PRELIMINARY DRAFT AMENDING BUDGET No 1 TO THE BUDGET FOR 2003 - GENERAL STATEMENT OF REVENUE - STATEMENT OF REVENUE AND EXPENDITURE BY SECTION - Section III - Commission

(presented by the Commission)

Having regard to:

- the Treaty establishing the European Community, and in particular Article 272 thereof,

- the Treaty establishing the European Atomic Energy Community, and in particular Article 177 thereof,

- the Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities [1], and in particular Article 37 thereof,

[1] OJ L 248, 16.09.2002, p.1.

The European Commission hereby presents to the budgetary authority the preliminary draft amending budget No 1 to the 2003 budget for the reasons set out in the explanatory memorandum.

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TABLE OF CONTENTS

EXPLANATORY MEMORANDUM

1. troduction

2. HEADING 2: STRUCTURAL OPERATIONS: Reform of the Common Fisheries Policy and emergency Community measure for scrapping fishing vessels

2.1. Background

2.2. Actions envisaged

2.3. Calculation of the cost of the reform

2.4. Cost of the specific measure in 2003 and re-reprogramming in the structural funds

2.5. Consequences for the Community budget in 2003

3. HEADING 3: INTERNAL POLICIES: Information and Communication actions on the "Role of the European Union in the World"

4. HEADING 5: DMINISTRATIVE EXPENDITURE: uropean master's courses in human rights and democratisation

SUMMARY TABLE PER HEADING OF THE FINANCIAL PERSPECTIVE

GENERAL STATEMENT OF REVENUE

A. TOTAL REVENUE

B. FINANCING OF THE GENERAL BUDGET

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION

EXPLANATORY MEMORANDUM

1. troduction

The present Preliminary Draft Amending Budget No 1 for the year 2003 covers three elements:

- the provision of supplementary appropriations for the scrapping of fishing vessels, under Heading 2 of the Financial Perspective, in the framework of the reform of the Common Fisheries Policy,

- the creation of a new line under Heading 3 of the Financial Perspective, with a token entry (p.m.) for the actions of information and communication related to the role of the European Union in the world,

- the modification of the title and remarks of the post A-3014, so as to align it with comparables actions under budget lines in the same chapter and to facilitate its implementation.

As for the first element, on the 28th of May 2002 the Commission proposed a major review of the Common Fisheries Policy aiming at a fishing fleet whose capacity is in line with available resources. The proposals included an emergency Community measure designed to provide additional incentives for scrapping fishing vessels in order to urgently address over-capacity in fisheries. The reform of the Common Fisheries Policy was adopted in the Council (Agriculture and Fisheries) meeting of 16-20 December 2002. A major part of the emergency measure will be financed through re-programming the Structural Funds for the years 2004 to 2006, but extra-funding is needed in 2003 in order to initiate the reform.

The additional funding needed for 2003 is EUR 32 million in commitment appropriations and EUR 10 million in payment appropriations.

As the measure concerned by this proposal is eligible under the Financial Instrument for Fisheries Guidance (FIFG) and anticipates a major reshuffle of the FIFG programmes, it has to be financed under heading 2 of the Financial Perspective. There is no margin left under the ceiling of heading 2 in the 2003 budget and no possibility to reallocate appropriations. Thus the Commission is referring to its proposal [2] to use the flexibility instrument, as foreseen in point 24 of the Inter-Institutional Agreement [3], to allow financing the measure under budget line B2-201 "Supplementary Community Measure for Scrapping Fishing Vessels". This line was created in the budget 2003, in the chapter "other specific structural operations", with a token entry (p.m.).

[2] COM(2002) 599, put forward on 10 July 2002 at the time of the Amending Letter No 1/2003.

[3] OJ C 172, 18.06.1999, p.1.

The additional payment appropriations of EUR10 million can be financed by an increase of surpluses available from the financial year 2002, deriving from the under-implementation of expenditure, in particular in the field of structural funds. The call for own ressources remains unchanged.

The second element is based on the Commission's communication on the "Information and Communication Strategy of the European Union" of 2 July 2002, which proposed the "role of the European Union in the world" as a priority theme for the coming years. The Inter-Institutional Working Group on the Information policy approved this approach in its meeting on 24 September 2002. However, no budgetary translation of this was achieved during the procedure leading to the adoption of the budget for 2003.

The third element, under Heading 5 of the Financial Perspective, relates to a line of chapter A-30 (subsidies) whose beneficiary is not clearly indicated in the title, contrary to similar actions in the same chapter.

2. HEADING 2: STRUCTURAL OPERATIONS: Reform of the Common Fisheries Policy and emergency Community measure for scrapping fishing vessels

2.1. Background

Council Regulation (EC) N° 2792/1999 of 17 December 1999 laying down the detailed rules and arrangements regarding Community structural assistance in the fisheries sector [4] has afforded decommissioning incentives as a way of bringing about a balanced ratio of fleet capacity to available resources in the long term. Several resources of major importance to Community fisheries are now seriously depleted. The owners of fishing vessels whose fishing opportunities have been severely reduced as a result of a recovery plan adopted by the Council should therefore be offered additional decommissioning incentives on top of those already provided for in Regulation (EC) N° 2792/1999. This requires that sufficient additional funds be made available to Member States for this purpose, which led the December 2002 Council to adopt an emergency Community measure for scrapping fishing vessels [5], as part of the reform package of the Common Fisheries Policy.

[4] OJ L 337, 30.12.1999, p.10. Regulation as last amended by Regulation (EC) N° 179/2002 (OJ L 31, 1.2.2002, p.25

[5] OJ L 358 of 31.12.2002, p.57

Under the measure, Member States are allowed to offer additional money to vessel owners severely affected by fishing effort reductions, for scrapping their vessels. The aim is to encourage more vessel owners to take up the offer and thus help bring the capacity of the fleet in fisheries affected by a recovery plan in line with the available resources. For conservation reasons the Community measure should be established as soon as possible and should be limited in time to ensure that suitable restructuring of the fleet can proceed without delay. Thus the Community measure was instituted for the period from 2003 to 2006.

For the years 2004-2006 the funds necessary for financing the emergency Community measure shall be made available by reprogramming the Structural Funds, in the context of their mid-term review. However, in order to initiate this new policy in 2003, as decided by the Council, additional funding is needed on top of the Community budget already available through FIFG.

2.2. Actions envisaged

It is intended to allow additional financial incentives for scrapping, in order to ensure that, taken together, FIFG and this new measure will mobilise sufficient financial aid to meet the needs of more rapid decommissioning of fishing vessels.

The target beneficiaries are ship-owners whose fishing vessels are covered by recovery plans adopted by the Council. The immediate output is the uptake of the measure leading in a net reduction of the capacity of the fleet(s).

Member States wishing to receive the additional financial contribution available in 2003 will present to the Commission, by 30 June 2003, a plan of the decommissioning expenditure for which they are seeking extra money. They will have to show that their annual allocations of FIFG money are insufficient to achieve their scrapping targets of the year. On the basis of this information, the Commission will then proceed with the commitment of the global annual amount available in the budget for this emergency Community measure.

Member States shall submit their application for payment of assistance by 30 June 2004. On the basis of the applications, the Commission shall decide on the Community contribution to be paid to each Member State.

2.3. Calculation of the cost of the reform

The starting-point for calculating the cost of the necessary capacity reductions is the recommended reductions in fishing effort. The number of vessels that would be affected by such reductions in fishing effort can be calculated approximately, using the fishing fleet register. By using estimates of how many of these vessels will seek scrapping aid, total demand for scrapping premiums in each Member State can be calculated. The difference between this figure and the amount already programmed for scrapping aid in each national FIFG programme indicates the need for additional financial resources.

Assuming that the oldest vessels will be scrapped first, the total number of vessels that would need to be removed from fishing in order to achieve the reduction in fishing mortality is estimated at 8,592. Converting them into tonnage and assuming an uptake of 80%, the total cost of scrapping would be EUR 1,376million, including a Community contribution of EUR 712 million.

2.4. Cost of the specific measure in 2003 and re-reprogramming in the structural funds

EUR 663 Million have already been programmed under the FIFG for adjusting the fleet capacity (i.e. amounts earmarked for scrapping but also for exports or joint companies that would be re-assigned to scrapping). The requirements by Member States show that some would not require any extra financing whereas others would. It will not be possible, however, to transfer FIFG funds between Member States. Considering these calculations per Member State the Commission therefore estimates that the additional amount required for decommissioning for those vessels likely to be severely affected by recovery plans adopted by the Council could be evaluated at EUR 272 million over the period 2003-2006 [6].

[6] See table in annex 6.1.1. to the Commission's proposal for a Council Regulation establishing a Community measure for scrapping fishing vessels, COM(2002) 190 final.

The amount provided for 2003 represents the estimated need for extra funding before the mid-term review and reprogramming can take place to cover the remainder. The proposal involves a broad operation of reprogramming of means available within the framework of the Structural Funds, which Member States will be invited to carry out within the framework of the mid-term review. As far as this measure is concerned, Member States should be able to re-deploy in that way EUR 240 million of the EUR 272 million estimated necessary for the scrapping of vessels. In the light of the timetable for the mid-term revision of the Structural Funds, which will not come into effect until 2004, an additional amount of EUR 32 million is therefore necessary in 2003 to initiate the reform of the fisheries policy.

2.5. Consequences for the Community budget in 2003

As explained above, the measure has to be financed under heading 2 of the Financial Perspective. Since there is no margin left under the ceiling of heading 2 in the 2003 budget and no possibility to reallocate appropriations, the Commission is putting forward at the same time a proposal to use the flexibility instrument. The scrapping measure should be financed under budget line B2-201 "Supplementary Community Measure for Scrapping Fishing Vessels", which was created in the budget 2003, in the chapter "other specific structural operations", with a token entry (p.m.).

3. HEADING 3: INTERNAL POLICIES: Information and Communication actions on the "Role of the European Union in the World"

The Commission's communication on the "Information and Communication Strategy of the European Union" of 2 July 2002, proposed the "role of Europe in the world" as a priority theme for the coming years. The Inter-Institutional Working Group on the Information policy approved this approach in its meeting on 24 September 2002, and discussed the possibility to bring through several media (television, internet chats, CD-ROM, conferences and seminars) a message focussing on the Community's trade policy, its interest in the globalisation process and the principles defended by the Union in international fora and negotiations. The Commission however would envisage extending the funded actions to the neighbourhood policy, on the one hand, and to the opening of the Union towards developing countries, on the other hand.

It is therefore proposed to create a new budget line, under Heading 3 of the Financial Perspective, with the following nomenclature and title:

B3-3065 - "PRINCE - Role of Europe in the World"

Given the very modest margin in 2003 under the ceiling of Heading 3, this new line is proposed with a token entry (p.m.). The necessary appropriations should be provided during the course of the year by way of transfer, within Heading 3, keeping as a reference the amount of EUR1.57 Mio. foreseen in the conclusions of the Inter-Institutional Working Group.

4. HEADING 5: ADMINISTRATIVE EXPENDITURE: European master's courses in human rights and democratisation

For the subsidies foreseen under budget lines A-3031, A-3033, A-3034 and A-3039, comparable to a large extent to the one provided for on the line A-3014, the beneficiaries of the subsidies are identified in the line's title and in its remarks. For the line A-3014 though, the beneficiary is mentioned in the remarks only, despite the fact that the concerned activities are clearly identified.

It is proposed to harmonise the titles and remarks of these budget lines, falling in the same policy area "External Relations" and thus managed in common, which will facilitate their implementation.

SUMMARY TABLE PER HEADING OF THE FINANCIAL PERSPECTIVE

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GENERAL STATEMENT OF REVENUE

A. TOTAL REVENUE

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TITLE 3

SURPLUSES AVAILABLE

CHAPTER 30 - SURPLUS AVAILABLE FROM THE PRECEDING YEAR

Article 300 Surplus available from the preceding financial year

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B. FINANCING OF THE GENERAL BUDGET

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STATEMENT OF REVENUE AND EXPENDITURE BY SECTION

PART A

TITLE A-3

EXPENDITURE RESULTING FROM SPECIAL FUNCTIONS CARRIED OUT BY THE INSTITUTION

CHAPTER A-30 - COMMUNITY SUBSIDIES

Article A-301 Institutions of European interest

Modify the title of post A-3014 as follows:

A-3014 European Inter-University Centre

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Remarks:

Modify the text as follows:

This appropriation is intended to finance the European Inter-University Centre for :

- The continuation of the Venice-based European master's degree courses in human rights and democratisation, organised by 29 universities in European Union Member States , including an increase in the capacity to run specialised training courses,

- The continuation of the programme enabling certain graduates to acquire practical experience, for a period not exceeding 12 months, on the human rights training programme run by the United Nations and the European Union.

PART B

SUB-SECTION B2

STRUCTURAL OPERATIONS, STRUCTURAL AND COHESION EXPENDITURE, FINANCIAL MECHANISM, OTHER AGRICULTURAL AND REGIONAL OPERATIONS, TRANSPORT AND FISHERIES

TITLE B2-2

OTHER SPECIFIC STRUCTURAL OPERATIONS

CHAPTER B2-20 - OTHER SPECIFIC STRUCTURAL OPERATIONS

B2-201 Supplementary Community measure for scrapping fishing vessels

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SUB-SECTION B3

EDUCATION, VOCATIONAL TRAINING AND YOUTH

TITLE B3-3

INFORMATION AND COMMUNICATION

CHAPTER B3-30 - INFORMATION AND COMMUNICATION

B3-306 Prince (information programme for European citizens) - Information activities in connection with specific policies

New post

B3-3065 PRINCE - Role of the European Union in the World

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Former Article B3-3 0 6 (in part)

This appropriation is intended to cover the funding of priority information measures on Community policies.

It covers the « role of the European Union in the world», with the following objectives:

(i) to encourage a more balanced view of globalisation;

(ii) to point out the value of the present system / past achievements of commercial policy as a common strategy/response by Europeans to globalisation;

(iii) to stress the links between globalisation, multilateral rules and sustainable development;

(iv) to highlight the principles / values espoused by the EU on the world stage.

On 27 June 2001, the Commission adopted a communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on a new framework for cooperation in activities concerning the information and communication policy of the European Union (COM(2001) 354 final). This communication proposes an interinstitutional framework for cooperation between the institutions and with the Member States for the development of a communication and information policy strategy for the European Union.

The Interinstitutional Group on Information (IGI), co-chaired by the European Parliament, the Council and the Commission, lays down common guidelines for interinstitutional cooperation in matters of EU information and communication policy. It coordinates the central and decentralised public information activities on European topics. Each year the IGI gives its opinion on the priorities for the following years based on a report drawn up by the Commission.

Irrespective of the beneficiary of the measure, no administrative expenditure against this item is authorised.

Legal basis

The Commission considers this to be one of the tasks arising from its institutional prerogatives within the meaning of the Interinstitutional Agreement of 6 May 1999 between the European Parliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedure (OJ C 172, 18.6.1999, p. 1).