PRELIMINARY DRAFT SUPPLEMENTARY AND AMENDING BUDGET No 3 TO THE BUDGET FOR 2002 - GENERAL STATEMENT OF REVENUE - STATEMENT OF REVENUE AND EXPENDITURE BY SECTION - Section III - Commission - Section V - Court of Auditors - Section VI - Economic and Social Committee

(presented by the Commission)

Having regard to:

- Article 78 of the Treaty establishing the European Coal and Steel Community,

- Article 272 of the Treaty establishing the European Community,

- Article 177 of the Treaty establishing the European Atomic Energy Community,

- Article 15 of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities, [1] as last amended by Regulation No 762/2001 [2] of 9 April 2001,

[1] OJ L 356, 31.12.1977, p.1.

[2] OJ L 111, 20.04.2001, p. 1.

The European Commission hereby presents to the budgetary authority the draft supplementary and amending budget No 3 to the 2002 budget for the reasons set out in the explanatory memorandum.

***

TABLE OF CONTENTS

EXPLANATORY MEMORANDUM

1 Revenue

2 Commission

3 Court of Auditors

4 Economic and Social Committee

SUMMARY TABLE - Effect of the SAB on the financial perspective

EXPLANATORY MEMORANDUM

This Preliminary Draft Supplementary and Amending Budget (PDSAB) No 3/2002 contains the following elements:

As regards revenue:

- the budgeting of the definitive amount of the positive balance of budget 2001, of the surplus from the Guarantee Fund for external measures and of fines in the competition field;

- the adjustment of collection costs in 2001 related to the application of the new own resources decision;

- the creation of budget lines with a token entry for the contribution of the research fund for coal and steel to the administrative expenditure of the Commission, and for the contribution of Norway and Iceland to the Eurodac project;

- the updating of forecasts of customs duties, VAT and GNP bases for 2002.

As regards expenditure in section III - Commission:

-

the increase in administrative appropriations for the payment of the interest of fines paid back by the Commission, in the competition field, when the fines were later reduced of cancelled.

As regards section V - Court of Auditors, the addition of remarks under title 2 in expenditure, in order to cover the risk of damages to buildings due to industrial or terrorist actions.

As regards section VI - Economic and Social Committee, the amendment of the establishment plan and the addition of administrative expenditure related to the taking-over by the Committee of the tasks associated to the current ECSC Consultative Committee.

In complement to the request of the Economic and Social Committee, the Commission states that the reduction of its activities associated with the expiry of the ECSC Treaty has been fully taken into account in budget 2002 and in the Preliminary Draft Budget 2003, as regards both appropriations and staff.

1 Revenue

1.1 Balance of budget 2001

The implementation of the budget year 2001 shows a surplus of EUR15 002 522 103.55, shared between the negative component resulting from an under-registering in revenue (-EUR408 225 830.75), an under-spending in expenditure (+EUR15 337 477 830.27) and a positive balance of monetary exchange (+EUR73 270 104.03).

The under-registering of revenue can be analysed by title as follows:

>TABLE POSITION>

The under-spending of payment appropriations in 2001 can be analysed by heading of the Financial perspective as follows:

>TABLE POSITION>

The financial statement and balance sheet for the year 2001 provides for more information on the implementation of budget 2001.

1.2 Update of the adjustment of collection costs (2001)

SAB 2/2002 entered the first estimate of the amounts to be budgeted under article 200. This article was created to cover the reimbursement to the Member States of the amount resulting from the difference in the retention rates applied for the recovery of traditional own resources, between the new decision on the system of the Communities' own resources and the old decision, during the period from March 2001 to December 2001. (see Articles 2(3), 10(1) and 10(2)(c) of the Council Decision 2000/597/EC, Euratom)

As a result of the new data stemming from the revenue account 2001 those amounts have to be adjusted.

1.3 Repayment of the surplus from the Guarantee Fund for external measures

Article 7 of the Council Decision 2000/597/EC, Euratom on the system of the European Communities' own resources states that " ...surplus from the Guarantee Fund arising from external measures, transferred to the revenue account in the budget, shall be regarded as constituting own resources ". In line with the revision of the forecasts relating to own resources this PDSAB enters the repayment of the surplus from the Guarantee Fund for external measures. This amounts to EUR372.46 million.

1.4 Competition fines

Article 7100 is marked to register the recovery of fines. No amount was introduced in the 2002 budget, as it is very difficult to forecast these recoveries. However some undertakings fined by the Commission, especially pharmaceutical companies, will not file an appeal against the Commission Decision imposing fines. Therefore an amount of EUR583.4 million is being budgeted.

1.5 ECSC administrative expenditure

The Decision of the Representatives of the Governments of the Member States, meeting within the Council, of 27 February 2002, on the financial consequences of the expiry of the ECSC Treaty and on the research fund for coal and steel (OJ L79 of 22 March 2002), provides that all assets and liabilities of the ECSC, as they exist on 23 July 2002, shall, as from 24 July 2002, be managed by the Commission on behalf of the Member States.

According to Annex I, Point 6, of this Decision, administrative expenditure resulting from liquidation, investment and management operations referred to in this Decision, corresponding to the expenditure laid down in Article 20 of the Treaty establishing a Single Council and a Single Commission of the European Communities of 8 April 1965, the amount of which was adjusted by the Council Decision of 21 November 1977, shall be met by the Commission from a lump sum payment of EUR3.3 million per year prorata temporis transferred to the general budget of the European Union from the capital reserve of the fund.

On this basis it is proposed to create a new item to receive the payment from the capital reserve of the fund. For the period 24 July 2002 - 31 December 2002 the amount involved shall be EUR1 455 616.

According to the provisions of the Financial Regulation, article 4, paragraph 2, fifth indent, revenue from third parties (here the member States) in respect of work carried out at their request, shall not be used for any other purpose. It is therefore proposed to assign the lump sum payment from the capital reserve of the fund to the following expenditure lines used for the management of the fund:

* A-1100, A-7000, A-2000 for the staff expenditure (officials, auxiliaries, rents),

* A-2421 for the connection to the interbanks communication network SWIFT,

* A-7070 for the computer system supporting the management of the fund,

* A-2255 for subscriptions to information agencies (such as Reuters, Bloomberg)

* A-2320 for subscriptions to rating agencies (such as S&P, Moody's)

An indicative repartition of the amount between budget lines is the following:

>TABLE POSITION>

1.6 Contributions within the framework of the EURODAC project (Iceland and Norway)

Article 9 of the agreement between the European Community and the Republic of Iceland and the Kingdom of Norway concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Iceland or Norway (OJ L93 of 3 April 2001, p.40), fixes the contribution of Iceland and Norway to the general budget of the European Union.

Therefore it is proposed to create a new chapter (64), and a new budget heading, with a "p.m", for this earmarked revenue.

1.7 Revision of the forecasts of Customs Duties, VAT bases & GNP bases

Since the presentation of the preliminary draft supplementary and amending budget (PDSAB) No 1/98, the Commission has proposed to extend the adjustment of the calculations of financing normally contained in one of the supplementary and amending budgets (SAB) of the year to the revised forecasts of customs duties and VAT and GNP bases.

The Commission believes that the decision to use revised estimates for these aggregates in a SAB for the year in question is a logical extension of the earlier practice. In the SAB revising the revenue side of the budget, the Member States' VAT and GNP contributions are normally adjusted in line with any change in expenditure, the (remaining) balance from the previous year and the revised figures for the UK correction. The use of revised forecasts of own resources improves the accuracy of the payments that Member States are asked to make during the budget year and reduces the adverse impact of the unavoidable forecasting errors from the previous year.

Due to lower than expected growth in 2001 as well as lower forecast economic growth for 2002 as compared to last year's budgetary forecast, all three aggregates subject to revision in the present PDSAB are revised downwards:

* The EU-15 GNP at current market prices is forecast to amount to EUR9 145.9 billion in 2002, which represents a decrease by 1.12 % compared to the EUR9 249.2 billion entered in PDAB 2/2002 [3].

[3] The 2002 budget was financed according to the rules of the old Own Resources Decision. Following the entry into force of the new Own Resources Decision as from 1 March 2002, the budget was recalculated according to the new rules through the PDAB 2/2002. This meant, inter alia, that the GNP bases established according to the European system of accounts (ESA) 1979 in the 2002 budget were replaced by GNP bases established according to ESA 95. Both GNP forecasts dated, however, from April 2001.

* The EU-15 VAT base at current market prices is forecast to amount to EUR4 386.7 billion in 2002, which represents a decrease of 0.66 % compared to the EUR4 416.0 billion entered in PDAB 2/2002.

* Total customs duties for 2002 are now estimated at EUR13 734.2 million. This represents a decrease in the forecast gross revenue from customs duties by EUR2 031.7 million or 12.9 % relative to the PDAB 2/2002. The main reasons for the decrease in relation to the PDAB 2/2002 are a sharp downward adjustment of the forecast growth of imports in 2002 as well as a lower than forecast outturn of revenue from customs duties in 2001.

The use of the exchange rate of 28 December 2000 for converting the forecast VAT and GNP bases into euro (for the three Member States that are not members of the eurozone) avoids distortion since it is this rate which is used to convert budget estimates from euro into national currency when the amounts are called in (as stipulated in Regulation No 1150/2000).

The revised forecasts of customs duties, VAT and GNP bases for 2002 set out in the following table were adopted at the meeting of the Advisory Committee on Own Resources on 26 April 2002.

Revised forecasts of customs duties, VAT & GNP bases for 2002

>TABLE POSITION>

1.8 Correction of budgetary imbalances in favour of the United Kingdom (1998 and 2001)

The correction of budgetary imbalances in favour of the United Kingdom to be budgeted in the present PDSAB concerns two years (1998 and 2001).

The 2001 correction is the first to be subject to the rules of the new Council Decision on the system of the European Communities' own resources (2000/597/EC, Euratom) [4] and its accompanying working document [5] ("The Calculation Method"), whereas the rules of the previous Own resources Decision [6] and its accompanying working document [7] still apply to the 1998 correction.

[4] OJ L 253, 7.10.2000, p. 42.

[5] Commission working document on calculation, financing, payment and entry in the budget of the correction of budgetary imbalances in accordance with Articles 4 and 5 of the Council Decision on the system of the European Communities' own resources, Council of the European Union, 10646/00 ADD 2, 21 September 2000.

[6] OJ L 293, 12.11.1994, p. 9.

[7] Method of calculation, financing, payment and entry in the budget of the correction of budgetary imbalances in accordance with Articles 4 and 5 of the Council Decision on the system of the European Communities' own resources, Council of the European Union, 5455/94, 9 March 1994.

The new "Calculation Method" neutralises the net gains (the "windfall gains") of the United Kingdom that result from the increase in the percentage of traditional own resources (TOR) retained by Member States. Adjustments are also foreseen as a consequence of future enlargements of the Union.

Furthermore, according to the new Own Resources Decision the share of Austria, Germany, the Netherlands and Sweden in the financing of the UK correction is reduced to one fourth of their normal share. The reduction is financed by the other Member States, excluding the United Kingdom. The new financing rules consequently have an impact on the so-called frozen rate, which increases as compared to the calculation under the previous Own Resources Decision.

Since two different set of rules apply to the financing of the two corrections to be budgeted in this PDSAB two frozen rates consequently have to be calculated (presented in conjunction with tables 6.1 and 6.2 in part B of the general statement of revenue). The resulting uniform rate of call of VAT is the difference between the maximum rate of call (0.75 % of the capped VAT base) and the sum of the two frozen rates.

1.8.1 Calculation of the corrections

According to the "Calculation Method" the Commission shall propose an update of the provisional estimate of the correction if it has ground to believe that the initial calculation will differ significantly from the definitive calculation of the correction. In the present PDSAB it is proposed that the 2001 correction, previously entered in the preliminary draft amending budget (PDAB) 2/2002 [8], be updated. Furthermore, the result of the final calculation of the 1998 correction and its financing is also budgeted in this PDSAB.

[8] The 2001 correction was entered in the 2002 budget, which was financed according to the rules of the old Own Resources Decision. Following the entry into force of the new Own Resources Decision as from 1 March 2002, the budget, including the UK correction, was subsequently recalculated (but not updated) according to the new rules through the PDAB 2/2002.

1.8.2 Update of the correction for 2001

The current estimate does differ significantly compared to the estimate for the 2001 correction entered in the PDAB 2/2002. An update of the 2001 correction, to be inserted in the present PDSAB, is therefore proposed.

The following table summarises the changes compared to the estimate entered in the PDAB 2/2002.

>TABLE POSITION>

Table 1 shows that, as a result of these changes, the updated figure for the 2001 UK correction is approximately EUR 401.2 Mio higher compared to the previously budgeted amount.

The difference is due to the combined effect of five factors, which could be quantified as follows:

* The decrease in the United Kingdom's share of European Union revenue decreases the correction by EUR 106.2 Mio.

* The decrease in the United Kingdom's share of European Union expenditure increases the correction by EUR 677.9 Mio.

* The decrease in total expenditure allocated to the Member States (due to the under-execution of budgeted expenditure) decreases the correction by EUR 552.3 Mio.

* The decrease in the so-called UK advantage increases the correction by EUR 390.1 Mio. The "advantage" is the benefit that the UK derives from the current own resources system as compared to the previous ones (due to the introduction of the GNP resource and the capping of the VAT bases).

* The increase in the so-called TOR windfall gains (see point 1.8, third paragraph above) decreases the correction by EUR 8.4 Mio.

The revised estimate for the UK correction for 2001 consequently amounts to EUR 5 027 007 572, which corresponds to an increase by EUR 401 152 696 as compared to the provisional estimate entered in the PDAB 2/2002.

1.8.3 Final calculation of the correction for 1998

The result of the final calculation of the correction for 1998 amounts to EUR 3 996 402 029, i.e. an increase of 65 186 721 as compared to the previously budgeted amount in the SAB 1/99.

The following table summarises the changes compared to the provisional estimate entered in the SAB 1/99.

>TABLE POSITION>

The difference is due to the combined effect of four factors, which could be quantified as follows:

* The decrease in the United Kingdom's share of European Union revenue decreases the correction by EUR 605.3 Mio.

* The decrease in the United Kingdom's share of European Union expenditure increases the correction by EUR 176.1 Mio.

* The increase in total expenditure allocated to the Member States increases the correction by EUR 19.1 Mio.

* The decrease in the so-called UK advantage increases the correction by EUR 475.2 Mio. The "advantage" is the benefit that the UK derives from the current own resources system as compared to the previous ones (due to the introduction of the GNP resource and the capping of the VAT bases).

1.8.4 Entry in the budget of the updated estimate for 2001 and the final amount of the 1998 correction

1.8.4.1 Amount to be budgeted (chapter 15)

The total amount of the UK corrections to be budgeted in the PDSAB 3/2002 is the sum of:

* The total amount of the revised estimate for the 2001 correction.

* The difference between the final amount of the 1998 correction and the amount previously budgeted (in the SAB 1/99).

The amount to be entered in the present PDSAB is therefore equal to

(EUR 5 027 007 572 + EUR 65 186 721) = EUR 5 092 194 293.

1.8.4.2 Financing of the corrections to be budgeted - chapter 15

According to the "Calculation Method" the correction for year n shall be financed according to the GNP key of year n + 1.

The total amount of the revised estimate for 2001 is therefore budgeted and financed according to the revised GNP key of the present PDSAB and entered in chapter 15.

Concerning the final correction for 1998 the "Calculation Method" from 1994 states that in addition to the final calculation of the amount of the UK correction, a definitive calculation should also be made for the financing. The final correction for 1998 is therefore budgeted in two steps. The difference between the final amount of the 1998 correction and the amount previously budgeted (in the SAB 1/99) is entered in chapter 15 according to the GNP key of the present PDSAB. The entire financing is then recalculated according to the final VAT and GNP bases of 1999 and compared with the payments already entered in the budget. The difference per Member State is entered in chapter 35 (see below Definitive calculation of the financing of the 1998 correction - chapter 35).

The budgeting in chapter 15 of the two different UK corrections according to the GNP keys of this PDSAB is summarised below.

>TABLE POSITION>

a Budgeting of the difference as compared to the amount previously budgeted in the SAB 1/99.

1.8.4.3 Definitive calculation of the financing of the 1998 correction - chapter 35

The definitive calculation of the financing of the 1998 correction is based on the final amount of the correction and on the actual GNP and VAT bases of n + 1 (1999) as they appear at the end of n + 3 (2001).

The amounts entered in chapter 35 corrects for

* The differences as regards the "direct effect", i.e. the difference between what each Member State should pay for the final amount of the 1998 correction according to the final 1999 financing key on the one hand and the amounts budgeted in the SAB 1/99 and in chapter 15 of the present PDSAB on the other hand, as well as

* The differences as regards the "indirect effect", i.e. the difference between the implicit effect of the final amount of the 1998 correction on the uniform rate of VAT (and the corresponding effects on each Member State's VAT and GNP payments [9]) on the one hand and the implicit effects of the amounts of the 1998 correction budgeted in the SAB 1/99 and in chapter 15 of the present PDSAB on the other hand.

[9] Using the 1999 VAT and GNP bases as known at the end of n + 3 (2001).

The results are shown in table 4.

>TABLE POSITION>

The direct and indirect effects of the final amount of the 1998 correction financed according to the financing keys of n + 1 and the direct and indirect effects of the amounts budgeted in respect of the 1998 UK correction in the SAB 1/1999 and in chapter 15 of the present PDSAB are compared in table 5.

Table 5 only includes the financing of the correction and not the payment of the correction to the United Kingdom, which is the reason why the totals correspond to the total amount of the 1998 UK correction budgeted in the year and budgetary chapter in question.

>TABLE POSITION>

2 Commission

Following the judgment by the Court of First Instance in the Corus case, [10] five companies initiated legal proceedings to recover interest on the amounts paid to the Commission as fines for the infringement of competition law which were subsequently repaid by the Commission when the fines were annulled or reduced by court decision.

[10] Ruling of 10.10.2001 in Case T-171/99 "CORUS UK Ltd v. Commission of the European Communities"

The Court called on the Commission to repay this interest and reach agreement on the rate to be applied and accordingly on the amount to be refunded to these companies.

An initial estimate of the amount to be repaid was made at the end of 2001. The amount which definitely had to be repaid was estimated at EUR3.8 million. This led to transfer of appropriations No 60/2001.

However, at the time there was some uncertainty about the exact amount to be repaid as the companies concerned had not all had the opportunity to confirm that they accepted the Commission's proposal.

Since March, following an informal hearing before the Court in Luxembourg in February, all the parties have accepted the Commission's proposal. There is a shortfall of EUR1.3 million to repay the interest and settle the demands under the agreement.

The obligation to pay this additional amount is unavoidable and exceptional and could not be foreseen when the 2002 budget was drawn up. The Commission has therefore decided to incorporate it in preliminary draft supplementary and amending budget 3/2002 in accordance with Article 15 of the Financial Regulation.

3 Court of Auditors

After the troubles of September 2001, the insurance companies revoked cover for the risk of industrial conflicts and terrorist attacks on the Court of Auditors' buildings.

The Court of Auditors has therefore asked for a remark to be added to Title 2 of Section V of the budget to the effect that the appropriations entered in this Title will cover all expenditure linked to damage resulting from industrial conflicts and attacks. This remark is identical to that for Title 2 of Section I (European Parliament) of the 2002 budget.

4 Economic and Social Committee

4.1 Succession of the ECSC Consultative Committee.

4.1.1 Basis for the submission of a 2002 supplementary and amending budget

In the light of the expiry of the ECSC Treaty on 23 July 2002, the Industry Council of 18 May 2002 asked the European Commission to submit its ideas on the future of structured dialogue in the areas covered by the Treaty. Having rejected a number of options, the Commission, in response to the wishes of the Member States, approached the European Economic and Social Committee (EESC) with a view to examining, jointly with the ECSC Consultative Committee, the possible options for a successor to that body.

On the basis of that consultation, the Commission submitted its proposals in a Communication of 27 September 2000 entitled "The future of structured dialogue after the expiry of the ECSC Treaty"1, addressed to the Council, the European Parliament, the Economic and Social Committee, the ECSC Consultative Committee and the Committee of the Regions. In the Communication the Commission proposed that "the EESC's remit ... be extended to include the coal and steel sectors, and [that it be made] the consultative body with ordinary competence for those two sectors, in line with the arrangements for the other economic and social sectors" [11].

[11] COM(2000) 588 final

At institutional level, the Commission's communication stresses that "this solution appears flexible and less costly than the other options, merely entailing a marginal increase in the EESC's budget resources, which are currently set at EUR 80 million; the budgetary authority could also consider a limited adjustment in administrative back-up for the EESC's new consultative activities, along the lines of what is currently offered to the ECSC Consultative Committee. Unlike all the other options, this approach avoids setting up a new structure with an ill-defined status which is difficult to justify vis-à-vis the other institutions and economic and social sectors"1.

With regard to this new EESC consultative function, the Commission stresses its "determination to examine the development of ECSC structured dialogue in a firmly future-based perspective". The ECSC's unique "experience - notably in the fields of social consensus, industrial restructuring and research - will enhance the EESC's ability to play an active role in modernising the European economy and making it more competitive1".

The European Parliament, in its Resolution of 22 March 2001 containing the observations which form an integral part of the decision concerning the discharge in respect of the implementation of the budget of the European Coal and Steel Community (ECSC) for the 1999 financial year [12], called on the Commission "to urge the Member States to ensure that the composition and operating methods of the Economic and Social Committee, which will assume responsibility for the structured dialogue after expiry of the ECSC, reflect the specific expertise of the coal and steel industries".

[12] European Parliament final document A5-0097/2001 (PE 294.383)

The European Economic and Social Committee fully supports the European Commission's proposal. This new consultative function for the EESC would be consistent with the path mapped out at the Lisbon Summit on the modernisation of the European economy and it would enrich the role of the EESC as "a bridge between Europe and organised civil society and as a permanent, structured forum for dialogue and consultation at Community level"; more specifically, it would "enhance the EESC's ability to deal with industrial conversion issues, particularly in the light of enlargement" [13].

[13] COM(2000) 588 final, p. 4

Consequently the Committee is ready to assume this new function, provided that sufficient human and financial resources are made available to it to enable it to make a substantial contribution to successfully tackling modernisation of the economy and industrial change. The EESC agrees with the European Commission that its proposals for 2002 (SAB) and 2003 should not have any impact on the Community budget, as the financing of the Committee's new consultative function would replace that of the ECSC Consultative Committee, charged to the budget of the European Commission up to July 2002.

4.1.2 Implementing measures adopted

A joint working party has been set up by the two consultative committees. The working party has drawn up a draft for the integration and dynamic development of the ECSC consultative function. The bureaux of the European Economic and Social Committee and the ECSC Consultative Committee, by agreement with the European Commission which has participated closely and actively in the discussions, have examined and approved the following proposal for the implementation of the EESC's new task, the main points of which are set out below:

As specified by the Commission in its communication, the implementation of the new consultative function in the area of industrial change does not require legislation and would be based on the provisions of the EESC's Rules of Procedure, in accordance with Article 261 of the Treaty.

To this end, the EESC's Rules of Procedure are being amended to set up an internal working body entitled the consultative commission. The Consultative Commission on Coal - Steel - Industrial Change (CCIC) would be made up of a maximum of 24 members of the European EESC and 30 external delegates from ECSC socio-occupational organisations, progressively extended to the other sectors concerned by the modernisation of the economy, embracing all the interests involved (industry - commerce - SMEs - labour - consumers - environment).

Delegates from socio-occupational organisations would initially be appointed on the basis of proposals by the existing ECSC Consultative Committee.

The CCIC's remit:

* will cover the areas of the coal and steel industries, and their production and consumption chains, in which the Community is active;

* will be progressively extended to the handling of industrial change in all the sectors of activity and the repercussions of this (e.g. with regard to employment, social and structural policy measures, aid and competition policy, industrial change, research and technological development, environmental and sustainable development policy, energy policy, trade policy);

* will focus particularly on EU enlargement and the handling of industrial change in the new Member States.

The full extent of this remit will ultimately be determined by the appropriations available.

The CCIC's activities will comprise mandatory opinions under the terms of the Treaty, optional and exploratory opinions at the request of the European Parliament, the Council and the Commission, as well as own-initiative opinions, information reports and the holding of conferences and hearings.

The EESC and the ECSC Consultative Committee have jointly drawn up a draft work programme, which is attached, of potential activities during (the latter part of) 2002 and 2003. The institutions will be able, under Article 262 of the Treaty, to benefit from the extended remit of the EESC in order to elucidate their decisions in these areas.

On the basis of their budgetary competence, the EU institutions will define the framework within which the activities of this working body will be conducted. To this end, the EESC, in concert with the ECSC Consultative Committee, and with the support of the European Commission, proposes:

* an increase in the EESC budget to enable the CCIC to function;

* a special budget for the CCIC, to cover (i) travel and subsistence expenses for delegates from the socio-occupational organisations, (ii) activities and events;

* the establishment of an ad hoc unit within the EESC secretariat;

* the use of the EESC secretariat's logistical facilities (rooms, meetings service, interpreting, translation, printing etc).

4.1.3 Purpose of the budget application

The EESC envisages a limited level of activity for the CCIC during the last five months of 2002. The provisional work schedule for 2002 is limited to an inaugural plenary meeting and four study group meetings.

However, the EESC will incur additional costs, and new posts will need to be created in the staff chart; a new budget heading covering the costs of organising the work of the CCIC should also be created in the interests of transparency.

4.1.4 New posts for the CCIC unit at the EESC

The EESC proposes that a unit be set up within its secretariat, the task of which would be to monitor the specific activities of the CCIC. The unit would be headed by an A5, supported by 1 A7, 1 B5 and 2 C5. The cost for 5 months would amount to EUR215,000.

4.1.5 New budget heading covering the costs of organising the work of the CCIC

In the interests of transparency, it is proposed that a new budget article 252 be created, entitled Costs of organising the work of the CCIC, for appropriations intended to cover the cost of meetings, including delegates' travel and meeting expenses. Delegates would be reimbursed under the same conditions as EESC members. On the basis of the 2002 provisional work plan, appropriations to be entered under this new heading would amount to EUR39,000.

4.1.6 Other costs

The activities of the CCIC, although limited in the first year, will involve additional work and costs for the EESC secretariat. Additional appropriations will be needed under the following budget items: Item 1004, Travel and subsistence allowances, attendance at meetings and associated expenditure - EUR26,000 and Item 1891, Interpreter services - EUR47,000. For the 2002 financial year the other costs will be absorbed by the EESC's current budget.

4.2 Budgetary impact of EESC PDSAB

This SAB should have no significant impact on the Community budget. The operating costs of the CCIC are currently covered by the European Commission budget, either under specific headings, or generic headings such as staff or interpreting costs.

Moreover, the posts applied for already exist in the Commission's establishment plan.

For information, the estimated full-year operating costs of the CCIC and the appropriations entered in the European Commission's 2001 budget to cover the operating costs of the ECSC Consultative Committee are shown in the following table:

>TABLE POSITION>

Full-year salary costs for staff requested by the EESC would total EUR 309,000.

For comparative purposes, the Commission's ECSC Consultative Committee secretariat unit has a staff of 11, including 2.5 carrying out duties which will not be taken over by the EESC. Taking into account only the cost of staff performing the functions taken over by the EESC, the staff costs at the Commission can be estimated at EUR550,000. Bringing this consultative function within the ambit of the EESC will therefore produce a saving in staff costs of EUR250,000.

4.3 Upgrading of an A5 post as A4

On 1 April 2001 a grade A5 official was transferred from the European Parliament to the European Economic and Social Committee in order to occupy a vacant A5 post in the latter's establishment plan. The job description for this post included consolidating and developing the relationships with the main European institutions (EP, Council, Commission). At the end of 2001, several months after the transfer, the EP informed the EESC in writing that the official had been promoted from A5 to A4 with retroactive effect as from 1 January 2001.

Apart from the fact that the retroactive promotion of an official who has been transferred from another institution poses a problem of principle (insofar as the conditions of the agreement are thereby affected), it has been impossible for the EESC to take account of this new situation in the 2001 promotions round, which is already closed. Given the current state of the establishment plan, it is therefore impossible to grant the promotion awarded by the EP to the official in question.

In the light of the above and in order not to infringe either the legitimate interests of the official or those of other officials in line for promotion, the EESC requests the upgrading of an A5 post to A4 as from 1 April 2001.

SUMMARY TABLE (EESC - EXPENDITURE)

(Budget situation at 21/3/2002)

>TABLE POSITION>

LIST OF POSTS - ECONOMIC AND SOCIAL COMMITTEE

>TABLE POSITION>

>TABLE POSITION>