Opinion of the Economic and Social Committee on the "Proposal for a Council Regulation amending Regulation (EC) No 1267/1999 establishing an Instrument for structural policies for pre-accession"

(2001/C 221/26)

On 18 April 2001, the Council decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Economic and Social Committee decided to appoint Mr Walker as rapporteur-general to prepare its opinion.

At its 382nd plenary session on 30 and 31 May 2001 (meeting of 30 May) the Economic and Social Committee adopted the following opinion by 48 votes to one with two abstentions.

1. Introduction

1.1. Council Regulation (EC) No 1267/1999 established an Instrument for Structural Policies for Accession (ISPA) in 1999 to assist the central and eastern European countries (CEEC) which were candidates for membership of the European Union in meeting the requirements of the acquis communautaire in the fields of transport infrastructure and the environment. The implementation of this instrument in the following year resulted in the grant of Community assistance to a total of around 80 measures.

1.2. Pursuant to this regulation, measures eligible for Community assistance must be of a sufficient scale to have a significant impact in the relevant field. Experience acquired by the Commission in appraising applications for financing submitted by the beneficiary countries shows that they often have difficulties in part-financing such measures from available public resources.

1.2.1. Accordingly, to ensure that ISPA has more impact in the beneficiary countries, as much funding as possible must be obtained from the European Investment Bank (EIB) or other international financial institutions (the European Bank for Reconstruction and Development (EBRD), the World Bank etc.) and, where appropriate, from private-sector sources. In 2000, ISPA obtained funding from international institutions in around 40 % of approved measures and was thus able to achieve a multiplier effect of about 25 %.

1.3. However, finding such funding is proving difficult due to the absence in the Regulation establishing ISPA of specific provisions allowing a derogation from the rule laid down in Article 114(1) of the Financial Regulation applicable to the General Budget of the European Communities. Under the terms of this rule, which applies to external aid, invitations to tender for contracts financed by the Community are open only to natural and legal persons in the Member States of the European Union and the ISPA beneficiary countries.

1.3.1. The problem arises because the basic framework of ISPA was modelled on the Cohesion Fund which, being an instrument for Community assistance, required tenders to be open to all comers, regardless of nationality, whereas ISPA is, in fact, an instrument for external assistance and is therefore governed by Article 114(1) of the Financial Regulation which restricts tenders to nationals of the Member States and the CEEC and companies registered therein.

1.4. The problem also relates to the question of co-financing; this may take the form of joint co-financing or parallel co-financing. Under joint co-financing, there is one tender, one control and one supervisory authority. Under parallel co-financing, there may be two or more separate tenders which combine to form a single project.

1.4.1. Under the existing regulations, joint co-financing which incorporated international financial institutions would be open to tender by any persons; in this context, the EBRD is deemed to be an international financial institution rather than a European one by virtue of the fact that it has shareholders from third countries. Under parallel co-financing, each tender is treated as a separate entity and where the Community was involved in financing for one tender, that tender would be limited to natural and legal persons of the Member States and the CEEC, although other tenders forming part of the same overall project could be awarded under different rules if there were no Community financial involvement.

1.4.2. This means, in effect, that, under the existing regulations, the ISPA fund cannot be used for Community participation in either joint co-financing or parallel co-financing of a tender, although it could participate in parallel financing of one or more tenders in a single project provided that those tenders were subject to the requirements of the Financial Regulation.

1.5. The Commission proposes to remove this restriction by inserting into this Regulation an article which mirrors the existing provisions of the Phare programme.

2. The Commission's proposals

2.1. The Commission's proposals are set out in Appendix.

3. Comments

3.1. The Committee notes that the application of Article 114(1) of the Financial Regulation constitutes an insurmountable barrier in some cases to the participation of international financial institutions in the funding of measures eligible for assistance under ISPA.

3.2. The Committee signifies its approval of the Commission's proposal to insert a basic condition in the instrument allowing Article 114(2) to be applied. It considers that this would increase the scope for co-financing by international financial institutions and facilitate the achievement of a higher multiplier effect in ISPA financing.

3.3. The Committee approves the proposal that the Commission be assisted by a committee on the terms set out in the Commission's proposals.

3.4. The Committee believes that eligibility for participation in ISPA should be extended to the other candidate countries of Cyprus, Malta and Turkey.

3.5. The Committee considers that there are certain aspects of the way in which the ISPA fund is structured and operated which warrant more detailed examination. It therefore proposes to draw up an own-initiative opinion on this subject in the near future.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke Frerichs

APPENDIX

to the Opinion of the Economic and Social Committee

Extract from the Proposal for a Council Regulation amending Regulation (EC) No 1267/1999 establishing an Instrument for structural policies for pre-accession COM(2001) 110 final - 2001/0058 (CNS)

Article 1

Regulation (EC) No 1267/1999 is hereby amended as follows:

(1) The following Article 6a is inserted: "Article 6a

Award of contracts

1. In the case of measures for which the Community is the sole source of external aid, participation in invitations to tender and contracts shall be open on equal terms to all natural and legal persons of the Member States and of the countries referred to in the second subparagraph of Article 1(1).

2. Paragraph 1 shall also apply to co-financing. In the case of co-financing, however, the participation of third countries in invitations to tender and contracts may be authorised by the Commission, after examination on a case-by-case basis."

(2) The following paragraph 8 is added to Article 7: "8. Where a measure is co-financed together with international financial institutions, expenditure meeting the rules for eligibility referred to in paragraph 7 but carried out in accordance with procedures appropriate to external sources of financing other than Community assistance and borne by those financial institutions may be used in calculating total eligible expenditure for that measure."

(3) Paragraphs 1, 2 and 3 of Article 14 are replaced by the following: "1. The Commission shall be assisted by a committee, composed of representatives of the Member States and chaired by the representative of the Commission (hereinafter referred to as 'the Committee'). The European Investment Bank shall appoint a non-voting representative.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7 thereof.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month."