COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.03.1998 
COM(1998) 182 final 
COMMUNICATION FROM THE COMMISSION 
AGENDA 2000 : THE LEGISLATIVE PROPOSALS 
OVERALL VIEW 

AGENDA 2000 : THE LEGISLATIVE PROPOSALS 
OVERALL VIEW 
Context 
In its Agenda 2000 communication of 16 July 1997 the Commission set out proposals for 
the reform of existing EU policies, the process of Enlargement and the financial 
framework for the period 2000-2006. 
The intensive discussions of the Commission's communication in the Council and the 
Parliament allowed a technical examination of the package. Moreover, they enabled the 
European Council in Luxembourg in December 1997 to agree on the start of the 
Enlargement process. This comprises the first meeting of the European Conference in 
London on 12 March 1998; the launch of the Accession Process with all eleven candidate 
countries in the margins of the General Affairs Council on 30 March and the opening of 
Accession negotiations with six countries on 31 March 1998. 
The legislative proposals adopted by the Commission today provide the legal texts on 
which decisions can be taken on the policy reforms proposed in Agenda 2000 and on the 
new pre-Accession aid instruments. The Commission has also adopted a report on the 
workings of the Interinstitutional Agreement on Budget Discipline and its proposal for 
new Financial Perspectives for the period 2000-2006. 
Still to come in the autumn of 1998 is the Commission's comprehensive report on the 
own resources system which will also address the development of relative budgetary 
positions of the Member States. 
The proposals adopted today fall into four main groups as follows: 
• agricultural Regulations; 
• Regulations on the Structural and Cohesion Funds; 
• pre-Accession instruments; and 
• the Financial Perspective for 2000-2006 (together with reports on the operation of the 
Interinstitutional Agreement on budget discipline and the Loan Guarantee Regulation 
(N° 2728/94)). 
It should also be noted that the Commission adopted today a proposal for a revised 
Financial Regulation for Trans European Networks, thus adding a further dimension to 
this package in a priority area. 
• Agriculture 
The main proposals for new agricultural Regulations cover : 
revised Council Regulations for the common market organisations for cereals, 
arable crops, beef, and milk; 
a revised Council Regulation on olive oil (which follows the recent proposal on 
tobacco and will be followed by a proposal on wine before June 1998); 
a "horizontal" Regulation to introduce some common provisions on cross 
compliance with environmental conditions, modulation of payments linked to the 
labour force and an element of degressivity in large payments; 
a revision to the EAGGF Financing Regulation (729/70); 
a new Regulation on support for rural development from the EAGGF both from 
its Guidance Section (in objective 1 areas) and from the Guarantee Section 
(elsewhere). 
The main principles of these proposals follow the prescription for further CAP reform set 
out in Agenda 2000. Some adjustments have however been made to take account of 
extensive consultations and notably of the first round of discussions in the Council in the 
autumn of 1997. In particular, it is now proposed to have a larger reduction in 
intervention prices for dairy products of 15 % instead of 10 %, which substantially 
improves competitiveness and marketing possibilities. This will be offset by a small 
increase (2 %) in milk quotas to be allocated in favour of young farmers in all Member 
States and to farmers in mountainous and Nordic regions. It will be further offset by the 
retention of the premium for maize silage. Because this will also benefit beef production, 
there is a corresponding adjustment in the bull premium. 
The opportunity has been taken to consolidate and simplify the existing Regulations 
wherever possible. In accordance with the principle of subsidiarity more discretion will be 
left to the Member States to decide on the allocation of part of the direct payments to beef 
and dairy farmers. Moreover, the "horizontal" Regulation will permit Member States to 
reduce payments where cross compliance with national environment conditions has not 
been met and where the agricultural labour force has been reduced below a certain level 
The proceeds of such reductions will be available for environmental measures by the 
Member States. The horizontal Regulation also introduces an element of degressivity for 
holdings in receipt of payments in excess of EUR 100,000. 
The Regulation on support for rural development from the EAGGF (which consolidates 
nine existing Regulations) will provide a coherent approach to rural development 
measures across the EU. In objective 1 and 2 regions such measures will be included in 
the same programming approach as for the Structural Funds. 
The agricultural proposals are for the most part due to come into effect in the year 2000 
They represent a further major step in the direction of the reform of the CAP which was 
started in 1992. As indicated in Agenda 2000, the further reductions in market support 
prices proposed and the increase in direct payments to farmers are designed to improve 
the competitiveness of EU agriculture on domestic and world markets thus reducing the 
risk of a return to the production of expensive and unsaleable surpluses while avoiding 
over compensation. Lower prices will benefit consumers and leave more room for price 
differentiation in favour of quality products. Greater market orientation will prepare the 
way for the integration of new Member States and reinforce the EU's position in the 
coming WTO Round. Moreover, there will be increased emphasis in the new CAP on 
food safety and environmental concerns. The rural development Regulation will for the 
first time bring together all the measures related to the development of the countryside 
which are funded by the EAGGF. 
• Structural Funds and Cohesion Fund 
The proposals for new Regulations on the Structural and Cohesion Funds will provide the 
legal framework for support from these funds in the next programming period 2000-2006 
The package has been constructed around the three principles enunciated in Agenda 2000, 
namely concentration, simplification and clarification of responsibilities. The legal texts 
proposed are as follows : 
a new general Regulation including provisions which apply to all the Funds (this 
replaces two existing Council Regulations); 
new "vertical" Regulations for each of the four Funds (ERDF, ESF, FIFG and, a 
Regulation on support for rural development from the EAGGF (see above)); 
a revised Regulation for the Cohesion Fund. 
The key elements are as set out in the Agenda 2000 communication : 
• 
• strict application of the 75 % GDP per head eligibility criterion for objective 1 
Objective 1 regions, which will also cover ultraperipheral regions and ex-objective 6 
regions, should continue to receive about 2/3 of the resources for structural funds; 
concentration of support in new objective 2 regions (covering restructuring areas of 
industrial and rural decline, urban areas and areas dependent on fisheries) limiting EU 
population covered to 18 % with an equitable contribution to this concentration from 
the Member States, limiting the reduction per Member State (including regions phased 
out from Objective 1 but eligible for Objective 2) to no more than one third of the 
coverage of current Objective 2 and 5b regions; 
objective 3 to finance human resource programmes in all other areas and to provide a 
general reference framework for such policies throughout each Member State; 
continuation of restructuring of fishing fleets and socio-economic accompanying 
measures in areas dependent on fishing; 
phasing out arrangements for regions losing eligibility to objectives 1 or 2 over 6-7 
years and 4 years respectively; 
encouragement for Structural Fund resources to be combined with financial 
engineering instruments; 
clarification and decentralisation of responsibility for programming and implementation 
(reducing the number of decisions which need to be referred to the Commission), 
deepening and strengthening of partnership, 
reduction in the number of Community initiatives from 14 to 3 and their share of 
funding from 9 % to 5 %; initiatives more targeted on Community wide actions, 
simplification of the verification of additionally; 
simpler financial arrangements in return for clearer Member State responsibilities for 
monitoring, evaluation, control and corrections; 
• rewards for well run programmes through extra allocations from a performance 
reserve; and 
• for the Cohesion Fund, appropriate macro-economic conditionality for countries 
participating in the single currency and streamlined financial management provisions 
Key questions about the eligibility of specific regions for the different objectives cannot be 
answered until the autumn. Only then will data become available which will permit the 
identification of those regions which are likely to qualify for the various Structural Fund 
objectives. In the case of objective 1 the Commission will draw up the list of those regions 
whose GDP per capita was less than 75% of the EU average in the last three years for 
which statistics are available. In the case of the new objective 2 Member States will be 
invited to propose regions from among those which qualify under a range of EU and 
national criteria included in the Structural Fund regulations but within population ceilings 
for each Member State designed to limit eligibility to no more than 18% of the population 
of the EU overall. The Regulations, which enter into force from 1.1.2000, should be 
adopted by early 1999 at the latest to prevent programming delays in the year 2000 
As proposed in Agenda 2000, the Commission's intention is that the overall envelope for 
structural and cohesion policies should be maintained at the level of 0.46% of GNP over 
the period 2000-2006, which equates to nearly EUR 287 billion (in 1999 prices). Of this 
amount about EUR 240 billion, including EUR 21 billion for the Cohesion Fund, will be 
available in the present Member States (compared with EUR 208 billion for 1993-99 on 
the same price basis) . The remaining EUR 47 billion will be for structural assistance in 
new Member States and the candidate countries. This represents a substantial commitment 
to the policy of cohesion which will be further reinforced by the intended concentration of 
resources on the poorest regions and those with the worst structural problems, in 
particular regarding unemployment. 
A considerable effort has been made to simplify the existing procedures in a number of 
respects and to decentralise decision taking as far as possible to the authorities in the 
Member States and regions concerned. This more decentralised approach brings with it 
increased responsibility for accurate monitoring and control of programmes at national 
and regional level and, where necessary, effective action on financial corrections In 
making its proposals in these areas the Commission has drawn on the experience gained in 
recent years in improving financial management and control under the SEM 2000 
initiative. 
• Trans-European Networks 
The proposed revision to the TEN financial regulation both sets out to improve the 
management of this programme, through greater recourse to multiannual planning, (which 
will facilitate public private partnerships by providing funding availability for the lifetime 
of a project), and provides an indication of spending needs totalling EUR 5.5 billion in the 
period 2000 - 2006, with around EUR 5 billion of this for Transport TENs. 
• Pre-Accession instruments 
The instruments for pre-accession aid proposed in Agenda 2000 comprise : 
a co-ordination Regulation to coordinate the three pre-Accession aid instruments 
to avoid any overlapping; 
an agricultural pre-accession instrument; 
an instrument for Structural Policies for pre-Accession (ISPA); and 
the existing PHARE Regulation will continue to provide pre-accession aid. 
Actions under the three pre-Accession aid instruments will be integrated into the 
Accession Partnerships with each of the candidate countries to ensure coherence The 
overall amount of pre-Accession aid will total some EUR 3 billion a year for the period 
2000-2006 (more than double the amount available in 1999) : 
» the PHARE programme will focus on accession by setting two priority aims which 
were endorsed by the European Council at Luxembourg : the reinforcement of 
administrative and judicial capacity (about 30 % of the overall amount) and 
investments related to the adoption and application of the "acquis" (about 70 %), 
• the agricultural instrument will support the modernisation of the agriculture and food 
industries through improved processing, marketing and quality control and assistance 
for rural development; 
• ISPA will provide support for transport networks and the protection of the 
environment. 
The three pre-Accession aid instruments will be operated in the context of the Accession 
Partnerships with each of the candidate countries. These Partnerships will provide a single 
framework setting out the priorities to be pursued by each country and the various 
financial resources available from the Community to support the pre-Accession process 
Each candidate country has been invited to draw up a national programme for the 
adoption of the EU "acquis" indicating in detail how it will implement each of the 
priorities identified in the Accession Partnership. The monitoring of Accession 
Partnerships and the related national programmes will provide an important input into the 
Commission's regular reviews of the progress of candidate countries. 
Financial Perspectives and Interinstitutional Agreement (IÎA) 
In accordance with Article 25 of the existing Interinstitutional Agreement (II A) on budget 
discipline and the improvement of the budgetary procedure the Commission has adopted a 
report on the working of the IIA and proposals for the Financial Perspective for the 
period 2000-2006. The proposals for the Financial Perspective closely follow those in 
Agenda 2000 : the figures have changed because they are presented in 1999 prices rather 
than 1997 prices. As requested by the Luxembourg European Council, the Financial 
Perspective is presented on an EUÎ5 basis, leaving sufficient margin to finance 
enlargement, but with an accompanying table to estimate the costs associated with 
Enlargement and their financing under the technical assumptions used by the Commission 
The main table in the Financial Perspective sets ceilings for the six categories oi 
expenditure (agriculture, structural policies, internal, external, administration and 
reserves) It indicates a growing unused margin which may be set aside for Enlargement 
within the ceiling on the EU's revenues (or "own resources") of 1.27 % GNP Table 2, 
analyses the amounts which should be available for the initial costs of Enlargement in the 
period 2000-2006. This still leaves room for an ample contingency reserve within the own 
resources ceiling, taking into account its increase due to Enlargement. 
The report on the operation of the IIA analyses how the agreement lias worked in 
practice since 1993 and suggests some improvements which could be incorporated into a 
new agreement for the succeeding period. These would provide some limited additional 
flexibility for transfers between the internal and external categories of expenditure and for 
a limited carryover of unspent allocations from one year to the next to meet a specific 
political priority. The current rule providing for automatic transfers of unspent 
commitments in category 2 (structural policies) to subsequent years will no longer be 
necessary. The Commission will propose that the new IIA should consolidate and 
Complete where necessary, all the extant agreements on budgetary matters between the 
Parliament, the Council (which make up the two halves of the Budget Authority) and the 
Commission. These cover such matters as the classification of expenditure, respect for 
financial ceilings in legislation, the need for a legal base for items in the Budget and the 
conciliation process in the budget procedure. 
The Commission will circulate a working document with the text for a new IIA for use in 
the negotiation with the Budget Authority. Further legislative proposals will be required 
to amend the Budget Discipline Decision in due course. 
The Commission has also adopted a report on the operation of the Loan Guarantee 
Regulation (N° 2728/94) which includes some proposals for amending the Regulation to 
take account of the experience gained since its adoption. It is proposed that the rate of 
provisioning on new loans should be reduced to 6% and the amount of the reserve 
reduced to EUR 150 million from the year 2000 in order to maintain the existing capacity 
to make loans. 
* * * 
Further details on the contents of the legislative package will be found in the explanatory 
memoranda which accompany each of the main groups of proposals. The Commission 
hopes that the Council and Parliament will set in hand the necessary detailed examination 
of its proposals without delay. Although it will not be possible to reach a final agreement 
until all the missing elements are in place, there are strong arguments for seeking to reach 
an overall settlement, if possible, under the Austrian Presidency before the end of 1998 
Failure to adopt the proposals on the Structural Funds by then in particular would be 
likely to result in serious delays in the programming for the new period. Finally, agreement 
on the financial package is necessary to avoid delays in the Enlargement negotiations 
d:\data\2000-agc\divcrs\58X-lcgi.doc 

ISSN 0254-1475 
COM(98) 182 final 
DOCUMENTS 
EN oi il 06 IO 
Catalogue number : CB-CO-98-182-EN-C 
ISBN 92-78-32389-6 
Office for Official Publications of the lUiropcau ( oiimiiinilics 
1,-2985 Luxembourg