•ft * COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 08.09.1995 
COM(95)362 final 
REPORT OV THE COORDINATION 
OF ACTIVITIES IN FAVOUR 
OF SMEs AND THE CRAFT SECTOR 

SUMMARY 
This report on the coordination of activities in favour of SMEs and the craft sector, drawn up 
in accordance with article 5 of Council Decision 93/379/EEC1 of 14 June 1993, seeks to 
respond to the Council's request while taking into account the framework proposed by the 
Commission in its Integrated Programme in favour of SMEs and the Craft Sector2. Since the 
Integrated Programme was adopted, the Commission has reaffirmed the contribution of small 
and medium-sized enterprises (SMEs) to providing more employment, in its White Paper on 
European Social Policy3 and also as part of the work on new areas of employment and local 
development initiatives4. In addition, it has emphasized the role of SMEs in the development 
of the information society5 and of industrial competitiveness policy of the European Union6. 
The aim of coordination between the different Community programmes is, on the one hand, 
to ensure that the SME dimension is integrated into the definition and implementation of 
Community policies so that better account can be taken of the individuality of SMEs and, on 
the other hand, to increase their involvement in Community programmes. 
Hence the report presents a comprehensive view of the measures taken, under both enterprise 
policy and other Union policies, to improve the business environment (Chapter I) and to 
support the development of SMEs (Chapter II). Whereas the first two chapters concentrate 
essentially on coordination between the Commission services, Chapter III is devoted to 
coordination with the Commission's partners: the Member States, the professional 
organizations and the other European institutions. 
INTEGRATED PROGRAMME IN FAVOUR OF THE SMEs AND THE CRAFT SECTOR 
Within the framework of the objectives of the White Paper on Growth, Competitiveness and 
Employment, the Integrated Programme in favour of SMEs and the Craft Sector aims to 
reinforce coordination of national, regional and Community intervention in favour of SMEs. 
Two forms of action are proposed: concerted actions and contributions the Union intends to 
make to the development of SMEs under its policies. 
Council Decision of 14 June 1993, OJ No L 161 of 02.07.1993, p. 71. 
COM(94)207 of 03.06.1994 and Council Resolution of 10.10 1994, OJ No C 294 of 22.10.1994, pp. 
6-8. 
European Social Policy - A way forward for the Union - COM(94) 333, 27.07.1994. 
Inventory of Community action to support local development and employment - SEC (94) 2199, 
19.12.1994 and Local development and employment initiatives (An investigation in the European 
Union) - SEC (94) 564, 04.04.1994. 
Europe's way to the information society, an action plan - COM (94) 347, 19.07.1994. 
An industrial competitiveness policy for the European Union - COM(94) 319, 14.09.1994. 
Conceited actions 
Concerted actions target the promotion of mutual consultation between Member States and 
coordination between them as required. First of all, they relate to improvement and 
simplification of the business environment with a view to reducing burdens on businesses and 
unlocking their potential to create jobs. To achieve this, a committee to improve and simplify 
the business environment, set up in December 1994, has the task of identifying best practice 
for simplifying the formalities affecting enterprises and improving the legislative framework 
within which they operate. In this context, a forum was organized in June 1995 in Paris to 
examine legislation and constraints confronting businesses during setting up and their first few 
years of existence. Concerted actions also target support measures for businesses at national 
or regional level. The Commission has proposed the creation of concertation forums within 
which Member States can present their best practice in terms of support to SMEs, and also 
the launch of a concerted action with SME intermediaries to stimulate SME demand for 
information, training and advice. 
A second forum is scheduled for October 1995 in Madrid on the subject of support 
arrangements for setting up enterprises and back-up for enterprises in their first few years of 
business life (see Introduction). 
The contributions of the Union 
The actual contributions of the Union to the development of SMEs relate to action taken 
specifically within the framework of enterprise policy and under other Union policies. 
Coordination of all these interventions takes place through inter-service work. 
The Integrated Programme in favour of SMEs does not contain any new expenditure but 
brings together all the actions under other policies which can contribute towards the 
development of SMEs, like the Structural Funds, research and technological development and 
vocational training. The financing of the new actions proposed consequently relies essentially 
on the established instruments. It is by means of these instruments that the Union contributes 
to the development of SMEs. 
IMPROVING THE BUSINESS ENVIRONMENT 
The Commission has presented several proposals for action in the area of improving the 
business environment which should have a positive influence on SMEs. 
A draft document covering the adoption of a definition of SMEs is aimed at making the 
implementation of Community policies more coherent. I* provides, on the one hand, for a 
recommendation to the Member States in line with the partnership advocated by the Integrated 
Programme and, on the other, a draft Commission decision on programmes it runs as a 
Community contribution. 
Three recommendations relating respectively to taxation of SMEs, transfer of businesses, and 
payment delays in commercial transactions, form part of the enlarged partnership with the 
Member States. By this means, the Commission identifies best practice within the Union and 
invites Member States which have yet to make comparable arrangements to draw inspiration 
from this and take the appropriate measures (see points 1.1.1.4 and 5 and 1.1.2.2.). 
The evaluation of the impact of legislative proposals on SMEs has allowed account to be 
taken of the needs of SMEs during the legislative process as in the case of directives relating 
to the environmental audit and the eco-label. Furthermore, the proposal for a regulation on 
the protection of Community design has made it possible to achieve a balance between the 
divergent interests of spare parts manufacturers on the one hand, and motor manufacturers on 
the other. Another relevant example relates to the proposal for a directive on cross-border 
payments (see point 1.2.1.2.1.). 
As regards competition, the Commission's traditionally favourable attitude towards state aid 
for SMEs is expressed in a specific framework which allows Member States to grant aid 
intended to encourage investment by SMEs and encourage them to improve their skills 
through advice and training. Furthermore, to simplify the administrative procedures, the 
framework has introduced a "de minimis" rule which exempts Member States from notifying 
the Commission of small amounts of aid. Finally, to take into account the special position 
of SMEs, higher aid thresholds are authorized (generally 10 points above the permitted 
ceiling). This position has again been included in the new Community framework for state 
aid for the protection of the environment (see point 1.2.2.2.). 
PROGRAMMES AND SUPPORT MEASURES FOR SMEs 
In the area of support measures for SMEs, the Union has established new instruments and 
programmes directly geared to SMEs. 
As part of its enterprise policy, the Commission assists the development of SMEs through the 
business information network (the EURO-INFO-CENTRES), the trans-national cooperation 
networks and programmes (the BC-NET, BCC networks, the EUROPARTENARIAT and 
INTERPRISE programmes and action for sub-contracting) and pilot schemes 
(EUROMANAGEMENT, Venture Capital, Commerce 2000) aimed at improving SME 
management, financing and know-how. Most of this action is being taken in direct 
cooperation with other Commission services (see point II. 1). 
Under other policies, support for SMEs takes place principally through the Structural Funds 
and research and technological development programmes, vocational training and international 
cooperation but also in other Community programmes like the Fifth Environmental Action 
Programme, special attention is given to SMEs. 
The Community SME initiative, part of the follow-up to the White Paper on Growth, 
Competitiveness and Employment naturally links with the Integrated Programme measures, 
but according to the methods and procedures of the Structural Funds. With a budget of one 
billion ECU, principally for objective 1, 2 and 5b regions, the SME initiative should make 
a significant contribution to making SMEs more competitive by improving their know-how 
and helping them become more international. By taking up three previous Community 
initiatives, the Community SME initiative is contributing to a simpler presentation of 
Community programmes in favour of SMEs. The Community initiative, ADAPT, which 
targets adaptation to industrial change and improving the competitiveness of enterprises (ECU 
1.4 Billion), provides a number of measures in favour of SMEs. It will be coordinated with 
the SME initiative so as to avoid any dual use of funds and to strengthen their 
complementarity (see points II.2.1.2.2. and 2.1.3.2.). 
The Structural Funds in general will benefit SMEs in the context of the operational 
programmes adopted for 1994-1999. The Commission will monitor the programmes very 
closely so that SMEs can effectively benefit from the amounts of aid intended for them (see 
point II.2.1). 
The new financial instruments put in place following the Edinburgh and Copenhagen Councils 
- subsidized EIB loans for job-creating SMEs and European Investment Fund guarantees for 
SMEs - are now in place (see point II.2.1.1.). 
The implementation of the 4th Framework Programme for Research and Technological 
Development should see an appreciable increase in participation by SMEs, notably through 
the introduction, across 10 programmes, of technological stimulation measures for SMEs and 
a budget of ECU 700 million for SMEs. Over and above these measures, SMEs can also 
participate in other actions not specifically earmarked for them in the programmes (see point 
II.2.2.3.). New simplified procedures for the submission and evaluation of the SME proposals 
have been put in place. 
In the field of vocational training, the new LEONARDO programme, with a budget of ECU 
620 million for 1995-1999, comprises actions targeting SMEs, in particular to allow them to 
acquire qualifications and skills to adapt to industrial changes, the evolution of systems of 
production, and the spread of new technologies. It also targets management training for 
SMEs, language audits and new training methods in SMEs (see point II.2.3.4.). Taking up 
several earlier programmes in a single programme, LEONARDO contributes to simpler 
presentation of actions that can benefit SMEs. 
Concerning, international cooperation, coordination between enterprise policy and the 
cooperation programmes with third countries like PHARE, TACIS or MED-INVEST has 
allowed these countries to benefit from acquired expertise as regards enterprise policy as well 
as existing intermediary networks and European SMEs to be better informed of opportunities 
on offer in third countries thanks to Community programmes (see point H.2.4.4.). 
COORDINATION WITH PARTNERS 
In the context of the social dialogue, a significant number of organisations representing SMEs 
have now been consulted ana are participating in the Standing Committee on Employment. 
So representation of the interests of SMEs is progressively becoming a reality, thanks also to 
cooperation agreements concluded between a certain number of them. 
The other Union institutions have made a significant contribution to the development of 
SMEs: the European Parliament, the Economic and Social Council and the Committee of the 
Regions, as well as the EIB and the EIF. The Commission intends to pursue this excellent 
collaboration. 
Finally, coordination with the various partners has not only influenced programmes with a 
budgetary impact (like the Structural Funds, research or vocational training), but also policies 
which could have an impact on the SME environment (like the single market, fiscal policy 
or competition). 
However, by virtue of the principle of subsidiarity and bearing in mind that SME policy is 
principally the responsibility of national and regional authorities, the Commission's policy 
coordination role is limited to stimulating or organizing mutual consultation and cooperation 
between themselves and with the Commission with a view to ensuring more effectiveness and 
higher profile for the actions. 
In future, the Commission will continue its efforts to ensure coordination at the internal level 
as well as with all its partners - the Member States, the European institutions, the professional 
organizations - so that the efforts of the Union in favour of SMEs are transformed into 
growth, competitiveness and employment. 
FINANCIAL INSTRUMENTS, COMMUNITY PROGRAMMES AND SMEs 
Community inteiventions Amount 
allotted to 
SMEs (in 
ecus) Number of SMEs SMEs' paiticipation 
rate across the 
projects as a whole SMEs' paiticipation rate in 
te mis of the overall budget 
Financial Instmiucnts 
EIB - Global losuis 90-94 
SME Facility - Global loans with interest 
subsidy 1994 
EIF (guarantees) 
Structural Funds (94-99) 
ERDF (94-99) * 
ESF (94-99) * 
EAGGF 5a (91-93) 
Community Initiatives (94-99) 
SME 
ADAPT : 1.4 MM 
III Framewoik Programme forRDT (91-94) 
AU programmes taken together: 
of which Biite Eurani II 
and ESP1UT 
SPRINT (89-94) 
THERMIE (90-94) 
IN' Fmmcwoik Programme for RDT (94-98) 
Specific measures in 12 programmes 
Vocational training 
EUROTECNET (90-94) 
COMETT (90-94) 
FORCE (91-94) 
International cooperation 
PHARE -SME (90-93) 
TAOS -SME (92-94) . 
MED-INVEST (93-95) 
A L-IN VEST (93-95) 
ECIP(1994) 
Environment 
Financial instiument LIFE 9.4 MM 
1 MM 
165 M 
6 MM 
705 M 
1 MM 
1035 MM 
219 M 
459 M 
700 M 
320 M 
51 M 
12.2 M 
18.5 M 
17 M 36000 
2100 
(end April 1995) 
6368 
3427 
1250 
162500 
46 projects 
10000 (direct) 
40000 (indirect) 
2250 
43 100% 
65% 
100% 
56% 
27% 
60% 
18% 
75% 
73% 
100% 
100% 
84% 45% of financing allotted to 
industry and services 
100% 
10% on average 
14% 
58% 
100% 
22% 
30% 
31% 
MM = 1000 Million 
N.B. : Since this table groups together Community inteiventions of different types (subsidies, loans, guanuitecs) covering different peiiods, the 
amounts listed cannot be added together. 9% 
100% 
100% 
38% 
The figure shown is an estimate of SMEs' anticipated paiticipation. 
TABLE OF CONTENTS 
INTRODUCTION 
CHAPTER I. IMPROVING THE SME ENVIRONMENT 
1. Improving the SME environment in terms of enterprise policy 
1.1. Administrative, legal and fiscal environment 
1.1.1. Inter-service consultations relating to legislative proposals 
1.1.2. Evaluation of the impact of legislative proposals on SMEs 
1.1.3. Guidelines on regulatory policy 
1.1.4. Recommendation, on taxation of SMEs 
1.1.5. Recommendation on transfer of SMEs 
1.2. Financial environment 
1.2.1. Banks-SME partnership 
1.2.2. Recommendation on payment terms for commercial transactions 
1.2.3. Mutual guarantees 
1.2.4. The European capital market 
1.2.5. Other initiatives with an impact on the SME financial environment 
1.2.6. New financial instruments for SMEs 
2. Improving the SME environment under other Union policies 
2.1. The Internal Market Programme 
2.1.1. Impact on the legal environment for SMEs 
2.1.1.1. Findings of studies 
2.1.1.2. Compatibility rules 
2.1.1.3. Protection of intellectual and industrial property 
2.1.2. Impact on the financial environment for SMEs 
2.1.2.1. Cross-border payments 
2.1.2.2. Insurance sector 
2.1.2.3. Stock exchanges 
2.2. Competition policy 
2.2.1. Impact on the legal environment: rules of competition applicable to 
enterprises 
2.2.2. Impact on the financial environment: state aid 
2.3. Energy policy 
2.4. Environmental policy 
CHAPTER H. PROGRAMMES AND SUPPORT MEASURES FOR SMEs 
1. Programmes and support measures for SMEs under enterprise policy 
1.1. The Euro-Info-Centres network 
1.1.1. The EICs as disseminators of useful information targeted on enterprises 
1.1.2. The EICs as organizers of feedback 
1.1.3. The EICs as partners at the local level 
1.2. Networks and cooperation programmes 
1.3 Pilot schemes 
1.3.1. The craft sector and small enterprises 
1.3.2. Euromanagement 
1.3.3. Start-up capital pilot scheme 
1.3.4. Commerce and distribution : Action COMMERCE 2000 
1.3.5. Cooperatives, mutual societies, associations 
1.3.6. Statistics 
2. Programmes and support measures tinder other Union policies 
2.1 The Union's financial instruments (EIB and Structural Funds) and the SMEs 
2.1.1. The EIB, the EIF and SMEs 
2.1.1.1. Global EIB loans 
2.1.1.2. The SME facility 
2.1.1.3. The European Investment Fund 
2.1.2. Specific regional policy actions in favour of SMEs 
2.1.2.1. Community Support Frameworks 
2.1.2.2. Community initiatives 
2.1.2.3. Innovatory forms of intervention 
2.1.3. The European Social Fund and the SMEs 
2.1.3.1. Community Support Frameworks 
2.1.3.2. The ADAPt Community initiative 
2.1.3.3. Local development and employment 
2.1.4. The EAGGF-Guidance and SMEs 
2.1.5. The Common Fisheries Policy and SMEs 
2.1.6. Coordination between enterprise policy and the Union's financial 
instruments 
2.2. Research and technological development policy and the SMEs 
2.2.1. SME definition 
2.2.2. Overview of SME participation under the Third Framework Programme 
2.2.2.1. Statistics 
2.2.2.2. BRITE-EURAM 
2.2.2.3. Research into information and telecommunications technologies 
(ESPRIT) 
2.2.2.4. Research results optimization programmes (VALUE) 
2.2.3. SME specific actions under the Fourth Framework Programme (FP IV) 
2.2.4. Innovation and technology transfer programme (SPRINT) 
2.2.4.1. European innovation services infrastructure 
2.2.4.2. Intra-Community dissemination of technological resources 
2.2.4.3. Better knowledge of innovation and greater concertation 
between the Member States and the Commission 
2.2.5. EUROTECH CAPITAL action 
2.2.6. THERMIE programme 
2.2.6.1. THERMIE programme 1990-1994 
2.2.6.2. THERMIE programme 1995-1998 
2.2.7. Research into transport 
2.3. Vocational training programmes 
2.3.1. EUROTECNET programme 
2.3.2. COMETT programme 
2.3.3. FORCE programme 
2.3.4. New LEONARDO programme 
24 Other Community programmes 
2.4.1. Environmental policies 
2.4.1.1. The LIFE financial instrument 
2.4.1.2. Environmental audit 
2.4.2. Hygiene, safety and health in the workplace 
2.4.3. The information market 
2.4.3.1. The IMPACT Programme 
2.4.3.2. The TEDIS Programme 
2.4.4. International cooperation 
2.4.4.1. Cooperation with European Economic Area countries (EEA) 
2.4.4.2. Cooperation with central and eastern European countries 
(CEEC) 
2.4.4.3. Cooperation with the CIS and Mongolia 
2.4.4.4. Cooperation with developing countries in Asia, Latin America 
and the Mediterranean 
2.4.4.5. Cooperation with China 
2.4.4.6. Promotion of Community exports to Japan 
2.4.4.7. Conclusion 
2.4.5. Development policy for ACP countries 
10 
CHAPTER m. COORDINATION WITH THE PARTNERS 
1. Consultation with professionals 
2. Social dialogue 
3. Partnership with the Member States 
4. Collaboration with other institutions 
CONCLUSION 
11 
INTRODUCTION 
Article 5 of Council Decision 93/379/EEC of 14 June 19937 on the multiannual programme 
1993-1996 in favour of small and medium-sized enterprises (SMEs) states that the 
Commission shall submit to the European Parliament, the Council and the Economic and 
Social Committee, during the first half of 1995, a report on "coordination between the 
different Community programmes manifestly in the interests of SMEs and craft industries but 
not covered by this Decision and on the initiatives taken in pursuance of this Decision". 
Since then, the Commission has adopted, on 25 May 1994, the Integrated Programme in 
favour of SMEs and the Craft Sector8 - implementation of which was agreed by the Council 
in its resolution of 10 October 19949. It aims to assemble the various initiatives - existing and 
new - into a global framework, with a view to ensuring their coherence and giving them a 
high profile. It proposes a strengthened partnership between all the parties concerned in the 
development of SMEs10 - at the Community, national and regional levels - in order to achieve 
greater convergence of actions. 
The Integrated Programme includes two types of action: concerted actions and the 
contributions the Union intends to make to the development of SMEs. 
Concerted actions arising from article 130, paragraph 2, of the Treaty on European Union are 
aimed at encouraging mutual consultation between Member States and coordination between 
them as required. 
One of the first concerted actions with the Member States concerns the improvement and 
simplification of the environment for enterprises. A committee for the improvement and 
simplification of the environment for enterprises was created in December 1994 in order to 
identify the best measures for simplifying the formalities which enterprises have to comply 
with, and to improve the legislative framework in which they operate. There was consultation 
on legislative and administrative provisions of Member States which hinder the creation, 
growth and transfer of enterprises. In this context, a forum was organized in June 1995 in 
Paris during which the legislation and formalities burdening enterprises during their creation 
and their first few years of existence were examined. 
7 
9 
10 Council Decision on a multiannual programme of Community measures to intensify the priority areas and 
to ensure the continuity and consolidation of policy for enterprise, in particular small and medium-sized 
enterprises, in the Community, OJ No L 161, 02.07.1993, p. 71. 
COM(94) 207 of 03.06.1994. 
Council Resolution of 10.10.1994, OJ No C 294, 22.10.1994, pp. 6-8. 
Given that enterprise policy applies to any enterprise whatever its sector of activity or legal form and 
including cooperatives, mutual societies, associations and foundations. 
12 
The other concerted actions relate to the improvement and strengthening of the effectiveness 
of support measures for SMEs and the craft sector. To this end, the Commission has 
proposed organizing themed forums allowing the Member States and the Commission to 
present and compare best practice in terms of support for SMEs. The exchange of 
experiences between Member States will relate to support measures for SMEs which exist at 
every level. In fact, the majority of the provisions on support for SMEs are the responsibility 
of the States and the regions, but certain pilot schemes have also been floated at Community 
level, and a good exchange of best practice should have a positive effect on the 
implementation of Community, national or regional measures. In this context, a second forum 
will cover support provisions for the creation of enterprises and the accompaniment of 
enterprises during the first few years of their existence. To stimulate SMEs' demand for 
information, training and advice, the Commission has also proposed a concerted action with 
SME intermediaries with the aim of raising the profile of the support services offered to 
SMEs and encouraging them to make greater use of these services. For resource reasons, the 
Commission has had to put back the start of the preparatory work. 
This report takes account both of the requirements of the Council and the framework proposed 
by the Commission in its Integrated Programme which includes the Community actions in 
favour of SMEs. It relates to the contributions the Union intends to make to the development 
of SMEs under both enterprise policy and its other policies. 
This report hinges on 2 axes relating, on the one hand, to the improvement of the environment 
of enterprises (Chapter I) and, on the other hand, to the programmes or measures of support 
to SMEs (Chapter II). Chapter III is devoted to coordination with the Commission's partners 
which are the Member States, the professional organizations and the other European 
institutions while the first two chapters essentially cover coordination between Commission 
services. 
This report on coordination between the various Community activities seeks to present and 
analyze the way in which the SME dimension has been integrated into the definition and the 
implementation of Community actions in order to take greater account of the individuality of 
SMEs and facilitate their participation in Community programmes. 
13 
CHAPTER I. IMPROVING THE SME ENVIRONMENT 
1. IMPROVING THE SME ENVIRONMENT IN TERMS OF ENTERPRISE POLICY 
1.1. ADMINISTRATIVE, LEGAL AND FISCAL ENVIRONMENT 
1.1.1. INTER-SERVICE CONSULTATIONS RELATING TO LEGISLATIVE 
PROPOSALS 
The role of the Commission service in charge of enterprise policy (DG XXIII) in inter-service 
consultations on legislative proposals is to ensure that the Commission is taking appropriate 
account of the impact on enterprise, and in particular on SMEs which might often be 
disproportionately burdened by regulation if account of their size and scarce resources is not 
appropriately taken. Account should be taken not only of the compliance costs and other 
burdens of the regulation itself, but also the administrative procedures or requirements which 
stem directly from the regulation. DG XXIII's responsibility is to consider the regulation 
itself and to ensure that the views of the SME business organisations have been taken into 
account. In addition, where it is appropriate for a business impact assessment to be 
completed, then DG XXIII has to give its approval. 
Although the number of proposals for legislation coming forward from other Directorates 
General slowed down in 1994, reflecting in part the fact that the Internal Market Legislative 
Programme is almost complete, there were a number of issues where DG XXIII was 
particularly involved, both in the inter-service consultation, and to ensure that business impact 
assessments were properly completed. 
In the field of environmental regulations for example, such as those on Environmental 
Management and Audit Systems (EMAS)", and the Eco-labelling scheme12, DG XXIII has 
been able, in close cooperation with DG XI, to ensure that the particular concerns of SMEs 
are taken into account. While both these schemes are voluntary the pressure to participate 
may be overwhelming in practice as businesses strive to maintain and improve their 
competitive position, or as subcontractors find they need such environmental credentials in 
order to win contracts. On the whole SMEs lack the human and financial resources to take 
an active part in these schemes which is compounded by the fact that so far European 
standards have not been established, which would help SMEs comply. Such issues as the 
environmental criteria which need to be satisfied in order to qualify for an Eco-label need to 
be established in such a way, particularly in respect of testing and certification requirements, 
so that SMEs have a reasonable chance of taking part. Recognizing the need for positive 
action to facilitate participation by SMEs in EMAS, DG XXIII is considering launching a new 
Euromanagement Project in 1995, specifically to help SMEs in this area. 
11 Regulation 1836/93 of 29.06.1993, OJ No L 168, 10.07.1993. 
12 Regulation 880/92 of 23.03.1992, OJ No L 99, 11.04.1992, pp. 1-7. 
14 
1.1.2. EVALUATION OF THE IMPACT OF LEGISLATIVE PROPOSALS ON THE SMEs 
All the legislative proposals - some fifteen in 1994 - likely to have an impact on businesses 
in terms of cost or extra administrative processes are the subject of an impact file. The 
quality of business impact assessments completed by Directorates General has gradually 
improved although there is still room for further improvement. In 1994 there was a wide 
range of legislative proposals covering various sectors which were likely to impact on 
business, particularly on SMEs, and for which impact assessments were required. A number 
of legislative proposals scheduled for adoption by the Commission in 1994 had business 
impact assessments drafted into them, but were delayed until 1995. 
The business impact assessment completed for the Commission proposal on cross-border 
payments13 (see point 1.2.1.2.1.) is a good example of a comprehensive assessment and 
demonstrates the full extent of the consultation procedures undertaken by the Commission. 
The assessment suggests that going ahead with the proposal would be overwhelmingly 
positive in terms of benefit. SME business organisations were specifically consulted and were 
strongly in favour of the principles of the proposal, but would have preferred self-regulation 
provided that its effects could have been measured in the short term. SMEs would also have 
preferred the value ceiling for payments covered by the proposal to be removed, but the 
Commission felt that the threshold of ECU 10,000 afforded SMEs reasonably suitable 
coverage, without having any significant impact on the banking sector. 
The Commission proposal for a Council regulation on the protection of Community design14 
is a good example.of where the business impact assessment sets out the often conflicting 
interests of different business sectors. While on the one hand enterprises will only need to 
acquire a single Community registration for each design, on the other, it was argued by a 
number of SME business organisations, representing the producers of automobile spare parts, 
that the criteria for individual character and novelty could lead to a lower protection threshold 
than was envisaged. The Commission felt that a reasonable balance had been struck in its 
final proposal between the need to protect car manufacturers and at the same time allowing 
the independent spare parts manufacturers competitive access to the market. The result of all 
the negotiations was that the Commission decided on a "repair clause" which gives any third 
party the right, after three years of the marketing of a car, to manufacture the spare parts 
which will restore a damaged vehicle to its original state. This business impact assessment 
set out the various issues on which both the Commission, and subsequently the Council and 
European Parliament, would be able to make a decision in the light of the impact that the 
proposal was likely to have. 
The Commission's proposal for a Council directive on packaging and packaging waste when 
originally put forward by the Commission in July 199215, contained an impact assessment 
which not only set out the difficulties that some industry sectors might have in meeting 
recovery and recycling targets, but also the particular problems for SMEs in the retail sector. 
COM(94) 436 final of 18.11.1994. 
COM(93) 342 final of 03.12.1993. 
COM(92) 278 final of 15.07.1992. 
15 
The Council have only just reached agreement on a proposal which has substantially modified 
target levels reflecting the strength of concern felt by a number of industry sectors. Member 
States are required to consider the problems that SMEs would have in complying with the 
directive, including the need to provide detailed data. 
Other examples of legislative proposals where business impact assessments were completed 
include : 
amendment to Directive 89/655/EEC on the minimum safety and health requirements for 
the use of equipment by workers16 which deals with the dangers inherent in certain types 
of equipment. The assessment dealt with such issues as the principles for in-service 
inspection of equipment, and the requirement for Member States to take measures to 
facilitate implementation by enterprises, particularly SMEs. 
proposal for a Council Directive on energy efficiency requirements for household electric 
refrigerators and freezers17. Amongst other issues the concern of some appliance 
manufacturers for voluntary agreements to be considered emerged from this business 
impact assessment, but ultimately it was not accepted. It was felt that the concerns of 
SMEs about the new investment costs necessary would be eased by an adaptation period 
of three years. 
proposal for a Council Directive on Statistical returns in respect of carriage of goods and 
passengers by sea18. The impact assessment showed that detailed consultation had taken 
x, place with business from an early stage including ship and port owners. The concerns of 
SMEs were taken into account through the ability of Member States to exempt certain 
operations carried out by small vessels or to require only summary statistics at the 
smallest ports. 
proposal for a Council Directive on cableway installations designed to carry passengers19. 
Most enterprises covered by this proposal are small companies and the impact assessment 
refers to consultations with a number of business organizations who were broadly content 
with the proposals. 
COM(94) 56 final of 14.03.1994. 
COM(94) 521 final of 07.12.1994. 
COM(94) 275 final of 04.07.1994. 
COM(93) 646 of 31.01.1994. 
16 
1.1.3. GUIDELINES ON REGULATORY POLICY 
The services are currently collaborating to draw up guidelines for the Community legislative 
process and examining the possibilities of improving the impact file system, particularly 
through the introduction of more complete assessment techniques including, where 
appropriate, cost-benefit analysis. For certain specific subjects this collaboration between the 
Directorates-General began at the conceptual stage of the work. 
1.1.4. RECOMMENDATION ON TAXATION OF SMEs 
Two documents, produced in close collaboration between the services dealing with taxation 
and the services responsible for enterprise policy, and adopted by the Commission in 1994, 
target improvement of the fiscal environment for enterprises and for SMEs in particular. In 
its communication on the improvement of the fiscal environment for SMEs20, the Commission 
identifies three priority problems of SMEs: their capacity to attract adequate financial 
resources, their capacity to respond to administrative complexity and finally the problem of 
change of proprietor. The recommendation on the taxation of SMEs21 aims, on the one hand, 
to ensure greater equity in the fiscal treatment of retained or reinvested profits between sole 
traders, partnerships and limited companies and, on the other hand, to lift the fiscal obstacles 
inherent in the transformation from sole trader or partnership to limited company. 
1.1.5. RECOMMENDATION ON TRANSFER OF SMEs 
With the aim of ensuring the survival of enterprises and the jobs attached to them, the 
Commission adopted a recommendation on 7 December 1994 on the transfer of small and 
medium-sized enterprises22. Drawn up in coordination with the services dealing with taxation 
and company law, this recommendation is the result of wide consultation amongst companies 
and the Member States, on the Commission's guidelines contained in its communication on 
the transfer of enterprises: actions in favour of SMEs23. The Commission recommends that 
the Member States encourage actions on awareness and information for heads of enterprises, 
offer them a financial environment favourable to the success of the transfer as well as the 
legal tools to allow them to prepare effectively for this operation, promote transfers to third 
parties and finally reduce the fiscal burden on inheritance or gift. 
20 
21 
22 
23 COM(94) 206 final of 25.05.1994 
C(94) 1305 final of 25.05.1994, published in OJ No L 177 of 09.07.1994. 
C(94) 3312 of 07.12,1994, see also OJ L 385 of 31.12.1994, p. 14. for the legal instrument and OJ C 400 
of 31.12.1994, p. 1. for the Explanatory Memorandum. 
C(94) 1491 of 29.06.1994, published in OJ No C 204 of 23.07.1994. 
17 
1.2. FINANCIAL ENVIRONMENT 
1.2.1. BANKS-SME PARTNERSHIP 
A Round Table of Senior Bank Officials was created in 1993 on the initiative of the 
Commissioner in charge of enterprise policy. Composed of senior representatives of financial 
institutions and organizations representing SMEs, it had the task of issuing recommendations 
geared to creating a more effective partnership between the financial institutions and SMEs. 
These recommendations are contained in the final report that the Round Table delivered to 
the Commission on 19 May 1994 and they are addressed to the financial institutions, the 
SMEs, the Member States and the European Union. 
The Round Table recommended that the European Union should look to better utilization -
in the interests of the SMEs - of its financial instruments such as the activities of the 
European Investment Bank and those of the European Investment Fund. It also advocates 
examining the possibilities of using certification tools relating to management quality in 
enterprises. On 28 October 1994 the Commission adopted a Communication24 in which it 
commented on the Round Table's final report. 
1.2.2. RECOMMENDATION ON PAYMENT TERMS FOR COMMERCIAL 
TRANSACTIONS 
After wide consultation of interested parties, the various Commission services concerned and 
committees made up of representatives of the Member States regularly consulted by these 
services, on 12 May 1995 the Commission adopted a recommendation on payment terms for 
commercial transactions25. Addressed to the Member States, this recommendation aims to 
combat delays in payment by providing a legal framework that is sufficiently dissuasive of 
bad payers and to ensure the maintenance of reasonable payment terms for transactions where 
contractual relations between partners are not in balance (public contracts in particular). 
In this context, the Commission has given thought to encouraging the development of 
integrated cash flow management software. The purpose of this action is to urge heads of 
enterprises to manage their cash flows better and software suppliers to offer suitable products 
which integrate accounting, financial analysis and management control. 
24 COM(94) 435 final of 28.10.94. 
25 C(94) 3283 of 30.11.1994, see also OJ L 127 of 10.06.1995, p. 19 for the legal instrument and OJ C 144 
of 10.06.1995, p. 3. for the Explanatory Memorandum. 
18 
1.2.3. MUTUAL GUARANTEES 
In accordance with the guidelines set out in its communication on the role of mutual 
guarantee societies in the financing of SMEs26, the Commission encourages the promotion, 
development and extension of mutual guarantee societies in the European Union. Specifically, 
it collaborates with the European Mutual Guarantee Association (EMGA-AECM) which 
includes in its operations support for a cooperation project with Portugal where the first 
mutual guarantee society was created in 1994 (this project will later be supported in the 
framework of the Structural Funds), improvement in the weighting of risks and qualification 
for guarantee offered by the mutual guarantee societies under European banking law and the 
organization of mutual guarantee awareness seminars. Finally, the EMGA-AECM has also 
been active in the context of establishing the EIF, which should accept several projects 
relating to reinsurance of national mutual guarantee systems. It should be recalled that in its 
opinion of 29 April 199227 the Economic and Social Committee supported the efforts of the 
Commission to give new impetus to mutual guarantees. It recommended that the Commission 
present its ideas and proposals for action on the financing of SMEs. 
1.2.4. THE EUROPEAN CAPITAL MARKET 
In the context of its enterprise policy and the encouragement of employment, the Commission 
supported the launching of a feasibility study into the creation of a European Capital Market 
more suited to the needs of growing, entrepreneurially managed companies. This led to the 
formation of the EASD (European Association of Securities Dealers) which, in conjunction 
with other members of the financial community, is preparing the ground for the early 
launching of the EASDÂQ (European Association of Securities Dealers Automated Quotation) 
stock market. 
1.2.5. OTHER INITIATIVES WITH AN IMPACT ON THE SME FINANCIAL 
ENVIRONMENT 
Other initiatives have been taken to improve the SME financial environment, such as the 
proposal for a directive relating to cross-border payments (see point 1.2.1.2.1.) and the 
application of the third directives on the coordination of insurance (see point 1.2.1.2.2). 
1.2.6. NEW FINANCIAL INSTRUMENTS FOR SMES 
After the Edinburgh and Copenhagen Councils two new financial instruments were put in 
place: subsidized loans for job-creating SMEs and the European Investment Fund (see point 
II.2.1.1.). 
26 
27 COM(91) 1550 of 05.09.1991. 
Opinion of 29.04.1992 on the role of mutual guarantee systems in the financing of SMEs, rapporteur Mr 
E. Muller, published in OJ No C 169 of 06.07.1992, p.7. 
19 
2. IMPROVING THE SME ENVIRONMENT UNDER OTHER UNION POLICIES 
2.1 THE INTERNAL MARKET PROGRAMME 
On the whole, the Internal Market should be regarded as an "enabling programme" which 
opens up commercial opportunities for companies previously confined to one Member State 
market, and thereby offering them new avenues for growth. In general, the Internal Market 
is expected to deliver proportionately greater benefits to SMEs than to larger firms, especially 
in those sectors where there was a high incidence of non-tariff barriers in markets and in 
those regions where markets were artificially divided by trade barriers. SMEs will also 
benefit in their capacity as purchasers of inputs through access to a wider range of competing 
suppliers. However, it would be a mistake to regard the Internal Market as an initiative 
capable, in itself, of solving all the problems confronting Community enterprises. In practice, 
the most pronounced impact of the Internal Market programme will be felt in approximately 
40 manufacturing industries (accounting for 50% of industrial output), and a small number 
of important service sectors. Furthermore, measures to complete the single market must be 
complemented by appropriate actions and policies at national and Community level, notably 
as regards implementation and enforcement, and in the application of competition and 
industrial policy. 
2.1.1. IMPACT ON THE LEGAL ENVIRONMENT FOR SMES 
2.1.1.1. Findings of studies 
On the basis of the responses to a questionnaire sent in 1993 by the SME Observatory28 to a 
selection of SME experts in all EU Member States, it can be concluded that the Internal 
Market programme is seen as having a positive effect on the business environment of SMEs. 
It is also seen as providing a stimulus to overall demand, resource and business development, 
and as allowing for a reduction in average production costs as a result of market expansion -
particularly in those Member States with a lower proportion of SMEs. On the other hand, 
the Internal Market programme is perceived as leading to keener competition, and placing 
greater pressure on costs and price as factors in competitiveness. On the whole, the 
completion of the Internal Market programme may occasion a certain amount of restructuring 
in the short-run while the positive effects materialize in the medium to longer-term. 
While the above analysis states the case for an Internal Market in rather abstract terms, the 
benefits for the individual company can take very concrete form. The manner in which the 
generalized advantages of Internal Market integration translate into direct cost improvements 
for small and medium-sized companies was illustrated in a survey undertaken in late 1993 -
early 1994. 
28 The European Observatory for SMEs, Second Annual Report of 31.03.1994, point 4-6. 
20 
In order to gain an impression of the effects of the Internal Market from the grass-roots level, 
the Commission launched a Communitv-wide study of business experience of the Internal 
Market which covers 1993 and 199429. To date 240 companies have responded. The study 
provides a useful picture of the reality for business, albeit through companies which perhaps 
already had a significant European awareness. It focused on SMEs as perhaps more 
vulnerable to trade barriers, not having the resources required to overcome them. But the 
results, presented here, show that both SMEs and larger companies have much to gain from 
the opportunities the Single Market affords. 
Findings of case-studies of the experience of individual companies : 
Cross-border shipments : moving goods from place to place has become much easier with 
the Single Market - almost every respondent agreed that intra EC transactions are now 
both faster and cheaper. With the abolition of frontier controls border delays were greatly 
reduced, and firms are no longer constrained by customs opening hours. Return of 
defective goods is also now much easier. However it was interesting that some companies 
in both Greece and the UK were unaffected by these improvements, as they exported 
largely by air. Competition in the transport sector appears to have been particularly 
successful in forcing down costs (some firms quote reductions of up to 50%). But in 
those Member States where transport costs were already well below the EC average, EC 
carriers are still more expensive than local ones. The new customs declaration system has 
saved time and money for many, although some firms, from countries where the 
information was not collected through an existing procedure, have found some small 
countervailing costs. 
Access to cheaper and better inputs : on the financial side, several companies welcome 
greater flexibility in the insurance market - for instance British companies report taking 
up French insurance for a better deal. But many regret that the Internal Market in 
insurance is not yet complete. Improved access to capital markets was widely welcomed, 
with several companies making use of foreign capital. Some had centralised cash flow 
activities in production countries to avoid currency movement costs. It seems that in 
many cases benefits from bank liberalisation have yet to feed through. Some firms report 
reduced transaction costs while others find no change, although those which mention them 
consider that credit transaction costs are reducing. But the most common complaint about 
the financial aspect of the Single Market concerned not the failure of an existing structure, 
but the lack of one essential requirement - Economic and Monetary Union. 
29 IP(94) 228 du 17.03.1994, "Companies Start to notice the difference, a short report on the effect of the 
Internal Market on business". The findings of this study will be published in 1995. 
21 
3. Technical harmonization : for many, progress in technical harmonization had made 
exporting significantly easier, as well as producing savings in the testing and certification 
field - a Belgian company cited a saving of more than 50%. Several firms had adopted 
the EN 29000 standard with significant financial and other benefits - it was particularly 
useful in providing a common reference for companies wishing to develop new contacts. 
A few firms reported that the need to switch to European standards was delaying the 
expected decrease in production costs, but this is of course only temporary. In some areas 
unharmonized national requirements were still causing problems, and European standards 
were often requested as a solution. And somewhat disturbingly, experience of mutual 
recognition was somewhat mixed - as many complained about its failure as benefitted 
from it. The results of the EUROMANAGEMENT pilot action in this field (see point 
II. 1.3.2.) show that there was an even more negative attitude on the part of SMEs to 
standards and the standards-making process, combined with a lack of information on the 
basic mechanisms of the Single Market and the benefits to be gained from harmonised 
standards. 
4. Public procurement : there are also reports of greater success in penetrating foreign public 
procurement markets, and benefits gained from the EC information systems on tender 
opportunities. Some problems remain - with regard to, for example : information on 
contracting opportunities, contract awards and tight tender response times. However 
several companies are minimising remaining problems by developing a local presence 
through partnership arrangements and other links. And as one company pointed out, the 
mere fact of having competed for a tender in another Member State gives a Europe-wide 
v view and experience. 
5. Business strategy and reactions : this EC dimension to the export market has had a 
profound effect on business activity. Almost all companies perceive that competition has 
become fiercer, and many have as a result been spurred to innovate new products and 
improve efficiency. One British company was forced to develop more advanced and 
efficient versions of its product, for instance, and won back a lost contract as a result. 
Competitive expansion into other Member States is common and takes many forms -
partnerships with companies in other EC countries, licensing and agency agreements, 
distribution agreements with firms in other countries and sub-contracting arrangements are 
only some of the measures employed. In one case a French and Italian company created 
a joint subsidiary to enter a new market; in another a Belgian firm used a partnership with 
another EC company to increase exports from 0% to around 60% of turnover. Another 
company has seen its EU business rise from virtually nothing before 1992 to around half 
its export total now. And in one of the key trends, several firms commented that the new 
"export mentality" and know-how gained in the Internal Market gives them the vision and 
the edge to compete internationally - new opportunities are promoting changes in business 
culture which can only be beneficial to the European economy. 
Perhaps the crucial lesson to be learned from the survey is that the Single Market is not 
a panacea for all problems facing European firms, but rather is all about seizing 
opportunities. As a French businessman put it : "The Single Market cannot itself 
stimulate companies to invest and expand, if the determination isn't there. Rather, it 
provides an environment in which dynamic, innovative and competitive businesses can 
perform to their maximum effectiveness, reaping in full the rewards of their own efforts". 
22 
2.1.1.2. Accountancy Rules 
Directives 78/660/EEC (annual accounts)30, 83/349/EEC (consolidated accounts)31 and 
84/253/EEC (account controllers)32 provide the Member States with the option of exempting 
small and medium-sized enterprises which do not exceed certain turnover limits from some 
of their obligations. Article 53 § 2 of Directive 78/660/EEC provides for these turnover 
limits to be revised every five years, as a function of the economic and monetary evolution 
in the Union. 
The last of these revisions took place in March 1994. Council Directive 94/8/EC of 21 March 
199433 rajsecj tne aforesaid turnover limits by 25%, thus giving the Member States the option 
of allowing a larger number of firms to benefit from the exemptions mentioned in the 
previous paragraph. 
2.1.1.3. Protection of intellectual and industrial property 
In 1995, The Commission intends to prepare a Green Paper dealing with the question of the 
need for harmonization of legislation relating to utility models - "Intellectual Property Rights" 
(IPR) are the ownership rights vested in the generation of an original idea. These utility 
models are a particular form of protection of innovation which, because of their specificity, 
are of special interest to SMEs. This is a flexible form of protection, not very costly and well 
adapted to active SMEs in certain sectors of innovation. The Commission has also proposed 
a Regulation on the protection of Community design34 which is potentially of great interest 
for SMEs (see point 1.1.1.2.). 
30 OJ No L 222 of 14.08.1978, p. 11. 
31 OJ No L 193 of 18.07.1983, p. 1. 
32 OJ No L 126 of 12.05.1984, p. 20. 
33 OJ No L 82 of 25.03.1994, p. 33. 
34 COM(93) 342 of 03.12.1993. 
23 
2.1.2. IMPACT ON THE SME FINANCIAL ENVIRONMENT 
2.1.2.1. Cross-border payments 
An in-depth case-study of a proposed Community Directive, foreseen in the Commission's 
Strategic Programme on the Internal Market, provides a useful insight into how Community 
legislation can benefit SMEs, and the extent to which SME interests are borne in mind when 
preparing Internal Market legislation. Attempts to bring about reductions in the level of 
commission charged for cross-border payments and in the extent of double-charging, through 
voluntary codes of good practice, did not work. The Commission therefore tabled a proposal 
for a Commission Directive to tackle this problem35. The business impact assessment 
completed for this proposal is part of the document adopted by the Commission36. This 
indicates the expected costs and benefits of the measure, particularly for SMEs, describes the 
consultation procedures carried out, and the analysis which has prompted the Commission to 
come forward with this proposal. 
2.1.2.2. The insurance sector 
On 1 July 1994 the Third Directives on coordination relating to insurance came into force, 
completing the Internal Market in the financial sector37. Conditions of access to insurance 
markets as well as operating conditions have been simplified by the introduction of the 
"European passport" system. This makes access to the various national insurance markets 
much easier and less expensive. An increase in competition between insurance companies 
and greater innovation in insurance products should also be expected. 
This should allow SMEs to have access to insurance products existing in the European Union 
and thus procure for themselves the insurance cover they consider best adapted to their 
specific needs, at the best prices. The favourable climate produced by the elimination of 
national frontiers in the insurance sector encourages the appearance of insurance products 
adapted to the special risks cover which often concerns SMEs (bio-technology, computers, 
electronics, etc.). In fact,; insurers are aware of the importance of SMEs in the economic and 
industrial fabric of the Member States and they are increasingly setting up products adapted 
to the very particular needs of SMEs, both as regards company risks themselves and as 
regards contingency provision and supplementary social security. 
35 COM(94) 436 final of 18.11.1994. 
36 COM(94) 436 final of 18:11.1994. 
37 Life assurance OJ No L 360 of 09.12.1992 and non-life insurance OJ No L 228 of 11.08.1992. 
24 
2.1.2.3. Stock exchanges, 
One area of action of the Commission services in the field of stock exchanges has a particular 
bearing on SMEs. Point 5 of Article 1 § 1 of Directive 94/18/EC (the "EUROLIST 
Directive") adopted on 30 May 199438 allows companies in regulated junior markets to 
become officially listed without publishing new listing particulars, under certain 
circumstances. This is a simplification of previous rules and represents a saving for the SMEs 
involved. 
2.2. COMPETITION POLICY 
2.2.1. IMPACT ON THE LEGAL ENVIRONMENT: RULES OF COMPETITION 
APPLICABLE TO ENTERPRISES 
Under article 85 of the EC Treaty on agreements between enterprises, SMEs are the principal 
beneficiaries of the Commission communication on agreements of minor importance39. At the 
same time as reinforcing legal security, this communication has contributed to freeing SMEs 
from unnecessary administrative burdens and has thus facilitated cooperation between SMEs. 
In fact, cooperation agreements - which should normally be prohibited by virtue of article 85 
paragraph 1 of the Treaty - are permitted and need no longer be notified if the firms 
concerned have a market share of less than 5% and if their total turnover for one financial 
year does not exceed ECU 200 million. This threshold was raised to ECU 300 million in 
199440 
Furthermore, the Commission communication on agreements, decisions and joint practices 
relating to cooperation between firms41 lays down that agreements whose only purpose is the 
exchange of views and experiences, the completion of joint studies and the establishment of 
common statistics and calculation systems do not restrict competition. Furthermore, the 
Commission communication on the assessment of subcontracting agreements42 provides that 
certain restrictions relating to the execution of subcontracting agreements are not covered by 
article 85. 
Clearly the aforesaid provisions open up development possibilities for small and medium-sized 
enterprises. 
38 
39 
40 
41 
42 OJ No L 135 of 31.05.1994, p. 1. 
OJ No C 231 of 12.09.1986, p. 2. 
JO C 368 of 23.12.1994, p. 20. 
OJ No C 75 of 29.07.1968, p. 3. 
OJ No C 1 of 03.01.1979, p. 2. 
25 
Furthermore, in its resolution of 10 October 199443, the Council invited the Commission to 
examine possibilities for cooperation between SMEs (for example cooperation in networks for 
joint purchases and sales) in the light of Community competition law. 
As regards the application of competition rules in specific sectors of activity, such as 
distribution and sales and after sales service in respect of motor vehicles, Regulation 123/8544 
was amended to include a number of provisions aimed at ensuring that dealers - who are in 
the vast majority of cases SMEs - enjoy a greater degree of commercial independence vis-à-
vis manufacturers. This amendment also served to redress the imbalance between 
manufacturers and distributors of spare parts on the one hand and car manufacturers on the 
other. 
In the area of research and development45, specialization46, patent licensing47 and know-how 
licensing48, in 199249 the Commission amended the relevant exemption regulations with the 
intention of facilitating the use of these provisions, in particular during transfer of technology 
or RTD projects and which contain thresholds designed to take account of the smallest 
restrictive effect on competition in rgreements concluded between enterprises which do not 
have small shares in the market, which should be favourable to SMEs. In addition, on 30 
June 1994 the Commission published a draft regulation aimed at facilitating certain categories 
of technology transfer agreements, inviting those involved to send in their comments50. 
As regards control of concentrations, the thresholds provided by regulation 4064/8951 defining 
the Community dimension of concentration operations, exclude SMEs from its field of 
application. Finally, article 86 protects SMEs from abuse of dominant position by larger 
competitors. 
43 
44 
45 
46 
47 
48 
49 
50 
51 OJ No C 294 of 22.10.1994, p. 7. 
OJ No L 15 of 18.01.1985, p. 16, amended by C(95) 1447 approved by the Commission on 21.06.1995. 
OJ No L 53 of 22.02.1985, p. 5. 
OJ No L 53 of 22.02.1985, p. 1. 
OJ No L 219 of 16.08.1984, p. 15, corrigendum: OJ No L 280 of 22.10.1985, p. 32. 
OJ No L 61 of 04.03.1989, p. 1. 
OJNoL21 of 29.01.1993, p. 8. 
OJ No C 178 of 30.06.1994, p. 3. 
OJ No L 395 of 30.12.1989, corrigendum: OJ No L 257 of 21.09.1990. 
26 
2.2.2. IMPACT ON THE FINANCIAL ENVIRONMENT: STATE AID 
The Commission's traditionally favourable attitude to state aid for SMEs was formalized by 
the adoption, in 1992, of a specific framework52 which will be reexamined in 1995. This 
framework provides Member States with the option of granting aid, within certain set limits, 
designed to encourage investment by SMEs (that is, enterprises with less than 250 employees 
and turnover below ECU 20 million, which are not 25% or more owned by a large enterprise), 
and to encourage them to improve their competence through advice and information. In order 
to simplify the administrative procedures in the interest of SMEs, the framework introduces, 
for the first time, a "de minimis" rule which dispenses Member States from notifying the 
Commission of very small sums of aid which it considers to have a negligible impact on trade 
between Member States and on competition. At the same time, the Commission has 
published a communication53 which extends the field of application of the accelerated 
authorization procedure for aid systems of minor importance to all SMEs (outside of specific 
sectors) as defined in the framework. 
Finally, in the control of state aid, the Commission takes general account of the special 
position of SMEs. This is expressed in the authorization of a higher aid threshold (generally 
10 points higher than the normally permitted ceilings) or more relaxed conditions when the 
beneficiaries are SMEs. This position has been confirmed recently in the new Community 
framework on state aid for environmental protection adopted in 199354, as well as the 
Community guidelines on state aid for rescuing and restructuring firms in difficulty adopted 
in 1994" 
2.3. ENERGY POLICY 
The objectives of the Union's energy policy have a direct effect on the development and 
operation of SMEs, since they are aimed at meeting the needs of individual and industrial 
users at less cost, under circumstances which ensure security of supply and environmental 
protection. 
52 OJNoC213of 19.08.1992, p. 2. 
53 OJ No C 213 of 19.08.1992, p. 10. 
54 OJ No C 72 of 10.03.1994, p. 3. 
55 OJ No C 368 of 23.12.1994, p. 12. 
27 
Of these three objectives, improving the overall competitiveness of the economy is the most 
directly linked to expanding SMEs. The availability of energy at the best prices and on the 
best terms is a determining factor in strengthening the overall competitiveness of the 
economy, and that of SMEs in particular. The second objective, i.e. security of supply, 
should also have a great effect on SMEs, since the possibility of guaranteeing in the future 
that essential energy needs can be met guarantees that prices of the various forms of energy 
will continue to fall and that the quality of user service will be maintained. The third 
objective concerns developing sustainable and non-inflationary growth while protecting the 
environment. Progress towards sustainable development means finding balanced solutions 
which take account of the cost/effectiveness aspect, so as to avoid any distortions in the 
development of the competitiveness of Community industry vis-à-vis the outside world and 
also vis-à-vis SMEs. 
The objectives of energy policy must be attained in the context of the Single Market and 
therefore the completion of the single market for energy is a sine qua non. 
The growth of trade and the internationalization of markets expose the world of the SMEs to 
increased competition. In this process of reinforcing competition, containing production costs 
obviously plays an essential role if SMEs are to survive in a world market. 
Energy costs, which for some of these enterprises represent a large proportion of total costs, 
must also be contained. Accordingly, industry is taking an interest in the completion of the 
single market for energy. It is important to maintain the competitiveness of all industry, and 
thus of SMEs, to guarantee access to energy at competitive prices in the immediate future. 
Consumers must be able to choose between the various sources of supply and a greater 
number of suppliers. 
At present, transboundary trade in energy and competition between producers is somewhat 
limited, because of technical, legal (because of national monopolies) and fiscal barriers. 
In all these fields, progress has already been made over the past few years, in particular 
through standardization and the first phase of liberalizing the electricity and gas sectors56. 
56 Council Directive 90/377/EEC of 29.06.1990 concerning a Community procedure to improve the 
transparency of gas and electricity prices charged to industrial end-users, OJ L 185 of 17.07.1990, Council 
Directive 90/547/EEC of 29.10.1990 on the transit of electricity through transmission grids, OJ L 313 of 
13.11.1990, Council Directive 91/296/EEC of 31.05.1991 on the transit of natural gas through grids, OJ 
L 147 of 12.06.1991. 
28 
Other proposals57 have been forwarded to give customers a greater choice of sources of supply 
and of suppliers. 
The second phase of liberalizing the electricity and gas markets proposed by the Commission 
provides for the reinforcement of competition in the production sector and access for third 
parties to the network, which would give the major industrial consumers and the distributors 
a greater choice of suppliers in the Union. 
It is through the distributors (who will pass on the benefits to their customers) that, in this 
second phase, the SMEs will be able to take advantage of the opportunities offered by this 
increased competition, which will reinforce security of supply and give more competitive 
prices on the market. In the third phase, access could be extended to other industrial 
consumers (by lowering the consumption threshold), so that some SMEs could negotiate their 
supply contract freely with a supplier in the Union. 
2.4. ENVIRONMENTAL POLICY 
In the review of the 5th. Action Programme, of November 1994, mention is made of the 
British, Danish, German and Dutch governments' initiatives to assist SMEs with consultants 
advice and financial incentives to upgrade environmental performance and to install clean 
technology. In the UK, industry has set up a Committee to help the scaling down of cleaner 
technology developed for large enterprises for SME use. 
In November 1994, the Commission also presented a Communication on "Economic Growth 
and the Environment". The Communication strongly underlines the need for market based 
instruments in the area of environmental policies, in particular economic and fiscal 
instruments like eco-labelling, eco-auditing, voluntary agreements, tax rebates for green 
investments, etc. A shift is proposed away from a "command and control" policy towards 
more market based instruments, so that companies are able to integrate environmental 
considerations in their policies in a more flexible way. This form of "deregulation" is of 
special importance for SMEs." 
57 Draft Directives concerning common rules for the internal market in natural gas and electricity, 
COM(93) 643 of 07.12.1993. 
29 
CHAPTER H. PROGRAMMES AND SUPPORT MEASURES FOR SMEs 
1. PROGRAMMES AND SUPPORT MEASURES FOR SMEs UNDER ENTERPRISE 
POLICY 
1.1. THE EURO-INFO-CENTRES NETWORK 
Because of their special position at local level, the EICs can contribute to raising interest 
amongst enterprises in their region in the various Community programmes and policies. They 
provide information to heads of firms and feed information back to the different Commission 
services so that they can take account of the special problems of SMEs. 
A deepening of the EICs' information mission has been achieved largely thanks to the special 
relationship which has been developed between the Commission services and the EICs in the 
framework of the special working groups. Thus, specialized groups have been set up, since 
1992, in the following main areas (which have themselves been divided into sub-groups): 
Internal Market (Information on the markets of other Member States, public tenders, VAT and 
quality), RTD, external relations and Community programmes (environment, training and 
Structural Funds). Essentially these are sectors which have been difficult for SMEs to access 
up to now. This growing specialization by the EICs allows information monitoring actions 
to be increased and facilitates the exchange of good practice. 
1.1.1. THE EICs AS DISSEMINATORS OF USEFUL INFORMATION TARGETED ON 
ENTERPRISES 
Anxious to respond to the real needs of firms, the EICs increasingly tend to offer an "info-
service", that is, a full personalized service of diagnostics, advice and monitoring which 
identifies through research the optimum solutions for the firm. 
During 1994, the EICs contributed greatly to the organization of Internal Market Weeks which 
took place in all the Member States of the European Union and met with great success 
amongst SME participants. 
As regards public tenders, the EICs have been particularly active in circulating information 
about calls for tender, thanks notably to the TED database. Software programs (TENNIS and 
TED AUTOMATA) have been developed as a function of the specific needs of SMEs allowing 
them better to understand and exploit these very complex markets. 
30 
Thanks to the support of the Commission services involved, the EICs have played an active 
role in the promotion of Community RTD programmes, most notably CRAFT, with SMEs. 
They have particularly made them aware of the new opportunities which arise from the Fourth 
Framework Programme through training seminars or brochures, including a guide to project 
management. 
On transport, the Commission services have collaborated to carry out an awareness action 
exclusively for SMEs in the transport sector, which resulted in the publication of a leaflet in 
August 1994. In addition to a brief description of services and programmes available to 
SMEs from the Commission (EIC, BC-NET, BRE and EUROPARTENARIAT), notably with 
a view to promoting trans-national cooperation, the leaflet provides a concrete example for 
each of these, involving one or more transport firms as well as a list of useful addresses by 
country. 
t. 
On the environment, the EICs have been chosen by the Commission services to carry out an 
information and awareness campaign for SMEs on environmental questions with a view to 
encouraging them to adopt the voluntary regulations on environmental management and the 
eco-audit (EMAS - '"Eco-Management and Audit Scheme"). In practical terms, the 
contribution of the EICs has consisted in drawing up a self-evaluation guide (on paper and 
on disk) to environmental performance for heads of firms, and in particular SMEs, most of 
which have not yet adopted a particular strategy in this area because they see in it more 
threats than potential opportunities. 
1.1.2. THE EICs AS ORGANIZERS OF FEEDBACK 
The Commission services are, increasingly aware that the information and advice mission 
fulfilled by the EICs puts them in a special position to understand the particular problems 
encountered by SMEs in thé implementation of legislation or in participating in certain 
Community programmes. This feedback is particularly valuable because it gives a better idea 
of the reality on the ground and eventually can help adapt the legislation or programmes in 
question. 
Up to now, the Commission services have structured this feedback by directly consulting EICs 
or having them carry out specific studies based on questionnaires circulated to SMEs in their 
region. 
In the first case, the most significant example is the participation of certain EICs on the 
Listening Committee on VAT. The EICs have participated actively in the meetings and have 
also been asked to carry out a study on the impact of the transitional VAT regime. 
An identical step has been undertaken on the Internal Market. This has made it possible to 
collect, from a questionnaire and structured interviews carried out with the economic 
operators, both quantitative and qualitative information about the impact of the Internal 
Market, as well as numerous SME success stories (see point 1.2.1.1.). 
31. 
The analysis of this data has served as a basis for drawing up the Annual Report on the 
Internal Market58 and has been taken into account in completing the Strategic Programme59. 
Greater cooperation with other Commission services is also under study for the transmission 
of complaints, in order to improve the procedures for enterprises. 
1.1.3. THE EICs AS PARTNERS AT THE LOCAL LEVEL 
This double function of dissernination of information and organization of feedback for the 
various Commission services therefore stands the EICs in good stead as a valuable channel 
of direct contacts with economic circles and the other actors in local development and 
illustrates in a concrete way the application of the principle of subsidiarity. 
The partnership relations which the EIC has developed with all the parties concerned at local 
level, whether public or private (Chambers of Commerce and Trades Councils, Regional 
Councils and organizations promoting/spreading technologies), make it possible to offer a 
more complete service to economic operators. It is thus possible for the EICs to relay 
technical documents to more specialized organizations. Furthermore, certain EICs have 
succeeded in coordinating, even co-piloting, community initiative programmes financed in the 
context of the Structural Funds. 
In other sectors the Commission services have preferred to use information /advice and 
enterprise cooperation services which the EIC network can offer them rather than establishing 
their own network, both for reasons of effectiveness and credibility on the ground. So in 
RTD, certain EICs have been designated as Value Relay Centres with the function of ensuring 
promotion of the transfer of innovations resulting from Community programmes towards 
SMEs. 
The various Commission services have also called on the EICs as members of a well-
established network in the European Union, and soon in the European Economic Area, which 
has established correspondents in the countries of central and eastern Europe and the 
Mediterranean. Currently the Commission services also envisage the possibility of using 
organizations located in third countries (in Asia or in Latin America, for example) which have 
already established a working relationship with certain EICs to the benefit of European firms 
in the search for market opportunities and outlets. 
58 COM(94) 55 final of 14.03.1994 
59 COM(93) 632 final of 22.12.1993. 
32 
1.2. NETWORKS AND COOPERATION PROGRAMMES 
One of the priority areas in enterprise policy concerns inter-enterprise cooperation. The 
Commission has established partner search networks, the Business Cooperation Network (BC-
NET) and the Business Communication Centre (BCC) as well as the Europartenariat and 
Interprise programmes. 
In 1994, the 461 correspondents in the BCC network generated 7,629 cooperation profiles. 
As regards the regions eligible under objectives 1, 2 and 5b, the activity of the network is 
distributed as follows: 
- Objective 1 92 correspondents have generated 919 cooperation profiles; 
- Objective 2 : 142 correspondents have generated 2,156 cooperation profiles; 
- Objective 5b : 15 correspondents have generated 184 cooperation profiles. 
The 533 BC-NET advisers have generated 10,349 cooperation profiles. For the regions 
eligible under objectives 1, 2 and 5b, the activity is distributed as follows: 
Objective 1 
Objective 2 
Objective 5b 96 correspondents have generated 1,085 cooperation profiles; 
142 correspondents have generated 3,624 cooperation profiles; 
28 correspondents have generated 560 cooperation profiles. 
49 INTERPRISE events were organized in 1994, 31 of which (63%) have related to objective 
1, 2 and 5b regions. 
The Europartenariat held in Bilbao in 1994 allowed 479 selected enterprises from 7 Spanish 
regions to meet over 2,000 enterprises at 9,000 meetings. 
Furthermore, the various Commission services cooperate to encourage international 
cooperation thanks to the opening of partnership programmes for third countries. This is how 
enterprise policy makes available to the other policies of the Union its tools and know-how, 
notably allowing the countries of central and eastern Europe, Mediterranean third countries 
and other third countries to benefit (see point II.2.4.4). 
As an example the European Union/Middle East Partenariat event which was held in Cairo 
in December 1994 brought together 600 enterprises in the region (Egypt, Israel, Palestinian 
territories and Jordan) and more than 400 enterprises from Europe. It is estimated that about 
10,000 scheduled meetings and 5,000 spontaneous meetings took place between enterprises. 
In 1994, three Med-Interprise events took place in the Mediterranean countries of Morocco, 
Lebanon and Cyprus. The enterprise policy services ensure technical assistance under the 
cooperation section of the Med-Invest programme, the finance contributed by the services in 
charge of external relations. 
33 
On subcontracting, the enterprise policy services are cooperating with the industrial policy 
services, notably for the organization of European forums like those organized in 1994 in the 
sectors of clothing and construction and for the cooperation actions targeting the 
competitiveness of firms. 
In this context, in accordance with the Council's request (in its resolution of 22 November 
199360) and the proposals of the Integrated Programme, the Commission has tested the 
meetings formula known as "reverse salons" organized on the initiative of the clients to 
contact subcontractors in the context of new inter-industrial partnership relations. Thus 
VETIS was organized in Turin in November 1994 making meeting areas available to 
purchasing and technical departments of manufacturers and large suppliers to the motor 
industry to play host to suppliers of components or services. This action was aimed at 
establishing permanent relations to their mutual advantage between manufacturers, suppliers 
and subcontractors in the areas of quality ("zero fault"), service to clients, price (affordable 
and competitive) and time ("Just in Time, Time to Market"). 
Furthermore, the Integrated Programme provides for the reinforcement of support measures 
to enterprises notably in the area of cooperation. The members of the network (BC-NET and 
BCC), as local operators in direct contact with firms, are required to play a fundamental role 
in the implementation of the proposed actions which affect 3 areas: stimulating cooperation 
between SMEs by support beyond the initial partner stage, access to public markets and new 
information technologies. 
1.3 PILOT SCHEMES 
Under enterprise policy, the Commission is carrying out a certain number of actions in 
particularly sensitive areas such as access to research and technological development (RTD), 
access to public contracts, standardization and certification, commerce and distribution and, 
finally, the craft sector and small enterprises. These actions are carried out through inter-
service cooperation in the majority of cases. 
As an example, in RTD, an inter-service working group has been created for better 
coordination of actions in favour of SMEs. This coordination has been effective in the 
context of Euromanagement RTD II and above all the 4th RTD Framework Programme which 
has made it possible to extend the CRAFT procedures and the feasibility premiums to all 
RTD programmes (see point II.2.2.3.). In the context of Euromanagement RTD II, DG XXIII 
has, for the first time, associated the Member States in the selection of participants and 
beneficiary SMEs, as well as the management of the action. This collaboration makes it 
possible to encourage the Member States to establish similar actions in the future themselves. 
60 OJ No C 326 of 03.12.1993, p. 1. 
34 
1.3.1 THE CRAFT SECTOR AND SMALL ENTERPRISES 
As regards the craft sector, following a call for tenders launched in 1994, the Commission 
will support the creation of 7 cross-border offices to help the craft sector and small enterprises 
develop cross-border activities and help them overcome existing barriers. It has also 
commissioned a series of studies on the problems of border areas. 
In order to lay the ground for the Second European Conference on the Craft Sector, 12 
subject-specific preparatory conferences were organized in the Member States with a view to 
stimulating discussion and an exchange of experiences on the role of small enterprises and 
craft businesses within the Single Market. At the end of this Second European Conference 
on the craft sector and small enterprises, which took place in Berlin on 26 and 27 September 
1994 around the common theme of "craft and small enterprises : the key to growth, 
innovation and employment", conclusions were presented as regards new actions aimed at 
ensuring that these enterprises benefit fully from the advantages of the Single Market and 
from Community programmes. The Commission intends to act on the recommendations 
formulated at the Council's request in its Resolution of 10 October 199461 by presenting a 
communication on follow-up measures before the end of 1995. 
Finally, in October 1994 the Commission published a call for proposals to support trans­
national cooperation" with the help of intermediaries. The Commission aims via this action 
to support partnerships between small businesses and craft enterprises in two Member States 
by ensuring that they are accompanied by intermediaries who facilitate their moves towards 
cooperation. 
1.3.2. EUROMANAGEMENT 
On standardization, certification, quality and safety in the workplace, the Commission 
launched a Euromanagement action in 1993 which ended in 1994 and made it possible to 
audit 842 SMEs. The report produced by the coordinator of the action, AFNOR (Association 
Française pour Normalisation), shows that the principles of the single market and 
standardization (through European directives and standards) are generally very poorly 
understood, for reasons relating to the difficulties of gaining access to information and the low 
participation rate of SMEs in the work on European and even national standards (one of the 
reasons seems to be the lack of human and financial resources). As to quality, a good number 
of SMEs have commented that they are looking for an improvement in their organization and 
their competitiveness from the quality assurance systems. However, these are harder to 
establish in SMEs than in large enterprises. The report shows that SMEs have difficulty in 
understanding and applying EN ISO 9000 and in particular in formalizing their quality 
procedures. Since they are unfamiliar with the language of standards, they feel that they are 
dependent on outside consultation and often do not know how to avoid making over-complex 
interpretations of the standards and setting up systems which are too clumsy and expensive. 
61 OJC 294 of 22.10.1994, p. 6. 
62 OJ No C 282 of 08.10.1994, p. 14. 
35 
As regards certification, the report notes that there is still much work to be done on 
completing the single market, in particular on mutual recognition. SMEs stress in their 
comments that they expect substantial benefits. However, SMEs are often unfamiliar with EC 
markings and see the cost of obtaining certificates as a problem (for products and/or quality 
systems). Lastly, on health and safety in the workplace knowledge amongst SMEs is low. 
About one in five SMEs are in a position to quote the existing standards on safety of 
employees. 
1.3.3. START-UP CAPITAL PILOT SCHEME 
The Commission (in particular the. services responsible for enterprise policy and those 
concerned with regional policy) launched a pilot scheme in 1989 to "stimulate the creation 
of start-up capital funds". In this context, it has supported the establishment of 23 "start-up 
funds" whose essential mission consists in making capital available to firms in the embryonic 
stage of existence which generally have enormous difficulty in obtaining this on the market. 
As at 1 January 1995, the 23 funds had raised ECU 41 million in capital, of which ECU 27 
million have been invested in 228 new enterprises (average rate of capital paiticipation of 
26%), generating 2,085 direct jobs. 
It is costing the Commission ECU 1 260 to take part in a job creation scheme under the pilot 
plan. For ECU 8.76 million invested by the Commission in the form of reimbursable advances 
(ECU 6.085 million) and contributions to the capital (ECU 2.675 million), a capital sum of 
ECU 41 million has been raised by the pilot plan funds (58% of which is from private 
sources), which represents a substantial lever effect. 
1.3.4. COMMERCE AND DISTRIBUTION : ACTION COMMERCE 2000 
The European conference on strategies for a modern distribution network in Europe, which 
was held in Athens on 2 and 3 June 1994, has invited the Commission to pursue and intensify 
the Commerce 2000 pilot programme. This programme aims to encourage the promotion of 
cooperation relations between SMEs by establishing modern methods of management and new 
technologies. A second call for tenders launched at the end of 1993 was used to select, in 
1994, 52 feasibility study projects and 6 pilot projects, the results of which should become 
available in the course of 1995. 
36 
1.3.5. COOPERATIVES, ASSOCIATIONS, MUTUAL SOCIETIES 
The Community multi-annual programme of work for cooperatives, mutual societies, 
associations and foundations in the European Union63, adopted by the Commission in February 
1994, received the consent of the European Parliament in March 1995. This programme 
provides a formal framework for Community action based on innovation, partnership, 
networking and the trans-national dynamic. It aims to preserve diversity in the sector, to 
encourage solidarity and to help cooperative enterprises to respond to the dual objective of 
economic development and social progress in the European Union. 
Cooperative enterprises are involved under various headings in the process of allocation of 
structural funds at the European, national, regional and local level. However, their inclusion 
in partnerships, as well as their experience, remains very scattered. Exchange of best practice 
is encouraged, so as to maximize the contribution of SMEs to the creation of employment, 
occupational training, regional development, local initiative and urban reconversion. 
The various actions supported include the Euro-Info-Centre for the social economy known as 
ARIES, the European financial mechanism SOFICATRA for financing enterprises in this 
sector from own funds, the European training network for the third sector and the network of 
experts on proximity services. 
Recognizing the growing importance of associations in Europe, the Commission is also 
preparing a White Paper on Associations and Foundations. Associations have been 
increasingly involved in providing services that were hitherto provided by public authorities, 
and in a number of key European programmes. 
1.3.6. STATISTICS 
With a view to improving the statistical information which is available, Eurostat, in 
conjunction with the NSIs of the Member States, has begun to collect all the financial 
information available on enterprises, so as to highlight the importance of SMEs as regards 
production in the Member States and employment. In conjunction with DG XXIII, Eurostat 
has published at regular intervals the report "Enterprises in Europe", the third edition, of 
which is from 1994. This report contains detailed information by sector of economic activity 
and by payroll size classes on all the enterprises in the European Union, viz. their number, 
number of employees and turnover. 
63 COM(93) 650 of 16.02.1994. 
37 
2. SUPPORT PROGRAMMES AND MEASURES FOR SMEs UNDER OTHER UNION 
POLICIES 
It has to be recognized that the majority of Community support is provided largely in the 
context of the Union's financial instruments and, in particular, the structural funds, as well as 
Community programmes, such as the research and technological development and 
occupational training programmes. 
Here close coordination between policies is essential in order to facilitate effective 
participation by SMEs in these programmes. 
2.1. THE UNION'S FINANCIAL INSTRUMENTS (EIB AND STRUCTURAL FUNDS) 
AND THE SMEs 
2.1.1. THE EUROPEAN INVESTMENT BANK, THE EUROPEAN INVESTMENT FUND 
AND SMEs 
Created in 1958 to facilitate, with funds borrowed on the capital markets, the funding of 
investments to promote balanced development of the Community and European integration, 
the European Investment Bank participates actively in the support of Community policies. 
It also contributes to cooperation policies towards third countries (the African states, the 
Caribbean and the Pacific, the countries of the Mediterranean basin and the countries of 
central and eastern Europe. 
The EIB finances investments supporting regional development as a priority. It contributes 
regularly to strengthening European communications networks, the protection of the 
environment and the improvement of the life context as well as the competitiveness of 
industry. 
To strengthen the international competitiveness of industry and promote its integration at the 
Community level, the EIB finances large-scale investments through individual loans and 
modest ones,«in particular those of small and medium-sized enterprises, indirectly through its 
global loans. 
2.1.1.1. The EIB's global loans 
The global loans are concluded with financial intermediaries, operating at the national, 
regional or even local level, and used in agreement with the Bank and according to its 
economic, technical and financial criteria. This decentralized procedure, closer to the local 
reality, puts the EIB in a position to support small and medium-sized investments made 
mainly by SMEs, which it would not be able to finance by individual loans, for reasons of 
management efficiency. Currently the EIB is collaborating with over one hundred partners, 
financial institutions or commercial banks. 
38 
The field of application of global loans has been progressively increased in order to adapt to 
the development of needs and the diversification of Community policies. They usually 
respond to several Community policy objectives and concern : 
investments of small and medium-sized enterprises in industry, services (notably tourism) 
and agriculture; 
small-scale infrastructure contributing to Community objectives in the areas of regional 
development, environmental protection, energy or transport. 
The figures presented in Table No 1 indicate the importance of the role of the EIB in support 
to the investments of SMEs. 
39 
Table No 1 
THE EUROPEAN INVESTMENT BANK 
The EBB in figures : 
EIB loans amounted to : 
1994 : ECU 19.9 billion including ECU 17.7 billion in the Community and ECU 2.2 
billion in the context of cooperation policies relating to third countries; 
1993 : ECU 19.6 billion; 
1992 : ECU 17 billion. 
The EIB and regional development : 
1994 : ECU 12 billion (88% in regions eligible for the Structural Funds - objectives 1, 
2 et 5b); 
1993 : ECU 12.5 billion; 
1992 : ECU 11.8 billion. 
From 1989 to 1994, EIB finance in favour of regional development amounted to ECU 59 
billion of which ECU 54 billion in Structural Fund zones (objectives 1, 2 and 5b) 
The EIB and the SMEs : 
In 1994, the EIB concluded global loans in a total amount of ECU 3.281 million 
compared with ECU 3.598 million in 1993. During the year 7 712 credits were granted 
on current global loans in an amount of 2.763 million (6 023 credits and 3.258 million in 
1993). 
60% of this amount was devoted to supporting 6 776 SMEs, nine-tenths of which 
employed less than 50 people and benefited from more than 60%> of the credits granted. 
About 70%) of these SMEs are located in regional development zones. 
Some 35%o of the credits relate to small or medium-sized investments in the infrastructure 
sector (environment, communications, energy) usually made by local communities. The 
balance consists of investment by SMEs to improve the environment and promote the 
rational use of energy. 
Finance granted in the Community by the EIB to support the competitiveness of 
enterprises amounted to : 
1991 : ECU 3.3 billion of which ECU 2.3 billion for 9 548 SMEs; 
1992 : ECU 2.6 billion of which ECU 2.1 billion for 7 223 SMEs; 
1993 : ECU 2.7 billion of which ECU 1.5 billion for 5 257 SMEs. 
1994 : ECU 1.8 billion of which ECU 1.7 billion for 6 776 SMEs. Italy (ECU 595 
million), France (ECU 947 million), Germany (ECU 342 million) and Belgium 
(ECU 116 million) have benefitted most from credits on global loans. In 
addition, the EIB supports investments of SMEs relating to environment or 
rational use of energy. 
40 
Since 1990, the EIB has provided significant support to the financing of SMEs. Thus 
nearly 36,000 SMEs have benefitted from credits in a total amount of over ECU 9.4 
billion, or some 45% of the financing granted to industry and services. Over 4/5 of 
them are enterprises employing less than 50 people and 97% less than 250. More than 
23,000 operations (ECU 6.2 billion in credits) relate to investments in the aided areas 
and some 13,000 projects outside these areas. 
The experience of the EIB in financing SMEs and its close relations with the European 
banking system led the European Council of Edinburgh (December 1992) and 
Copenhagen (June 1993) to ask it to strengthen its activities in this area. 
In the context of the growth initiative, the EIB was invited not only to accelerate the 
financing of infrastructure, and notably the trans-European networks, but also to help 
job-creating SMEs. 
2.1.1.2 The SME facility : subsidized loans for job-creating SMEs 
A mechanism for interest subsidies on budgetary resources of the European Union 
relating to ECU 1 billion in global EIB loans in favour of the SMEs was approved in 
April 1994 by the Council of Ministers64. An agreement was signed between the 
European Commission and the EIB on 14.6.1994 on the implementation by the latter 
of the interest subsidy mechanism. The Commission adopted a report on the 
implementation of this decision on 19.11.1994". 
This mechanism is open to SMEs with net fixed assets of a maximum of ECU 75 
million and with staff not exceeding 500 persons; however, at least 60%> of the 
beneficiaries will be SMEs with less than 250 employees and an annual turnover of 
a maximum of ECU 20 million or a total payroll under ECU 10 million. 
The interest subsidy of 2% per year is applied for 5 years on a maximum loan amount 
of ECU 30,000 per job created, which comes out at a subsidy of ECU 3,000 over 5 
years per job created. The payment will be made as from 1.8.1995, when the 
beneficiary has proved that the new jobs have been in existence for at least 6 months. 
The SME facility should allow 30,000 jobs to be created. 
After decision of the Council, this mechanism was implemented in September 1994 
and at the end of April 1995, 48% of the one billion of global loans had been allocated 
to some 2 100 businesses and more than 23 000 new jobs were planned. 96% of the 
volume of loans were granted to SMEs with less than 250 employees. The number 
of EIB intermediaries in the implementation of this mechanism varies by Member State 
from 1 to 25 In Italy). An information leaflet has been widely circulated, notably 
through the Euro-Info-Centres. The relevant Commission services are monitoring the 
implementation of this mechanism closely. 
64 
65 Council Decision 94/217/EC of 19.04.1994, OJ No L 107 of 28.04.1994, p. 57. 
COM(94) 434 final of 19.11.1994, report by the Commission on the implementation of the decision 
regarding the provision of Community interest subsidies on loans for small and medium-sized enterprises 
extended by the EIB to the SMEs under its temporary leading facility (the SME facility). 
41 
2.1.1.3. The European Investment Fund : loan guarantees granted to SMEs 
At the Edinburgh Council it was decided, in the context of the European growth 
initiative, to create a European Investment Fund aimed at granting loan guarantees for 
projects relating to the trans-European networks and for the SMEs. With a capital of 
ECU 2 billion subscribed by the EIB (40%), the Commission (30%) and some sixty 
financial institutions (30%), this instrument can extend guarantees for a total amount 
which can eventually reach rise to eight times its paid-up capital, or ECU 16 billion. 
Later, the EIF will be able to take shares in the capital of enterprises specializing in 
the financing of SME capital. 
The EIF focuses its attention on those areas where it can be complementary to existing 
sources of finance. It follows sound banking principles in offering two main types of 
financial products : 
financial guarantees : the level and extent of guarantees depend on the nature of 
the project; variations in the risks involved are reflected in differentiated rates of 
guarantee commissions. Guarantees may be provided not only to projects financed 
by EIF shareholders but also for those of third parties. In general, these guarantees 
will not cover more than half of the project cost and may be given in conjunction 
with other guarantors; 
equity : in the case of SMEs, the EIF will provide equity or quasi-equity only 
through competent intermediaries (indirect facility). The Fund could however take 
small direct participations in Trans-European Networks (TENs) projects during the 
start-up phase. During its two-year start-up period, the EIF's activities will consist 
of providing guarantees. It will take equity participations only after further study 
and a decision by the General Meeting. 
the initial ceiling on the overall commitments of the Fund has been set at 3 times 
its subscribed capital. This may be raised, by decision of the Fund's bodies, first 
to 5 times and then up to a maximum of 8 times subscribed capital once adequate 
reserves have been established. 
The Fund will not normally provide direct guarantees to individual SMEs. It will 
rather work through appropriate financial intermediaries in the Member States, offering 
guarantee lines to underwrite selected portfolios of SME projects or guarantees on the 
sources of funding used by the intermediaries for their SME loans (i.e. EIB global 
loans, bond issues). 
As of 2.2.1995, the Fund has approved 4 guarantee operations in favour of SMEs (in 
addition to 8 in favour of TENs), one of which has been signed. These SME lines, 
to with financial institutions in Portugal and France, amount to over ECU 165 million 
to be drawn down during the next 1-3 years. Further operations are under examination 
including with mutual guarantee schemes which would not only facilitate access to 
credit through guarantees but would also increase the volume of loans granted to 
SMEs. 
42 
2.1.2. SPECIFIC REGIONAL POLICY ACTIONS IN FAVOUR OF SMEs 
Aware of the role of the SMEs in achieving economic and social cohesion, the 
Commission is implementing a real policy of support to enterprise, targeting regional 
economic development. The 1988 reform has made it possible to strengthen action in 
favour of local development both in traditional forms and innovative forms of 
intervention. Article lc of the ERDF regulation66 in fact gives this fund a mission of 
"development of the endogenous potential of the regions for measures of promotion 
and support for initiatives of local development and activities of SMEs". 
This section concentrates on presenting the Commission's main guidelines for the 
programming period 1994-1999, supplementing earlier reports which have dealt 
exhaustively with the Community's major principles on structural action for the benefit 
of the SMEs, their instruments and their financing methods as well as the balance 
sheet for the period 1989-199367. 
2.1.2.1. The Community Support Frameworks 
Within the new Community Support Frameworks (CSF) and Single Programming 
Documents (DOCUP), on average 10% of the total resources of the ERDF are devoted 
specifically to measures dealing with the promotion and improvement of the economic 
environment centred on the SMEs. Given that the budgetary envelope of the ERDF 
has been doubled for 1994-1999, this percentage constitutes a virtual doubling in value 
relative to the period 1989-1993. This quantitative progress is largely due to the 
efforts of the Commission during negotiations. The increase is certainly more tangible 
in objective 2 (industrial decline) and 5b (rural) areas - where the percentage is 
between 15 and 20% on average - than in the objective 1 areas. In these areas it does 
not appear to exceed 8% except in the case of Portugal, thanks mainly to the 
programme to modernize the Portuguese economic fabric (notably PEDOP II), the 
commerce modernization programme (PROCOM) and the programmes of rural and 
local development and regional aid, and in the cases of French and Belgian Hainaut, 
Flevoland and the United Kingdom regions concerned (notably the Highlands and 
Islands and Merseyside). It should be noted that the programme in favour of Greek 
industry includes sub-programme for SMEs. 
Operators can obtain information on the operational programmes either from the 
European Commission or directly from the competent national or regional authorities, 
or from the Euro-Info Centres. 
66 Council Regulation (EEC) No 2083/93 of 20.07.1993, OJ No L 193 of 31.07.1993, p. 34. 
67 COM(94) 221 final of 07.09.1994 and 5th annual report on the implementation of the reform of the 
Structural Funds COM(95) 30 of 20.03.1995 
43 
ERDF interventions cover two broad categories of action : 
support to the encouragement of demand for services by SMEs through co-
financing of national or regional aid procedures with a regional aim : subsidies to 
investment that creates jobs, youth employment, equipment forming part of the 
context of modernization of a firm or of environmental protection are thus the 
principal measures co-financed by the Union. Small economic infrastructure 
projects (industrial zones, technology parks, small business parks, enterprise 
facilities in general) can also be supported; 
support to the supply of services to SMEs consistent with creating, developing or 
supporting structures improving their non-material working environment. 
Hence, finance is available for arrangements responding to the principal needs 
expressed by the SMEs. 
Advice and innovation : technological centres, management shops, Enterprise and 
Innovation Centres, certification and standardization bodies, the "enterprise" 
services of Chambers of Commerce and of Industry, consultancy organizations; 
Financing : financial engineering mechanisms68 in the most varied forms : 
guarantee funds, start-up capital, risk capital, participatory loans, mutual guarantee 
societies, hire-purchase, factoring; 
Internationalization : support measures for international actions by SMEs under 
collective (group participation in fairs and shows, common export services) or 
individual form (bringing a product up to standard or packaging a product, 
specialized advice or market studies). 
The guidelines advocated by the Commission clearly give preference to interventions 
in favour of the offer of services, by insisting on the need for extended integration : 
advice and accompaniment do in fact considerably improve the rate of survival of 
newly created SMEs and the performance of developing SMEs. So they are in the end 
closely linked to access of SMEs to credit and its cost, the latter depending directly 
on the appreciation of the risk run by the financing bodies. 
2.1.2.2. Community initiatives 
The Commission uses its right of initiative to propose several "Community Initiatives" 
specially geared towards the SMEs and to which they can have access via the relevant 
authorities at regional or national level, charged with collecting and selecting projects 
covered by the general guidelines of the operational programmes. 
See the guide to financial engineering techniques used in the context of regional policies, available on 
demand from the European Commission. 
44 
The SME Community initiative69, allocated ECU 1 billion for the period 1994-99 -
including ECU 800 million for objective 1 regions, is naturally linked with all the 
enterprise actions under the Integrated Programme in favour of SMEs and the Craft 
Sector, always according to the methods and procedures of the Structural Funds. This 
initiative notably groups together the earlier initiatives TELEMATIC, PRISMA and 
STRIDE. 
Considering, on the one hand, the potential creation of jobs and the competitiveness 
gains of SMEs and, on the other hand, the particular characteristics of these enterprises 
in the objective 1 regions, the aim of the Community SME initiative, in accordance 
with the guidelines of the White Paper on Growth, Competitiveness and Employment, 
is to contribute to the internationalization of the SMEs and promote improvements in 
their level of competitiveness. 
For this purpose, seven priority areas have been identified : improvement of production 
and organization systems, environment and rational use of energy, cooperation with 
research centres, access to new markets, cooperation networks, strengthening vocational 
qualifications, improved access to the financial system. 
This initiative must contribute, in a significant way, to making the SMEs of the Union 
more competitive by improving their environment and their know-how. The proposals 
submitted by the Member States contain measures both in the area of cooperation 
between SMEs - notably targeting their internationalization and better access to 
domestic markets as well as to public markets - and in subcontracting, adoption of 
total quality strategy, cooperation with research centres, access to new technologies, 
marketing, finance, better organization and management of enterprises and ' also 
management of the environment. The programmes, which target SMEs in the 
industrial and service sectors, explicitly include the commercial sector for some, with 
specific programmes as for Spain and Portugal. They also contain proposals targeting 
micro-enterprises (Portugal) or small enterprises (Ireland). 
The 12 other Community initiatives (INTERREGII, LEADER II, REGIS II, EMPLOI, 
ADAPT, RECHAR II, RESIDER II, KONVER, RETEX, TEXTILE-PORTUGAL, 
URBAN and PESCA) ;on which the Communications to the Member States were 
published on 1 July 199470 can also contribute to the development of the SMEs. For 
example: 
REGIS : which is principally concerned with the diversification of the productive 
fabric of the most peripheral regions of the European Union in a perspective of full 
participation of their SMEs in the single market. 
RETEX: which is designed to assist enterprises in the textiles sector in the regions 
most affected by international competition by improving their competitiveness with 
a view to the full participation of SMEs in the large internal market. 
69 
70 OJ No C 180 of 01.07.1994, pp. 10-14. 
OJNoC 180 of 01.07.1994. 
45 
URBAN : with the objective of revitalizing degenerated urban areas by a global 
and coordinated strategy. The programmes proposed often contain measures 
intended to support and create jobs by encouraging the establishment of industrial 
and service SMEs, notably commercial ones with a view to ensuring 
satisfactory commercial facilities for the population. 
ADAPT : which targets adaptation to industrial change and improving the 
competitiveness of firms (see point II.2.1.3.2). The Commission attaches particular 
importance to the coordination of this relevant initiative of the European Social 
Fund with the SME initiative. 
2.1.2.3. Innovative forms of intervention 
Innovative forms of Community intervention include global subsidies and pilot 
schemes. 
a) The global development subsidy introduced as from 198871 is granted by the 
Community to an existing or newly established body, described as an "intermediary 
body", for carrying out a territorial development strategy which it has designed, 
formalized, negotiated with the Commission in the context of a contractual 
agreement, and which it will implement under its own responsibility. 
Article 6 of the ERDF regulation72 states that this instrument should preferably be 
used in the context of the CSFs, in favour of local development initiatives in order, 
notably, to establish a propitious environment for the development of SMEs. 
This financing technique experienced a relatively sustained spread during the 
period 1988-1993 when 31 agreements were established for a total combined 
amount of ECU 687 million. 22 of these subsidies have involved intermediary 
bodies in the Italian Mezzogiorno, largely backing up support services to the SMEs 
of these regions. The new programming period should see increased development 
of this form of intervention, notably in Italy and Spain where 9 agreements are 
currently being prepared compared with two in the preceding period. 
b) Community pilot schemes include tested programmes: 
The "European Enterprise and Innovation Centres" (EEICs), launched in 1984 are 
public-private partnership structures for identifying and selecting entrepreneurs and 
projects which offer the most complete range of services to enterprise and 
accompany the firm during the start-up period. Today the EEICs, of which 70 are 
fully operational on Community territory, have already contributed to the creation 
of more than 2,800 enterprises representing 16,000 direct jobs. This network is 
grouped into the "European Business & Innovation Centres Network" (EC-BIC). 
71 
72 Council Regulation (EEC) 2081/93 of 20.07.1993, OJ No L 193 of 31.07.1993, p. 9 and 
Council Regulation (EEC) 2082/93 of 20.07.1993, OJ No L 193 of 31.07.1993, p. 25. 
Council Regulation (EEC) 2083/93 of 20.07.1993, OJ No L 193 of 31.07.1993, p. 37. 
46 
On inter-enterprise cooperation, Europartenariat - organized jointly by the Commission 
services responsible for enterprise policy and regional policies - constitutes an initiative 
resolutely centred on SMEs. In effect, it establishes contacts between SMEs in the 
"host region" (Ireland in 1988, Andalusia in 1989, Wales in 1990, Portugal and the 
new Lander in 1991, Greece and the Mezzogiomo in 1992, North-East France and 
Scotland in 1993, Poland and 7 "Atlantic Corniche" regions of Spain in 1994) and the 
SMEs of other regions of the Community, so that they can conclude agreements at the 
technical, commercial and financial level : in this way several thousand enterprises 
have already established mutual relations through the Europartenariat, resulting in 
many cooperation agreements. 
This tried and tested method is also used in the context of more sectoral or 
regionalized operations, like the "DOM-Interpartenariat" in June 1994, also organized 
into an inter-service partnership. 
Other inter-enterprise pilot schemes target : 
groupings of regional producers including craft businesses and linking them with 
actors in the distribution sector (marketing of quality regional products); 
cooperation between large enterprises and networks of sub-contractors, including 
those involved in large infrastructure projects, as well as the support of industrial 
clustering (Eurospin). 
lastly, the new proposed guidelines on pilot projects (Article 10 of the ERDF 
Regulation) favour in a general way supporting the development of the latent 
potential of the regions, while stressing that enterprises, and in particular SMEs, 
should have access to R & DT and to the possibilities offered by the information 
society. The pilot projects concerned with interregional cooperation will stress the 
provision of common resources to give SMEs in the regions better access to the 
Single Market, in particular by supporting the supply of common services and their 
concerted actions on international promotion. 
2.1.3. THE EUROPEAN SOCIAL FUND AND THE SMEs 
2.1.3.1. Community Support Frameworks 
Small and medium-sized enterprises are recognised as being a major source of new 
employment. The creation of new SMEs and the development of existing SMEs is 
crucial in the search for new jobs. The Commission is therefcre paying particular 
attention to such issues as the contribution of different kinds of enterprises to job 
creation and the encouragement of entrepreneurial activity to stimulate the creation of 
more SMEs. 
47 
The far-reaching revision of the ESF regulation in July 1993" has made the ESF a 
much more flexible and policy driven instrument. The Community Support 
Frameworks now agreed or proposed in relation to the various objectives pursued by 
the Structural Funds reflect a more coherent and strategic approach to human resources 
development and improvement of the labour market. Account has been taken of the 
three priorities for the ESF formulated by the Commission in the White Paper on 
Social Policy74 : 
improving access to and the quality of education and initial training, and boosting 
human potential in research, science and technology; 
increasing competitiveness and preventing unemployment by adapting the 
workforce to the challenge of change through a systematic approach to continuing 
training; 
improving the employment opportunities of those exposed to long-term 
unemployment and exclusion through the development of a package of measures 
which form a pathway to integration. 
Emphasis has been put on establishing or improving in-firm training systems including 
the drawing up of company training plans, management development and mechanisms 
to anticipate labour market trends. The particular difficulties faced by SMEs in 
addressing their training needs in-house has also been highlighted and encouragement 
given to improving the quality and relevance of external training supply and to the 
promotion of distance training techniques to open up cost efficient and flexible training 
possibilities. In Greece, for example, decentralised accredited training centres are 
being set up to provide continuing training. 
Thus both the important role to be played by SMEs in generating jobs and the 
particular difficulties they face in developing their personnel are widely recognised. 
The promotion of a more systematic approach to continued training is planned to make 
up approximately ECU 6 Billion during the period 1994-1999 or some 14% of total 
Social Fund allocations. Actions are to a large extent, but not exclusively, 
concentrated in regions lagging behind, in terms of general economic development, or 
seriously affected by industrial or rural decline (Objectives 1, 2 and 5b). Other 
measures are applied throughout the Union with a view to facilitating the adaptation 
of workers to industrial change and to changes in production systems (Objective 4 and 
Community Initiatives). 
The new Objective 4 of the European Social Fund intends to "facilitate the adaptation 
of workers of either sex, particularly those threatened with unemployment, to industrial 
change and to changes in the production systems". The actions aim to take into 
account specifically the particular needs of small and medium-sized enterprises. 
73 Council Regulation (EEC) 2084/93 of 20.07.1993, OJ No L 193 of 20.07.1993, p. 39. 
74 COM(94) 333 of 27.07.1994. 
48 
There are three main areas of action : 
the anticipation of labour market trends and vocational training requirements; 
vocational training and retraining, guidance and counselling; 
assistance for the improvement and development of appropriate training systems. 
Objective 4 actions are applicable right across the European Union. The approach is 
"horizontal" rather than favouring a particular economic sector. Objective 4 also 
promotes the "extended partnership" approach, that is the involvement of the relevant 
economic and social partners, and training bodies. The level and degree of partner 
involvement depends on the institutional practice in the respective Member States. 
One of the common measures that Member States have decided is to develop the 
capacity of managers within SMEs to manage change (new technologies, processes, 
markets). Another main theme developed by Member States is the reskilling of 
workers whose skills have become obsolete. This leads to the development of training 
programmes that support "multi-skilling" of workers and their active participation at 
several points of production and organization within an enterprise. 
The improvement of training systems within firms is also emphasized. Certain 
countries, for example, have decided to promote mutual cooperation between firms, 
with the aim (amongst others) of developing training plans for the workers. 
If the concept of anticipation, and the involvement of at least some big companies is 
developing in France and Germany, the approach is less advanced in other Member 
States. France, for example, is intending to spend about ECU 228 million of a total 
Objective 4 allocation of ECU 300 million on training workers within enterprises. 
70% of this allocation for training (ECU 160 million) will be aimed at workers within 
SMEs. Precise spending allocations for most countries are not yet available. It is, 
however, expected that SMEs will benefit from a substantial proportion of the 
resources. 
The total Community expenditure for Objective 4, outside of regions lagging behind 
(Objective 1), is just over ECU 1 billion for the period 1994-1996. At global level, 
it is foreseen that private enterprise, Member States and the Community will each 
contribute one-third to the financing of measures (thus multiplying the one billion by 
three). 
49 
2.1.3.2. The Adapt Community Initiative 
ADAPT is a new trans-national Community Initiative specifically designed to help the 
labour force respond to the changing needs of the labour market. ADAPT focuses on 
developing companies' human capital through training and qualification schemes, thus 
helping to increase the competitiveness of industry, services and commerce. The 
beneficiaries of ADAPT will, to a great extent, be small and medium-sized enterprises 
and their labour force. Under ADAPT four main fields of action should be retained 
training, counselling and guidance; 
forward planning, promotion of networking and new employment opportunities 
(employment and industrial change, qualification and training needs); 
adaptation of support structures and systems; 
information, dissemination and awareness raising. 
The actions of ADAPT will be complementary to those of the SME Community 
initiative. The SME initiative, like ADAPT, is fundamentally about promoting 
adaptation to industrial change, however, the SME initiative's focus is on the 
introduction of new production and organisation systems into enterprises (see point 
II.2.1.2.2.). 
During the first half of 1995 each Member State should have the framework of 
national programmes in place. Project selection, which is the responsibility of the 
national governments, should take place during the second half of 1995. 
There is a total of ECU 1.4 billion available for the ADAPT Community Initiative 
financing over the period 1995-1999. Of this money, ECU 400 million will be 
reserved for actions within regions lagging behind (Objective 1). Measures under 
ADAPT are co-financed by the Community: with the "additional" money of Member 
States and private business, the global amount spent on ADAPT should be at least 
triple. By the very nature of ADAPT a large proportion of expenditure should go to 
the benefit of SMEs. 
50 
2.1.3.3. Local development and employment 
Community actions in favour of local development and employment often concern 
SMEs, particularly micro-enterprises and craft businesses73. 
At the June 1994 European Council particular stress was laid on local development and 
the role of the SMEs, micro-enterprises and craft businesses in the development of 
employment76. This led the Commission, at the Essen European Council in December 
1994, to present an inventory of Community action to support local development and 
employment77. This report presents the tools made available by the European Union 
together with an evaluation of the use of these instruments. It sets out proposals to 
improve the effectiveness and coherence of Community actions based on 
experimentation, the transfer of good practice and the strengthening of European 
information and cooperation networks. Finally, it proposes initiating debate and 
exchange of views at the European level with a view to re-establishing the partnership 
between the Member States and the Union to benefit local initiatives. This report was 
complemented by a survey within the European Union on local development and 
employment initiatives78. 
Lastly, on the basis of a Commission proposal79, The Essen European Council (in 
addition to the decisions taken by the two preceding Councils in Brussels and Corfu) 
defined five broad areas of priority actions on employment80 based on the White Paper 
on Growth, Competitiveness and Employment, which were intended to assist SMEs to 
develop, viz.: 
1. improving employment opportunities for the labour force by promoting investment 
in vocational training; 
2. increasing the employment-intensiveness of growth, in particular by: 
more flexible organization of work in a way which fulfils both the wishes of 
employees and the requirements of competition; 
a wage policy which encourages job-creating investment; 
the promotion of initiatives, particularly at regional and local level, that create 
jobs which take account of new requirements, e.g. in the environmental and 
services spheres; 
75 A detailed presentation of the ELI and ELDA is contained in report COM(94) 221 of 07.09.1994, point 
III.5. 
76 EC Bulletin 06/1994, point 1.6, p. 10. 
77 SEC(94) 2199 of 19.12.1994. 
78 SEC(95) 564 of 04.04.1995. 
79 "Actions to convert growth into employment" - Brussels action plan (phase 2) of 28.11.1994. 
EC Bulletin 12/1994, point 1.3. 
i 51 80 
3. reducing non-wage labour costs extensively enough to promote the engagement of 
workers, particularly non-skilled workers; 
4. improving the effectiveness of labour-market policy; 
5. measures to help groups which are particularly hard hit by unemployment, such as 
young people, the long-term unemployed, older employees and unemployed 
women. 
To implement these conclusions, the Commission has recently forwarded to the 
Council a communication on establishing a European instrument to support and 
promote employment (ESSEN), which, inter alia, deals with supporting the 
development of local development and employment initiatives, including the role of 
micro-enterprises and "économie sociale" enterprises80A. 
The Essen Initiative recognizes the need to stimulate the creation of jobs in the 
following areas, which will partly be taken up by SMEs : home help services, child 
care, new information and communication technologies, assistance to young people 
facing difficulties, better housing, security, local public transport services, revitalisation 
of urban public areas, local shops, tourism, audiovisual services, the cultural heritage, 
local cultural development, waste management, water services, protection and 
conservation of natural areas, and the control of pollution. 
2.1.4. THE EAGGF-GUIDANCE AND SMEs 
The interventions of the EAGGF-Guidance section relate to objectives 1,5b and 5a. 
As regards objective 1 regions, the EAGGF Guidance Section intervenes principally 
in the form of operational programmes, supported by one or more funds, and 
Community initiatives, including LEADER. The commitment appropriations for 1993 
are ECU 866 million for operational programmes (excluding the amounts allocated to 
objective 5a horizontal measures). 
As regards the next period, it is still too soon to identify the measures to assist SMEs, 
since a large number of operational programmes have yet to be approved. 
The structural appropriations for LEADER II81 amount to ECU 1.4 thousand million, 
which includes 900 million for objective 1 regions for 1994-1999. As negotiations are 
currently in progress, it is not possible to indicate the share that will be reserved for 
the SMEs. However, it is probable, that as in LEADER I, the SMEs will be 
beneficiaries of the interventions on a large scale. 
80A COM(95) 250 of 13.6.1995. 
81 OJ No C 180 of 01.07.1994, p. 48. 
52 
As to objective 5b, it covers 50 areas in .9 Member States. It covers 5% of the 
population and 17% of the Community's territory. 73 operational programmes have 
been approved for this objective, amounting to ECU 2 607 million. On 31 December 
1993 all the appropriations for this objective had been committed. A detailed analysis 
of Community actions under objective 5b for the period 1989-1993 is contained in the 
report COM(94) 221 of 7 September 1994 (1.1.1.). The appropriations available for 
objectives 5b for the next period - 1994-1999 - amount to ECU 6 667 million. This 
budgetary envelope covers a population of 28.523 million inhabitants, or 8.24% of the 
population of the Union. It should be noted that the population in these areas has 
grown by 72% compared with the coverage for the period 1989-1993. The 
programming stage is not yet completed for these zones, so the measures in favour of 
SMEs cannot yet be identified. 
In the context of objective 5a, EAGGF-Guidance intervenes to accelerate the 
adaptation of agricultural structures and to improve the conditions of processing and 
marketing of agricultural and forestry products, viz.: 
a) aids to modernize agricultural holdings 
Community regulations provide for the possibility of granting aids to farmers or groups 
of farmers. In 1993 the commitments of the European Agriculture Guidance and 
Guarantee Fund (Guidance Section) were of the order of ECU 1 059 million and 
covered the cofinancing of three sectors mainly, viz.: 
investment aids, at the rate of 50 000 new farm workers each year, promoting 
diversification of activities and more care for the environment; 
compensatory payments in badly affected regions affect over 1.2 million 
agricultural workers and 55% of the Union's territory; 
installation and investment aids for young farmers (indispensable for making the 
farm population younger, with an average of 20 000 installations per annum). 
These measures have been successful when applied to viable holdings and young 
farmers, and in the countries which have been using them only a little while, such as 
Spain and Portugal for modernizing their agricultural sector. 
53 
b) aids for modernizing the processing and marketing of agricultural and forestry 
products 
Two Regulations provide for Community support for investment in the processing and 
marketing of agricultural products (Regulation (EEC) No 866/90) and forestry products 
(Regulation (EEC) No 867/90). During the period 1991-1993, some 65% of projects 
co-financed under these Regulations related to SMEs, which obtained nearly 58% of 
the total EAGGF assistance of ECU 1 217 million. While SMEs form the majority 
of the beneficiaries as regards the number of projects, their projects are smaller and 
consequently the EAGGF assistance is proportionally less for SMEs than for large 
enterprises. In addition, the size of the projects presented by SMEs varies appreciably 
from one Member State to another, from 33% of the projects in Denmark to 100% in 
Spain and Greece, for example. The average Community contribution per project 
carried out.by SMEs was ECU 304 600 (ranging from ECU 65 649 in the Netherlands 
to ECU 559 838 in Ireland). 
2.1.5. THE COMMON FISHERIES POLICY AND SMEs 
The fisheries and aquaculture sector is essentially made up of SMEs. Thus 95% of the 
Community fleet consists of vessels under 24 m, 65% under 12 m, the latter employing 
40% of the labour force, with 1 or 2 seamen per boat82. Likewise, according to a 
recent study carried out on behalf of the European Commission83, the fisheries and 
aquaculture products processing industry employs more than 90,000 people in some 
2240 establishments or a Community average of 40 people per enterprise. 
The SMEs are thus the principal beneficiaries of Community structural interventions 
in favour of fisheries. Since January 1994, the structural side of the common fisheries 
policy (CFP), forms an integral part of the Community Structural Funds arrangements, 
the two preceding financial instruments84 having merged to give birth to the Financial 
Instrument for Fisheries-Guidance (FIFG)85. As for the other Structural Funds, the 
principle of multi-annual global programming is the rule, this programming forming 
the subject of negotiations in the context of partnership with the Member States. 
82 
83 
84 
85 Source: Index of the Community fleet. 
Statistical study of the fisheries and aquaculture product processing sector in the European Community, 
April 1993. 
Council Regulation (EEC) 4028/86 and Council Regulation (EEC) 4042/89. 
Council Regulation (EEC) 2080/93 of 20.07.1993, defining the criteria and conditions for Community 
interventions for structural purposes in the fisheries and aquaculture sector as well as the processing and 
marketing of their products. 
54 
Respecting the requirements of the Common Fisheries Policy, in particular the fleet 
restructuring objectives defined in the Multi-annual Guidance Programmes (MGP), the 
FIFG participates in the financing of investments and actions in the following areas: 
restructuring and renewal of the fishing fleet; 
modernization of the fishing fleet; 
improvement of conditions of transformation and marketing of fisheries and 
aquaculture products; 
development of aquaculture and development of coastal marine areas; 
equipment of fishing ports; 
market research. 
The FIFG also contributes to the implementation of measures for the adaptation of 
capacities and to the setting up of temporary associations of firms and mixed 
companies. 
Investments eligible for the FIFG relate, in particular, to operating conditions on board 
ship, improved selection of techniques and fishing tackle, improvement of product 
quality, bringing product hygiene, health and safety in the workplace and 
environmental protection up to Community standards. 
Community participation can reach 75% of public expenditure in the regions covered 
by Structural Funds objective 1 and 50% in the other regions. These percentages are 
50 and 30% respectively for productive investments. The FIFG has a financial 
envelope of some ECU 2.7 billion for the period 1994-1999. 
It is also appropriate to highlight the adoption of the Community initiative PESCA86 
supplementing the FIFG. The originality of PESCA resides in the fact that it aims to 
create very targeted projects to aid the fisheries sector to change successfully and to 
revitalize the socio-economic fabric of the coastal zones. The PESCA initiative has 
an allocation of ECU 250 million (of which ECU 125 million for the objective 1 
regions) for the period 1994-1999. 
Finally, at the request of the Council, the Commission has presented a report on the 
socio-economic accompaniment measures linked to the restructuring of the fisheries 
sector87. 
86 
87 Notice to the Member States published in OJ no C 180 of 01.07.1994, p. 1. 
COM(95) 55 of 20.03.1995. 
55 
2.1.6. COORDINATION BETWEEN ENTERPRISE POLICY AND THE UNION'S 
FINANCIAL INSTRUMENTS 
As regards the new financial instruments of the Union, that is, the EIB's subsidized 
loans for SMEs and the European Investment Funds, the enterprise policy services 
cooperate with the financial affairs services and the EIB so that the SMEs can take full 
advantage of these opportunities. 
The services dealing with enterprise policy collaborate with the services responsible 
for the Structural Funds in the context of the implementation of the Community 
Support Frameworks (1994-1995) and the operational programmes that accompany 
them as well as the Community initiatives, in particular the SME and ADAPT 
initiatives in order to make support for SMEs effective and visible. In this context, 
they participate in inter-service work as well as negotiations with the Member States. 
They are members of the monitoring committees for the programmes of greatest 
interest to the SMEs like the programmes relating to industry and to services (Ireland, 
Italy, Greece and Portugal) or local development (Ireland, Portugal) and naturally the 
same will apply to the programmes relating to the SME initiative. 1995 will be 
marked by the completion of negotiations with the Member States with a vi-ew to 
adopting operational programmes relating to the SME and ADAPT initiatives which 
should have a major impact on the development of the SMEs. 
While during the 1989-1993 period substantial amounts were provided to support 
industry and services in the Community Support Frameworks (CSFs) (about 20% of 
the financial envelope), the SMEs did not always benefit fully88. The new CSFs 
adopted for the period 1994-1999 accord greater importance to the development of the 
SMEs. The operational programmes already adopted provide in fact for significant 
amounts in favour of the SMEs, sometimes proposing SME sub-programmes (Greece), 
or a programme for commerce (Portugal). In future the monitoring committees should 
ensure the concrete implementation of these measures in favour of SMEs. 
In conclusion, closer cooperation between the Commission services has been 
established which allows the SME dimension to be better taken into account in the 
programmes. It allows the interventions to be better coordinated to strengthen their 
coherence, their visibility and their effectiveness. Nevertheless, because of the 
decentralization of the management of the programmes, the role of the Commission 
is limited, once the programmes have been adopted, to monitoring and checking .on 
their implementation. So, by virtue of the partnership, the Member States, the regional 
and local authorities, and the economic and social partners need to be made aware of 
the importance of the role of SMEs in the achievement of economic and social 
cohesion. 
In its report on the coordination of Community actions in favour of SMEs and craft businesses of 
07.09.1994, the Commission analyzes the way in which the SMEs have been able to benefit from the 
support of the Structural Funds and puts forward a certain number of recommendations to increase and 
improve the use of these funds by the SMEs, COM(94) 207, point 1.1.5. 
56 
2.2 RESEARCH AND TECHNOLOGICAL DEVELOPMENT POLICY AND 
THE SMEs 
Increased efforts have been made in the context of the 4th Framework Programme for 
Research and Technological Development89 to facilitate the participation of SMEs in 
Community research programmes, thanks to close coordination between enterprise 
policy and RTD policy. This chapter, in addition to a retrospective analysis of the 
participation of SMEs in the 3rd Framework Programme, presents the significant 
innovations introduced in the 4th Framework Programme to facilitate participation by 
SMEs. 
2.2.1. SME DEFINITION 
While there is no formal definition of SMEs in the field of the Commission's Research 
Programmes, the definition used for the CRAFT action under the third Framework 
Programme (FP III) is maintained as a provisional definition to determine the 
eligibility of enterprises for the SME specific "technology stimulation" measures 
implemented under the fourth Framework Programme (FP IV). According to this 
provisional definition, an enterprise is considered as an SME if it satisfies the 
following conditions : 
has no more than 500 employees; 
has an annual turnover of no more than ECU 38 million; 
is no more than 1/3 owned by an organisation larger than an SME (based ort 
turnover and number of employees) unless it is a financial investor such as a bank 
or venture capitalist. 
In the future, this provisional definition could be revised in order to introduce a 
coherent definition of SMEs in all Community programmes. In particular, the 
Commission will closely monitor the participation of SMEs in the category of less than 
250 employees in order to determine whether its programmes take sufficient account 
of the needs of these enterprises, which represent 99.8% of all enterprises in the 
European Union. In fact, the CRAFT Programme has shown that 90% of SME 
participants have fallen into the category of less than 250 employees. 
89 4th FPRTD, OJ No L 126 of 18.05.1994, p. 1. 
57 
2.2.2. OVERVIEW OF SME PARTICIPATION UNDER THE THIRD 
FRAMEWORK PROGRAMME 
2.2.2.1. Statistics 
Table No 2 gives a summary of participation rates by SMEs in the programmes of FP 
III and the corresponding EC financial contribution on a programme by programme 
basis. Overall, the total number of SMEs participating was 6 368, which represents 
a budgetary commitment of ECU 1 035 million, equal to 22% of the total Community 
financial commitment 
The data in table No 2 must be used with caution since they include all enterprises 
with less than 500 employees irrespective of any other criteria for turnover or 
ownership (i.e. subsidiaries of large companies are included). 
58 
Table No 2 
SME participation in programmes of the 3rd RTD Framework Programme' 
Number of SME 
participations* % of total 
participations* EC fînancial 
commitment 
(MECU) % of total EC 
financial 
commitment 
Industrial&Materials Technologies:BriteEuram II 
- Industrial and focused fundamental research 
- CRAFT (Step 1) 
- CRAFT (Step 2) 
- Feasibility Awards 
ESPRIT 
RACE 
Telematics and TIDE 
Non Nuclear Energy 
Measurement and Testing 
Agriculture and Agro-Industry 
Aeronautics 
Marine S&T 
Environment 
Biotechnology 
Nuclear Fission 
Biomedicine and Health 
Human Capital 3427 56% 219 
652 
1304 
1203 
268 
1250 
585 
411 
341 
44 
59 
37 
52 
80 
20 
22 
7 
33 24% 
95% 
70% 
100% 
27% 
41% 
20.3% 
17% 
13% 
10% 
9% 
7% 
3% 
2% 
2% 
1% 
<1% 
* The same SME participating in two different projects is counted as two participations 139 
5 
67 
8 
459 
185 
86 
49 
5 
6 
2.5 
7 
10 
2 
1 
2 
2 30% 
24% 
100% 
100% 91 
100% 
31% 
34% 
23.6% 
21% 
12% 
3% 
4% 
7% 
3% 
1% 
3% 
1% 
1% 
Source: Directorate-General for RTD. 
90 Statistics for contracts signed up to 01.11.1994. 
Although most RTD work is carried out by R&D performer organisations, the results are entirely for the benefit of the SME proposers. 
59 
2.2.2.2. BRTTEEURAM 
a) CRAFT and Feasibility Awards 
Within the Brite-Euram programme (Industrial and Materials Technologies) the 
Commission introduced two SME specific schemes, Feasibility Awards (1989) and 
CRAFT (1991) in order to increase both quantitatively and qualitatively SME 
participation in the Framework Programme. Feasibility Awards were aimed at SMEs 
with RTD capacity who wished to prepare themselves to take a major or leading role 
in a large multi-partner project, while CRAFT targeted SMEs with little or no RTD 
means, enabling them to engage third party organisations with adequate RTD means 
to carry out RTD work on their behalf. 
The total figures for Brite Euram in table 2 have been broken down to show the effect 
of the SME specific actions. Furthermore, when normalised to the size of the budget 
available (i.e. EC budgetary commitment) the participation figures reveal the strong 
multiplier effect resulting from the SME specific nature of the actions. 
For CRAFT Step 1, the 1304 SME participations correspond to 391 outline proposals 
selected for expansion, 83% of which followed through with a full research proposal. 
Altogether, a total of 165 Step 2 CRAFT (Co-operative research) proposals were 
selected for funding involving, as indicated, over 1200 SMEs. This achievement of 
CRAFT is all the more notable since the greater majority of these SMEs (80%) are 
total newcomers to EC RTD with 50% having no previous RTD co-operation 
experience at all. 
The CRAFT action has made it possible to triple the number of SMEs participating 
in the BRITE-EURAM programme. The nature of the "co-operative research" projects 
supported under CRAFT has made it particularly popular with traditional industrial 
sectors such as textiles, materials processing, leather, mechanical engineering, 
construction, or wood and furniture. Many of the projects tackle problems to do with 
the modernisation of production and processes via adaptation of existing technologies. 
Given the profile of the types of companies thus involved, the success of CRAFT is 
owed to a sustained information dissemination and SME stimulation campaign which 
was implemented largely via a European wide network of officially appointed CRAFT 
National Focal Points (NFPs). Apart from ad-hoc focused SME stimulation actions 
conducted on a sectoral/transnational basis, the NFPs and their associated sub-networks 
have acted as decentralized sources of information and advice responding to specific 
requests as well as undertaking promotional activities on their own initiative, all aimed 
at helping SMEs in the process of setting up and submitting proposals. 
60 
Feasibility Awards recipients and all other SME participations in the various specific 
programmes listed mostly represent the high-tech end of the SME population. While 
such SMEs tend to be better equipped and informed regarding EC RTD opportunities, 
they still suffer from disadvantages of scale when compared to large companies. In 
fact, a study carried out in the context of the BRITE-EURAM programme revealed 
that SMEs derive a lot less benefit from participating in collaborative industrial 
research projects than large companies or SME subsidiaries of large companies. This 
has had clear implications for the type of improvements that have been made in the 
SME specific actions to be implemented under FP IV. 
Both these schemes in their present forms have come to an end in 1994 as the Third 
Framework Programme (FP III) draws to a close and the Fourth Framework 
Programme (FP IV) comes on-stream. However, this changeover between framework 
programmes marks an important milestone for SME specific research actions. Based 
on the success under Brite-Euram II of the CRAFT action, the decision has been taken 
to deploy a new improved CRAFT action, which integrates the Feasibility Award 
concept, to all specific programmes of industrial relevance under FP IV (see point 
H.2.2.3.). 
b) Concrete examples of typical CRAFT projects in BRITE-EURAM H 
"Obtaining smooth ceramic glazes with improved wear resistance and 
hardness" 
Réf. CR - 1001-91 
This project has been running since February 1993. Its objective is to develop 
new formulations for glossy and mat ceramic floor tile glazes with improved 
hardness and abrasion resistance, thereby reducing their dirt retention 
characteristics. A total of eight SMEs are involved (2 German, 2 British, 2 
Spanish, 1 Irish and 1 Italian), six of which are involved in manufacture and 
distribution of ceramic tiles, one is a glaze manufacturer and one is involved in 
construction. Two research centres, one in Belgium and one in Spain, are 
carrying out the research work for the SME proposers. 
"Development and Characterisation of Surface treatments eliminating 
nickel-induced allergies" 
- Ref. CR - 1076-91 
This project, which has been running since December 1993 is developing a 
procedure for coating the surface of nickel to avoid the allergy problems nickel 
causes when it cornes in contact with the skin. The project, which is of 
particular relevance to the jewellery and watch making industries, involves a 
total of 14 SMEs from three countries (7 French, 2 Spanish and 5 Italian). 
Eight of these SMEs are electro-platers, two are instrumentation manufacturers, 
one is a material supplier and three are jewellery makers. Three research 
organisations (one each in France, Spain and Italy) are carrying out the research 
on behalf of the SMEs. 
61 
2.2.2.3. Research into information and telecommunications technologies (ESPRIT) 
The Information Technology programme ESPRIT III, with a budget of ECU 1,532 
million for the period 1991-1994, covers the following areas: micro-electronics, 
advanced treatment of, information, calculation and high performance networks, 
advanced information systems for the firm and the initiative on micro-processor open 
systems, integrated computer-assisted production and, finally, basic research. 
a) Implementing ESPRIT m 
The RTD actions have been implemented through some 710 projects carried out by 
consortia grouping together large, medium-sized or small enterprises as well as 
universities teams or research centres. About 920 separate SMEs, belonging to 
different Member States, have participated. About a third of these SMEs took part in 
more tan one project. They carry out about 31% of the total of the relevant work of the 
programme. The various efforts made by the programme in favour of the SMEs have 
been crowned with success, because this rate of participation is growing rapidly 
compared to that obtained during the previous phase of the programme (ESPRIT II, 
ECU 1,600 million, 1987-1991) when it was 21%. 
The Information Technologies Programme plays an essential role vis-à-vis SMEs 
wishing to carry out an RTD in information technologies or to have access to results 
at the cutting edge of technology. Besides the financial aid contributed, the SMEs 
participate in consortia uniting the required critical niass at the level of size and 
necessary competence. They benefit from a rigorous system of evaluation and piloting 
of projects which assures them of the validity of the work carried out. Finally, the 
programme allows the SMEs to form trans-national links with other partners. It is 
important to emphasize that the SMEs are generally very concerned to put the RTD 
effort they have made to good account. So they play a visible and significant role in 
industrial exploitation of the results obtained by these projects. 
62 
b) Concrete examples of the impact of the programme on SMEs 
SMEs and tlte European Systems and Software Initiative (ESSI) 
ES SI is an accompanying measure to the specific research and technological 
development programme for information technologies (J 990 to 1994). Its main 
goal is to promote Software Best Practice in all industries, so as to achieve 
greater efficiency, higher quality and greater economy. 
70% of all European software development is now carried out in .non-
information technologies sectors of industry, with significant participation by 
SMEs. It follow s that SMEs form a substantial part of the ES SI target group. 
Moreover, within the Information technologies industry itself the great majority 
of suppliers of software-based process improvement technology are SMEs. 
The pilot phase ofESSI was. started in 1993 to test the perceived relevance of 
the programme and the effectiveness of the implementation mechanism. The 
amount allocated was ECU 30 million. 45% of all accepted proposals have had 
SMEs as prime proposers. In addition, SMEs make up a significant number of 
the partners, subcontractors and suppliers in the remaining accepted proposals. 
Overall SMEs are present either as lead users or as tecltnology suppliers in more 
than 90% of the ESSI pilot phase projects. 
There are several reasons for the high profile of SMEs within ESSI First, as 
indicated, SMEs are a major target for this initiative. Secondly, this initiative 
has a broader industrial appeal than traditional RTD activities and is specifically 
targeted at practitioners and users. Consequently simpler, more flexible and 
"lighter" methods of implementation have been developed, thus making it more 
attractive to smaller organisations with more limited resources. This applies in 
particular to the preparation of proposals. Thirdly, the method of funding, based 
upon the principle of 100% marginal costing, can be seen as being particularly 
attractive to organisations with lower overheads, such as SMEs. 
63 
HPCN contribution to European industrial competitiveness 
+ 
Goods and services sectors rely increasingly on Information technology, as a 
component and as a tool. HPCN (High Performance Computing and 
Networking) provides a level of functionality and performance not previously 
attainable or viable. It opens up new opportunities for faster, more efficient and 
more reliable design, manufacture, quality control and information storage and 
retrieval. Strategically, HPCN is central to increasing the competitiveness of 
European industry and Europe must maintain a leading position in HPCN 
technologies. ESPRIT, and the new Information Technology programme, aim 
to promote the development of'the HPCN technology in Europe, and its adoption 
by European industry as a competitive weapon. SMEs are central in this regard, 
as both technology developers and users. 
GP-MIMD and DESIRE, are examples of projects in which HPCN technology 
is being developed. GP-MIMD aims to support development of hardware and 
software environments for parallel computers. It is based on architecture which 
allows modular interconnection of up to thousands of processors. Processing 
power can thus exceed hundreds of Giga-flops. This advanced technology is 
now pioneered in Europe by a number of SMEs including Meiko, Parsys, 
Parsytech and Telmat. ESPRIT has contributed to their success by providing 
funding for their technology, and a framework for the establishment of 
partnerships. Moreover ESPRIT is a showcase allowing greater visibility of 
results and facilitating their dissemination. 
The sales by Meiko of their CS-2 machine to the US Energy Department (the 
first sale of a super computer to a U.S. government laboratory by a non-U.S. 
company), and to the CERN laboratory for Particle Physics in Geneva (the first-
ever such sale by a European company) are recent examples of European 
successes arising from this project. 
As part of the DESIRE project, an SME, Mental Images, uses parallel computers 
in CAD applications to provide better visual feedback and photo realistic 
rendering and visualisation than was hitherto possible. (Rendering makes a 
computer image more realistic by simulating surface textures and reflections and 
shades on the object displayed). A typical application is in the design of car 
bodies, simulating a metallic finish and reflective windscreen. The SME-
developed rendering technology in this project has been sold to major industrial 
end users such as BMW andMercedez-Benz. Agreements with Dassault and 
Softimage, a Canadian subsidiary of Microsoft's Advanced Technology Division 
specialized in 3D and visualisation software, testify to the worldwide reputation 
won by this SME. 
64 
c) The new Information Technologies Programme 
In the new Information Technologies Programme covering the period 1994-199892, the 
programme's effoit to adapt to the specificities of SMEs will be continued and 
amplified, both in the technical content of the programme and in procedures. 
First of all, the accent will be on several actions which are of special interest to SMEs 
and also respond to the objectives of the programme, in particular contributing to 
building the information society. Thus, in the area of components and systems 
technology, an action is planned in favour of the "first use" of integrated circuits in 
specific and innovatory applications. 
In the field of software technologies, a first series of actions has been put in place 
experimentally during ESPRIT III under "best practice" to promote the use of the most 
advanced software technologies in concrete applications. Given the success of this 
experiment, notably for SMEs, this type of action will be developed strongly in the new 
Information Technologies Programme, which will allow a vast range of SMEs and 
users to be reached and the know-how acquired to be circulated. 
As regards procedures, several new provisions are included as presented in the chapter 
on the specific actions in favour of SMEs within the 4th Framework Programme for 
RTD, viz : cooperative type projects, exploratory premiums and the two-stage 
procedure (see point II.2.2.3. below). 
2.2.2.4. Research results optimization programme (VALUE) 
The VALUE programme is aimed at promoting the spread and effective use of the 
results of the research into science and technology in order to contribute to 
strengthening the competitiveness of European industry and notably of the SMEs. The 
support provided to the contracting parties participating in Community research, and 
notably the SMEs, involves the financing of market studies, feasibility studies, the 
preparation of business plans for SMEs seeking risk capital or other forms of finance. 
VALUE I (1989-1993) with ECU 38 million and the centralized action VALUE II 
(1992-1994)93 with ECU 66 million are reaching the end of their implementation94. 
Table No 3 on the participation of SMEs in VALUE shows that the SMEs have been 
involved 69% as contractor, 39% as partner and 38% as participant. 
92 
93 
94 SEC(94 1917 of 15.11.1994. 
Council Decision 92/272/EEC of 29.04.1992, OJ No L 141 of 23.05.1992, p. 1. 
These programmes are the subject of a detailed presentation in report COM(94) 221 of 07.09.1994, see 
point II. 3. 
65 
Table No 3 
Participation of SMEs in VALUE Programme 
Programme 
VALUE I 
VALUE II Commitment 
Appro­
priations 
7.276.890 
9.950.000 Appro-
priations*al 
lotted 
to SMEs 
2.910.156 
4.079.500 * 
40 
41 Projects** 
Total 
109 
143 SME 
55 
98 % 
50 
69 Partners*** 
Total 
197 
429 SME 
93 
166 % 
47 
39 Participations* * * * 
Total 
205 
469 SME 
101 
180 % 
49 
38 
*T* *T* *T* Extrapolation from available data to cover all projects 
Number of contracts 
Partners : there can be several SME partners in a single project 
Participation : one SME can participate in several projects 
Source : Directorate General for telecommunications, the Information Market and the Optimization of Research 
66 
2.2.3. SME SPECIFIC ACTIONS UNDER THE FOURTH FRAMEWORK PROGRAMME 
(FPIV) 
Based on the experience of the Brite-Euram programme, technology stimulation measures for 
SMEs have been introduced in 12 RTD programmes under FP IV using the following general 
schemes: 
Proposals can be submitted and evaluated in 2 stages : Outline proposals submitted 
at Stage 1 may give rise to an exploratory award to help cover the cost of preparing 
a complete proposal for submission at Stage 2; 
A standard project called "co-operative research" is available under most programmes 
exclusively for SMEs with little or no RTD capability; co-operative research proposals 
may be submitted directly or through the two stage procedure when appropriate; 
Co-operative research and exploratory award proposals are implemented via a 
continuously open call - i.e. proposals can be submitted at any time; 
Decentralised information, advice and assistance are available at national and regional 
levels to SMEs from a Network of Focal Points. 
These measures are well underway and the first proposals have been submitted in early 1995. 
Furthermore, there is an information package on "technology stimulation measures for SMEs" 
which is common to 10 programmes and a new SME Unit within the Commission services 
responsible for RTD to ensure the harmonized implementation of the SME specific measures 
between all the relevant programmes. Specific budgets have been allocated within the 
different programmes for specific SME measures and the total amount is over ECU 700 
million, which represents 9% of the total budget for these programmes. 
In addition, however, the share of the FP IV budget which will benefit SMEs will be greater 
than ECU 700 million as SMEs will also participate in other actions within the mainstream 
research programmes. 
In conclusion, great progress has been achieved to facilitate access of SMEs to Community 
RTD programmes. 
67 
2.2.4. INNOVATION AND TECHNOLOGY TRANSFER PROGRAMME (SPRINT) 
The implementation of the strategic programme for innovation and technology transfer 
(SPRINT) was extended up to 31 December 19949i. The measures adopted aim to stimulate 
innovation and technology transfer, notably in the SMEs. Continuity of these measures will 
be assured in the context of the third action provided for in the Fourth Framework Programme 
of RTD96. The budget allocated to SPRINT for the period 1989-1994 was ECU 113 million. 
The activities promoted by SPRINT relating to SMEs are covered by three sets of actions : 
2.2.4.1. European innovation services infrastructure 
In 1994, the actions consisted in consolidating the networks rather than developing them. 
Innovation in SMEs has been stimulated by the following networks: 
a) Networks of consultants in technology and innovation management 
These networks aim to promote trans-national technological cooperation between their SME 
clients. By the end of 1994, SPRINT had subsidized more than 150 networks which include 
over 350 bodies. Definite technological agreements made, each involving two SMEs, have 
been estimated at 750. These agreements cover the various contractual forms of transfer of 
technology like: patent or know-how licences, industrial franchise, technical cooperation, 
technical assistance and the creation of joint ventures. 
SPRINT also laid stress in 1994 on the exchange of experiences and the dissemination of 
good practice in the area of technology brokerage with SMEs. A mobilization campaign 
covering all the Member States reinforced the SPRINT series of 20 Technology Transfer Days 
for SMEs and increased awareness amongst over 2000 SMEs and technological advisoiy 
bodies. 
b) Network of research and technology organizations (RTO) 
Over 60 RTO networks linking 300 members have been supported. The work programmes 
in these projects aim to disseminate technologies to the SMEs, both in the traditional 
industries (building, textiles or wood) and in diffusion technologies such as laser or 
CAD/CAM for example. It has been estimated that some 50,000 SMEs have benefitted from 
the technology dissemination activities earned on by these networks. 
95 
96 OJNoL6of 08.01.1994, p. 25. 
Council Decision 94/917/EC of 15.12.1994 relating to the specific programme of dissemination and 
optimization of the results of activities in the field of research and technological development, 
including demonstration, OJ No L 361 of 31.12.1994, p. 101. 
68 
2.2.4.2. Intra-Community dissemination of technological resources 
a) Intra-Community innovation transfer 
Specific projects for intra-Community innovation transfer have been promoted. Of the forty-
odd projects that have received financial support during their definition stage, twenty-one 
projects had been set in motion by the end of 1994. Their objective is to adapt and transfer 
finished technologies from one region to another, or from one sector to another. 
b) SME awareness actions on innovation management 
The growing complexity of technology entails profound changes in enterprises. The use of 
management techniques (such as quality, industrial design, value analysis or intellectual 
property management) facilitate the integration of new technologies within enterprises. In 
order to make SMEs more aware of access and the use of new innovation management 
techniques, SPRINT launched the MINT initiative. MINT (Managing the Integration of New 
Technologies) has been prepared as a Community experimental advice and diagnostic 
programme, providing financial support to about 1500 SMEs in the Member States as well 
as in certain EFTA countries forming part of the European Economic Area. These enterprises 
will receive advice designed to facilitate their adoption of new technologies thanks to 
integrated use of management techniques. 
In parallel with the MINT programme, several initiatives have been launched to promote the 
exchange of experiences between professionals in the European Union in the key areas linked 
to innovation management as well as the dissemination of these techniques with the SMEs. 
Amongst these initiatives, the organization of the 4th European Design Prize should be 
highlighted. The very high number of entrants from SMEs (over 1200) demonstrates the 
success of this initiative to make SMEs more aware of the advantages of design as a 
management technique. 
The activities to promote quality and value analysis (publication of success stories or drawing 
up users' manuals) affect over 10,000 SMEs every year, notably in the traditional industries 
sector. 
c) Innovation financing activities 
Two programmes relating to innovation financing have been launched by SPRINT. The first, 
entitled "Trans-national Investment Forums", brings together entrepreneurs from innovative 
and rapidly growing SMEs, seeking sources of finance, and financiers seeking investment 
opportunities. A dozen forums have been planned for 1994 and 1995, bringing together some 
500 innovative SMEs and more than 1000 contributors of capital, largely risk capital 
companies, from all over the Union. 
The second, known as the Technology Performance Financing Plan (TPF) aims to facilitate 
the acquisition of new technologies by enterprises, and notably SMEs by improving their 
liquidity and by strengthening the competitiveness of European suppliers of new technologies. 
69 
2.2.4.3. Better knowledge of innovation and greater concertation between the Member 
States and the Commission 
The European Innovation Observatory (EIMS) under the SPRINT programme has established 
a knowledge base and a research capacity on innovation and technology transfer at 
Community level. 
Notable amongst the studies in progress in 1994 affecting SMEs is the Community Innovation 
Survey (CIS), a joint SPRINT and EUROSTAT initiative which has created a database on 
40,000 enterprises, mainly SM*Es, covering 200 variables in each enterprise. This research 
will permit the analysis of capacities and innovative strategies of European SMEs as well as 
the dissemination of technologies and innovation management techniques. 
Beyond the various studies launched by the EIMS in 1994 to provide an analytical and 
empirical outline of the current state of innovation in European SMEs, SPRINT has promoted 
a series of forums in 1994 on certain key issues in innovation policies for SMEs (regional 
innovation infrastructure, innovation financing, Research and Technology Organizations' 
development strategies, participation of workers in innovation, and finally, innovation policy 
themes). 
Table No 4 shows the estimated number of enterprises that have directly benefitted from the 
SPRINT programme, by type of measure. Altogether 162,600 SMEs have benefitted from the 
SPRINT programme, either purchasing, testing or keeping themselves informed of the new 
technologies, notably thanks to the trans-national networks. 
2.2.5. EUROTECH CAPITAL ACTION 
The purpose of the EUROTECH CAPITAL action is to encourage the financing by private 
capital of High-Technology Transnational Projects. Accordingly, the commission has approved 
European financial units specializing in supplying their own funds to SMEs. These financial 
units, which have a minimum investment capacity of ECU 50 million, agree to reserve at least 
20% for participation in SMEs which develop High-Technology Transnational Projects or 
which use environmentally-friendly technologies. 
In 1994 the EUROTECH CAPITAL network comprised 13 members, covering the majority 
of the Member States, who had undertaken to invest an overall total of ECU 202 million in 
High-Technology Transnational Projects, which in relation to the Community budget has a 
leverage effect of 2 500%. 
70 
TABLE No 4 
ESTIMATE OF THE NUMBER OF SMES WHICH HAVE DIRECTLY BENEFITTED FROM SPRINT 
I European innovation services infrastructure 
1.1. Trans-national technological cooperation between SMEs through trans­
national networks of consultants in technology and innovation 
management and technology transfer days (since 1989) 
- 750 agreements forged each involving two SMEs. 
Examples of such agreements : production or distribution licences, 
joint R&D and production agreements 
- for each agreement concluded, an average of 10 SMEs have assessed 
or tested the technology 
- for each agreement concluded, some 30 SMEs have become aware of 
the new technology 
- SMEs participating in technology transfer days 
1.2. Dissemination of new technologies through networks of research and 
technology organizations. 
300 research and technology organizations with on average 750 SME 
clients, took part in this action 
- 2 % of SME clients have acquired a new technology as a direct 
result of the activities of this network 
- 8 % of SME clients have assessed or tested a new technology as a 
direct result of the activities of this network 
- 20 % of SME clients have become aware of the new technology 
II. Intra-Community dissemination of technological resources 
2.1. Specific projects designed for the intra-Community transfer of 
innovations (21 projects of this type each involve 5 SMEs) : 
SMEs participating in specific projects; 
SMEs will will be made aware of the new technology during the 
dissemination of specific projects. 
2.2. Awareness actions with SMEs on innovation management 
MINT programme 
SMEs made aware of the advantages of innovation management 
techniques 
2.3. Innovation financing activities 
12 forums each bringing together some 40 innovative SMEs from 
different countries seeking finance 
III EIMS- Community innovation survey 
TOTAL Number of 
SMEs which 
have 
acquired a 
new tech­
nology or 
other 
resources 
1.500 
4.500 
Number of 
enter-prises 
directly 
involved 
100 
1.500 
500 
8.100 Number of 
SMEs which 
have tested/ 
assessedthe 
new tech­
nology 
7.500 
18.000 
25.500 Number of 
SMEs which 
have become 
aware of the 
new tech­
nology 
22.000 
2.000 
45.000 
10.000 
N 10.000 
40.000 
129.000 
Source : Directorate General of Telecommunications, the Information Market and the Optimization of Research 
71 
2,2.6. THE THERMIE PROGRAMME 
Given the importance of the role of SMEs in the economic development of the European 
Union, they constitute a special target for energy policy. The THERMIE programme, one of 
the pillars of this policy, responds effectively to the needs of SMEs in terms of innovative and 
high performance energy technologies by establishing continuity of research and development 
activities in the market by demonstration. 
2.2.6.1. The THERMIE Programme 1990-1994 
After the first oil shock in 1973, the Commission implemented programmes to support energy 
demonstration and hydrocarbons technologies to respond effectively to the effects of the crisis, 
particularly on SMEs, which were faced at the time with the double challenge of maintaining 
their competitiveness and controlling their production costs. From 1974 to 1989, 50% of the 
projects supported by these programmes involved SMEs in a total of 2450 projects; this 
represents ECU 1.2 billion of financial support. 
In 1990, the THERMIE Programme97, with funding of ECU 700 million over five years, was 
adopted, ensuring the continuity of the earlier programmes and adding three new dimensions: 
- better coordination and complementarity with similar programmes in Member States, 
- broad dissemination of information on innovative energy technologies already developed 
and ready to penetrate the market, 
- subsidiary priority projects in which SMEs participate. 
This programme supports a wide group of technologies aimed both at production and 
processing and at energy use in the following areas : 
- Rational use of energy in industry, buildings and transport, 
- Renewable energies, 
- Solid fuels, 
- Hydrocarbons. 
From 1990 to 1994, the THERMIE programme supported 713 projects at a cost of ECU 573 
million. 60% of the projects involved SMEs which were included as a selection criterion in 
the evaluation of technological tenders. This marks an important development by comparison 
with the 1973-1989 period and shows the interest of the THERMIE Programme in SMEs. 
97 Council Regulation (EEC) 2008/90 of 29.06.1990, OJ No L 185 of 17.07.1990, p. 1. 
72 
The THERMIE Programme has also permitted the implementation of associated measures to 
accompany the technological projects and promote energy technologies amongst users and 
notably SMEs. These measures are largely carried out through the OPET network 
(Organizations for the Promotion of Energy Technologies") which was launched in 1990 and 
which now groups together 49 public and private organizations in Europe. This network has 
woven close relations with the industrial world and the SMEs by a whole series of actions on 
communication, market studies, seminars, workshops and marketing groups. Providing 
information in a form that is as adapted to and receivable by SMEs as possible, is one of the 
principal roles of the OPET network. 
2.2.6.2. The THERMIE Programme 1995-1998 
For the 1995-1098 period, the THERMIE98 is part of the Fourth Framework Programme for 
Research and Technological Development, including demonstration, in the field of non-nuclear 
energy. 
THERMIE, with a budget of over ECU 500 million over the period considered, is divided into 
two main chapters ; 
- financial support to projects implementing innovative energy technologies; 
- financial support to a whole series of complementary activities such as: 
- definition of the strategy for energy demonstration; 
- dissemination of energy technologies on the market; 
- support and accompaniment measure; 
- technological stimulation of SMEs. 
So this new THERMIE programme provides for support to even more SMEs both at the 
project support level and complementary activities including one chapter exclusively devoted 
to SMEs. The aim is to encourage and facilitate participation by SMEs in technological 
projects by : 
- assisting SMEs to identify their needs and find partners; 
- adapting newly developed energy technologies to their specific needs; 
- training their staff in the new energy technologies; 
- assisting SMEs to participate in existing energy demonstration projects. 
In addition, in order to complete the activities for market penetration of energy technologies, 
the Commission has proposed an additional programme (THERMIE II) for the 1995-1998 
period99, currently under negotiation. 
98 Council Decision 94/806/EC of 23.11.1994, p. 87. 
99 COM(94) 654 of 20.01.1995. 
73 
2.2.7. RESEARCH ACTIVITIES IN THE FIELD OF TRANSPORT 
The EURET Programme (EUropean REsearch in Transport) was launched by the Council 
Decision of 21 December 1990100. It responds to three objectives : the optimization of the 
management of transport networks, the optimization of logistics and the reduction of external 
effects. With a budget of ECU 26.8 million, the programme has allowed SMEs to participate, 
thanks to the creation of enterprise consortia. While large enterprises have benefitted from 
more than half the available funds (51%), SMEs come second amongst beneficiaries with J.9% 
of the budget (ECU 3.6 million) and 25% of the number of participants. 
The Council Decision adopting a specific programme for research and technological 
development, including demonstration in the field of transport (1994 to 1998)101 also provides 
for technological stimulation geared to encouraging and facilitating the participation of SMEs. 
The programme will encourage the participation of SMEs by granting a subsidy covering the 
exploratory phase, and including the search for partners and an RTD action and through 
cooperative research. This subsidy will be granted on the basis of outline proposals which can 
be submitted at any time (see point II.2.2.3.). 
2.3. VOCATIONAL TRAINING PROGRAMMES AND THE SMEs 
In the field of vocational training, in addition to the important resources (some ECU 20 billion 
for the 1989-1993 period) devoted to the occupational integration of people who have 
difficulties on the labour market, thanks to the European Social Fund, the Commission has 
implemented a certain number of programmes intended to raise the level of qualifications 
throughout the Community in order to master the process of economic, technological, social 
and cultural change (COMETT, EUROTECNET, FORCE and PETRA). These programmes 
were completed at the end of 1994 and replaced as from 1.1.1995 by the LEONARDO 
programme102 which opens the way to the new generation of professional training programmes 
for the 1995-1999 period. This chapter therefore presents, first, an evaluation of the impact 
of the earlier programmes on the SMEs103 and, secondly, the new prospects offered by the 
LEONARDO programme. 
The EUROTECNET, COMETT and FORCE programmes have achieved significant and 
concrete results laying the basis of trans-national cooperation and demonstrating the 
importance accorded throughout the European Union to vocational training as a policy 
fundamental to economic growth. Particular attention has been accorded to the participation 
of SMEs in the actions supported by these programmes. Table No 5 gives the figures for 
SME participation in these three programmes. 
100 
101 
102 
103 Council Decision 91/11/EEC of 21.12.1990, OJ No L 8 of 11.01.1991, p. 6. 
OJ No L 361 of 31.12.1994, p. 56. 
OJ No L 340 of 29.12.1994, p. 8. 
This part consists of an update of the information in the report COM(94) 221 final of 07.09.1994, point 
III. The Commission report on the coordination of activities in favour of SMEs presents a detailed 
analysis of these programmes together with examples of projects. 
74 
Table No 5 
iilIlîONAL TRAINING 
ACTIONS IN FAVOUR OF SMES IN THE 
EUROTECNET, COMETT AND FORCE PROGRAMMES 
PROGRAMMES 1993-1994 
EUROTECNET (1990-1994) 
. Budget (MECU) 7,5 MECU 
Total number of projects in the network 284 
Total number of projects targeting SMEs 46 
% of projects targeting SMEs 18 % 
FOKCE (1991-1994) 
. Budget 91-94 83,1 MECU 
Total number of projects 716 
(call for tenders, 91 to 93) 
Number of SMEs contracting or coordinating 253 
projects, of which groups of SMEs 
SME beneficiaries Several thousand, groups of SMEs able to 
- directly assemble many members, sometimes several 
- through groups hundred, 
of enterprises 
- through business, sectoral federations 
Number of enterprises involved 
of which groups of SMEs 
(contracting, coordinators, partners) 3.100 
Number of SMEs directly involved of which 
groups of SMEs (contracting, 
coordinators, partners) 2.250 
Rate of direct participation 
SMEs, groups of SMEs 
all firms 73 % 
75 
PROGRAMMES 1993-1994 
COMETT (1990-1994) 
Budget (excluding EFTA) (MEClf)(90-92:121)(93-94:79) 
EFTA Budget 
Number of SMEs directly benefitting, of which: 
- SMEs receiving students on placement 
- SME employees receiving training courses 
- SME staff using training products 
Number of SMEs involved as partners in a project, of 
which: 
- Number of SMEs < 50 employees 
- Number of SMEs with 50 to 200 employees 
- SMEs in university-enterprise training partnerships 
- SMEs in exchange projects 
- SMEs as partners in education and continuing 
training projects 
Percentage of COMETT projects including at least 1 SME 
as partner 
Estimate of rate of participation of SMDEs (<500 
employees) amongst all participating enterprises 200 MECU 
30 MECU 
> 40.000-+/- 200.000 employees 
> 15.000 
+/- 100.000 
+/- 70.000 
> 10.000 
> 5.000 
> 3.000 
> 3.000 
> 4.000 
> 2.500 
>2.000 (80%) 
+ /- 75% 
Source : Commission Services DG XXII 
76 
2.3.1. THE EUROTECNET PROGRAMME 
The EUROTECNET programme104 (1990-1994) aimed to promote innovation in the field 
of vocational training resulting from technological change. The Council Decision 
stipulated that it is appropriate to ensure that small and medium-sized enterprises 
participate in the implementation of the programme and the dissemination of the results 
obtained. EUROTECNET therefore attached particular importance to projects which have 
an impact on innovative solutions in the development of human resources in the SMEs. 
At the outcome of the selection procedures in the 12 Member States, 284 demonstration 
projects were selected to constitute the network of EUROTECNET projects of which 46 
(or 18% of the total) relate to initial or continuing vocational training in SMEs or for 
SMEs. 
2.3.2. THE COMETT PROGRAMME 
The COMETT programme (1990-1994)105 was a programme of intra-Community 
cooperation between university and enterprise on initial and continuing training in the 
field of technologies, notably advanced technologies. One of its general objectives was 
to respond to the needs for specific qualifications for SMEs. The global budget was ECU 
230 million (including the EFTA contribution). 
SMEs have been able to benefit from the COMETT programme as partner in a project, 
as direct beneficiary of the results of a project (e.g. by going on a course) or as indirect 
beneficiary (by gaining access to the training resulting from analysis of needs supported 
by the programme). 
A detailed analysis of SME participation in the COMETT programme shows that about 
75% of enterprises involved as partners in one or more COMETT projects are SMEs (less 
than 500 employees), reaching a figure of 10,000 SMEs in 1994 and possibly rising to 
15,000 by the end of 1995. Of these 10,000 SMEs participating directly, 5,000 (or half) 
employ less than 50 people and 3,000 (or a third) have between 50 and 200 employees. 
80% of COMETT projects include at least one SME. The UETA (University Enterprise 
Training Association) and the universities have made it possible to involve SMEs in 
COMETT projects. The role of the UETA has grown continuously thanks to the network 
and the system of bringing partners 
together. 40% of the manufacturing enterprises entered COMETT through a university 
compared with 5% through training enterprises. 
Of the SMEs which have participated in COMETT, 33% participate in the 
UETA, 40% in trans-national exchanges and about 25% in joint continuing training 
projects. 
104 Council Decision 89/657/EEC of 18.12.1989, OJ No L 393 of 30.12.1989, p. 30. 
105 Council Decision 89/27/EEC, OJ No L 13 of 17.01.1989, p. 28. 
77 
Altogether, it is estimated that 40,000 SMEs will have benefitted directly from 
COMMETT H, including at least 15,000 which have received students on placements 
from different countries. As regards the measures for continuing training, it is currently 
estimated that some 200,000 SME employees have taken a training course or are using 
training materials. Finally, it should be noted that over one thousand SME intermediary 
organizations (Chambers of Commerce or trade associations) have participated in the 
COMETT partnerships with a multiplier effect on SMEs. 
2.3.3. THE FORCE PROGRAMME 
The FORCE programme106 (Continuing Vocational Training in the European Community) 
had the objective of encouraging enterprises, notabiy SMEs, to invest in continuing 
vocational training. For this purpose the trans-national measures of the FORCE 
programme supported the achievement of synergy in innovation, European sectoral 
surveys, analysis of contractual policy and forecasts of the development of qualifications 
and skills. 
During the years 1991, 1992 and 1993, 716 projects were selected (164 in 1991, 263 in 
1992 and 289 in 1993). 2250 SMEs or groups of SMEs participated in this as partners 
in more than two-thirds of the projects, directly or indirectly via associations, chambers 
or inter-enterprise training organizations. 
As an example, the retail sector was chosen as a field of investigation to identify the new 
trends in this sector where the links between vocational training and the organization of 
work are traditionally weak. Thus a programme of distance learning for the employees 
of commercial SMEs belonging to a form of cooperation between shopkeepers in 3 
Member States was supported. 
2.3.4. THE NEW LEONARDO da Vinci PROGRAMME (1995-1999) 
On the proposal of the Commission, the Council adopted a Decision establishing a 
programme of action for implementing a continuing vocational training programme in the 
European Community known as LEONARDO da Vinci107. The programme will run from 
1.1.1995 to 31.12.1999, with a budget of ECU 620 million. 
The LEONARDO programme aims to promote quality in vocational training and 
innovative capacity in this field. For this purpose, it establishes a Common Framework 
of objectives, qualitatively describing the eighteen objectives for vocational training 
defined at Community level. The Community measures described below will be 
implemented on the basis of this common framework of objectives. 
106 Council Decision 90/267/EEC of 29.05.1990, OJ No L 156 of 21.06.1990, p. 1. 
107 Council Decision of 6.12.1994, OJ No L 340 of 29.12.1994, p. 8. 
78 
LEONARDO takes up the three main types of trans-national cooperation measure initiated 
in the earlier programmes : 
pilot cooperation projects; 
exchange programmes for different publics; 
surveys and analysis. 
It includes an important innovation. In fact, all the proposals included in these three 
types of measure should have a trans-national character and a stronger accent is put on 
the dissemination and breaking-down of the results. 
The measures are distinguished according to their purpose, in three sections: 
Section I : Support to improvement of systems and arrangements for vocational 
training in the Member States; 
Section II : Support to improvement of vocational training actions, including 
through university-enterprise cooperation relating to enterprises and 
workers; 
Section III : Support to development of language skills, knowledge and 
dissemination of innovations in the field of vocational training. 
In each section specific priorities are defined. As regards the trans-national pilot projects 
in section II, and without prejudice to the procedure laid down by article 6 of the 
Decision, these priorities must include, amongst others : 
the acquisition of the qualifications and skills required for adapting to industrial 
change, the development of production systems and the dissemination of new 
technologies, notably in small and medium-sized enterprises and the traditional 
sectors of industry; 
the development of training of enterprise management in the transfer of 
technological innovations and the training of directors and heads of small and 
medium-sized enterprise. 
Furthermore, in the context of section III and in particular of cooperation with a view to 
the improvement of language skills, Community support is planned for the conception of 
trans-national pilot projects targeting the completion of linguistic audits for enterprises, 
and notably small and medium-sized enterprises and the socio-economic actors. 
Equally, in the context of surveys and analyses in the area of vocational training, 
Community support is planned on a trans-national basis with a view to analyzing new 
training methods intended for small and medium-sized enterprises in order to increase 
access for their workers to appropriate training. 
79 
All fields of vocational training are covered : initial training and transition to working 
life, continuing training, university-enterprise cooperation in particular with SMEs and 
with a view to supporting the transfer of technological innovations (section II). Through 
the notion of continuum, LEONARDO is advancing the objective of transverse 
cooperation between areas corresponding to the policy objective of the development of 
life-long learning. 
All the players in vocational training are involved in the measures : public authorities, 
enterprises, notably SMEs, the social partners at the national level and the Community 
level, public and private training organizations, universities. An important point is that 
the partnerships between the various players are researched with a view to increasing the 
quality of training by better adjustment of supply to the needs of enterprises and in 
particular the SMEs. Each project will be presented by its coordinator and will identify 
clearly the associated partners in the various Member States. 
LEONARDO lays particular stress on coordination with other Community actions108. The 
actions supported in the context of LEONARDO essentially bear on the preparation of 
training actions, product conception and innovative methods, dissemination and de-
multiplication of results. The LEONARDO programme must not target support for 
carrying out training actions as such in a marginal way, hence the search for 
complementarity between this action programme and the finance allocated in the context 
of the Structural Funds, notably under the heading of the Community initiative ADAPT 
(see point II.2.1.3.2.) where the SMEs will be widely involved and the Community SME 
initiative (see point II.2.1.2.2.) where they are directly targeted. 
In addition, the services charged to Education, Training and Youth seek increased 
coordination with those of enterprise policy to ensure that the implementation of the 
LEONARDO programme is coherent with the Integrated Programme in favour of the 
SMEs (see Introduction to this report). 
2.4 THE OTHER COMMUNITY PROGRAMMES 
2.4.1. ENVIRONMENTAL POLICY 
2.4.1.1. The LIFE financial instrument 
Since 1992, the SMEs can be supported in the context of the LIFE financial instrument 
for the environment, created by EEC Regulation No 1973/92 of 21.5.1992109. 
In 1993, 99 demonstration projects in the Member States have been co-financed in the 
context of this programme from total assistance of ECU 44,653,159. 
108 Article 8, paragraph 2 of Council Decision 94/819/EC, OJ No L 340 of 29.12.1994, p. 13. 
109 OJ No L 206 of 22.07.1992, p. 1. 
80 
Amongst these projects it is estimated that 43 concern SMEs which have consequently 
benefitted from co-financing of ECU 16,983,627, or 38% of the total granted. The 
sectors involved are mainly as follows : 
Own technologies sector. 
- Treatment of surfaces 
- Textiles 
- Tannery 
- Paper 
- Agri-food 4 projects 
3 projects 
5 projects 
3 projects 
3 projects 
2. Waste treatment sector, notably by recycling : 17 projects 
3. Rehabilitation of contaminated sites : 5 projects 
4. Water sector : 2 projects 
As regards the impact on employment, estimation is difficult because when pilot 
demonstration projects are involved it is generally a matter of temporary employment or 
employment already present in the enterprise. 
However it is estimated that there would be between 4 and 6 jobs per project, which leads 
to the view that about 200 to 250 jobs in SMEs have been suppoited by LIFE. 
2.4.1.2. Environmental audit 
In addition, like large enterprises, the SMEs are subject to national and Community 
regulations on environmental protection. The environmental policy services have made 
a group of specialized Euro-Info-Centres responsible for preparing a self-analysis tool and 
for increasing the awareness of the SMEs of the system of management and 
environmental audit (see point II. 1.1.1.). 
Moreover, the Commission (DGXI) financed 23 pilot projects involving SMEs in 1994, 
aimed at facilitating participation of small enterprises in the EC Environmental 
Development and Audit Scheme. 
2.4.2. HYGIENE, SAFETY AND HEALTH EST THE WORKPLACE 
The European Year of Hygiene, safety and health in the Workplace observed in 1992 
constituted a special occasion for informing about and improving health and safety in the 
SMEs110, notably through good cooperation between the Commission services. Since then 
a certain number of actions have been pursued in this area (cf. EUROMANAGEMENT 
pilot action, II. 1.3.2.). 
See COM(94) 221 of 07.09.1994, point IV.2. 
81 
The Commission services (DG XXIII and DG V) have drawn up a document on risk 
assessment in the workplace1", in collaboration with the Consultative Committee on 
Safety, Hygiene and the Protection of Health in the Workplace. Its objective is to inform 
employees, workers and other parties interested in the practical aspects of implementing 
the directions on risk assessment set by Council Directive 89/391/EEC112 concerning the 
introduction of measures aimed at promoting the improvement of the safety and health 
of employees at work. Although this document deals primarily with risk assessment, it 
also examines certain aspects of risk management. One part is particularly devoted to the 
needs of small and medium-sized enterprises in this area 
Furthermore, the self-audit method for health and safety at work prepared by the 
Commission services offers support to the heads of SME during their assessments and 
their decision-making in the field of protection of health and safety in the workplace. 
This method will be disseminated in the form of a self-audit manual for the use of SMEs. 
In coordination with the World Health Organization and the International Labour 
Organization, the Commission services are developing safety cards on chemical 
substances. These cards, mainly intended for SMEs, should provide information on the 
characteristics, toxic potential and typical reactions of certain chemical substances used 
in the workplace. The preparation of a CD-ROM version of these cards is also envisaged. 
In liaison with the Health and Safety Authority, the Commission services organized a 
conference entitled "Taking risks and working safely" in Dublin on 9 and 10 March 1995. 
This conference was principally geared to health and safety in small and medium-sized 
enterprises. 
The European Agency for Safety and Health at Work was established by the Council on 
18 July 1994113. Its mission, inter alia, is to provide technical, scientific and economic 
information on the methods and tools designed for carrying out preventative activities, 
with particular attention to the specific problems of small and medium-sized enterprises. 
The Commission will particularly press for this Agency to come into operation in 1995. 
The Commission has recently proposed a Fourth Programme on safety, hygiene and health 
at work in which two of the basic principles are : the need to ensure that actions 
undertaken on health and safety are designed to support the competitiveness of 
enterprises, particularly SMEs and that improved education, training and information are 
essential towards achieving better health and safety at work and in assisting SMEs in 
doing so113a. 
One of the actions in this proposed Programme is the SAFE Programme (Safety Action 
for Europe). SAFE will support projects of a practical nature intended to demonstrate: 
the promotion of improvements in the work place specially directed at safety, hygiene and 
health at work, particularly for SMEs, and the improvement in the organisation of work 
practice and to influence attitudes towards safety and health at work in order to reduce 
accidents at work and occupational diseases. 
m 
112 
113 Work is in progress on the publication of this document. 
OJ No L 183 of 29.06.1989, p. 1. 
EEC Regulation No 2062/94, OJ No L 216 of 20.08.1994, p. 1. 
113a COM(95) 282 of 12.7.1995. 
82 
2.4.3. THE INFORMATION MARKET 
2.4.3.1. The IMPACT Programme 
The IMPACT programme (1991-1995), targeting the single market for information 
services, has undertaken several actions in favour of SMEs. In 1994, this programme 
implemented over 700 actions on awareness and promotion of electronic information 
services, through a specialist network of national partners. Most of these addressed 
SMEs, which need advanced methods of access to and processing of information to 
become and remain competitive. Secondly, the productive industry of electronic 
information services is itself largely composed of SMEs. Consequently, the shared cost 
projects for developing new information products and services supported by the IMPACT 
programme have been implemented by organizations 75% of which are SMEs. Finally, 
the set of projects which were supported following a call for proposals in 1994 
specifically targeted information intended for industry and commerce taking account more 
particularly of the needs of SMEs. 
2.4.3.2. The TEDIS Programme 
Electronic Data Interchange, EDI, is a powerful tool towards helping modernize the 
European economy and to implement European Union policies for business and, in 
particular SMEs. The TEDIS (Trade Electronic Data Interchange Systems) programme 
was launched in 1988 and entered in its second phase in 1991 "4. Out of the 160 contracts 
signed half of the prime contractors are SMEs. TEDIS promotes EDI standards and 
raises awareness of EDI within enterprises to use in their commercial transactions and in 
their contacts with administrations, and has application on standards, intellectual property, 
and telecommunications. TEDIS also co-ordinates sectoral groups and has developed a 
network of 40 awareness centres in various European regions to stimulate the knowledge 
and use of EDI to help SMEs. 
A recommandation has been adopted on an EDI Interchange Agreement115 which is 
intended to simplify the establishment of EDI based transactions and to help SMEs 
wishing to trade electronically with large companies and administrations. TEDIS has 
encouraged the use of electronic signatures for EDI messages as a means towards simple 
and cost-effective solutions for EDI software adapted for SMEs. 
In telecommunications, TEDIS has developed interconnection solutions for EDI related 
telecom services, such as a One Stop Administration (the EDIRA project), which 
simplifies electronic contacts between small businesses and administrations. 
Council Decision n° 91/385/EEC of 22.07.1993, JO L 208 of 30.07.1991, p. 66. 
Recommandation n° 94/820/EC of 19.10.1994, JO L 338 of 28.12.1994, p. 98. 
83 
Most small businesses by industry sectors are represented in the various pan-European 
EDI communities coordinated by TEDIS. TEDIS is also active in several international 
cooperative ventures where EDI and SMEs are involved, either with developed countries, 
eg Canada and G7 pilot projects, ("Global Marketplace for SMEs"), or with 
Mediterranean countries, eg Tunisia, or more recently with Eastern and Central European 
countries. 
TEDIS has also inspired a project for Electronic Commerce in the Commission services 
themselves, called PECANEC (Pilot Experiment in Canada and EC on electronic 
Commerce). This project is based on a TEDIS project called Fortius whose objective is 
to set up a network of "Electronic Commerce Centers" where an electronic catalogue of 
goods and services offered by small firms is presented, and which can be ordered, 
delivered and paid for through EDI by purchasers in their own language and currency. 
In the case of PECANEC, the purchasers are the administrations themselves and the 
products available in the electronic catalogues include furniture, computers, office 
supplies and data processing expertise. The goal is to demonstrate that public 
procurement can be opened up to small enterprises and that they can operate in 
international markets by using EDI and modern but simple technology. 
In conclusion, TEDIS, based on commercially available technologies, is well adapted to 
SMEs, helps modernize business transactions and supports various European policies 
developed in favour of SMEs. 
2.4.4. INTERNATIONAL COOPERATION 
Cooperation between enterprises is one of the priorities of enterprise policy. 
This chapter presents the cooperation programmes which have been established to 
stimulate and support cooperation between Community enterprises and the enterprises of 
non-Community countries, viz : the countries of EFTA, central and eastern Europe, the 
CIS and Georgia and those of Asia, Latin America and the Mediterranean. 
2.4.4.1. Cooperation with the European Economic Area countries (EEA) 
With the entry into force of the European Economic Area (EEA) on 1 January 1994, the 
countries which were members of the European Free Trade Association (EFTA) with the 
exception of Switzerland and Liechtenstein (Austria, Sweden, Finland, Norway and 
Iceland) are participating in Community activities in the context of enterprise policy and 
tourism. These countries contributed ECU 2.5 million in 1994 to participate in all 
enterprise policy activities. Thus correspondence centres were established in these 
countries and became fully fledged Euro-Info-Centres in June 1994. The member 
countries of the EEA form part of the Committee known as "article 4" by virtue of 
Council Decision 93/379/EEC of 14.6.1993116 without voting rights. 
116 OJ No L 161 of 02.07.1993. 
84 
2.4.4.2. Cooperation with the central and eastern European countries : (CEECs) 
In the context of the PHARE programme, the Commission has set up sub-programmes 
for the development of SMEs by providing technical assistance to the following countries 
: Poland, Hungary, Czech Republic, Slovakia, Bulgaria, Albania, Slovenia, Rumania, 
Lithuania, Latvia and Estonia. In this context, between 1990 and 1993, the European 
Union made a contribution of ECU 320 million distributed by country and by measure 
as shown in Table No 6. The support provided is concentrated on 3 types of measure : 
assistance services to SMEs (advice, information and training), financial instruments 
(banking services) and guidelines for formulating an enterprise policy. These programmes 
are managed in a decentralized way by a management unit established in each country. 
Table No 6 
Distribution of Community aid to SMEs in the CEECs 
Country 
Estonia 
Latvia 
Lithuania 
Poland 
Czech Republic 
Slovak Republic 
Hungary 
Romania 
Bulgaria 
Slovenia 
Albania 
TOTAL 
Programme, preparation, monitoring and 
evaluation 
EU organisations 
JOPP 
TOTAL Total 
MECU 
3 
3 
6 
91 
35.5 
22 
59 
10 
25 
1 
6.5 
262 
5.5 
5 
47.5 
320 Know-
how 
MECU 
2 
2 
3 
33.7 
13.5 
8.7 
27.6 
7.6 
6 
1 
2.4 
107.5 
5.5 
5 
118 Financial 
instruments 
MECU 
1 
1 
3 
57.3 
22 
13.3 
31.4 
2.4 
19 
-
4.1 
154.5 
154.5 Programme 
started 
01/1993 
01/1993 
01/1993 
01/1991 
01/1992 
01/1992 
12/1990 
02/1993 
09/1991 
01/1993 
01/1992 
12/1991 
48.3% of PHARE support to SME development between 1990 and 1993 has been 
committed to financial instruments, 36.9% for transfer of know-how and 14.8% for JOPP. 
85 
The services responsible for enterprise policy are closely associated with the establishment 
of measures in favour of SMEs in the context of the PHARE programme. This 
coordination is carried out at several levels, notably through technical assistance to the 
development of SMEs in these countries, contributing to the definition, monitoring and 
evaluation of calls for tender, as well as joint organization of seminars. 
In addition, these services contribute to the progressive integration of new partners from 
the CEECs into the network of information and cooperation between SMEs, that is the 
EICs and BC-NET, to the organization of a EUROPARTENARIAT in Gdansk in Poland 
in 1994 and finally, to the development of cooperation and the inter-enterprise partnership 
in the context of the JOPP programme (Joint Venture PHARE Programme)117. 
The JOPP programme is a specific programme within the PHARE programme which aims 
to develop support actions to the creation of joint enterprises in the CEECs between 
Community SMEs and partners in these countries. The actions supported relate to 
feasibility studies, participations in the capital of the joint enterprise, the training of its 
staff and the information necessary for its creation. 
JOPP initially had ECU 20 million available for the period 1991-1993 of which ECU 17 
million directly benefit the SMEs. An additional amount of ECU 27.5 million was later 
allocated to the JOPP programme to allow it to face up to the continuing growth in 
requests from the SMEs. 
The measures implemented have essentially permitted Community SMEs to carry out 
feasibility studies of their joint enterprise projects, thus reducing the administrative, 
financial and legal constraints which are holding back the development of joint 
enterprises. After these studies, a certain number of SMEs have already effectively 
created the joint enterprises envisaged with assistance from appropriations from the JOPP 
programme. 
Although JOPP finance benefits all the CEECs, Poland, the Czech Republic and Hungary 
are the principal beneficiary countries. This finance covers all the productive economic 
sectors, and the sectors of industrial production and consumer goods have benefitted most, 
followed by services and agri-food. The programme effectively prioritizes assistance to 
SMEs, given that 66% of the cases- approved have been introduced by enterprises with 
fewer than 100 employees. By encouraging the creation or extension of joint enterprises 
in the CEECs, this programme is intended to encourage investment in Community SMEs 
abroad. The forecasts for investment amounted at the end of 1994 to ECU 720 million 
for a Community budget commitment of ECU 39 million, or a leverage effect of 1800% 
117 Commission Decision of 30.01.1991 No Z91/01, XXV General Report, No 69, p. 26. 
86 
2.4.4.3 Cooperation with the CIS and Mongolia 
The TACIS Programme is a European Union initiative for the Commonwealth of 
Independent States (CIS) and Mongolia which fosters the development of harmonious and 
prosperous economic and political links between the European Union and these partner 
countries. Within the framework of TACIS, ECU 19 million have been allocated to 
support small and medium-sized enterprises in 1992, ECU 20 million in 1993 and ECU 
12 million in 1994 which is ECU 51 million for these 3 years. The distribution by 
country over these years is the following : Armenia: 1.6, Azerbaijan: 1.3, Belarus: 3.4, 
Georgia: 3.53, Kazahkstan: 3.8, Moldova: 0.8, Mongolia: 2, Russian Federation: 14.26, 
Turkmenistan: 1.0, Ukraine: 3.9, Uzbekistan: 3.32, Inter-State: 11.5. 
The TACIS SME programme, to date, has been founded on a strategy based upon the 
need to build up intermediary agencies. That is, to put in place, and support through 
further technical assistance, organizations which can provide assistance to existing 
entrepreneurs and those who wish to set up businesses. As a result of the 1992, 1993 and 
1994 SME programme over 40 support centres have been established in the New 
Independent States. 
Since the launching of the SME TACIS programme, the Commission services responsible 
for enterprise policy have been involved in the development of some actions such as the 
shortlisting of tendering organizations and the evaluation of tenders. Although the support 
centres in the CIS do not form part of the Euro-Info Correspondence Centres, these 
Commission Services are providing active help in creating systematic links between the 
TACIS support centres and the relay centres, which have been established by some Euro-
Info- Centres in the CIS. 
Furthermore, the Commission services will progressively include the TACIS Support 
centres in the BCC network, starting with the centres in the Russian Federation and 
Ukraine. In June 1994 a selected number of CIS entrepreneurs participated in the 
Europartenariat in Gdansk/Poland. Since then, TACIS has formalized the CIS 
participation. National counsellors have been appointed in almost all CIS republics and 
a special training programme has been organized for them. While the Commission 
services directly responsible for the TACIS programme are providing the funding for the 
national counsellors, the enterprise policy services have included them in all activities 
organized for them with regard to the Europartenariat. 
Finally, three panels are to be established in Hungary, Russia and Ukraine by the 
Committee on Commerce and Distribution with the support of DG XXIII's Distributive 
Trade Unit. The objective is to raise awareness in these countries on problems that EU 
enterprises wishing to do business there are facing and to provide technical advice and 
assistance for developing independent professional federations and efficient distribution 
networks in these countries. 
In conclusion, there is steady and constructive cooperation between the Commission 
services in implementing the TACIS SME programme which enables the Commission 
services in charge of TACIS to benefit from the experience gained in the field of SME 
policy by the Commission services directly in charge of enterprise policy. 
87 
2.4.4.4. Cooperation with developing countries in Asia, Latin American and the 
Mediterranean 
Specific programmes supporting the development of SMEs have been established in a 
certain number of developing countries, in particular the MED-INVEST programme for 
Mediterranean third countries, the AL-INVEST programme for Latin American countries 
and the ECIP programme. 
MED-INVEST is a programme of support to cooperation for development of SMEs in 
Mediterranean third countries in association with European SMEs and professional 
organizations. Its objective is to promote an environment in Mediterranean third countries 
that is favourable to the development of SMEs and to the growth in their competitive 
capacity. MED-INVEST, with a budget of ECU 12.2 million for a period of 2 years 
(1993-1995), grants non-reimbursable aid to groupings of enterprises, institutions, 
organizations or development companies which possess a real competence in the area of 
information, inter-enterprise cooperation as well as in support to economic development. 
The Business Cooperation Network (BC-NET) is associated with mis programme to 
strengthen and extend the network in the 11 Mediterranean third countries118 as well as to 
provide training of members and the necessary accompaniment measures to the economic 
players. The Commission services responsible for enterprise policy provide technical 
assistance for the creation of partnerships. Correspondence centres linked to the Euro-
Info-Centres network were established in Israel in 1993 and in Jordan, Morocco and 
Tunisia in 1994. 
AL-INVEST, the programme of industrial cooperation and promotion of investment in the 
Latin American countries119, with a budget of ECU 18.5 million for a duration of 2 years 
(1993-1995), aims to facilitate commercial exchanges, technology and know-how transfer 
and financing to the mutual benefit of Latin American and European enterprises. The 
BCC is also associated with mis programme. 
ECIP (European Communities Investment Partners) is a financial instrument in favour of 
the developing countries of Latin America, Asia and the Mediterranean created in 1988 
and its legal basis dates from 1992120, the date on which it was extended by a new 3-year 
trial period and provided with increased finance in view of the success it has experienced 
(ECU 39.15 million for 1993). 
The principal objective of ECIP is to facilitate the creation of joint enterprises in the 
eligible countries so as to contribute to their economic development. Hence it intervenes 
in the various stages of the creation of an enterprise : from identification of partners and 
potential projects through intermediaries to training and technical assistance, via the 
project feasibility study and a contibution to the capital of the joint enterprise. The 
maximum amount that can be granted is ECU 1 million for a joint enterprise. ECIP 
excludes multinational firms and makes it a condition that the joint enterprise includes at 
least one Community partner and a partner from the country concerned. 
118 Morocco, Algeria, Tunisia, Jordan, Occupied Territories, Lebanon, Syria, Israel, Turkey, Malta and 
Cyprus. 
119 Council Regulation No 443/92 of 25.02.1992, OJ No L 52 of 27.02.1992, p. 1. 
120 Council Regulation No 319/92 of 03.02.1992, OJ No L 35 of 12.02.1992, p. 1. 
88 
The orientation of the ECIP scheme is towards SMEs (excluding large multinational 
undertakings, which are expressly excluded by the Regulation). By their very nature all 
the Facility One actions (grants for identification of projects and partners) are oriented 
towards SMEs and 84% of all Facility Two, Three and Four actions in terms of number 
of projects approved in 1994 have concerned beneficiary SME firms. This reflects the 
provisions of the Regulation which provides for SME applications to have a priority status 
but without excluding larger firms, most notably in cases concerning particular 
development benefits such as technology transfer. 
In 1994, 337 projects were approved for a total amount of 42.13 MECU (271 MECU in 
1993). This instrument was extended to South Africa according to the conclusions of the 
Council of 19 April 1994. The results show that this instrument is playing a role in Asia, 
Latin America and in the Mediterranean to help local economic operators to consider the 
European Union as a partner in the development of their businesses. 
2.4.4.5. Cooperation with China 
After a conference organized with the China Council for the Promotion of International 
Trade at Antwerp in NovemberT993, two Interprise meetings in Paris and Nanjing were 
organized in 1994 to develop contacts between SMEs. Moreover, the last mixed EU-
China Commission (Beijing, February 1994) decided to accord the highest priority to 
industrial cooperation between enterprises and notably European and Chinese. In this 
context, several actions are in preparation to develop a programme of cooperation in this 
domain. 
2.4.4.6. Promotion of Community exports to Japan 
The EXPROM-Japan programme aims to promote Community exports to Japan. In this 
context the Commission is implementing : 
management training actions in communication in the Japanese business 
environment; the Executive Training Programme (ETP) targets medium-sized 
enterprises but is also intended for small enterprises which have found a niche on 
the Japanese market; 
an integrated three-year promotion campaign. "Gateway to Japan", which provides 
logistic and financial support to encourage participation in international fairs taking 
place in Japan to nine European sectors of activity (essentially industrial) whose 
performances in Japan are not yet satisfactory given their competitiveness at the 
world level. Small and medium-sized enterprises are naturally invited to benefit 
from this campaign, even if only through the access thus provided to them to 
sectoral market studies integrating the draconian changes that have recently taken 
place in Japan which cannot but encourage them to reconsider this market if they 
had renounced it. 
concerted actions with the Japanese authorities to introduce small firms into the 
Japanese market In the context of the commercial cooperation programme 
implemented jointly by the Commission and the Japanese authorities, the 
Commission is in particular presenting small and medium-sized enterprises as 
candidates for the JETRO (Japan External Trade Organization) Export to Japan 
Study Programme. 
89 
2.4.4.7. Conclusion 
Most of the programmes for cooperation with third countries, like TACIS, PHARE, 
EXPROM-Japan, MED-INVEST and ECIP encourage the development of SMEs and 
notably of joint enterprises. Although the SMEs are the principal beneficiaries directly 
or indirectly (through larger enterprises), it should be noted that Community support is 
not specifically geared towards Community SMEs and that the PHARE and TACIS 
programmes, for example, also provide support to SMEs in the countries benefitting from 
Community aid. On the other hand, in cases of joint enterprises, the two parties are 
guided by common interest which allows them to weave durable economic links between 
the Community partners and those of the third countries. 
The group of actions of cooperation with third countries are the subject of good 
coordination between the various relevant Commission services. They allow these 
countries to benefit from acquired expertise in enterprise policy as well as the existing 
intermediary networks and give European SMEs better information about the opportunities 
available to them in third countries through Community programmes. 
2.4.5. DEVELOPMENT POLICY TOWARDS ACP COUNTRIES (AFRICA, THE 
CARIBBEAN, THE PACIFIC) 
Given the importance of the private sector for the development of African, Caribbean and 
Pacific States (ACP), the 4th Lomé Convention121 provides for a vast range of instruments 
which can be used to support SMEs in those countries. A large part of these programmes 
are of direct or indirect interest to European SMEs. 
The instruments of the Convention are implemented by the Commission via the indicative 
programmes, negotiated and signed with each ACP State, by the EIB or by the Centre for 
Industrial Development (CID). 
Within the framework of these programmes, private sector projects, of priority interest to 
SMEs, currently affect some forty ACP States, representing some ECU 240 million in 
technical and financial assistance. 
The distribution by ACP region shows the interest of West and East Africa (including the 
Horn of Africa), each with 9 countries involved and an allocation of ECU 60 million. 
Programmes centred on SMEs have also been implemented or are in preparation with 
countries in the Caribbean region and in certain countries surrounding South Africa 
121 Lomé IV, OJ No L 229 of 17.08.1991. 
90 
From the indicative programmes, measures of technical assistance are available as an 
example : support to specialized bodies (Chambers of Commerce), the despatch of experts 
to banks financing SMEs but also and above all, for the last ten years the promotion of 
Investment Forums. First held in West Africa (Dakar) and Central Africa (Libreville), 
these Forums bring together hundreds of European investors who identify investment 
opportunities through meeting local entrepreneurs. 
Recently, sectoral Forums (mining sector in Lusaka) have also been organized by the 
Commission. In view,of the difficulties ACP exports experience on world markets, 
commercial promotion actions, in agreement with European SMEs, are assisting local 
enterprises to improve their competitiveness. 
The contribution of resources drawn from these programmes is not limited to technical 
assistance alone. The Commission also contributes to the financing of the SMEs, through 
subsidies and indirectly, via lines of credit from local financial intermediaries, import 
programmes, and the creation of guarantee funds (recently, participation in a guarantee 
fund for loans from banks, notably European, in West Africa). 
A special effort is also made to attack the roots of the problems of SMEs, mainly African, 
by giving priority to the creation of enterprises and the training of entrepreneurs at work. 
A new approach, launched a few years ago in certain Sahel countries, has instigated the 
creation of hundreds of micro-enterprises and ensured the employment of several thousand 
people. This effort is being applied in other ACP countries in the region. 
The resources of the EIB, notably the risk capital, are particularly adapted to financing 
SMEs, in view of their great flexibility. Since the 4th Convention, this capital is also 
offered to joint European-ACP enterprises in the form of capital participation and 
conditional loans (maximum rate 3%). A significant part of the total amount of this risk 
capital (about 40%) has been allocated, directly or indirectly, to ACP - or joint EU-ACP -
SMEs, in cooperation, in certain cases, with the financial institutions of the Member 
States. 
For some fifteen years, the Centre for the Development of Industry (CDI), created by the 
Conventions which govern cooperation between the EU and the ACP countries, has been 
supporting cooperation between European industrial SMEs and those of the ACP States, 
using instruments like joint-venture, management contract, licensing and subcontracting 
backed by a network of local and European antennae and strict cooperation with Member 
States' promotion bodies. 
The CDI receives some 500 requests for assistance a year and makes use of a budget of 
ECU 60 million to launch some 200 direct interventions annually in favour of ACP and 
European SMEs. 
In view of the complementarity of their respective roles, the Commission, the EIB and the 
CDI operate in close cooperation. For example, the CDI selects "bankable" projects 
which benefit from easier access to the resources of the EIB; certain EIB global loans to 
local SMEs are accompanied by technical assistance offered by the Commission and by 
the CDI (e.g. with a regional bank in West Africa). The negotiations in progress for the 
second part of the Lomé Convention (1995-2000) are certainly going to reinforce this 
inter-institutional cooperation around programmes of support to the private sector, thus 
promoting the growth of local enterprises and their collaboration with European SMEs. 
91 
CHAPTER IE. COORDINATION WITH THE PARTNERS 
1. CONSULTATION WITH BUSINESS ORGANIZATIONS 
The Commission regularly consults and informs associations representative of SMEs, the 
craft sector, commerce and the social economy at the European level on Community 
activities specifically directed towards SMEs as well as on all subjects that may concern 
them (like the Structural Funds, RTD and legislative proposals). In parallel, thèse 
organizations inform the Commission on their attitudes to all matters which more 
particularly affect them. A good partnership has been established between the 
Commission and these organizations which allows the viewpoints of business to be made 
known and often taken into account. 
The conference organized in June 1994 on "European Enterprises and the final VAT 
system", which enabled a wide-ranging and fruitful discussion to take place between the 
various parties concerned, and in particular SME organizations, is a good example of the 
Commision's strategy. 
In the commerce and distribution sector, the Commission systematically consults the 
Committee on Commerce and Distribution created in 1981122 on all Community measures 
likely to concern commerce. 
2. SOCIAL DIALOGUE 
On 14 December 1993, the Commission presented to the Council and to the European 
Parliament a "Communication concerning the application of the Agreement on social 
policy"123 which notably defines, at Community level, new procedures for consultation 
with the social partners as well as the conditions by which these collective agreements 
could be concluded. 
Paragraph 24 of this communication defines the criteria to be satisfied by organizations 
to be consulted, in terms of the provisions of article 3 of the Agreement on social policy. 
The list of social partner organizations "corresponding at the present stage to the criteria 
defined in paragraph 24", linked to annexe 2 of the Communication, makes explicit 
reference to the European Association of Craft, Small and Medium-sized Enterprises 
(UEAPME, EUROPMI and other associated organizations), in accordance with the 
conclusions of a study undertaken by the Commission services in order to assess the 
representativeness of the social partners. 
122 Commission Decision 81/428/EC of 20.05.1981, OJ No L 165 of 23.06.1981, p. 24. 
123 COM(93) 600 final of 14.12.1993. 
92 
Furthermore, paragraph 26 of the Communication states that a certain number of 
organizations exist which meet the criteria set out in paragraph 24 and could therefore be 
included in the consultation. The Commission does not wish to adopt a restrictive 
position on this subject but it is also aware of the practical problems posed by the 
multiplicity of potential players. Only the organizations themselves can develop their own 
dialogue and negotiating structures. The Commission will try to promote the development 
of new liaison structures between all the social partners in order to contribute to the 
rationalization and improvement of this process. Here, special attention will be paid to 
representation of small and medium-sized enterprises. 
In the context of the social dialogue, the Commission services have been in contact, 
during 1994, with numerous organizations expressing a particular interest in small and 
medium-sized enterprises, both at the interprofessional level and at the sectoral level. 
Particular note should be taken of the support provided to the new structure "UEAPME-
EUROPMI - Joint Committee on Social Dialogue", which participates in the meetings of 
the Permanent Committee on Employment. Before the last meeting of this committee, 
which was held on 22 September 1994, the Commission also provided funding for a 
preparatory meeting, organized by this SME representative structure. 
In the sector of commerce and distribution, over 90% made up of enterprises with less 
than 10 people, the Commission, in its communication of 14.12.1993, estimated that 
EUROCOMMERCE fulfils the criteria of representativity. The sectoral social dialogue 
carried on under the aegis of the Commission between EUROCOMMERCE and 
EUROFIET has already permitted joint training projects intended mainly for SMEs to be 
carried out in the context of FORCE (see point II.2.3.3.) as well as the conclusion of a 
common view on combatting violence in commerce. 
In addition, after the Commission's Communication on the Social Protocol, the 
Directorates General responsible for the structural funds decided to enlarge the 
consultation under article 31 para. 2 of the regulation on the coordination of EEC funds 
No 2082/93 to a limited number of professional or specific organizations. As a result, in 
the context of the meetings it organized with social partners, the Directorate General 
responsible for Regional Policy invited the following organizations, in addition to the 
general inter-professional organizations, to the social partners consultation meeting of 21 
December 1994: UEAPME, EUROCHAMBRES, COPA, COGECA and EUROPECHE. 
This invitation illustrated the Commission's wish to consult business in order to establish 
a dialogue propitious to taking into account the needs of small and medium-sized 
enterprises in the implementation of the Structural Funds. 
93 
3. PARTNERSHIP WITH THE MEMBER STATES 
In adopting its resolution of 10 October 1994124 to give free flight to the dynamic and 
innovative potential of SMEs - including the craft sector and micro-enterprises - in a 
competitive economy, the Council wanted to make the implementation of the Integrated 
Programme a clear political message. So it is endorsing the new approach proposed in 
the Integrated Programme (by virtue of article 130 of the Treaty on European Union) 
which targets, by mutual consultation and cooperation between the Member States and 
between the Member States and the Commission, the inclusion of their actions for the 
benefit of the SMEs so that their potential for growth and employment can be.better 
mobilized. This innovation in method converts into the implementation of concerted 
actions which relate both to the improvement of the environment of SMEs and to 
measures of support to SMEs (see Introduction). Thus a new form of partnership with 
the Member States is being established through these actions which will be orchestrated 
by the Commission with the aim of strengthening the effectiveness of measures in favour 
of SMEs. 
In its resolution the Council invites the Commission to present a report on the results of 
the consultation and the exchange of information as well as concertation on stimulation 
of demand for services offered to enterprises. In addition, it invites the Commission 
ensure that SMEs obtain better access to the specific research programmes of the 4th RTD 
Framework Programme as well as training programmes, and stresses the importance of 
coordinating the instruments of the Union. 
In the sector of commerce and distribution, the Commission is encouraging consultation 
between the Member States and with them notably through meetings of a group of 
government experts in internal commerce and directors general of internal commerce. 
This concertation is proving useful as a framework for Community actions relating to 
commerce and, particularly to commercial SMEs, in the context of the policies conducted 
by the Member States. 
4. COLLABORATION WITH THE OTHER INSTITUTIONS 
The European Parliament has emphasized that the Integrated Programme is the result of 
the good collaboration that it maintains with the Commission and that there is now a 
global commitment and a strategy in favour of SMEs. In its resolution of 24 October 
1994125 on the implementation of the Integrated Programme in favour of SMEs and the 
Craft Sector, it gave a favourable welcome to the Commission's proposals, stressing the 
need to make the existing programmes in favour of SMEs more transparent, and the 
advantages of exchange of good practice. It invited the Commission services responsible 
for enterprise policy to strengthen coordination with the other Commission services. The 
European Parliament also emphasized its interest in commercial SMEs by creating an 
Interparliamentary Group on commerce and distribution. 
124 Council Resolution of 10.10.1994, OJ No C 294 of 22.10.1994, pp. 6-8. 
125 Harrison Report, EP 184.350, 24.10.1994, OJ C 323 of 21.11.1994, p. 19. 
94 
The Economic and Social Committee, in its opinion of 15 September 1994126 relating to 
the Integrated Programme, has raised certain questions as to the actual capacity of the 
Commission to ensure real integration of Community actions in favour of SMEs. The 
committee considers that, to transform the objectives of the Integrated Programme into 
concrete terms, a global policy commitment by the Union is necessary. To this end, it 
proposes carrying out an evaluation of the effectiveness of existing measures and an 
institutional strengthening according the political weight necessary to implement 
Community policy in favour of SMEs. 
On 1 February 1995 the Committee of the Regions adopted its opinion127 on the Integrated 
Programme in which it supported the Commission's proposals and emphasized, inter alia, 
the importance of coordination between the Community programmes so as to facilitate 
access by SMEs and the craft sector to research and training programmes, thanks notably 
to an effort of information, a simplification of procedures, greater participation of SME 
representative organizations and a decentralization of measures to the regional or local 
level. 
126 ECS 973/94, Report by Mr Lustenhouwer, OJ C 393 of 21.12.1994, p. 221. 
127 CR 18/95, Opinion on the Integrated Programme in favour of SMEs and the Craft Sector. 
95 
CONCLUSION 
In line with the Council's request, the Commission has attempted in this report to present 
the links and coordination between the actions conducted under enterprise policy and 
those conducted under other Union policies. The accent has been placed on Community 
actions which more particularly concern the SMEs and the craft sector. In the spirit of 
the Integrated Programme, the Commission has followed the two great lines of enterprise 
policy, viz: improving the environment and support measures to SMEs. In fact, 
coordination does not merely cover programmes with a budgetary incidence (like the 
Structural Funds, research or vocational training), it also covers policies which may have 
an impact on the environment of SMEs (like the completion of the Single Market, taxation 
or the rules of competition). 
The coordination of Community activities implies several levels : first of all within the 
Commission services, then with the Member States and the other European institutions 
and finally with business circles. 
The Commission will pursue its internal coordination efforts to contribute through its 
policies to accompanying the development of SMEs. It should be noted that SMEs are 
now effectively targeted in almost all Community programmes. Significant progress has 
been made, as the report demonstrates, in the field of the Structural Funds and in 
particular through the Community SME initiative, RTD (thanks to the specific measures 
in favour of SMEs introduced into the 4th Framework Programme) and vocational training 
(notably in the context of the new objective 4, the ADAPT initiative and the new 
LEONARDO programme). However the Commission must be sure to monitor the 
implementation of programmes so that the declared objectives in favour of greater support 
for SMEs are effectively transformed into concrete advantages for the SMEs. The 
enterprise policy services cooperate with all the other services both in the conception of 
programmes and policies and in their implementation. So it is a question of pursuing the 
effort begun to make these programmes more visible and effective. 
The other institutions of the Union have also made a significant contribution to the 
development of SMEs and are called on to play a determinant role : the European 
Parliament, the Economic and Social Council and the Committee of the Regions, as well 
as the EIB and the EIF. The Commission intends to pursue good cooperation with these 
institutions. 
96 
Nevertheless, by virtue of the principle of subsidiarity, and given that SME policy is 
principally incumbent on the national or regional authorities, the role of the Commission 
in coordinating the policies of the Member States (Article 130 of the TEU) is limited to 
stimulating or organizing and orchestrating mutual consultation and cooperation between 
them and with the Commission with a view to ensuring more effectiveness, visibility and 
a certain convergence of actions. The Integrated Programme, which introduces the second 
generation of enterprise policy, is clearly part of this perspective. The concerted actions 
with Member States should contribute to encouraging coordination of actions carried out 
at the national, regional or local levels. 
Finally, the effectiveness of the measures imply good coordination and a permanent 
dialogue with SME representative organizations. Progress has been made on the 
Representation of the interests of SMEs and the craft sector, notably in the context of the 
social dialogue. 
In conclusion, the Commission will reinforce coordination with all its partners, the 
Member States, the European institutions, and the business organizations so that the 
efforts o£ the Union in favour of SMEs are converted into growth, competitiveness and 
employment. 
97 

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