# Official Journal C 159/2019

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 159 |
| | |
| English edition | Information and Notices | Volume 6210 May 2019 |

ISSN 1977-091X

Official Journal

of the European Union

C 159

English edition

Information and Notices

Volume 6210 May 2019

---

| Contents | page |
| --- | --- |
| | I   Resolutions, recommendations and opinions |
| | OPINIONS |
| | European Economic and Social Committee |
| 2019/C 159/01 | Opinion of the European Economic and Social Committee on Social dialogue for innovation in digital economy(own-initiative opinion) | 1 |
| | OPINIONS |
| 2019/C 159/02 | Opinion of the European Economic and Social Committee on Women in the Western Balkans (own-initiative opinion) | 7 |
| 2019/C 159/03 | Opinion of the European Economic and Social Committee on Reforming the WTO to adapt to developments in world trade(own-initiative opinion) | 15 |
| 2019/C 159/04 | Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements (exploratory opinion requested by the European Parliament) | 28 |

Contents

page

I   Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

2019/C 159/01

Opinion of the European Economic and Social Committee on Social dialogue for innovation in digital economy(own-initiative opinion)

1

OPINIONS

2019/C 159/02

Opinion of the European Economic and Social Committee on Women in the Western Balkans (own-initiative opinion)

7

2019/C 159/03

Opinion of the European Economic and Social Committee on Reforming the WTO to adapt to developments in world trade(own-initiative opinion)

15

2019/C 159/04

Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements (exploratory opinion requested by the European Parliament)

28

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| | III   Preparatory acts |
| --- | --- |
| | EUROPEAN ECONOMIC AND SOCIAL COMMITTEE |
| | European Economic and Social Committee |
| 2019/C 159/05 | Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements [COM(2018) 329 final — 2018/0164 (CNS)] | 38 |
| | EUROPEAN ECONOMIC AND SOCIAL COMMITTEE |
| 2019/C 159/06 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards the adjustment of annual pre-financing for the years 2021 to 2023(COM(2018) 614 final — 2018/0322 (COD)) | 45 |
| 2019/C 159/07 | Opinion of the European Economic and Social Committee on Recommendation for a Council Recommendation on the economic policy of the euro area(COM(2018) 759 final) | 49 |
| 2019/C 159/08 | Opinion of the European Economic and Social Committee on Proposal for a Directive of the European Parliament and of the Council on common standards and procedures in Member States for returning illegally staying third-country nationals. A contribution from the European Commission to the Leaders meeting in Salzburg on 19-20 September 2018’ (COM(2018) 634 final — 2018/0329 COD) | 53 |
| 2019/C 159/09 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council laying down conservation and control measures applicable in the Regulatory Area of the Northwest Atlantic Fisheries Organisation and repealing Council Regulation (EC) No 2115/2005 and Council Regulation (EC) No 1386/2007(COM(2018) 577 final — 2018/0304 (COD)) | 60 |
| | European Economic and Social Committee |
| 2019/C 159/10 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council establishing the European Cybersecurity Industrial, Technology and Research Competence Centre and the Network of National Coordination Centres(COM(2018) 630 final — 2018/0328 (COD)) | 63 |
| | EUROPEAN ECONOMIC AND SOCIAL COMMITTEE |
| 2019/C 159/11 | Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council on adapting Directive 2012/27/EU of the European Parliament and of the Council on energy efficiency [as amended by Directive (EU) 2018/2002] and Regulation (EU) 2018/1999 of the European Parliament and of the Council [Governance of the Energy Union], by reason of the withdrawal of the United Kingdom from the European Union(COM(2018) 744 final — 2018/0385 (COD)) | 68 |
| 2019/C 159/12 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 1305/2013 and (EU) No 1307/2013 as regards certain rules on direct payments and support for rural development in respect of the years 2019 and 2020(COM(2018) 817 final — 2018/0414(COD)) | 71 |

III   Preparatory acts

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

European Economic and Social Committee

2019/C 159/05

Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements [COM(2018) 329 final — 2018/0164 (CNS)]

[COM(2018) 329 final — 2018/0164 (CNS)]

38

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

2019/C 159/06

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards the adjustment of annual pre-financing for the years 2021 to 2023(COM(2018) 614 final — 2018/0322 (COD))

(COM(2018) 614 final — 2018/0322 (COD))

45

2019/C 159/07

Opinion of the European Economic and Social Committee on Recommendation for a Council Recommendation on the economic policy of the euro area(COM(2018) 759 final)

(COM(2018) 759 final)

49

2019/C 159/08

Opinion of the European Economic and Social Committee on Proposal for a Directive of the European Parliament and of the Council on common standards and procedures in Member States for returning illegally staying third-country nationals. A contribution from the European Commission to the Leaders meeting in Salzburg on 19-20 September 2018’ (COM(2018) 634 final — 2018/0329 COD)

(COM(2018) 634 final — 2018/0329 COD)

53

2019/C 159/09

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council laying down conservation and control measures applicable in the Regulatory Area of the Northwest Atlantic Fisheries Organisation and repealing Council Regulation (EC) No 2115/2005 and Council Regulation (EC) No 1386/2007(COM(2018) 577 final — 2018/0304 (COD))

(COM(2018) 577 final — 2018/0304 (COD))

60

European Economic and Social Committee

2019/C 159/10

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council establishing the European Cybersecurity Industrial, Technology and Research Competence Centre and the Network of National Coordination Centres(COM(2018) 630 final — 2018/0328 (COD))

(COM(2018) 630 final — 2018/0328 (COD))

63

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

2019/C 159/11

Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council on adapting Directive 2012/27/EU of the European Parliament and of the Council on energy efficiency [as amended by Directive (EU) 2018/2002] and Regulation (EU) 2018/1999 of the European Parliament and of the Council [Governance of the Energy Union], by reason of the withdrawal of the United Kingdom from the European Union(COM(2018) 744 final — 2018/0385 (COD))

(COM(2018) 744 final — 2018/0385 (COD))

68

2019/C 159/12

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 1305/2013 and (EU) No 1307/2013 as regards certain rules on direct payments and support for rural development in respect of the years 2019 and 2020(COM(2018) 817 final — 2018/0414(COD))

(COM(2018) 817 final — 2018/0414(COD))

71

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| EN | |
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EN

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I Resolutions, recommendations and opinions

OPINIONS

European Economic and Social Committee

| 10.5.2019 | EN | Official Journal of the European Union | C 159/1 |
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10.5.2019

EN

Official Journal of the European Union

C 159/1

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Opinion of the European Economic and Social Committee on ‘Social dialogue for innovation in digital economy’

(own-initiative opinion)

(2019/C 159/01)

Rapporteur: Jukka AHTELA

| Plenary Assembly decision | 15.2.2018 |
| --- | --- |
| Legal basis | Rule 29(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 18.12.2018 |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 133/0/0 |

Plenary Assembly decision

15.2.2018

Legal basis

Rule 29(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

18.12.2018

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

133/0/0

1.   Conclusions and recommendations

| 1.1. | Innovation is an important factor of competitiveness, productivity and the growth potential of companies that can also boost the quality of work and creation of employment and improve living standards. Tapping the full potential of innovation requires the involvement and motivation of workers including through social dialogue. This should be supported by an innovation-friendly political and regulatory environment in all Europe. |
| --- | --- |

1.1.

| 1.2. | Digitalisation together with other developments affecting working conditions, the economic situation of workers and working life is challenging existing company structures, methods of management and leadership, labour relations as well as the scope and methods of social dialogue. |
| --- | --- |

1.2.

| 1.3. | Knowledge work is becoming mainstream in all spheres of the world of work. Information technology and especially digitalisation enable decoupling of time and place from work. The development towards skills- and knowledge-based work enhances the autonomy of knowledge workers while a tendency to polarisation between highly qualified knowledge work and less potentially productive work can be discerned. In order to counter the rise in economic insecurity that is partly driven by digitalisation, collective bargaining should be promoted at all levels, especially in sectors and businesses that are affected by digitalisation. This can contribute to new forms of digitalised work organisation that improve rather than deteriorate job quality (1). |
| --- | --- |

1.3.

| 1.4. | While the development towards enhanced autonomy of a number of workers challenges management structures and leadership methods it also necessitates new forms of dialogue, provision of information and consultation as well as worker contribution to the management methods. New participative approaches are needed to engage the maximum of human resources in the innovation and development processes. |
| --- | --- |

1.4.

| 1.5. | The EESC stresses the importance of ensuring the widest possible understanding of the benefits and challenges which will accrue to employees from the adoption of new approaches in workplace culture, in terms of security and quality of employment and working conditions, including health and safety and training. Genuine support and involvement of employees requires serious and dedicated efforts at all levels. |
| --- | --- |

1.5.

| 1.6. | Social dialogue and notably collective bargaining between social partners prevail as key tools if they are involved from the outset (see 5.1 and 5.5) when introducing new technologies in a spirit of trust between personnel and management. Within their autonomy and without undermining key principles of existing structures the social partners should continue to find new solutions for the social dialogue, notably negotiations, adapted to tackle new challenges in order to deliver balanced solutions and maintain meaningfulness and sense of purpose of the role of social partners at all levels. |
| --- | --- |

1.6.

| 1.7. | New forms of fragmented work, and the rise in the number of atypical workers, mean that these workers need to be involved by informing and consulting them to a greater extent, as well as by adjusting collective rights, working time arrangements and social rights (2). |
| --- | --- |

1.7.

| 1.8. | As the EESC has previously pointed out, trade union representation and collective bargaining for workers in some new forms of work are being called into question (3). We therefore need to remove the obstacles preventing people from asserting the fundamental rights guaranteed by the Charter of Fundamental Rights of the European Union and the ILO conventions (4). |
| --- | --- |

1.8.

| 1.9. | The EESC endorses the view that the probability of innovation is boosted when strong work organisation structures are combined with various forms of increased employee participation within a solid legal and contractual framework. With this aim collective representation needs to be increasingly accompanied by a more inclusive, reflective and democratic dialogue in work structures and methods. The importance of training in social dialogue for management in order to adapt management methods in the new context should equally be taken into account. The EESC also stresses the need to promote a business friendly environment allowing companies to grow and to be competitive. |
| --- | --- |

1.9.

| 1.10. | A trusting relationship between employee representation, trade unions and management, in combination with direct employee participation in decision-making, see 6.7, is associated with higher levels of performance and well-being and created a positive environment for innovative action. Participative change nourishes an environment of trust between management, workers and trade unions (5). It is essential to have workers’ (and their trade unions’) trust and contributions at all relevant levels and in all relevant bodies — be it at local level and/or on management or supervisory boards. It is vital that they participate in anticipating, managing and taking decisions on the changes that are taking place in order to address the effects of digital change and create an attitude and culture geared to innovation (6). |
| --- | --- |

1.10.

| 1.11. | At national level initiatives by social partners to enhance the productivity and well-being of workers at workplace level are a promising method, that should be promoted in a wider European context. In this regard the EESC welcomes the initiatives and research of Eurofound and the European Workplace Innovation Network and proposes that the EU take action to develop the dialogue between social partners and other stakeholders in the context of participative approaches to promote workplace innovation. |
| --- | --- |

1.11.

2.   Introduction

| 2.1. | Innovation is an important factor of competitiveness, productivity and the growth potential of companies. Tapping the full potential of innovation requires the involvement and motivation of workers. Innovation activities put European workplaces in a better position to compete internationally and hence to create a solid basis for quality employment and are thus a key to higher living standards. All this should be supported by an innovation-friendly political and regulatory environment in Europe. |
| --- | --- |

2.1.

| 2.2. | Digitalisation is a key innovation driver. Digitalisation of industry and services offers enormous potential e.g. in terms of automatisation, processing technologies, increased productivity and mutually beneficial flexibility. Investing in education and training in an inclusive way with a view to ensure the skills needed in the digital economy is also an important tool to reduce inequalities and to reap the benefits of this potential for all, in workplaces and society at large. The public sector has a crucial responsibility in modernising public education and fostering the skills needed and in contributing to a high-quality business environment. At the same time, business and industry should also play their role and contribute to facilitate workers having access to vocational training and life-long learning. The gender perspective must be at the core of all digital initiatives fostering full integration of women in the digital economy to reduce the gender pay gap and promote work-life balance. |
| --- | --- |

2.2.

| 2.3. | Despite rapidly declining ICT prices, a shift from ICT investment to ICT services and a continued increase in knowledge-based assets there is little indication that the new digital economy has boosted productivity growth. International studies suggest that the new digital economy is still in its ‘installation phase’ and productivity effects may occur only once the technology enters the ‘deployment phase’ (7). Also the reflection of the shift from more productive to less productive forms of employment in national statistics may be hiding the full contribution of ICT to growth as the contribution of ICT to productivity and employment can vary considerably from branch to branch. |
| --- | --- |

2.3.

| 2.4. | The world of work is facing changes which will have a profound impact on employers, workers and their contractual employment relationships. Some of these changes take place outside companies, such as outsourcing, whereas many changes take place inside companies, such as moving towards flexible working time and agile forms of work. These developments, taking place in the framework based on legislation and collective agreements, are challenging existing company structures, methods of management and leadership as well as the scope and methods of social dialogue, with implications for security and quality of employment too. However, social dialogue and negotiations between social partners can and should prevail as key tools if they are adjusted to changes and involved upstream (see 5.1), from the outset, when introducing new technologies in a spirit of trust. The European social partners issued a joint statement on digitalisation in 2016 (8). |
| --- | --- |

2.4.

| 2.5. | This opinion aims to clarify and establish links between skills and the role of workers as a contributor to innovation processes, increased productivity and well-being of workers on the one hand, and the need to establish well-functioning workplace practices to support and promote these objectives on the other. |
| --- | --- |

2.5.

3.   What is at stake: the challenges of innovation culture at the workplace

| 3.1. | There is an urgent need to adapt company structures and working methods to the digital economy. Finding new ways to enhance productivity in the digital era is a challenge for all stakeholders. Continuous innovation activity with a view to tap the potential of human resources while at the same time promoting the well-being of workers is key in finding solutions for these challenges. Social dialogue, notably negotiations at local level, can play a key role in facilitating innovation and adaptation processes. |
| --- | --- |

3.1.

| 3.2. | Digitalisation has a profound impact both on existing organisations and on emerging new ones in terms of how company activities and work will be organised. While traditional forms of work may be largely maintained we can already now distinguish the impact of digitalisation on the new working methods such as rapidly increasing distance work in many sectors with increased autonomy for a number of workers. |
| --- | --- |

3.2.

| 3.3. | Knowledge work is becoming mainstream in all spheres of the world of work. Information technology and especially digitalisation enable decoupling of time and place from work. This development towards skills- and knowledge-based work enhances the autonomy of knowledge workers, while a tendency to polarisation between highly qualified knowledge work and less potentially productive work with diminished tasks can be discerned. |
| --- | --- |

3.3.

| 3.4. | The trend towards more autonomy that digitalisation offers some workers represents a challenge for businesses, their constituent bodies and their governance, as well as for management methods and businesses’ traditional hierarchies. It also presents a challenge for working conditions, the economic situation of workers, and labour relations. These changes mean that more forms of social dialogue, information and consultation, and strong worker participation are needed. Workers can provide their own input into innovation and development processes that are beneficial to their company and its stakeholders (9). Therefore the social partners should seek solutions so as to ensure the coexistence of traditional forms and innovative approaches of social dialogue. |
| --- | --- |

3.4.

4.   How can innovation culture be enhanced at the workplace?

| 4.1. | While the development towards enhanced autonomy of a number of workers challenges management structures and leadership methods it also necessitates new forms of dialogue, provision of information and consultation as well as worker contribution to the management methods of the company. New approaches are needed to engage the maximum of human resources in the innovation and development processes of the company. |
| --- | --- |

4.1.

| 4.2. | However, bringing workers to the core of the innovation processes of the workplace does not always call for major organisational changes. A number of simple tools can be used for this purpose, but the main tool to achieve this should be collective bargaining and social dialogue in line with the needs of the specific workplace. Self-sustaining teams, experimental workshops, suggestion boxes and interdisciplinary project groups are just some examples. A common feature is a workplace culture that encourages workers’ inventiveness; and such a workplace culture can only be based on mutual trust between management and personnel. |
| --- | --- |

4.2.

| 4.3. | The importance of ensuring the widest possible understanding of the benefits which will accrue to employees from the adoption of new approaches in workplace culture, in terms of security and quality of employment and working conditions should be highlighted. The risks for workers for example in terms of working conditions, health and safety protection, economic insecurity, and increased polarisation must also be addressed. Genuine support and involvement of employees and trade unions should be promoted at all levels and requires serious and dedicated efforts at all levels of organisation to avoid a mere ‘box-ticking’ method. |
| --- | --- |

4.3.

| 4.4. | An innovation culture at the workplace implies that the individual worker not only focuses on performing his or her duties but also considers whether these duties could be performed in a continuously improved way. Furthermore, an innovation culture implies that management listens actively to workers' ideas and encourages them to take part in innovation processes (10). |
| --- | --- |

4.4.

| 4.5. | Increasing autonomy of workers in the framework of innovation and development activities of companies is a major opportunity to draw on workers’ skills. The same applies to flexibility in working time and locations, which functions more effectively if innovative approaches to organising work are based on locally agreed arrangements based on mutual trust. All of this requires a modern leadership culture within a solid legal and contractual framework based on participatory approaches, which should also be promoted at EU level. |
| --- | --- |

4.5.

5.   The role of various forms of social dialogue

| 5.1. | One of the main functions of the social dialogue, notably collective bargaining, is to contribute to shaping the business environment and managing change in working life, by provision of information, anticipation, participation and facilitation, to build up mutual trust between social partners at all levels, an objective of the European Union, implemented according to national practices. |
| --- | --- |

5.1.

| 5.2. | In several opinions, the EESC has reiterated the key part played by social dialogue in the changing world of work (11). Social dialogue must play a leading role at all relevant levels and must fully respect the social partners’ autonomy. |
| --- | --- |

5.2.

| 5.3. | However, considering the challenges and the accelerating speed of changes there is a clear need to adapt the structures and objectives of the social dialogue to the continuous flow of changes while respecting legal and contractual national and European frameworks. This is a challenge for the social partners at all levels. Within their autonomy and without undermining key principles of existing structures the social partners should continue to find new solutions for the social dialogue, notably negotiations, adapted to tackle new challenges in order to deliver balanced solutions and maintain meaningfulness and sense of purpose of the role of social partners at all levels. Partnership with local communities can also be a source of inspiration for social partners. |
| --- | --- |

5.3.

| 5.4. | The EESC stated, ‘it is not yet possible to predict the full range of opportunities and challenges that the digital economy will bring. The role of social and civic dialogue is not to oppose these transitions, but rather to steer them in the best way possible for reaping the full range of benefits they can bring for growth, the promotion of innovation and skills, good jobs and the sustainable, solidarity-based financing of social protection (12).’ |
| --- | --- |

5.4.

| 5.5. | Regarding transition management in a digitalised world of work, it is important to count on smooth decision-making processes so that companies and workers could rapidly adapt to a changing environment. The EESC has stated that ‘[i]n connection with the introduction of new technologies such as robots and smart machines, the EESC highlights in its study the importance of informing and consulting workers’ representatives in advance and the need for collective bargaining to accompany the changes generated by these technologies. It also points out that the Directive 2009/38/EC of the European Parliament and of the Council (13) on European works councils makes such consultation mandatory (14)’. |
| --- | --- |

5.5.

| 5.6. | Furthermore, the EESC has given examples where activities of social partners have led to solutions to challenges that have arisen in this period of transition (15). A further example is the collective agreement between the digital platform for cleaning services Hilfr and trade union 3F in Denmark (16). The EU should encourage such activities by promoting social dialogue and supporting capacity building of social partners. |
| --- | --- |

5.6.

6.   Main findings in support of new approaches to boost innovation

| 6.1. | As highlighted in a recent Eurofound study (17), companies that encourage their employees to participate in broad decision-making around operations or strategic direction can not only improve job satisfaction, but also raise the level of innovation. Participative change nourishes an environment of trust between management, workers and trade unions. It is essential to have workers’ (and their trade unions’) trust and contributions at all relevant levels and in all relevant bodies — be it at local level and/or on management or supervisory boards. It is vital that they participate in anticipating, managing and taking decisions on the changes that are taking place in order to address the effects of digital change and create an attitude and culture geared to innovation (18). |
| --- | --- |

6.1.

| 6.2. | According to Eurofound the probability of innovation is boosted when strong work organisation structures are combined with direct employee participation (for example, involvement in solving problems or improving the quality of production) (19). This observation tallies with the suggestion that while collective representation plays an important role in securing worker involvement in innovation processes there is an increasing need for more inclusive and democratic dialogue based on involvement of workers in the process of reflection. The methods of social dialogue should in this spirit facilitate the sharing and realising of the collective expertise of all organisational members, be they workers, their representatives or managers (20). |
| --- | --- |

6.2.

| 6.3. | Equally, the Eurofound analysis revealed that access for employees to training was linked positively to innovation. As the EESC has already pointed out, work should give those who perform it the satisfaction of giving the fullest measure of their skill and attainments and making their greatest contribution to the common wellbeing (21). |
| --- | --- |

6.3.

| 6.4. | Motivation, in the form of financial incentives such as variable pay, was also positively linked to innovation in the Eurofound study. It was also found that the more innovative organisations experienced better company performance and greater workplace well-being. These innovative companies tended to have strong employee participation practices in place. |
| --- | --- |

6.4.

| 6.5. | Trusting type of social dialogue is important for performance and well-being according to Eurofound. Levels of performance and workplace well-being were well below average in establishments where disputes and industrial action had taken place. A trusting relationship between employee representation and management, in combination with direct employee participation, was associated with higher levels of performance and well-being and created a positive environment for innovative action (22). The EESC stresses the importance of training for management to adapt the management methods in the new context. |
| --- | --- |

6.5.

| 6.6. | A culture of trust is also an important competitive factor for companies. When complex issues of digitalisation are addressed in a workplace the culture of trust is a solid basis for successful cooperation, contrary to the culture of control and compliance (23). |
| --- | --- |

6.6.

| 6.7. | As stated by Eurofound: ‘There is no recipe for creating trust in a workplace, but there are certain conditions that favour its emergence. These include mutual recognition for the two parties in charge of finding solutions to common problems, timely intervention that allows room for meaningful discussion, transparency, the timely sharing of good quality information, and the involvement of all parties in strategy and objectives’ (24). As the EESC notes in its opinion (25) there is a need for workers to have more of an influence on — and participate more in — decision making bodies. It is vital that they participate in anticipating, managing and taking decisions on the changes that are taking place in order to address the effects of digital change and create an attitude and culture geared to innovation. |
| --- | --- |

6.7.

| 6.8. | At national level initiatives by social partners to enhance productivity, well-being of workers and employment at workplace level are a promising method, that should be promoted in a wider European context. The joint project by the Finnish Technology Industries Federation and the Industrial Union is a unique project in Finland (26). In Denmark the Danish Confederation of Trade Unions has produced a special study on the subject ‘Employee-driven innovation’ (27). Furthermore, in the Czech Republic, Denmark, France, Germany, Italy and Spain the social partners are involved in national debates and projects on digital change and its impact on working life (28). |
| --- | --- |

6.8.

| 6.9. | At EU level, the EESC welcomes the initiatives and research of Eurofound and the European Workplace Innovation Network launched by the European Commission, and proposes that the EU take action to develop the dialogue between social partners and other stakeholders in the context of participative approaches to promote workplace innovation. |
| --- | --- |

6.9.

Brussels, 23 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

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(1)  OJ C 13, 15.1.2016, p. 161.

1

(2)  OJ C 434, 15.12.2017, p. 36 and As Marianne Thyssen noted at the joint ETUI/ETUC conference in June 2016 on ‘Shaping the new world of work’.

2

(3)  OJ C 303, 19.8.2016, p. 54.

3

(4)  Articles 12 and 28 of the Charter, and ILO conventions No 87 and 98; see also below, points 3.2 et seq.

4

(5)  3rd European Company Survey: ‘Innovative changes in European companies’. Eurofound, 2017.

5

(6)  OJ C 434, 15.12.2017, p. 30.

6

(7)  ‘The Productivity Paradox of the New Digital Economy’, Bart van Ark (The Conference Board and the University of Groningen, International Productivity Monitor, 2016 pp. 3-18.

7

(8)  Statement by the European Social Partners on digitalisation.

8

(9)  OJ C 434, 15.12.2017, p. 30.

9

(10)  ‘Employee-driven innovation’, Danish Confederation of Trade Unions, 2007.

10

(11)  OJ C 125, 21.4.2017, p. 10, OJ C 303, 19.8.2016, p. 54.

11

(12)  OJ C 434, 15.12.2017, p. 30.

12

(13)  Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (Recast) (OJ L 122, 16.5.2009, p. 28).

13

(14)  OJ C 434, 15.12.2017, p. 30.

14

(15)  OJ C 434, 15.12.2017, p. 30.

15

(16)  Hilfr collective agreement.

16

(17)  3rd European Company Survey: ‘Innovative changes in European companies’. Eurofound, 2017.

17

(18)  OJ C 434, 15.12.2017, p. 30.

18

(19)  3rd European Company Survey: ‘Innovative changes in European companies’. Eurofound, 2017.

19

(20)  ‘Workplace Social Dialogue as a Form of “Productive Reflection”’. Peter Cressey, Peter Totterdill, Rosemary Exton; International Journal of Action Research, Volume 9, Issue 2, 2013.

20

(21)  OJ C 288, 31.8.2017, p. 43.

21

(22)  3rd European Company Survey: ‘Innovative changes in European companies’. Eurofound, 2017.

22

(23)  ‘Vertrauenskultur als Wettbewerbsvorteil in digitalen Zeiten’.

23

(24)  ‘Win-win arrangements: Innovative measures through social dialogue at company level’, Eurofound, 2016.

24

(25)  OJ C 434, 15.12.2017, p. 30.

25

(26)  ‘Productivity together’ project.

26

(27)  ‘Employee-driven innovation’, Danish Confederation of Trade Unions, 2007.

27

(28)  ‘Addressing digital and technological change through social dialogue’, Eurofound, 2017.

28

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OPINIONS

| 10.5.2019 | EN | Official Journal of the European Union | C 159/7 |
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10.5.2019

EN

Official Journal of the European Union

C 159/7

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Opinion of the European Economic and Social Committee on Women in the Western Balkans

(own-initiative opinion)

(2019/C 159/02)

Rapporteur: Dilyana SLAVOVA

| Plenary Assembly decision | 15 February 2018 |
| --- | --- |
| Legal basis | Rule 29(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | External Relations |
| Adopted in section | 19 December 2018 |
| Adopted at plenary | 23 January 2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 174/1/6 |

Plenary Assembly decision

15 February 2018

Legal basis

Rule 29(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

External Relations

Adopted in section

19 December 2018

Adopted at plenary

23 January 2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

174/1/6

1.   Conclusions and recommendations

| 1.1. | The EU policy towards the Western Balkans has been re-energised. It was given an additional boost by the Bulgarian presidency, which made the region its priority, and by the EC’s Communication ‘A credible enlargement perspective for and enhanced EU engagement with the Western Balkans’ published on 6 February 2018. |
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1.1.

| 1.2. | The Sofia summit and the June 2018 Council conclusions on ‘Enlargement and Stabilisation and Association Process’ confirmed this commitment and defined the next stages in the European integration of the region. More specifically, Albania and FYROM were given a conditional date of June 2019t for the start of accession negotiations. This focus and action is likely to be sustained and taken forward by the presidencies that follow, since they are among those Member States that also show greater sensitivity towards and commitment to the Western Balkans, namely Austria, Romania, and Croatia. |
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1.2.

| 1.3. | The EESC is a strong proponent of enlargement as it is in the interest of both sides — the Western Balkans and the EU. The success of this policy is a major factor for the EU’s global standing and the cornerstone of Europe’s stability and prosperity. The EESC is therefore convinced that the accession process should be pursued further with both vigour and rigour as one of the EU’s top priorities, under the clear and stringent conditions that are the basis of all enlargement processes – nothing more, and nothing less. |
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1.3.

| 1.4. | Gender equality is a fundamental right recognised by Articles 2 and 3 of the Treaty on European Union and by the EU Charter of Fundamental Rights. In this opinion, the EESC highlights the role of women as a key driving force for the consolidation of democracy, respect for human rights and freedoms, and economic and social progress. The purpose of the opinion is to raise awareness about and promote women’s political, social and economic rights and gender equality in the Western Balkans. Gender mainstreaming can be successful only if there is a strong political will and belief in the benefits that equality between women and men would bring to society. |
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1.4.

| 1.5. | Women have played and continue to play an essential role in reconciliation and social and economic development in the region, especially in conditions of severely weakened economic structures, poverty and broken social ties, where women manifest greater flexibility and initiative in restoring and renewing social networks and exploring new avenues for work. Despite some good practices and positive developments concerning the empowerment of women and programmes put in place, women still remain in a disadvantaged position with respect to their ability to fully exercise their political, social and economic rights, and take full advantage of socioeconomic development opportunities. Owing to the patriarchal culture which results in their marginalised role, women face prejudices and gender stereotypes, labour market and education segregation and much greater risk of discrimination and violence that impede their advancement to leadership positions. |
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1.5.

| 1.6. | The EESC calls not only for the equal representation and inclusion of women in socioeconomic and political life at all levels but also for the implementation of effective laws and policies to fight discriminatory behaviour and deeply ingrained patriarchal attitudes towards women, including women from minority groups (particularly Roma and LGBTIQ), young women, elderly women, rural women and women with disabilities, as well as women and girl refugees that are seeking asylum in the Western Balkans. |
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1.6.

| 1.7. | The EESC emphasises the importance of developing a gender equality roadmap and measures that could lead to a more equal distribution of power and resources in the Western Balkans. Women’s rights groups, business associations and trade unions have been active in promoting the role of women in the region and there is a need for further focused and persistent work with civic and social partners in order to be effective in fighting and advocating for women’s rights. The EU institutions should do more to financially support these organisations and associations by providing specific plans and projects which target the empowerment of women at all levels, including programmes to support gender equality organisations and detailed action plans. |
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1.7.

| 1.8. | The EESC calls upon the EU and national authorities to cooperate more on dismantling education stereotypes so as to ensure access for young girls and women during their whole life cycle to affordable and quality education, equipping them with relevant skills and facilitating their careers and access to quality jobs in the labour market. |
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1.8.

| 1.9. | As violence and discrimination against women is one of the most serious violations of human rights, and is increasingly common in this post-war area, the EESC invites the Commission to encourage stronger regional cooperation on the exchange of best practices with regard to domestic violence and extend necessary funding and expert support for all efforts made to reduce and possibly eradicate the occurrence of this widespread social ill. |
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1.9.

| 1.10. | The EESC believes that national authorities should make considerable efforts to improve media freedom, including by reinforcing the existing legislation and by implementing it consistently. This, among other things, will help raise awareness of gender-equality matters and advocate for a safer media environment in which gender stereotypes can be deconstructed through public debate and where women are not targeted by sexism, hate speech and online smear campaigns. |
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1.10.

| 1.11. | The EESC reiterates the need for Western Balkan partners to mainstream the gender perspective into all relevant programmes funded through the Instrument for Pre-accession Assistance (IPA II), particularly in policy area 3, which includes employment, social policies, education, promotion of gender equality and human resources development. Thematic funds for combating domestic violence and support for women’s civic and media activism should be developed. |
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1.11.

| 1.12. | Clear and sustained commitment to gender equality as a founding value of the EU should be guaranteed. The EESC encourages the Commission to include critical gender equality indicators in its benchmarking system for the accession negotiations, developed and monitored in close collaboration with social and civic partners who are committed to women’s empowerment in the region and across the EU. The systemic application of a gender perspective should be treated as a horizontal benchmark for assessing the acceptability and quality of the legislative process as part of the accession negotiations. |
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1.12.

| 1.13. | The EESC expects future efforts in the Western Balkans to be aimed not only at bringing legislation related to women’s human rights in line with the EU acquis and relevant international mechanisms and instruments, but also and most importantly at closing the gap between existing laws and their proper implementation. Governments in the Western Balkans should be encouraged and supported in developing viable public funding mechanisms, focused on protecting women against violence, discrimination and economic exploitation. |
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1.13.

| 1.14. | The EESC calls on the Member States and Western Balkan partners who have not yet ratified the Istanbul Convention to do so urgently, as it represents the most comprehensive policy framework for preventing domestic violence, protecting victims and prosecuting offenders. The EESC also calls upon churches and other religious institutions and civil society organisations of all faiths not to violate women’s rights or interfere with their reproductive rights, which is a critical prerequisite for women’s social and economic emancipation and empowerment. |
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1.14.

| 1.15. | The EESC reiterates the importance of linking gender-responsive budgeting to overall gender equality measures. It calls for the inclusion of a gender perspective in all policies and programs through better resource allocation that is in line with gender-specific needs. In light of this and in view of the next MFF, the EU should be more consistent when dealing with the Western Balkans on gender mainstreaming and should insist on gender-responsive budgeting and gender disaggregated data collection in order to make sure that equality and respect for women’s rights are taken into consideration in a sustainable way. To this end, the Western Balkan partners, as well as the Commission, are encouraged to intensify policy consultations with women’s rights activists and gender equality experts in different policy areas related to enlargement. |
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1.15.

| 1.16. | The EESC stresses that particular attention needs to be given to female entrepreneurship in view of its potential to significantly increase the region’s growth prospects, and invites EU institutions to play a role in this respect. Measures to support new business creation include, among others, ensuring access to financial and institutional resources, offering optimal infrastructure for start-ups, providing relevant information concerning the founding of an enterprise, fostering interest in female entrepreneurship through media campaigns, and granting loans for start-ups and expansion projects. Female entrepreneurs and their business organisations should be systematically included in all policy development processes that are relevant to the social and economic dimension of enlargement. |
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1.16.

2.   Background

| 2.1. | Equality between women and men is a fundamental right and a common value, recognised by the EU. Embodied in the EU Treaties and international human rights conventions, gender equality forms part of the accession conditions with which candidates and potential candidates from the Western Balkans (Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Kosovo (1), Montenegro and Serbia) have to comply. Investing in gender equality is essential: not only is it an EU requirement, but it also serves as a key indicator of an equal and democratic society. |
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2.1.

| 2.2. | As part of their preparation for EU accession, the Western Balkans countries have taken steps to advance women’s rights in recent years. These include adopting or amending relevant legislation (e.g. anti-discrimination, criminal and labour laws), preparing national strategies and action plans, and establishing institutional mechanisms to carry out and monitor relevant policies. Nevertheless, promotion of gender equality is often only superficial while the actions taken in this respect lack true political commitment, competences and financial resources, resulting in weak and sporadic implementation. |
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2.2.

| 2.3. | Regrettably, the Western Balkans Summit in London in July 2018 missed an opportunity to make progress in terms of promotion of gender equality in the region. The proposal for coherent action, which was considered during preparations for the summit should therefore quickly find political endorsement and expeditiously be implemented in a sustainable way. |
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2.3.

| 2.4. | Inequality between men and women remains a problem in the Western Balkans because of the highly patriarchal structures typical for the region, which manifest themselves in gender-based violence, discrimination and exploitation, a chronic double burden for women in respect to their work and family-related responsibilities, numerous barriers to women’s upward mobility and equal pay and inadequate access to social and reproductive health services and financial instruments. There have been some improvements regarding women’s political representation, yet with little lasting effect on the fair redistribution of political power between women and men. The critical problem lies in the weak implementation of progressive policies, reflecting a lack of true political commitment, funding and expertise. |
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2.4.

| 2.5. | Ensuring equality between women and men remains ‘unfinished business’ (2) in the region. With this opinion the EESC draws attention to efforts on the part of the EU’s social partners and civil society to promote gender equality as part of the EU enlargement policy, and make it a cross-cutting indicator in all domains of society. It also addresses some of the major challenges that women face in the Western Balkans, such as their weaker roles in social, economic and political fields, and widespread gender-based violence. |
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2.5.

3.   Gender-based violence

| 3.1. | Gender-based violence, i.e. sexual, reproductive and domestic violence, remains a prevalent problem in the region. Although domestic violence is under-reported, the reported numbers are still high. The data indicates that in Albania 56 % of women are exposed to at least one form of domestic violence; in Kosovo almost 70 % of women experience domestic violence in their lifetime, whereas in Serbia, at least twenty-six cases of femicide were registered in 2017 and in most of these cases the perpetrator was the victim’s partner (3). A review of services relating to domestic violence in the countries of the region revealed that they were under-funded, under-staffed and over-worked (4) and that reporting mechanisms were in general very weak. |
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3.1.

| 3.2. | Every Western Balkan partner has a national strategy aimed at combatting domestic violence (5). Women for the most part do not report incidents due to norms of acceptance, mistrust in security and justice authorities, and a lack of institutional response even to those cases that are reported. The absence of financially sustainable support networks, safe-houses and institutions for victims who are brave enough to report violence contributes to further victimisation of the most vulnerable women. There are a number of shortcomings in comparable data collection in the region that need to be dealt with. The objective is to have well-designed, funded and monitored policies that prevent, protect and prosecute. This requires proper training for all actors involved in the process, adequate awareness-raising, and a change in attitudes in society. The EESC considers that, like elsewhere, prevention is of primary importance and costs less than later-stage interventions. |
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3.2.

| 3.3. | The full implementation of the Council of Europe’s Convention on preventing and combating violence against women and domestic violence (Istanbul Convention) is needed across the Western Balkan region. Having signed and ratified the Convention, the majority of Western Balkan partners should intensify their work on allocating adequate public funding, coordinating policies and implementing practical measures to address any form of violence inflicted on women. In addition, the Commission is asked to prioritise the issue of domestic violence in the context of pre-accession funding both for civil society and for institutional capacity-building activities. The EESC calls on the Commission to encourage stronger regional cooperation on the exchange of best practices relating to domestic violence, beyond division between EU Member States and enlargement countries. In the context of enlargement, it is important that EU Member States present a positive model in this respect.
  Greater engagement and coordination between all actors from the public and private sector, and greater inclusion of NGOs, as collaboration between state services and NGOs is fundamental for the successful implementation of legislation and policy action in combatting all forms of violence against women. |
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3.3.

Greater engagement and coordination between all actors from the public and private sector, and greater inclusion of NGOs, as collaboration between state services and NGOs is fundamental for the successful implementation of legislation and policy action in combatting all forms of violence against women.

| 3.4. | Families and schools have a crucial role to play. The upbringing of children and education should be gender-sensitive and focused on the eradication of gender-based violence specifically against girls and young women. Setting up a framework that introduces clear policies in schools to address gender-based violence would contribute to the reduction of such practices and would consequently create a more supportive environment for the victims and enhance gender equality as a fundamental principle underpinning society. |
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3.4.

4.   Human rights

| 4.1. | Women’s human rights are being systematically targeted in the Western Balkans by nationalist and clerical actors who often profess religious dogmas and national interests, such as traditional patriarchal family values and demographic renewal, as a moral justification for depriving women of their freedoms, equality and safety. Despite existing comprehensive and generally protective laws related to human rights, the mechanisms of delivery and enforcement have considerable deficiencies. The EESC calls for more efficient cooperation and joint action between national human rights structures, social partners, civil society organisations and government authorities to advance a human rights agenda and to assist those who are particularly vulnerable. |
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4.1.

| 4.2. | Traditional gender roles and attitudes towards women’s sexuality prevail. Access to maternity care is reasonable, but beyond that, women still often choose not to go to the doctor. Women in work often face discrimination in terms of maternity rights, including questions in job interviews about their marital status and intention to have children, despite the fact that laws have been put in place to prevent this. Regular medical check-ups should be encouraged and promoted. Intensive awareness-raising activities regarding reproductive health services are needed. |
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4.2.

| 4.3. | It is of particular concern to the EESC that women’s reproductive health in the Western Balkan countries is being put at risk due to increasing attacks on the part of ultraconservative interest groups, which are closely affiliated with dominant religious communities. A further analysis should take place regarding the impact of fundamentalist religious views on women’s rights and especially on their reproductive rights in the region. |
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4.3.

| 4.4. | The LGBTIQ community deserves particular attention, given that their rights are far from consolidated. What is more, they are under consistent pressure from various conservative social groups. |
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4.4.

5.   Social rights

| 5.1. | There are still deficiencies in the countries of the region in terms of guaranteeing and monitoring economic and social rights, including the right to non-discrimination. This affects all women in the labour market but especially those women and girls from vulnerable groups, including ethnic minorities (above all the Roma), internally displaced people, people with disabilities, migrants and refugees. |
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5.1.

| 5.2. | Women from these disadvantaged groups often do not have sufficient knowledge about social rights, access to social services, education, healthcare or housing. The institutions legally responsible for these areas are not yet in a position to provide these people with adequate support. The EESC believes that stakeholders such as centres for social work, local administrations and non-governmental organisations should improve the conditions needed to ensure equal social rights for vulnerable groups. There is an urgent need to revisit the quality and financial viability of social reform programmes supported by the EU, such as via a joint inclusion memorandum geared towards social inclusion, diversification, democratisation and decentralisation of social services. Avenues should be explored for timely application of the European Pillar of Social Rights in the enlargement process. |
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5.2.

| 5.3. | A worrying social phenomenon is women’s radicalisation in some Muslim communities and their involvement in violent extremism. From 2012 to 2016, roughly 20 % of some 1 000 individuals leaving the Western Balkan region for the conflict zones in Syria and Iraq were women (6). Governments, institutions and civil society organisations are not doing enough to publicly acknowledge the migration of women to the Middle East and guarantee that the gender perspective is being included in current efforts to counter violent extremism (CVE). The enactment of legislation to criminalise participation in, material support of, and recruitment for foreign paramilitary groups should be followed up by practical measures to support the de-radicalisation and rehabilitation of women who should primarily be recognised as victims of extremist propaganda and recruitment. |
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5.3.

6.   Women in the labour market

| 6.1. | The exclusion of women from the labour market is widespread in the region and is considerably higher than the EU average (7). Almost two-thirds of working-age women in the region are either inactive or unemployed. For Roma women and women with disabilities the rates are even higher. Statistics show that women have lower levels of activity compared to men and little progress has been made in closing the gender employment gap. |
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6.1.

| 6.2. | This represents not only violation of fundamental human rights but also carries a high economic and social cost and stunts potential economic growth in the region. Every year, countries in the Western Balkans lose an average of 18 percent of their total GDP due to gender gaps in the labour market (8). One-third of this loss is due to distortions in the choice of occupations between men and women. The remaining two-thirds correspond to costs associated with gaps in labour force participation. The Western Balkans should be encouraged to make optimal use of existing untapped human resources, support and facilitate the participation of women in the labour market, and address the issue of a large proportion of women engaged in the informal economy. |
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6.2.

| 6.3. | This gender gap stems from the existence of entrenched norms concerning family roles and an insufficient institutional response to tackle these challenges. Family responsibilities tend to fall on women, and flexible working arrangements are extremely limited. This forces women to choose between family and career. Women are formally employed at a much lower rate than men, earn less and seldom occupy high-level positions. It is important to include men in the discussion and to encourage them to take on a greater share of family responsibilities. |
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6.3.

| 6.4. | Access to affordable childcare and the encouragement of parental leave for fathers is one of the prerequisites to increase participation of women in labour markets. Specific measures are also needed to improve labour-market matching for women workers such as the provision of publicly provided nursery and kindergarten education for young children. Stereotypes in parental upbringing and attitudes, particularly in some communities, towards boys’ versus girls’ education, as well as stereotypes in choosing a typically ‘female’ or ‘male’ profession, among other factors, contribute to the pay and pensions gap between women and men. |
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6.4.

| 6.5. | The gender pay gap in the region, which is around 20 % (9), is a persistent problem. This consequently has an impact on the gender pension gap and inequality between men and women at retirement age. With the possible rise in the working poor, many of whom are women, there is a clear case for greater policy attention and action on the part of government, employers and social partners, not only through direct measures associated with both the minimum and living wage, progressive taxation, inward benefits and social assistance but also, and more importantly, through indirect measures, such as more flexible working arrangements, housing, upgrading of skills and childcare. |
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6.5.

| 6.6. | The economic situation and lack of employment opportunities negatively affect women, in particular young women, forcing them to leave their countries and thus exacerbating the brain drain in the region. Policy measures should be designed to make full use of the talent and skills of women in the dynamically changing economic environment. In this respect, the establishment of pipelines of women experts should be considered in order to highlight their expertise in different fields. Furthermore, the access of women to lifelong learning should be improved and ensured. |
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6.6.

| 6.7. | To break education stereotypes it is necessary to consistently encourage girls and women to be more engaged in the STEM (science, technology, engineering and mathematics) areas, vocational education and training, and apprenticeships. |
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6.7.

7.   Empowerment of women

7.1.   Economic empowerment of women

| 7.1.1. | Women entrepreneurs are still an untapped source of business and job creation and an important driving force for economic growth. Women entrepreneurs face unique challenges and barriers in starting and growing business, such as a lack of business and entrepreneurial skills, prevailing prejudices in banks against the credit-worthiness of women-led businesses. There is no unique definition of ‘female entrepreneurship’, which results in the lack of data on this important matter. |
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7.1.1.

| 7.1.2. | The drive for change is based on strong evidence that there is a supply of highly skilled women across the Western Balkans and therefore any argument for gender balance should be based on the ‘merit and preference rule’ rather than positive discrimination. Nevertheless, there are still factors that hinder women from taking the lead, such as a lack of reconciliation measures between business and family life, limited access to networks that are important for higher positions, lack of self-confidence, etc. (10). |
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7.1.2.

| 7.1.3. | The EESC would further recommend that policymakers and companies review the following issues to ensure women engage at a senior level in the Western Balkans (11):






  — | better visibility of women in senior roles; |
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7.1.3.

—

better visibility of women in senior roles;

| — | greater transparency in headhunting talent; |
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—

greater transparency in headhunting talent;

| — | challenging stereotypes around gendered roles; |
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—

challenging stereotypes around gendered roles;

| — | leadership succession planning; |
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—

leadership succession planning;

| — | creation of a talent pipeline; |
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—

creation of a talent pipeline;

| — | disseminating examples of good practice; |
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—

disseminating examples of good practice;

| — | creating a coordinated database of qualified women for board positions. |
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—

creating a coordinated database of qualified women for board positions.

| 7.1.4. | Training and access to finance, including microfinance, should be provided as an integrated package for women’s start-ups and growing businesses (12). Promoting female entrepreneurship in the region would lead to job creation and bring about economic benefits for all. For this purpose, measures such as business incubators, mentoring programmes, innovation hubs, technology labs and other forms of support for women in business should be more actively used. |
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7.1.4.

| 7.1.5. | Associations of businesswomen should actively take part in decision-making processes and public dialogue with local and regional authorities and partner organisations. Recent projects in this area have concluded that the topic is receiving a higher level of recognition than in the past and support for women entrepreneurs has moved forward from being a project to being an ongoing process. Achieving further substantial progress would require a change in people’s mind-sets. |
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7.1.5.

| 7.1.6. | Social enterprises have an important role to play in bringing female entrepreneurs together and should be encouraged across the region in order to coordinate action and facilitate successful access to funding. |
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7.1.6.

| 7.1.7. | Youth entrepreneurship is essential for the region and there is a need for a new growth model in order to reach the digital frontier. It should be based on innovation and the entrepreneurial spirit of the new millennial generation. The model should, inter alia, entail tailor-made education of young women and men for the new world of work, with secure financing solutions. |
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7.1.7.

7.2.   Political empowerment of women

| 7.2.1. | All Western Balkan partners have a gender quota and there is quite a strong policy in place to increase women’s representation. The quota system in most of the respective partners requires political parties to include at least 30 % of female candidates on their lists, except in Bosnia and Herzegovina and the former Yugoslav Republic of Macedonia, where the minimum is 40 %. |
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7.2.1.

| 7.2.2. | Although the gender quotas are developing and providing positive changes in the region, there is no consistency in the pursuit of this policy. As a result, the status of women in politics and their participation in decision-making processes has not improved substantially and is still not sustainable. |
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7.2.2.

| 7.2.3. | There is hierarchical marginalisation in the region that shows the presence of larger number of men than women in high decision-making positions. Women still do not occupy top positions of power. They are very often involved in political bodies dealing with education, health, social policy and administration and this can lead to horizontal segregation in some sectors. They are, however, much less represented in other bodies, which have greater decision-making power and influence on policymaking or governmental legislation. |
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7.2.3.

| 7.2.4. | There are some good examples of women’s political empowerment in the region. Local organisations have managed to mobilise women in political processes and the support provided to women in political parties has led to the election of the first female mayor in Kosovo. In Albania, partners have led the civil society coalition demanding respect for the gender quota in parliament, raising the level of female participation in the past few elections. There are many ongoing plans, mechanisms and support structures to raise women’s political participation in the region, and considerable improvements have taken place. (13) |
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7.2.4.

8.   The role of social partners and civil society organisations

| 8.1. | Social partners and civil society organisations (CSOs) in the Western Balkans have an important role to play in influencing authorities to commit to gender equality. They are proven catalysts for positive change and the building of tolerant and resilient societies. There are a number of successful women’s initiatives, projects and platforms and the EESC firmly supports these positive undertakings. |
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8.1.

| 8.2. | Women’s organisations as part of CSOs are particularly instrumental in this respect and play a leading role in preventing violence against women as well as with regard to reconciliation at local and regional levels. They are a key part of the process of monitoring and holding governments to account with regard to effective policy implementation. |
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8.2.

| 8.3. | In spite of formally introduced mechanisms for the inclusion of social partners and CSOs in consultation procedures, communication and cooperation with governments leaves a lot to be desired. The recent more negative attitude toward CSOs makes it hard for them to deliver sound criticism and propose measures to deal efficiently with existing shortcomings. The EESC emphasises the need to support and safeguard space in civil society for women’s rights and empowerment. |
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8.3.

| 8.4. | The enlargement process and the Berlin Process have contributed to the inclusion of civil society in regional initiatives and policy-making. There are signs of progress in relation to the status and position of the sector as a whole, whereby several changes in legislation, policy and budgets have been made, taking into consideration what citizens want. |
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8.4.

| 8.5. | The EESC has developed a dual approach, both regional and bilateral, for its relations with the CSOs of the Western Balkans. The Western Balkans Follow-up Committee, established by the EESC in 2004, is the main instrument for coordinating the EESC’s activities in the region and monitoring the changes in the political, economic and social situation in the Western Balkan partners, as well as in EU-Western Balkans relations, including in the area of women’s rights. The Western Balkans Civil Society Forum is part of the work of the Follow-up Committee. The 6th Forum, conducted in July 2017 in Sarajevo, discussed and adopted recommendations in the area of rights and the empowerment of women. |
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8.5.

| 8.6. | The 2018 Enlargement Communication by the European Commission calls on national authorities, with the support of their societies, to take ownership and deliver on the well-known conditions for EU accession. An inclusive and effective structured dialogue on reform priorities with the involvement of an empowered civil society would determine to a great extent the success of any transformational action. The EU should therefore do more to encourage and facilitate this dialogue. |
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8.6.

Brussels, 23 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

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(1)  This designation is without prejudice to positions on the status of Kosovo, and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

1

(2)  EPRS. Briefing on Women in the Western Balkans, July 2018.

2

(3)  Civil Society forum (CSF) of the Western Balkans Summit, Gender Issues in the Western Balkans, Policy Brief No 04, April 2018, http://wb-csf.eu/wp-content/uploads/2018/04/CSF-PB-04-Gender-Issues-in-the-Western-Balkans.pdf

3

(4)  Hughson, 2014, Gender Country Profile of Bosnia and Herzegovina and Brankovic, 2015. Multisectoral Cooperation: An Obligation or Wishful Thinking. UNDP.

4

(5)  Petricevic, I. 2012. Women’s Rights in the Western Balkans in the Context of EU Integration.

5

(6)  Regional Cooperation Council, A Waiting Game: Assessing and Responding to the Threat from Returning Foreign Fighters in the Western Balkans, November 2017, https://www.rcc.int/pubs/54/a-waiting-game-assessing-and-responding-to-the-threat-from-returning-foreign-fighters-in-the-western-balkans

6

(7)  EPRS. Briefing on Women in the Western Balkans, July 2018.

7

(8)  http://blogs.worldbank.org/europeandcentralasia/key-unlocking-economic-potential-western-balkans-women

8

(9)  UN Women Regional Project.

9

(10)  OJ C 133, 9.5.2013, p. 68.

10

(11)  OJ C 133, 9.5.2013, p. 68.

11

(12)  EC SME Policy Index, Western Balkans and Turkey 2016, Assessing the implementation of the Small Business Act for Europe.

12

(13)  UNDP, 2016.

13

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| 10.5.2019 | EN | Official Journal of the European Union | C 159/15 |
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10.5.2019

EN

Official Journal of the European Union

C 159/15

---

Opinion of the European Economic and Social Committee on ‘Reforming the WTO to adapt to developments in world trade’

(own-initiative opinion)

(2019/C 159/03)

Rapporteur: Emmanuelle BUTAUD-STUBBS

| Plenary Assembly decision | 12.7.2018 |
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| Legal basis | Rule 29(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | REX |
| Adopted in section | 19.12.2018 |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 174/2/3 |

Plenary Assembly decision

12.7.2018

Legal basis

Rule 29(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

REX

Adopted in section

19.12.2018

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

174/2/3

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) would like to reiterate its commitment to the World Trade Organization (WTO) as the guardian of international trade and a crucible for developing rules and disciplines to ensure fair trade, the liberalisation of trade in goods and services, and transparency in trade-related policy-making. |
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1.1.

| 1.2. | The EESC is convinced not only that urgent reforms should be implemented as soon as possible, particularly for the functioning of the Appellate Body of the Dispute Settlement Body (DSB), but also that WTO members should be committed to more ambitious and systemic changes related to the labour standards, and fight against the climate and global SDGs in order to adapt the rules of international trade to the global challenges. |
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1.2.

| 1.3. | The European Economic and Social Committee would like to encourage the European Commission (EC) to pursue, with the support of the Member States, an ambitious EU-27 trade policy that will provide EU companies with better market access opportunities and that will disseminate EU values in the field of human rights and the core labour standards, such as the fight against discrimination, equality between men and women, union freedoms and so on through the channels of multilateral, plurilateral (including the WTO), bilateral and unilateral (GSP, EBA) agreements. EU civil society demands free but fair trade. |
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1.3.

| 1.4. | After the withdrawal of the United Kingdom from the EU (29 March 2019) the UK will become an independent member at the WTO. This means that the EU 27 and the United Kingdom should secure their bilateral trade and investment relationships, and the EU 27 should give due consideration to the important issue of tariff rate quotas with its FTA partners. The EESC wishes that the UK could support the EU proposals aiming at reforming the WTO in order to modernise multilateral trade rules. |
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1.4.

| 1.5. | The EESC supports the European Commission’s proposition for a workable solution in order to get the Appellate Body of the Dispute Settlement Body back on track and the recent communications circulated by WTO members to amend certain provisions of the understanding on rules and procedures governing the settlement of disputes. |
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1.5.

| 1.6. | The European Economic and Social Committee, as a representative of European organised civil society, is very involved in monitoring free trade agreements, the fulfilment of commitments undertaken by the parties in the sustainable development chapters, and the requirement to take into account the UN’s Sustainable Development Goals (SDGs) and the fight against climate change. |
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1.6.

| 1.7. | The proliferation of barriers to trade and the increasing taxation of imports (aluminium, steel, etc.) by key players in world trade (US, China, etc.) are a real danger to the growth of world trade – already slowing down since 2014 – which could harm global growth, efforts to reduce inequality, the development of the most fragile economies and the creation of value and jobs in global value chains. |
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1.7.

| 1.8. | Given these risks, the EESC believes that an ambitious reform of the WTO is needed. That reform should be divided into two parts: a first, more technical part on the most urgent issues before the end of 2019 in order to avoid the blockage of the Appellate Body of the Dispute Settlement Body and to clarify some definitions; and a second, more systemic part that could take more time and that will adapt the missions and the functioning of the WTO to the major developments in world trade. |
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1.8.

| 1.9. | For the first phase, several of the proposals put forward by the European Commission in a concept paper drawn up in September 2018 in response to a mandate given by the Member States at the European Council on 28 and 29 June should be supported. |
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1.9.

| 1.10. | The proposals in question are as follows: strengthen the role of the secretariat, change the rules regarding the term of judges on the Appellate Body of the DSB, update the rules on subsidies, state-owned enterprises and technology transfer, and make increased use of open plurilateral negotiations. |
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1.10.

| 1.11. | The EESC considers also urgent for the first phase that the WTO should also become more ambitious with regard to the agricultural sector in order to ensure good quality, safe and secure supplies of food. The role of the WTO in reducing uncertainties in international trade is essential for the future of agriculture in each country, as well as its ability to ensure food safety in compliance with high environmental standards for production and animal welfare. |
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1.11.

| 1.12. | The EESC sees it vital that the precautionary principle, as enshrined in the EU treaties, is adequately protected also at multilateral level and to gain full legal recognition in order to ensure a higher level of protection through preventative decision making in the case of risk to human health or the environment. Given its importance, the EU should make it an offensive interest in all its trade negotiations. |
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1.12.

| 1.13. | The EESC considers that safeguarding data protection in international trade through multilateral instruments inspired by standards and rules put in place in the EU, and in the OECD, APEC and UN, is another priority. The existing multilateral instrument in the area of data protection should be further developed and more third countries should be encouraged to join. The EU approach on horizontal provisions for cross-border data flows and data protection should be promoted as a multilateral standard. |
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1.13.

| 1.14. | The adaptation of these exiting rules regarding the agricultural sector and data protection is necessary in order to take into account market characteristics and trade practices of a number of WTO members. |
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1.14.

| 1.15. | However, other avenues of more ambitious and systemic reform not mentioned at that stage by the European Commission also merit consideration. |
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1.15.

| 1.16. | The EESC suggests initiating a process of reflection on the definition of developing countries for the proceedings of the WTO which could rest on a set of criteria including, for instance, the market share in the global economy, and human development indexes, aligned with already existing definitions in other international organisations. |
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1.16.

| 1.17. | The proposals supported by the EESC mainly cover three areas: labour standards and decent work, climate change objectives and the achievement of the UN’s 2030 SDGs. |
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1.17.

| 1.18. | How to articulate core labour standards and multilateral trade rules has been a longstanding issue for more than 20 years. The EESC considers that, with the adoption of ambitious and comprehensive SDGs by the UN, the time has come for the WTO as the guardian of international trade to play its role in actively promoting core labour standards. This could be achieved through recognition of the SDGs and the core ILO conventions in a general preamble and full use of Article XX of the GATT both for environmental matters (XX g) and for social matters (XX e). |
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1.18.

| 1.19. | But beyond the possible avenues for updating the current rules and outlining new rules adapted to 21st-century trade, it is really the WTO’s complex unanimity-based governance structure that should be made more flexible and transparent in order to enhance the efficiency of the organisation. |
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1.19.

| 1.20. | That is why the European Economic and Social Committee is asking the European Commission, in cooperation with its major partners, to open the reflection on possible evolutions in the WTO’s decision-making procedures, the transparency of its work, and the involvement of civil society. |
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1.20.

2.   A key player in international trade

| 2.1. | The WTO is a cornerstone of multilateralism in trade, which has brought about a lot of beneficial developments: a process of liberalisation of world trade, greater transparency on trade policy measures through peer review, the case-law of the Dispute Settlement Body (DSB), which enables any member country of the organisation to assert its rights in relation to another WTO member should its rules be infringed, and the admittedly slow and difficult drafting of rules and disciplines to govern the development of international trade (trade facilitation, combating subsidisation in the fisheries sector, etc.). |
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2.1.

| 2.2. | The EESC considers as a success the fact that the WTO has welcomed an increasing number of members, brought geopolitical ‘giants’ (China and Russia) on board with the principles of multilateralism, and facilitated the integration of vulnerable economies into world trade (Liberia, Cambodia, etc.). |
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2.2.

| 2.3. | Since it was established in January 1995, the WTO has thus played the threefold role of guardian of trade rules, driver of the internationalisation of developing countries’ economies and facilitator of the establishment of global value chains. |
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2.3.

| 2.4. | Its work has mainly been carried out within the framework of the following three pillars:
  2.4.1.   Drawing up a set of rules and disciplines for international trade









  2.4.1.1. | These rules currently cover three main areas: the General Agreement on Tariffs and Trade, the General Agreement on Trade in Services, and the Agreement on Trade-Related Aspects of Intellectual Property. These three pillars have been supplemented by a dispute settlement system and a principle of transparency based on examining member countries’ trade policies. This whole set of rules, which is enforced by the DSB, gives legal certainty and predictability to international traders, which is essential for long-term investments. |
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2.4.

2.4.1.   Drawing up a set of rules and disciplines for international trade

2.4.1.1.

2.4.2.   The Dispute Settlement Body

| 2.4.2.1. | This is one of the major advances achieved by the WTO following on from GATT. The timetables and procedural rules applicable to the settlement of disputes between member countries were placed on a formal footing and strictly governed by deadlines, which has led to over 500 disputes being brought to the DSB since 1995 and over 350 rulings being issued. |
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2.4.2.1.

| 2.4.2.2. | The DSB has made a number of important rulings, even if there might be some concerns about their implementation: aircraft subsidies (EU/US), foreign sales corporations (EU/US), cotton subsidies (Brazil/US), etc. The rate of referrals has increased recently with the proliferation of trade policy measures establishing additional or protectionist customs duties (US/China), forced technology transfers and non-compliance with intellectual property rights. |
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2.4.2.2.

2.4.3.   The trade liberalisation rounds

| 2.4.3.1. | The Uruguay Round (1986-1994) is the last round of multilateral negotiations to have led to an ambitious programme of reducing industrial customs duties, dismantling non-tariff measures, including textiles and clothing quotas, as well as strengthened rules and the establishment of new procedural rules on dispute settlement. |
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2.4.3.1.

3.   The current shortcomings of the WTO

3.1.   
  An ongoing crisis in the DSB’s Appellate Body

| 3.1.1. | The Appellate Body, which is the cornerstone of the WTO’s judicial function, is currently in danger of stalling completely: in December 2019, there will be fewer than three permanent judges able to serve on this body if the United States continues to refuse to appoint new judges. This blockage would prevent the Appellate Body from making decisions as a minimum of three judges is required, and this at a time when the number of disputes is increasing given growing pressure from protectionism. |
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3.1.1.

| 3.1.2. | Several criticisms have been made by the Office of the United States Trade Representative (USTR) regarding the current functioning of the DSB: functioning beyond the core role to assist WTO members in resolving trade disputes, disregard for the 90-day deadline, opinions issued on matters unrelated to the subject of the dispute, and the fact that a new balance needs to be struck between the rights and obligations of the Appellate Body. |
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3.1.2.

| 3.1.3. | This is a paradox given that the US is part of the small circle of members that make most use of the DSB, alongside the EU, Canada, Brazil and India. |
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3.1.3.

3.2.   
  The inability to deliver new multilateral rules or agreements

| 3.2.1. | The EESC takes note of the fact that the WTO has suffered a certain number of setbacks, such as the stalling of the Doha Round launched in 2001, failure to act in the face of unfair practices implemented in several member countries and failure to adopt a ministerial declaration at the Ministerial Conference in Buenos Aires in December 2017, although some progress has been made, notably the entry into force of the Trade Facilitation Agreement in 2013.) This has prompted several trading partners (EU, US, Japan, Canada, China, etc.) and NGOs to propose substantial reforms to both its remit and its working methods. |
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3.2.1.

| 3.2.2. | In reality, these failures reflect the difficulty faced by the WTO in adapting its operating rules to the new state of play in international trade: the increasing number of protectionist measures, the complexity of the global trade arena, public opinion pressure on trade policy makers because of the social and environmental impacts of trade, the existing resistance against some adverse impacts of globalisation, the excessively slow and geographically restricted opening-up of public procurement, and the emergence of over-capacity in certain industrial sectors due to massive subsidies. |
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3.2.2.

| 3.2.3. | The difficulties of fully including a number of WTO members in the multilateral rules-based trade system: given their economic size, the role of the state and various public bodies in business decisions, it is a fact that many complaints and referrals to the DSB concerning IPR infringements, forced transfer of technologies, limited access to investment for foreign companies in certain sectors, export controls, massive public subsidies in some industrial sectors and so on were made during the last 15 years by several WTO members (the United States, the European Union, Japan, Canada and so on). |
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3.2.3.

3.3.   
  A general imbalance of rights and duties between developed countries and large emerging economies

| 3.3.1. | Since it was set up, the WTO has continuously welcomed new members, 36 in total, with both key countries that are now members of the ‘multilateral class’, and fragile developing countries wishing to become integrated in international trade. |
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3.3.1.

| 3.3.2. | It should be noted that there are no WTO definitions of developed and developing countries, with the exception of LDCs as designated as such by the UN: each country that successfully completes the accession process declares which category it belongs to, and this can be challenged. This situation, based on self-declaration, is problematic because a number of large emerging economies, which have declared themselves ‘developing countries’ receive waivers on this basis although their economic performance and successful integration in international trade would suggest that they should rather be included in the category of ‘industrialised countries’. Thus, the EESC suggests opening a process of reflection on the definition of developing countries for the proceedings of the WTO that could rest on a set of criteria such as the market share in the global economy, and, as suggested by the European Parliament, human development indexes (1), aligned with already existing definitions in other international organisations. |
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3.3.2.

| 3.3.3. | As the European Commission pointed out in its 2015 communication (2): ‘There has been a major shift in the relative economic power of the major trading partners and it has not yet been fully reflected in the WTO system. As a result, there is a growing imbalance between the contribution large emerging countries make to the multilateral trading system and the benefits they derive from it’ (p. 28). |
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3.3.3.

| 3.3.4. | However, from 2005 to 2015, despite benefiting from generalised tariff preferences from industrialised countries, LDCs have failed to make a major leap forward in international trade: their share has risen from 0,8 % to 1 % (3). The EESC recognises that this stagnation demonstrates that these LDCs should be given the same quota- and duty-free market access not only by industrialised countries but also by the large emerging economies. |
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3.3.4.

4.   The strands of an urgent reform aimed at overcoming the current crisis

4.1.   
  Finding a swift solution to get the DSB back on track

| 4.1.1. | The EESC upholds the proposals drawn up by the European Commission and the European Parliament which would authorise extending the term of the judges currently in office beyond three years, to make provision in future for recruiting full-time, independent professional judges, to raise the number of judges sitting on the Appellate Body from seven to nine. |
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4.1.1.

| 4.1.2. | The EESC supports the two communications circulated by several WTO Members, in the light of the General Council of 12-13 December 2018, proposing amendments to certain provisions related to the understanding on rules and procedures governing the settlement of disputes: possible exception of the 90 day period; exclusion of specific municipal law measures by the party, increase from 7 to 9 Appellate Body members and extension of their term. |
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4.1.2.

4.2.   
  More frequent use of open plurilateral negotiations

| 4.2.1. | A large number of bilateral and regional agreements have been concluded (4), the direct result of there being no multilateral dynamic since 2001. The EESC recommends that plurilateral agreements should be concluded in the framework of the WTO and, in any case, should be open and transparent. Plurilateral negotiations compared to multilateral negotiations offer a number of advantages:






  — | they are based on a critical mass of countries willing to act, |
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4.2.1.

—

they are based on a critical mass of countries willing to act,

| — | they involve shorter negotiations, |
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—

they involve shorter negotiations,

| — | there is no danger of the unanimity principle being misused, since one country or a group of less relevant countries cannot block an agreement, |
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—

there is no danger of the unanimity principle being misused, since one country or a group of less relevant countries cannot block an agreement,

| — | their scope is often limited, meaning that they can concentrate the impact of the partners’ commitments and promote investment, trade and job creation. |
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—

their scope is often limited, meaning that they can concentrate the impact of the partners’ commitments and promote investment, trade and job creation.

| 4.2.2. | This solution has already been used and has yielded positive results, although it does need to be explored further (ITA I and II, Agreement on Government Procurement). |
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4.2.2.

| 4.2.3. | Open, inclusive and transparent plurilateral agreements could be used more systematically, while making provision for inclusion mechanisms enabling non-signatory countries to enjoy the benefits of the agreement under certain conditions in terms of commitments and implementation. |
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4.2.3.

| 4.2.4. | Negotiations are currently underway on a number of topics such as e-commerce, investment facilitation and micro, small and medium-sized enterprises (MSMEs), liberalisation of environmental goods and services, and trade in services, with a view to concluding open plurilateral agreements. |
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4.2.4.

| 4.2.5. | WTO members have taken important steps to bring MSME’s perspective to the centre of the discussions, through, for example, the joint open initiative on supporting MSMEs, which was launched in Buenos Aires in 2017. The focus is on trade finance and the multilateral development banks have responded through their trade finance facilitation programmes. By streamlining, simplifying and standardising customs procedures the Trade Facilitation Agreement will help to cut trade costs and alleviate administrative burdens for MSMEs. The EESC would suggest a comprehensive, inclusive, coherent and effective multilateral approach that takes into account the needs of all the different SME sub-groups and interests. |
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4.2.5.

4.3.   
  Updating some of the existing rules

4.3.1.   The Agreement on subsidies and countervailing measures

| 4.3.1.1. | Given the huge programmes of direct and indirect subsidies to industry in certain member countries (‘Made in China 2025’ for example), the Committee supports the proposals drawn up by the European Commission in its September 2018 concept paper which are being discussed with the US, Japan and Canada: introduce a presumption that all non-notified subsidies distort the market, improve the notification procedure, and add new categories of subsidies, such as those given to an insolvent or ailing company without a credible restructuring plan. More attention should also be paid to the issue of dual-pricing which is used by some member States, e.g. Russia, in order to gain a competitive advantage especially in energy-intensive industries. |
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4.3.1.1.

| 4.3.1.2. | A more robust system for monitoring notifications, including sanctions, should be introduced in the light of the downward trend in the number of WTO member countries declaring their subsidies, with the percentage having fallen from 50 % in 1995 (128 member countries) to 38 % currently (164 member countries) (5). |
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4.3.1.2.

4.3.2.   Forced technology transfers

| 4.3.2.1. | The EESC endorses the proposals put forward by the European Commission which wants to establish new mechanisms to control the variety of forms of forced technology transfers (limitations on joint ventures, limitations on equity-type financing by foreign companies, granting licences on the basis of opaque criteria, granting licences with restrictions) and to safeguard trade secrets more effectively. These new mechanisms should cover only forced technology transfers and not technology transfers in general that produce a positive impact in developing countries. |
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4.3.2.1.

4.3.3.   State-owned enterprises (SOE)

| 4.3.3.1. | The definition and the rules related to SOE needs to be brought up to date and clarified in order to cover the entire range of enterprises linked directly or indirectly to the state or to public bodies. |
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4.3.3.1.

4.3.4.   Discussing new rules in the area of Special and Differential Treatment (SDT)

| 4.3.4.1. | The European Commission put forward a number of interesting options in its September 2018 concept paper (graduation and opt out, objective criteria for granting SDT to developing countries, case-by-case consideration of requests for new flexibilities under SDT), that the EESC supports. |
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4.3.4.1.

4.3.5.   Investments

| 4.3.5.1. | During the Ministerial Conference in Buenos Aires, 45 WTO members signed a joint declaration on investment facilitation for trade, calling for discussions to be opened up on establishing a multilateral framework providing transparency and predictability. The EESC notes that foreign investment, while useful, may also carry risks and would like to refer to its opinion recommending some measures to be taken to address potential adverse impacts (6). |
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4.3.5.1.

| 4.3.5.2. | Greater transparency is needed in foreign direct investment (FDI) as some huge flows towards developing countries seem opaque. In the context of establishing a Multilateral Investment Court (MIC), the EESC would like to refer to its opinion highlighting a number of fundamental questions to be taken into consideration (7). |
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4.3.5.2.

4.3.6.   Public procurement

| 4.3.6.1. | Progress is needed in three areas:






  — | transparency: with penalties applied if mandatory reporting requirements are not met, |
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4.3.6.1.

—

transparency: with penalties applied if mandatory reporting requirements are not met,

| — | coverage: increasing the number of countries which have signed the Government Procurement Agreement (CPA) and the public procurement procedures, which come under this agreement. Urging countries such as China, Russia, India to sign is a priority and their commitments must cover national and provincial levels as well as enterprises with ties to the state, |
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—

coverage: increasing the number of countries which have signed the Government Procurement Agreement (CPA) and the public procurement procedures, which come under this agreement. Urging countries such as China, Russia, India to sign is a priority and their commitments must cover national and provincial levels as well as enterprises with ties to the state,

| — | maintaining the ability for the procuring entities to use environmental, social and labour-related criteria such as the obligation to comply with and adhere to collective agreements, in procurement tenders (8). |
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—

maintaining the ability for the procuring entities to use environmental, social and labour-related criteria such as the obligation to comply with and adhere to collective agreements, in procurement tenders (8).

4.3.7.   E-commerce

| 4.3.7.1. | During the December 2017 WTO Ministerial Conference in Buenos Aires, 71 member countries, representing 77 % of e-commerce, supported the notion of a plurilateral initiative to stabilise the regulatory framework and mobilise skills and expertise in the most vulnerable economies. The high-level group on e-commerce in 2030 subsequently delivered its report to the WTO Public Forum on 4 October 2018. |
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4.3.7.1.

| 4.3.7.2. | The European Economic and Social Committee feels that the GATS telecommunications Annex and the Reference paper should be used as a starting point in order to provide a set of uniform and ambitious rules on e-commerce which are geared to the many challenges ahead. These include enforcing the principle of non-discrimination between domestic and foreign operators by pulling down barriers to the development of cross-border flows, such as the requirement that servers be located locally however, with the important need to introduce an exception of the general interest (security, public order...) as well as guaranteeing the access to the digital trade platform at the same conditions for national and foreign companies; guaranteeing the integrity of data; guaranteeing legal certainty for operators with regard to their investments; and promoting investments in telecommunications infrastructure in order to combat the digital divide. |
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4.3.7.2.

| 4.3.7.3. | However, the European Economic and Social Committee points out that any initiative on e-commerce must be fully in line with the recommendation set out below on data protection in international trade and the horizontal provisions for cross-border data flows (in EU trade and investment agreements). |
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4.3.7.3.

4.4.   
  Data protection in international trade

| 4.4.1. | The EESC believes that given the rapid technological advances and continuous expansion of ITC infrastructure, there is a need for close governmental oversight and monitoring. Even though adequacy decisions are evaluated every four years (see Article 45(3) of the Regulation (EU) 2016/679 of the European Parliament and of the Council (9) (General Data Protection Regulation), the EESC recommends permanent contact between the Commission, data protection authorities (DPAs) and third-country governmental authorities in order to identify new challenges in what is a very dynamic technological and economic environment (10). |
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4.4.1.

| 4.4.2. | The EESC considers that promoting data protection standards through multilateral instruments should be a priority for the European Commission and that this commitment should be backed by resources, so as to deliver real protection of human rights a priori and, a posteriori, an effective legal remedy for prejudices (11). The Council of Europe Convention No 108 of 1981, with its additional Protocol of 1999, is the only binding multilateral instrument in the area of data protection. The instrument should be further developed and more third countries should be encouraged to join. |
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4.4.2.

| 4.4.3. | Multilateral efforts within the OECD (Organisation for Economic Cooperation and Development), the G20 and APEC (Asia-Pacific Economic Cooperation) should be further developed with a view to building a truly global multilateral system of data protection. Cooperation with the UN Special Rapporteur on the right to privacy should be solid and functional. |
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4.4.3.

| 4.4.4. | The EESC hopes that the Commission, the Council, the national governments and parliaments of the Member States and the US Government and Congress will welcome the proposals put forward in the European Parliament Resolution of 6 April 2017 on the adequacy of the protection afforded by the EU-US Privacy Shield. The European Parliament raises serious concerns in its Resolution, many of them indicating that the agreement and the current US legislative framework do not in practice protect the rights of EU citizens (12). |
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4.4.4.

| 4.4.5. | The EESC demands that any future multilateral initiative on data flows fully comply with EU horizontal provisions for cross-border data flows and data protection in EU trade and investment agreements, and in particular with Article B paragraph 2 (13). |
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4.4.5.

4.5.   
  Agriculture in trade negotiations

| 4.5.1. | With combined imports and exports of EUR 242 billion in 2015, the EU is the world’s foremost trader in agri-food products, benefiting producers and consumers within and outside the EU (14). The EESC believes that the EU must consider the effects on agriculture across the EU from recent EU trade agreements as well as developments in trade globally (15). The WTO’s role in reducing uncertainties in international trade will be crucial for the future of agriculture. |
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4.5.1.

| 4.5.2. | A strong and viable agricultural sector in each WTO member country is essential to maintain or increase stable, safe and secure supplies of food. Trade of course helps to even out imbalances in demand and supply, promoting resource use efficiency and increasing market opportunities and economic growth, thus generating jobs, income and prosperity in rural areas (16). |
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4.5.2.

| 4.5.3. | The 1995 WTO SPS Agreement covers the application of food safety, animal and plant health regulations. Article 5.7 covers the Precautionary Principle, now enshrined in the Lisbon Treaty. Any attempt to alter this other than at multilateral level would have profound implications for the world trade order and for the future credibility of the Agreement itself (17). However, the EESC sees the importance of the precautionary principle as enshrined in the EU treaties as vital and calls for its adequate protection and full legal recognition at multilateral level, for high-level food safety standards as well as high animal welfare and environmental standards in agricultural production. The EESC takes note with concern that the EU failed to successfully defend its precautionary measures in two WTO disputes under the current rules. Given its importance, the EU should make its precautionary principle an offensive interest in all its trade negotiations. |
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4.5.3.

| 4.5.4. | As shown by Nairobi, where against expectations a significant Ministerial Declaration was agreed, the EU is in a strong position to play a leading role in future trade in agriculture negotiations. This is based on the EU’s perceived leading role in promoting both sustainability and development (the role it played in Nairobi) and as a result of earlier CAP reforms, the EU is no longer seen to be primarily defensive (18). In any case, LDCs and their particular vulnerability in the agricultural sectors should be protected through all available instruments, such as for instance the Special and Differential Treatment mechanisms and the Special Safeguard Mechanism. |
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4.5.4.

| 4.5.5. | To this extent, the EESC believes that there must be a much more coherent strategy between the CAP and the international trade policy being pursued by the EU. |
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4.5.5.

4.6.   
  Services

| 4.6.1. | During the Ministerial Conference in Buenos Aires, 34 WTO members called for work on domestic regulations (licences, professional qualifications, procedures, etc.) to be stepped up, with a view to establishing a clear, transparent multilateral framework since negotiations on a multilateral services agreement (TiSA) were at a standstill. Civil society and trade unions raised several concerns regarding the effective implementation of safeguards on public services. |
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4.6.1.

| 4.6.2. | This effort to establish such a multilateral framework is critical given that with combined imports and exports of EUR 1 809 billion in 2017, the EU is by far the world’s biggest trader in services, benefiting producers and consumers within and outside the EU (19). The service sectors are contributing to more than 75 % of the GDP of developed countries, and 50 % of the developing countries, and they are the backbone of global value chains. |
| --- | --- |

4.6.2.

4.7.   
  The impact of Brexit

| 4.7.1. | The UK will act as a single country member of the WTO from the end of March 2019. The EESC hopes that, in this capacity, the UK will back ambitious and forward-looking reforms called for by the EU. The recent commitment to join the Agreement on Government Procurement (GPA) is positive. |
| --- | --- |

4.7.1.

| 4.7.2. | The EU-27 will have the task to reshape market access offers to EU trade partners, particularly in the agricultural sector with a fair and balanced redistribution of quotas between the Member States. |
| --- | --- |

4.7.2.

5.   Opening up discussion on important but systemic reform of the WTO

5.1.   
  Designing a new system of governance for a new world

| 5.1.1. | The internal organisation of the WTO set up in 1994 should be overhauled so that it can adapt to major developments:






  — | a rapid increase in the number of members, which, if the principle of consensus is not altered, will block decision-making, |
| --- | --- | --- |

5.1.1.

—

a rapid increase in the number of members, which, if the principle of consensus is not altered, will block decision-making,

| — | major changes in the structure of international trade, |
| --- | --- |

—

major changes in the structure of international trade,

| — | the adoption of ambitious goals in the field of sustainable development (the UN SDGs) and the fight against climate change (the Paris Agreement) |
| --- | --- |

—

the adoption of ambitious goals in the field of sustainable development (the UN SDGs) and the fight against climate change (the Paris Agreement)

| — | the EU’s experience in including Trade and Sustainable Development chapters in all its recent Free Trade Agreements. |
| --- | --- |

—

the EU’s experience in including Trade and Sustainable Development chapters in all its recent Free Trade Agreements.

5.1.2.   Devising a creative solution to put an end to the systematic need for unanimity

| 5.1.2.1. | The WTO decision-making process, inherited from GATT, is de facto consensus, in other words unanimity among the 164 members. ‘Positive’ unanimity is required to adopt General Council decisions and ministerial declarations. When it comes to settling disputes, ‘negative’ unanimity is required to reject a final report issued by a panel. This rule obviously enables a country acting alone or, in most cases, coalitions of member countries formed around common objectives (G3, G20), to veto the conclusion of negotiations. |
| --- | --- |

5.1.2.1.

| 5.1.2.2. | Most international organisations have adopted decision-making mechanisms which allow for debate and avoid matters being brought to a standstill, such as weighting votes on the basis of objective criteria (IMF) or introducing qualified majority voting (European Union). The EESC suggests opening a reflection on possible new rules for decision-making on qualified majority, based on the double criteria considering the market share in the global economy and the composite indicator of development. |
| --- | --- |

5.1.2.2.

| 5.1.2.3. | The EESC suggests that the number of issues that require unanimity should be reduced, avoiding it to also apply to the normal operations of the WTO. Such normal operations include agreement on the agenda of Committee meetings, proposals to have a discussion on a trade policy-related matter, or suggestions to invite independent experts to provide inputs on a subject that is directly relevant to the implementation of a WTO Agreement (20). |
| --- | --- |

5.1.2.3.

5.1.3.   Streamlining the organisation in order to gain efficiency

| 5.1.3.1. | The WTO has a complex organisational structure (21). Its overarching structure comprises the General Council, made up of representatives of the member countries tasked with approving the positions of the three specialised bodies: the Council for Trade in Goods, the Council for Trade in Services, and the Council for Trade-Related Aspects of Intellectual Property Rights. These thematic councils are complemented by other bodies tasked with managing existing plurilateral agreements and developing new plurilateral initiatives. The political-level Ministerial Conference, which meets at least once every two years and comprises member countries’ trade ministers, operates on the basis of unanimous agreement on resolutions drawn up by the other bodies. |
| --- | --- |

5.1.3.1.

| 5.1.3.2. | A number of committees set up for a specific occasion which is no longer relevant, such as the working group on the Singapore issues, are designed to be temporary. The number of committees should be reduced on the basis of the number of meetings held and the results achieved, so as to allocate resources to topics considered to be priorities by the members. An evaluation culture must be established. |
| --- | --- |

5.1.3.2.

5.1.4.   Strengthening the role of the secretariat by allocating additional resources

| 5.1.4.1. | In order to ensure that the WTO prepares ministerial resolutions and launches new plurilateral initiatives more effectively, the secretariat’s role should be bolstered by giving it a right of initiative to propose new topics for negotiation, changes to the set of rules and disciplines, and proposals for compromises on subjects under discussion. |
| --- | --- |

5.1.4.1.

5.1.5.   Setting aside the single undertaking rule

| 5.1.5.1. | At the Ministerial Conference in Bali, the WTO abandoned the single undertaking approach whereby ‘nothing is concluded until everything has been concluded’. This new, more flexible approach allowed for the adoption of the multilateral Trade Facilitation Agreement which entered into force on 22 February 2017 when more than two thirds of WTO members (i.e. 110) presented their instrument of ratification. This agreement aims to facilitate and speed up international trade in goods thanks to more effective and swifter procedures in areas such as release and clearance of goods (22). |
| --- | --- |

5.1.5.1.

5.1.6.   Building stronger bridges with civil society

| 5.1.6.1. | The European Union has considerable experience in consulting and involving civil society in trade policy. Labour and environmental commitments contributing to the sustainable development of the parties are set down in the Trade and Sustainable Development (TSD) chapters of all recently negotiated EU free trade agreements, usually those providing for civil society monitoring mechanisms, known as Domestic Advisory Groups (DAGs), in the EU and in the partner country or countries. The EESC would suggest that such experience of active participation of civil society should be promoted with other WTO Members in order to make proposals on the most suitable mechanisms that could be put in place at multilateral level. |
| --- | --- |

5.1.6.1.

| 5.1.6.2. | The EESC would suggest that the WTO Public Forum, in the form of a balanced and representative assembly of social and economic stakeholders from all different sectors and interests, acts as a possible platform for civil society participation and be allowed to issue recommendations within the WTO proceedings. The way the OECD has been able to structure the consultation of a wide range of stakeholders could be also taken into consideration. |
| --- | --- |

5.1.6.2.

| 5.1.6.3. | As proposed bilaterally by the EESC (23), a specific monitored clause could be included in each multilateral and plurilateral agreement, ‘requiring both parties of each civil society monitoring mechanism to work together to promote the SDGs and monitor the effects of that’. |
| --- | --- |

5.1.6.3.

5.2.   
  Introducing coherence between a multilateral trade system and social and labour international standards

| 5.2.1. | The OECD and the EU took up the issue of global value chains in 2010, seeking to understand how they work and to propose solutions to correct dysfunctions noted with regard to the environment and fundamental human rights. Detailed monographs have been drawn up for several sectors, practical guides prepared and specific CSR issues identified (child labour, freedom of association and collective bargaining, decent living standards, loss of biodiversity and unfair pricing practices). |
| --- | --- |

5.2.1.

| 5.2.2. | A 2016 ILO declaration on decent work in global supply chains identified several lines of action: promoting international labour standards, closing governance deficits, promoting inclusive and effective social dialogue, strengthening labour administration systems, improving knowledge and expanding statistics. |
| --- | --- |

5.2.2.

| 5.2.3. | The EESC regrets that the scope of the existing Article XX(e) is limited to forced labour and proposes envisaging an extension to core labour standards (child labour, forced labour and so on). The EESC suggests also that the EU’s experience in the integration of the protection of labour and environmental standards into its trade policy could inspire the WTO to make reference, for instance in a preamble, to the eight ILO Conventions, the Paris Agreement and the SDGs. Each WTO member not fully in compliance should ratify the missing ILO convention, or at least demonstrate an equivalent level of protection, and benefit from capacity-building resources to do so. |
| --- | --- |

5.2.3.

| 5.2.4. | The ILO and the WTO currently cooperate at technical level, preparing joint studies. In 2007, the study on Trade and employment, challenges for policy research showed that technologies rather than trade were more responsible for rising inequality. In 2017, another joint study on ‘Investing in skills for inclusive trade’ showed that bolstering basic skills and technical and management skills helped countries to reap the benefits of trade. |
| --- | --- |

5.2.4.

| 5.2.5. | The WTO has developed a database on global value chains and produced scientific studies (such as Trade patterns and global value chains in South-East Asia) which provides data on their structure and working methods that should be used to devise new multilateral guidelines, inspired by those of the OECD, in order to ensure sustainable management of global value chains (GVCs). |
| --- | --- |

5.2.5.

| 5.2.6. | The EESC supports the creation of a new working group on Trade and decent work in the WTO, whose objectives will be two-fold, in coherence with the works within the UN on an international legally binding instrument to regulate the activities of transnational corporations and other business enterprises and building on multi-stakeholder initiatives (24). On the one hand, it aims to promote good practices on how the responsibility to respect and protect human rights can be delivered on, given the complexity of responsible business conduct in global value chains (linear or complex, long or short) (25). On the other hand, it aims to raise awareness in developing countries regarding responsible business conduct, by focusing on concrete actions to meet current and future social, environmental and governance challenges and by exploring the way to remedy potential adverse impact. The WTO system of Trade Policy Reviews should systematically include a review of countries’ implementation of the ILO Core Labour Standards. |
| --- | --- |

5.2.6.

5.3.   
  Making international trade contribute to the fight against climate change

| 5.3.1. | Adapting WTO rules to the need to combat climate change is one of the major priorities of the WTO reform, and aims to ensure that the international trade in industrial and agricultural goods enters a more virtuous circle. The EESC encourages enterprises which invest in more sustainable production and believes that unfair competition should be prevented. These efforts are more than needed with regards to investments that are crucial to achieving SDGs: Unctad estimates that an annual budget of USD 2 500 billion is necessary, and the WTO also has a role to play in encouraging these responsible investments in transport, water and energy infrastructure. |
| --- | --- |

5.3.1.

| 5.3.2. | A number of measures could be considered:







  — | extending GATT Article XX waivers, which grant WTO members autonomy (with certain limitations) to set their own environmental goals (combating smoking, protecting dolphins, asbestos, etc.), to cover national measures taken to support the fight against greenhouse gas emissions. This would, for instance, enable a member country to set up a carbon inclusion mechanism at its borders with a view to safeguarding clean air (Article XX(g)), |
| --- | --- | --- |

5.3.2.

—

extending GATT Article XX waivers, which grant WTO members autonomy (with certain limitations) to set their own environmental goals (combating smoking, protecting dolphins, asbestos, etc.), to cover national measures taken to support the fight against greenhouse gas emissions. This would, for instance, enable a member country to set up a carbon inclusion mechanism at its borders with a view to safeguarding clean air (Article XX(g)),

| — | developing an international method for measuring and modelling new greenhouse gas emissions connected to the development of trade flows, for instance between two countries or two regions which have signed an FTA, |
| --- | --- |

—

developing an international method for measuring and modelling new greenhouse gas emissions connected to the development of trade flows, for instance between two countries or two regions which have signed an FTA,

| — | joint reflection groups set up by the WTO and the UNFCCC (United Nations Framework Convention on Climate Change) Secretariat, which registers all the contributions of each individual country, could draw up proposals to offset these additional emissions (afforestation, reforestation, CO2 capture, investing in clean technologies). The planned 5 year reviews in 2023 could also contribute to ‘making finance flows consistent with a pathway towards low greenhouse gas emission and climate-resilient development’ (26), |
| --- | --- |

—

joint reflection groups set up by the WTO and the UNFCCC (United Nations Framework Convention on Climate Change) Secretariat, which registers all the contributions of each individual country, could draw up proposals to offset these additional emissions (afforestation, reforestation, CO2 capture, investing in clean technologies). The planned 5 year reviews in 2023 could also contribute to ‘making finance flows consistent with a pathway towards low greenhouse gas emission and climate-resilient development’ (26),

| — | relaunching the plurilateral agreement on the liberalisation of environmental goods and services which would promote the movement of goods and services with a positive impact on the environment (energy, water, waste, etc.). |
| --- | --- |

—

relaunching the plurilateral agreement on the liberalisation of environmental goods and services which would promote the movement of goods and services with a positive impact on the environment (energy, water, waste, etc.).

5.4.   
  Building the Sustainable Development Goals (SDGs) into the multilateral agenda

| 5.4.1. | The WTO rules and disciplines inherently contribute to achieving some of the SDGs, specifically Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization (Target 17.10) and End hunger, achieve food security and improved nutrition and promote sustainable agriculture (Goal 2). |
| --- | --- |

5.4.1.

| 5.4.2. | Work has begun on this with the Ministerial Declaration of Nairobi, which pledged to abolish export subsidies for agricultural products, and the Ministerial Declaration of Buenos Aires which addressed the most harmful fisheries subsidies. However, it could certainly be argued that other SDGs, such as Goals 8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all), 14 (Conserve and sustainably use the oceans, seas and marine resources) and 17 (Strengthen the means of implementation and revitalise the global partnership for sustainable development) deserve to be taken into account by the WTO in its activities. |
| --- | --- |

5.4.2.

| 5.4.3. | This would mean that all the plurilateral and multilateral agreements concluded under the auspices of the WTO should contribute to achieving these goals, and that non-compliance could possibly trigger the dispute settlement mechanism. |
| --- | --- |

5.4.3.

| 5.4.4. | The conclusions of the 6th WTO Global Review of Aid for Trade, held in Geneva in July 2017, should be converted into action in order to help developing countries benefit from e-commerce and digital opportunities, and to encourage investment in physical and digital infrastructure. |
| --- | --- |

5.4.4.

Brussels, 23 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  European Parliament Resolution on WTO: the way forward, point 9, 29 November 2018 (2018/2084(INI)).

1

WTO: the way forward

(2)  Trade for all – Towards a more responsible trade and investment policy.

2

(3)  Share of LDCs in world trade (source: World Trade Statistical Review 2016, WTO, p 59).

3

(4)  Regional agreements notified to the WTO (source: www.wto.org).

4

(5)  Improving disciplines on subsidies notification, TN/RL/GEN/188, WTO, 2017.

5

(6)  EESC opinion on the Proposal for a Regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union (COM(2017) 487 final — 2017/0224 (COD)), rapporteur: Christian Bäumler), co-rapporteur: Gintaras Morkis (OJ C 262, 25.7.2018, p. 94).

6

(7)  EESC Opinion on Recommendation for a Council Decision authorising the opening of negotiations for a Convention establishing a multilateral court for the settlement of investment disputes, rapporteur: Philippe de Buck, co-rapporteur: Tanja Buzek (OJ C 110, 22.3.2019, p. 145).

7

(8)  Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU and its Member States (http://data.consilium.europa.eu/doc/document/ST-13541-2016-INIT/en/pdf).

8

(9)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

9

(10)  EESC Opinion on Exchanging and Protecting Personal Data in a Globalised World, rapporteur: Christian Pîrvulescu (OJ C 81, 2.3.2018, p. 209).

10

(11)  .EESC Opinion on Exchanging and Protecting Personal Data in a Globalised World, rapporteur: Christian Pîrvulescu (OJ C 81, 2.3.2018, p. 209).

11

(12)  EESC Opinion on Exchanging and Protecting Personal Data in a Globalised World, rapporteur: Christian Pîrvulescu (OJ C 81, 2.3.2018, p. 209).

12

(13)  ‘Each party may adopt and maintain the safeguards it deems appropriate to ensure the protection of personal data and privacy, including through the adoption and application of the rules for cross-border transfer of personal data. Nothing in this agreement shall affect the protection of personal data and privacy afforded by the Parties’ respective safeguards.’ http://trade.ec.europa.eu/doclib/docs/2018/may/tradoc_156884.pdf.

13

(14)  https://ec.europa.eu/agriculture/sites/agriculture/files/trade-analysis/statistics/graphs/eu-agrifood-trade.pdf.

14

(15)  EESC Opinion on The role of agriculture in multilateral, bilateral and regional trade negotiations in the light of the Nairobi WTO Ministerial meeting, rapporteur: Jonathan Peel (OJ C 173, 31.5.2017, p. 20).

15

(16)  EESC Opinion on The role of agriculture in multilateral, bilateral and regional trade negotiations in the light of the Nairobi WTO Ministerial meeting, rapporteur: Jonathan Peel (OJ C 173, 31.5.2017, p. 20).

16

(17)  EESC Opinion on The role of agriculture in multilateral, bilateral and regional trade negotiations in the light of the Nairobi WTO Ministerial meeting, rapporteur: Jonathan Peel (OJ C 173, 31.5.2017, p. 20).

17

(18)  EESC Opinion on The role of agriculture in multilateral, bilateral and regional trade negotiations in the light of the Nairobi WTO Ministerial meeting, rapporteur: Jonathan Peel (OJ C 173, 31.5.2017, p. 20).

18

(19)  https://www.wto.org/english/res_e/statis_e/wts2018_e/wts2018_e.pdf.

19

(20)  Policy Brief Revitalizing Multilateral Governance at the World Trade Organization — Report of the High-Level Board of Experts on the Future of Global Trade Governance, Bertelsmann Stiftung, 2018.

20

Revitalizing Multilateral Governance at the World Trade Organization — Report of the High-Level Board of Experts on the Future of Global Trade Governance

(21)  Structure of the WTO (source: Revitalising Multilateral Governance at the World Trade Organization, Bertelsmann Stiftung, p. 54).

21

(22)  Les trois réformes de l’OMC, Zaki Laïdi, Libération, 2003.

22

Les trois réformes de l’OMC

(23)  EESC Opinion on The core role of trade and investment in meeting and implementing the Sustainable Development Goals (SDGs), rapporteur: Jonathan Peel, co-rapporteur: Christophe Quarez (OJ C 129, 11.4.2018, p. 27, point 1.8).

23

(24)  i.e. the recent French Duty of Vigilance Act.

24

(25)  EESC Opinion on Decent work in global supply chains, rapporteur: Emmanuelle Butaud_Stubbs (OJ C 303, 19.8.2016, p. 17).

25

(26)  Article 2 of the Paris Agreement (UNFCCC).

26

---

| 10.5.2019 | EN | Official Journal of the European Union | C 159/28 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/28

---

Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements

(exploratory opinion requested by the European Parliament)

(2019/C 159/04)

Rapporteur: Alberto MAZZOLA

| Referral | European Parliament, 11 September 2018 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | External relations |
| Adopted in section | 15 January 2019 |
| Adopted at plenary | 23 January 2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 152/0/2 |

Referral

European Parliament, 11 September 2018

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

External relations

Adopted in section

15 January 2019

Adopted at plenary

23 January 2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

152/0/2

1.   Conclusions and recommendations

| 1.1. | EESC recognises that trade contributes to economic development in a wider sense and in this regard supports enlarging the number of trade agreements the EU has in place. However, FTAs are also a centre of intense debate about its contribution to social development and environmental protection, the benefits and drawbacks and on how they are apportioned to the countries and different stakeholders. The EESC wishes to underline this point. |
| --- | --- |

1.1.

| 1.2. | The EU today faces an increasing demand for a constructive dialogue with civil society on trade. One of the key achievements of stakeholders’ involvement through DAGs is strengthening civil society processes. |
| --- | --- |

1.2.

| 1.3. | The EESC considers that the participation of civil society in all kind of agreements is indispensable. On the one side, that participation responds to the need for monitoring, as well as a way to convey proposals and to put forward legitimate issues that have an impact on all parts of society. On the other side, it is a key element in order to effectively achieve the strategic aspirations that are currently part of agreements, aspirations that cannot be developed only through relations between institutions and governments.
  The EESC considers that participation in all kind of agreements has to be done through a single civil society participation body that has to be a joint one, comprising both sides in the agreement.
  In the EESC’s view, DAGs should be advisory, consultative, institutionalised, competent to cover all provisions in the agreement, made up of a balance membership of all three sectors, representative, responsible and independent role in monitoring and evaluating EU agreements. All these criteria are essential to the empowerment civil society, its visibility and its capacity to draft structured proposals that can effectively influence the decision-making. |
| --- | --- |

1.3.

The EESC considers that participation in all kind of agreements has to be done through a single civil society participation body that has to be a joint one, comprising both sides in the agreement.

In the EESC’s view, DAGs should be advisory, consultative, institutionalised, competent to cover all provisions in the agreement, made up of a balance membership of all three sectors, representative, responsible and independent role in monitoring and evaluating EU agreements. All these criteria are essential to the empowerment civil society, its visibility and its capacity to draft structured proposals that can effectively influence the decision-making.

| 1.4. | The DAGs should, among other things, put a particular emphasis on the parties’ respect for the Core Labour Standards and fundamental conventions of the ILO as well as for Multilateral Environmental Agreements. |
| --- | --- |

1.4.

| 1.5. | The EESC reiterates its recommendation to mandate DAGs to monitor the impact of all parts of trade agreements on human, labour and environmental rights, and the scope needs to cover consumer interests (1). |
| --- | --- |

1.5.

| 1.6. | The EESC expects that extending the scope of DAG monitoring to the whole agreement and to all aspects of the agreement, also not related to sustainable development while keeping a special attention to these aspects, could complement the efforts put in place by the European Commission to promote better implementation of future EU FTAs and supports such an extension. DAGs are expected to have a positive impact on raising awareness among wider circles of civil society on the benefits of free, rules-based, sustainable and inclusive trade, while addressing shortcomings. Further, they can provide factual information and contribute to an objective approach to trade agreements. |
| --- | --- |

1.6.

| 1.7. | Extending the competence to all aspects of the agreement will in all likelihood make it easier for partner countries to accept civil society monitoring and speed up the DAG establishment. |
| --- | --- |

1.7.

| 1.8. | It is particularly important to engage with third countries on the basis of mutual respect and understanding. In the EESC’s opinion, joint DAGs meetings with the partner country are extremely important. For all future relevant agreements, the EESC calls for the establishment of a DAG-to-DAG (which is a joint civil society body with the partner countries), not just separate DAGs for each party (2). In cases where other mechanisms for expressing the opinion of civil society are already in place, it would be essential to keep them, as the time to create trust and appropriate working conditions requires years. |
| --- | --- |

1.8.

| 1.9. | The EESC thinks that what makes DAGs relevant is also their composition, and in particular the representativeness and competence of their members to be insured by an improved selection mechanism in consultation with EESC as in other successful cases; in the DAGs a balanced representation of civil society interests as well as an appropriate internal expertise should be guaranteed. DAGs should be able to involve and consult external stakeholders. |
| --- | --- |

1.9.

| 1.10. | The EESC recommends that DAGs meet at least twice a year at EU level and that formal DAG-to-DAG meetings take place twice a year in an institutional form using also videoconference, but at least once per year face to face. |
| --- | --- |

1.10.

| 1.11. | The EESC recommends that a conference of all DAG members at the EU level be organised in Brussels every year to allow mutual sharing of experience from their respective DAGs. |
| --- | --- |

1.11.

| 1.12. | DAGs should also have the possibility to organise a hearing every year. Cooperation with national institutional bodies representing civil society, the national counterparts of the EESC, would be a plus to extend the dialogue outside Brussels and reach a wider audience beyond the current setting, which privileges Brussels-based organisations. |
| --- | --- |

1.12.

| 1.13. | The establishment of multiple bodies under the same agreement creates confusion in the EU’s trading partners (3) and imposes a burden on both third countries and the EESC. The EESC calls on the EU to provide for Join Consultative Mechanisms to be competent for all pillars of future Association Agreements, starting with the renegotiated agreements with Chile and Mexico, and in the future with Mercosur. |
| --- | --- |

1.13.

| 1.14. | A reporting mechanism should be provided for that would allow civil society organisations sitting in future DAGs to report problems in implementation or to present suggestions for improvement. The EESC further recommends that DAG Chair should have the right to present the views of their groups to the Trade and TSD Committees, which should be required to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe. The EESC welcomes the commitment of the European Commission to a structured, transparent and time-based complaint mechanism for the implementation of TSD chapters in the future. |
| --- | --- |

1.14.

| 1.15. | Before the civil society bodies are established, the EESC makes a big effort to work on the setting up of DAGs/Consultative Committees well before the entering into force of the agreement. The EESC’s efforts should be recognised and supported by the European Parliament and the Council, in particular in their budgetary capacity, and the Commission. |
| --- | --- |

1.15.

| 1.16. | To ensure visibility of the DAGs, the EESC recommends that a communication strategy be defined, including the use of webpages, an IT platform for exchanges and social media. |
| --- | --- |

1.16.

| 1.17. | Financial support should be provided for the implementation of future agreements, especially by partner governments. The EESC considers that the text of the agreements should explicitly provide for the commitment to adequately finance and politically and logistically support the envisaged civil society bodies, also by the counterpart governments. |
| --- | --- |

1.17.

| 1.18. | The EESC believes its participation to be invaluable and wishes to continue to be part of all DAGs. |
| --- | --- |

1.18.

| 1.19. | Through its rules and way of working and through its members, the EESC provides a structured and organised functioning of the DAG contributing to identifying the counterparts in the partner country, setting the agenda, running the meetings, reporting to EU institutions and civil society, as well as accountability. |
| --- | --- |

1.19.

| 1.20. | The cost of being resent in DAGs for the EESC is assumed to double in the next three years and to triple to cover the FTAs currently negotiated. The DAGs will therefore represent a challenge for the EESC in terms of financial and human resources. EESC asks budgetary authorities for an additional budget matching the current expenditure foreseen by the Commission to support Domestic Advisory Groups to fulfil the expected work in terms of quantity and quality. |
| --- | --- |

1.20.

| 1.21. | The EESC suggests the following criteria be considered for establishing a DAG and setting the number of members: the total volume of EU external trade per year, the EU investments in the partner country(ies), the significance of the agreement from a geo-political and strategic perspective, relevant sustainability considerations. |
| --- | --- |

1.21.

| 1.22. | On the EU side, DAGs report essentially to the European Commission, and it would be important in the future to be able to also report to Parliament and the Council. The EESC recommends a regular a structured dialogue between the EU DAGs, the Commission, the EEAS, the European Parliament and the EU Member States. Concerning the European Parliament, a structured, regular consultation mechanism could be envisaged. |
| --- | --- |

1.22.

2.   Background

| 2.1. | The President of the European Parliament, in line with Article 304, first paragraph, second sentence of the Treaty on the Functioning of the European Union, has consulted the EESC for an opinion on the Functioning of the Domestic Advisory Groups (4), pointing out that ‘[there] are several aspects that need further analysis and discussion such as the necessary resources for [DAGs] to effectively fulfil their tasks, ways to solve organisational and logistical challenges currently faced by civil society bodies, ways to improve the interaction between [DAGs] and [TSD] committees and any other aspect that would allow to improve the current state of play’. |
| --- | --- |

2.1.

| 2.2. | Domestic Advisory Groups are one key achievement of the inclusion of Trade and Sustainable Development chapters in the EU’s free trade agreements. Their establishment is grounded not only in the EU’s trade policy, but more broadly in the EU’s strong political will to mainstream sustainable development in all its policies and strategies since the Rio+20 Declaration of 2012. The Strategy ‘Trade for All’, adopted by the European Commission in 2015, further aimed at greater transparency and inclusiveness in the EU’s trade policy, including through a deepened dialogue with civil society. |
| --- | --- |

2.2.

| 2.3. | On 26 February 2018, the European Commission presented a non paper (5) that ‘suggests a set of 15 concrete and practicable actions to be taken to revamp the TSD chapters’, including among others [‘broadening] the substantive scope of competence of DAGs’ advice to cover the implementation of the whole agreement in future FTAs’. The non paper states that ‘[this] approach will be first rolled out with the EU-Mexico and EU-Mercosur FTAs, and thereafter become part of the Commission’s standard negotiating approach’. |
| --- | --- |

2.3.

| 2.4. | The EU-Mexico and EU-Mercosur agreements are Association Agreements and so also have political and cooperation pillars negotiated by EEAS. The EU has proposed a ‘nested’ approach with DAGs and civil society fora at the level of the overall Association Agreement and also for the trade part. In contrast, self-standing FTAs such as with Indonesia, Australia or New Zealand would have a simpler approach covering the whole FTA. In exchanges with the Commission, it was highlighted that the drafting of the provisions for civil society will be open-ended and they will be free to provide inputs on any matter of interest, also not related to sustainable development. |
| --- | --- |

2.4.

| 2.5. | The EESC has already adopted several opinions (6) on Trade and Sustainable Development, urging to strengthen its monitoring mechanism and giving recommendations on improving the functioning of DAGs. In its opinion on ‘Trade and sustainable development chapters in EU Free Trade Agreements’, the EESC called specifically for mandating DAGs to monitor the impact of all parts of trade agreements on human, labour and environmental rights, and to extend the scope to cover consumer interests as well as social and economic impact. The EESC further praises the fact that a report on Implementation of Free Trade Agreements will now be published every year. |
| --- | --- |

2.5.

| 2.6. | The EU-Cariforum Economic Partnership Agreement (EPA) and the EU-Korea Free Trade Agreement, which entered into force respectively in 2014 and in 2011, were the first to provide for the establishment of a civil society advisory body tasked with the monitoring of the implementation of the Trade and Sustainable Development (TSD) chapter of the agreement. All subsequent EU agreements, including with Central America, Colombia Peru and Ecuador, Georgia, Moldova, Ukraine and Canada, have adopted this approach. Today, eight DAGs, with 27 members of the EESC, are active, five more are expected to be established by 2021, and more may follow in the future, subject to the conclusion of new FTAs negotiations already launched, such as those with Australia and New Zealand, or to the revision of current Agreements. |
| --- | --- |

2.6.

| 2.7. | The DAGs, under the current agreements, allow for a balanced representation of civil society interests through the three sub-groups in which they are organised: employers, trade unions and various interests, including environmental and consumer organisations, as well as other relevant stakeholders. Members of the DAGs are representatives from the main European economic and social organisations, as well as of environmental organisations, consumers, farmers and other third sector interests. The EESC is a permanent component in the membership of DAGs. |
| --- | --- |

2.7.

3.   General comments

| 3.1. | The EESC recognises that trade contributes to economic growth and to economic development in a wider sense and in this regard, supports enlarging the number of trade agreements the EU has in place. However, FTAs are also a centre of intense debate about its contribution to social development and environmental protection, the benefits and drawbacks and on how they are apportioned to the countries and different stakeholders. The EU today faces an increasing demand for a constructive dialogue with civil society on FTAs. The current EU mechanisms for agreements include DAGs, Joint Consultative Committees Civil Society Platforms, civil society fora and Joint Civil Society Fora. This complex architecture of consultation mechanisms makes it somehow a challenge to turn them into effective and good functioning structures (7). Further mechanisms for exchanges with civil society on the EU’s trade policy include public consultations and platforms like the Civil Society Dialogue as well as the Group of Experts on EU Trade Agreements (called for by DG Trade). |
| --- | --- |

3.1.

| 3.2. | The Treaty of Lisbon reinforced and confirmed the EESC function and composition as an institutional representative of organised civil society. The EESC, in partnership with the other institutions, was set up to be the instrument of participatory democracy and civil dialogue at European level. From an institutional perspective, EU civil society views on the EU’s trade policy are provided through its opinions by the EESC, and also through other means. In light of its capacity, the EESC requests to be consulted during the negotiating phase of EU AAs, EPAs, and FTAs. |
| --- | --- |

3.2.

| 3.3. | The EESC, a permanent member of DAGs, provides the secretariat of all existing DAGs, has extensive first-hand knowledge of the benefits and impact that civil society monitoring has on the implementation of TSD chapters. Some of the lessons learnt through the work of existing DAGs will apply, mutatis mutandis, when the competence of DAGs is extended to the other chapters of the agreements. At the same time, the EESC deems it important to make further considerations and wishes to present recommendations on the DAGs’ relevance, effectiveness and efficiency, composition, way of working and duration of mandate, administrative and budgetary aspects. |
| --- | --- |

3.3.

Relevance of DAGs

| 3.4. | The EESC supports the concept of sustainable development in its three interrelated and mutually reinforcing economic, social and environmental dimensions. It is clear that international trade can only take place by taking sustainable development, environmental protection and social protection of workers, citizens and consumers rights into account. Agreements must include provisions aimed at establishing a level playing field and fair competition on all these aspects. |
| --- | --- |

3.4.

| 3.5. | In general terms, the participation of representatives from civil society has contributed to better outcomes – in terms of a positive economic, social and environmental impact of trade agreements. The added value of their involvement in the EU’s FTA monitoring is crucial, as concrete progress in the case of Korea has demonstrated (8). It is important to remember that the institutionalised dialogue with civil society represents a distinctive feature of the EU’s way of life and work; however, we must recognise that it is not always fully shared by our partners. In the EESC’s opinion, DAGs should continue to have an advisory, consultative, responsible and independent role in monitoring and evaluating EU agreements. Civil society participation is also a pivotal contribution to the strategic value of these agreements, that nowadays goes beyond the mere benefits of trade. |
| --- | --- |

3.5.

| 3.6. | One of the key achievements of stakeholders’ involvement through structures like DAGs is strengthening civil society processes and empowering organisations of civil society that have little or no recognition by their own governments. This is especially true for partner countries that have a different understanding of the role of civil society than in the EU and for those that have less developed practices when it comes to civil society consultation. On several occasions, in particular when the trade partner is a developing country, the creation of a DAG has allowed for the empowerment of stakeholders who hold critical expertise and for a bottom-up approach to problem-solving through dialogue, cooperation and capacity building (9). |
| --- | --- |

3.6.

| 3.7. | The ‘cooperative’ approach of the civil society organisations (CSO) can represent a policy-relevant contribution to ensure an innovative, effective and successful monitoring of the implementation of clauses of the Free Trade Agreements even in the absence of enforceable provisions. In this case, the role of CSO in the context of trade is to support a pragmatic and flexible approach to sustainable development adapted to the specific conditions of the countries where the DAG will be established. The joint work of DAGs organised in this context between partner countries and the EU can play an important role both in identifying problems and in proposing public policies to overcome them. |
| --- | --- |

3.7.

| 3.8. | The DAGs should, among other things, put a particular emphasis on the parties’ ratification and respect for the Core Labour Standards and fundamental conventions of the ILO, as well as for Multilateral Environmental Agreements. The implementation and enforcement of concrete crucial legislation, for example on freedom of association, collective bargaining, social dialogue, social protection, health and safety, and labour inspection, should be a subject of special attention from the DAGs. |
| --- | --- |

3.8.

| 3.9. | Civil society participation through DAGs contributes to maintaining and improving consumer protection, considering environmental implications and ensuring the full respect of the sustainability goals, as well as examining the opportunities for small and medium-sized companies. DAGs can also check for possible negative social consequences as regards equal opportunities for women and men, the rights of disabled people and other minorities as well as equal access to services of general interest. Consumer organisations have expressed their support for EU Free Trade Agreements and have demanded that the protection of consumers continue to be guaranteed after liberalisation of markets. Consumers have suggested the introduction of a consumer chapter in future EU agreements. The extended scope of DAG monitoring would enable consumer associations to more closely follow the implementation of the dedicated consumer chapter. |
| --- | --- |

3.9.

| 3.10. | The DAGs could help prioritising among issues in implementation. As shown by the European Commission in its Report on Trade and Investment Barriers, protectionism in its various forms continues to increase, negatively affecting EU stakeholders. Should breaches of provisions or sub-optimal implementation be noticed, economic operators will have in the DAG an additional channel at their disposal to raise awareness on issues on the ground, and the possibility for the DAG to alert to possible links between FTA preference utilisation rates and barriers to trade included in the Market Access Data Base. As shown in a recent report (10), non-utilisation of preferential FTA tariffs may be high and difficult to measure for small and medium-sized enterprises in particular. Equally, the EESC wishes to reiterate the essential link of the economic dimension and the way tariffs are implemented, to the promotion and protection of jobs. |
| --- | --- |

3.10.

Extending the scope of DAGs

| 3.11. | Given such benefits of civil society involvement, the EESC expects that extending the scope of DAG monitoring to the whole agreement and to all aspects of the agreement, also not related to sustainable development while keeping a special attention to these aspects„ could complement the efforts put in place by the European Commission to promote better implementation of EU FTAs. DAGs are expected to have a positive impact on raising awareness among wider circles of civil society of the benefits of free, rules-based, sustainable and inclusive trade, while addressing shortcomings. Monitoring of FTA implementation is crucial to demonstrate both the benefits and negative impacts stemming from the agreements for businesses, workers, consumers and citizens at large. Further, they can provide factual information and contribute to an objective approach to trade agreements. |
| --- | --- |

3.11.

| 3.12. | Extending the competence to the business aspects of the agreement will in all likelihood make it easier for partner countries to accept civil society monitoring and speed up the DAG establishment (11). DAGs shall be in a position (composition, way of working, etc.) to properly address the variety of issues arising from all chapters of FTAs and have the ability to engage with the appropriate parts of civil society. The EESC believes that extending the scope of monitoring to the whole agreement will require prioritisation so that efforts are made where most needed, keeping a balanced representation of all interests in the work programme of the DAG. |
| --- | --- |

3.12.

| 3.13. | However, the EESC regrets that the extension of the scope did not go along with further strengthening the monitoring mechanism with respect to effective enforceability of the commitments in TSD chapters, which is of crucial importance to the EESC, and the important role of DAGs in ensuring that their violations are detected and effectively addressed. |
| --- | --- |

3.13.

4.   Specific issues to be addressed

The DAG in partner countries

| 4.1. | It is particularly important to engage with third countries on the basis of mutual respect and understanding. Several governments are very reluctant to negotiate a TSD chapter and set up a civil society monitoring mechanism. In many countries, civil society’s involvement in TSD implementation monitoring is often organised according to different schemes compared to the EU. For instance, Canada is setting up two DAGs, one on environment and one on labour. Establishing DAGs is a gradual process that requires an effort on the part of the EU aimed at supporting the counterpart in involving civil society. In the EESC’s opinion, joint DAGs with the partner country are extremely important. For all future agreements, the EESC calls for the establishment of a DAG-to-DAG (which is a joint civil society body with the partner countries), not just separate DAGs for each party (12). However, in cases where other mechanisms for expressing the opinion of civil society are already in place, as in the case of the EU-Chile Association Agreement, it would be essential to keep them, as the time to create trust and appropriate working conditions requires years. |
| --- | --- |

4.1.

| 4.2. | Main shortcomings, some identified in previous EESC Opinions, are unbalanced membership, serious delays, lack of political and financial support by counterpart governments, and exclusion of the most representative organisations in a specific country remain clear obstacles to achieving a proper counterpart. The choice of national organisations instead of existing, representative and balanced regional civil society structures (the case of Central America and Mercosur) is detrimental to civil society’s ability to work jointly at regional level, and to regional cohesion itself. |
| --- | --- |

4.2.

| 4.3. | The EU must persuade, diplomatically but firmly, the counterpart countries of the need to comply with the agreement to set up balanced and representative DAGs; to this end, coordination should be established between the Commission, the EEAS, the European Parliament and its various constituent bodies, and the EESC. |
| --- | --- |

4.3.

Composition and representativeness

| 4.4. | What makes DAGs relevant is also their composition, and in particular the representativeness and competence of their members, which are key aspects that must be retained in the future and further encouraged in third countries. This must be ensured in the selection process. The EESC expects to be consulted on improving the selection process. In the DAGs a balanced representation of civil society interests should be guaranteed. The purpose is to ensure that a single stakeholder or subgroup of stakeholders does not dominate the debate or the agenda, which should incorporate items proposed by all subgroups. |
| --- | --- |

4.4.

Efficiency and effectiveness/Logistical and organisational challenges

| 4.5. | The restricted number of members (usually no more than six per sub-group), and their modus operandi ensures the efficiency and effectiveness of DAGs. The EESC recommends that DAGs meet at least twice a year at EU level and that DAG-to-DAG meetings to be formalised into the texts of future agreements, allowing to meet twice a year (while one of the meetings must be face to face, the second could be held via videoconference for logistics and budgetary reasons). The EESC urges the negotiators to learn from the experience of other free trade agreements, which have set up domestic advisory groups (DAGs) for each party without including any possibility for recognised joint dialogue within the agreements. The clear limitations of this model have been shown. The EESC calls for DAG-to-DAG meetings in current agreements to be formally recognised by the Parties to existing agreements. DAG-to-DAG meetings allow for civil society organisations involved on a regular basis in their respective domestic monitoring exercises to exchange views on implementation issues. The definition of deliverables and a common work programme allows the DAG members to assess the progress made, prepare joint recommendations and report to the institutions and the wider civil society, ensuring transparency, accountability and continuity. |
| --- | --- |

4.5.

| 4.6. | Better coordination of the DAGs will ensure higher quality monitoring by civil society. In light of the considerable knowledge that is acquired within each DAG, the EESC recommends that a conference of all DAG members at the EU level be organised in Brussels every year to allow mutual sharing of experience from their respective DAGs. |
| --- | --- |

4.6.

| 4.7. | The composition of future DAGs should mirror the range of topics that will be part of the work programme. This calls for the participation of organisations that have the technical expertise on all aspects of trade agreements and direct interests at stake. For the DAGs’ monitoring to properly cover all aspects of FTAs, DAGs need to have appropriate expertise internally while also being able to enlarge participation and consult external stakeholders. DAGs should also have the possibility to organise a hearing every year. Cooperation with national institutional bodies representing civil society, the national counterparts of the EESC, will be a plus to extend the dialogue outside Brussels and reach a wider audience beyond the current setting, which privileges Brussels-based organisations. |
| --- | --- |

4.7.

| 4.8. | The establishment of multiple bodies under the same agreement creates confusion in the EU’s trading partners (13) and imposes a burden on both third countries and the EESC. It is unnecessary and inefficient to include civil society representation twice – once in the general AA and again in the chapter on Trade and Sustainable Development. For instance, in the case of Association Agreements with Moldova, Georgia and Ukraine, two different bodies are established: the political pillar of the Agreement sets up a Civil Society Platform that is competent for all matters under the agreement, while the Trade pillar within the Agreement sets up a DAG. The EESC calls on the EU to provide for Join Consultative Mechanisms to be competent for all pillars of future Association Agreements, starting with the renegotiated agreements with Chile and Mexico, and in the future with Mercosur. |
| --- | --- |

4.8.

| 4.9. | It has been observed that breaches of some provisions reported in the past by a DAG were not taken up swiftly. A reporting mechanism should be provided for that would allow civil society organisations sitting in future DAGs to report problems in implementation or to present suggestions for improvement. The EESC further recommends that DAG Chair should have the right to present the views of their groups to the Trade and TSD Committees, which should be required to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe. The EESC welcomes the commitment of the European Commission to a structured, transparent and time-based complaint mechanism for the implementation of TSD chapters in the future. Such an engagement should also inform the future approach. |
| --- | --- |

4.9.

More transparency and communication strategy

| 4.10. | Before the civil society bodies are established, the EESC makes a big effort to work on the setting up of DAGs/Consultative Committees well before the implementation of the agreement. This is especially the case in Central America, Canada, Japan, Chile, Mercosur or Ukraine, where EESC members have made contact with counterpart organisations and governments in order to raise their awareness on the need to prepare our future joint work. The EESC’s efforts should be supported by the European Parliament, DG Trade and EEAS so that information is provided to civil society organisations in the partner countries on the need to establish these civil society bodies to make them operational as soon as possible after the entry into force of the agreement. |
| --- | --- |

4.10.

| 4.11. | After their establishment, and in order to ensure visibility of the DAGs, the EESC recommends that a communication campaign is conducted and that the dedicated webpage is regularly updated with meeting documents including agenda and minutes. An IT platform to facilitate exchanges between the EU’s and the partner countries’ DAGs could be set up to this end. Social media should also be used. |
| --- | --- |

4.11.

Resources needed

| 4.12. | Both the EESC and the European Commission have so far provided financing and human resources to assist in the functioning of DAGs. As of 2018, the Commission has set aside a budget of three million euros for three years. An external contractor will be in charge of the logistic organisation of DAG meetings. |
| --- | --- |

4.12.

| 4.13. | Further financial support should be provided for the implementation of future agreements, especially by partner governments. The EU institutions should constantly raise the matter with the partner countries’ governments to look together for longer-term sustainable solutions. The EESC considers that the text of the agreements should explicitly provide for the commitment to adequately finance and politically and logistically support the envisaged civil society bodies, also by the counterpart governments. |
| --- | --- |

4.13.

5.   The EESC and the DAGS

| 5.1. | At the request of the European Commission, the EESC supports DAGs through its members and secretariat. The EESC considers its participation valuable and wishes to continue to be part of all DAGs. The EESC recommends that DAG membership be defined for a term of five years to provide stability and continuity. However, the Chair members should rotate every 2.5 years. |
| --- | --- |

5.1.

| 5.2. | The EESC allows for a structured and organised functioning of the DAG contributing to identifying the counterparts in the partner country, setting the agenda, running the meetings, reporting to EU institutions and civil society, as well as ensuring accountability. For these reasons, EESC is best placed to Chair the DAGs and therefore proposes that future FTAs include provisions for EESC to chair the European DAG. |
| --- | --- |

5.2.

| 5.3. | The cost of being present in DAGs for the EESC is assumed to double in the next three years and to triple to cover the FTAs currently negotiated. The EESC membership of DAGs is expected to require about further 50 EESC members to be involved. |
| --- | --- |

5.3.

| 5.4. | The DAGs will therefore represent a challenge for the EESC in terms of financial and human resources. It is estimated that with all current and future DAGs in place, the annual cost might amount to as much as 24 % of the current External Relations Section budget for members. |
| --- | --- |

5.4.

| 5.5. | In terms of human resources, the External Relations Secretariat will also need to be strengthened and its budget for missions reinforced. On the basis of the agreement between the EESC and the European Commission (DG Trade), the EESC Section for External Relations (REX) provides secretariat services to the established EU DAGs and liaises with the partner countries’ DAGs in matters related to the annual joint meetings and cooperation between sessions. |
| --- | --- |

5.5.

| 5.6. | The EESC wants to draw special attention to the secretariat work carried out by EESC officials facilitates the DAGs’ work in areas which go beyond the purely organisational. The DAGs benefit from the extensive experience of the EESC staff in supporting civil society consultations both within the EU and with third countries or regions (the REX secretariat currently manages 17 joint bodies with third countries). The secretariat:






  — | provides policy advice for members in their work; |
| --- | --- | --- |

5.6.

—

provides policy advice for members in their work;

| — | assists DAG chairs in drawing up meeting agendas and takes notes of the meetings; |
| --- | --- |

—

assists DAG chairs in drawing up meeting agendas and takes notes of the meetings;

| — | advises on potential speakers, experts and civil society organisations which could be invited; |
| --- | --- |

—

advises on potential speakers, experts and civil society organisations which could be invited;

| — | prepares meeting files and facilitates provision of a constant flow of information on topics of interest to DAG members; |
| --- | --- |

—

prepares meeting files and facilitates provision of a constant flow of information on topics of interest to DAG members;

| — | uses its network of contacts in other EU institutions and in international organisations in order to facilitate exchanges between the DAGs and those institutions. |
| --- | --- |

—

uses its network of contacts in other EU institutions and in international organisations in order to facilitate exchanges between the DAGs and those institutions.

However, this task involves more and more effort in both economic and human terms.

| 5.7. | The EESC is thankful to the European Parliament, which requested an increase in members’ and staff budget in 2017 and 2018, and hopes that such support can be maintained in the future. EESC asks budgetary authorities for an additional budget matching the current expenditure foreseen by the Commission to support Domestic Advisory Groups to fulfil the expected work in terms of quantity and quality. |
| --- | --- |

5.7.

| 5.8. | The limited resources require participation to be set, when initially establishing the DAG, at three EESC members for a regular DAG, 6 members only in exceptional cases, such as:






  — | a DAG with a country/area representing more than EUR 100 billion of the total volume of EU trade per year; |
| --- | --- | --- |

5.8.

—

a DAG with a country/area representing more than EUR 100 billion of the total volume of EU trade per year;

| — | or EU investments above EUR 100 billion; |
| --- | --- |

—

or EU investments above EUR 100 billion;

| — | or that has a strong significance from a geo-political and strategic perspective; |
| --- | --- |

—

or that has a strong significance from a geo-political and strategic perspective;

| — | or where sustainability considerations are especially relevant. |
| --- | --- |

—

or where sustainability considerations are especially relevant.

Similar criteria could be considered for whether or not to establish a DAG. The EU has Trade Agreements with 69 countries and regions in the world. Not all of them would require the establishment of a DAG.

The EESC and EU’s institutions

| 5.9. | DAGs play a different role vis-à-vis the EU and vis-à-vis the partner country. On the EU side, DAGs report essentially to the European Commission, and it would be important in the future to be able to also report to Parliament and the Council. Concerning the European Parliament, reporting is currently done on an ad-hoc, informal basis at the request either of the INTA Committee or of one of the EP delegations for relations with third countries. A more structured, regular consultation mechanism could be envisaged. |
| --- | --- |

5.9.

Brussels, 23 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC Opinion on Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTAs) (OJ C 227, 28.6.2018, p. 27).

1

(2)  EESC Opinion ‘Towards an EU-Mercosur Association Agreement’, point 6 (OJ C 283, 10.8.2018, p. 9).

2

(3)  EESC Opinion on Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTAs) (OJ C 227, 28.6.2018, p. 27).

3

(4)  Letter of Antonio Tajani, President of the European Parliament, to Luca Jahier, President of the European Economic and Social Committee, 11 October 2018.

4

(5)  The non paper of the Commission services ‘Feedback and way forward on improving the implementation and enforcement of Trade and Sustainable Development chapters in EU Free Trade Agreements took stock of the debate that involved consultations with the EU Member States, the European Parliament and civil society’, http://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf.

5

(6)  EESC Opinion on Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTAs) (OJ C 227, 28.6.2018, p. 27), EESC opinions ‘Towards an EU-Mercosur Association Agreement’ (OJ C 283, 10.8.2018, p. 9), EESC Opinion ‘EU-Korea Free Trade Agreement — Trade and Sustainable Development Chapter’ (OJ C 81, 2.3.2018, p. 201).

6

(7)  Point further developed at 4.8.

7

(8)  See the formal consultation in 2018 by DG Trade with the Korean Government on the situation of trade union rights in Korea and lack of ratification by Korea of certain ILO Conventions, as repeatedly requested by the EU DAG for Korea.

8

(9)  Damien Raess, page 13.

9

(10)  Report by Unctad and the National Board of Trade Sweden.

10

(11)  For instance, in 2018 implementation issues in the Korea FTA include ratification and implementation of ILO conventions, beef export to Korea, remuneration of intellectual property rights, the regulatory framework, market access for electronics, cars and machinery, and improvement of customs procedures. Other FTAs will obviously have their own.

11

(12)  EESC Opinion ‘Towards an EU-Mercosur Association Agreement’, point 6 (OJ C 283, 10.8.2018, p. 9).

12

(13)  EESC Opinion on Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTAs) (OJ C 227, 28.6.2018, p. 27).

13

---

III Preparatory acts

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

European Economic and Social Committee

| 10.5.2019 | EN | Official Journal of the European Union | C 159/38 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/38

---

Opinion of the European Economic and Social Committee on the role of Domestic Advisory Groups in monitoring the implementation of Free Trade Agreements

[COM(2018) 329 final — 2018/0164 (CNS)]

(2019/C 159/05)

Rapporteur: Krister ANDERSSON

Co-rapporteur: Giuseppe GUERINI

| Consultation | Council of the European Union, 11.07.2018 |
| --- | --- |
| Legal basis | Article 113 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 20.12.2018 |
| Adopted at plenary | 24.01.2019 |
| Plenary session No | 540 |
| Outcome of vote (for/against/abstentions) | 163/0/2 |

Consultation

Council of the European Union, 11.07.2018

Legal basis

Article 113 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

20.12.2018

Adopted at plenary

24.01.2019

Plenary session No

540

Outcome of vote (for/against/abstentions)

163/0/2

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the Commission’s proposal to replace the transitional VAT system for the taxation of trade between Member States put in place more than 25 years ago and still in force. Going beyond the transitional regime is a crucial step to completing the move to the definitive destination principle-based VAT system for taxing goods in B2B relations and it is an important achievement proving the continuous consolidation of the EU internal market. |
| --- | --- |

1.1.

| 1.2. | The EESC urges the Commission, once again (1), to explore how a common system for both services and goods can be rolled out as quickly as possible, thereby reducing the foreseeable problems triggered by the existence of two different systems for goods and services. However, the Commission has repeatedly advocated a gradual two-step shift to the new regime, involving goods as a first step and services as a future second step. |
| --- | --- |

1.2.

| 1.3. | The EESC stresses the importance of continuing the work towards the second step, since treating goods and services in the same way for VAT purposes would be more conducive to growth and more effective against fraud. |
| --- | --- |

1.3.

| 1.4. | The EESC highlights that, although the Commission proposal is extensive and well drafted, some outstanding questions still remain open. The proposed system would indeed benefit from clear provisions or clarity laying down the rules for bad debt and refunds management within the One-Stop Shop (OSS). Moreover, additional definitions regarding concepts such as ‘marketplace’ and ‘platforms’ could be provided and elaborated. |
| --- | --- |

1.4.

| 1.5. | The EESC notes that the proposed system will trigger cash flow effects due to VAT on cross-border B2B supplies of goods, resulting in a cash flow income for the seller and a cash flow cost for the buyer. However, the cost of capital will in general be greater, since the time for recovering VAT will always be longer than the time the VAT is held by the seller. Moreover, through the OSS system, a differentiated return period will arise from the Member States’ reporting periods, payment time to their local tax authority and the tax authority’s efficiency in returning VAT to the country of the buyer. |
| --- | --- |

1.5.

| 1.6. | The EESC calls for these aspects to be further investigated in order to prevent negative effects on the Single Market and to ensure the certainty and predictability of the new VAT system under construction, thereby reducing compliance costs and administrative burden. |
| --- | --- |

1.6.

| 1.7. | The EESC asks for clear and proportionate criteria regarding the concept of ‘certified taxable person’ (CTP) to be implemented across Member States, in order to facilitate the broadest possible access to CTP status. In order to achieve the purpose of the new destination-based regime, it would be beneficial to harmonise the timeframe during which Member States must handle an application to receive the status of CTP. The Member States should process a CTP application promptly in order to enable businesses to continue operating without unnecessary interruptions, delays and administrative burdens due to uncertainty. At the same time, the functioning of CTP status should be carefully monitored by the European Commission to avoid possible abuses and lack of regulatory uniformity, especially during the first months of application. |
| --- | --- |

1.7.

| 1.8. | The EESC underlines that a functioning OSS is crucial in order to implement the new destination-based system. Without a fully developed OSS, based on home-country audits, scalable simplifications and the ability to offset incurred input VAT from all Member States, any destination-based system will dramatically increase the administrative burden, especially for SMEs. |
| --- | --- |

1.8.

| 1.9. | The EESC is concerned that the current proposal may turn out to be a prohibitive obstacle for both SMEs and start-ups. The EESC believes that the system of reverse charge should be granted to all cross-border supplies of goods B2B, until the definitive system is fully in place and reimbursement of VAT is done in a timely manner. |
| --- | --- |

1.9.

| 1.10. | The EESC recommends an adequate investment in IT hardware/software assets to properly develop a solid and reliable OSS able to efficiently manage a considerable amount of sensible information, guaranteeing a swift and secure functioning of the system to the benefit of both European companies and fiscal administrations. Such investments are strategic in order to avoid adverse outcomes during the transition period from the old system to the new one, which will entail significant adaptation costs that should be minimised as far as possible through adequate digitalisation. |
| --- | --- |

1.10.

| 1.11. | The EESC stresses the need for further cooperation between Member States to fight fraud and continuous analysis on the matter to ensure that the proposed system will not lead to new kinds of fraud and collection losses. A taxation of B2B cross-border transactions will increase the total amount of VAT in the system. This may increase the possibility for other kinds of fraud, leakage and collection losses. A taxable person in a Member State with a high VAT GAP will act as a collector for Member States with a lower VAT GAP. |
| --- | --- |

1.11.

| 1.12. | The EESC recommends greater collaboration between national fiscal and enforcement authorities in order to make the new destination-based VAT system more effective in terms of both effectiveness against fraud and reliability in favour of European enterprises. Such a collaboration should include, inter alia, an automated exchange of information and data, as well as periodic reports and analytics regarding the functioning of the new regime, especially during the first years of its implementation. |
| --- | --- |

1.12.

| 1.13. | Finally, the EESC deems that European enterprises would benefit from an extensive communication action carried out by the Commission in order to adequately explain, in clear and practical terms, the main features of the new VAT system, as well as the concrete advantages the VAT reform is expected to deliver in favour of European businesses and their growth. |
| --- | --- |

1.13.

2.   Introduction and background

| 2.1. | Within its Action Plan on VAT adopted in April 2016 (2), the European Commission has published a proposal for a Council Directive introducing detailed technical amendments to EU rules on value added tax (‘VAT’) (3). The proposed directive amends some two hundred articles of Council Directive 2006/112/EC of 28 November 2006 (4), which will be adapted to introduce the detailed technical measures for the operation of the definitive VAT system for taxing trade between Member States (based on the destination principle). |
| --- | --- |

2.1.

| 2.2. | The Commission’s proposal replaces the transitional arrangements in force since 1 January 1993 and contains detailed provisions for intra-union Business-to-Business (B2B) trade, under which domestic and cross-border transactions of goods would be treated in the same way. Moreover, it serves as the first of the two regulatory steps – one covering goods, the other services – pursued by the Commission in order to achieve a simpler and more fraud-proof definitive VAT system for intra-Union trade. |
| --- | --- |

2.2.

| 2.3. | The Commission proposal gives rise to important changes to the VAT Directive, with the purpose of bringing the following benefits for businesses and national budgets: i) simplifying how goods are taxed; ii) developing a single online portal for traders (‘One Stop Shop’); iii) reducing red tape; iv) establishing the seller as generally responsible for VAT collection. |
| --- | --- |

2.3.

| 2.4. | The main changes include the elimination of the concept of ‘intra-Community acquisition of goods’ according to which, for VAT purposes, a trade of goods between businesses is split into two transactions: a VAT-exempt sale in the Member State of origin and a taxed acquisition in the Member State of destination. This will be replaced by the new concept of ‘intra-Union supply of goods’, according to which a cross-border B2B supply of goods within the Union will give rise to one single transaction for VAT purposes. |
| --- | --- |

2.4.

| 2.5. | The modifications proposed by the Commission also include: i) a new exception to the general rule according to which the place of supply of an intra-Union supply of goods will be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends; ii) an amendment that determines a single rule for the moment of chargeability of VAT on intra-Union supplies; iii) a new article according to which VAT is to be payable by the person to whom the goods are supplied insofar as that person is a certified taxable person (‘CTP’). According to the Commission, the proposal is also expected to reduce cross-border VAT fraud by up to EUR 41 billion per annum. |
| --- | --- |

2.5.

3.   General comments

| 3.1. | The EESC welcomes the Commission’s proposal to replace the transitional VAT system for the taxation of trade between Member States put in place more than 25 years ago and still in force. Going beyond the transitional regime is a crucial step to completing the move to the definitive destination principle-based VAT system for taxing goods in B2B relations and it is an important achievement proving the continuous consolidation of the EU internal market. |
| --- | --- |

3.1.

| 3.2. | The EESC is concerned about the costs for businesses and for SME in particular. They have to adopt their systems to comply with rules for trade both inside and outside Europe. It is paramount that new reporting requirements for VAT do not become part of the proposal or its implementation. Such changes would only increase compliance costs. |
| --- | --- |

3.2.

| 3.3. | In its previous opinions, the EESC urged the Commission to explore how a common system for both services and goods can be rolled out as quickly as possible, thereby reducing the foreseeable problems triggered by the existence of two different systems for goods and services (5). However, the Commission has repeatedly advocated a gradual two-step shift to the new regime. |
| --- | --- |

3.3.

| 3.4. | Thus, before including services, the Commission and national fiscal authorities will be able to assess the results of the new destination-based VAT system in terms of: i) effectiveness in fighting frauds; ii) compliance costs for European companies; iii) management of the new framework by tax authorities. |
| --- | --- |

3.4.

| 3.5. | The EESC hopes that the choice of a progressive and slower transition to the new VAT regime could allow, in the near future, the construction of a unique and efficient definitive system covering both goods and services. During the gradual implementation it may be possible to profitably learn from the first operational outcomes delivered by the new regime only with regard to goods. |
| --- | --- |

3.5.

| 3.6. | However, it should be noted that the definitive VAT system has been an awaited second step from the transitional system for over 25 years. The EESC therefore stresses the importance of continuing the work towards the second step. Should goods and services be treated in the same way, the VAT system would be more conducive to growth and robust against fraud. |
| --- | --- |

3.6.

| 3.7. | Although the proposal is extensive, the EESC would like to highlight the fact that some outstanding questions still remain. For instance, the proposed system would benefit from clear provisions or further clarity laying down the rules for bad debt, refunds management within the OSS, payments on account and definitions of ‘marketplace’, ‘platforms’, etc. These uncertainties, together with a negative cash-flow, will prompt business to take action to minimise the risks. The EESC wants these aspects to be investigated further in order to prevent negative effects on the Single Market. |
| --- | --- |

3.7.

| 3.8. | From a different perspective, it is worth noting that European enterprises would benefit from an extensive communication action carried out by the Commission in order to adequately explain, in clear and practical terms, the main features of the new VAT system, as well as the concrete advantages the VAT reform is expected to deliver in order to support European businesses and their growth. |
| --- | --- |

3.8.

| 3.9. | A taxation of B2B cross-border transactions will increase the total amount of VAT in the system. This may increase the possibility for other kinds of fraud, leakage and collection losses. A taxable person in a Member State with a high VAT GAP will act as a collector for Member States with a lower VAT GAP. Therefore, the EESC stresses the need for further cooperation between Member States to fight fraud and continuous analysis on the matter to ensure that the proposed system will not lead to new kinds of fraud and collection losses. |
| --- | --- |

3.9.

4.   Main amendments to Directive 2006/112/EC

| 4.1. | The current subdivision of a goods transaction in two parts for VAT purposes – an exempt supply in the departure jurisdiction of the goods and an ‘intra Community acquisition’ taxed in the destination State – will be replaced by a single transaction named ‘intra-Union supply of goods’, where the word ‘Community’ is replaced by the word ‘Union’ (6). |
| --- | --- |

4.1.

| 4.1.1. | The shift to a single transaction is necessary to achieve the new VAT system based on the destination principle and it will presumably simplify the administrative management of the single trades. On the other hand, the elimination of the reference to the ‘European Community’ in the entire text of Directive 2006/112/EC is a necessary textual adaptation in light of the new institutional formulation embedded in the Lisbon Treaty, which refers to ‘European Union’. |
| --- | --- |

4.1.1.

| 4.1.2. | The definition of ‘intra-Union supply of goods’ refers to ‘a supply of goods carried out by a taxable person for a taxable person or for a non-taxable legal person whereby the goods are dispatched or transported, by or on behalf of the supplier or the person acquiring the goods within the Union, from one Member States to another Member State’ (7). |
| --- | --- |

4.1.2.

| 4.1.3. | It is important to note that such a comprehensive notion will not cover: i) the supply of goods with assembly or installation with or without trial runs; ii) the supply of goods exempted under Articles 148 or 151 of Directive 2006/112/EC; and iii) goods covered by the flat rate schemes for farmers (8). Such transactions, when performed cross border, do not currently give rise to intra-Community supplies and acquisitions and the new text confirms this specific regime. |
| --- | --- |

4.1.3.

| 4.1.4. | The EESC considers the above-mentioned exemptions as useful confirmations of provisions already included in Directive 2006/112/EC with regard to specific listed goods and therefore able to guarantee the consistency and certainty of VAT rules across the single market during the initial implementation of the new system. |
| --- | --- |

4.1.4.

| 4.2. | The notion of intra-Union supply of goods is supplemented by a specific insertion in Directive 2006/112/EC concerning the ‘place of supply of goods’, which determines the Member State in which VAT is due. The existing general rules in this respect are confirmed, but with a new exception (9) according to which ‘the place of supply of an intra-Union supply of goods shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends’ (10). |
| --- | --- |

4.2.

| 4.2.1. | The EESC supports the idea behind both the regulatory choices of the Commission, since they are clearly aimed at developing the new destination-based system and keeping extensive exceptions, based on the State of origin principle, could harm the consistency of the new VAT framework, reducing the predictability of the law and possibly increasing both compliance costs for enterprises and administrative burden for fiscal authorities. |
| --- | --- |

4.2.1.

| 4.2.2. | Nonetheless, it is important to further analyse the cash flow effects of the proposed system. Today, there are no cash flow effects due to VAT on cross-border B2B supplies of goods. The proposed system will, on the contrary, result in a cash flow income for the seller and a cash flow cost for the buyer (11). |
| --- | --- |

4.2.2.

| 4.2.3. | However, the cost of capital will in general be greater since the time for recovering VAT will normally be longer than the time the VAT is held by the seller. This is due to the fact that many Member States tend to postpone VAT refunds. The cost of capital will vary depending on the Member States’ reporting periods, payment time to their local tax authority and the tax authority’s efficiency in refunding VAT to the buyer. The cost of capital is especially a concern for small Member States with high export figures. |
| --- | --- |

4.2.3.

| 4.2.4. | Such implications on the cash flow and liquidity of European enterprises should be adequately considered by both the European and national fiscal authorities and addressed in efficient ways, avoiding delays in refunds and the connected costs. Changes in supply chains, due to cash flow effects, risk hampering intra-union trade and may hinder the fulfilment of the Single Market. |
| --- | --- |

4.2.4.

| 4.3. | The principle stating that VAT shall be payable by any taxable person carrying out a taxable supply of goods remains a cornerstone of the VAT system, except for some listed exceptions already included in Article 193 Directive 2006/112/EC, which are now supplemented by a new derogation under Article 194(a). Pursuant to such a derogation, in the event that the supplier is not established in the State where VAT is due, VAT shall be payable by the person to whom the goods are supplied insofar as it is a certified taxable person (‘CTP’) (12). |
| --- | --- |

4.3.

| 4.3.1. | With regard to the CTP, the EESC understands the idea behind enabling businesses whose tax reliability is proven to benefit from appropriate simplification measures. However, as noted in opinion ECO/442 VAT Reform Package (I), the concept of CTP should be backed up by clear and transparent implementation criteria able to allow businesses, and SMEs in particular, to benefit from the status of CTP. |
| --- | --- |

4.3.1.

| 4.3.2. | The Committee underlines the fact that it is important, in order to achieve the expected benefits, to enable a taxable person who transfers composite supplies to apply the provided simplifications on all parts of a transaction. By forcing a fictive division of the transaction, the intended simplification risks becoming a complication. |
| --- | --- |

4.3.2.

| 4.3.3. | In this respect, it is crucial that harmonised, clear and proportionate criteria are implemented across Member States to facilitate the broadest possible access to CTP status. At the same time, the functioning of CTP status should be carefully monitored by the European Commission to avoid possible abuses and lack of regulatory uniformity, especially during the first months of application. |
| --- | --- |

4.3.3.

| 4.3.4. | In order to achieve the purpose of the regime it would be beneficial to harmonise the timeframe during which Member States must handle an application to receive the status of a CTP. The Member States should process a CTP application promptly in order to enable businesses to continue to operate without unnecessary interruptions, delays and administrative burdens due to uncertainty. |
| --- | --- |

4.3.4.

| 4.3.5. | Furthermore, the EESC is concerned that the current proposal may turn out to be a prohibitive obstacle for both SMEs and start-ups. The EESC believes that the system of reverse charge should be granted to all cross-border supplies of goods B2B, until the definitive system is fully in place and reimbursement of VAT is done in a timely manner. |
| --- | --- |

4.3.5.

| 4.4. | The elimination of recapitulative VAT statements with regard to goods proposed by the Commission is in line with the new VAT framework pursued, which re-installs the self-policing character of VAT. On the other hand, the confirmation of recapitulative statements for services is consistent with the Commission’s choice to implement the action plan in two different steps (13). |
| --- | --- |

4.4.

| 4.4.1. | The EESC supports the changes put forward by the Commission to allow Member States to simplify the obligation to submit recapitulative statements, since simplification will hopefully reduce red tape and operative costs for European companies. It nevertheless stresses that such simplification measures should be devised properly to avoid wrongdoing by businesses, considering not least that the achievement of a simpler system could be substantially favoured by an increased use of electronic invoices within national fiscal systems. |
| --- | --- |

4.4.1.

| 4.4.2. | The current special scheme for intra-Union distance sale of goods and for services supplied by taxable persons within the EU, but not in the member States of consumption, is subject to substantial changes in order to implement the principle of a single registration scheme for declaration, payment, and deduction of tax. |
| --- | --- |

4.4.2.

| 4.5. | Starting from 1 January 2021, a taxable person registered in its identification State will be able to electronically submit quarterly mini one-stop-shop (MOSS) VAT returns regarding supplies of services and intra Union distance sales to non-taxable persons in another Member State (State of consumption), along with the VAT due (14). |
| --- | --- |

4.5.

| 4.5.1. | The Member State of identification will then transmit the returns along with the VAT paid to the Member State of consumption, avoiding the need for these taxable persons to be registered in the Member State of consumption. |
| --- | --- |

4.5.1.

| 4.5.2. | The scope of transactions covered by such a mechanism is increased and extended from B2C transactions to B2B transactions (objective extension) and made available also for taxable persons established outside the EU that appoint an intermediary within the EU, which become liable for the VAT payment and corresponding obligations (subjective extension). |
| --- | --- |

4.5.2.

| 4.5.3. | Taxable persons utilising the scheme shall submit monthly One Stop Shop (OSS) VAT returns when their annual turnover is over EUR 2 500 000. |
| --- | --- |

4.5.3.

| 4.5.4. | The possibility to exercise VAT deduction, as well as to obtain refunds of VAT credit from a Member State within the OSS, allows the efficient concentration in a single venue of several VAT obligations to be carried out by both taxpayers and fiscal administrations. |
| --- | --- |

4.5.4.

| 4.5.5. | The Committee notes that it is positive that the new scheme including deduction will be simplified by allowing the taxable person to pay the sum of the net amount of VAT (15) in each of the Member States of taxation. |
| --- | --- |

4.5.5.

| 4.5.6. | On the other hand, the possibility of deduction increases the need for legal certainty and the completeness of the information available for fiscal authorities and thereby justifies the Commission proposal to complement the one stop shop VAT return with additional information, including: i) the total amount of VAT that has become chargeable on supplies of goods and services for which the taxable person as recipient is liable to pay the tax and on the importation of goods where the Member State exercises the option under the second paragraph of Article 211; ii) the VAT for which deduction is made; iii) amendments relating to previous tax periods; and iv) the net amount of the VAT to pay or to be refunded or credited. |
| --- | --- |

4.5.6.

| 4.5.7. | A functioning OSS is a vital part of a destination-based system. Without a fully developed OSS, based on home-country audits, scalable simplifications and the ability to offset incurred input VAT from all Member States, any destination-based system will dramatically increase the administrative burden, especially for SMEs. |
| --- | --- |

4.5.7.

| 4.5.8. | The first operational outcomes of the MOSS in force since 1 January 2015 for telecommunication, broadcasting and electronic services and due to be extended to all e-commerce B2C transactions (16) should be taken sufficiently into consideration in order to achieve a solid and fully functioning OSS with an extended and significant scope of application based on the concrete outcomes delivered so far by such a tool when applied to specific sectors or industries. |
| --- | --- |

4.5.8.

| 4.5.9. | Finally, the EESC recommends an adequate investment in IT hardware/software assets to properly develop a solid and reliable OSS able to efficiently manage a considerable amount of sensible information, guaranteeing a swift and secure functioning of the system to the benefit of both European companies and fiscal administrations. Such investments are strategic in order to avoid adverse outcomes during the transition period from the old system to the new one, which will entail significant adaptation costs that should be minimised as far as possible through adequate digitalisation. |
| --- | --- |

4.5.9.

Brussels, 24 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

---

(1)  See previous EESC opinions; Action plan on VAT (
  OJ C 389, 21.10.2016, p. 43
  ); VAT reform package (I) (
  OJ C 237, 6.07.2018, p. 40
  ); VAT reform package (II) (
  OJ C 283, 10.08.2018, p. 35
  ).

1

OJ C 389, 21.10.2016, p. 43

OJ C 237, 6.07.2018, p. 40

OJ C 283, 10.08.2018, p. 35

(2)  COM(2016) 148 final.

2

(3)  COM(2018) 329 final.

3

(4)  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1).

4

(5)  See previous EESC opinions; Action plan on VAT (OJ C 389, 21.10.2016, p. 43); VAT reform package (I) (OJ C 237, 6.07.2018, p. 40); VAT reform package (II) (OJ C 283, 10.08.2018, p. 35).

5

(6)  Modifications to Article 2 – 4 of Directive 2006/112/EC.

6

(7)  COM(2018) 329 final, p. 6.

7

(8)  Modifications to Article 14 of Directive 2006/112/EC.

8

(9)  Set forth by Article 35a, Directive 2006/112/EC.

9

(10)  COM(2018) 329 final, p. 7.

10

(11)  If the seller has to pay the VAT before having received the amount from the buyer, the seller will experience a negative cash-flow and therefore a cost.

11

(12)  Modifications to Articles 193, 194a, Directive 2006/112/EC.

12

(13)  Modifications to Articles 262 – 271, Directive 2006/112/EC.

13

(14)  Modifications to Articles 358 – 369, Directive 2006/112/EC.

14

(15)  VAT due minus VAT deductible.

15

(16)  Allowing businesses supplying telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons in Member States where they do not have an establishment to account for the VAT due on such supplies via a web-portal in the Member State where they are identified.

16

---

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

| 10.5.2019 | EN | Official Journal of the European Union | C 159/45 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/45

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards the adjustment of annual pre-financing for the years 2021 to 2023’

(COM(2018) 614 final — 2018/0322 (COD))

(2019/C 159/06)

Rapporteur: Javier DOZ ORRIT

| Referral | European Parliament, 13.9.2018
  European Council, 17.9.2018 |
| --- | --- |
| Legal basis | Articles 177 and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 20.12.2018 |
| Adopted at plenary | 24.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 121/1/3 |

Referral

European Parliament, 13.9.2018

European Council, 17.9.2018

Legal basis

Articles 177 and 304 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

20.12.2018

Adopted at plenary

24.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

121/1/3

1.   Conclusions and recommendations

| 1.1. | The European Commission proposal for a regulation under examination (1) amends the current Common Provisions Regulation for European funds (2), with a view to reducing the pre-financing of aid granted to the Member States under the 2014-2020 MFF from 3 % to 1 % of the amount of such aid between 2021 and 2023. |
| --- | --- |

1.1.

| 1.2. | If the new Common Provisions Regulation (3) is approved in the terms proposed by the Commission, the reduction in the pre-financing percentage in the final period of implementation of programmes financed with EU funds under the 2014-2020 MFF will be compounded, when implementation of the 2021-2027 MFF begins, by an even greater reduction: the percentage will fall to 0,5 % between 2021 and 2026, and will be abolished altogether with effect from 2027. At the same time, the Commission proposes the following for the next MFF: a reduction in resources for cohesion policy (-10 %) and for the European Maritime and Fisheries Fund (-13 %), an increase in the Member States’ percentage of co-financing, and a shorter programme implementation period (from N+3 to N+2). |
| --- | --- |

1.2.

| 1.3. | Pre-financing primarily supports Member State cash-flow in order to launch the implementation of programmes co-financed by European funds and avoid excessive delay in their completion. Pre-financing is a useful and necessary instrument. It should be borne in mind that, in order to launch a programme financed by European funds, the Member States must advance the resources to the public and/or private actors who are directly responsible for the programme’s implementation. |
| --- | --- |

1.3.

| 1.4. | The EESC does not consider the reasons given by the Commission for reducing the pre-financing percentages in the final stage of implementation of the 2014-2020 MFF to carry sufficient weight to justify this action. |
| --- | --- |

1.4.

| 1.5. | In the EESC’s view, the Commission possesses adequate instruments to monitor the proper use of European funds, including pre-financing, by the Member States: it would of course support any reforms that enhance this capacity. |
| --- | --- |

1.5.

| 1.6. | The EESC urges the Commission to reconsider its proposal to reduce pre-financing percentages and to retain the percentages set out in the current Common Provisions Regulation for European funds under the 2014-2020 MFF. |
| --- | --- |

1.6.

| 1.7. | The EESC also calls on the Commission to revise the pre-financing provisions in its proposal for a Common Provisions Regulation for European funds for the 2021-2027 MFF in line with the arguments set out in the present opinion. |
| --- | --- |

1.7.

2.   Background to the Commission proposal

| 2.1. | The current Regulation (EU) No 1303/2013 laying down common provisions on European Funds sets out rules governing the distribution of resources within the Multiannual Financial Framework (MFF) 2014-2020. Article 134 sets out the pre-financing amounts that Member States can receive from the EU to launch eligible programmes which will be financed by those funds. The regulation provided for the pre-financing rate to gradually rise from 1 % in 2014 to 3 % of the value of support for programmes from the Funds and the EMFF between 2020 and 2023. |
| --- | --- |

2.1.

| 2.2. | Article 1 of the Proposal for a Regulation amending Regulation (EU) No 1303/2013, discussed in this opinion — the only one of the two articles in the text with regulatory content — amends Article 134 of Regulation (EU) No 1303/2013, reducing the pre-financing in the period 2021-2023 from 3 % to 1 % and retaining 3 % only for 2020. This is still pre-financing under the 2014-2020 MFF programmes, which will continue to be implemented until 2023. |
| --- | --- |

2.2.

| 2.3. | The reasons for the change in the pre-financing arrangement as set out in the explanatory memorandum of the proposal are ‘... to increase transparency and contribute to the predictability of budgetary planning and to a more stable and predictable payment profile’, with regard to the repayment of funds from Member States to the EU generated by the system during clearance. The explanatory memorandum also mentions the fact that from 2019 the basis for calculating the pre-financing rate will already include the ‘performance reserve’, equivalent to 6 % of the total value of the planned support. |
| --- | --- |

2.3.

| 2.4. | The proposal concerns pre-financing for programmes financed by the following funds: the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund and the European Maritime and Fisheries Fund, together with the Border Management and Visa Instrument. |
| --- | --- |

2.4.

| 2.5. | Article 84 of the Proposal for a Regulation laying down common provisions on European Funds within the Multiannual Financial Framework 2021-2027 (4) sets a pre-financing rate of 0,5 % of the total amount of assistance from the Funds laid down in the decision approving the programme, stipulating that it is only to be granted during the first six years of the period — from 2021 to 2026. The Commission proposal does not provide for pre-financing in 2027 and subsequent years. Interreg programmes will be governed by specific rules setting a pre-financing rate of 1 % of the total amount of the programme. |
| --- | --- |

2.5.

| 2.6. | Other changes to the current rules contained in the draft Regulation laying down common provisions for 2021-2027 are a decrease in the rate of co-financing from the EU budget and a shorter implementation time for programmes, with the suggestion of changing from the N+3 rule to the N+2 rule. |
| --- | --- |

2.6.

3.   General and specific comments, and proposals

| 3.1. | The procedures to implement support for programmes financed by the funds affected by Regulation (EU) No 1303/2013, together with the other accounting and control rules for resources provided by the EU to the Member States, require the Member States to advance the resources to the public institutions, private actors or partnerships of both, who are directly responsible for implementing these programmes. As programmes are implemented, and implementation is duly certified by the Member States, the EU releases the matching share of co-financing committed to each of the approved programmes. |
| --- | --- |

3.1.

| 3.2. | Pre-financing primarily supports Member State cash-flow, which is very useful for launching the implementation of programmes co-financed by European funds and avoiding excessive delay in their completion as a result of any cash-flow problems they may have. Such cash-flow difficulties were particularly acute during the worst years of the recent economic and financial crisis, when extreme austerity policies were applied, and these difficulties persist, especially for those Member States that have to bring down their budget deficits. |
| --- | --- |

3.2.

| 3.3. | The time taken to reflect on, draw up, present, adopt and begin to implement programmes varies according to their character and the ability of administrations and private actors in each of the Member States. This frequently takes more than two years: as a result, implementation phases often accumulate in the final years of each MFF, finishing two or three years after completion of the latter. The 2013 Common Provisions Regulation appeared to take this factor into account by providing that annual pre-financing rates would rise from 1 % in 2014 to 3 % from 2020 to 2023, moving from 2 % to 2,875 % between 2016 and 2019. |
| --- | --- |

3.3.

| 3.4. | The Commission is now adopting the opposite approach. In the proposal to amend the 2013 Regulation discussed in the present opinion, annual pre-financing, which will stand at 2,875 % of the value of each programme in 2019, falls to 1 % between 2021 and 2023. Similarly, but more radically, the Proposal for a Regulation on the common provisions of the MFF 2021-2027 sets annual pre-financing at 0,5 % between 2021 and 2026, and removes it entirely in 2027 and the subsequent years in which the implementation of programmes financed by the structural and cohesion funds will continue. |
| --- | --- |

3.4.

| 3.5. | In the Committee’s view, the reasons given by the Commission in the explanatory memorandum to the Proposal for a Regulation are insufficient to warrant the change. It cites the transparency and predictability of budgetary planning and a predictable payment profile. The EESC considers there to be no reason for these — entirely desirable — criteria to be incompatible with a procedure for advancing and clearing support, where adequate controls are in place, as they should be. |
| --- | --- |

3.5.

| 3.6. | The figure mentioned in the exploratory memorandum — a financial flow of EUR 6,6 billion (2017) in recoveries from the Member States to the EU — cannot, on account of its volume, be the result solely of excess pre-financing, but must also arise from the non-implementation or poor implementation of programmes, or poor planning of certification of expenditure. Moreover, the claim made in the explanatory memorandum that the reduction in the pre-financing percentage will be offset because the reduction will also apply, from 2019 onwards, to the ‘performance reserve’ is not accurate. This reserve represents only 6 % of the programme, and the percentage of new pre-financing that is proposed will only be one third of that planned. What is more, the ‘performance reserve’ is also accounted for in each Member State’s budget and the only outcome for them is to lose this 6 % in whole or in part, if they do not meet the implementation criteria. |
| --- | --- |

3.6.

| 3.7. | If the problem that the regulatory change is intended to resolve were to be related to the cash-flow management of budget resources, what the Commission is proposing would transfer cash-flow problems from the EU to the Member States. The issue is complex because, given that in the current 2014-2020 MFF, EU resources based on the Member States’ contributions according to their Gross National Income (GNI) represent 72 % of overall EU income (5), any discussion of EU cash-flow also involves the cash-flow of the Member States in keeping with their levels of wealth. |
| --- | --- |

3.7.

| 3.8. | It should also be borne in mind that the Proposal for a Regulation on common provisions for the 2021-2027 MFF introduces an increase in the percentage of co-financing to be covered by the Member States, and the rule governing the implementation period is reduced by a year, changing from N+3 to N+2. At the same time, the 2021-2027 MFF proposal entails a reduction in resources for cohesion policies of 10 % and for the European Maritime and Fisheries Fund of 13 %. In other words, it is proposed at the same time to significantly cut fund resources, to reduce programme implementation periods, and that the Member States should increase their co-financing commitments while pre-financing is slashed. |
| --- | --- |

3.8.

| 3.9. | It should be pointed out that in its umbrella opinion on the 2021-2027 MFF (6), ‘The EESC, in accordance with the European Parliament’s position, proposes that the expenditure and revenue figure reach 1,3 % of GNI’ and that ‘... the financing of cohesion policies (the sum of ERDF, CF and ESF) should be maintained in the MFF 2021-2027, at least with the same resources, at constant prices, as in the current financial framework’. The same criterion can be applied to the CAP and the European Maritime and Fisheries Fund. With regard to revenue, in the same opinion the EESC argued that this ‘... should start from the HLGOR and European Parliament proposals for a wide range of further sources of own resources, leading to a significant shift towards reliance on own resources within the period of the coming MFF’. The agreement between the EESC, the EP and the Committee of the Regions on this and many other aspects of the next MFF is particularly striking. |
| --- | --- |

3.9.

| 3.10. | Earlier positions are reiterated in the sector-oriented opinions on the EU’s new financial framework, in particular the opinion on the Common Provisions Regulation (7) which, in accordance with the views set out in the opinion on the Multiannual Financial Framework post 2020 (8), adds ‘... the EESC regrets that this proposal amends the current N+3 rule to an N+2 rule and invites the European Commission to reconsider it’, and at the same time ‘asks the Commission to reconsider increasing the co-financing rates [to be borne by the Member States]’. |
| --- | --- |

3.10.

| 3.11. | In the EESC’s view, the Commission possesses adequate instruments to monitor the proper use of European funds, including pre-financing, by the Member States. At the same time, it considers that close cooperation between the Commission and the Member States can and should improve a number of aspects of programme planning and management, and would support reforms that enhance such capacities. |
| --- | --- |

3.11.

| 3.12. | In the light of the above points, the EESC disagrees with the Proposal for a Regulation amending Regulation (EU) No 1303/2013 that seeks to substantially reduce annual pre-financing for the 2021-2023 period. |
| --- | --- |

3.12.

| 3.13. | The Committee urges the Commission to reconsider its proposal and to take account of the present opinion and the views of the Member States, in particular those that most efficiently and correctly implement programmes that are co-financed with European funds. In the event that the pre-financing percentages set out in the current regulation are not maintained, it calls for the reduction to be significantly less than the two-thirds (calculated proportionately) proposed. |
| --- | --- |

3.13.

| 3.14. | The EESC also calls for the drastic cut in pre-financing and its abolition from 2027 onwards, as set out in the Proposal for a Regulation on the common provisions for the European funds under the 2021-2027 MFF, to be reviewed. |
| --- | --- |

3.14.

Brussels, 24 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards adjusting the level of annual pre-financing for the years 2021 to 2023, COM(2018) 614 final — 2018/0322 (COD).

1

(2)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

2

(3)  Proposal for a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, and the European Maritime and Fisheries Fund and financial rules for those and for the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument, COM(2018) 375 final — 2018/0196 (COD) and annexes.

3

(4)  COM(2018) 375 final — 2018/0196 (COD) and annexes.

4

(5)  The Commission’s proposal for the 2021-2027 MFF increases the EU’s planned ‘own resources’, but the GNI-determined Member State contributions would continue to be close to 57 %.

5

(6)  OJ C 440, 6.12.2018, p. 106.

6

(7)  OJ C 62, 15.2.2019, p. 83.

7

(8)  OJ C 440, 6.12.2018, p. 106.

8

---

| 10.5.2019 | EN | Official Journal of the European Union | C 159/49 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/49

---

Opinion of the European Economic and Social Committee on ‘Recommendation for a Council Recommendation on the economic policy of the euro area’

(COM(2018) 759 final)

(2019/C 159/07)

Rapporteur: Javier DOZ ORRIT

| Referral | European Commission, 24.1.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 20.12.2018 |
| Adopted at plenary | 24.1.2019 |
| Plenary session No | 540 |
| Outcome of vote (for/against/abstentions) | 162/2/2 |

Referral

European Commission, 24.1.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

20.12.2018

Adopted at plenary

24.1.2019

Plenary session No

540

Outcome of vote (for/against/abstentions)

162/2/2

1.   Conclusions and recommendations

| 1.1. | The EESC is of the opinion that building economic resilience, an objective that underlies the recommendations of the European Commission on the economic policy of the euro area, is of the utmost importance for the euro area economies, given the prominent downside risks to economic growth, which could well evolve into a new crisis in the not too distant future. However, the Committee would like to stress that the pursuit of economic resilience should go hand in hand with increased labour market resilience, that is, the capacity of labour markets to weather shocks with limited social costs (1). |
| --- | --- |

1.1.

| 1.2. | The Committee appreciates the European Commission’s recommendation for differentiated fiscal policy stances across the Member States but warns that in several Member States with high public debt and negative or zero output gaps, the building of fiscal buffers at this point may be counterproductive for inclusive and sustainable growth and debt sustainability. |
| --- | --- |

1.2.

| 1.3. | The Committee reaffirms the position it took in its opinion on Euro area economic policy 2018 (2) on the crucial importance of overcoming the public and private investment deficit suffered by the EU. For these reasons, it asks the EU institutions to adopt the guidelines and measures necessary to encourage public investment and facilitate private investment. |
| --- | --- |

1.3.

| 1.4. | The EESC welcomes the proposals to shift taxes away from labour and strengthen education systems and investment in skills, as well as the effectiveness of active labour market policies that support transitions to high quality jobs. Labour market segmentation should also be addressed. Member States must ensure sufficient financing for social investment and social protection systems. |
| --- | --- |

1.4.

| 1.5. | Moreover, the EESC fully shares the European Commission’s concern regarding the need to act against tax fraud, evasion and avoidance with measures against aggressive tax planning in order to make tax systems more efficient and fairer and in the context of improving the quality of public finances. |
| --- | --- |

1.5.

| 1.6. | The EESC reiterates the importance of implementing the European Pillar of Social Rights as a means of increasing resilience, promoting upward convergence and ultimately protecting the European integration project from centrifugal trends. |
| --- | --- |

1.6.

| 1.7. | The EESC welcomes the European Commission’s recommendation for a symmetric rebalancing of current account imbalances in the euro area and in particular the call for higher wage growth in Member States with surpluses. The EESC thinks that in the medium term national real wage growth should be commensurate with national productivity growth and not lagging behind it. |
| --- | --- |

1.7.

| 1.8. | Improving the business environment and promoting the completion of the single market, without undermining social and labour rights, are, in the EESC’s view, important ways of strengthening economic resilience in the euro area. The Committee is in full agreement with the European Commission that the establishment of the common consolidated corporate tax base is a step in that direction and should be pursued. |
| --- | --- |

1.8.

| 1.9. | Facilitating the financing of businesses should be another of the priorities of economic policy. The EESC reiterates that the Capital Markets Union is very important when it comes to financing economic activity and expresses its concern about the delays and obstacles that the development of the Banking Union is encountering, including the volume of bad debts in some Member States. |
| --- | --- |

1.9.

| 1.10. | The EESC urges the Member States to demonstrate political leadership and the necessary commitment in order to overcome disagreements on the way forward to deepening the EMU, most notably completing the Banking Union, increasing own resources and establishing, within the EU budget, a function for macroeconomic stabilisation which would allow an increase of the economic resilience of the euro area. |
| --- | --- |

1.10.

2.   Background

| 2.1. | Although output growth in the euro area has entered its sixth year, it is now expected to slow down while downside risks are visibly increasing and the scars of the Great Recession, from lower potential growth to disparities among Member States and high unemployment rates in certain areas, remain. Convergence towards more resilient economic structures is thus a major objective, as is advancing the deepening of the EMU. Against this background, the main recommendations of the European Commission for economic policies in the euro area in 2019 are the following: |
| --- | --- |

2.1.

| 2.2. | Deepen the Single Market, improve the business environment, and pursue resilience-enhancing product and service market reforms. Reduce external debt and pursue reforms to boost productivity in euro area Member States with current account deficits, and strengthen the conditions that support wage growth respecting the role of the social partners and implement measures that foster investment in euro area Member States with large current account surpluses. |
| --- | --- |

2.2.

| 2.3. | Rebuild fiscal buffers in euro area countries with high levels of public debt, support public and private investment and improve the quality and composition of public finances in all countries. Unlike previous years, the European Commission has not issued a recommendation for a specific fiscal policy stance in the euro area for 2019. |
| --- | --- |

2.3.

| 2.4. | Shift taxes away from labour and strengthen education systems and investment in skills, as well as the effectiveness of active labour market policies that support transitions. Address labour market segmentation and ensure adequate social protection systems across the euro area. |
| --- | --- |

2.4.

| 2.5. | Make the backstop for the Single Resolution Fund operational, set up a European Deposit Insurance Scheme and strengthen the European regulatory and supervisory framework. Promote orderly deleveraging of large stocks of private debt. Swiftly reduce the level of non-performing loans in the euro area and prevent their build up, including by removing debt bias in taxation. |
| --- | --- |

2.5.

| 2.6. | Make swift progress on completing the Economic and Monetary Union, also with the perspective to strengthen the international role of the euro, taking into account the Commission proposals, including those concerning the financial sector as well as the Reform Support Programme and the European Investment Stabilisation Function under the proposal for the 2021-2027 Multiannual Financial Framework. |
| --- | --- |

2.6.

3.   General comments

| 3.1. | The EESC is concerned that the downside risks to the economic outlook for the euro area could well evolve into another socioeconomic crisis in the not too distant future, which would pose major challenges for adjustment. |
| --- | --- |

3.1.

| 3.1.1. | Current output growth has already peaked after having reached only 1,7 % in 2017. Potential output growth is still below its rate in 2008 while public investment is very far from recovering from its large drop (by more than a quarter of its peak level) since the beginning of the crisis. |
| --- | --- |

3.1.1.

| 3.1.2. | Disparities among Member States persist, especially in terms of unemployment. Despite improvements in headline indicators, the total number of hours worked and the volume of employment remain below their 2008 level, while real wage growth has been modest and continues to fall behind productivity growth, suggesting the gains even from modest growth remain unequally distributed. |
| --- | --- |

3.1.2.

| 3.1.3. | The euro area still registers a sizeable current account surplus, mostly driven by current account surpluses in particular Member States; this indicates relatively low domestic demand, and is one of the causes of international tensions feeding into trade protectionism. |
| --- | --- |

3.1.3.

| 3.1.4. | Despite recent downward adjustments to growth predictions, the European Central Bank decided to end its quantitative easing programme, thus removing an important pillar of policy support to the euro area’s growth. |
| --- | --- |

3.1.4.

| 3.1.5. | While vulnerabilities from the crisis, such as high public and private debt levels and non-performing loans weighing on banks’ balance sheets persist, there is still insufficient progress in strengthening the EMU institutional architecture in a way that would increase the resilience of the euro economy without bearing too heavily on public finances, labour markets and social policies for adjustment in the event of shocks. |
| --- | --- |

3.1.5.

| 3.1.6. | There are important global downside risks, from increasing trade protectionism to volatility in financial markets. |
| --- | --- |

3.1.6.

| 3.2. | Given the consequences of the previous crisis, the scars of which, especially in labour market and social domains are still visible in several Member States, the EESC thinks that strengthening the economic resilience of the euro area by advancing decisively and promptly to completing and deepening the EMU and the single market, along the lines proposed by the European Commission, is essential for preventing another economic crisis turning into labour market and social crises. |
| --- | --- |

3.2.

| 3.3. | In addition to these risks, technological advances present opportunities but also threats. On the one hand, and provided that sufficient investment in them takes place, they can help increase the chronically weak productivity growth in the euro area. On the other hand, they are likely to favour some societal groups, notably those with higher and better skills, more than others. |
| --- | --- |

3.3.

| 3.4. | Although the average output gap (3) in the euro area is projected to turn modestly positive in 2018 (0,3 % of potential GDP), there are significant differences between Member States, suggesting that the cyclical upturn is not the same everywhere. The size of a country’s positive output gap is an indication of how far its fiscal policy stance could tighten without fiscal policy being procyclical. Several Member States (and most notably a couple of large ones with a considerable bearing on the overall euro area performance) with high public debt/GDP ratios have negligible or negative output gaps. While Member States should do their utmost to ensure the high quality of their public finances, urging them to build fiscal buffers by means of contractionary fiscal stances is likely to perpetuate low growth in them, without helping reduce their public debt as a share of GDP. |
| --- | --- |

3.4.

| 3.5. | Moreover, a well-documented deficiency of the EU economic governance and one of the motivations behind reforms such as the establishment of the European Fiscal Board has been the sole focus on the compliance of national fiscal policies with the EU’s fiscal rules while the aggregate fiscal stance in the euro area has been neglected. The absence of a recommendation for the aggregate area stance this year is therefore unfortunate and misses an opportunity to combine with more specific recommendations for differentiation between Member States. |
| --- | --- |

3.5.

| 3.6. | In line with previous EESC opinions, the Committee is urging the Member States and the European Commission to strengthen public investment as a means of promoting long-term growth but also of reducing current uncertainties and of promoting smooth transitions to a more sustainable and equitable growth model. |
| --- | --- |

3.6.

| 3.7. | The Committee questions whether in countries with high public debt/GDP ratios more efficient and effective public procurement alone (4) can provide enough space for increasing public spending on investment – including in education, skills and enabling active labour market policies – to the appropriate levels for enhancing long-term inclusive growth and meeting the targets of the Paris Agreement on cutting carbon emissions and whether such changes can be sufficiently timely given the urgent need for public investment. |
| --- | --- |

3.7.

| 3.8. | The EESC opinion on Euro area economic policy 2018 (5) underlined the great contradiction posed by the situation of countries that maintained excessive surpluses of their current account balance and fiscal surpluses with negative net rates of public capital formation. The Committee expresses its concern that, despite the repeated recommendations of the Commission and the Council, the Autumn Forecast foresees that these countries will continue with very high current account surpluses until 2020 (6). |
| --- | --- |

3.8.

| 3.9. | The Committee welcomes the emphasis on strengthening education systems and investment in skills and reducing labour market segmentation and reiterates its call for structural reforms that promote higher aggregate productivity growth, while creating high quality jobs and ensuring the fair distribution of productivity gains. |
| --- | --- |

3.9.

| 3.10. | The Committee agrees with the call for higher wage growth in Member States with surpluses. It notes, however, that productivity growth alone will not necessarily help increase real wages in Member States with negative net international investment positions as in many countries there has been a decoupling between productivity and real compensation growth. Measures supporting more equal distribution of productivity gains should also be taken. The primary tool for this is collective bargaining based on the autonomy of the social partners, which should take account of rises in the cost of living and in real productivity when setting wages, as well as addressing other aspects that improve the quality of employment. |
| --- | --- |

3.10.

4.   Specific comments

| 4.1. | ‘Addressing tax fraud, evasion and aggressive tax planning (ATP) [is] essential to make tax systems more efficient and fairer. [Such measures] are essential to secure government revenues, impede distortions of competition between firms, preserve social cohesion and fight increasing inequalities’. The EESC fully agrees with this statement in the working document accompanying the proposed recommendation (7). It therefore calls for the rules adopted to combat these crimes and these malpractices at European level to be applied without delay, and to evaluate the possibility of establishing other more effective measures that also include instruments to end the illicit activities of tax havens. |
| --- | --- |

4.1.

| 4.2. | The Committee thinks that more decisive steps should be taken to facilitate public spending on investment, for example, by exempting spending on public investment from the calculation of deficits in the application of the EU’s fiscal rules (the so-called Golden Rule), taking due account of the sustainability of existing debt levels. |
| --- | --- |

4.2.

Brussels, 24 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  This definition of labour market resilience is taken from the OECD’s 2012 report on What makes labour markets resilient during recessions?, in the OECD Employment Outlook, OECD Publishing, Paris.

1

What makes labour markets resilient during recessions?

(2)  OJ C 62, 15.2.2019, p. 312.

2

(3)  That is the difference between actual and potential GDP as a share of potential GDP.

3

(4)  See European Commission (2018), Analysis of the Euro Area economy, SWD(2018) 467 final, p. 8.

4

(5)  OJ C 62, 15.2.2019, p. 312.

5

(6)  Statistical Annex, European Economic Forecast – Autumn 2018, Table 50, p. 196.

6

(7)  See European Commission (2018), Analysis of the Euro Area economy, SWD(2018) 467 final.

7

---

| 10.5.2019 | EN | Official Journal of the European Union | C 159/53 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/53

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Directive of the European Parliament and of the Council on common standards and procedures in Member States for returning illegally staying third-country nationals. A contribution from the European Commission to the Leaders’ meeting in Salzburg on 19-20 September 2018’

(COM(2018) 634 final — 2018/0329 COD)

(2019/C 159/08)

Rapporteur: José Antonio MORENO DÍAZ

Co-rapporteur: Vladimíra DRBALOVÁ

| Referral | Commission 24.10.2018 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Section for Employment, Social Affairs and Citizenship |
| Adopted in section | 18.12.2018 |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote (for/against/abstentions) | 169/2/6 |

Referral

Commission 24.10.2018

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Section for Employment, Social Affairs and Citizenship

Adopted in section

18.12.2018

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote (for/against/abstentions)

169/2/6

1.   Conclusions and recommendations

| 1.1. | The EESC notes the European Commission’s arguments for a recast of the directive on returns (1), but reiterates its belief that it is first essential for the EU to have a common policy and legislation for legal migration, as well as on international protection and asylum (2). |
| --- | --- |

1.1.

| 1.2. | The EESC is concerned at the discrepancy between the criteria used by the EU Member States in managing migration, particularly in how irregular migrants are dealt with, giving rise to legal uncertainty and inequality of treatment. |
| --- | --- |

1.2.

| 1.3. | The EESC believes that the Commission should have launched a process of communication and consultation with governments and civil society on the matter in the new circumstances, as it did at an earlier stage with the green paper (3). |
| --- | --- |

1.3.

| 1.4. | The EESC considers that the Commission should have provided data, or at least estimates, regarding the level of application of Directive 2008/115/EC of the European Parliament and of the Council (4) on returns and on its level of applicability, as well as on the degree of monitoring of the effectiveness of its application, the main difficulties arising during the years in which it was in force, and the degree of compliance by the various Member States. |
| --- | --- |

1.4.

| 1.5. | The Commission should exercise a modicum of self-criticism, or at least analysis, in order to explain the low rates of returns carried out by the Member States and clearly identify the reasons for this and/or those responsible; if the Member States have neither applied the Directive nor respected the Commission Recommendation (EU) 2017/432 (5) on making returns more effective, then an impact assessment should be drawn up. This study should include an evaluation of how Member States have approached creating operational programmes to provide help and advice in returns and a comparison of the cost-effectiveness of voluntary and forced returns. |
| --- | --- |

1.5.

| 1.6. | The EESC is aware that a strand of extreme right-wing and nationalist discourse on migration is fuelling xenophobic and intolerant attitudes. The EESC believes that a comprehensive common EU migration policy would be the best argument with which to allay the fears of the people of Europe. |
| --- | --- |

1.6.

| 1.7. | In line with the EESC’s views set out in other opinions (6), a different narrative must be developed on migration that fosters a de-dramatised view of it as a normal social and economic factor and enables efforts to educate society on the issue. |
| --- | --- |

1.7.

| 1.8. | On the other hand, the EESC can support the European Council conclusions of June 2018, which state that a precondition for a functioning EU policy is a comprehensive approach to migration which combines more effective control of the EU’s external borders, increased external action and the internal aspects, in line with the principles and values of the EU, and that such efforts must continue in order to avoid humanitarian disasters (7). |
| --- | --- |

1.8.

| 1.9. | Data provided by the European Council of 18 October (8) reveals that irregular arrivals in the EU have been brought down by 95 %. At the same time, IOM data from September 2018 (9) explains that up to that date, 83 067 people had arrived in the EU by sea, and 1 987 had died. |
| --- | --- |

1.9.

| 1.10. | The EESC sees an effective returns policy as an integral part of a comprehensive EU immigration and asylum policy; however, such a policy is missing and the Commission should proceed in a consistent and measured way and not adopt a purely security and policing-focused vision of migration as a criminal matter. |
| --- | --- |

1.10.

| 1.11. | The EESC considers that a comparative study — based on data and visits — of detention centres in the EU, their situation and compliance with human rights inside them needs to be carried out. |
| --- | --- |

1.11.

| 1.12. | The EESC welcomes the Commission’s efforts to speed up decisions on returns and link this with the decision to refuse asylum and the decision to terminate a legal stay, as well as generally making the return procedure quicker and more efficient. Even so, consideration should be given to how realistic the proposed time-scales are and an assessment made of the obstacles that could frustrate this intention. |
| --- | --- |

1.12.

| 1.13. | At the same time, the EESC sees an effective returns policy as being linked to a process of effective collaboration with third countries and the concluding and implementing of readmission agreements; it calls on the Commission to make further efforts and the Member States to make the most of these arrangements. |
| --- | --- |

1.13.

| 1.14. | The EESC also considers that mention should be made of the best practices applied in some EU countries to prevent illegally-staying foreign nationals from falling into a chronically irregular situation. Such best practices include granting residence permits on exceptional grounds of strong social, work or family ties (arraigo) in Spain or the Duldung provision in Germany. |
| --- | --- |

1.14.

2.   Background and the Commission proposal

| 2.1. | Since 1999, the EU has been trying to develop a comprehensive approach to migration which covers the harmonisation of readmission conditions, the right of legally staying third-country nationals and the development of legal measures and practical cooperation to prevent irregular migration. The Returns Directive 2008/115/EC aimed to establish an effective removal and repatriation policy based on common standards but the implementation report of the Returns Directive published in 2014 showed very slow progress on the improvement of the EU’s effective return rate: 2014 — 36,3 %, 2015 — 36,8 %, 2016 — 45,8 %, 2017 — 36,6 %. Nor has any improvement been effected by the Recommendation (EU) 2017/432, which contained a batch of measures Member States ought to take to capitalise fully on the flexibility the directive offers. |
| --- | --- |

2.1.

| 2.2. | Without changing the scope of the directive or affecting the protection of the rights of the migrants that currently exist, including with regard to the best interests of the child, family life and the state of health, and the principle of non-refoulement, the recast directive should make the return process more effective by proposing:






  — | More coherence and synergies with asylum procedures; |
| --- | --- | --- |

2.2.

—

More coherence and synergies with asylum procedures;

| — | A new border procedure; |
| --- | --- |

—

A new border procedure;

| — | Clear procedures and rules to prevent abuses; |
| --- | --- |

—

Clear procedures and rules to prevent abuses;

| — | Suggestions to promote efficient voluntary returns; |
| --- | --- |

—

Suggestions to promote efficient voluntary returns;

| — | Clear rules on detention. |
| --- | --- |

—

Clear rules on detention.

3.   General comments

| 3.1. | The EESC is concerned at the discrepancy between the criteria used by the EU Member States in managing migration, particularly in how irregular migrants are dealt with, giving rise to legal uncertainty and inequality of treatment. |
| --- | --- |

3.1.

| 3.2. | The EESC reiterates the recommendations put forward in its opinion on the 2002 Commission Communication on a Community Return Policy on Illegal Residents, as it considers that those were not — or not fully — taken up in the various legislative an policy measures introduced at Union level ever since, in particular as regards the rights of irregular migrants, regularisation, forced return, judicial appeal, the right to family unity, detention, and the need for a truly common legal migration policy (10). |
| --- | --- |

3.2.

| 3.3. | The proclaimed intention of the recast — to make return procedures more efficient, speed up processing and link this directly to the decision to refuse asylum and the decision to terminate a legal stay — is, of course, welcome; Member States have the right to return irregular migrants, provided that fair and efficient asylum systems are in place which fully respect the principle of non-refoulement. However, regarding the stated aims of the proposed changes, the EESC is concerned by what the effect of these will be. The EESC wonders about the efficiency of these changes and is fearful that the only result of the changes could be to make the situation tougher and more punitive. The basic principle underlying the priority of voluntary returns, enshrined back in the original Directive 2008/115/EC, should not be discarded and replaced only with repressive policies. |
| --- | --- |

3.3.

| 3.4. | The proposal should also be evaluated in terms of the viability of its objectives, especially if it is to remain compatible with human rights. Seeking the blanket removal of all illegally staying third-country nationals on EU territory, as the sole means of restoring them to a state of legality, is simply impossible to implement, in the light of experience over recent years and on account of the disproportionate human, economic and other costs that it would produce. |
| --- | --- |

3.4.

| 3.5. | Over the last 10 years, there has not been any effective implementation, monitoring and evaluation of a returns policy that, moreover, is still not effectively embedded in a comprehensive and common EU migration policy. |
| --- | --- |

3.5.

| 3.6. | In the proposal, the Commission should have explained why Directive 2008/115/EC has not been properly applied by the Member States, who have also failed to follow Recommendation (EU) 2017/432 that includes guidance on implementing the directive and call on the Member States to take the necessary steps to remove the legal and practical obstacles that make returns difficult. |
| --- | --- |

3.6.

| 3.7. | Similarly, against a backdrop of rising social confusion, an attempt should be made to publish real data on irregular migration to the EU and to interpret it responsibly so as to avoid fuelling xenophobic and racist discourse that feeds into extreme right-wing positions. |
| --- | --- |

3.7.

4.   Specific comments

| 4.1. | Based on how events have unfolded since 2008, the Commission sees amending the directive as a way to achieve the legitimate objective of restoring legality and making the carrying out of returns more effective. However, that there are many other methods that achieve the same effect but are more effective and less onerous (e.g. voluntary returns, regularisation on an individual basis, etc.). The EESC sees an efficient returns policy as an integral part of a comprehensive EU immigration and asylum policy; however, the lack of such a policy should prompt the Commission to a self-critical, consistent and balanced approach and to avoid taking a purely security and policing-focused vision of migration as a criminal matter (11). |
| --- | --- |

4.1.

| 4.2. | Our previous opinion said: ‘The EESC would remind the Commission that various of its opinions have pointed to the need to take action on regularisation’ (12). Yet, European legislation foresees measures to end a person’s irregular status in a reasonable and constructive manner. |
| --- | --- |

4.2.

| 4.3. | Examples of such measures can be found in Articles 6 — Return decision — and 7 — Voluntary departure — of Directive 2008/115/EC, which have been very little explored and applied by the Member States, particularly in cases where it has been tried to return a person to no avail. In that light, the EESC endorses Recommendation (EU) 2017/432 to create assisted voluntary return operational programmes. |
| --- | --- |

4.3.

| 4.4. | Moreover, the EESC notes that rules applying to removals of European citizens and their family members on grounds of public policy or public security (13) are not applied to irregular migrants. We are referring here to the possibility of asking for a removal order to be lifted due to a change in circumstances after a reasonable period and, when two years have passed since the order was issued, the obligation not to enforce a removal order without assessing the circumstances. It does not seem reasonable that the approach taken to European citizens — i.e. only for being a threat to public policy or public security — cannot be taken in the case of those whose only fault is an issue of documentation if they have experienced significant changes in their circumstances. |
| --- | --- |

4.4.

| 4.5. | It is imperative that the return procedure comprises mechanisms and effective safeguards — going beyond the simple possibility of recourse or appeal — to protect the rights and interests of third-country nationals subject to proceedings. There needs to be an effective way to exercise these rights with appropriate legal assistance; each procedure should be automatically assigned a specialist lawyer, who has received tailored training, to put forward the case for the defence. |
| --- | --- |

4.5.

| 4.6. | The policy of persecuting illegal residents must go hand in hand with a sweeping and robust prohibition on identifying people on the basis of their ethnicity and/or religion. The current relaxation of this prohibition makes Europe a territory where racial minorities could be intolerably exposed to the suspicion and control of the authorities. The UN’s Human Rights Committee reprimanding Spain in July 2009 (14) for detaining a Spanish citizen on suspicion of being an illegal immigrant, simply because she was black, speaks volumes. |
| --- | --- |

4.6.

| 4.7. | The EESC considers that a comparative study — based on data and visits — of detention centres in the EU, their conditions and compliance with human rights needs to be carried out. |
| --- | --- |

4.7.

| 4.8. | The EESC also proposes that the Commission continuously examine the approach of the Member States to creating operational programmes to provide better help and advice in returns, including support for reintegration in third countries of return – programmes they ought to have begun setting up back in 2017. This study should include a comparison of the cost-effectiveness of voluntary and forced returns. |
| --- | --- |

4.8.

| 4.9. | The EESC would like to mention the best practices applied in some EU countries to prevent irregular migrants from falling into a chronically irregular situation. Such best practices include the arraigo and Duldung arrangements in Spain and Germany respectively, which allow some foreign nationals who have been living on their territory under irregular conditions to obtain – on extraordinary grounds – regular status provided they meet certain requirements; this is granted on an individual and selective basis. |
| --- | --- |

4.9.

5.   Analysis of the proposed changes

| 5.1. | The text of the directive is very clear, introducing nine specific changes, which the EESC opinion focuses on. |
| --- | --- |

5.1.

| 5.2. | There is a need for EU-wide objective criteria to determine the existence or not of a risk of absconding, including unauthorised secondary movements. To prevent diverging or ineffective interpretations, Article 6 of the proposal sets out a common list of objective criteria to determine if there is a risk of absconding as part of an overall assessment of the specific circumstances of the individual case. The list of criteria is too broad and goes beyond Recommendation (EU) 2017/432. The result is that although the directive provides for two types of return procedures — one emergency and exceptional, without voluntary departure and subject to other encumbrances; the other with safeguards and with the option of voluntary compliance — in practice most irregular migrants will be subject to the procedure that should, in theory, be exceptional. |
| --- | --- |

5.2.

| 5.2.1. | Only a limited number of the proposed objective criteria in Article 6 — stemming from Recommendation (EU) 2017/432 and corresponding in the amended text to the criteria in (f), (h) and (k) — serve to rigorously define ‘risk of absconding’. Point (j) can also be considered a suitable criterion in line with the provisions of Article 7 on the obligation to cooperate.






  a) | The lack of documentation at the point when proceedings are initiated can, in most cases, be rectified upon request which, if not fulfilled, could lead to point (f). |
| --- | --- | --- |

5.2.1.

a)

The lack of documentation at the point when proceedings are initiated can, in most cases, be rectified upon request which, if not fulfilled, could lead to point (f).

| b) | This objective puts the burden of proof on the migrant who will have to demonstrate effective residence, removing a fundamental legal safeguard. The broad difficulties related to accommodation — in particular those that many municipalities cause for foreigners in general and people with an irregular status in particular — lend this point disproportionate magnitude. |
| --- | --- |

b)

This objective puts the burden of proof on the migrant who will have to demonstrate effective residence, removing a fundamental legal safeguard. The broad difficulties related to accommodation — in particular those that many municipalities cause for foreigners in general and people with an irregular status in particular — lend this point disproportionate magnitude.

| c) | If we wish to avoid the possibility of ALL irregular migrants being accused of a risk of absconding, meaning that procedures with safeguards will be completely cast aside, the risk of absconding cannot be defined using this kind of parameter. After all, anyone who is deprived of the right to work is obviously also deprived of economic resources and most irregular migrants will therefore suffer from a lack of financial resources. |
| --- | --- |

c)

If we wish to avoid the possibility of ALL irregular migrants being accused of a risk of absconding, meaning that procedures with safeguards will be completely cast aside, the risk of absconding cannot be defined using this kind of parameter. After all, anyone who is deprived of the right to work is obviously also deprived of economic resources and most irregular migrants will therefore suffer from a lack of financial resources.

| d) | Given the closed border policy applied by the Member States, many irregular (and even legal) migrants will have entered the territory of the Member States illegally. |
| --- | --- |

d)

Given the closed border policy applied by the Member States, many irregular (and even legal) migrants will have entered the territory of the Member States illegally.

| e) | If an irregular migrant moves between Member States this is by default unauthorised, but not necessarily a reason to find there is a risk of absconding. |
| --- | --- |

e)

If an irregular migrant moves between Member States this is by default unauthorised, but not necessarily a reason to find there is a risk of absconding.

| g) | Being subject to a return decision from another Member State. If the directive itself provides for the direct enforcement of that decision by the second state, it makes no sense to set out this possibility. |
| --- | --- |

g)

Being subject to a return decision from another Member State. If the directive itself provides for the direct enforcement of that decision by the second state, it makes no sense to set out this possibility.

| i) | Non-compliance with the requirement to go to another Member State where they are legally resident. In such cases, initiating removal proceedings without voluntary departure to the country of origin is completely disproportionate. What is needed in such cases is some sort of compulsory measure to bring them back to the other Member State, but not removal to the country of origin, much less via the emergency procedure. |
| --- | --- |

i)

Non-compliance with the requirement to go to another Member State where they are legally resident. In such cases, initiating removal proceedings without voluntary departure to the country of origin is completely disproportionate. What is needed in such cases is some sort of compulsory measure to bring them back to the other Member State, but not removal to the country of origin, much less via the emergency procedure.

| 5.3. | As a preface to the analysis of Articles 7 and 8, and other articles in the proposal, we should clarify the following: the whole text of these changes demonstrates a clear lack of understanding of the legal nature of a return decision, which, once clarified, will underpin the comprehensive challenge raised with regard to paragraph 3, reflected in the directive’s new Article 8. A return decision constitutes an executive decision taken by a state that has a direct impact on a human being’s personal sphere of rights and interests. Moreover, the justification is usually directly or indirectly related to the fulfilment of obligations or to certain behaviour of which the person is accused, and this person deserves an appropriate process to check the veracity of these allegations, which, in these cases, can no doubt be independently substantiated. All of this is to say that removal is a sanction, a penalty, a punishment of an administrative – not criminal – nature, but is governed by the same constitutional principles and fundamental rights as criminal law. |
| --- | --- |

5.3.

| 5.4. | With regard to Article 7 — obligation to cooperate — the EESC notes the Commission’s assumption that the obligation of third-country nationals to cooperate with the competent authorities of the Member States at all stages of the return procedure could assist the smooth running and effectiveness of these procedures. It must be noted, however, that this directly infringes the fundamental right of not giving evidence against oneself. The obligations set out in this article can be boiled down to just one: to cooperate and collaborate during a procedure that is directed against oneself. Article 8 — Return decision — now requires Member States to issue a return decision immediately after the adoption of a decision ending a legal stay of a third-country national, including a decision not to grant refugee status or subsidiary protection status. The EESC thinks that Article 8 should be expanded to include the possibility of third-country nationals being given a reasonable opportunity to comply with the obligation to leave the country on their own or to seek alternative ways to regularise their situation. |
| --- | --- |

5.4.

| 5.5. | Article 9 on voluntary departure stipulates that an appropriate period of thirty days must be granted for voluntary departure, annulling the original provision of seven to thirty days. While the maximum period of only thirty days used to be grounds for criticism, the existence of a minimum served as a safeguard. Abolishing this minimum makes it possible for Member States not to allow for a voluntary departure period at all. |
| --- | --- |

5.5.

| 5.6. | The new measure introduced in Article 13 allows Member States to impose an entry ban, which does not accompany a return decision, on a third-country national whose illegal stay in the Member States is detected when (voluntarily) leaving the EU. The EESC sees this measure as a penalty imposed on a person who at that very moment is complying with the law, i.e. leaving EU territory and ending their illegal stay. On the other hand, the measure can be seen as an insurance policy against repeated entry into the Member State concerned. |
| --- | --- |

5.6.

| 5.7. | Article 14 on Return Management asks each Member State to set up, operate, maintain and further develop a national return management system, which shall process all the necessary information for implementing this Directive. However, technical compatibility must be ensured with the EU’s central system. Article 14 also provides for Member States to introduce an operational programme to provide support to those concerned. |
| --- | --- |

5.7.

| 5.7.1. | The shortcomings of the Schengen Information System (SIS) mean that measures are required to improve coordination between states. It is highly doubtful that specific rules at the level of a directive are needed to deal with what are essentially management issues of a practical nature. |
| --- | --- |

5.7.1.

| 5.7.2. | The proposal that Member States establish programmes for providing logistical, financial and other material assistance to support voluntary return, which would include reintegration programmes, comes from Recommendation (EU) 2017/432. The Commission should support, monitor and assess their creation. |
| --- | --- |

5.7.2.

| 5.8. | Article 16 lingers and focuses exclusively on ‘the only mandatory case where automatic suspensive effect shall be granted under this proposal’, i.e. substantiating the removal of someone whose application for international protection has been rejected. We have nothing to object, save that the EESC sees other cases where the suspension of the removal should be similarly automatic, so as to reinforce the scope of safeguards or guarantees. A non-exhaustive list of these should include:






  — | cases in which minors are directly or indirectly affected, |
| --- | --- | --- |

5.8.

—

cases in which minors are directly or indirectly affected,

| — | cases in which EU family members are directly or indirectly affected and which therefore does not fall under Directive 2004/38/EC, |
| --- | --- |

—

cases in which EU family members are directly or indirectly affected and which therefore does not fall under Directive 2004/38/EC,

| — | cases in which there is a demonstrable risk to the health or physical integrity of the person concerned, |
| --- | --- |

—

cases in which there is a demonstrable risk to the health or physical integrity of the person concerned,

| — | when the return is to be to a country identified as unsafe, including countries that do not respect human rights. |
| --- | --- |

—

when the return is to be to a country identified as unsafe, including countries that do not respect human rights.

| 5.9. | Regarding detention and the establishment of at least three months as a maximum detention period, we must point out that the facts show that a period of less than three months is sufficient for the procedure and steps needed to be able to enforce a removal to a third country, and that almost nothing is achieved by an extension to this period, however long it may be, and even less so by subjecting someone who has not committed any crime to such an extreme measure as depriving them of their liberty. |
| --- | --- |

5.9.

| 5.10. | We again urge other solutions to be found, such as the German Duldung or Spanish arraigo mentioned above, which take much less than three months to determine whether a person will be able to be removed or not. Preventive detention is an interim measure, the purpose of which is to make it easier to carry out forced return and prevent absconding. However, its misuse as a disguised form of imprisonment or punishment for irregular immigration must be ruled out. Such imprisonment is explicitly prohibited by the case-law of the Court of Justice of the European Union (15). |
| --- | --- |

5.10.

| 5.11. | Consequently, it should be a requirement under the directive that such detention centres not be comparable to, or worse than, prisons. It should be stipulated that internal surveillance of such centres is never carried out by state security forces, their role being limited to the perimeter, with internal surveillance being the responsibility of another type of state body, and also that there should be a minimum standard of detainees’ rights in every respect equal to or better than the legal status of those held in prisons in each Member State. |
| --- | --- |

5.11.

| 5.12. | The amendment introduced by paragraph 7 of Article 22 is entirely superfluous, as it is already regulated by the Member States’ various asylum procedures. In any case, it is disproportionate for a person who can be detained for up to four months for their return as a result of their asylum application being rejected to be then immediately plunged into a new, additional six-month period, with the same aim of repatriating them. |
| --- | --- |

5.12.

| 5.13. | The EESC agrees with the Commission that the efficiency of the EU’s return policy also depends on the cooperation of countries of origin. The EU has achieved already some progress, nevertheless the EESC calls on the Commission to continue its efforts in this area and at the same time to appeal to Member States to capitalise on these results and to make full use of these arrangements. |
| --- | --- |

5.13.

Brussels, 23 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  COM(2018) 634 final.

1

(2)  OJ C 85, 8.4.2003, p. 51.

2

(3)  COM(2002) 175 final.

3

(4)  Directive 2008/115/EC of the European Parliament and of the Council of 16 December 2008 on common standards and procedures in Member States for returning illegally staying third-country nationals (OJ L 348, 24.12.2008, p. 98).

4

(5)  Commission Recommendation (EU) 2017/432 of 7 March 2017 on making returns more effective when implementing Directive 2008/115/EC of the European Parliament and of the Council (JO L 66 du 11.3.2017, p. 15).

5

(6)  See EESC opinion on ‘The costs of non-immigration and non-integration’ (OJ C 110, 22.3.2019, p. 1).

6

(7)  European Council meeting, 28.6.2018, Conclusions.

7

(8)  European Council meeting, 18.10.2018, Conclusions.

8

(9)  IOM — Migration: Flow Monitoring Europe.

9

(10)  OJ C 85, 8.4.2003, p. 51.

10

(11)  See the discussion brief by the Research Social Platform on Migration and Asylum, ‘Crackdown on NGOs assisting refugees and other migrants’.

11

(12)  OJ C 85, 8.4.2003, p. 51.

12

(13)  Articles 32 and 33 of Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC (OJ L 158, 30.4.2004, p. 77).

13

(14)  FF. Communication No. 1493/2006, Williams Lecraft v. Spain

14

(15)  Judgments of the Court of Justice of 7 June 2016, Affum, C-47/15, ECLI:EU:C:2016:408, and of 28 April 2011, El Dridi, C-61/11, ECLI:EU:C:2011:268.

15

Affum

El Dridi

---

| 10.5.2019 | EN | Official Journal of the European Union | C 159/60 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/60

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council laying down conservation and control measures applicable in the Regulatory Area of the Northwest Atlantic Fisheries Organisation and repealing Council Regulation (EC) No 2115/2005 and Council Regulation (EC) No 1386/2007’

(COM(2018) 577 final — 2018/0304 (COD))

(2019/C 159/09)

Rapporteur-general: Gabriel SARRÓ IPARRAGUIRRE

| Referral | Council, 3.9.2018 |
| --- | --- |
| | European Parliament, 10.9.2018 |
| Legal basis | Articles 43(2) and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 104/0/2 |

Referral

Council, 3.9.2018

European Parliament, 10.9.2018

Legal basis

Articles 43(2) and 304 of the Treaty on the Functioning of the European Union

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

104/0/2

1.   Conclusions and recommendations

| 1.1. | The EESC believes that the conservation and enforcement measures adopted by the Northwest Atlantic Fisheries Organisation (NAFO) should be transposed into EU law, with a view to achieving their uniform and effective implementation within the EU. |
| --- | --- |

1.1.

| 1.2. | However, the Committee is of the view that the proposal presented does not establish an efficient mechanism for transposing the measures adopted by NAFO and does not resolve the issue of having to update these measures each year. |
| --- | --- |

1.2.

| 1.3. | The Committee is in favour of a more efficient, simpler mechanism and therefore proposes drafting a regulation containing a single article establishing that the European Union must necessarily apply NAFO measures to its fleet. |
| --- | --- |

1.3.

| 1.4. | The EESC stresses the risks involved in introducing a system of delegated acts, granting the Commission the power to legislate without following ordinary procedures. |
| --- | --- |

1.4.

2.   Summary of the Commission proposal

| 2.1. | The proposal presented aims to transpose the measures adopted by NAFO between 2008 and 2017 into EU law, the latter being the year that the amended NAFO Convention entered into force. As these measures are amended annually, the proposal encompasses transposition of the most recent measures and establishes a mechanism to speed up and facilitate those which need to be applied in the future. |
| --- | --- |

2.1.

| 2.2. | It therefore provides for the delegation of powers to the Commission, so it can regulate measures relating to the operation of vessels that carry out their activities in this Regulatory Area. These measures cover, for example, fishing opportunities (quota and/or fishing effort limitations), the closure of fisheries, by-catches, the fishing of certain species (skate, northern prawns, Greenland halibut), shark conservation, fishing gear used, the protection of vulnerable marine ecosystems and inspection and monitoring of this activity. In total, thirty different types of measures are described. |
| --- | --- |

2.2.

| 2.3. | The proposal repeals Council Regulations (EC) No 2115/2005 (1) and (EC) No 1386/2007 (2). |
| --- | --- |

2.3.

3.   General comments

| 3.1. | The EESC considers it necessary to transpose conservation and enforcement measures adopted by NAFO, with the aim of achieving their uniform and effective implementation within the EU. |
| --- | --- |

3.1.

| 3.2. | However, bearing in mind the fact that NAFO amends its conservation and enforcement measures every year, the Committee is of the view that the proposal presented does not provide an efficient mechanism for transposing measures adopted by NAFO, nor for updating them each year. |
| --- | --- |

3.2.

| 3.3. | The Committee believes that the most efficient mechanism for carrying out these regular updates to NAFO measures would be to adopt a simple regulation explaining the regular need to update at least the relevant rules in the thirty areas proposed, and containing a single article that summarises the European Union’s firm commitment to applying without fail the measures adopted by NAFO each year to its fleet. |
| --- | --- |

3.3.

| 3.4. | Otherwise, the EESC warns that there is a risk of a permanent mismatch between NAFO measures and EU legislation published, which has the potential to generate a high degree of uncertainty. |
| --- | --- |

3.4.

| 3.5. | The Committee highlights its concerns regarding the linked reduction in the time limits provided for certain procedures, as the Commission has reduced the deadline for specific communications to Member States. They in turn will be required to reduce the deadlines for communication with the operators of fishing vessels. |
| --- | --- |

3.5.

| 3.6. | In the Committee’s view, the only aspect that will be facilitated by the introduction of a system of delegated acts is that the Commission will be able to establish rules without having to follow the ordinary procedures. |
| --- | --- |

3.6.

4.   Specific comments

| 4.1. | Article 5(1) establishes that each Member State is to ensure that catch and effort limitations apply to stocks identified in fishing opportunities. The EESC believes that the text should read ‘catch and/or effort limitations’. |
| --- | --- |

4.1.

| 4.2. | The wording of Article 28(3), which refers to the electronic reporting by the observer programme, is unclear. Paragraph 1 is even less clear as it is uncertain whether it can apply to the electronic observer without saying so explicitly. The Committee therefore believes that confusion may arise regarding the interpretation of the content of this article. |
| --- | --- |

4.2.

| 4.3. | The EESC considers that Article 31(1)(a), referring to surveillance procedures, also does not clarify how, without having carried out an inspection, a volumetric evaluation or an evaluation of the catch composition of the content of a haul can be carried out. |
| --- | --- |

4.3.

Brussels, 23 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Council Regulation (EC) No 2115/2005 of 20 December 2005 establishing a recovery plan for Greenland halibut in the framework of the Northwest Atlantic Fisheries Organisation (OJ L 340, 23.12.2005, p. 3).

1

(2)  Council Regulation (EC) No 1386/2007 of 22 October 2007 laying down conservation and enforcement measures applicable in the Regulatory Area of the Northwest Atlantic Fisheries Organisation (OJ L 318, 5.12.2007, p. 1).

2

---

European Economic and Social Committee

| 10.5.2019 | EN | Official Journal of the European Union | C 159/63 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/63

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council establishing the European Cybersecurity Industrial, Technology and Research Competence Centre and the Network of National Coordination Centres’

(COM(2018) 630 final — 2018/0328 (COD))

(2019/C 159/10)

Rapporteur: Antonio LONGO

Co-rapporteur: Alberto MAZZOLA

| Consultation | European Council, 5.10.2018
  European Parliament, 1.10.2018 |
| --- | --- |
| Legal basis | Articles 173(3), 188 and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 9.1.2019 |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 143/5/2 |

Consultation

European Council, 5.10.2018

European Parliament, 1.10.2018

Legal basis

Articles 173(3), 188 and 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

9.1.2019

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

143/5/2

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) welcomes the Commission’s initiative, considering it an important step in developing an industrial strategy for cybersecurity and a strategic move to achieve robust and comprehensive digital autonomy. These aspects are essential for strengthening Europe’s defence mechanisms against the ongoing cyberwarfare that threatens to undermine its political, economic and social systems. |
| --- | --- |

1.1.

| 1.2. | The Committee points out that any strategy on cybersecurity must go hand in hand with widespread awareness and the adoption of safe practices by all users. |
| --- | --- |

1.2.

| 1.3. | The EESC supports the general objectives of the proposal and is aware that specific aspects of how it will work will be dealt with at a later point. However, as this is a regulation, it considers that certain sensitive aspects related to governance, funding and achieving the objectives set should be outlined in advance. It is important that the future Network and the Centre should build as far as possible on the Member States’ expertise and cyber skills, and that competences should not all be concentrated in the new Centre. It is also important to ensure that the activities of the future Network and the Centre do not overlap with existing cooperation mechanisms and bodies. |
| --- | --- |

1.3.

| 1.4. | The EESC is in favour of extending the partnership to include the industry, on the basis of firm commitments on the scientific and investment fronts, and by including it in future in the Governing Board. In the event of a tripartite partnership between the European Commission, the Member States and the industry, the involvement of companies from non-EU countries should be limited to those that have long been established on European soil and are fully involved in the European technological and industrial base, and their involvement should be subject to proper screening and oversight mechanisms and to compliance with the principle of reciprocity and confidentiality obligations. |
| --- | --- |

1.4.

| 1.5. | Cybersecurity requires a joint commitment from all Member States, which should therefore participate in the Governing Board on the basis of arrangements to be determined. Their financial contributions could draw on the allocation of EU funds to each Member State. |
| --- | --- |

1.5.

| 1.6. | The proposal should explain more clearly how the Centre will be involved in coordinating the funding streams from the Digital Europe and Horizon Europe programmes, or, above all, what guidelines will be followed when framing and awarding contracts. This is of key importance in order to avoid duplications and overlaps. Furthermore, in order to increase the budget, it would be advisable to extend the synergies to other EU financial instruments (e.g. regional funds, structural funds, the CEF, the EDF, InvestEU, etc.). |
| --- | --- |

1.6.

| 1.7. | The EESC considers it essential to set out the details of the cooperation arrangements and relations between the European Centre and the national centres. It is also important that the national centres be funded by the EU, at least when it comes to their administrative costs, thereby facilitating harmonisation in terms of administration and expertise, so as to reduce the gap between European countries. |
| --- | --- |

1.7.

| 1.8. | The Committee reiterates the importance of human capital and hopes that – in cooperation with universities, research centres and higher education institutes – the Competence Centre can promote initiatives aimed at educating and training people to a standard of excellence, including through dedicated third-level and secondary-school courses. In the same vein, it is essential to provide for specific support for start-ups and SMEs. |
| --- | --- |

1.8.

| 1.9. | The EESC considers it essential to further clarify the respective remits of and dividing lines between the Centre and the European Network and Information Security Agency (ENISA), and to clearly set out how they will work together and support each other and thereby avoid overlaps of responsibilities and duplication of efforts. Similar problems arise with other bodies dealing with cybersecurity such as the EDA, Europol and CERT-EU; it would be advisable to set up mechanisms for structured dialogue between each of the various bodies. |
| --- | --- |

1.9.

2.   Current framework for cybersecurity

| 2.1. | Cybersecurity is one of the issues at the top of the EU’s agenda, given that it plays an essential part in protecting institutions, businesses and individuals, as well as in actually safeguarding democracies. Among the most worrying issues is the exponential increase in the incidence of malware disseminated online via automated systems, which has risen from 130 000 in 2007 to 8 million in 2017. Furthermore, the EU is a net importer of cybersecurity products and solutions, and this is problematic for economic competitiveness and civilian and military security. |
| --- | --- |

2.1.

| 2.2. | Although the EU has considerable expertise and experience in the field of cybersecurity, the industry, universities and research centres are still fragmented, lacking alignment and a common development strategy. This is because the relevant cybersecurity sectors (e.g. energy, space, defence and transport) are not sufficiently supported, while synergies between civilian and defence cybersecurity are not harnessed. |
| --- | --- |

2.2.

| 2.3. | In order to address the growing challenges, the EU established a Cybersecurity Strategy in 2013 to foster a reliable, safe, and open cyber ecosystem (1). Later, in 2016, the first specific measures were adopted on the security of network and information systems (2). This process led to the creation of a public-private partnership (‘cPPP’) on cybersecurity. |
| --- | --- |

2.3.

| 2.4. | In 2017, the communication entitled Resilience, deterrence and defence: Building strong cybersecurity for the EU (3) pointed out the need to ensure that the EU retains and develops essential cybersecurity technological capacities to secure the digital single market, and, in particular, to protect critical networks and information systems and provide key cybersecurity services. |
| --- | --- |

2.4.

| 2.5. | Therefore, the EU must be in a position to secure its own digital assets and processes and to compete on the global cybersecurity market in order to achieve robust and comprehensive digital autonomy (4). |
| --- | --- |

2.5.

3.   The Commission’s proposals

| 3.1. | The Competence Centre (or ‘Centre’) will aim to facilitate and coordinate the work of the Network of National Coordination Centres and act as a reference point for the cybersecurity competence community, driving the cybersecurity technological agenda and facilitating access to the expertise so gathered. |
| --- | --- |

3.1.

| 3.2. | In particular, the Centre will do so by implementing relevant parts of the Digital Europe and Horizon Europe programmes by allocating grants and carrying out procurements. In view of the huge investments in cybersecurity made in other parts of the world and of the need to coordinate and pool relevant resources in Europe, the Competence Centre is proposed as a European Partnership with a double legal basis, thus facilitating joint investment by the EU, the Member States and/or industry. |
| --- | --- |

3.2.

| 3.3. | The proposal requires the Member States to contribute a commensurate amount to the activities of the Competence Centre and Network. The budgetary allocation proposed by the EU is around EUR 2 billion from the Digital Europe programme; an amount to be determined from the Horizon Europe programme; and a total contribution from the Member States at least matching that from the EU. |
| --- | --- |

3.3.

| 3.4. | The principal decision-making body is to be the Governing Board, in which all Member States will take part but only those that participate financially will have voting rights. Its voting mechanism is to follow a double majority principle requiring 75 % of the financial contribution and 75 % of the votes. The Commission is to hold 50 % of the voting rights. The Centre is to be assisted by an Industrial and Scientific Advisory Board to ensure dialogue with businesses, consumers and other relevant stakeholders. |
| --- | --- |

3.4.

| 3.5. | Working closely with the Network of National Coordination Centres and the cybersecurity competence community, the Centre would be the main implementation body for EU financial resources dedicated to cybersecurity under the proposed Digital Europe and Horizon Europe programmes. |
| --- | --- |

3.5.

| 3.6. | The national coordination centres are to be selected by the Member States. These centres must either possess or have direct access to technological expertise in cybersecurity, notably in domains such as cryptography, ICT security services, automatic intrusion detection, system security, network security, software and application security, and human and societal aspects of security and privacy. They must also have the capacity to effectively engage and coordinate with industry and the public sector, including authorities designated under Directive (EU) 2016/1148. |
| --- | --- |

3.6.

4.   General comments

| 4.1. | The EESC welcomes the Commission’s initiative and considers it a strategic move for the development of cybersecurity, which gives effect to the decisions taken at the Tallinn summit in September 2017. At that occasion, the heads of state and government called on the EU to ‘make Europe a leader in cybersecurity by 2025, in order to ensure the trust, confidence, and protection of our citizens, consumers and enterprises online and to enable a free and law-governed internet’. |
| --- | --- |

4.1.

| 4.2. | The EESC reiterates that we are currently in the midst of fully-fledged cyberwarfare, which threatens to undermine our political, economic and social systems, attacking institutions’ IT systems, critical infrastructure (such as energy, transport, banking and financial institutions) and businesses, and affecting – partly through fake news – elections and democratic processes in general (5). A high level of awareness must therefore be promoted, combined with a robust and timely response. For these reasons, a clear and well-supported industrial strategy for cybersecurity is needed as a precondition to achieving digital autonomy. The EESC considers that the work programme should give priority to sectors identified in the Directive (EU) 2016/1148, which applies to companies providing services, be they public or private, that are essential because of their importance for society (6). |
| --- | --- |

4.2.

| 4.3. | The Committee points out that any strategy on cybersecurity must go hand in hand with widespread awareness and the adoption of safe practices by all users. For this reason, any technological initiative must be accompanied by appropriate information and awareness-raising campaigns in order to create a ‘culture of digital safety’ (7). |
| --- | --- |

4.3.

| 4.4. | The EESC supports the general objectives of the proposal and is aware that specific aspects of how it will work will be dealt with at a later point. However, as this is a regulation, it considers that certain sensitive aspects related to governance, funding and achieving the objectives set should be outlined in advance. It is important that the future Network and the Centre should build as far as possible on the Member States’ expertise and cyber skills, and that competences should not all be concentrated in the new Centre. It is also important to ensure that the activities of the future Network and the Centre do not overlap with existing cooperation mechanisms and bodies. |
| --- | --- |

4.4.

| 4.5. | The EESC points out that, in its opinion TEN/646 on the Cybersecurity Act (8), it proposed tripartite PPP cooperation between the European Commission, the Member States and the industry, including SMEs, while the current structure, whose legal form needs to be fleshed out, essentially provides for a public-public partnership between the European Commission and the Member States. |
| --- | --- |

4.5.

| 4.6. | The EESC is in favour of extending the partnership to include the industry, on the basis of firm commitments on the scientific and investment fronts, and by including it in future in the Governing Board. The establishment of an Industrial and Scientific Advisory Board may not ensure ongoing dialogue with businesses, consumers and other relevant stakeholders. Moreover, in the new landscape sketched out by the Commission, it is not clear what role the European Cyber Security Organisation (ECSO) will play. This body was established in June 2016 at the instigation of the Commission to act as the Commission’s counterpart, and its capital in terms of networks and expertise should not be wasted. |
| --- | --- |

4.6.

| 4.6.1. | In the event of a tripartite partnership, is important to give attention to the situation of companies from third countries. In particular, the EESC stresses that such a partnership should be underpinned by a robust mechanism to prevent the involvement of non-EU companies that might undermine the security and autonomy of the EU. The relevant clauses set out in the EDIDP (9) should also be applied in this context. |
| --- | --- |

4.6.1.

| 4.6.2. | At the same time, the EESC recognises that certain companies that are from non-EU countries but have long been established on European soil and are fully involved in the European technological and industrial base could be very useful for EU projects, and should be able to access these projects provided that the Member States ensure proper screening and oversight mechanisms for these companies, and on condition that the principle of reciprocity and confidentiality obligations are respected. |
| --- | --- |

4.6.2.

| 4.7. | Cybersecurity requires a joint commitment from all Member States, which should therefore participate in the Governing Board on the basis of arrangements to be determined. It is also important that all Member States make a sufficient financial contribution to the Commission’s initiative. Their financial contributions could draw on the allocation of EU funds to each Member State. |
| --- | --- |

4.7.

| 4.8. | The EESC agrees that each Member State should be free to appoint a representative to the Governing Board of the European Competence Centre. The EESC recommends that the profiles of the national representatives be clearly defined, combining strategic and technological expertise with management, administrative and budgetary skills. |
| --- | --- |

4.8.

| 4.9. | The proposal should explain more clearly how the Centre will be involved in coordinating the funding streams from the Digital Europe and Horizon Europe programmes – currently still under negotiation – or, above all, what guidelines will be followed when framing and awarding contracts. This is of key importance in order to avoid duplications and overlaps. Furthermore, in order to increase the budget, it would be advisable to extend the synergies to other EU financial instruments (e.g. regional funds, structural funds, the CEF, the EDF, InvestEU). The Committee hopes that the Network of National Coordination Centres will be involved in managing and coordinating the funds. |
| --- | --- |

4.9.

| 4.10. | The EESC notes that the Advisory Board is to comprise 16 members and that no detail is given as to how this body will draw on the worlds of business, universities, research and consumers. The Committee thinks it would be useful and appropriate to ensure that this board is made up of people with an outstanding level of knowledge of the subject who are representative in a balanced way of the different sectors involved. |
| --- | --- |

4.10.

| 4.11. | The EESC considers it important to set out the details of the cooperation arrangements and relations between the European Centre and the national centres. It is also important that the national centres be funded by the EU, at least when it comes to their administrative costs, thereby facilitating harmonisation in terms of administration and expertise, so as to reduce the gap between European countries. |
| --- | --- |

4.11.

| 4.12. | In line with its previous opinions (10), the EESC emphasises the importance of educating and training people to a standard of excellence in the field of cybersecurity, including through specific school curricula and undergraduate and postgraduate courses. Sufficient financial support should also be offered to SMEs and start-ups in the sector (11), which are essential to the development of cutting-edge research. |
| --- | --- |

4.12.

| 4.13. | The EESC considers it essential to further clarify the respective remits of and dividing lines between the Centre and ENISA, and to clearly set out how they will work together and support each other and thereby avoid overlaps of responsibilities and duplication of efforts (12). The proposal for a regulation states that an ENISA representative is to be a permanent observer on the Governing Board; however, that does not guarantee structured dialogue between the two bodies. Similar problems arise with other bodies dealing with cybersecurity such as the EDA, Europol and CERT-EU. In this regard, it is interesting to note that a memorandum of understanding was signed in May 2018 between ENISA, the EDA, Europol and CERT-EU. |
| --- | --- |

4.13.

Brussels, 23 January 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  JOIN(2013) 1 final.

1

(2)  Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union (OJ L 194, 19.7.2016, p. 1).

2

(3)  JOIN(2017) 450 final.

3

(4)  OJ C 227, 28.6.2018, p. 86.

4

(5)  Information report on’How media is used to influence social and political processes in the EU and Eastern neighbouring countries’, Ms Vareikytė, 2014.

5

(6)  OJ C 227, 28.6.2018, p. 86.

6

(7)  OJ C 227, 28.6.2018, p. 86.

7

(8)  OJ C 227, 28.6.2018, p. 86.

8

(9)  COM(2017) 294.

9

(10)  OJ C 451, 16.12.2014, p. 25.

10

(11)  OJ C 227, 28.6.2018, p. 86.

11

(12)  OJ C 227, 28.6.2018, p. 86.

12

---

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

| 10.5.2019 | EN | Official Journal of the European Union | C 159/68 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/68

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Decision of the European Parliament and of the Council on adapting Directive 2012/27/EU of the European Parliament and of the Council on energy efficiency [as amended by Directive (EU) 2018/2002] and Regulation (EU) 2018/1999 of the European Parliament and of the Council [Governance of the Energy Union], by reason of the withdrawal of the United Kingdom from the European Union’

(COM(2018) 744 final — 2018/0385 (COD))

(2019/C 159/11)

Rapporteur-general: Séamus BOLAND

| Referral | European Parliament, 15.11.2018
  Council of the European Union, 26.11.2018 |
| --- | --- |
| Legal basis | Articles 192(1), 194(2) and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Bureau decision | 11.12.2018 |
| Adopted at plenary | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 106/0/0 |

Referral

European Parliament, 15.11.2018

Council of the European Union, 26.11.2018

Legal basis

Articles 192(1), 194(2) and 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Bureau decision

11.12.2018

Adopted at plenary

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

106/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the proposal to amend the EU legislation governing energy efficiency on the basis that the changes are necessary as a result of the UK leaving the EU. |
| --- | --- |

1.1.

| 1.2. | The EESC recognises that the changes are technical and welcomes the fact that they will enable the new EU of 27 members to continue plans to implement Directive 2012/27/EU of the European Parliament and of the Council (1) on energy efficiency and Regulation (EU) 2018/1999 of the European Parliament and of the Council (2) on the governance of the Energy Union. |
| --- | --- |

1.2.

| 1.3. | The EESC welcomes the fact that the proposed changes will not affect the further momentum of relevant energy Directives as noted in the publication of the political agreement in June 2018. |
| --- | --- |

1.3.

| 1.4. | The EESC recommends that the EU encourage the UK to align itself with the objectives contained in the agreement on targets as set out by the Directive, after Brexit. |
| --- | --- |

1.4.

| 1.5. | The EESC recommends that EU Commission commit to introducing a comprehensive EU-wide communication strategy, which ensures that the objectives of the Energy Efficiency Directive and the Regulation on governance of the Energy Union are met as a matter of urgency, especially after Brexit. |
| --- | --- |

1.5.

| 1.6. | The EESC strongly recommends that the EU should take advantage of all opportunities to involve civil society in achieving energy efficiency objectives, including the process of amendments, as necessitated by Brexit. |
| --- | --- |

1.6.

| 1.7. | The EESC recommends that the Commission take due care to ensure that there will be no unintended consequences in terms of budget or human rights as a result of these changes. |
| --- | --- |

1.7.

2.   Context

| 2.1. | The EU Directive on energy efficiency and the Regulation on governance of the Energy Union are essential instruments in ensuring that the EU meets its commitments to reach energy efficiency targets by 2030 and thereby honour its environmental commitments agreed in various international agreements. |
| --- | --- |

2.1.

| 2.2. | As part of the preparation for the United Kingdom’s withdrawal from membership of the European Union, the EU Commission has proposed to amend EU legislation concerning energy efficiency and the Regulation on governance of the Energy Union. |
| --- | --- |

2.2.

| 2.3. | The necessity of this proposal originates from the fact that the energy consumption figures that are outlined in the revised Directive on energy efficiency and the Regulation on governance of the Energy Union are based on a Union of 28 states and therefore need to be amended to reflect a new Union of 27 members. |
| --- | --- |

2.3.

| 2.4. | The proposal will not affect the EU’s energy efficiency targets as stated in the political agreement of June 2018, which underlines the commitment to the achievement of an efficiency target for 2030 of 32,5 %. |
| --- | --- |

2.4.

3.   Background

| 3.1. | On 23 June 2016, following a referendum on the subject of EU membership, the United Kingdom of Great Britain and Northern Ireland voted to leave. This decision includes the territory of Gibraltar. |
| --- | --- |

3.1.

| 3.2. | On 29 March 2017, the United Kingdom submitted notification of its intention to withdraw from the Union. This means that, unless a ratified agreement establishes a change of date, all Union primary and secondary law will cease to apply to the United Kingdom from 30 March 2019 (‘the withdrawal date’). The United Kingdom will then become a third country. |
| --- | --- |

3.2.

| 3.3. | The Energy Efficiency Directive seeks to achieve an energy efficiency target of 32,5 % for 2030 by requiring Member States to set indicative national energy efficiency contributions. |
| --- | --- |

3.3.

| 3.4. | Therefore, Member States are expected to take account of the Union’s energy consumption projections. |
| --- | --- |

3.4.

| 3.5. | The proposal refers to the Regulation on the governance of the Energy Union, which also requires Member States to take account of the 2030 energy consumption when setting them contribution towards the Union 2030 target. |
| --- | --- |

3.5.

| 3.6. | Since the Governance Regulation repeats the absolute values in the Energy Efficiency Directive, those values need to be amended accordingly. |
| --- | --- |

3.6.

| 3.7. | EU projections demonstrate that primary energy consumption in 2030 must be no more than 1 273 Mtoe (Million tonnes of oil equivalent) with final energy consumption being no more than 956 Mtoe. Equivalent projections for the EU 27 members will demonstrate that primary energy consumption must be no more than 1 128 Mtoe, with final energy consumption being no more than 846 Mtoe. |
| --- | --- |

3.7.

| 3.8. | The principles of subsidiarity (Article 5(3) TEU) and proportionality (Article 5(4) TEU) are fully respected, mainly because the proposal is seeking technical changes only, which do not affect legislation already enacted. |
| --- | --- |

3.8.

| 3.9. | It is already accepted by all stakeholders that these are necessary technical changes, which will allow the new 27-member European Union to pursue the objectives contained in the relevant Directives. |
| --- | --- |

3.9.

4.   EESC observations

| 4.1. | It is clear that this proposal aims to achieve a necessary technical change to the relevant EU energy efficiency and Energy Union governance legislation as a result of the withdrawal of the United Kingdom from the European Union. |
| --- | --- |

4.1.

| 4.2. | In taking account of recent EESC opinions on Energy Union Governance (3) and Revision of the Energy Efficiency Directive (4) (Mr Manoliu), it is also clear that all of the recommendations contained therein remain completely valid and must be promoted strongly by the EESC. |
| --- | --- |

4.2.

| 4.3. | While it is accepted that the proposal has no bearing on wider matters such as budget or human rights, it is still necessary to ensure vigilance in this area so that there can be no unintended consequences, which would cause a budgetary or human rights effect. |
| --- | --- |

4.3.

| 4.4. | The EESC welcomes the fact that the principles of subsidiarity and proportionality are respected in full. |
| --- | --- |

4.4.

| 4.5. | Accepting that the proposal is designed to amend existing legislation affecting energy and that the strong commitments to certain targets remain, it must be noted that outcomes may be affected by whether or not the UK will continue to meet the same targets in line with the remaining 27 members. |
| --- | --- |

4.5.

| 4.6. | In that regard the EESC advises that a strong communication strategy should be put in place designed to ensure that there will be no confusion among stakeholders caused by the advent of Brexit as regards the commitment and implementation of plans already agreed among Member States to reach certain energy efficiency targets. |
| --- | --- |

4.6.

| 4.7. | The EESC notes that the changes proposed are technical and do not require public consultation; however it also strongly recommends that all opportunities to involve civil society in the support of governments’ implementation plans should be taken. |
| --- | --- |

4.7.

| 4.8. | The EESC notes the necessity of these technical changes and believes that they will enhance the implementation of the directive. |
| --- | --- |

4.8.

| 4.9. | The EESC welcomes the fact that the June 2018 provisional agreement on a revision of the Energy Efficiency Directive will not be affected by this Decision. |
| --- | --- |

4.9.

| 4.10. | Apart from the need to ensure a communication strategy is in place to allay any confusion on continued implementation of the Directives, the EESC is satisfied that the proposal will not materially affect plans by Member States to achieve the stated targets. |
| --- | --- |

4.10.

Brussels, 23 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).

1

(2)  Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).

2

(3)  OJ C 246, 28.7.2017, p. 34.

3

(4)  OJ C 246, 28.7.2017, p. 42 .

4

---

| 10.5.2019 | EN | Official Journal of the European Union | C 159/71 |
| --- | --- | --- | --- |

10.5.2019

EN

Official Journal of the European Union

C 159/71

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 1305/2013 and (EU) No 1307/2013 as regards certain rules on direct payments and support for rural development in respect of the years 2019 and 2020’

(COM(2018) 817 final — 2018/0414(COD))

(2019/C 159/12)

| Referral | European Parliament, 13.12.2018
  Council of the European Union, 14.12.2018 |
| --- | --- |
| Legal basis | Articles 43(2) and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Agriculture, Rural Development and the Environment |
| Adopted at plenary session | 23.1.2019 |
| Plenary session No | 540 |
| Outcome of vote
  (for/against/abstentions) | 175/1/5 |

Referral

European Parliament, 13.12.2018

Council of the European Union, 14.12.2018

Legal basis

Articles 43(2) and 304 of the Treaty on the Functioning of the European Union

Section responsible

Agriculture, Rural Development and the Environment

Adopted at plenary session

23.1.2019

Plenary session No

540

Outcome of vote

(for/against/abstentions)

175/1/5

Since the Committee unreservedly endorses the content of the proposal and feels that it requires no comment on its part, it decided, at its 540th plenary session of 23 and 24 January 2019 (meeting of 23 January), by 175 votes to 1 with 5 abstentions, to issue an opinion endorsing the proposed text.

Brussels, 23 January 2019.

The president

of the European Economic and Social Committee

Luca JAHIER

---