[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 7.5.2009

COM(2009) 213 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

ON EXPENDITURE INCURRED BY MEMBER STATES AND CO-FINANCED BY THE COMMUNITY IMPLEMENTING MONITORING AND CONTROL SYSTEMS APPLICABLE TO THE COMMON FISHERIES POLICY FOR THE PERIOD 2001-2006

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

ON EXPENDITURE INCURRED BY MEMBER STATES AND CO-FINANCED BY THE COMMUNITY IMPLEMENTING MONITORING AND CONTROL SYSTEMS APPLICABLE TO THE COMMON FISHERIES POLICY FOR THE PERIOD 2001-2006

1. RATIONALE OF COMMUNITY CO-FINANCE FOR FISHERIES CONTROL

The Community rules on the preservation of fish stocks that are part of the Common Fisheries Policy (CFP) can only become effective if Member States, which are in charge of the proper implementation of those rules, have sufficient human resources and technical means. This necessity is the reason why, since 1990, the Community applies a financial aid scheme by which Member States are supported in their efforts to implement Community rules on fisheries control. In order to react to assessments regarding the effectiveness of supported measures as well as to new challenges for fisheries control, the aid scheme has seen several amendments. These include Council Decisions (EC) No. 431/2001[1] and (EC) No. 465/2004[2], which are the pieces of legislation determining the shape of the aid scheme for the periods 2001-03 and 2004-06 respectively.

2. COUNCIL DECISIONS (EC) NO 431/2001 & 465/2004

2.1. Types of expenditure co-financed by the Community

The types of expenditure eligible for Community support, as laid down in Article 2 of Council Decision (EC) No. 431/2001, have been resumed and expanded in the corresponding Article 4 of Council Decision (EC) No. 465/2004, albeit with some slight changes in the wording.

In this vein, both decisions provide for support for the creation of IT networks facilitating the exchange of control-related data among different Member States' authorities as well as Member States' authorities and the Commission.

Innovative approaches are to be stimulated via the co-finance of expenditure related to implementing new technologies in fisheries control. While Decision 431/2001 subsumes expenditure for VMS and electronic recording devices under the "new technologies" article, Decision 465/2004 flags them out as an independent expenditure item.

To enhance the skills of officials of control departments and to promote the pursuit of coordination with other Member States' authorities, related training and exchange programmes have been included in the list of eligible projects.

Given the Community's participation in Regional Fisheries Organisations (RFOs) and its interest in their effectiveness, costs incurred by Member States and related to the implementation of new inspection and observer schedules in the framework of RFOs, fall in the range of eligible expenditure under the 2001-03 regime. Regarding the years 2004-06, the scope of the provision has been broadened so that pilot inspection and observer schemes in general are eligible and not only those relating to RFOs.

Additionally the Community co-finances the acquisition and modernisation of control, inspection and surveillance equipment. This type of expenditure ranges from minor repairs to the construction of new patrol vessels and aircraft.

Finally, costs related to a system to assess expenditure incurred in controlling the CFP are also deemed eligible.

Given the differing perspectives adopted by Member States towards the prosecution of serious infringements of the CFP rules, the 2004-06 regime added seminars and media tools to enhance awareness of the need to fight illegal fishing to the eligible expenditure categories. Furthermore, costs incurred by Member States and related to studies in the field of fisheries control carried out on the Commission's initiative became eligible through an amendment at the end of 2005[3].

2.2. Contribution rates

Articles 5-10 of Council Decision (EC) No. 431/2001 and Article 6(2) of Council Decision (EC) No. 465/2004 determine the maximum contribution rates per type of eligible expenditure for the years 2001-03 and 2004-06 respectively. As the left section of the table in Annex I shows, the 2004-06 regime has brought about only little changes compared to the previous regime.

3. THE ANNUAL COMMISSION FINANCING DECISIONS

3.1. Contribution rates

As shown in the right section of the table in Annex I, the annual financing decisions adopted by the Commission to implement the provisions of Council Decisions (EC) No. 431/2001 and 465/2004, have generally applied contribution rates as high as the maxima permitted under those two decisions.

The only exception is the contribution rate to IT-related expenditure under the financing decisions 2002 and 2003, where 50% instead of the permissible 65% were applied.

The provisions concerning VMS were similarly implemented in the periods 2001-03 and 2004-06. In both periods a maximum eligible expenditure which may qualify for co-finance was determined for a satellite tracking device and a cut-off point after which the contribution rate switches from 100% to 50%.

3.2. Overall commitments

Both Council Decisions, 2001/431/EC and the amended 2004/465/EC, stipulate in Articles 4(2) and 5(1) respectively, a maximum Community contribution to fisheries control of 105 million EUR, spread over three years. Implementation of those provisions has taken place through the annual Commission Financing Decisions. These have determined for every Member State, the eligible expenditure for each expenditure category as well as the rates of the financial contribution, which has resulted in overall maximum contributions of 100.890.377 EUR for 2001-03 and 98.319.418 EUR for 2004-06[4].

3.3. Maximum contributions per eligible expenditure category

Comparing the different expenditure items' relative shares of the overall maximum contributions for the periods 2001-03 and 2004-06 (see Figure I), one finds broad similarities. The construction/modernisation of vessels and aircraft accounts for by far the highest share (56% and 62,2%), followed by co-finance related to new technologies (20,6% and 16,6%), which, for presentational ease, has been

2001-03 [pic]

2004-06[pic]

Figure I – Maximum contributions per type of eligible expenditure

merged with Community contributions related to VMS and other electronic reporting devices. Financial aid for the creation of IT networks takes the third place (16,7% and 15,3 %), being more extensive than financial support for control inspectors' training courses (6,1% and 3,9%).

In both the 2001-03 and the 2004-06 periods, contributions for setting up a system to assess expenditure is the smallest item of expenditure (0,5% and 0,1%), and is less than aid related to awareness-raising seminars (1,7% in 2004-06) and the implementation of new inspection schedules (0,3% in 2004-06).

3.3.1. The relative importance of Community contributions to control equipment

As Figure I shows, with the share increasing from 56% to 62%, the acquisition and modernisation of vessels and aircraft accounts for more than 50% of the Community commitments in both 2001-03 and 2004-06. Obviously, such prevalence is primarily rooted in the average cost of items in this expenditure category. The construction of seagoing vessels can involve costs of several million EUR, whereas the other categories will never approach these levels. Trying to nevertheless cut back Community contributions to that expenditure category, the Commission used the explanatory memorandum accompanying the proposal for the 2001-03 financial aid scheme[5] to announce a shift from a policy of "initial equipment provision" to a more selective one focusing on "renewal and addition" only. This move was followed by an increasingly restrictive practice regarding the grant of financial aid to that expenditure category. For the period 2001-03, the ratio of commitments regarding control equipment to the expenditure for control equipment applied for in national control programmes was only 74%, and driven down further to 48% under the 2004-06 regime. However, these efforts by the Commission were thwarted by the Member States' tendency to demand ever increasing amounts. While planned expenditure for control equipment in 2001 was at some 40 million EUR, it climbed to more than 190 million EUR in the 2006 control programmes. Even the reduction of the maximum contribution rate to equipment-related expenditure that was applied in the Financing Decisions from 2004 onwards (25% co-finance instead of 35%) did not reverse this trend.

3.3.2. Infrequently used/non-used expenditure categories

As Figure I shows, certain expenditure categories did not or hardly translate into eligible expenditure. Regarding the period 2001-03, this is true for Member States' costs related to the implementation of new inspection and observer schedules in the framework of RFOs. Considering that only two Member States successfully applied for related contributions, the setting-up of an expenditure assessment system seems to suffer from a similar problem.

Also in 2004-06, only two of the Member States' control programmes resulted in commitments for those two expenditure types. Of the expenditure categories newly introduced in the 2004-06 regime, only co-finance of seminars about illegal fishing was requested by Member States and resulted in accordant commitments[6].

4. OVERVIEW OF THE ITEMS FINANCED

The Financing Decisions of the 2001-06 period have up till now reimbursed 472 out of 900 projects that were eligible for Community co-finance. The following figures concern a selection of expenditure items that are relatively standardised and can therefore be aggregated across Member States. They help to get a more concrete idea of what has been achieved with Community aid so far.

161 projects concerning training of staff employed in fisheries control have been co-financed, several of which involved exchanges of staff among Member States. In addition, there were 5 projects exclusively dedicated to the exchange of control personnel, aiming to foster cooperation and coordination among the Member States. In this respect, it is appreciable that four of the seven Member States that acceded in 2004, and which are Coastal States, have received co-finance for projects partially or entirely dedicated to the exchange of inspectors. However, three of those seven Member States did not conduct any co-financed exchanges, with two of them failing to conduct even a co-financed training course. Given the potential advantages in particular for the new Member States, it appears that the potential of exchange programmes has not been optimally used yet.

A total of 5.066 Blue Boxes, co-financed under the Financing Decisions 2001-06, appears initially to be impressive. However, a closer look reveals that this amount is far from satisfactory. Commission Financing Decision (EC) No. 690/2004[7], for example, is entirely dedicated to VMS and has been drawn up on the basis of concrete demands by the Member States. However, it has only resulted in co-financing of 1.050 Blue Boxes, although 4.653 had been deemed eligible. On the assumption that the requests by Member States were based upon a realistic evaluation of the number of vessels that are obliged to have a blue box aboard, it seems reasonable to prioritise VMS-related expenditure in future financing decisions.

As regards expenditure, given the large spread involved with financing vessels, it is appropriate to classify them by overall construction costs. This runs parallel with the different classes of vessels involved. The smallest class covers vessels costing up to 50.000 EUR[8], which includes rigid inflatable boats (RIBs) used normally to cover small distances and which can also operate in inshore waters. Here the Community has contributed to the provision of some 27 of this class of vessel.

The price range 50.000-1.000.000 EUR covers the majority of patrol vessels of which some 33 have been built with a Community contribution. Those vessels costing significantly more than 1.000.000 EUR cover the class of patrol vessel mandated with controls on the high seas, sometimes distant from European waters. 13 such vessels were built with a Community contribution.

5. EXECUTION OF THE ANNUAL CONTROL PROGRAMMES

Having described the structure of the Community commitments and having provided concrete figures concerning the items financed so far, it is of interest to provide a more comprehensive overview of the degrees to which the national control programmes have actually been executed.

Calculation of the ratio of overall de-commitments to initial commitments gives an overall non-execution rate of 25% for the period 2001-03, and of 14% for the period 2004-06. Considering that those figures are accompanied by a ratio of outstanding commitments to initial commitments of 33% and 53% respectively, only the non-execution rate for the 2001-03 period seems sufficiently mature to be the subject of further analysis.

Given that a non-execution rate of 25% and an outstanding commitments rate of 33%, means that the remainder (42% of the initial commitments) have been executed, the ratio of de-commitments to contributions paid is roughly 1:2.[9] This suggests that until the closure of all programmes concerning the 2001-03 period, the non-execution rate will probably rise to at least 33% as a consequence of new de-commitments; assuming that the likelihood of outstanding commitments being de-committed rises, the more time has passed since the initial commitment, the 33% appear even as a rather conservative estimate. Clearly both the non-execution rate reported, and, even more so, the estimated final non-execution rate, are unsatisfactorily high.

5.1. Relation between non-execution rates and maximum contributions

The table in Annex II illustrates the underlying structures, and gives a ranking of Member States covered by the 2001-03 scheme in respect of their non-execution rate. Member States marked with a (*) should not be considered as they have outstanding commitment rates significantly higher than the actual overall rate (and therefore misleadingly low non-execution rates). However, the remaining ten Member States can safely be considered for analysis.

As the table shows, the non-execution rates for Member States 1 to 10 range from a quarter of the maximum contributions to almost a hundred percent. Comparison of these figures with the ranking reported in the middle of the table (the maximum contributions granted to Member States) clearly shows there is no evidence of a systematic positive correlation between non-execution rates and the size of the maximum contributions. A country like Belgium, although being granted the second smallest maximum contribution, still has the second largest non-execution rate. Conversely, Spain is associated with the second biggest Community contribution, and yet has a non-execution rate considerably smaller than the average rate of 51%. As the cases of Finland and Greece show, there is also no convincing support of a correlation in the opposite direction. Accordingly, the size of the maximum contribution granted to a Member State does not seem to have a bearing on the execution of the programme by the Member State.

5.2. Relation between maximum contributions and de-commitments

The conclusion changes, if one turns from the relative to the absolute size of the de-commitments, reported in the right section of the table. Comparing this ranking to the one based upon the maximum contribution per Member State, a strong correlation can be identified. The five countries with the highest maximum contributions (the Member States indicated with an asterisk being excluded) are at the same time the five countries with the highest de-committed amounts. While this pattern originates in the structure of the allocation of commitments (the seven largest receiver countries account for 87% of the overall maximum contribution), this correlation could still be weakened if the countries benefiting most from the scheme increased their efforts to reduce their non-execution rates. In the future, it would be desirable that all Member States benefiting from an above-average maximum contribution produce a below-average non-execution rate.

5.3. Reasons for the sub-optimal execution of control programmes

The reasons for the non-execution of a significant part of the annual control programmes are varied and, given that Member States frequently do not report any reasons, it is impossible to draw up a representative list. Generally, two explanations are relevant for dropping a project.

5.3.1. Member States' over-estimation of their budgetary capacities

Firstly, the frequency of projects cancelled by Member States that have already seen a good share of their expenditure planned in the control programme deemed ineligible by the Commission, suggests that the scope of the control programmes might be, a priori, too large. Against this backdrop at the same time more modest and more realistic annual control programmes would be desirable.

5.3.2. In-eligibility of expenditure

A second explanation involves ineligibility of expenditure. Projects introduced in a certain control programme but initiated before the year to which the control programme refers are typical examples and always lead to the Commission rejecting corresponding claims for reimbursement.

A more thorough adherence to the rules applicable to Community funding for fisheries control on the part of Member States would help to decrease the frequency of such problems. In a similar vein, Member States should feel encouraged to contact the responsible Commission staff in case of doubts about the interpretation of certain rules, thus avoiding to work on the basis of assumptions which might finally prove false and lead to the rejection of Community contributions.

In this context, it should be mentioned that initial non-compliance with the rules regarding supporting documents that must be attached to every claim for reimbursement,[10] is a frequent source of delays in reimbursing. Full compliance with the rules by the Member States would speed up payments.

6. IMPACT OF THE CONTROL PROGRAMMES 2001-06

Article 16(b) of Council Decision (EC) No. 465/2004 as amended by Council Decision (EC) No. 2/2006, demands, inter alia, an overall assessment of the impact of Community contributions to the fisheries control programmes over the whole period 2001-06. However only reports from a few Member States satisfactorily fulfil this obligation[11].

This imbalance in reporting makes it difficult to give a comprehensive account of the impact. However, certain trends appear in assessment reports from more than just one Member State, and can therefore be assumed to mirror broader tendencies.

6.1. Stimulation versus savings effect

First of all, Community aid seems to have had a significant effect on the spending behaviour of the Member States. Instead of just cheapening the expenditure that anyhow would have been incurred, two Member States explicitly state that Community co-finance has induced them to implement projects they otherwise would not have conducted[12]. In the cases where EU funding has not resulted in realising otherwise unaffordable projects, it has in some cases at least led to the choice of higher-quality solutions[13] and/or an earlier implementation of projects[14].

6.2. Connection and coordination among Member States

A second commonality of many reports is the emphasis on connection and coordination that is said to have been enhanced among Member States[15]. The exchange programmes for fisheries inspectors, as well as new software for the Fisheries Monitoring Centres, which allow easy exchange of information among Member States, are just two examples.

6.3. Quantitative Effects

In addition to these qualitative effects, many Member States stress the quantitative impact of Community aid. This goes especially for investment into control equipment (e.g. vessels, aircraft) and training courses, which have helped to prepare a significant number of new staff for their work in fisheries control.

6.4. Impact of the control programmes in figures

While the majority of Member States reporting the impact of Community aid do not provide concrete figures, four of them apply numeric indicators, as stipulated in Article 16(b)(iii) of Council Decision (EC) No. 465/2004.

Spain reports the amount of annual inspections. The ones conducted by ship have risen from 320 in 2001 to 2.612 in 2006, which has fed into an increase in detected infringements from 129 in 2001 to 959 in 2006.

The Italian authorities report, for the same period, an increase in the total number of controls (not only those at sea) of 71%. Also in that case, positive repercussions could be witnessed, with the number of serious and administrative infringements detected increasing by 58% and 26% respectively.

The Portuguese report contrasts the amount of vessels observed and vessels inspected in 2006 with the equivalent numbers in 2001. The impressive increase is from 1.432 to 33.975 and from 1.929 to 6.750 respectively.

Estonia has provided an indicator on the development of infringements in data reporting and registration from 2004 to 2007. However, the generally low number of infringements detected makes it impossible to derive statistically sound conclusions.

An extrapolation of the numbers reported in this section to arrive at estimates for the effect of investments on other Member States is for various reasons impossible. However, the numbers do at least provide some support for the assumption that Community funding has had a sizeable effect on the control capacities of Member States and immediate repercussions on the performance of the control authorities.

7. CONCLUDING RECOMMENDATIONS

In spite of diagnosing a positive impact of Community aid on fisheries control, the report also identifies room for improvement, which translates into the following practical measures:

The Commission should:

- keep on subjecting the increasing number of projects concerning the construction and modernisation of vessels and aircraft to a critical examination as regards their necessity;

- prioritise in future financing decisions co-finance related to automation and management of data, e-log books and VMS, as well as to training courses and exchange programmes, particularly in the area of illegal fishing;

- conclude Memoranda of Understanding with Members States which have not yet signed one[16]. These agreements will aim at defining improvement needs in the national control systems in the context of Community financial aid for fisheries control. They will put in place a framework for strategic risk analysis and define benchmarks for these improvements. These benchmarks will cover all subjects related to inspection, from national legal frameworks to inspection means and procedures or use of VMS and other data. They will also indicate improvements to be brought in the administrative control area, the national organisational structure and the follow-up of infringements.

The Member States should:

- limit the extent of the annual control programmes so that implementation of all projects is feasible;

- (EU-10) not hesitate to invest in training courses and exchange programmes of control staff;

- increase awareness in the administration of the possibility of co-finance for expenditure categories that have so far not had much take-up in Member States' control programmes. Especially efforts to set up a system to assess expenditure are appreciable, since such a system might help Member States reaching the above-stipulated target of more selective annual control programmes;

- ensure that their non-execution rate is further reduced. In this respect, the Member States benefiting from an above-average maximum contribution have a special responsibility and should produce a below-average non-execution rate;

- ensure that the staff responsible for the implementation of the programmes are fully aware of the eligibility rules for expenditure and thereby reduce the risk of claimed expenditure being considered ineligible by the Commission;

- ensure the implementation of the Memoranda of Understanding concluded in agreement with the Commission;

- closely adhere to the prescribed format and the deadlines concerning the annual assessment reports.

Annex I – Maximum contribution rates per Council Decision & actual contribution rates per Commission Financing Decision

TYPES OF ELIGIBLE EXPENDITURE & MAXIMUM CONTRIBUTION RATES (in %) | ACTUAL CONTRIBUTION RATES (in %) |

Council Decision 2001/431/EC | Council Decision 2004/465/EC | Financing Decisions: |

65% | 50% |

NEW TECHNOLOGIES: | 50%; 50%/100% for VMS, electr. logbook | 50% |

50%;>50% for VMS/logbook | >50% |

VMS/REPORT. DEVICES: | for VMS: 50%/100% |

lump sum |

TRAINING: | 50% |

50% | 50% |

NEW INSPECTION SCHEDULES: | n/a | 50% | n/a |

50% | 50% |

EQUIPMENT: | 35% | 25%;50% for new MS |

35% | 25%; 50% for new MS |

EXPENDITURE ASSESSMENT: | 50% | n/a | 50% |

50% | 50% |

SEMINARS: | 75% |

>50% |

STUDIES: | n/a |

100% |

Annex II – Ranking of the Member States regarding non-execution rate, maximum contribution & de-commitment (for the period 2001-03)

Annex III[17] – Overview of the Execution of Community Funds per Member State for the Periods 2001-03 and 2004-06 respectively

[1] OJ L 154, 09.06.2001, p. 22

[2] OJ L 157, 30.04.2004, p. 114; amended by Council Decision (EC) No 2/2006 (OJ L 2, 05.01.2006, p. 4)

[3] Council Decision (EC) No 2/2006 of 21 December 2005

[4] This downwards deviation from the maximum permissible amount of 105 million EUR is due to the expenditure-limiting nature of co-finance, as well as the rejection of some projects with a view to maintaining a certain balance amongst the contributions to the different Member States and different expenditure categories.

[5] COM (2000) 684 final, 27.10.2000

[6] Given that the eligible expenditure category related to studies about fisheries control carried out on the initiative of the Commission has entered the 2004-06 regime at the end of 2005 only (amendment 2006/2/EC), it appears premature to give a judgment on its degree of utilisation by the Member States.

[7] OJ L 314, 13.10.2004, p. 11

[8] The amounts reported in this section are all exclusive value-added tax.

[9] These calculations are based upon Commission-internal follow-up tables of the execution of Community funds and have last been updated on 12/12/2008.

[10] Annex VI of Commission Regulation n° 391/2007 (OJ L 97, page 30) describes the content of claims for reimbursement.

[11] Note that this is the case although the Commission sent several letters in early 2008, recalling the criteria such a report must fulfil.

[12] reported by Germany, Malta

[13] reported by Sweden

[14] reported by Belgium, Sweden, Malta

[15] reported by Denmark, Estonia, France, Germany, Lithuania, Sweden

[16] Up to now, a Memorandum of Understanding was signed between the Commission and Sweden, Poland and Greece respectively.

[17] All tables in this Annex are based upon Commission-internal follow-up tables of the execution of Community funds and have last been updated on 12/12/2008.