9. 6. 81 Official Journal of the European Communities NoC 138/11 
Opinion on the proposal for a Council Decision empowering the Commission to contract 
loans for the purpose of promoting investment within the Community 
The text referred to the Committee has been published in Official Journal of the 
European Communities No C 341 of 31 December 1980, page 18. 
A. LEGAL BASIS FOR THE OPINION 
On 11 November 1980 the Council referred the abovementioned proposal to the 
Economic and Social Committee in accordance with Articles 235 and 198 of the Treaty 
establishing the European Economic Community. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 
185th plenary session held in Brussels on 25 and 26 February 1981. 
The full text of the opinion is as follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, 
Having regard to the Treaty establishing the 
European Economic Community, and in particular 
Articles 235 and 198 thereof, 
Having regard to the letter of 11 November 1980 in 
which the Council of the European Communities 
requested the Committee's opinion on the proposal 
for a Decision empowering the Commission to 
contract loans for the purpose of promoting 
investment within the Community, 
Having regard to the decision taken by its Bureau on 
18 November 1980 entrusting the preparation of an 
opinion on the matter to the Section for Economic 
and Financial Questions, 
Having regard to the opinion it adopted on 27 April 
1978 on the proposal for a Council Decision 
empowering the Commission to issue loans for the 
purpose of promoting investment within. the 
Community (l), 
Having regard to the oral report of the rapporteur, 
Mr Rouzier, 
Having regard to the discussions of the Section for 
Economic and Financial Questions at its 62nd 
meeting held on 17 February 1981, 
Having regard to the discussions at its 185th plenary 
session, held on 25 and 26 February 1981 (meeting of 
25 February 1981), 
(i) OJ NoC 269, 13. 11. 1978. HAS ADOPTED THE FOLLOWING OPINION 
unanimously, with no votes against and one 
abstention: 
1. General remarks 
1.1. In responding to the request for an opinion on 
the present proposal, which basically extends and 
expands the scope of the NCI (New Community 
Instrument), the Committee would first of all 
reaffirm what the Committee said in its opinion on 
the original NCI proposal. 
1.2. The Committee points out that the NCI forms 
part of a set of Community measures for resuming 
the movement towards Economic and Monetary 
Union. The NCI should be seen as an additional 
facility that is not in competition with any 
organization or authority. The prime objectives lie in 
the energy, industrial and infrastructure sectors; they 
must take account of both regional imbalances and 
the need to reduce unemployment. 
1.3. The present proposal furthers these aims by 
removing the overall ceiling on the loans the 
Commission is empowered to raise. It also slightly 
modifies the system of borrowing in tranches, 
thereby permitting different tranches to run 
concurrently. The proposal would have the Council 
lay down the guidelines for the eligibility of projects, 
No C 138/12 Official Journal of the European Communities 9. 6. 81 
by a qualified majority rather than unanimously as 
before. 
1.4. The Committee has repeatedly placed great 
emphasis on the need to increase investment so as to 
be able to achieve the Community's economic and 
social goals and in particular so as to be able to better 
combat unemployment. There has in recent years 
been a tendency for investment to decline as a 
percentage of national income. This has happened at 
a time when there is a great need for structural 
adaptation and such adaptation always requires large 
investment. In its opinion on the Commission's 
annual economic report 1980/81 (l), the Committee 
said that the need for investment arises from many 
directions. The change in the relative price of energy 
will change consumer habits considerably over a 
period of time. It also makes some industries 
relatively more unprofitable and others more 
profitable than in the past and it makes necessary 
large expenditure for energy saving and for the 
production of forms of energy alternative to oil. In 
addition there must be investment to create the new 
activities which will permit a return to full 
employment in the future and to increase the 
competitiveness of the economy. 
1.5. In the same opinion, the Committee went on to 
say that since manufacturing has been severely 
affected both by the increase in the cost of energy and 
by loss of competitiveness, it considered it necessary 
that everything possible should be done to encourage 
investment in manufacturing. The Committee 
believes, therefore, that loans to manufacturing 
projects, specifically those involving small and 
medium-sized firms, should be given just as high a 
priority as projects in the energy and infrastructure 
sectors. 
1.6. One of the major failings of the Community so 
far has been its inability to collectively adapt itself to 
the industrial realities of the future. 
1.7. The Committee realizes that it is not alone in 
pointing out the need to apply a purposeful policy for 
industrial cooperation in Europe now that the 
European economy is going through a series of 
difficulties requiring its industrial structures to be 
adapted and its competitiveness increased in view of 
the unprecedented intensity of competition on a 
market open to the world (2). 
(') OJ No C 348, 31. 12. 1980. 
(2) Draft report of the European Parliament's Committee 
on Economic and Monetary Affairs on 'Industrial 
cooperation between the Member States'. 1.8. Indeed, the Committee, in its opinion on the 
report on some structural aspects of growth (3), urged 
that the Commission should investigate the 
possibility of a more efficient use of the existing 
Community instruments. It said that if such 
instruments, despite their limited scope (industrial 
policy being a case in point), are deployed together, 
their effectiveness can be increased. 
1.9. The Committee trusts that these considerations 
will be to the fore when the Council, acting on a 
proposal from the Commission and after consulting 
the European Parliament, lays down the guidelines 
for the eligibility of projects. 
1.10. These guidelines should be integrally linked to 
the Community objectives of the fifth medium-term 
economic policy programme (1981 to 1985), shortly 
to be adopted. 
2. Specific comments on the operation of the 1978 NCI 
Decision and on its future in its amended form 
2.1. The original NCI Decision on the draft of 
which the Committee gave its opinion, imposed an 
overall ceiling of 1 000 million EUA on the loans 
which the Commission is empowered to raise. The 
Council has already approved two tranches of 
500 million EUA, and the present proposal seeks to 
extend the use of this instrument by removing the 
overall ceiling. In the light of experience to date and 
the Community's role in fostering growth and 
employment, and given the safeguards that exist, the 
Committee can approve the removal of the overall 
ceiling. 
2.2. A further aspect of the present proposal which 
seeks to amend the original NCI Decision is that the 
system of borrowing in tranches is to be made sligthly 
more flexible so as to allow for the possibility of 
simultaneous tranches. The Committee believes that 
the NCI should be used to further much needed 
industrial investment and that, as indicated in 
paragraphs 2.5 and 2.6 below, such loans must be 
tailored to the requirements of this new objective. 
The Committee therefore welcomes the greater 
flexibility implied by this modification of the NCI 
provisions. 
2.3. This proposal differs from the original NCI 
Decision in that it is proposed that the Council, 
(3) OJ No C 146, 16. 6. 1980. 
9. 6. 81 Official Journal of the European Communities No C 138/13 
acting by qualified majority and not unanimously as 
before, on a proposal from the Commission, and 
after consulting the European Parliament, should lay 
down the guidelines for the eligibility of projects. The 
Committee endorses this amendment, and renews its 
call for the Committee to be consulted on the same 
footing as the Parliament. 
2.4. The NCI should remain a source of finance 
that is complementary to the European Investment 
Bank, and other national and international lenders. 
The NCI should be seen as an additional facility, in 
competition with no other organization or authority. 
The Committee notes from the Commission report 
on the operation of the NCI during the first 
17 months of its existence, that the placing of NCI 
loans has not in fact impeded issues under other 
Community borrowing machinery. It emphasizes 
that the volume and frequency of their issues, notably 
those of the ECSC and of the EIB, have continued to 
increase rapidly. 
2.5. The Committee notes the geographical 
distribution of loans authorized so far, their sectoral 
breakdown, and the estimated short-term impact 
they might have on employment. Whilst included in 
the basic Decision, Industry has not yet benefitted 
directly from the NCI. The question must be asked 
whether this is due to the manner in which the 
instrument has been operated (Commission deeming 
a project is not eligible or the Council deciding 
against a specific tranche proposal) or whether the 
provisions of the instrument themselves need 
amending. Back-to-back loans are obviously too 
large for most industrial projects. The contracting of 
loans before the funds are borrowed by the 
Commission have obvious disadvantages to an 
industrial investor, more particularly because the 
investor does not know the loan procedures and 
terms. 
2.6. Since the Decision does not rule out the 
possibility of borrowing the funds before conclusion 
of the contracts relating to the loans to be granted, 
tranches should be authorized by the Council in 
smaller lots (say 100 million units of account to 
Done at Brussels, 25 February 1981. 150 million units of account), which would be raised 
on the market, and subsequently lent on to a number 
of borrowers as eligible requests for loans are 
made. 
2.7. The Committee reiterates its view that the ECU 
should be introduced for all lending and borrowing 
operations as soon as possible. 
2.8. The necessary controls would exist in so far as 
the Council would have more frequently to approve 
the different tranches (several possibly running 
concurrently). The EIB would continue to consider 
the creditworthiness of the borrowers and the 
viability of projects on the basis of normal banking 
standards. The Commission does repeatedly say that 
the NCI is obviously one of the borrowing/lending 
instruments fully covered by the Commission's 
proposals that such activities be included in the 
budget. Other safeguards against the NCI getting out 
of hand exist in the form of the budgetary authority 
and the Court of Auditors. 
3. Conclusions 
3.1. The Committee sees the proposal to continue 
and extend the scope of the NCI as going some way 
towards meeting the Community's need to take every 
possible measure to boost the level of economic 
activity by increasing investment and to support 
common policies, thus furthering the requisite 
convergence of the nine economies. It can be a 
usefull tool for assisting the restructuring of industry. 
The Committee considers the experience so far to 
have been beneficial to the Community. It sees this as 
part of a Community strategy that will help restore 
economic and social equilibrium and help in 
particular to create employment. The Committee 
hopes the NCI will be adapted more in the future to 
the needs of the industrial sector. 
3.2. For all these reasons, subject to the provisos 
made, the Committee supports the present 
proposal. 
The Chairmann 
of the Economic and Social Committee 
Tomas ROSEINGRAVE 
No C 138/14 Official Journal of the European Communities 9. 6. 81 
ANNEX 
to the opinion of the Economic and Social Committee 
The following proposed amendment was rejected during the discussion: 
Page 12 (2.1) 
Insert on page 4, at the end of 2.1: 
'It considers, however, that the Community's total borrowing (for all purposes) should be 
limited (albeit to a figure representing a sizeable percentage of the Community's annual 
budget), in order to set an overall ceiling on the Community's financial commitments.' 
Result of the voting 
For: 16, Against: 38, Abstentions: 0