Resolution of the European Committee of the Regions — The 2019 European Semester and in view of the 2020 Annual Growth Survey

(2020/C 39/02)

Submitted by the EPP, PES, Renew Europe, EA and ECR political groups

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

— having regard to the European Commission’s Communication on the Annual Growth Survey 2019 (AGS) (1) and to the 2019 European Semester,

— having regard to its resolution of 10 October 2018 on economic policies of the euro area and in view of the 2019 Annual Growth Survey (2) (AGS) and to its opinion of 10 April 2019 on ‘the European Semester and cohesion policy: aligning structural reforms with long-term investments’,

— having regard to the European Parliament resolution of 13 March 2019 on the European Semester for economic policy coordination: Annual Growth Survey 2019 (3);

1. welcomes the 2019 Annual Growth Survey’s focus on investment and reforms fostering sustainable and inclusive growth as a way to improve competitiveness and cohesion among and within Member States and regions and to coordinate all EU investment policies, including cohesion policy;

2. insists that, to ensure ownership and effectiveness of structural reforms of the European Semester process, the local and regional authorities should be formally associated with it, based on the principles of partnership and multi-level governance ( 4 ) and using the CoR’s proposal for a ‘Code of Conduct for the involvement of the local and regional authorities in the European Semester’ ( 5 )

3. notes that growth is slowing down and that trade tensions and the risk of a no-deal Brexit generate uncertainty which discourages investment. Calls, against this background, on the EU to consider frontloading measures to boost the EU’s investment programmes and to support those areas that could be mostly affected by a no-deal Brexit;

4. stresses that public investment at country level has shrunk significantly and remains too low, especially in the countries that were most affected by the crisis; notes that, in times of severe budget constraints, current expenditure was not cut nearly as much as investment; underlines that subnational governments, responsible for more than half of public investment in the EU, had to cut their investment disproportionately ( 6 )

5. asks the Commission to present, ahead of the reform process of the Stability and Growth Pact (SGP) envisaged in 2020, an assessment of the use of the flexibility clauses of the SGP since 2015. Considers that the SGP reform should lead to clearer rules that will help avoid procyclical fiscal policies, allow for reasonable and sustainable debt reduction for the most vulnerable economies in a context of low inflation, remove national co-financing of Cohesion Policy programmes from the accounting for the SGP ceilings and introduce a ‘golden rule’ of public accounting giving public authorities at all levels the fiscal space necessary to undertake long-term investments needed to ensure sustainable development;

6. stresses that Member States with available fiscal room should engage in the public investment needed to boost long-term growth, which would reduce macroeconomic imbalances in the EU and the euro area;

7. strongly supports the Commission President-elect’s commitment to refocusing the European Semester as an instrument that integrates the United Nations Sustainable Development Goals;

8. welcomes in principle the Commission President-elect’s intention to put forward a Sustainable Europe Investment Plan, to support EUR 1trillion of investment over the next decade in every corner of the EU, but expects further clarification on how this Plan relates in particular to the InvestEU programme and how it is expected to affect investment in the EU’s regions and cities. Also supports the Commission President-elect’s intention to put forward a strategy for green financing;

9. shares the Commission President-elect’s stress on promoting the EU transition towards climate neutrality by 2050 by appropriate industrial strategies, as well as to support the people and regions most affected through a new Just Transition Fund. Advocates that such a fund should in particular help mitigate the social, socioeconomic and environmental impact of structural change in European coal regions;

10. stresses that trade agreements negotiated and concluded by the European Union should contribute to achieving the Sustainable Development Goals;

11. notes that the implementation rate of the Country-Specific Recommendations remains slow and uneven and considers that this is also the result of a lack of ownership and an insufficient administrative and institutional capacity; highlights that, in 2019, 137 of the individual recommendations packaged in the broader Country-Specific Recommendations (sub-recommendations) were either directly/indirect addressed to LRAs or had a territorial impact, up from 120 in 2018, currently representing 62 % of all 2019 sub-recommendations ( 7 ) . 112 of these sub-recommendations addressed obstacles to investment, up from 79 in 2018, as a consequence of the European Semester’s stronger focus on investment this year, while 26 were about improving administrative capacity of local and regional authorities and were addressed to 17 Member States. Stresses that these findings underline the role of local and regional authorities in delivering on the European Semester’s goals, which is not sufficiently recognised in the Semester’s governance process;

12. emphasises that 55 sub-recommendations included in the 2019 Country-Specific Recommendations addressed the role of local and regional authorities in the implementation of the European Pillar of Social Rights. As social disparities are often rooted in regional disparities, they should be thoroughly analysed in the Country Reports and the National Reform Programmes. Recalls that the CoR, in cooperation with Eurostat, has contributed to a methodological study on how to build a European Regional Social Scoreboard which could be used, in the context of the European Semester, to monitor the progress of the European Pillar of Social Rights and asks the upcoming Commission to further support this process;

13. acknowledges the European Commission’s multi-annual assessment of the implementation of Country-specific Recommendations, which shows that more than two-thirds of country-specific recommendations issued up to 2018 have been implemented with at least ‘some progress’ ( 8 ) , but regrets once again the persistent lack of transparency on the criteria upon which such assessment is based;

14. welcomes the guidelines for the 2021-2027 programming of the ESI Funds included in the Country Reports (Annex D); notes however that the underlying analysis of regional disparities is still insufficient, also because of the failure to involve the local and regional authorities in its preparation, as revealed by a survey carried out by the CoR right after the publication of the Country Reports;

15. stresses that the European Semester should assess the state of implementation of investment policies on a yearly basis; stresses that local and regional authorities, through their representative organisations, should be involved in this assessment from the publication of the Country Reports, including in the dialogue between the Commission’s Vice-President in charge and the Member States;

16. emphasises that the lack of structured and ongoing involvement of the local and regional authorities throughout the European Semester, in particular in the design and implementation of the National Reform Programmes, creates an asymmetry between the Semester, which is centralised and top-down, and Cohesion Policy, which is under shared management and decentralised. Proposes to address this issue as a matter of urgency by expanding the current Code of Conduct on Partnership to cover the European Semester policy process;

17. points out that the National Reform Programme (NRP) is also the only document through which each Member State of the European Union sets out each year to the European Commission the specific policies that it intends to implement in pursuit of common goals, sustainable public finances and structural reforms, along with proposals to deliver the growth and employment objectives, in line with the recommendations made in the European Semester and the ten-yearly targets set by the Europe 2020 strategy. Therefore, complying fully with the principle of multilevel governance, the regions should be involved in shaping the NRP; several Member States are indeed already doing so, using the NRP as a mechanism for integrated planning of action on the ground, including in light of the innovative features of the EU regulations on the 2021-2027 programming period which are intended to align it with the European Semester; recalls against this background that the CoR has produced a European Regional Social Scoreboard ( 9 ) , welcomes the European Commission’s proposal for adding a regional dimension to the Social Scoreboard in the European Semester process and looks forward to its swift implementation;

18. reiterates its concern that the European Commission has still not provided a definition of ‘structural reforms’ in the context of the economic governance of the EU and possible support through EU programmes such as the proposed Reform Support Programme. In accordance with the principle of subsidiarity, the scope of the structural reforms eligible for EU funding should only include the strategic policy areas relevant to the implementation of the Treaty objectives and which relate directly to EU competences;

19. expects the European Semester to provide for a broad, coordinated and integrated EU response to the disruptive effects of demographic change, particularly by reinforcing the effectiveness of cohesion policy and by promoting regional strategies, especially those aimed at developing smart and competitive rural areas;

20. notes that the CSRs identify the housing market as critical for financial stability and that the scarcity of adequate and affordable housing is a growing problem in several Member States. This analysis strengthens the case for evaluating the need for a European Agenda for Housing leaving a wide margin of discretion for the Member States in what is their area of responsibility ( 10 )

21. highlights that multilateralism and a rules-based global order are in the EU’s interest and must be defended. Welcomes therefore initiatives intended to fight for a level playing field and to be tough against states that compete by dumping, deregulating or subsidising; warns, however, that EU internal competition policy rules are far stricter than is the case internationally and therefore risk putting European companies at disadvantage at the global level;

22. considers that the negotiation of Free Trade Agreements should be informed, among other, by regional impact assessments, as they would facilitate the early identification and quantification of possible asymmetric impacts on European regions, so as to allow for swift public policy responses;

23. supports the European Council’s call ( 11 ) for an integrated policy approach in deepening and strengthening the Single Market, designing an industrial policy fit for the future, addressing the digital revolution and ensuring fair and effective taxation;

24. welcomes the report of the European Commission’s high-level group on the future of European industry ( 12 ) , outlining a long-term vision for a European industrial strategy and emphasising the regional dimension of such a strategy;

25. reiterates its call for strengthened EU support for pan-European and inter-regional collaboration that focuses on developing synergies and reaching critical mass in co-investment for innovation in industrial value chains across Europe, as well as on realising the potential of the circular and carbon neutral economy;

26. recognises that the competitiveness of the European economy and industry is based on the entrepreneurial and innovative potential of SMEs; calls on the European Commission and the Council to take account of the specific needs of SMEs when developing the EU’s long-term economic strategies, including measures to break down existing barriers to the free movement of goods and services in the EU Single Market, which are particularly hampering the growth of European SMEs;

27. highlights that improving local and regional public procurement would bring sizeable competitiveness and efficiency gains. This is corroborated by the CoR’s analytical work showing that the complexity of current public procurement rules, and goldplating tendencies in many Member States, increase the likelihood of errors and subsequent risk of legal action, which in turn leads to overly risk-averse procurement strategies among many local and regional authorities;

28. instructs the President to forward this resolution to the European Commission, the European Parliament, the Finnish Presidency of the Council and the President of the European Council.

Brussels, 9 October 2019. The President of the European Committee of the Regions Karl-Heinz LAMBERTZ

(1) Commission communication of 21 November 2018 entitled Annual Growth Survey 2019: For a stronger Europe in the face of global uncertainty (COM(2018) 770).

(2) https://webapi2016.cor.europa.eu/v1/documents/cor-2018-03900-00-00-res-tra-en.docx/content

(3) http://www.europarl.europa.eu/doceo/document/TA-8-2019-0201_EN.html

(4) On the European Semester and cohesion policy: aligning structural reforms with long-term investments, adopted unanimously by the CoR Plenary of 10 April 2019 https://webapi2016.cor.europa.eu/v1/documents/cor-2018-05504-00-00-ac-tra-en.docx/content

(5) https://webapi2016.cor.europa.eu/v1/documents/cor-2016-05386-00-00-ac-tra-en.docx/content

(6) https://www.eib.org/attachments/efs/economic_investment_report_2018_key_findings_en.pdf

(7) CoR, 2019 European Semester. Territorial Analysis of the Country-Specific Recommendations

(https://portal.cor.europa.eu/europe2020/Pages/welcome.aspx#).

(8) Commission Communication on the 2019 CSRs, p. 3.

https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1560257977630&uri=CELEX%3A52019DC0500

(9) https://cor.europa.eu/en/engage/studies/Documents/European%20Regional%20Social%20Scoreboard/European-Regional-Social-Scoreboard.pdf?_cldee=bWF0dGhpZXUuaG9ybnVuZ0Bjb3IuZXVyb3BhLmV1&recipientid=contact-09d0f0455cf2e4118a29005056a05119-28d790990cbf4dcc890968d369dec000&esid=8685471a-6dd4-e911-8116-005056a043ea

(10) Point 20 of the CoR Resolution on the Proposals for the new European Union legislative mandate, 27 June 2019 https://webapi2016.cor.europa.eu/v1/documents/cor-2019-02550-00-01-res-tra-en.docx/content

(11) As expressed in its conclusions of 20 June 2019 https://www.consilium.europa.eu/media/39922/20-21-euco-final-conclusions-en.pdf

(12) Published on 26 June 2019 https://ec.europa.eu/growth/industry/policy/industry-2030_en#vision2030