventory of available capacities, technology and innovation at naval yards, so that the best value for money can be pursued in new calls for tenders. Taking into account that naval yards clients are Governments, spill-over of subsidies between naval and merchant vessels production should be avoided. |
| --- | --- |

5.16

Successful cooperation projects already exist, such as those between Germany and the Netherlands on the building of frigates and between France and the United Kingdom concerning carriers. New projects may be planned in collaboration with the forthcoming European Armaments Procurement Agency. Optimum synergy between yards is very important for maintaining and improving knowledge and know-how. It is desirable that the Agency be asked for an inventory of available capacities, technology and innovation at naval yards, so that the best value for money can be pursued in new calls for tenders. Taking into account that naval yards clients are Governments, spill-over of subsidies between naval and merchant vessels production should be avoided.

| 5.17 | Consolidation of the industry is seen as a cornerstone for the future viability of the sector. It remains to be seen, however, how this process will be realised, given the complicated relationship between the core business and the high percentage of suppliers. |
| --- | --- |

5.17

Consolidation of the industry is seen as a cornerstone for the future viability of the sector. It remains to be seen, however, how this process will be realised, given the complicated relationship between the core business and the high percentage of suppliers.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Data from the study on the Economic Impact of Maritime Industries in Europe commissioned by the European Commission from the Policy Research Corporation N.V. & ISL.

1

(2)  Source: Lloyds' Register.

2

(3)  LeaderSHIP 2015. Defining the Future of the European Shipbuilding and Ship repair Industry published by the European Commission, Brussels, 2003.

3

(4)  COM(2003) 717 final.

4

(5)  COM(2003) 717 final, page 14 line 22.

5

(6)  Council conclusions on the ‘Contribution of industrial policy to European Competitiveness’ — Brussels, 24 November 2003 (15472/03).

6

(7)  Such as e.g. large crude oil tankers and bulk carriers which require lower technological skills and for which labour cost constitutes a comparatively large cost element.

7

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/8 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/8

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a Decision of the European Parliament and of the Council amending Decision 2000/819/EC on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs)’ (2001-2005)

(COM(2003) 758 final - 2003/0292 (COD))

(2004/C 302/02)

On 23 December 2003, the Council decided to consult the European Economic and Social Committee, under Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 June 2004. The rapporteur was Mr Dimitriadis.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 140 votes to one with four abstentions.

1.   Foreword

| 1.1 | The EU has faced and still faces, both before and after the setting of the Lisbon objectives,: (1) serious problems with respect to the competitiveness and modernisation of European companies, in particular SMEs, (2) serious inefficiencies and excessive bureaucracy of public authorities when promoting entrepreneurship, (3) lack of coordination between bodies representing SMEs, public authorities and the Commission in promoting entrepreneurship, (4) lack of coordination between national policies to support SMEs, (5) absence of an essential long-term strategy for SMEs in the Member States, (6) serious problems with respect to financial support for companies (in particular SMEs) from the banking sector and the venture capital industry, (7) high lending costs owing to the small size of SMEs and increased risk and (8) lack of a permanent policy on SMEs. |
| --- | --- |

1.1

The EU has faced and still faces, both before and after the setting of the Lisbon objectives,: (1) serious problems with respect to the competitiveness and modernisation of European companies, in particular SMEs, (2) serious inefficiencies and excessive bureaucracy of public authorities when promoting entrepreneurship, (3) lack of coordination between bodies representing SMEs, public authorities and the Commission in promoting entrepreneurship, (4) lack of coordination between national policies to support SMEs, (5) absence of an essential long-term strategy for SMEs in the Member States, (6) serious problems with respect to financial support for companies (in particular SMEs) from the banking sector and the venture capital industry, (7) high lending costs owing to the small size of SMEs and increased risk and (8) lack of a permanent policy on SMEs.

| 1.2 | The EU recognises that, while the Single Market has been completed in terms of legislation and rules, SMEs have not fully accepted the current system and its potential advantages and are not making full use of that potential. |
| --- | --- |

1.2

The EU recognises that, while the Single Market has been completed in terms of legislation and rules, SMEs have not fully accepted the current system and its potential advantages and are not making full use of that potential.

| 1.3 | The EU is putting up a tough fight against international competition, against the considerable economic and political influence of the US (1), which has achieved very high competitiveness and productivity, and against Japan, the countries of south-east Asia (2) and emerging economies such as China, India and Brazil. |
| --- | --- |

1.3

The EU is putting up a tough fight against international competition, against the considerable economic and political influence of the US (1), which has achieved very high competitiveness and productivity, and against Japan, the countries of south-east Asia (2) and emerging economies such as China, India and Brazil.

| 1.4 | The most serious social and economic problem facing the EU is unemployment, and it has made the creation of new jobs a primary objective, particularly in SMEs, which constitute the overwhelming majority of European companies. |
| --- | --- |

1.4

The most serious social and economic problem facing the EU is unemployment, and it has made the creation of new jobs a primary objective, particularly in SMEs, which constitute the overwhelming majority of European companies.

| 1.5 | The EU is making a huge effort to boost research and technology because it knows that making improvements in these sectors is the only way to guarantee development and progress, but the proposed strategy does not always produce the expected results owing to a lack of flexible mechanisms and to regulatory frameworks that encourage red tape, reduce effectiveness and create undesirable delays. |
| --- | --- |

1.5

The EU is making a huge effort to boost research and technology because it knows that making improvements in these sectors is the only way to guarantee development and progress, but the proposed strategy does not always produce the expected results owing to a lack of flexible mechanisms and to regulatory frameworks that encourage red tape, reduce effectiveness and create undesirable delays.

| 1.6 | In response to the above, the Amsterdam Council (June 1997) and the special Summit on Employment (November 1997 in Luxembourg) laid the foundations for the Growth and Employment Initiative, while the Council of Ministers — with Decisions 98/347/EC (3)and 2000/819/EC (4) — laid the foundations for organised and ongoing support for European entrepreneurship, together with specific programmes to create more jobs. |
| --- | --- |

1.6

In response to the above, the Amsterdam Council (June 1997) and the special Summit on Employment (November 1997 in Luxembourg) laid the foundations for the Growth and Employment Initiative, while the Council of Ministers — with Decisions 98/347/EC (3)and 2000/819/EC (4) — laid the foundations for organised and ongoing support for European entrepreneurship, together with specific programmes to create more jobs.

2.   Introduction

2.1   Objectives

The objective of the programme is to promote job creation and to establish and develop innovative small and medium-sized enterprises, as defined in Commission Recommendation 96/280/EC, by increasing the financial resources available and thereby stepping up investment in SMEs.

| 2.1.1 | The reason for supporting SMEs is that it has been demonstrated that they create new jobs more easily because they adapt well to changing market conditions, make decisions easily and implement new requirements more quickly within the company. Moreover, it is often SMEs that have the most problems setting up (owing to red tape and lack of financial resources), promoting innovative projects (given their inability to access funding from banks and, in the new Member States, the lack of a banking system capable of providing similar funding) and stepping up international cooperation. |
| --- | --- |

2.1.1

The reason for supporting SMEs is that it has been demonstrated that they create new jobs more easily because they adapt well to changing market conditions, make decisions easily and implement new requirements more quickly within the company. Moreover, it is often SMEs that have the most problems setting up (owing to red tape and lack of financial resources), promoting innovative projects (given their inability to access funding from banks and, in the new Member States, the lack of a banking system capable of providing similar funding) and stepping up international cooperation.

2.2   Description — scope of the programme

The programme consists of three schemes: (i) a venture capital scheme (ETF Start-up Facility (5)), operated by the European Investment Fund (EIF), (ii) a financial support scheme to promote the creation of transnational joint ventures between SMEs in the EU (Joint European Venture – JEV), operated by the Commission, and (iii) a guarantee scheme (SME Guarantee Facility), operated by the EIF.

| 2.2.1 | The budget for the programme was €423.56 million, made up of €168 million for the ETF Start-up Facility, €57 million for JEV and €198.56 million for the SME Guarantee Facility. Owing to high take-up of the SME Guarantee Facility, €30.56 million was transferred to it from JEV. By 29 May 2002, or the end of the period covering the commitment of budgetary funds, the initial budgetary allocation for the ETF Start-up Facility and the SME Guarantee Facility was fully committed by the EIF. For JEV a total of €14.5 million was available for implementing various projects. |
| --- | --- |

2.2.1

The budget for the programme was €423.56 million, made up of €168 million for the ETF Start-up Facility, €57 million for JEV and €198.56 million for the SME Guarantee Facility. Owing to high take-up of the SME Guarantee Facility, €30.56 million was transferred to it from JEV. By 29 May 2002, or the end of the period covering the commitment of budgetary funds, the initial budgetary allocation for the ETF Start-up Facility and the SME Guarantee Facility was fully committed by the EIF. For JEV a total of €14.5 million was available for implementing various projects.

| 2.2.2 | The venture capital scheme (ETF Start-up Facility) supports venture capital investment in SMEs, particularly during start-up and their early stages of development, and/or in innovative SMEs, by investing in specialised venture capital funds. |
| --- | --- |

2.2.2

The venture capital scheme (ETF Start-up Facility) supports venture capital investment in SMEs, particularly during start-up and their early stages of development, and/or in innovative SMEs, by investing in specialised venture capital funds.

| 2.2.2.1 | Under the Joint European Venture (JEV), the EU provides financial contributions for SMEs to set up new transnational joint ventures in the EU. |
| --- | --- |

2.2.2.1

Under the Joint European Venture (JEV), the EU provides financial contributions for SMEs to set up new transnational joint ventures in the EU.

| 2.2.2.2 | Under the SME Guarantee Facility, the EU provides funding to cover the cost of EIF guarantees and counter-guarantees to promote an increase in loans to new, innovative SMEs. This is achieved by increasing the capacity of guarantee schemes operating in the Member States and relates to both new and existing programmes. The Facility covers part of the losses incurred under the guarantees up to a predetermined amount, with particular emphasis on funding the intangible assets of SMEs. |
| --- | --- |

2.2.2.2

Under the SME Guarantee Facility, the EU provides funding to cover the cost of EIF guarantees and counter-guarantees to promote an increase in loans to new, innovative SMEs. This is achieved by increasing the capacity of guarantee schemes operating in the Member States and relates to both new and existing programmes. The Facility covers part of the losses incurred under the guarantees up to a predetermined amount, with particular emphasis on funding the intangible assets of SMEs.

3.   Impact of the programme

| 3.1 | According to the Commission's report, under the ETF Start-up Facility some 206 SMEs in the high-technology sector (biotechnology/life sciences and information technology) had benefited from the programme as at June 2002 (6); they had also achieved very positive results in terms of job creation. The SME Guarantee Facility supported 112,000 smaller companies, which increased employment by over 30 %, while JEV supported very few proposals (only 137 proposals were accepted). |
| --- | --- |

3.1

According to the Commission's report, under the ETF Start-up Facility some 206 SMEs in the high-technology sector (biotechnology/life sciences and information technology) had benefited from the programme as at June 2002 (6); they had also achieved very positive results in terms of job creation. The SME Guarantee Facility supported 112,000 smaller companies, which increased employment by over 30 %, while JEV supported very few proposals (only 137 proposals were accepted).

4.   Observations

| 4.1 | The Commission Report (7)on the three schemes is based on a very small sample of businesses, which means that the conclusions drawn carry a high probability of statistical as well as factual error. |
| --- | --- |

4.1

The Commission Report (7)on the three schemes is based on a very small sample of businesses, which means that the conclusions drawn carry a high probability of statistical as well as factual error.

| 4.2 | Over the four-year period from 1998 (starting year) to 2002 (evaluation year), some 206 SMEs benefited from the ETF Start-up Facility. The EESC considers this number low when compared with the results of equivalent initiatives in the United States, where there has been a proliferation of SME start-ups and flourishing entrepreneurship based on similar measures backed by high-risk venture capital. Only 31 transnational joint ventures were set up and 252 new jobs created under JEV, a result which did not meet expectations. The results of the SME Guarantee Facility are considered good. |
| --- | --- |

4.2

Over the four-year period from 1998 (starting year) to 2002 (evaluation year), some 206 SMEs benefited from the ETF Start-up Facility. The EESC considers this number low when compared with the results of equivalent initiatives in the United States, where there has been a proliferation of SME start-ups and flourishing entrepreneurship based on similar measures backed by high-risk venture capital. Only 31 transnational joint ventures were set up and 252 new jobs created under JEV, a result which did not meet expectations. The results of the SME Guarantee Facility are considered good.

| 4.3 | The forecasts made in the report for job creation in companies receiving support are based on earlier data (2001 to mid-2002) and cannot be considered adequate for these three schemes. |
| --- | --- |

4.3

The forecasts made in the report for job creation in companies receiving support are based on earlier data (2001 to mid-2002) and cannot be considered adequate for these three schemes.

| 4.4 | The EESC does not have definitive, concrete and full data on the creation of new jobs (1998-2003), which makes it extremely difficult to assess the situation, and to present positions and conclusions. The EESC nevertheless points again to its particular interest in efforts to create jobs, and calls on the Commission to make this a top priority after adapting the multiannual programme. |
| --- | --- |

4.4

The EESC does not have definitive, concrete and full data on the creation of new jobs (1998-2003), which makes it extremely difficult to assess the situation, and to present positions and conclusions. The EESC nevertheless points again to its particular interest in efforts to create jobs, and calls on the Commission to make this a top priority after adapting the multiannual programme.

| 4.5 | High-risk investment is an essential prerequisite for promoting innovative ideas that will be transformed into business ventures and result in successful investment projects. The phenomenal success of certain ventures like this makes up for the failures of other innovative ventures which are not taken up by the market. |
| --- | --- |

4.5

High-risk investment is an essential prerequisite for promoting innovative ideas that will be transformed into business ventures and result in successful investment projects. The phenomenal success of certain ventures like this makes up for the failures of other innovative ventures which are not taken up by the market.

| 4.6 | The scheme completely ignores the traditional economy. By constantly referring to innovative activities, it excludes the possibility of access to funding for small and medium-sized traditional businesses. Innovation is a very important tool for modernising the economy and boosting competitiveness. But it must be stressed that: (a) European businesses risk losing market shares permanently to imports of traditional sector products from low-cost third countries, (b) if support is not provided to traditional small and medium-sized enterprises there is a risk that oligopolies will be created in the trade and distribution sectors, with knock-on effects for the whole production process, and a net loss of jobs. |
| --- | --- |

4.6

The scheme completely ignores the traditional economy. By constantly referring to innovative activities, it excludes the possibility of access to funding for small and medium-sized traditional businesses. Innovation is a very important tool for modernising the economy and boosting competitiveness. But it must be stressed that: (a) European businesses risk losing market shares permanently to imports of traditional sector products from low-cost third countries, (b) if support is not provided to traditional small and medium-sized enterprises there is a risk that oligopolies will be created in the trade and distribution sectors, with knock-on effects for the whole production process, and a net loss of jobs.

| 4.7 | Cutting red tape by setting up one-stop shops responsible for implementing procedures and getting rid of unnecessary documents by using modern technology are basic requirements for the involvement of SMEs in the programmes concerned. |
| --- | --- |

4.7

Cutting red tape by setting up one-stop shops responsible for implementing procedures and getting rid of unnecessary documents by using modern technology are basic requirements for the involvement of SMEs in the programmes concerned.

5.   Conclusions

| 5.1 | The EESC endorses the amendments to Decision 2000/819/EC proposed by the Commission. |
| --- | --- |

5.1

The EESC endorses the amendments to Decision 2000/819/EC proposed by the Commission.

| 5.2 | The Committee agrees with the Commission's view that the full impact of the three funding instruments can only be evaluated after a considerable time lag, but it believes that enough time has elapsed since they were introduced to draw conclusions with a view to making certain adjustments, and that in the current fiercely competitive globalised economy time is of the essence, since business trends and outlooks are constantly changing. |
| --- | --- |

5.2

The Committee agrees with the Commission's view that the full impact of the three funding instruments can only be evaluated after a considerable time lag, but it believes that enough time has elapsed since they were introduced to draw conclusions with a view to making certain adjustments, and that in the current fiercely competitive globalised economy time is of the essence, since business trends and outlooks are constantly changing.

| 5.3 | The EESC realises that during 2001 and 2002 the international business environment was unfavourable and that there was a reduced supply of venture capital in the EU and a reluctance on the part of large banks to lend to SMEs. In 2002 demand for guarantees in Europe rose substantially, as large banks started to request additional security in view of the high risk and high cost associated with loan management. In this situation, the EESC considers the instruments, especially the Guarantee Facility and the Start-up Facility, to still be very useful. It also suggests strengthening cooperation with specialised small banks which work mainly with SMEs and have flexible communication systems. |
| --- | --- |

5.3

The EESC realises that during 2001 and 2002 the international business environment was unfavourable and that there was a reduced supply of venture capital in the EU and a reluctance on the part of large banks to lend to SMEs. In 2002 demand for guarantees in Europe rose substantially, as large banks started to request additional security in view of the high risk and high cost associated with loan management. In this situation, the EESC considers the instruments, especially the Guarantee Facility and the Start-up Facility, to still be very useful. It also suggests strengthening cooperation with specialised small banks which work mainly with SMEs and have flexible communication systems.

| 5.4 | The EESC endorses the projects under the three schemes and recognises that there is a need for them. However, it considers the process by which SMEs access the instruments to be onerous, bureaucratic and inflexible, since companies often have considerable problems acquiring information and with internal procedures. |
| --- | --- |

5.4

The EESC endorses the projects under the three schemes and recognises that there is a need for them. However, it considers the process by which SMEs access the instruments to be onerous, bureaucratic and inflexible, since companies often have considerable problems acquiring information and with internal procedures.

| 5.5 | The EESC considers the SME Guarantee Facility to be particularly useful and calls for this funding to be substantially stepped up and for every effort to be made to directly include those countries that have not been covered up until now (Greece, Ireland and Luxembourg). |
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5.5

The EESC considers the SME Guarantee Facility to be particularly useful and calls for this funding to be substantially stepped up and for every effort to be made to directly include those countries that have not been covered up until now (Greece, Ireland and Luxembourg).

| 5.6 | The EESC supports efforts to extend the Guarantee Facility with a view to accession of the new Member States, which contain thousands of SMEs that do not have access to bank loans and are thus unable to invest effectively and create new jobs. |
| --- | --- |

5.6

The EESC supports efforts to extend the Guarantee Facility with a view to accession of the new Member States, which contain thousands of SMEs that do not have access to bank loans and are thus unable to invest effectively and create new jobs.

| 5.7 | The EESC thinks that the budget for the programme should be reviewed with a view to covering the needs of the new Member States. The budget currently available was intended for only 15 and not 25 Member States, and the new members will certainly have greater needs. |
| --- | --- |

5.7

The EESC thinks that the budget for the programme should be reviewed with a view to covering the needs of the new Member States. The budget currently available was intended for only 15 and not 25 Member States, and the new members will certainly have greater needs.

| 5.8 | The EESC calls on the Commission to take the necessary steps to further enhance the ETF Start-up Facility, since it is an essential instrument for creating innovative SMEs and supporting high-risk business ventures, which are necessary for developing research and technology, as well as other SME investment schemes that do not come under the high-technology heading but are of substantial business interest and must have access to all types of funding means and instruments. The Committee therefore proposes that:






  a) | guarantees be provided for all legal forms of company, regardless of their type of activity, |
| --- | --- | --- |

5.8

The EESC calls on the Commission to take the necessary steps to further enhance the ETF Start-up Facility, since it is an essential instrument for creating innovative SMEs and supporting high-risk business ventures, which are necessary for developing research and technology, as well as other SME investment schemes that do not come under the high-technology heading but are of substantial business interest and must have access to all types of funding means and instruments. The Committee therefore proposes that:

a)

guarantees be provided for all legal forms of company, regardless of their type of activity,

| b) | funding be made available through ETF Start-up to all types of companies, |
| --- | --- |

b)

funding be made available through ETF Start-up to all types of companies,

| c) | more support be given to innovative, high-risk initiatives, |
| --- | --- |

c)

more support be given to innovative, high-risk initiatives,

| d) | in all cases there should be a progressive increase in start-up capital (ETF) based on jobs, or increase in employment and innovation, |
| --- | --- |

d)

in all cases there should be a progressive increase in start-up capital (ETF) based on jobs, or increase in employment and innovation,

| e) | the banking system should be involved in distributing information and supporting funding and guarantee programmes, |
| --- | --- |

e)

the banking system should be involved in distributing information and supporting funding and guarantee programmes,

| f) | the possibility should be considered of the interest rate for beneficiary companies being negotiated on the basis of a central agreement between the guarantee facility and banks, |
| --- | --- |

f)

the possibility should be considered of the interest rate for beneficiary companies being negotiated on the basis of a central agreement between the guarantee facility and banks,

| g) | the possibility should be considered of supporting national initiatives through the guarantee facility. |
| --- | --- |

g)

the possibility should be considered of supporting national initiatives through the guarantee facility.

| 5.9 | The EESC considers private and public capital available in the EU for RTD to be inadequate to cover the greater needs of SMEs in the information, new technologies and biotechnology sectors. The Committee calls for substantially increased funding to be found in order to cover those needs. |
| --- | --- |

5.9

The EESC considers private and public capital available in the EU for RTD to be inadequate to cover the greater needs of SMEs in the information, new technologies and biotechnology sectors. The Committee calls for substantially increased funding to be found in order to cover those needs.

| 5.10 | Where necessary, the fast-track, flexible systems set up and operated very successfully in the US should be considered, evaluated and used. There should also be more scope for cooperation with specialised venture capital funds, wherever and whenever investment interest exists (8). The EESC calls on the Commission to take the initiative on this matter. |
| --- | --- |

5.10

Where necessary, the fast-track, flexible systems set up and operated very successfully in the US should be considered, evaluated and used. There should also be more scope for cooperation with specialised venture capital funds, wherever and whenever investment interest exists (8). The EESC calls on the Commission to take the initiative on this matter.

| 5.11 | The EESC thinks that more effort should be made to inform SMEs about the existence and functioning of the Guarantee Facility and to find better ways of accessing and communicating with the EIF and the ΕΙΒ. The survey carried out showed that a majority of SMEs are unaware that the EU has set up a formal support system for them. It is therefore necessary to directly involve business organisations (chambers of commerce, trade associations, organisations of small and medium-sized enterprises, etc.) so as to improve information provision and make communication with SMEs more direct and more effective, and to solve more quickly the practical problems that arise when the programme is implemented. |
| --- | --- |

5.11

The EESC thinks that more effort should be made to inform SMEs about the existence and functioning of the Guarantee Facility and to find better ways of accessing and communicating with the EIF and the ΕΙΒ. The survey carried out showed that a majority of SMEs are unaware that the EU has set up a formal support system for them. It is therefore necessary to directly involve business organisations (chambers of commerce, trade associations, organisations of small and medium-sized enterprises, etc.) so as to improve information provision and make communication with SMEs more direct and more effective, and to solve more quickly the practical problems that arise when the programme is implemented.

| 5.12 | The EESC thinks that soon after the accession of the new Member States a special assessment should be carried out to establish take-up of the facilities, since although account is being taken of the problems currently being experienced in the accession countries, it is certain that: a) the actual situation will prove less favourable than reported, b) substantial levels of support will be needed that cannot now be estimated, and c) a period of adjustment will be required that will entail serious risks for SMEs. |
| --- | --- |

5.12

The EESC thinks that soon after the accession of the new Member States a special assessment should be carried out to establish take-up of the facilities, since although account is being taken of the problems currently being experienced in the accession countries, it is certain that: a) the actual situation will prove less favourable than reported, b) substantial levels of support will be needed that cannot now be estimated, and c) a period of adjustment will be required that will entail serious risks for SMEs.

| 5.13 | The EESC agrees with the Commission's proposal to phase out the JEV early, bearing in mind its present criticised structure. However, the EESC would like to emphasise that it also continues to support transnational joint ventures because it believes there is a substantial lag in transnational projects and business ventures in the EU and that barriers to business must be removed in Europe. |
| --- | --- |

5.13

The EESC agrees with the Commission's proposal to phase out the JEV early, bearing in mind its present criticised structure. However, the EESC would like to emphasise that it also continues to support transnational joint ventures because it believes there is a substantial lag in transnational projects and business ventures in the EU and that barriers to business must be removed in Europe.

| 5.14 | It will also be necessary to consider the possibility of re-introducing the JEV programme or a programme based on a similar principle, if and when after enlargement possibilities arise for creating transnational ventures within the EU and the EEA. Thus there should be a policy to support transnational ventures between SMEs so that it is possible to achieve this important goal, without the excessive red tape that puts a strain on the JEV programme and was a reason for its failure. |
| --- | --- |

5.14

It will also be necessary to consider the possibility of re-introducing the JEV programme or a programme based on a similar principle, if and when after enlargement possibilities arise for creating transnational ventures within the EU and the EEA. Thus there should be a policy to support transnational ventures between SMEs so that it is possible to achieve this important goal, without the excessive red tape that puts a strain on the JEV programme and was a reason for its failure.

| 5.15 | The EESC believes that after the experience already gained with the Sixth Framework Programme for Research and Technological Development small-scale programmes should be reintroduced for SMEs, since such programmes are not currently part of the concept of the multiannual programme. |
| --- | --- |

5.15

The EESC believes that after the experience already gained with the Sixth Framework Programme for Research and Technological Development small-scale programmes should be reintroduced for SMEs, since such programmes are not currently part of the concept of the multiannual programme.

| 5.16 | The EESC recognises that there are heavy administrative costs involved in implementing low-level funding programmes and that there is therefore a tendency to limit them substantially. However, it notes that cutting back on such programmes removes access for SMEs, which are unable to benefit from high-level funding programmes. For these reasons, the EESC agrees with the European Parliament and urges the Commission to be particularly careful with regard to reducing or abolishing these programmes, especially since they manifestly meet actual needs of SMEs. The Committee considers it necessary for the Commission to work together with business organisations to this end. |
| --- | --- |

5.16

The EESC recognises that there are heavy administrative costs involved in implementing low-level funding programmes and that there is therefore a tendency to limit them substantially. However, it notes that cutting back on such programmes removes access for SMEs, which are unable to benefit from high-level funding programmes. For these reasons, the EESC agrees with the European Parliament and urges the Commission to be particularly careful with regard to reducing or abolishing these programmes, especially since they manifestly meet actual needs of SMEs. The Committee considers it necessary for the Commission to work together with business organisations to this end.

| 5.17 | The EESC considers the European Charter for Small Enterprises adopted at the European Council in Feira (19 June 2002) to be a particularly important initiative and has drawn up many opinions on this matter. The Committee would reiterate the need to implement the provisions of the Charter in practice on the basis of clear legal rules. |
| --- | --- |

5.17

The EESC considers the European Charter for Small Enterprises adopted at the European Council in Feira (19 June 2002) to be a particularly important initiative and has drawn up many opinions on this matter. The Committee would reiterate the need to implement the provisions of the Charter in practice on the basis of clear legal rules.

| 5.18 | The EESC endorses the funding objectives set out in Annex I (description of spheres of action) for the SME Guarantee Facility (Annex I, point 4(a)(i)), but it believes this could be further broadened after serious and sustained dialogue with the representative organisations of SMEs (e.g. quality systems, environmental studies, quality studies, technical and technological support, technology transfer). |
| --- | --- |

5.18

The EESC endorses the funding objectives set out in Annex I (description of spheres of action) for the SME Guarantee Facility (Annex I, point 4(a)(i)), but it believes this could be further broadened after serious and sustained dialogue with the representative organisations of SMEs (e.g. quality systems, environmental studies, quality studies, technical and technological support, technology transfer).

| 5.19 | The EESC believes that the Commission must take more decisive and effective action to strengthen innovative SMEs and cut the degree of red tape in programmes (e.g. getting rid of unnecessary documents, speeding up procedures, etc.) as this has negative consequences and causes unnecessary delays. |
| --- | --- |

5.19

The EESC believes that the Commission must take more decisive and effective action to strengthen innovative SMEs and cut the degree of red tape in programmes (e.g. getting rid of unnecessary documents, speeding up procedures, etc.) as this has negative consequences and causes unnecessary delays.

| 5.20 | The EESC is pleased with the way the programmes have developed and hopes that they will continue to be supported and improved. |
| --- | --- |

5.20

The EESC is pleased with the way the programmes have developed and hopes that they will continue to be supported and improved.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: ‘Action Plan: The European agenda for Entrepreneurship’, COM(2004) 70 final, 11.2.2004.

1

(2)  Commission staff working paper: ‘ European Competitiveness Report 2003’, SEC(2003) 1299, 12.11.2003.

2

(3)  Council Decision 98/347/EC on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) – the growth and employment initiative – OJ L 155 of 29.5.1998.

3

(4)  Council Decision 2000/819/EC on a multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005).

4

(5)  ETF: European Technology Facility, set up by the European Investment Bank (EIB) in order to generate venture capital for SMEs in the high technology sector by providing investment funding through existing venture capital funds.

5

(6)  Report from the Commission to the European Parliament and the Council – COM(2003) 758 final, of 8.12 2003.

6

(7)  Report from the Commission to the European Parliament and the Council – COM(2003) 758 final, of 8.12.2003.

7

(8)  Communication from the Commission to the Council and the European Parliament on implementation of the risk capital action plan (RCAP), COM(2002) 563, 16.10.2002

8

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/12 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/12

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council and the European Parliament concerning a new legal framework for payments in the internal market’

(COM(2003) 718 final)

(2004/C 302/03)

On 2 December 2003, the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 June 2004. The rapporteur was Mr Ravoet.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 140 votes for, none against and five abstentions.

1.   Content and scope of the proposal

| 1.1 | The European Commission issued on 2 December 2003 a consultative document entitled Communication from the Commission to the Council and the European Parliament concerning a New Legal Framework for Payments in the Internal Market. |
| --- | --- |

1.1

The European Commission issued on 2 December 2003 a consultative document entitled Communication from the Commission to the Council and the European Parliament concerning a New Legal Framework for Payments in the Internal Market.

| 1.1.1 | The European Commission perceives inefficiencies of legal and technical nature in the area of cross-border euro retail payments. According to the European Commission a reason for these cross-border inefficiencies lies in the inadequate legal framework at European level. A number of legal acts relating to payments have been adopted – including the Regulation 2560/2001/EC (1), which introduces the principle of equal charges for national and cross-border payments in euros, the Directive 97/5/EC (2) concerning the protection of the users of electronic payment instruments – but no coherent legal framework is in place. It is a necessary prerequisite for the proper functioning of the internal market for goods and services to be able to use cheap, efficient and secure payment services. The Commission lists a number of guiding principles, which are deemed particularly relevant in the context of the EU payment legislation. They are as follows: 1) Efficiency as a permanent objective; 2) Security as a ‘conditione sine qua non’; 3) Competition: access to markets and level playing field; 4) Customer (3) protection at a high level; 5) Legal provisions need to be technically neutral; 6) Recasting of payment legislation must add value; 7) Nature of a future legal instrument(s). |
| --- | --- |

1.1.1

The European Commission perceives inefficiencies of legal and technical nature in the area of cross-border euro retail payments. According to the European Commission a reason for these cross-border inefficiencies lies in the inadequate legal framework at European level. A number of legal acts relating to payments have been adopted – including the Regulation 2560/2001/EC (1), which introduces the principle of equal charges for national and cross-border payments in euros, the Directive 97/5/EC (2) concerning the protection of the users of electronic payment instruments – but no coherent legal framework is in place. It is a necessary prerequisite for the proper functioning of the internal market for goods and services to be able to use cheap, efficient and secure payment services. The Commission lists a number of guiding principles, which are deemed particularly relevant in the context of the EU payment legislation. They are as follows: 1) Efficiency as a permanent objective; 2) Security as a ‘conditione sine qua non’; 3) Competition: access to markets and level playing field; 4) Customer (3) protection at a high level; 5) Legal provisions need to be technically neutral; 6) Recasting of payment legislation must add value; 7) Nature of a future legal instrument(s).

| 1.2 | The Commission's consultative document is the result of preliminary work carried out over a relatively long period and is intended to lead in 2004 to a legislative initiative. |
| --- | --- |

1.2

The Commission's consultative document is the result of preliminary work carried out over a relatively long period and is intended to lead in 2004 to a legislative initiative.

| 1.3 | The Commission aspires, through the removal of technical and legal barriers, to achieve efficiency of payment services, competition on equal terms, adequate consumer protection, security of payments as well as legal certainty for all parties involved in a payment process. |
| --- | --- |

1.3

The Commission aspires, through the removal of technical and legal barriers, to achieve efficiency of payment services, competition on equal terms, adequate consumer protection, security of payments as well as legal certainty for all parties involved in a payment process.

| 1.4 | The Commission recognises the efforts undertaken by European banks (4). Indeed the European Payment Council was established in June 2002. It decided on a wide-ranging work programme for the Single Euro Payment Area with suggestions for considerable changes on how to organise payment services in the European Union. These plans include, in particular, the decision to establish, as a priority, a new infrastructure (5) for credit transfers in euro at very low transaction costs and an expedient execution time of three days maximum. |
| --- | --- |

1.4

The Commission recognises the efforts undertaken by European banks (4). Indeed the European Payment Council was established in June 2002. It decided on a wide-ranging work programme for the Single Euro Payment Area with suggestions for considerable changes on how to organise payment services in the European Union. These plans include, in particular, the decision to establish, as a priority, a new infrastructure (5) for credit transfers in euro at very low transaction costs and an expedient execution time of three days maximum.

| 1.5 | In the Commission's view, the liberalisation of capital has facilitated cross-border money transfers within the EU. At the same time, the internal market, especially for retail payments, is still not as efficient as at a national level. Differences also exist between national legislations and conventions with regard to payment services in the internal market. The new legal framework should remove, where necessary, these legal barriers to the single payment area, in particular if they create an obstacle to the proper functioning of EU-wide payment infrastructures and systems as, for instance, the rules relating to the revocation of a payment order differ depending on where the order was placed in the internal market. Interoperability, the use of common technical standards and harmonisation of the essential legal rules are paramount. |
| --- | --- |

1.5

In the Commission's view, the liberalisation of capital has facilitated cross-border money transfers within the EU. At the same time, the internal market, especially for retail payments, is still not as efficient as at a national level. Differences also exist between national legislations and conventions with regard to payment services in the internal market. The new legal framework should remove, where necessary, these legal barriers to the single payment area, in particular if they create an obstacle to the proper functioning of EU-wide payment infrastructures and systems as, for instance, the rules relating to the revocation of a payment order differ depending on where the order was placed in the internal market. Interoperability, the use of common technical standards and harmonisation of the essential legal rules are paramount.

| 1.6 | Legal uncertainty is an element hindering payment service providers and users from transacting without reticence or at all. This is, for example, the case for direct debit transactions, which do not yet exist at the EU-level (see Annex 16). It is also relevant for regular, recurring payments (e.g. standing order for a foreign newspaper or a public utility for a summer house in another Member State) for which 'domiciliation' is not possible. If the users, e.g. consumers and SMEs, should reap the full benefit from the internal market, cross-border payment services have to be as efficient as those at a national level. The new legal framework should therefore close the loopholes and enhance confidence and welfare of consumers in the single payment area in the internal market. |
| --- | --- |

1.6

Legal uncertainty is an element hindering payment service providers and users from transacting without reticence or at all. This is, for example, the case for direct debit transactions, which do not yet exist at the EU-level (see Annex 16). It is also relevant for regular, recurring payments (e.g. standing order for a foreign newspaper or a public utility for a summer house in another Member State) for which 'domiciliation' is not possible. If the users, e.g. consumers and SMEs, should reap the full benefit from the internal market, cross-border payment services have to be as efficient as those at a national level. The new legal framework should therefore close the loopholes and enhance confidence and welfare of consumers in the single payment area in the internal market.

| 1.7 | In the internal market consumer confidence in payment transactions is in particular relevant since there is often a cross-border dimension and since confidence is essential when using the potential of e-commerce within the EU-market. Article 153 of the Treaty therefore requires a high level of consumer protection, which is a guiding principle for the new legal framework. However, the costs for such protection need to be assessed as they will ultimately be borne by the customer in one or the other way. |
| --- | --- |

1.7

In the internal market consumer confidence in payment transactions is in particular relevant since there is often a cross-border dimension and since confidence is essential when using the potential of e-commerce within the EU-market. Article 153 of the Treaty therefore requires a high level of consumer protection, which is a guiding principle for the new legal framework. However, the costs for such protection need to be assessed as they will ultimately be borne by the customer in one or the other way.

| 1.8 | For the benefit of customer protection it is necessary to have coherent and user-friendly information requirements prior and post execution of a payment transaction. Many provisions already exist in the present EU payment legislation in this respect, which need to be reviewed. One of the most difficult tasks is to strike the right balance with regard to the content and volume of information so that the Payment Service User reading it is able to understand and to be aware of these rights and obligations. |
| --- | --- |

1.8

For the benefit of customer protection it is necessary to have coherent and user-friendly information requirements prior and post execution of a payment transaction. Many provisions already exist in the present EU payment legislation in this respect, which need to be reviewed. One of the most difficult tasks is to strike the right balance with regard to the content and volume of information so that the Payment Service User reading it is able to understand and to be aware of these rights and obligations.

| 1.9 | The Commission considers legal safeguards for consumer protection in case of non-, defective- or unauthorised payment transactions also to be very important. |
| --- | --- |

1.9

The Commission considers legal safeguards for consumer protection in case of non-, defective- or unauthorised payment transactions also to be very important.

| 1.10 | The essential part of the Communication is represented by the 21 annexes, each raising a specific legal and/or technical issue concerning the efficient functioning of the internal market for payments. |
| --- | --- |

1.10

The essential part of the Communication is represented by the 21 annexes, each raising a specific legal and/or technical issue concerning the efficient functioning of the internal market for payments.

2.   General observations

| 2.1 | The objective of the Commission's initiative of establishing a coherent and comprehensive legal framework for the Single European Payment Area is shared by the Committee. While there are certainly barriers to the internal market for payments, these are a product of differences in national legislation systems. Payments in the internal market today are still very largely governed by national rules and/or conventions. With 98 % of all European retail payments made domestically (6), consumer demand for cross-border payments in the EU is obviously limited. |
| --- | --- |

2.1

The objective of the Commission's initiative of establishing a coherent and comprehensive legal framework for the Single European Payment Area is shared by the Committee. While there are certainly barriers to the internal market for payments, these are a product of differences in national legislation systems. Payments in the internal market today are still very largely governed by national rules and/or conventions. With 98 % of all European retail payments made domestically (6), consumer demand for cross-border payments in the EU is obviously limited.

| 2.2 | Many domestic markets for payments in Europe are highly efficient. Therefore, legislation should be limited to removing barriers to cross-border payments, so as to achieve a common efficiency level. The improvement of cross-border payment systems should not therefore carry any negative consequences for existing, efficient national payment systems. |
| --- | --- |

2.2

Many domestic markets for payments in Europe are highly efficient. Therefore, legislation should be limited to removing barriers to cross-border payments, so as to achieve a common efficiency level. The improvement of cross-border payment systems should not therefore carry any negative consequences for existing, efficient national payment systems.

| 2.3 | The Commission should remove the legal obstacles that prevent the creation of EU-wide market conventions and agreements, but not impose regulation on aspects that can be covered by those conventions and agreements. Indeed, one has to strike the right balance between the self-regulation/co-regulation and the EU legislation. |
| --- | --- |

2.3

The Commission should remove the legal obstacles that prevent the creation of EU-wide market conventions and agreements, but not impose regulation on aspects that can be covered by those conventions and agreements. Indeed, one has to strike the right balance between the self-regulation/co-regulation and the EU legislation.

| 2.4 | According to the EESC (7), self-regulation as well as co-regulation shall be supported. However, strict regulation must be adopted in all areas where self-regulatory or co-regulatory measures proves to be inappropriate, inadequate or incorrectly applied |
| --- | --- |

2.4

According to the EESC (7), self-regulation as well as co-regulation shall be supported. However, strict regulation must be adopted in all areas where self-regulatory or co-regulatory measures proves to be inappropriate, inadequate or incorrectly applied

| 2.5 | Indeed, the Committee supports the principle of a high, common level of consumer protection on the basis that it is an overriding Treaty objective. |
| --- | --- |

2.5

Indeed, the Committee supports the principle of a high, common level of consumer protection on the basis that it is an overriding Treaty objective.

| 2.6 | The internal market for payments must be internationally competitive. If the new EU legislative framework leads to an increase in payment related costs, there is a real risk that payments business will be increasingly operated by non-EU players outside Europe and that the legislation will fail to meet its goals. |
| --- | --- |

2.6

The internal market for payments must be internationally competitive. If the new EU legislative framework leads to an increase in payment related costs, there is a real risk that payments business will be increasingly operated by non-EU players outside Europe and that the legislation will fail to meet its goals.

| 2.7 | The Committee does not think that it would be desirable to exclude cheques from the scope of payments covered by the new instrument, since this means of payment is still used in some Member States. |
| --- | --- |

2.7

The Committee does not think that it would be desirable to exclude cheques from the scope of payments covered by the new instrument, since this means of payment is still used in some Member States.

| 2.8 | It will also be necessary under the new arrangements to ensure, through self-regulation, that credit and debit cards issued or authorised by any financial institution recognised in a Member State are accepted by any ATM in any other Member State. |
| --- | --- |

2.8

It will also be necessary under the new arrangements to ensure, through self-regulation, that credit and debit cards issued or authorised by any financial institution recognised in a Member State are accepted by any ATM in any other Member State.

3.   Specific observations

3.1   Right to provide payment service to the public (Annex 1)

The treatment of this issue in a new legal framework for payments is of vital importance to the safety of the financial system. As a payment system is the cornerstone of the entire economy payment services have to be regulated in all Member States. The mutual recognition principle should not be employed without first establishing harmonised minimum licensing requirements for payment services. This principle would neither provide sufficient security for consumers nor a level playing. A binding and directly applicable legal instrument (Regulation) to implement the Commission option 2 (special licence for payment services) would ensure a secure legal framework for this activity. It has to be clear that if a payment service provider is allowed to take deposits he has to be subjected to the banking licence (solvency requirements etc.). On a general note, it is understood that any Regulation to be developed in this area will also apply to non-European payment service providers operating within the Union.

3.2   Information Requirements (Annex 2)

Credit institutions are obliged to comply with the Directive 97/5/EC on cross-border credit transfers, the Regulation 2560/2001/EC on cross-border payments in euros and the Recommendation 97/489/EC on electronic payment instruments. Some Member States may have their own national legislation and there exist the EU rules that specifically deal with consumer information issues, i.e. the Directive 2002/65/EC concerning the distance marketing of consumer financial services and the Directive 2000/31/EC (‘the E-commerce Directive’). These requirements, sufficient in scope and content, are implemented by banks. The Committee fully supports the Commission initiative of consolidating existing legal provisions in order to establish one clear legal text that will cover the whole arena of information requirements. Information requirements have to be so general as to allow them to be applied to payment instruments that do not yet exist today.

3.3   Non-Resident Accounts (Annex 3)

This issue reaches far beyond the area of payments and should thus be considered somewhere else.

3.4   Value dates (Annex 4)

| 3.4.1 | Value dating is not only a payments issue; indeed value dates are often not specifically linked to a payment transaction – it can result from any account operation. |
| --- | --- |

3.4.1

Value dating is not only a payments issue; indeed value dates are often not specifically linked to a payment transaction – it can result from any account operation.

| 3.4.2 | As the Commission admits, value dating is primordially a pricing issue (i.e. a product management or customer relationship). As a product management issue, value dates are independent of bookings, which are used to compute movements on the account. |
| --- | --- |

3.4.2

As the Commission admits, value dating is primordially a pricing issue (i.e. a product management or customer relationship). As a product management issue, value dates are independent of bookings, which are used to compute movements on the account.

| 3.4.3 | Value dates may vary by bank, by customers within the same bank, or even by different operations of the same customer within the same bank. |
| --- | --- |

3.4.3

Value dates may vary by bank, by customers within the same bank, or even by different operations of the same customer within the same bank.

| 3.4.4 | The Committee welcomes the idea of transparency requirements for payment service providers on the use of value date. There should be a moderation of the financial impact of value dating on the consumer. Convergence of the system of value across Europe must also be considered, although since national systems vary considerably between the Member States, convergence must be seen as a medium-term objective. |
| --- | --- |

3.4.4

The Committee welcomes the idea of transparency requirements for payment service providers on the use of value date. There should be a moderation of the financial impact of value dating on the consumer. Convergence of the system of value across Europe must also be considered, although since national systems vary considerably between the Member States, convergence must be seen as a medium-term objective.

| 3.4.5 | This convergence process should be guided by the principle that the value date of a payment transaction must be the same as the date at which the money flow of the payment order at the relevant payment service provider takes place |
| --- | --- |

3.4.5

This convergence process should be guided by the principle that the value date of a payment transaction must be the same as the date at which the money flow of the payment order at the relevant payment service provider takes place

3.5   Portability of bank account numbers (Annex 5)

| 3.5.1 | The existing Regulation 2560 refers to IBAN (8) and BIC (9) which have been promoted and sponsored by the European Authorities, including the ESCB (European System of Central Banks). The IBAN numbering standard is accepted and well functioning across the EU, proving its success. This coding system does not allow portability. Banks should, as a minimum, guarantee the customer to be able to keep his account number when moving to another branch within the same bank. |
| --- | --- |

3.5.1

The existing Regulation 2560 refers to IBAN (8) and BIC (9) which have been promoted and sponsored by the European Authorities, including the ESCB (European System of Central Banks). The IBAN numbering standard is accepted and well functioning across the EU, proving its success. This coding system does not allow portability. Banks should, as a minimum, guarantee the customer to be able to keep his account number when moving to another branch within the same bank.

3.6   Customer mobility (Annex 6)

As a general rule a competitive market will provide for a natural drive towards more customer mobility. Banks must facilitate the transfer of accounts as far as possible by forwarding all relevant details to customers. The Committee fully encourages self-regulation aimed at increasing customer mobility. In addition the Committee is in favour of transparency on closing fees. Those fees should be reasonable and geared to the real administrative costs involved in closing and transferring accounts. In addition, they should be communicated before a customer opens an account with a bank.

3.7   The evaluation of the security of payment instruments and components (Annex 7)

Since legislative initiatives would run the risk of enshrining old technological solutions (security components are by essence perpetually adjusted) standardisation should preferably be industry led in the frame of self-regulation that is proposed as a first option by the Commission. The Committee believes that industry-led certification on security should be brought in line with common EU principles to be established, in order to avoid confusion.

3.8   Information on the originator of a payment (SRVII of FATF) (Annex 8)

The FATF is an inter-governmental body setting standards and developing policies to combat money laundering and terrorist financing on an international level. The Special Recommendation VII in the field of terrorist financing refers to wire transfers and states ‘Countries should take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information (name, address and account number) on funds transfers and related messages that are sent, and the information should remain with the transfer or related message through the payment chain. Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address and account number)’. The Committee suggests that Special Recommendation VII should be implemented in a fully harmonised way in form of a Regulation throughout the internal market so as to ensure its consistent and uniform application. The respect of privacy requirements is crucial in this context. The countries of the European Economic Area should preferably also be included. On a specific note, the information on the payer should include the name of the account holder, instead of that of the payer, as they might differ, so that the information on the account holder is already stored and easily accessible by the payment service provider.

3.9   Alternative dispute resolution (ADR) (Annex 9)

The Committee in its opinion on the Commission Green Paper on ‘Alternative dispute resolution in civil and commercial law’ (10) supports FIN-NET since its inception by the Commission. It demonstrates that cross-border conciliation schemes can work efficiently and without bureaucracy using existing mechanisms. The efficiency of FIN-NET owes its success to the fact that it covered the then novel area of cross-border payment ADR, while building on existing non-cross-border schemes. In the payments area, procedure speed is of particular importance for the consumer.

3.10   Revocability of a payment order (Annex 10)

| 3.10.1 | To ensure the legal certainty for a customer, a more appropriate approach for this annex would be to discuss the definition and communication of a ‘point of irrevocability’ according to the payment instrument used. The Committee supports that a customer should be informed about irrevocability conditions regarding various payment systems and the payment instrument involved. |
| --- | --- |

3.10.1

To ensure the legal certainty for a customer, a more appropriate approach for this annex would be to discuss the definition and communication of a ‘point of irrevocability’ according to the payment instrument used. The Committee supports that a customer should be informed about irrevocability conditions regarding various payment systems and the payment instrument involved.

| 3.10.2 | It also has to be kept in mind that customers are not only sending but receiving payments. Extensively long revocability periods would then have the reverse effect of being detrimental to customers expecting those payments. |
| --- | --- |

3.10.2

It also has to be kept in mind that customers are not only sending but receiving payments. Extensively long revocability periods would then have the reverse effect of being detrimental to customers expecting those payments.

| 3.10.3 | Further, it is important to distinguish between customer revocability and system revocability. For clarity and legal certainty reasons, the settlement of payment orders should, as a general rule, not be revoked once entered into a system as defined by the Settlement Finality Directive. |
| --- | --- |

3.10.3

Further, it is important to distinguish between customer revocability and system revocability. For clarity and legal certainty reasons, the settlement of payment orders should, as a general rule, not be revoked once entered into a system as defined by the Settlement Finality Directive.

| 3.10.4 | The Committee is of the opinion that the issue of revocability is complex and that further discussion is necessary. Nevertheless, the payment service provider should inform his customer on demand about the point of irrevocability regarding the individual payment in question. |
| --- | --- |

3.10.4

The Committee is of the opinion that the issue of revocability is complex and that further discussion is necessary. Nevertheless, the payment service provider should inform his customer on demand about the point of irrevocability regarding the individual payment in question.

3.11   The role of the payment service provider in the case of a customer/merchant-dispute in distance commerce (Annex 11)

The Committee considers that a distinction must be made between the basic transaction and the execution of the payment: the payment transaction as such is completely neutral. Neither the originating nor the beneficiary's banks have any influence on the underlying transaction between the originator (customer of the merchant) and the beneficiary (merchant). The Committee acknowledges that the issue represented by this annex is very complex and needs further discussion.

3.12   Non-execution or defective execution (Annex 12)

| 3.12.1 | The Committee agrees that a payment service provider should be responsible for accurately executing a payment order and for proving that a transaction has been accurately recorded, executed and credited to the beneficiary's account. He is responsible for the part of the payment system (in a technical sense), that is under his control. At the same time it is clear that a payment service provider cannot be held liable beyond his civil responsibility, and certainly not if he was not negligent, or in case of ‘force majeure’. It is therefore up to the service provider to prove that the payment transaction was accurately recorded, executed and entered into the accounts in the terms in which it was ordered, and this obligation cannot be limited or avoided by contractual means. |
| --- | --- |

3.12.1

The Committee agrees that a payment service provider should be responsible for accurately executing a payment order and for proving that a transaction has been accurately recorded, executed and credited to the beneficiary's account. He is responsible for the part of the payment system (in a technical sense), that is under his control. At the same time it is clear that a payment service provider cannot be held liable beyond his civil responsibility, and certainly not if he was not negligent, or in case of ‘force majeure’. It is therefore up to the service provider to prove that the payment transaction was accurately recorded, executed and entered into the accounts in the terms in which it was ordered, and this obligation cannot be limited or avoided by contractual means.

| 3.12.2 | The Committee believes that payment service providers could offer to be liable for claims relating to matters outside their control in the form of a value added service. This would be beneficial for a consumer and would lead to increased competition. |
| --- | --- |

3.12.2

The Committee believes that payment service providers could offer to be liable for claims relating to matters outside their control in the form of a value added service. This would be beneficial for a consumer and would lead to increased competition.

3.13   Obligations and liabilities of the contractual parties related to unauthorised transactions (Annex 13)

| 3.13.1 | With respect to card payments, credit institutions have already to comply with the provisions of the Recommendation 97/489/CE, particularly regarding:






  — | the limitation of the card holder's pecuniary liability (unless he or she commits a serious fault) to 150 euros for transactions carried out with lost or stolen cards prior to stop payment notification; and |
| --- | --- | --- |

3.13.1

With respect to card payments, credit institutions have already to comply with the provisions of the Recommendation 97/489/CE, particularly regarding:

—

the limitation of the card holder's pecuniary liability (unless he or she commits a serious fault) to 150 euros for transactions carried out with lost or stolen cards prior to stop payment notification; and

| — | the reimbursement of debits that are disputed in good faith (and of all associated bank expenses for involved debits) resulting from fraudulent transactions effected at a distance, without physical use of the card, or from transactions with a counterfeit card. |
| --- | --- |

—

the reimbursement of debits that are disputed in good faith (and of all associated bank expenses for involved debits) resulting from fraudulent transactions effected at a distance, without physical use of the card, or from transactions with a counterfeit card.

| 3.13.2 | Organised crime also stands behind fraudulent transactions. The 150 euro threshold has the potential of encouraging fraud. Therefore, the Committee believes that a risk-based threshold should be introduced. The cardholder's liability in the above mentioned case should be a percentage of the total credit limit of his card to which he agrees in his contract. Such a fair approach would reflect the true risk and cost, while at the same time more efficiently discouraging fraud, thus reducing the common cost. |
| --- | --- |

3.13.2

Organised crime also stands behind fraudulent transactions. The 150 euro threshold has the potential of encouraging fraud. Therefore, the Committee believes that a risk-based threshold should be introduced. The cardholder's liability in the above mentioned case should be a percentage of the total credit limit of his card to which he agrees in his contract. Such a fair approach would reflect the true risk and cost, while at the same time more efficiently discouraging fraud, thus reducing the common cost.

| 3.13.3 | A limited update of the Recommendation 97/489/EC in accordance with the New Legal Framework is a positive way forward. The Committee is of the opinion that this annex should be read in connection with the opportunities to use an electronic signature in relation to the Directive on e-signatures. |
| --- | --- |

3.13.3

A limited update of the Recommendation 97/489/EC in accordance with the New Legal Framework is a positive way forward. The Committee is of the opinion that this annex should be read in connection with the opportunities to use an electronic signature in relation to the Directive on e-signatures.

| 3.13.4 | It is unclear whether a payment service provider can prove conclusively – if at all – whether or not the customer was the initiator of the transaction effected with the technically secure electronic payment instrument. Especially in the case of online banking transactions it seems that payment service providers have difficulty providing such evidence since these transactions can be conducted on private PCs which are beyond the payment service provider's sphere of control. |
| --- | --- |

3.13.4

It is unclear whether a payment service provider can prove conclusively – if at all – whether or not the customer was the initiator of the transaction effected with the technically secure electronic payment instrument. Especially in the case of online banking transactions it seems that payment service providers have difficulty providing such evidence since these transactions can be conducted on private PCs which are beyond the payment service provider's sphere of control.

3.14   Use of ‘our’, ‘ben’ and ‘share’ (11) (Annex 14)

| 3.14.1 | The principle of transferring the full amount to the beneficiary is central to this annex. This principle is now well established following the Regulation 2560/2001 for payments that can be processed in a full STP manner (Straight-Through-Processing) as long as the corresponding domestic payments are paid in full without deduction on the beneficiary side. |
| --- | --- |

3.14.1

The principle of transferring the full amount to the beneficiary is central to this annex. This principle is now well established following the Regulation 2560/2001 for payments that can be processed in a full STP manner (Straight-Through-Processing) as long as the corresponding domestic payments are paid in full without deduction on the beneficiary side.

| 3.14.2 | In addition, self-regulation exists in the form of the ICP (Interbank Convention on Payments) (12)
  , which today limits the scope to credit transfers in euro. The ICP promotes the abolishment of the possibility for intermediary banks, when used, to deduct fees from the transferred amount. |
| --- | --- |

3.14.2

In addition, self-regulation exists in the form of the ICP (Interbank Convention on Payments) (12)
  , which today limits the scope to credit transfers in euro. The ICP promotes the abolishment of the possibility for intermediary banks, when used, to deduct fees from the transferred amount.

| 3.14.3 | Any legal framework should move away from technical terms used within specific message formats and systems (such as SHARE, BEN, OUR), which in many cases are inappropriate in a domestic context. The Committee is of the opinion that no additional provisions should therefore be created to replace the Directive 97/5/EC. The current charging options exist to give customers a choice, which is part of terms and conditions negotiated between a customer and a bank. The risk of an over simplification and limitation of choice has to be avoided as those charging options are the response to market needs which go beyond the basic intra-EU credit transfer instrument(s) and are necessary to support the various payment types as well as distance commerce. The Committee would like the industry to increase transparency on the charging option applied. |
| --- | --- |

3.14.3

Any legal framework should move away from technical terms used within specific message formats and systems (such as SHARE, BEN, OUR), which in many cases are inappropriate in a domestic context. The Committee is of the opinion that no additional provisions should therefore be created to replace the Directive 97/5/EC. The current charging options exist to give customers a choice, which is part of terms and conditions negotiated between a customer and a bank. The risk of an over simplification and limitation of choice has to be avoided as those charging options are the response to market needs which go beyond the basic intra-EU credit transfer instrument(s) and are necessary to support the various payment types as well as distance commerce. The Committee would like the industry to increase transparency on the charging option applied.

| 3.14.4 | The Committee encourages the Commission to remove the discrepancy between the default ‘OUR’ option of the Directive, a charging mechanism that does not exist in most of the Member States, and the ‘SHA’ option, favoured by the Regulation. |
| --- | --- |

3.14.4

The Committee encourages the Commission to remove the discrepancy between the default ‘OUR’ option of the Directive, a charging mechanism that does not exist in most of the Member States, and the ‘SHA’ option, favoured by the Regulation.

3.15   Execution times for credit transfers (Annex 15)

| 3.15.1 | The Committee recalls that European banks within the European Payments Council agreed to the default credit transfer execution time of 3 banking working days (after the acceptance date) via self-regulation under the CREDEURO Convention. In fact, the 3 days are default times which can be further improved by individual banks. As the execution time is a core service element, it should be left to competitive forces to enhance services. |
| --- | --- |

3.15.1

The Committee recalls that European banks within the European Payments Council agreed to the default credit transfer execution time of 3 banking working days (after the acceptance date) via self-regulation under the CREDEURO Convention. In fact, the 3 days are default times which can be further improved by individual banks. As the execution time is a core service element, it should be left to competitive forces to enhance services.

| 3.15.2 | A further need for legislation should only be considered if the sector's initiative fails. |
| --- | --- |

3.15.2

A further need for legislation should only be considered if the sector's initiative fails.

3.16   Direct debiting (Annex 16)

| 3.16.1 | Legislation to be passed and/or legal barriers to be lifted will be precisely identified by the European Payments Council (EPC) and communicated to the Commission once the Pan-European Direct Debit scheme has been approved formally by the EPC. The legal framework needed to support the Pan-European Direct Debit scheme will very much depend on the model chosen. Therefore, the Committee is convinced that a close cooperation of the industry and the legislator (EC) should be envisaged. |
| --- | --- |

3.16.1

Legislation to be passed and/or legal barriers to be lifted will be precisely identified by the European Payments Council (EPC) and communicated to the Commission once the Pan-European Direct Debit scheme has been approved formally by the EPC. The legal framework needed to support the Pan-European Direct Debit scheme will very much depend on the model chosen. Therefore, the Committee is convinced that a close cooperation of the industry and the legislator (EC) should be envisaged.

3.17   Removing barriers to professional cash circulation (Annex 17) (13)

| 3.17.1 | This annex is not related to the question of payments and thus outside the scope of the New Legal Framework for Payments. |
| --- | --- |

3.17.1

This annex is not related to the question of payments and thus outside the scope of the New Legal Framework for Payments.

| 3.17.2 | There should be no discrimination between cash and non-cash payments regulation. A number of regulatory and technical barriers prevent the development of cross-border cash transportation in the euro zone, in particular between national central banks' branches in one country and financial institutions' branches in another country. |
| --- | --- |

3.17.2

There should be no discrimination between cash and non-cash payments regulation. A number of regulatory and technical barriers prevent the development of cross-border cash transportation in the euro zone, in particular between national central banks' branches in one country and financial institutions' branches in another country.

| 3.17.3 | The access to cross-border National Central Bank (NCB) services is part of the natural development of the single currency usage within the euro zone. |
| --- | --- |

3.17.3

The access to cross-border National Central Bank (NCB) services is part of the natural development of the single currency usage within the euro zone.

| 3.17.4 | Competition in the cash transportation sector should be fostered within the Euro zone in order to maximise efficiency, but the Committee expresses the necessity of creating a cross-border cash transportation licence and sufficient controls of its application. |
| --- | --- |

3.17.4

Competition in the cash transportation sector should be fostered within the Euro zone in order to maximise efficiency, but the Committee expresses the necessity of creating a cross-border cash transportation licence and sufficient controls of its application.

3.18   Data protection issues (Annex 18)

The Commission's option of including in a Regulation a provision corresponding to the Article 13, letter d of the existing Data Protection Directive 95/46/EC (14) is the best chance to harmonise in the short run the possibilities of exchange of information for fraud prevention purposes in payment systems (between operators and the authorities, and among the operators themselves, by the way of an exception to the Data Protection Directive: e.g. a database of fraudulent merchants as regards card transactions).

3.19   Digital signatures (Annex 19)

The Committee suggests that the Commission should first of all submit their report on the implementation of the Directive 1999/93/EC (15) on Electronic Signatures. Commission proposals for new measures are welcome. On a general note the Committee would like to highlight that digital certification is a product management area where the principles of technical neutrality and competition apply.

3.20   Security of the networks (Annex 20)

The Committee welcomes actions and initiatives that make cyber-crime a more serious offence and that look at harmonisation in this respect across the EU in cooperation with other jurisdictions (e.g. the United States). The employment of dissuasive sanctions to punish unauthorised access to automatic data processing systems with the aim of fraud, the destruction or modification of data and the alteration of system functioning is positive. It is also necessary to sanction parties who make available data, programs, hardware or information specifically designed or adapted to enable unauthorised access to an automatic data processing system in order to commit fraud. A distinction must therefore be made between the criminalisation of fraudulent activities on payment networks for which further EU harmonisation through legislation would be welcome and the preventative measures to secure the payment networks which should be left to the industry in order to encompass all technological developments.

3.21   Breakdown of a payment network (Annex 21)

| 3.21.1 | It seems to the Committee that the question referred to in the Annex 21 is a sub-issue of the Annex 12 (non-execution or defective execution). Indeed, it has to be recognised that:






  — | payment network breakdowns are not a habitual phenomenon; |
| --- | --- | --- |

3.21.1

It seems to the Committee that the question referred to in the Annex 21 is a sub-issue of the Annex 12 (non-execution or defective execution). Indeed, it has to be recognised that:

—

payment network breakdowns are not a habitual phenomenon;

| — | payment network breakdowns can affect systems and appliances that are not in the direct control of the credit institution (network externalities); |
| --- | --- |

—

payment network breakdowns can affect systems and appliances that are not in the direct control of the credit institution (network externalities);

| — | credit institutions have to comply with resilience and business continuity obligations imposed to them by the competent regulatory authorities. |
| --- | --- |

—

credit institutions have to comply with resilience and business continuity obligations imposed to them by the competent regulatory authorities.

| 3.21.2 | No liability should be imposed on payment service providers for payments not entered into the system at the time of the breakdown. The payment service provider has limited liability according to his civil responsibility and should prove that he has taken all necessary measures to prevent the breakdown. |
| --- | --- |

3.21.2

No liability should be imposed on payment service providers for payments not entered into the system at the time of the breakdown. The payment service provider has limited liability according to his civil responsibility and should prove that he has taken all necessary measures to prevent the breakdown.

| 3.21.3 | The recent case of email ‘phishing’ attacks against UK banks, one online provider saw the taking down of the online service as a key response to the attack. Such attacks are beyond the direct control of a provider, due to the direct email contact between an attacker and a customer. Payment service providers should inform their customers, if possible, before they close down the system for security reasons. The Committee considers it inappropriate to penalise a provider for taking measures to protect its customers in this manner. Further, the Committee encourages payment service providers to be pro-active in the prevention of such types of fraud. |
| --- | --- |

3.21.3

The recent case of email ‘phishing’ attacks against UK banks, one online provider saw the taking down of the online service as a key response to the attack. Such attacks are beyond the direct control of a provider, due to the direct email contact between an attacker and a customer. Payment service providers should inform their customers, if possible, before they close down the system for security reasons. The Committee considers it inappropriate to penalise a provider for taking measures to protect its customers in this manner. Further, the Committee encourages payment service providers to be pro-active in the prevention of such types of fraud.

4.   Conclusion

| 4.1 | The New Legal Framework should be consistent with the European Consumer Policy Strategy, which sets the achievement of a high, common level of consumer protection as a key objective. |
| --- | --- |

4.1

The New Legal Framework should be consistent with the European Consumer Policy Strategy, which sets the achievement of a high, common level of consumer protection as a key objective.

| 4.1.1 | The Committee supports the European Commission's aim to increase consumer confidence, legal certainty and market efficiency for payments in the internal market. It further welcomes the fact that self-regulation and co-regulation are considered as a possible way forward in several of the areas mentioned in the 21 annexes. |
| --- | --- |

4.1.1

The Committee supports the European Commission's aim to increase consumer confidence, legal certainty and market efficiency for payments in the internal market. It further welcomes the fact that self-regulation and co-regulation are considered as a possible way forward in several of the areas mentioned in the 21 annexes.

| 4.2 | Priority should be given to the legislative measures covering Annexes 1, 2, 8, 12, 13, 18 and 19. In particular, the annexes on Consumer Information Requirements (2), Information on the Originator of a Payment (8) and the Data Protection Issues (18) urgently require attention. |
| --- | --- |

4.2

Priority should be given to the legislative measures covering Annexes 1, 2, 8, 12, 13, 18 and 19. In particular, the annexes on Consumer Information Requirements (2), Information on the Originator of a Payment (8) and the Data Protection Issues (18) urgently require attention.

| 4.3 | Increased cooperation between the Commission and the banking industry should be envisaged concerning the establishment of the European Direct Debit Scheme (Annex 16), the determination of who has the right to provide payment services (Annex 01) as well as in the area of security certification of payment instruments and components (Annex 07). |
| --- | --- |

4.3

Increased cooperation between the Commission and the banking industry should be envisaged concerning the establishment of the European Direct Debit Scheme (Annex 16), the determination of who has the right to provide payment services (Annex 01) as well as in the area of security certification of payment instruments and components (Annex 07).

| 4.4 | Regarding the other annexes it seems to the Committee that self-regulation or co-regulation would be a more appropriate way to achieve the Commission's aim of an efficient internal market for payments. It is clear that if self-regulatory measures do not prove successful, a European Regulation should be envisaged. |
| --- | --- |

4.4

Regarding the other annexes it seems to the Committee that self-regulation or co-regulation would be a more appropriate way to achieve the Commission's aim of an efficient internal market for payments. It is clear that if self-regulatory measures do not prove successful, a European Regulation should be envisaged.

| 4.5 | In the same vein, the Committee suggests that the overall framework should concentrate on providing transparency to consumers and try to build as much as possible on existing practices and self-regulatory rules. For instance, it is not necessary to regulate further where the market has already achieved the objectives of the legislator (e.g. there is no immediate need to update the Directive on Credit Transfers to shorten the execution times). Nevertheless, in certain areas a common approach is the right solution. |
| --- | --- |

4.5

In the same vein, the Committee suggests that the overall framework should concentrate on providing transparency to consumers and try to build as much as possible on existing practices and self-regulatory rules. For instance, it is not necessary to regulate further where the market has already achieved the objectives of the legislator (e.g. there is no immediate need to update the Directive on Credit Transfers to shorten the execution times). Nevertheless, in certain areas a common approach is the right solution.

| 4.6 | The scope of the Communication is often much broader than just payments and the Commission has to highlight in a more explicit manner the difference between commercial services and payment systems. Any legislative measure related to payments should exclude issues relating to the fulfilment of undertakings other than the payments themselves. |
| --- | --- |

4.6

The scope of the Communication is often much broader than just payments and the Commission has to highlight in a more explicit manner the difference between commercial services and payment systems. Any legislative measure related to payments should exclude issues relating to the fulfilment of undertakings other than the payments themselves.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  OJ L 344, 28.12.2001.

1

(2)  OJ L 43, 14.2.1997.

2

(3)  By customer is meant consumers and other persons, such as retailers and SMEs, using payment services.

3

(4)  e.g. Euro Banking Association's (EBA) system EURO 1 and STEP1.

4

(5)  EBA made its first transactions on 28.04.2003.

5

(6)  Aggregate percentage of various sources (Swift, EBA, Card Schemes) compiled by the Fédération Bancaire Européenne (2003).

6

(7)  EESC 500/2004, rapporteur Mr Retureau.

7

(8)  International Bank Account Number

8

(9)  Bank Identifier Code

9

(10)  OJ C 85, 8.4.2003.

10

(11)  ‘our’, ‘beneficiary’ and ‘share’ are three charging options for credit transfers.

11

(12)  Interbank Convention on payments for basic credit transfers falling under the Regulation 2560/2001.

12

(13)  Particular attention should be paid to the accuracy of the translations. In Italian, for example, the heading should rather be ‘Rimozióne delle barriere al transporto di fondi’, which is closer to the meaning of the original version.

13

(14)  OJ L 281, 23.11.1995.

14

(15)  OJ L 13, 19.1.2000.

15

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/19 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/19

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Decision on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits’

(COM(2004) 159 final — 2004/0056 (CNS))

(2004/C 302/04)

On 13 May 2004, the Council decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community on the abovementioned proposal.

The Section for the Single Market, Production, and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 June 2004. The rapporteur was Mr Frank von Fürstenwerth.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June) the European Economic and Social Committee adopted the following opinion by 133 votes, with one vote against and four abstentions:

1.   Contents

| 1.1 | The proposal entails codifying Council Decision 73/391/EEC of 3 December 1973 on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits. This Decision has since been modified by Council Decision 76/641/EEC and by the acts of accession of Spain and Portugal, as well as those of Austria, Finland and Sweden. |
| --- | --- |

1.1

The proposal entails codifying Council Decision 73/391/EEC of 3 December 1973 on consultation and information procedures in matters of credit insurance, credit guarantees and financial credits. This Decision has since been modified by Council Decision 76/641/EEC and by the acts of accession of Spain and Portugal, as well as those of Austria, Finland and Sweden.

| 1.2 | These Decisions exclusively concern matters pertaining to state export credit guarantees. In particular, they lay down the conditions under which Member States must enter into a consultation procedure with other Member States and the Commission about granting or guaranteeing foreign credits which are being considered. The Decision has no bearing on the private export credit insurance market. |
| --- | --- |

1.2

These Decisions exclusively concern matters pertaining to state export credit guarantees. In particular, they lay down the conditions under which Member States must enter into a consultation procedure with other Member States and the Commission about granting or guaranteeing foreign credits which are being considered. The Decision has no bearing on the private export credit insurance market.

| 1.3 | The proposal would replace the various legislative instruments covered by the codification. |
| --- | --- |

1.3

The proposal would replace the various legislative instruments covered by the codification.

| 1.4 | The proposal would not alter the substance of the legislative instruments being codified. It does no more than bring them together with only such formal amendments as are required by the codification exercise itself. |
| --- | --- |

1.4

The proposal would not alter the substance of the legislative instruments being codified. It does no more than bring them together with only such formal amendments as are required by the codification exercise itself.

2.   Assessment

| 2.1 | The proposal comes in response to the Commission's concern to codify legislation, which has been frequently amended, in the interests of clarity and rationality. |
| --- | --- |

2.1

The proposal comes in response to the Commission's concern to codify legislation, which has been frequently amended, in the interests of clarity and rationality.

| 2.2 | To date the provisions in question have been scattered across various legislative instruments. This has made costly searches and lengthy comparisons between the many different instruments necessary in order to ascertain what provisions apply. |
| --- | --- |

2.2

To date the provisions in question have been scattered across various legislative instruments. This has made costly searches and lengthy comparisons between the many different instruments necessary in order to ascertain what provisions apply.

| 2.3 | The proposal is confined to bringing together the different instruments into one single instrument whilst fully preserving their substance. There is no need to take any action as regards content. |
| --- | --- |

2.3

The proposal is confined to bringing together the different instruments into one single instrument whilst fully preserving their substance. There is no need to take any action as regards content.

| 2.4 | The proposal is to be welcomed in that it boosts transparency and makes EU legislation more comprehensible (1). |
| --- | --- |

2.4

The proposal is to be welcomed in that it boosts transparency and makes EU legislation more comprehensible (1).

| 2.5 | Nonetheless the Commission should take the following points into consideration in the codification process:






  — | Whereas (2) of the Council Decision of 03.12.1973 (‘Whereas by a Decision of 26 January 1965 (2) the Council set up a consultation procedure in matters of credit insurance, credit guarantees and financial credits.’) is no longer contained in the proposal and should still be included to ensure it is complete. |
| --- | --- | --- |

2.5

Nonetheless the Commission should take the following points into consideration in the codification process:

—

Whereas (2) of the Council Decision of 03.12.1973 (‘Whereas by a Decision of 26 January 1965 (2) the Council set up a consultation procedure in matters of credit insurance, credit guarantees and financial credits.’) is no longer contained in the proposal and should still be included to ensure it is complete.

| — | Article 20 of the proposal repeals Council Decision 73/391/EEC. Annex III to the proposal, however, also mentions Council Decision 76/641/EEC under the title ‘Repealed Decision with its amendment’. Hence, in order to be consistent, the amendment introduced by Decision 76/641/EEC should also be repealed in Article 20. |
| --- | --- |

—

Article 20 of the proposal repeals Council Decision 73/391/EEC. Annex III to the proposal, however, also mentions Council Decision 76/641/EEC under the title ‘Repealed Decision with its amendment’. Hence, in order to be consistent, the amendment introduced by Decision 76/641/EEC should also be repealed in Article 20.

| 2.6 | Moreover, particular attention needs to be paid to ensuring that the translations are correct since inaccuracies could lead to legal uncertainty and to the legislation being wrongly applied. |
| --- | --- |

2.6

Moreover, particular attention needs to be paid to ensuring that the translations are correct since inaccuracies could lead to legal uncertainty and to the legislation being wrongly applied.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  In Portuguese, for example, the following amendments should be made:

1

| a) | In Article 4 (e) ii) and iv) ‘credit starting point’ should be translated as ‘ponto de partida do credito’ rather than as ‘inícui dó crédito’, the two dates not being necessarily the same; |
| --- | --- |

a)

In Article 4 (e) ii) and iv) ‘credit starting point’ should be translated as ‘ponto de partida do credito’ rather than as ‘inícui dó crédito’, the two dates not being necessarily the same;

| b) | In Article 4 (e) iv) the expression ‘where repayment is not to be effected by equal instalments at regular intervals’ should better be translated by ‘escalonadas em prestações iguais e espaçadas de modo regular’ rather than ‘escalonadas por parcelas de igual montante de modo regular’; |
| --- | --- |

b)

In Article 4 (e) iv) the expression ‘where repayment is not to be effected by equal instalments at regular intervals’ should better be translated by ‘escalonadas em prestações iguais e espaçadas de modo regular’ rather than ‘escalonadas por parcelas de igual montante de modo regular’;

| c) | Identically, the expression ‘aid credit’ (e.g. in Articles 4 (f) i) and 5 (e) i)) should be translated by ‘crédito de ajuda’ and not as ‘crédito de auxílio’ which has a completely different sense in the EU legislation concerning ‘State aid’; |
| --- | --- |

c)

Identically, the expression ‘aid credit’ (e.g. in Articles 4 (f) i) and 5 (e) i)) should be translated by ‘crédito de ajuda’ and not as ‘crédito de auxílio’ which has a completely different sense in the EU legislation concerning ‘State aid’;

| d) | Finally, several orthographic mistakes have been found at least in Article 3.2 (first and third lines) ‘ntureza’ and ‘peirem’, Article 10.1 (c): (‘desdadoravel’), and in the Annex I B) d) (‘antiantamentos’). |
| --- | --- |

d)

Finally, several orthographic mistakes have been found at least in Article 3.2 (first and third lines) ‘ntureza’ and ‘peirem’, Article 10.1 (c): (‘desdadoravel’), and in the Annex I B) d) (‘antiantamentos’).

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/20 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/20

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a regulation of the European Parliament and of the Council on the implementation of the International Safety Management Code within the Community’

(COM(2003) 767 final — 2003/0291 (COD))

(2004/C 302/05)

On 13 January 2004, the Council of the European Union decided to consult the European Economic and Social Committee, under Article 80(2) of the Treaty establishing the European Community, on the abovementioned proposal.

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 10 May 2004. The rapporteur was Dr Bredima Savopoulou.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 155 votes to 2, with 4 abstentions:

1.   Introduction

| 1.1 | The International Management Code for the Safe Operation of Ships and Pollution Prevention (ISM Code) was adopted by the International Maritime Organisation (IMO) in 1979 as a tool to promote the development of a safety culture and environmental conscience in shipping. In 1994 the IMO decided to make the Code mandatory through the adoption of a new Chapter IX ‘Management for the Safe Operation of Ships’, in the International Convention for the Safety of Life at Sea (SOLAS) 1974. |
| --- | --- |

1.1

The International Management Code for the Safe Operation of Ships and Pollution Prevention (ISM Code) was adopted by the International Maritime Organisation (IMO) in 1979 as a tool to promote the development of a safety culture and environmental conscience in shipping. In 1994 the IMO decided to make the Code mandatory through the adoption of a new Chapter IX ‘Management for the Safe Operation of Ships’, in the International Convention for the Safety of Life at Sea (SOLAS) 1974.

| 1.2 | The mandatory application of the Code was effected in two phases. On 1 July 1998 it became mandatory for companies operating passenger ships, oil tankers, chemical tankers, gas carriers and bulk carriers of 500 gross tons and over, engaged on international voyages. On 1 July 2002 the Code became mandatory for companies operating other cargo ships of 500 gross tons and over, engaged on international sea voyages. |
| --- | --- |

1.2

The mandatory application of the Code was effected in two phases. On 1 July 1998 it became mandatory for companies operating passenger ships, oil tankers, chemical tankers, gas carriers and bulk carriers of 500 gross tons and over, engaged on international voyages. On 1 July 2002 the Code became mandatory for companies operating other cargo ships of 500 gross tons and over, engaged on international sea voyages.

| 1.3 | In response to the Estonia tragedy the EU decided to take action for the early implementation of the ISM Code for ro-ro passenger ferries engaged on international and domestic voyages within the Community by 1/7/1996 under Regulation (EC) 3051/95 (8/12/1995) (1). The EESC in its relevant opinion welcomed the proposed action and supported the Commission's initiative. (2) |
| --- | --- |

1.3

In response to the Estonia tragedy the EU decided to take action for the early implementation of the ISM Code for ro-ro passenger ferries engaged on international and domestic voyages within the Community by 1/7/1996 under Regulation (EC) 3051/95 (8/12/1995) (1). The EESC in its relevant opinion welcomed the proposed action and supported the Commission's initiative. (2)

| 1.4 | The Regulation has been amended twice: a) by Regulation 179/1998 (3) concerning the uniform implementation of the ISM Code documents / certificates for ferries operating in Europe and b) by the Regulation 1970/2002 (4) taking account of subsequent amendments to the ISM Code adopted by IMO. The Regulation entered into force on 26 November 2002. |
| --- | --- |

1.4

The Regulation has been amended twice: a) by Regulation 179/1998 (3) concerning the uniform implementation of the ISM Code documents / certificates for ferries operating in Europe and b) by the Regulation 1970/2002 (4) taking account of subsequent amendments to the ISM Code adopted by IMO. The Regulation entered into force on 26 November 2002.

2.   The Commission's proposal

| 2.1 | When Regulation (EC) No 3051/95 was adopted Member States and the European Parliament stated that the application of the ISM Code to ro-ro passenger ferries was a priority, but also that it was the first of a series of continuing initiatives to improve safety at sea. |
| --- | --- |

2.1

When Regulation (EC) No 3051/95 was adopted Member States and the European Parliament stated that the application of the ISM Code to ro-ro passenger ferries was a priority, but also that it was the first of a series of continuing initiatives to improve safety at sea.

| 2.2 | The proposed Regulation is of a more general nature, it will replace Regulation (EC) No 3051/95 and its main purpose is to facilitate the correct, strict and harmonised implementation of the Code in all Member States and acceding countries. The Regulation will maintain in parallel the existing EU ISM rules applicable to ro-ro ferries, irrespective of their flag and sailing on a regular service to and from European ports. |
| --- | --- |

2.2

The proposed Regulation is of a more general nature, it will replace Regulation (EC) No 3051/95 and its main purpose is to facilitate the correct, strict and harmonised implementation of the Code in all Member States and acceding countries. The Regulation will maintain in parallel the existing EU ISM rules applicable to ro-ro ferries, irrespective of their flag and sailing on a regular service to and from European ports.

| 2.3 | The Regulation will apply to any companies operating one or more of the following ships at sea:






  — | cargo ships, flying the flag of a Member State engaged in international and domestic voyages; |
| --- | --- | --- |

2.3

The Regulation will apply to any companies operating one or more of the following ships at sea:

—

cargo ships, flying the flag of a Member State engaged in international and domestic voyages;

| — | passenger ships flying the flag of a Member State engaged on international voyages; |
| --- | --- |

—

passenger ships flying the flag of a Member State engaged on international voyages;

| — | passenger ships engaged on domestic voyages in sea areas of Class A and B, as defined in article 4 of Directive 98/18/EC, regardless of their flag; |
| --- | --- |

—

passenger ships engaged on domestic voyages in sea areas of Class A and B, as defined in article 4 of Directive 98/18/EC, regardless of their flag;

| — | ro-ro passenger ferries operating to or from ports of the Member States of the Community on a regular ro-ro passenger ferry service, regardless of their flag; and |
| --- | --- |

—

ro-ro passenger ferries operating to or from ports of the Member States of the Community on a regular ro-ro passenger ferry service, regardless of their flag; and

| — | cargo ships, operating to or from ports of the Member States of the Community on a cabotage feeder service, regardless of their flag. |
| --- | --- |

—

cargo ships, operating to or from ports of the Member States of the Community on a cabotage feeder service, regardless of their flag.

| 2.4 | The scope of the proposed regulation is based on the provisions of Chapter IX of SOLAS Convention, and applies to all ships falling under the scope of SOLAS and flying the flag of a Member State, even if they operate on domestic voyages. Nevertheless, for passenger ships operating on domestic voyages the provisions will only apply to passenger ships operating more than five miles from the coastline, but these rules will apply to all flags. |
| --- | --- |

2.4

The scope of the proposed regulation is based on the provisions of Chapter IX of SOLAS Convention, and applies to all ships falling under the scope of SOLAS and flying the flag of a Member State, even if they operate on domestic voyages. Nevertheless, for passenger ships operating on domestic voyages the provisions will only apply to passenger ships operating more than five miles from the coastline, but these rules will apply to all flags.

| 2.5 | Any company operating one or more of the aforementioned ships will have to comply with the International Management Code for the safe operation of ships and for pollution prevention (ISM Code), reproduced at Title I of the Annex. Member States will have to comply with the Guidelines on the certification process (Provisions for the Administration concerning the implementation of the ISM Code), as outlined in Title II of the Annex. |
| --- | --- |

2.5

Any company operating one or more of the aforementioned ships will have to comply with the International Management Code for the safe operation of ships and for pollution prevention (ISM Code), reproduced at Title I of the Annex. Member States will have to comply with the Guidelines on the certification process (Provisions for the Administration concerning the implementation of the ISM Code), as outlined in Title II of the Annex.

3.   General comments

| 3.1 | The ISM Code is one of the most significant steps forward that IMO has taken in the field of maritime safety because it provides the framework through which IMO Conventions can be effectively implemented. The EESC view, as expressed in its past opinions, is that Regulation 3051/95 has served a useful purpose in advancing the implementation of the ISM Code to ro-ro passenger ships by two years and extending its application to such ships engaged in domestic sea voyages. |
| --- | --- |

3.1

The ISM Code is one of the most significant steps forward that IMO has taken in the field of maritime safety because it provides the framework through which IMO Conventions can be effectively implemented. The EESC view, as expressed in its past opinions, is that Regulation 3051/95 has served a useful purpose in advancing the implementation of the ISM Code to ro-ro passenger ships by two years and extending its application to such ships engaged in domestic sea voyages.

| 3.2 | The EESC notes that with respect to companies operating passenger and cargo ships engaged on international voyages, the objective of the proposed regulation has already been achieved, since the obligation to comply with the ISM Code stems from the SOLAS Convention. Likewise, for companies operating ro-ro passenger ships engaged on domestic voyages the objective has been achieved through the implementation of Regulation 3051/95. |
| --- | --- |

3.2

The EESC notes that with respect to companies operating passenger and cargo ships engaged on international voyages, the objective of the proposed regulation has already been achieved, since the obligation to comply with the ISM Code stems from the SOLAS Convention. Likewise, for companies operating ro-ro passenger ships engaged on domestic voyages the objective has been achieved through the implementation of Regulation 3051/95.

| 3.3 | The Commission's basic justification for the proposal is that the transposition of the full ISM Code and relevant IMO guidelines into EU law will enhance the effective implementation of the ISM Code within the Community. The EESC agrees with the justification and fully supports the objective to the extent that it relates to ships to which the ISM Code is already applicable. However, regarding the added value of the proposed extension of application of the ISM Code to other types of ships the EESC has the following comments. |
| --- | --- |

3.3

The Commission's basic justification for the proposal is that the transposition of the full ISM Code and relevant IMO guidelines into EU law will enhance the effective implementation of the ISM Code within the Community. The EESC agrees with the justification and fully supports the objective to the extent that it relates to ships to which the ISM Code is already applicable. However, regarding the added value of the proposed extension of application of the ISM Code to other types of ships the EESC has the following comments.

| 3.3.1 | The ISM Code originated from an industry initiative as a voluntary tool to promote quality shipping. The experience from the ISM Code mandatory global implementation since the first phase in 1998, as expected, has revealed the strengths and shortcomings of the Code. It has been generally recognised that there is a need for a better understanding throughout the maritime community (flag states, classification societies and shipping companies) of the objectives of the Code, for improved links between those who issue ISM certificates and uniform standards of training for ISM Code auditors. The cornerstone of good safety management is commitment from the top. In maritime safety and pollution prevention it is the commitment and motivation of individuals at all levels that determine the end result. Without the understanding of the maritime cluster the ISM Code could become the paper exercise that the sceptics would like to suggest. |
| --- | --- |

3.3.1

The ISM Code originated from an industry initiative as a voluntary tool to promote quality shipping. The experience from the ISM Code mandatory global implementation since the first phase in 1998, as expected, has revealed the strengths and shortcomings of the Code. It has been generally recognised that there is a need for a better understanding throughout the maritime community (flag states, classification societies and shipping companies) of the objectives of the Code, for improved links between those who issue ISM certificates and uniform standards of training for ISM Code auditors. The cornerstone of good safety management is commitment from the top. In maritime safety and pollution prevention it is the commitment and motivation of individuals at all levels that determine the end result. Without the understanding of the maritime cluster the ISM Code could become the paper exercise that the sceptics would like to suggest.

| 3.3.2 | Risk assessment is nowadays being widely used as an objective and reliable tool for the consideration of safety improvements. Based on this approach, and taking into account the demonstrated need, the mandatory application of the ISM Code within the EU for ferries operating on a regular service to and from European ports was fully justified and endorsed. On the same grounds, the application of the Guidelines to all other ships engaged in domestic voyages so far has been left, quite rightly, to the discretion of the national administrations on the basis of the subsidiarity principle. The EESC is not aware of any national legislation extending the mandatory implementation of the ISM Code to other ships engaged in domestic voyages. |
| --- | --- |

3.3.2

Risk assessment is nowadays being widely used as an objective and reliable tool for the consideration of safety improvements. Based on this approach, and taking into account the demonstrated need, the mandatory application of the ISM Code within the EU for ferries operating on a regular service to and from European ports was fully justified and endorsed. On the same grounds, the application of the Guidelines to all other ships engaged in domestic voyages so far has been left, quite rightly, to the discretion of the national administrations on the basis of the subsidiarity principle. The EESC is not aware of any national legislation extending the mandatory implementation of the ISM Code to other ships engaged in domestic voyages.

| 3.3.3 | The ISM Code, designed for ships engaged on international voyages, and hence beyond the easy reach of administrations and companies, places significant obligations to companies and their ships and requires compliance with international conventions and encourages adherence to industry standards. Furthermore, the safety regime of cargo ships engaged exclusively on domestic voyages is regulated by national legislations and, by implication, such ships may have to comply with the regime applicable to cargo ships engaged on international voyages. |
| --- | --- |

3.3.3

The ISM Code, designed for ships engaged on international voyages, and hence beyond the easy reach of administrations and companies, places significant obligations to companies and their ships and requires compliance with international conventions and encourages adherence to industry standards. Furthermore, the safety regime of cargo ships engaged exclusively on domestic voyages is regulated by national legislations and, by implication, such ships may have to comply with the regime applicable to cargo ships engaged on international voyages.

| 3.3.4 | The EESC as the guardian, inter alia, of the interests of small and medium-sized undertakings in Europe, is concerned about the mandatory application of the ISM Code on small and medium-sized shipping companies exclusively engaged in domestic voyages. In light of the above considerations, the proposed regulation should take into consideration the bureaucratic formalities and the cost of compliance regarding its application to the ships of such companies, Hence, flexibility of application and/or derogations will be required. |
| --- | --- |

3.3.4

The EESC as the guardian, inter alia, of the interests of small and medium-sized undertakings in Europe, is concerned about the mandatory application of the ISM Code on small and medium-sized shipping companies exclusively engaged in domestic voyages. In light of the above considerations, the proposed regulation should take into consideration the bureaucratic formalities and the cost of compliance regarding its application to the ships of such companies, Hence, flexibility of application and/or derogations will be required.

4.   Specific comments

4.1   Article 3 — Application

| 4.1.1 | The EESC believes that derogations may be necessary for reasons of practicality in cases of small cargo ships and passenger ships engaged in domestic voyages and especially when such ships are operated by the owner himself or under its direct supervision. |
| --- | --- |

4.1.1

The EESC believes that derogations may be necessary for reasons of practicality in cases of small cargo ships and passenger ships engaged in domestic voyages and especially when such ships are operated by the owner himself or under its direct supervision.

4.2   Article 4 — Safety management requirements

| 4.2.1 | By implication, the aforementioned ships may have to comply with the regime applicable to ships engaged on international voyages. The EESC believes that, the Regulation should clearly stipulate the basic requirements of the ISM Code which may be relevant to such ships. |
| --- | --- |

4.2.1

By implication, the aforementioned ships may have to comply with the regime applicable to ships engaged on international voyages. The EESC believes that, the Regulation should clearly stipulate the basic requirements of the ISM Code which may be relevant to such ships.

4.3   Article 5 — Certification

| 4.3.1 | The EESC endorses the mandatory application of the certification process, which is the main valid justification for the proposed regulation. |
| --- | --- |

4.3.1

The EESC endorses the mandatory application of the certification process, which is the main valid justification for the proposed regulation.

| 4.3.2 | With respect to paragraphs 2 and 6 it should be noted that Documents of Compliance and Safety Management Certificates respectively can also be issued by an Administration at the request of the flag Administration. |
| --- | --- |

4.3.2

With respect to paragraphs 2 and 6 it should be noted that Documents of Compliance and Safety Management Certificates respectively can also be issued by an Administration at the request of the flag Administration.

| 4.3.3 | The EESC maintains that Art. 5 paragraphs 4 and 9 need clarification and streamlining with the ISM Code provisions because they place unnecessary restrictions and lead to confusion. |
| --- | --- |

4.3.3

The EESC maintains that Art. 5 paragraphs 4 and 9 need clarification and streamlining with the ISM Code provisions because they place unnecessary restrictions and lead to confusion.

4.4   Article 7 — Safeguard procedure

| 4.4.1 | The safeguard procedure does not, as it should, involve the Member State or the flag State that has issued the Document of Compliance and which may need to suspend the validity or withdraw the Document. |
| --- | --- |

4.4.1

The safeguard procedure does not, as it should, involve the Member State or the flag State that has issued the Document of Compliance and which may need to suspend the validity or withdraw the Document.

4.5   Article 9 — Reporting

| 4.5.1 | The article refers to a reporting form to be established by the Commission, however it does not stipulate what should be reported. It should be clarified if reporting of compliance of Member States with the Regulation and more specifically with the certification procedures is envisaged, or reporting of compliance of companies and their ships, as may be evidenced by flag and port state control. |
| --- | --- |

4.5.1

The article refers to a reporting form to be established by the Commission, however it does not stipulate what should be reported. It should be clarified if reporting of compliance of Member States with the Regulation and more specifically with the certification procedures is envisaged, or reporting of compliance of companies and their ships, as may be evidenced by flag and port state control.

4.6   Article 13 — Entry into force

| 4.6.1 | Consistent with the comments under Articles 3 and 4, the EESC considers that the one-year transitional period for the compliance of cargo ships and passenger ships engaged on domestic voyages is appropriate. |
| --- | --- |

4.6.1

Consistent with the comments under Articles 3 and 4, the EESC considers that the one-year transitional period for the compliance of cargo ships and passenger ships engaged on domestic voyages is appropriate.

5.   Conclusions

| 5.1 | The EESC supports the transposition of the full ISM Code and relevant IMO guidelines into EU law through the proposed new Regulation replacing Regulation 3051/95. However, in real terms, the added value of the extension of the scope of the proposed regulation could be limited, since ships engaged on international voyages and ro-ro passenger ships engaged in domestic voyages already comply with the ISM Code. |
| --- | --- |

5.1

The EESC supports the transposition of the full ISM Code and relevant IMO guidelines into EU law through the proposed new Regulation replacing Regulation 3051/95. However, in real terms, the added value of the extension of the scope of the proposed regulation could be limited, since ships engaged on international voyages and ro-ro passenger ships engaged in domestic voyages already comply with the ISM Code.

| 5.2 | The EESC notes that the experience from the ISM implementation since the first phase in 1998 has revealed the strengths and shortcomings of the Code. All parties of the maritime cluster involved in the implementation of the ISM Code should fully understand the objectives of the Code, otherwise it could become a paper exercise. The need is more obvious regarding companies and ships thus far excluded from the ISM Code regime. |
| --- | --- |

5.2

The EESC notes that the experience from the ISM implementation since the first phase in 1998 has revealed the strengths and shortcomings of the Code. All parties of the maritime cluster involved in the implementation of the ISM Code should fully understand the objectives of the Code, otherwise it could become a paper exercise. The need is more obvious regarding companies and ships thus far excluded from the ISM Code regime.

| 5.3 | The initiative to extend the application of the ISM Code to all ships engaged on domestic voyages needs to be reviewed with a view to render it more flexible. Inadvertently and disproportionately, the new categories of ships may have to comply with the regime applicable to ships engaged on international voyages with probably prohibitive cost for compliance, in particular in cases of ships operated or under the direct supervision of the owner of the ship. The certification procedure of the proposed regulation needs to be adjusted so as not to impose unnecessary restrictions for small and medium-sized companies engaged in domestic voyages. Hence, derogations or alternatively stipulation of basic requirements of the ISM Code relevant to those ships may be necessary. |
| --- | --- |

5.3

The initiative to extend the application of the ISM Code to all ships engaged on domestic voyages needs to be reviewed with a view to render it more flexible. Inadvertently and disproportionately, the new categories of ships may have to comply with the regime applicable to ships engaged on international voyages with probably prohibitive cost for compliance, in particular in cases of ships operated or under the direct supervision of the owner of the ship. The certification procedure of the proposed regulation needs to be adjusted so as not to impose unnecessary restrictions for small and medium-sized companies engaged in domestic voyages. Hence, derogations or alternatively stipulation of basic requirements of the ISM Code relevant to those ships may be necessary.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Council Regulation (EC) No 3051/95 of 8 December 1995 on the safety management of roll-on/roll-off passenger ferries (ro-ro ferries), OJ L 320, 30.12.1995, p. 14.

1

(2)  OJ C 236 of 11.9.1995, p. 42.

2

(3)  OJ L 19 of 24.01.1998, p. 35.

3

(4)  OJ L 302 of 6.12.2002, p. 3.

4

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/23 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/23

---

Opinion of the European Economic and Social Committee on the ‘Proposal for a directive of the European Parliament and of the Council on enhancing port security’

(COM(2004) 76 final — 2004/0031 (COD))

(2004/C 302/06)

On 24 February 2004, the Council of the European Union decided to consult the European Economic and Social Committee, under Article 80(2) of the Treaty establishing the European Community, on the abovementioned proposal.

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 10 May 2004. The rapporteur was Dr Bredima Savopoulou.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 154 votes in favour and four abstentions.

1.   Introduction

| 1.1 | The Commission with its Communication (1) on Enhancing Maritime Transport Security and with its proposal (2) for a Regulation on Enhancing Ship and Port Facility Security addressed the ship and ship/port interface security concerns and proposed specific action currently going through the legislative process. However, the proposed Regulation stopped at the part of the port which represents the ship/port interface, i.e., the terminal. |
| --- | --- |

1.1

The Commission with its Communication (1) on Enhancing Maritime Transport Security and with its proposal (2) for a Regulation on Enhancing Ship and Port Facility Security addressed the ship and ship/port interface security concerns and proposed specific action currently going through the legislative process. However, the proposed Regulation stopped at the part of the port which represents the ship/port interface, i.e., the terminal.

| 1.2 | The EESC with its opinion (3) welcomed the proposed action and supported the Commission's intention as a second step to pursue the implementation of additional Community measures that would secure the port and its interface with the hinterland. |
| --- | --- |

1.2

The EESC with its opinion (3) welcomed the proposed action and supported the Commission's intention as a second step to pursue the implementation of additional Community measures that would secure the port and its interface with the hinterland.

| 1.3 | The second, and more difficult, step of the Commission's initiative acknowledges the need for a comprehensive port security policy in view of the vulnerability of the wider port areas that provide an essential link with the total transport chain and passenger flows. |
| --- | --- |

1.3

The second, and more difficult, step of the Commission's initiative acknowledges the need for a comprehensive port security policy in view of the vulnerability of the wider port areas that provide an essential link with the total transport chain and passenger flows.

2.   The Commission's proposal

| 2.1 | The proposal complements the security measures introduced by the Regulation on Enhancing Ship and Port Facility Security by ensuring that, as a result, the entire port is covered by a security regime. The Directive will guarantee the proper security levels for Community ports and will ensure the harmonised implementation of security measures covering the entire port areas. |
| --- | --- |

2.1

The proposal complements the security measures introduced by the Regulation on Enhancing Ship and Port Facility Security by ensuring that, as a result, the entire port is covered by a security regime. The Directive will guarantee the proper security levels for Community ports and will ensure the harmonised implementation of security measures covering the entire port areas.

| 2.2 | The Commission asserts that the anticipated IMO and ILO joint measures in the form of a voluntary Code of Practice on Port Security, currently under development, will not guarantee the early establishment of the required security regime. Hence, pro-active EU action is necessary, preferably in the form of a Directive to introduce the required flexibility. |
| --- | --- |

2.2

The Commission asserts that the anticipated IMO and ILO joint measures in the form of a voluntary Code of Practice on Port Security, currently under development, will not guarantee the early establishment of the required security regime. Hence, pro-active EU action is necessary, preferably in the form of a Directive to introduce the required flexibility.

| 2.3 | The proposed Directive will allow the maintenance of existing port security regimes that comply with its principles and framework requirements. More particularly, the Directive requires the obligation to carry out security assessments, to define security levels, to develop and approve security plans, to designate responsible security authorities, to designate security officers, to establish security committees and to support the implementation of the measures. |
| --- | --- |

2.3

The proposed Directive will allow the maintenance of existing port security regimes that comply with its principles and framework requirements. More particularly, the Directive requires the obligation to carry out security assessments, to define security levels, to develop and approve security plans, to designate responsible security authorities, to designate security officers, to establish security committees and to support the implementation of the measures.

3.   General comments

| 3.1 | Events and actions since the 11 September terrorist attacks vindicated predictions that the war on terrorism is bound to last for long. The tragic events in Madrid on 11 March 2004 brought to the fore the vulnerability of the whole transport system to terrorist attacks and proved that absolute security can never be achieved. In its exploratory opinion on transport security (4) and its subsequent opinion (5) regarding maritime transport security, the EESC maintained that the EU should take the lead internationally in developing a broader framework for security which will address the causes of terrorism and not only seek to prevent it or eliminate its effects. |
| --- | --- |

3.1

Events and actions since the 11 September terrorist attacks vindicated predictions that the war on terrorism is bound to last for long. The tragic events in Madrid on 11 March 2004 brought to the fore the vulnerability of the whole transport system to terrorist attacks and proved that absolute security can never be achieved. In its exploratory opinion on transport security (4) and its subsequent opinion (5) regarding maritime transport security, the EESC maintained that the EU should take the lead internationally in developing a broader framework for security which will address the causes of terrorism and not only seek to prevent it or eliminate its effects.

| 3.2 | Maritime security being a global problem has received adequate global and EU attention. However, rail security appears to be largely focused on national level initiatives whilst terrorism in road and inland waterways transport has thus far received relatively little attention. The EESC underlines that unless the other modes of transport bear their share of responsibility, the ‘weakest link’ will be the target of terrorists in order to infiltrate into the system. It is unrealistic to expect ports to fill the security gaps of other modes of transport and unfair to impose upon them the financial burden. |
| --- | --- |

3.2

Maritime security being a global problem has received adequate global and EU attention. However, rail security appears to be largely focused on national level initiatives whilst terrorism in road and inland waterways transport has thus far received relatively little attention. The EESC underlines that unless the other modes of transport bear their share of responsibility, the ‘weakest link’ will be the target of terrorists in order to infiltrate into the system. It is unrealistic to expect ports to fill the security gaps of other modes of transport and unfair to impose upon them the financial burden.

| 3.3 | The EESC reiterates that measures aimed at fighting terrorism should be coupled with measures aimed at fighting traditional security problems (organised crime, piracy, fraud, smuggling and illegal immigration). Such security problems exist in the wider port areas and should have been addressed as a matter of urgency, as requested by the EESC. In this connection, the EESC regrets that a number of EU Member States are not as yet parties to the Suppression of Unlawful Acts (SUA) Convention and its Protocol and underlines the necessity and urgency of prompt ratifications that would reinforce the legal means for the fight against terrorism. |
| --- | --- |

3.3

The EESC reiterates that measures aimed at fighting terrorism should be coupled with measures aimed at fighting traditional security problems (organised crime, piracy, fraud, smuggling and illegal immigration). Such security problems exist in the wider port areas and should have been addressed as a matter of urgency, as requested by the EESC. In this connection, the EESC regrets that a number of EU Member States are not as yet parties to the Suppression of Unlawful Acts (SUA) Convention and its Protocol and underlines the necessity and urgency of prompt ratifications that would reinforce the legal means for the fight against terrorism.

| 3.4 | The EESC (6) supported EU action to ensure a reciprocal and collaborative arrangement with the US giving equal treatment for all cargoes (containers) originating from the EU and to transfer/integrate the bilateral arrangements in a multilateral agreement under the auspices of the World Customs Organisation (WCO). Similar reciprocal arrangements should be pursued with other regions/countries supported by a system of exchange of information. Where necessary, the agreements should provide for technical cooperation and financial aid to developing countries to upgrade their port security infrastructure. |
| --- | --- |

3.4

The EESC (6) supported EU action to ensure a reciprocal and collaborative arrangement with the US giving equal treatment for all cargoes (containers) originating from the EU and to transfer/integrate the bilateral arrangements in a multilateral agreement under the auspices of the World Customs Organisation (WCO). Similar reciprocal arrangements should be pursued with other regions/countries supported by a system of exchange of information. Where necessary, the agreements should provide for technical cooperation and financial aid to developing countries to upgrade their port security infrastructure.

| 3.5 | The framework of the proposed measures is similar to the one established for the port facilities (terminals). Its significant new element is the extension of the geographical scope to cover the entire port areas, to be defined by the Member States in line with similar action undertaken by the US. The EESC believes that the purpose could have been best served by way of expanding the scope of Regulation (EC) 725/2004 (7). Nevertheless, the EESC acknowledges the constrains for the early extension of the full security regime of the aforementioned Regulation to cover the wider port areas and the need to afford to Member States, through the Directive, the required flexibility to implement appropriate measures in view of the significant variety of Community ports and the diverse activities within them. The flexibility should not lead to big differences of measures in EU ports that may result in the classification of foreign ports as ‘safe’ and blacklisting of ‘unsafe’ in terms of detecting illegal immigrants and terrorists as they may lead to market distortion and could jeopardise the smooth flow of international trade. |
| --- | --- |

3.5

The framework of the proposed measures is similar to the one established for the port facilities (terminals). Its significant new element is the extension of the geographical scope to cover the entire port areas, to be defined by the Member States in line with similar action undertaken by the US. The EESC believes that the purpose could have been best served by way of expanding the scope of Regulation (EC) 725/2004 (7). Nevertheless, the EESC acknowledges the constrains for the early extension of the full security regime of the aforementioned Regulation to cover the wider port areas and the need to afford to Member States, through the Directive, the required flexibility to implement appropriate measures in view of the significant variety of Community ports and the diverse activities within them. The flexibility should not lead to big differences of measures in EU ports that may result in the classification of foreign ports as ‘safe’ and blacklisting of ‘unsafe’ in terms of detecting illegal immigrants and terrorists as they may lead to market distortion and could jeopardise the smooth flow of international trade.

| 3.6 | The EESC reiterates its view (8) that with the advent of EU enlargement, the Mediterranean Sea acquires an enhanced role. Its vicinity to areas from where potential security problems might arise emphasises the need for a Mediterranean dimension to maritime transport security. The EESC welcomed (9) the development of a Euro-Mediterranean Transport Network and the incorporation of maritime security in its objectives. It agreed that it is essential that the Mediterranean partners strengthen security measures and the Euro-Mediterranean Institute for Safety and Security was considered as a first step towards this goal. |
| --- | --- |

3.6

The EESC reiterates its view (8) that with the advent of EU enlargement, the Mediterranean Sea acquires an enhanced role. Its vicinity to areas from where potential security problems might arise emphasises the need for a Mediterranean dimension to maritime transport security. The EESC welcomed (9) the development of a Euro-Mediterranean Transport Network and the incorporation of maritime security in its objectives. It agreed that it is essential that the Mediterranean partners strengthen security measures and the Euro-Mediterranean Institute for Safety and Security was considered as a first step towards this goal.

| 3.7 | In its present form the Directive focuses on administrative aspects. The directive does not define harmonised procedures for the application of the details related to the Annexes. Instead, it provides the possibility for future adaptations. The EESC realises the urgency to enhance security beyond the ship/port interface but underlines that it would have been more prudent to take stock of the progress achieved thus far at international level in this regard, and in particular in IMO, ILO and World Customs Organisation (WCO) and to provide prompt and clear guidance for the realisation of its objective. |
| --- | --- |

3.7

In its present form the Directive focuses on administrative aspects. The directive does not define harmonised procedures for the application of the details related to the Annexes. Instead, it provides the possibility for future adaptations. The EESC realises the urgency to enhance security beyond the ship/port interface but underlines that it would have been more prudent to take stock of the progress achieved thus far at international level in this regard, and in particular in IMO, ILO and World Customs Organisation (WCO) and to provide prompt and clear guidance for the realisation of its objective.

| 3.8 | The EESC notes that the Directive does not create new obligations in areas already covered by Regulation (EC) 725/2004 (10), or indeed in the expanded port areas. However, it takes the opportunity to reiterate the basic principle that port security measures should be balanced in relation to the objectives they pursue, their costs and impact on traffic and trade flows. Hence, it is necessary to consider carefully their need and assess whether they are realistic and practically feasible. The measures should respect the fundamental rights and observe the principles recognised in particular by the Charter of Fundamental Rights of the European Union so as not to restrain the personal human rights of the citizens nor the constitutional order, thus serving the purpose of terrorists. Therefore, care should be exercised to avoid:






  — | deflection of traffic in favour of some ports (because of increased security measures) to the detriment of other ports. Small ports may particularly get hit by such port diversion. Security measures should not become an issue of competition between ports; |
| --- | --- | --- |

3.8

The EESC notes that the Directive does not create new obligations in areas already covered by Regulation (EC) 725/2004 (10), or indeed in the expanded port areas. However, it takes the opportunity to reiterate the basic principle that port security measures should be balanced in relation to the objectives they pursue, their costs and impact on traffic and trade flows. Hence, it is necessary to consider carefully their need and assess whether they are realistic and practically feasible. The measures should respect the fundamental rights and observe the principles recognised in particular by the Charter of Fundamental Rights of the European Union so as not to restrain the personal human rights of the citizens nor the constitutional order, thus serving the purpose of terrorists. Therefore, care should be exercised to avoid:

—

deflection of traffic in favour of some ports (because of increased security measures) to the detriment of other ports. Small ports may particularly get hit by such port diversion. Security measures should not become an issue of competition between ports;

| — | imposing disproportionate bureaucracy or costs; |
| --- | --- |

—

imposing disproportionate bureaucracy or costs;

| — | any imbalance between vessel security and port security that may result in forcing upon vessels and their operators the obligation to provide additional quay security to redress the imbalance. Ports should not be unduly burdened by the cost of compliance to the benefit of other modes of transport; |
| --- | --- |

—

any imbalance between vessel security and port security that may result in forcing upon vessels and their operators the obligation to provide additional quay security to redress the imbalance. Ports should not be unduly burdened by the cost of compliance to the benefit of other modes of transport;

| — | disproportionate technical infrastructure which can be seen as promoting certain commercial interests. |
| --- | --- |

—

disproportionate technical infrastructure which can be seen as promoting certain commercial interests.

| 3.9 | The cost of compliance with the additional measures to secure the geographical area of the significantly wider port, namely access restrictions, cargo and luggage control and identification of persons will multiply for most ports, as the expansion of the application of the security measures will involve additional arrangements in terms of infrastructure, equipment, manpower and training. The EESC, recalling its earlier opinions on financing of security costs, reiterates its invitation to the Commission to devise a EU scheme for financing the implementation of the measures. The EESC specifically asserted that ‘although part of the cost of compliance will be passed on to customers, in the interest of the fairness EU governments should also bear part of some costs since terrorism is a reaction to policies of governments’. Moreover, the EESC reiterates its call for an overall impact study by the Commission about the financial implications of the increased maritime security measures and joins the EP in its similar request. |
| --- | --- |

3.9

The cost of compliance with the additional measures to secure the geographical area of the significantly wider port, namely access restrictions, cargo and luggage control and identification of persons will multiply for most ports, as the expansion of the application of the security measures will involve additional arrangements in terms of infrastructure, equipment, manpower and training. The EESC, recalling its earlier opinions on financing of security costs, reiterates its invitation to the Commission to devise a EU scheme for financing the implementation of the measures. The EESC specifically asserted that ‘although part of the cost of compliance will be passed on to customers, in the interest of the fairness EU governments should also bear part of some costs since terrorism is a reaction to policies of governments’. Moreover, the EESC reiterates its call for an overall impact study by the Commission about the financial implications of the increased maritime security measures and joins the EP in its similar request.

| 3.9.1 | Seaports are critical national assets. Measures aimed at securing the entire port area logically qualify as being of general public interest. Public funding of such measures would, therefore, not be subject to the State aid rules of the EU treaty. Given the fact that Member States, however, have the choice in granting public support for such measures or not, a harmonised approach should be developed at EU level to avoid distortion of competition. This approach, which also takes into account financing of port facility security measures, should be based on the following principles:






  — | costs of port security measures taken as a consequence of the port security Directive are in the general public interest and should be covered through national public funding or EU funding; |
| --- | --- | --- |

3.9.1

Seaports are critical national assets. Measures aimed at securing the entire port area logically qualify as being of general public interest. Public funding of such measures would, therefore, not be subject to the State aid rules of the EU treaty. Given the fact that Member States, however, have the choice in granting public support for such measures or not, a harmonised approach should be developed at EU level to avoid distortion of competition. This approach, which also takes into account financing of port facility security measures, should be based on the following principles:

—

costs of port security measures taken as a consequence of the port security Directive are in the general public interest and should be covered through national public funding or EU funding;

| — | costs of port facility security measures taken as a consequence of the ship and port facility regulation should be financed as follows:






  a) | all costs made by the designated authority (assessment, approval of assessments, approval of plan, audit and declaration of compliance) should be covered through national public funding or EU funding; |
| --- | --- | --- |

—

costs of port facility security measures taken as a consequence of the ship and port facility regulation should be financed as follows:

a)

all costs made by the designated authority (assessment, approval of assessments, approval of plan, audit and declaration of compliance) should be covered through national public funding or EU funding;

| b) | recurrent overhead costs to control and audit port facilities security plans should be covered through national public funding or EU funding; |
| --- | --- |

b)

recurrent overhead costs to control and audit port facilities security plans should be covered through national public funding or EU funding;

| c) | all other security costs related to port facilities should be recovered from the users of those facilities on a transparent basis. |
| --- | --- |

c)

all other security costs related to port facilities should be recovered from the users of those facilities on a transparent basis.

| 3.9.2 | Estimates on port security costs are extremely difficult to derive. However, by way of comparison port security costs in the EU are expected to be higher than in the US for geographical reasons due to the larger number of EU ports. It is anticipated that comparatively speaking the cost of compliance for big ports (11) and small ports will be huge. |
| --- | --- |

3.9.2

Estimates on port security costs are extremely difficult to derive. However, by way of comparison port security costs in the EU are expected to be higher than in the US for geographical reasons due to the larger number of EU ports. It is anticipated that comparatively speaking the cost of compliance for big ports (11) and small ports will be huge.

| 3.10 | Failure to react swiftly to new terrorist realities may result in costly multi-billion port shutdowns. Hence, the danger of security may become a non-tariff barrier to trade. |
| --- | --- |

3.10

Failure to react swiftly to new terrorist realities may result in costly multi-billion port shutdowns. Hence, the danger of security may become a non-tariff barrier to trade.

4.   Specific comments

| 4.1 | Ports are generally well defined in terms of geographical coverage and administration and within them diverse activities co-exist. Normally the boundaries of ports cover port facilities and not vice-versa, as implied by Article 2.4, or indeed by the definition of ‘port’ οr ‘seaport’ in Article 3. The definition seems to imply that the port area is lesser than the area of the ‘port facility’ which includes in addition anchorages, waiting berths and approaches from seaward. Therefore, clarification of the notion on ‘taking precedence’ is required in Article 2.4. |
| --- | --- |

4.1

Ports are generally well defined in terms of geographical coverage and administration and within them diverse activities co-exist. Normally the boundaries of ports cover port facilities and not vice-versa, as implied by Article 2.4, or indeed by the definition of ‘port’ οr ‘seaport’ in Article 3. The definition seems to imply that the port area is lesser than the area of the ‘port facility’ which includes in addition anchorages, waiting berths and approaches from seaward. Therefore, clarification of the notion on ‘taking precedence’ is required in Article 2.4.

| 4.2 | As a first step, the port security plan, being a master plan, has to be compatible with the decisions already made during the implementation process of the ISPS-code and Regulation (EC) 725/2004 (12), regarding criteria for port facilities. It should encompass the integrated security plans for port facilities within the boundaries of the port. Eventually the subordinate port facilities should function as sections of the port and their security plans should be part of the overall port security plan, adjusted where necessary to be harmonised and coordinated with its comprehensive objectives and consequently the port security authority should have the ultimate authority and responsibility. |
| --- | --- |

4.2

As a first step, the port security plan, being a master plan, has to be compatible with the decisions already made during the implementation process of the ISPS-code and Regulation (EC) 725/2004 (12), regarding criteria for port facilities. It should encompass the integrated security plans for port facilities within the boundaries of the port. Eventually the subordinate port facilities should function as sections of the port and their security plans should be part of the overall port security plan, adjusted where necessary to be harmonised and coordinated with its comprehensive objectives and consequently the port security authority should have the ultimate authority and responsibility.

| 4.3 | The advisory role of the envisaged port security committees will enhance the effective implementation of the port security plan. The EESC presumes that the committees will be established by the port security authorities, also for the purpose of identifying the elements of the port security plan. The EESC supports the participation of seamen and port workers representatives in ports security committees for the purpose of arriving at practical solutions. |
| --- | --- |

4.3

The advisory role of the envisaged port security committees will enhance the effective implementation of the port security plan. The EESC presumes that the committees will be established by the port security authorities, also for the purpose of identifying the elements of the port security plan. The EESC supports the participation of seamen and port workers representatives in ports security committees for the purpose of arriving at practical solutions.

| 4.4 | Cargo and passengers should not be subject to double-checking when entering the port area and then eventually when entering the port facility area. Moreover, a practical approach is required regarding the mobility of the ship's crew, visitors and ship suppliers. |
| --- | --- |

4.4

Cargo and passengers should not be subject to double-checking when entering the port area and then eventually when entering the port facility area. Moreover, a practical approach is required regarding the mobility of the ship's crew, visitors and ship suppliers.

| 4.5 | Inspections of compliance with port security measures in one Member State by security officials of another Member State should be carried out under the authority of the European Commission (Article 17.2 and 14.3). |
| --- | --- |

4.5

Inspections of compliance with port security measures in one Member State by security officials of another Member State should be carried out under the authority of the European Commission (Article 17.2 and 14.3).

5.   Conclusions

| 5.1 | The tragic events in Madrid on 11 March 2004 vindicated the fears that the whole transport system is vulnerable to terrorist attacks and the belief that absolute security can never be achieved. |
| --- | --- |

5.1

The tragic events in Madrid on 11 March 2004 vindicated the fears that the whole transport system is vulnerable to terrorist attacks and the belief that absolute security can never be achieved.

| 5.2 | The EESC underlines that unless all modes of transport bear their share of responsibility, the ‘weakest link’ will be the target of terrorists in order to infiltrate into the system. It is unrealistic to expect ports to fill the security gaps of other modes of transport and unfair to impose upon them the financial burden. |
| --- | --- |

5.2

The EESC underlines that unless all modes of transport bear their share of responsibility, the ‘weakest link’ will be the target of terrorists in order to infiltrate into the system. It is unrealistic to expect ports to fill the security gaps of other modes of transport and unfair to impose upon them the financial burden.

| 5.3 | The EESC firmly believes that a policing strategy is not a secure strategy in a non-secure world. Hence, the EU should take the lead internationally in developing a broader framework for security which will address the causes of terrorism and not only seek to eliminate its effects. |
| --- | --- |

5.3

The EESC firmly believes that a policing strategy is not a secure strategy in a non-secure world. Hence, the EU should take the lead internationally in developing a broader framework for security which will address the causes of terrorism and not only seek to eliminate its effects.

| 5.4 | The EESC fully supports the proposed Directive to implement security measures in the wider port areas. The flexibility afforded to Member States under the proposed Directive should not result in the classification of foreign ports as ‘safe’ and blacklisting of ‘unsafe’ as they may lead to market distortion and could jeopardise the smooth flow of international trade. |
| --- | --- |

5.4

The EESC fully supports the proposed Directive to implement security measures in the wider port areas. The flexibility afforded to Member States under the proposed Directive should not result in the classification of foreign ports as ‘safe’ and blacklisting of ‘unsafe’ as they may lead to market distortion and could jeopardise the smooth flow of international trade.

| 5.5 | The EESC reiterates that measures aimed at fighting terrorism should be coupled with measures aimed at fighting traditional security problems (organised crime, piracy, fraud, smuggling and illegal immigration). |
| --- | --- |

5.5

The EESC reiterates that measures aimed at fighting terrorism should be coupled with measures aimed at fighting traditional security problems (organised crime, piracy, fraud, smuggling and illegal immigration).

| 5.6 | Seaports are critical national assets. Measures aimed at securing the entire port area logically qualify as being of general public interest. Public funding of such measures would therefore not be subject to the State aid rules of the EU treaty. A harmonised approach of the Member States in granting public support should be developed at EU level to avoid distortion of competition. The EESC reiterates its invitation to the Commission to devise an EU scheme for financing, where necessary, the implementation of the measures. Hence, the EESC believes that the economic dimensions of port security are a major issue for international trade and should be addressed by the EU as a matter of urgency. |
| --- | --- |

5.6

Seaports are critical national assets. Measures aimed at securing the entire port area logically qualify as being of general public interest. Public funding of such measures would therefore not be subject to the State aid rules of the EU treaty. A harmonised approach of the Member States in granting public support should be developed at EU level to avoid distortion of competition. The EESC reiterates its invitation to the Commission to devise an EU scheme for financing, where necessary, the implementation of the measures. Hence, the EESC believes that the economic dimensions of port security are a major issue for international trade and should be addressed by the EU as a matter of urgency.

| 5.7 | The security measures in port areas should respect the fundamental rights and observe the principles recognised by the Charter of Fundamental Rights of the European Union so as not to restrain the personal human rights of the citizens nor the constitutional order. |
| --- | --- |

5.7

The security measures in port areas should respect the fundamental rights and observe the principles recognised by the Charter of Fundamental Rights of the European Union so as not to restrain the personal human rights of the citizens nor the constitutional order.

| 5.8 | The EESC underlines the urgent need to give a Mediterranean dimension to the EU port security policy which becomes vital with the EU enlargement. |
| --- | --- |

5.8

The EESC underlines the urgent need to give a Mediterranean dimension to the EU port security policy which becomes vital with the EU enlargement.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  COM (2003) 229 final – 2003/0089 (COD).

1

(2)  COM (2003) 229 final – 2003/0089 (COD).

2

(3)  OJ C 32 of 5.2.2004, p. 21.

3

(4)  OJ C 61 of 14.3.2003, p. 174.

4

(5)  OJ C 32 of 5.2.2004, p. 21.

5

(6)  OJ C 61 of 14.3.2003, OJ C 32 of 5.2.2004, p. 21.

6

(7)  OJ L 129 of 29.4.2004, p. 6.

7

(8)  OJ C 32 of 5.2.2004, p. 21.

8

(9)  OJ C 32 of 5.2.2004, p.21 and COM(2003) 376 final.

9

(10)  OJ L 129 of 29.4.2004, p. 6.

10

(11)  Container scanners in the port of Rotterdam cost €14 m: OJ C 32 of 5.2.2004.

11

(12)  OJ L 129 of 29.4.2004, p. 6.

12

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/27 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/27

---

Opinion of the European Economic and Social Committee on ‘Fusion energy’

(2004/C 302/07)

On 29 January 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on ‘Fusion energy’.

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 10 June 2004. The rapporteur was Mr Wolf.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the Committee adopted the following opinion by 141 votes in favour, with nine abstentions:

This opinion supplements earlier Committee opinions on energy and research policy. It looks at the development of nuclear fusion reactors and their expected safety and environmental benefits. It does that against the backdrop of the global energy issue. The R&D work required is briefly outlined and assessed. The opinion also considers the European position in the current negotiations on the siting of ITER.

Table of contents:

| 1. | The energy issue |
| --- | --- |

1.

| 2. | Nuclear energy — nuclear fission and nuclear fusion |
| --- | --- |

2.

| 3. | Developments to date |
| --- | --- |

3.

| 4. | Fusion power plant: the way ahead |
| --- | --- |

4.

| 5. | Siting ITER |
| --- | --- |

5.

| 6. | Summary and the Committee's recommendations |
| --- | --- |

6.

1.   The energy issue

| 1.1 | Usable energy (1) is the mainstay of our contemporary way of life and culture. Its ready availability opened the door to our present-day standard of living. Unprecedented strides have been made in the major and emerging industrial countries in terms of life expectancy, food supply, overall prosperity and personal freedom. Insufficient energy supply would jeopardise these achievements. |
| --- | --- |

1.1

Usable energy (1) is the mainstay of our contemporary way of life and culture. Its ready availability opened the door to our present-day standard of living. Unprecedented strides have been made in the major and emerging industrial countries in terms of life expectancy, food supply, overall prosperity and personal freedom. Insufficient energy supply would jeopardise these achievements.

| 1.2 | The need for a secure, inexpensive, environmentally sound and sustainable supply of usable energy is at the heart of the Lisbon, Gothenburg and Barcelona European Council decisions. EU energy policy is thus pursuing three closely related and equally important objectives, namely to safeguard and enhance (1) competitiveness, (2) security of supply and (3) the environment – all of them linked by the common thread of sustainable development. |
| --- | --- |

1.2

The need for a secure, inexpensive, environmentally sound and sustainable supply of usable energy is at the heart of the Lisbon, Gothenburg and Barcelona European Council decisions. EU energy policy is thus pursuing three closely related and equally important objectives, namely to safeguard and enhance (1) competitiveness, (2) security of supply and (3) the environment – all of them linked by the common thread of sustainable development.

| 1.3 | There are serious obstacles to achieving these objectives, however, as the Committee has made clear in a number of opinions. It has addressed the resultant energy question on a number of occasions, considering various facets of the issue and exploring potential solutions (2). Its opinions on the Commission Green Paper Towards a European strategy for the security of energy supply (3) and on Research needs for a safe and sustainable energy supply (4) are worthy of special mention. |
| --- | --- |

1.3

There are serious obstacles to achieving these objectives, however, as the Committee has made clear in a number of opinions. It has addressed the resultant energy question on a number of occasions, considering various facets of the issue and exploring potential solutions (2). Its opinions on the Commission Green Paper Towards a European strategy for the security of energy supply (3) and on Research needs for a safe and sustainable energy supply (4) are worthy of special mention.

| 1.4 | In these opinions, the Committee stressed that supplying and using energy puts a strain on the environment, presents risks, depletes resources and involves the problem of external dependence and imponderables. The Committee also made the point that the most important measure for reducing the risks associated with the security of energy supply — and other risks – is to ensure the most diverse and balanced possible use of all types and forms of energy, including all efforts to save energy and use it rationally. The pros and cons of the various individual processes are also briefly outlined, but, for lack of space, these cannot not be repeated here (5). |
| --- | --- |

1.4

In these opinions, the Committee stressed that supplying and using energy puts a strain on the environment, presents risks, depletes resources and involves the problem of external dependence and imponderables. The Committee also made the point that the most important measure for reducing the risks associated with the security of energy supply — and other risks – is to ensure the most diverse and balanced possible use of all types and forms of energy, including all efforts to save energy and use it rationally. The pros and cons of the various individual processes are also briefly outlined, but, for lack of space, these cannot not be repeated here (5).

| 1.5 | In technical terms, however, none of the potential future energy supply options and technologies is perfect. None is wholly free of damaging environmental impacts. None is sufficient to cover all needs, and it is difficult to adequately gauge their long-term potential. Nor, therefore, can a forward-looking, responsible European energy policy bank on being able to secure an adequate energy supply along the lines of the objectives set out above by using only a small number of energy sources. This is also true given the need to save energy and use it rationally. |
| --- | --- |

1.5

In technical terms, however, none of the potential future energy supply options and technologies is perfect. None is wholly free of damaging environmental impacts. None is sufficient to cover all needs, and it is difficult to adequately gauge their long-term potential. Nor, therefore, can a forward-looking, responsible European energy policy bank on being able to secure an adequate energy supply along the lines of the objectives set out above by using only a small number of energy sources. This is also true given the need to save energy and use it rationally.

| 1.6 | Thus, no secure, long-term, environmentally sound and economically viable energy supply exists — either in Europe or elsewhere in the world (6). The key to potential solutions can lie only in further intensive research and development. Energy research (7) is the strategic element and essential mainstay of any long-term, successful energy policy. In the opinion referred to, the Committee also recommended a consistent European energy research programme, key elements of which are admittedly already contained in the Sixth Framework Programme for research and development and the Euratom research and training programme, but with significantly increased R&D investment. |
| --- | --- |

1.6

Thus, no secure, long-term, environmentally sound and economically viable energy supply exists — either in Europe or elsewhere in the world (6). The key to potential solutions can lie only in further intensive research and development. Energy research (7) is the strategic element and essential mainstay of any long-term, successful energy policy. In the opinion referred to, the Committee also recommended a consistent European energy research programme, key elements of which are admittedly already contained in the Sixth Framework Programme for research and development and the Euratom research and training programme, but with significantly increased R&D investment.

| 1.7 | The Committee has also made the point that, given the slow pace of change in the energy industry, the fact that climate gas emissions are a global, not a regional issue, and the expectation that the problem will further worsen in the second half of the century, the approach to the energy issue should be more global in scale and cover a substantially longer time period. |
| --- | --- |

1.7

The Committee has also made the point that, given the slow pace of change in the energy industry, the fact that climate gas emissions are a global, not a regional issue, and the expectation that the problem will further worsen in the second half of the century, the approach to the energy issue should be more global in scale and cover a substantially longer time period.

| 1.8 | The problems of finite resources and emissions (greenhouse gases) are compounded by the forecast two- if not three-fold increase in global energy requirements by 2060 as the result of population growth and the need for less developed countries to catch up. Any strategy and prospects for development must therefore look beyond that timeframe. |
| --- | --- |

1.8

The problems of finite resources and emissions (greenhouse gases) are compounded by the forecast two- if not three-fold increase in global energy requirements by 2060 as the result of population growth and the need for less developed countries to catch up. Any strategy and prospects for development must therefore look beyond that timeframe.

| 1.9 | In its recent Opinion on the sustainable use of natural resources, the Committee also reiterated the point that any sustainable development strategy must cover a considerably longer timeframe. |
| --- | --- |

1.9

In its recent Opinion on the sustainable use of natural resources, the Committee also reiterated the point that any sustainable development strategy must cover a considerably longer timeframe.

| 1.10 | As the Committee has also noted, these points are not, however, adequately reflected in either public perceptions or in open debate. Rather, there is a broad range of opinions at the extremes respectively over- or under-estimating the risks and opportunities involved. At one extreme, some people take the view that there is no energy problem at all, that things have always worked out so far and that new reserves could be developed should the need arise (for decades we have been hearing predictions of forest dieback and claims that oil and gas stocks are set to run out in just 40 years). At the other end of the spectrum is the belief that renewables could easily meet the world's entire energy needs if only all research funding were channelled into them and society adapted accordingly. |
| --- | --- |

1.10

As the Committee has also noted, these points are not, however, adequately reflected in either public perceptions or in open debate. Rather, there is a broad range of opinions at the extremes respectively over- or under-estimating the risks and opportunities involved. At one extreme, some people take the view that there is no energy problem at all, that things have always worked out so far and that new reserves could be developed should the need arise (for decades we have been hearing predictions of forest dieback and claims that oil and gas stocks are set to run out in just 40 years). At the other end of the spectrum is the belief that renewables could easily meet the world's entire energy needs if only all research funding were channelled into them and society adapted accordingly.

| 1.11 | There is therefore still no sufficiently consistent global energy policy, and even within the EU Member States, there are considerable differences of approach to the energy issue. |
| --- | --- |

1.11

There is therefore still no sufficiently consistent global energy policy, and even within the EU Member States, there are considerable differences of approach to the energy issue.

2.   Nuclear energy — nuclear fission and nuclear fusion

| 2.1 | For a given mass of fuel, around a million times more energy is released through the fission of very heavy atomic nuclei and the fusion of very light atomic nuclei than through chemical processes. |
| --- | --- |

2.1

For a given mass of fuel, around a million times more energy is released through the fission of very heavy atomic nuclei and the fusion of very light atomic nuclei than through chemical processes.

| 2.2 | Around 1928 it was discovered that nuclear fusion was the hitherto unexplained energy source powering the sun and most of the stars. Through the sun's rays, therefore, fusion energy is also the main energy source for life on earth — the energy which makes plants grow and which is locked up in fossil fuels and renewable energies. |
| --- | --- |

2.2

Around 1928 it was discovered that nuclear fusion was the hitherto unexplained energy source powering the sun and most of the stars. Through the sun's rays, therefore, fusion energy is also the main energy source for life on earth — the energy which makes plants grow and which is locked up in fossil fuels and renewable energies.

| 2.3 | As soon as nuclear fission was discovered in 1938 — and as soon as the potential of its peaceful application as a huge terrestrial energy resource was recognised — a promising and dynamic development was set in motion for its exploitation. |
| --- | --- |

2.3

As soon as nuclear fission was discovered in 1938 — and as soon as the potential of its peaceful application as a huge terrestrial energy resource was recognised — a promising and dynamic development was set in motion for its exploitation.

| 2.4 | In the course of that development, the objectives of nuclear fission were achieved astoundingly quickly; the hope of exploiting nuclear fusion as a virtually infinite terrestrial energy resource, however, still remains to be realised. |
| --- | --- |

2.4

In the course of that development, the objectives of nuclear fission were achieved astoundingly quickly; the hope of exploiting nuclear fusion as a virtually infinite terrestrial energy resource, however, still remains to be realised.

| 2.5 | The practical use of both kinds of nuclear energy is intended (i) to generate electricity without emitting greenhouse gases and (ii) to reduce consumption of hydrocarbons (oil and natural gas) — key fuels in the transport sector — which produce less CO2 than coal when combusted and are thus also being increasingly considered — or indeed are already being used — to generate electricity (8). |
| --- | --- |

2.5

The practical use of both kinds of nuclear energy is intended (i) to generate electricity without emitting greenhouse gases and (ii) to reduce consumption of hydrocarbons (oil and natural gas) — key fuels in the transport sector — which produce less CO2 than coal when combusted and are thus also being increasingly considered — or indeed are already being used — to generate electricity (8).

| 2.6 | The processes of nuclear fission and nuclear fusion differ fundamentally in terms of how they work, operating conditions, environmental and safety aspects, raw material reserves and availability, etc. In all these areas nuclear fusion would have conceptual advantages (see points 2.11 et seq.). |
| --- | --- |

2.6

The processes of nuclear fission and nuclear fusion differ fundamentally in terms of how they work, operating conditions, environmental and safety aspects, raw material reserves and availability, etc. In all these areas nuclear fusion would have conceptual advantages (see points 2.11 et seq.).

| 2.7 | Nuclear fission. Nuclear fission has been used for decades to generate energy. Nuclear fission power plants have already done much to prevent greenhouse gas emissions (CO2) and to reduce the dependencies involved in the consumption and import of oil and gas. This was a factor in reviving the nuclear energy debate, especially in the context of moves to cut CO2 emissions and ways and means of achieving this (incentives/penalties). The Committee recently devoted an opinion to this question (9). |
| --- | --- |

2.7

Nuclear fission. Nuclear fission has been used for decades to generate energy. Nuclear fission power plants have already done much to prevent greenhouse gas emissions (CO2) and to reduce the dependencies involved in the consumption and import of oil and gas. This was a factor in reviving the nuclear energy debate, especially in the context of moves to cut CO2 emissions and ways and means of achieving this (incentives/penalties). The Committee recently devoted an opinion to this question (9).

| 2.8 | Fuel for nuclear fission is provided by isotopes (10) of the particularly heavy elements in the periodic system: thorium, uranium and plutonium. The neutrons released during nuclear fission set off new fission processes in the nuclei of these materials. This produces an energy-yielding chain reaction that needs to be controlled. During this process, radioactive — and in some cases very long-life — fission products and actinides arise that must be kept away from the biosphere for thousands of years. This raises concerns and leads some people to reject nuclear energy use out of hand. Moreover, new fissile substances are also generated – for instance plutonium (from (11)uranium) — which are subject to monitoring as potential nuclear weapons material. |
| --- | --- |

2.8

Fuel for nuclear fission is provided by isotopes (10) of the particularly heavy elements in the periodic system: thorium, uranium and plutonium. The neutrons released during nuclear fission set off new fission processes in the nuclei of these materials. This produces an energy-yielding chain reaction that needs to be controlled. During this process, radioactive — and in some cases very long-life — fission products and actinides arise that must be kept away from the biosphere for thousands of years. This raises concerns and leads some people to reject nuclear energy use out of hand. Moreover, new fissile substances are also generated – for instance plutonium (from (11)uranium) — which are subject to monitoring as potential nuclear weapons material.

| 2.9 | Nuclear fission reactors operate on the basis of a ‘pile’. The nuclear fuel stock — sufficient for a number of years (100 tonnes in a power plant) — is enclosed in the core. Control processes regulate the number of fission reactions needed to secure the desired output. In spite of the advanced technology available to control these processes and to guarantee safety, the sheer quantity of the energy stored heightens these concerns even further. Moreover, considerable amounts of after-heat are also produced, necessitating, for most reactor types, a relatively long and intensive cooling period once the reactor has been shut down to prevent the cladding overheating. |
| --- | --- |

2.9

Nuclear fission reactors operate on the basis of a ‘pile’. The nuclear fuel stock — sufficient for a number of years (100 tonnes in a power plant) — is enclosed in the core. Control processes regulate the number of fission reactions needed to secure the desired output. In spite of the advanced technology available to control these processes and to guarantee safety, the sheer quantity of the energy stored heightens these concerns even further. Moreover, considerable amounts of after-heat are also produced, necessitating, for most reactor types, a relatively long and intensive cooling period once the reactor has been shut down to prevent the cladding overheating.

| 2.10 | Referring to such concerns, the Committee notes in its recent opinion on this subject (12), that the fourth generation of fission power plant is now under development. These will raise the high passive safety standards of current plants still further. |
| --- | --- |

2.10

Referring to such concerns, the Committee notes in its recent opinion on this subject (12), that the fourth generation of fission power plant is now under development. These will raise the high passive safety standards of current plants still further.

| 2.11 | Nuclear fusion. In terms of the fuel masses employed, nuclear fusion is the most efficient potentially useable energy process on the planet. Fusion reactors are facilities for the controlled generation of fusion processes and the use of the energy thereby released. They operate continuously as power plants generating electricity (13) – mainly baseload electricity. They will be fuelled by heavy hydrogen isotopes (see below). Helium, a harmless noble gas (14) with useful applications, is the ‘ash’ of the fusion reactor. |
| --- | --- |

2.11

Nuclear fusion. In terms of the fuel masses employed, nuclear fusion is the most efficient potentially useable energy process on the planet. Fusion reactors are facilities for the controlled generation of fusion processes and the use of the energy thereby released. They operate continuously as power plants generating electricity (13) – mainly baseload electricity. They will be fuelled by heavy hydrogen isotopes (see below). Helium, a harmless noble gas (14) with useful applications, is the ‘ash’ of the fusion reactor.

| 2.12 | However, during the fusion reaction, which only takes place when the reaction partners meet each other at very high speeds (15), additional neutrons are released which produce radioactivity in the reactor's wall material (and may change its mechanical properties). For that reason, one of the aims of the relevant R&D programme is to develop material, the radiotoxicity (16) of which will drop to the range of coal ash in between one hundred and, at most, several hundred years. This could, among other things, potentially make it possible to reuse a large part of the materials in question, thereby substantially defusing the question of final storage. |
| --- | --- |

2.12

However, during the fusion reaction, which only takes place when the reaction partners meet each other at very high speeds (15), additional neutrons are released which produce radioactivity in the reactor's wall material (and may change its mechanical properties). For that reason, one of the aims of the relevant R&D programme is to develop material, the radiotoxicity (16) of which will drop to the range of coal ash in between one hundred and, at most, several hundred years. This could, among other things, potentially make it possible to reuse a large part of the materials in question, thereby substantially defusing the question of final storage.

| 2.13 | The scientific and technological requirements for generating fusion energy are extremely exacting. The basic — and difficult — task is to heat a gas consisting of hydrogen isotopes (a deuterium-tritium mix) to temperatures of over 100 million degrees (the gas thereby becoming a plasma (17)), so that the colliding nuclei reach speeds high enough to facilitate the desired fusion processes. It is also necessary to hold this plasma together long enough and to extract and use the energy thereby generated. |
| --- | --- |

2.13

The scientific and technological requirements for generating fusion energy are extremely exacting. The basic — and difficult — task is to heat a gas consisting of hydrogen isotopes (a deuterium-tritium mix) to temperatures of over 100 million degrees (the gas thereby becoming a plasma (17)), so that the colliding nuclei reach speeds high enough to facilitate the desired fusion processes. It is also necessary to hold this plasma together long enough and to extract and use the energy thereby generated.

| 2.14 | These processes take place in the fusion reactor's combustion chamber. The energy contained in the few grams of fuel that is injected — if not constantly topped up — is only enough for a few minutes' output, so there can be no undesired nuclear excursions. Moreover, the fact that, if any error is made, the thermonuclear burning process cools and stops (18), is another inherent safety benefit. |
| --- | --- |

2.14

These processes take place in the fusion reactor's combustion chamber. The energy contained in the few grams of fuel that is injected — if not constantly topped up — is only enough for a few minutes' output, so there can be no undesired nuclear excursions. Moreover, the fact that, if any error is made, the thermonuclear burning process cools and stops (18), is another inherent safety benefit.

| 2.15 | Thus, given these inherent safety qualities, the opportunity to drastically cut long-lived radiotoxic waste levels (fusion processes do not involve fission products or any long-lived, particularly hazardous components [actinides]) and the practically limitless availability of raw materials, the use of fusion energy would therefore be a very attractive and important component of future sustainable energy supply, and would thus help resolve current difficulties. |
| --- | --- |

2.15

Thus, given these inherent safety qualities, the opportunity to drastically cut long-lived radiotoxic waste levels (fusion processes do not involve fission products or any long-lived, particularly hazardous components [actinides]) and the practically limitless availability of raw materials, the use of fusion energy would therefore be a very attractive and important component of future sustainable energy supply, and would thus help resolve current difficulties.

| 2.16 | Accordingly, in earlier opinions the Committee made the point that R&D geared towards the use of fusion energy is a key element of future energy policy and a prime example of successful European integration. As such, it must be vigorously promoted in the European R&D framework programmes and the Euratom research and training programmes. |
| --- | --- |

2.16

Accordingly, in earlier opinions the Committee made the point that R&D geared towards the use of fusion energy is a key element of future energy policy and a prime example of successful European integration. As such, it must be vigorously promoted in the European R&D framework programmes and the Euratom research and training programmes.

3.   Developments to date

| 3.1 | The peaceful use of fusion energy was first mooted almost fifty years ago. At that time some countries already had fusion weapons technology (the hydrogen bomb), and the move towards the peaceful use of fusion appeared very promising, although extremely difficult and protracted. |
| --- | --- |

3.1

The peaceful use of fusion energy was first mooted almost fifty years ago. At that time some countries already had fusion weapons technology (the hydrogen bomb), and the move towards the peaceful use of fusion appeared very promising, although extremely difficult and protracted.

| 3.2 | Two statements from that period which are still quoted today make this particularly clear and typify the tension recognised early on between high expectations and the most intractable physical and technical difficulties. The first is from H. J. Bhabha in his opening speech to the first Conference on the Peaceful Uses of Atomic Energy held in Geneva in 1955: ‘I venture to predict that a method will be found for liberating fusion energy in a controlled manner within the next two decades.’ (19) Conversely, in the first general article on the fusion issue published by the USA (20), R.F. Post wrote: ‘However, the technical problems to be solved seem great indeed. When made aware of these, some physicists would not hesitate to pronounce the problem impossible of solution.’ (21) |
| --- | --- |

3.2

Two statements from that period which are still quoted today make this particularly clear and typify the tension recognised early on between high expectations and the most intractable physical and technical difficulties. The first is from H. J. Bhabha in his opening speech to the first Conference on the Peaceful Uses of Atomic Energy held in Geneva in 1955: ‘I venture to predict that a method will be found for liberating fusion energy in a controlled manner within the next two decades.’ (19) Conversely, in the first general article on the fusion issue published by the USA (20), R.F. Post wrote: ‘However, the technical problems to be solved seem great indeed. When made aware of these, some physicists would not hesitate to pronounce the problem impossible of solution.’ (21)

| 3.3 | Among the many possible approaches put forward at the time were proposals for magnetic confinement, which have now emerged as the most promising means of achieving the required conditions. Coming to that realisation, however, required laborious scientific and technological development and optimisation, marked by obstacles and setbacks. This concerns the tokamak (a Russian acronym for toroidal (22) magnetic chamber), and the stellarator. Both these approaches are variants of a common basic concept which involves confining the hot plasma under the required conditions using appropriately structured ring-shaped magnetic fields. |
| --- | --- |

3.3

Among the many possible approaches put forward at the time were proposals for magnetic confinement, which have now emerged as the most promising means of achieving the required conditions. Coming to that realisation, however, required laborious scientific and technological development and optimisation, marked by obstacles and setbacks. This concerns the tokamak (a Russian acronym for toroidal (22) magnetic chamber), and the stellarator. Both these approaches are variants of a common basic concept which involves confining the hot plasma under the required conditions using appropriately structured ring-shaped magnetic fields.

| 3.4 | The pioneering role in this process was played by the European JET project (Joint European Torus), the technical blueprint (23) for which appeared twenty or so years later (24). During this project's experimental phase not only were the required plasma temperatures achieved for the first time, but in the 1990s, using the deuterium-tritium fusion process, it proved possible to release significant amounts of fusion energy (some 20 megajoules per experiment) in a controlled manner. Thus, for a short period, the plasma's fusion energy output almost equalled the heating energy fed into the plasma. |
| --- | --- |

3.4

The pioneering role in this process was played by the European JET project (Joint European Torus), the technical blueprint (23) for which appeared twenty or so years later (24). During this project's experimental phase not only were the required plasma temperatures achieved for the first time, but in the 1990s, using the deuterium-tritium fusion process, it proved possible to release significant amounts of fusion energy (some 20 megajoules per experiment) in a controlled manner. Thus, for a short period, the plasma's fusion energy output almost equalled the heating energy fed into the plasma.

| 3.5 | This success was made possible through the synergy of all the resources of the European Community's fusion research programme implemented under Euratom auspices. The network established as part of this programme brought together the various Euratom-associated laboratories in the Member States — with their respective test facilities, their various individual contributions and their involvement in the JET project — and gave them a shared identity. This therefore is an early example of the European research area in practice and a clear demonstration of its effectiveness. |
| --- | --- |

3.5

This success was made possible through the synergy of all the resources of the European Community's fusion research programme implemented under Euratom auspices. The network established as part of this programme brought together the various Euratom-associated laboratories in the Member States — with their respective test facilities, their various individual contributions and their involvement in the JET project — and gave them a shared identity. This therefore is an early example of the European research area in practice and a clear demonstration of its effectiveness.

| 3.6 | This was, therefore, the first, critical step forward in worldwide fusion research. The physical principle of generating and magnetically confining fusion plasma had been demonstrated. |
| --- | --- |

3.6

This was, therefore, the first, critical step forward in worldwide fusion research. The physical principle of generating and magnetically confining fusion plasma had been demonstrated.

| 3.7 | Advances on this front were also marked by exemplary worldwide cooperation, coordinated by organisations such as the International Atomic Energy Agency (IAEA) and the International Energy Agency (IEA). European research provided key input. It worked determinedly to catch up — particularly with the USA — and is now recognised to hold the leading position in the field. |
| --- | --- |

3.7

Advances on this front were also marked by exemplary worldwide cooperation, coordinated by organisations such as the International Atomic Energy Agency (IAEA) and the International Energy Agency (IEA). European research provided key input. It worked determinedly to catch up — particularly with the USA — and is now recognised to hold the leading position in the field.

| 3.8 | Building on an initiative launched seventeen years ago by President Gorbachev and President Reagan — later joined by President Mitterrand — a plan emerged for a joint global project to develop, and, possibly also as a joint project, to build and operate ITER (25) — the first test reactor to provide a net energy gain from the plasma (i.e. where the plasma's power output from fusion processes is considerably higher than the energy fed into the plasma). The purpose of ITER is to demonstrate the technological and scientific feasibility of producing useable fusion energy by means of a burning plasma. |
| --- | --- |

3.8

Building on an initiative launched seventeen years ago by President Gorbachev and President Reagan — later joined by President Mitterrand — a plan emerged for a joint global project to develop, and, possibly also as a joint project, to build and operate ITER (25) — the first test reactor to provide a net energy gain from the plasma (i.e. where the plasma's power output from fusion processes is considerably higher than the energy fed into the plasma). The purpose of ITER is to demonstrate the technological and scientific feasibility of producing useable fusion energy by means of a burning plasma.

| 3.9 | The term ‘burning’ (also known as ‘thermonuclear burning’) describes a process in which the energy released by the fusion process (or more accurately the energy carried by the helium nuclei) plays a major part in keeping the plasma temperature at the extremely high levels required. Experimental findings to date have shown that that can only be achieved using sufficiently large facilities (i.e. similar in size to power plants). ITER was thus designed to an appropriate size. |
| --- | --- |

3.9

The term ‘burning’ (also known as ‘thermonuclear burning’) describes a process in which the energy released by the fusion process (or more accurately the energy carried by the helium nuclei) plays a major part in keeping the plasma temperature at the extremely high levels required. Experimental findings to date have shown that that can only be achieved using sufficiently large facilities (i.e. similar in size to power plants). ITER was thus designed to an appropriate size.

| 3.10 | The programme, therefore, is in a transitional phase between research and development although it is not possible to make a clear-cut distinction between the two concepts. To achieve the ITER targets, it is necessary on the one hand to provide a definitive response to certain physical questions that can only be answered once a fusion plasma has been kept burning for a reasonably long time. On the other hand, some technical building components are also needed to similar specifications and on a similar scale to those that will later be required for an operational reactor (e.g. very large superconductive magnets, a combustion chamber able to withstand the plasma (26), plasma heating units etc.). This therefore is the first step from physics to power plant technology. |
| --- | --- |

3.10

The programme, therefore, is in a transitional phase between research and development although it is not possible to make a clear-cut distinction between the two concepts. To achieve the ITER targets, it is necessary on the one hand to provide a definitive response to certain physical questions that can only be answered once a fusion plasma has been kept burning for a reasonably long time. On the other hand, some technical building components are also needed to similar specifications and on a similar scale to those that will later be required for an operational reactor (e.g. very large superconductive magnets, a combustion chamber able to withstand the plasma (26), plasma heating units etc.). This therefore is the first step from physics to power plant technology.

| 3.11 | The results of the worldwide planning for ITER include design data and comprehensive blueprints, as well as prototypes and tested model components. These results draw on experience and extrapolation from all the experiments conducted to date, starting with JET, the flagship not only of the European but of the worldwide fusion programme. |
| --- | --- |

3.11

The results of the worldwide planning for ITER include design data and comprehensive blueprints, as well as prototypes and tested model components. These results draw on experience and extrapolation from all the experiments conducted to date, starting with JET, the flagship not only of the European but of the worldwide fusion programme.

| 3.12 | ITER's linear dimensions will thus be around twice those of JET (mean diameter of the plasma ring: 12 meters, combustion chamber volume: around 1000 m3). The idea is that ITER will generate some 500 MW of fusion power in combustion times of initially at least eight minutes, with a tenfold energy output/input ratio (27) (and a lower output/input ratio during essentially unlimited combustion times). |
| --- | --- |

3.12

ITER's linear dimensions will thus be around twice those of JET (mean diameter of the plasma ring: 12 meters, combustion chamber volume: around 1000 m3). The idea is that ITER will generate some 500 MW of fusion power in combustion times of initially at least eight minutes, with a tenfold energy output/input ratio (27) (and a lower output/input ratio during essentially unlimited combustion times).

| 3.13 | ITER construction costs are estimated at around EUR 5 billion (28). |
| --- | --- |

3.13

ITER construction costs are estimated at around EUR 5 billion (28).

| 3.13.1 | In the construction of ITER, most of these costs would accrue to those firms that are awarded the contract to manufacture and fit the various components of the test facility. A significant European contribution to ITER's construction would therefore benefit European industry in terms of innovative capacity and general technological know-how and thus help achieve the Lisbon strategy objectives. |
| --- | --- |

3.13.1

In the construction of ITER, most of these costs would accrue to those firms that are awarded the contract to manufacture and fit the various components of the test facility. A significant European contribution to ITER's construction would therefore benefit European industry in terms of innovative capacity and general technological know-how and thus help achieve the Lisbon strategy objectives.

| 3.13.2 | Industry has already benefited in the past from many fusion programme spin-offs (29). This is expected to be a particularly important side benefit of ITER's construction. |
| --- | --- |

3.13.2

Industry has already benefited in the past from many fusion programme spin-offs (29). This is expected to be a particularly important side benefit of ITER's construction.

| 3.13.3 | During the ITER construction period, European expenditure on the entire fusion programme (i.e. both the Community and the Member States) would be less than 0.2 % of the costs of final energy consumption in Europe. |
| --- | --- |

3.13.3

During the ITER construction period, European expenditure on the entire fusion programme (i.e. both the Community and the Member States) would be less than 0.2 % of the costs of final energy consumption in Europe.

| 3.14 | In the course of its development, the ITER partnership has had various ups and downs (30). Initially, it involved the EU, Japan, Russia and the USA. The USA withdrew about five years ago but rejoined in 2003, while China and Korea also came on board. This partnership has made it possible not only to spread the planning costs among all the major international energy research partners, but also to ensure that the project planning benefits from all available results worldwide. |
| --- | --- |

3.14

In the course of its development, the ITER partnership has had various ups and downs (30). Initially, it involved the EU, Japan, Russia and the USA. The USA withdrew about five years ago but rejoined in 2003, while China and Korea also came on board. This partnership has made it possible not only to spread the planning costs among all the major international energy research partners, but also to ensure that the project planning benefits from all available results worldwide.

| 3.15 | This has also brought out the importance of the scheme as a global project to resolve a global problem. |
| --- | --- |

3.15

This has also brought out the importance of the scheme as a global project to resolve a global problem.

| 3.16 | The joint construction and operation of ITER would also mean a substantial gain in knowledge and technical skills for all the partner countries concerned (see also section 5), not only as regards this new kind of energy system, but also in terms of overall innovation for cutting-edge technologies. |
| --- | --- |

3.16

The joint construction and operation of ITER would also mean a substantial gain in knowledge and technical skills for all the partner countries concerned (see also section 5), not only as regards this new kind of energy system, but also in terms of overall innovation for cutting-edge technologies.

| 3.17 | In terms of technological development, however, it would be a new departure if, across the world, just one facility were to be build in line with ITER objectives, in other words if it were decided to dispense at this stage with any exploration or testing of contending and equally advanced alternatives, as had been done, for instance, in the development of aviation, space exploration and fission reactors. |
| --- | --- |

3.17

In terms of technological development, however, it would be a new departure if, across the world, just one facility were to be build in line with ITER objectives, in other words if it were decided to dispense at this stage with any exploration or testing of contending and equally advanced alternatives, as had been done, for instance, in the development of aviation, space exploration and fission reactors.

| 3.18 | This cost-cutting move would thus have to be offset by a particularly effective back-up programme which also offered scope for innovative ideas and alternative concepts (31) for reducing development risks. However, these could be studied, initially, on a lesser scale and thus at lower cost. |
| --- | --- |

3.18

This cost-cutting move would thus have to be offset by a particularly effective back-up programme which also offered scope for innovative ideas and alternative concepts (31) for reducing development risks. However, these could be studied, initially, on a lesser scale and thus at lower cost.

4.   Fusion power plant: the way ahead

| 4.1 | The accumulated results of the ITER project, expected some twenty years after building work starts, will provide basic data for the design and construction of the first electricity-producing fusion demonstration power plant (DEMO). Construction work on DEMO could thus begin in around twenty to twenty-five years. |
| --- | --- |

4.1

The accumulated results of the ITER project, expected some twenty years after building work starts, will provide basic data for the design and construction of the first electricity-producing fusion demonstration power plant (DEMO). Construction work on DEMO could thus begin in around twenty to twenty-five years.

| 4.2 | On the basis of current knowledge, fusion power plants should be designed to incorporate the following features:






  — | baseload electricity provision in block sizes offered by current power plants; also possible hydrogen production; |
| --- | --- | --- |

4.2

On the basis of current knowledge, fusion power plants should be designed to incorporate the following features:

—

baseload electricity provision in block sizes offered by current power plants; also possible hydrogen production;

| — | hourly fuel requirement (32) of, say, a 1 GW block (33) (electric power): approximately 14 g of heavy hydrogen (deuterium) > as a component of around 420 kg of natural water and approximately 21 g of superheavy hydrogen (tritium) > bred from approximately 42 g (6)-Li as a component of some 570 g of natural lithium; |
| --- | --- |

—

hourly fuel requirement (32) of, say, a 1 GW block (33) (electric power): approximately 14 g of heavy hydrogen (deuterium) > as a component of around 420 kg of natural water and approximately 21 g of superheavy hydrogen (tritium) > bred from approximately 42 g (6)-Li as a component of some 570 g of natural lithium;

| — | fuel stocks available worldwide and far exceeding requirements over the foreseeable timeframe (34); |
| --- | --- |

—

fuel stocks available worldwide and far exceeding requirements over the foreseeable timeframe (34);

| — | hourly ash production of a block of this kind: around 56 g of helium (35); |
| --- | --- |

—

hourly ash production of a block of this kind: around 56 g of helium (35);

| — | internal cycle (36) of radioactive tritium, (half-life: 12.5 years) which is bred from lithium in the blanket of the combustion chamber; |
| --- | --- |

—

internal cycle (36) of radioactive tritium, (half-life: 12.5 years) which is bred from lithium in the blanket of the combustion chamber;

| — | neutron-induced radioactivity of the combustion chamber material; depending on the selected material, radiotoxicity levels will drop to the range of coal ash in between one hundred and several hundred years; |
| --- | --- |

—

neutron-induced radioactivity of the combustion chamber material; depending on the selected material, radiotoxicity levels will drop to the range of coal ash in between one hundred and several hundred years;

| — | no risk of an uncontrolled chain reaction as, like a gas burner, the fuel is introduced from outside and, once switched off, burns off in just a few minutes; |
| --- | --- |

—

no risk of an uncontrolled chain reaction as, like a gas burner, the fuel is introduced from outside and, once switched off, burns off in just a few minutes;

| — | no accident scenarios involving high enough radioactive releases (dust, tritium, etc.) to necessitate evacuation measures extending beyond the confines of the site; |
| --- | --- |

—

no accident scenarios involving high enough radioactive releases (dust, tritium, etc.) to necessitate evacuation measures extending beyond the confines of the site;

| — | also, relatively limited damage in the event of terrorist attack because of the intrinsic safety characteristics and the low levels of radiotoxic substances that can readily be released; |
| --- | --- |

—

also, relatively limited damage in the event of terrorist attack because of the intrinsic safety characteristics and the low levels of radiotoxic substances that can readily be released;

| — | plant size comparable to that of existing power plants; |
| --- | --- |

—

plant size comparable to that of existing power plants;

| — | cost structure similar to that of existing nuclear power plants: most of the costs arise from construction; fuel supply costs are a virtual non-issue. |
| --- | --- |

—

cost structure similar to that of existing nuclear power plants: most of the costs arise from construction; fuel supply costs are a virtual non-issue.

| 4.3 | To bring DEMO to fruition, it is necessary not only to address key issues such as energy output and processes which limit the combustion time (these issues are to be examined and demonstrated within the ITER framework), and to apply sophisticated procedures which are already available or remain to be developed further for that purpose, but also to press ahead with and consolidate other important technical developments. |
| --- | --- |

4.3

To bring DEMO to fruition, it is necessary not only to address key issues such as energy output and processes which limit the combustion time (these issues are to be examined and demonstrated within the ITER framework), and to apply sophisticated procedures which are already available or remain to be developed further for that purpose, but also to press ahead with and consolidate other important technical developments.

| 4.4 | These relate mainly to the internal fuel cycle (the breeding and treatment of tritium); power extraction; the capacity of certain materials to withstand plasma load (plasma-wall interaction) and neutron load; repair technology; the optimisation of remote operations and technological solutions for extending the combustion time with a view, ultimately, to achieving a fully continuous burning process. Another particularly important task is to develop appropriate low-activation structural materials – or structural materials that are activated only for short periods. More work must be done on that front, given the need to test and verify such materials over long periods. |
| --- | --- |

4.4

These relate mainly to the internal fuel cycle (the breeding and treatment of tritium); power extraction; the capacity of certain materials to withstand plasma load (plasma-wall interaction) and neutron load; repair technology; the optimisation of remote operations and technological solutions for extending the combustion time with a view, ultimately, to achieving a fully continuous burning process. Another particularly important task is to develop appropriate low-activation structural materials – or structural materials that are activated only for short periods. More work must be done on that front, given the need to test and verify such materials over long periods.

| 4.5 | It would, however, be a mistake to believe that DEMO marks the final phase of R&D. As the history of technology shows, intensive R&D often gets underway only when the initial prototype is already in place. |
| --- | --- |

4.5

It would, however, be a mistake to believe that DEMO marks the final phase of R&D. As the history of technology shows, intensive R&D often gets underway only when the initial prototype is already in place.

| 4.5.1 | The history of technology also shows that initial prototypes of new technologies are often crude, primitive devices compared with later, elegant versions that gradually evolve. |
| --- | --- |

4.5.1

The history of technology also shows that initial prototypes of new technologies are often crude, primitive devices compared with later, elegant versions that gradually evolve.

| 4.5.2 | The present-day optimisation of the diesel engine came almost a century after its invention. Fusion power plants too will certainly also need to be improved, optimised and then adapted to the requirements of the time. |
| --- | --- |

4.5.2

The present-day optimisation of the diesel engine came almost a century after its invention. Fusion power plants too will certainly also need to be improved, optimised and then adapted to the requirements of the time.

5.   The siting of ITER

| 5.1 | Two sites — Cadarache (37) in Europe and Rokkasho-mura (38) in Japan — are currently competing at the highest government level to house ITER. The outcome will determine both the financial participation of the various partners involved and the shape of the requisite back-up programme. |
| --- | --- |

5.1

Two sites — Cadarache (37) in Europe and Rokkasho-mura (38) in Japan — are currently competing at the highest government level to house ITER. The outcome will determine both the financial participation of the various partners involved and the shape of the requisite back-up programme.

| 5.2 | Before the USA rejoined the ITER partnership and before China and Korea came on board, there was, realistically speaking, little doubt that ITER would be located in Europe, not least because, as with JET, that would be the best guarantee of its success. |
| --- | --- |

5.2

Before the USA rejoined the ITER partnership and before China and Korea came on board, there was, realistically speaking, little doubt that ITER would be located in Europe, not least because, as with JET, that would be the best guarantee of its success.

| 5.3 | A new state of affairs has now arisen, however, as the USA and Korea currently back the Rokkasho-mura location in Japan, despite the clear and broadly accepted technical advantages of the Cadarache site. If this decision were confirmed, Europe would lose its leading position and be deprived of the fruits of investment made and work done to date – with all that that implies for research and industry. |
| --- | --- |

5.3

A new state of affairs has now arisen, however, as the USA and Korea currently back the Rokkasho-mura location in Japan, despite the clear and broadly accepted technical advantages of the Cadarache site. If this decision were confirmed, Europe would lose its leading position and be deprived of the fruits of investment made and work done to date – with all that that implies for research and industry.

| 5.4 | The Committee therefore notes, welcomes and backs the European Council's decision of 25 and 26 March 2004 in which it reaffirms unanimous support for the European proposal and calls on the Commission ‘to progress negotiations on the ITER project with a view to its rapid commencement at the European candidate site.’ |
| --- | --- |

5.4

The Committee therefore notes, welcomes and backs the European Council's decision of 25 and 26 March 2004 in which it reaffirms unanimous support for the European proposal and calls on the Commission ‘to progress negotiations on the ITER project with a view to its rapid commencement at the European candidate site.’

6.   Summary and the Committee's recommendations

| 6.1 | The Committee agrees with the Commission that, in the long term, the peaceful use of fusion energy has the potential to play a very important part in resolving questions of energy supply in a sustainable, environmentally sound and competitive way. |
| --- | --- |

6.1

The Committee agrees with the Commission that, in the long term, the peaceful use of fusion energy has the potential to play a very important part in resolving questions of energy supply in a sustainable, environmentally sound and competitive way.

| 6.1.1 | This is due to the potential advantages of this technology of the future, i.e.:






  — | There is an infinite supply of deuterium and lithium as fuel resources for the foreseeable future. |
| --- | --- | --- |

6.1.1

This is due to the potential advantages of this technology of the future, i.e.:

—

There is an infinite supply of deuterium and lithium as fuel resources for the foreseeable future.

| — | There is no generation of ‘climate-change’ gases, fission products or actinides. |
| --- | --- |

—

There is no generation of ‘climate-change’ gases, fission products or actinides.

| — | The intrinsic safety characteristics prevent any uncontrolled nuclear excursion (39). |
| --- | --- |

—

The intrinsic safety characteristics prevent any uncontrolled nuclear excursion (39).

| — | The radioactivity of the combustion chamber material may drop to the radiotoxicity of coal ash in between one hundred and, at most, several hundred years; this substantially defuses the question of final storage. |
| --- | --- |

—

The radioactivity of the combustion chamber material may drop to the radiotoxicity of coal ash in between one hundred and, at most, several hundred years; this substantially defuses the question of final storage.

| — | Because of these characteristics and the low levels of highly volatile radiotoxic substances, there would also be only a relatively limited risk of damage in the event of terrorist attack. |
| --- | --- |

—

Because of these characteristics and the low levels of highly volatile radiotoxic substances, there would also be only a relatively limited risk of damage in the event of terrorist attack.

| 6.1.2 | The potential of fusion energy particularly complements that of renewables – but with the advantage over wind and solar energy that it is not dependent on the weather, the seasons or the time of the day. That is also true of the relationship – adjusted to suit actual requirements – between centralised and decentralised systems. |
| --- | --- |

6.1.2

The potential of fusion energy particularly complements that of renewables – but with the advantage over wind and solar energy that it is not dependent on the weather, the seasons or the time of the day. That is also true of the relationship – adjusted to suit actual requirements – between centralised and decentralised systems.

| 6.1.3 | In a number of opinions, therefore (40), the Committee has already advocated clear and enhanced promotion of the R&D programme for fusion energy. |
| --- | --- |

6.1.3

In a number of opinions, therefore (40), the Committee has already advocated clear and enhanced promotion of the R&D programme for fusion energy.

| 6.2 | The Committee is pleased to note that, thanks to the leadership provided by the European fusion programme and its JET project, the first, critical stage in global fusion research has successfully been completed, i.e. to demonstrate the physical principle of releasing energy from nuclear fusion, thereby laying the foundations for the ITER test reactor in which, for the first time, a burning fusion plasma - with energy output substantially exceeding input - is to be produced and studied. |
| --- | --- |

6.2

The Committee is pleased to note that, thanks to the leadership provided by the European fusion programme and its JET project, the first, critical stage in global fusion research has successfully been completed, i.e. to demonstrate the physical principle of releasing energy from nuclear fusion, thereby laying the foundations for the ITER test reactor in which, for the first time, a burning fusion plasma - with energy output substantially exceeding input - is to be produced and studied.

| 6.3 | Thanks, therefore, to many years of R&D - and the requisite investment - it has been possible, through worldwide cooperation, to reach the decision-making stage of planning and policy for the construction and operation of the ITER, which is already approaching power plant dimensions. |
| --- | --- |

6.3

Thanks, therefore, to many years of R&D - and the requisite investment - it has been possible, through worldwide cooperation, to reach the decision-making stage of planning and policy for the construction and operation of the ITER, which is already approaching power plant dimensions.

| 6.4 | The Committee would also stress the leading, pioneering input of the European fusion programme, without which the ITER project would not exist today. |
| --- | --- |

6.4

The Committee would also stress the leading, pioneering input of the European fusion programme, without which the ITER project would not exist today.

| 6.5 | The results of the ITER project will provide basic data for the design and construction of the first electricity-producing fusion demonstration power plant (DEMO). Building work on DEMO could thus begin in around 20 to 25 years. |
| --- | --- |

6.5

The results of the ITER project will provide basic data for the design and construction of the first electricity-producing fusion demonstration power plant (DEMO). Building work on DEMO could thus begin in around 20 to 25 years.

| 6.6 | The Committee backs the Commission in its efforts to prepare Europe strategically so that it can also play a central role in the commercial exploitation phase and thus, even today, increasingly use part of its fusion research programme to look beyond ITER and focus on DEMO. |
| --- | --- |

6.6

The Committee backs the Commission in its efforts to prepare Europe strategically so that it can also play a central role in the commercial exploitation phase and thus, even today, increasingly use part of its fusion research programme to look beyond ITER and focus on DEMO.

| 6.7 | To develop DEMO, it is essential not only to find answers to key issues to be examined and demonstrated as part of the ITER project, but also to press ahead with other major tasks. Examples include the optimisation of the magnetic configuration; material development (improvements in the case of plasma-induced erosion, neutron damage, decay time of the induced radioactivity); the fuel cycle; energy extraction; driving the plasma current and controlling its internal distribution; efficiency; and component reliability. |
| --- | --- |

6.7

To develop DEMO, it is essential not only to find answers to key issues to be examined and demonstrated as part of the ITER project, but also to press ahead with other major tasks. Examples include the optimisation of the magnetic configuration; material development (improvements in the case of plasma-induced erosion, neutron damage, decay time of the induced radioactivity); the fuel cycle; energy extraction; driving the plasma current and controlling its internal distribution; efficiency; and component reliability.

| 6.7.1 | The Committee also points out, however, that further such progress will only be attainable through a broad European R&D back-up programme, tying in the Member States and requiring a network of physical and especially technical experiments and large-scale facilities that must be available to back up and complement ITER. |
| --- | --- |

6.7.1

The Committee also points out, however, that further such progress will only be attainable through a broad European R&D back-up programme, tying in the Member States and requiring a network of physical and especially technical experiments and large-scale facilities that must be available to back up and complement ITER.

| 6.8 | The Committee feels it is vital to keep up the present momentum and, with vigour, commitment and the requisite resources, to rise to a challenge of great scientific and technological complexity that is so important for long-term energy supply. That also involves a serious commitment to carrying out the Lisbon and Gothenburg strategies. |
| --- | --- |

6.8

The Committee feels it is vital to keep up the present momentum and, with vigour, commitment and the requisite resources, to rise to a challenge of great scientific and technological complexity that is so important for long-term energy supply. That also involves a serious commitment to carrying out the Lisbon and Gothenburg strategies.

| 6.8.1 | For the future seventh R&D framework programme and the Euratom programme, this means giving energy research as a whole — and the fusion programme in particular — the markedly increased resources they need for continued success. It also means making full use of other ITER financing options. |
| --- | --- |

6.8.1

For the future seventh R&D framework programme and the Euratom programme, this means giving energy research as a whole — and the fusion programme in particular — the markedly increased resources they need for continued success. It also means making full use of other ITER financing options.

| 6.8.2 | It also involves ensuring a sufficient supply of physicists and technologists so that an adequate number of European experts are on hand to operate ITER and develop DEMO. The Committee would also point to its recent opinion on this specific issue (41). |
| --- | --- |

6.8.2

It also involves ensuring a sufficient supply of physicists and technologists so that an adequate number of European experts are on hand to operate ITER and develop DEMO. The Committee would also point to its recent opinion on this specific issue (41).

| 6.8.3 | It also means that academic institutions and research centres remain part of the network, not only so as to train young scientists and engineers in the specialist disciplines required, but also so that they can use their expertise and knowledge to contribute to the various tasks and, ultimately, also act as a link to civil society. |
| --- | --- |

6.8.3

It also means that academic institutions and research centres remain part of the network, not only so as to train young scientists and engineers in the specialist disciplines required, but also so that they can use their expertise and knowledge to contribute to the various tasks and, ultimately, also act as a link to civil society.

| 6.8.4 | One key task is to take timely steps to secure the increasingly necessary involvement of European industry in this very varied field of cutting-edge scientific and technological development. In the fusion programme to date, European industry has mainly been involved in developing and supplying highly specialised and extremely sophisticated components – and this experience should be cultivated and maintained. However, as fusion reactors move closer to becoming a practical reality, industry should gradually take on a more independent, pro-active role. |
| --- | --- |

6.8.4

One key task is to take timely steps to secure the increasingly necessary involvement of European industry in this very varied field of cutting-edge scientific and technological development. In the fusion programme to date, European industry has mainly been involved in developing and supplying highly specialised and extremely sophisticated components – and this experience should be cultivated and maintained. However, as fusion reactors move closer to becoming a practical reality, industry should gradually take on a more independent, pro-active role.

| 6.8.5 | The considerable investments earmarked for industry to build ITER and develop DEMO will both strengthen the economy and, even more importantly, boost expertise and innovation in a technologically most demanding new area. This is already becoming clear from the many spin-offs of the fusion programme to date. |
| --- | --- |

6.8.5

The considerable investments earmarked for industry to build ITER and develop DEMO will both strengthen the economy and, even more importantly, boost expertise and innovation in a technologically most demanding new area. This is already becoming clear from the many spin-offs of the fusion programme to date.

| 6.9 | Internationally, Europe faces a multiple challenge. It is vital on the one hand to maintain its leading role in fusion research not only in the face of US dominance in research but also against the growing strength of the three Asian ITER partners. On the other hand, however, it is important as far as possible to maintain and expand the unprecedented international cooperation seen up to now. |
| --- | --- |

6.9

Internationally, Europe faces a multiple challenge. It is vital on the one hand to maintain its leading role in fusion research not only in the face of US dominance in research but also against the growing strength of the three Asian ITER partners. On the other hand, however, it is important as far as possible to maintain and expand the unprecedented international cooperation seen up to now.

| 6.10 | The Committee therefore supports the Commission in its intention to take up that challenge, and calls on the Council, the Parliament and the Member States to do the same and not to give up Europe's leading position in this key area of the future. This does however present difficulties. |
| --- | --- |

6.10

The Committee therefore supports the Commission in its intention to take up that challenge, and calls on the Council, the Parliament and the Member States to do the same and not to give up Europe's leading position in this key area of the future. This does however present difficulties.

| 6.11 | Before the USA rejoined the ITER partnership and China and Korea came on board, there was, realistically speaking, little doubt that ITER would be located in Europe, not least because, as with JET, that would be the best guarantee of its success. |
| --- | --- |

6.11

Before the USA rejoined the ITER partnership and China and Korea came on board, there was, realistically speaking, little doubt that ITER would be located in Europe, not least because, as with JET, that would be the best guarantee of its success.

| 6.12 | A new state of affairs has now arisen, however, as the USA and Korea currently back the Rokkasho-mura location in Japan, despite the clear and broadly accepted technical advantages of the Cadarache site. If this decision were confirmed, Europe would lose its leading position and be deprived of the fruits of investment made and work done to date — with all that that implies for research and industry. |
| --- | --- |

6.12

A new state of affairs has now arisen, however, as the USA and Korea currently back the Rokkasho-mura location in Japan, despite the clear and broadly accepted technical advantages of the Cadarache site. If this decision were confirmed, Europe would lose its leading position and be deprived of the fruits of investment made and work done to date — with all that that implies for research and industry.

| 6.13 | The Committee therefore notes, welcomes and backs the European Council's decision of 25 and 26 March 2004 in which it reaffirms unanimous support for the European proposal and calls on the Commission ‘to progress negotiations on the ITER project with a view to its rapid commencement at the European candidate site’. |
| --- | --- |

6.13

The Committee therefore notes, welcomes and backs the European Council's decision of 25 and 26 March 2004 in which it reaffirms unanimous support for the European proposal and calls on the Commission ‘to progress negotiations on the ITER project with a view to its rapid commencement at the European candidate site’.

| 6.14 | Summing up and reiterating this point, the Committee calls on the Council, the Parliament and the Commission to launch initiatives and to genuinely exhaust all possibilities — if necessary working out new structural approaches to the international division of labour — to ensure that, whatever happens, ITER is located in Europe, given its key strategic role in the development of a major sustainable energy resource. |
| --- | --- |

6.14

Summing up and reiterating this point, the Committee calls on the Council, the Parliament and the Commission to launch initiatives and to genuinely exhaust all possibilities — if necessary working out new structural approaches to the international division of labour — to ensure that, whatever happens, ITER is located in Europe, given its key strategic role in the development of a major sustainable energy resource.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Energy is not consumed, but merely converted and, in the process, used. That happens through conversion processes such as coal combustion, the conversion of wind energy into electricity, and nuclear fission (conservation of energy; E = mc2). However, the terms ‘energy supply’, ‘energy generation’ and ‘energy consumption’ are also used.

1

2

(2)  Promoting renewable energy: Means of action and financing instruments; Proposal for a Directive of the European Parliament and of the Council on the promotion of cogeneration based on a useful heat demand in the internal energy market; Draft proposal for a Council Directive (Euratom) setting out basic obligations and general principles on the safety of nuclear installations and Draft proposal for a Council Directive (Euratom) on the management of spent nuclear fuel and radioactive waste. The issues involved in using nuclear power in electricity generation.

2

(3)  Green Paper: Towards a European strategy for the security of energy supply.

3

(4)  Research needs for a safe and sustainable energy supply.

4

(5)  Research needs for a safe and sustainable energy supply, points 2.1.3 et seq.

5

(6)  The overall problem was foreshadowed by previous oil crises (e.g. in 1973 and 1979) and the current controversy — centred on the trade-off between economy and environment — about the allocation of emissions certificates.

6

(7)  Point 7.4 of Committee opinion says: ‘The Committee therefore recommends that the Commission draw up an integrated European energy research strategy, from which a comprehensive future European energy research programme will be derived.’

7

(8)  As a result serious fuel shortages are expected to occur sooner.

8

(9)  The issues involved in using nuclear power in electricity generation.

9

(10)  Atoms of the same element, but with different mass (different number of neutrons in the nucleus).

10

(11)  The issues involved in using nuclear power in electricity generation.

11

(12)  Although short, perhaps hourly interruptions in the fusion process alone may be necessary.

12

(13)  Helium has an extremely stable nucleus and is chemically inert (hence its classification as a ‘noble gas’).

13

(14)  Typically 1 000 km/sec.

14

(15)  Radiotoxicity is a measure of the radiation damage caused by a radionuclide entering the human organism.

15

(16)  At these temperatures, a gas is fully ionised (i.e. the negatively charged electrons are no longer bound in the atomic shell, but move freely like the positively charged nuclei), and is thus an electricity-conducting medium that can, among other ways, be confined by magnetic fields. This state is called plasma.

16

(17)  Thermonuclear burning is explained in point 3.9.

17

(18)  Quotation original English.

18

(19)  Rev. Mod. Phys. 28, 338 (1956).

19

(20)  Quotation original English

20

(21)  Toroidal = ring-shaped.

21

(22)  Designed using a variant of the tokamak principle.

22

(23)  JET was thus a realisation of the method forecast by Bhabha, thereby confirming his prediction.

23

(24)  Originally the International Thermonuclear Experimental Reactor, but today a name in its own right.

24

(25)  Plasma–wall interaction

25

(26)  In other words, ten times more energy is generated in the fusion plasma than is put in through special instruments such as high-performance neutral beam injectors or high-frequency emitters.

26

(27)  According to COM(2003) 215 final, the cost of the ITER construction phase is estimated at EUR 4,570 million (at 2000 values).

27

(28)  See, for instance, Spin-off benefits from fusion R&D EUR 20229-Fusion energy-Moving forward ISBN 92-894-4721-4 and the brochure Making a difference of the Culham Science Centre, Abingdon, Oxfordshire OX14 3DB, UK.

28

(29)  Lack of space precludes a detailed description of the complex and volatile political history of the project.

29

(30)  Particular mention must be made here of the stellarator.

30

(31)  For comparison: a brown-coal power plant requires around 1 000 t of brown coal.

31

(32)  1 gigawatt (GW) equals 1,000 megawatts (MW)

32

(33)  Lithium may be extracted from certain rocks, salt lake brines, geothermal and mineral water sources, water pumped from oilfields, and seawater. With the stocks currently known to be available, it would be possible to meet current total world energy requirements ten times over for many thousands of years.

33

(34)  For comparison: a brown-coal power plant with the same output emits around 1 000 t of CO2.

34

2

(35)  Excluding initial requirements on set-up which can be obtained, for example, from heavy water moderated fission reactors (Canada).

35

(36)  Near Aix-en-Provence, north-east of Marseilles, France.

36

(37)  In northern Japan.

37

(38)  or energy release/time

38

(39)  ‘...enhancing the development of the fusion option.’

39

(40)  Communication from the Commission to the Council and the European Parliament — Researchers in the European Research Area: one profession, multiple careers.

40

(41)  China, Japan and (South) Korea.

41

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/35 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/35

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament and the Council — Progress report on the GALILEO research programme as at the beginning of 2004’

(COM(2004) 112 final)

(2004/C 302/08)

On 5 May 2004, the European Commission decided to consult the European Economic and Social Committee, under Article 262 of the EC Treaty on the abovementioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for the Commission's work on the subject, adopted its opinion on 10 June 2004. The rapporteur was Mr Buffetaut.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion by 161 votes, with three abstentions:

1.   Preamble

| 1.1 | The GALILEO programme represents a major challenge for the European Union, its independence, its technological and scientific capacity, its economy and, primarily, its space and telecommunications industries. Over the last few years, the development of the space industry in the EU has been based mainly on commercial activity linked to satellite telecommunications. The difficulties which have afflicted the telecommunications industry have had serious repercussions on the space industry, which has been given insufficient institutional and political support, in particular in comparison with its main competitors. |
| --- | --- |

1.1

The GALILEO programme represents a major challenge for the European Union, its independence, its technological and scientific capacity, its economy and, primarily, its space and telecommunications industries. Over the last few years, the development of the space industry in the EU has been based mainly on commercial activity linked to satellite telecommunications. The difficulties which have afflicted the telecommunications industry have had serious repercussions on the space industry, which has been given insufficient institutional and political support, in particular in comparison with its main competitors.

| 1.2 | The GALILEO programme, which was delayed because of the discussions on the allocation of ‘fair returns’ from the programme between the various states which are members of the European Space Agency and because of pressures from outside Europe, finally entered the actual starting phase following the agreement on 26 May 2003 in the Council of the European Space Agency (ESA) on the respective financial contributions of the ESA Member States. |
| --- | --- |

1.2

The GALILEO programme, which was delayed because of the discussions on the allocation of ‘fair returns’ from the programme between the various states which are members of the European Space Agency and because of pressures from outside Europe, finally entered the actual starting phase following the agreement on 26 May 2003 in the Council of the European Space Agency (ESA) on the respective financial contributions of the ESA Member States.

| 1.3 | The GALILEO programme has an important feature when compared with the GPS system, namely that it is a civil programme. This major infrastructure project is of decisive strategic importance to Europe and the independence of Europe, as has already been pointed out by the EESC, the European Parliament and the European Council. The GALILEO programme ties in perfectly with the Lisbon Strategy. The importance of such a large-scale project to the cause of promoting European integration should also be strongly emphasised. |
| --- | --- |

1.3

The GALILEO programme has an important feature when compared with the GPS system, namely that it is a civil programme. This major infrastructure project is of decisive strategic importance to Europe and the independence of Europe, as has already been pointed out by the EESC, the European Parliament and the European Council. The GALILEO programme ties in perfectly with the Lisbon Strategy. The importance of such a large-scale project to the cause of promoting European integration should also be strongly emphasised.

| 1.4 | The GALILEO system will provide five services:






  — | the ‘open service’ (comparable to the GPS basic service); |
| --- | --- | --- |

1.4

The GALILEO system will provide five services:

—

the ‘open service’ (comparable to the GPS basic service);

| — | the ‘safety of life service’ intended primarily for use by air, rail and maritime transport bodies; |
| --- | --- |

—

the ‘safety of life service’ intended primarily for use by air, rail and maritime transport bodies;

| — | the ‘commercial service’, which is more accurate than the open service and is designed for commercial applications; |
| --- | --- |

—

the ‘commercial service’, which is more accurate than the open service and is designed for commercial applications;

| — | the ‘search and rescue service’; |
| --- | --- |

—

the ‘search and rescue service’;

| — | the ‘public regulated service’; the use of this service is reserved for public authorities and their police, customs and civil protection services. High-precision, encrypted signals will be used for these activities; they will also be able to used for military purposes and the necessary measures will be taken to prevent any malicious interference. |
| --- | --- |

—

the ‘public regulated service’; the use of this service is reserved for public authorities and their police, customs and civil protection services. High-precision, encrypted signals will be used for these activities; they will also be able to used for military purposes and the necessary measures will be taken to prevent any malicious interference.

| 1.5 | As GALILEO is a civil system, its main use is nonetheless for everyday purposes, particularly in the field of transport. It will therefore have to be able ensure a continuous and secure service, and, in the event of a breakdown, its civil liability may be engaged, which is not the case with the GPS system. |
| --- | --- |

1.5

As GALILEO is a civil system, its main use is nonetheless for everyday purposes, particularly in the field of transport. It will therefore have to be able ensure a continuous and secure service, and, in the event of a breakdown, its civil liability may be engaged, which is not the case with the GPS system.

| 1.6 | Finally, GALILEO will be slightly more precise than GPS and, above all, have a range covering the whole of the planet. It can also provide for real time verification of the integrity of the signal; this is a vital requirement for certain applications, particularly in the field of civil aviation. |
| --- | --- |

1.6

Finally, GALILEO will be slightly more precise than GPS and, above all, have a range covering the whole of the planet. It can also provide for real time verification of the integrity of the signal; this is a vital requirement for certain applications, particularly in the field of civil aviation.

| 1.7 | The basic aim of the communication under review is to report on the progress made with the GALILEO programme, to outline the prospects for the future and to pinpoint a number of ongoing uncertainties in respect of a project which is expected to cost EUR3.2 bn. and to involve three phases, namely:






  — | a development and validation phase, running from 2002 to 2005; |
| --- | --- | --- |

1.7

The basic aim of the communication under review is to report on the progress made with the GALILEO programme, to outline the prospects for the future and to pinpoint a number of ongoing uncertainties in respect of a project which is expected to cost EUR3.2 bn. and to involve three phases, namely:

—

a development and validation phase, running from 2002 to 2005;

| — | a deployment phase from 2006 to 2007; |
| --- | --- |

—

a deployment phase from 2006 to 2007;

| — | a commercial operating phase, due to begin in 2008. |
| --- | --- |

—

a commercial operating phase, due to begin in 2008.

2.   Structure and gist of the Commission document

The communication revolves around the following three points:

| — | the progress of the development phase; |
| --- | --- |

—

the progress of the development phase;

| — | the development of international cooperation; |
| --- | --- |

—

the development of international cooperation;

| — | the transition to the deployment and operating phases. |
| --- | --- |

—

the transition to the deployment and operating phases.

2.1   The development phase

2.1.1   The Joint Undertaking

The agreement reached in May 2003 in the Council of the ESA made it possible to resolve the outstanding issues, with the result that the GALILEO Joint Undertaking has been fully operational since last summer. The director of the Joint Undertaking has been appointed, the establishment plan has been accepted and its budget for 2003 and 2004 has been adopted. EGNOS, the European Geostationary Navigation Overlay Service, should be placed under the control of the Joint Undertaking. The remaining problem is the question of the Joint Undertaking's fiscal and social status. This matter is being discussed with the Belgian Government. The sums involved are by no means negligible (EUR 5 million per year). The aim is to secure for the 32 persons working at the Joint Undertaking arrangements of the same nature as those applicable to the members of the European Space Agency (ESA) and the European Commission. The Belgian authorities are not opposed to this request but wish to ensure that the staff of the Joint Enterprise enjoy social security cover. The problem is therefore more of an administrative nature than a substantive nature.

2.1.2   Technical studies and research work

These concern:

| — | the latest work on the definition phase; |
| --- | --- |

—

the latest work on the definition phase;

| — | basic infrastructure; |
| --- | --- |

—

basic infrastructure;

| — | the EGNOS system, which will soon be operational; |
| --- | --- |

—

the EGNOS system, which will soon be operational;

| — | a European radio navigation schedule. |
| --- | --- |

—

a European radio navigation schedule.

2.1.3   The World Radio Communication Conference, held in June 2003

| 2.1.3.1 | The issues at stake were extremely important for the EU, which had two objectives:






  — | to obtain confirmation of the spectrum of frequencies allocated in 2000; |
| --- | --- | --- |

2.1.3.1

The issues at stake were extremely important for the EU, which had two objectives:

—

to obtain confirmation of the spectrum of frequencies allocated in 2000;

| — | to ensure, within that frequency spectrum, distribution amongst the different systems should not prove disadvantageous to the European system and to ensure that access to the frequency spectrum was both equitable and based on the principle of interoperability. |
| --- | --- |

—

to ensure, within that frequency spectrum, distribution amongst the different systems should not prove disadvantageous to the European system and to ensure that access to the frequency spectrum was both equitable and based on the principle of interoperability.

| 2.1.3.2 | The discussions took place against the background of the historical monopoly of the American GPS system. The EU did, however, in fact secure the outcome which it had hoped for, both as regards the conditions for utilising the frequency spectrum and as regards its demand that there should be impartial multilateral coordination. |
| --- | --- |

2.1.3.2

The discussions took place against the background of the historical monopoly of the American GPS system. The EU did, however, in fact secure the outcome which it had hoped for, both as regards the conditions for utilising the frequency spectrum and as regards its demand that there should be impartial multilateral coordination.

2.1.4   Integration of the new Member States and the candidate countries

Initiatives have been elaborated on an industrial scale so as to ensure the full participation of the abovementioned countries in the GALILEO programme, as desired by the Commission.

2.2   The development of international cooperation

| 2.2.1 | As the Council has stressed on several occasions, international cooperation is an essential element for ensuring that maximum benefits are derived from the GALILEO programme. Furthermore, requests from third countries to be associated with the project are becoming more and more numerous. In this context, the Commission wishes to pursue, at one and the same time, a bilateral approach and a regional approach. |
| --- | --- |

2.2.1

As the Council has stressed on several occasions, international cooperation is an essential element for ensuring that maximum benefits are derived from the GALILEO programme. Furthermore, requests from third countries to be associated with the project are becoming more and more numerous. In this context, the Commission wishes to pursue, at one and the same time, a bilateral approach and a regional approach.

| 2.2.2 | An initial agreement was signed with China on 30 October 2003 and talks have got under way with India and Israel. Similar steps are being taken in the case of South Korea, Brazil, Japan, Canada, Australia, Mexico and Chile. |
| --- | --- |

2.2.2

An initial agreement was signed with China on 30 October 2003 and talks have got under way with India and Israel. Similar steps are being taken in the case of South Korea, Brazil, Japan, Canada, Australia, Mexico and Chile.

| 2.2.3 | As regards regional cooperation, dialogue has started with the Mediterranean region, Latin America and Africa. |
| --- | --- |

2.2.3

As regards regional cooperation, dialogue has started with the Mediterranean region, Latin America and Africa.

| 2.2.4 | Negotiations are also under way with the two states which already have a satellite navigation system, namely Russia and the United States. These negotiations are particularly important as they are designed to ensure technical compatibility and interoperability between the systems used by these latter states and the GALILEO programme. It should be pointed out that, initially, the United States questioned the very justification of the GALILEO programme. The consultation mechanism currently under discussion must be based on a system under which each of the partners has symmetrical rights and duties in respect of the other partner, particularly in connection with the exercise of a possible right of veto. |
| --- | --- |

2.2.4

Negotiations are also under way with the two states which already have a satellite navigation system, namely Russia and the United States. These negotiations are particularly important as they are designed to ensure technical compatibility and interoperability between the systems used by these latter states and the GALILEO programme. It should be pointed out that, initially, the United States questioned the very justification of the GALILEO programme. The consultation mechanism currently under discussion must be based on a system under which each of the partners has symmetrical rights and duties in respect of the other partner, particularly in connection with the exercise of a possible right of veto.

2.3   Transition to the deployment and operating phases

This is the crucial issue. The deployment and operating phases of the system will start in 2006 and 2008 respectively.

2.3.1   Concession procedure

| 2.3.1.1 | The concession procedure is managed by the Joint Undertaking. The procedure was launched in October 2003. Four tenders were registered and declared to be eligible. The tenders were submitted by consortia consisting of a number of lead partners, backed up by a cluster of associated companies. All of the bidders considered that the future European system could generate substantial commercial revenue and each was willing to fund a considerable proportion of its contribution from its own assets. |
| --- | --- |

2.3.1.1

The concession procedure is managed by the Joint Undertaking. The procedure was launched in October 2003. Four tenders were registered and declared to be eligible. The tenders were submitted by consortia consisting of a number of lead partners, backed up by a cluster of associated companies. All of the bidders considered that the future European system could generate substantial commercial revenue and each was willing to fund a considerable proportion of its contribution from its own assets.

| 2.3.1.2 | This factor is all the more important in view of the fact that the Council wishes that Community funding should not exceed one-third of the financing for the deployment phase. Under the second phase of the concession procedure, known as ‘competitive negotiation’, three consortia have been shortlisted (Alcatel/Alenia/Vinci, EADS/Thalès/Inmarsat, Eutelsat). |
| --- | --- |

2.3.1.2

This factor is all the more important in view of the fact that the Council wishes that Community funding should not exceed one-third of the financing for the deployment phase. Under the second phase of the concession procedure, known as ‘competitive negotiation’, three consortia have been shortlisted (Alcatel/Alenia/Vinci, EADS/Thalès/Inmarsat, Eutelsat).

| 2.3.1.3 | Six types of resources have been identified, namely:






  — | the sale of the services generated by the GALILEO system; |
| --- | --- | --- |

2.3.1.3

Six types of resources have been identified, namely:

—

the sale of the services generated by the GALILEO system;

| — | licences and intellectual property rights; |
| --- | --- |

—

licences and intellectual property rights;

| — | EU financing; |
| --- | --- |

—

EU financing;

| — | loans from the European Investment Bank (EIB); |
| --- | --- |

—

loans from the European Investment Bank (EIB);

| — | financial contributions from some third countries; |
| --- | --- |

—

financial contributions from some third countries;

| — | if it should be necessary, a levy on satellite radionavigation receivers. |
| --- | --- |

—

if it should be necessary, a levy on satellite radionavigation receivers.

2.3.2   Framework structure for the system

| 2.3.2.1 | The Commission has forwarded to the Council and the European Parliament a proposal for a Regulation on the establishment of structures for the management of the European Satellite Radionavigation Programme. It had been proposed to establish a Supervisory Authority and a Centre for Security and Safety; the latter body would be placed under the direct responsibility of the General Secretary of the Council/High Representative for the Common Security and Foreign Policy. It ultimately transpired that a Supervisory Authority should indeed be established and would be given responsibilities in respect of security. The Centre for Security and Safety would not be set up; the Council itself would take decisions in real time in the event of a crisis. |
| --- | --- |

2.3.2.1

The Commission has forwarded to the Council and the European Parliament a proposal for a Regulation on the establishment of structures for the management of the European Satellite Radionavigation Programme. It had been proposed to establish a Supervisory Authority and a Centre for Security and Safety; the latter body would be placed under the direct responsibility of the General Secretary of the Council/High Representative for the Common Security and Foreign Policy. It ultimately transpired that a Supervisory Authority should indeed be established and would be given responsibilities in respect of security. The Centre for Security and Safety would not be set up; the Council itself would take decisions in real time in the event of a crisis.

| 2.3.2.2 | Another key issue with regard to the framework structure for the system is the issue of possible threats to individual privacy. It should be pointed out that the GALILEO system does not, in itself, pose any threat to privacy since it does not receive any information from users (there is no ‘uplink’). On the other hand, information received by the user can be retransmitted by another system — e.g. mobile phones — thereby making it possible to pinpoint the location of the user. Responsibility for regulating such use of information provided by the GALILEO system does not in any way lie with the EU programme management structures but rather with national authorities. The attention of the national authorities should be drawn to the measures which they are responsible for taking in order to regulate the use of the GALILEO system and — forthwith — the use of the GPS system. |
| --- | --- |

2.3.2.2

Another key issue with regard to the framework structure for the system is the issue of possible threats to individual privacy. It should be pointed out that the GALILEO system does not, in itself, pose any threat to privacy since it does not receive any information from users (there is no ‘uplink’). On the other hand, information received by the user can be retransmitted by another system — e.g. mobile phones — thereby making it possible to pinpoint the location of the user. Responsibility for regulating such use of information provided by the GALILEO system does not in any way lie with the EU programme management structures but rather with national authorities. The attention of the national authorities should be drawn to the measures which they are responsible for taking in order to regulate the use of the GALILEO system and — forthwith — the use of the GPS system.

3.   General comments

| 3.1 | The Committee appreciates the decisive approach adopted by the Commission in its Communication in view of the fact that the project in question is clearly of the utmost importance and involves considerable difficulties. In this spirit — marked by a determination to succeed — sustained attention should be paid to the following issues:






  — | the building-in of the security requirements at the design stage of both the system and its management; |
| --- | --- | --- |

3.1

The Committee appreciates the decisive approach adopted by the Commission in its Communication in view of the fact that the project in question is clearly of the utmost importance and involves considerable difficulties. In this spirit — marked by a determination to succeed — sustained attention should be paid to the following issues:

—

the building-in of the security requirements at the design stage of both the system and its management;

| — | the conclusion of negotiations with the USA with a view to reaching an agreement based on symmetrical commitments and the goal of interoperability; |
| --- | --- |

—

the conclusion of negotiations with the USA with a view to reaching an agreement based on symmetrical commitments and the goal of interoperability;

| — | the endeavour to find adequate private funding and the guaranteed provision of long-term loans by the EIB; |
| --- | --- |

—

the endeavour to find adequate private funding and the guaranteed provision of long-term loans by the EIB;

| — | the need to keep the cost of realising the programme within the confines of the estimated budget. |
| --- | --- |

—

the need to keep the cost of realising the programme within the confines of the estimated budget.

| 3.2 | The success of this major project depends upon the clear affirmation of political and financial will by the Council and its resolute adherence to this stance. By committing itself to the GALILEO project, the Council has demonstrated its ambition for both the EU and its space policy. |
| --- | --- |

3.2

The success of this major project depends upon the clear affirmation of political and financial will by the Council and its resolute adherence to this stance. By committing itself to the GALILEO project, the Council has demonstrated its ambition for both the EU and its space policy.

4.   Conclusion

| 4.1 | In its conclusions, the Commission appears to demonstrate some anxiety or uncertainty as regards the issue of financing. This is a matter of fundamental importance; if the financing were to be called into question, the whole programme could be placed in jeopardy. The EESC can only reaffirm the fact that the GALILEO project is of major strategic importance to the EU, to the future of its space industry and to the cause of promoting European integration; The EESC already strongly emphasised this point, setting out a detailed case, in its opinions on the Commission's Green Paper and White Paper on the European space policy (1). The EESC shares the Commission's satisfaction with regard to the very real progress which has been achieved in getting this project underway and hopes that the optimism displayed by the Commission will not be lessened by last-minute difficulties. |
| --- | --- |

4.1

In its conclusions, the Commission appears to demonstrate some anxiety or uncertainty as regards the issue of financing. This is a matter of fundamental importance; if the financing were to be called into question, the whole programme could be placed in jeopardy. The EESC can only reaffirm the fact that the GALILEO project is of major strategic importance to the EU, to the future of its space industry and to the cause of promoting European integration; The EESC already strongly emphasised this point, setting out a detailed case, in its opinions on the Commission's Green Paper and White Paper on the European space policy (1). The EESC shares the Commission's satisfaction with regard to the very real progress which has been achieved in getting this project underway and hopes that the optimism displayed by the Commission will not be lessened by last-minute difficulties.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Opinion of the European Economic and Social Committee on the White Paper entitled Space: a new European frontier for an expanding Union — an action plan for implementing the European Space Policy (COM(2003) 673 final).

1

Opinion of the European Economic and Social Committee on the Green Paper on European Space Policy (COM(2003) 17 final — OJ C 220 of 16.9.2003)

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/38 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/38

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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 licensing of railway undertakings (codified version)’

(COM(2004) 232 final — 2004/0074 (COD))

(2004/C 302/09)

On 27 April 2004 the Council decided to consult the European Economic and Social Committee, under Article 71 of the Treaty establishing the European Community, on the abovementioned proposal.

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 10 June 2004. The rapporteur was Mr Chagas.

At its 410th plenary session (meeting of 30 June 2004) the European Economic and Social Committee adopted the following opinion with 160 votes in favour and ten abstentions:

| 1. | The purpose of the proposal is to codify Council Directive 95/18/EC of 19 June 1995 on the licensing of railway undertakings (1). |
| --- | --- |

1.

The purpose of the proposal is to codify Council Directive 95/18/EC of 19 June 1995 on the licensing of railway undertakings (1).

| 2. | Simplifying and clarifying Community law is a matter of great importance in the context of a people's Europe. The European Parliament, Council and Commission have therefore underlined the need to codify legislative acts that have been frequently amended, and agreed by interinstitutional agreement of 20 December 1994 that an accelerated procedure may be used. No substantive changes may be made to acts when they are codified. |
| --- | --- |

2.

Simplifying and clarifying Community law is a matter of great importance in the context of a people's Europe. The European Parliament, Council and Commission have therefore underlined the need to codify legislative acts that have been frequently amended, and agreed by interinstitutional agreement of 20 December 1994 that an accelerated procedure may be used. No substantive changes may be made to acts when they are codified.

| 3. | The Commission proposal complies with this requirement, and the EESC therefore has no objections to raise. |
| --- | --- |

3.

The Commission proposal complies with this requirement, and the EESC therefore has no objections to raise.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  OJ L 143 of 27.6.1995, p. 70 — EESC opinion: OJ C 393 of 31.12.1994, p. 56.

1

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/39 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/39

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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 1228/2003 as regards the date of application of certain provisions to Slovenia’

(COM(2004) 309 final — 2004/0109 (COD))

(2004/C 302/10)

On 11 May 2004, the Council of the European Union decided to consult the European Economic and Social Committee, under Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

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 10 June 2004. The rapporteur was Mr Simons.

At its 410th plenary session, held on 30 June and 1 July 2004 (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion by 158 votes to two, with seven abstentions:

1.   Introduction

| 1.1 | Regulation 1228/2003/EC of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity (the ‘Electricity Regulation’) aims to set up a true single electricity market by stepping up cross-border trade in electricity. Fair, cost-oriented, transparent and directly applicable rules are to be introduced for the fixing of prices for cross-border transfers and the allocation of available connection capacity. These rules would take account of a comparison between efficient network operators from structurally comparable areas and supplement the provisions of Directive 96/92/EC so that cross-border transactions are guaranteed effective access to transmission networks. |
| --- | --- |

1.1

Regulation 1228/2003/EC of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity (the ‘Electricity Regulation’) aims to set up a true single electricity market by stepping up cross-border trade in electricity. Fair, cost-oriented, transparent and directly applicable rules are to be introduced for the fixing of prices for cross-border transfers and the allocation of available connection capacity. These rules would take account of a comparison between efficient network operators from structurally comparable areas and supplement the provisions of Directive 96/92/EC so that cross-border transactions are guaranteed effective access to transmission networks.

2.   The Commission's proposal

| 2.1 | The Republic of Slovenia has submitted to the Commission a request for amendment of the Electricity Regulation, which would allow Slovenia to continue operating its current system of congestion management at the interconnections with Austria and Italy until 1 July 2007. At the moment, half of the total available capacity of the two interconnections in question is allocated by Slovenia on the basis of this system. In fact, according to an arrangement between the transmission system operators concerned, the other halves of the total capacity are allocated by the Italian or the Austrian system operator respectively. Under the current Slovenian system the available capacity, in case total demand for capacity exceeds the capacity available (congestion), is allocated to applicants for capacity on a pro rata basis. The capacity is allocated free of charge. Such a system cannot be considered a non-discriminatory, market-based solution in the sense of the Electricity Regulation. Slovenia has justified its request for a derogation on the grounds that the restructuring of Slovenian industry has not yet been completed and Slovenian electricity production is still adjusting to the new market conditions (high costs of investment in environmental protection). |
| --- | --- |

2.1

The Republic of Slovenia has submitted to the Commission a request for amendment of the Electricity Regulation, which would allow Slovenia to continue operating its current system of congestion management at the interconnections with Austria and Italy until 1 July 2007. At the moment, half of the total available capacity of the two interconnections in question is allocated by Slovenia on the basis of this system. In fact, according to an arrangement between the transmission system operators concerned, the other halves of the total capacity are allocated by the Italian or the Austrian system operator respectively. Under the current Slovenian system the available capacity, in case total demand for capacity exceeds the capacity available (congestion), is allocated to applicants for capacity on a pro rata basis. The capacity is allocated free of charge. Such a system cannot be considered a non-discriminatory, market-based solution in the sense of the Electricity Regulation. Slovenia has justified its request for a derogation on the grounds that the restructuring of Slovenian industry has not yet been completed and Slovenian electricity production is still adjusting to the new market conditions (high costs of investment in environmental protection).

3.   General comments

| 3.1 | The EU Commission proposal is based on Article 95 of the Treaty establishing the European Community, which is part of the chapter on the approximation of laws. The facts, however — Regulation 1228/2003 came out after the end of the accession negotiations and the signing of the accession treaty, so that Slovenia could not take part in the adoption process — justify in every respect an approach based on the relevant Accession Treaty and Act of Accession. |
| --- | --- |

3.1

The EU Commission proposal is based on Article 95 of the Treaty establishing the European Community, which is part of the chapter on the approximation of laws. The facts, however — Regulation 1228/2003 came out after the end of the accession negotiations and the signing of the accession treaty, so that Slovenia could not take part in the adoption process — justify in every respect an approach based on the relevant Accession Treaty and Act of Accession.

| 3.2 | The latter contains provisions concerning the application of decisions taken by the institutions, and particularly if a new Member State has not been able to take part in the negotiations concerning a decision that has been taken between the date on which the Treaty or Act was signed and the country's actual accession on 1 May 2004. That is now the case for Slovenia. |
| --- | --- |

3.2

The latter contains provisions concerning the application of decisions taken by the institutions, and particularly if a new Member State has not been able to take part in the negotiations concerning a decision that has been taken between the date on which the Treaty or Act was signed and the country's actual accession on 1 May 2004. That is now the case for Slovenia.

| 3.3 | It is in the spirit of these provisions that one must consider the request from the Slovenian government for a postponement until 1 July 2007 of the application of Article 6(1) of the Regulation and the provisions of the Annex relating directly to it, together with the present Commission proposal. |
| --- | --- |

3.3

It is in the spirit of these provisions that one must consider the request from the Slovenian government for a postponement until 1 July 2007 of the application of Article 6(1) of the Regulation and the provisions of the Annex relating directly to it, together with the present Commission proposal.

| 3.4 | In line with the adage ‘pacta sunt servanda’, a refusal can only be considered if acceptance of the proposal would result in irreparable damage for the Union as a whole. |
| --- | --- |

3.4

In line with the adage ‘pacta sunt servanda’, a refusal can only be considered if acceptance of the proposal would result in irreparable damage for the Union as a whole.

| 3.5 | However, the Commission states in its proposal that the practical impact of the transitional period on the functioning of the internal electricity market would be very small. The EESC can go along with this view. It is also difficult to maintain that during the requested transitional period Slovenia can realise its potential of becoming a not unimportant regional hub within the internal market. |
| --- | --- |

3.5

However, the Commission states in its proposal that the practical impact of the transitional period on the functioning of the internal electricity market would be very small. The EESC can go along with this view. It is also difficult to maintain that during the requested transitional period Slovenia can realise its potential of becoming a not unimportant regional hub within the internal market.

| 3.6 | In addition, the argument that Regulation 1228/2003 was brought in for the very reason of at last getting proper international trade in electricity off the ground (1) and the Slovenian request would be in breach of it does not, in view of the duration, scope and geographical area involved, carry enough weight for the request to be rejected. |
| --- | --- |

3.6

In addition, the argument that Regulation 1228/2003 was brought in for the very reason of at last getting proper international trade in electricity off the ground (1) and the Slovenian request would be in breach of it does not, in view of the duration, scope and geographical area involved, carry enough weight for the request to be rejected.

| 3.7 | The statement — which in itself is correct — that fair competition between, for instance, European aluminium and steel makers as well as between electricity producers is an essential component of the single market also does not apply here. |
| --- | --- |

3.7

The statement — which in itself is correct — that fair competition between, for instance, European aluminium and steel makers as well as between electricity producers is an essential component of the single market also does not apply here.

| 3.8 | From another angle, it can be argued that ensuring a safe and reliable electricity system in Slovenia and enabling environmental investments to be made during the transitional period are grounds for accepting the Commission proposal. |
| --- | --- |

3.8

From another angle, it can be argued that ensuring a safe and reliable electricity system in Slovenia and enabling environmental investments to be made during the transitional period are grounds for accepting the Commission proposal.

| 3.9 | The EESC is all the more inclined to recommend acceptance of the proposal since, in its opinion of 17 October 2001 (2) on Regulation 1228/2003, it said the following concerning the consequences for the applicant countries, as they were then: ‘... the electricity and natural gas sectors in the applicant countries ... maintain uncompetitive infrastructures and management methods. The immediate consequence of this could be considerable job losses in companies in these sectors, which in turn would cause unbearable social tensions in the applicant countries, particularly for those countries which do not have the same kind of social security system as found in the Member States. The European Union must share with these countries the experience that has been gained from the liberalisation processes currently underway in Europe, and provide funding to help them modernise their companies. Opening up these new markets is not enough; their energy sectors must also be restructured so that companies in the applicant countries can compete under the same conditions.’ |
| --- | --- |

3.9

The EESC is all the more inclined to recommend acceptance of the proposal since, in its opinion of 17 October 2001 (2) on Regulation 1228/2003, it said the following concerning the consequences for the applicant countries, as they were then: ‘... the electricity and natural gas sectors in the applicant countries ... maintain uncompetitive infrastructures and management methods. The immediate consequence of this could be considerable job losses in companies in these sectors, which in turn would cause unbearable social tensions in the applicant countries, particularly for those countries which do not have the same kind of social security system as found in the Member States. The European Union must share with these countries the experience that has been gained from the liberalisation processes currently underway in Europe, and provide funding to help them modernise their companies. Opening up these new markets is not enough; their energy sectors must also be restructured so that companies in the applicant countries can compete under the same conditions.’

4.   Summary and conclusion

| 4.1 | The arguments put forward in the Commission proposal for allowing Slovenia until 1 July 2007 to comply with Article 6(1) of Regulation 1228/2003 and with the relevant provisions concerning congestion management are not justified when considered purely from the point of view of the interests of fair competition in the single market. |
| --- | --- |

4.1

The arguments put forward in the Commission proposal for allowing Slovenia until 1 July 2007 to comply with Article 6(1) of Regulation 1228/2003 and with the relevant provisions concerning congestion management are not justified when considered purely from the point of view of the interests of fair competition in the single market.

| 4.2 | However, after considering the facts of the time when the Regulation was produced and the accession negotiations were signed, the EESC feels that these arguments are justified. Authorisation of the short transitional period requested will not result in irreparable damage for the Union as a whole — on the contrary: security and reliability as well as environmental investments in the Slovenian system are ensured — and in its opinion on Regulation 1228/2003 (3), on the issue of competition from the applicant states as they were then, the EESC recommended that the EU should offer a helping hand. The EESC believes that it is quite clear that Slovenia was unable to take part in the negotiations concerning or in the approval of Regulation 1228/2003. |
| --- | --- |

4.2

However, after considering the facts of the time when the Regulation was produced and the accession negotiations were signed, the EESC feels that these arguments are justified. Authorisation of the short transitional period requested will not result in irreparable damage for the Union as a whole — on the contrary: security and reliability as well as environmental investments in the Slovenian system are ensured — and in its opinion on Regulation 1228/2003 (3), on the issue of competition from the applicant states as they were then, the EESC recommended that the EU should offer a helping hand. The EESC believes that it is quite clear that Slovenia was unable to take part in the negotiations concerning or in the approval of Regulation 1228/2003.

| 4.3 | Quite apart from the explanation and the basis of the Commission proposal, which should be completed or adapted in line with the views set out above, the EESC recommends acceptance of the proposal to postpone the application of Regulation 1228/03 until 1 July 2007. |
| --- | --- |

4.3

Quite apart from the explanation and the basis of the Commission proposal, which should be completed or adapted in line with the views set out above, the EESC recommends acceptance of the proposal to postpone the application of Regulation 1228/03 until 1 July 2007.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  See EESC opinion on the Proposal for a Regulation of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity, OJ C 36 of 8.2.2002, page 10.

1

(2)  See EESC opinion on the Proposal for a Regulation of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity, OJ C 36 of 8.2.2002, page 10.

2

(3)  Point 6.6 of the EESC opinion, OJ C 36 of 8.2.2002, page 10.

3

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/41 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/41

---

Opinion of the European Economic and Social Committee on ‘Industrial change and economic, social and territorial cohesion’

(2004/C 302/11)

On 29 January 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on ‘Industrial change and economic, social and territorial cohesion’.

The Consultative Commission on Industrial Change, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 7 June 2004. The rapporteur was Mr Leirião and the co-rapporteur was Mr Cué.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 155 votes, with 13 abstentions.

Summary

The aim of this opinion is to check whether the instruments for fostering economic, social and territorial cohesion are adequate and whether or not the framework conditions are favourable to firms, allowing industrial change to be carried out in a way which is compatible with firms' competitiveness requirements.

Seventeen points are set out in the conclusions and recommendations section; these point to the need for improvement in terms of policies, instruments, criteria for determining regions' eligibility for Community funds, the implementation of good practices, and the search for synergies between policies and instruments, as well as general coordination in implementing the EU's structural strategies, such as the Lisbon Strategy, the Structural Reforms and Sustainable Development.

The thinking behind the above is based on the following ideas; these are set out in sequence and provide the main themes appearing throughout the opinion:

| — | regional development as a factor regulating globalisation, through the creation of regional clusters, as an effective way to attract firms to an area and encourage them to stay; |
| --- | --- |

—

regional development as a factor regulating globalisation, through the creation of regional clusters, as an effective way to attract firms to an area and encourage them to stay;

| — | corporate social responsibility and the implementation of ‘good practices’ as part of an approach involving preventive and other measures for anticipating and managing change; |
| --- | --- |

—

corporate social responsibility and the implementation of ‘good practices’ as part of an approach involving preventive and other measures for anticipating and managing change;

| — | negotiations and social dialogue in firms to ensure that restructuring is tackled in a socially responsible fashion, with a firm's management and workers adopting a positive attitude to seeking solutions which are seen as successful by the firm, workers and community, thus striking a balance between social and economic aspects; |
| --- | --- |

—

negotiations and social dialogue in firms to ensure that restructuring is tackled in a socially responsible fashion, with a firm's management and workers adopting a positive attitude to seeking solutions which are seen as successful by the firm, workers and community, thus striking a balance between social and economic aspects;

| — | action in partnership between businessmen, social partners, civil society (universities, research and innovation centres, associations, etc.) and local authorities, so as to create the right conditions for boosting productivity and improving regions' growth potential; and |
| --- | --- |

—

action in partnership between businessmen, social partners, civil society (universities, research and innovation centres, associations, etc.) and local authorities, so as to create the right conditions for boosting productivity and improving regions' growth potential; and

| — | proposal to create the status of ‘most favoured region’ for those regions which have high levels of social and employment cohesion and suddenly lose skills because firms relocate, without having any alternative economic activities to sustain local employment levels; these regions would receive financial support, with the specific aim of regenerating the local economic fabric. |
| --- | --- |

—

proposal to create the status of ‘most favoured region’ for those regions which have high levels of social and employment cohesion and suddenly lose skills because firms relocate, without having any alternative economic activities to sustain local employment levels; these regions would receive financial support, with the specific aim of regenerating the local economic fabric.

Introduction

In its own-initiative opinion entitled Industrial change: current situation and prospects - An overall approach (1), the EESC expressed the view that the CCIC's future work should aim to promote ‘a framework and conditions allowing industrial change to take place in a way compatible both with firms' need for competitiveness and with economic, social and territorial cohesion’, thus laying down the basis for this commission's work and outlining the type of contribution it should make and the kind of topic it should cover in its opinions. The decision to draw up this own-initiative opinion on Industrial change and economic, social and territorial cohesion is to be seen against this background.

1.   Definitions

| 1.1 | In order for this own-initiative opinion to be viewed in the right context and properly interpreted, ‘industrial change’ has been defined as ‘the normal and continuous process of an industrial sector pro-actively responding to the dynamic movements in its business environment in order to remain competitive and create growth opportunities’ (2). ‘Restructuring’ refers to ‘a particular form of industrial change and regularly is [viewed as] an ad hoc process of (often enforced) adaptation to the conditions in the business environment in order to regain competitiveness, leading to discontinuities in business activities’ (3). The idea of ‘anticipating’ change provides the key to good management of such change, because it means that problems can be avoided in the restructuring process. Anticipating change involves studying and forecasting future terms of competition and market requirements, allowing the necessary adjustments to be planned in good time, thus keeping a firm's social and productivity problems to a minimum. |
| --- | --- |

1.1

In order for this own-initiative opinion to be viewed in the right context and properly interpreted, ‘industrial change’ has been defined as ‘the normal and continuous process of an industrial sector pro-actively responding to the dynamic movements in its business environment in order to remain competitive and create growth opportunities’ (2). ‘Restructuring’ refers to ‘a particular form of industrial change and regularly is [viewed as] an ad hoc process of (often enforced) adaptation to the conditions in the business environment in order to regain competitiveness, leading to discontinuities in business activities’ (3). The idea of ‘anticipating’ change provides the key to good management of such change, because it means that problems can be avoided in the restructuring process. Anticipating change involves studying and forecasting future terms of competition and market requirements, allowing the necessary adjustments to be planned in good time, thus keeping a firm's social and productivity problems to a minimum.

| 1.2 | Globalisation can be defined as efforts to step up and facilitate trade relations between countries, to which end trade barriers between countries are dismantled, import taxes cut back or abolished, and international groupings such as the EU and Mercosur are consolidated. As part of this process, governments in every country offer incentives to attract foreign firms to establish operations within their borders and facilitate the internationalisation of all aspects of their trade. Globalisation also calls for common, basic rules to be established and respected world-wide. |
| --- | --- |

1.2

Globalisation can be defined as efforts to step up and facilitate trade relations between countries, to which end trade barriers between countries are dismantled, import taxes cut back or abolished, and international groupings such as the EU and Mercosur are consolidated. As part of this process, governments in every country offer incentives to attract foreign firms to establish operations within their borders and facilitate the internationalisation of all aspects of their trade. Globalisation also calls for common, basic rules to be established and respected world-wide.

| 1.3 | Economic, social and territorial cohesion policy aims to narrow current economic and social disparities between Member States and between regions, speed up growth and encourage more sustainable development, helping less-favoured regions adapt to the challenges of a knowledge-based economy, thus assisting all regions to achieve the objectives of the Lisbon strategy.
  More specifically, this policy has to target infrastructures, the environment, entrepreneurship, per capita income, access to employment and social security, steps to counter social exclusion, access to new information technologies, education and lifelong learning, better administration and a stronger role for economic and social operators. |
| --- | --- |

1.3

Economic, social and territorial cohesion policy aims to narrow current economic and social disparities between Member States and between regions, speed up growth and encourage more sustainable development, helping less-favoured regions adapt to the challenges of a knowledge-based economy, thus assisting all regions to achieve the objectives of the Lisbon strategy.

More specifically, this policy has to target infrastructures, the environment, entrepreneurship, per capita income, access to employment and social security, steps to counter social exclusion, access to new information technologies, education and lifelong learning, better administration and a stronger role for economic and social operators.

| 1.4 | One good definition of ‘cluster’, as defined by Michael Porter (Professor at the Harvard Business School) in his book on ‘The Competitive Advantage of Nations’, is ‘a geographically proximate group of interconnected companies and associated institutions (universities, public agencies or trade associations) in a particular field, linked by competition and cooperation’. |
| --- | --- |

1.4

One good definition of ‘cluster’, as defined by Michael Porter (Professor at the Harvard Business School) in his book on ‘The Competitive Advantage of Nations’, is ‘a geographically proximate group of interconnected companies and associated institutions (universities, public agencies or trade associations) in a particular field, linked by competition and cooperation’.

2.   The impact of globalisation and the inevitability of industrial change

| 2.1 | Throughout European society, there is acceptance of the fact that industrial change is inevitable as a result of globalisation and lasting changes to the world economy; these are hallmarked by rapid, far-reaching developments in the markets and in behaviour, growing technical complexity and considerable consumer involvement in the design and production of goods, products and service delivery. |
| --- | --- |

2.1

Throughout European society, there is acceptance of the fact that industrial change is inevitable as a result of globalisation and lasting changes to the world economy; these are hallmarked by rapid, far-reaching developments in the markets and in behaviour, growing technical complexity and considerable consumer involvement in the design and production of goods, products and service delivery.

| 2.2 | Globalisation is the driving force behind world-wide labour market and productivity competition. Multinational companies are redirecting investment to countries with low-cost labour, direct market access and technological skills. |
| --- | --- |

2.2

Globalisation is the driving force behind world-wide labour market and productivity competition. Multinational companies are redirecting investment to countries with low-cost labour, direct market access and technological skills.

| 2.3 | Increased competition, an ageing population, and new consumer requirements and standards all come together to create an environment where there are, and will continue to be, major tensions and problems. |
| --- | --- |

2.3

Increased competition, an ageing population, and new consumer requirements and standards all come together to create an environment where there are, and will continue to be, major tensions and problems.

| 2.4 | The European Union must face up to these tensions and problems with determination using measures which anticipate de-industrialisation in Europe, i.e. taking steps to prevent the following three problems from occurring at the same time:






  — | the relocation of firms (4); |
| --- | --- | --- |

2.4

The European Union must face up to these tensions and problems with determination using measures which anticipate de-industrialisation in Europe, i.e. taking steps to prevent the following three problems from occurring at the same time:

—

the relocation of firms (4);

| — | a fall in employment and production; and |
| --- | --- |

—

a fall in employment and production; and

| — | a worsening trade balance. |
| --- | --- |

—

a worsening trade balance.

These three things are not yet occurring at the same time, but it is clear that there is a genuine deterioration in the employment and trade balance situation.

| 2.5 | The EU will only be able to mount a successful response to these challenges if industrial policy is revamped in such a way as to make it more pro-active and provide comprehensive, systematic transparency regarding the particular, cumulative effects of any decision affecting the European industry's cost and efficiency structures – in terms of both horizontal aspects and specific industrial sectors, such as the steel and textile industries, all the while bearing in mind the impact of enlargement. |
| --- | --- |

2.5

The EU will only be able to mount a successful response to these challenges if industrial policy is revamped in such a way as to make it more pro-active and provide comprehensive, systematic transparency regarding the particular, cumulative effects of any decision affecting the European industry's cost and efficiency structures – in terms of both horizontal aspects and specific industrial sectors, such as the steel and textile industries, all the while bearing in mind the impact of enlargement.

3.   Regional development as a factor regulating globalisation: clusters

| 3.1 | It is a paradox of our times that inequalities persist in an era when scientific and technical progress is such that everyone's hunger should be able to be satisfied and yet at the same time, there is a serious risk that the ‘new global economy’, because it is rooted in deregulated competition, may exacerbate these asymmetries.
  It is against this background that regional development is to be seen as a vital instrument for regulating globalisation itself, paying more attention to people's needs, irrespective of where they are located, giving them easier access to goods, services and opportunities. |
| --- | --- |

3.1

It is a paradox of our times that inequalities persist in an era when scientific and technical progress is such that everyone's hunger should be able to be satisfied and yet at the same time, there is a serious risk that the ‘new global economy’, because it is rooted in deregulated competition, may exacerbate these asymmetries.

It is against this background that regional development is to be seen as a vital instrument for regulating globalisation itself, paying more attention to people's needs, irrespective of where they are located, giving them easier access to goods, services and opportunities.

| 3.2 | Development has to come to the people, wherever they might be; it cannot be blithely assumed that the mobility available to some for boosting personal development is available to everyone, apart from anything else because those lacking most in means are also those who are least able to move around.
  Regions must mark out their ambitions regarding industrial change and restructuring, pinpoint the investments which need to be made and define the cooperation necessary between the public and private sectors, and more particularly infrastructure for education and vocational training. |
| --- | --- |

3.2

Development has to come to the people, wherever they might be; it cannot be blithely assumed that the mobility available to some for boosting personal development is available to everyone, apart from anything else because those lacking most in means are also those who are least able to move around.

Regions must mark out their ambitions regarding industrial change and restructuring, pinpoint the investments which need to be made and define the cooperation necessary between the public and private sectors, and more particularly infrastructure for education and vocational training.

| 3.3 | The EESC deems the creation of regional ‘clusters’ to be the most effective way of attracting firms and encouraging them to stay; this is a key component of regional competitiveness and at the same time a driving force for economic, social and territorial cohesion, as well as a means to avoid the negative economic, social and territorial repercussions which might be triggered by industrial change and restructuring.
  The following factors are likely to ensure that the ‘cluster’ system makes it easier for firms to stay in an area and keep skills in a region:






  — | stronger and better cooperation between firms; |
| --- | --- | --- |

3.3

The EESC deems the creation of regional ‘clusters’ to be the most effective way of attracting firms and encouraging them to stay; this is a key component of regional competitiveness and at the same time a driving force for economic, social and territorial cohesion, as well as a means to avoid the negative economic, social and territorial repercussions which might be triggered by industrial change and restructuring.

The following factors are likely to ensure that the ‘cluster’ system makes it easier for firms to stay in an area and keep skills in a region:

—

stronger and better cooperation between firms;

| — | opportunities for improving technological skills linked to the presence of R&D institutes associated with the ‘cluster’ process (e.g. the car industry ‘cluster’); |
| --- | --- |

—

opportunities for improving technological skills linked to the presence of R&D institutes associated with the ‘cluster’ process (e.g. the car industry ‘cluster’);

| — | networking of clients, sub-contractors and suppliers, which fosters the establishment and development of closer ties between socio-economic operators, particularly between regions; |
| --- | --- |

—

networking of clients, sub-contractors and suppliers, which fosters the establishment and development of closer ties between socio-economic operators, particularly between regions;

| — | involvement of firms in trans-national networks giving access to new markets; and |
| --- | --- |

—

involvement of firms in trans-national networks giving access to new markets; and

| — | development of workers' mobility experience within ‘clusters’. |
| --- | --- |

—

development of workers' mobility experience within ‘clusters’.

| 3.4 | Since firms in the present economic climate compete on a global basis, they gravitate towards ‘clusters’ relating to their area of business, and may gain competitive advantages from doing so. These advantages are rooted in generic factors such as: the qualifications and skills of the working population, the quality of governance, territorial infrastructure, local and regional innovation and development levels and generally the quality of life in the region (which might require, for example, public intervention to clean up derelict industrial areas). Regional ‘clusters’ may be key factors in boosting economic, social and territorial cohesion and provide a reason for firms to move to developing regions, as long as the EU and national governments carry out and fund programmes to provide back-up for the establishment of technology firms, promote development, innovation and vocational training and foster partnership between firms, universities, local authorities, social partners and civil society. |
| --- | --- |

3.4

Since firms in the present economic climate compete on a global basis, they gravitate towards ‘clusters’ relating to their area of business, and may gain competitive advantages from doing so. These advantages are rooted in generic factors such as: the qualifications and skills of the working population, the quality of governance, territorial infrastructure, local and regional innovation and development levels and generally the quality of life in the region (which might require, for example, public intervention to clean up derelict industrial areas). Regional ‘clusters’ may be key factors in boosting economic, social and territorial cohesion and provide a reason for firms to move to developing regions, as long as the EU and national governments carry out and fund programmes to provide back-up for the establishment of technology firms, promote development, innovation and vocational training and foster partnership between firms, universities, local authorities, social partners and civil society.

| 3.5 | Metropolitan areas, as centres of culture and a variety of activities where public and private operators work together to seek solutions for change and modern developments, have a key role to play in successfully creating ‘clusters’, since these areas ‘are in the front line of technological change, affecting transport, construction and public works, information and communication technologies, infrastructure management, etc. This technological change is also at the root of industrial restructuring and the relocation of workforce activities and services with high added value. Economic specialisation also has a spatial manifestation: ‘clusters’ or groups of business working as part of a network with research and innovation centres and universities’ (5).
  The major challenge for metropolitan areas also relates to social cohesion problems such as exclusion and poverty, the solution to which clearly involves the harmonious, balanced and sustained development of the major metropolitan areas in Europe, including links to neighbouring areas. Nevertheless, the lack of consistent data makes it difficult to find suitable solutions. |
| --- | --- |

3.5

Metropolitan areas, as centres of culture and a variety of activities where public and private operators work together to seek solutions for change and modern developments, have a key role to play in successfully creating ‘clusters’, since these areas ‘are in the front line of technological change, affecting transport, construction and public works, information and communication technologies, infrastructure management, etc. This technological change is also at the root of industrial restructuring and the relocation of workforce activities and services with high added value. Economic specialisation also has a spatial manifestation: ‘clusters’ or groups of business working as part of a network with research and innovation centres and universities’ (5).

The major challenge for metropolitan areas also relates to social cohesion problems such as exclusion and poverty, the solution to which clearly involves the harmonious, balanced and sustained development of the major metropolitan areas in Europe, including links to neighbouring areas. Nevertheless, the lack of consistent data makes it difficult to find suitable solutions.

4.   The effects of industrial change and restructuring

The process of industrial change and restructuring entails repercussions of varying degrees in a variety of aspects as well as challenges at sectoral and regional level.

4.1   Social aspects

All economic operators acknowledge that restructuring and consolidation is a prerequisite for businesses to survive and improve their competitiveness.

Restructuring is a social problem when there are neither suitable employment alternatives available in the region concerned nor possibilities for mobility.

Moreover, firms should act in a genuinely socially responsible fashion, involving workers' representative bodies and also local and regional authorities early on in their approach to restructuring.

Industrial competitiveness must be achieved through social dialogue.

4.2   The challenges facing businesses

The major challenge facing businesses is to find a proper response to change, taking account of the need to improve competitiveness in a complex environment and particular social and institutional situation.

The repercussion for subcontracting SMEs of industrial change set in motion by big companies cannot be ignored. There should be a cooperation network allowing SMEs to make the necessary adjustments.

4.3   Impact on accession countries, in particular the impact on employment

Specific development and employment support policies must be devised to ensure that change management and industrial restructuring in the enlargement countries is seen as a major opportunity to be grasped for managing economic growth, improving quality of life and protecting the environment.

Foreign direct investment (FDI) comes chiefly from EU countries (more than 60 % in 1998) and is mainly channelled to the Czech Republic, Hungary and Poland. These three countries accounted for around 75 % of inward investment in the enlargement countries at the end of 2001. The case of Košice (Slovak Republic) provides one example of success in the steel sector, where FDI enabled the modernisation of local plants without any job losses, through agreements between local authorities, workforce mobility, incentives, innovation and competition. The impact of multinational strategies on employment depends on the type of investment involved.

THE IMPACT ON THE EMPLOYMENT: THREE POSSIBLE SCENARIOS

| Multinational Strategy | Employment impact |
| --- | --- |
| FDI originating country | FDI beneficiary country |
| (1) | Web extension: very local and not very exportable products or services – Energy – Transports – Banks – Trade – Food Industry - Tourism |

Multinational Strategy

Employment impact

FDI originating country

FDI beneficiary country

(1)

Web extension: very local and not very exportable products or services – Energy – Transports – Banks – Trade – Food Industry - Tourism

Low or non-existent in the short term. In the medium to long term: reorganisation of back office functions.

More or less sizeable depending on the purchase of existing activities (with or without productivity gains) or creation ex-nihilo.

| (2) | Horizontal capacity extension: re-exportable products or services - Cars - Chemicals - Iron and Steel |
| --- | --- |

(2)

Horizontal capacity extension: re-exportable products or services - Cars - Chemicals - Iron and Steel

Immediate indirect impact (no capacities created) and possible substitutional effects in medium term, cf: Seat/Škoda

Major restructuring in the event of restarting previous activities.

Job creation if ‘Greenfield’ enterprises.

| (3) | Relocation to bring down costs: highly re-exportable products or services – Textile – Foundry - Car Components– large scale Electronics - Computer Services with low or medium added value |
| --- | --- |

(3)

Relocation to bring down costs: highly re-exportable products or services – Textile – Foundry - Car Components– large scale Electronics - Computer Services with low or medium added value

Major short or medium-term impact (length of substitution varies time in line with activities)

Major restructuring in the event of restarting previous activities.

Job creation if ‘Greenfield’ enterprises.

Risks in medium to long-term: relocation.

| (1) & (2): | These two scenarios cover a horizontal investment strategy adopted by multinationals. In the first scenario multinationals mainly seek to move into new markets and extend their services network, such as banking services and transport and energy networks. In the second, multinationals try to expand their production capacities for services or products which are easily re-exportable. |
| --- | --- |

(1) & (2):

These two scenarios cover a horizontal investment strategy adopted by multinationals. In the first scenario multinationals mainly seek to move into new markets and extend their services network, such as banking services and transport and energy networks. In the second, multinationals try to expand their production capacities for services or products which are easily re-exportable.

| (3): | This scenario covers a vertical delocalisation strategy which has a greater employment impact.
  This scenario covers firms whose activities are essentially labour intensive (for example, textile and car electronics). |
| --- | --- |

(3):

This scenario covers a vertical delocalisation strategy which has a greater employment impact.

This scenario covers firms whose activities are essentially labour intensive (for example, textile and car electronics).

4.4   Regional and local effects

| 4.4.1 | In the event of industrial restructuring or a firm's relocation elsewhere, infrastructure, equipment and human resources assets must be assessed and measures taken to attract new businesses into the area. In some cases, it is vital to clean up the soil and sub-soil when a firm leaves a region so that the area can be put to another use.
  Investors receiving public funding must bear more responsibility locally and this must be monitored.
  Cooperation agreements between all parties is necessary to breathe new life into regions badly hit by industrial change. |
| --- | --- |

4.4.1

In the event of industrial restructuring or a firm's relocation elsewhere, infrastructure, equipment and human resources assets must be assessed and measures taken to attract new businesses into the area. In some cases, it is vital to clean up the soil and sub-soil when a firm leaves a region so that the area can be put to another use.

Investors receiving public funding must bear more responsibility locally and this must be monitored.

Cooperation agreements between all parties is necessary to breathe new life into regions badly hit by industrial change.

4.5   Impact on human resources

All parties must be committed in their approach to ensuring that less qualified workers have access to training. This is one condition for ensuring that local businesses remain viable.

In managing workers' skills, firms should consider entering into agreements and adopting joint approaches with employees as regards requirements for training, skills and qualifications.

4.6   Impact on the European Social Model

It is a fundamental for the sustainability of the European Social Model to reach a high level of economic, social, environmental and territorial cohesion.

Industrial restructuring within the European Social Model will be successful if everyone involved benefits from it.

4.7   Aspects of interaction between industrial and services sectors

| 4.7.1 | Since the 1970s, economic growth has been hallmarked by the services sector becoming predominant over the manufacturing industrial sector. Nevertheless, it is vital that there be a certain interdependence and interaction between the two sectors in order to increase productivity, boost innovation and improve the quality of products and services.
  As far as industrial restructuring and change is concerned, this interaction is crucial, since firms providing services (such as R&D) for industrial firms generally follow the latter if they relocate. |
| --- | --- |

4.7.1

Since the 1970s, economic growth has been hallmarked by the services sector becoming predominant over the manufacturing industrial sector. Nevertheless, it is vital that there be a certain interdependence and interaction between the two sectors in order to increase productivity, boost innovation and improve the quality of products and services.

As far as industrial restructuring and change is concerned, this interaction is crucial, since firms providing services (such as R&D) for industrial firms generally follow the latter if they relocate.

5.   Corporate social responsibility and economic and social cohesion

| 5.1 | The EESC Opinion on Industrial change: current situation and prospects — An overall approach (6) states that Europe needs to apply ‘a new paradigm focused on ’industrial change with a human face‘ which is based on competitiveness, sustainable development and social and territorial cohesion.’ The Lisbon strategy objectives provide the backdrop to this statement; to this end, the EU has made a special appeal to firms' sense of social responsibility, bearing in mind vocational training requirements and best practices for life in general, work organisation, equal opportunities, social inclusion and sustainable development. |
| --- | --- |

5.1

The EESC Opinion on Industrial change: current situation and prospects — An overall approach (6) states that Europe needs to apply ‘a new paradigm focused on ’industrial change with a human face‘ which is based on competitiveness, sustainable development and social and territorial cohesion.’ The Lisbon strategy objectives provide the backdrop to this statement; to this end, the EU has made a special appeal to firms' sense of social responsibility, bearing in mind vocational training requirements and best practices for life in general, work organisation, equal opportunities, social inclusion and sustainable development.

| 5.2 | It is generally acknowledged that corporate social responsibility, based on an ethical approach, can be applied in two key spheres:






  — | working conditions and employment; and |
| --- | --- | --- |

5.2

It is generally acknowledged that corporate social responsibility, based on an ethical approach, can be applied in two key spheres:

—

working conditions and employment; and

| — | living conditions in the area where the businesses concerned are operating, i.e. a business's involvement in boosting the local economy and promoting acceptable environmental practices in the local community. |
| --- | --- |

—

living conditions in the area where the businesses concerned are operating, i.e. a business's involvement in boosting the local economy and promoting acceptable environmental practices in the local community.

Firms are generally asked to involve the social partners, local authorities, consumers and suppliers, each at their own level of responsibility.

| 5.3 | This exercise in corporate social responsibility (in relation to the above-mentioned aspects) may be valuable as a tool for helping achieve economic, social and territorial cohesion, if a proactive, preventive approach is adopted to managing change and restructuring; this will benefit all the parties involved. |
| --- | --- |

5.3

This exercise in corporate social responsibility (in relation to the above-mentioned aspects) may be valuable as a tool for helping achieve economic, social and territorial cohesion, if a proactive, preventive approach is adopted to managing change and restructuring; this will benefit all the parties involved.

6.   ‘Good practices’ in restructuring, in terms of social and local responsibility

| 6.1 | The European Social Fund is encouraging and supporting ‘good practice’ as regards ways to manage industrial change. The European Monitoring Centre on Change (EMCC), at the Dublin-based European Foundation for the Improvement of Living and Working Conditions, regularly reflects such good practice in its moves to promote local and regional corporate social responsibility. Moreover, the first phase of consultation launched by the Commission, entitled ‘Anticipating and managing change: a dynamic approach to the social aspects of corporate restructuring’, has also made it possible to pinpoint a series of good practices in this connection.
  Generally such good practice involves:






  — | the need to anticipate employment problems entailed in possible restructuring and deal with these upstream of the process; |
| --- | --- | --- |

6.1

The European Social Fund is encouraging and supporting ‘good practice’ as regards ways to manage industrial change. The European Monitoring Centre on Change (EMCC), at the Dublin-based European Foundation for the Improvement of Living and Working Conditions, regularly reflects such good practice in its moves to promote local and regional corporate social responsibility. Moreover, the first phase of consultation launched by the Commission, entitled ‘Anticipating and managing change: a dynamic approach to the social aspects of corporate restructuring’, has also made it possible to pinpoint a series of good practices in this connection.

Generally such good practice involves:

—

the need to anticipate employment problems entailed in possible restructuring and deal with these upstream of the process;

| — | the need to study the direct and indirect impact on the region concerned; |
| --- | --- |

—

the need to study the direct and indirect impact on the region concerned;

| — | action by, and the mobilisation of, operators in the field (firms, trade unions, regional and local public authorities, associations and civil society, etc); |
| --- | --- |

—

action by, and the mobilisation of, operators in the field (firms, trade unions, regional and local public authorities, associations and civil society, etc);

| — | the promotion of collective bargaining and the requirement for ‘social dialogue’ between firms, worker representatives, and local and regional authorities — these are vital in the search for solutions and alternatives to firms' strategic relocation decisions; |
| --- | --- |

—

the promotion of collective bargaining and the requirement for ‘social dialogue’ between firms, worker representatives, and local and regional authorities — these are vital in the search for solutions and alternatives to firms' strategic relocation decisions;

| — | social support measures accompanying change (retraining, training, skills promotion amongst workers, careers guidance and steps to renew employment bases, development of the industrial fabric; workers setting up businesses, etc.); |
| --- | --- |

—

social support measures accompanying change (retraining, training, skills promotion amongst workers, careers guidance and steps to renew employment bases, development of the industrial fabric; workers setting up businesses, etc.);

| — | commitments by firms to do business with workers who have had to leave because of activity outsourcing and who now provide services as sub-contractors; |
| --- | --- |

—

commitments by firms to do business with workers who have had to leave because of activity outsourcing and who now provide services as sub-contractors;

| — | the emergence of innovative solutions by developing an entrepreneurial spirit; and |
| --- | --- |

—

the emergence of innovative solutions by developing an entrepreneurial spirit; and

| — | timely information for the whole network of subcontracting SMEs, public services and authorities, universities and business associations on locally based multinationals' restructuring plans; this is more difficult to implement when multinational firms are involved which have a decision-making centre located outside the region, country or even Europe. |
| --- | --- |

—

timely information for the whole network of subcontracting SMEs, public services and authorities, universities and business associations on locally based multinationals' restructuring plans; this is more difficult to implement when multinational firms are involved which have a decision-making centre located outside the region, country or even Europe.

| 6.2 | Negotiation and social dialogue are crucial if restructuring is to be implemented in a socially responsible manner; it is therefore very important that both firms and trade unions are positive in their approach to seeking successful restructuring formulas which are good for firms, workers and local communities. The Commission gave a boost to these good practices in directives 98/59/EC, 2001/23/EC, 94/45/EC, and 2002/12/EC, which lay down certain guidelines and requirements. The 2002 European-level initiative advocating ‘socially responsible’ restructuring is to be noted here, on the basis of which a series of guidelines were issued in June 2003. Every alternative to laying off workers should be explored. |
| --- | --- |

6.2

Negotiation and social dialogue are crucial if restructuring is to be implemented in a socially responsible manner; it is therefore very important that both firms and trade unions are positive in their approach to seeking successful restructuring formulas which are good for firms, workers and local communities. The Commission gave a boost to these good practices in directives 98/59/EC, 2001/23/EC, 94/45/EC, and 2002/12/EC, which lay down certain guidelines and requirements. The 2002 European-level initiative advocating ‘socially responsible’ restructuring is to be noted here, on the basis of which a series of guidelines were issued in June 2003. Every alternative to laying off workers should be explored.

| 6.3 | There are many positive instances good practice in this field, of European firms adopting socially responsible practices as part of industrial change and restructuring strategies. One such case — among many — is the Arcelor steel group, the result of a merger between Arbed, Aceralia and Usinor; it decided — against a backdrop of structural overcapacity in steel flat production and with a view to improving synergies — progressively to close the Liège steelworks and scale down production in Bremen and Eisenhüttenstadt. In the light of the job losses these measures would entail, Arcelor undertook to assist all those concerned, rehabilitate all the sites affected and contribute to the reindustrialisation of the local economic fabric, with the help of all the parties involved.
  On the other hand, an example of what happens when such good practices are not adopted can be seen in the restructuring process in the car industry in Mezzogiorno (Italy), where the company involved was planning to transfer part of its sub-contracting business abroad without envisaging or organising any adequate back-up measures or solutions to the problems thus created. |
| --- | --- |

6.3

There are many positive instances good practice in this field, of European firms adopting socially responsible practices as part of industrial change and restructuring strategies. One such case — among many — is the Arcelor steel group, the result of a merger between Arbed, Aceralia and Usinor; it decided — against a backdrop of structural overcapacity in steel flat production and with a view to improving synergies — progressively to close the Liège steelworks and scale down production in Bremen and Eisenhüttenstadt. In the light of the job losses these measures would entail, Arcelor undertook to assist all those concerned, rehabilitate all the sites affected and contribute to the reindustrialisation of the local economic fabric, with the help of all the parties involved.

On the other hand, an example of what happens when such good practices are not adopted can be seen in the restructuring process in the car industry in Mezzogiorno (Italy), where the company involved was planning to transfer part of its sub-contracting business abroad without envisaging or organising any adequate back-up measures or solutions to the problems thus created.

| 6.4 | The industrial change needed for firms to remain competitive should be backed up by the authorities; this should include funding for education and training for the work-force, and against this background, steps should be taken to promote new technologies. Moreover, it is necessary to work towards increased corporate social responsibility, the social benefits of creating more and better jobs and environmental sustainability in regions where these businesses are located. |
| --- | --- |

6.4

The industrial change needed for firms to remain competitive should be backed up by the authorities; this should include funding for education and training for the work-force, and against this background, steps should be taken to promote new technologies. Moreover, it is necessary to work towards increased corporate social responsibility, the social benefits of creating more and better jobs and environmental sustainability in regions where these businesses are located.

7.   Industrial change and economic, social and territorial cohesion as instruments of sustainable development

| 7.1 | The aim of sustainable development is central to the EU. The main trans-European projects such as transport networks and other infrastructures in the pipeline at EU level are not enough to promote sustainable development or to launch development in general in the least favoured regions. Persistent disparities between countries and regions in production, productivity and access to employment are rooted in shortcomings in key areas of competitiveness, namely human and physical capital, environmental aspects, innovation capacity and regional governance. |
| --- | --- |

7.1

The aim of sustainable development is central to the EU. The main trans-European projects such as transport networks and other infrastructures in the pipeline at EU level are not enough to promote sustainable development or to launch development in general in the least favoured regions. Persistent disparities between countries and regions in production, productivity and access to employment are rooted in shortcomings in key areas of competitiveness, namely human and physical capital, environmental aspects, innovation capacity and regional governance.

| 7.2 | Opportunities created by industrial change — due to its impact on the economic fabric, social and scientific issues and civil society and local authority involvement, through the combined use of social cohesion instruments and policies and Community structural policies — may significantly assist the process of sustainable, balanced development. Change does in fact require certain adjustment, research, innovation and new attitudes, both on the part of businessmen and the social partners and civil society acting in partnership. Here the aim is to help regions maintain and improve their economic and social structures in a balanced fashion. |
| --- | --- |

7.2

Opportunities created by industrial change — due to its impact on the economic fabric, social and scientific issues and civil society and local authority involvement, through the combined use of social cohesion instruments and policies and Community structural policies — may significantly assist the process of sustainable, balanced development. Change does in fact require certain adjustment, research, innovation and new attitudes, both on the part of businessmen and the social partners and civil society acting in partnership. Here the aim is to help regions maintain and improve their economic and social structures in a balanced fashion.

8.   The proposals for reform set out in the Third Report on Economic and Social Cohesion

| 8.1 | The Commission is proposing a new design for EU economic, social and territorial cohesion policy, built up around three priorities: |
| --- | --- |

8.1

The Commission is proposing a new design for EU economic, social and territorial cohesion policy, built up around three priorities:

Convergence

The aim is to foster growth and job creation in the Member States and less-developed regions.

Regional competitiveness and employment: anticipating and fostering change

This priority is welcomed by the EESC in relation to the topic of this opinion, because it links industrial change with cohesion policy, through national and regional programmes which are specifically geared to certain related effects, prevention, anticipation and adjustment to economic developments. All this ties in with the political priorities of the European strategy for employment and for the promotion of labour quality and productivity, together with social inclusion.

European regional cooperation

The aim here is to encourage smooth, balanced harmonisation throughout the European Union by means of measures which foster cross-border and transnational cooperation.

9.   Comments on the Third Cohesion Report's proposals on industrial change and restructuring

| 9.1 | The EESC welcomes the fact that the Third Report on Economic and Social Cohesion, published on 17 February, has specifically and objectively tackled the subject of industrial and economic change in general. |
| --- | --- |

9.1

The EESC welcomes the fact that the Third Report on Economic and Social Cohesion, published on 17 February, has specifically and objectively tackled the subject of industrial and economic change in general.

| 9.2 | In particular, it fully endorses the principles underlying the strategies of the Third Cohesion Report, and the link between the Lisbon Strategy and the future regional policy with regard to knowledge-oriented programmes and national and regional programmes, with a view to driving forward the economic development of the more disadvantaged regions. It nevertheless deems these measures to be inadequate and would raise a number of concerns regarding the following points:






  — | the lack of quantified objectives for implementing the cohesion measures, either at Member State or regional level, indicating a slackening of the requirements for achieving these objectives from the outset; |
| --- | --- | --- |

9.2

In particular, it fully endorses the principles underlying the strategies of the Third Cohesion Report, and the link between the Lisbon Strategy and the future regional policy with regard to knowledge-oriented programmes and national and regional programmes, with a view to driving forward the economic development of the more disadvantaged regions. It nevertheless deems these measures to be inadequate and would raise a number of concerns regarding the following points:

—

the lack of quantified objectives for implementing the cohesion measures, either at Member State or regional level, indicating a slackening of the requirements for achieving these objectives from the outset;

| — | the absence of guarantees that, during the upcoming 2007-2013 programme, there will be greater cohesion between regions and not just between Member States as was the case with the previous 1994-1999 and 2000-2006 programmes; if this does not change, it will indicate poor policy implementation and a failure on the part of the EU to implement its economic, social and territorial cohesion policy to assist the less developed regions; |
| --- | --- |

—

the absence of guarantees that, during the upcoming 2007-2013 programme, there will be greater cohesion between regions and not just between Member States as was the case with the previous 1994-1999 and 2000-2006 programmes; if this does not change, it will indicate poor policy implementation and a failure on the part of the EU to implement its economic, social and territorial cohesion policy to assist the less developed regions;

| — | the lack of a specific monitoring process to ensure that the necessary financial resources are earmarked for the development of the less favoured regions, bearing in mind that, as in the past, the more favoured regions may benefit more than the less favoured ones because they have better production infrastructures and service provision; |
| --- | --- |

—

the lack of a specific monitoring process to ensure that the necessary financial resources are earmarked for the development of the less favoured regions, bearing in mind that, as in the past, the more favoured regions may benefit more than the less favoured ones because they have better production infrastructures and service provision;

| — | the absence of proposals for incentives to encourage businesses to pursue a policy of social responsibility with a positive impact on economic, social and territorial cohesion; |
| --- | --- |

—

the absence of proposals for incentives to encourage businesses to pursue a policy of social responsibility with a positive impact on economic, social and territorial cohesion;

| — | the lack of an effective method for coordinating the outcome of cohesion policies, entailing penalties for Member States which do not achieve the cohesion policy objectives; |
| --- | --- |

—

the lack of an effective method for coordinating the outcome of cohesion policies, entailing penalties for Member States which do not achieve the cohesion policy objectives;

| — | the fact that industrial change has not been recognised as a factor which may generate and fuel regional imbalances because of the possibility that businesses might relocate, causing huge upsets at various levels; indeed, the regions concerned run the risk that their cohesion position, which may have been strong, might be adversely affected, jeopardising their medium and long-term capacity to recover; the report does not make any specific proposals as to how to prevent this from occurring. |
| --- | --- |

—

the fact that industrial change has not been recognised as a factor which may generate and fuel regional imbalances because of the possibility that businesses might relocate, causing huge upsets at various levels; indeed, the regions concerned run the risk that their cohesion position, which may have been strong, might be adversely affected, jeopardising their medium and long-term capacity to recover; the report does not make any specific proposals as to how to prevent this from occurring.

10.   Conclusions and recommendations

| 10.1 | The EESC considers that the proposals for cohesion policy reform presented by the Commission are inadequate, and that the opportunity to manage change has not been fully grasped; such change is not only unavoidable, but it is also a crucial element for securing a dynamic economy and a lever for attaining sustainable development. All this is because not enough steps have been taken to obtain maximum benefit from the situation and to combine the opportunities created by the Lisbon strategy, its positive approach to change, competitiveness and cohesion, the Social Policy Agenda — a key objective of which is to pinpoint and anticipate the management of change — and the European employment strategy, in particular its focus on adaptability. |
| --- | --- |

10.1

The EESC considers that the proposals for cohesion policy reform presented by the Commission are inadequate, and that the opportunity to manage change has not been fully grasped; such change is not only unavoidable, but it is also a crucial element for securing a dynamic economy and a lever for attaining sustainable development. All this is because not enough steps have been taken to obtain maximum benefit from the situation and to combine the opportunities created by the Lisbon strategy, its positive approach to change, competitiveness and cohesion, the Social Policy Agenda — a key objective of which is to pinpoint and anticipate the management of change — and the European employment strategy, in particular its focus on adaptability.

| 10.2 | The EESC feels that it is necessary to strike a balance between economic and social aspects and to manage industrial change with the two-fold aim of a) securing and promoting comprehensive social objectives (training, employment, opportunities and social protection) and b) ensuring the survival of businesses by means of specific support policies which guarantee restructuring and consolidation as a condition of their survival and increased competitiveness, through integrated, complementary actions involving the main operators, i.e. the state (at national, regional and local level) and the businesses concerned. |
| --- | --- |

10.2

The EESC feels that it is necessary to strike a balance between economic and social aspects and to manage industrial change with the two-fold aim of a) securing and promoting comprehensive social objectives (training, employment, opportunities and social protection) and b) ensuring the survival of businesses by means of specific support policies which guarantee restructuring and consolidation as a condition of their survival and increased competitiveness, through integrated, complementary actions involving the main operators, i.e. the state (at national, regional and local level) and the businesses concerned.

| 10.3 | The EESC deems it vital to the success of economic, social and territorial cohesion policy that there be better coordination in implementing the EU's current development policies, involving: existing directives governing workers' participation in firms; social dialogue covering all the industrial sectors; regular consultation of the EESC's Consultative Commission on Industrial Change (CCIC); the European Monitoring Centre on Change (EMCC); structural fund deployment; competition policy; and steps to promote implementation of corporate social responsibility. To this end, it is crucial that all the parties concerned demonstrate compromise and commitment. |
| --- | --- |

10.3

The EESC deems it vital to the success of economic, social and territorial cohesion policy that there be better coordination in implementing the EU's current development policies, involving: existing directives governing workers' participation in firms; social dialogue covering all the industrial sectors; regular consultation of the EESC's Consultative Commission on Industrial Change (CCIC); the European Monitoring Centre on Change (EMCC); structural fund deployment; competition policy; and steps to promote implementation of corporate social responsibility. To this end, it is crucial that all the parties concerned demonstrate compromise and commitment.

| 10.4 | The EESC considers it necessary to draw up a series of principles for situations where restructuring is needed; these principles should provide a basis and back-up for good practice, involving the requirement that firms' competitiveness be boosted and other requirements pertaining to the consolidation of economic, social and territorial cohesion. |
| --- | --- |

10.4

The EESC considers it necessary to draw up a series of principles for situations where restructuring is needed; these principles should provide a basis and back-up for good practice, involving the requirement that firms' competitiveness be boosted and other requirements pertaining to the consolidation of economic, social and territorial cohesion.

| 10.5 | The EESC feels that the continued deterioration in Europe's competitiveness compared to that of the USA is due to the fact that there is no obligation on Member States to meet the deadlines for implementing the EU's basic strategies and instruments such as the Lisbon strategy, structural reforms and sustainable development.
  If this trend continues, the EU runs the risk that it will slip back from second to third place in terms of world power (Japan, China and India are waiting in the wings); this must be avoided. The EESC therefore concludes that the Commission has to impose stricter requirements and take on a more active role in coordinating and monitoring effective implementation of the aforementioned strategies. A key coordination measure might entail appointing a commissioner responsible for monitoring industrial change and relocation; this would allow a better link-up between industrial policy and environmental protection. |
| --- | --- |

10.5

The EESC feels that the continued deterioration in Europe's competitiveness compared to that of the USA is due to the fact that there is no obligation on Member States to meet the deadlines for implementing the EU's basic strategies and instruments such as the Lisbon strategy, structural reforms and sustainable development.

If this trend continues, the EU runs the risk that it will slip back from second to third place in terms of world power (Japan, China and India are waiting in the wings); this must be avoided. The EESC therefore concludes that the Commission has to impose stricter requirements and take on a more active role in coordinating and monitoring effective implementation of the aforementioned strategies. A key coordination measure might entail appointing a commissioner responsible for monitoring industrial change and relocation; this would allow a better link-up between industrial policy and environmental protection.

In this own-initiative opinion, the EESC recommends the following:

| a) | It is necessary to revisit the strategic vision for cohesion in view of the current challenges facing the EU, by devising a new, stronger concept of cohesion, which is not limited just to the financial aspects of the Structural and Cohesion Funds, but which bears in mind the following three-fold aim:






  — | to strengthen European economic cohesion; |
| --- | --- | --- |

a)

It is necessary to revisit the strategic vision for cohesion in view of the current challenges facing the EU, by devising a new, stronger concept of cohesion, which is not limited just to the financial aspects of the Structural and Cohesion Funds, but which bears in mind the following three-fold aim:

—

to strengthen European economic cohesion;

| — | to promote a ‘community spirit’ in Europe; and |
| --- | --- |

—

to promote a ‘community spirit’ in Europe; and

| — | to boost solidarity between the countries and regions of the EU. |
| --- | --- |

—

to boost solidarity between the countries and regions of the EU.

| b) | The absolute criterion of per capita GDP for determining eligibility should be altered, given that this is a source of injustice as regards implementation of the structural policies. As is well known, relative wealth is not only reflected in cold statistics such as per capita GDP. Workers' skill levels, infrastructure shortcomings, distance from the hub of the European economy and demographic structure — these are all factors relevant to a region's eligibility. |
| --- | --- |

b)

The absolute criterion of per capita GDP for determining eligibility should be altered, given that this is a source of injustice as regards implementation of the structural policies. As is well known, relative wealth is not only reflected in cold statistics such as per capita GDP. Workers' skill levels, infrastructure shortcomings, distance from the hub of the European economy and demographic structure — these are all factors relevant to a region's eligibility.

| c) | A new matrix of criteria for assessing the regions should be drawn up so as to produce a new map of European cohesion requirements. |
| --- | --- |

c)

A new matrix of criteria for assessing the regions should be drawn up so as to produce a new map of European cohesion requirements.

| d) | As far as territorial cohesion is concerned, the way that the Community's territory is managed should be revamped so as to allow multi-centred, harmonious, balanced and sustained development to take place. Such spatial planning should bear in mind inter-regional physical and economic cohesion, involving local, regional national and European authorities in the construction of a European territorial development model leading to new economic strategies (investment, R&D and social (employment) strategies). |
| --- | --- |

d)

As far as territorial cohesion is concerned, the way that the Community's territory is managed should be revamped so as to allow multi-centred, harmonious, balanced and sustained development to take place. Such spatial planning should bear in mind inter-regional physical and economic cohesion, involving local, regional national and European authorities in the construction of a European territorial development model leading to new economic strategies (investment, R&D and social (employment) strategies).

| e) | A more speedy approach has to be adopted to formulating structural policies for economic, social and territorial cohesion, as a way of anticipating economic change in general and industrial change in particular. The current ceiling on financial resources (1.2 %) — which might even be lowered in the 2007-2013 financial perspectives — is too low to cover needs and it limits the scope for action, which prevents the cohesion objectives being attained more quickly. |
| --- | --- |

e)

A more speedy approach has to be adopted to formulating structural policies for economic, social and territorial cohesion, as a way of anticipating economic change in general and industrial change in particular. The current ceiling on financial resources (1.2 %) — which might even be lowered in the 2007-2013 financial perspectives — is too low to cover needs and it limits the scope for action, which prevents the cohesion objectives being attained more quickly.

| f) | It is important to focus on human resources, channelling resources to vocational courses at school and colleges and vocational training per se, but adopting a flexible approach which can be adapted to the various problems facing Member States and regions. |
| --- | --- |

f)

It is important to focus on human resources, channelling resources to vocational courses at school and colleges and vocational training per se, but adopting a flexible approach which can be adapted to the various problems facing Member States and regions.

| g) | Special assistance must be provided to regions where the industrial production structures are undergoing dramatic restructuring, by pinpointing those sectors and regions where there is a high risk that competitiveness may be lost; specific proposals for support must be made, taking account of the particular features of each sector. Particular attention should be paid to the impact of industrial restructuring on the new Member States. |
| --- | --- |

g)

Special assistance must be provided to regions where the industrial production structures are undergoing dramatic restructuring, by pinpointing those sectors and regions where there is a high risk that competitiveness may be lost; specific proposals for support must be made, taking account of the particular features of each sector. Particular attention should be paid to the impact of industrial restructuring on the new Member States.

| h) | In this connection, a ‘most favoured region principle’ must be established, whereby it would be possible to provide specific financial support aimed at fostering regional conversion. Social dialogue has a key role to play here, as well as does civil dialogue, involving all the local protagonists (firms, universities, research centres, local authorities, associations, trade unions, etc.). It would thus be possible to breathe new life into the economic fabric of a region by creating new alternatives for economic activity. |
| --- | --- |

h)

In this connection, a ‘most favoured region principle’ must be established, whereby it would be possible to provide specific financial support aimed at fostering regional conversion. Social dialogue has a key role to play here, as well as does civil dialogue, involving all the local protagonists (firms, universities, research centres, local authorities, associations, trade unions, etc.). It would thus be possible to breathe new life into the economic fabric of a region by creating new alternatives for economic activity.

| i) | It is necessary to encourage the development of regional ‘clusters’ by fostering the expansion of information and communication technology sectors, creative industries, and industries with a strong technological base so that they boost regional potential and skills, promoting region's capacity to attract firms and encourage them to stay. This would help ensure that industrial change and restructuring generates stronger regional competitiveness, greater economic, social and territorial cohesion and more employment.
  It is vital that regional studies be carried out and that steps be taken together with national and regional governments to plan how to make full use of a region's potential in building up a ‘cluster’. |
| --- | --- |

i)

It is necessary to encourage the development of regional ‘clusters’ by fostering the expansion of information and communication technology sectors, creative industries, and industries with a strong technological base so that they boost regional potential and skills, promoting region's capacity to attract firms and encourage them to stay. This would help ensure that industrial change and restructuring generates stronger regional competitiveness, greater economic, social and territorial cohesion and more employment.

It is vital that regional studies be carried out and that steps be taken together with national and regional governments to plan how to make full use of a region's potential in building up a ‘cluster’.

| j) | Account should be taken of positive, previous experience with sectoral programmes such as Rechar, Resider and Retext in formulating policies for the industrial modernisation of regions in order to make full use of their potential for development. |
| --- | --- |

j)

Account should be taken of positive, previous experience with sectoral programmes such as Rechar, Resider and Retext in formulating policies for the industrial modernisation of regions in order to make full use of their potential for development.

| k) | The Commission must continue to modernise and revitalise industrial policy with a view to aligning its rules on the new world context. Here the EESC welcomes the recent proposal to revisit industrial policy, which was presented on 20 April 2004. (7) It is particularly important to ensure that industrial policy is coordinated with other Community policies, especially environmental policy. |
| --- | --- |

k)

The Commission must continue to modernise and revitalise industrial policy with a view to aligning its rules on the new world context. Here the EESC welcomes the recent proposal to revisit industrial policy, which was presented on 20 April 2004. (7) It is particularly important to ensure that industrial policy is coordinated with other Community policies, especially environmental policy.

| l) | Europe must comply strictly with, and enforce, the ILO rules; if nothing is done to put a stop to ‘social and tax dumping’ in other areas which do not apply market rules equally, it could slide into an economic crisis because of a lack of competitiveness on the part of European firms. |
| --- | --- |

l)

Europe must comply strictly with, and enforce, the ILO rules; if nothing is done to put a stop to ‘social and tax dumping’ in other areas which do not apply market rules equally, it could slide into an economic crisis because of a lack of competitiveness on the part of European firms.

| m) | Europe must operate on the world stage by displaying high levels of technical, technological and human skills, but to do so it has to revisit its policy for supporting research, and particularly human capital. Of the approximately 14,000 European researchers who leave to study in the USA, only around 3,000 intend to return to Europe. This is a most serious situation requiring immediate measures. One step in the right direction is the ‘Regions for Knowledge’ initiative (KnowREG) under which it was decided on 27 April 2004 to set up 14 pilot projects promoting the knowledge economy at local and regional level. |
| --- | --- |

m)

Europe must operate on the world stage by displaying high levels of technical, technological and human skills, but to do so it has to revisit its policy for supporting research, and particularly human capital. Of the approximately 14,000 European researchers who leave to study in the USA, only around 3,000 intend to return to Europe. This is a most serious situation requiring immediate measures. One step in the right direction is the ‘Regions for Knowledge’ initiative (KnowREG) under which it was decided on 27 April 2004 to set up 14 pilot projects promoting the knowledge economy at local and regional level.

| n) | The European Council must establish a clear link between the competitiveness and knowledge objectives on the one hand, and the future regional policy on the other. |
| --- | --- |

n)

The European Council must establish a clear link between the competitiveness and knowledge objectives on the one hand, and the future regional policy on the other.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  OJ C 10 of 14.1.2004, pp 105 et seq.

1

(2)  EESC own-initiative opinion on ‘The repercussions of trade policy on industrial change, with special reference to the steel sector’ (CESE 668/2004).

2

(3)  Ibidem.

3

(4)  In September 2004, the EESC will adopt an own-initiative opinion on ‘The scope and effects of company relocations’ (CCMI/014).

4

(5)  EESC own-initiative opinion on ‘European Metropolitan Areas: socio-economic implications for Europe's future’ (CESE 968/2004).

5

(6)  OJ C 10 of 14.1.2004, pp. 105 et seq.

6

(7)  Communication from the Commission: ‘Fostering structural change: an industrial policy for an enlarged Europe’ (COM(2004) 274).

7

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/49 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/49

---

Opinion of the European Economic and Social Committee on the ‘International Convention on Migrants’

(2004/C 302/12)

On 29 January 2004 the European Economic and Social Committee decided, under Article 29(2) of its Rules of Procedure, to draw up an opinion on the ‘International Convention on Migrants’.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 14 June 2004. The rapporteur was Mr Pariza Castaños.

At its 410th plenary session (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion by 162 votes to three with 11 abstentions.

1.   Introduction

| 1.1 | The convention was adopted by the General Assembly of the United Nations in its resolution No. 45/158 of 18 December 1990. It entered into force on 1 July 2003 following ratification by the first 20 states. Thus far, 25 states have ratified the convention (1). As such, it is a fully enforceable international treaty that must be upheld by the states' parties. |
| --- | --- |

1.1

The convention was adopted by the General Assembly of the United Nations in its resolution No. 45/158 of 18 December 1990. It entered into force on 1 July 2003 following ratification by the first 20 states. Thus far, 25 states have ratified the convention (1). As such, it is a fully enforceable international treaty that must be upheld by the states' parties.

| 1.2 | The aim of the convention is to protect the human rights and dignity of people across the globe who emigrate for economic or employment-related reasons by means of appropriate legislation and good national practice. The common basis for such international legislation on migratory policies should be the promotion of democracy and human rights. The Convention also safeguards the balance between the different situations in both countries of origin and host countries. |
| --- | --- |

1.2

The aim of the convention is to protect the human rights and dignity of people across the globe who emigrate for economic or employment-related reasons by means of appropriate legislation and good national practice. The common basis for such international legislation on migratory policies should be the promotion of democracy and human rights. The Convention also safeguards the balance between the different situations in both countries of origin and host countries.

| 1.3 | This convention is one of seven international United Nations treaties governing human rights. It recognises that certain basic human rights, as defined in the Universal Declaration of Human Rights, must be guaranteed internationally for all migrant workers and their families. It codifies in a comprehensive and universal manner the rights of migrant workers and their families on the basis of the principle of equality of treatment. It sets out those rights that must be granted to immigrants who are in a regular and an irregular situation, setting down minimum standards of protection in terms of civil, economic, political, social and employment rights and recognising that migrant workers must have fundamental rights that are safeguarded in international rules. |
| --- | --- |

1.3

This convention is one of seven international United Nations treaties governing human rights. It recognises that certain basic human rights, as defined in the Universal Declaration of Human Rights, must be guaranteed internationally for all migrant workers and their families. It codifies in a comprehensive and universal manner the rights of migrant workers and their families on the basis of the principle of equality of treatment. It sets out those rights that must be granted to immigrants who are in a regular and an irregular situation, setting down minimum standards of protection in terms of civil, economic, political, social and employment rights and recognising that migrant workers must have fundamental rights that are safeguarded in international rules.

| 1.4 | This convention further develops previous conventions of the ILO (2) by extending the legal framework to all immigration worldwide, promoting just treatment for immigrants and striving to prevent exploitation of irregular immigrants. It looks at the migration process as a whole from education, selection, departure, transit and residence in the country of employment to return to and re-establishment in the country of origin. |
| --- | --- |

1.4

This convention further develops previous conventions of the ILO (2) by extending the legal framework to all immigration worldwide, promoting just treatment for immigrants and striving to prevent exploitation of irregular immigrants. It looks at the migration process as a whole from education, selection, departure, transit and residence in the country of employment to return to and re-establishment in the country of origin.

| 1.5 | The individual states are responsible for managing migratory flows. The EESC supports the view of the Secretary-General of the United Nations and advocates better bilateral, regional and international cooperation between countries of origin and host countries. The convention neither promotes nor manages migratory flows, rather aims only to guarantee the universal recognition of basic human rights and reinforce the protection thereof worldwide. |
| --- | --- |

1.5

The individual states are responsible for managing migratory flows. The EESC supports the view of the Secretary-General of the United Nations and advocates better bilateral, regional and international cooperation between countries of origin and host countries. The convention neither promotes nor manages migratory flows, rather aims only to guarantee the universal recognition of basic human rights and reinforce the protection thereof worldwide.

| 1.6 | The convention considers the possible administrative situations of migrants in different ways: it guarantees for all individuals the protection of their basic human rights, applying further-reaching rights to legal immigrants. |
| --- | --- |

1.6

The convention considers the possible administrative situations of migrants in different ways: it guarantees for all individuals the protection of their basic human rights, applying further-reaching rights to legal immigrants.

| 1.7 | Through this convention, the international community and the United Nations have reasserted their desire to improve cooperation between states so as to prevent and indeed eradicate the trafficking and clandestine employment of immigrants who are in an irregular situation as well as to extend the protection of the basic human rights of immigrants to the entire world (3). |
| --- | --- |

1.7

Through this convention, the international community and the United Nations have reasserted their desire to improve cooperation between states so as to prevent and indeed eradicate the trafficking and clandestine employment of immigrants who are in an irregular situation as well as to extend the protection of the basic human rights of immigrants to the entire world (3).

2.   Immigrants' rights

| 2.1 | The convention aims to guarantee equal treatment and the same legal conditions for immigrant workers as for national workers. This implies:






  — | preventing inhuman living and working conditions, physical and sexual abuse and degrading treatment including slavery (Articles 10, 11, 25, 54); |
| --- | --- | --- |

2.1

The convention aims to guarantee equal treatment and the same legal conditions for immigrant workers as for national workers. This implies:

—

preventing inhuman living and working conditions, physical and sexual abuse and degrading treatment including slavery (Articles 10, 11, 25, 54);

| — | guaranteeing the rights of immigrants to freedom of thought, expression and religion (Articles 12, 13); |
| --- | --- |

—

guaranteeing the rights of immigrants to freedom of thought, expression and religion (Articles 12, 13);

| — | recognising the rights of immigrants to privacy and personal security (Articles 14, 15, 16); |
| --- | --- |

—

recognising the rights of immigrants to privacy and personal security (Articles 14, 15, 16);

| — | establishing access to effective legal assistance through fair legal proceedings that guarantee the right to equality before the law and the right to non-discrimination and during which appropriate legal procedures are applied to the immigrant workers and interpreting services are provided (Articles 18, 19, 20); |
| --- | --- |

—

establishing access to effective legal assistance through fair legal proceedings that guarantee the right to equality before the law and the right to non-discrimination and during which appropriate legal procedures are applied to the immigrant workers and interpreting services are provided (Articles 18, 19, 20);

| — | guaranteeing access for immigrants to information on their rights (Articles 33, 37); |
| --- | --- |

—

guaranteeing access for immigrants to information on their rights (Articles 33, 37);

| — | guaranteeing equal access to education and social services for all immigrants (Articles 27, 28, 30, 43 to 45, 54); |
| --- | --- |

—

guaranteeing equal access to education and social services for all immigrants (Articles 27, 28, 30, 43 to 45, 54);

| — | recognising the right of immigrants to join and participate in trade unions (Articles 26, 40). |
| --- | --- |

—

recognising the right of immigrants to join and participate in trade unions (Articles 26, 40).

| 2.2 | The convention also stipulates that immigrants must have the right to maintain ties with their country of origin. This implies:






  — | ensuring that immigrants are able to return to their country of origin should they wish and permitting them to make occasional visits and maintain cultural links (Articles 8, 31, 38); |
| --- | --- | --- |

2.2

The convention also stipulates that immigrants must have the right to maintain ties with their country of origin. This implies:

—

ensuring that immigrants are able to return to their country of origin should they wish and permitting them to make occasional visits and maintain cultural links (Articles 8, 31, 38);

| — | guaranteeing the political participation of immigrants in their country of origin (Articles 41, 42); |
| --- | --- |

—

guaranteeing the political participation of immigrants in their country of origin (Articles 41, 42);

| — | safeguarding the right of immigrants to transfer income to their country of origin (Articles 32, 46, 48). |
| --- | --- |

—

safeguarding the right of immigrants to transfer income to their country of origin (Articles 32, 46, 48).

| 2.3 | The convention is based on the fundamental principle of ensuring a minimum level of protection for all immigrants. It considers the two possible situations in which immigrant workers can find themselves (regular and irregular), setting out a series of further-reaching rights for legal immigrants and recognising some basic rights for irregular immigrants. |
| --- | --- |

2.3

The convention is based on the fundamental principle of ensuring a minimum level of protection for all immigrants. It considers the two possible situations in which immigrant workers can find themselves (regular and irregular), setting out a series of further-reaching rights for legal immigrants and recognising some basic rights for irregular immigrants.

| 2.4 | The convention proposes that initiatives be undertaken to eradicate illegal immigration, principally by eliminating the misleading information used to entice people into irregular immigration and by imposing sanctions on traffickers and employers of non-documented immigrants. |
| --- | --- |

2.4

The convention proposes that initiatives be undertaken to eradicate illegal immigration, principally by eliminating the misleading information used to entice people into irregular immigration and by imposing sanctions on traffickers and employers of non-documented immigrants.

| 2.5 | It establishes a Committee on the Protection of the Rights of All Migrant Workers and Members of their Families, consisting of ten experts to be appointed by the states parties and who will oversee the application of the convention. |
| --- | --- |

2.5

It establishes a Committee on the Protection of the Rights of All Migrant Workers and Members of their Families, consisting of ten experts to be appointed by the states parties and who will oversee the application of the convention.

3.   The countries of the west have still not ratified the convention

| 3.1 | International immigration is a consequence of the major economic and social inequality between the rich countries of the north and the developing countries. This inequality is deepening in the increasingly globalised economic system of today. And yet, the majority of those countries that have thus far ratified the convention are countries of origin of immigrants. The Member States of the European Union, the United States of America, Canada, Australia, Japan and the remaining countries of the western world, who play host to a great many immigrants (4), have as yet neither ratified nor signed (5) the convention. |
| --- | --- |

3.1

International immigration is a consequence of the major economic and social inequality between the rich countries of the north and the developing countries. This inequality is deepening in the increasingly globalised economic system of today. And yet, the majority of those countries that have thus far ratified the convention are countries of origin of immigrants. The Member States of the European Union, the United States of America, Canada, Australia, Japan and the remaining countries of the western world, who play host to a great many immigrants (4), have as yet neither ratified nor signed (5) the convention.

| 3.2 | The European Union, which is keen to establish international rules in a host of areas (in international trade within the WTO, in the environment through Kyoto, and so on), must also ensure that the basic rights of immigrants are guaranteed via such international norms. |
| --- | --- |

3.2

The European Union, which is keen to establish international rules in a host of areas (in international trade within the WTO, in the environment through Kyoto, and so on), must also ensure that the basic rights of immigrants are guaranteed via such international norms.

4.   Immigration policy within the European Union

| 4.1 | The European Union is an area in which human rights are upheld and protected and most of the international legal instruments of the United Nations are applied. The European Union also has its own instruments in this area, such as the European Convention on Human Rights and the Charter of Fundamental Rights. |
| --- | --- |

4.1

The European Union is an area in which human rights are upheld and protected and most of the international legal instruments of the United Nations are applied. The European Union also has its own instruments in this area, such as the European Convention on Human Rights and the Charter of Fundamental Rights.

| 4.2 | The European Union has also developed a series of legal instruments to counter discrimination (6). Despite this, various experts, including the European Monitoring Centre on Racism and Xenophobia (7), have reported discrimination suffered by migrants in terms of their working conditions. |
| --- | --- |

4.2

The European Union has also developed a series of legal instruments to counter discrimination (6). Despite this, various experts, including the European Monitoring Centre on Racism and Xenophobia (7), have reported discrimination suffered by migrants in terms of their working conditions.

| 4.3 | Since the European Council of Tampere, the European Union has been in the process of drafting common legislation governing asylum and immigration. Tampere laid down a sound political basis enabling the Union to harmonise its immigration and asylum legislation and improve cooperation with third countries in order to better manage migratory flows. Furthermore, in Tampere consensus was reached as to the need to guarantee fair treatment for all individuals and develop policies to promote integration and prevent discrimination. |
| --- | --- |

4.3

Since the European Council of Tampere, the European Union has been in the process of drafting common legislation governing asylum and immigration. Tampere laid down a sound political basis enabling the Union to harmonise its immigration and asylum legislation and improve cooperation with third countries in order to better manage migratory flows. Furthermore, in Tampere consensus was reached as to the need to guarantee fair treatment for all individuals and develop policies to promote integration and prevent discrimination.

| 4.4 | The Commission has drawn up numerous legislative proposals which have, however, met with considerable resistance within the Council (8). Four years on, the results are meagre: the legislation that has been adopted is disappointing and has moved away considerably from the Tampere objectives, the proposals of the Commission, the opinion of the Parliament and the stance of the EESC. The current system used within the Council to adopt agreements allows proposals to be blocked. This, coupled with the attitudes of some governments, makes it very difficult to achieve consensus. |
| --- | --- |

4.4

The Commission has drawn up numerous legislative proposals which have, however, met with considerable resistance within the Council (8). Four years on, the results are meagre: the legislation that has been adopted is disappointing and has moved away considerably from the Tampere objectives, the proposals of the Commission, the opinion of the Parliament and the stance of the EESC. The current system used within the Council to adopt agreements allows proposals to be blocked. This, coupled with the attitudes of some governments, makes it very difficult to achieve consensus.

| 4.5 | The European Economic and Social Committee has called upon the Council through a series of opinions to act with greater responsibility and adopt a more constructive approach based on enhanced cooperation. It is becoming increasingly necessary for the European Union to have adequate common legislation enabling it to manage immigration in a legal and transparent manner. |
| --- | --- |

4.5

The European Economic and Social Committee has called upon the Council through a series of opinions to act with greater responsibility and adopt a more constructive approach based on enhanced cooperation. It is becoming increasingly necessary for the European Union to have adequate common legislation enabling it to manage immigration in a legal and transparent manner.

| 4.6 | The EESC has drafted several opinions (9) in which it urges the European Union to adopt a policy that will ensure that economic immigration is processed through the right legal channels, irregular immigration is prevented and illegal trafficking of people is stopped. |
| --- | --- |

4.6

The EESC has drafted several opinions (9) in which it urges the European Union to adopt a policy that will ensure that economic immigration is processed through the right legal channels, irregular immigration is prevented and illegal trafficking of people is stopped.

| 4.7 | In the light of the above, the approval of the Directive on the conditions for entry, residence, and access to employment of immigrants, which is based on the Commission proposal (10) and takes account of the opinion of the EESC (11), is now a matter of urgency. |
| --- | --- |

4.7

In the light of the above, the approval of the Directive on the conditions for entry, residence, and access to employment of immigrants, which is based on the Commission proposal (10) and takes account of the opinion of the EESC (11), is now a matter of urgency.

| 4.8 | The Thessaloniki European Council welcomed the Commission's Communication on immigration, integration and employment (12), in which it projects that labour migration into the European Union will increase considerably over the coming years and that appropriate legislation will therefore be required enabling immigration to be managed within a legal framework. The Commission also states that integration policies focusing on the migrant population and endeavouring to eliminate all forms of exploitation and discrimination will be needed. |
| --- | --- |

4.8

The Thessaloniki European Council welcomed the Commission's Communication on immigration, integration and employment (12), in which it projects that labour migration into the European Union will increase considerably over the coming years and that appropriate legislation will therefore be required enabling immigration to be managed within a legal framework. The Commission also states that integration policies focusing on the migrant population and endeavouring to eliminate all forms of exploitation and discrimination will be needed.

| 4.9 | Some national legislation on immigration does not fully tally with the applicable international conventions on human rights, and some European Directives (on family reunification for example) are even considered by various NGOs and by the European Parliament to run contrary to basic human rights. The EESC believes that the existing international conventions on human rights as well as the EU Charter of Fundamental Rights should be the basis for the entire European legislative structure in terms of immigration. |
| --- | --- |

4.9

Some national legislation on immigration does not fully tally with the applicable international conventions on human rights, and some European Directives (on family reunification for example) are even considered by various NGOs and by the European Parliament to run contrary to basic human rights. The EESC believes that the existing international conventions on human rights as well as the EU Charter of Fundamental Rights should be the basis for the entire European legislative structure in terms of immigration.

5.   The global values of the European Union

| 5.1 | Of late, the United States has been developing a unilateral approach to governance of international affairs. The entire system of the United Nations faces serious problems as a result of this situation. As a result the only system that currently exists within which to seek out multilateral solutions to international conflicts based on cooperation is in danger. |
| --- | --- |

5.1

Of late, the United States has been developing a unilateral approach to governance of international affairs. The entire system of the United Nations faces serious problems as a result of this situation. As a result the only system that currently exists within which to seek out multilateral solutions to international conflicts based on cooperation is in danger.

| 5.2 | The European Union is, albeit with great difficulty, drawing up its own common foreign policy within which the United Nations will play an essential role. The future Constitutional Treaty will consolidate this external policy mandate as one of the Community's tasks. |
| --- | --- |

5.2

The European Union is, albeit with great difficulty, drawing up its own common foreign policy within which the United Nations will play an essential role. The future Constitutional Treaty will consolidate this external policy mandate as one of the Community's tasks.

| 5.3 | The European Union's external relations are based on multilateralism and active compromise within the United Nations. In a recent document (13) the European Commission asserted that: ‘The challenge currently facing the UN is clear: “global governance” will remain weak if multilateral institutions are unable to ensure effective implementation of their decisions and norms – whether in the 'high politics' sphere of international peace and security, or in the practical implementation of commitments made at recent UN conferences in the social, economic and environmental fields. The EU has a particular responsibility in this regard. On the one hand, it has made multilateralism a constant principle of its external relations. On the other, it could and should serve as a model to others in implementing – and even going beyond – its international commitments’. |
| --- | --- |

5.3

The European Union's external relations are based on multilateralism and active compromise within the United Nations. In a recent document (13) the European Commission asserted that: ‘The challenge currently facing the UN is clear: “global governance” will remain weak if multilateral institutions are unable to ensure effective implementation of their decisions and norms – whether in the 'high politics' sphere of international peace and security, or in the practical implementation of commitments made at recent UN conferences in the social, economic and environmental fields. The EU has a particular responsibility in this regard. On the one hand, it has made multilateralism a constant principle of its external relations. On the other, it could and should serve as a model to others in implementing – and even going beyond – its international commitments’.

| 5.4 | Globalisation is generating new opportunities and new problems for global governance (14). At present, migration entails major problems both for the migrants themselves and for the countries of origin and host countries. The challenge we face is to transform these problems into opportunities for everyone, for migrants, for countries of origin and for host countries. Multilteralism and international cooperation are the route to good global governance, to a system of rules and institutions established by the international community and universally recognised. |
| --- | --- |

5.4

Globalisation is generating new opportunities and new problems for global governance (14). At present, migration entails major problems both for the migrants themselves and for the countries of origin and host countries. The challenge we face is to transform these problems into opportunities for everyone, for migrants, for countries of origin and for host countries. Multilteralism and international cooperation are the route to good global governance, to a system of rules and institutions established by the international community and universally recognised.

| 5.5 | As Kofi Annan, Secretary-General of the United Nations, said at the European Parliament on 29 January 2004, international cooperation is the best approach to managing the rising international migration of the coming years. ‘Only through cooperation – bilateral, region, and global – can we build the partnerships between receiver and sender countries that are in the interests of both; explore innovations to make migration a driver of development; fight smugglers and traffickers effectively; and agree on common standards for the treatment of immigrants and the management of migration’ |
| --- | --- |

5.5

As Kofi Annan, Secretary-General of the United Nations, said at the European Parliament on 29 January 2004, international cooperation is the best approach to managing the rising international migration of the coming years. ‘Only through cooperation – bilateral, region, and global – can we build the partnerships between receiver and sender countries that are in the interests of both; explore innovations to make migration a driver of development; fight smugglers and traffickers effectively; and agree on common standards for the treatment of immigrants and the management of migration’

| 5.6 | Europe is an area of freedom, democracy and respect for the human rights of all people. In order to strengthen these values in the future, all the Member States of the EU must ratify the international conventions that protect these basic human rights and their legal precepts must be incorporated into both Community and national legislation. |
| --- | --- |

5.6

Europe is an area of freedom, democracy and respect for the human rights of all people. In order to strengthen these values in the future, all the Member States of the EU must ratify the international conventions that protect these basic human rights and their legal precepts must be incorporated into both Community and national legislation.

| 5.7 | Article 7 of the draft Constitution for Europe advocates the accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms. The EESC supports this. The EESC also backs the inclusion into the Constitution of the Charter of Fundamental Rights of the Union, which will create a common basis for the rights of all people inside the Union. |
| --- | --- |

5.7

Article 7 of the draft Constitution for Europe advocates the accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms. The EESC supports this. The EESC also backs the inclusion into the Constitution of the Charter of Fundamental Rights of the Union, which will create a common basis for the rights of all people inside the Union.

| 5.8 | These values must also become an integral part of the Union's international relations. Europe must promote the creation of a common judicial body for the worldwide protection of the basic rights of all people, irrespective of national origin and place of residence, on the basis of the international conventions drawn up by the United Nations. |
| --- | --- |

5.8

These values must also become an integral part of the Union's international relations. Europe must promote the creation of a common judicial body for the worldwide protection of the basic rights of all people, irrespective of national origin and place of residence, on the basis of the international conventions drawn up by the United Nations.

6.   EESC proposal

| 6.1 | In line with the opinions it has drawn up on European immigration policy and in support of the opinion of the European Parliament, the European Economic and Social Committee would encourage the Member States of the European Union to ratify the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, which was approved by the General Assembly of the United Nations in resolution No. 45/158 of 18 December 1990, and which entered into force on 1 July 2003. |
| --- | --- |

6.1

In line with the opinions it has drawn up on European immigration policy and in support of the opinion of the European Parliament, the European Economic and Social Committee would encourage the Member States of the European Union to ratify the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, which was approved by the General Assembly of the United Nations in resolution No. 45/158 of 18 December 1990, and which entered into force on 1 July 2003.

| 6.2 | The EESC calls upon the President of the Commission and the current Presidency of the Council to undertake the necessary political initiatives to ensure that the Member States ratify this convention within the coming 24 months and that the EU also ratify the convention when the Constitutional Treaty authorises it to sign international agreements. To facilitate ratification, the Commission should carry out a study analysing national and Community legislation relating to the convention. Furthermore, the social partners and other civil society organisations will join with the EESC and the Commission in promoting ratification. |
| --- | --- |

6.2

The EESC calls upon the President of the Commission and the current Presidency of the Council to undertake the necessary political initiatives to ensure that the Member States ratify this convention within the coming 24 months and that the EU also ratify the convention when the Constitutional Treaty authorises it to sign international agreements. To facilitate ratification, the Commission should carry out a study analysing national and Community legislation relating to the convention. Furthermore, the social partners and other civil society organisations will join with the EESC and the Commission in promoting ratification.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Azerbaijan, Belize, Bolivia, Bosnia-Herzegovina, Burkina Faso, Cape Verde, Colombia, East Timor, Ecuador, Egypt, El Salvador, Ghana, Guatemala, Guinea, Krygyzstan, Mali, Mexico, Morocco, Philippines, Senegal, Seychelles, Sri Lanka, Tajikistan, Uganda, Uruguay.

1

(2)  Convention No. 97 of 1949 and Convention No. 143 of 1975.

2

(3)  According to the International Organisation for Migration, 175 million people currently live in a country other than their country of birth or nationality.

3

(4)  55 % of the world's immigrants live in North America and western Europe.

4

(5)  The signatory states are states that have indicated their desire to join the convention in the future, such as Chile, Bangladesh, Turkey, Comoros, Guinea-Bissau, Paraguay, São Tomé and Principe, Sierra Leone, and Togo.

5

(6)  Directive 2000/43 and Directive 2000/78.

6

(7)  Directive 2000/43 and Directive 2000/78.

7

(8)  As far back as 1994 the Commission, in its White Paper on European social policy (COM(1994) 333 final), recommended that the Member States ratify the convention.

8

(9)  See the EESC opinions on family reunification, OJ C 204 of 18.7.2000 and OJ C 241 of 7.10.2002; on the Communication from the Commission on a Community immigration policy, OJ C 260 of 17.9.2001; on the status of long-term residents, OJ C 36 of 8.2.2002; on the conditions for entry and residence for the purpose of paid employment, OJ C 80 of 3.4.2002; on a common policy on illegal immigration, OJ C 149 of 21.6.2002; on the conditions of entry and residence for purposes of studies, vocational training or voluntary service, OJ C 133 of 6.6.2003; and on access to European Union citizenship, OJ C 208 of 3.9.2003.

9

(10)  Cf. OJ C 332 of 27.11.2001.

10

(11)  Opinion of the EESC in OJ C 80 of 3.4.2002 (rapporteur Mr Pariza Castaños).

11

(12)  Communication from the Commission COM(2003) 336 final and opinion of the EESC in OJ C 80 of 30.03.2004 (rapporteur Mr Pariza Castaños).

12

(13)  COM(526) 2003, ‘The European Union and the United Nations: The choice of multilateralism’.

13

(14)  ‘ Coping with globalisation – the only option for the most vulnerable’

14

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/53 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/53

---

Opinion of the European Economic and Social Committee on ‘The CAP second pillar: outlook for change in development policy for rural areas’ (follow-up to the Salzburg conference)

(2004/C 302/13)

On 29 January 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on: ‘The CAP second pillar: outlook for change in development policy for rural areas (follow-up to the Salzburg conference)’.

The Section for Agriculture, Rural Development and the Environment was responsible for preparing the Committee's work on the subject.

In a letter to the Committee from Mr Silva Rodriguez of DG Agriculture dated 3 May 2004, the European Commission asked to have the EESC's views on the subject as quickly as possible. Given the urgency, the European Economic and Social Committee, at its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June 2004), appointed Mr Bros as rapporteur-general and adopted the following opinion by 127 votes in favour, with nine abstentions:

1.   Introduction

| 1.1 | In November 2003, the European Commission organised a conference in Salzburg on the future of Community rural development policy against the backdrop of EU enlargement. Like the Cork conference, which had called for a ‘living countryside’, (1) the Salzburg event was an opportunity:






  — | to bring together the key players involved in framing and implementing rural development policy; |
| --- | --- | --- |

1.1

In November 2003, the European Commission organised a conference in Salzburg on the future of Community rural development policy against the backdrop of EU enlargement. Like the Cork conference, which had called for a ‘living countryside’, (1) the Salzburg event was an opportunity:

—

to bring together the key players involved in framing and implementing rural development policy;

| — | to issue a declaration, putting forward key policy guidelines for rural development players; |
| --- | --- |

—

to issue a declaration, putting forward key policy guidelines for rural development players;

| — | to lay down priorities for assistance under a ‘rural fund’ ahead of the budget debate on the financial perspectives for 2007-2013. |
| --- | --- |

—

to lay down priorities for assistance under a ‘rural fund’ ahead of the budget debate on the financial perspectives for 2007-2013.

Thus, the Committee is proposing that any consideration of changes to rural development policy for the period 2007-2013 should build on the conclusions of this conference.

| 1.2 | Given the increasing diversity of rural areas in the wake of EU enlargement, but above all recognising that social issues and employment are of paramount importance in the new Member States, the Committee feels it is essential to focus on the consistency and interlinkage between regional policy and the second CAP pillar. |
| --- | --- |

1.2

Given the increasing diversity of rural areas in the wake of EU enlargement, but above all recognising that social issues and employment are of paramount importance in the new Member States, the Committee feels it is essential to focus on the consistency and interlinkage between regional policy and the second CAP pillar.

| 1.3 | The Commission has published two documents: one sets out the financial perspectives for the future programming period (2), the other is the third cohesion report (3). As these documents show, regional policy plays a full part in the Lisbon strategy, which is designed to put in place a competitive and knowledge-based economy. Future rural development policy is dealt with under the section on Sustainable management and protection of natural resources which refers to the sustainable development strategy. This section also covers the first CAP pillar and Community environment programmes. |
| --- | --- |

1.3

The Commission has published two documents: one sets out the financial perspectives for the future programming period (2), the other is the third cohesion report (3). As these documents show, regional policy plays a full part in the Lisbon strategy, which is designed to put in place a competitive and knowledge-based economy. Future rural development policy is dealt with under the section on Sustainable management and protection of natural resources which refers to the sustainable development strategy. This section also covers the first CAP pillar and Community environment programmes.

| 1.4 | The Gothenburg European Council of 15 and 16 June 2001 (4) provided, in its conclusions, for the adoption of a European sustainable development strategy and, as part of that, agreed that the common agricultural policy ‘... should, among its objectives, contribute to achieving sustainable development by increasing its emphasis on encouraging healthy, high-quality products [and] environmentally sustainable production methods.’ (5) |
| --- | --- |

1.4

The Gothenburg European Council of 15 and 16 June 2001 (4) provided, in its conclusions, for the adoption of a European sustainable development strategy and, as part of that, agreed that the common agricultural policy ‘... should, among its objectives, contribute to achieving sustainable development by increasing its emphasis on encouraging healthy, high-quality products [and] environmentally sustainable production methods.’ (5)

| 1.5 | The conclusions of the June 2003 Agriculture and Fisheries Council in Luxembourg confirm that the second CAP pillar is to be strengthened in order to ‘... promote the environment, quality and animal welfare and to help farmers to meet Union production standards starting in 2005.’ (6) This own-initiative opinion will thus have to consider — and examine in greater depth — the three lines of action taken up in Salzburg, i.e. the competitiveness of the farming sector, environmental protection and the contribution to economic and social cohesion in rural areas. |
| --- | --- |

1.5

The conclusions of the June 2003 Agriculture and Fisheries Council in Luxembourg confirm that the second CAP pillar is to be strengthened in order to ‘... promote the environment, quality and animal welfare and to help farmers to meet Union production standards starting in 2005.’ (6) This own-initiative opinion will thus have to consider — and examine in greater depth — the three lines of action taken up in Salzburg, i.e. the competitiveness of the farming sector, environmental protection and the contribution to economic and social cohesion in rural areas.

| 1.6 | In the Salzburg conference final declaration, rural development players also stressed that a significant simplification of EU rural development policy was both necessary and urgent. As part of that simplification, more responsibility must be given to programme partnerships to define and deliver comprehensive strategies. |
| --- | --- |

1.6

In the Salzburg conference final declaration, rural development players also stressed that a significant simplification of EU rural development policy was both necessary and urgent. As part of that simplification, more responsibility must be given to programme partnerships to define and deliver comprehensive strategies.

| 1.7 | In this own-initiative opinion, therefore, the Committee proposes (i) examining the consistency between future regional policy and future rural development policy in order to limit the number of grey areas; (ii) taking a closer look at the three main lines of action put forward for future rural development policy and (iii) focusing specifically on the various facets of administrative simplification. |
| --- | --- |

1.7

In this own-initiative opinion, therefore, the Committee proposes (i) examining the consistency between future regional policy and future rural development policy in order to limit the number of grey areas; (ii) taking a closer look at the three main lines of action put forward for future rural development policy and (iii) focusing specifically on the various facets of administrative simplification.

A.   INTERLINKAGE BETWEEN REGIONAL AND RURAL DEVELOPMENT POLICY

2.   Regional policy: from the principle of economic cohesion to the principle of territorial solidarity

| 2.1 | The 1986 Single European Act accelerated the integration of the Member States' economies. However, the widely differing levels of regional development within the Union and the introduction of interregional competition gave rise to a proper cohesion policy, designed to offset single market constraints in southern European countries and less-favoured regions. Economic and social cohesion policy was subsequently placed on an institutionalised footing by the Maastricht Treaty on European Union, which entered into force in 1993. |
| --- | --- |

2.1

The 1986 Single European Act accelerated the integration of the Member States' economies. However, the widely differing levels of regional development within the Union and the introduction of interregional competition gave rise to a proper cohesion policy, designed to offset single market constraints in southern European countries and less-favoured regions. Economic and social cohesion policy was subsequently placed on an institutionalised footing by the Maastricht Treaty on European Union, which entered into force in 1993.

| 2.2 | At the same time, the EU's growing trade relations and the gradual opening-up of the single market intensified competition between the European regions despite the fact that they did not all enjoy the same advantages. Thus, in the 1990s, structural policy sought to address the following key concerns:






  — | to reduce the development gaps by supporting job creation in less-favoured areas; |
| --- | --- | --- |

2.2

At the same time, the EU's growing trade relations and the gradual opening-up of the single market intensified competition between the European regions despite the fact that they did not all enjoy the same advantages. Thus, in the 1990s, structural policy sought to address the following key concerns:

—

to reduce the development gaps by supporting job creation in less-favoured areas;

| — | to compensate for the handicaps facing regions that do not have the same advantages or the same access to the global market; |
| --- | --- |

—

to compensate for the handicaps facing regions that do not have the same advantages or the same access to the global market;

| — | to support wealth creation in less-favoured areas. |
| --- | --- |

—

to support wealth creation in less-favoured areas.

| 2.3 | Building on elements of existing structural policy, the reform adopted in 1999 (Agenda 2000) sought:






  — | to increase financial transfers from the regions with the greatest advantages to regions with lagging growth (fewer objectives and 75 % of funding earmarked for Objective 1); |
| --- | --- | --- |

2.3

Building on elements of existing structural policy, the reform adopted in 1999 (Agenda 2000) sought:

—

to increase financial transfers from the regions with the greatest advantages to regions with lagging growth (fewer objectives and 75 % of funding earmarked for Objective 1);

| — | to expand economic links between these regions (Interreg III); and |
| --- | --- |

—

to expand economic links between these regions (Interreg III); and

| — | through the Cohesion Fund, to help regions with lagging development integrate into the single market. |
| --- | --- |

—

through the Cohesion Fund, to help regions with lagging development integrate into the single market.

| 2.4 | The declaration of the EU Member States' spatial planning ministers (Potsdam, 10 and 11 May 1999) (7) and the June 2001 Gothenburg European Council conclusions setting out a European sustainable development strategy underscored the need for territorial cohesion in the interests of balanced and sustainable regional development within the EU. This process culminated in the Convention's proposal to include territorial cohesion as a Union objective (see Article 3 of the draft Constitution for Europe). (8) |
| --- | --- |

2.4

The declaration of the EU Member States' spatial planning ministers (Potsdam, 10 and 11 May 1999) (7) and the June 2001 Gothenburg European Council conclusions setting out a European sustainable development strategy underscored the need for territorial cohesion in the interests of balanced and sustainable regional development within the EU. This process culminated in the Convention's proposal to include territorial cohesion as a Union objective (see Article 3 of the draft Constitution for Europe). (8)

| 2.5 | Moreover, Regulation 1260/1999 laying down general provisions on the Structural Funds (9) recognises that building on local potential in rural areas remains a key objective for promoting the development and structural adjustment of regions whose development is lagging behind. |
| --- | --- |

2.5

Moreover, Regulation 1260/1999 laying down general provisions on the Structural Funds (9) recognises that building on local potential in rural areas remains a key objective for promoting the development and structural adjustment of regions whose development is lagging behind.

| 2.6 | Given the way in which the principles underpinning structural policy have evolved — i.e. in providing support for growth and sustainable development — the Committee asks the Commission and the Council to make it clear, in the interests of territorial cohesion, that rural development must remain one of the top priorities of regional policy. Hence, this policy must fully address the difficulties rural areas face in the fields of job creation, continuing training and access to new information technologies. |
| --- | --- |

2.6

Given the way in which the principles underpinning structural policy have evolved — i.e. in providing support for growth and sustainable development — the Committee asks the Commission and the Council to make it clear, in the interests of territorial cohesion, that rural development must remain one of the top priorities of regional policy. Hence, this policy must fully address the difficulties rural areas face in the fields of job creation, continuing training and access to new information technologies.

3.   Rural development policy: from the ‘Green Europe’ to the Luxembourg compromise

| 3.1 | In the space of almost fifty years, farming has undergone major changes which, over time, have shaped the Community's agricultural structural policy. From 1962 to 1972, the Community was involved only in coordinating the nascent market management measures. From 1972 to 1985, activities fell into two further main categories: (i) horizontal measures applicable in all Member States (vocational training, early retirement etc.) and (ii) regional measures designed to mitigate natural structural handicaps and promote agriculture as a whole. |
| --- | --- |

3.1

In the space of almost fifty years, farming has undergone major changes which, over time, have shaped the Community's agricultural structural policy. From 1962 to 1972, the Community was involved only in coordinating the nascent market management measures. From 1972 to 1985, activities fell into two further main categories: (i) horizontal measures applicable in all Member States (vocational training, early retirement etc.) and (ii) regional measures designed to mitigate natural structural handicaps and promote agriculture as a whole.

| 3.2 | From 1985 to 1999, agricultural structural policy evolved into the agricultural dimension of the new regional policy strategy as a result of a number of factors, i.e. the search for a balance between the necessary improvements in the competitiveness of Europe's farming sector on the one hand and matching production potential with market requirements on the other, environmental protection and the development of less-favoured regions. Structural policy therefore not only involves horizontal measures, but also includes actions designed to conserve rural areas, protect the environment and develop rural and tourist infrastructure and farming activities. |
| --- | --- |

3.2

From 1985 to 1999, agricultural structural policy evolved into the agricultural dimension of the new regional policy strategy as a result of a number of factors, i.e. the search for a balance between the necessary improvements in the competitiveness of Europe's farming sector on the one hand and matching production potential with market requirements on the other, environmental protection and the development of less-favoured regions. Structural policy therefore not only involves horizontal measures, but also includes actions designed to conserve rural areas, protect the environment and develop rural and tourist infrastructure and farming activities.

| 3.3 | Building on the Cork conference, Agenda 2000 made it possible to establish an integrated rural development policy using two legal instruments (EAGGF–Guarantee and EAGGF-Guidance). These instruments are designed to secure greater consistency between rural development policy (second CAP pillar) and market policy (first CAP pillar) among other things by promoting a more diversified rural economy. |
| --- | --- |

3.3

Building on the Cork conference, Agenda 2000 made it possible to establish an integrated rural development policy using two legal instruments (EAGGF–Guarantee and EAGGF-Guidance). These instruments are designed to secure greater consistency between rural development policy (second CAP pillar) and market policy (first CAP pillar) among other things by promoting a more diversified rural economy.

| 3.4 | The option of direct aid modulation was also introduced. This tool makes it possible to increase funding for agri-environmental, early retirement and afforestation measures, and measures to support less-favoured areas, through a levy on the compensatory support for reductions in institutional prices adopted under the common organisations of the markets in agricultural products. |
| --- | --- |

3.4

The option of direct aid modulation was also introduced. This tool makes it possible to increase funding for agri-environmental, early retirement and afforestation measures, and measures to support less-favoured areas, through a levy on the compensatory support for reductions in institutional prices adopted under the common organisations of the markets in agricultural products.

| 3.5 | Regulation 1257/1999 on support for rural development from the EAGGF (10) makes the following key points:






  — | rural development measures must accompany and complement market policy; |
| --- | --- | --- |

3.5

Regulation 1257/1999 on support for rural development from the EAGGF (10) makes the following key points:

—

rural development measures must accompany and complement market policy;

| — | the three accompanying measures introduced by the 1992 CAP reform must supplement the scheme for less-favoured areas (natural constraints) and areas with environmental restrictions; |
| --- | --- |

—

the three accompanying measures introduced by the 1992 CAP reform must supplement the scheme for less-favoured areas (natural constraints) and areas with environmental restrictions;

| — | other rural development measures may form part of integrated development programmes for Objective 1 and Objective 2 regions. |
| --- | --- |

—

other rural development measures may form part of integrated development programmes for Objective 1 and Objective 2 regions.

| 3.6 | For the 2000-2006 programming period, the twenty-two measures that Member States may include in their rural development programming divide up as follows: (11) 39.2 % for improving competitiveness and promoting change in the farming sector, 35 % for less-favoured areas and agri-environmental measures and 25.8 % for adapting and developing rural areas. |
| --- | --- |

3.6

For the 2000-2006 programming period, the twenty-two measures that Member States may include in their rural development programming divide up as follows: (11) 39.2 % for improving competitiveness and promoting change in the farming sector, 35 % for less-favoured areas and agri-environmental measures and 25.8 % for adapting and developing rural areas.

| 3.7 | The CAP reform adopted in June 2003 reinforced one of the tasks of regional development policy, namely to back moves to adapt agriculture to the needs of society. The scope of measures has been widened to include promoting product quality, improving production standards (environment, animal welfare), implementing Natura 2000 and stepping up measures for the setting-up of young farmers. |
| --- | --- |

3.7

The CAP reform adopted in June 2003 reinforced one of the tasks of regional development policy, namely to back moves to adapt agriculture to the needs of society. The scope of measures has been widened to include promoting product quality, improving production standards (environment, animal welfare), implementing Natura 2000 and stepping up measures for the setting-up of young farmers.

| 3.8 | Moreover, modulation is now mandatory at European level and should mean the transfer of almost EUR 1.2 billion over the whole year from market policy to rural development policy. |
| --- | --- |

3.8

Moreover, modulation is now mandatory at European level and should mean the transfer of almost EUR 1.2 billion over the whole year from market policy to rural development policy.

| 3.9 | In the light of these developments, the Committee would stress that the primary purpose of the second CAP pillar must be to support agriculture as it adapts to meet the underlying changes in public expectations. |
| --- | --- |

3.9

In the light of these developments, the Committee would stress that the primary purpose of the second CAP pillar must be to support agriculture as it adapts to meet the underlying changes in public expectations.

| 3.10 | The Commission communication on the 2007-2013 financial perspectives presents a stable and modest budget, maintaining EU own resources at 1.24 % of GNP. The Committee backs the Commission's proposal and stresses that cutting Community resources would send out the wrong signal just as EU enlargement was taking effect. |
| --- | --- |

3.10

The Commission communication on the 2007-2013 financial perspectives presents a stable and modest budget, maintaining EU own resources at 1.24 % of GNP. The Committee backs the Commission's proposal and stresses that cutting Community resources would send out the wrong signal just as EU enlargement was taking effect.

| 3.11 | The same also applies to rural development policy. The only ‘extra’ resource for this policy would be the application of modulation. This basically means allowing financial transfers only between the first and second CAP pillars. Hence, the Committee would urge the Council and the European Parliament to ensure that adequate financial resources are made available for this policy as otherwise it would be devoid of substance. |
| --- | --- |

3.11

The same also applies to rural development policy. The only ‘extra’ resource for this policy would be the application of modulation. This basically means allowing financial transfers only between the first and second CAP pillars. Hence, the Committee would urge the Council and the European Parliament to ensure that adequate financial resources are made available for this policy as otherwise it would be devoid of substance.

| 3.12 | Furthermore, future rural development policy will be implemented by a new and probably 25-strong Commission. There would be a real risk of these two policies becoming disjointed if the two CAP pillars were each managed by a different commissioner. The Committee reiterates its opposition to any move to establish separate directorates-general and appoint different commissioners for agriculture and sustainable development issues. |
| --- | --- |

3.12

Furthermore, future rural development policy will be implemented by a new and probably 25-strong Commission. There would be a real risk of these two policies becoming disjointed if the two CAP pillars were each managed by a different commissioner. The Committee reiterates its opposition to any move to establish separate directorates-general and appoint different commissioners for agriculture and sustainable development issues.

4.   Multifunctional agriculture: its role in rural development policy

| 4.1 | In its earlier opinions (12), the Committee has already reiterated the point that agricultural markets are, by their very nature, unstable and frequently subject to price fluctuations. Hence, the mechanisms in place to regulate supply and the market are essential for farms to be able to meet the conditions of sustainable agriculture. The Committee would stress that maintaining a policy that supports the regulation of markets in agricultural products is also conducive to the success of any rural development policy. |
| --- | --- |

4.1

In its earlier opinions (12), the Committee has already reiterated the point that agricultural markets are, by their very nature, unstable and frequently subject to price fluctuations. Hence, the mechanisms in place to regulate supply and the market are essential for farms to be able to meet the conditions of sustainable agriculture. The Committee would stress that maintaining a policy that supports the regulation of markets in agricultural products is also conducive to the success of any rural development policy.

| 4.2 | Moreover, the last CAP reform of 26 June 2003 broke the link between production and public support for agriculture. This change reinforces the need to secure farming's economic development in order to better reflect new requirements — such as biodiversity, the conservation of specific landscapes, and job creation by this sector. The Committee therefore notes that agricultural production is a prime factor in securing a living countryside, as it establishes a direct link between human activities and the local area. |
| --- | --- |

4.2

Moreover, the last CAP reform of 26 June 2003 broke the link between production and public support for agriculture. This change reinforces the need to secure farming's economic development in order to better reflect new requirements — such as biodiversity, the conservation of specific landscapes, and job creation by this sector. The Committee therefore notes that agricultural production is a prime factor in securing a living countryside, as it establishes a direct link between human activities and the local area.

| 4.2.1 | Regionally-based production systems and measures to enhance the value of farm products — including the expansion of protected designations of origin (PDOs), protected geographical indications (PGIs) and direct sales — are elements of multifunctional agriculture that help promote rural development. |
| --- | --- |

4.2.1

Regionally-based production systems and measures to enhance the value of farm products — including the expansion of protected designations of origin (PDOs), protected geographical indications (PGIs) and direct sales — are elements of multifunctional agriculture that help promote rural development.

| 4.3 | In a Union of 25 Member States, farming will employ more than 13 million people directly, and more than 5 million indirectly in its upstream and downstream sectors. By their very nature, these jobs are firmly rooted at regional level. Processed agrifood products also make up a growing share of intra-Community trade, strengthening the link between the farming and the agrifood sectors. The maintenance and distribution of farming activities across rural areas is thus becoming a priority if their integration into the regional economy is not to be held back. |
| --- | --- |

4.3

In a Union of 25 Member States, farming will employ more than 13 million people directly, and more than 5 million indirectly in its upstream and downstream sectors. By their very nature, these jobs are firmly rooted at regional level. Processed agrifood products also make up a growing share of intra-Community trade, strengthening the link between the farming and the agrifood sectors. The maintenance and distribution of farming activities across rural areas is thus becoming a priority if their integration into the regional economy is not to be held back.

| 4.4 | In an EU of 27 Member States, 190 million hectares — 45 % of the land mass — will be given over to farming. In 2001, more than 10 % of the utilised agricultural area (UAA) was subject to agri-environmental measures. Agricultural land makes up 15 % of areas classified under the habitats and birds directive. 38 % of agricultural land in the fifteen ‘old’ EU Member States has also been designated as ‘nitrate-vulnerable zones’. These measures meet local environmental protection and/or spatial planning requirements. Clearly, then, farming will always play a key role in land management. |
| --- | --- |

4.4

In an EU of 27 Member States, 190 million hectares — 45 % of the land mass — will be given over to farming. In 2001, more than 10 % of the utilised agricultural area (UAA) was subject to agri-environmental measures. Agricultural land makes up 15 % of areas classified under the habitats and birds directive. 38 % of agricultural land in the fifteen ‘old’ EU Member States has also been designated as ‘nitrate-vulnerable zones’. These measures meet local environmental protection and/or spatial planning requirements. Clearly, then, farming will always play a key role in land management.

| 4.5 | The Committee would again make the point that one aim of multifunctional agricultural production is to maintain a living countryside. The Commission and the Council must make that clear before embarking on any new departure in rural development policy. |
| --- | --- |

4.5

The Committee would again make the point that one aim of multifunctional agricultural production is to maintain a living countryside. The Commission and the Council must make that clear before embarking on any new departure in rural development policy.

| 4.6 | While backing the Salzburg conference conclusions on diversifying the rural economy, the Committee would stress the need to avoid any ‘rurbanisation’ of the countryside, i.e. the application of the same development measures in rural as in urban areas. The Committee is currently working on an own-initiative opinion on agriculture in peri-urban areas (13). Moves to diversify the rural economy as part of rural development policy should therefore focus on a few issues closely linked to farming, including services to the farming community designed to improve people's quality of life, promote agri-tourism and support agriculture-based multiple jobbing. |
| --- | --- |

4.6

While backing the Salzburg conference conclusions on diversifying the rural economy, the Committee would stress the need to avoid any ‘rurbanisation’ of the countryside, i.e. the application of the same development measures in rural as in urban areas. The Committee is currently working on an own-initiative opinion on agriculture in peri-urban areas (13). Moves to diversify the rural economy as part of rural development policy should therefore focus on a few issues closely linked to farming, including services to the farming community designed to improve people's quality of life, promote agri-tourism and support agriculture-based multiple jobbing.

5.   Rural development policy: its features and limits

| 5.1 | The conclusions of the third cohesion report show that disparities in sustainable output, productivity and job creation which persist between regions stem from structural deficiencies in the key factors of competitiveness. The Committee would stress that rural development policy must also be guided by these principles in order to help foster structural developments in rural areas. |
| --- | --- |

5.1

The conclusions of the third cohesion report show that disparities in sustainable output, productivity and job creation which persist between regions stem from structural deficiencies in the key factors of competitiveness. The Committee would stress that rural development policy must also be guided by these principles in order to help foster structural developments in rural areas.

| 5.2 | EU enlargement exacerbates the issue of economic development in rural areas because of the high level of ‘hidden unemployment’ in the new Member States. This further complicates the distinction between regional policy and rural development policy. The Committee proposes that the issues common to regional policy and rural development policy should be set out clearly in a new Structural Funds regulation and that the number of measures eligible for funding under one or other of these policies should be limited so as to establish greater clarity between them. |
| --- | --- |

5.2

EU enlargement exacerbates the issue of economic development in rural areas because of the high level of ‘hidden unemployment’ in the new Member States. This further complicates the distinction between regional policy and rural development policy. The Committee proposes that the issues common to regional policy and rural development policy should be set out clearly in a new Structural Funds regulation and that the number of measures eligible for funding under one or other of these policies should be limited so as to establish greater clarity between them.

| 5.3 | While agriculture cannot claim to be the sole guarantor of rural development, it does remain a sine qua non of any successful rural development policy. The link between jobs — both direct and indirect — and the local region and the sheer size of the areas concerned mean that back-up for agriculture as it adapts to meet changing public expectations remains a priority. Moreover, the first and second CAP pillars are also conducive to achieving rural development targets by maintaining or strengthening farming activity. |
| --- | --- |

5.3

While agriculture cannot claim to be the sole guarantor of rural development, it does remain a sine qua non of any successful rural development policy. The link between jobs — both direct and indirect — and the local region and the sheer size of the areas concerned mean that back-up for agriculture as it adapts to meet changing public expectations remains a priority. Moreover, the first and second CAP pillars are also conducive to achieving rural development targets by maintaining or strengthening farming activity.

| 5.4 | EU enlargement also presents a key challenge for the future of the CAP. The Committee stresses that exchanges of experience and the transfer of good practice should also play a special role in establishing the conditions for implementing the second CAP pillar for the future period. |
| --- | --- |

5.4

EU enlargement also presents a key challenge for the future of the CAP. The Committee stresses that exchanges of experience and the transfer of good practice should also play a special role in establishing the conditions for implementing the second CAP pillar for the future period.

| 5.5 | The Committee would also stress that because of their permanent natural handicaps sparsely populated regions such as islands, Arctic areas and upland areas are still pursuing the goal of completing the single market. Regional policy and rural development policy must reflect this in the way in which they are implemented, not least by proposing a higher level of co-financing to take account of these constraints. The Committee is also currently working on an own-initiative opinion (14) looking more specifically at how to better integrate regions suffering from natural handicaps into the regional economy. |
| --- | --- |

5.5

The Committee would also stress that because of their permanent natural handicaps sparsely populated regions such as islands, Arctic areas and upland areas are still pursuing the goal of completing the single market. Regional policy and rural development policy must reflect this in the way in which they are implemented, not least by proposing a higher level of co-financing to take account of these constraints. The Committee is also currently working on an own-initiative opinion (14) looking more specifically at how to better integrate regions suffering from natural handicaps into the regional economy.

| 5.6 | The Committee would also stress that rural development policy and regional policy are not the only ways in which the authorities can promote harmonious territorial development within the European Union. The Committee notes that firmly implanting public services in a region also helps secure territorial cohesion. |
| --- | --- |

5.6

The Committee would also stress that rural development policy and regional policy are not the only ways in which the authorities can promote harmonious territorial development within the European Union. The Committee notes that firmly implanting public services in a region also helps secure territorial cohesion.

B.   A CLOSER LOOK AT THE PROPOSED IMPROVEMENTS

6.   Measures adopted under the Luxembourg compromise of 26 June 2003

| 6.1 | The CAP reform of June 2003 highlighted the stronger link between the second pillar (rural development) and the changes to the first pillar. A series of new first-pillar flanking measures have been introduced, taking the total number from 22 to 26. |
| --- | --- |

6.1

The CAP reform of June 2003 highlighted the stronger link between the second pillar (rural development) and the changes to the first pillar. A series of new first-pillar flanking measures have been introduced, taking the total number from 22 to 26.

| 6.1.1 | Two new measures have been introduced in the area of food quality (voluntary participation in recognised national quality indicator schemes and actions to promote these products and inform consumers about them). The two other new measures seek to adapt production methods to European standards of environmental protection, animal welfare and animal and plant health. |
| --- | --- |

6.1.1

Two new measures have been introduced in the area of food quality (voluntary participation in recognised national quality indicator schemes and actions to promote these products and inform consumers about them). The two other new measures seek to adapt production methods to European standards of environmental protection, animal welfare and animal and plant health.

| 6.1.2 | A number of existing measures have been adapted (the incorporation of animal welfare considerations into agri-environmental measures, the consolidation of public support for the setting-up of young farmers, implementation of the habitat and birds directive and the funding of forest investments to promote environmentally and socially sound forest management. |
| --- | --- |

6.1.2

A number of existing measures have been adapted (the incorporation of animal welfare considerations into agri-environmental measures, the consolidation of public support for the setting-up of young farmers, implementation of the habitat and birds directive and the funding of forest investments to promote environmentally and socially sound forest management.

| 6.2 | For the new Member States, a temporary rural development programme has been adopted for the period 2004-2006. As well as the four new flanking measures, this programme will provide support to encourage farming partnerships, support for semi-subsistence farms, technical assistance, and top-ups to direct aid under the CAP first pillar. |
| --- | --- |

6.2

For the new Member States, a temporary rural development programme has been adopted for the period 2004-2006. As well as the four new flanking measures, this programme will provide support to encourage farming partnerships, support for semi-subsistence farms, technical assistance, and top-ups to direct aid under the CAP first pillar.

7.   New approaches in the three areas focused on at the Salzburg conference

| 7.1 | As the single market consolidates and the internal market gradually opens up to farming economies with comparative natural advantages or lower environmental standards, it is essential that the European agricultural model continue to become ever more competitive. |
| --- | --- |

7.1

As the single market consolidates and the internal market gradually opens up to farming economies with comparative natural advantages or lower environmental standards, it is essential that the European agricultural model continue to become ever more competitive.

| 7.2 | The Committee therefore feels that support for farming investments as part of rural development policy should continue to be strengthened. It is important to support investments that enable farms to take account both of environmental requirements and of improvements in animal welfare and working conditions, especially where they help reinforce farming activity in a particular area. |
| --- | --- |

7.2

The Committee therefore feels that support for farming investments as part of rural development policy should continue to be strengthened. It is important to support investments that enable farms to take account both of environmental requirements and of improvements in animal welfare and working conditions, especially where they help reinforce farming activity in a particular area.

| 7.3 | The Committee considers that the provision of agricultural advisory services to support the switch to new production standards should be brought forward. The scheme may not actually be implemented in the Member States until 2006, while conditionality will apply from 2005. |
| --- | --- |

7.3

The Committee considers that the provision of agricultural advisory services to support the switch to new production standards should be brought forward. The scheme may not actually be implemented in the Member States until 2006, while conditionality will apply from 2005.

| 7.4 | Over the past few years a number of factors — including the slackening of market regulation in agricultural products, climatic changes and action to tackle health crises — have highlighted the importance of bringing farm turnover under control. Under the 2003 CAP reform, the Commission undertook to draw up a report to examine the possibility of allowing a percentage of modulation to be used at national level for specific measures designed to meet risks, crises and natural disasters. The Committee notes that the Commission has to submit this report before the end of 2004 and should also look at national and Community approaches to developing agricultural insurance systems. The Committee asks that, if need be, input from the second CAP pillar might be considered as a flanking measure. |
| --- | --- |

7.4

Over the past few years a number of factors — including the slackening of market regulation in agricultural products, climatic changes and action to tackle health crises — have highlighted the importance of bringing farm turnover under control. Under the 2003 CAP reform, the Commission undertook to draw up a report to examine the possibility of allowing a percentage of modulation to be used at national level for specific measures designed to meet risks, crises and natural disasters. The Committee notes that the Commission has to submit this report before the end of 2004 and should also look at national and Community approaches to developing agricultural insurance systems. The Committee asks that, if need be, input from the second CAP pillar might be considered as a flanking measure.

| 7.5 | The second plank of future rural development policy should be environmental protection and spatial management, with agri-environmental measures and compensation for natural handicaps as a key main tool, drawing on common yardsticks in the interests of maintaining territorial balance. |
| --- | --- |

7.5

The second plank of future rural development policy should be environmental protection and spatial management, with agri-environmental measures and compensation for natural handicaps as a key main tool, drawing on common yardsticks in the interests of maintaining territorial balance.

| 7.6 | CAP reform has introduced the principle that direct aid to agriculture is conditional on compliance with European legislation (nineteen directives and regulations) on the environment, public health, animal and plant health and animal welfare. The Committee stresses that this new element of the first CAP pillar must not be confused with agri-environmental measures (AEM). AEM are not regulatory, but support farmers' voluntary, participatory activities aimed at using farming methods designed to protect the environment and conserve natural areas. |
| --- | --- |

7.6

CAP reform has introduced the principle that direct aid to agriculture is conditional on compliance with European legislation (nineteen directives and regulations) on the environment, public health, animal and plant health and animal welfare. The Committee stresses that this new element of the first CAP pillar must not be confused with agri-environmental measures (AEM). AEM are not regulatory, but support farmers' voluntary, participatory activities aimed at using farming methods designed to protect the environment and conserve natural areas.

| 7.7 | The Committee feels that the administrative arrangements for AEM implementation should be simplified. The objectives of the measures should thus be decided in line with subsidiarity. Mindful of budgetary stability, the Committee also questions the need to further widen the scope of these measures to include other environmental issues. However, particular emphasis should be put on AEM, which focus on the diversity of agricultural production systems in order to maintain balanced agri-systems. |
| --- | --- |

7.7

The Committee feels that the administrative arrangements for AEM implementation should be simplified. The objectives of the measures should thus be decided in line with subsidiarity. Mindful of budgetary stability, the Committee also questions the need to further widen the scope of these measures to include other environmental issues. However, particular emphasis should be put on AEM, which focus on the diversity of agricultural production systems in order to maintain balanced agri-systems.

| 7.7.1 | In the light of the declaration of the Gothenburg European summit, agri-environmental measures should be made mandatory in each of the national programmes. |
| --- | --- |

7.7.1

In the light of the declaration of the Gothenburg European summit, agri-environmental measures should be made mandatory in each of the national programmes.

| 7.7.2 | The Committee would stress that Natura 2000 should not be financed to the detriment of existing measures. Hence, it would like to see the Commission identify new avenues of finance to offset the costs involved in implementing the habitat and birds directive. |
| --- | --- |

7.7.2

The Committee would stress that Natura 2000 should not be financed to the detriment of existing measures. Hence, it would like to see the Commission identify new avenues of finance to offset the costs involved in implementing the habitat and birds directive.

| 7.8 | The third plank of future rural development policy should focus on diversifying the farm-linked rural economy in order to help maintain rural populations. |
| --- | --- |

7.8

The third plank of future rural development policy should focus on diversifying the farm-linked rural economy in order to help maintain rural populations.

| 7.9 | In its third cohesion report, the Commission states that three kinds of measures — tourism, the craft trades and rural heritage — should be covered jointly by regional policy and rural development policy. The Committee wants to see this balance maintained. Apparently, rural infrastructure should no longer be financed by the Structural Funds. The Committee rejects any transfer of funding for this type of investment from regional policy to rural development policy. |
| --- | --- |

7.9

In its third cohesion report, the Commission states that three kinds of measures — tourism, the craft trades and rural heritage — should be covered jointly by regional policy and rural development policy. The Committee wants to see this balance maintained. Apparently, rural infrastructure should no longer be financed by the Structural Funds. The Committee rejects any transfer of funding for this type of investment from regional policy to rural development policy.

| 7.10 | The Committee also proposes that, to carry regional policy forward, rural heritage renewal or regeneration schemes not undertaken as part of an agri-tourism project should no longer come under rural development policy. |
| --- | --- |

7.10

The Committee also proposes that, to carry regional policy forward, rural heritage renewal or regeneration schemes not undertaken as part of an agri-tourism project should no longer come under rural development policy.

| 7.11 | The Committee also proposes that measures to strengthen the rural economy should include a number of services designed to improve quality of life for the farming community (e.g. farmer replacement services). |
| --- | --- |

7.11

The Committee also proposes that measures to strengthen the rural economy should include a number of services designed to improve quality of life for the farming community (e.g. farmer replacement services).

C.   IMPROVING THE MANAGEMENT OF RURAL DEVELOPMENT POLICY

| 8. | The first area in which management conditions have to be improved is in the continuity of rural development planning. The Committee therefore supports Commission efforts to frame the new rural development policy in order to limit as far as possible the ‘latent period’ between two programming periods. |
| --- | --- |

8.

The first area in which management conditions have to be improved is in the continuity of rural development planning. The Committee therefore supports Commission efforts to frame the new rural development policy in order to limit as far as possible the ‘latent period’ between two programming periods.

| 8.1 | The administrative difficulties in some Member States in implementing rural development policy show that using a number of financial instruments that are subject to different rules may run counter to moves to make public administration easier to understand. Thus, the positive move to bring rural development measures together into a single regulation has potentially been perceived as a source of extra red tape by those it was intended to benefit. |
| --- | --- |

8.1

The administrative difficulties in some Member States in implementing rural development policy show that using a number of financial instruments that are subject to different rules may run counter to moves to make public administration easier to understand. Thus, the positive move to bring rural development measures together into a single regulation has potentially been perceived as a source of extra red tape by those it was intended to benefit.

| 8.2 | Simplifying planning means having no more than one fund for managing rural development activities. That said, the Committee would stress that this single fund must be managed in a way consistent with the management of the Structural Funds. |
| --- | --- |

8.2

Simplifying planning means having no more than one fund for managing rural development activities. That said, the Committee would stress that this single fund must be managed in a way consistent with the management of the Structural Funds.

| 8.3 | The future three-pronged structure of rural development policy (agricultural competitiveness, spatial management and diversification of the rural economy) should also be reflected when drafting the forthcoming rural development regulation. This regulation could lay down the principles for support and the goals of the three strands. It might also list possible types of activity (investment aid, subsidised loans, multiannual public support to meet certain specifications, technical assistance, financial engineering etc). The arrangements for implementing each of the measures should be subject to national subsidiarity. The Committee feels that if the Member States had to manage a single decision on the basis of a strategic document, this would have the advantage of establishing a fixed Community framework for the programming period. |
| --- | --- |

8.3

The future three-pronged structure of rural development policy (agricultural competitiveness, spatial management and diversification of the rural economy) should also be reflected when drafting the forthcoming rural development regulation. This regulation could lay down the principles for support and the goals of the three strands. It might also list possible types of activity (investment aid, subsidised loans, multiannual public support to meet certain specifications, technical assistance, financial engineering etc). The arrangements for implementing each of the measures should be subject to national subsidiarity. The Committee feels that if the Member States had to manage a single decision on the basis of a strategic document, this would have the advantage of establishing a fixed Community framework for the programming period.

| 8.4 | The current way of adopting amendments to measures in the Committee on Agricultural Structures and Rural Development (the STAR Committee) is not flexible enough since the ex-ante assessment procedure is still too long. The Committee proposes that the new provisions should be based on the State aid procedure. This means that, when the rural development plan is adopted at the start of programming, the changes to the measures could be submitted to the Commission to check their legality (ex-post evaluation). |
| --- | --- |

8.4

The current way of adopting amendments to measures in the Committee on Agricultural Structures and Rural Development (the STAR Committee) is not flexible enough since the ex-ante assessment procedure is still too long. The Committee proposes that the new provisions should be based on the State aid procedure. This means that, when the rural development plan is adopted at the start of programming, the changes to the measures could be submitted to the Commission to check their legality (ex-post evaluation).

| 8.5 | Operational programmes should be subject to national or infra-national subsidiarity, depending on the way each Member State is organised. The Commission would thus be responsible for ensuring that the measures taken did not distort competition in any way, for verifying the legality of the support arrangements and ensuring consistency with the Structural Funds. The Committee would also point out that, given its past record in this field, the Commission could support moves to pass on experience as part of technical assistance, not least for the new Member States. |
| --- | --- |

8.5

Operational programmes should be subject to national or infra-national subsidiarity, depending on the way each Member State is organised. The Commission would thus be responsible for ensuring that the measures taken did not distort competition in any way, for verifying the legality of the support arrangements and ensuring consistency with the Structural Funds. The Committee would also point out that, given its past record in this field, the Commission could support moves to pass on experience as part of technical assistance, not least for the new Member States.

| 8.6 | The Committee wants to see a cut in the number of steps involved in ratifying programmes by having clear-cut responsibilities for each level of decision-making: Commission, Member States and regional and local authorities. |
| --- | --- |

8.6

The Committee wants to see a cut in the number of steps involved in ratifying programmes by having clear-cut responsibilities for each level of decision-making: Commission, Member States and regional and local authorities.

| 8.7 | Having a single fund for rural development measures is also designed to simplify financial management. This new fund should share the same main features as the Structural Funds, i.e.:






  — | it should be based on a projected yearly timetable; |
| --- | --- | --- |

8.7

Having a single fund for rural development measures is also designed to simplify financial management. This new fund should share the same main features as the Structural Funds, i.e.:

—

it should be based on a projected yearly timetable;

| — | it should be subject to multiannual planning; |
| --- | --- |

—

it should be subject to multiannual planning;

| — | its payment methods should be more flexible than those of the EAGGF — Guarantee Section (commitment appropriations — payment appropriations). |
| --- | --- |

—

its payment methods should be more flexible than those of the EAGGF — Guarantee Section (commitment appropriations — payment appropriations).

| 8.8 | Moves to simplify the administrative management of rural development policy also cover monitoring. The Committee backs the Commission's approach set out in the third cohesion report, particularly as regards proportionality in monitoring. Below certain thresholds, the Member State would have the option of using its national control systems for the programmes concerned. The Committee would stress that these guidelines should apply to rural development policy management, provided they secure the same effective monitoring — and thus sound use — of Community funds. |
| --- | --- |

8.8

Moves to simplify the administrative management of rural development policy also cover monitoring. The Committee backs the Commission's approach set out in the third cohesion report, particularly as regards proportionality in monitoring. Below certain thresholds, the Member State would have the option of using its national control systems for the programmes concerned. The Committee would stress that these guidelines should apply to rural development policy management, provided they secure the same effective monitoring — and thus sound use — of Community funds.

| 8.9 | The performance reserve for the Structural Funds introduced as part of Agenda 2000 is seen more as a measure used in frustration when the administrative implementation of programmes is not going according to plan. Moreover, allocations of this reserve based solely on appropriation take-up could be harmful by encouraging rapid planning followed by a strict monitoring of implementation. This is not consistent with multiannual rural development programming. The Committee therefore feels that the performance reserve principle should not be applied to future rural development policy. |
| --- | --- |

8.9

The performance reserve for the Structural Funds introduced as part of Agenda 2000 is seen more as a measure used in frustration when the administrative implementation of programmes is not going according to plan. Moreover, allocations of this reserve based solely on appropriation take-up could be harmful by encouraging rapid planning followed by a strict monitoring of implementation. This is not consistent with multiannual rural development programming. The Committee therefore feels that the performance reserve principle should not be applied to future rural development policy.

| 8.10 | Partnership is also consistent with simplifying programme implementation. The Committee hopes that each Member State, mirroring what is happening in regional policy, will strive to secure cooperation both between the various administrative tiers and also with the social partners and organised civil society representatives in the framing, implementation and follow-up of the programmes. |
| --- | --- |

8.10

Partnership is also consistent with simplifying programme implementation. The Committee hopes that each Member State, mirroring what is happening in regional policy, will strive to secure cooperation both between the various administrative tiers and also with the social partners and organised civil society representatives in the framing, implementation and follow-up of the programmes.

| 8.11 | Since it was launched in 1989, the Commission's Leader initiative has proved successful, not least thanks to the priority it gives to seeking out new avenues for development in rural areas. The current programming phase has also highlighted the multiplier effect of sharing experiences in facilitating partnerships between local action groups in the different countries. The Committee feels that the Leader initiative should continue backing local initiatives by exploring new avenues for development in rural areas, not least through the inclusion of a specific strand in rural development policy: how to foresee training needs in a specific area, the search for new outlets for farm products, the development of synergies between economic players operating in the same area: these are just some of the other subjects that might shed new light on future rural development policy. The Committee therefore backs the continuation of the Leader initiative as part of development policy with a view to identifying innovative solutions for rural development areas. |
| --- | --- |

8.11

Since it was launched in 1989, the Commission's Leader initiative has proved successful, not least thanks to the priority it gives to seeking out new avenues for development in rural areas. The current programming phase has also highlighted the multiplier effect of sharing experiences in facilitating partnerships between local action groups in the different countries. The Committee feels that the Leader initiative should continue backing local initiatives by exploring new avenues for development in rural areas, not least through the inclusion of a specific strand in rural development policy: how to foresee training needs in a specific area, the search for new outlets for farm products, the development of synergies between economic players operating in the same area: these are just some of the other subjects that might shed new light on future rural development policy. The Committee therefore backs the continuation of the Leader initiative as part of development policy with a view to identifying innovative solutions for rural development areas.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  The European Conference on Rural Development, Cork, Ireland, 7-9 November 1996;

1

http://www.europa.eu.int/comm/agriculture/rur/cork_en.htm

(2)  COM(2004) 101.

2

(3)  COM(2004) 107.

3

(4)  Gothenburg European Council, 15-16 June 2001; see:

4

http://europa.eu.int/comm/gothenburg_council/sustainable_en.htm

(5)  Gothenburg European Council, presidency conclusions, 15 and 16 June 2001, point 31. document no: 200/1/01.

5

(6)  2516th Council meeting — Agriculture and Fisheries — Luxembourg, 11, 12, 17, 18, 19, 25 and 26 June 2003; 10272/03 (Presse 164), page. 7, point 3.

6

(7)  Potsdam, May 1999,

7

http://europa.eu.int/comm/regional_policy/sources/docoffic/official/reports/som_en.htm

(8)  Article 3: The Union's objectives: ‘ 3. The Union [...] shall promote economic, social and territorial cohesion, and solidarity among Member States.’

8

http://europa.eu.int/futurum/constitution/part1/title1/index_en.htm#Article3

(9)  Council Regulation (EC) No. 1260/1999 of 21.6.1999 laying down general provisions on the Structural Funds; OJ L 161, 26.6.1999, pp. 1 - 42.

9

(10)  Council Regulation (EC) No. 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations; OJ L 160, 26.6. 1999, pp. 80 - 102.

10

(11)  Fact Sheet: Rural Development in the European Union, page 9, Office for Official Publications of the European Communities 2003.

11

(12)  A policy to consolidate the European agricultural model, CES 953/99, OJ C 368, 20.12.99, pp. 76-86.

12

The future of the CAP, CES 362/2002, OJ C 125, 27.5.2002, pp. 87-99.

(13)  Draft EESC opinion on agriculture in peri-urban areas, CES 1324/2003 (to be adopted at the September 2004 plenary session)

13

(14)  Preliminary draft EESC opinion on how to achieve better integration of regions suffering from permanent natural and structural handicaps, R/CESE 631/2004 (to be adopted at the September 2004 plenary session)

14

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/60 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/60

---

Opinion of the European Economic and Social Committee on the ‘Third report on economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation’

(COM(2004) 107 final)

(2004/C 302/14)

On 8 December 2003, the European Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the ‘Third report on economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation’.

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 8 June 2004. The rapporteur was Mr Barros Vale.

At its 410th plenary session (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion with 115 votes in favour and five abstentions.

1.   Introduction

| 1.1 | The third report on economic and social cohesion, entitled A new partnership for cohesion - convergence, competitiveness, cooperation, takes stock of cohesion policy in the European Union (EU), in particular progress achieved on economic, social and territorial issues and future prospects. |
| --- | --- |

1.1

The third report on economic and social cohesion, entitled A new partnership for cohesion - convergence, competitiveness, cooperation, takes stock of cohesion policy in the European Union (EU), in particular progress achieved on economic, social and territorial issues and future prospects.

| 1.2 | The document is divided into four main parts and also includes an executive summary at the beginning of the report and a proposal for a reformed cohesion policy, presented in the conclusions:






  — | Part 1 – Cohesion, competitiveness, employment and growth – Situation and trends; |
| --- | --- | --- |

1.2

The document is divided into four main parts and also includes an executive summary at the beginning of the report and a proposal for a reformed cohesion policy, presented in the conclusions:

—

Part 1 – Cohesion, competitiveness, employment and growth – Situation and trends;

| — | Part 2 – The impact of Member State policies on cohesion; |
| --- | --- |

—

Part 2 – The impact of Member State policies on cohesion;

| — | Part 3 – Impact of Community policies: competitiveness, employment and cohesion; |
| --- | --- |

—

Part 3 – Impact of Community policies: competitiveness, employment and cohesion;

| — | Part 4 – Impact and added value of structural policies. |
| --- | --- |

—

Part 4 – Impact and added value of structural policies.

| 1.3 | The European Economic and Social Committee welcomes both the results attained over the last few years in social cohesion, one of the European Union's fundamental policy areas, and the proposals put forward in the report, corresponding as they do to the objectives defined by the EESC in the many documents it has adopted over the years. |
| --- | --- |

1.3

The European Economic and Social Committee welcomes both the results attained over the last few years in social cohesion, one of the European Union's fundamental policy areas, and the proposals put forward in the report, corresponding as they do to the objectives defined by the EESC in the many documents it has adopted over the years.

| 1.3.1 | For this reason, the EESC welcomes the fact that the Commission has rejected certain moves to renationalise cohesion policy. |
| --- | --- |

1.3.1

For this reason, the EESC welcomes the fact that the Commission has rejected certain moves to renationalise cohesion policy.

| 1.4 | Owing to the complexity and diversity of the issues addressed in the report, and with a view to ensuring that the opinion presents these issues clearly, it was decided to structure this document along the same lines as the Commission report and conclude by assessing progress achieved and also interpreting future prospects. |
| --- | --- |

1.4

Owing to the complexity and diversity of the issues addressed in the report, and with a view to ensuring that the opinion presents these issues clearly, it was decided to structure this document along the same lines as the Commission report and conclude by assessing progress achieved and also interpreting future prospects.

2.   Part 1 – Cohesion, competitiveness, employment and growth – Situation and trends

| 2.1 | On the basis of various statistics, the report addresses the cohesion situation in Europe in economic, social and territorial terms, particularly in terms of the positive impact on convergence. |
| --- | --- |

2.1

On the basis of various statistics, the report addresses the cohesion situation in Europe in economic, social and territorial terms, particularly in terms of the positive impact on convergence.

| 2.2 | Using data for 2001 and 2002, the document assesses in some detail progress made towards real convergence in the ‘cohesion countries’, and outlines a number of future prospects. The document also analyses the potential cohesion situation in an enlarged Europe. |
| --- | --- |

2.2

Using data for 2001 and 2002, the document assesses in some detail progress made towards real convergence in the ‘cohesion countries’, and outlines a number of future prospects. The document also analyses the potential cohesion situation in an enlarged Europe.

| 2.3 | This part of the report addresses growth in GDP and employment in the cohesion countries over recent years relative to that in the rest of the EU and looks at how disparities between regions in the EU15 have changed over the past decade, with particular focus on the Objective 1 regions. It also analyses recent economic developments in the new Member States, in particular the way that economic performance varies within these countries and the fact that if these countries are to attain income levels close to the EU average, they will need to sustain high rates of growth for a prolonged period. |
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2.3

This part of the report addresses growth in GDP and employment in the cohesion countries over recent years relative to that in the rest of the EU and looks at how disparities between regions in the EU15 have changed over the past decade, with particular focus on the Objective 1 regions. It also analyses recent economic developments in the new Member States, in particular the way that economic performance varies within these countries and the fact that if these countries are to attain income levels close to the EU average, they will need to sustain high rates of growth for a prolonged period.

| 2.4 | The report also highlights Europe's ageing population and factors determining competitiveness, growth and employment, such as innovation and knowledge, along with environmental protection in the context of the Gothenburg objectives. |
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2.4

The report also highlights Europe's ageing population and factors determining competitiveness, growth and employment, such as innovation and knowledge, along with environmental protection in the context of the Gothenburg objectives.

2.5   General aspects

| 2.5.1 | Over the last decade, and in particular since the second half of the 1990s, national and regional cohesion has improved significantly, with a narrowing of disparities both between countries and between regions in the EU. Nonetheless, there has been greater cohesion between Member States than between regions. |
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2.5.1

Over the last decade, and in particular since the second half of the 1990s, national and regional cohesion has improved significantly, with a narrowing of disparities both between countries and between regions in the EU. Nonetheless, there has been greater cohesion between Member States than between regions.

| 2.5.2 | Despite the positive contribution of the Structural Funds and progress achieved, some very significant differences remain in terms of prosperity and economic performance, reflecting structural weaknesses in some countries and regions. |
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2.5.2

Despite the positive contribution of the Structural Funds and progress achieved, some very significant differences remain in terms of prosperity and economic performance, reflecting structural weaknesses in some countries and regions.

| 2.5.3 | There also remain a number of problems relating to the competitiveness of less prosperous regions. Some European regions are still too isolated and fall short in terms of skilled labour, investment and the resources necessary to gain proper access to the information society. |
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2.5.3

There also remain a number of problems relating to the competitiveness of less prosperous regions. Some European regions are still too isolated and fall short in terms of skilled labour, investment and the resources necessary to gain proper access to the information society.

| 2.5.4 | Less progress seems to have been made in terms of social cohesion and employment: |
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2.5.4

Less progress seems to have been made in terms of social cohesion and employment:

| 2.5.4.1 | it is proving difficult to make a dent in long-term unemployment; |
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2.5.4.1

it is proving difficult to make a dent in long-term unemployment;

| 2.5.4.2 | the limited increase in employment in the EU15 in 2001, combined with a fall in employment in the accession countries in recent years, has further exacerbated regional disparities; |
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2.5.4.2

the limited increase in employment in the EU15 in 2001, combined with a fall in employment in the accession countries in recent years, has further exacerbated regional disparities;

| 2.5.4.3 | natural population growth has fallen in various European regions and is set to decline even further in the future (demographic projections predict a decline in the Member States and accession countries, with a few exceptions); |
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2.5.4.3

natural population growth has fallen in various European regions and is set to decline even further in the future (demographic projections predict a decline in the Member States and accession countries, with a few exceptions);

| 2.5.4.4 | more relevant for employment, the population of working age is likely to begin to shrink before the total population does. Projections suggest that by 2025, people aged 50 and over will account for 35 % of the working age population in the EU15, as against 26 % in 2000. This will be accompanied by a continuing increase in the number of people aged 65 and over; |
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2.5.4.4

more relevant for employment, the population of working age is likely to begin to shrink before the total population does. Projections suggest that by 2025, people aged 50 and over will account for 35 % of the working age population in the EU15, as against 26 % in 2000. This will be accompanied by a continuing increase in the number of people aged 65 and over;

| 2.5.4.5 | the data available point to a rise in old-age dependency rates. In the EU15, the number of people aged 65 and over currently amounts to almost 25 % of the working-age population — i.e. there are four people aged 15 to 64 for every one of retirement age. By 2025, the figure will have risen to 36 %, i.e. less than three people of working age for each one in retirement. In the accession countries, the ratio will increase from under 20 % to over 30 %. |
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2.5.4.5

the data available point to a rise in old-age dependency rates. In the EU15, the number of people aged 65 and over currently amounts to almost 25 % of the working-age population — i.e. there are four people aged 15 to 64 for every one of retirement age. By 2025, the figure will have risen to 36 %, i.e. less than three people of working age for each one in retirement. In the accession countries, the ratio will increase from under 20 % to over 30 %.

| 2.5.4.6 | The report does, however, point out that these statistics do not reveal how many people of working age will be in employment to support those aged 65 and over (in 2002, 64 % of the working-age population was actually in employment in the EU15, compared to only 56 % in the accession countries, with marked differences both between countries and regions). |
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2.5.4.6

The report does, however, point out that these statistics do not reveal how many people of working age will be in employment to support those aged 65 and over (in 2002, 64 % of the working-age population was actually in employment in the EU15, compared to only 56 % in the accession countries, with marked differences both between countries and regions).

| 2.5.5 | The report warns that disparities in both income and employment will widen still further, across countries and across regions, when the new Member States join the EU in May 2004. These countries have experienced high growth but still have lower levels of GDP per capita and, in many cases, employment than the EU15 average. |
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2.5.5

The report warns that disparities in both income and employment will widen still further, across countries and across regions, when the new Member States join the EU in May 2004. These countries have experienced high growth but still have lower levels of GDP per capita and, in many cases, employment than the EU15 average.

| 2.5.6 | Given the growing interdependence in trade and investment, economic development in the new Member States will sustain high levels of growth throughout the EU. The benefits of this will be felt in Germany and Italy in particular. |
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2.5.6

Given the growing interdependence in trade and investment, economic development in the new Member States will sustain high levels of growth throughout the EU. The benefits of this will be felt in Germany and Italy in particular.

| 2.5.7 | With enlargement, the Member States can be divided into three groups according to GDP per capita expressed in terms of purchasing power standards (PPS):






  — | a first group consisting of twelve of the present fifteen Member States, where GDP per capita in PPS is above the EU average (10 percentage points or more); |
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2.5.7

With enlargement, the Member States can be divided into three groups according to GDP per capita expressed in terms of purchasing power standards (PPS):

—

a first group consisting of twelve of the present fifteen Member States, where GDP per capita in PPS is above the EU average (10 percentage points or more);

| — | a second group of seven countries, comprising the remaining three present Member States (Spain, Portugal and Greece) plus Cyprus, Slovenia, Malta and the Czech Republic, where GDP per capita in PPS is between 73 % and 92 % of the EU25 average; |
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—

a second group of seven countries, comprising the remaining three present Member States (Spain, Portugal and Greece) plus Cyprus, Slovenia, Malta and the Czech Republic, where GDP per capita in PPS is between 73 % and 92 % of the EU25 average;

| — | and finally, a third group of eight countries (including Romania and Bulgaria), where GDP per capita is below 60 % of the Community average. |
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—

and finally, a third group of eight countries (including Romania and Bulgaria), where GDP per capita is below 60 % of the Community average.

| 2.5.8 | The section on territorial cohesion acknowledges that cooperation between the regions – at cross-border, trans-national and inter-regional level – has played an important role in promoting balanced development across the EU. |
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2.5.8

The section on territorial cohesion acknowledges that cooperation between the regions – at cross-border, trans-national and inter-regional level – has played an important role in promoting balanced development across the EU.

| 2.5.9 | As regards factors determining growth and competitiveness, the report notes that regional disparities persist:






  — | in terms of human resources, the less prosperous regions have high numbers of early school leavers while participation in continuing training is much lower in the cohesion countries, Ireland apart, and in many cases significantly lower in the accession countries; |
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2.5.9

As regards factors determining growth and competitiveness, the report notes that regional disparities persist:

—

in terms of human resources, the less prosperous regions have high numbers of early school leavers while participation in continuing training is much lower in the cohesion countries, Ireland apart, and in many cases significantly lower in the accession countries;

| — | the report presents several statistics which demonstrate major disparities between EU15 countries in terms of innovation. Figures for R&D expenditure confirm that Objective 1 regions are lagging behind (firms' R&D expenditure as a percentage of GDP is well below the European average, at just over a fifth of the EU average). |
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—

the report presents several statistics which demonstrate major disparities between EU15 countries in terms of innovation. Figures for R&D expenditure confirm that Objective 1 regions are lagging behind (firms' R&D expenditure as a percentage of GDP is well below the European average, at just over a fifth of the EU average).

| 2.5.9.1 | In the accession countries, much less is spent on R&D as a proportion of GDP than in most of the current Member States, but only slightly less than in Objective 1 regions. |
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2.5.9.1

In the accession countries, much less is spent on R&D as a proportion of GDP than in most of the current Member States, but only slightly less than in Objective 1 regions.

| 2.5.9.2 | As in the EU15, in the accession countries too there is a relative concentration of R&D expenditure in the most prosperous regions. |
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2.5.9.2

As in the EU15, in the accession countries too there is a relative concentration of R&D expenditure in the most prosperous regions.

| 2.5.9.3 | Disparities also remain in terms of regional access to information and communication technologies (ICT). |
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2.5.9.3

Disparities also remain in terms of regional access to information and communication technologies (ICT).

| 2.5.10 | According to the report, it is necessary to create the right conditions for regional development to be sustained and also to pursue employment-promoting strategies. At national level, there is a need for a macroeconomic environment conducive to stability and growth, and a tax and regulatory system that encourages business. At regional level, the need is for basic infrastructures and a skilled labour force - especially in the Objective 1 regions and the accession countries, which are seriously lacking in both at present. Basically, the report points to the need for the regions to meet a set of conditions which relate more directly to the intangible factors of competitiveness, such as innovation, R&D and the use of ICT, in order to achieve the objectives set out in the Lisbon Strategy. |
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2.5.10

According to the report, it is necessary to create the right conditions for regional development to be sustained and also to pursue employment-promoting strategies. At national level, there is a need for a macroeconomic environment conducive to stability and growth, and a tax and regulatory system that encourages business. At regional level, the need is for basic infrastructures and a skilled labour force - especially in the Objective 1 regions and the accession countries, which are seriously lacking in both at present. Basically, the report points to the need for the regions to meet a set of conditions which relate more directly to the intangible factors of competitiveness, such as innovation, R&D and the use of ICT, in order to achieve the objectives set out in the Lisbon Strategy.

| 2.5.11 | The report also mentions the substantial differences between Member States and between regions as regards environmental protection, in terms of achieving the Gothenburg objectives. |
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2.5.11

The report also mentions the substantial differences between Member States and between regions as regards environmental protection, in terms of achieving the Gothenburg objectives.

2.6   Cohesion countries

| 2.6.1 | The detailed analysis of convergence of GDP per capita, employment and productivity in the cohesion countries reveals that these countries are continuing to catch up, their growth being well above the EU average during the 1994-2001 period. The report highlights the case of Ireland, which forcefully demonstrates the positive contribution of Structural Fund support when combined with growth-oriented national policies. |
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2.6.1

The detailed analysis of convergence of GDP per capita, employment and productivity in the cohesion countries reveals that these countries are continuing to catch up, their growth being well above the EU average during the 1994-2001 period. The report highlights the case of Ireland, which forcefully demonstrates the positive contribution of Structural Fund support when combined with growth-oriented national policies.

| 2.6.2 | The report points out that economic growth in the EU has slowed appreciably since publication of the last report. This has inevitably affected cohesion, not only because it has led to a rise in unemployment, but also because it has created a climate which is not conducive to a further reduction in regional disparities in both income and employment. |
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2.6.2

The report points out that economic growth in the EU has slowed appreciably since publication of the last report. This has inevitably affected cohesion, not only because it has led to a rise in unemployment, but also because it has created a climate which is not conducive to a further reduction in regional disparities in both income and employment.

| 2.6.3 | The economic slow-down in the EU has affected nearly all the Member States. Of the cohesion countries, Portugal seems to have been the worst hit. According to data for 2001, and if the forecasts for 2004 are confirmed, Portugal could reverse its convergence course and start to move away from the EU average. |
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2.6.3

The economic slow-down in the EU has affected nearly all the Member States. Of the cohesion countries, Portugal seems to have been the worst hit. According to data for 2001, and if the forecasts for 2004 are confirmed, Portugal could reverse its convergence course and start to move away from the EU average.

| 2.6.4 | Up until 2001, the gap in income levels (GDP per capita) between the least prosperous regions in the EU (which have been the main focus of cohesion policy) and the other regions was narrowing. It is not yet possible, however, to say what has happened since 2001, as this is the last year for which regional figures are available. |
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2.6.4

Up until 2001, the gap in income levels (GDP per capita) between the least prosperous regions in the EU (which have been the main focus of cohesion policy) and the other regions was narrowing. It is not yet possible, however, to say what has happened since 2001, as this is the last year for which regional figures are available.

2.7   Accession countries

| 2.7.1 | Regional disparities in GDP per capita have widened significantly in the accession countries. In the Czech Republic and Slovakia, the 20 % of the population living in the most prosperous regions have a GDP per capita twice as high as the 20 % living in the least prosperous regions. |
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2.7.1

Regional disparities in GDP per capita have widened significantly in the accession countries. In the Czech Republic and Slovakia, the 20 % of the population living in the most prosperous regions have a GDP per capita twice as high as the 20 % living in the least prosperous regions.

| 2.7.2 | If these countries are to attain income levels close to the EU average, they will need to sustain high growth levels for a prolonged period. Growth in these countries would increase growth in the EU as a whole, reducing unemployment and strengthening social cohesion. |
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2.7.2

If these countries are to attain income levels close to the EU average, they will need to sustain high growth levels for a prolonged period. Growth in these countries would increase growth in the EU as a whole, reducing unemployment and strengthening social cohesion.

| 2.7.3 | Since 2001, economic growth has slowed in the accession countries, in part because of the fall-off in growth in the EU, their main export market, leading to a fall in employment. |
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2.7.3

Since 2001, economic growth has slowed in the accession countries, in part because of the fall-off in growth in the EU, their main export market, leading to a fall in employment.

| 2.7.4 | In 2002, the average employment rate in the ten accession countries was 56 %, much lower than the EU15 average of around 64 %. In all of the accession countries, except Cyprus, the employment rate was below the targets for Europe defined in the Lisbon Strategy (67 % in 2005 and 70 % in 2010). |
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2.7.4

In 2002, the average employment rate in the ten accession countries was 56 %, much lower than the EU15 average of around 64 %. In all of the accession countries, except Cyprus, the employment rate was below the targets for Europe defined in the Lisbon Strategy (67 % in 2005 and 70 % in 2010).

2.8   Enlargement

| 2.8.1 | Enlargement will increase the disparity between the most and least prosperous Member States. Although the new Member States have recently grown faster than the EU15, the gap in GDP per capita remains quite pronounced. In 2002, only Malta, Cyprus, the Czech Republic and Slovenia had a GDP per capita in PPS above 60 % of the EU15 average. In Poland, Estonia and Lithuania it was around 40 %, in Latvia, almost 35 % and in Bulgaria and Romania, around 25 % of the average. |
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2.8.1

Enlargement will increase the disparity between the most and least prosperous Member States. Although the new Member States have recently grown faster than the EU15, the gap in GDP per capita remains quite pronounced. In 2002, only Malta, Cyprus, the Czech Republic and Slovenia had a GDP per capita in PPS above 60 % of the EU15 average. In Poland, Estonia and Lithuania it was around 40 %, in Latvia, almost 35 % and in Bulgaria and Romania, around 25 % of the average.

| 2.8.2 | Enlargement will have an even greater effect on disparities between regions than between countries. According to the latest estimates (2001), around 73 million people (representing some 19 % of the EU15 population) live in regions where GDP per capita is below 75 % of the EU average. Enlargement will increase the number of people living in such regions to almost 123 million in the EU of 25. If Bulgaria and Romania are included in the calculation, this figure rises to 153 million, i.e. more than double the current number. |
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2.8.2

Enlargement will have an even greater effect on disparities between regions than between countries. According to the latest estimates (2001), around 73 million people (representing some 19 % of the EU15 population) live in regions where GDP per capita is below 75 % of the EU average. Enlargement will increase the number of people living in such regions to almost 123 million in the EU of 25. If Bulgaria and Romania are included in the calculation, this figure rises to 153 million, i.e. more than double the current number.

| 2.8.3 | The statistical effect of enlargement will be to reduce average GDP per capita. If the criteria for determining Objective 1 status were to remain unchanged, some regions would no longer be eligible for such status, even though their GDP per capita will not have changed. This will affect, for example, various regions in Germany, Spain, Greece, Italy and Portugal. |
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2.8.3

The statistical effect of enlargement will be to reduce average GDP per capita. If the criteria for determining Objective 1 status were to remain unchanged, some regions would no longer be eligible for such status, even though their GDP per capita will not have changed. This will affect, for example, various regions in Germany, Spain, Greece, Italy and Portugal.

3.   Part 2 – The impact of Member State policies on cohesion

| 3.1 | Part 2 of the report examines the extent to which national policies complement the EU's cohesion policy, in the sense that both try to bring about not only a fairer distribution of income and life chances between the regions, but also towards more balanced territorial development at national level and across the EU as a whole. |
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3.1

Part 2 of the report examines the extent to which national policies complement the EU's cohesion policy, in the sense that both try to bring about not only a fairer distribution of income and life chances between the regions, but also towards more balanced territorial development at national level and across the EU as a whole.

| 3.1.1 | The Commission points out that constraints imposed to reduce public expenditure entail an incentive to improve the quality of expenditure programmes, though it is impossible to say how far this has resulted in more effective policies for regional cohesion. |
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3.1.1

The Commission points out that constraints imposed to reduce public expenditure entail an incentive to improve the quality of expenditure programmes, though it is impossible to say how far this has resulted in more effective policies for regional cohesion.

| 3.1.2 | Though incomplete, public expenditure statistics in the various Member States clearly indicate that a large part of public expenditure in the EU Member States, in particular on social protection, is associated with the European Social Model and, deliberately or not, makes a major contribution to reducing disparities in income levels and life chances. |
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3.1.2

Though incomplete, public expenditure statistics in the various Member States clearly indicate that a large part of public expenditure in the EU Member States, in particular on social protection, is associated with the European Social Model and, deliberately or not, makes a major contribution to reducing disparities in income levels and life chances.

| 3.1.3 | As regards changes in the composition of public expenditure, despite an ageing population and growing number of pensioners, between 1995 and 2002 there was a downward trend in spending on social benefits as a proportion of GDP throughout the EU, except in some countries such as Germany, Greece, Portugal and – to a lesser extent – Italy. |
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3.1.3

As regards changes in the composition of public expenditure, despite an ageing population and growing number of pensioners, between 1995 and 2002 there was a downward trend in spending on social benefits as a proportion of GDP throughout the EU, except in some countries such as Germany, Greece, Portugal and – to a lesser extent – Italy.

| 3.1.4 | In the section on regional development policy in Member States, the report points out that the approach to territorial development differs between Member States, in part reflecting institutional factors (essentially the degree to which economic development policy is decentralised) as well as different views about the factors determining economic development. |
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3.1.4

In the section on regional development policy in Member States, the report points out that the approach to territorial development differs between Member States, in part reflecting institutional factors (essentially the degree to which economic development policy is decentralised) as well as different views about the factors determining economic development.

| 3.1.5 | Because foreign direct investment (FDI) brings jobs and is a mechanism for transferring technology and know-how, policies to attract FDI are an important part of the regional development strategy. Indeed, a significant aim of regional support is precisely to make regions more attractive to foreign investors. |
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3.1.5

Because foreign direct investment (FDI) brings jobs and is a mechanism for transferring technology and know-how, policies to attract FDI are an important part of the regional development strategy. Indeed, a significant aim of regional support is precisely to make regions more attractive to foreign investors.

| 3.1.6 | Though incomplete, data suggest that a disproportionate amount of investment inflows tends to go to the economically stronger regions both within countries and across the EU as a whole. |
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3.1.6

Though incomplete, data suggest that a disproportionate amount of investment inflows tends to go to the economically stronger regions both within countries and across the EU as a whole.

| 3.1.7 | This poses a particular dilemma for governments in the cohesion countries and also in the accession countries, where there is a potential trade-off between the need to attract investment for the less developed regions and the fact that investment tends naturally to home in on the most dynamic regions. |
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3.1.7

This poses a particular dilemma for governments in the cohesion countries and also in the accession countries, where there is a potential trade-off between the need to attract investment for the less developed regions and the fact that investment tends naturally to home in on the most dynamic regions.

4.   Part 3 – Impact of Community policies: competitiveness, employment and cohesion

| 4.1 | The second cohesion report outlined the contribution of Community policies to cohesion. This part of the third report sets out the main changes occurring since 2001 in terms of the Lisbon and Gothenburg objectives. |
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4.1

The second cohesion report outlined the contribution of Community policies to cohesion. This part of the third report sets out the main changes occurring since 2001 in terms of the Lisbon and Gothenburg objectives.

| 4.1.1 | The results of the various initiatives launched under the Lisbon strategy reveal the progress that has been made, particularly in the use of new technologies (e.g. schools online and the development of government services online in all of the accession countries, some of which are more advanced in certain areas than some current Member States). |
| --- | --- |

4.1.1

The results of the various initiatives launched under the Lisbon strategy reveal the progress that has been made, particularly in the use of new technologies (e.g. schools online and the development of government services online in all of the accession countries, some of which are more advanced in certain areas than some current Member States).

| 4.1.2 | Despite differences between the Member States, the report highlights the positive impact that the European Employment Strategy (EES) has had on the labour market (reducing the average unemployment rate in the EU and increasing the rate of participation in the workforce amongst the working-age population). |
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4.1.2

Despite differences between the Member States, the report highlights the positive impact that the European Employment Strategy (EES) has had on the labour market (reducing the average unemployment rate in the EU and increasing the rate of participation in the workforce amongst the working-age population).

| 4.1.3 | Regarding the role of other Community policies in strengthening economic and social cohesion, in particular transport, telecommunications, energy, agriculture and fisheries and environmental protection policy, the report highlights the development of trans-European transport, communications and energy networks. These have improved accessibility, particularly since 1991, and even greater improvements are expected over the coming years, especially in the accession countries. |
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4.1.3

Regarding the role of other Community policies in strengthening economic and social cohesion, in particular transport, telecommunications, energy, agriculture and fisheries and environmental protection policy, the report highlights the development of trans-European transport, communications and energy networks. These have improved accessibility, particularly since 1991, and even greater improvements are expected over the coming years, especially in the accession countries.

| 4.1.4 | Given that in line with the Kyoto Protocol, sustainable development is one of the priorities for energy policy, the report points out that the development of new energy sources would enable outlying regions to diversify their energy sources and improve quality of life. Investment in environmental protection may also have a highly positive impact on job creation. |
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4.1.4

Given that in line with the Kyoto Protocol, sustainable development is one of the priorities for energy policy, the report points out that the development of new energy sources would enable outlying regions to diversify their energy sources and improve quality of life. Investment in environmental protection may also have a highly positive impact on job creation.

| 4.1.5 | The report also acknowledges the complementarity between state aid and cohesion policy and points out that strict control of state aid is necessary to achieve the Lisbon and Gothenburg objectives. The Member States have therefore been called upon to redirect aid to horizontal areas. |
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4.1.5

The report also acknowledges the complementarity between state aid and cohesion policy and points out that strict control of state aid is necessary to achieve the Lisbon and Gothenburg objectives. The Member States have therefore been called upon to redirect aid to horizontal areas.

| 4.2 | Finally, the report refers to the need to guarantee a secure environment in which the rule of law is respected, as an essential precondition for sustainable economic development. |
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4.2

Finally, the report refers to the need to guarantee a secure environment in which the rule of law is respected, as an essential precondition for sustainable economic development.

5.   Part 4 – Impact and added value of structural policies

| 5.1 | This part of the report presents the results of cohesion policy intervention for the 1994-1999 period and the preliminary results on programme implementation during the 2000-2006 programming period. Various aspects of cohesion policy are examined, such as the contribution of structural policies to supporting sustained growth in lagging regions, the effects of these policies outside Objective 1 regions, the specific role of the European Social Fund (ESF) in promoting education, employment and training, the role of structural polices in encouraging cooperation and the contribution made by pre-accession support in the new Member States. |
| --- | --- |

5.1

This part of the report presents the results of cohesion policy intervention for the 1994-1999 period and the preliminary results on programme implementation during the 2000-2006 programming period. Various aspects of cohesion policy are examined, such as the contribution of structural policies to supporting sustained growth in lagging regions, the effects of these policies outside Objective 1 regions, the specific role of the European Social Fund (ESF) in promoting education, employment and training, the role of structural polices in encouraging cooperation and the contribution made by pre-accession support in the new Member States.

| 5.2 | The Committee would like to highlight the following results in particular: |
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5.2

The Committee would like to highlight the following results in particular:

| 5.2.1 | Between the 1989-1993 and 1994-1999 periods, there was a marked increase in public investment in almost all the countries eligible for support under Objective 1. |
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5.2.1

Between the 1989-1993 and 1994-1999 periods, there was a marked increase in public investment in almost all the countries eligible for support under Objective 1.

| 5.2.2 | The Structural Funds have provided support for the development of trans-European transport networks, increasing the attractiveness of the regions concerned and boosting economic activity. |
| --- | --- |

5.2.2

The Structural Funds have provided support for the development of trans-European transport networks, increasing the attractiveness of the regions concerned and boosting economic activity.

| 5.2.3 | It is recognised that investing in infrastructure and equipment is not in itself sufficient to develop a knowledge-based economy. Over the past decade therefore, structural policies have also aimed to increase R&D capacity, particularly in Objective 1 regions. |
| --- | --- |

5.2.3

It is recognised that investing in infrastructure and equipment is not in itself sufficient to develop a knowledge-based economy. Over the past decade therefore, structural policies have also aimed to increase R&D capacity, particularly in Objective 1 regions.

| 5.2.4 | Structural intervention measures have also made a positive contribution to environmental protection. |
| --- | --- |

5.2.4

Structural intervention measures have also made a positive contribution to environmental protection.

| 5.2.5 | Recent empirical studies have analysed real convergence between regions and show that there is a positive correlation between the amount of structural aid provided and GDP growth in real terms. |
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5.2.5

Recent empirical studies have analysed real convergence between regions and show that there is a positive correlation between the amount of structural aid provided and GDP growth in real terms.

| 5.2.6 | Using simulations of the macroeconomic effects of structural policies in the 1994-1999 period, it has been estimated that, as a result of structural intervention, GDP in real terms in 1999 was 2.2 % higher in Greece, 1.4 % higher in Spain, 2.8 % higher in Ireland and 4.7 % higher in Portugal. These differences reflect the varying degree of openness of their economies, the latter two being the most open. |
| --- | --- |

5.2.6

Using simulations of the macroeconomic effects of structural policies in the 1994-1999 period, it has been estimated that, as a result of structural intervention, GDP in real terms in 1999 was 2.2 % higher in Greece, 1.4 % higher in Spain, 2.8 % higher in Ireland and 4.7 % higher in Portugal. These differences reflect the varying degree of openness of their economies, the latter two being the most open.

| 5.2.7 | Structural intervention is associated with a significant increase in investment, particularly in infrastructure and human capital, which in 1999 was estimated to be 24 % higher in Portugal and 18 % higher in Greece. |
| --- | --- |

5.2.7

Structural intervention is associated with a significant increase in investment, particularly in infrastructure and human capital, which in 1999 was estimated to be 24 % higher in Portugal and 18 % higher in Greece.

| 5.2.8 | Experience has shown that, in some cases, the Structural Funds have favoured national convergence (Ireland), while in others they have tended to counteract the effects of a polarisation of economic activities (Spain). Experience also indicates, however, that the extent to which a trade-off between regional and national convergence exists depends above all on the spatial distribution of economic activity and settlements in the country in question. |
| --- | --- |

5.2.8

Experience has shown that, in some cases, the Structural Funds have favoured national convergence (Ireland), while in others they have tended to counteract the effects of a polarisation of economic activities (Spain). Experience also indicates, however, that the extent to which a trade-off between regional and national convergence exists depends above all on the spatial distribution of economic activity and settlements in the country in question.

| 5.2.9 | The Structural Funds have helped promote greater economic integration. European economies have become more closely integrated, reflecting growing trade and investment flows between them. Trade between the cohesion countries and the rest of the EU has more than doubled over the past decade. This situation also reflects the fact that other EU countries have benefited from structural aid to less prosperous regions. Estimates suggest that for the 2002-2006 period, almost a quarter (24.1 %) of such expenditure returns to the rest of Europe in the form of increased exports to cohesion countries, particularly exports of machinery and equipment. This percentage is particularly high for Greece and Portugal (42.3 % and 35.2 % of structural aid respectively). |
| --- | --- |

5.2.9

The Structural Funds have helped promote greater economic integration. European economies have become more closely integrated, reflecting growing trade and investment flows between them. Trade between the cohesion countries and the rest of the EU has more than doubled over the past decade. This situation also reflects the fact that other EU countries have benefited from structural aid to less prosperous regions. Estimates suggest that for the 2002-2006 period, almost a quarter (24.1 %) of such expenditure returns to the rest of Europe in the form of increased exports to cohesion countries, particularly exports of machinery and equipment. This percentage is particularly high for Greece and Portugal (42.3 % and 35.2 % of structural aid respectively).

| 5.2.10 | In addition to assisting Objective 1 regions, Structural Fund intervention also helps to support economic development in other EU regions suffering from structural problems (e.g. areas hit by industrial decline, rural areas). The report presents the results of recent evaluation studies on the main effects of this intervention during the 1994-1999 period. Community support helped to restructure traditional industries, diversify economic activity and create jobs in the areas receiving assistance during this time. |
| --- | --- |

5.2.10

In addition to assisting Objective 1 regions, Structural Fund intervention also helps to support economic development in other EU regions suffering from structural problems (e.g. areas hit by industrial decline, rural areas). The report presents the results of recent evaluation studies on the main effects of this intervention during the 1994-1999 period. Community support helped to restructure traditional industries, diversify economic activity and create jobs in the areas receiving assistance during this time.

| 5.2.11 | Detailed analyses indicate that R&D expenditure on innovation and technology transfer seems to have been particularly effective in creating new jobs as well as in saving existing ones. Nevertheless, with a few exceptions, the capacity to maintain a steady flow of innovation in these regions is considerably lower than in the most developed regions of the EU. This contrasts with the extent to which they are endowed with infrastructure, in particular transport and telecommunication systems, and human capital. Substantial efforts have also been made to reconvert old industrial sites and improve the environment, especially in urban areas. |
| --- | --- |

5.2.11

Detailed analyses indicate that R&D expenditure on innovation and technology transfer seems to have been particularly effective in creating new jobs as well as in saving existing ones. Nevertheless, with a few exceptions, the capacity to maintain a steady flow of innovation in these regions is considerably lower than in the most developed regions of the EU. This contrasts with the extent to which they are endowed with infrastructure, in particular transport and telecommunication systems, and human capital. Substantial efforts have also been made to reconvert old industrial sites and improve the environment, especially in urban areas.

| 5.2.12 | As regards support for agriculture, rural development and fisheries, the report presents, inter alia, the results of the measures implemented under Objective 5a and 5b programmes over the 1994-1999 period. |
| --- | --- |

5.2.12

As regards support for agriculture, rural development and fisheries, the report presents, inter alia, the results of the measures implemented under Objective 5a and 5b programmes over the 1994-1999 period.

| 5.2.13 | In addition to supporting Objective 1 regions, a substantial part of ESF resources have gone towards helping other regions in the EU. In the 1994-1999 period, ESF support for Objective 3 and 4 regions helped cut back unemployment (in particular long-term unemployment), assist ethnic minorities and foster equal opportunities between men and women. |
| --- | --- |

5.2.13

In addition to supporting Objective 1 regions, a substantial part of ESF resources have gone towards helping other regions in the EU. In the 1994-1999 period, ESF support for Objective 3 and 4 regions helped cut back unemployment (in particular long-term unemployment), assist ethnic minorities and foster equal opportunities between men and women.

| 5.2.14 | A number of Community initiatives to promote cooperation and networking have done much to complement cohesion policy. INTERREG II helped to encourage networking between countries, the exchange of experience between regions and the dissemination of knowledge. Nonetheless, in terms of reducing isolation, results have been mixed, i.e. land-based links and port facilities have improved significantly in some border areas (e.g. in Greece, Germany and Finland), while in others (e.g. in Portugal and Spain) the effects have been more limited. |
| --- | --- |

5.2.14

A number of Community initiatives to promote cooperation and networking have done much to complement cohesion policy. INTERREG II helped to encourage networking between countries, the exchange of experience between regions and the dissemination of knowledge. Nonetheless, in terms of reducing isolation, results have been mixed, i.e. land-based links and port facilities have improved significantly in some border areas (e.g. in Greece, Germany and Finland), while in others (e.g. in Portugal and Spain) the effects have been more limited.

| 5.2.15 | The report also highlights the contribution of the URBAN Community initiative to developing urban areas and improving quality of life. |
| --- | --- |

5.2.15

The report also highlights the contribution of the URBAN Community initiative to developing urban areas and improving quality of life.

| 5.2.16 | The report points out that enlargement will pose a major challenge for cohesion policy. It acknowledges that Structural Fund support will be of central importance to the new Member States in terms of strengthening their competitiveness and aligning their GDP per capita on the rest of the EU, but stresses that these countries must also make careful preparations in terms of administrative capacity and managing the funds they receive. Pre-accession assistance is, in part, an exercise for the countries concerned in how to use financial support effectively, before receiving much larger funds. However, administrative capacity must be further strengthened and programme implementation further decentralised after 2006. |
| --- | --- |

5.2.16

The report points out that enlargement will pose a major challenge for cohesion policy. It acknowledges that Structural Fund support will be of central importance to the new Member States in terms of strengthening their competitiveness and aligning their GDP per capita on the rest of the EU, but stresses that these countries must also make careful preparations in terms of administrative capacity and managing the funds they receive. Pre-accession assistance is, in part, an exercise for the countries concerned in how to use financial support effectively, before receiving much larger funds. However, administrative capacity must be further strengthened and programme implementation further decentralised after 2006.

6.   Views of the European Economic and Social Committee

| 6.1 | The results set out in the report demonstrate that cohesion policy has had a very visible, positive impact. |
| --- | --- |

6.1

The results set out in the report demonstrate that cohesion policy has had a very visible, positive impact.

| 6.2 | The EESC is, however, concerned by the fact that measures to achieve cohesion policy objectives have met with more visible success in boosting cohesion between Member States than between regions. Despite some progress, regional disparities persist in terms of economic and social development. The EESC also warns that enlargement will exacerbate these disparities, thus posing a major challenge for cohesion policy. |
| --- | --- |

6.2

The EESC is, however, concerned by the fact that measures to achieve cohesion policy objectives have met with more visible success in boosting cohesion between Member States than between regions. Despite some progress, regional disparities persist in terms of economic and social development. The EESC also warns that enlargement will exacerbate these disparities, thus posing a major challenge for cohesion policy.

| 6.3 | The EESC agrees that enlargement will significantly expand the Community's internal market, bringing new opportunities. The impact of this will, however, vary across the EU. Given the growing interdependence in trade and investment, economic development in the new Member States will sustain high levels of growth throughout the EU (it has been shown that the Structural Funds help promote greater economic integration, reflecting growing trade and investment flows). |
| --- | --- |

6.3

The EESC agrees that enlargement will significantly expand the Community's internal market, bringing new opportunities. The impact of this will, however, vary across the EU. Given the growing interdependence in trade and investment, economic development in the new Member States will sustain high levels of growth throughout the EU (it has been shown that the Structural Funds help promote greater economic integration, reflecting growing trade and investment flows).

| 6.4 | The EESC also points out that the Structural Funds do not benefit the economies of eligible regions alone. A substantial part of aid earmarked for regions lagging behind in development returns to the most developed regions of the European Union in the form of increased exports. Estimates suggest that this will happen with almost a quarter (24.1 %) of structural aid under Objective 1 in the 2000-2006 period. In the long term, the development generated in these regions will also open up new markets for regions and countries that are net contributors, thereby benefiting their economies too. |
| --- | --- |

6.4

The EESC also points out that the Structural Funds do not benefit the economies of eligible regions alone. A substantial part of aid earmarked for regions lagging behind in development returns to the most developed regions of the European Union in the form of increased exports. Estimates suggest that this will happen with almost a quarter (24.1 %) of structural aid under Objective 1 in the 2000-2006 period. In the long term, the development generated in these regions will also open up new markets for regions and countries that are net contributors, thereby benefiting their economies too.

| 6.5 | Data suggest that a disproportionate amount of investment inflows tends to go to the economically stronger regions both within countries and across the EU as a whole. This poses a particular dilemma for governments in the cohesion countries and, in particular, in the accession countries. |
| --- | --- |

6.5

Data suggest that a disproportionate amount of investment inflows tends to go to the economically stronger regions both within countries and across the EU as a whole. This poses a particular dilemma for governments in the cohesion countries and, in particular, in the accession countries.

| 6.6 | The coordination of various sector-specific Community policies, especially agriculture, fisheries, transport, research and technology and education and vocational training policy, has had a positive effect on cohesion. |
| --- | --- |

6.6

The coordination of various sector-specific Community policies, especially agriculture, fisheries, transport, research and technology and education and vocational training policy, has had a positive effect on cohesion.

| 6.7 | The report also acknowledges the importance of Community support for non-Objective 1 regions in terms of reducing economic and social disparities. |
| --- | --- |

6.7

The report also acknowledges the importance of Community support for non-Objective 1 regions in terms of reducing economic and social disparities.

| 6.8 | This economic slow-down has, in general, had negative repercussions on employment. The employment rate in the EU15 is still well below the ambitious objective set by the Lisbon European Council. However, the average rate masks substantial differences across the EU. |
| --- | --- |

6.8

This economic slow-down has, in general, had negative repercussions on employment. The employment rate in the EU15 is still well below the ambitious objective set by the Lisbon European Council. However, the average rate masks substantial differences across the EU.

| 6.9 | Demographic trends, in particular the ageing labour force, will have a significant impact on the EU's future labour market and demonstrate the need to improve lifelong training and learning. |
| --- | --- |

6.9

Demographic trends, in particular the ageing labour force, will have a significant impact on the EU's future labour market and demonstrate the need to improve lifelong training and learning.

| 6.10 | Demographic projections highlight the importance of reaching a high level of employment in the coming years to prevent an increase in social tension. This must go hand in hand with a sustained increase in productivity. |
| --- | --- |

6.10

Demographic projections highlight the importance of reaching a high level of employment in the coming years to prevent an increase in social tension. This must go hand in hand with a sustained increase in productivity.

| 6.11 | There is agreement on the need to focus the European economy more on activities based on know-how, innovation and new information and communication technologies, in order to make it more competitive, increase employment and improve quality of life - in short, so as to achieve the objectives laid down in the Lisbon Strategy. |
| --- | --- |

6.11

There is agreement on the need to focus the European economy more on activities based on know-how, innovation and new information and communication technologies, in order to make it more competitive, increase employment and improve quality of life - in short, so as to achieve the objectives laid down in the Lisbon Strategy.

7.   Cohesion policy priorities

| 7.1 | The EESC welcomes the new architecture that has been devised for EU cohesion policy after 2006. This is organised around a limited number of priority themes (I – Convergence; II – Regional competitiveness and employment; III – European territorial cooperation) and will be put into practice primarily by implementing the Lisbon and Gothenburg strategies at national and regional level. |
| --- | --- |

7.1

The EESC welcomes the new architecture that has been devised for EU cohesion policy after 2006. This is organised around a limited number of priority themes (I – Convergence; II – Regional competitiveness and employment; III – European territorial cooperation) and will be put into practice primarily by implementing the Lisbon and Gothenburg strategies at national and regional level.

| 7.2 | The EESC believes that the data presented in the report clearly demonstrate the need to put an even greater effort into pursuing the cohesion objective in an enlarged EU. It therefore agrees that the convergence objective should focus first and foremost on those regions whose GDP per capita is less than 75 % of the Community average and welcomes the special treatment that will be given to regions affected by the ‘statistical effect’. Such regions will now benefit from more support than they would have received under the ‘phasing out’ arrangements adopted in 1999. |
| --- | --- |

7.2

The EESC believes that the data presented in the report clearly demonstrate the need to put an even greater effort into pursuing the cohesion objective in an enlarged EU. It therefore agrees that the convergence objective should focus first and foremost on those regions whose GDP per capita is less than 75 % of the Community average and welcomes the special treatment that will be given to regions affected by the ‘statistical effect’. Such regions will now benefit from more support than they would have received under the ‘phasing out’ arrangements adopted in 1999.

| 7.3 | The EESC welcomes the proposal to channel Cohesion Fund resources towards the convergence objective and considers that allocation of these resources should continue to be determined by national criteria (i.e. Member States with GNI below 90 % of the Community average) rather than more restrictive regional criteria. |
| --- | --- |

7.3

The EESC welcomes the proposal to channel Cohesion Fund resources towards the convergence objective and considers that allocation of these resources should continue to be determined by national criteria (i.e. Member States with GNI below 90 % of the Community average) rather than more restrictive regional criteria.

| 7.4 | The EESC agrees with the approach to be adopted for cohesion policy outside the least developed Member States and regions (namely to promote competitiveness, reduce disparities between regions, and back up the European Employment Strategy) and it is in favour of focusing the approach on a limited number of key competitiveness-related themes (e.g. the knowledge economy, accessibility, the environment and services of general interest). |
| --- | --- |

7.4

The EESC agrees with the approach to be adopted for cohesion policy outside the least developed Member States and regions (namely to promote competitiveness, reduce disparities between regions, and back up the European Employment Strategy) and it is in favour of focusing the approach on a limited number of key competitiveness-related themes (e.g. the knowledge economy, accessibility, the environment and services of general interest).

| 7.5 | The EESC also agrees that, where the second priority is concerned, special treatment should be given to those regions which are currently eligible for Objective 1 support but do not fulfil the eligibility criteria for the convergence priority. Such regions will benefit from a higher level of support during a transitional period (‘phasing in’). |
| --- | --- |

7.5

The EESC also agrees that, where the second priority is concerned, special treatment should be given to those regions which are currently eligible for Objective 1 support but do not fulfil the eligibility criteria for the convergence priority. Such regions will benefit from a higher level of support during a transitional period (‘phasing in’).

| 7.6 | Support for cross-border, trans-national and inter-regional cooperation has played a key role in European territorial integration. The EESC therefore supports the Commission's proposal, building on the experience of the INTERREG initiative, to create a new territorial cooperation objective, maintaining cooperation on cross-border, inter-regional and trans-national issues and continuing to allow Member States to include maritime regions in cross-border cooperation. Moreover, regions that share a border with the new Member States must adapt to the new situation; a special programme should therefore be created for them. The EESC therefore agrees that the financial resources earmarked for the European territorial cooperation objective should be significantly higher than those allocated in the past to INTERREG. |
| --- | --- |

7.6

Support for cross-border, trans-national and inter-regional cooperation has played a key role in European territorial integration. The EESC therefore supports the Commission's proposal, building on the experience of the INTERREG initiative, to create a new territorial cooperation objective, maintaining cooperation on cross-border, inter-regional and trans-national issues and continuing to allow Member States to include maritime regions in cross-border cooperation. Moreover, regions that share a border with the new Member States must adapt to the new situation; a special programme should therefore be created for them. The EESC therefore agrees that the financial resources earmarked for the European territorial cooperation objective should be significantly higher than those allocated in the past to INTERREG.

| 7.7 | The EESC welcomes the Commission's intention to propose a new legal instrument in the form of ‘cross-border regional authorities’, designed to facilitate cooperation between the Member States and local authorities and step up links with the EU's external borders, in particular with its new neighbours. |
| --- | --- |

7.7

The EESC welcomes the Commission's intention to propose a new legal instrument in the form of ‘cross-border regional authorities’, designed to facilitate cooperation between the Member States and local authorities and step up links with the EU's external borders, in particular with its new neighbours.

| 7.8 | The EESC shares the Commission's view that programmes should generally provide an integrated response to specific territorial characteristics, and must take account of the need to combat the various forms of social discrimination. |
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7.8

The EESC shares the Commission's view that programmes should generally provide an integrated response to specific territorial characteristics, and must take account of the need to combat the various forms of social discrimination.

| 7.9 | The EESC welcomes the importance attached to urban issues, whereby urban measures are included in the programmes, giving particular emphasis to the problems facing cities and acknowledging the latter's role in promoting regional development. The EESC agrees with the Commission that cooperation between cities is a key component of territorial cooperation. |
| --- | --- |

7.9

The EESC welcomes the importance attached to urban issues, whereby urban measures are included in the programmes, giving particular emphasis to the problems facing cities and acknowledging the latter's role in promoting regional development. The EESC agrees with the Commission that cooperation between cities is a key component of territorial cooperation.

| 7.10 | The EESC attaches particular importance to the guarantee that new instruments deployed in rural areas will be incorporated into the Common Agricultural Policy, maintaining the current level of focus on assisting the less developed regions and countries covered by the convergence programmes. The EESC stresses that support for rural areas must not be limited to agricultural projects, but must include other projects which promote rural development. |
| --- | --- |

7.10

The EESC attaches particular importance to the guarantee that new instruments deployed in rural areas will be incorporated into the Common Agricultural Policy, maintaining the current level of focus on assisting the less developed regions and countries covered by the convergence programmes. The EESC stresses that support for rural areas must not be limited to agricultural projects, but must include other projects which promote rural development.

8.   Management system

| 8.1 | The EESC agrees that the number of financial instruments available for cohesion policy should be limited to three (ERDF, ESF and Cohesion Fund) and that both the objectives and the associated financial instruments should be limited. This would allow for simpler and more effective programming. |
| --- | --- |

8.1

The EESC agrees that the number of financial instruments available for cohesion policy should be limited to three (ERDF, ESF and Cohesion Fund) and that both the objectives and the associated financial instruments should be limited. This would allow for simpler and more effective programming.

| 8.2 | The EESC is in favour of enhancing cooperation between the Member States, local authorities and the economic and social partners. |
| --- | --- |

8.2

The EESC is in favour of enhancing cooperation between the Member States, local authorities and the economic and social partners.

| 8.3 | The EESC agrees that it is important to conduct regular assessments of the territorial impact of regional policy, including trade impact assessments, as recommended by the Commission. |
| --- | --- |

8.3

The EESC agrees that it is important to conduct regular assessments of the territorial impact of regional policy, including trade impact assessments, as recommended by the Commission.

| 8.4 | The EESC also believes that it is important for future Commission reports to give more prominence to equal opportunities between men and women and to assessing how cohesion policy helps achieve this objective. |
| --- | --- |

8.4

The EESC also believes that it is important for future Commission reports to give more prominence to equal opportunities between men and women and to assessing how cohesion policy helps achieve this objective.

| 8.5 | As regards the management system, the EESC is in favour of retaining the four principles (Programming, Partnership, Concentration and Additionality) and simplifying the system through increased decentralisation. The EESC is, however, of the view that more decentralisation must not in any way affect the need for the Commission to closely monitor programme implementation, thus ensuring that regional policy is consistent across the EU and preventing any slippage which might undermine the respective objectives. The Commission must therefore keep a very close eye both on whether funds are used properly, in order to ensure there is no slippage, and on whether programmes receiving funding serve the purpose for which they were set up. |
| --- | --- |

8.5

As regards the management system, the EESC is in favour of retaining the four principles (Programming, Partnership, Concentration and Additionality) and simplifying the system through increased decentralisation. The EESC is, however, of the view that more decentralisation must not in any way affect the need for the Commission to closely monitor programme implementation, thus ensuring that regional policy is consistent across the EU and preventing any slippage which might undermine the respective objectives. The Commission must therefore keep a very close eye both on whether funds are used properly, in order to ensure there is no slippage, and on whether programmes receiving funding serve the purpose for which they were set up.

9.   The partnership for implementing the Structural Funds

| 9.1 | The EESC reiterates the views expressed in its opinion on the Partnership for implementing the Structural Funds (1) and highlights the following points in particular: |
| --- | --- |

9.1

The EESC reiterates the views expressed in its opinion on the Partnership for implementing the Structural Funds (1) and highlights the following points in particular:

| 9.2 | Thought must be given to the monitoring committees established under Article 35 of the Structural Funds regulation. The mechanisms for involving the social partners must be revised in the light of the new and important duties to be carried out by these committees or those that replace them. |
| --- | --- |

9.2

Thought must be given to the monitoring committees established under Article 35 of the Structural Funds regulation. The mechanisms for involving the social partners must be revised in the light of the new and important duties to be carried out by these committees or those that replace them.

| 9.3 | First and foremost, the involvement of the socio-economic partners on the monitoring committees must be made mandatory, and must be strengthened by giving them the right to vote so that their position on the issues discussed by the monitoring committees is quite clear. |
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9.3

First and foremost, the involvement of the socio-economic partners on the monitoring committees must be made mandatory, and must be strengthened by giving them the right to vote so that their position on the issues discussed by the monitoring committees is quite clear.

| 9.4 | The Commission should commission a new study of the different types of participation models that have been used at national and regional level. Practices which are less well known, but which could be important for the future, could then be evaluated and disseminated more widely. |
| --- | --- |

9.4

The Commission should commission a new study of the different types of participation models that have been used at national and regional level. Practices which are less well known, but which could be important for the future, could then be evaluated and disseminated more widely.

| 9.5 | The Committee considers it vital to guarantee that the party evaluating a specific programme is independent from the national authority that is responsible for implementing it. Here too, the institutional and socio-economic partners can play a greater role, thanks to the knowledge acquired with regard to the practical results of the various measures. |
| --- | --- |

9.5

The Committee considers it vital to guarantee that the party evaluating a specific programme is independent from the national authority that is responsible for implementing it. Here too, the institutional and socio-economic partners can play a greater role, thanks to the knowledge acquired with regard to the practical results of the various measures.

| 9.6 | The Committee considers that the selection of the partners is vital, and that their role and responsibilities must be made quite clear. |
| --- | --- |

9.6

The Committee considers that the selection of the partners is vital, and that their role and responsibilities must be made quite clear.

| 9.7 | A question arises about the compatibility (or otherwise) of partners being involved in the various stages of programme implementation when they are also project promoters. In such circumstances, rules must be established for selecting the partners so as to ensure that the partnership does not include bodies which are dependent on the state and whose ability to act independently would therefore be functionally or structurally limited. |
| --- | --- |

9.7

A question arises about the compatibility (or otherwise) of partners being involved in the various stages of programme implementation when they are also project promoters. In such circumstances, rules must be established for selecting the partners so as to ensure that the partnership does not include bodies which are dependent on the state and whose ability to act independently would therefore be functionally or structurally limited.

| 9.8 | Alongside those bodies which traditionally make up the socio-economic partners (trade unions, industrial and agricultural organisations, trade and craft associations, the cooperative and non-profit sector, etc.), a greater role in Community structural policies should be given to autonomous bodies such as chambers of commerce, universities, public housing associations, etc. |
| --- | --- |

9.8

Alongside those bodies which traditionally make up the socio-economic partners (trade unions, industrial and agricultural organisations, trade and craft associations, the cooperative and non-profit sector, etc.), a greater role in Community structural policies should be given to autonomous bodies such as chambers of commerce, universities, public housing associations, etc.

| 9.9 | Problems may arise with regard to the membership of the partnership and possible ineffectiveness of the procedures, owing to the accumulation of functions that are incompatible with transparency and independent decision-making (e.g. involvement of the same people in the programming, monitoring and evaluation stages, when in many cases these people are also beneficiaries of the programmes concerned). |
| --- | --- |

9.9

Problems may arise with regard to the membership of the partnership and possible ineffectiveness of the procedures, owing to the accumulation of functions that are incompatible with transparency and independent decision-making (e.g. involvement of the same people in the programming, monitoring and evaluation stages, when in many cases these people are also beneficiaries of the programmes concerned).

| 9.10 | There often appears to be potential incompatibility or conflicts of interest in cases where a decision-taker may also be a beneficiary of the Structural Funds. |
| --- | --- |

9.10

There often appears to be potential incompatibility or conflicts of interest in cases where a decision-taker may also be a beneficiary of the Structural Funds.

| 9.11 | The Committee thinks that the socio-economic partners should have access to financing and training in order to help them play their full role. This is rarely the case at present. |
| --- | --- |

9.11

The Committee thinks that the socio-economic partners should have access to financing and training in order to help them play their full role. This is rarely the case at present.

| 9.12 | In some cases, the partners are unable to play their proper role because they lack high-calibre technical experts to play an active part in Fund-related forums, where they could and should have a role. |
| --- | --- |

9.12

In some cases, the partners are unable to play their proper role because they lack high-calibre technical experts to play an active part in Fund-related forums, where they could and should have a role.

| 9.13 | The Committee thinks that the Member States must make every effort to cut red tape wherever possible. Overly complex administrative procedures frequently jeopardise the whole partnership principle, erecting barriers and introducing practices that often prove counterproductive. |
| --- | --- |

9.13

The Committee thinks that the Member States must make every effort to cut red tape wherever possible. Overly complex administrative procedures frequently jeopardise the whole partnership principle, erecting barriers and introducing practices that often prove counterproductive.

| 9.14 | The Committee considers that it would be very helpful to set a minimum participation threshold, laid down by a Community regulation but leaving the Member States to establish detailed participation levels in their own national law or provisions. The rules to be established should allow for more information and more intensive, stable and permanent ways of involving the economic and social partners. |
| --- | --- |

9.14

The Committee considers that it would be very helpful to set a minimum participation threshold, laid down by a Community regulation but leaving the Member States to establish detailed participation levels in their own national law or provisions. The rules to be established should allow for more information and more intensive, stable and permanent ways of involving the economic and social partners.

| 9.15 | The role of the socio-economic partners, the content of the proposals and the participation procedures necessarily differ at the preparatory, financing, monitoring and evaluation stages of Community structural measures. It is therefore necessary to clarify what is expected of the partners, what the partners need to do to ensure that the programmes are as successful as possible, at what levels the partnership is conducted, and the political and technical bodies in which the partners should be involved. |
| --- | --- |

9.15

The role of the socio-economic partners, the content of the proposals and the participation procedures necessarily differ at the preparatory, financing, monitoring and evaluation stages of Community structural measures. It is therefore necessary to clarify what is expected of the partners, what the partners need to do to ensure that the programmes are as successful as possible, at what levels the partnership is conducted, and the political and technical bodies in which the partners should be involved.

| 9.16 | The partnership is of crucial importance at two stages:






  — | at the ‘political’ stage of Fund programming and when general decisions are taken, at both Community and national level; |
| --- | --- | --- |

9.16

The partnership is of crucial importance at two stages:

—

at the ‘political’ stage of Fund programming and when general decisions are taken, at both Community and national level;

| — | at the monitoring and evaluation stage. |
| --- | --- |

—

at the monitoring and evaluation stage.

10.   The EESC's contributions to the current debate and to preparations for A new partnership for cohesion - convergence, competitiveness, cooperation

10.1   Cohesion policy priorities

| 10.1.1 | The EESC welcomes the Commission's intention, within the convergence objective, to set up a specific compensation mechanism covering all the handicaps of the outermost regions, as well as regions with permanent structural handicaps. |
| --- | --- |

10.1.1

The EESC welcomes the Commission's intention, within the convergence objective, to set up a specific compensation mechanism covering all the handicaps of the outermost regions, as well as regions with permanent structural handicaps.

| 10.1.2 | As part of the support strategy for the various regions, the EESC recommends analysing how faithfully the quantitative data available reflect economic and social progress and whether they have been influenced at all by the statistical impact of external factors that very often bear no relation to economic and social conditions in these regions. One example of this is system headquarters being located offshore, which distorts the indicators used. |
| --- | --- |

10.1.2

As part of the support strategy for the various regions, the EESC recommends analysing how faithfully the quantitative data available reflect economic and social progress and whether they have been influenced at all by the statistical impact of external factors that very often bear no relation to economic and social conditions in these regions. One example of this is system headquarters being located offshore, which distorts the indicators used.

10.2   Complementary nature of the various sector-specific Community policies

| 10.2.1 | The EESC points to the complementary nature of the various sector-specific Community policies in terms of working towards the cohesion objective, particularly in areas such as R&D, the information society and transport; it endorses the view that consistency between cohesion and competition policies is a key issue in the various Community policies. |
| --- | --- |

10.2.1

The EESC points to the complementary nature of the various sector-specific Community policies in terms of working towards the cohesion objective, particularly in areas such as R&D, the information society and transport; it endorses the view that consistency between cohesion and competition policies is a key issue in the various Community policies.

| 10.2.2 | Given that over 50 % of R&D expenditure is concentrated in a very small number of EU regions, the EESC stresses that a complementary approach between sector-specific policies is essential to offset this excessive degree of concentration and provide more incentives for technology transfer between the regions. |
| --- | --- |

10.2.2

Given that over 50 % of R&D expenditure is concentrated in a very small number of EU regions, the EESC stresses that a complementary approach between sector-specific policies is essential to offset this excessive degree of concentration and provide more incentives for technology transfer between the regions.

10.3   Budget

| 10.3.1 | In view of the high expectations that Member States place on the EU in terms of the enlargement and Lisbon strategy objectives, it is unreasonable to think that financial resources can be maintained at the same level. A number of EESC opinions issued over the last few years have asked for the Community budget ceiling to be raised. Given that the Commission has proposed a ceiling of 1.24 % in the financial perspective for the 2007-2013 period, the EESC considers that the 0.41 % earmarked for cohesion policy (0.46 % before transfers to rural development and fisheries) is simply the result of setting the maximum ceiling for all resources at a level that the EESC feels is too low to achieve the ambitious objectives proposed. |
| --- | --- |

10.3.1

In view of the high expectations that Member States place on the EU in terms of the enlargement and Lisbon strategy objectives, it is unreasonable to think that financial resources can be maintained at the same level. A number of EESC opinions issued over the last few years have asked for the Community budget ceiling to be raised. Given that the Commission has proposed a ceiling of 1.24 % in the financial perspective for the 2007-2013 period, the EESC considers that the 0.41 % earmarked for cohesion policy (0.46 % before transfers to rural development and fisheries) is simply the result of setting the maximum ceiling for all resources at a level that the EESC feels is too low to achieve the ambitious objectives proposed.

| 10.3.1.1 | Against this background, and bearing in mind that more financial resources will be needed to address the increase in regional disparities after enlargement, it will essentially be the regions currently benefiting from cohesion policy that will bear the cost of enlargement, through a fall in Community support allocated to them. |
| --- | --- |

10.3.1.1

Against this background, and bearing in mind that more financial resources will be needed to address the increase in regional disparities after enlargement, it will essentially be the regions currently benefiting from cohesion policy that will bear the cost of enlargement, through a fall in Community support allocated to them.

| 10.3.1.2 | It is the EESC's view that this situation cannot be sustained from either a political or an economic point of view, because it goes completely against any principle of fairness in distributing the costs of enlargement. |
| --- | --- |

10.3.1.2

It is the EESC's view that this situation cannot be sustained from either a political or an economic point of view, because it goes completely against any principle of fairness in distributing the costs of enlargement.

| 10.3.1.3 | The EESC therefore fails to understand how it will be possible to meet the unanimously agreed political objective of EU enlargement while at the same time maintaining or even reducing the financial contribution that the Member States will be required to make. The EESC opposes such a narrow view of the European venture, which can only be explained by economic difficulties and by the fact that some of the most important stakeholders in this process lack long-term vision. |
| --- | --- |

10.3.1.3

The EESC therefore fails to understand how it will be possible to meet the unanimously agreed political objective of EU enlargement while at the same time maintaining or even reducing the financial contribution that the Member States will be required to make. The EESC opposes such a narrow view of the European venture, which can only be explained by economic difficulties and by the fact that some of the most important stakeholders in this process lack long-term vision.

11.   Other recommendations

| 11.1 | The EESC believes it is absolutely essential for the economic, social and territorial criteria used to distribute resources earmarked for the ‘Regional competitiveness and employment’ priority among the Member States to be defined as objectively and rigorously as possible and to take particular account of social indicators and not just economic ones. |
| --- | --- |

11.1

The EESC believes it is absolutely essential for the economic, social and territorial criteria used to distribute resources earmarked for the ‘Regional competitiveness and employment’ priority among the Member States to be defined as objectively and rigorously as possible and to take particular account of social indicators and not just economic ones.

| 11.2 | As regards the deployment of funds, the EESC believes that increasingly there is a need to find new ways of involving the authorities and the economic and social partners beyond mere participation in planning, management, monitoring and assessment bodies. |
| --- | --- |

11.2

As regards the deployment of funds, the EESC believes that increasingly there is a need to find new ways of involving the authorities and the economic and social partners beyond mere participation in planning, management, monitoring and assessment bodies.

| 11.3 | In this regard, the mechanisms linked to the global grants need to be consolidated further by requiring Member States to adopt this type of model, at least in a few of their Community Support Frameworks. The potential benefits of such action would be to cut back on red tape, speed up procedures and reduce pressure on Member States' budgets; this is particularly important in the light of current constraints on public finances in general. |
| --- | --- |

11.3

In this regard, the mechanisms linked to the global grants need to be consolidated further by requiring Member States to adopt this type of model, at least in a few of their Community Support Frameworks. The potential benefits of such action would be to cut back on red tape, speed up procedures and reduce pressure on Member States' budgets; this is particularly important in the light of current constraints on public finances in general.

| 11.4 | Moreover, public-private partnerships must be encouraged as a way of overcoming these public finance constraints and safeguarding their funding in the long term. |
| --- | --- |

11.4

Moreover, public-private partnerships must be encouraged as a way of overcoming these public finance constraints and safeguarding their funding in the long term.

| 11.5 | The EESC believes that rules governing abuses in business relocation should be made stricter, in particular by introducing penalties which serve as an example and requiring any incentives received to be given back if it can be proven that the reason for a business pulling out is not that the production unit is no longer viable but simply that the business concerned has decided to relocate in order to benefit from yet more grants. |
| --- | --- |

11.5

The EESC believes that rules governing abuses in business relocation should be made stricter, in particular by introducing penalties which serve as an example and requiring any incentives received to be given back if it can be proven that the reason for a business pulling out is not that the production unit is no longer viable but simply that the business concerned has decided to relocate in order to benefit from yet more grants.

| 11.6 | The EESC also believes it would be a good idea for more business support to be made available to SMEs in recognition of both their important socio-economic role, particularly in terms of job and wealth creation, and their greater ‘commitment’ to the development of the region where they are located. |
| --- | --- |

11.6

The EESC also believes it would be a good idea for more business support to be made available to SMEs in recognition of both their important socio-economic role, particularly in terms of job and wealth creation, and their greater ‘commitment’ to the development of the region where they are located.

| 11.7 | Finally, the ambition to pursue a policy promoting economic, social and territorial cohesion in an enlarged Europe is, without a doubt, one of the greatest challenges that the EU will ever face. Given that cohesion policy is a key pillar for integration between the people and regions of the European Union, the EESC calls on the Member States to carry this reform forward successfully, especially in the light of recent failures in moves to achieve closer European integration, so that the general public will once again start believing in the European venture. |
| --- | --- |

11.7

Finally, the ambition to pursue a policy promoting economic, social and territorial cohesion in an enlarged Europe is, without a doubt, one of the greatest challenges that the EU will ever face. Given that cohesion policy is a key pillar for integration between the people and regions of the European Union, the EESC calls on the Member States to carry this reform forward successfully, especially in the light of recent failures in moves to achieve closer European integration, so that the general public will once again start believing in the European venture.

| 11.8 | The EESC believes it is essential for the Member States to continue and indeed step up their efforts in matters of cohesion policy, regardless of what the EU's policies in this area might entail. |
| --- | --- |

11.8

The EESC believes it is essential for the Member States to continue and indeed step up their efforts in matters of cohesion policy, regardless of what the EU's policies in this area might entail.

| 11.9 | The structure and priorities of EU cohesion policy have changed in response to enlargement and the limited resources available, and not really because regional and social discrepancies no longer exist. Some Member States and regions that up until now have been major beneficiaries of EU cohesion policy will therefore gradually become ineligible for support under a considerable number of the instruments available. This obviously does not mean that they have already reached the desired level of development and cohesion; it is therefore essential that they are given due consideration under national budgetary policies. |
| --- | --- |

11.9

The structure and priorities of EU cohesion policy have changed in response to enlargement and the limited resources available, and not really because regional and social discrepancies no longer exist. Some Member States and regions that up until now have been major beneficiaries of EU cohesion policy will therefore gradually become ineligible for support under a considerable number of the instruments available. This obviously does not mean that they have already reached the desired level of development and cohesion; it is therefore essential that they are given due consideration under national budgetary policies.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

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(1)  Point 9 is taken from the EESC's Opinion on the Partnership for implementing the Structural Funds - OJ C 10 of 14.1.2004, p. 21.

1

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/70 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/70

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee: Dividend taxation of individuals in the Internal Market’

(COM(2003) 810 final)

(2004/C 302/15)

On 19 December 2003, the EU Commission decided, in accordance with Article 262 of the Treaty establishing the European Community, to consult the European Economic and Social Committee on the abovementioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, responsible for preparing the Committee's work on the subject, adopted its opinion on 8 June 2004. The rapporteur was Mr Retureau.

At its 410th plenary session, held on 30 June and 1 July 2004 (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion by 151 votes to one, with 12 abstentions.

1.   Introduction

| 1.1 | The communication submitted for an opinion concerns primarily the taxation of dividends received by individuals for their portfolio investments. |
| --- | --- |

1.1

The communication submitted for an opinion concerns primarily the taxation of dividends received by individuals for their portfolio investments.

| 1.2 | It is part of the follow-up to the Communication accompanying the Company Taxation Study (1), which already proposed to develop guidelines for applying the main ECJ rulings in this area and, in the case of dividends received by individuals, refers to the Verkooijen ruling (2). The inclusion of inbound and outbound dividends under the free movement of capital is something new; dividends are not expressly mentioned in the Treaty or in the directive. |
| --- | --- |

1.2

It is part of the follow-up to the Communication accompanying the Company Taxation Study (1), which already proposed to develop guidelines for applying the main ECJ rulings in this area and, in the case of dividends received by individuals, refers to the Verkooijen ruling (2). The inclusion of inbound and outbound dividends under the free movement of capital is something new; dividends are not expressly mentioned in the Treaty or in the directive.

| 1.3 | Differences between the tax systems of the Member States with regard to the ‘double taxation of corporate profits distributed to individual shareholders in the form of dividends’ (3) would constitute a major source of discrimination, and an obstacle to the free movement of capital within the single market. |
| --- | --- |

1.3

Differences between the tax systems of the Member States with regard to the ‘double taxation of corporate profits distributed to individual shareholders in the form of dividends’ (3) would constitute a major source of discrimination, and an obstacle to the free movement of capital within the single market.

| 1.4 | The proposed guidelines concern the implications of EU law for Member States' dividend taxation systems and are aimed, in the light of the ECJ case law referred to above, at eliminating restrictions encountered by individuals when their income from shares held in a portfolio is taxed. The proposal also seeks to reduce excessively high withholding tax rates in the states of origin of dividends. |
| --- | --- |

1.4

The proposed guidelines concern the implications of EU law for Member States' dividend taxation systems and are aimed, in the light of the ECJ case law referred to above, at eliminating restrictions encountered by individuals when their income from shares held in a portfolio is taxed. The proposal also seeks to reduce excessively high withholding tax rates in the states of origin of dividends.

| 1.5 | The aim is ‘to help Member States to ensure that their systems are compatible with the requirements of the internal market in accordance with the Treaty principles regarding the free movement of capital.’ |
| --- | --- |

1.5

The aim is ‘to help Member States to ensure that their systems are compatible with the requirements of the internal market in accordance with the Treaty principles regarding the free movement of capital.’

| 1.6 | If Member States do not adopt the proposed method for removing obstacles to freedom of movement for equity investments, the Commission, as guardian of the Treaties, could then use Article 226 of the EC Treaty. |
| --- | --- |

1.6

If Member States do not adopt the proposed method for removing obstacles to freedom of movement for equity investments, the Commission, as guardian of the Treaties, could then use Article 226 of the EC Treaty.

| 1.7 | It should be pointed out that the ECJ can highlight elements relating to the interpretation of EU law, so as to enable that judge to resolve the legal problem referred to him (4). |
| --- | --- |

1.7

It should be pointed out that the ECJ can highlight elements relating to the interpretation of EU law, so as to enable that judge to resolve the legal problem referred to him (4).

2.   Dividend taxation in the internal market

| 2.1 | Taxation on companies' earnings consists of a tax on profits, the rate of which varies from 12.5 to 40 % depending on the country (approximately 30 % on average). Taxation of the dividends paid out of profits after corporation tax may be carried out at source and be deducted from the dividend distributed, but it may also be imposed as personal tax at the marginal rate or at a separate rate. |
| --- | --- |

2.1

Taxation on companies' earnings consists of a tax on profits, the rate of which varies from 12.5 to 40 % depending on the country (approximately 30 % on average). Taxation of the dividends paid out of profits after corporation tax may be carried out at source and be deducted from the dividend distributed, but it may also be imposed as personal tax at the marginal rate or at a separate rate.

| 2.2 | According to the Commission, the taxation of companies' earnings and dividends is ‘economic double taxation’, and individuals also run the risk of ‘international juridical double taxation’ (when two states tax dividends received abroad). |
| --- | --- |

2.2

According to the Commission, the taxation of companies' earnings and dividends is ‘economic double taxation’, and individuals also run the risk of ‘international juridical double taxation’ (when two states tax dividends received abroad).

| 2.2.1 | The OECD Model Tax Convention, which has been proposed in order to avoid international juridical double taxation, does not deal with economic double taxation. |
| --- | --- |

2.2.1

The OECD Model Tax Convention, which has been proposed in order to avoid international juridical double taxation, does not deal with economic double taxation.

| 2.2.2 | On the basis of the OECD Model Tax Convention, tax already paid at source on dividends in the state of origin should be deducted from tax due in the state where the shareholder has his tax domicile, in the form of an ordinary charge limited to any tax that may be due on dividends in the state of tax domicile. |
| --- | --- |

2.2.2

On the basis of the OECD Model Tax Convention, tax already paid at source on dividends in the state of origin should be deducted from tax due in the state where the shareholder has his tax domicile, in the form of an ordinary charge limited to any tax that may be due on dividends in the state of tax domicile.

| 2.2.3 | The OECD model, according to the Commission, applies to all the tax systems on dividends, whether in a pure or mixed form (classical, schedular, imputation and exemption). |
| --- | --- |

2.2.3

The OECD model, according to the Commission, applies to all the tax systems on dividends, whether in a pure or mixed form (classical, schedular, imputation and exemption).

3.   The Verkooijen ruling and some other relevant judgements

| 3.1 | In the ECJ judgment on the Verkooijen case, the person named was refused exemption from income tax for share dividends from a company established in a Member State other than the Netherlands. |
| --- | --- |

3.1

In the ECJ judgment on the Verkooijen case, the person named was refused exemption from income tax for share dividends from a company established in a Member State other than the Netherlands.

| 3.2 | That exemption applied to income from shares on which Netherlands dividend tax had been levied at source in the Netherlands, which excluded income from shares received in other countries. |
| --- | --- |

3.2

That exemption applied to income from shares on which Netherlands dividend tax had been levied at source in the Netherlands, which excluded income from shares received in other countries.

| 3.2.1 | Firstly, the exemption was intended to raise the level of undertakings' equity capital and to stimulate interest on the part of private individuals in Netherlands shares; secondly, in particular for small investors, the exemption was intended to compensate in some measure for the double taxation through an exemption of one thousand guilders. |
| --- | --- |

3.2.1

Firstly, the exemption was intended to raise the level of undertakings' equity capital and to stimulate interest on the part of private individuals in Netherlands shares; secondly, in particular for small investors, the exemption was intended to compensate in some measure for the double taxation through an exemption of one thousand guilders.

| 3.2.1.1 | For the purpose of taxing Mr Verkooijen's income, the tax inspector did not apply the dividend exemption on the ground that Mr Verkooijen was not entitled to it since the dividends received by him ‘had not been subject to the Netherlands dividend tax.’ |
| --- | --- |

3.2.1.1

For the purpose of taxing Mr Verkooijen's income, the tax inspector did not apply the dividend exemption on the ground that Mr Verkooijen was not entitled to it since the dividends received by him ‘had not been subject to the Netherlands dividend tax.’

| 3.2.2 | When requested by the national court with jurisdiction for a preliminary question, the Court considered that the receipt of foreign dividends was indissociable from a capital movement; thus, if the tax rules applicable to incoming dividends was different from and less advantageous than that applicable to domestic dividends, this was a prohibited restriction on the free movement of capital. |
| --- | --- |

3.2.2

When requested by the national court with jurisdiction for a preliminary question, the Court considered that the receipt of foreign dividends was indissociable from a capital movement; thus, if the tax rules applicable to incoming dividends was different from and less advantageous than that applicable to domestic dividends, this was a prohibited restriction on the free movement of capital.

| 3.2.2.1 | The Court stated that a legislative provision such as the one at issue ... ‘has the effect of dissuading nationals of a Member State residing in the Netherlands from investing their capital in companies which have their seat in another Member State.’ |
| --- | --- |

3.2.2.1

The Court stated that a legislative provision such as the one at issue ... ‘has the effect of dissuading nationals of a Member State residing in the Netherlands from investing their capital in companies which have their seat in another Member State.’

| 3.2.2.2 | ‘Such a provision also has a restrictive effect as regards companies established in other Member States: it constitutes an obstacle to the raising of capital in the Netherlands.’ |
| --- | --- |

3.2.2.2

‘Such a provision also has a restrictive effect as regards companies established in other Member States: it constitutes an obstacle to the raising of capital in the Netherlands.’

| 3.3 | In the Schmid case (5), the Advocate-General noted that dividends from foreign shares, which are not subject in Austria to the final withholding at source by way of tax on revenue from capital assets, are therefore subject in full to income tax there and cannot, moreover, benefit from the application of the 50 % tax rate. The Advocate-General concluded that the freedom of capital movements was violated. |
| --- | --- |

3.3

In the Schmid case (5), the Advocate-General noted that dividends from foreign shares, which are not subject in Austria to the final withholding at source by way of tax on revenue from capital assets, are therefore subject in full to income tax there and cannot, moreover, benefit from the application of the 50 % tax rate. The Advocate-General concluded that the freedom of capital movements was violated.

4.   General comments of the EESC

| 4.1 | The Member States continue to have jurisdiction on tax matters. However, Articles 56 and 58 ECT currently in force limit this national jurisdiction, which must not violate a fundamental freedom or circumvent Community law: Article 56 makes it illegal to obstruct the free movement of capital, while Article 58 recognises that, while the provisions of national tax laws may ‘distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested’ and while states may take ‘ take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions.... or ... take measures which are justified on grounds of public policy or public security,’ such measures ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments.’ |
| --- | --- |

4.1

The Member States continue to have jurisdiction on tax matters. However, Articles 56 and 58 ECT currently in force limit this national jurisdiction, which must not violate a fundamental freedom or circumvent Community law: Article 56 makes it illegal to obstruct the free movement of capital, while Article 58 recognises that, while the provisions of national tax laws may ‘distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested’ and while states may take ‘ take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions.... or ... take measures which are justified on grounds of public policy or public security,’ such measures ‘shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments.’

| 4.2 | The case law of the Court, in essence, asks that persons liable for taxation be treated equally, and condemns international double taxation. |
| --- | --- |

4.2

The case law of the Court, in essence, asks that persons liable for taxation be treated equally, and condemns international double taxation.

| 4.3 | With EU enlargement, and even greater differences in rates of corporation tax and personal income tax on dividends, the EESC thinks it is urgent to encourage all the Member States who have not yet done so to conclude international agreements against double taxation on the basis, at least, of the model proposed by the OECD, so as to bring about equality of treatment at national level for dividends received by portfolio investors, irrespective of their origin within the Community. |
| --- | --- |

4.3

With EU enlargement, and even greater differences in rates of corporation tax and personal income tax on dividends, the EESC thinks it is urgent to encourage all the Member States who have not yet done so to conclude international agreements against double taxation on the basis, at least, of the model proposed by the OECD, so as to bring about equality of treatment at national level for dividends received by portfolio investors, irrespective of their origin within the Community.

| 4.4 | The EESC notes that the Treaty also envisages the free movement of capital to or from non-EU countries, and that a number of international bilateral agreements also exist between some Member States and some non-EU countries. |
| --- | --- |

4.4

The EESC notes that the Treaty also envisages the free movement of capital to or from non-EU countries, and that a number of international bilateral agreements also exist between some Member States and some non-EU countries.

| 4.5 | Full neutrality could only ideally be achieved, combining all the conditions set out in the communication and sticking to the EU area, with a single Community rate of corporation tax in an exemption system, provided that the conditions for imposing personal income tax were equal in all the countries concerned, and if income from shares were considered to be the only income of a taxpayer investing in a portfolio. The Commission recognises itself, moreover, that full tax neutrality could only be achieved by the complete harmonisation of Member States' taxation. |
| --- | --- |

4.5

Full neutrality could only ideally be achieved, combining all the conditions set out in the communication and sticking to the EU area, with a single Community rate of corporation tax in an exemption system, provided that the conditions for imposing personal income tax were equal in all the countries concerned, and if income from shares were considered to be the only income of a taxpayer investing in a portfolio. The Commission recognises itself, moreover, that full tax neutrality could only be achieved by the complete harmonisation of Member States' taxation.

| 4.6 | The tax sovereignty of parliaments and states, deciding on personal and corporate taxation and on the national budget, lies historically at the heart of Europe's democracies. The equality of citizens before charges levied by the state is a basic principle of constitutional values. Member States, at the present stage of European integration, still have serious reasons for wishing to retain their national jurisdiction over tax matters, as provided for in the treaties. This situation could, of course, change in the future. But the EESC would not like to see the latitude that the Member States have at present giving rise to cases of ‘fiscal dumping.’ |
| --- | --- |

4.6

The tax sovereignty of parliaments and states, deciding on personal and corporate taxation and on the national budget, lies historically at the heart of Europe's democracies. The equality of citizens before charges levied by the state is a basic principle of constitutional values. Member States, at the present stage of European integration, still have serious reasons for wishing to retain their national jurisdiction over tax matters, as provided for in the treaties. This situation could, of course, change in the future. But the EESC would not like to see the latitude that the Member States have at present giving rise to cases of ‘fiscal dumping.’

| 4.7 | The EESC considers that the guidelines proposed, if they are limited to the matters actually dealt with by the Court, should be included on these terms among the respective terms of reference of the Commission and the Member States. If this were decided, the European Parliament and the Community's consultative bodies should be fully involved in the monitoring of such a procedure. |
| --- | --- |

4.7

The EESC considers that the guidelines proposed, if they are limited to the matters actually dealt with by the Court, should be included on these terms among the respective terms of reference of the Commission and the Member States. If this were decided, the European Parliament and the Community's consultative bodies should be fully involved in the monitoring of such a procedure.

| 4.8 | Finally, the EESC wonders whether the threat of a referral to the Court of Justice is really likely to facilitate the search for a solution; nevertheless, the EESC feels that the Member States concerned must rapidly adopt provisions to prevent inbound or outbound dividends being subject to discrimination. This could also amount to trying to make the Court a substitute for Community tax legislation, beyond the jurisdiction adopted by the Member States, which would risk leading to a confusion of powers. |
| --- | --- |

4.8

Finally, the EESC wonders whether the threat of a referral to the Court of Justice is really likely to facilitate the search for a solution; nevertheless, the EESC feels that the Member States concerned must rapidly adopt provisions to prevent inbound or outbound dividends being subject to discrimination. This could also amount to trying to make the Court a substitute for Community tax legislation, beyond the jurisdiction adopted by the Member States, which would risk leading to a confusion of powers.

5.   Specific comments

| 5.1 | The EESC notes that the Commission's relatively simple analysis model covers only one shareholding scenario: that of an individual portfolio made up of shares of companies based in two or more Member States. A portfolio may contain shares from companies in several EU and non-EU countries. |
| --- | --- |

5.1

The EESC notes that the Commission's relatively simple analysis model covers only one shareholding scenario: that of an individual portfolio made up of shares of companies based in two or more Member States. A portfolio may contain shares from companies in several EU and non-EU countries.

| 5.2 | The EESC would also point out that income from securities may also come from investment trusts or pension funds, in forms where it is impossible to know the national origin of the various components of the distributed dividends and capital gains. Moreover, the tax rules applying to capital gains from these forms of investment and to the distributed income are sometimes different from those governing dividends paid direct to individuals with their own share portfolio. The Commission does not deal with these issues. |
| --- | --- |

5.2

The EESC would also point out that income from securities may also come from investment trusts or pension funds, in forms where it is impossible to know the national origin of the various components of the distributed dividends and capital gains. Moreover, the tax rules applying to capital gains from these forms of investment and to the distributed income are sometimes different from those governing dividends paid direct to individuals with their own share portfolio. The Commission does not deal with these issues.

| 5.3 | The EESC notes that the communication does not deal either with the question of capital gains tax on sales of listed securities. Individuals do not invest in shares just so they can collect the dividends. Re-selling shares to take a profit is sometimes an even more fundamental reason for investing, and is part and parcel of managing a portfolio and one's income. This issue too should doubtless also be studied. |
| --- | --- |

5.3

The EESC notes that the communication does not deal either with the question of capital gains tax on sales of listed securities. Individuals do not invest in shares just so they can collect the dividends. Re-selling shares to take a profit is sometimes an even more fundamental reason for investing, and is part and parcel of managing a portfolio and one's income. This issue too should doubtless also be studied.

| 5.4 | Regarding the debate on economic double taxation, the EESC considers it legitimate to distinguish between individuals and companies, irrespective of the methods and tax rates used. The part of earnings that is distributed to shareholders constitutes disposable income for the latter, but not all earnings are necessarily distributed. Some are ploughed back into the company, which adds value to its shares and shareholders' wealth; this part of earnings is only covered by corporation tax and not by personal income tax in the Commission's scheme of things. It should therefore also be made known if these capital gains are taxed or not when they are realised and under which conditions; the communication does not deal with this question, which the EESC considers to be an important one. |
| --- | --- |

5.4

Regarding the debate on economic double taxation, the EESC considers it legitimate to distinguish between individuals and companies, irrespective of the methods and tax rates used. The part of earnings that is distributed to shareholders constitutes disposable income for the latter, but not all earnings are necessarily distributed. Some are ploughed back into the company, which adds value to its shares and shareholders' wealth; this part of earnings is only covered by corporation tax and not by personal income tax in the Commission's scheme of things. It should therefore also be made known if these capital gains are taxed or not when they are realised and under which conditions; the communication does not deal with this question, which the EESC considers to be an important one.

6.   Conclusions

| 6.1 | The EESC considers that the treatment of double taxation and the taxation at source of inbound and outbound domestic dividends with a view to ensuring their non-discriminatory treatment are major objectives, without jeopardising the basic principle of the equality of individuals before charges levied by the state at national level. The Member States could also consider cooperation between countries with similar tax practices, in order to study the best tax practices available. |
| --- | --- |

6.1

The EESC considers that the treatment of double taxation and the taxation at source of inbound and outbound domestic dividends with a view to ensuring their non-discriminatory treatment are major objectives, without jeopardising the basic principle of the equality of individuals before charges levied by the state at national level. The Member States could also consider cooperation between countries with similar tax practices, in order to study the best tax practices available.

| 6.2 | The issues raised by the EESC in its specific comments could be examined later on, with a view to greater harmonisation of corporation tax and taxes on income and gains from securities, so as to improve the operation of the internal market. |
| --- | --- |

6.2

The issues raised by the EESC in its specific comments could be examined later on, with a view to greater harmonisation of corporation tax and taxes on income and gains from securities, so as to improve the operation of the internal market.

| 6.3 | Finally, the EESC feels that the Commission's communication opens the door to resolving problems that are often the subject of referrals to the Court of Justice and that should be avoided in the future so as to avoid overburdening it needlessly with appeals in this area. |
| --- | --- |

6.3

Finally, the EESC feels that the Commission's communication opens the door to resolving problems that are often the subject of referrals to the Court of Justice and that should be avoided in the future so as to avoid overburdening it needlessly with appeals in this area.

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  ‘Towards an internal market without tax obstacles’ COM (2001) 582 final

1

(2)  Case C-35/98 Verkooijen [2000] ECR I-4071

2

(3)  Ruding report of March 1992 pp. 207-208

3

(4)  Judgement of 28 January 1992, Bachmann, CR09204/90, Rec. p. I-249

4

(5)  C-516/99 case, on 30 May 2002

5

---

APPENDIX

to the opinion of the European Economic and Social Committee

The following amendments, though rejected, were supported by at least one-quarter of the votes cast:

Point 4.6

Delete the last sentence in this point.

Voting

| For: | 58 |
| --- | --- |
| Against: | 84 |
| Abstentions: | 9 |

For:

58

Against:

84

Abstentions:

9

Point 4.8

Delete this point.

Voting

| For: | 53 |
| --- | --- |
| Against: | 85 |
| Abstentions: | 16 |

For:

53

Against:

85

Abstentions:

16

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/74 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/74

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions and the social partners at Community level concerning the re-exam of Directive 93/104/EC concerning certain aspects of the organisation of working time’

(COM(2003) 843 final)

(2004/C 302/16)

On 5 January 2004, the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 14 June 2004. The rapporteur was Mr Hahr.

At its 410th plenary session of 30 June - 1 July 2004 (meeting of 30 June 2004), the European Economic and Social Committee adopted the following opinion by 154 votes in favour, 71 against and 13 abstentions.

1.   Gist of the Commission document

| 1.1 | The subject of this communication is Directive 93/104/EC of 23 November 1993, as amended by Directive 2000/34/EC, laying down minimum requirements with regard to the organisation of working time in order to ensure a better level of safety and health protection for workers. |
| --- | --- |

1.1

The subject of this communication is Directive 93/104/EC of 23 November 1993, as amended by Directive 2000/34/EC, laying down minimum requirements with regard to the organisation of working time in order to ensure a better level of safety and health protection for workers.

| 1.2 | The aim of the communication is threefold: |
| --- | --- |

1.2

The aim of the communication is threefold:

| 1.2.1 | Firstly, it aims to evaluate the application of two of the directive's provisions subject to review prior to the expiry of a seven-year period, calculated from the deadline for transposal by the Member States, i.e. prior to 23 November 2003, namely the derogations in Article 17(4) from the reference periods for the application of Article 6 concerning the maximum working week and the option in Article 18(1)(b)(i) for Member States not to apply Article 6, provided that measures are taken to ensure that individual workers consent to working in excess of 48 hours per week (generally known as opt-out). |
| --- | --- |

1.2.1

Firstly, it aims to evaluate the application of two of the directive's provisions subject to review prior to the expiry of a seven-year period, calculated from the deadline for transposal by the Member States, i.e. prior to 23 November 2003, namely the derogations in Article 17(4) from the reference periods for the application of Article 6 concerning the maximum working week and the option in Article 18(1)(b)(i) for Member States not to apply Article 6, provided that measures are taken to ensure that individual workers consent to working in excess of 48 hours per week (generally known as opt-out).

| 1.2.2 | Secondly, the communication aims to analyse the impact of the case law of the Court concerning the definition of working time and the qualification of time on call, as well as new developments aimed at improving compatibility between working and family life. |
| --- | --- |

1.2.2

Secondly, the communication aims to analyse the impact of the case law of the Court concerning the definition of working time and the qualification of time on call, as well as new developments aimed at improving compatibility between working and family life.

| 1.2.3 | Finally, the aim of the communication is to consult the European Parliament and the Council, but also the European Economic and Social Committee, the Committee of the Regions and the social partners, on a possible revision of the text. |
| --- | --- |

1.2.3

Finally, the aim of the communication is to consult the European Parliament and the Council, but also the European Economic and Social Committee, the Committee of the Regions and the social partners, on a possible revision of the text.

| 1.2.4 | It should be noted that the European Parliament on 11 February 2004 adopted a report that called for the opt-out provisions to be phased out altogether. The Commission released a second consultation paper on 19 May. According to the Commission the purpose of that document is to call upon the social partners to negotiate and, failing that, to give broad indications as to the direction of any legislation that might later be proposed by the Commission. |
| --- | --- |

1.2.4

It should be noted that the European Parliament on 11 February 2004 adopted a report that called for the opt-out provisions to be phased out altogether. The Commission released a second consultation paper on 19 May. According to the Commission the purpose of that document is to call upon the social partners to negotiate and, failing that, to give broad indications as to the direction of any legislation that might later be proposed by the Commission.

2.   General comments

| 2.1 | The EESC considers the method of consultation used by the Commission to be inadequate, given that this matter is subject to collective bargaining at national level. The Commission should first have consulted the social partners before launching the consultation procedure with the European institutions, the EESC and the Committee of the Regions. |
| --- | --- |

2.1

The EESC considers the method of consultation used by the Commission to be inadequate, given that this matter is subject to collective bargaining at national level. The Commission should first have consulted the social partners before launching the consultation procedure with the European institutions, the EESC and the Committee of the Regions.

| 2.2 | The Commission is not making any concrete proposals for amending the directive. The consultation asks for responses on five main issues with a view to a future revision of the directive:






  — | the length of reference periods – currently four months, with certain provisions allowing for six months or a year; |
| --- | --- | --- |

2.2

The Commission is not making any concrete proposals for amending the directive. The consultation asks for responses on five main issues with a view to a future revision of the directive:

—

the length of reference periods – currently four months, with certain provisions allowing for six months or a year;

| — | the definition of working time following recent European Court of Justice rulings on time on call; |
| --- | --- |

—

the definition of working time following recent European Court of Justice rulings on time on call;

| — | the conditions for the application of the opt-out; |
| --- | --- |

—

the conditions for the application of the opt-out;

| — | measures to improve balance between work and family life; |
| --- | --- |

—

measures to improve balance between work and family life;

| — | how to achieve the best possible balance between these measures. |
| --- | --- |

—

how to achieve the best possible balance between these measures.

| 2.2.1 | In order to provide detailed answers to the Commission's five questions, respondents not only need a thorough knowledge of the general Working Time Directive 93/104/EC, but also an analysis of the way it has been implemented in Member State legislation and of the impact this has had compared to previous national working time legislation and of national collective bargaining agreements. The Committee notes that the report (1) published by the Commission and the content of the current Communication provide only a limited analysis of this impact. The Committee's comments will therefore necessarily be more wide-ranging. |
| --- | --- |

2.2.1

In order to provide detailed answers to the Commission's five questions, respondents not only need a thorough knowledge of the general Working Time Directive 93/104/EC, but also an analysis of the way it has been implemented in Member State legislation and of the impact this has had compared to previous national working time legislation and of national collective bargaining agreements. The Committee notes that the report (1) published by the Commission and the content of the current Communication provide only a limited analysis of this impact. The Committee's comments will therefore necessarily be more wide-ranging.

| 2.2.2 | In order to ensure better protection of workers' health and safety in accordance with the social provisions of the Treaty establishing the European Community (Article 136 et seq.) and Directive 89/391/EEC, the general Working Time Directive 93/104/EC lays down in particular:






  — | maximum weekly working hours of 48 hours on average, including overtime; |
| --- | --- | --- |

2.2.2

In order to ensure better protection of workers' health and safety in accordance with the social provisions of the Treaty establishing the European Community (Article 136 et seq.) and Directive 89/391/EEC, the general Working Time Directive 93/104/EC lays down in particular:

—

maximum weekly working hours of 48 hours on average, including overtime;

| — | a minimum rest period of 11 consecutive hours for each 24-hour period; |
| --- | --- |

—

a minimum rest period of 11 consecutive hours for each 24-hour period;

| — | a rest break where the working day is longer than six hours; |
| --- | --- |

—

a rest break where the working day is longer than six hours;

| — | a minimum rest period of one day per week; |
| --- | --- |

—

a minimum rest period of one day per week;

| — | four weeks of paid annual leave; |
| --- | --- |

—

four weeks of paid annual leave;

| — | an average of no more than eight hours of work at night in any 24-hour period. |
| --- | --- |

—

an average of no more than eight hours of work at night in any 24-hour period.

| 2.2.3 | It also establishes the conditions under which the Member States, via legislation, and the national social partners, via collective agreements, may derogate from the rules contained in the directive. Derogations can only be allowed where the general principles of worker health and safety are complied with. |
| --- | --- |

2.2.3

It also establishes the conditions under which the Member States, via legislation, and the national social partners, via collective agreements, may derogate from the rules contained in the directive. Derogations can only be allowed where the general principles of worker health and safety are complied with.

| 2.2.4 | Unfortunately no comprehensive assessment has been made of whether implementation of the directive in the Member States has brought the intended improvements in living and working conditions for workers in the EU, but the Committee assumes this to be the case, at any rate in the long run. Any amendments to the content of the directive must therefore be considered carefully and be well substantiated, particularly from the point of view of the social partners. |
| --- | --- |

2.2.4

Unfortunately no comprehensive assessment has been made of whether implementation of the directive in the Member States has brought the intended improvements in living and working conditions for workers in the EU, but the Committee assumes this to be the case, at any rate in the long run. Any amendments to the content of the directive must therefore be considered carefully and be well substantiated, particularly from the point of view of the social partners.

| 2.2.5 | At the same time, it should be remembered that the directive builds on discussions and comments dating back more than fourteen years. European Court of Justice interpretations of ‘working time’ and ‘compensatory rest’ have created acute problems for many Member States. Consequently, the Committee notes with interest, whilst highlighting the limitations already pointed out, the consultation procedure launched by the Commission, which makes it possible to collate useful viewpoints from various quarters with regard to how the directive and subsequent legislation has worked in the Member States, thus closing the information gap highlighted above. Naturally, under the provisions of the EC Treaty, the social partners in particular have a very important role to play. |
| --- | --- |

2.2.5

At the same time, it should be remembered that the directive builds on discussions and comments dating back more than fourteen years. European Court of Justice interpretations of ‘working time’ and ‘compensatory rest’ have created acute problems for many Member States. Consequently, the Committee notes with interest, whilst highlighting the limitations already pointed out, the consultation procedure launched by the Commission, which makes it possible to collate useful viewpoints from various quarters with regard to how the directive and subsequent legislation has worked in the Member States, thus closing the information gap highlighted above. Naturally, under the provisions of the EC Treaty, the social partners in particular have a very important role to play.

| 2.2.6 | Working time and the organisation of working time are crucial to relations between employers' organisations and trade unions as well as to everyday employer-employee relations. Consequently, the way working time rules are framed in collective agreements is of vital importance to the social partners, which have a wealth of expertise and experience in these matters. |
| --- | --- |

2.2.6

Working time and the organisation of working time are crucial to relations between employers' organisations and trade unions as well as to everyday employer-employee relations. Consequently, the way working time rules are framed in collective agreements is of vital importance to the social partners, which have a wealth of expertise and experience in these matters.

| 2.2.7 | National legislation on working time is generally based on employers and employees taking joint responsibility for ensuring that working time is organised satisfactorily. It is up to the social partners at various levels in the Member States to resolve any working time issues that emerge in the workplace, basing their decisions on working time rules and as part of collective agreements. |
| --- | --- |

2.2.7

National legislation on working time is generally based on employers and employees taking joint responsibility for ensuring that working time is organised satisfactorily. It is up to the social partners at various levels in the Member States to resolve any working time issues that emerge in the workplace, basing their decisions on working time rules and as part of collective agreements.

| 2.2.8 | A purely legal analysis of the Working Time Directive's rules on daily rest periods, breaks, weekly rest periods and weekly working time shows that, when compared to the permitted derogation provisions under Article 17, and without taking into account the impact of Court of Justice rulings on time on call, the directive should be regarded as providing a certain degree of negotiating flexibility. However, it should be noted that the Working Time Directive is a relatively complex area of Community law. The Committee therefore suggests that, in conjunction with a proposal to review the directive, the Commission should also take on board the conditions in which it might be simplified. Simplification must not, however, be allowed to sideline basic employee health and safety requirements. |
| --- | --- |

2.2.8

A purely legal analysis of the Working Time Directive's rules on daily rest periods, breaks, weekly rest periods and weekly working time shows that, when compared to the permitted derogation provisions under Article 17, and without taking into account the impact of Court of Justice rulings on time on call, the directive should be regarded as providing a certain degree of negotiating flexibility. However, it should be noted that the Working Time Directive is a relatively complex area of Community law. The Committee therefore suggests that, in conjunction with a proposal to review the directive, the Commission should also take on board the conditions in which it might be simplified. Simplification must not, however, be allowed to sideline basic employee health and safety requirements.

3.   Specific comments

3.1   Reference periods

| 3.1.1 | Annual working time issues were already being discussed in Europe when the directive was launched. ‘Annual Working time’ can best be defined as a system in which the reference period for the average working week covers a year or 365 days. |
| --- | --- |

3.1.1

Annual working time issues were already being discussed in Europe when the directive was launched. ‘Annual Working time’ can best be defined as a system in which the reference period for the average working week covers a year or 365 days.

| 3.1.2 | Article 6 of the Working Time Directive contains a rule on an average working week of 48 hours. This can be spread over four months or, under the provisions of Article 17, over six or twelve months (2). The directive thus provides a certain amount of freedom to stagger working hours over the reference period. Organisation of working time must, of course, comply with the provisions governing daily rest periods, weekly rest, night work, etc., and respect general worker health and safety principles. |
| --- | --- |

3.1.2

Article 6 of the Working Time Directive contains a rule on an average working week of 48 hours. This can be spread over four months or, under the provisions of Article 17, over six or twelve months (2). The directive thus provides a certain amount of freedom to stagger working hours over the reference period. Organisation of working time must, of course, comply with the provisions governing daily rest periods, weekly rest, night work, etc., and respect general worker health and safety principles.

| 3.1.3 | The Commission communication notes that ‘it is not always easy to analyse national legislation with regard to the transposal of Articles 6 and 16’ (3) (which deal respectively with maximum weekly working time and the reference period, and that ‘In general, there appears to be a tendency towards expressing working time as an annual figure.’ (4) |
| --- | --- |

3.1.3

The Commission communication notes that ‘it is not always easy to analyse national legislation with regard to the transposal of Articles 6 and 16’ (3) (which deal respectively with maximum weekly working time and the reference period, and that ‘In general, there appears to be a tendency towards expressing working time as an annual figure.’ (4)

| 3.1.4 | The question is the extent to which the reference period affects an employee's health and safety. The Commission does not address this problem. It might, of course, be inconvenient to have to concentrate a lot of work into a relatively short time span, but given that yearly reference periods are, in fact, used by many collective agreements – it can be surmised that any negative impact of a longer reference period in terms of health and safety is offset by the parties to collective agreements, if equivalent rest periods are provided. |
| --- | --- |

3.1.4

The question is the extent to which the reference period affects an employee's health and safety. The Commission does not address this problem. It might, of course, be inconvenient to have to concentrate a lot of work into a relatively short time span, but given that yearly reference periods are, in fact, used by many collective agreements – it can be surmised that any negative impact of a longer reference period in terms of health and safety is offset by the parties to collective agreements, if equivalent rest periods are provided.

| 3.1.5 | One of the arguments used for extending the reference period is that it would give firms more flexibility to manage working time. This flexibility already exists in many countries, thanks to collective agreements, and the problem of poor flexibility tends to affect countries where collective agreements have traditionally played a less significant role. It would be worthwhile to seek to strengthen collective agreements on the issue of working time, particularly in those countries where such agreements are not especially strong. |
| --- | --- |

3.1.5

One of the arguments used for extending the reference period is that it would give firms more flexibility to manage working time. This flexibility already exists in many countries, thanks to collective agreements, and the problem of poor flexibility tends to affect countries where collective agreements have traditionally played a less significant role. It would be worthwhile to seek to strengthen collective agreements on the issue of working time, particularly in those countries where such agreements are not especially strong.

| 3.1.6 | The EESC notes that the EC Treaty Article 137, which underpins the Working Time Directive, provides that directives adopted on the basis of that article ‘are to avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings.’ |
| --- | --- |

3.1.6

The EESC notes that the EC Treaty Article 137, which underpins the Working Time Directive, provides that directives adopted on the basis of that article ‘are to avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings.’

| 3.1.7 | As a 12-month reference period is already used in many Member States by virtue of collective agreements, the EESC feels, given the current provisions, which allow for the option of extending the reference period through collective agreements, that the social partners have the necessary flexibility to adjust working time to deal with different situations in Member States, sectors, and companies. Therefore, these provisions should be retained. |
| --- | --- |

3.1.7

As a 12-month reference period is already used in many Member States by virtue of collective agreements, the EESC feels, given the current provisions, which allow for the option of extending the reference period through collective agreements, that the social partners have the necessary flexibility to adjust working time to deal with different situations in Member States, sectors, and companies. Therefore, these provisions should be retained.

| 3.1.8 | Considering the special working time arrangements for managerial staff, the Committee is in favour of involving the organisations representing this occupational category directly in the procedures and negotiations laying down conditions regarding working time. This would require special provisions. |
| --- | --- |

3.1.8

Considering the special working time arrangements for managerial staff, the Committee is in favour of involving the organisations representing this occupational category directly in the procedures and negotiations laying down conditions regarding working time. This would require special provisions.

3.2   Definition of working time

| 3.2.1 | Article 2 of the Working Time Directive defines ‘working time’ as ‘any period during which the worker is working, at the employer's disposal and carrying out his activity or duties, in accordance with national laws and/or practice’. Conversely, Article 2(2) defines ‘any period which is not working time’ as a rest period. |
| --- | --- |

3.2.1

Article 2 of the Working Time Directive defines ‘working time’ as ‘any period during which the worker is working, at the employer's disposal and carrying out his activity or duties, in accordance with national laws and/or practice’. Conversely, Article 2(2) defines ‘any period which is not working time’ as a rest period.

| 3.2.2 | The Court of Justice has had to interpret the directive's definition of working time on two occasions. In the first judgment (5) on the time spent on call by doctors in a healthcare establishment, the Court of Justice ruled that the time a doctor spends on call should be regarded as working time within the meaning of Article 2(1) of the directive if the doctor has to be physically present in the healthcare establishment. But this time spent on call includes a duty to be physically present at the place designated by the employer and to be available for duty when called upon by the employer. When ruling on the Jaeger case (6), the Court of Justice confirmed its previous interpretation and concluded that a doctor's periods of actual inactivity when on call must be regarded as work within the meaning of the directive. It also ruled that compensatory rest should be taken immediately. |
| --- | --- |

3.2.2

The Court of Justice has had to interpret the directive's definition of working time on two occasions. In the first judgment (5) on the time spent on call by doctors in a healthcare establishment, the Court of Justice ruled that the time a doctor spends on call should be regarded as working time within the meaning of Article 2(1) of the directive if the doctor has to be physically present in the healthcare establishment. But this time spent on call includes a duty to be physically present at the place designated by the employer and to be available for duty when called upon by the employer. When ruling on the Jaeger case (6), the Court of Justice confirmed its previous interpretation and concluded that a doctor's periods of actual inactivity when on call must be regarded as work within the meaning of the directive. It also ruled that compensatory rest should be taken immediately.

| 3.2.3 | The EESC notes that the judgments – particularly, but not exclusively, with regard to health sector staff – may have far-reaching consequences for work organisation. Several Member States have national legislation that contains rules on time spent on call. These rules are framed in different ways but what they have in common is that time spent on call counts either not at all or only partly as working time. However, it is also not counted as time spent resting. |
| --- | --- |

3.2.3

The EESC notes that the judgments – particularly, but not exclusively, with regard to health sector staff – may have far-reaching consequences for work organisation. Several Member States have national legislation that contains rules on time spent on call. These rules are framed in different ways but what they have in common is that time spent on call counts either not at all or only partly as working time. However, it is also not counted as time spent resting.

| 3.2.4 | It is remarkable that the scope of the definition of working time in Article 2(1) of the directive seems neither to have been analysed nor discussed satisfactorily before the directive was adopted. There is no other explanation for the surprise the judgments caused both within the EU institutions and in the Member States, particularly since most Member States already have rules on time spent on call in their national working time legislation. |
| --- | --- |

3.2.4

It is remarkable that the scope of the definition of working time in Article 2(1) of the directive seems neither to have been analysed nor discussed satisfactorily before the directive was adopted. There is no other explanation for the surprise the judgments caused both within the EU institutions and in the Member States, particularly since most Member States already have rules on time spent on call in their national working time legislation.

| 3.2.5 | The Committee shares the Commission's view that there are several potential solutions. Under the current circumstances, the Committee would not wish to recommend any of the particular solutions put forward. The one selected should aim, first and foremost, to:






  — | provide greater protection for workers' health and safety in relation to working time; |
| --- | --- | --- |

3.2.5

The Committee shares the Commission's view that there are several potential solutions. Under the current circumstances, the Committee would not wish to recommend any of the particular solutions put forward. The one selected should aim, first and foremost, to:

—

provide greater protection for workers' health and safety in relation to working time;

| — | provide firms and the Member States with more flexibility in organising working time; |
| --- | --- |

—

provide firms and the Member States with more flexibility in organising working time;

| — | make it easier to combine work and family life; |
| --- | --- |

—

make it easier to combine work and family life;

| — | avoid obstacles being created, especially for SMEs. |
| --- | --- |

—

avoid obstacles being created, especially for SMEs.

3.3   Implementation of the opt-out in accordance with Article 18(1)(b)(i)

| 3.3.1 | The directive's Article 18 gives the Member States the right to legislate to derogate from Article 6 of the directive, which limits the average weekly working time to 48 hours. Implementation of the opt-out is subject to a number of conditions:






  a) | workers must have agreed to work a greater number of hours; |
| --- | --- | --- |

3.3.1

The directive's Article 18 gives the Member States the right to legislate to derogate from Article 6 of the directive, which limits the average weekly working time to 48 hours. Implementation of the opt-out is subject to a number of conditions:

a)

workers must have agreed to work a greater number of hours;

| b) | workers who refuse must not be subject to reprisals; |
| --- | --- |

b)

workers who refuse must not be subject to reprisals;

| c) | employers are obliged to keep up-to-date records of all workers who do this work; |
| --- | --- |

c)

employers are obliged to keep up-to-date records of all workers who do this work;

| d) | the records must be made available to the competent authorities. |
| --- | --- |

d)

the records must be made available to the competent authorities.

It should also be noted that even workers who are working according to the opt-out under Article 18 are entitled to daily rest of 11 consecutive hours and a rest break after six hours.

| 3.3.2 | The Working Time Directive builds on some vague, unformulated assumptions of what might be called a ‘healthy working time culture’. According to Article 137 of the Treaty establishing the European Community, ‘the Community shall support and complement the activities of the Member States’ to improve working conditions and ‘to protect workers' health and safety’. The very existence of the Working Time Directive and the fact that it has been implemented in most of the Member States are, in any case, evidence of a general desire to reduce the scope for an unhealthy working time culture to develop. The opt-out provided for in Article 18(1)(b)(i) can thus only be applied if the Member State respects ‘the general principles of the protection of health and safety of workers’. |
| --- | --- |

3.3.2

The Working Time Directive builds on some vague, unformulated assumptions of what might be called a ‘healthy working time culture’. According to Article 137 of the Treaty establishing the European Community, ‘the Community shall support and complement the activities of the Member States’ to improve working conditions and ‘to protect workers' health and safety’. The very existence of the Working Time Directive and the fact that it has been implemented in most of the Member States are, in any case, evidence of a general desire to reduce the scope for an unhealthy working time culture to develop. The opt-out provided for in Article 18(1)(b)(i) can thus only be applied if the Member State respects ‘the general principles of the protection of health and safety of workers’.

| 3.3.3 | An assessment of the legitimacy of an opt-out will necessarily depend on whether a link can be shown between a working week of more than 48 hours and the health and safety of workers. In its communication, the Commission states that an analysis of the impact of the opt-out on the health and safety of workers ‘appears not to be possible owing to the lack of reliable data’ (7). Nevertheless, the Commission mentions a recent study according to which there could be a link between long working days and physical health, particularly when working time exceeds 48 to 50 hours per week. In its opinion on the 1990 proposal for a directive, the EESC had already stated that it had emerged from numerous studies that working for too long without rest could damage workers' health, lead to occupational diseases and wear workers down (8). |
| --- | --- |

3.3.3

An assessment of the legitimacy of an opt-out will necessarily depend on whether a link can be shown between a working week of more than 48 hours and the health and safety of workers. In its communication, the Commission states that an analysis of the impact of the opt-out on the health and safety of workers ‘appears not to be possible owing to the lack of reliable data’ (7). Nevertheless, the Commission mentions a recent study according to which there could be a link between long working days and physical health, particularly when working time exceeds 48 to 50 hours per week. In its opinion on the 1990 proposal for a directive, the EESC had already stated that it had emerged from numerous studies that working for too long without rest could damage workers' health, lead to occupational diseases and wear workers down (8).

| 3.3.4 | It is important that the opt-out should be undertaken voluntarily. According to the rules laid down in the directive, a worker must always be free to choose not to work more than an average 48 hours per week. The rules have been criticised because this freedom is not always possible: it is difficult for an employee to refuse to sign an agreement in a recruitment situation. |
| --- | --- |

3.3.4

It is important that the opt-out should be undertaken voluntarily. According to the rules laid down in the directive, a worker must always be free to choose not to work more than an average 48 hours per week. The rules have been criticised because this freedom is not always possible: it is difficult for an employee to refuse to sign an agreement in a recruitment situation.

| 3.3.5 | According to the Commission communication, an employer survey carried out in Great Britain shows that 48 % of employees in the construction industry work more than 48 hours per week (9). This is a surprisingly high figure, particularly since many of them are probably in jobs that require both physical resistance and precision. For the employer, the benefit of these extra working hours (during which – because of overtime pay – the worker is also very expensive labour) must be relatively small. One might therefore wonder whether the general long working hours' culture in Great Britain is not linked to other structural problems. |
| --- | --- |

3.3.5

According to the Commission communication, an employer survey carried out in Great Britain shows that 48 % of employees in the construction industry work more than 48 hours per week (9). This is a surprisingly high figure, particularly since many of them are probably in jobs that require both physical resistance and precision. For the employer, the benefit of these extra working hours (during which – because of overtime pay – the worker is also very expensive labour) must be relatively small. One might therefore wonder whether the general long working hours' culture in Great Britain is not linked to other structural problems.

| 3.3.6 | An important question is the impact long hours have on the family. How do parents who both work more than 48 hours per week manage to hold things together? Is the long hours culture a factor in keeping one of the partners – usually the woman – partially or wholly outside the labour market? If so, the opt-out could be at odds with the Lisbon Strategy objective of getting 60 % of the EU's female population in work by 2010. It is somewhat surprising to note that the difference in male and female participation in the labour market in Great Britain is actually slightly below the European Union average, but, on the other hand, Great Britain is, after the Netherlands, the EU country where relatively most women (about half) work part-time (10). According to the Commission communication, 26.2 % of British men work more than 48 hours per week, whereas for women, the proportion is 11.5 % (11). A study published in the British Medical Journal found that no control of overtime is a health risk for female workers, especially manual workers with families (12). The opt-out would thus seem to have a negative effect on equal opportunities between women and men. This aspect needs to be analysed in greater depth. |
| --- | --- |

3.3.6

An important question is the impact long hours have on the family. How do parents who both work more than 48 hours per week manage to hold things together? Is the long hours culture a factor in keeping one of the partners – usually the woman – partially or wholly outside the labour market? If so, the opt-out could be at odds with the Lisbon Strategy objective of getting 60 % of the EU's female population in work by 2010. It is somewhat surprising to note that the difference in male and female participation in the labour market in Great Britain is actually slightly below the European Union average, but, on the other hand, Great Britain is, after the Netherlands, the EU country where relatively most women (about half) work part-time (10). According to the Commission communication, 26.2 % of British men work more than 48 hours per week, whereas for women, the proportion is 11.5 % (11). A study published in the British Medical Journal found that no control of overtime is a health risk for female workers, especially manual workers with families (12). The opt-out would thus seem to have a negative effect on equal opportunities between women and men. This aspect needs to be analysed in greater depth.

| 3.3.7 | The EESC does not intend to take a stance towards the opt-out at this stage. A more thorough analysis of the situation involving the social partners is required before a stance can be taken. |
| --- | --- |

3.3.7

The EESC does not intend to take a stance towards the opt-out at this stage. A more thorough analysis of the situation involving the social partners is required before a stance can be taken.

3.4   Measures to provide a better balance between work and family life

| 3.4.1 | What does a better balance between work and family life mean for workers? What does family life mean? If we put the question to the parents of small children, we will get one answer. If we put the same question to a couple without children, we will most surely get a different one. A single father will give yet another. Consequently, it is not possible to give a straightforward answer to how the balance between work and family life should improve. |
| --- | --- |

3.4.1

What does a better balance between work and family life mean for workers? What does family life mean? If we put the question to the parents of small children, we will get one answer. If we put the same question to a couple without children, we will most surely get a different one. A single father will give yet another. Consequently, it is not possible to give a straightforward answer to how the balance between work and family life should improve.

| 3.4.2 | However, it can be said generally that for most people the option to influence or direct their working situation is a positive factor that makes for a good working environment. This is particularly true of parents with small children. The European Parliament Resolution on the organisation of working time particularly emphasises the fact that:






  — | women are more likely to suffer negative effects on their health and well-being if they have to take on the double burden of working life and family responsibilities; |
| --- | --- | --- |

3.4.2

However, it can be said generally that for most people the option to influence or direct their working situation is a positive factor that makes for a good working environment. This is particularly true of parents with small children. The European Parliament Resolution on the organisation of working time particularly emphasises the fact that:

—

women are more likely to suffer negative effects on their health and well-being if they have to take on the double burden of working life and family responsibilities;

| — | attention must be drawn to the worrying trend of women working two part-time jobs, often with a combined working week that exceeds the legal limit, in order to earn enough money to live; |
| --- | --- |

—

attention must be drawn to the worrying trend of women working two part-time jobs, often with a combined working week that exceeds the legal limit, in order to earn enough money to live;

| — | that the long hours culture in higher professions and managerial jobs is an obstacle for the upward mobility of women and sustains gender segregation in the workplace (13). |
| --- | --- |

—

that the long hours culture in higher professions and managerial jobs is an obstacle for the upward mobility of women and sustains gender segregation in the workplace (13).

The EESC strongly supports this opinion, but would add that the problems in question do not only apply to women, but to parents in general who find it difficult to combine working life with family responsibilities. This also implies a health risk.

| 3.4.3 | The EESC would point out that an important aspect of any working time policy should be to enable everyone to set aside some time from work and family to make a contribution towards society and democratic life. |
| --- | --- |

3.4.3

The EESC would point out that an important aspect of any working time policy should be to enable everyone to set aside some time from work and family to make a contribution towards society and democratic life.

| 3.4.4 | Both Community and national law currently include a number of rules that take account of the need to reconcile family life and childcare with paid employment. There are, for example, provisions on parental leave, part-time work, teleworking, flexible working time, etc. The EESC would welcome a survey involving Social Partners of the existing provisions in this area before any new measures are proposed and debated. The EESC suggests that the European Foundation for the Improvement of Living and Working Conditions should be asked to carry out this survey. The Foundation has already published a report that addresses these problems to some extent (14). |
| --- | --- |

3.4.4

Both Community and national law currently include a number of rules that take account of the need to reconcile family life and childcare with paid employment. There are, for example, provisions on parental leave, part-time work, teleworking, flexible working time, etc. The EESC would welcome a survey involving Social Partners of the existing provisions in this area before any new measures are proposed and debated. The EESC suggests that the European Foundation for the Improvement of Living and Working Conditions should be asked to carry out this survey. The Foundation has already published a report that addresses these problems to some extent (14).

Brussels, 30 June 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  Report from the Commission – State of Implementation of Council Directive 93/104/EC of 23 November 1993 concerning certain aspects of the organisation of working time (Working time Directive), COM(2000) 787 final.

1

(2)

2

| 1. | From four to six months for collective agreements or agreements concluded between the two sides of industry (reference to article 17(3) in the first sentence of article 17(4)). |
| --- | --- |

1.

From four to six months for collective agreements or agreements concluded between the two sides of industry (reference to article 17(3) in the first sentence of article 17(4)).

| 2. | In addition, Member States have the option of allowing collective agreements or agreements concluded between the two sides of industry to set reference periods not exceeding twelve months, ‘subject to compliance with the general principles relating to the safety and health of workers’ or ‘for objective or technical reasons or reasons concerning the organisation of work’. |
| --- | --- |

2.

In addition, Member States have the option of allowing collective agreements or agreements concluded between the two sides of industry to set reference periods not exceeding twelve months, ‘subject to compliance with the general principles relating to the safety and health of workers’ or ‘for objective or technical reasons or reasons concerning the organisation of work’.

(3)  COM(2003) 843 final, p. 5.

3

(4)  COM(2003) 843 final p. 6.

4

(5)  ECJ judgment of 3.10.2000 in case C-303/98 (Simap).

5

(6)  ECJ judgment of 9.10.2003 in case C-151/02 (Jaeger), not yet published.

6

(7)  COM(2003) 843 final, p. 14.

7

(8)  OJ C 60 of 8.3.1991, p. 26.

8

(9)  COM(2003) 843 final, p. 13.

9

(10)  Report from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Report on equality between women and men, 2004 COM(2004) 115 final, p. 16.

10

(11)  COM(2003) 843 final, p. 12.

11

(12)  Ala-Mursula & al.: ‘Effect of employee worktime control on health: a prospective cohort study’, Occupational and Environment Medicine; 61: 254-261, No. 3, March 2004.

12

(13)  European Parliament Resolution of 11.2.2004 on the organisation of working time (Amendment of Directive 93/104/EC), P5_TA-PROV(2004)0089, point 20-22.

13

(14)  ‘A new organisation of time over working life’, European Foundation for the Improvement of Living and Working Conditions, 2003.

14

---

APPENDIX

to the European Economic and Social Committee opinion

The following amendments attracted more than 25 % of the votes cast, but were rejected during the course of the deliberations:

Point 3.1.7

Replace this paragraph by the following text:

‘In its communication of 19 May, the Commission suggests that the reference period should be extended without citing already a concrete proposal. Therefore the EESC does not intend to take a stand in the matter at this stage. The EESC will do so when consulted on a draft directive.’

Reason

On the two other issues (definition of working time, point 3.2.5, and the opt-out, point 3.3.7) the EESC does not take a stand awaiting more concrete proposals. Therefore it is justified to take a parallel attitude in relation with the reference period.

Result of the vote

| For: | 84 |
| --- | --- |
| Against: | 135 |
| Abstentions: | 7 |

For:

84

Against:

135

Abstentions:

7

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/80 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/80

---

Opinion of the European Economic and Social Committee on ‘EU-Turkey relations with a view to the European Council of December 2004’

(2004/C 302/17)

On 28 January 2004, the European Economic and Social Committee decided to draw up an opinion under Rule 29 of its Rules of Procedure on ‘EU Turkey relations with a view to the European Council of December 2004’.

The Section for External Relations, which was responsible for preparing the Committee's work on this subject, adopted its opinion on 7 June 2004. The rapporteur was Mr Tom Etty.

At its 410th plenary session, held on 30 June – 1 July 2004 (meeting on 1 July 2004), the European Economic and Social Committee adopted the following opinion, with 166 votes in favour, 17 against and 28 abstentions:

1.   Background

| 1.1 | The EESC has followed developments in Turkey for many years now. Turkey associated with the EC in 1963, applied for membership in 1987, and became a partner of the EU in the Customs Union in 1995. |
| --- | --- |

1.1

The EESC has followed developments in Turkey for many years now. Turkey associated with the EC in 1963, applied for membership in 1987, and became a partner of the EU in the Customs Union in 1995.

| 1.2 | Through a Joint Consultative committee (JCC), established with organised civil society in Turkey and functioning well since 1995, the EESC is well informed of the aspirations of the social and economic interest groups in Turkey as regards membership of their country of the EU. It has always taken these aspirations into account and sincerely hopes that the European Summit of December 2004 will be able to conclude that Turkey has met the 1993 Copenhagen political criteria and therefore decide that negotiations on accession will be opened without delay. |
| --- | --- |

1.2

Through a Joint Consultative committee (JCC), established with organised civil society in Turkey and functioning well since 1995, the EESC is well informed of the aspirations of the social and economic interest groups in Turkey as regards membership of their country of the EU. It has always taken these aspirations into account and sincerely hopes that the European Summit of December 2004 will be able to conclude that Turkey has met the 1993 Copenhagen political criteria and therefore decide that negotiations on accession will be opened without delay.

| 1.3 | Turkey has demonstrated for several decades that it has, unequivocally, chosen to turn itself to Europe. |
| --- | --- |

1.3

Turkey has demonstrated for several decades that it has, unequivocally, chosen to turn itself to Europe.

| 1.4 | Turkey is a country with a secular state with an overwhelmingly Islamic population. It wishes to function as a modern, secular democracy. It is a highly important example for those countries which have a predominantly Islamic population and which want to strengthen their political structures in terms of secularism and democracy. Turkey's accession to the EU would demonstrate the high level the EU has achieved in terms of its pluralism, of its ability to manage dialogue between cultures and religions, and of its role in promoting peace and justice in the world. |
| --- | --- |

1.4

Turkey is a country with a secular state with an overwhelmingly Islamic population. It wishes to function as a modern, secular democracy. It is a highly important example for those countries which have a predominantly Islamic population and which want to strengthen their political structures in terms of secularism and democracy. Turkey's accession to the EU would demonstrate the high level the EU has achieved in terms of its pluralism, of its ability to manage dialogue between cultures and religions, and of its role in promoting peace and justice in the world.

| 1.5 | Turkey is a demographically young country with a strongly growing economy of great potential. It would be, however, incorrect to continue considering it only as a large market for European export or a zone for low cost investment. |
| --- | --- |

1.5

Turkey is a demographically young country with a strongly growing economy of great potential. It would be, however, incorrect to continue considering it only as a large market for European export or a zone for low cost investment.

| 1.6 | Turkey has developed during many years a role, on the one hand as a buffer zone and on the other hand as a bridge between the West and the East, but it has never stopped to consider itself as European. If Turkey succeeds in becoming a member of the EU, it could even more directly support the EU activities for conflict prevention, in particular thanks to its excellent relations with the Central Asian region, the Middle East, and the Gulf area. |
| --- | --- |

1.6

Turkey has developed during many years a role, on the one hand as a buffer zone and on the other hand as a bridge between the West and the East, but it has never stopped to consider itself as European. If Turkey succeeds in becoming a member of the EU, it could even more directly support the EU activities for conflict prevention, in particular thanks to its excellent relations with the Central Asian region, the Middle East, and the Gulf area.

2.   Introduction

| 2.1 | Relations between the EU and Turkey are presently, and for the rest of this year will continue to be dominated by the question whether or not negotiations on accession will be opened. The European Summit will take a decision at its meeting in December 2004. |
| --- | --- |

2.1

Relations between the EU and Turkey are presently, and for the rest of this year will continue to be dominated by the question whether or not negotiations on accession will be opened. The European Summit will take a decision at its meeting in December 2004.

| 2.2 | That decision will be a decisive event after a period of more than fifteen years during which Turkey has been waiting for a clear-cut answer to its application for membership of the EU. The Helsinki Council of December 1999 gave Turkey the status of a candidate for membership. The Copenhagen Council of December 2002 decided that a decision on opening negotiations would be taken on the basis of the outcome of an assessment, if Turkey by then meets the 1993 Copenhagen political criteria. Satisfying them is considered to be an essential precondition for embarking on the route to full membership. |
| --- | --- |

2.2

That decision will be a decisive event after a period of more than fifteen years during which Turkey has been waiting for a clear-cut answer to its application for membership of the EU. The Helsinki Council of December 1999 gave Turkey the status of a candidate for membership. The Copenhagen Council of December 2002 decided that a decision on opening negotiations would be taken on the basis of the outcome of an assessment, if Turkey by then meets the 1993 Copenhagen political criteria. Satisfying them is considered to be an essential precondition for embarking on the route to full membership.

| 2.3 | The decision to be taken is obviously not only of the greatest importance for Turkey, but also for the EU. |
| --- | --- |

2.3

The decision to be taken is obviously not only of the greatest importance for Turkey, but also for the EU.

| 2.4 | So far, the outcome of the monitoring of relevant progress in Turkey by the European Commission has been positive. According to the Commission, results of the reform process have been particularly impressive in the past two or three years. However, significant further progress is necessary as regards the independence of the judiciary, freedom of expression, the role of the army, and cultural rights – the latter especially in the South-East.
  The European Parliament, in its most recent report on Turkey, makes a similar assessment. It considers that Turkey, despite all the efforts made so far, still does not meet the Copenhagen political criteria. Major shortcomings are in the 1982 Constitution, adopted under military rule. Reforms since 2001 have not yet removed its basically authoritarian character. Further important concerns, according to the Parliament's report, are with implementation of reforms in practice, persisting torture in police stations, harassment of human rights organisations, and the lack of respect for the rights of minorities (in particular of the Kurds). |
| --- | --- |

2.4

So far, the outcome of the monitoring of relevant progress in Turkey by the European Commission has been positive. According to the Commission, results of the reform process have been particularly impressive in the past two or three years. However, significant further progress is necessary as regards the independence of the judiciary, freedom of expression, the role of the army, and cultural rights – the latter especially in the South-East.

The European Parliament, in its most recent report on Turkey, makes a similar assessment. It considers that Turkey, despite all the efforts made so far, still does not meet the Copenhagen political criteria. Major shortcomings are in the 1982 Constitution, adopted under military rule. Reforms since 2001 have not yet removed its basically authoritarian character. Further important concerns, according to the Parliament's report, are with implementation of reforms in practice, persisting torture in police stations, harassment of human rights organisations, and the lack of respect for the rights of minorities (in particular of the Kurds).

| 2.5 | Turkey has not only realised an impressive programme of legislation, but it has also taken important measures so as to monitor the implementation of this new legislation in practice. |
| --- | --- |

2.5

Turkey has not only realised an impressive programme of legislation, but it has also taken important measures so as to monitor the implementation of this new legislation in practice.

| 2.6 | This opinion has been prepared, among others, on the basis of relevant work done by the EU-Turkey Joint Consultative Committee. This has allowed the EESC to take into account the views, aspirations and expectations of a significant part of Turkish civil society. |
| --- | --- |

2.6

This opinion has been prepared, among others, on the basis of relevant work done by the EU-Turkey Joint Consultative Committee. This has allowed the EESC to take into account the views, aspirations and expectations of a significant part of Turkish civil society.

3.   General observations

| 3.1 | It must be clear from the outset that the crucial issues for the EESC to discuss at this point of time are basically the political issues of democracy, rule of law, human rights, and the protection of minorities, as decided by the December 2002 Copenhagen Council. |
| --- | --- |

3.1

It must be clear from the outset that the crucial issues for the EESC to discuss at this point of time are basically the political issues of democracy, rule of law, human rights, and the protection of minorities, as decided by the December 2002 Copenhagen Council.

| 3.2 | The economic criteria and the acquis will only be discussed here insofar as progress Turkey has realised with regard to them can be considered to contribute to the strengthening of human rights, of civil society and of democracy. |
| --- | --- |

3.2

The economic criteria and the acquis will only be discussed here insofar as progress Turkey has realised with regard to them can be considered to contribute to the strengthening of human rights, of civil society and of democracy.

| 3.3 | The EESC has carefully taken note of recent relevant information, in particular the European Commission's 2003 Regular Report on Turkey's progress towards accession, European Parliament's Report on Turkey of April 2004 and the Council of Europe's Report on Human Rights on Turkey of December 2003. It shares the general assessment of the reform process made in these reports. It considers the added value of this opinion to be in its views of the political criteria which are of particular importance for the economic and social interest groups. Therefore, it is on these aspects that this opinion will focus. |
| --- | --- |

3.3

The EESC has carefully taken note of recent relevant information, in particular the European Commission's 2003 Regular Report on Turkey's progress towards accession, European Parliament's Report on Turkey of April 2004 and the Council of Europe's Report on Human Rights on Turkey of December 2003. It shares the general assessment of the reform process made in these reports. It considers the added value of this opinion to be in its views of the political criteria which are of particular importance for the economic and social interest groups. Therefore, it is on these aspects that this opinion will focus.

| 3.4 | For the EESC, aspects of particular importance in the political criteria are:






  — | the respect for human rights (in particular the right to organise and the right to bargain collectively; women's rights and the cultural rights of minorities); |
| --- | --- | --- |

3.4

For the EESC, aspects of particular importance in the political criteria are:

—

the respect for human rights (in particular the right to organise and the right to bargain collectively; women's rights and the cultural rights of minorities);

| — | democracy, in particular the contribution which economic and social interest groups and civil society at large can make to the political decision making process; |
| --- | --- |

—

democracy, in particular the contribution which economic and social interest groups and civil society at large can make to the political decision making process;

| — | freedom of expression, free media; and |
| --- | --- |

—

freedom of expression, free media; and

| — | the role of the army in Turkish society, in particular in economic and social life. |
| --- | --- |

—

the role of the army in Turkish society, in particular in economic and social life.

| 3.5 | The 1999 Helsinki Council stated clearly that Turkey's reform-performances would be measured against the same accession criteria applying to the other candidate countries. |
| --- | --- |

3.5

The 1999 Helsinki Council stated clearly that Turkey's reform-performances would be measured against the same accession criteria applying to the other candidate countries.

| 3.6 | In this connection, it should be observed that some countries with whom negotiations on accession have been opened several years ago, apparently did not fully meet the political criteria at the moment when negotiations were opened with them. In some of them, serious discrepancies still persist, even now that they have become members of the EU. One can think in this connection of important elements such as corruption, the independence of the judiciary and the treatment of minorities. Against this background it is important to state that in our opinion Turkey should not only be tested against the same criteria as the other candidate Member States, but also that these criteria will be applied in the same way. |
| --- | --- |

3.6

In this connection, it should be observed that some countries with whom negotiations on accession have been opened several years ago, apparently did not fully meet the political criteria at the moment when negotiations were opened with them. In some of them, serious discrepancies still persist, even now that they have become members of the EU. One can think in this connection of important elements such as corruption, the independence of the judiciary and the treatment of minorities. Against this background it is important to state that in our opinion Turkey should not only be tested against the same criteria as the other candidate Member States, but also that these criteria will be applied in the same way.

| 3.7 | In December 2002, when the Council set its deadline for taking a decision on opening negotiations with Turkey yes or no, their decision can only have meant that they thought that at that very moment Turkey had made enough progress to justify the expectation that, if it would make a strong effort in the remaining twenty four months, the remaining shortcomings could indeed be overcome. Had this not been the case, giving Turkey this perspective would have been pointless and unfair. |
| --- | --- |

3.7

In December 2002, when the Council set its deadline for taking a decision on opening negotiations with Turkey yes or no, their decision can only have meant that they thought that at that very moment Turkey had made enough progress to justify the expectation that, if it would make a strong effort in the remaining twenty four months, the remaining shortcomings could indeed be overcome. Had this not been the case, giving Turkey this perspective would have been pointless and unfair.

| 3.7.1 | For some of the remaining key problems, like the role of the army in society and the treatment of minorities, (in particular the Kurds in the Southeast), which have a complicated history of many decades, two years is a very short period. Therefore, it is reasonable to infer that Council cannot have meant that Turkey would be able to fully meet the political criteria by December 2004. |
| --- | --- |

3.7.1

For some of the remaining key problems, like the role of the army in society and the treatment of minorities, (in particular the Kurds in the Southeast), which have a complicated history of many decades, two years is a very short period. Therefore, it is reasonable to infer that Council cannot have meant that Turkey would be able to fully meet the political criteria by December 2004.

| 3.7.2 | If that is a correct interpretation of Council's decision in December 2002, the question is how much progress on which aspects of the political criteria can realistically be demanded of Turkey before negotiations can be started. |
| --- | --- |

3.7.2

If that is a correct interpretation of Council's decision in December 2002, the question is how much progress on which aspects of the political criteria can realistically be demanded of Turkey before negotiations can be started.

| 3.8 | In the current discussion on the opening of negotiations on accession with Turkey, reference is made regularly to the problem of Cyprus. The positive role Turkey has played in the efforts to find a solution, and the consecutive 65 % vote in favour of the island reunification by the Turkish Cypriot community, have to be taken into consideration. Undoubtedly, Cyprus remains an issue of capital importance, both in terms of principles and of political realities. However, if one sticks faithfully and honestly to the decision of the Copenhagen Council of December of 2002 referred to in para. 2.2, the EU cannot make the solution of the Cyprus problem a new condition for opening negotiations as this would mean setting an extra condition ex post. |
| --- | --- |

3.8

In the current discussion on the opening of negotiations on accession with Turkey, reference is made regularly to the problem of Cyprus. The positive role Turkey has played in the efforts to find a solution, and the consecutive 65 % vote in favour of the island reunification by the Turkish Cypriot community, have to be taken into consideration. Undoubtedly, Cyprus remains an issue of capital importance, both in terms of principles and of political realities. However, if one sticks faithfully and honestly to the decision of the Copenhagen Council of December of 2002 referred to in para. 2.2, the EU cannot make the solution of the Cyprus problem a new condition for opening negotiations as this would mean setting an extra condition ex post.

4.   Specific remarks

4.1   Human rights

| 4.1.1 | The economic and social interest groups are deeply involved in issues related to the right to organise and the right to bargain collectively, enshrined in ILO Conventions 87 and 98, and in the European Social Charter. Turkey has ratified both ILO Conventions and is a party to the European Social Charter. It has made reservations as to Articles 5 (right to organise) and 6 (right to bargain collectively, right to strike) of the Charter. |
| --- | --- |

4.1.1

The economic and social interest groups are deeply involved in issues related to the right to organise and the right to bargain collectively, enshrined in ILO Conventions 87 and 98, and in the European Social Charter. Turkey has ratified both ILO Conventions and is a party to the European Social Charter. It has made reservations as to Articles 5 (right to organise) and 6 (right to bargain collectively, right to strike) of the Charter.

| 4.1.2 | In the last two decades, and in particular as a consequence of the military coup d'état of September 1980, serious infringements of these rights have occurred. The military regime went so far as to inscribe a number of grave violations of fundamental trade union rights in the 1982 Constitution. |
| --- | --- |

4.1.2

In the last two decades, and in particular as a consequence of the military coup d'état of September 1980, serious infringements of these rights have occurred. The military regime went so far as to inscribe a number of grave violations of fundamental trade union rights in the 1982 Constitution.

| 4.1.3 | Several of these articles and pieces of legislation based upon them have been amended in recent years. |
| --- | --- |

4.1.3

Several of these articles and pieces of legislation based upon them have been amended in recent years.

| 4.1.4 | However, some important deviations of the fundamental ILO Conventions still persist. In particular, Article 54 of the Constitution still contains detailed restrictions of the right to strike. Article 51 of the Constitution, setting pre-conditions for the election of trade union officials, has been amended so as to bring it in line with ILO Convention 87. Initiatives to amend similar provisions in Act 2821 on Trade Unions and Act 2822 on Collective Labour Agreements, Strikes and Lock-outs are under way. However, according to the 2004 report of the Committee of Experts on ratified Conventions of the ILO to the International Labour Conference, the Government has recently opened court procedures based on this legislation against DISK, one of the trade union confederations represented on the EU-Turkey Joint Consultative Committee. |
| --- | --- |

4.1.4

However, some important deviations of the fundamental ILO Conventions still persist. In particular, Article 54 of the Constitution still contains detailed restrictions of the right to strike. Article 51 of the Constitution, setting pre-conditions for the election of trade union officials, has been amended so as to bring it in line with ILO Convention 87. Initiatives to amend similar provisions in Act 2821 on Trade Unions and Act 2822 on Collective Labour Agreements, Strikes and Lock-outs are under way. However, according to the 2004 report of the Committee of Experts on ratified Conventions of the ILO to the International Labour Conference, the Government has recently opened court procedures based on this legislation against DISK, one of the trade union confederations represented on the EU-Turkey Joint Consultative Committee.

| 4.1.5 | For more than twenty years, the supervisory bodies of the ILO (the independent Committee of Experts on the Application of Conventions, the International Labour Conference's Committee on the Application of Conventions as well as the Governing Body's Committee on Freedom of Association) have severely criticised these violations and indicated how Turkey should put an end to them. Action by successive Turkish Governments to redress the situation has been disappointingly slow and unfortunately signs of improvement are still lacking. |
| --- | --- |

4.1.5

For more than twenty years, the supervisory bodies of the ILO (the independent Committee of Experts on the Application of Conventions, the International Labour Conference's Committee on the Application of Conventions as well as the Governing Body's Committee on Freedom of Association) have severely criticised these violations and indicated how Turkey should put an end to them. Action by successive Turkish Governments to redress the situation has been disappointingly slow and unfortunately signs of improvement are still lacking.

| 4.1.6 | A report on Social Dialogue and Economic and Social Rights in Turkey, prepared for the 12th meeting of the EU-Turkey JCC (1), highlighted in particular the restrictions of the right to organise and the right to strike in the public sector. Despite several reforms in trade union and industrial relations legislation, these, unfortunately, still persist today. |
| --- | --- |

4.1.6

A report on Social Dialogue and Economic and Social Rights in Turkey, prepared for the 12th meeting of the EU-Turkey JCC (1), highlighted in particular the restrictions of the right to organise and the right to strike in the public sector. Despite several reforms in trade union and industrial relations legislation, these, unfortunately, still persist today.

| 4.1.7 | As regards the right to organise in NGOs, there are legal restrictions in the Associations Law, regarding i.a. membership, fund-raising and scope of activities. In practice, the functioning of these organisations is often seriously hampered. NGOs considered to take anti-government positions in a peaceful way are confronted with infiltrations, close monitoring, censorship, etc. |
| --- | --- |

4.1.7

As regards the right to organise in NGOs, there are legal restrictions in the Associations Law, regarding i.a. membership, fund-raising and scope of activities. In practice, the functioning of these organisations is often seriously hampered. NGOs considered to take anti-government positions in a peaceful way are confronted with infiltrations, close monitoring, censorship, etc.

| 4.1.8 | Foundations for (religious) minorities face particular difficulties as regards property rights. The Government seems to be ready to redress these restrictions to their free functioning. Improvements have been promised for Spring 2004, but these have not been fulfilled so far. |
| --- | --- |

4.1.8

Foundations for (religious) minorities face particular difficulties as regards property rights. The Government seems to be ready to redress these restrictions to their free functioning. Improvements have been promised for Spring 2004, but these have not been fulfilled so far.

| 4.1.8.1 | Serious problems continue to exist as regards the training of religions minority clergy, in particular Greek orthodox clergy. The theological college of Halki has been closed for more than thirty years. |
| --- | --- |

4.1.8.1

Serious problems continue to exist as regards the training of religions minority clergy, in particular Greek orthodox clergy. The theological college of Halki has been closed for more than thirty years.

| 4.1.9 | As regards women's rights, the Committee notes several serious defects despite Turkey's ratification of the fundamental ILO Conventions on Equal Remuneration (No 100) and on Discrimination (Employment and Occupation) (No 111). The Conventions are implemented in law with some exceptions (e.g. legal barriers exist to women's access to certain jobs). Implementation in practice, however, shows many weaknesses, e.g. with respect to equal remuneration for the same job with equal qualifications and access to certain types of quality employment. Similar problems exist in many EU Member States. |
| --- | --- |

4.1.9

As regards women's rights, the Committee notes several serious defects despite Turkey's ratification of the fundamental ILO Conventions on Equal Remuneration (No 100) and on Discrimination (Employment and Occupation) (No 111). The Conventions are implemented in law with some exceptions (e.g. legal barriers exist to women's access to certain jobs). Implementation in practice, however, shows many weaknesses, e.g. with respect to equal remuneration for the same job with equal qualifications and access to certain types of quality employment. Similar problems exist in many EU Member States.

| 4.1.9.1 | A point of serious concern is the problem of powerful criminal networks which exploit forced prostitution and national as well as international trafficking of women, boys and girls, and organs. |
| --- | --- |

4.1.9.1

A point of serious concern is the problem of powerful criminal networks which exploit forced prostitution and national as well as international trafficking of women, boys and girls, and organs.

| 4.1.10 | Despite important changes in legislation, grave problems persist for the time being as regard the treatment of the Kurds in practice. Their cultural rights as a minority are not being respected sufficiently yet, despite certain recent important improvements in particular with respect to broadcasting in the Kurdish language. In Turkey, the status of minority is reserved for the country's religious groups based on the Treaty of Lausanne of 1923 which only speaks of religious minorities. |
| --- | --- |

4.1.10

Despite important changes in legislation, grave problems persist for the time being as regard the treatment of the Kurds in practice. Their cultural rights as a minority are not being respected sufficiently yet, despite certain recent important improvements in particular with respect to broadcasting in the Kurdish language. In Turkey, the status of minority is reserved for the country's religious groups based on the Treaty of Lausanne of 1923 which only speaks of religious minorities.

4.2   Democracy

| 4.2.1 | Under this heading, the EESC wishes to stress once more the potential importance of the new Economic and Social Council of Turkey. It can contribute significantly to reinforcement of the democratic process in the area of decision-making on major economic and social issues through meaningful consultations of the most representative interest groups by the Government. In that sense, it is much more than just an element of the social dialogue as the Commission addresses it in its Regular Report. |
| --- | --- |

4.2.1

Under this heading, the EESC wishes to stress once more the potential importance of the new Economic and Social Council of Turkey. It can contribute significantly to reinforcement of the democratic process in the area of decision-making on major economic and social issues through meaningful consultations of the most representative interest groups by the Government. In that sense, it is much more than just an element of the social dialogue as the Commission addresses it in its Regular Report.

| 4.2.2 | The Turkish Economic and Social Council was established in 2001. It is presided over by the Prime Minister and several other Cabinet Ministers participate in its work. Since its inception it was not convened until the present Government came to power, one and a half years ago. It has met three times now, according to schedule, but is certainly has not functioned in the way as recommended in the EU-Turkey JCC's Report on Social Dialogue and Economic and Social Rights, mentioned in para. 4.1.6 above. Rather, it appears to be a talking shop in which statements are delivered and inconclusive discussions take place, instead of an influential body where economic and social interest groups, officially consulted by the Government, make serious efforts to reach consensus on difficult issues in their fields of competence and activity. Clearly, such a body and such activities cannot be created overnight. But, so far, the Government has failed to provide the organisations represented on the Council with incentives to do real business with each other, for instance by reassuring them and by proving to them that, if they succeed to reach meaningful compromises, the Government's policies will significantly reflect the latter. The EESC hopes that the Government of Turkey will seriously and constructively cooperate with the Economic and Social Council enabling it to develop into a significant element in the democratisation process in Turkey. In February of this year, the Government announced that it intends to review the composition of the Economic and Social Council, and in particular its own dominant position in it. |
| --- | --- |

4.2.2

The Turkish Economic and Social Council was established in 2001. It is presided over by the Prime Minister and several other Cabinet Ministers participate in its work. Since its inception it was not convened until the present Government came to power, one and a half years ago. It has met three times now, according to schedule, but is certainly has not functioned in the way as recommended in the EU-Turkey JCC's Report on Social Dialogue and Economic and Social Rights, mentioned in para. 4.1.6 above. Rather, it appears to be a talking shop in which statements are delivered and inconclusive discussions take place, instead of an influential body where economic and social interest groups, officially consulted by the Government, make serious efforts to reach consensus on difficult issues in their fields of competence and activity. Clearly, such a body and such activities cannot be created overnight. But, so far, the Government has failed to provide the organisations represented on the Council with incentives to do real business with each other, for instance by reassuring them and by proving to them that, if they succeed to reach meaningful compromises, the Government's policies will significantly reflect the latter. The EESC hopes that the Government of Turkey will seriously and constructively cooperate with the Economic and Social Council enabling it to develop into a significant element in the democratisation process in Turkey. In February of this year, the Government announced that it intends to review the composition of the Economic and Social Council, and in particular its own dominant position in it.

| 4.2.3 | The Committee also wishes to highlight the importance of freedom of expression and free media for the democratic process in Turkey. It acknowledges the great number of reforms in this particular area. However, it shares the concern expressed by the Commissioner for Human Rights of the Council of Europe that some of the changes (for instance in the Constitution) could be interpreted in such a way as being even more restrictive than the provisions which they have replaced. Furthermore, practical application and interpretation of the new articles is the essential test for these reforms, as for those in other areas. Early experiences in legal proceedings show, unfortunately, little consistency as far as this is concerned. |
| --- | --- |

4.2.3

The Committee also wishes to highlight the importance of freedom of expression and free media for the democratic process in Turkey. It acknowledges the great number of reforms in this particular area. However, it shares the concern expressed by the Commissioner for Human Rights of the Council of Europe that some of the changes (for instance in the Constitution) could be interpreted in such a way as being even more restrictive than the provisions which they have replaced. Furthermore, practical application and interpretation of the new articles is the essential test for these reforms, as for those in other areas. Early experiences in legal proceedings show, unfortunately, little consistency as far as this is concerned.

4.3   Role of the armed forces in Turkish society

| 4.3.1 | The EESC is aware of the important role the armed forces have played and still play in the history of the country as well as in Turkish society today. It acknowledges that there have been instances when this role has been a positive one. However, it must also be observed that many of the difficulties Turkey faces today in meeting the 1993 Copenhagen political criteria result from the army's extremely broad and deep involvement in society. That involvement has to be put to an end on the basis of a concrete programme and a strict timetable. |
| --- | --- |

4.3.1

The EESC is aware of the important role the armed forces have played and still play in the history of the country as well as in Turkish society today. It acknowledges that there have been instances when this role has been a positive one. However, it must also be observed that many of the difficulties Turkey faces today in meeting the 1993 Copenhagen political criteria result from the army's extremely broad and deep involvement in society. That involvement has to be put to an end on the basis of a concrete programme and a strict timetable.

| 4.3.2 | The EESC realises that it is impossible to eradicate such a dominant role in many spheres of life, way beyond the normal role of an army (defence, internal security), in a very short period of time. However, it must be made absolutely clear to Turkey that if it wants to become a member of the EU, the role of the army must be confined to the tasks of the army in the other Member States; i.e. limited to safeguarding the external and internal security of the country and participate in international operations, under democratic control of the Parliament. |
| --- | --- |

4.3.2

The EESC realises that it is impossible to eradicate such a dominant role in many spheres of life, way beyond the normal role of an army (defence, internal security), in a very short period of time. However, it must be made absolutely clear to Turkey that if it wants to become a member of the EU, the role of the army must be confined to the tasks of the army in the other Member States; i.e. limited to safeguarding the external and internal security of the country and participate in international operations, under democratic control of the Parliament.

| 4.3.3 | In addition to the points which have already been discussed by the European Commission and by the European Parliament (among others the role and composition of the National Security Council, the political responsibility for the army's budget, military representation on civilian bodies in the realm of education and audio-visual media) it must be noted here that the army and army officers also take prominent positions in economic life. A law of 2003 stipulates that the two extra budgetary funds of the armed forces will be included in the general State budget by the end of 2004 and will cease to exist as a separate heading by 2007. This implies that as from 2007 the armed forces' budget will be completely under democratic control. However, for the time being, the armed forces maintain considerable power in Turkish society and economy: there is a vast area of influence – formal as well as informal – of the military which must be made transparent in the same way as all other economic activities (2). This economic aspect has so far been neglected in discussions by the EU of the powerful role of the army in Turkish society only. The European Parliament has addressed it in its most recent report. |
| --- | --- |

4.3.3

In addition to the points which have already been discussed by the European Commission and by the European Parliament (among others the role and composition of the National Security Council, the political responsibility for the army's budget, military representation on civilian bodies in the realm of education and audio-visual media) it must be noted here that the army and army officers also take prominent positions in economic life. A law of 2003 stipulates that the two extra budgetary funds of the armed forces will be included in the general State budget by the end of 2004 and will cease to exist as a separate heading by 2007. This implies that as from 2007 the armed forces' budget will be completely under democratic control. However, for the time being, the armed forces maintain considerable power in Turkish society and economy: there is a vast area of influence – formal as well as informal – of the military which must be made transparent in the same way as all other economic activities (2). This economic aspect has so far been neglected in discussions by the EU of the powerful role of the army in Turkish society only. The European Parliament has addressed it in its most recent report.

5.   Conclusions and recommendations

| 5.1 | The EESC considers Turkey a developing democracy, which has made important progress in its efforts to meet the political Copenhagen criteria, especially since December 2002. |
| --- | --- |

5.1

The EESC considers Turkey a developing democracy, which has made important progress in its efforts to meet the political Copenhagen criteria, especially since December 2002.

| 5.2 | Turkey should not only meet the same political criteria as other candidate member states before negotiations can be opened; its performance in the reform process should also be measured by the same standards as those used for other candidate member states. Every effort should be made on the side of the EU to avoid even the suggestion of double standards. |
| --- | --- |

5.2

Turkey should not only meet the same political criteria as other candidate member states before negotiations can be opened; its performance in the reform process should also be measured by the same standards as those used for other candidate member states. Every effort should be made on the side of the EU to avoid even the suggestion of double standards.

| 5.3 | The decision of the Copenhagen Council, in 2002, means that the EU at that point of time was convinced that Turkey, by making serious efforts, could satisfy the political criteria within a period of two years. As regards some areas, which have been dominated by long standing traditions and practices, this can only have meant that full compliance with the political criteria by December 2004 is however impossible and that they are rather looking for a critical mass of real progress which would suffice for opening negotiations. Even some of the new member states, which have gone through the full negotiating process, are not fully meeting the political criteria today. |
| --- | --- |

5.3

The decision of the Copenhagen Council, in 2002, means that the EU at that point of time was convinced that Turkey, by making serious efforts, could satisfy the political criteria within a period of two years. As regards some areas, which have been dominated by long standing traditions and practices, this can only have meant that full compliance with the political criteria by December 2004 is however impossible and that they are rather looking for a critical mass of real progress which would suffice for opening negotiations. Even some of the new member states, which have gone through the full negotiating process, are not fully meeting the political criteria today.

| 5.3.1 | In these particular areas, what the EU can and must realistically demand of Turkey is that such credible progress will have been made by the end of 2004 that it can be expected that a ‘point of no return’ will have been passed by then. Obvious examples are the role of the army and the treatment of minorities in particular the Kurds in the Southeast. The EESC insists that the reforms with respect to the reduction of the power of the armed forces in society at large, as well as those regarding the cultural rights of minorities will be continued at the present pace and direction and hopes that no retrogressive development will occur in the future which would jeopardize the accession negotiation process. |
| --- | --- |

5.3.1

In these particular areas, what the EU can and must realistically demand of Turkey is that such credible progress will have been made by the end of 2004 that it can be expected that a ‘point of no return’ will have been passed by then. Obvious examples are the role of the army and the treatment of minorities in particular the Kurds in the Southeast. The EESC insists that the reforms with respect to the reduction of the power of the armed forces in society at large, as well as those regarding the cultural rights of minorities will be continued at the present pace and direction and hopes that no retrogressive development will occur in the future which would jeopardize the accession negotiation process.

| 5.3.2 | The role of the army, outside the scope of its basic functions of defence and security, must be rolled back in a determined way so as to give the EU confidence that a process beyond a point of no return is under way. The army budget must be brought under full democratic control. The army's influence should be made transparent and appropriate measures should be taken to guarantee this transparency in future. |
| --- | --- |

5.3.2

The role of the army, outside the scope of its basic functions of defence and security, must be rolled back in a determined way so as to give the EU confidence that a process beyond a point of no return is under way. The army budget must be brought under full democratic control. The army's influence should be made transparent and appropriate measures should be taken to guarantee this transparency in future.

| 5.3.3 | The EU should continue its discussion with Turkey on the definition of minorities (which Turkey bases on the Treaty of Lausanne), with a view to the difficulties it raises for Turkey to ratify without reservations, as well as to implement in practice, relevant international instruments. In this discussion, the EU should pay full attention to the fact that some of its twenty five Member States also subscribe to a narrow definition of minorities which causes the same problem. |
| --- | --- |

5.3.3

The EU should continue its discussion with Turkey on the definition of minorities (which Turkey bases on the Treaty of Lausanne), with a view to the difficulties it raises for Turkey to ratify without reservations, as well as to implement in practice, relevant international instruments. In this discussion, the EU should pay full attention to the fact that some of its twenty five Member States also subscribe to a narrow definition of minorities which causes the same problem.

| 5.3.3.1 | The EESC refers to the work done by the JCC recently on regional development (3) and stresses the importance of an active regional development policy in Turkey, supported by the EU, which would create the opportunity to actively involve the population in Turkey's South-eastern (as well as in other) areas in the economic and social development of their region. The gradual adoption by Turkey of EU regional policy standards represents an opportunity to promote a greater and consistent partnership among organised civil society – in particular free, independent and representative economic and social interest groups on the one hand, and the authorities at all relevant levels on the other. Jointly, they should develop a shared view on development policy. Exchanges of experience between EU and Turkish socio-economic organisations should be promoted. |
| --- | --- |

5.3.3.1

The EESC refers to the work done by the JCC recently on regional development (3) and stresses the importance of an active regional development policy in Turkey, supported by the EU, which would create the opportunity to actively involve the population in Turkey's South-eastern (as well as in other) areas in the economic and social development of their region. The gradual adoption by Turkey of EU regional policy standards represents an opportunity to promote a greater and consistent partnership among organised civil society – in particular free, independent and representative economic and social interest groups on the one hand, and the authorities at all relevant levels on the other. Jointly, they should develop a shared view on development policy. Exchanges of experience between EU and Turkish socio-economic organisations should be promoted.

| 5.3.3.2 | The EESC notes with interest initiatives of the Turkish Government like the Bill of 2000 on compensation for harm caused by the security forces during anti-terrorist activities and the Internally Displaced Persons and ‘Back to Village and Rehabilitation’ Project. The EESC considers it of great importance for the credibility of reforms as regards the rights of the population of the South Eastern provinces that before December 2004 these initiatives will have started to benefit the victims concretely. |
| --- | --- |

5.3.3.2

The EESC notes with interest initiatives of the Turkish Government like the Bill of 2000 on compensation for harm caused by the security forces during anti-terrorist activities and the Internally Displaced Persons and ‘Back to Village and Rehabilitation’ Project. The EESC considers it of great importance for the credibility of reforms as regards the rights of the population of the South Eastern provinces that before December 2004 these initiatives will have started to benefit the victims concretely.

| 5.4 | In other areas like human rights, where Turkey has been in discussion with the ILO and the Council of Europe for a long time and where change does not, or not so much, require the uprooting of long established power positions, traditions and beliefs, Turkey should be able to show strong progress and meet the requirements it has known for a very long time now by the end of 2004. For instance, by that time the violations of ILO Conventions 87 and 98 which have lasted now about a quarter of a century must have been put to an end. Also, the undemocratic restrictions on the functioning of NGOs in the Associations Law as well as in day to day practice must be removed. The reform process Turkey is going through presently gives rise to positive expectations. However, in this area concrete and full results must be shown by the deadline mentioned. |
| --- | --- |

5.4

In other areas like human rights, where Turkey has been in discussion with the ILO and the Council of Europe for a long time and where change does not, or not so much, require the uprooting of long established power positions, traditions and beliefs, Turkey should be able to show strong progress and meet the requirements it has known for a very long time now by the end of 2004. For instance, by that time the violations of ILO Conventions 87 and 98 which have lasted now about a quarter of a century must have been put to an end. Also, the undemocratic restrictions on the functioning of NGOs in the Associations Law as well as in day to day practice must be removed. The reform process Turkey is going through presently gives rise to positive expectations. However, in this area concrete and full results must be shown by the deadline mentioned.

| 5.5 | The Turkish Economic and Social Council should, already in the course of this year, be much more seriously involved in the preparation of economic and social policy. The Government must consult it on key issues in these areas and must show that it takes its opinions and advice seriously. It is only by giving real responsibility to economic and social interest groups, and by rewarding them if they take it, that the Government can expect them to take seriously the Council, as well as the Government's intentions with it. The EESC notes with interest that the Government is preparing a review of the Economic and Social Council. However, this should not be used as an argument to further delay the active involvement of organised civil society in economic and social policy making in Turkey. |
| --- | --- |

5.5

The Turkish Economic and Social Council should, already in the course of this year, be much more seriously involved in the preparation of economic and social policy. The Government must consult it on key issues in these areas and must show that it takes its opinions and advice seriously. It is only by giving real responsibility to economic and social interest groups, and by rewarding them if they take it, that the Government can expect them to take seriously the Council, as well as the Government's intentions with it. The EESC notes with interest that the Government is preparing a review of the Economic and Social Council. However, this should not be used as an argument to further delay the active involvement of organised civil society in economic and social policy making in Turkey.

| 5.6 | In order to strengthen civil society in Turkey, the Government must not only stop its interferences in the activities of genuine NGOs and economic and social interest groups. It should rather encourage their emergence, facilitate their work, and cooperate with them. |
| --- | --- |

5.6

In order to strengthen civil society in Turkey, the Government must not only stop its interferences in the activities of genuine NGOs and economic and social interest groups. It should rather encourage their emergence, facilitate their work, and cooperate with them.

| 5.7 | It is the view of the EESC that a positive decision on the opening of negotiations with Turkey on accession to the EU must be taken if the Government of Turkey by December next, will have






  — | taken measures to satisfy the demands with respect to the role of the army in Turkish society in paras 4.3.1 and 4.3.2 above; |
| --- | --- | --- |

5.7

It is the view of the EESC that a positive decision on the opening of negotiations with Turkey on accession to the EU must be taken if the Government of Turkey by December next, will have

—

taken measures to satisfy the demands with respect to the role of the army in Turkish society in paras 4.3.1 and 4.3.2 above;

| — | shown, in concrete measures, determination to fully implement in practice the legal reforms concerning the cultural rights of the Kurds in the South-Eastern provinces of the country; |
| --- | --- |

—

shown, in concrete measures, determination to fully implement in practice the legal reforms concerning the cultural rights of the Kurds in the South-Eastern provinces of the country;

| — | started to implement in practice the intentions expressed and commitments made with regard to voluntary return, rehabilitation and compensation of displaced victims of the violence in the South East in the 1980s and 1990s; |
| --- | --- |

—

started to implement in practice the intentions expressed and commitments made with regard to voluntary return, rehabilitation and compensation of displaced victims of the violence in the South East in the 1980s and 1990s;

| — | brought its legislation and practice with regard to basic trade union rights and freedoms fully in line with ILO Conventions 87 and 98; |
| --- | --- |

—

brought its legislation and practice with regard to basic trade union rights and freedoms fully in line with ILO Conventions 87 and 98;

| — | cleaned the Associations Law from all anti-democratic stains and refrained in practice from restrictions on the free functioning of genuine civil society organisations including religious foundations; and |
| --- | --- |

—

cleaned the Associations Law from all anti-democratic stains and refrained in practice from restrictions on the free functioning of genuine civil society organisations including religious foundations; and

| — | created conditions for the free and independent functioning of the Economic and Social Council of Turkey, as well as basis for meaningful and constructive cooperation with this Council. |
| --- | --- |

—

created conditions for the free and independent functioning of the Economic and Social Council of Turkey, as well as basis for meaningful and constructive cooperation with this Council.

| 5.8 | The EESC thinks that the reforms made so far by the Government of Turkey as regards the problems related to the role of the army in society, as well as those which pertain to the cultural rights of the Kurds in the South East, represent the credible progress demanded in paragraph 5.3.1 above. |
| --- | --- |

5.8

The EESC thinks that the reforms made so far by the Government of Turkey as regards the problems related to the role of the army in society, as well as those which pertain to the cultural rights of the Kurds in the South East, represent the credible progress demanded in paragraph 5.3.1 above.

| 5.9 | Furthermore, if the points enumerated in the last four indents of paragraph 5.7 will have been met before December 2004, the EESC believes that a reliable basis has been created for the opening of the negotiations which, in due time, will lead to mutually beneficial results. In this event, the EESC is of the view that each of the European institutions, including the EESC itself, should begin preparing for the effects of Turkish accession on the workings and the concept of the European Union itself. As a result of such accession the European Union would be considerably enlarged and altered, which would require widespread support from European public opinion. |
| --- | --- |

5.9

Furthermore, if the points enumerated in the last four indents of paragraph 5.7 will have been met before December 2004, the EESC believes that a reliable basis has been created for the opening of the negotiations which, in due time, will lead to mutually beneficial results. In this event, the EESC is of the view that each of the European institutions, including the EESC itself, should begin preparing for the effects of Turkish accession on the workings and the concept of the European Union itself. As a result of such accession the European Union would be considerably enlarged and altered, which would require widespread support from European public opinion.

| 5.10 | Irrespective of the decision of the December Council, the EESC will continue its fruitful cooperation with Turkey's organised civil society. |
| --- | --- |

5.10

Irrespective of the decision of the December Council, the EESC will continue its fruitful cooperation with Turkey's organised civil society.

Brussels, 1 July 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  ‘Social dialogue and economic and social rights in Turkey’.

1

(2)  Examples are the retirement fund of army officers owning a bank and a holding company which is, among others, the Turkish counterpart in the major joint venture in the automobile industry. According to information supplied by OYAK, it has been established as a corporate entity, financially and administratively autonomous, subject to the provisions of Turkish civic and commercial codes like any other similar institutions. Its main function is to provide benefits to its members, in addition to those provided by the social security plan of the Turkish State, and it basically corresponds to the second pillar pension funds operating in the EU.

2

All armed forces' military and civilian members are members of OYAK Pension Fund. They remain as permanent members of OYAK. However, except constituting its membership base, OYAK has no relationship with the State and Turkish armed forces in terms of investments or business; fund transfers or state aids, or any other type of financial support. OYAK is an occupational pension fund that is alike with its equivalents in the EU.

As part of its transparency policy, annual reports of OYAK are published for general public release and the accounts of both the Institution and its subsidiaries are being audited every year, by the international auditing firms. OYAK proved supplementary retirement benefits.

(3)  Reports on Regional Disparities in Turkey/Regional Development by Mrs Cassina and Mr Guvenc.

3

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/86 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/86

---

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Modernising social protection for more and better jobs - a comprehensive approach contributing to making work pay’

(COM(2003) 842 final)

(2004/C 302/18)

On 5 January 2004, the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 14 June 2004. The rapporteur was Ms St Hill.

At its 410th plenary session (meeting of 1 July 2004), the European Economic and Social Committee adopted the following opinion by 130 votes in favour, 13 votes against and 24 abstentions.

1.   Introduction

| 1.1 | This spring, the European Council requested the current Communication and met to discuss progress on the improvement and modernisation of social protection systems with the aim of making them more ‘employment-friendly’. The aim is that this should be achieved through a greater emphasis on the effectiveness of incentives (that is, the way in which member countries' benefit systems, the reconciliation of family and work life, pensions for retired workers and subsidies to reduce poverty and social exclusion). That meeting followed the final report of the Employment Task Force (1) to the European Commission in November 2003. Communications from both milestone events highlight the main employment challenges faced by Europe and identify reforms that need to be carried out if the EU is to reach the objectives it set for itself in the Lisbon strategy.
  The consensus is that the European Union is late in achieving its ambitious goal, set at the Lisbon summit in 2000, of becoming the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion by 2010. They both acknowledge that while the Lisbon objectives are ambitious Europe cannot afford to miss them and that the key prerequisite for making the Lisbon objectives a reality is the compliance for Member States in stepping up their efforts.
  At this juncture, all official indicators suggest that success in creating more and better employment will depend on four key requirements:






  1. | increasing adaptability of workers and enterprises; |
| --- | --- | --- |

1.1

This spring, the European Council requested the current Communication and met to discuss progress on the improvement and modernisation of social protection systems with the aim of making them more ‘employment-friendly’. The aim is that this should be achieved through a greater emphasis on the effectiveness of incentives (that is, the way in which member countries' benefit systems, the reconciliation of family and work life, pensions for retired workers and subsidies to reduce poverty and social exclusion). That meeting followed the final report of the Employment Task Force (1) to the European Commission in November 2003. Communications from both milestone events highlight the main employment challenges faced by Europe and identify reforms that need to be carried out if the EU is to reach the objectives it set for itself in the Lisbon strategy.

The consensus is that the European Union is late in achieving its ambitious goal, set at the Lisbon summit in 2000, of becoming the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion by 2010. They both acknowledge that while the Lisbon objectives are ambitious Europe cannot afford to miss them and that the key prerequisite for making the Lisbon objectives a reality is the compliance for Member States in stepping up their efforts.

At this juncture, all official indicators suggest that success in creating more and better employment will depend on four key requirements:

1.

increasing adaptability of workers and enterprises;

| 2. | including in and attracting more people to the labour market; |
| --- | --- |

2.

including in and attracting more people to the labour market;

| 3. | investing more and more effectively in human capital; |
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3.

investing more and more effectively in human capital;

| 4. | ensuring effective implementation of reforms through better governance. |
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4.

ensuring effective implementation of reforms through better governance.

While these largely supply-side prerequisites are clearly in the purview of national governments, this Opinion will introduce the additional requirement for a truly public-private partnership on making work pay by including employer responsibilities in this important effort.

| 1.2 | Underlying the recent assessments is the additional motivation to ensure that incentives to increase labour supply are effectively balanced with measures to provide adequate social protection for all while maintaining efficiency of public spending in this area. This balance is crucial if countries are to avoid a long-term potential hazard posed by the ageing of European populations, a prospect which has serious implications not only for maintaining an optimal workforce but also threatens the viability of European social systems themselves. Increasing attachment to the labour market among disadvantaged groups, especially mothers, racial minorities, disabled people and young people in precarious employment, is an important goal for the effective combination of social protection and employment expansion. This opinion singles out these groups because to list an exhaustive record of every conceivable disadvantage becomes less meaningful for policy and because these groups identified above find it difficult to transcend their disadvantage precisely because of imprecise policy traditions that continue to equate all labour market disadvantage. |
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1.2

Underlying the recent assessments is the additional motivation to ensure that incentives to increase labour supply are effectively balanced with measures to provide adequate social protection for all while maintaining efficiency of public spending in this area. This balance is crucial if countries are to avoid a long-term potential hazard posed by the ageing of European populations, a prospect which has serious implications not only for maintaining an optimal workforce but also threatens the viability of European social systems themselves. Increasing attachment to the labour market among disadvantaged groups, especially mothers, racial minorities, disabled people and young people in precarious employment, is an important goal for the effective combination of social protection and employment expansion. This opinion singles out these groups because to list an exhaustive record of every conceivable disadvantage becomes less meaningful for policy and because these groups identified above find it difficult to transcend their disadvantage precisely because of imprecise policy traditions that continue to equate all labour market disadvantage.

| 1.3 | At EU level, the efforts made by Member States to review social protection systems in order to make them more employment friendly are driven through strengthened coordination of economic, employment and social policies. Ambitious targets have been set at EU level for 2010: to increase the overall employment rate to 70 %, the employment rate of women to 60 % and the employment rate for people in the age range 55-64 to 50 %. These targets are supported by various guidelines and recommendations included in the Broad Economic Policy Guidelines and the Employment Guidelines, as well as in the common objectives of the Open Method of Coordination in the areas of pensions and social inclusion. |
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1.3

At EU level, the efforts made by Member States to review social protection systems in order to make them more employment friendly are driven through strengthened coordination of economic, employment and social policies. Ambitious targets have been set at EU level for 2010: to increase the overall employment rate to 70 %, the employment rate of women to 60 % and the employment rate for people in the age range 55-64 to 50 %. These targets are supported by various guidelines and recommendations included in the Broad Economic Policy Guidelines and the Employment Guidelines, as well as in the common objectives of the Open Method of Coordination in the areas of pensions and social inclusion.

2.   General comments

| 2.1 | It is important that this review be approached from a medium to long-term perspective as getting more people into the labour market is also associated with costs, both for the unemployed or economically inactive and for governments so that reforms could necessitate increased costs before the economic burden on government of un/under-employment is eventually reduced. Public and private investments in preparing people for a knowledge-based economy and the continuous development of human capital of people of working age, although long-term processes which take up to 20 years to fully mature, provide the biggest return on investment aimed at transforming a country's labour market. There is a need for less-skilled workers to benefit from public and private investments in higher skills, in particular, to be provided with opportunities for further training by both public institutions and by employers, in order to enable such workers to contend with the changing requirements of a knowledge-based economy. The effect of longer-term, supply-side productivity measures is that they reduce the supply of the low skilled; reduce unemployment (especially long-term unemployment); increase labour-force participation rates (especially of women); and they increase overall productivity. These are permanent results. A purely supply-side orientated approach would, however, not be sufficient. It is also essential to increase the demand for labour, i.e. to boost the supply of jobs by pursuing an active employment-friendly and employment-promoting financial policy. However, some Member States which have focussed on the quick gains of getting the low-skilled into work at the expense of human capital attainment are unlikely to find lasting solutions to the dilemma of low-pay/no pay for these types of workers at various points over their working lives. Thus the effects can occur instantly but die equally rapidly, as low skilled livelihoods are not sustainable in today's global economy. Therefore cost efficiency is as important a watchword as cost reduction in this regard. |
| --- | --- |

2.1

It is important that this review be approached from a medium to long-term perspective as getting more people into the labour market is also associated with costs, both for the unemployed or economically inactive and for governments so that reforms could necessitate increased costs before the economic burden on government of un/under-employment is eventually reduced. Public and private investments in preparing people for a knowledge-based economy and the continuous development of human capital of people of working age, although long-term processes which take up to 20 years to fully mature, provide the biggest return on investment aimed at transforming a country's labour market. There is a need for less-skilled workers to benefit from public and private investments in higher skills, in particular, to be provided with opportunities for further training by both public institutions and by employers, in order to enable such workers to contend with the changing requirements of a knowledge-based economy. The effect of longer-term, supply-side productivity measures is that they reduce the supply of the low skilled; reduce unemployment (especially long-term unemployment); increase labour-force participation rates (especially of women); and they increase overall productivity. These are permanent results. A purely supply-side orientated approach would, however, not be sufficient. It is also essential to increase the demand for labour, i.e. to boost the supply of jobs by pursuing an active employment-friendly and employment-promoting financial policy. However, some Member States which have focussed on the quick gains of getting the low-skilled into work at the expense of human capital attainment are unlikely to find lasting solutions to the dilemma of low-pay/no pay for these types of workers at various points over their working lives. Thus the effects can occur instantly but die equally rapidly, as low skilled livelihoods are not sustainable in today's global economy. Therefore cost efficiency is as important a watchword as cost reduction in this regard.

| 2.2 | While traditional financial incentives involved in benefit and tax systems remain the core of policies to make work pay, other incentives such as child care, access and special provisions for disabled people, education and public health assets, are increasingly accepted as having a complimentary role to play. Therefore, comprehensive national approaches involving a wide range of financial and other incentives that support employment attainment and retention are to be recommended rather than an approach that only emphasises one or the other method. Again, taking the long-term view of sustainability, these issues of care and human capital investment should be considered from the view point of the recipient (e.g. the children of working parents and not the working parents themselves) as these rights and provisions form an immutable foundation for accelerated human capital development in a labour market context in later years. Recourse should be had to the EU Structural Funds to better assist low skilled job-seekers and for essential long-term investments in human capital and social infrastructure. |
| --- | --- |

2.2

While traditional financial incentives involved in benefit and tax systems remain the core of policies to make work pay, other incentives such as child care, access and special provisions for disabled people, education and public health assets, are increasingly accepted as having a complimentary role to play. Therefore, comprehensive national approaches involving a wide range of financial and other incentives that support employment attainment and retention are to be recommended rather than an approach that only emphasises one or the other method. Again, taking the long-term view of sustainability, these issues of care and human capital investment should be considered from the view point of the recipient (e.g. the children of working parents and not the working parents themselves) as these rights and provisions form an immutable foundation for accelerated human capital development in a labour market context in later years. Recourse should be had to the EU Structural Funds to better assist low skilled job-seekers and for essential long-term investments in human capital and social infrastructure.

| 2.3 | While many Member States, together with the social partners, have increased investments in active measures to help those re-entering or progressing in the labour market by improving their skills and enhancing their employability, much more attention needs to be paid to demand determinants, including the use of fiscal incentives and promoting employer best practices in order to assist vulnerable groups in the economy such as older workers and disabled workers. The ESC urges the appropriate EU authorities to promote and improve demand stimulating policies that positively affect employment levels and quality, and urges the inclusion of examples and perspectives on the role of corporate social responsibility in achieving the Lisbon objectives on employment. Both employers and employees need to have a stake in ‘making work pay’. Demand-stimulating policies consequently require a balanced, ‘win-win’ approach, enabling employers to focus on their core business activities and create jobs, and enabling job-seekers to find work with pay levels that are better than they would receive on unemployment benefit or social security and which provide a living wage. As the Committee has already argued, ‘Taxation and social security systems in the Member States should be organised in such a way that it is worth their while for workers who join the labour market to stay there and to advance their careers ... backed up by measures to boost the number of available jobs’ (2). |
| --- | --- |

2.3

While many Member States, together with the social partners, have increased investments in active measures to help those re-entering or progressing in the labour market by improving their skills and enhancing their employability, much more attention needs to be paid to demand determinants, including the use of fiscal incentives and promoting employer best practices in order to assist vulnerable groups in the economy such as older workers and disabled workers. The ESC urges the appropriate EU authorities to promote and improve demand stimulating policies that positively affect employment levels and quality, and urges the inclusion of examples and perspectives on the role of corporate social responsibility in achieving the Lisbon objectives on employment. Both employers and employees need to have a stake in ‘making work pay’. Demand-stimulating policies consequently require a balanced, ‘win-win’ approach, enabling employers to focus on their core business activities and create jobs, and enabling job-seekers to find work with pay levels that are better than they would receive on unemployment benefit or social security and which provide a living wage. As the Committee has already argued, ‘Taxation and social security systems in the Member States should be organised in such a way that it is worth their while for workers who join the labour market to stay there and to advance their careers ... backed up by measures to boost the number of available jobs’ (2).

| 2.4 | Public support for the reconciliation of work and family life aim to help families as they perform tasks which are fundamental to the very organisation and perpetuation of society. In particular, this involves supporting families as they give birth to, nurture and educate children and as they care for dependent family members, most mainly sick, disabled or elderly dependants. In the context of demographic ageing, these policies are becoming more important as a means to reverse the declining fertility rates. |
| --- | --- |

2.4

Public support for the reconciliation of work and family life aim to help families as they perform tasks which are fundamental to the very organisation and perpetuation of society. In particular, this involves supporting families as they give birth to, nurture and educate children and as they care for dependent family members, most mainly sick, disabled or elderly dependants. In the context of demographic ageing, these policies are becoming more important as a means to reverse the declining fertility rates.

| 2.5 | However it is important that the mechanisms used to pay family benefits should not adversely affect work incentives. In some countries the separation of family supplements for dependents from unemployment benefits helps to strengthen the financial incentives to take up employment, especially among mothers and women caring for elderly relatives. The non-availability of affordable child-care, due to costs or physical accessibility is seen as a key barrier to the participation of parents, in particular women. As such, the key role of subsidised, adequate and affordable provision of childcare in promoting participation in employment, particularly of women, is to be strongly welcomed and supported. In some Member States, women of child-bearing age are losing a commitment to child bearing as the personal financial costs associated with parenting for women is simply too high, resulting in what amounts to a tax on working mothers. While these attitudes may be short-sighted from a national perspective it is even more so a false economy on the part of policy-makers who could do more to halt the continual decline of European birth-rates by ensuring that the employment rate of women increases by means of financial and non-financial incentives. |
| --- | --- |

2.5

However it is important that the mechanisms used to pay family benefits should not adversely affect work incentives. In some countries the separation of family supplements for dependents from unemployment benefits helps to strengthen the financial incentives to take up employment, especially among mothers and women caring for elderly relatives. The non-availability of affordable child-care, due to costs or physical accessibility is seen as a key barrier to the participation of parents, in particular women. As such, the key role of subsidised, adequate and affordable provision of childcare in promoting participation in employment, particularly of women, is to be strongly welcomed and supported. In some Member States, women of child-bearing age are losing a commitment to child bearing as the personal financial costs associated with parenting for women is simply too high, resulting in what amounts to a tax on working mothers. While these attitudes may be short-sighted from a national perspective it is even more so a false economy on the part of policy-makers who could do more to halt the continual decline of European birth-rates by ensuring that the employment rate of women increases by means of financial and non-financial incentives.

| 2.6 | Occupational and geographic mobility is crucial for a high level of economic efficiency and therefore measures need to be taken to ensure that entitlements under statutory pension schemes and company pension schemes are maintained when persons change employers or place of residence within the EU. It is also important to target those who are entering the labour market or who are changing from employee to entrepreneur to ensure that they are adequately supported by social protection. There is also room for reducing last resort labour mobility by stimulating stagnant local economies through partnerships of public and private investment that maximise local employment markets. Considering that while one aspect of increased professional mobility may be loss of particular skills from one area to another, the other side of the mobility coin is that individuals are free to re-locate to where there is real demand for their skills as well as opportunities to experience the kind of technology transfer that adds value to their current skills base. Therefore mobility cannot be narrowly understood as representing a loss but a more effective allocation of relevant skills and talents where they are most in need. |
| --- | --- |

2.6

Occupational and geographic mobility is crucial for a high level of economic efficiency and therefore measures need to be taken to ensure that entitlements under statutory pension schemes and company pension schemes are maintained when persons change employers or place of residence within the EU. It is also important to target those who are entering the labour market or who are changing from employee to entrepreneur to ensure that they are adequately supported by social protection. There is also room for reducing last resort labour mobility by stimulating stagnant local economies through partnerships of public and private investment that maximise local employment markets. Considering that while one aspect of increased professional mobility may be loss of particular skills from one area to another, the other side of the mobility coin is that individuals are free to re-locate to where there is real demand for their skills as well as opportunities to experience the kind of technology transfer that adds value to their current skills base. Therefore mobility cannot be narrowly understood as representing a loss but a more effective allocation of relevant skills and talents where they are most in need.

| 2.7 | Physical and mental incapacity reduces labour supply significantly, particularly among workers in their 50s and 60s who are prime targets of a European Making Work Pay strategy. In some Member States up to one fifth or even one quarter of people in the age groups 55-59 and 60-64 are on invalidity benefits. This fact reflects significant pressures in today's world of work, which can be highly detrimental to physical and mental health. This problem, which can be linked to occupational health, needs to be tackled by adopting appropriate strategies with regard to preventive employee-protection and health-protection and by improving working conditions. Persons who are not fully incapacitated but have only an impaired ability to work have little chance of finding a suitable job which takes account of their limitations. There is therefore a need to boost the supply of such jobs in order to provide opportunities also for persons who are not fully able to work. However, many people who are in this situation of disguised unemployment would prefer to pursue some gainful activity if they still have significant working capacity left. Member States must take necessary measures to ensure that employment and disability benefits do not force disabled workers into an unemployment trap, but instead raise the complementarity of different strands of social policy in the interests of disabled workers. It must, however, be recognized that disability is on a spectrum of ability and new thinking defines disability as society's response to an individual which is disabling rather than the physical or other constraint on its own determining whether or not a person is disabled. In this context, the Committee would caution against policies that inadvertently end up obscuring true levels of unemployment. While remaining protective and supportive of disabled people's needs, closer cooperation for observing and improving the exchange of best practice in invalidity policy across States is crucial. So is the need for an open coordination framework of good practice and positive action providing benefits that are related to the promotion of employment and self employment among those along the spectrum of physical and mental ability. |
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2.7

Physical and mental incapacity reduces labour supply significantly, particularly among workers in their 50s and 60s who are prime targets of a European Making Work Pay strategy. In some Member States up to one fifth or even one quarter of people in the age groups 55-59 and 60-64 are on invalidity benefits. This fact reflects significant pressures in today's world of work, which can be highly detrimental to physical and mental health. This problem, which can be linked to occupational health, needs to be tackled by adopting appropriate strategies with regard to preventive employee-protection and health-protection and by improving working conditions. Persons who are not fully incapacitated but have only an impaired ability to work have little chance of finding a suitable job which takes account of their limitations. There is therefore a need to boost the supply of such jobs in order to provide opportunities also for persons who are not fully able to work. However, many people who are in this situation of disguised unemployment would prefer to pursue some gainful activity if they still have significant working capacity left. Member States must take necessary measures to ensure that employment and disability benefits do not force disabled workers into an unemployment trap, but instead raise the complementarity of different strands of social policy in the interests of disabled workers. It must, however, be recognized that disability is on a spectrum of ability and new thinking defines disability as society's response to an individual which is disabling rather than the physical or other constraint on its own determining whether or not a person is disabled. In this context, the Committee would caution against policies that inadvertently end up obscuring true levels of unemployment. While remaining protective and supportive of disabled people's needs, closer cooperation for observing and improving the exchange of best practice in invalidity policy across States is crucial. So is the need for an open coordination framework of good practice and positive action providing benefits that are related to the promotion of employment and self employment among those along the spectrum of physical and mental ability.

| 2.8 | In terms of mature workers, the Stockholm European Council set the ambitious goal of raising the employment rate of people aged 55-64 years to 50 % (standing at 40.1 % in 2002 and as low as one quarter for people aged 60-64). The Barcelona European Council set the Member States a complementary ambitious target of introducing measures by 2010 to increase by five years the average effective age of exit from the labour market. Achieving these goals will be crucial for ensuring the future financial sustainability of social protection and notably for guaranteeing adequate level incomes for future pensioners. The Committee considers this to be a sensible objective. The Committee considers this to be a sensible objective, in principle, provided the labour market allows employment of older workers and special measures are taken to improve their long-term employability. Unless there are enough suitable jobs for older people the main result of this requirement would be rising unemployment and decreased pensions. |
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2.8

In terms of mature workers, the Stockholm European Council set the ambitious goal of raising the employment rate of people aged 55-64 years to 50 % (standing at 40.1 % in 2002 and as low as one quarter for people aged 60-64). The Barcelona European Council set the Member States a complementary ambitious target of introducing measures by 2010 to increase by five years the average effective age of exit from the labour market. Achieving these goals will be crucial for ensuring the future financial sustainability of social protection and notably for guaranteeing adequate level incomes for future pensioners. The Committee considers this to be a sensible objective. The Committee considers this to be a sensible objective, in principle, provided the labour market allows employment of older workers and special measures are taken to improve their long-term employability. Unless there are enough suitable jobs for older people the main result of this requirement would be rising unemployment and decreased pensions.

3.   Specific comments

| 3.1 | Along with specific, targeted economic policies, making work pay is also about process. One area of making work pay that is ripe for reform is the situation of workers who leave paid employment before reaching pensionable age. For example, in many Member States people with long contribution records may be eligible for a pension before reaching the standard retirement age, although they often incur considerable financial penalties as a result. These workers may well still have an economic contribution to make and the decision to go ahead should be made easier, not least by establishing a labour market environment sensitive to the needs of older people. For women early exit from the workforce is not always voluntary but is often linked to workplace discrimination against females. This also has an impact on the pension rights of women, most of whom will have experienced broken employment careers due to maternity and child/elder care, occupational segregation into insecure and low paying ‘feminised’ professions and the gender pay gap all of which would reduce the length of time and quantity of contributions to retirement pension schemes and would only worsen women's economic prospects in retirement by prematurely truncating their paid employment. The feminisation of poverty has long been a cause for concern and the greying of Europe necessitates urgent policy attention to improve women's economic empowerment over the life course. For instance, the impact of discrimination against women during their active working life would be substantially mitigated in retirement if, when calculating pension rights, greater weight were given to substitute periods credited to cover spells of childcare. |
| --- | --- |

3.1

Along with specific, targeted economic policies, making work pay is also about process. One area of making work pay that is ripe for reform is the situation of workers who leave paid employment before reaching pensionable age. For example, in many Member States people with long contribution records may be eligible for a pension before reaching the standard retirement age, although they often incur considerable financial penalties as a result. These workers may well still have an economic contribution to make and the decision to go ahead should be made easier, not least by establishing a labour market environment sensitive to the needs of older people. For women early exit from the workforce is not always voluntary but is often linked to workplace discrimination against females. This also has an impact on the pension rights of women, most of whom will have experienced broken employment careers due to maternity and child/elder care, occupational segregation into insecure and low paying ‘feminised’ professions and the gender pay gap all of which would reduce the length of time and quantity of contributions to retirement pension schemes and would only worsen women's economic prospects in retirement by prematurely truncating their paid employment. The feminisation of poverty has long been a cause for concern and the greying of Europe necessitates urgent policy attention to improve women's economic empowerment over the life course. For instance, the impact of discrimination against women during their active working life would be substantially mitigated in retirement if, when calculating pension rights, greater weight were given to substitute periods credited to cover spells of childcare.

| 3.2 | Another example of where appropriate administrative reforms must take precedence over public inertia is ensuring that efforts to make work pay are gender equitable. While some new Member States are lumbered with social and employment policies that restrict women's access to employment, others have complementary tax and social policies that promote high levels of workforce participation among females. These previously outstandingly high employment rates have been declining during the transition to a market economy. It is important that the gains women workers made towards full employment should not be sacrificed in a gender-blind effort to restructure the economies of the accession countries. National policy-makers must be encouraged to prioritise those workers for whom making work pay presents the greatest challenge rather than continue to act as though all un/under-employed groups are equally disadvantaged. |
| --- | --- |

3.2

Another example of where appropriate administrative reforms must take precedence over public inertia is ensuring that efforts to make work pay are gender equitable. While some new Member States are lumbered with social and employment policies that restrict women's access to employment, others have complementary tax and social policies that promote high levels of workforce participation among females. These previously outstandingly high employment rates have been declining during the transition to a market economy. It is important that the gains women workers made towards full employment should not be sacrificed in a gender-blind effort to restructure the economies of the accession countries. National policy-makers must be encouraged to prioritise those workers for whom making work pay presents the greatest challenge rather than continue to act as though all un/under-employed groups are equally disadvantaged.

4.   Specific comments on some of the Commission's seven policy lessons

| 4.1 | First policy lesson: The Committee considers that the idea of creating new social protection instruments as well as making better use of existing ones should not be rejected, but rather developed and made mutually complementary. For example, the highly fragmented and diverse forms of aid and services aimed at young people are no longer appropriate, given the unprecedented extension of this phase of people's lives. The absence of social protection instruments specifically targeted at this age group causes some young people to opt hastily for low-skill forms of training and employment, with very serious consequences for them throughout their lives, and with a corresponding positive impact on public social spending. Similarly, the lack of new instruments providing lifelong occupational social protection – making it possible to alternate periods of training, work and caring responsibilities – without risking poverty or social exclusion considerably impedes labour-market mobility and flexibility (sixth policy lesson). |
| --- | --- |

4.1

First policy lesson: The Committee considers that the idea of creating new social protection instruments as well as making better use of existing ones should not be rejected, but rather developed and made mutually complementary. For example, the highly fragmented and diverse forms of aid and services aimed at young people are no longer appropriate, given the unprecedented extension of this phase of people's lives. The absence of social protection instruments specifically targeted at this age group causes some young people to opt hastily for low-skill forms of training and employment, with very serious consequences for them throughout their lives, and with a corresponding positive impact on public social spending. Similarly, the lack of new instruments providing lifelong occupational social protection – making it possible to alternate periods of training, work and caring responsibilities – without risking poverty or social exclusion considerably impedes labour-market mobility and flexibility (sixth policy lesson).

| 4.2 | The EESC considers it extremely important to pay close attention to the medium-term effects of the many initiatives adopted by Member States in an attempt to ‘activate’ social benefits. |
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4.2

The EESC considers it extremely important to pay close attention to the medium-term effects of the many initiatives adopted by Member States in an attempt to ‘activate’ social benefits.

| 4.3 | The EESC considers that the time has come for strong European incentives (in particular incentives aimed at and implemented in cooperation with the social partners) to promote the coordination of supplementary social protection schemes, which, as the Commission points out, are becoming an important element of social protection (seventh policy lesson). |
| --- | --- |

4.3

The EESC considers that the time has come for strong European incentives (in particular incentives aimed at and implemented in cooperation with the social partners) to promote the coordination of supplementary social protection schemes, which, as the Commission points out, are becoming an important element of social protection (seventh policy lesson).

5.   Conclusions and recommendations

| 5.1 | The Committee calls for convergence in European Member States efforts to make work pay by making employment truly an economically attractive option to unemployment or welfare by targeting the full range of barriers to paid work. Domestic policies need to enable the low-paid and low-skilled to escape poverty and unemployment through work. Hence the key issue facing Member States in making work pay is to design a common and reasonable level of in-and-out-of-employment supports which maintain people's incentives for labour-market attachment. The Committee has distinguished between the contributions of quick-gain policies to provide short but terminal benefits for the low-skilled, and the more long-term human capital investments which are the key to making work pay, especially for those most vulnerable, in the sustainable long term. |
| --- | --- |

5.1

The Committee calls for convergence in European Member States efforts to make work pay by making employment truly an economically attractive option to unemployment or welfare by targeting the full range of barriers to paid work. Domestic policies need to enable the low-paid and low-skilled to escape poverty and unemployment through work. Hence the key issue facing Member States in making work pay is to design a common and reasonable level of in-and-out-of-employment supports which maintain people's incentives for labour-market attachment. The Committee has distinguished between the contributions of quick-gain policies to provide short but terminal benefits for the low-skilled, and the more long-term human capital investments which are the key to making work pay, especially for those most vulnerable, in the sustainable long term.

| 5.2 | The Committee highlights the substantial scope for the contribution of private firms and employers in meeting European employment objectives. Effort should be made to identify feasible demand policies that target changing employer behaviour in ways that promote the achievement of Lisbon objectives of more quality, sustainable employment throughout Europe. The Commission should provide and disseminate evidence and experience on where good corporate behaviour has improved the quantity and quality of jobs and look for ways to replicate the successes. |
| --- | --- |

5.2

The Committee highlights the substantial scope for the contribution of private firms and employers in meeting European employment objectives. Effort should be made to identify feasible demand policies that target changing employer behaviour in ways that promote the achievement of Lisbon objectives of more quality, sustainable employment throughout Europe. The Commission should provide and disseminate evidence and experience on where good corporate behaviour has improved the quantity and quality of jobs and look for ways to replicate the successes.

| 5.3 | In addition to supporting good practice, sanctions on inappropriate employer behaviour including discrimination on the basis of gender, race, sexual orientation, religion or age must be enforced to support innovation, increased labour supply and the possibility of having longer working lives in European economies. Employment discrimination drives talented people into the underground or informal sector where productivity is low, incentives to train and invest are weak and social protection non-existent. Such irrational economic behaviour not only deprives Europe of economic competitiveness but it robs national economies of much needed tax revenue. |
| --- | --- |

5.3

In addition to supporting good practice, sanctions on inappropriate employer behaviour including discrimination on the basis of gender, race, sexual orientation, religion or age must be enforced to support innovation, increased labour supply and the possibility of having longer working lives in European economies. Employment discrimination drives talented people into the underground or informal sector where productivity is low, incentives to train and invest are weak and social protection non-existent. Such irrational economic behaviour not only deprives Europe of economic competitiveness but it robs national economies of much needed tax revenue.

| 5.4 | Thus a range of instruments and benefit schemes need to be applied in Member States backed by strong national coordination which balances labour supply and demand instruments. The combined household effects of benefits or tax levels on income must be carefully balanced and anticipated, paying particular attention to the incentive structures these create for poor households. Other measures such as the provision of childcare, flexible working times, job security, job mobility and training opportunities have been highlighted as essential to a comprehensive policy framework for making work pay. |
| --- | --- |

5.4

Thus a range of instruments and benefit schemes need to be applied in Member States backed by strong national coordination which balances labour supply and demand instruments. The combined household effects of benefits or tax levels on income must be carefully balanced and anticipated, paying particular attention to the incentive structures these create for poor households. Other measures such as the provision of childcare, flexible working times, job security, job mobility and training opportunities have been highlighted as essential to a comprehensive policy framework for making work pay.

Brussels, 1 July 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

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(1)  ‘Jobs, Jobs, Jobs, Creating more employment in Europe’. Report of the Employment Task Force chaired by Wim Kok (November 2003). Also see EESC Opinion on Employment support measures- OJ C 110 of 30-4-2004

1

(2)  See EESC Opinion on Employment support measures OJ C 110 of 30/4/2004 point 4.1.

2

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| 7.12.2004 | EN | Official Journal of the European Union | C 302/90 |
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7.12.2004

EN

Official Journal of the European Union

C 302/90

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Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: The future of the textiles and clothing sector in the enlarged European Union’.

(COM(2003) 649 final)

(2004/C 302/19)

On 28 October 2003, the Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 May 2004. The rapporteur was Mr Pezzini and the co-rapporteur was Mr Nollet.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 1 July), the European Economic and Social Committee adopted the following opinion by 81 votes to one.

1.   Introduction

| 1.1 | The fact that 2.1 million people continue to be employed in the European textile industry is an indication of the way its vitality has endured and of its great potential. This figure has increased by more than 500,000 with the accession of the new Member States. Thanks to considerable innovations in the field of both processes and products, the industry continues to contribute to European wealth with an annual turnover of over EUR 200 billion, not taking into account the ancillary sector, and strong growth – particularly in the ‘non-conventional’ sector (hi-tech technical textiles (1)) – which now account for almost 30 % of all output and with R&D spending approaching 8-10 % of turnover. |
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1.1

The fact that 2.1 million people continue to be employed in the European textile industry is an indication of the way its vitality has endured and of its great potential. This figure has increased by more than 500,000 with the accession of the new Member States. Thanks to considerable innovations in the field of both processes and products, the industry continues to contribute to European wealth with an annual turnover of over EUR 200 billion, not taking into account the ancillary sector, and strong growth – particularly in the ‘non-conventional’ sector (hi-tech technical textiles (1)) – which now account for almost 30 % of all output and with R&D spending approaching 8-10 % of turnover.

| 1.2 | The European Union is the biggest world player in the textile and clothing sector. The suggestion that globalisation would inevitably sideline the textile industries of the industrialised countries has turned out to be false, and it is definitely not the case in Europe. The European continent is still the biggest exporter of textile products in the world and the second biggest clothing exporter in a global import-export market of over EUR 350 billion in 2002 (6 % of world trade). |
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1.2

The European Union is the biggest world player in the textile and clothing sector. The suggestion that globalisation would inevitably sideline the textile industries of the industrialised countries has turned out to be false, and it is definitely not the case in Europe. The European continent is still the biggest exporter of textile products in the world and the second biggest clothing exporter in a global import-export market of over EUR 350 billion in 2002 (6 % of world trade).

| 1.2.1 | It is worth remembering here that China is the biggest global exporter of clothing. |
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1.2.1

It is worth remembering here that China is the biggest global exporter of clothing.

| 1.3 | Europe has thus far managed to capitalise on its assets in terms of quality and organisation: small ranges, fashion system, highly creative haute couture, quick to respond to demand, fast manufacturing and delivery times. It has also innovated in the area of processes and intelligent materials thanks to nanotechnology and new fibres, i.e. technical textiles, which are highly competitive and with a growing trade surplus. Recent chemistry applications to textiles have lead to the creation of new products. It should be pointed out here that global market access conditions vary widely in the sector. While the EU applies customs tariffs of less than 9 % on average, many other countries apply tariffs of up to 30 %, in addition to hefty non-tariff barriers. |
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1.3

Europe has thus far managed to capitalise on its assets in terms of quality and organisation: small ranges, fashion system, highly creative haute couture, quick to respond to demand, fast manufacturing and delivery times. It has also innovated in the area of processes and intelligent materials thanks to nanotechnology and new fibres, i.e. technical textiles, which are highly competitive and with a growing trade surplus. Recent chemistry applications to textiles have lead to the creation of new products. It should be pointed out here that global market access conditions vary widely in the sector. While the EU applies customs tariffs of less than 9 % on average, many other countries apply tariffs of up to 30 %, in addition to hefty non-tariff barriers.

| 1.4 | In Europe, the textiles and clothing sector has managed to cope with series of radical changes and has been quick to take advantage of new technology to find an appropriate response to different production costs, reacting promptly to the emergence of new global competitors. The reaction of European industry has been, on the one hand, a firm commitment to modernisation achieved through competitive restructuring and assimilation of technology; and, on the other, to occupy a new market position by exploiting networking opportunities in production, distribution, innovation and technological marketing. |
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1.4

In Europe, the textiles and clothing sector has managed to cope with series of radical changes and has been quick to take advantage of new technology to find an appropriate response to different production costs, reacting promptly to the emergence of new global competitors. The reaction of European industry has been, on the one hand, a firm commitment to modernisation achieved through competitive restructuring and assimilation of technology; and, on the other, to occupy a new market position by exploiting networking opportunities in production, distribution, innovation and technological marketing.

| 1.5 | In 2002 gross investment was approximately 9 % of value added in the sector, or some EUR 5 billion. Naturally, almost 70 % of this went to the textile sector, while the clothing sector received around 30 %. The textile sector trade balance is positive, whereas imports exceed exports in the clothing sector. Moreover, the textile-clothing sector, to which footwear should be added, is a very diverse, composite industry, with a vast array of products ranging from high-tech synthetic fibres to wool processing; cotton to industrial filters; rags to high fashion; and from carpet slippers to footwear designed to protect against corrosive chemicals. |
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1.5

In 2002 gross investment was approximately 9 % of value added in the sector, or some EUR 5 billion. Naturally, almost 70 % of this went to the textile sector, while the clothing sector received around 30 %. The textile sector trade balance is positive, whereas imports exceed exports in the clothing sector. Moreover, the textile-clothing sector, to which footwear should be added, is a very diverse, composite industry, with a vast array of products ranging from high-tech synthetic fibres to wool processing; cotton to industrial filters; rags to high fashion; and from carpet slippers to footwear designed to protect against corrosive chemicals.

| 1.6 | The textile, clothing and footwear industry is concentrated in the five most populated countries of the European Union, and their companies account for over three-quarters of European output in the sector. Value added is also concentrated in these countries, of which Italy is by far the most important, followed by the United Kingdom, France, Germany and, to a lesser extent, Spain. Of the smaller countries, Portugal, Belgium and Greece are particularly important in terms of value added. Belgium is especially active in the field of technical and intelligent textiles. As far as the new Member States are concerned, the sector is particularly important in Poland, Estonia and Lithuania and in the candidate countries – Turkey, Romania and Bulgaria. |
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1.6

The textile, clothing and footwear industry is concentrated in the five most populated countries of the European Union, and their companies account for over three-quarters of European output in the sector. Value added is also concentrated in these countries, of which Italy is by far the most important, followed by the United Kingdom, France, Germany and, to a lesser extent, Spain. Of the smaller countries, Portugal, Belgium and Greece are particularly important in terms of value added. Belgium is especially active in the field of technical and intelligent textiles. As far as the new Member States are concerned, the sector is particularly important in Poland, Estonia and Lithuania and in the candidate countries – Turkey, Romania and Bulgaria.

| 1.7 | In terms of employment, the rate has declined by an average 2.6 % per annum over the last five years. Spain and Sweden are the only exceptions to this trend, with an increase in employment (+ 2 %) in the sector between 1995-2002. As a full player in market globalisation of the sector, the European textiles industry has thoroughly restructured and streamlined its companies, outsourcing the most labour-intensive operations and focusing instead on more skill-intensive manufacturing processes. Use of information and communications technology, new technology and more efficient production methods has also played a role here. |
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1.7

In terms of employment, the rate has declined by an average 2.6 % per annum over the last five years. Spain and Sweden are the only exceptions to this trend, with an increase in employment (+ 2 %) in the sector between 1995-2002. As a full player in market globalisation of the sector, the European textiles industry has thoroughly restructured and streamlined its companies, outsourcing the most labour-intensive operations and focusing instead on more skill-intensive manufacturing processes. Use of information and communications technology, new technology and more efficient production methods has also played a role here.

| 1.8 | With regard to trade, import quotas are due to disappear when the Multi-Fibre Arrangement (MFA) is phased out in 2005. This means all parties will have to think hard about how new trading conditions for textile products can be created, in order to enable the European textiles industry to compete globally; and, at the same time, to guarantee fair conditions for the poorest and particularly vulnerable countries. It is increasingly clear that implementation of the Barcelona Process should be a priority. This provides for an area of free trade between Europe and the entire southern shore of the Mediterranean, thus making the pan-Euro-Mediterranean area a reality. |
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1.8

With regard to trade, import quotas are due to disappear when the Multi-Fibre Arrangement (MFA) is phased out in 2005. This means all parties will have to think hard about how new trading conditions for textile products can be created, in order to enable the European textiles industry to compete globally; and, at the same time, to guarantee fair conditions for the poorest and particularly vulnerable countries. It is increasingly clear that implementation of the Barcelona Process should be a priority. This provides for an area of free trade between Europe and the entire southern shore of the Mediterranean, thus making the pan-Euro-Mediterranean area a reality.

2.   The Commission proposal

| 2.1 | The Commission communication addresses the complex problem of the textile and clothing sector in a bid to boost its competitiveness and dynamism, applying the Lisbon Strategy specifically to the sector. |
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2.1

The Commission communication addresses the complex problem of the textile and clothing sector in a bid to boost its competitiveness and dynamism, applying the Lisbon Strategy specifically to the sector.

| 2.2 | The communication proposes measures based on industrial and trade policies, with particular emphasis on employment, research and technological development, innovation, vocational training, regional development, sustainable development, corporate social responsibility, public health, consumer protection, combating counterfeiting, patent and industrial and intellectual property rights, competition policy and state aid. |
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2.2

The communication proposes measures based on industrial and trade policies, with particular emphasis on employment, research and technological development, innovation, vocational training, regional development, sustainable development, corporate social responsibility, public health, consumer protection, combating counterfeiting, patent and industrial and intellectual property rights, competition policy and state aid.

| 2.3 | The Commission suggests some areas in which industrial policy measures should be more efficient and more effective, in particular:






  — | research, development and innovation, new materials and intelligent materials, nanotechnology, new production processes and cleaner technology, focusing on fashion and promoting creativity; |
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2.3

The Commission suggests some areas in which industrial policy measures should be more efficient and more effective, in particular:

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research, development and innovation, new materials and intelligent materials, nanotechnology, new production processes and cleaner technology, focusing on fashion and promoting creativity;

| — | corporate social responsibility: compliance with international labour and environmental standards, responsible management of industrial change, worker consultation; |
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corporate social responsibility: compliance with international labour and environmental standards, responsible management of industrial change, worker consultation;

| — | education and training: easier access to finance for SMEs through streamlined procedures, dissemination of information, coordination of action; |
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education and training: easier access to finance for SMEs through streamlined procedures, dissemination of information, coordination of action;

| — | development of networking potential and capacity; |
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development of networking potential and capacity;

| — | the Doha Programme, for the reduction and harmonisation of customs tariffs and the elimination of non-tariff barriers to trade; |
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the Doha Programme, for the reduction and harmonisation of customs tariffs and the elimination of non-tariff barriers to trade;

| — | complete the Euro-Mediterranean area by 2005, in order to provide free movement of textile products in countries with the same rules of origin and administrative cooperation systems; |
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complete the Euro-Mediterranean area by 2005, in order to provide free movement of textile products in countries with the same rules of origin and administrative cooperation systems;

| — | labelling systems for EU access: examination of label use for articles/products in accordance with international labour and environmental standards; |
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labelling systems for EU access: examination of label use for articles/products in accordance with international labour and environmental standards;

| — | EU trade preferences: focusing on the 49 poorest countries (LDCs - Less Developed Countries) (2), and extending preferential status to intermediate clothing products; |
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EU trade preferences: focusing on the 49 poorest countries (LDCs - Less Developed Countries) (2), and extending preferential status to intermediate clothing products;

| — | combating fraud and counterfeiting, strengthening existing measures and adoption of new measures to protect industrial and intellectual property, checks to avoid unfair commercial practices; strengthening the common customs system; |
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combating fraud and counterfeiting, strengthening existing measures and adoption of new measures to protect industrial and intellectual property, checks to avoid unfair commercial practices; strengthening the common customs system;

| — | ‘Made in Europe’ label of origin in order to promote European quality products and protect consumers; |
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‘Made in Europe’ label of origin in order to promote European quality products and protect consumers;

| — | Structural Funds: use and new guidelines, particularly in the framework of the Financial Perspective for 2007-2013. |
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Structural Funds: use and new guidelines, particularly in the framework of the Financial Perspective for 2007-2013.

| 2.4 | In addition, the Commission communication suggests some avenues to be explored:






  — | action at stakeholder level; |
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2.4

In addition, the Commission communication suggests some avenues to be explored:

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action at stakeholder level;

| — | action at Member State level; |
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action at Member State level;

| — | action at European Union level. |
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action at European Union level.

| 2.4.1 | It proposes establishing a High Level Group comprising representatives from the Commission, the Member States and the social partners, in order to check on the initiatives and their implementation at the various levels. The communication also provides for regular reports to be drawn up between spring 2005 and the end of 2006. |
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2.4.1

It proposes establishing a High Level Group comprising representatives from the Commission, the Member States and the social partners, in order to check on the initiatives and their implementation at the various levels. The communication also provides for regular reports to be drawn up between spring 2005 and the end of 2006.

3.   The viewpoint of textile industry representatives

The Committee held a hearing of textile industry representatives at its building in Brussels on 21 January 2004. The views expressed in this point reflect the written contributions received and the statements made in the course of the hearing (3).

| 3.1 | The social players present – employers, trade union representatives and local administrators – were unanimous in calling for urgent action to cushion the extremely rapid impact of imports from a number of countries, particularly China, India and Pakistan, on European businesses in the sector. |
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3.1

The social players present – employers, trade union representatives and local administrators – were unanimous in calling for urgent action to cushion the extremely rapid impact of imports from a number of countries, particularly China, India and Pakistan, on European businesses in the sector.

| 3.2 | As 2005 and the end of the quotas regime approaches, the following measures were requested as a matter of urgency:






  — | the possibility of tapping new financial resources; |
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3.2

As 2005 and the end of the quotas regime approaches, the following measures were requested as a matter of urgency:

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the possibility of tapping new financial resources;

| — | a special intervention to be introduced within the Structural Funds; |
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a special intervention to be introduced within the Structural Funds;

| — | investment in training and hence human resources; |
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investment in training and hence human resources;

| — | compulsory labelling of product origin for all countries; |
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compulsory labelling of product origin for all countries;

| — | compulsory traceability at all stages of production; |
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compulsory traceability at all stages of production;

| — | attention to consumer health through relevant labelling of risk-free products; |
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attention to consumer health through relevant labelling of risk-free products;

| — | reciprocity in customs tariffs with countries developing rapidly in the sector; |
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reciprocity in customs tariffs with countries developing rapidly in the sector;

| — | review of agreements with third countries, removing tariff concessions for countries infringing the rules of trade, social standards, and sustainable development or manufacturing nuclear weapons; |
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review of agreements with third countries, removing tariff concessions for countries infringing the rules of trade, social standards, and sustainable development or manufacturing nuclear weapons;

| — | review of the organisation of European customs, in order to simplify them and ensure more specific checks to reduce fraud, now at an unsustainable level; |
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review of the organisation of European customs, in order to simplify them and ensure more specific checks to reduce fraud, now at an unsustainable level;

| — | a strong financial commitment to research and innovation and assistance to businesses, especially SMEs, so that they can diversify production to include technical and intelligent textiles. |
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a strong financial commitment to research and innovation and assistance to businesses, especially SMEs, so that they can diversify production to include technical and intelligent textiles.

| 3.3 | The Italian textile and clothing sector, which is one of the most vulnerable in the European Union, presented a joint document agreed by all the country's producers, large and small, and trade union representatives, highlighting a number of priorities and recommending that these lead to practical, effective and timely measures. According to the document, inertia at this point in time could impose heavy social and economic costs on Europe. |
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3.3

The Italian textile and clothing sector, which is one of the most vulnerable in the European Union, presented a joint document agreed by all the country's producers, large and small, and trade union representatives, highlighting a number of priorities and recommending that these lead to practical, effective and timely measures. According to the document, inertia at this point in time could impose heavy social and economic costs on Europe.

| 3.3.1 | The main points were as follows: |
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3.3.1

The main points were as follows:

| 3.3.2 | Community products are granted 0 % rates in only 22 countries, while on other markets they are subject to an average rate varying between 15 and 60 %. Moreover, they often run up against a plethora of non-tariff barriers. From 2005 onwards in particular, the textile and clothing sector will no longer be able to bear the privileges currently granted to the EU's largest competitors (China, India, Pakistan and Indonesia). In any case, such privileges should be restricted to the least developed countries and to small producing countries who in 2005 will themselves be placed in an extremely vulnerable position. |
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3.3.2

Community products are granted 0 % rates in only 22 countries, while on other markets they are subject to an average rate varying between 15 and 60 %. Moreover, they often run up against a plethora of non-tariff barriers. From 2005 onwards in particular, the textile and clothing sector will no longer be able to bear the privileges currently granted to the EU's largest competitors (China, India, Pakistan and Indonesia). In any case, such privileges should be restricted to the least developed countries and to small producing countries who in 2005 will themselves be placed in an extremely vulnerable position.

| 3.3.3 | It is hoped that labelling will avoid a generic ‘Made in the EU’ for a more explicit ‘Made in Italy-EU’, ‘Made in France-EU’ etc. formula. More than 60 % of products on the market are already voluntarily labelled with the origin. If the wording were to be made compulsory, checks on penalties would follow: the wide leeway presently allowed opens the floodgates to counterfeiting and fraud, which is doubly damaging to European industry. Furthermore, European buyers are at a disadvantage compared to their American, Japanese, Chinese or Australian counterparts. There is no reason not to have the same information as others, by means of compulsory labelling. If European consumers were aware of product origin, they could effectively judge not only the price, but also the price/quality ratio in relation to their own requirements. |
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3.3.3

It is hoped that labelling will avoid a generic ‘Made in the EU’ for a more explicit ‘Made in Italy-EU’, ‘Made in France-EU’ etc. formula. More than 60 % of products on the market are already voluntarily labelled with the origin. If the wording were to be made compulsory, checks on penalties would follow: the wide leeway presently allowed opens the floodgates to counterfeiting and fraud, which is doubly damaging to European industry. Furthermore, European buyers are at a disadvantage compared to their American, Japanese, Chinese or Australian counterparts. There is no reason not to have the same information as others, by means of compulsory labelling. If European consumers were aware of product origin, they could effectively judge not only the price, but also the price/quality ratio in relation to their own requirements.

| 3.3.4 | The link between textiles and health has been repeatedly demonstrated. Many skin conditions are triggered by use of low-quality textile products. This is further reason for allowing consumers to choose the area of origin of products. |
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3.3.4

The link between textiles and health has been repeatedly demonstrated. Many skin conditions are triggered by use of low-quality textile products. This is further reason for allowing consumers to choose the area of origin of products.

| 3.3.5 | Illegal imports of items of clothing have reached alarming levels, and false ‘Made in...’ labels are spreading across international markets. More severe checks and harsher penalties are called for here. |
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3.3.5

Illegal imports of items of clothing have reached alarming levels, and false ‘Made in...’ labels are spreading across international markets. More severe checks and harsher penalties are called for here.

| 3.3.6 | The development of new materials, production processes and clean technologies in support of sustainable development are of particular importance to the sector. |
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3.3.6

The development of new materials, production processes and clean technologies in support of sustainable development are of particular importance to the sector.

| 3.3.7 | Employers' and trade union federations stressed that they have always adhered to the underlying principles of the ‘Code of Conduct’ for the textiles and clothing sector, which has in effect been directly incorporated into the Member States' national collective labour agreements. The Commission is consequently asked to introduce the social dimension into the sphere of international agreements. |
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3.3.7

Employers' and trade union federations stressed that they have always adhered to the underlying principles of the ‘Code of Conduct’ for the textiles and clothing sector, which has in effect been directly incorporated into the Member States' national collective labour agreements. The Commission is consequently asked to introduce the social dimension into the sphere of international agreements.

| 3.3.8 | Social dumping (manufacturing products while pushing down labour costs to the detriment of workers' rights, using child and forced labour) is morally repugnant, but cannot be directly tackled by imposing anti-dumping tariffs. The industrialised nations, of Europe in particular, should therefore combat dumping far more vigorously through more stringent clauses and, most importantly, through the GSP (4). Ecological dumping also reduces production costs, to the detriment of the environment. |
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3.3.8

Social dumping (manufacturing products while pushing down labour costs to the detriment of workers' rights, using child and forced labour) is morally repugnant, but cannot be directly tackled by imposing anti-dumping tariffs. The industrialised nations, of Europe in particular, should therefore combat dumping far more vigorously through more stringent clauses and, most importantly, through the GSP (4). Ecological dumping also reduces production costs, to the detriment of the environment.

| 3.3.9 | International institutions, with the support of industrialised countries, should launch targeted projects in order to disseminate know-how flowing from the sustainable development principle among developing countries, as the Community is indeed doing with the new Member States. |
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3.3.9

International institutions, with the support of industrialised countries, should launch targeted projects in order to disseminate know-how flowing from the sustainable development principle among developing countries, as the Community is indeed doing with the new Member States.

| 3.3.10 | The use of labels confirming that a product's access to the EU is subject to compliance with international environmental standards might be helpful in achieving this objective. |
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3.3.10

The use of labels confirming that a product's access to the EU is subject to compliance with international environmental standards might be helpful in achieving this objective.

| 3.3.11 | The aim that should be pursued is to protect the environment and provide European businesses with realistic conditions of operation and competition, through a radical overhaul of the contents of agreements. |
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3.3.11

The aim that should be pursued is to protect the environment and provide European businesses with realistic conditions of operation and competition, through a radical overhaul of the contents of agreements.

4.   EESC comments

| 4.1 | The EESC has closely followed the Commission's efforts, particularly over the last few years, to re-establish the textile and clothing sector as a key Community concern. It notes, in particular, that the presentation of best practice in the various areas of innovation and marketing provided food for thought for the many people who attended the Conferences recently organised by the various DGs in Brussels (5). |
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4.1

The EESC has closely followed the Commission's efforts, particularly over the last few years, to re-establish the textile and clothing sector as a key Community concern. It notes, in particular, that the presentation of best practice in the various areas of innovation and marketing provided food for thought for the many people who attended the Conferences recently organised by the various DGs in Brussels (5).

| 4.2 | Unfortunately, the local-level impact of these thought-provoking initiatives did not live up to expectations. This leads us to reflect once again on how we can harness knowledge and information and disseminate them more widely to all stakeholders. |
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4.2

Unfortunately, the local-level impact of these thought-provoking initiatives did not live up to expectations. This leads us to reflect once again on how we can harness knowledge and information and disseminate them more widely to all stakeholders.

| 4.2.1 | Close involvement of professional employers' and workers' associations at all levels must go hand in hand with and be used as a framework for the whole innovation process. |
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4.2.1

Close involvement of professional employers' and workers' associations at all levels must go hand in hand with and be used as a framework for the whole innovation process.

| 4.2.2 | Only a tried and tested policy of cooperation between the social partners, including the experience of the Bilateral Agencies (6) and a common effort to support growth in the sector, will enable us to meet the challenge of globalisation which, especially in this sector, ‘... poses real concerns...’, as Commissioner Lamy rightly said recently. |
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4.2.2

Only a tried and tested policy of cooperation between the social partners, including the experience of the Bilateral Agencies (6) and a common effort to support growth in the sector, will enable us to meet the challenge of globalisation which, especially in this sector, ‘... poses real concerns...’, as Commissioner Lamy rightly said recently.

| 4.3 | The Industry Council of 27 November 2003 described industrial competitiveness as one of the key areas where the European Union and the Member States have active roles to play in order to meet the objectives set by the Lisbon strategy (OJ C 317 of 30.12.2003, p. 2). The textiles sector is unquestionably the most exposed at present to the deindustrialisation triggered by the new aspects of world trade. |
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4.3

The Industry Council of 27 November 2003 described industrial competitiveness as one of the key areas where the European Union and the Member States have active roles to play in order to meet the objectives set by the Lisbon strategy (OJ C 317 of 30.12.2003, p. 2). The textiles sector is unquestionably the most exposed at present to the deindustrialisation triggered by the new aspects of world trade.

| 4.3.1 | Primarily for these reasons, the textile sector is faced with a permanent process of restructuring and modernisation, combined with a marked slow-down of economic activity, production and employment. It is however a strategic sector which continues to provide employment, especially to women. In its above-mentioned conclusions, the Council – aware of the sector's value – invites the Commission to report back by July 2004 on initiatives which might take the form of an Action Plan to support the textile sector. |
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4.3.1

Primarily for these reasons, the textile sector is faced with a permanent process of restructuring and modernisation, combined with a marked slow-down of economic activity, production and employment. It is however a strategic sector which continues to provide employment, especially to women. In its above-mentioned conclusions, the Council – aware of the sector's value – invites the Commission to report back by July 2004 on initiatives which might take the form of an Action Plan to support the textile sector.

| 4.4 | The Committee believes that the Commission should, partly in the light of the points made in its communication, urgently take a fresh look at the following points: |
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4.4

The Committee believes that the Commission should, partly in the light of the points made in its communication, urgently take a fresh look at the following points:

| 4.4.1 | Reviving the Doha Development Agenda negotiations, beefing up its own document (COM(2003) 734 final of 26 November 2003) in response to a number of clear signals from workers', employers' and consumers' circles (7). |
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4.4.1

Reviving the Doha Development Agenda negotiations, beefing up its own document (COM(2003) 734 final of 26 November 2003) in response to a number of clear signals from workers', employers' and consumers' circles (7).

| 4.4.2 | Role of customs in the integrated management of external borders (8), taking on board the considerations and other suggestions set out in the Committee's opinion. |
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4.4.2

Role of customs in the integrated management of external borders (8), taking on board the considerations and other suggestions set out in the Committee's opinion.

| 4.4.3 | Rules of origin in preferential trade arrangements (COM(2003) 787 final), in order to stabilise the level of future tariffs produced by the new round of multilateral negotiations, by free trade agreements and by support for sustainable development. Moreover, as repeatedly argued in the present opinion, ‘management procedures and supervisory and safeguard mechanisms [...] also need to be designed to make sure that preferential arrangements are used properly and shield the business community and the financial interests at stake from abuses of the system’ (9). |
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4.4.3

Rules of origin in preferential trade arrangements (COM(2003) 787 final), in order to stabilise the level of future tariffs produced by the new round of multilateral negotiations, by free trade agreements and by support for sustainable development. Moreover, as repeatedly argued in the present opinion, ‘management procedures and supervisory and safeguard mechanisms [...] also need to be designed to make sure that preferential arrangements are used properly and shield the business community and the financial interests at stake from abuses of the system’ (9).

| 4.4.4 | The terms of the partnership with China (10), within which various Community resources have been earmarked to increasing competition between China and the EU (Junior Managers Training Programme, Development of Vocational Training, under title B7-3). |
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4.4.4

The terms of the partnership with China (10), within which various Community resources have been earmarked to increasing competition between China and the EU (Junior Managers Training Programme, Development of Vocational Training, under title B7-3).

| 4.4.5 | Introduction of an adequately resourced Community programme to support research, innovation (not exclusively technological) and vocational training in the sector (capacity of small-scale employers and the workforce in particular to adjust to the new international setting and consumers' requirements). This principle has also been clearly stated by the European Parliament in its resolution on the future of the textile and clothing sector adopted in February 2004. |
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4.4.5

Introduction of an adequately resourced Community programme to support research, innovation (not exclusively technological) and vocational training in the sector (capacity of small-scale employers and the workforce in particular to adjust to the new international setting and consumers' requirements). This principle has also been clearly stated by the European Parliament in its resolution on the future of the textile and clothing sector adopted in February 2004.

| 4.4.6 | Consumer protection measures. Consumers are increasingly aware of the potential health effects of certain products which are often in contact with the skin, not least in connection with the spread of contact allergies or other skin disorders (11). In the light of developments in European legislation regarding transparency in the food sector, similar legislation should be introduced for compulsory labelling to inform consumers on the origin of the material used and where the finished product is manufactured. |
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4.4.6

Consumer protection measures. Consumers are increasingly aware of the potential health effects of certain products which are often in contact with the skin, not least in connection with the spread of contact allergies or other skin disorders (11). In the light of developments in European legislation regarding transparency in the food sector, similar legislation should be introduced for compulsory labelling to inform consumers on the origin of the material used and where the finished product is manufactured.

| 4.5 | The introduction of a compulsory ‘Made in ...’ label could help increase consumers' confidence that when they purchase a garment they are paying a price that corresponds to the standards of production and style applied in the country of origin – the country of origin must be the country in which the garment was finished as opposed to the country in which it was produced – but the Commission's ‘Made in Europe’ proposal is unconvincing. A single European label would be blind to the particular and outstanding qualities of individual countries' products –‘ united in diversity’. |
| --- | --- |

4.5

The introduction of a compulsory ‘Made in ...’ label could help increase consumers' confidence that when they purchase a garment they are paying a price that corresponds to the standards of production and style applied in the country of origin – the country of origin must be the country in which the garment was finished as opposed to the country in which it was produced – but the Commission's ‘Made in Europe’ proposal is unconvincing. A single European label would be blind to the particular and outstanding qualities of individual countries' products –‘ united in diversity’.

| 4.5.1 | Regarding the alternatives set out in the Commission's proposal on labels of origin, the Committee urges opting for compulsory labelling of both imported products and those manufactured within the single market, when they are marketed within the European Union. One effect of this would be to make it easier to guide consumers towards ‘ethical’ products in terms of both their intrinsic quality and compliance with workers' rights in the production process. |
| --- | --- |

4.5.1

Regarding the alternatives set out in the Commission's proposal on labels of origin, the Committee urges opting for compulsory labelling of both imported products and those manufactured within the single market, when they are marketed within the European Union. One effect of this would be to make it easier to guide consumers towards ‘ethical’ products in terms of both their intrinsic quality and compliance with workers' rights in the production process.

| 4.6 | The culture of corporate social responsibility should be consolidated as a European model, but must also be extended to the developing countries through specific instruments which could be checked at consumer level and whose trade-related aspects would therefore be significant (12). |
| --- | --- |

4.6

The culture of corporate social responsibility should be consolidated as a European model, but must also be extended to the developing countries through specific instruments which could be checked at consumer level and whose trade-related aspects would therefore be significant (12).

| 4.7 | Environmental and workplace safety legislation in force in industry must be made more visible to consumers, in order to boost competitive advantage. |
| --- | --- |

4.7

Environmental and workplace safety legislation in force in industry must be made more visible to consumers, in order to boost competitive advantage.

| 4.7.1 | The Union's clear-cut position on sustainable development and, consequently, on compliance with the timetable of the Kyoto Protocol, can be successful and meet with the approval of the European manufacturing sector, provided that it is accompanied by an acknowledgement of the efforts entailed by these commitments. Failing to take account of unfair competition or to take action to prevent it would do nothing to facilitate the spread of a culture of progress among European employers and workers. Furthermore, it could accelerate deindustrialisation in Europe, which would benefit some multinational companies (13), who can turn to production in countries with less awareness of this principle, emblematic of a ‘social market economy’. |
| --- | --- |

4.7.1

The Union's clear-cut position on sustainable development and, consequently, on compliance with the timetable of the Kyoto Protocol, can be successful and meet with the approval of the European manufacturing sector, provided that it is accompanied by an acknowledgement of the efforts entailed by these commitments. Failing to take account of unfair competition or to take action to prevent it would do nothing to facilitate the spread of a culture of progress among European employers and workers. Furthermore, it could accelerate deindustrialisation in Europe, which would benefit some multinational companies (13), who can turn to production in countries with less awareness of this principle, emblematic of a ‘social market economy’.

| 4.7.2 | The Commission's efforts to reduce energy consumption, in part through the general introduction of eco-design requirements for energy-using products (14), may in time achieve their objective, if European industries – textiles and clothing in particular – still have a market, and consequently machinery, for production. Otherwise, the proposal might just as well be extended to some allegedly developing countries so that they can enhance the energy consumption of plant used to manufacture their products. |
| --- | --- |

4.7.2

The Commission's efforts to reduce energy consumption, in part through the general introduction of eco-design requirements for energy-using products (14), may in time achieve their objective, if European industries – textiles and clothing in particular – still have a market, and consequently machinery, for production. Otherwise, the proposal might just as well be extended to some allegedly developing countries so that they can enhance the energy consumption of plant used to manufacture their products.

| 4.8 | The Committee urges that at European level too, constant attention focus on micro and small enterprises, which are very common in this sector. Particular attention should be paid to the present financial system, which tends to favour large businesses. The Committee also recognises the Commission's work to highlight the problems micro and small enterprises, and to cultivate entrepreneurship within European culture (15). |
| --- | --- |

4.8

The Committee urges that at European level too, constant attention focus on micro and small enterprises, which are very common in this sector. Particular attention should be paid to the present financial system, which tends to favour large businesses. The Committee also recognises the Commission's work to highlight the problems micro and small enterprises, and to cultivate entrepreneurship within European culture (15).

| 4.9 | The Committee calls for a reduction in the number of countries benefiting from the Generalised System of Preferences (GSP), as stated earlier. In conjunction with this, the Committee considers that the customs tariffs currently applied by the EU – which are among the lowest in the world – must not be lowered any further before those of a number of countries with highly competitive textile and clothing exports come down to a comparable level. In its resolution on the future of the textile and clothing sector in the European Union of 29 January 2004, the European Parliament also recommends adopting the criterion of reciprocity, or ‘access to markets at world level that is comparable to the import conditions that the EU will be applying with effect from 2005’. The Committee is for trade liberalisation, but against one-way liberalisation. Other countries should also be ready to open their markets to EU textiles and clothing producers. |
| --- | --- |

4.9

The Committee calls for a reduction in the number of countries benefiting from the Generalised System of Preferences (GSP), as stated earlier. In conjunction with this, the Committee considers that the customs tariffs currently applied by the EU – which are among the lowest in the world – must not be lowered any further before those of a number of countries with highly competitive textile and clothing exports come down to a comparable level. In its resolution on the future of the textile and clothing sector in the European Union of 29 January 2004, the European Parliament also recommends adopting the criterion of reciprocity, or ‘access to markets at world level that is comparable to the import conditions that the EU will be applying with effect from 2005’. The Committee is for trade liberalisation, but against one-way liberalisation. Other countries should also be ready to open their markets to EU textiles and clothing producers.

| 4.9.1 | External border customs controls must be stepped up in order to overcome the serious problems of pirating and counterfeiting. They need to be combined into genuine joint European customs services, with specific support measures for the new Member States. |
| --- | --- |

4.9.1

External border customs controls must be stepped up in order to overcome the serious problems of pirating and counterfeiting. They need to be combined into genuine joint European customs services, with specific support measures for the new Member States.

| 4.9.2 | The Committee shares the serious concerns of those categories affected by fraud, and considers that all possible measures should be taken to reduce it. Customs services have repeatedly pointed out that they have insufficient personnel to check goods in transit, especially in ports. An average of 1,000 containers arrive daily in the port of Naples, for example, with a staff of only three to check them: on average, less than 1 % of these are opened (and opened only, not inspected). |
| --- | --- |

4.9.2

The Committee shares the serious concerns of those categories affected by fraud, and considers that all possible measures should be taken to reduce it. Customs services have repeatedly pointed out that they have insufficient personnel to check goods in transit, especially in ports. An average of 1,000 containers arrive daily in the port of Naples, for example, with a staff of only three to check them: on average, less than 1 % of these are opened (and opened only, not inspected).

| 4.9.3 | Given this state of affairs, made worse by the planned fraud carried out by criminal groups affecting business in many European ports, one possible approach might be to concentrate particular products in specifically equipped ports, in which the categories concerned would be represented and tighter controls carried out by the customs services. |
| --- | --- |

4.9.3

Given this state of affairs, made worse by the planned fraud carried out by criminal groups affecting business in many European ports, one possible approach might be to concentrate particular products in specifically equipped ports, in which the categories concerned would be represented and tighter controls carried out by the customs services.

| 4.9.4 | Point 11 of the European Parliament's resolution substantially agrees with this line, requesting the Commission to encourage and assist manufacturers in establishing a surveillance and information network to identify the sources of counterfeit or pirated products and eliminate them from the market. |
| --- | --- |

4.9.4

Point 11 of the European Parliament's resolution substantially agrees with this line, requesting the Commission to encourage and assist manufacturers in establishing a surveillance and information network to identify the sources of counterfeit or pirated products and eliminate them from the market.

| 4.9.5 | Another solution might be to divide containers, in sealed condition, between the areas of final destination. This would dramatically reduce the number of containers needing to be checked in ports and enable more thorough checks to be made. |
| --- | --- |

4.9.5

Another solution might be to divide containers, in sealed condition, between the areas of final destination. This would dramatically reduce the number of containers needing to be checked in ports and enable more thorough checks to be made.

| 4.10 | The countries from which goods originate must also be asked to improve controls. Countries which connive at fraud by operating ineffectual control mechanisms should suffer temporary withdrawal of advantageous export conditions. The GSP alone, widely used in the textile and clothing sector, costs the EU EUR 2.2 billion annually by way of lost customs revenue. Conversely, the participating countries receive an annual benefit of the same amount. If the EU is given advantages of that magnitude, it is entitled to impose terms and conditions on the receipt of those advantages. |
| --- | --- |

4.10

The countries from which goods originate must also be asked to improve controls. Countries which connive at fraud by operating ineffectual control mechanisms should suffer temporary withdrawal of advantageous export conditions. The GSP alone, widely used in the textile and clothing sector, costs the EU EUR 2.2 billion annually by way of lost customs revenue. Conversely, the participating countries receive an annual benefit of the same amount. If the EU is given advantages of that magnitude, it is entitled to impose terms and conditions on the receipt of those advantages.

| 4.10.1 | The Committee is well aware that the EU's real borders do not necessarily coincide with the Member States' physical boundaries: they increasingly lie within the territory of the countries from which its imports come. The EESC has already expressed its views on this question. |
| --- | --- |

4.10.1

The Committee is well aware that the EU's real borders do not necessarily coincide with the Member States' physical boundaries: they increasingly lie within the territory of the countries from which its imports come. The EESC has already expressed its views on this question.

| 4.11 | The current rules of origin are too complex and are difficult to apply; they are easily misunderstood and require in-depth knowledge of numerous legal texts. They now represent a constraint on trade and a powerful incitement to fraud. Beneficiary countries most often merely serve as conduits for the products of non-beneficiary countries. |
| --- | --- |

4.11

The current rules of origin are too complex and are difficult to apply; they are easily misunderstood and require in-depth knowledge of numerous legal texts. They now represent a constraint on trade and a powerful incitement to fraud. Beneficiary countries most often merely serve as conduits for the products of non-beneficiary countries.

| 4.12 | With regard to the advantages to be granted to developing countries, the Committee calls on the Commission – the Trade DG in particular – to define clear standards, especially for the protection of labour rights, protection of the environment, suppression of drug trafficking, observance of fundamental human rights, sustainable development and other important aspects concerning consumer protection and animal welfare. |
| --- | --- |

4.12

With regard to the advantages to be granted to developing countries, the Committee calls on the Commission – the Trade DG in particular – to define clear standards, especially for the protection of labour rights, protection of the environment, suppression of drug trafficking, observance of fundamental human rights, sustainable development and other important aspects concerning consumer protection and animal welfare.

| 4.13 | Turning to the Common Customs Tariff (CCT), the Committee notes that the recent Regulation 1789/2003 amending Regulation 2658/87, and which came into force on 1 January 2004, is also the result of a series of compromises over the level of the CCT. These compromises make implementation difficult and complex and consequently facilitate fraud and evasion. The heading ‘Articles of apparel and clothing accessories’, indicated by codes 61, 62 and 63 includes 466 items; of these 398 attract a tariff of 12 %, with the other 68 having tariffs ranging from complete exemption to 2 %, 4 %, 5.3 %, 6.2 %, 6.3 %, 6.5 %, 6.9 %, 7.2 %, 7.5 %, 7.6 %, 7.7 %, 8 %, 8.9 %, 10 % and 10.5 %. Other codes: 64 (Footwear, gaiters and the like), 65 (Headgear and parts thereof), 66 (Umbrellas) and 67 (Feathers and artificial flowers) have tariffs of 1.7 %, 2.2 %, 2.7 %, 4.7 %, 5 %, 5.2 %, 7 % and 8 %. |
| --- | --- |

4.13

Turning to the Common Customs Tariff (CCT), the Committee notes that the recent Regulation 1789/2003 amending Regulation 2658/87, and which came into force on 1 January 2004, is also the result of a series of compromises over the level of the CCT. These compromises make implementation difficult and complex and consequently facilitate fraud and evasion. The heading ‘Articles of apparel and clothing accessories’, indicated by codes 61, 62 and 63 includes 466 items; of these 398 attract a tariff of 12 %, with the other 68 having tariffs ranging from complete exemption to 2 %, 4 %, 5.3 %, 6.2 %, 6.3 %, 6.5 %, 6.9 %, 7.2 %, 7.5 %, 7.6 %, 7.7 %, 8 %, 8.9 %, 10 % and 10.5 %. Other codes: 64 (Footwear, gaiters and the like), 65 (Headgear and parts thereof), 66 (Umbrellas) and 67 (Feathers and artificial flowers) have tariffs of 1.7 %, 2.2 %, 2.7 %, 4.7 %, 5 %, 5.2 %, 7 % and 8 %.

| 4.13.1 | There are more than 20 tariff levels for the total of 1,516 headings covered by codes 50 to 67 of the Combined Nomenclature (CN). Having such a large number of very similar tariffs causes only problems, and demonstrates the weakness of a system which could be more rational and less vulnerable to pressure from centres of economic interest which, while maximising their gains, generate nothing but difficulties for very many businesses. The Committee considers that setting a limited number of tariffs – three or four at most – would significantly reduce fraud and simplify the system enormously. |
| --- | --- |

4.13.1

There are more than 20 tariff levels for the total of 1,516 headings covered by codes 50 to 67 of the Combined Nomenclature (CN). Having such a large number of very similar tariffs causes only problems, and demonstrates the weakness of a system which could be more rational and less vulnerable to pressure from centres of economic interest which, while maximising their gains, generate nothing but difficulties for very many businesses. The Committee considers that setting a limited number of tariffs – three or four at most – would significantly reduce fraud and simplify the system enormously.

| 4.14 | The Committee attaches particular importance to promoting compliance with core labour standards and fair trade, protection of the environment and combating drug trafficking. Whilst it is true that the current GSP cuts CCT levels by 40 %, thus enabling all the developing countries to export their textile, clothing and footwear products to EU countries with a tariff of less than 5 % provided that they undertake to observe the social and environmental clauses, it has nevertheless proved unsuccessful as a moral campaign. Neither has the special incentive regime intended to counter drug trafficking, from which 12 countries have benefited, had any impact in terms of reducing the drugs trade. On the other hand, many small European businesses have had to fold due to unsustainable competition; this is the result of overall production costs which are not at all comparable with those costs imposed by progressive, sustainable development-oriented regulation (16). |
| --- | --- |

4.14

The Committee attaches particular importance to promoting compliance with core labour standards and fair trade, protection of the environment and combating drug trafficking. Whilst it is true that the current GSP cuts CCT levels by 40 %, thus enabling all the developing countries to export their textile, clothing and footwear products to EU countries with a tariff of less than 5 % provided that they undertake to observe the social and environmental clauses, it has nevertheless proved unsuccessful as a moral campaign. Neither has the special incentive regime intended to counter drug trafficking, from which 12 countries have benefited, had any impact in terms of reducing the drugs trade. On the other hand, many small European businesses have had to fold due to unsustainable competition; this is the result of overall production costs which are not at all comparable with those costs imposed by progressive, sustainable development-oriented regulation (16).

| 4.15 | The EESC believes that the efforts of the Council, the Commission and the European Parliament should be stepped up in order to exclude from the GSP all those countries that need to export their textile, clothing and footwear products to the EU, yet do not respect the fundamental rights enshrined by the ILO (17) (International Labour Organisation) (18). |
| --- | --- |

4.15

The EESC believes that the efforts of the Council, the Commission and the European Parliament should be stepped up in order to exclude from the GSP all those countries that need to export their textile, clothing and footwear products to the EU, yet do not respect the fundamental rights enshrined by the ILO (17) (International Labour Organisation) (18).

| 4.16 | The EESC is convinced that per capita GDP cannot be the sole criterion for deciding whether countries are eligible for reductions under the GSP in the textile sector. It also shares the concern expressed in many quarters that an undue proportion of the benefits currently to those nations which have least need of them. In order to ensure that GSP assistance is concentrated on the countries with the greatest need, the Committee recommends that the following categories of country be excluded from the system:






  — | nations which are members of OPEC (19); |
| --- | --- | --- |

4.16

The EESC is convinced that per capita GDP cannot be the sole criterion for deciding whether countries are eligible for reductions under the GSP in the textile sector. It also shares the concern expressed in many quarters that an undue proportion of the benefits currently to those nations which have least need of them. In order to ensure that GSP assistance is concentrated on the countries with the greatest need, the Committee recommends that the following categories of country be excluded from the system:

—

nations which are members of OPEC (19);

| — | nations which are not defined by the UN as ‘developing countries’; |
| --- | --- |

—

nations which are not defined by the UN as ‘developing countries’;

| — | nations which have a nuclear weapons programme; |
| --- | --- |

—

nations which have a nuclear weapons programme;

| — | nations which serve as tax havens; |
| --- | --- |

—

nations which serve as tax havens;

| — | nations which have bilateral or regional agreements with the EU (20); |
| --- | --- |

—

nations which have bilateral or regional agreements with the EU (20);

| — | nations which do not comply with the fundamental rights enshrined by the ILO (21). |
| --- | --- |

—

nations which do not comply with the fundamental rights enshrined by the ILO (21).

| 4.17 | The Technological Poles and Innovation Centres – widespread across the EU – must help to improve networking and dissemination of experience with entrepreneurs in the industry, universities and civil society organisations. |
| --- | --- |

4.17

The Technological Poles and Innovation Centres – widespread across the EU – must help to improve networking and dissemination of experience with entrepreneurs in the industry, universities and civil society organisations.

| 4.18 | Technical, high-tech textiles and technical footwear are increasingly gaining market share in Europe and globally. Thanks to their solid hands-on experience, small and medium-sized European companies can play, both now and in the future, an important role in producing garments that can exploit new chemical processes and develop new technology. |
| --- | --- |

4.18

Technical, high-tech textiles and technical footwear are increasingly gaining market share in Europe and globally. Thanks to their solid hands-on experience, small and medium-sized European companies can play, both now and in the future, an important role in producing garments that can exploit new chemical processes and develop new technology.

| 4.19 | The EESC feels that there is a need to trial Concerted Actions between the Commission and the Member States in order to finance and support a variety of advanced services that can improve business performance, so as to encourage a match between supply and demand for innovative garments. |
| --- | --- |

4.19

The EESC feels that there is a need to trial Concerted Actions between the Commission and the Member States in order to finance and support a variety of advanced services that can improve business performance, so as to encourage a match between supply and demand for innovative garments.

| 4.19.1 | The European Social Fund (ESF) and the 6th Research and Development Framework Programme should be used to enhance and develop training facilities for a new type of professional with specific technical-operating ability, and who can act – following a suitable game plan – as innovation enablers for SMEs. Special attention should be given to those EU countries where the textile and clothing sectors have a strategic importance. |
| --- | --- |

4.19.1

The European Social Fund (ESF) and the 6th Research and Development Framework Programme should be used to enhance and develop training facilities for a new type of professional with specific technical-operating ability, and who can act – following a suitable game plan – as innovation enablers for SMEs. Special attention should be given to those EU countries where the textile and clothing sectors have a strategic importance.

| 4.19.2 | The professional profiles required to help businesses improve and expand production of technical textiles and footwear include: technology audit analysts, restructuring plan facilitators, and people skilled in business opportunity scouting. |
| --- | --- |

4.19.2

The professional profiles required to help businesses improve and expand production of technical textiles and footwear include: technology audit analysts, restructuring plan facilitators, and people skilled in business opportunity scouting.

| 4.19.3 | The EESC is convinced that by harnessing existing local opportunities – technology poles, universities, Structured Dialogue between employers, workers and local authorities – businesses, and SMEs in particular, could benefit from cooperation with these new types of skilled professional in order to migrate to a higher level of competitive technology (22). |
| --- | --- |

4.19.3

The EESC is convinced that by harnessing existing local opportunities – technology poles, universities, Structured Dialogue between employers, workers and local authorities – businesses, and SMEs in particular, could benefit from cooperation with these new types of skilled professional in order to migrate to a higher level of competitive technology (22).

| 4.20 | The Committee is also aware, as is the Commission and the European Parliament, that small firms (with fewer than 50 employees) account for approximately 70 % of the EU's textiles, clothing and footwear industry; circa 20 % of firms have between 50 and 249 employees and the remaining 10 % employ 250 or more. The sector has a higher concentration of female workers than other industries. Efforts to encourage innovation and technology upgrades are clearly hampered by the high degree of company fragmentation across Europe. |
| --- | --- |

4.20

The Committee is also aware, as is the Commission and the European Parliament, that small firms (with fewer than 50 employees) account for approximately 70 % of the EU's textiles, clothing and footwear industry; circa 20 % of firms have between 50 and 249 employees and the remaining 10 % employ 250 or more. The sector has a higher concentration of female workers than other industries. Efforts to encourage innovation and technology upgrades are clearly hampered by the high degree of company fragmentation across Europe.

| 4.21 | The EESC, whose representatives have a direct relationship with civil society organisations, has on several occasions condemned the relentless fraud operations involving a wide range of goods across Community borders. The most blatant examples of fraud include:






  — | declarations inconsistent with products that have cleared customs (23); |
| --- | --- | --- |

4.21

The EESC, whose representatives have a direct relationship with civil society organisations, has on several occasions condemned the relentless fraud operations involving a wide range of goods across Community borders. The most blatant examples of fraud include:

—

declarations inconsistent with products that have cleared customs (23);

| — | goods with no certification of conformity, which are often dangerous for consumers; |
| --- | --- |

—

goods with no certification of conformity, which are often dangerous for consumers;

| — | goods produced which do not comply with intellectual property rights; |
| --- | --- |

—

goods produced which do not comply with intellectual property rights;

| — | goods subjected to triangulation between various States (24); |
| --- | --- |

—

goods subjected to triangulation between various States (24);

| — | goods that do not comply with the rules of origin (25); |
| --- | --- |

—

goods that do not comply with the rules of origin (25);

| — | counterfeit or pirated goods. |
| --- | --- |

—

counterfeit or pirated goods.

| 4.21.1 | Some statistical surveys were recently carried out into this phenomenon. The EESC welcomes the fact that the European Union has finally adopted a Regulation that provides for counterfeit goods to be burned and destroyed by customs (26). |
| --- | --- |

4.21.1

Some statistical surveys were recently carried out into this phenomenon. The EESC welcomes the fact that the European Union has finally adopted a Regulation that provides for counterfeit goods to be burned and destroyed by customs (26).

| 4.21.2 | The Committee feels, however, that success in this area remains limited. |
| --- | --- |

4.21.2

The Committee feels, however, that success in this area remains limited.

| 4.21.3 | Indeed, customs agency directors complain about the shortcomings of Community regulation (which ought to compensate for fragmented national legislation), and the lack of staff and resources to deal with such a vast, active market. |
| --- | --- |

4.21.3

Indeed, customs agency directors complain about the shortcomings of Community regulation (which ought to compensate for fragmented national legislation), and the lack of staff and resources to deal with such a vast, active market.

| 4.21.4 | In the first half of 2003, over 50 million counterfeit or bootleg products were intercepted by European customs (27). Fraud doubled between 2000 and 2002 in the clothing sector and trebled in the perfume and cosmetics sectors (28). This is, however, only the tip of the iceberg, compared with what has slipped through the net. |
| --- | --- |

4.21.4

In the first half of 2003, over 50 million counterfeit or bootleg products were intercepted by European customs (27). Fraud doubled between 2000 and 2002 in the clothing sector and trebled in the perfume and cosmetics sectors (28). This is, however, only the tip of the iceberg, compared with what has slipped through the net.

| 4.21.5 | As to the origin of these products, 66 % come from Asia, especially China and Thailand. According to Commissioner Bolkestein, counterfeiting is no longer confined to luxury goods: all everyday consumer products are now potential targets for counterfeiting and pirating with the result that SMEs are increasingly falling victim to counterfeiters (29). |
| --- | --- |

4.21.5

As to the origin of these products, 66 % come from Asia, especially China and Thailand. According to Commissioner Bolkestein, counterfeiting is no longer confined to luxury goods: all everyday consumer products are now potential targets for counterfeiting and pirating with the result that SMEs are increasingly falling victim to counterfeiters (29).

| 4.21.6 | The sheer scale of the phenomenon puts increasing pressure on European firms, often forcing small firms to cease trading, making it impossible for them to stay on the market. |
| --- | --- |

4.21.6

The sheer scale of the phenomenon puts increasing pressure on European firms, often forcing small firms to cease trading, making it impossible for them to stay on the market.

5.   Specific comments

| 5.1 | Since 1971 the European Community – initially via the GATT and then the WTO (World Trade Organisation) – has granted significant reductions on the Common Customs Tariff (CCT) to developing countries. |
| --- | --- |

5.1

Since 1971 the European Community – initially via the GATT and then the WTO (World Trade Organisation) – has granted significant reductions on the Common Customs Tariff (CCT) to developing countries.

| 5.1.1 | Products classed as non-sensitive are exempt from customs duty when exported by developing countries to the Community. |
| --- | --- |

5.1.1

Products classed as non-sensitive are exempt from customs duty when exported by developing countries to the Community.

| 5.1.2 | Products classed as sensitive – which include textiles, clothing and footwear – benefit from a 20 % reduction (general regime), rising to 40 % for the special regimes (30). |
| --- | --- |

5.1.2

Products classed as sensitive – which include textiles, clothing and footwear – benefit from a 20 % reduction (general regime), rising to 40 % for the special regimes (30).

| 5.1.3 | In 2003, the United Nations recognised 116 developing countries. In practice, however, the advantages granted by the EU extend to 174 Countries (31). |
| --- | --- |

5.1.3

In 2003, the United Nations recognised 116 developing countries. In practice, however, the advantages granted by the EU extend to 174 Countries (31).

| 5.1.4 | Asia is by far the main beneficiary of the preferential terms, accounting for almost 70 % of the total in 2002. China alone accounts for some 25 %. |
| --- | --- |

5.1.4

Asia is by far the main beneficiary of the preferential terms, accounting for almost 70 % of the total in 2002. China alone accounts for some 25 %.

| 5.1.5 | The average EU tariff for the TCF sector (Textiles, Clothing, Footwear) applied to the above countries is 4.8 %. The tariff imposed by the US is 8.9 %, by Japan 6.6 % and by Canada 12 %. The tariffs imposed by China are 20 %, by Thailand 29 %, by India 35 %, and by Indonesia 40 % (32). |
| --- | --- |

5.1.5

The average EU tariff for the TCF sector (Textiles, Clothing, Footwear) applied to the above countries is 4.8 %. The tariff imposed by the US is 8.9 %, by Japan 6.6 % and by Canada 12 %. The tariffs imposed by China are 20 %, by Thailand 29 %, by India 35 %, and by Indonesia 40 % (32).

| 5.2 | Euro-Mediterranean manufacturers of TCF continue to run up against obstacles in accessing Asian markets. In order to obstruct trade, these markets have created non-tariff barriers which pose a serious problem for European industry as a whole (33). |
| --- | --- |

5.2

Euro-Mediterranean manufacturers of TCF continue to run up against obstacles in accessing Asian markets. In order to obstruct trade, these markets have created non-tariff barriers which pose a serious problem for European industry as a whole (33).

| 5.3 | Within EU manufacturing industry as a whole, textiles value added accounts for some 2.5 % (34). Some countries, however, have relatively higher levels: Luxembourg 8.7 %; Portugal 6.3 %; Greece 5.1 %; Italy 4.6 %; Belgium 4.3 % (35). In the new EU Member States, the textiles and clothing industry is even more important: Lithuania 16.1 % (36), Estonia 10.5 % (37) etc. |
| --- | --- |

5.3

Within EU manufacturing industry as a whole, textiles value added accounts for some 2.5 % (34). Some countries, however, have relatively higher levels: Luxembourg 8.7 %; Portugal 6.3 %; Greece 5.1 %; Italy 4.6 %; Belgium 4.3 % (35). In the new EU Member States, the textiles and clothing industry is even more important: Lithuania 16.1 % (36), Estonia 10.5 % (37) etc.

6.   Conclusions

| 6.1 | The many European entrepreneurs in the sector feel the current situation is unfair and punitive. They are often forced to cease trading as they are sometimes faced with a competitive climate that would appear to be neither fair, nor linked to entrepreneurial ability or respect for human rights in the workplace. Entrepreneurs, workers and EU political decision-makers at the different levels need to have a shared, joint vision for the medium- and long-term future of a competitive, advanced European clothing and textiles sector. |
| --- | --- |

6.1

The many European entrepreneurs in the sector feel the current situation is unfair and punitive. They are often forced to cease trading as they are sometimes faced with a competitive climate that would appear to be neither fair, nor linked to entrepreneurial ability or respect for human rights in the workplace. Entrepreneurs, workers and EU political decision-makers at the different levels need to have a shared, joint vision for the medium- and long-term future of a competitive, advanced European clothing and textiles sector.

| 6.1.1 | Respect for the fundamental labour rights set forth in the ILO's fundamental standards must be reinforced both by specific ILO control arrangements and by close cooperation between the ILO and the WTO. The EU must step up its efforts to ensure that ILO principles on the protection of workers become a WTO touchstone. |
| --- | --- |

6.1.1

Respect for the fundamental labour rights set forth in the ILO's fundamental standards must be reinforced both by specific ILO control arrangements and by close cooperation between the ILO and the WTO. The EU must step up its efforts to ensure that ILO principles on the protection of workers become a WTO touchstone.

| 6.2 | Preferential customs tariffs could be applied only to the 49 least developed countries. The negotiations launched in Doha should lead to greater reciprocity between the Pan-Euro-Mediterranean area and the countries of Asia. A worldwide agreement should be reached as part of the Doha Round bringing all customs tariffs applicable to the textiles and clothing sector down to a maximum uniform level of 15 % within a specific time frame, e.g. 5 years. |
| --- | --- |

6.2

Preferential customs tariffs could be applied only to the 49 least developed countries. The negotiations launched in Doha should lead to greater reciprocity between the Pan-Euro-Mediterranean area and the countries of Asia. A worldwide agreement should be reached as part of the Doha Round bringing all customs tariffs applicable to the textiles and clothing sector down to a maximum uniform level of 15 % within a specific time frame, e.g. 5 years.

| 6.3 | EU customs controls must be stepped up in order to achieve, as soon as possible, a common customs system that is consistent with single market legislation. |
| --- | --- |

6.3

EU customs controls must be stepped up in order to achieve, as soon as possible, a common customs system that is consistent with single market legislation.

| 6.4 | In order to combat counterfeiting and fraud and to provide consumers with more information, a label of origin system (geographic, social and environmental) could be developed. |
| --- | --- |

6.4

In order to combat counterfeiting and fraud and to provide consumers with more information, a label of origin system (geographic, social and environmental) could be developed.

| 6.4.1 | For the same reason, the EESC proposes that the possibility be explored of launching a textile traceability system, which would be a factor in reducing fraud in relation to rules of origin legislation (38) and counterfeit products. |
| --- | --- |

6.4.1

For the same reason, the EESC proposes that the possibility be explored of launching a textile traceability system, which would be a factor in reducing fraud in relation to rules of origin legislation (38) and counterfeit products.

| 6.5 | The Committee supports the Commission's efforts to secure tougher trade protection instruments, and antidumping and anti-subsidy measures. Similarly, it calls on the Commission to implement safeguard measures, particularly where fraud has been identified and confirmed. In the Doha negotiations the EU should try to obtain a much stricter discipline regarding the use of safeguard measures, antidumping actions and other protective measures such as changes in origin regulations and so on. |
| --- | --- |

6.5

The Committee supports the Commission's efforts to secure tougher trade protection instruments, and antidumping and anti-subsidy measures. Similarly, it calls on the Commission to implement safeguard measures, particularly where fraud has been identified and confirmed. In the Doha negotiations the EU should try to obtain a much stricter discipline regarding the use of safeguard measures, antidumping actions and other protective measures such as changes in origin regulations and so on.

| 6.6 | The Commission must step up its efforts to ensure that the TRIPS (Trade-Related Aspects of Intellectual Property Rights) are guaranteed by the WTO and respected by the Member States. |
| --- | --- |

6.6

The Commission must step up its efforts to ensure that the TRIPS (Trade-Related Aspects of Intellectual Property Rights) are guaranteed by the WTO and respected by the Member States.

| 6.7 | Innovation capacity must be increased – particularly as regards SMEs – by means of projects and programmes agreed at local level, with the contribution of all social partners and the involvement of research centres. Europe has some textiles colleges with long experience. It would be extremely useful to create a network of excellence with close links with enterprise and the labour market which can tap into the opportunities provided by the Sixth Framework Programme and implement a technical foresight programme to promote technological development in the sector. |
| --- | --- |

6.7

Innovation capacity must be increased – particularly as regards SMEs – by means of projects and programmes agreed at local level, with the contribution of all social partners and the involvement of research centres. Europe has some textiles colleges with long experience. It would be extremely useful to create a network of excellence with close links with enterprise and the labour market which can tap into the opportunities provided by the Sixth Framework Programme and implement a technical foresight programme to promote technological development in the sector.

| 6.7.1 | The European textiles industry must add to its assets of fashion and the beauty of the manufactured product a capacity for innovation, introducing new fibres and composite fabrics, enriched by powders developed by nanotechnology research, which increase the fitness for purpose, safety, heat protection qualities and wearability of a product. |
| --- | --- |

6.7.1

The European textiles industry must add to its assets of fashion and the beauty of the manufactured product a capacity for innovation, introducing new fibres and composite fabrics, enriched by powders developed by nanotechnology research, which increase the fitness for purpose, safety, heat protection qualities and wearability of a product.

| 6.7.2 | Non-woven fabrics – special fabrics – treated with chemical substances which act as adhesives, are becoming increasingly widespread in a number of sectors – including sport, construction, the aeronautical and transport industries. As has already been said, this market is constantly expanding and represents an opportunity for product diversification with great potential for future development (39). |
| --- | --- |

6.7.2

Non-woven fabrics – special fabrics – treated with chemical substances which act as adhesives, are becoming increasingly widespread in a number of sectors – including sport, construction, the aeronautical and transport industries. As has already been said, this market is constantly expanding and represents an opportunity for product diversification with great potential for future development (39).

| 6.8 | The CCIC (Consultative Commission on Industrial Change), which has acquired a wealth of experience over numerous decades of handling problems related to the development of the coal and steel markets (40), could play an important role as a link between the Commission and the textiles sector, facilitating product diversification. |
| --- | --- |

6.8

The CCIC (Consultative Commission on Industrial Change), which has acquired a wealth of experience over numerous decades of handling problems related to the development of the coal and steel markets (40), could play an important role as a link between the Commission and the textiles sector, facilitating product diversification.

| 6.8.1 | There is a need to reskill those staff, who will lose their jobs as a result of restructuring. The creation and growth of entrepreneurs' interests as regards these new composite products should be encouraged. There can only be genuine sustainable development in the future if young people are familiarised with new products and helped to appreciate their qualities and take on board the principles of respect for the environment which they promote. European bodies such as the CCIC, which have both social and technical experience, can make a valuable contribution in this regard. |
| --- | --- |

6.8.1

There is a need to reskill those staff, who will lose their jobs as a result of restructuring. The creation and growth of entrepreneurs' interests as regards these new composite products should be encouraged. There can only be genuine sustainable development in the future if young people are familiarised with new products and helped to appreciate their qualities and take on board the principles of respect for the environment which they promote. European bodies such as the CCIC, which have both social and technical experience, can make a valuable contribution in this regard.

| 6.9 | The textiles, clothing and leather sector is the first to be addressed by the European Commission's recently launched vertical policy on industry, complementing the existing horizontal policies. All observers, and particularly employers and workers in the sector, agree that it is vital that the Commission, in conjunction with the Member States and the social partners, should succeed in helping the sector to modernise its technology and meet the challenges of globalisation. |
| --- | --- |

6.9

The textiles, clothing and leather sector is the first to be addressed by the European Commission's recently launched vertical policy on industry, complementing the existing horizontal policies. All observers, and particularly employers and workers in the sector, agree that it is vital that the Commission, in conjunction with the Member States and the social partners, should succeed in helping the sector to modernise its technology and meet the challenges of globalisation.

| 6.9.1 | In addition to the technological platforms already established by Community policies (41) a fourth platform could be envisaged, dedicated to the many innovative aspects of textiles of modern design. |
| --- | --- |

6.9.1

In addition to the technological platforms already established by Community policies (41) a fourth platform could be envisaged, dedicated to the many innovative aspects of textiles of modern design.

| 6.10 | Deindustrialisation is underway in all the more advanced countries. In the EU, value added of the tertiary sector has risen to 70 % of total GDP (22 % for industry, 5 % for construction and 3 % for agriculture) (42). The process should not, however, be encouraged, since a large part of the value added is channelled to, or originates in, businesses: trade and transport 21.6 %; financial and business services 27.2 %; public administration 21.6 % (43). |
| --- | --- |

6.10

Deindustrialisation is underway in all the more advanced countries. In the EU, value added of the tertiary sector has risen to 70 % of total GDP (22 % for industry, 5 % for construction and 3 % for agriculture) (42). The process should not, however, be encouraged, since a large part of the value added is channelled to, or originates in, businesses: trade and transport 21.6 %; financial and business services 27.2 %; public administration 21.6 % (43).

| 6.11 | The EESC believes that the full weight of the European vision of a ‘social market economy’ should be brought to bear on changing the WTO rules to make them as effective as possible. At present, the rules do not allow imports of products to be banned, except where they constitute a danger. However, respect for a number of social, environmental and economic priorities must be imposed without delay, given that the EU, as a global economic player, can make global governance more effective by endeavouring to ‘generalise sustainable development across the planet through ... international cooperation and good domestic policies’ (44). |
| --- | --- |

6.11

The EESC believes that the full weight of the European vision of a ‘social market economy’ should be brought to bear on changing the WTO rules to make them as effective as possible. At present, the rules do not allow imports of products to be banned, except where they constitute a danger. However, respect for a number of social, environmental and economic priorities must be imposed without delay, given that the EU, as a global economic player, can make global governance more effective by endeavouring to ‘generalise sustainable development across the planet through ... international cooperation and good domestic policies’ (44).

| 6.11.1 | The costs of implementing these policies which developing countries have to meet could be borne partly by development cooperation programmes which seek to improve commercial conduct. The programmes would have to be reviewed regularly. |
| --- | --- |

6.11.1

The costs of implementing these policies which developing countries have to meet could be borne partly by development cooperation programmes which seek to improve commercial conduct. The programmes would have to be reviewed regularly.

| 6.12 | A stage in the process of globalisation has probably been reached where more attention must focus on the ‘collective preferences and sensibilities’ voiced by the general public, in order to ease international tensions and head off the ideological ‘trade wars’ which are on the increase and which it appears not to be possible to resolve using the current mechanisms and rules. |
| --- | --- |

6.12

A stage in the process of globalisation has probably been reached where more attention must focus on the ‘collective preferences and sensibilities’ voiced by the general public, in order to ease international tensions and head off the ideological ‘trade wars’ which are on the increase and which it appears not to be possible to resolve using the current mechanisms and rules.

Brussels, 1 July 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

---

(1)  ‘Technical textiles’ are increasingly applied in the following areas: clothing, agro-technics, building, geotechnics, household technics, industrial technics, medical technics, transport technics, environmental technics, packaging technics, protection systems technics, sport technics. See Appendix 2.

1

(2)  There are 49 Less Developed Countries, of which 40 are ACP countries (Africa, Caribbean, Pacific) and 9 non-ACP: Afghanistan, Bangladesh, Butan, Cambodia, Laos, Myanmar, Maldives, Nepal, Yemen.

2

(3)  The hearing was attended by Ms Concepció Ferrer i Casals, Member of the European Parliament and President of the Forum for Textiles, Clothing and Leather. The European Commission was represented by Mr Luis Filipe Girão, Head of Unit in DG ENTR, and Mr Ghazi Ben Ahmed of DG TRADE. The 60 people attending included Italians, Germans, French, Turks, Lithuanians and Belgians.

3

(4)  EESC opinion CESE 313/2004 (REX/141).

4

(5)  Conference of 15 October 2002‘The European apparel business goes high-tech’, Borschette - Brussels. Conference of 20 March 2003‘The future of the textile and clothing industry in an enlarged Europe’. Conference of 5-6 May 2003‘The Future of Textiles and Clothing after 2005’, Charlemagne - Brussels.

5

(6)  The Bilateral Agencies comprise representatives of small businesses and workers who, acting on the principle of reciprocity, take provide finance for back-up, refresher and innovation courses for employees and owners of micro- and small enterprises.

6

(7)  Cf. the hearing of 21 January 2004 and the conclusions in point 13.

7

(8)  COM(2003) 452 final of 24.4. 2003.

8

(9)  COM(2003) 787 final of 18.12.2003.

9

(10)  COM(2003) 533 final of 10.9.2003.

10

(11)  Approximately 1,000 chemical substances are most often used out of 5,000 available in the textile sector. In addition, there is an unspecified quantity of different combinations of several substances, some of which are toxic, which are used for dying and other treatment of fabric. In the EU, toxic substances are selected, rejected or treated before use in accordance with environmental and health legislation. The cost of this is borne by European businesses.

11

(12)  Cf. COM(2004) 101 of 10.02.2004 - Communication from the Commission on Building our common future, Section C: The EU as a global partner.

12

(13)  Cf. Eurostat: The GDP in the World. Of world GDP, which was EUR 34,000 billion in 2002, over 55 % was in the hands of approximately 45,000 multinationals.

13

(14)  Proposal for a Directive, COM(2003) 453 final of 1.8.2003.

14

(15)  Cf., inter alia, the following documents: COM(2001) 98 final of 1.3.2001; COM(2001) 366 final of 18.7.2001; COM(2003) 21 final of 21.1.2003; COM(2002) 345 final of 1.7.2002; COM(2001) 122 final of 7.3.2001; COM(2002) 68 final of 6.2.2002; and COM(2003) 27 final of 21.1.2003.

15

(16)  Cf. Opinion REX/141 (GSP), points 6.6.2, 6.6.2.1, 6.6.2.2 and 6.6.2.3.

16

(17)  C29 – Forced Labour Convention; C87 – Freedom of Association and Protection of the Right to Organise Convention; C98 – Right to Organise and Collective Bargaining Convention; C100 – Equal Remuneration Convention; C105 – Abolition of Forced Labour Convention; C111 – Discrimination (Employment and Occupation) Convention; C138 – Minimum Age Convention; C182 – Worst Forms of Child Labour Convention.

17

(18)  Cf. REX/141 (GSP), point 6.6.2.3

18

(19)  Venezuela, Algeria, Nigeria, Libya, Saudi Arabia, The United Arab Emirates, Quasar, Kuwait, Iraq, Iran, Indonesia.

19

(20)  (Generalised System of Preferences), point 6.6.1.2.

20

(21)  Ibidem

21

(22)  Small businesses would often like to switch from producing garments made from traditional products to new ones made from technical or intelligent textiles, but they lack the necessary information and knowledge of technical and commercial processes.

22

(23)  The customs tariff percentage depends on the type of product imported. Often they are declared as various products, with lower tariffs than for those actually imported.

23

(24)  Green Paper on The future of rules of origin in preferential trade agreements, COM(2003) 787 final, point 1.2.2.

24

(25)  Ibidem.

25

(26)  Regulation (EC) 1383/2003 of 22.7.2003. Enters into force on 1.7.2004.

26

(27)  IP 03/1589 of 24.11.03.

27

(28)  Ibidem

28

(29)  Ibidem

29

(30)  Special Regime for the protection of workers' rights; SR for the protection of the environment; SR to combat drugs production and trafficking.

30

(31)  Annex I to Regulation 2501/2001.

31

(32)  Source: EU Commission.

32

(33)  The most frequently used non-tariff barriers are: additional taxes or charges; minimum import prices; customs valuation prices not paid on imported goods; unreasonable discriminatory requirements on labelling and brand names; import authorisation regimes; difficult advance procedures.

33

(34)  Cod. from 17.1 to 17.6.

34

(35)  Source: Eurostat, manufacturing industry in the EU 1992-2002.

35

(36)  Department of Statistics of the Republic of Lithuania, 2003.

36

(37)  Department of Statistics of the Republic of Estonia, 2003.

37

(38)  Green Paper: The future of rules of origin in preferential trade arrangements, COM(2004) 787 final of 18 December 2003.

38

(39)  Carbon fibre and kevlar fabrics are more resistant than the metals traditionally used and are lighter and more malleable.

39

(40)  Cf. the work of the ECSC Consultative Committee, which became the CCIC.

40

(41)  Aerospace, communications and steel.

41

(42)  Source: Eurostat, structure of gross value added, 2002.

42

(43)  Source: Eurostat, ibidem.

43

(44)  COM(2004) 101 final of 10.02.2004 on Building our common future, page 24.

44

---

APPENDIX 1

to the Opinion of the European Economic and Social Committee

Although it received at least one quarter of the votes cast, the following amendment was defeated:

Delete point 6.1.1.

Outcome of the vote:

| For: | 31 |
| --- | --- |
| Against: | 32 |
| Abstentions: | 9 |

For:

31

Against:

32

Abstentions:

9

---

| 7.12.2004 | EN | Official Journal of the European Union | C 302/101 |
| --- | --- | --- | --- |

7.12.2004

EN

Official Journal of the European Union

C 302/101

---

Opinion of the European Economic and Social Committee on ‘European Metropolitan Areas: socio-economic implications for Europe's future’

(2004/C 302/20)

On 15 July 2003 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on ‘European Metropolitan Areas: socio-economic implications for Europe's future’.

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 8 June 2004. The rapporteur was Mr van Iersel.

At its 410th plenary session (meeting of 1 July 2004) the European Economic and Social Committee adopted the following opinion by 129 votes to none with 2 abstentions.

1.   Summary

| 1.1 | In this opinion the EESC draws attention to the importance of Europe's metropolitan regions in the context of EU regional policy. |
| --- | --- |

1.1

In this opinion the EESC draws attention to the importance of Europe's metropolitan regions in the context of EU regional policy.

| 1.2 | Metropolitan regions are of great importance for the future from both an economic and a demographic perspective. These regions face a whole series of major challenges. So far the Union and the European institutions have not shown any particular interest in the subject. |
| --- | --- |

1.2

Metropolitan regions are of great importance for the future from both an economic and a demographic perspective. These regions face a whole series of major challenges. So far the Union and the European institutions have not shown any particular interest in the subject.

| 1.3 | The EESC argues that the economic, social and environmental development of Europe's metropolises should be firmly placed on the Community agenda. For this, European data and an exchange of information through Eurostat, as well as the Commission's specific attention, are essential. |
| --- | --- |

1.3

The EESC argues that the economic, social and environmental development of Europe's metropolises should be firmly placed on the Community agenda. For this, European data and an exchange of information through Eurostat, as well as the Commission's specific attention, are essential.

| 1.4 | It is in the Union's interest that national debates on the future organisation of metropolitan areas be followed up by a European debate to see what added value the European Union can provide. The EESC would refer in particular to the direct connection between the role of European metropolises and the Lisbon Strategy. Indeed, achieving the goals of the Lisbon Strategy is largely dependent on how it is pursued in metropolitan areas. |
| --- | --- |

1.4

It is in the Union's interest that national debates on the future organisation of metropolitan areas be followed up by a European debate to see what added value the European Union can provide. The EESC would refer in particular to the direct connection between the role of European metropolises and the Lisbon Strategy. Indeed, achieving the goals of the Lisbon Strategy is largely dependent on how it is pursued in metropolitan areas.

| 1.5 | The EESC therefore urges that, besides setting up a forum to bring together metropolitan areas and the Commission, this matter also be discussed in the Competitiveness Council and the informal Council for Regional Planning and Urban Issues. |
| --- | --- |

1.5

The EESC therefore urges that, besides setting up a forum to bring together metropolitan areas and the Commission, this matter also be discussed in the Competitiveness Council and the informal Council for Regional Planning and Urban Issues.

2.   Introduction

| 2.1 | The world is changing fast. Everywhere we are facing innovative economic, technological and social developments. These developments do not only have far-reaching consequences for manufacturing, the services sector and labour markets; of course, they also affect the territorial context and society and, consequently, how countries and regions should be governed. |
| --- | --- |

2.1

The world is changing fast. Everywhere we are facing innovative economic, technological and social developments. These developments do not only have far-reaching consequences for manufacturing, the services sector and labour markets; of course, they also affect the territorial context and society and, consequently, how countries and regions should be governed.

| 2.2 | In this opinion, the EESC focuses on metropolitan areas, i.e. large agglomerations and their zones of economic influence. It does so for three reasons: they are at the heart of these rapid changes; they are important contributors to the European growth strategy; and they are also partners to many smaller centres of excellence in the European Union. |
| --- | --- |

2.2

In this opinion, the EESC focuses on metropolitan areas, i.e. large agglomerations and their zones of economic influence. It does so for three reasons: they are at the heart of these rapid changes; they are important contributors to the European growth strategy; and they are also partners to many smaller centres of excellence in the European Union.

| 2.3 | A metropolitan area is made up of a central core – either an individual town or an urban agglomeration; and a periphery – a group of neighbouring municipalities from which a significant number of residents commute to the central core every day. The notion of ‘metropolitan area’ is thus close to that of ‘employment area’ or ‘functional urban region’ (1). It takes account of the existence of peripheral areas that are highly focused on a centre, and whose growth depends on the development of that centre. In terms of time, metropolitan areas can extend to up to a one hour commute. They include urban and rural areas. |
| --- | --- |

2.3

A metropolitan area is made up of a central core – either an individual town or an urban agglomeration; and a periphery – a group of neighbouring municipalities from which a significant number of residents commute to the central core every day. The notion of ‘metropolitan area’ is thus close to that of ‘employment area’ or ‘functional urban region’ (1). It takes account of the existence of peripheral areas that are highly focused on a centre, and whose growth depends on the development of that centre. In terms of time, metropolitan areas can extend to up to a one hour commute. They include urban and rural areas.

| 2.4 | The central core must include a minimum number of inhabitants (2) or jobs in order to be recognised as the centre of a metropolitan area. Similarly, there must be a minimum commuter intensity between a peripheral municipality and the central core for it to be included in a metropolitan area (3). In practice, these minimum thresholds have been set arbitrarily, and are therefore of varying importance. The lack of harmonisation of the definitions at European level restricts international comparisons. |
| --- | --- |

2.4

The central core must include a minimum number of inhabitants (2) or jobs in order to be recognised as the centre of a metropolitan area. Similarly, there must be a minimum commuter intensity between a peripheral municipality and the central core for it to be included in a metropolitan area (3). In practice, these minimum thresholds have been set arbitrarily, and are therefore of varying importance. The lack of harmonisation of the definitions at European level restricts international comparisons.

| 2.5 | A new type of metropolitan area has emerged over the last decade. When several agglomerations operate in network and their employment areas overlap, they make up multi-centre metropolitan areas. Examples are the Randstad, with 7 million inhabitants, the Rhine-Ruhr region, with 11 million inhabitants, the Vienna-Bratislava region with 4.6 million inhabitants, the Oresund region with 2.5 million inhabitants and the Lille region with 1.9 inhabitants (4). |
| --- | --- |

2.5

A new type of metropolitan area has emerged over the last decade. When several agglomerations operate in network and their employment areas overlap, they make up multi-centre metropolitan areas. Examples are the Randstad, with 7 million inhabitants, the Rhine-Ruhr region, with 11 million inhabitants, the Vienna-Bratislava region with 4.6 million inhabitants, the Oresund region with 2.5 million inhabitants and the Lille region with 1.9 inhabitants (4).

| 2.6 | Depending on their size and function, metropolitan areas have regional, national, European or global influence. It is estimated that the enlarged Europe includes some 50 metropolitan areas of over 1 million inhabitants. |
| --- | --- |

2.6

Depending on their size and function, metropolitan areas have regional, national, European or global influence. It is estimated that the enlarged Europe includes some 50 metropolitan areas of over 1 million inhabitants.

| 2.7 | It is important to note that metropolitan areas as discussed in this opinion cover areas and socio-economic situations that do not coincide with the European regional administrative entities defined in the somewhat rigid NUTS system of ‘regions’ (Nomenclature of Statistical Territorial Units) as used for official purposes by Eurostat and the European institutions. The concept of administrative region in Europe is particularly ambiguous as, apart from a few exceptions, the geographical boundaries of such regions fall either outside or inside the boundaries of metropolitan areas (5). Consequently, it is not useful to use administrative areas to compare the socio-economic development of European metropolitan areas. |
| --- | --- |

2.7

It is important to note that metropolitan areas as discussed in this opinion cover areas and socio-economic situations that do not coincide with the European regional administrative entities defined in the somewhat rigid NUTS system of ‘regions’ (Nomenclature of Statistical Territorial Units) as used for official purposes by Eurostat and the European institutions. The concept of administrative region in Europe is particularly ambiguous as, apart from a few exceptions, the geographical boundaries of such regions fall either outside or inside the boundaries of metropolitan areas (5). Consequently, it is not useful to use administrative areas to compare the socio-economic development of European metropolitan areas.

| 2.8 | In February 2004 the European Commission published its Third Report on Cohesion. This report opens up new avenues for discussion on regional policy and economic progress. The same applies to a new focus on spatial and urban development. For the future, the Third Report highlights the link between regional policy and the Lisbon Strategy. Competitiveness will join cohesion policy and territorial cooperation and employment policy as the third pillar of regional policy. In this respect, the Third Report underlines in particular the role of cities and major agglomerations. |
| --- | --- |

2.8

In February 2004 the European Commission published its Third Report on Cohesion. This report opens up new avenues for discussion on regional policy and economic progress. The same applies to a new focus on spatial and urban development. For the future, the Third Report highlights the link between regional policy and the Lisbon Strategy. Competitiveness will join cohesion policy and territorial cooperation and employment policy as the third pillar of regional policy. In this respect, the Third Report underlines in particular the role of cities and major agglomerations.

| 2.9 | The impulse for new approaches and fresh ideas comes chiefly from globalisation, the completion of the single market (including in the new Member States), and from the Lisbon Strategy. Clearly, for metropolitan areas it is not just a question of regional policy, but also industrial policy, expertise, transport and European networks, sustainable development and quality of life. |
| --- | --- |

2.9

The impulse for new approaches and fresh ideas comes chiefly from globalisation, the completion of the single market (including in the new Member States), and from the Lisbon Strategy. Clearly, for metropolitan areas it is not just a question of regional policy, but also industrial policy, expertise, transport and European networks, sustainable development and quality of life.

| 2.10 | A worldwide phenomenon is the increasing attention paid to ‘urban renaissance’, which is on the agenda of most EU members. |
| --- | --- |

2.10

A worldwide phenomenon is the increasing attention paid to ‘urban renaissance’, which is on the agenda of most EU members.

| 2.11 | Metropolitan areas and their governance have never been discussed thoroughly at EU-level. Consequently, they have never been specific targets of EU-policies. The EESC feels that the time has come for a deeper analysis and to look into how good regional governance by all stakeholders in these areas can be beneficial for their inhabitants and for the EU as a whole. A situation report on metropolitan areas can only be useful if it is based on reliable, comparable figures on a European scale. Such figures are, unfortunately, currently lacking. The EESC therefore believes that the European Union should ensure that these are provided. |
| --- | --- |

2.11

Metropolitan areas and their governance have never been discussed thoroughly at EU-level. Consequently, they have never been specific targets of EU-policies. The EESC feels that the time has come for a deeper analysis and to look into how good regional governance by all stakeholders in these areas can be beneficial for their inhabitants and for the EU as a whole. A situation report on metropolitan areas can only be useful if it is based on reliable, comparable figures on a European scale. Such figures are, unfortunately, currently lacking. The EESC therefore believes that the European Union should ensure that these are provided.

3.   Situation of metropolitan areas

| 3.1 | More than three quarters of Europe's population currently lives in urban or peri-urban areas. There is a direct link between the Lisbon Strategy and metropolitan areas. A large number of the factors underpinning future European competitiveness are to be found in these areas. Metropolitan areas transmit innovation and information to other European cities. The prosperity of metropolitan areas is essential to solving problems of social and territorial cohesion in their own areas and in other European cities and regions. |
| --- | --- |

3.1

More than three quarters of Europe's population currently lives in urban or peri-urban areas. There is a direct link between the Lisbon Strategy and metropolitan areas. A large number of the factors underpinning future European competitiveness are to be found in these areas. Metropolitan areas transmit innovation and information to other European cities. The prosperity of metropolitan areas is essential to solving problems of social and territorial cohesion in their own areas and in other European cities and regions.

| 3.2 | Metropolitan areas, in European as elsewhere in the world, are facing a number of major challenges: globalisation, which is linked to the integration of international markets in goods, services, capital, expertise and skilled and unskilled labour, leading to the rapid transformation of their manufacturing systems; sustainable development, which calls for prudent management of natural resources; social cohesion; quality of life; and territorial cohesion. |
| --- | --- |

3.2

Metropolitan areas, in European as elsewhere in the world, are facing a number of major challenges: globalisation, which is linked to the integration of international markets in goods, services, capital, expertise and skilled and unskilled labour, leading to the rapid transformation of their manufacturing systems; sustainable development, which calls for prudent management of natural resources; social cohesion; quality of life; and territorial cohesion.

| 3.2.1 | Many cities and metropolitan areas are successfully adapting their economic, social and institutional structures. These powerful urban areas are national and international communication hubs that are served by all forms of rapid transport and broadband telecommunications networks, and whose economy has long depended on diversification, in particular providing quality services to people and businesses. Industrial regions that were once in crisis are also excellent examples of this type of development. Lille, Barcelona and Bilbao exemplify this restructuring process. |
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3.2.1

Many cities and metropolitan areas are successfully adapting their economic, social and institutional structures. These powerful urban areas are national and international communication hubs that are served by all forms of rapid transport and broadband telecommunications networks, and whose economy has long depended on diversification, in particular providing quality services to people and businesses. Industrial regions that were once in crisis are also excellent examples of this type of development. Lille, Barcelona and Bilbao exemplify this restructuring process.

| 3.2.2 | Similar processes are underway in the ten new EU Member States, in particular in the metropolitan areas of Warsaw, Prague and Budapest. |
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3.2.2

Similar processes are underway in the ten new EU Member States, in particular in the metropolitan areas of Warsaw, Prague and Budapest.

| 3.3 | European regional policy has for years had the objective of improving the climate for growth, employment and competitiveness in the less developed regions. To that end, specific programmes have been set up and a fine-tuned system for allocating financial resources has been put in place. Most of the regions concerned have made economic progress, sometimes even substantial progress, as a result of these EU policies. |
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3.3

European regional policy has for years had the objective of improving the climate for growth, employment and competitiveness in the less developed regions. To that end, specific programmes have been set up and a fine-tuned system for allocating financial resources has been put in place. Most of the regions concerned have made economic progress, sometimes even substantial progress, as a result of these EU policies.

| 3.4 | The evaluation of regions in Europe has consequently been confined to an analysis of the regions that have benefited from the Structural Funds. |
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3.4

The evaluation of regions in Europe has consequently been confined to an analysis of the regions that have benefited from the Structural Funds.

| 3.5 | The relatively favourable or unfavourable economic and social trends in other regions cannot be ignored. The EESC believes that they must also be analysed in-depth at European level. Such an analysis is desirable anyway in view of the discussion on the Third Report on Regional Cohesion, which is intended to open up new avenues. It could also further our understanding of current economic trends and their impact on the way societies and living and working conditions adapt. Finally, such an analysis could enable some EU policies to be adjusted in order to provide adequate support for specific regional developments and requirements, including those in metropolitan areas. |
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3.5

The relatively favourable or unfavourable economic and social trends in other regions cannot be ignored. The EESC believes that they must also be analysed in-depth at European level. Such an analysis is desirable anyway in view of the discussion on the Third Report on Regional Cohesion, which is intended to open up new avenues. It could also further our understanding of current economic trends and their impact on the way societies and living and working conditions adapt. Finally, such an analysis could enable some EU policies to be adjusted in order to provide adequate support for specific regional developments and requirements, including those in metropolitan areas.

| 3.6 | It is significant that there is an ongoing debate – in centralised and decentralised countries alike – surrounding the new balance that is needed between centralisation and devolution. The authorities are looking at new approaches from both a bottom-up and a top-down perspective. Clearly, these are often difficult to implement because of governmental traditions and vested interests in the regions concerned. Despite some institutional logjams here and there, there is a clear trend towards recognising the need for integrated management of metropolitan areas, for the welfare and prosperity of citizens and businesses. |
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3.6

It is significant that there is an ongoing debate – in centralised and decentralised countries alike – surrounding the new balance that is needed between centralisation and devolution. The authorities are looking at new approaches from both a bottom-up and a top-down perspective. Clearly, these are often difficult to implement because of governmental traditions and vested interests in the regions concerned. Despite some institutional logjams here and there, there is a clear trend towards recognising the need for integrated management of metropolitan areas, for the welfare and prosperity of citizens and businesses.

| 3.7 | In Europe we can easily distinguish between several different categories of metropolitan area. On the one hand, we have very big metropolitan areas such as London, Paris, the Rhine-Ruhr, the Randstad and Madrid, with a population of over 5 million inhabitants; and on the other, a number of smaller but sometimes successful metropolitan areas with great development potential and ambition. Examples are those around the capital cities and major economic centres in nearly all the Member States. |
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3.7

In Europe we can easily distinguish between several different categories of metropolitan area. On the one hand, we have very big metropolitan areas such as London, Paris, the Rhine-Ruhr, the Randstad and Madrid, with a population of over 5 million inhabitants; and on the other, a number of smaller but sometimes successful metropolitan areas with great development potential and ambition. Examples are those around the capital cities and major economic centres in nearly all the Member States.

| 3.8 | As said earlier, some of these economic centres were previously depressed areas. They owe their renaissance to the joint efforts of private and public stakeholders in the region. It should also be said that the metropolitan areas in the new Member States are in a transitional phase, and are working on their comparative strengths to become competitive on international markets. |
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3.8

As said earlier, some of these economic centres were previously depressed areas. They owe their renaissance to the joint efforts of private and public stakeholders in the region. It should also be said that the metropolitan areas in the new Member States are in a transitional phase, and are working on their comparative strengths to become competitive on international markets.

| 3.9 | There are a growing number of these areas at European level. Since 2003 the German metropolitan areas have been working together on a project called ‘Regions of the Future’. In 2003, the British Government asked the relevant regions to define their strategies for becoming internationally competitive. The Danish Government is wholeheartedly behind the spectacular cross-border cooperation initiative to make Copenhagen and Malmö (Sweden) a major economic centre in the Baltic. In the Netherlands, a fairly recent phenomenon is the promotion of the Randstad as an international-scale metropolitan area. In Spain, the regeneration programmes for Barcelona and Bilbao reflect the same ambition. Other examples could be given. |
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3.9

There are a growing number of these areas at European level. Since 2003 the German metropolitan areas have been working together on a project called ‘Regions of the Future’. In 2003, the British Government asked the relevant regions to define their strategies for becoming internationally competitive. The Danish Government is wholeheartedly behind the spectacular cross-border cooperation initiative to make Copenhagen and Malmö (Sweden) a major economic centre in the Baltic. In the Netherlands, a fairly recent phenomenon is the promotion of the Randstad as an international-scale metropolitan area. In Spain, the regeneration programmes for Barcelona and Bilbao reflect the same ambition. Other examples could be given.

| 3.10 | Another factor which will have an evident impact on how governance is organised in metropolitan areas and on their ability to direct economic development is the increasing transfer of powers to the regions in the EU Member States. At the same time, some governments are taking a pro-active approach to the economic development of major cities. For example, a British Government initiative setting up a working party bringing together the 8 ‘core cities’, 9 regional development agencies and several ministerial departments in order to establish an action plan to improve the economic performance of the metropolitan areas and, consequently, the competitiveness of the country (6). In France, following the publication of a report on European cities (7), the government drew up a national strategy aimed at raising the profile of the French metropolises at European level (8). |
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3.10

Another factor which will have an evident impact on how governance is organised in metropolitan areas and on their ability to direct economic development is the increasing transfer of powers to the regions in the EU Member States. At the same time, some governments are taking a pro-active approach to the economic development of major cities. For example, a British Government initiative setting up a working party bringing together the 8 ‘core cities’, 9 regional development agencies and several ministerial departments in order to establish an action plan to improve the economic performance of the metropolitan areas and, consequently, the competitiveness of the country (6). In France, following the publication of a report on European cities (7), the government drew up a national strategy aimed at raising the profile of the French metropolises at European level (8).

| 3.11 | Recent history shows clearly that we are living in times in which a new attitude is emerging towards the development of the major urban areas. Where consultation arrangements exist, they are confined to the national level. Alongside these national arrangements, initiatives have been launched to promote European platforms for key urban development players. These include Eurocities, which focuses on the knowledge society, and the more recent METREX network of European Metropolitan Regions and Areas. Generally speaking, however, meetings and contacts are organised randomly. At the same time, a more favourable climate for more structured initiatives can be observed. |
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3.11

Recent history shows clearly that we are living in times in which a new attitude is emerging towards the development of the major urban areas. Where consultation arrangements exist, they are confined to the national level. Alongside these national arrangements, initiatives have been launched to promote European platforms for key urban development players. These include Eurocities, which focuses on the knowledge society, and the more recent METREX network of European Metropolitan Regions and Areas. Generally speaking, however, meetings and contacts are organised randomly. At the same time, a more favourable climate for more structured initiatives can be observed.

4.   Ongoing processes

| 4.1 | The process of metropolisation involves the multiplication of large conurbations and a higher concentration of people, activities and wealth creation within an expanding geographical area with no clearly defined physical boundaries. This growth often brings with it social and spatial fragmentation (social segregation, spatial specialisation, crime and a lack of security). Furthermore, unlike cities, the metropolis has no political institutions. It has to solve its problems through a series of negotiations between different stakeholders. Spatial fragmentation can slow down and hinder public and private investment. Consequently, it makes sense to have a regional policy that aims to reduce this spatial fragmentation by reconciling governance of the metropolitan areas with ongoing processes. The Barcelona and Stuttgart areas are positive examples of this. |
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4.1

The process of metropolisation involves the multiplication of large conurbations and a higher concentration of people, activities and wealth creation within an expanding geographical area with no clearly defined physical boundaries. This growth often brings with it social and spatial fragmentation (social segregation, spatial specialisation, crime and a lack of security). Furthermore, unlike cities, the metropolis has no political institutions. It has to solve its problems through a series of negotiations between different stakeholders. Spatial fragmentation can slow down and hinder public and private investment. Consequently, it makes sense to have a regional policy that aims to reduce this spatial fragmentation by reconciling governance of the metropolitan areas with ongoing processes. The Barcelona and Stuttgart areas are positive examples of this.

| 4.2 | Globalisation: European urban regions are structured according to processes and dynamics that exist increasingly at global level. Europe's major cities are hubs in a constantly evolving global network of metropolises. New York, London, Tokyo and Hong Kong, but also Frankfurt, Paris, the Randstad, Brussels, Milan and Madrid are foremost among these. These metropolises ‘steer’ the world economy through the international institutions, banks and large international corporations which have their command and control headquarters there and thanks to the power of information and communication technologies. In the next few years, the main Asian metropolises will also take their place in this global network. |
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4.2

Globalisation: European urban regions are structured according to processes and dynamics that exist increasingly at global level. Europe's major cities are hubs in a constantly evolving global network of metropolises. New York, London, Tokyo and Hong Kong, but also Frankfurt, Paris, the Randstad, Brussels, Milan and Madrid are foremost among these. These metropolises ‘steer’ the world economy through the international institutions, banks and large international corporations which have their command and control headquarters there and thanks to the power of information and communication technologies. In the next few years, the main Asian metropolises will also take their place in this global network.

| 4.3 | Europeanisation: the interactive process of adapting economic, social and environmental and spatial planning policies to European integration and enlargement, the completion of the single market (still ongoing), and the arrival of the euro and enlargement, will contribute even further to the integration and dispersion of economic activity throughout Europe. The more national borders are blurred, the more there will be a natural tendency to strengthen the economic poles across the continent. The gradual organisation of inter-regional poles and even cross-border poles (Copenhagen-Malmö, Dutch Limburg-Belgian Limburg-Aachen, the French and Belgian sides of the Lille metropolitan area) show that economic development will be increasingly blind to the often artificial political and administrative borders bequeathed by history. |
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4.3

Europeanisation: the interactive process of adapting economic, social and environmental and spatial planning policies to European integration and enlargement, the completion of the single market (still ongoing), and the arrival of the euro and enlargement, will contribute even further to the integration and dispersion of economic activity throughout Europe. The more national borders are blurred, the more there will be a natural tendency to strengthen the economic poles across the continent. The gradual organisation of inter-regional poles and even cross-border poles (Copenhagen-Malmö, Dutch Limburg-Belgian Limburg-Aachen, the French and Belgian sides of the Lille metropolitan area) show that economic development will be increasingly blind to the often artificial political and administrative borders bequeathed by history.

| 4.4 | Metropolitan areas are the main focal points of research, innovation and the creation of new activities. It is there where activities with high added value are centred, especially business services. The new information and communication technologies are also playing a key role here. Economic dynamism is concentrated mainly in metropolitan regions, which are focal points for innovation, the knowledge society and training. |
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4.4

Metropolitan areas are the main focal points of research, innovation and the creation of new activities. It is there where activities with high added value are centred, especially business services. The new information and communication technologies are also playing a key role here. Economic dynamism is concentrated mainly in metropolitan regions, which are focal points for innovation, the knowledge society and training.

| 4.5 | These areas are linked to each other by physical and virtual networks of all sorts, depending on the volume and significance of the economic clusters in the various regions. This process is tending to broaden and to deepen. EU transport policy (Trans-European Transport Networks) rightly encourages these networks, as does deregulation of the airline sector. |
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4.5

These areas are linked to each other by physical and virtual networks of all sorts, depending on the volume and significance of the economic clusters in the various regions. This process is tending to broaden and to deepen. EU transport policy (Trans-European Transport Networks) rightly encourages these networks, as does deregulation of the airline sector.

| 4.6 | The Lisbon Strategy for a knowledge-based competitive economy that takes account of social cohesion and sustainability is particularly important. Its implementation could herald a new mission for metropolitan areas. |
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4.6

The Lisbon Strategy for a knowledge-based competitive economy that takes account of social cohesion and sustainability is particularly important. Its implementation could herald a new mission for metropolitan areas.

| 4.7 | This new mission is partly an offshoot of the increasing importance of the network society, which creates a changing basis for prosperity, attracts new investments and is leading to new approaches to educating young people and to the labour market at large. Accordingly, there is an interaction between the recent interest in cities and metropolitan areas, and modern applied technology, particularly ICT (Information and Communication Technologies) and broadband internet networks, that has also a tremendous effect on people's daily lives and on business. ICTs are making a big impact on manufacturing and service structures. Consequently they also influence spatial planning and the way cities and metropolitan areas develop. |
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4.7

This new mission is partly an offshoot of the increasing importance of the network society, which creates a changing basis for prosperity, attracts new investments and is leading to new approaches to educating young people and to the labour market at large. Accordingly, there is an interaction between the recent interest in cities and metropolitan areas, and modern applied technology, particularly ICT (Information and Communication Technologies) and broadband internet networks, that has also a tremendous effect on people's daily lives and on business. ICTs are making a big impact on manufacturing and service structures. Consequently they also influence spatial planning and the way cities and metropolitan areas develop.

| 4.8 | The internationalisation of investment, the mobility of brainpower and the interaction of universities, technology institutes and the private sector could promote economic clusters, as in the famous Porter's Diamond model. This is a very important basis for the network society, in which metropolitan areas play a key role. |
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4.8

The internationalisation of investment, the mobility of brainpower and the interaction of universities, technology institutes and the private sector could promote economic clusters, as in the famous Porter's Diamond model. This is a very important basis for the network society, in which metropolitan areas play a key role.

| 4.9 | These metropolitan areas are also important centres for culture, tourism and leisure activities. Their architectural heritage is a major component of their history and identity. Their universities, libraries, museums, theatres, operas and concert halls play a key role in protecting and disseminating European culture and in creating and disseminating culture. It is also in metropolitan areas that major sporting events and concerts are held, pulling in crowds. |
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4.9

These metropolitan areas are also important centres for culture, tourism and leisure activities. Their architectural heritage is a major component of their history and identity. Their universities, libraries, museums, theatres, operas and concert halls play a key role in protecting and disseminating European culture and in creating and disseminating culture. It is also in metropolitan areas that major sporting events and concerts are held, pulling in crowds.

| 4.10 | The cosmopolitan nature of metropolitan areas is very important for the development of the media industry. The media industry (i.e. the press, publishing, radio, television, films, video, publicity, telecommunications) and the creative industries as a whole are a rapidly expanding sector of activity in these areas. |
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4.10

The cosmopolitan nature of metropolitan areas is very important for the development of the media industry. The media industry (i.e. the press, publishing, radio, television, films, video, publicity, telecommunications) and the creative industries as a whole are a rapidly expanding sector of activity in these areas.

| 4.11 | The various socio-economic groups and players and cultural organisations are joining forces to find new avenues for integration and participation. In parallel to the measures taken by the public authorities, civil society is playing an extremely important role in the urban dynamic. In many cases, the success of a metropolitan area is largely due to the collaboration and interaction of public and private stakeholders. |
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4.11

The various socio-economic groups and players and cultural organisations are joining forces to find new avenues for integration and participation. In parallel to the measures taken by the public authorities, civil society is playing an extremely important role in the urban dynamic. In many cases, the success of a metropolitan area is largely due to the collaboration and interaction of public and private stakeholders.

| 4.12 | This cooperation and the interaction of public and private interests are crucial in the context of metropolitan areas. Experience has shown that this can be achieved more readily and more productively in the major geographic areas rather than at national level. The metropolitan area tends to be the right level for establishing the planning objectives for an urban area with all stakeholders, and for putting in place the arrangements to achieve them. |
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4.12

This cooperation and the interaction of public and private interests are crucial in the context of metropolitan areas. Experience has shown that this can be achieved more readily and more productively in the major geographic areas rather than at national level. The metropolitan area tends to be the right level for establishing the planning objectives for an urban area with all stakeholders, and for putting in place the arrangements to achieve them.

| 4.13 | Unlike the trend in the US, European cities are now developing both as cities and conurbations. City centres still serve as hubs of activity and meeting points. Metropolises also play a crucial part in consolidating a European model of society. |
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4.13

Unlike the trend in the US, European cities are now developing both as cities and conurbations. City centres still serve as hubs of activity and meeting points. Metropolises also play a crucial part in consolidating a European model of society.

| 4.14 | The European economy is in a major period of transition with enlargement and the integration of the single market. This involves a combination of competition and partnership between regions, and especially between metropolitan areas, which play a decisive role in some complex games. The lack of government at metropolitan area level is a weakness when it comes to establishing and implementing competitive economic development strategies and partnerships. |
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4.14

The European economy is in a major period of transition with enlargement and the integration of the single market. This involves a combination of competition and partnership between regions, and especially between metropolitan areas, which play a decisive role in some complex games. The lack of government at metropolitan area level is a weakness when it comes to establishing and implementing competitive economic development strategies and partnerships.

5.   Specific social aspects

| 5.1 | Major cities suffer more acutely than other areas from serious problems of social cohesion and territorial imbalance. Metropolitan areas could provide a good example of how to restore social and territorial equilibrium in the European Union. However, such improvements can only be achieved if accompanied by sustainable economic development. |
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5.1

Major cities suffer more acutely than other areas from serious problems of social cohesion and territorial imbalance. Metropolitan areas could provide a good example of how to restore social and territorial equilibrium in the European Union. However, such improvements can only be achieved if accompanied by sustainable economic development.

| 5.2 | Each metropolitan area has its own profile. But notwithstanding differences in culture and in social and economic development, similar phenomena can be observed all over Europe. Fortunately, public and private players are in most cases becoming increasingly aware of the need to improve living and working conditions for all. It must be admitted, however, that there is often still a long way to go. |
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5.2

Each metropolitan area has its own profile. But notwithstanding differences in culture and in social and economic development, similar phenomena can be observed all over Europe. Fortunately, public and private players are in most cases becoming increasingly aware of the need to improve living and working conditions for all. It must be admitted, however, that there is often still a long way to go.

| 5.3 | In those cases where economic restructuring has taken place or is taking place at the moment, the transition from one business cycle to the next phase of this process has led or is still leading to substantial unemployment, in particular among young people and people over 50. Such a process affects metropolitan areas. It has also to be noted that this process is often leading to the creation of completely new activities with new employment, better equipped for the future. |
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5.3

In those cases where economic restructuring has taken place or is taking place at the moment, the transition from one business cycle to the next phase of this process has led or is still leading to substantial unemployment, in particular among young people and people over 50. Such a process affects metropolitan areas. It has also to be noted that this process is often leading to the creation of completely new activities with new employment, better equipped for the future.

| 5.4 | Economic restructuring also involves relocation, particularly of labour, and this tends to cause structural unemployment in regions that are dependent on one type of industry. This can also happen in metropolitan areas, despite the fact that they are often able to change their economic base. This modernisation process often sees the switch from a heavy industrial base to a society based on services and hi-tech. Examples of this are Bilbao, Lille and the Rhine-Ruhr. |
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5.4

Economic restructuring also involves relocation, particularly of labour, and this tends to cause structural unemployment in regions that are dependent on one type of industry. This can also happen in metropolitan areas, despite the fact that they are often able to change their economic base. This modernisation process often sees the switch from a heavy industrial base to a society based on services and hi-tech. Examples of this are Bilbao, Lille and the Rhine-Ruhr.

| 5.5 | The EU is experiencing an ever-increasing influx of immigrants from third countries. Although there are remarkable differences in the way countries and cities integrate immigrants, Europe as a whole is undeniably facing a tremendous challenge in this respect and metropolitan areas are a very special case in point. The EESC has on several occasions called on the EU to draw up common immigration and asylum legislation. The EU will have to absorb new economic migrants for demographic, social and employment-related reasons (9). Such migrants will include both highly skilled and unskilled people. Community legislation must promote legal immigration and curb illegal immigration. Moreover, the EU must encourage the integration of immigrants into the host society and do its best to prevent discrimination (10). |
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5.5

The EU is experiencing an ever-increasing influx of immigrants from third countries. Although there are remarkable differences in the way countries and cities integrate immigrants, Europe as a whole is undeniably facing a tremendous challenge in this respect and metropolitan areas are a very special case in point. The EESC has on several occasions called on the EU to draw up common immigration and asylum legislation. The EU will have to absorb new economic migrants for demographic, social and employment-related reasons (9). Such migrants will include both highly skilled and unskilled people. Community legislation must promote legal immigration and curb illegal immigration. Moreover, the EU must encourage the integration of immigrants into the host society and do its best to prevent discrimination (10).

| 5.6 | In many cities and metropolitan areas, there is a concentration of immigrants who find it extremely difficult to find good jobs owing to their lack of professional qualifications, poor language knowledge, social discrimination and lack of a proper integration policy. This leads to inequalities in income and, consequently, in access to housing and public services, including schooling and health care. Particular attention should be given to poor areas that are seriously affected by this issue. |
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5.6

In many cities and metropolitan areas, there is a concentration of immigrants who find it extremely difficult to find good jobs owing to their lack of professional qualifications, poor language knowledge, social discrimination and lack of a proper integration policy. This leads to inequalities in income and, consequently, in access to housing and public services, including schooling and health care. Particular attention should be given to poor areas that are seriously affected by this issue.

| 5.7 | Metropolisation often exacerbates social inequalities and spatial disparities. Less-favoured social groups, e.g. unemployed young people and elderly people on low incomes, tend to gather in certain areas, leading to a concentration of disadvantages. The exclusion of less-favoured sectors of the population and the poor quality of public services in these areas feeds on itself, eventually becoming a trap from which it is almost impossible to escape. Often there is mounting urban exclusion, even where urban regeneration policies have been in place for years. Large-scale action coordinated at metropolitan area level is needed if implementation is to have the best chance of success. |
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5.7

Metropolisation often exacerbates social inequalities and spatial disparities. Less-favoured social groups, e.g. unemployed young people and elderly people on low incomes, tend to gather in certain areas, leading to a concentration of disadvantages. The exclusion of less-favoured sectors of the population and the poor quality of public services in these areas feeds on itself, eventually becoming a trap from which it is almost impossible to escape. Often there is mounting urban exclusion, even where urban regeneration policies have been in place for years. Large-scale action coordinated at metropolitan area level is needed if implementation is to have the best chance of success.

| 5.8 | Law and order issues in metropolitan areas have become a worrying phenomenon, and can have serious repercussions on social cohesion and balanced development. Paradoxically, the assets and demographic features of metropolitan areas make them particularly vulnerable to certain types of risk. On the one hand, the way they operate as a system can be weakened by any attack connected – however marginally – to law and order issues on one of their vital components. On the other, metropolitan features encourage flows of people and goods that are conducive to illegal activity linked to national or international criminal networks. They can facilitate the establishment of activist groups by offering anonymity, logistical support and a recruitment base. The nerve centres of metropolitan areas are a particular target for new forms of terrorism. These trends are worrying in the current international political situation. |
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5.8

Law and order issues in metropolitan areas have become a worrying phenomenon, and can have serious repercussions on social cohesion and balanced development. Paradoxically, the assets and demographic features of metropolitan areas make them particularly vulnerable to certain types of risk. On the one hand, the way they operate as a system can be weakened by any attack connected – however marginally – to law and order issues on one of their vital components. On the other, metropolitan features encourage flows of people and goods that are conducive to illegal activity linked to national or international criminal networks. They can facilitate the establishment of activist groups by offering anonymity, logistical support and a recruitment base. The nerve centres of metropolitan areas are a particular target for new forms of terrorism. These trends are worrying in the current international political situation.

| 5.9 | Environmental protection and compliance with sustainable development objectives are another challenge facing metropolitan areas. They must respect international commitments: Kyoto Protocol, Agenda 21, Maastricht Treaty, and the 1993 and 1998 Community programmes for sustainable development. To do this, they need to reconcile economic development and environmental protection, which can be mutually reinforced by organising urban development (transport systems, establishment of centres of habitation, waste and waste water management, noise reduction, protection of city centres, and of the natural and agricultural heritage, etc.). |
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5.9

Environmental protection and compliance with sustainable development objectives are another challenge facing metropolitan areas. They must respect international commitments: Kyoto Protocol, Agenda 21, Maastricht Treaty, and the 1993 and 1998 Community programmes for sustainable development. To do this, they need to reconcile economic development and environmental protection, which can be mutually reinforced by organising urban development (transport systems, establishment of centres of habitation, waste and waste water management, noise reduction, protection of city centres, and of the natural and agricultural heritage, etc.).

| 5.10 | The fast growth of a number of metropolitan areas in combination with the widening and deepening of their economies is challenging for infrastructure and for public and private transport. For environmental and economic reasons, congestion calls for hi-tech solutions. All environmental policies are costly for the public and private sectors. Public funds are, as a rule, insufficient, and the success of public-private partnerships has so far been limited. |
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5.10

The fast growth of a number of metropolitan areas in combination with the widening and deepening of their economies is challenging for infrastructure and for public and private transport. For environmental and economic reasons, congestion calls for hi-tech solutions. All environmental policies are costly for the public and private sectors. Public funds are, as a rule, insufficient, and the success of public-private partnerships has so far been limited.

| 5.11 | Shortcomings in metropolitan areas are aggravated when the administrative management of these areas does not keep pace with economic development and the increase in population, housing and commuting. Often the administrative management within metropolitan areas still reflects bygone times. This in turn hampers effective government and, consequently, effective economic policy. Proper coordination between the administrative management and economic stakeholders and, in broader terms, between the public and private sectors is a prerequisite for good governance in metropolitan areas. |
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5.11

Shortcomings in metropolitan areas are aggravated when the administrative management of these areas does not keep pace with economic development and the increase in population, housing and commuting. Often the administrative management within metropolitan areas still reflects bygone times. This in turn hampers effective government and, consequently, effective economic policy. Proper coordination between the administrative management and economic stakeholders and, in broader terms, between the public and private sectors is a prerequisite for good governance in metropolitan areas.

| 5.12 | In this respect situations vary widely. Sometimes the metropolitan area is smaller than the administrative region of which it is a part. More often it embraces more than one administrative region. Nearly always there are more municipalities or other administrative units within one metropolitan area. Most public (regional and national) authorities consider these situations as a matter of fact and not as a subject for discussion. |
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5.12

In this respect situations vary widely. Sometimes the metropolitan area is smaller than the administrative region of which it is a part. More often it embraces more than one administrative region. Nearly always there are more municipalities or other administrative units within one metropolitan area. Most public (regional and national) authorities consider these situations as a matter of fact and not as a subject for discussion.

| 5.13 | Each government has its own method of looking for solutions. Big cities are trying to learn from each other, but there is not enough consultation and exchange at EU-level to promote benchmarks or good practices. |
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5.13

Each government has its own method of looking for solutions. Big cities are trying to learn from each other, but there is not enough consultation and exchange at EU-level to promote benchmarks or good practices.

| 5.14 | Although the abovementioned phenomena are characteristic of metropolitan areas, there are substantial differences in the way individual regions handle them. There are outstanding examples in which the regional government, as a rule supported by the national government, together with the private sector and organised civil society, are changing the course of events and are creating a new pattern for the future. In realising such policies the social and economic conditions are improving and such regions are visibly becoming more competitive. The European Union should capitalise on such examples by setting up consultation rounds to identify best practices and discuss how the Union can use the means at its disposal for improvement. |
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5.14

Although the abovementioned phenomena are characteristic of metropolitan areas, there are substantial differences in the way individual regions handle them. There are outstanding examples in which the regional government, as a rule supported by the national government, together with the private sector and organised civil society, are changing the course of events and are creating a new pattern for the future. In realising such policies the social and economic conditions are improving and such regions are visibly becoming more competitive. The European Union should capitalise on such examples by setting up consultation rounds to identify best practices and discuss how the Union can use the means at its disposal for improvement.

6.   Data on European regions and metropolitan areas

| 6.1 | The European statistical system is driven by European policies. Hence, we know the number of cows and pigs per region thanks to the CAP. But we do not know the employment statistics or added value per sector in big cities and their spheres of economic influence because there is no relevant policy and because Europe has until recently devoted to few resources to urban statistics. Eurostat's Cities and Regions unit consists of only 5 people. Eurostat's resources are not at all commensurate with its remit. |
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6.1

The European statistical system is driven by European policies. Hence, we know the number of cows and pigs per region thanks to the CAP. But we do not know the employment statistics or added value per sector in big cities and their spheres of economic influence because there is no relevant policy and because Europe has until recently devoted to few resources to urban statistics. Eurostat's Cities and Regions unit consists of only 5 people. Eurostat's resources are not at all commensurate with its remit.

| 6.2 | Comparative socio-economic studies of metropolitan regions covering the whole of Europe carried out by institutions involved in economic development and the promotion of the regions, universities, consultants or the European Commission are often nothing more than vague and incomplete descriptions. The fact is, they are based on the regional statistics published by Eurostat. These have the advantage of being harmonised at European level. However, they also have a major drawback: the regional division used by Eurostat, the Nomenclature of Statistical Territorial Units (NUTS), is a patchwork of national administrative units. The divisions reflect the political and administrative history of each country. With a few exceptions, they are geographically inadequate for a reliable picture and comparison of the economic, social and environmental situation in metropolitan areas at European level. The NUTS division was not designed to do this. |
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6.2

Comparative socio-economic studies of metropolitan regions covering the whole of Europe carried out by institutions involved in economic development and the promotion of the regions, universities, consultants or the European Commission are often nothing more than vague and incomplete descriptions. The fact is, they are based on the regional statistics published by Eurostat. These have the advantage of being harmonised at European level. However, they also have a major drawback: the regional division used by Eurostat, the Nomenclature of Statistical Territorial Units (NUTS), is a patchwork of national administrative units. The divisions reflect the political and administrative history of each country. With a few exceptions, they are geographically inadequate for a reliable picture and comparison of the economic, social and environmental situation in metropolitan areas at European level. The NUTS division was not designed to do this.

| 6.3 | Eurostat statistics do not, then, make it possible to track population trends, activities, unemployment or production in metropolitan areas, nor do they provide for any reliable comparison of strategic indicators such as: population growth rates, production value added, employment, unemployment or overall productivity per job. An analysis of the results of studies into metropolitan areas carried out by private consultants or by national public institutions shows that the lack of any reliable, geographically comparable figures can lead to incorrect or even contradictory conclusions regarding the socio-economic trends that have been ‘observed’ in European metropolitan areas (e.g. with regard to productivity trends within a single region). |
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6.3

Eurostat statistics do not, then, make it possible to track population trends, activities, unemployment or production in metropolitan areas, nor do they provide for any reliable comparison of strategic indicators such as: population growth rates, production value added, employment, unemployment or overall productivity per job. An analysis of the results of studies into metropolitan areas carried out by private consultants or by national public institutions shows that the lack of any reliable, geographically comparable figures can lead to incorrect or even contradictory conclusions regarding the socio-economic trends that have been ‘observed’ in European metropolitan areas (e.g. with regard to productivity trends within a single region).

| 6.4 | The absence of data on the socio-economic evolution of regions and metropolitan areas in Europe is a handicap for two main reasons: |
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6.4

The absence of data on the socio-economic evolution of regions and metropolitan areas in Europe is a handicap for two main reasons:

| 6.4.1 | Metropolitan areas are the engine rooms of growth. The economic activity they generate and the resulting advantages spread to other urban centres in each country. In order to make the most of the constraints and opportunities of the changing international environment, the metropolitan areas need a continually updated performance assessment at European level. |
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6.4.1

Metropolitan areas are the engine rooms of growth. The economic activity they generate and the resulting advantages spread to other urban centres in each country. In order to make the most of the constraints and opportunities of the changing international environment, the metropolitan areas need a continually updated performance assessment at European level.

| 6.4.2 | It would also be desirable to have reliable analyses and comparisons at European level on important aspects, including problems linked to immigration, job quality, poverty and exclusion, the environment, security and others. |
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6.4.2

It would also be desirable to have reliable analyses and comparisons at European level on important aspects, including problems linked to immigration, job quality, poverty and exclusion, the environment, security and others.

| 6.5 | Over the last few decades, the US has been producing a large number of up-to-date, comparable data on its 276 metropolitan areas and these are freely available on the Internet (11). In Europe, since every country has its own definition of a ‘town’ or ‘city’ (and sometimes metropolis), it is naturally more difficult to agree on a common definition of a metropolitan area. Given that, with regard to implementation of the Lisbon Strategy, it is now important to have reliable, comparable data on European metropolitan areas, the EESC believes the time has come for the latter to defined by Eurostat in cooperation with national statistics offices, and for a large quantity of data to be produced within these confines. |
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6.5

Over the last few decades, the US has been producing a large number of up-to-date, comparable data on its 276 metropolitan areas and these are freely available on the Internet (11). In Europe, since every country has its own definition of a ‘town’ or ‘city’ (and sometimes metropolis), it is naturally more difficult to agree on a common definition of a metropolitan area. Given that, with regard to implementation of the Lisbon Strategy, it is now important to have reliable, comparable data on European metropolitan areas, the EESC believes the time has come for the latter to defined by Eurostat in cooperation with national statistics offices, and for a large quantity of data to be produced within these confines.

| 6.6 | The European Commission's Urban Audit II, now underway, will produce data on the living conditions of people in 258 cities and conurbations. This project is an important step forward in terms of informing the debate on social cohesion. However, it will not deliver comparable Europe-wide socio-economic indicators on metropolitan areas. The indicators are assessed in terms of the cities and conurbations of each country as defined nationally. Moreover, the indicators for London, Paris and Berlin will be evaluated within the boundaries of the respective administrative regions (Greater London, Île-de-France and Berlin Land). |
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6.6

The European Commission's Urban Audit II, now underway, will produce data on the living conditions of people in 258 cities and conurbations. This project is an important step forward in terms of informing the debate on social cohesion. However, it will not deliver comparable Europe-wide socio-economic indicators on metropolitan areas. The indicators are assessed in terms of the cities and conurbations of each country as defined nationally. Moreover, the indicators for London, Paris and Berlin will be evaluated within the boundaries of the respective administrative regions (Greater London, Île-de-France and Berlin Land).

| 6.7 | The aim of the ESPON project (European spatial planning observation network) is to gain a better knowledge of land use. But it is hampered in particular by the lack of economic data at local authority level or at NUTS 3 level throughout the EU. The merit of the project is that it shows up the many shortcomings of the European statistical system. |
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6.7

The aim of the ESPON project (European spatial planning observation network) is to gain a better knowledge of land use. But it is hampered in particular by the lack of economic data at local authority level or at NUTS 3 level throughout the EU. The merit of the project is that it shows up the many shortcomings of the European statistical system.

| 6.8 | All these observations highlight the fact that, if Eurostat is to be able to produce reliable, comparable urban and metropolitan data, it must have the extra budgetary and human resources needed to achieve this. |
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6.8

All these observations highlight the fact that, if Eurostat is to be able to produce reliable, comparable urban and metropolitan data, it must have the extra budgetary and human resources needed to achieve this.

| 6.9 | A recent study presenting data from the European Union Labour Force Survey, carried out in metropolitan areas with a population of over 1 million in North Western Europe, is worth reading (12). It shows that for the larger metropolitan areas, demarcated according to common criteria, it is possible to produce at a marginal cost a great deal of comparable, European socio-economic data by using an annual survey carried out by the national statistics offices and coordinated by Eurostat. |
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6.9

A recent study presenting data from the European Union Labour Force Survey, carried out in metropolitan areas with a population of over 1 million in North Western Europe, is worth reading (12). It shows that for the larger metropolitan areas, demarcated according to common criteria, it is possible to produce at a marginal cost a great deal of comparable, European socio-economic data by using an annual survey carried out by the national statistics offices and coordinated by Eurostat.

7.   Conclusions and recommendations

| 7.1 | The last decade has seen a number of analyses and discussions in several Member States and at regional level regarding the new phenomenon of metropolitan areas in Europe. Although these areas are now more visible at national and international level than was previously the case, their role in implementing the Lisbon Strategy has yet to be recognised. |
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7.1

The last decade has seen a number of analyses and discussions in several Member States and at regional level regarding the new phenomenon of metropolitan areas in Europe. Although these areas are now more visible at national and international level than was previously the case, their role in implementing the Lisbon Strategy has yet to be recognised.

| 7.2 | Metropolitan areas are crucial for meeting the economic, social and environmental objectives of the Lisbon Strategy and for training, research, innovation, cutting-edge technology, the creation of new activities and the promotion of entrepreneurship. They are also the main transport and telecommunication hubs, making it easier to set up networks of businesses, universities and research centres. The EESC wishes to stress that a more effective mobilisation of the potential for economic growth in Europe depends on the active support of all the public and private stakeholders who are striving to achieve sustainable economic development in metropolitan areas. In other words, given the role played by metropolitan areas in Europe, the objectives of the Lisbon Strategy cannot be achieved unless they are achieved first in metropolitan areas. |
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7.2

Metropolitan areas are crucial for meeting the economic, social and environmental objectives of the Lisbon Strategy and for training, research, innovation, cutting-edge technology, the creation of new activities and the promotion of entrepreneurship. They are also the main transport and telecommunication hubs, making it easier to set up networks of businesses, universities and research centres. The EESC wishes to stress that a more effective mobilisation of the potential for economic growth in Europe depends on the active support of all the public and private stakeholders who are striving to achieve sustainable economic development in metropolitan areas. In other words, given the role played by metropolitan areas in Europe, the objectives of the Lisbon Strategy cannot be achieved unless they are achieved first in metropolitan areas.

| 7.3 | One of the main reasons this development has not attracted sufficient government attention is the fact that the boundaries of the political-administrative regions only rarely correspond to the geographical boundaries of metropolitan areas. As a result, apart from a few exceptions, there is no reliable or comparable data on a European scale that would enable the socio-economic situation and dynamics at work in metropolitan areas to be described. |
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7.3

One of the main reasons this development has not attracted sufficient government attention is the fact that the boundaries of the political-administrative regions only rarely correspond to the geographical boundaries of metropolitan areas. As a result, apart from a few exceptions, there is no reliable or comparable data on a European scale that would enable the socio-economic situation and dynamics at work in metropolitan areas to be described.

| 7.4 | The EESC stresses that it is in the interests of the Union that:






  — | the metropolitan areas in the 25 EU Member States should be defined; |
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7.4

The EESC stresses that it is in the interests of the Union that:

—

the metropolitan areas in the 25 EU Member States should be defined;

| — | a set of relevant data on such areas should be produced annually, in particular through the European Labour Force Surveys; |
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a set of relevant data on such areas should be produced annually, in particular through the European Labour Force Surveys;

| — | the main Lisbon Strategy indicators should be evaluated for these areas; |
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the main Lisbon Strategy indicators should be evaluated for these areas;

| — | clusters of activity with high value added should be identified within these areas; |
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—

clusters of activity with high value added should be identified within these areas;

| — | the Commission should report regularly on the socio-economic situation of metropolitan areas and their ranking. |
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—

the Commission should report regularly on the socio-economic situation of metropolitan areas and their ranking.

| 7.5 | Producing such information and making it available for all should:






  — | contribute towards the recognition of metropolitan areas and provide more in-depth knowledge of their social, economic and environmental situation; |
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7.5

Producing such information and making it available for all should:

—

contribute towards the recognition of metropolitan areas and provide more in-depth knowledge of their social, economic and environmental situation;

| — | make it easier to assess the strengths and weaknesses of these areas on a European scale; |
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—

make it easier to assess the strengths and weaknesses of these areas on a European scale;

| — | improve the definition and implementation of both European and national policies, adapting them to the specific characteristics of these areas; |
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—

improve the definition and implementation of both European and national policies, adapting them to the specific characteristics of these areas;

| — | provide local and regional authorities with an assessment of the competitive ranking of their areas on a European scale. Today such assessments are either non-existent or drawn up at huge expense on the basis of incomplete information; |
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—

provide local and regional authorities with an assessment of the competitive ranking of their areas on a European scale. Today such assessments are either non-existent or drawn up at huge expense on the basis of incomplete information;

| — | enrich the debate on European regional policy by facilitating dialogue between all the parties concerned on the basis of objective information; |
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—

enrich the debate on European regional policy by facilitating dialogue between all the parties concerned on the basis of objective information;

| — | provide the private sector with information which could prove useful when defining business strategies. |
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—

provide the private sector with information which could prove useful when defining business strategies.

| 7.6 | The EESC strongly supports the proposal made by METREX in 2003 to create a European programme for metropolitan areas (13). This programme – called METROPOLITAN - could be a forum for meetings and discussions. It could also include working parties tasked with identifying and disseminating best practice in the areas addressed in this opinion. |
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7.6

The EESC strongly supports the proposal made by METREX in 2003 to create a European programme for metropolitan areas (13). This programme – called METROPOLITAN - could be a forum for meetings and discussions. It could also include working parties tasked with identifying and disseminating best practice in the areas addressed in this opinion.

| 7.7 | The EESC welcomes the importance given to ‘competitiveness’ and the link established between the recently framed regional policy and the Lisbon Strategy in the Third Report on economic and social cohesion, which has special significance for metropolitan areas. For these areas, certain objectives under the titles ‘competitiveness’ and ‘knowledge’ could be supported through the European Regional Development Fund. |
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7.7

The EESC welcomes the importance given to ‘competitiveness’ and the link established between the recently framed regional policy and the Lisbon Strategy in the Third Report on economic and social cohesion, which has special significance for metropolitan areas. For these areas, certain objectives under the titles ‘competitiveness’ and ‘knowledge’ could be supported through the European Regional Development Fund.

| 7.8 | The EESC believes it is essential for a ‘metropolitan areas’ unit to be set up within Eurostat, which would be responsible for producing the aforementioned data each year. |
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7.8

The EESC believes it is essential for a ‘metropolitan areas’ unit to be set up within Eurostat, which would be responsible for producing the aforementioned data each year.

| 7.9 | The possible difficulties in defining the geographical boundaries of all the metropolitan areas and producing comparable information and data cannot be allowed to justify inaction. Consequently, the EESC suggests that, in line with the recommendations put forward above, a pilot project should be set up in a limited number of metropolitan areas as soon as possible. It also suggests that this pilot programme should be carried out in partnership with DG Regional Policy, Eurostat, the national statistics offices and the metropolitan areas concerned. |
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7.9

The possible difficulties in defining the geographical boundaries of all the metropolitan areas and producing comparable information and data cannot be allowed to justify inaction. Consequently, the EESC suggests that, in line with the recommendations put forward above, a pilot project should be set up in a limited number of metropolitan areas as soon as possible. It also suggests that this pilot programme should be carried out in partnership with DG Regional Policy, Eurostat, the national statistics offices and the metropolitan areas concerned.

| 7.10 | The EESC hopes that the European institutions will agree with the broad thrust of this opinion. The EESC believes that, against the background of the establishment of a forum bringing together metropolitan areas and the Commission, the situation of these areas should also be on the agenda of the Competitiveness Council and the informal Council for Regional Planning and Urban Issues. |
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7.10

The EESC hopes that the European institutions will agree with the broad thrust of this opinion. The EESC believes that, against the background of the establishment of a forum bringing together metropolitan areas and the Commission, the situation of these areas should also be on the agenda of the Competitiveness Council and the informal Council for Regional Planning and Urban Issues.

Brussels, 1 July 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

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(1)  In its opinion of 14 May 1998 on Towards an urban agenda in the European Union, the Committee of the Regions established the notion of a Functional Urban Region to describe a metropolis and its area of influence. It is accepted that cities have become agglomerations and then metropolitan areas which then extended to form urban regions. This concept also underlines the mutual dependence between the territorial units that make up the urban region: labour market, home-work commute, transport networks, shopping centres, localisation of new activity, real estate, parks and leisure facilities, protection of the environment, etc.

1

(2)  For example, 500,000 inhabitants (METREX threshold). A list of European agglomerations with over 500,000 inhabitants is appended.

2

(3)  For example, 10 % of the active population with a job in the central core, resident in the peripheral municipalities (GEMACA threshold).

3

(4)  The Randstad is made up of the urban agglomerations of Amsterdam, The Hague, Rotterdam and Utrecht. The Rhine-Ruhr region includes the urban agglomerations of Bonn, Cologne, Düsseldorf, Duisburg, Essen and Dortmund. The Vienna-Bratislava region comprises the agglomerations of Vienna and Bratislava. The Oresund region is made up of the agglomerations of Copenhagen and Malmö, while the Franco-Belgian Lille region has four medium-sized cities and a large number of smaller towns and districts.

4

(5)  Examples include London, which has 7,400,000 inhabitants in the administrative region (NUTS 2) and 13,230,000 in the metropolitan area, and Département du Nord (NUTS 3), which has 2,600,000 inhabitants and 970,000 in the French part of the metropolitan area of Lille.

5

(6)  Cities, regions and competitiveness, Office of the Deputy Prime Minister and other public partners, June 2003.

6

(7)  Les villes européennes, analyse comparative – Celine Rozenblat, Patricia Cicille (DATAR 2003).

7

(8)  www.datar.gouv.fr - CIADT of 13 December 2003.

8

(9)  COM(2003) 336 final – Communication from the Commission on immigration, integration and employment.

9

(10)  EESC opinion on immigration, integration and employment, OJ C 80 of 30.03.2004, p. 92.

10

(11)  http://data.bls/gov/servlet/SurveyOutputSerlet

11

(12)  Study carried out as part of INTERREG II by GEMACA (Group for European Metropolitan Comparative Analysis). Published in Les Cahiers de l'IAURIF No 135; www.iaurif.org/en/doc/studies/cahiers/cahier 135/index.htm

12

(13)  METREX – The network of European Regions and Areas – main declared objectives for the METROPOLITAN European programme:

13

| 1 – | recognise the important role of metropolises in Europe |
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1 –

recognise the important role of metropolises in Europe

| 2 – | support the creation of effective metropolitan governance |
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2 –

support the creation of effective metropolitan governance

| 3 – | support the definition by all stakeholders of integrated metropolitan strategies |
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3 –

support the definition by all stakeholders of integrated metropolitan strategies

| 4 – | support metropolitan policies to boost competitiveness and social and territorial cohesion. |
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4 –

support metropolitan policies to boost competitiveness and social and territorial cohesion.

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