EXPLANATORY MEMORANDUM

1. introduction

The present proposal replaces the Commission's proposal of 20 July 2010 for a decision of the European Parliament and of the Council amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework, to address additional financing needs of the ITER project[1].

The proposal takes progress made so far in negotiations into account, notably with regard to the level of redeployment within Heading 1A and the amounts for additional commitment and payment appropriations required for ITER under Heading 1A in 2012 and 2013. It aims at facilitating a rapid agreement by the budgetary authority with a view to securing the success of the ITER project.

The proposal is fully consistent with the Draft Budget 2012, as well as with the Commission's proposal for a Council Decision concerning the framework programme of the European Atomic Energy Community for nuclear research and training activities (2012-2013)[2]. Final adoption of the Euratom Framework Programme by the Council will be conditional upon a positive outcome of the parallel budgetary procedure to provide additional funds for ITER.

2. use of margins and redeployment within heading 1A

No margin is left for 2011 under the expenditure ceiling of Heading 1A, and the margins available in 2012 and 2013 are insufficient to meet the ITER requirements and to leave, at the same time, sufficient margins for unforeseen needs as provided for in Point 13 of the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management (IIA)[3].

In accordance with Point 23, first paragraph, of the IIA the Commission has examined the scope for reallocating expenditure between the programmes covered by Heading 1A with the objective that a significant amount, in absolute terms and as a percentage of the new expenditure planned, is made available within the existing ceiling for this Heading. As a result, it proposes to redeploy an amount of EUR 100 million in 2012 and of EUR 360 million in 2013 from the Seventh Research Framework Programme.

3. transfers from one heading to another (commitment appropriations)

In accordance with Point 23, second paragraph, of the IIA the Commission has examined the scope for offsetting any raising of the ceiling for one heading by the lowering of the ceiling for another.

The margins left under the expenditure ceilings for the Headings other than Heading 1A for the years 2011 to 2013 are currently estimated as follows:

|| 2011 || 2012 || 2013

Heading 1B || 6.4 || 22.1 || 0.4

Heading 2 || 1678.8 || 651.6 || 112.8

Heading 3 A || 67.0 || 65.6 || 34.3

Heading 3 B || 0.1 || 15.5 || 25.3

Heading 4 || 0 || 246.7 || 112.0

Heading 5 || 243.2 || 472.6 || 521.6

With a view to Point 13 of the IIA the Commission considers that the margins left under the ceilings of Headings 1B, 3A and 3 B are too tight to contribute to cover the additional financing needs of the ITER project and that the likely additional needs under Heading 4 do not allow for a reduction of the related expenditure ceiling.

On the other hand, the margins for the year 2011 under Headings 2 and 5 are at a level that allows for a reduction in the respective expenditure ceilings to offset the increase required in the expenditure ceiling of Heading 1A for ITER in 2012 and 2013. Therefore, the Commission proposes to lower the ceiling of Heading 2 for the year 2011 by an amount of EUR 650 million, and the ceiling of Heading 5 for the same year by EUR 190 million, and to increase the expenditure ceilings of Heading 1A by EUR 650 million for the year 2012 and by EUR 190 million for the year 2013.

The proposed adjustment between expenditure ceilings leaves a margin of EUR 1028.8 million available under the ceiling of Heading 2 and of EUR 53.2 million under Heading 5 in 2011. The Commission has undertaken to take all appropriate measures to ensure that decisions taken on CAP expenditure and its financing, including the agreement on the Health Check, are respected.

4. payment appropriations

Point 23, fourth paragraph, of the IIA provides that any revision must maintain an appropriate relationship between commitments and payments. The proposal keeps the overall ceiling for payment appropriations under the 2007-2013 financial framework unchanged, whilst ensuring an orderly progression in relation to appropriations for commitments.

5. summary table and conclusion

The table below summarises the proposed changes to the ceilings for commitment and payment appropriations in the financial framework. Amounts are expressed in current prices:

The revision keeps unchanged the global ceilings for commitment and payment appropriations over the period 2007-2013 expressed in current prices.

The table below shows the revised annual expenditure ceilings of the financial framework resulting from the above changes in current prices.

The formal decision amending the IIA as regards the financial framework must refer to the basic table agreed in the IIA, which is expressed in constant 2004 prices. The amounts in current values are thus to be converted into 2004 prices by means of a fixed deflator of 2% a year, in accordance with Point 16 of the IIA (see below annex to the proposed Decision of the European Parliament and of the Council).

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework, to address additional financing needs of the ITER project

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Interinstitutional Agreement between the European Parliament, the Council and the Commission of 17 May 2006 on budgetary discipline and sound financial management[4], and in particular to points 21, 22 and 23 thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) At the [trilogue]/[budgetary conciliation] meeting of … 2011 the European Parliament, the Council and the Commission have agreed on the modalities for providing additional financing to the ITER project. The financing requires a revision of the multiannual financial framework 2007-2013 in accordance with Points 21, 22, and 23 of the Interinstitutional Agreement, so as to raise the ceilings for commitment appropriations under sub-Heading 1A by EUR 650 million for the year 2012 and by EUR 190 million for the year 2013 in current prices.

(2) The increase of the ceilings for commitment appropriations under sub-Heading 1 A for the years 2012 and 2013 will be fully offset by a decrease of the ceilings for commitment appropriations for the year 2011 under Heading 2 and Heading 5.

(3) In order to keep an appropriate relationship between commitments and payments, the annual ceilings for payment appropriations will be adjusted. The adjustment will be neutral in terms of payment requirements over the period 2007-2013.

(4) Annex I of the Interinstitutional Agreement on budgetary discipline and sound financial management should therefore be amended accordingly[5],

HAVE DECIDED AS FOLLOWS:

Sole Article

Annex I to the Interinstitutional Agreement on budgetary discipline and sound financial management is replaced by the Annex to this Decision.

Done at Brussels,

For the European Parliament For the Council

ANNEX

[1] COM(2010) 403 final of 20.7.2010.

[2] COM(2011) 72 final of 7.3.2011.

[3] OJ C 139, 14.6.2006, p. 1.

[4] OJ C 139, 14.6.2006, p. 1.

[5] For that purpose, the figures resulting from the above agreement are converted into 2004 prices.