Opinion of the Economic and Social Committee on 'EC instruments for investment support in third countries` (98/C 284/14)

At its meeting on 29 January 1998 the Economic and Social Committee, acting under the third paragraph of Rule 23 of the Rules of Procedure, decided to draw up an opinion on 'EC instruments for investment support in third countries`.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 11 June 1998. The rapporteur was Mr Henri Malosse.

At its 356th plenary session of 1 and 2 July 1998 (meeting of 1 July) the Committee adopted the following opinion unanimously.

Recommendations

I. Mindful of:

1. The existence of numerous Community investment support instruments in third countries.

2. The apparent lack of meshing between these instruments and the Union's priorities.

3. The wide variety of ways in which these instruments operate.

II. Considering:

1. The Committee's Own-initiative Opinion on the Global harmonization of direct investment regulations (CES 260/96).

2. The new external relations responsibilities of the European Union following the entry into force of the Maastricht and Amsterdam Treaties.

3. The importance of direct foreign investment if it serves the goal of sustainable economic and social development.

4. Europe's ambition to promote the highest social and environmental standards.

5. The need to promote the development of small and medium-sized enterprises in Europe - a factor of paramount importance in wealth - and job-creation.

6. The context of multilateral negotiations on investments.

7. The aim of simplifying Community procedures to make EC instruments more accessible to all operators.

III. The Economic and Social Committee makes the following proposals in this own-initiative opinion:

1. The European Commission needs to make its investment support instruments in third countries part and parcel of an overall strategy that encompasses simultaneously the essential principles of cooperation; social regulations and environmental standards; and the legitimate interests of Europe, notably in respect of reciprocity, employment and competitiveness.

2. This strategy must be the subject of a political Communication by the Commission, accompanied by specific measures to ensure transparency, consistency and coordination.

3. To this effect the Committee proposes that a distinction be made between specialized instruments with simple, clearly defined rules, and programmes geared to each of the regions in question.

4. The Committee proposes that the strategy be reinforced in the countries of central and eastern Europe and the Mediterranean basin, which should be regarded as preferential areas of cooperation and partnership.

5. The Committee would draw attention to the importance of these Community instruments complementing the actions of the Member States and makes operational proposals to this effect.

6. The Committee advocates a simplification of the rules governing the administration of investment support instruments. This could be achieved first and foremost by merging the Commission services involved and tightening up vetting and assessment procedures. The Committee also proposes the setting-up of an Observatory to measure the economic and social impact of such instruments. An Observatory of this kind would operate with the participation of the social partners and the ESC.

1. Introduction

1.1. For more than twenty years the European Commission has been developing instruments to facilitate European investment in a number of third countries, notably through support for joint ventures. Such instruments, which operate today in almost all countries of the world, are still highly heterogeneous since they stem from policies of quite differing origin: the Lomé Convention with the countries of Africa, the Caribbean and the Pacific; cooperation with Latin America and Asia; the Mediterranean policy; the opening up of the countries of central and eastern Europe. Despite this, the Community's investment support instruments constitute an array of mechanisms which have become increasingly familiar to European operators who are tending to use them as an alternative to more traditional national mechanisms in promoting investments and exports.

1.2. The aim of this own-initiative opinion is to analyze the scope of these instruments, study their social, economic and other effects, and make recommendations on priority actions and on administrative and operational considerations with a view to achieving greater clarity and simplification.

1.3. This aim is particularly opportune since Europe has just embarked on the process of deepening and widening the Union - deepening it with Economic and Monetary Union centred round the introduction of a single currency, and widening it to eventually embrace Cyprus and ten countries of central and eastern Europe. These radical changes will inevitably have an effect on the European Union's external policy, including investment policy.

1.4. Our aim also coincides with the challenges arising out of the globalization of economic and commercial relations, a phenomenon which is particularly relevant to the question of investments, what with the debate on the OECD's proposed Draft Agreement on Investments (AMI), and the ever-increasing importance of environmental considerations and social regulations whenever questions of trade and investment are discussed.

2. Community instruments

2.1. Centre for the Development of Industry and the Lomé Convention

2.1.1. Under the Lomé Convention the Centre for the Development of Industry (CDI) is a joint EU/ACP institution providing financial and technical assistance to European and ACP entrepreneurs engaged in the setting up of industrial projects in the ACP countries. The CDI provides assistance to ACP and European companies in the form of four facilities: identification of partners; assistance in preparatory work; advice on the structuring of the project (financial and legal); support during the take-off phase. The EU may also finance investment projects under the Lomé Convention in the form of loans, interest-rate subsidies and the provision of risk capital.

2.1.2. In its Opinion on the Green Paper on the future of the Lomé Convention (CES 775/97) the Committee recommended that the CDI be subject to a radical reform and urged that its role be extended so that greater assistance could be given to the development of local ACP enterprises to improve the quality and marketing of their products, particularly under the new heading of a Centre for the development of enterprises (CDE). The Committee also proposed more rigorous financial engineering measures to encourage investment and industrial cooperation with the EU.

2.2. The ECIP programme

Launched in 1988 on the initiative of Commissioner Claude Cheysson, the ECIP programme (European Community Investment Partner) aims first and foremost to facilitate Community investment in Asia, Mediterranean third countries, and Latin America. The programme, which was allotted ECU 50 million for the 1996-1999 period, operates through five facilities:

- Facility No 1: The funding of preliminary project-identification studies or of seminars to arrange meetings between EU enterprises and enterprises of countries eligible under the ECIP programme,

- Facility No 2: Reimbursable, non interest-bearing advances for studies prior to the setting up of a joint venture between the EU and one of the countries eligible under the ECIP programme,

- Facility No 3: The acquisition of equity holdings and the provision of loan capital to fund new joint ventures, or the expansion of existing enterprises, or new investment by local enterprises working under license with enterprises of the European Union,

- Facility No 4: Reimbursable, non interest-bearing advances for training or for assistance in joint ventures,

- Facility No 1B: This is a new facility designed to finance preparations for the privatization of infrastructure and environment-sector enterprises in eligible countries. The Committee notes that this new Facility lies outside the range of normal ECIP programme objectives since there is no direct involvement of European enterprises at this stage.

2.3. The JOPP programme (Phare and Tacis)

With the development of EU cooperation with the countries of central and eastern Europe, the Commission launched the JOPP instrument in 1991. Modelled on the ECIP programme, JOPP is earmarked for countries eligible under the Phare and Tacis programmes (central and eastern Europe and the ex-USSR) and is aimed at European entrepreneurs who can count on the support of EU financial institutions in creating joint ventures in Phare and Tacis countries. It comprises four facilities:

- Facility No 1: Assistance in the establishment of contacts between potential partners,

- Facility No 2: Co-funding of feasibility studies on joint-venture projects involving EU enterprises on the one hand and Phare and Tacis enterprises on the other. This takes the form of advances which are converted into subsidies if the project is successful,

- Facility No 3: Funding of the capital needs of joint ventures in the form of equity holdings or long-term loans (a facility which is the process of being dropped),

- Facility No 4: Co-funding, in the form of reimbursable, non interest-bearing advances, of training and technical assistance schemes for recently created joint ventures.

2.4. The AL-Invest programme

The European Union has set up an AL-Invest instrument to encourage industrial cooperation between the EU and Latin America. This encompasses meetings between individual enterprises; specialized meetings on questions of sub-contracting; the creation of centres of cooperation involving enterprises in Latin America; the use of computerized systems for cooperation between enterprises; and AL-partnership meetings. The Union decided to earmark ECU 41 million for this programme for the 1996-2000 period.

2.5. The ASIA-Invest programme

In 1997 the European Union launched an Asia-Invest programme along the lines of AL-Invest with an estimated budget of ECU 45 million for the 1997-2002 period. This comprises three facilities:

- the Business Priming Fund, the first task of which is to co-fund (up to a ceiling of 50 %) joint studies on market prospects in Asia carried out by Chambers of Commerce or by trade associations in several Member States. The Business Priming Fund also supports training programmes for European entrepreneurs in the language and culture of Asian countries, as well as technical assistance missions in specific sectors based on European know-how and geared to the least developed Asian countries;

- meetings between enterprises (Asia-Interprise or Asia-Partnership);

- Asia Investment Facility: the aim here is to finance sectoral studies by country and by industrial sector in order to identify, evaluate and promote specific investment opportunities for EU enterprises in Asia.

2.5.1. We might also cite the launch in 1997 of a new Asia-Ecobest programme aimed at improving the environment in Asia, notably by encouraging investment and the transfer of know-how from European operators.

2.6. The MEDA programme

As far as the Mediterranean basin is concerned, the Committee notes that since the 1996 'freezing` of the MED-Invest programme following major administration problems and delays in implementing MEDA, there is uncertainty today about the nature of the specific instruments earmarked for this area. These countries are however eligible for ECIP, for loans from the European Investment Bank and for certain enterprise partnership actions of the MED-Enterprise and MED-Partnership type.

2.6.1. However, on 20 and 21 May 1996 the first Euro-Mediterranean Conference on industry closed with the adoption of a declaration on industrial cooperation. An Action Plan was approved on the basis of this declaration, providing for the establishment of two working groups, the first calling itself 'The development of the industrial and entrepreneurial fabric`, the second 'The legal and administrative framework.`

This Action Plan enables specific measures to be taken to assist the region in question, e.g. action designed to develop industrial areas (Guide of best practices, training and management programmes ...). At the same time the Committee understands the expectations of operators on both sides of the Mediterranean who might have legitimately hoped to see an Asia-Invest or AL-Invest-type programme for an area which is one of the Union's top priorities.

2.7. Other 'multi-country` instruments

To complete this list (even if it is not exhaustive) and to illustrate the full range and heterogeneity of these Community investment support instruments, we might also mention the following:

2.7.1. The European Investment Bank, which has a growing role to play in the Union's trading partner countries (Central and Eastern Europe; ACP countries; Latin America and Asia) by financially supporting the development of infrastructure and industries in these countries and by giving preferential treatment to partnerships with operators in the Union.

2.7.2. The establishment of a 'Centre for Industrial Cooperation` in Bosnia-Herzegovina, 'European Business Information Centres` (EBIC) in Asia, 'Eurocentros` in Latin America, 'Business Cooperation Centres` in the Tacis countries, and a Centre for EU/Japanese cooperation.

2.7.3. The application of international cooperation schemes under Community research and development programmes.

3. Questions raised by the Economic and Social Committee

3.1. Re the diversity of Community instruments

For the economic operator, as well as for the ordinary citizen, this wide range of instruments with their different rules and different operating arrangements, might appear to be going too far even if differentiation is understandable in view of the type of problems posed and the politico-economic context. The Committee accordingly urges transparency (drawing up of a vademecum) and genuine rationalization. In certain regions (e.g. Asia) competing procedures would seem to coexist in some fields (e.g. Asia Invest and ECIP). There are also some surprising procedural disparities, e.g. advances to finance joint-venture feasibility studies in Asia, Latin America and the Mediterranean basin (ECIP Facility No 2) must be reimbursed whereas in Phare and Tacis countries (JOPP/JVP Facility No 2) they are regarded as subsidies if the project is successful, even though the same types of studies are involved.

3.2. Re the eligibility of small and medium-sized enterprises

Whilst most Community instruments according to the Community definition, seem to be applicable first and foremost to small and medium-sized enterprises, there is some latitude depending on the instruments in question. This question needs to be clarified and consideration given to the prioritization of Community action.

3.3. Re the objectives of investment support instruments

The Committee asks what the real objectives of these instruments are: to facilitate the economic development of the partner countries; to encourage European investment in these countries; to promote a European presence and the establishment of European enterprises there; to develop industrial, technical and scientific cooperation; to promote the export of European know-how? By replying to these questions and establishing some order of priorities, the Union must make these investment support instruments serve a global strategy that takes into account the Union's international cooperation and development aid objectives and commitments as well as its own internal political and economic interests.

3.4. Re consistency with other Community policies

All these instruments appear in quite different contexts. The question to be asked today is therefore to what extent such instruments are consistent with major Community policies and more especially EU trade policy, with concerted action on employment, with sustainable economic and social development, with the common agricultural policy, and with the competitiveness of European industry, etc.

3.4.1. Re trade policy

Whilst trade policy falls largely within the remit of the Community, the actual promotion of exports continues to remain an area of national competence in accordance with the principle of subsidiarity. The only action taken by the Community in this area (Exprom programme, action focused on Japan) has been particularly low key. The attempt to include export promotion in the Treaty failed at the last Intergovernmental Conference. There may therefore be a temptation to present or use investment support instruments as the sole Community tool for the promotion of trade policy; in this light they must therefore appear to be tools of development where the most disadvantaged countries are concerned, or else market penetration incentives, above all in the case of markets which are particularly sealed off from Europe.

3.4.1.1. As far as the penetration of new markets is concerned the Committee believes that there is need for close cooperation with the authorities of those Member States which have marketing units and trade offices abroad. The Commission should concentrate its support on European-scale initiatives, particularly those emanating from European trade associations. As a back-up to this, the Union should encourage greater coordination of national marketing activities, for example by ensuring that information about market and investment opportunities identified by national trade offices is circulated throughout Europe. This twin approach is a credible and reasonable alternative to the establishment, with the support of the Commission, of a European presence abroad in competition with the services and Chambers of Commerce of the Member States.

3.4.1.2. Through trade policy and its own investments, the Union must also seek to promote fair trading rules. It is also absolutely essential for investment support instruments to include information campaigns which will alert European investors to the problem of counterfeit goods and familiarize them with industrial and intellectual property right systems, anti-dumping activities, rules of origin, etc.

3.4.2. Re trade policy and sustainable economic and social development

In the field of trade policy the European Union must promote compliance with the social Conventions of the International Labour Organizations (ILO) as well as respect for the environment. The Treaty on European Union has fixed sustainable economic and social development as the goal of cooperation policy (Article 130u). It is therefore essential for the Union, in using its own instruments, to not only comply with but also promote these principles. Of particular concern here are environmental questions (cf. The multilateral environmental agreements and especially the commitments entered into at the Rio and Kyoto Conferences) and social conditions, notably the effective application of ILO Conventions (particularly on non-discrimination, trade union rights, forced labour and child labour). And as the Committee pointed out in its opinion on the global harmonization of direct investment regulations (CES 260/96), 'the opportunity should also be grasped to restrict attempts to attract FDI on the basis of low labour standards not to be confused with low wage levels.`

3.4.3. Re the impact on employment

The effects on jobs of employing these Community investment support instruments is rarely discussed centre-stage (except in the JOPP programme). The Committee however recognizes that this question raises a whole host of complex problems: direct or indirect effects, direct or indirect employment, short-term or long-term effects, etc. The question however cannot be evaded. It is important to know to what extent such instruments really promote the economic and social development of the partner countries and to find out what effects they have on employment in the Member States of the European Union. Developing the activities of a Community firm in a third country may have positive effects on employment in the Union through the creation of added value, services and maintenance, the need for plant and equipment, and indirect growth opportunities. Much investment, however, simply takes the form of relocating means of production in the search for less burdensome fiscal or social conditions and has a very negative effect on employment in Europe. Projects should therefore include estimates which make it possible to assess this impact whilst any a posteriori evaluation of projects should include elements which are of major importance and are quantitatively significant from this point of view. The Committee calls upon the Commission to set up studies of the employment impact on regions and priority sectors in order to confirm such trends, where necessary, and draw up more sophisticated criteria for the selection of projects in line with this priority.

3.4.4. Re European competitiveness

The international competitiveness of European industry is an important factor in ensuring growth and improved job prospects, especially in a context of liberalized international trade. At the same time, any analysis of competitiveness must take into account the assets of the European Union - and notably its highly skilled labour force. It is therefore legitimate to ask whether there is not a case for evaluating the aims of these cooperation instruments from the point of view of their impact on the competitiveness of European enterprises. Investment and cooperation with third countries may of course be beneficial to growth and employment in Europe under certain conditions, notably when there is an offensive strategy (winning of markets) or sectoral strategies aimed at achieving complementarity with neighbouring areas. In its draft opinion on a Plan of action to increase the competitiveness of the European textile and clothing industry (CES 1479/97) the Committee accordingly recommended that Europe should invest, under certain conditions, in central and eastern Europe and in the Mediterranean basin. Such investments must also be consistent with the Union's internal structural policy, particularly ERDF investment aid, so as not to lead to the overcapacity of production in certain industrial sectors.

3.5. Re consistency between national and Community actions and the financial impact

The Committee notes that European operators are turning more and more to Community instruments, e.g. when there are prospects of promoting European interests abroad. This situation might lead to confusion or overlapping, especially since the promotion of exports is still in principle the province of national authorities.

3.5.1. The Committee proposes a method for achieving greater consistency, complementarity and transparency. This method should also cover the question of European representation in third countries since there is some degree of competition between national organizations (Chambers of Commerce located abroad) and Union initiatives. Efforts to achieve consistency should also be extended to include relations with international organizations such as UNIDO (the United Nations Industrial Development Organization), UNCTAD and the World Bank. Member States of the Union hold a majority share of the capital of UNIDO and preponderant share (35 %) of the capital of the World Bank, as against only 15 % held by the USA.

3.5.2. As far as funding is concerned, it is not always possible to know precisely what amounts are earmarked by the EU for these instruments either because of the very nature of the funding when it is a question of loans, or because certain instruments are an integral part of bigger financial envelopes, as is the case with MEDA. It would therefore help if there was greater clarity about funding levels and their complementarity with national schemes. This could take the form of an updated synopsis of EC and national instruments and the corresponding funding levels broken down into major geographical areas.

4. A framework for an integrated and coordinated approach

After having analyzed these matters and questioned the principal European Commission departments responsible, the Committee takes the view that a framework should be created for an integrated and coordinated approach.

4.1. Priority objectives

Some degree of integration is needed if the instruments in question are to dovetail with major Community priorities and policies. To this end a global strategy should be developed containing a number of objectives which would be modulated or strengthened according to the particular geographical area in question, its level of development and the closeness of its political ties with the European Union. These objectives would be as follows:

4.1.1. To promote sustainable growth (together with social progress and environmental protection) as well as a climate conducive to investment (stable political, legal and economic context), in the case of developing countries and first and foremost those with the closest links to the European Union (ACP countries in particular).

4.1.2. To facilitate the transition from a centrally-planned economy to a market economy, and to increase industrial cooperation within the context of preferential partnership arrangements, or some form of integration, in the case of CEECs and Mediterranean countries.

4.1.3. To encourage European investment in emerging markets, or markets with a promising future, where a large-scale Community drive might be needed to boost even further the activities of European firms.

4.2. The incorporation of these objectives into a world strategy

This strategy should form one of the strands of current debates about an international agreement on investments. The Committee might support such an initiative, but only if account was taken of a certain number of principles and conditions such as those set out by the European Parliament in a resolution on AMI presented by the deputy Kreissl-Dorfler and adopted on 11 March 1998. The Committee also believes that under such an agreement 'greater discipline should be sought when using fiscal incentives and direct incentives to attract FDI, which also has implications for financing from recipient states` (Opinion on The global harmonization of direct investment regulations). The aim in particular would be to avoid the development of free export zones which discriminate against national enterprises and often show a complete disregard for any basic social or environmental standards.

4.3. The principles underlying an integrated approach

The Committee believes that an overall strategy of this nature should be accompanied by measures which ensure that Community instruments are more transparent and modernized in line with the following principles:

4.3.1. It is necessary to draw a distinction between a) macro-economic measures in the fields of taxation or the security of investments, b) measures to support intermediate structures such as chambers of commerce or development agencies, and c) measures directly connected with investment proper.

4.3.2. It is necessary to ensure that European policy objectives form an integral part of the main criteria for approving projects, viz:

- the incorporation of social and environmental criteria in investment projects,

- a study of the impact on employment in the European Union,

- the opening-up of programmes in developing countries to investors from other developing countries or neighbouring areas (Mediterranean partners in sub-Saharan Africa for example) whilst preserving programmes in the emerging markets of Latin America and Asia exclusively for operators in the European Union.

4.3.3. The Committee believes that a genuine industrial partnership strategy needs to be developed with the applicant countries, the other countries of central and eastern Europe and the Mediterranean basin and would like to see extra funds earmarked for this policy within the MEDA, Phare and Tacis envelopes.

4.3.4. The Committee proposes harmonization of the rules governing the operation of the different instruments: rules on participation (eligibility, definition of a SME ....), financial conditions (mechanisms governing the allocation of funds, possible reimbursement), the merger of the Commission services involved, common assessment and vetting mechanisms. These reforms should be slanted towards simplification in order to ensure that EU operators, and particularly small and medium-sized enterprises, have easier and more direct access to the instruments in question. The operational rules must be spelt out clearly and precisely in a single vademecum covering all procedures and all countries.

4.3.5. The Committee proposes new working methods which would guarantee real complementarity by identifying first and foremost those projects conducive to the coordinated use of different Community instruments. These new working methods would permit a distinction between macro-economic measures in the field of taxation or the security of investments, measures to support intermediate structures such as chambers of commerce, trade organizations and development agencies, and direct investment support.

4.3.6. The Committee finally advocates practical implementation of the principle that investment support, just like any other form of aid, should be conditional on compliance with political, economic and social criteria.

5. Concrete suggestions regarding a framework for genuine consistency of action

In order to rationalize current instruments, the Committee proposes that a distinction be made between technical instruments and specific action programmes for individual geographical areas. By making such a distinction it should be possible to ensure that the different technical instruments are modulated in accordance with the Union's priorities, which would in turn be integrated with other Community policies and set out as part of an overall strategy.

5.1. Homogeneous technical instruments

Current instruments are at present highly incongruous and need to be transformed into a range of complementary measures tailored to local situations and the needs of operators and subject to uniform operating rules. According to the Committee this would include the following instruments:

5.1.1. Technical assistance programmes to be used in a macro-economic context (developing countries, Euro-Mediterranean area).

- Mechanisms for supporting intermediate structures in the form of partnership programmes (basically focused on training) involving similar EU institutions and geared to enterprise support services and the development of industrial cooperation centres.

- Instruments of direct aid to enterprises, i.e.:

The training of European business leaders in the culture of partner countries (particularly for developed countries).

Meetings between enterprises along the lines of Europartnership and Interprise but run on more professional lines with a better selection of participants on both sides.

Support for collective market research and sectoral studies, aimed first and foremost at emerging markets.

Funding of feasibility studies on investment projects and the creation of joint ventures, with harmonized rules covering all areas.

Use of a technical assistance centre for investments in the most difficult countries.

- Training schemes and the upgrading of the skills of persons employed in third countries.

- Programmes to encourage female business entrepreneurs (training, access to credit).

- Mobilization of EU financial instruments (EIB, but also the European Investment Fund, EIF) and of banking networks, with the use of financial engineering mechanisms (risk capital, guarantee funds, interest-rate support) differentiated according to a 'country/risk` criterion in order to encourage investment, particularly in central and eastern European countries and the Mediterranean area. These financial support programmes must be implemented by the banking networks themselves and be accompanied by a project identification and information mechanism run by intermediate organizations: a radically restructured CDI, industrial cooperation centres, chambers of commerce and trade associations.

5.2. Geographical action programmes

The Committee proposes that use of the different instruments be modulated according to the geographical area in question and that consistency be achieved through action programmes. Asia-Invest would seem to be the most appropriate example in this respect since it already encompasses a coherent range of instruments. The Committee would therefore propose the following action programmes:

5.2.1. A substantial AL-Invest programme for Latin America, encompassing the ECIP instrument, new training programmes in the cultures of the Latin American continent, technical assistance for developing countries in the area, assistance in collective and sectoral studies along the lines of the Business Priming Fund and Investment Facility as developed in Asia-Invest.

5.2.2. The expansion of Asia-Invest to include the ECIP instrument (to avoid overlapping) and to also cover technical assistance for developing countries.

5.2.3. An East-Invest programme for the CEEP and Tacis countries, to include specific instruments for European integration, the consolidation of intermediate structures, cooperation between SMEs, the promotion of European investment in strategic areas (wood, energy sources, aeronautics ...) through support from the EIB, EIF and various banking networks (with Community support in the form of financial engineering), use of the JOPP instrument for feasibility structures, EU/CEEP industrial cooperation centres managed jointly by the EU and local intermediate organizations.

5.2.4. An ACP-Invest programme comprising the ECIP instrument (for which ACP countries are currently ineligible for no real reason), technical assistance in the implementation of reforms, the consolidation of local, regional and occupational intermediate structures, a radically reworked CDI transformed into a centre for the development of enterprises (CDE) in order to help ACP enterprises become part of international trade, Europartnership and Interprise instruments, aid from the EIB, EIF and banking networks and a global system of intermediate networks offering support and back-up services.

5.2.5. A new MEDA-Invest programme comprising, in addition to the ECIP instruments, Europartnership, Interprise, technical assistance in the implementation of reforms, the consolidation of local intermediate structures through training programmes, the promotion of European investments in strategic areas (energy, tourism ...), aid from the EIB, EIF and banking networks accompanied by financial engineering, technical assistance for local enterprises with a CDI type centre.

5.2.6. A US-Invest and Japan-Invest programme geared solely to learning about the culture of these countries, and the use of Europartnership and Interprise instruments.

5.3. Rules on management, follow-up and monitoring

5.3.1. The Committee recommends the introduction of a common mechanism for the regular and frequent evaluation and monitoring of these instruments. This would include an obligation on project beneficiaries to provide long-term information over a period of at least ten years. In carrying out the evaluation, account would have to be taken of the economic and social consequences, particularly in terms of employment within and outside the EU, as well as the implications for sustainable development, competitiveness and the long-term commercial interests of the European Union.

5.3.2. The Committee also recommends the exchange of best practices (benchmarking) in respect of instruments and programmes, particularly in terms of results, consistency with objectives, and integration with other Community policies. The Commission departments concerned should be merged to ensure operational consistency and the exchange of best practices.

5.3.3. It is essential to strengthen anti-fraud mechanisms and make widespread use in Europe of the budget control powers of the European Parliament and the Court of Auditors.

5.3.4. These provisions for the evaluation and monitoring of instruments and for the combating of fraud must be applied without excessive bureaucracy and with a permanent eye on simplifying procedures. The best results can be obtained by making operators as responsible as possible (evaluation of individual objectives; a posteriori monitoring).

5.3.5. The Committee also proposes the establishment of an Observatory, involving the social partners and the ESC, to monitor the socio-economic impact of investment support instruments. The Observatory would have particular responsibility for measuring the employment impact in the European Union, the promotion of social regulations and environmental standards, and sustainable development in the beneficiary countries.

5.4. Financial resources and complementarity with national activities

5.4.1. The Committee also recommends, in the interests of consistency between national and Community actions, that national authorities and the relevant organizations (chambers of commerce, trade associations) be closely involved in monitoring and following up programmes affecting their particular country. The Committee recommends in this respect the drawing-up of a synopsis of national and Community actions, broken down by geographical area.

5.4.2. The Committee recommends that a substantial proportion of the funds available under cooperation programmes be devoted to these instruments, particularly in Europe and the Mediterranean basin. To make up for low budget ceilings and ensure complementarity with national activities, additional activities co-financed by the EU and Member States could be launched to speed up this necessary integration (the participation of operators from other Member States being treated as part of the Community's contribution).

Brussels, 1 July 1998.

The President of the Economic and Social Committee

Tom JENKINS