ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
 
 
 
 
COM (85) 413 
 
 
 
Vol. 1985/0 156 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Economic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation. 
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 1983 über die Freigabe der historischen Archive der Europäischen 
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983, 
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003 
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit 
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5 
der genannten Verordnung freigegeben. 
COMMISSION OF THE EUROPEAN COMMUNITIES
C0MC85) 413 final  
Brussels, 2 September 1985
■'·' " - X  
■  X
H Shir. ^ 0'j  
Sorli du S ecu·^’
INTERIM REPORT BY  
THE COMISSION
on action taken in response to the  
comments made in the resolution  
accompanying the decision granting  
a discharge in respect of the  
implementation of the 1983 budget
(Presented to Parliament in accordance with Article 85  
of the Financial Regulation of 21 December 1977)
C0MC85) 413 final

EUROPEAN COMMUNITIES
COMMISSION
INTERIM REPORT BY  
THE COMMISSION
on action taken in response to the  
comments made in the resolution  
accompanying the decision granting  
a discharge in respect of the  
implementation of the 1983 budget
(Presented to Parliament in accordance with Article  
of the Financial Regulation of 21 December 1977)

CONTENTS
Page
PART I GENERAL ASPECTS 1
PART 11 REPLIES BY THE COMMISSION TO INDIVIDUAL 8
POINTS OF PARLIAMENT'S RESOLUTION
Form of the discharge decision 9
Documents - j g
Balance sheet -1 1
Accounting problems 12
Three-year financial forecasts 14
Utilization problems 15
Joint Declaration 19
Revenue 24
EAGGF clearance problems 28
Common agricultural policy 30
Common fisheries policy 43
Regional policy 44
Social Fund 49
Investing in the future of Europe 52
Food aid 55
Cooperation with developing countries 57
Commission staff and administration 60
European Schools 69
Borrowing and lending 72
PART III ANNEXES 0
Annex I-A: New operations (1983 and 1984 budgets)  
for which the Council has adopted the legal basis
Annex I-B: New operations (1983 and 1984 budgets)  
for which the Council has not yet adopted a legal basis
Annex II Publications and reports relating to the  
evaluation of the Community RSD programmes

PART I 
GENERAL ASPECTS

-  1 -
PART I: GENERAL ASPECTS
1 -  The Commission's political will to promote sound management of Community  
financial resources
When the new Commission's programme was presented to Parliament on 14 January,  
emphasis was laid on the importance of sound management of the Community's  
financial resources. This has, of course, always been a fundamental  
principle of the Commission, but at a time of budgetary difficulty its  
responsibilities in this field take on particular importance. The  
Commission has accordingly decided to improve the control of Community revenue  
and expenditure, thus unequivocally demonstrating its political will to assign  
a leading role to this activity.
On the basis of a detailed report received from the Court of Auditors and a  
recommendation from the Council, Parliament clearly indicated the political  
importance it attaches to the control function when it adopted the discharge  
decision on 16 April and attached to it a detailed resolution containing  
comments addressed to the other institutions. These institutions are called  
upon to present to Parliament by 30 September 1985 an interim report on  
measures taken in response to these comments. (The final report is to be  
presented as an annex to the revenue and expenditure account for 1985 at the  
end of May 1986).
During the debate on the 1983 discharge, the Commission told Parliament  
that it could not agree with all the comments and conclusions  
which had been put forward but that the shared aim of Parliament and the  
Commission to rectify the failings of the management system should be  
translated into action. This interim report shows that the Commission has,  
to a very large extent, acted on Parliament's comments. It has already

-  2 -
drawn up or started preparation of a number of specific measures and these  
are detailed in Part II of this report. The exchanges of views which the  
Commission hopes to hold with the Committee on Budgetary Control on the basis  
of the interim report will make it possible to confirm and, if necessary,  
expand these measures with a view to the final report required under  
Article 85 of the Financial Regulation.
2-  Making available to Parliament and the other institutions the information  
necessary for strengthening control over budget implementation
The Commission has made a point of taking constructive action on Parliament's  
various requests aimed at increasing the opportunities for outside control of  
budget implementation.
Four elements were specifically referred to in Parliament's resolution, viz:  
Three-year financial forecasts
The Commission is pleased to note that its expressed wish to move away from  
excessively short-term management of the budget towards genuine multiannual  
planning has been endorsed by Parliament.
In particular, it shares Parliament's view that the multiannual forecasts of  
resource and expenditure patterns are now even more important than in the 
past.
In line with the desire expressed by Parliament in its resolution on budgetary  
policy guidelines for 1986, the Commission therefore took particular care in  
preparing the forecasts of budgetary requirements for 1986, 1987 and 1988.
The budget can no longer be the simple addition of costs deriving from  
individual decisions; it must be an integral part of a long-term financial  
strategy, especially as the resources available are limited.

- 3 -
Inclusion of new information in the revenue and expenditure account and the  
balance sheet
In the revenue and expenditure account for 1984 the Commission has already
- included a table showing the amount of commitments still to be paid by year  
of origin and giving payment forecasts for future years;
- prepared an annexed note showing the level of intervention stocks and the  
costs which might arise from their disposal;
- included a table showing the state of implementation at 31 December 1984  
of the budget headings amended by Parliament and supplemented this with  
more detailed information in tables contained in letters sent to the  
Chairmen of the Committees on Budgets and on Budgetary Control;
- provided details of budget headings where implementation has been hampered  
by legislative delay;
- provided details of aid granted to outside bodies in a tetter to the  
Presidents of the institutions.
Control of implementation in the current year
As regards control of the current year, Parliament has particularly asked the  
Commission to provide a report explaining the reasons for any under-utilization  
of appropriations entered in the budget and increased recourse to requests for  
transfer of appropriations. The Commission will be doing this for the first  
time in the report on budget implementation at 31 August 1985; it would stress  
that forecasts of utilization of appropriations made relatively early in the  
year are inevitably unreliable.

- 4 -
Clearance of EAGGF Guarantee Section accounts
The Commission has set itself the objective of clearing the 1985 accounts by  
30 June 1987 provided that the Member States submit their statements at least  
one year ahead of this date. It will ask the Member States to make every  
effort to comply with the deadlines laid down in the regulations and it will  
use all the means at its disposal to obtain the necessary information from the 
Member States in good time.
The Commission will draw the attention of Member States' Governments to the  
importance of clearing the accounts. It will act to improve the regulations  
and speed up procedures and will adopt the necessary internal arrangements.
3. Three frameworks for discussion within the Commission
With a view to seeking specific ways of improving the management of Community  
policies and finances, the Commission has defined three frameworks for  
discussion in the first half of 1985 to cover a broad range of Commission  
activities.
Green paper
With a view to improving the management of the common agricultural policy,  
the Commission has set up several working parties which will undertake  
in-depth analysis of the objectives and the cost effectiveness of several  
sectors of the policy. The recommendations of these working parties are  
currently being studied by the Commission and no final conclusions have yet  
been drawn. Parliament's comments, which fall within the brief assigned  
to these working parties, will therefore be dealt with in the Commission's  
final report on action taken in response to Parliament's comments on the 1983  
discharge.

- 5 -
Food aid
The Commission's food aid policy is also being analysed in depth by a working  
party. The Commission will outline what action it intends to take in  
response to Parliament's comments in its final report, using the working  
party's findings as its basis.
Resources management
On a more general level, the Commission has decided to set up a working party,  
chaired by its Secretary-General and consisting of the Directors-General  
exercising the principal control functions. Its task will be to carry out  
an analysis within the Commission of management of the Community's human  
resources and financial operations. The working party has already started  
its investigations and will look at different areas of activity. It is  
particularly intended that the working party should look at the administrative  
management of the Commission, the effective use of Community financial support  
and the quality of the management of individual Directorates-General and other  
departments. The working party is to make recommandations in these various  
fields.
4. Control aspects of various Community policies and operations
The interim report contains detailed replies to the various requests made by  
Parliament with regard to a number of Community policies and operations:

-  6 -
Agricultural, policy
- intervention stocks:
The Commission shares Parliament's view that intervention stocks should be  
disposed of at the most favourable time and that, where appropriate, the  
level of budget appropriations should be set accordingly. In this  
connection the Commission has proposed in its preliminary draft budget for  
1986 the inclusion of appropriations to offset the financial depreciation  
of stocks of butter and beef and veal. The Commission is relying on the  
budgetary authority to enter all the appropriations requested in the 1986  
budget since they are essential to the aim of a gradual reduction of stock  
levels.
- statement of objectives
The Commission is endeavouring to improve the presentation of its  
proposals in order to distinguish more clearly between the various economic,  
social and environmental objectives.
Regional policy
One of the most important functions of the Regional Fund is undoubtedly the  
creation and safeguarding of jobs. With this aspect in view, the Commission  
will be looking carefully and in detail at the criteria for granting ERDF  
assistance. In cases where it would seem clear that aid applications contain  
manifestly erroneous job estimates, the Commission will not hesitate to  
penalize what can be seen to be a knowingly fraudulent declaration, notably  
by withdrawal of the assistance granted.
The Commission also endorses Parliament's recommendation to delay approval of  
new commitments in favour of Member States which persistently fail to supply  
required information on time. The new ERDF Regulation gives the Commission  
new powers in this respect which it intends to use.

Social policy
The Commission has drawn Parliament's attention to the new management  
arrangements introduced by the recent revision of the European Social 
Fund Regulation. Once these are fully operational, it is likely that  
most of the criticisms justifiably expressed by Parliament will be  
satisfactorily answered.
5. Joint Declaration of 30 June 1982
Harmonious budgetary implementation involves combined action by all  
the Community institutions. The main aim of the Joint Declaration was  
to encourage such action. From this point of view, the Commission is  
very anxious to see it preserved and improved.
The Commission has included in the interim report a detailed reply enabling  
an objective assessment to be made of the results of implementation  
of the Joint Declaration, despite the fact that the criticisms contained  
in the discharge resolution were addressed not to the Commission but  
to the Council.
The Commission is convinced that while there are shortcomings in implementati  
of the Joint Declaration, there are also positive aspects. It is ready  
to take part in any effort towards future progress on specific points.

-  8
i
P A R T  I I
REPLIES BY THE COMMISSION  
TO INDIVIDUAL POINTS OF PARLIAMENT'S RESOLUTION

- 9 -
FORM OF THE DISCHARGE DECISION
(Parliament)
3. notes that each year the Court of Auditors lists quantifiable cases  
which it considers should lead to adjustments of the revenue and expenditure  
account but observes that no definitive procedure has been established  
for Parliament to make such changes when granting discharge; accordingly  
intends urgently to consider the issues involved in order to improve  
the discharge procedure for future years.
Commission reply
The Commission stated its position on this problem in its replies to  
the Annual Report of the Court of Auditors for 1982 and gave the relevant  
explanations at several meetings of the Committee on Budgetary Control  
considering amendments on this subject. These amendments were quite  
rightly rejected by Parliament, acting on the opinion of its Committee  
on Budgetary Control.
The Commission regards its position on these points as well-founded  
and considers that the revenue and expenditure account and balance sheet  
can do no more than reflect faithfully the financial operations which  
took place during the year in question.
(Parliament)
4. intends to include a summary of the balance sheet in future discharge  
decisions, thus indicating the importance which it attaches to this  
document; therefore proposes to the Commission and to the Court of Auditors  
that they should include the balance sheet figures which they suggest  
for this purpose with the revenue and expenditure figures which they  
put forward annually as a basis for the grant of discharge.
Commission reply
The Commission can subscribe to this. For 1984 the balance sheet figures  
are entered after the revenue and expenditure figures used as a basis  
for granting the discharge on page 9 of Volume V of the revenue and  
expenditure account and balance sheet.

-  10  -
DOCUMENTS
(Parliament)
5. calls upon the Commission to make available, upon request, to Parliament's  
Committee on Budgetary Control the documents upon which any decision  
of the Commission having financial implications was based, so that the  
powers of discharge may be exercised on the basis of the relevant information.
7. proposes to the Commission that, pending the adoption of satisfactory  
rules, documents of exceptional confidentiality need not be produced  
but that it should assert confidentiality only in truly exceptional  
cases and then by a Member of the Commission appearing in person to  
explain the reasons at a meeting of the Committee on Budgetary Control.
Commission reply
At its meeting on 24 April 1985 the Commission agreed that Mr Christophersen,  
Vice-President with special responsibility for budgets, would meet  
Mr Aigner, Chairman of the Committee on Budgetary Control, to discuss  
the problems raised by Parliament's requests.
When he presents this interim report to the Committee on Budgetary Control,
Mr Christophersen will comment on this matter in the light of what has  
emerged from these meetings.

-  11 -
BALANCE SHEET
(Parliament)
8.  notes that outstanding commitments totalled almost 8 900 million ECU  
at the end of 1983, of which over 7 800 million ECU were not covered  
by payment appropriations carried over, and that the cumulative nature  
of commitments makes further growth inevitable; concerned that ti>>; Commission  
does not publish figures showing the rate at which it forecasts these  
outstanding commitments will fall due for payment; therefore calls upon  
the Commission to expand the relevant note to the annual balance sheet  
to include a table showing, title by title, the amount of outstanding  
commitments, the years when they were entered into and the years when  
it is forecast they will fall due for payment.
Commission reply
The Commission can subscribe to this. For 1984, the table of commitments  
outstanding by year of origin, together with a likely schedule of payments,  
will be found on page 30 of Volume V of the revenue and expenditure  
account and balance sheet.
(Parliament)
9. calls upon the Commission to add a note to the annual balance sheet  
showing clearly the amount of the Community's contingent liabilities,,  
including particularly those estimated to arise on the disposal of intervention  
stocks.
Commission reply
The Commission can subscribe to this. It will publish shortly a note  
to the revenue and expenditure account and balance sheet for 1984 showing  
the costs arising from storage and disposal of intervention stocks.

-  12  -
ACCOUNTING PROBLEMS
(Parliament)
14. calls upon the Commission
(a) to implement the four recommendations of the Court of Auditors in paragraph  
2.19 of their annual report relating to the recovery of taxes and duties, and
(b) to recover immediately from all the relevant Member States the taxes and  
duties still outstanding.
Commission reply
Duties and taxes to be recovered (mainly value added tax) are booked by the  
Commission to the same budget headings and, in most cases, to the same  
commitments as the corresponding services or goods supplied. The duties and  
taxes to be recovered are then recovered from the Member States through a  
procedure outside the accounts. In general, amounts being recovered are  
entered in a suspense account on the assets and liabilities sides of the  
balance sheet at the end of the year. After they have been recovered, these  
amounts may be re-used.
It is true that the existing procedure could be improved. The Commission is  
therefore considering introducing an ab initio accounting procedure to monitor  
payment orders involving duties and taxes which might subsequently give rise  
to a debt to the Commission by national authorities from the point at which  
they are first recorded at the Central Accounting Unit. This computerized  
system should also facilitate the management of reimbursement requests.
The Commission is, however, unable to accept the Court of Auditors' proposal  
that expenditure should be booked exclusive of tax. It considers that this  
would be contrary to Articles 3 and 22 of the Financial Regulation of  
21 December 1977, which state that expenditure shall be entered in full and  
provide for the re-use of taxes refunded. These provisions were introduced  
in the Financial Regulation of 25 April 1973 for this very purpose. The
OJ C 348, 31.12.1984, p. 21.

- 13 -
Commission considers that full harmonization between all Community bodies, as  
desired by the Court of Auditors, could only be beneficial. The revision of  
the Financial Regulation, which is still in progress, would be an opportunity  
to clarify the precise impact of the provisions once and for all.
The Commission hopes that procedural changes will make it possible to speed up  
the introduction of reimbursement requests. But it still has to rely on the  
effective cooperation of the Member States for the application of the  
Protocol on Privileges and Immunities, which constitutes the legal basis for  
such requests.
(Parliament)
15. recommends to the Commission that they should initiate discussions with  
the other Community institutions and bodies so that uniform accounting principles  
and methods may be agreed, commencing with the valuation of fixed assets and  
stocks.
Commission reply
The Commission has begun consultations with the other institutions with a view  
to harmonizing methods and procedures for the valuation in the balance sheet  
of the Communities of fixed assets and stocks.

- 14 -
THREE-YEAR FINANCIAL FORECASTS
(Parliament)
16. calls upon the Commission to make the three-year financial forecast a more  
meaningful document as was envisaged in Parliament's resolution on the draft  
budget of 1978 by including a table showing the forecast rate of liquidation  
of outstanding commitments and also by assessing the financial impact of  
proposed new policies.
Commission reply
As the Commission pointed out in its political introduction to the preliminary  
draft budget for 1986, it entirely agrees with Parliament that the multiannual  
forecasts, already an important exercise, are now even more important than in  
the past, given the limited availability of resources.
The Commission is currently considering how it could make the three-year  
forecasts more meaningful, beginning with the 1987 budget. Meanwhile, it has  
included in the three-year forecasts for 1986-1987-1988 a table showing for  
each of those years the "cost of the past", that is, an estimate of the  
appropriations for payments required to meet commitments entered into in  
previous years.
20J C 280, 21.11.1977, p. 26.

- 15 -
UTILIZATION PROBLEMS
(Parliament)
18. recommends the Commission to propose greater use of dissociated  
appropriations so as to achieve greater flexibility in budgetary management  
and reduce the present large amounts of unused payment appropriations.
Commission reply
As it stated in its replies to the comments of the Court of Auditors for  
1983 (OJ C 348, p. 183), the Commission agrees that the system of differentiated  
appropriations could be improved by its extension to all areas whose multiannual  
nature and conditions of implementation require it.
The Commission would emphasize that this must be accompanied by improved  
management procedures if commitments entered into in previous years are not to  
grow even faster, since, as it noted in the political introduction to the  
preliminary draft budget for 1986, this could well restrict the means required  
to develop existing policies and launch new ones.
(Parliament)
19. calls upon the Commission to submit a written report on utilization of  
part B of its section of the budget to both arms of the budgetary authority  
by 30 September each year
(a) listing all lines where the Commission expects utilization of either  
commitment or payment appropriations to be less than 90% and
(b) showing against such line its estimate of probable utilization, brief  
reasons for the under-utilization and its proposals as to how the balance  
should be dealt with.

- 16 -
Commission reply
The Commission will include the information which Parliament wants in its  
report on the implementation of the budget of the European Communities at  
31 August, which Article 29 of the Financial Regulation requires it to send  
to Parliament and the Council.
However, the Commission must emphasize that, in many cases, forecasts made  
then of the utilization of appropriations by the end of the year are extremely  
tentative since implementation is often affected by completely outside factors.  
This is true, for example, of the structural funds, development aid, energy,  
research, etc., where the Commission is dependent on implementation by third  
parties (the Member States, non-member countries, etc.) over which it has  
no direct control.
Uncertainty over the utilization of appropriations will be greater than usual  
in 1985, given the delays in implementation in a number of budgetary sectors  
caused by the operation of the provisional twelfths arrangements for over  
five months.
(Parliament)
20. calls upon the Commission to submit such applications for transfer of  
appropriations as it considers necessary simultaneously with the report on  
utilization or as soon as possible thereafter.
Commission reply
The Commission will send applications for transfers to Parliament and the  
Council as soon as it is sure that appropriations are going to remain  
available at certain budget headings and that their utilization at other  
headings is necessary to further the policies and actions of the Community.

-  17  -
The Commission would nevertheless draw Parliament's attention to the fact  
that in many cases, because of the unreliability of forecasts covering the  
period to the end of the year made while there are still four or five months  
left for implementation, it will not always be able to send proposals for  
transfers with the report on utilization as requested by Parliament.
(Parliament)
21. calls upon the Commission to reassess its needs for the following year's  
budget in the light of the abovementioned report and to advise both arms of  
the budgetary authority at all appropriate times where there is a risk that  
they may provide
(a) too little in payments to meet the Community's commitments or
(b) excessive appropriations which cannot be used if the Commission exercises  
proper financial management;
22. calls upon the Commission to submit a written summary of such advice,  
preferably in tabular form, to both arms of the budgetary authority each year  
before the Council's second reading of the budget.
Commission reply
Before the second reading of the draft budget for 1986, the Commission will  
provide a written summary in table form and brief explanations to provide  
the information requested by Parliament.
(Parliament)
24. calls upon the Commission to include each year in volume I of the revenue  
and expenditure account and balance sheet
(a) a table such as that annexed to the explanatory statement of this report,  
showing the utilization of appropriations added by the European Parliament  
through amendments during the budgetary procedure, in the context of the  
overall utilization rates of the lines concerned, so that the significance
of Parliament's amendments can be better appreciated,
(b) details, similar to those already included for the first time, of the
budget headings where there has been a legislative delay affecting implementation,  
and
(c) explanations in the case of any other amendments where there has been no  
implementation.

- 18 -
Commission reply
The Commission can subscribe to this. For 1984 the utilization of appropriations  
at headings amended by Parliament and a list of items where the lack of a  
legal basis is causing delays in implementation are to be found on pages  
257 and 251 of Volume I of the revenue and expenditure account and balance  
sheet.
Detailed information on the utilization of appropriations at headings amended  
by Parliament was also sent direct to the chairmen of the Committee on Budgets  
and the Committee on Budgetary Control. Further columns will be added in  
1986 to show the implementation of appropriations carried over to 1985.

JOINT DECLARATION
(Parliament)
2 5. notes that the Council has failed to adhere to the Joint Declaration of  
30 June 1982, in particular by failing to use its best endeavours to adopt  
regulations for significant new Community actions by the end of May at the  
latest, and warms the Council that, if this attitude persists, Parliament  
will have to re-assert its view that the budget is normally a sufficient  
legal base and take action accordingly.
Commission reply
I. General comments
The first point to note is that Parliament's criticisms are addressed to the  
Council rather than the Commission. However, it is clearly also in the  
Commission s interests that the three parties to the Joint Declaration should  
respect the agreement, notably to prevent the awkward question of the legal  
basis from resurfacing (as Parliament hints it might).
Mr Christophersen did in fact confirm the Commission's commitment to the  
Joint Declaration in his statement to Parliament on 16 April, when he said:
"If I might return to the reports under discussion, a more difficult problem  
arises in relation to the budgetary procedure as a whole. It concerns the  
importance of the Declaration of 30 June 1982 signed by Parliament, the  
Council and the Commission and intended to improve the functioning of the  
budgetary procedure. I can quite understand the desire of the three  
institutions to amend or improve this procedure. Button behalf of the  
Commission, I would warn against abandoning the agreement which we managed  
to reach despite the difficulties. Discussing possible ways of improving

-  20  -
the system is a constructive move, but to abandon the agreement would lead  
to an institutional dispute at a time when the Community is starting to  
function smoothly and a number of important decisions are being taken.
The Commission considers it important that the impetus now being regained  
by the Community as a result of the decisions on enlargement, the integrated  
Mediterranean programmes, the solution to the 1985 budget issue and the  
increased resources for scientific and technical development should not be  
curbed by new institutional disputes. For this reason, I will say on behalf  
of the Commission that while the Joint Declaration may cause problems, it  
should not be abandoned lightly."
Under these circumstances, while Parliament's criticism is not intended for  
the Commission, it seems appropriate to formulate a reply taking account of  
the Commission's role in the institutional working of the Community.
II.  Review of implementation of the Joint Declaration in respect of the  
1983 and 1984 budgets
The relevant provision is set out in point IV(3)(c) of the Joint Declaration,  
which reads as follows:
"The implementation of appropriations entered for significant new Community  
action shall require a basic regulation. If such appropriations are entered  
the Commission is invited, where no draft regulation exists, to present one  
by the end of January at the latest. The Council and the Parliament  
undertake to use their best endeavours to adopt the regulation by the end of  
May at the latest."
Because the Joint Declaration was not signed until well into 1982 - 30 June -  
this provisions was scarcely applied in 1982; it can therefore only be  
assessed on the basis of its application in 1983 and 1984.

-  21  -
1’  The question of the Legal basis
As regards the specific question of the legal basis, the Commission has, in  
practice, respected the deadline (the end of January) for presentation of  
its proposals for new action.
As for the Council, while it has undoubtedly endeavoured to respect the  
deadline laid down for a decision (the end of May), it has not succeeded.
In most cases the Council's decision, based on Article 235 EEC, required a  
unanimous vote. And, as the Commission has so often maintained in discussions  
about the Community's institutional problems, the unanimity requirement within  
the Council has a restraining, even immobilizing effect on Community action.
The Joint Declaration of 30 June 1982 has nothing to do with difficulties of  
this kind. Moreover, the deadline set (Council Decision in May) now appears  
optimistic in view of the inevitable constraints and delays in the workings  
of the institutions concerned.
However, the Council has created the legal basis needed for most of the  
"significant new action", though sometimes well after the deadline (see  
Annex I.A). As regards the 1983 and 1984 budgets, the legal basis needed  
has not yet been created in six cases (see Annex I.B).
2. Overall review of the application of the Joint Declaration of 30 June 1982
The Commission notes that the application of the Joint Declaration of  
30 June 1982 has produced positive results in a number of other areas, and  
this has had a favourable impact on relations between the institutions.
Thus:

-  22  -
(a) The Joint Declaration brought to an end the legal dispute regarding  
adoption of the 1982 budget. It produced a classification of all items  
in the 1982 nomenclature as either compulsory or non-compulsory  
expenditure and outlined a suitable procedure for the future. So even  
though there have since been disagreements about classification of items,  
they have not seriously hampered budgetary procedures and, what is most  
important, they have not prevented their conclusion.
(b) The Council has honoured its undertaking not to set "maximum amounts"  
and has referred instead to the "amount estimated necessary"; this has  
fully safeguarded Parliament's budgetary powers and avoided the disputes  
so frequent hitherto.
(c) The permanent instrument created by the Joint Declaration, the "Trialogue"  
between the Presidents of the three institutions concerned, was used on
a number of occasions between 1982 and 1984"^ and made a definite  
contribution to solving difficult questions which the budgetary procedure  
inevitably engendered.^
The Commission's conclusion is that there have been positive aspects to the  
application of the Joint Declaration. What has been achieved must be  
safeguarded. The Commission is nevertheless ready to participate in any
Date and venue of the five "Trialogue" meetings:
6 October 1982  
17 November 1982
8 December 1982
9 December 1983  
9 November 1984Brussels 
Strasbourg  
Brussels 
Brussels 
Brussels.
hIn the case of the draft 1985 budget - rejected by Parliament on  
13 December 1984 - a suggestion made by the Commission on 7 December 1984  
that the "Trialogue" should be convened produced no result. It is,  
however, doubtful whether the nature of the problem which led to rejection,  
namely the shortfall in resources, was suitable for discussion in this  
context (since it was the Council itself, despite the efforts of its  
President, which was unable to resolve the problem within the time available)

- 23 -
future efforts towards progress on specific points in an area which is,  
moreover, subject to constant political change. The serious problems  
that remain relate mainly to the exercise by the Council of its decision­
making powers with regard to regulations, but it is clear that the origin  
of the difficulties lies outside the scope of the specific provisions of  
the Joint Declaration.

-  24
REVENUE
(Parliament)
26. notes that there are significant differences between the levels of gross  
domestic product or consumption in the Member States and the respective levels  
of VAT payments, the discrepancy appearing to show prima facie evidence of  
substantial under-collection of VAT.
Commission reply
When it proposed the introduction of VAT own resources, the Commission's aim  
was to create a true tax resource for the Communities to replace financial  
contributions based on purely statistical data. No direct comparison can be  
made between the results of applying the rules laid down for determining the  
VAT base - in particular the sixth VAT Directive - and any national accounts  
aggregate because of the difference between taxable transactions as defined  
for tax purposes and their definition for the purposes of the aggregates.
The Commision is therefore unable to accept the conclusion based solely on a  
comparison of the VAT base and the level of gross domestic product or  
consumption that there is substantial under-collection of VAT.
It would also point out that, apart from the corrections made to take account  
of the exceptions allowed under the sixth VAT Directive, the own resources  
base and the national VAT bases are identical.
The Member States themselves have a direct interest in ensuring that VAT is  
properly collected, the amounts they retain being far greater than the amount  
of Community own resources.
(Parliament)
27. notes also that the trade statistics of the Member States do not appear to  
correspond with the Community's revenue from customs duties and levies,  
although this may be partly explained by onward shipment within the Community.

- 25 ^
Commission reply
Here again the Commission would stress that the trade statistics of the Member  
States do not necessarily reflect the amount of customs duties to be paid over  
by the Member States. There are two main reasons:
- the place of importation, as noted in the resolution, is not always the same  
as the place where goods are released for home use;
- there are structural differences in imports in terms of the Common Customs  
Tariff, with the result that the same volume of imports may give rise to  
very different total amounts of customs duties.
(Parliament)
28. observes that under-collection could undermine the reliability of the VAT  
base and the yield of revenue from customs duties and levies and gives rise to  
unequal distribution of the tax burden.
Commission reply
The Commission shares Parliament's view that under-collection could undermine  
the reliability of the Community's own resources. It is therefore seeking to  
obtain, by way of legislation, greater powers of control and better access to  
information held by the Member States on cases of fraud and irregularities
affecting own resources. In particular this is the aim of its proposals for
5amendments to Regulation No 2891/77 and for a regulation on the measures to  
be taken in the event of irregularities affecting the own resources referred  
to in the Decision of 21 April 1970.6
?0J L 336, 27.12.1977, p. 1.  
60J L 94, 28.4.1970, p. 19.

-  26  -
(Parliament)
29. notes that varying degrees of stringency in the assessment and collection  
of taxation by the Member States result in differing tax burdens; therefore,  
recommends the Commission to examine the possibilities of achieving a fairer  
system.
Commission reply
1. On 25 April 1985 the Commission sent Parliament and the Council a report  
on the application of Council Regulations (EEC, Euratom, ECSC) Nos 2891/77 and  
2892/77 of 19 December 1977 implementing the Decision of 21 April 1970 on the  
replacement of financial contributions from Member States by the Communities'  
own resources. The report contains a detailed analysis of the entire range of  
questions raised by the implementation and amendment of the regulations  
concerning the Communities' own resources system.
2. On 7 May 1985 the Council adopted a Decision on the Communities' own  
resources system, which, after ratification by the Member States, will replace  
the Decision of 21 April 1970. The Decision increases Community own resources  
by raising the maximum call-up rate of VAT own resources. The ratification  
procedure is now under way.
The Commission is continuing its analysis of the drawbacks and advantages of  
the present system for financing Community activities, but it feels that it is  
still too early to present any new proposals. However, in the light of  
reactions to the abovementioned report in the various institutions, it will  
consider what possible proposals could be made for improvements to the  
Community's financing system, in particular in the report which it has  
undertaken to present one year before the new VAT limit is reached.
7----------------C0
M(85)170 final.

- 27 -
(Parliament)
31. considers that the introduction of a new computerized revenue accounting  
system by the Commission should improve the administration of Community  
revenue and calls upon the Commission to keep the Committee on Budgetary  
Control informed of progress.
Commission reply
The CORE computerized system introduced on 1 January 1985 is designed to  
ensure compliance with the rules concerning the implementation of the budget,  
adopted pursuant to the financial provisions of the Treaties. It handles both  
the procedural aspects and the appropriate entry in the accounts of the  
operations under the acts referred to in the procedure in question. The system  
is meant to be able to produce at any time a statement of debts due,  
indicating, individually and globally, the different stages reached.
At present the system, like its counterpart for handling expenditure, still  
works on the batch-processing principle since it is bound by the technical  
constraints of the existing equipment design.
However, with the rapid development of data-processing technology the  
Commission will soon be installing an interactive computer system operating in  
real time. From 1988 this system is meant to provide a state-of-the-art public  
accounting management tool for both revenue and expenditure. Nevertheless  
budgetary legislation has to be complied with and consequently any system is  
bound to incorporate outside constraints which limit its effective operational  
power.
As regards the information supplied to the budgetary authority, the expected  
management improvement, while still respecting the existing budget rules, will  
be reflected in more accurate analyses, in particular in the quarterly reports  
on the financial situation.

- 28 -
EAGGF CLEARANCE PROBLEMS
(Parliament)
34. notes with grave concern that only the 1976 and 1977 EAGGF accounts
were cleared in 1983 and that delays of more than five years in the clearance  
of these accounts, which represent more than half the entire annual budget,  
have become habitual, with the result that the work becomes more difficult  
and less efficient because officials move, documents are lost and memories  
are unreliable;
35. notes also that clearance is often subject to reservations, whereby  
the Commission postpones some of the more difficult problems, which should  
be resolved speedily and decisively, causing the cumulative sums involved  
to become much greater and the problems harder to resolve;
36. calls upon the Commission to take the following remedial steps:
(a) to commence the work of on-the-spot verification during the financial  
year concerned, as is the case at present with the verification of  
refunds and MCAs;
(b) to raise with the Member States points relating to their management  
and control of expenditure and differences in the interpretation of  
regulations as such points arise during the checking process, so that  
the Member States may rectify the errors before their consequences  
become even greater;
(c) to encourage the process of speedy rectification by the Member States  
by not imposing penalties on clearance, where there have been errors  
other than those of gross negligence, if the Member State concerned  
remedied the problem promptly on being notified;
(d) to create the conditions whereby the Member States are enabled and  
required to submit their final accounts by the following 31 March, as  
provided in the relevant regulation, by:
(i) specifying not later than the preceding 30 September its precise  
requirements for the statistics to be collected during the operations  
of the financial year and making subsequent changes only when they 
are the unavoidable result of new legislative requirements, and
(ii) proposing an amendment to the regulations whereby claims made by the  
Member States for rectifications in their favour made after 31 March,  
the date when their accounts are due, are normally disallowed;
37. decides that the only practicable way to bring clearance work up-to-date  
is to give priority to the current year; therefore calls on the Commission to  
implement these new procedures as fully as possible during 1985 and to complete  
the changes in time for them to be operative throughout 1986;

- 29 -
38. calls upon the Commission to clear the 1985 accounts without reservation  
by 30 June 1987 and then those of succeeding years also without reservation  
within 12 months of the close of the year concerned; and further calls upon  
the Commission, if any of these dates cannot be met, to submit to the  
European Parliament:
(a) within the said deadlines a full written report of the circumstances  
causing the delay, the measures taken to end it and the further time  
which it estimates as necessary to complete the clearance without  
reservation; and
(b) thereafter each month until clearance without reservation is completed  
a further progress report;
39. calls upon the Commission to make proposals for a working method and  
timetable to clear the accounts for 1980 to 1984 as soon as possible, while  
giving priority to ensuring that current clearance work does not fall behind  
the above schedule;
Commission reply
The Commission has set itself the objective of clearing the 1985 accounts by  
30 June 1987 provided that the Member States submit their statements at least  
one year ahead of this date. It will ask the Member States to make every effort  
to comply with the deadlines laid down in the regulations and it will use all the  
means at its disposal to obtain the necessary information from the Member States  
in good time.
The Commission has also made appropriate internal arrangements:
- to prepare the necessary amendments to regulations and administrative procedures, .  
with particular reference to the presentation of statements by the Member States  
and the submission to the Commission of any information requested;
- to simplify the Commission's internal controls and procedures and shorten  
negotiations with the Member States.
The Commission also intends to draw Member States' attention to the importance of  
clearing the accounts and to inform them of steps taken to speed up clearance  
procedures.
As to the preparation of decision for 1982, 1983 and 1984, appropriate measures  
will be taken to ensure that the delay will be made good by 30 June 1987.

- 30 -
COMMON AGRICULTURAL POLICY
(Parliament)
40. draws attention to the increasing lack of coherence in the common  
agricultural policy, partly as a result of the demands of individual Member  
States and their abuse of the practice of unanimity in the Council and partly  
in consequence of the changes in the patterms of supply and consumption in  recent years.
Commission reply
The Commission shares Parliament's concern regarding the problems arising  
from the demands of individual Member States, which have been particularly  
evident in the decisions on the 1985/86 prices for cereals and colza. The  
Commission (Mr Andriessen and Mr Delors) made a statement to Parliament on  
this subject on 13 June 1985.
(Parliament)
41. notes that the Commission has established working groups to study the  
main sectors of the common agricultural policy and calls for early reports i  
their recommendations.
Commission reply
The Commission adopted a Green Paper on
O
out possible options on 13 July .  This  
agricultural policy, including a debate  
has been sent.the common agricultural policy setting  
will promote a general discussion on  
in Parliament to which the Green Paper
(Parliament)
42. recommends to the Commission that in future proposals and other documents  
they should distinguish clearly and explicitly between the economic, social  
and environmental objectives of agricultural policy, so that each of these
C0M(85)333 final, 13 July 1985.

- 31 -
respective needs can met more effectively and economically.
Commission reply
Commission proposals for the annual farm price review and for major changes  
in agricultural policy are accompanied by "Explanatory memoranda" or reports  
setting out the various grounds for the proposals. The Commission will do  
its best to improve the presentation of its proposals to satisfy Parliament.
(Parliament)
43. notes that the Commission's action in deferring EAGGF guarantee expenditure  
of some 825 million ECU to 1984 was contrary to the principle of annuality and  
illustrates that at present the budget is ineffective as an instrument of  
control over such expenditure; therefore calls upon the Commission to monitor  
closely the trends and, in any year when an over-run of guarantee expenditure  
appears likely, to propose in a timely manner (a) such legislative or other  
action necessary to contain the expenditure within its budgetary limits and  
(b) a preliminary draft supplementary budget where such containment cannot be  
fully achieved.
Commission reply
The Commission agrees with Parliament's general position that legislative  
action must be taken to contain expenditure when appropriations are inadequate  
or a preliminary draft supplementary budget presented. In 1983 the Commission  
chose the second of these procedures. The appropriations it requested for  
the EAGGF Guarantee Section were cut (by 50 million ECU) by the budgetary  
authority. However, since the own resources limit was also reached and 
expenditure rose sharply at the end of the year when it was too late to act  
by means of a supplementary budget, the Commission took legislative steps to  
suspend or postpone payments.

-  32 -
In 1984 and 1985 it informed the budgetary authority at a very early  
stage that additional appropriations would be necessary.
(Parliament)
44. calls upon the Commission to dispose of intervention stocks at the  
most favourable time and, if necessary, to propose transfers or a  
preliminary draft supplementary budget in order to do so, since delay  
merely distorts the annuality of the budget and adds to costs.
Commission reply
The Commission agrees with Parliament that intervention stocks should be  
disposed of at the most favourable time and that adjustments should be made  
to budget appropriations as required.
In its preliminary draft budget for 1986, the Commission has, for the first  
time, accordingly set aside 423 million ECU to cover financial depreciation  
of butter and beef/veal stocks.
It should be pointed out, however, that disposal of stocks depends not only  
on the availability of funds but also on possible outlets.
(Parliament)
45. recognizes, nevertheless, that the Community must adhere to its  
international trade obligations and calls upon the Commission to take account  
of the legitimate interests of developing countries when conducting  
de-stocking operations, even where this involves a budgetary cost.
Commission reply
See the Commission's reply to sections 70 to 78 of Parliament's resolution.

- 33 -
(Parliament)
46. calls upon the Commission to propose measures which would ensure  
that the loss in value of intervention stocks is included, according to  
consistent principles, in the annual budget and accounts, since the present  
practice of postponing or bringing forward a large part of this expenditure  
distorts the annuality of the budget.
Commission reply
For each of the major products, i.e., cereals, olive oil, tobacco,  
skimmed milk powder, butter and beef and veal, the budget contains a  
special heading for "other public storage costs" under intervention  
expenditure. Under this heading are entered differences between  
buying-in prices and selling prices, that is to say, lossess for the  
current financial year.
On the general question of the cost of stock disposal extending beyond  
the end of the financial year, the Commission will, from 1984 onwards,  
attach a note to the revenue and expenditure account on "potential costs".
(Parliament)
47. calls upon the Commission to fulfil its responsibility as guardian
of the Treaties to ensure that Community law is upheld in the agricultural  
sector and that appropriate action, both financial and legal, is taken  
against those Member States who fail to comply.
Commission reply
The Commission places great importance on ensuring that the Member States  
comply with Community law. When infringements occur the Commission  
systematically initiates the procedure provided for under Article 169  
of the Treaty, which may Lead to an action being brought before the  
Court of Justice against the Member State in question. The possible  
financial effects of infringements on Community financing are dealt  
with in the clearance of the EAG6F Guarantee Section accounts.

o . 34 -
(Parliament)
48. recommends the Commission to conduct cost-benefit analyses and then  
review policy relating to the following matters:
(a) the use of private storage as compared with purchases into the public  
intervention stock;
(b) the possible limitation of sales into intervention to the end of the  
marketing season;
(c) the enforcement of Community quality requirements for fresh fruit
and vegetables at all major points of public sale and where withdrawals  
take place;
(d) the distillation of alcohol from grapes and other fruit;
(e) production aids for processed tomato products;
(f) the methods of supporting tobacco;
(g) the growing budgetary costs relating to oilseeds.
Commission reply
Generally speaking, the adoption by the Commission in July of its  
Green Paper accompanied by options on agricultural policy will enable  
Parliament to hold a policy debate. A number of topics raised in the  
resolution on the 1983 discharge will find an echo in the Green Paper,  
especially the operation of the organization of the cereals market.
For this reason, the Commission will give its reply in due course on  
the basis of the options presented in the Green Paper.
(a) Private as opposed to public storage
Private and public storage do not fulfil the same economic functions  
and do not operate in the same way. The aim of private storage is to  
help balance the markets in the course of the year. Operators are free  
to make use of it and they assume the responsibility for disposing of  
the product at the end of the storage period. Public storage, on the  
other hand, is a consequence of guaranteed fixed prices for farmers.  
Intervention agencies are obliged to buy in the products which are

- 35 -
offered to them and the EAG6F bears the cost of any Losses when these  
products are disposed of. Apart from a certain quantity regarded as  
normal storage, intervention products reflect structural surpluses.
The Commission considers whether or not to use private storage in the  
context of the smooth operation of each market organization.
(b) Limitation of sales into intervention
As the problems of intervention in the cereals sector are discussed  
in the Green Paper, the Commission will give its reply in due course  
on the basis of the options presented in the Green Paper.
(c) Quality requirements
Common quality standards exist for some thirty types of fruit and vegetables.
Under Regulation (EEC) No 1035/72 on the common organization of the market  
in fruit and vegetables, products which are subject to such standards must  
meet these requirements at all stages of marketing, up to and including  
the retail stage, whether they were harvested in the Community or imported  
from non-member countries.
The only exceptions to this rule concern:
- products sold, delivered or consigned by the grower for market preparation  
and packaging or storage,
- products consigned from storage for market preparation and packaging;
- products transferred by the producer on his holding to consumers for  
their personal use;
- products consigned to processing plants, where no quality standards have  
been established for products intended for industrial processing.

- 36 -
/
In the past, the competent bodies in the Member States were alone responsible  
for monitoring the observance of quality standards.
■ f
However, the Council has just approved a Regulation9 allowing Commission  
inspectors, together with officials of the Member States, to carry out checks  
on the quality of fruit and vegetables; these checks will apply both to  
products marketed normally and to products subject to intervention.
It is certainly not the intention that these Commission inspectors, whose  
numbers will inevitably be very small to start with, will take the place of  
officials of the Member States, whose role remains essential for effective  
monitoring.
(d) Distillation of alcohol
Fruit withdrawn from the market may be distilled as an intervention measure in  
the fruit sector. Two procedures are proposed: either the offering for sale
by tender of the fruit itself, or the opening up to tender of the  
distillation process.
In Italy, where fruit is sold to distilleries by tender, prevailing prices are  
very low and this could lead to an increase in distillation and perhaps  
distort the alcohol market.
The introduction of a minimum selling price in the tendering mechanisms could,  
without bringing about a radical change in these mechanisms, increase revenue  
and thus reduce overall intervention costs, but it might also limit purchases  
by distillers, which would inevitably Lead to an increase in the amount of  
fruit becoming unusable.
Council Regulation (EEC) No 1319/85 of 23 May 1985 on the reinforcement of  
supervision of the application of Community rules on fruit and  
vegetables - OJ L 137, 27.5.1985.

- 37 -
In Germany fruit is distilled on behalf of the Bundesamt für Ernährung und  
Forstwirtschaft, the distillation operations being awarded by tender, and the  
alcohol obtained is sold through the Branntweinmonopolverwaltung.
Since the cost of distillation is borne by the EAGGF, there might be an  
argument for excluding from the tendering procedure any bidder whose offer  
would involve greater expenditure than could be covered by the sale of the  
alcohol; here too, however, the danger is that the amount of fruit which  
cannot be used will increase.
On the other hand, the system in force in Germany for the production and sale  
of alcohol makes it practically impossible to sell by tender fruit withdrawn  
from the market for distillation at the expense of the distillers, as is done  
in Italy.
It would seem, then, that there are only two solutions to choose from:
- either to accept that the use of fruit withdrawn from the market will  
involve additional expenditure on top of the cost of withdrawal as such,
- or to accept that greater quantities of products withdrawn from the market  
will not be put to any use and will deteriorate in storage.
As regards the distillation of wine surpluses, attempts are already being made  
to reduce the scale of these operations.
Firstly, recently adopted structural measures should reduce production  
potential to a more reasonable level by the gradual elimination of high-yield  
vineyards.
Secondly, the most important measure in the recent amendment of the basic wine  
regulation is the introduction of compulsory distillation with the aim of  
increasing the efficiency of the rebalancing of the market at the beginning of  
the marketing year and of containing the increase in intervention costs by  
means of an appreciable reduction in buying-in prices.

- 38 -
This measure has a penal effect which is more pronounced in the case of high  
yields, making it an important element in the quality policy pursued in this  
sector for many years.
Lastly, the Council has recently extended for four more years the measures for  
identifying and developing new uses for products in this sector; these have  
been under way since 1982/83 and should shortly lead to practical proposals  
for encouraging the processing of concentrated musts into animal feed and thus 
reducing the quantity of wine being distilled.
Ce) Aids for processed tomato products
1. Production aid for tomato based products has been applicable since the  
beginning of the marketing year 1978/79 for tomato concentrate, peeled  
tomatoes and some tomato juices.
The system was extended from the beginning of the marketing year 1979/80  
and all tomato based products falling within subheading 20 .02 C of the  
Common Customs Tariff as well as tomato juices falling within  
heading 20.07 of the Common Customs Tariff are at present covered by the  
system.
The production of tomato based products has increased considerably since  
the aid system was introduced and has thus brought considerable advantages  
to the Community's Mediterranean areas.
The Commission is following very closely the evolution of the production  
of products attracting aid both for appreciating the consequences in the  
market and the financial consequences. The Commission has in particular  
followed the evolution in respect of tomato based products because the  
increase in production risks creating problems on the market and results  
in high levels of expenditure for the Community.
2. In 1982 the Commission thought it necessary to limit the risk of  
overproduction of tomato products and submitted therefore a proposal to  
the Council, according to which guarantee thresholds should be applied.

- 39 -
The Council adopted this proposal and the guarantee threshold was fixed at  
a total level of 4 295 000 tonnes of fresh tomatoes used for the  
manufacture of tomato concentrate and whole peeled tomatoes.
3. In 1984 the whole production aid system was reviewed and mechanisms for  
determining the aid and the minimum prices to be paid to growers were  
updated.
The guarantee threshold for tomato based products was fixed at  
4 700 000 tonnes of fresh tomatoes used for the manufacture of all types  
of processed products.
4. In 1985 the system was again subject to corrections and temporarily  
measures were introduced whereby the payment of aid was limited to a  
quantity of processed products corresponding to 4 700 000 tonnes of fresh  
tomatoes.
5. In 1987 the Commission will submit a report to the Council on the  
functioning of the whole production aid system and, if necessary, the  
Commission will propose any amendments to the system which it considers  
appropriate.
6. The production aid system, as can be seen from the above, has been  
monitored closely, and the system has been modified or adjusted whenever  
necessary. The Commission will continue this close monitoring because the  
system and its consequences are of considerable importance for the  
Mediterranean production areas and the evolution of both production and  
marketing of the products may be very different from one year to another.
(f) Tobacco
In 1982 the Commission's departments conducted a critical analysis of the  
premium mechanism in the light of the objectives the Commission had set itself  
in the tobacco sector. This work is to be taken further, the Commission  
having undertaken, when the Council reached agreement on 16 May 1985 on farm

- 40 -
prices and related measures, to make a specific analysis dealing with the  
following points:
1. Updating of the method of calculating the premium.
2. More limited choice of competing varieties from non-member countries.
3. Extension and strengthening of the contract system.
4. Long-term trends in demand for tobacco in the Community and in the world.
5. Real production costs.
6. Transfer of varieties from one Member State to another.
7. Modulation of the amount of the premium according to the quality of the  
same variety of tobacco.
The conclusions will form the basis for price and premium proposals for the  
1986 crop.
Cg) OiIseeds
Since production of vegetable oils and fats in the Community is in deficit,  
the Community agreed within GATT to allow imports from non-member countries  
without any protective barriers.
As a result, a system of aid to producers, financed by the EAGGF, was  
introduced to cover the difference between internal Community prices and  
world market prices.
The oilseeds sector needs to be viewed in a broader context with consideration  
for factors such as:
- security of supply within the Community, which is Largely dependent on its  
imports at the present time;
- the possibility of replacing surplus production, which is expensive for the  
Community;
- the agri-economic benefits of oilseed cultivation, especially from the  
point of view of rotation and fertilizer needs.
/.The Commission will give its reply in due course on the basis of the options  
presented in the Green Paper.-7

- 41 -
(Parti ament)
49. calls upon the Commission, working together with Member States, to see to  
it that the distribution of intervention fruit and vegetables to social  
institutions is organized more efficiently.
Commission reply
As Parliament itself has already observed (Bocklet report, EP 78.342), it is  
not always possible, for practical and technical reasons, to direct the  
products in question towards these uses.
The Commission is fully in agreement with the ideas set out in the  
Bocklet report and points out that these practical difficulties still exist.
Nevertheless, the Commission made a point of including this item on the agenda  
for the meeting of the Management Committee for Fruit and Vegetables on  
29 May 1985 and conveying to the national delegations Parliament's desire that  
the free distribution of intervention fruit and vegetables to social  
institutions should be organized more efficiently.
All the delegations spoke in support of the opinion of Parliament's Committee  
on Agriculture referred to above, namely that:
- the amounts distributed free of charge should not replace those purchased  
normally by the recipients; this creates the need for checks, which are in  
many cases difficult to carry out and inevitably restrict the quantities  
which can be distributed;
- potential recipients, which in most Member States are on a register and are  
informed of the possibility of receiving free allocations, have been slow  
to approach the producers' organizations which carry out the distributions,  
either through lack of interest or lack of transport;

- 42 -
Long distance distribution requires refrigerated transport if the goods are  
to arrive in a satisfactory condition. The cost is often out of all  
proportion to the aim in view and exceeds the fixed amounts covered by the  
EAGGF.

-  43  -
COMMON FISHERIES POLICY
(Parliament)
50. recommends to the Commission that they should not pay advances to  
Member States in respect of market intervention and refunds for quantities  
in excess of the total allowable catch of that species of fish allocated  
to that Member State.
Commission reply
The Commission has considered Parliament's recommendation. It is indeed  
in the interests of sound budgetary management that if it becomes apparent  
during the year that expenditure should not be incurred, then where  
possible the regularization of advances should not be postponed until  
the clearance stage.
The Commission would stress however that the problem raised by Parliament  
is extremely difficult to solve - more so for intervention than for  
refunds - given the complexity of the present quota system for fisheries.
The introduction of a system of advances by species to replace the present  
global advances would call for a monitoring system so complicated as  
to be out of all proportion to any benefits which might accrue.
In practice, under the present system, it is possible to withhold payment  
of advances for a given sector only if Community regulations have been  
infringed for all or most of the sector concerned. The Commission will  
see whether a solution to problems of this type can be found in an amendment  
of the system of advances. It has decided to look into this possibility  
and preparatory work is in progress.

-  44  -
REGIONAL POLICY
(Parliament)
51. recognizes the need for the Community budget to promote convergence  
of the economies of the Member States, particularly by re-distributing  
resources to the Community's less prosperous regions, but regrets that it  
is failing in this purpose because (a) Member States simply use ERDF  
money to replace national resources by means of their control over the  
applications submitted, (b) the ERDF is far too small to have a major  
regional impact, and (c) much larger Community funds flow to more prosperous  
regions.
Commission reply
1. When it proposed the new ERDF Regulation, the Commission, which fully  
agrees with Parliament's aims, did all it could to ensure that progress  
was made along these lines. The two following points should be noted in  
this respect:
(a) As stated in the fourth recital to Council Regulation (EEC) No 1787/84  
of 19 June 1984 on the European Regional Development Fund "the coordination  
of Community policies with each other and the coordination of Community
regional policy guidelines and priorities with national regional policies contributes  
to the achievement of a higher degree of convergence of the economies of Member States  
and to a more balanced distribution of economic activities within Community territory".
(b) The allocation of ERDF resources within the upper and lower limits  
fixed by Article 4 of the Regulation gives the Commission greater flexibility  
in allocating resources to less prosperous Community regions. This provision,  
which represents an advance on the quota system obtaining under the old  
Regulation (EEC) No 724/75, is in response to the concern expressed by  
Parliament on a number of occasions.

- 45 -
2. With regard to complementarity, recent developments concerning  
infrastructure, particularly in France, are in line with Parliament's wishes.  
In Italy and the United Kingdom in particular, ERDF assistance for  
infrastructure is transferred to the regional or local bodies concerned.
It should, however, be remembered that it is impossible to prove  
mathematically that ERDF aid is in addition to national public expenditure.  
Despite its still inadequate annual resources, the regional impact of  
the ERDF, although difficult to quantify, cannot be regarded as negligible,  
especially because of the cumulative nature of the aids for basic  
infrastructure, which is by definition durable. In those Member States  
where ERDF infrastructure aid is allocated at regional or local level,  
beneficiaries are increasingly aware of the substantial, and sometimes  
decisive, improvements which it makes to living conditions and the facilities  
for economic activities, and hence to the creation or maintenance of jobs.
(Parliament)
53. recommends to the Commission that it should expand the role  
of its Regional Policy Directorate-General so that it can appraise  
systematically the likely regional impact of legislative or other proposals  
before they are adopted by the Commission and thereafter to monitor  
adequately the regional impact of the Community budget as a whole.
Commission reply
The Commission accepts Parliament’s recommendation, which echoes what it  
announced in its work programme for 1985.

-46 -
The Commission's current internal assessments of Community policies  
in relation to the organization of its departments take account of  
these aims.
The following three points should be emphasized:
1. In accordance with the Council Resolution of 6 February 1979  
concerning the guidelines for Community regional policy, the Commission  
is constantly making regional impact assessments of Community  
policies. The assessments of agricultural policy, Mediterranean policy,  
the various industrial sectors (steel, shipbuilding, textiles),
energy and new technologies have made it possible to prepare specific  
actions (EROF non-quota operations. Integrated Mediterranean Programmes)
designed to accompany these policies or to counterbalance their regional  
effects.
2. In its programme for 1985 the Commission announced that this work  
would be stepped up. Under the revised ERDF, two programmes of Community  
interest for less-favoured regions will be submitted in 1985, one  
concerned with modern telecommunications and the other designed to exploit  
the potential of new energy resources.
3. The Commission is considering an internal procedure to ensure that a  
regional impact analysis is carried out for all decisions and proposals  
while they are being prepared.
(Parliament)
54. recommends to the Commission that they should delay the approval of  
further ERDF commitments to Member States who persistently fail to supply  
on time information which they are required to provide by the Fund Regulation  
and which is important for the assessment of Community objectives.

- 47 -
Commission reply
The Commission agrees with Parliament's recommendation. The information  
required under the Fund Regulation is essential for a proper assessment  
of projects or programmes for which finance is requested and to ensure  
that these actions are consistent with Community objectives.
The new ERDF Regulation gives the Commission fresh means of obtaining  
this information not formerly available; it will not fail to make use  
of it.
(Parliament)
55. stresses the importance of ERDF expenditure being used to create  
or maintain employment, even if this objective is sometimes attained  
paradoxically by the introduction of new technology which requires fewer  
workers; calls upon the Commission to scrutinize employment forecasts  
in ERDF applications carefully and to withhold payment or refuse subsequent  
applications where these are later found to have been deliberately  
misleading.
Commission reply
1. Although it is aware that in the present economic situation fixing  
precise target figures for jobs to be created is a very hazardous exercise,  
the ultimate deciding factor being the openings available, the Commission  
will nevertheless endeavour to pay full attention to this criterion for  
granting ERDF aid. The Commission will not fail to take step% including  
the withdrawal of aid, where it is clearly found that in the initial  
applications the estimates of the number of jobs to be created were  
deliberately false.
At all events, the Commission intends to give priority to any investment  
project which may create jobs, provided that it offers reasonable  
guarantees of being economically sound.

- 48 -
· - ■  The Commission would, however, emphasize that, depending on the  
economic structure of the region aided, the selection of projects for  
ERDF co-financing may encourage either the development of infrastructure  
where this is lacking or the promotion of industry, crafts or services  
appropriate to the locality. Where improved infrastructure is what  
is most required, in addition to the jobs directly or indirectly created  
by construction work, the ERDF contributes to the preparation of  
facilities for economic activities which will provide more lasting jobs.  
Hence its impact on employment is indirect. On the other hand, ERDF  
aid for the creation, extension or restructuring of firms contributes  
directly to the creation of new jobs or the maintenance of old ones.
Where firms are modernized or restructured, the ERDF contributes to saving  
the firm itself and, although this may lead to a reduction in the number  
of employees, the employment situation is at least prevented from  
getting any worse. It should be remembered that while the introduction  
of new technologies into a firm often reduces the number of jobs for  
a certain time, it also creates new jobs in the industries supplying the  
more sophisticated replacement equipment.

- 49 -
SOCIAL FUND
(Parliament)
56. considers that the high level of carryovers from year to year in  
the Social Fund reflects weaknesses in the procedures that should
that thSn c°rr®?ted earlier amendments to the regulations, notes  
that the situation should improve considerably under the new Fund  
provisions, and calls upon the Commission to put forward speedily,
in future, proposals for amendments to rules which distort budgetary  decisions; 3 '
57. deplores the Commission's failure in 1983 to use fully the monies  
made available by'Parliament in the social sector of the budget,  
especially in view of the worsening employment situation and insists  
that, henceforth, the Commission keep Parliament informed, on a  
regular basis during the financial year, of difficulties in  
implementing budget amendments.
Commission reply
At the end of 1984 the volume of payment appropriations carried over  
was 95.58 million ECU (compared with 575.95 million at the
end of 1983). For 1985, it is expected that appropriations will be  
fully used up. The substantial carryover in payment appropriations  
from 1983 to 1984 was the result of exceptional circumstances, which  
are unlikely to occur again.
The operating rules for the new European Social Fund following the  
1983 review, particularly those governing the time limits for  
approval of applications for assistance, should ensure that if  
problems arise in implementing the budget, Parliament can be
informed in good time during the year. The Commission will see that  
it is.

(Parliament)
58. observes the undesirable tendency for applications to be  
submitted rather tardily and recommends that Member States be  
strongly encouraged to transmit applications earlier; believes  
that the large number of recoveries of excessive advances in 1983  
indicated a lack of care on the part of the national bureaucracies  
and urges them to pay closer attention to detail when processing  
applications; and calls upon the Commission to report to Parliament  
on any reforms achieved at the national level.
Commission reply
The rules in force for the new Social Fund following the 1983  
review impose particularly strict deadlines on the Member States  
for submitting applications for both assistance and payment. These  
deadlines will enable the Commission to improve considerably the  
procedures for recovering overpayments made on advances. The  
Commission will keep Parliament informed of anything that Member  
States do which made for new delays in the reception of applications  
for assistance or payment.
(Parliament)
59. recommends to the Commission that it should delay the approval  
of further ES F commitments to Member States who persistently fail  
to supply on time the information which is important for the  
assessment of Community objectives.
Commission reply
The new aid application forms are designed to allow the planned  
measures to be set against Community objectives. If a completed  
form contains errors or omissions, the application for aid cannot  
be considered for approval. The forms have also been prepared in  
such a way that the Commission should have less need to call for  
further information.

- 51 -
(Parliament)
60. recommends the Commission to introduce an official manual to  
enable its staff and applicants to process applications and relevant  
associated documents in a streamlined, coherent and standardized  
manner.
Commission reply
This manual is now being prepared.
(Parliament)
61. considers that there is need for a far more thorough monitoring  
of effectiveness and efficiency in the social sector if the  
budgetary authority is to be assured that the criteria of sound  
management and value for money are respected in this domain; and  
recommends that the Commission carry out a comprehensive appraisal.
Commission reply
An appraisal of this problem will be one of the tasks of the  
resources management group referred to at the third indent of  
section 3 of Part I of this report.

- 52 -
INVESTING IN THE FUTURE OF EUROPE
(Parliament)
67. calls upon the Commission to keep the research sector under  
close and continuing review because of its importance for the future  
of Europe, and decides to re-assess the management and cost  
effectiveness of the Joint Research Centre on the basis of the  
evaluation report to be produced mid-way through the present  
four-year (1984 to 1987) programme.
Commission reply
1. The Commission has been making evaluations of research and  
development programmes for some years. A methodology appropriate  
to these programmes is gradually being applied to all research  
activities.
This methodology, approved by the Council on 25 June 1983, is  
based on a retrospective evaluation of the results of Community  
research programmes made by teams of outside independent experts.
The main purpose of evaluation is to make an overall appraisal  
of what has actually been achieved in terms of:
- scientific and technical results;
- the visible or foreseeable impact of the results on the  
Community's economic and social development and on the  
implementation of Community sectoral policies;
- programme management methods,
and to draw conclusions and make recommendations for future  
activity. A list of evaluation reports is attached in Annex II.
2. The mid-term evaluation for the current four-year programme  
(1984-87) will be submitted to Parliament.

- 53 -
3. The Commission has also organized international seminars, at  
which discussions have been very encouraging and have proved  
the worth of the procedures and criteria adopted. Experience  
to date confirms that this evaluation exercise has a very  
positive impact.
As matters stand, evaluation is now an integral part of the  
process of preparing, deciding and implementing research  
programmes. In the latest Council decisions concerning  
authorization of Community research programmes, an independent  
end-of-programme evaluation is expressly requested.
Pre-programme evaluation - notably for project selection - and  
evaluation of work in progress - monitoring and timely  
redirection of activity - are at present conducted on a less  
formal footing, the approach adopted varying from one programme  
to another. For some time now, the Commission has, however,  
been considering what possibilities there are for harmonization  
(methodology and criteria) at this level.
The Commission also organizes an exchange of information and is  
compiling a synopsis of criteria and procedures used by the  
various Directorates-General involved in the evaluation  
exercise.
(Parliament)
68. recommends to the Commission that they should remedy defects  
in the functional accounting system, so that decisions as to  
whether to proceed by direct, indirect or concerted action can  
be taken on the basis of comparable financial, as well as  
scientific, information.
Commission reply
The new provisions of the Financial Regulation proposed by the  
Commission under the current revision - which are in line with  
what Parliament wants in its opinion - aim to give the necessary  
transparency to appropriations and expenditure.

- 54 -
(Parliament)
69. stresses the importance of small and medium-sized enterprises,  
particularly in creating new jobs, and proposes to the Commission  
that they should monitor more closely the effects of all Community  
measures on these enterprises and apply the techniques of cost-  
benefit analysis for this purpose.
Commission reply
The Commission is fully aware of the vital role of small and  
medium-sized enterprises in the present economic context,  
especially in creating new jobs. The trend which begun to emerge  
in the early 70s towards a fall in employment in big firms and 
more jobs in small businesses has continued; despite the increase  
in unemployment, small businesses are still net creators of jobs  
in many Community regions.
Community policy to assist the SMEs has already long been the  
subject of a standing dialogue between Parliament and the  
Commission, which culminated in 1983 being made "European Year of  
Small and Medium-sized Enterprises and the Craft Industry". The  
activities of 1983 were followed on 22 May 1984 by a Commission  
communication to the Council (C0M(84)263 final) on Community  
policy with regard to small and medium-sized enterprises and craft  
industry; this paper sets out a series of measures already in hand  
or being prepared in collaboration with national authorities.
These measures seek to adapt the administrative, economic and  
legal environment more closely to the needs of small businesses.
As such businesses have much to offer by way of creating new jobs,  
the Commission will ensure that the measures to assist them  
implemented through the Community's financial instruments are made  
as effective as possible.

55
FOOD AID
(Parliament)
70. reaffirms that food aid must form part of a wider policy to  
encourage agricultural production in countries which suffer from  
food shortage and that food-aid decisions should not be determined  
by the need to dispose of the Community's agricultural surpluses;
71. calls upon the Commission to analyse the real value of  
intervention stocks, and to make proposals for the food-aid  
budget to be charged with more realistic amounts for intervention  
stocks used as food aid;
72. calls upon the Commission to investigate, as an urgent interim  
measure, the possibility of charging EAGGF stocks used as emergency  
food aid at reduced values;
73. identifies the lengthy and cumbersome procedures imposed by the  
Council in Regulation (EEC) No 3331/82, after it had unilaterally  
abandoned the conciliation procedure, as another major constraint  
on the attainment of a fully effective food-aid policy; therefore  
recommends to the Commission that it should propose a new framework  
Regulation to replace Regulation (EEC) No 3331/82, so as to  
streamline food-aid decision-taking and implementation;
74. warns the Council that it regards the practice of overriding  
budgetary decisions on food aid by more restrictive quantitative  
limits, imposed by Council Regulation, as a fundamental breach of  
the Joint Declaration of 30 June 1982, and that, if it persists in  
this practice, the inevitable result will be a breakdown in the  
cooperation between the two arms of the budgetary authority  
envisaged by that agreement;
75. notes that there are only eight officials whose duties are  
exclusively concerned with food aid and that they are split  
between the Agriculture and Development Directorates-General;  
identifies shortage of staff, exacerbated by divisions of  
responsibility, as another principal constraint on the effective  
management of food aid; calls upon the Commission to remedy the  
lack of staff devoted to food aid and proposes that the  
Development Directorate-General should assume more responsibility;

- 56 -
76. identifies the failure to correlate the times for action  
dictated by Third World harvests with the Community's annual  
food-aid programme as a cause of slow utilization of the food-aid  
budget; calls upon the Commission to provide a food-aid timetable  
showing for each recipient country the months of the annual  
harvest, the month when the Commission is normally able to assess  
the consequent need of food aid, and the months when delivery is  
most appropriate; thereafter calls upon the Commission to draw  
the necessary budgetary and programming conclusions, so that food  
aid is delivered in the years for which the budgetary  
appropriations were granted;
77. calls upon the Commission to take action to ensure that the  
transport costs of each food-aid delivery are shown separately;  
recommends that it should analyse the costs and benefits,  
including reliability and speed of delivery, of undertaking more  
of the transport management itself compared with the present  
system under which responsibility is devolved to the Member  
States; and recommends that the appropriate action is then taken;
78. expresses concern at the reports of unfit products being  
dispatched by the intervention agencies of Member States as  
Community food aid; notes that the Commission used only
0,1 million ECU of the 1,5 million ECU available in 1983 for  
quality control and recommends the Commission to make a major  
effort to ensure systematic quality control.
Commission reply
On 29 March 1985 the Commission set up an interdepartmental  
working party to look into procedures governing the grant of food  
aid with a view to making it more effective. Mr Heringa, an  
honorary Director-General, was appointed chairman. The working  
party's report is being examined in depth by the Commission which  
will take appropriate action in due course. The Commission will  
decide on the action to be taken in response to the relevant  
sections of Parliament's resolution in this context.

- 57 -
COOPERATION WITH DEVELOPING COUNTRIES
(Parliament)
79. observes that some of the world's poorest countries are in Asia  
and that the size and effectiveness of the Community's aid programme  
in that region is hampered by the lack of permanent Community  
representation to carry out the identification, appraisal and  
follow-up of projects; notes also the criticisms of the Court of Auditors  
relating to the employment of consultants in these and other countries;  
therefore, recommends to the Commission that it reviews its present  
arrangements and thereafter that it ensures stricter supervision of  
any consultants employed.
Commission reply
It is unlikely that the amount of aid provided for the poorest countries  
is adversely affected by the lack of on-the-spot representation, since  
the requests for aid received from the non-associated developing countries  
are far in excess of the amounts made available by the budgetary authority  
and the Commission's departments assist countries which have difficulty  
in setting the level.
As regards the effectiveness of the aid, it is true that on-the-spot  
representation is an important link in the chain of project implementation.  
The role of Community representations is essential in following up projects.  
Such representations are already in place in four Asian countries, including  
the three countries receiving most Community aid (India, Bangladesh and  
Pakistan). An office is being opened in Indonesia. The Commission intends  
to expand its representations and extend them gradually to other countries, 
especially countries where the number of projects is above a certain level  
(Indonesia).

- 58 -
As regards selection procedures for consultants, the Commission's  
departments are currently reviewing the arrangements in force, with 
the aim of finding a solution which answers the criticisms expressed  
by the Court of Auditors in its special report on technical cooperation  
financed out of Community development aid and by Parliament and at  
the same time makes it possible to provide, within the necessary  
deadlines, the type of technical assistance needed for the smooth operation  
of the aid programme in favour of non-associated developing countries.
As regards the Court's criticisms relating to the use of consultants, the  
Commission is endeavouring to introduce arrangements which will reconcile  
the requirements of sound financial management and efficiency.
(Parliament)
80. calls upon the Commission to investigate and remedy the causes  
of the inadequate rate of take-up and the excessive rates of  
cancellation of appropriations entered under the Protocol with the  
Maghreb countries.
Commission reply
1983 was the first year in which appropriations were entered in  
Articles 965 (Maghreb) and 966 (Mashreq) under the second financial  
Protocols with the countries of the Southern and Eastern Mediterranean.  
All these Protocols were concluded by Council Regulation of  
22 November 1982.
The budget estimates, which were prepared in February/March 1982, had  
to rely on approximate overall assessments. One of the criteria applied  
was Article 5 of each Protocol, which states that "the amounts to be  
committed each year shall be distributed as evenly as possible throughout  
the period of application of this Protocol".
r
These amounts thus exceeded actual commitment potential.

- 59 -
Since then the method for estimating budgetary requirements has been  
refined, in the Light of the results of programming and the implementing  
schedule of projects.
It is more difficult to put right the under-utilization of appropriations,  
resulting from slowness in implementing projects, the complexity of  
national procedures in the recipient countries or unexpected changes 
in emphasis of projects. Even here, however, the Commission's  
departments are attempting to set up a permanent dialogue with the  
authorities of recipient countries in an attempt to limit these  
difficulties.
(Parliament)
81. notes with concern the Commission's failure to make available  
to the Court of Auditors its files relating to about 130 trade promotion  
projects and its abstention from comment in answer to the Court of  
Auditors' observations; therefore asks the Court of Auditors to continue  
this investigation and calls upon the Commission to make the relevant  
files available for the purpose.
Commission reply
The Commission experienced practical diffficulties following widespread  
departmental reorganization of which the Court was informed. These  
difficulties did not however prevent the Commission from submitting  
financial files on these measures when the Court asked for them.

-  60  -
COMMISSION STAFF AND ADMINISTRATION
(Parliament)
82. recommends the Commission:
(a) to employ expert consultants, with relevant experience of public service  
as well as private sector environments, to assist them in the complex  
task of formulating both methods of assessing workloads and also  
operational criteria for determining the posts required; and
(b) to proceed in the meantime with policies to create greater  
flexibility and meet priority needs by internal re-deploymentJ
Commission reply
(a) In a desire to modernize the administrative structure of the  
institution, the Commission is evaluating the experience of a number  
of firms of consultants as an initial step to enable it to choose  
the one which can best assist it to assess its workload and calculate  
the number of posts required for each area of activity.
It also plans to contact the national administrations of the Member  
States to assess their procedures in this area and to obtain a better  
idea of the results actually obtained with the aid of outside  
consultants.
(b) The Commission intends to increase the pool of posts which can be  
used for new priority actions.
In 1983 and 1984 this pool totalled 38 posts. The Commission intends  
to increase it to 75 in 1985 and to 150 in 1986, which will provide  
greater flexibility in using resources.

- 61 -
(Parliament)
83. recommends to the Commission that it should conduct an urgent  
assessment of the staff levels in its Directorate-General for Development  
by reference to staff levels in other aid administrations and other  
Commission departments and then take appropriate action.
Commission reply
The Commission has to allocate its staff resources in the light of all  
the constraints to which it is subject.
It is, however, in the process of preparing the terms of reference for a  
study of DG VIII's staff level in comparison with its workload, in the  
light of the situation in other aid organizations and the availability of  
posts in other Directorates-General.
(Parliament)
84. recommends to the Commission that it should conduct a radical  
reappraisal of its policies both on studies and on pi lot projects, so that  
the results can be more widely known and have greater influence on the  
formulation of policy at Member State level, and calls upon it to present  
a full report to Parliament within 12 months.
Commission reply
1. This is an area where, under the declaration of 30 June 1982, the  
Commission can implement the budget without a legal basis.
2. The Commission would point out the basic difference between studies  
and pilot projects. A study is designed to provide the Commission  
with the information it requires to organize and prepare its work  
while a pilot project is designed to show, on a small scale, how a  
possible Community action will operate.

- 62 -
3. The highly technical and extremely specialized nature of some study  
reports rules out automatic publication.
In any case, whether.a study is published or not is not a crucial factor in  
determining its usefulness to the Commission, particularly when it covers  
one-off actions undertaken by the Commission to enable it to form a  
technical opinion.
4. The Commission is aware that circulation of certain studies could  
introduce a Community dimension into national policies and so it has  
set up a publications committee to decide whether studies should be  
published. However, it should not be forgotten that appropriations  
for publications are limited.
The Commission is willing to adopt measures to ensure greater  
distribution of studies to interested parties and, in particular, to  
bring a Community dimension into national policies. It will report  
to Parliament on this point within twelve months. Nevertheless, it  
would repeat that the highly technical and specific nature of  
certain studies makes it impossible to distribute all those carried  
out.
The Commission intends to update the coordinated directives for the  
management of study appropriations and the guide for their implementation  
adopted on 26 June 1974 and Last amended on 19 December 1984, so that  
all studies published can be stored on computer.
5. In its preliminary draft budget for 1986 the Commission looked  
particularly closely at studies appropriations in the general context  
of the shortage of appropriations. It imposed a 25% across-the-board  
cut on the 1985 figures for studies appropriations in operating  
headings (Part B of the budget).

- 63 -
6. Finally, when considering the first series of studies applications  
for 1985, the Commission decided to ask departments responsible  
for managing appropriations for studies to state in the annual evaluation  
report the actual results and the use made of the studies. It also  
asked the Advisory Committee on Commissioned Studies to carry out  
sample investigations to assess in practical terms the results of  
a series of studies completed in 1982 and 1983.
(Parliament)
85. calls upon the Commission to act upon the detailed comments contained  
in paragraph 45 of the Working Document on staff, operating expenditure  
and premises of the Commission as if they were included in this resolution;
45(b) recommends to the Commission that it should facilitate access  
to its buildings on Saturdays and Sundays for A- and B-grade officials  
who wish to work, since they are not entitled to overtime and, therefore,  
likely to be performing urgent tasks, as well as displaying great commitment  
to their duties.
Commission reply
The Commission, which was forced by budgetary constraints to close certain  
buildings during the weekend, conducted a survey of weekend occupation  
of buildings before taking the decision.
However, despite increasingly severe budgetary restrictions, pressure  
of work has forced the Commission to reopen certain buildings.
The Commission tries to provide all its staff with the best possible  
conditions in which to perform their duties. It will improve the facilities  
in accordance with the requirements of each building as far as the available  
resources permit.
The Commission's building in Luxembourg is open for those officials  
who wish to work during the weekend.

- 64 -
For security reasons, officials who wish to enter a Commission building  
during the weekend are required to sign an attendance list at the  
entrance and give the times of entering and leaving the building.
45(c) calls upon the Commission to ensure that all personal files comply  
with the provisions of Article 26 of the Staff Regulations and that they  
contain the correct up-to-date information necessary for efficient staff  
management.
Commission reply
1. Personal files opened since 1983 meet all the requirements of the  
Staff Regulations, particularly as regards the numbering of documents  
and the list of contents.
2. The Commission departments have been instructed to bring files opened  
before 1983 into line with the requirements of the Staff Regulations.
3. Measures have also been taken since the beginning of 1983 to ensure  
that supporting documents are in the correct form.
45(d) calls upon the Commission to improve the safeguards which protect  
the confidentiality of personal files, in particular by ensuring that  
all applications to consult files show adequate reasons and the name  
and grade of the final recipient of the information.
Commission reply
As regards the transmission of personal files, the existing internal  
instructions (IX/115/74—FR) designed to preserve their confidential  
nature will shortly be amended to take account of Parliament's comments.  
In particular, a clause on the reasons for consultation will be added.

- 65 -
45(e) recommends to the Commission that it should computerize all records  
relating to leave and other absences from work and ensure that proper  
monitoring and coordination of administration takes place.
Commission reply
The Commission is in the process of computerizing management of sick  
leave in Brussels. The system, which will become operational by the end  
of the year, will ensure improved links with the department responsible  
for annual leave.
In Luxembourg annual and special leave are already handled by computer.
A programme for processing sick leave and leave for cures is being  
prepared.
45(f) recommends to the Commission that it should seek to obtain figures  
showing the average rates of absence on account of sickness from the  
civil service of each Member State and also from several large commercial  
enterprises and then draw conclusions from a comparison between its own  
and these external figures.
Commission reply
The Commission has already sought figures on average absence rates for  
sickness from national administrations.
45(i) proposes to the Commission that it should continue its efforts  
to achieve savings in energy usage and recommends to it that a directive  
on energy savings be issued to all staff.

-  66  -
Commission reply
The Commission has embarked on a programme to modify and modernize  
heating and air conditioning plants in several buildings in Brussels.  
It is currently trying to solve a number of problems affecting energy  
saving, and particularly heating, in the Berlaymont complex. These  
stem from the basic design of the building and so are the owner's  
responsibility.
The owner has already taken steps to introduce certain improvements:
in August 1984 by improving the heat insulation on the 13th floor of  
Berlaymont;
by changing plant from the "all or nothing" principle to a system  
which will go some way towards providing heating or air conditioning  
as required.
These changes have been operational for over a year.
Naturally, the Commission and the owner are taking and will continue to  
take further steps in this direction, particularly when the lease comes  
up for renewal.
In Luxembourg the Commission has undertaken an urgent study on the  
installation of a computerized system which should yield substantial  
energy savings.
The Commission agrees that one of the cornerstones of the success of  
its energy saving policy is staff awareness. In future it will go on  
circulating notices and recommendations on this subject.

- 67 -
45(k) recommends that all types of computer and other information  
technology equipment purchased should be subject to periodic analysis,  
to ascertain Ci) whether, and to what extent, the forecast savings and  
other improvements have been achieved, (ii) whether the actual cost  
remained within the limits which were originally established, and  
(iii) comparative data as a guide for future purchases.
Commission reply
The Commission is aware that results can only be evaluated on the basis  
of statistics providing concrete evidence, which requires a considerable  
body of results and hence a certain period of observation. That is why  
an Internal Audit specialized department was set up in June 1984 in  
the Informatics Directorate. Its task is to continue on a broader basis  
the observations already made and propose any improvements which it thinks  
feasible. It should, however, be noted that positive results have been  
achieved since 1983: overall productivity of data-processing services
has gone up by 32% while appropriations have increased by only 4%.
(Parliament)
86. recommends the Commission to place more of its contracts by competitive  
tendering rather than by private treaty, to introduce systematic evaluation  
of the performance of contractors and take the necessary organizational  
measures for coordinating practice and for disseminating the lessons of  
experience.
Commission reply
The Commission would recall that the general principle of Articles 50 to  
58 of the Financial Regulation, concerning the conclusion of contracts for  
the supply of goods and services, and hire contracts, requires the  
institutions to invite tenders, use of private treaty being an exception  
strictly regulated by Article 52.

-  68  -
It should also be noted that the Commission's decision of 19 December 1984 
requires its departments to invite tenders for studies contracts likely  
to cost over 100 000 ECU.
In the 4th edition (May 1985) of its Vade Mecum, the Advisory Committee  
on Procurement and Contracts, which is particularly concerned to ensure  
the widest possible competition, introduced the following provisions:
- if there is no general invitation to tender, the authorizing officer  
must state in his report to the Advisory Committee that all the firms  
meriting consideration have been contacted;
- authorizing departments must build up a list of potential contractors  
for current services and supplies to be based on notices to interested  
firms published either in the Official Journal (supplement and, if  
appropriate, the C series) or the press;
- recommendation to authorizing officers to publish contracts for  
services in excess of 100 000 ECU in the Official Journal;
- recommendation that, even if the invitation to tender is published in  
the Official Journal or the press, firms concerned should be notified  
through the Offices of the Member States' Permanent Representatives,  
trade associations and other bodies.
All these are measures designed to ensure the widest possible consultation  
of the European market so that, when it considers files submitted to it  
by authorizing officers and in the light of accompanying reports, the  
Advisory Committee on Procurement and Contracts can coordinate practices  
and disseminate the lessons of experience.

- 69 -
EUROPEAN SCHOOLS
(Parliament)
90. finds that the Court of Auditors' latest report on the European Schools,  
which is for the 1982 financial year, reveals a number of disturbing factors  
which, by their nature, oblige the European Parliament to place a reservation  
against the use of funds of the European Schools.
Commission reply
Acting on instructions from his institution, on 24 May 1984 the Commission  
representative on the Board of Governors of the European Schools drew the  
Board's attention to the comments made by the Court of Auditors in its report  
of 20 March 1984 and asked for the points raised to be considered rapidly and  
thoroughly. He repeated this request at the meeting of the Board on  
27 November 1984, stating that the Commission endorsed the comments of the  
Court, especially those concerning the teachers' pay system. This problem  
is of direct concern to the Community because the portion of salaries referred  
to by the Court is paid entirely from the general budget of the Communities.  
Like the Court of Auditors, the Commission would like to see a thorough  
examination of the pay system. The administrative and financial management  
of the schools should also be rationalized and modernized.
On a practical level, the Commission has proposed that the Board of Governors  
bring in an outside consultant to make recommendations in three areas: the
organization of management structures, the design of a new pay system and the  
architecture of an integrated computer system, all accompanied by a feasibility  
study.
The Board of Governors preferred to have the Court's report examined by an  
internal preparatory committee, which did no more than propose a tax on  
incomes at the same level as that imposed on Community officials. The Board  
of Governors has not taken a decision on this proposal.

- 70 -
At the beginning of 1984 the Commission introduced a more rigorous system for  
managing the Community's contribution to the European Schools. This brought  
cash holdings into line with actual expenditure, improved the monitoring of  
appropriations and, as recommended by the Court of Auditors, reduced  
considerably the schools' cash reserves.
The legal framework of the European Schools does not give the Commission any  
direct responsibility for their management. It has, however, made use of its  
position on management bodies to put forward proposals for remedying shortcomings  
in the administrative and financial system. These include alignment of the 
budget calendar on that of the Communities, respect for the contractual budget  
procedure, elimination of a succession of supplementary budgets, use of the ECU,  
centralized management, the introduction of computers, the updating of  
financial agreements with outside bodies, etc.
At the meeting of the Board of Governors of 18 and 19 April 1985, the Commission  
also proposed the strengthening of certain key functions such as that of  
Representative of the Board of Governors and those concerned with the Secretariat.  
More specifically, it proposed dividing the secretariat in two, with one part  
covering administrative and financial matters, which could be dealt with by  
an official seconded from a Community institution, and the other dealing with  
educational matters, which would naturally be the responsibility of a teacher  
or inspector.
(Parliament)
91. calls on the Commission to publish in its analysis of financial management  
accompanying the annual revenue and expenditure account particulars of  
subsidies paid to external bodies under Articles 290, 291, 292, 293 and 299  
and corresponding budget items, showing the name of the beneficiaries and the  
amounts paid.

- 71 -
Commission reply
Information on the recipients of grants in 1984 was sent by separate Letters  
attached to the revenue and expenditure account on 4 June to the Presidents  
of Parliament, the Council and the Court of Auditors and on 28 May to the 
chairment of Parliament's Committee on Budgets and Committee on Budgetary  
Control,

- 72 -
BORROWING AND LENDING
(Parliament)
92. calls upon the Commission and the European Investment Bank to ensure that  
more comprehensive information is provided on borrowing and lending operations,  
so as to permit evaluation, in the framework of parliamentary supervision, of  
the financial risk and the economic implications and to ensure that Community  
priorities are observed.
Commission reply
The Commission and the EIB endeavour to provide Parliament with all the  
information required to evaluate the economic implications, priorities and  
financial risk arising from borrowing and lending operations. For instance,  
the Commission makes an annual report on the Community's borrowing and  
tending activities, a six-monthly report on NCI operations and regular  
reports in the revenue and expenditure account and the balance sheet on loans  
and borrowings guaranteed by the general budget. It makes available the  
documents which the Court of Auditors requires. The EIB publishes an annual  
report containing its balance sheet, profit and loss account and the position  
of the special section, which covers the transactions it has carried out as  
agent of the European Communities.
The Commission would point out that agreement has been reached between the  
Commission, the EIB and the Court of Auditors on inspection by the Court of  
NCI operations. This deals mainly with information from the EIB required  
by the Court for audit purposes. As the representative of the Court of  
Auditors told the Committee on Budgetary Control on 18 June, this agreement  
has proved satisfactory. It could well serve as a model for other areas  
where the EIB acts on behalf of the Commission.

- 73 -
(ParLiament)
93. calls upon the Commission systematically to remove the sources of error  
in its accounting procedure, so that uniform and reliable statistics are  
available to enable accurate assessment of the financial and economic  
implications of the operations.
Commission reply
The Commission has instructed the department responsible for the accounts of  
borrowing and lending operations (DG XVIII) to take all the measures required  
to meet Parliament's request. When the proposal for NCI IV was made this  
department took steps to ensure that the evaluation of operations concluded  
against the authorized ceiling was harmonized with the method used by the  
EIB in its periodic statistics. The Commission's undertaking should be seen  
in the context of its requests for more staff for the accounting section of  
DG XVIII and the optimum deployment of the officials assigned, to it.
Regular and spot checks of both the accounts and accounting procedures are  
also carried out.
Taken together, increased supervision by the accounting department, improved  
transmission of the information supplied by the EIB and tighter controls  
represent a coherent series of measures which should meet Parliament's wishes.
(Parliament)
94. welcomes the priority accorded in the granting of loans under the NCI  
mechanism to small and medium-sized undertakings and trusts that this funding  
activity, for which there is a vigorous demand, will continue.
Commission reply
The Commission can confirm that it intends to continue giving priority to  
loans, particularly under the NCI facility, to small and medium-sized  
undertakings.

(Parliament)
95. recognizes that investment in the service sector creates approximately  
10 times as many jobs as new investment in manufacturing and recommends that  
the future lending policy of the NCI for small and medium-sized enterprises  
should extend to tourism, which creates even more jobs than the service  
sector as a whole.
Commission reply
Investment in the service sector is included in the NCI's field of application  
"directly related industries and services". This priority is justified by  
the Community's need for industrial adjustment and the importance of promoting  
the spread of innovation and advanced technologies, to which the Council and  
Parliament attach particular importance.

-  75  -
PART III
ANNEXES

ANNEX I-A
New operations (1983 and 1984 budgets) for which the Council
has adopted the legal basis
Article
ItemHeading Remarks
5411
6610 & 
6611
7020
7021
7027
7031
7032
7033
704
7302Community measures in the framework  
of integrated operationsProposal: 6 April 1983
Parliament's opinion: 10 June 1983
Council Regulation: 21 June 1983
Operations concerning the environment Proposal: 11 January 1983
Parliament's opinion: 15 April 1983
New technologies for burning solid  
fuels and using the residues thereof
Projects for the liquefaction and  
gasification of solid fuels
Restructuring of the Community's  
coal industry
Projects concerning geothermal  
energy
Projects concerning solar energy  
and biomass
Other alternative energy sources
Community energy-saving programme
Basic technological research (BRITE)Council Decision: 28 June 1984
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 6 October 1983
Parliament's opinion: 20 January 1984
Council Regulation: 23 July 1984
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 3 August 1982
Parliament's opinion: 29 October 1982
Council Regulation: 11 July 1983
Proposal: 20 June 1983
Parliament's opinion: 18 November 1983
Council Decision: 12 March 1985

-  2 -
Article
ItemHeading Remarks
7306 Biotechnology Proposal: 26 April 1984
Parliament's opinion: 14 December 1984
Council Decision: 12 March 1985
7320 Non-nuclear energy (new  
programme)Proposal: 16 June 1983
Parliament's opinion: 11 February 1985
Council Decision: 12 March 1985
7503 Community activities in the  
specialized information sectorProposal: 17 November 1983
Parliament's opinion: 26 March 1984
Council Decision: 4 December 1984
7521 Promotion of a supporting  
infrastructure for innovation  
and technology transferProposal: 11 May 1983
Parliament's opinion: 11 March 1983
Council Decision: 25 November 1983
7702 Community operations for the  
development of data-processingProposals: 7 July 1982 and
18 November 1983
Parliament's opinions: 15 April 1983
and 26 March 1984
Council Decisions: 10 April 1984 and
15 October 1984
781 Financial support for transport  
infrastructure projectsProposals: 1976, 12 March 1980,
5 August 1983
Parliament's opinions: 18 November 1976,
4 July 1977 and 11 July 1980  
Council Decision: 10 May 1984
92 Food aid Proposal: 24 February 1983
No opinion issued by Parliament  
Council Regulation: 11 July 1983
958 Special scheme to combat hunger  
in the worldProposal: 27 January 1983
Parliament's opinion: 15 April 1983
Council Regulation: 11 July 1983

ANNEX I-B
New operations (1983 and 1984 budgets) for which the Council has not yet
adopted a legal basis
Article u „ IHeading RemarksItem
388 Community action for the protection Proposal: 14 June 1983
of forests against fire and acid rain Parliament's opinion: 23 May 1984
411
4111
4112Joint fisheries research programmes
Research programmes into fishery  
methods
Research programmes into the 
processing and conservation of  
fishery productsProposals: 18 July 1980 and
2 December 1980
Parliament's opinion: 19 December 1980
705 Promotion of energy investments Proposals: 14 September 1982 and
14 June 1983
Parliament's opinion: 12 April 1983
7331 Development of endogenous research Proposal: 8 June 1983
capacity in developing countries Parliament's opinion: 16 December 1983
7570 Updated value of the moratorium  
on interest paymentsProposals: 7 July 1983 and 17 January 1984
Parliament's opinion: 21 November 1983
7771 Mineral raw materials Proposal: 7 July 1982
Parliament's opinion: 14 January 1983

ANNEXE II
PUBLICATIONS AND REPORTS RELATING  
TO THE EVALUATION OF THE COMMUNITY R & D PROGRAMMES
1. The evaluation of Research and Development - EEC  
Seminar - Copenhagen - June/July 1978
2. The evaluation of the Community's energy conservation  
and solar energy R & D sub-programmes (1975-1978)
3. The evaluation of the Community's geothermal energy,  
production and utilization of hydrogen, and system  
analysis:development of models R & D sub-programmes
4. The evaluation of the Community Bureau of Reference  
- Indirect action programme (1975-1978)
5. Evaluation of the Community's indirect action programme  
on management and storage of radioactive waste
6. Report of the European Fusion Review Panel
7. Evaluation of the concerted actions of the Comunity's  
first medical research programme (1978-1981)
8. New directions in Community R & D Evaluation -  
Paper presented at the seminar on Research Evaluation  
organized by the Economic Commission for Europe,
Prague - November 1981EUR 6346 (2 vol.)  
1979, EN, FR
EUR 6902 (1981)  
DA,DE,EN,FR,IT,NL
EUR 7350 (1981)  
EN, FR
EUR 7422 (1981)  
EN, FR
EUR 7693 (1981)  
EN, FR
EUR Fu Brux/
XI1—715/81
DA,DE,EN,FR,IT,NL
EUR 7730 (1981)  
EN, FR
XII/590/83-E
EN
9.
10.
11Evaluation of Research and Development  
Conference - Brussels - January 1982EEC
Proposition d'une méthode d'évaluation socio­
économique de la recherche (Proposal for a method of  
socio-economic research evaluation)
The evaluation of the Community programme on forecasting  
and assessment in the field of science and technology  
FAST (1978-1983)EUR 7897 (1982)  
EN, FR
XII-362-82-F
EUR 8274 (1982)  
EN, FR
12. The économie and social impact of the ECSC Steel  
research programme
13. The évaluation of the COST action on teleinformatics  
projects 11 (1972-1977) and 11bis (1980-1983)EUR 8517 (1983)  
EN, FR
14. Evaluation of the European Community's radiation  
protection research programme (1976-1980)EUR 8648 (1983)  
EN, FR

-  2 -
15. Council resolution on a Community plan of action  
relating to the evaluation of Community research and  
development programmes
16. Report of the European Fusion Review Panel II
17. Evaluation of th?> Community's programme on  
scientific and technical training
18.
19.Evaluation of R 8 D 
October 1983EEC Seminar, Brussels
20.
21Evaluation of the European Community's Research  
and Development programmes - Paper presented at the  
seminar on Research Evaluation organized by the French  
Ministry of Research and Technology, Paris - May 1984
Evaluation of the Remote Sensing Programme of the Joint  
Research Centre (1980-1983)
Materials for Gas Turbines - High Temperature  
Materials for Conventional Systems of Energy Generation  
and Conversion using Fossil Fuels"0J N° C 213 of  
9.8.83
EUR Fu Bru/XII-213
EUR 9202 (1984)
EN, FR
EUR 9201
EUR 9438
EUR 9603 (1984)
Forthcoming publications
1. Evaluation of the Community Environmental Research Programme  
Direct, Indirect and COST Actions"
2. Evaluation of the Research Programme on Primary Raw Materials
3. Evaluation of the Medical Research on Public Health Programmes