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COM(82)783
Vol.1982/0237

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)783 final
Brussels.25thNovember 1982
COMMISSION REPORTONTHEEUROPEAN UNION
(Communication fromtheCommission totheEuropeanCouncil,
Copenhagen.3and4December1982)
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C0M(82)783final

COMMISSION REPORTONTHEEUROPEAN UNION
1.ThisreportontheprogressoftheCommunitytowardsEuropeanUnion
isthesixth(1)ofitskindfromtheCommission totheCouncilandthe
MemberStatessincetheTINDEMANS'report(2)in1975.
2.During1982,theEuropeanCommunity hasbeenseverelytestedbyevents.
Tradedisputesandmonetarydisturbances haveconfron­
tedtheCommunitywithanimperative needtoacttogetherindefense
ofthecommoninterest.Byandlarge,theCommunity hasresponded
welltothesechallenges .*
3.Howeversolidarityinthefaceofexternaleventshasnotbeenmatchedby
internalreform.Inparticular,theadaptation
oftheCommonAgricultural Policyandthefinancingofthe
Communityhavethreatened morethanoncetoblockthedecision-making
processasawhole,atcriticalmoments.Theyareendangering the
negotiations ontheThirdEnlargement,ttoincludeSpainandPortugal
intheCommunity .
Someprogresshasbeenpossibleineconomicandsocialpolicies,but
notenoughtoofferthefirmprospectthat,in1983,theCommunity
willbeabletomakeadecisiveadvancetowardseconomicrecovery,
andreducingunemployment .Itisessentialtomakepossibleamacro­
economicstrategybasedonagenuinelyintegratedinternalmarket,
onindustrial,energyandresearchanddevelopmentpoliciesthatare
fullyconsistentataEuropeanlevel,andsupportedbystructuralfi
nancialinstruments capableofexertingagreaterinfluence.
(1)Suppl.8/77,1/79and9/79,4/80,3/81-Bull.EC
(2)Suppl.1/76-Bull.EC -•

A.Nevertheless /in1982,valuablegroundworkhasbeendonewhichcouldenable
progresstobemadetowardsaEuropeanUnion.Inthisrespect,the
CommissionbelievesthattheCommunity'ssuccessinmeetingexternal
challengesisatimelyreminder.In
steel,forexample,ithasbeendemonstrated,onceagain,thatexternalsolida­
rityismosteffectivewhenbasedonadevelopedcommonpolicyforinternalas
wellasexternalaspectsofthequestion.Incontrast,thelackofcommon
policies,ortheirweakeningbylong-standing andunresolveddisagreements ,
isaconstantimpedimenttoexternalsolidarity,asitis,morebroadly,
toeconomicrecoverywithintheCommunity.
5-Thisreportnowexaminesinmore
detailtheprincipaldevelopments withintheCommunityin1982,
'relatingtoprogresstowardsEuropeanUnion.
Politicalandinstitutional Europe
6.InJune1982,tripartitediscussions betweenthePresidentsoftheCouncil,the
CommissionandtheEuropeanParliamentwerebroughttoasuccessful .conelusion(3)
withthesigningofanagreementonbudgetaryquestions.Thisagreementis
designedtoimprovetheoperationofthebudgetaryprocedureandthustoavoid,
totheextentpossible,recurrentdelaysintheadoptionoftheCommu­
nity'sbudget.Theagreementcovers,inparticular,theclassification
ofexpenditure anditsdivisionbetweencompulsory,andnon-compulsory
categories.Itprovidesaclarification oftheprocedurestobefollo­
wed,andoftheParliament'srole.
Thisagreementinaugurates,itistobehoped,aperiodinwhichthere
canbeamoreharmoniousfunctioning ofthebudgetproceduresof
theCommunity.
7.^sregardstheEurooeanUnionmorebrpadly,twomajorinitiatives have
beentaken:
(3)Bull.EC6-1982,pt.1.1.1etseq.

3.
ThefirstoftheseistheproposalforaEuropeanAct-(4),jointlymadeby
theForeignMinistersoftheFederalRepublicofGermanyandtheRepublic
ofItaly,inNovember1981.I.tincludesadeclaration relatingtoecono­
micintegration .Theproposalisdesignedtobringtogetherthepresent
CommunityprocessandtheEuropeanpoliticalco-operation process,and,
atthesametime,toextendintergovernmental co-operation tonewareas.
Italsoaimstoimprovethefunctioning oftheCommunity'sinstitutions ,
bymakingsomeadjustments tothebalanceofresponsibilities between
them,byimprovingmechanismsforco-ordinating thepolitical and
economicarmsoftheCommunity,andbyaclarification ofunderstandings
aboutvotingprocedures .
Thesecondiswider-ranging andmoreambitiousincharacter .
InJuly1982,theEuropeanParliament adoptedaresolutiondefiningits
attitudetothereformoftheexistingTreatiesandtheachievement ofa
EuropeanUnion.Theresolution concerns,inparticular,adefinition of
thetasksoftheUnion,thefinancingoftheUnion,andthedefinition
ofanewbalanceofresponsibilities betweentheCommunity'sinstitutions .
TheEuropeanParliament intendstoexamineafulldraftforanewTreaty
in1983,andhasannounceditsdesiretoseeorganised aconference
onthefutureoftheTreatiesatthe.endof1983.
8.Finally,theCommissionhassubmittedproposalstotheCouncilandtothe
EuropeanParliament,concerningtheroleoftheEuropeanParliamentinthe
preparation andconclusionofinternational agreements andaccession
treaties.Thesesuggestions represent,intheopinionoftheCommission,
practicalimprovements whichdonotrequireachangeinthedivisionof.
powersbetweentheInstitutions,aslaiddownintheTreaties.
EconomicandsocialEurope
9.Tworealignments havebeenmadewithinthe"EuropeanMonetarySystem,in^
FebruaryandinJuneof1982,relatedtoaninsufficient convergenceofecono­
micpolicies.Nevertheless,theserealignments,andtheinternalpolicy
measureswhichaccompanied them,again-confirmedtheabilityofthesystem
tomakeorderlyadjustments,Nnaccordancewithfundamental economiccriteria.
(4)Bull.EC11-1981,pts3.4.1and3.4.2

whilepreventingerraticorirrational exchangeratemovements.
TheCommission hopesthatitsproposals (5)forastrengthening „ofthe
EuropeanMonetarySystemwillobtain *theapprovaloftheCouncilof
Ministers.Awiderinternational stabilisation ofexchangerates
willhehelpedbysuchastrengthening .
10.Theeconomicrecoverywhichwasforecastforthesecondhalfof1982
hasnotmaterialised .Theprospectsfor1983arenotencouraging .The
Commission hasthereforeproposedtotheCouncil(6)thattheco-ordination
ofeconomicpolicies,andthefinancialpolicymixwithintheCommunity,
shouldensureabetterlevelofactivity,whilecontinuinatoDursue
areturntotheessentialfundamental equilibria .TheCommission has
identified three
mainissuesforinternaleconomicpolicytowardswhichitspoliciesare
directed.Theyare:
-inadequate investment andinsufficient effortfortechnological de­
velopment;
-excessiverigidities inwageandpriceformation andthelowprofita­
bilityofentreprises ;and
-aninappropriate structureofpublicexpenditure andarapidincrease
inpublicexpenditure relativetogrossnationalproduct.
11.Measurestostrengthentheunderlying economicenvironment,inparticular
inthefieldofinvestment,areessentialtoeconomicrecovery,andare
thebasisforareturntomoresatisfactory levelsofemployment .However
theyneedtobeaccompanied byspecificmeasuresintheemploymentfield,
relatingtothereduction andreorganisation ofworkingtimeundercertain
conditions,andtheimprovement ofemploymentopportunities foryoungpeople,
infulfillment ofguidelineslaiddownbyEuropeanCouncilatitsmeeting
inMarch1982.TheCommission'sproposaltotheCouncilconcerning the
reformoftheEuropeansocialfund,anditsdraftofaCouncilresolution
concerning apolicyforprofessional trainingintheEuropeanCommunity
arepartofthissameplanofaction.
TheCommunity hascontinueditseffortstoensureacoherentapproachto
industries inneedofmajorrestructuring .Ithasbeennecessaryto
./.
(5)Bull.EC3-1982,pt.1-4.1etseq.
(6)Bull.EC10-1982,pt

maintainandadapttheregimeofproductionquotasinthefaceofafurther
declineinmarketprospectsforthesteelindustry.Ingeneral>theCommission
hascontinuedtoplayanactiveroleinensuringthecompatibility ofstate
aidswithCommunityobjectives,andhastakenstepstoobtainamore
co-ordinated andeffectiveintervention byCommunityfunds,notablythe
RegionalandSocialFunds,inaidofthereconversion ofregionsinindustrial
decline.Finally,ithasproposedmeasuresinsupportofnewindustries,pai–
ticularyinformation technologies,andinsupportofinnovationingeneral.
12.ThefailuretomakedeterminedprogresstowardsagenuineCommunity-wide internal
marketremainsofconcerntotheCommission.Despitepoliticalundertakings at
thehighestlevel,thelatestbeingt^econclusionsoftheEuropeanCouncilin
June.1932,nosignificant progresscanbeclaimed.Proposalstodevelop
theinternalmarketarestill,forthemostpart,blockedinthe
Council,despiteeffortstopresentthemasacoherentwhole,andin
theirwidercontext(7).Inaddition,itshouldbeno.tedthatproposaj-s
abouttransportpolicyarealsoblocked.
Worse,therehasbeenaproliferation ofnationalmeasuresaimedat
reducingratherthanfreeingthemovementofgoodsandserviceswithin
theinternalmarket.Suchactionsareaseriousthreattooneofthe
mainpillarsoftheUnion,andequallytothepursuitofapolicy
basedonthecommoninterest,whichistheonlybasisforanearly
economicrecovery.TheCommissionisactingwithdetermination to
combatthem.
13.During1982,prolongeddiscussions havecontinuedabouttheroleofthe
Communitybudget,inparticular asasourceofdirectassistanceto
structuraladjustment^andabouttheimpactofCommunityfinancing
onMemberStates.Theyhaveputfurtherdifficulties inthewayofthe
development ofCommunitypolicies.
Thesequestionsarealsorelatedtothequestionoftheexpansionofthe
Community'sOwnResources.Theywillneedtoberesolved,ifthe
Communityistobeabletofinancetheexistingandthenewpolicies
itneeds,especiallyinviewoftheThirdEnlargement .
(7)OJC203of6.8.1982andBull\EC6-1982,pt.2.1.10;
Bull.EC4-1982,pt.2.1.87

Theadaptation oftheCommonAgricultural Policyisonekeyelementinthedeve
lopmentofCommunitypolicies.Despiteadifficultsocialenvironment,the
Community wasabletoadoptpriceproposalsfor1982/83whichkepttherateof
growthoftheEA6GFGuaranteesectionbelowtherateofgrowthinaggregate
budgetaryresources,whichintroduced ahierarchyofpricesreflecting
thedesiretoclosethegapbetweenCommunity andworldmarketprices
forsomekeyproducts,andwhichintroduced theprincipleoflimiting-
priceguarantees bymeansofproduction thresholdsforfourmajorpro­
ducts(cereals,colza,milk,processedtomatoes).However,apart
fromwine,insufficient progresshasbeenmadetowardsstrengthening
supportsystemsforMediterranean agriculture .

ί.
EUROPEINTHEWORLD
15.1982hasbeenaturbulentyear.InDecember1981,martiallawwas
imposedinPoland.InApril1982,theFalklandscrisisbroke.InJuly1982,
IsraelinvadedtheLebanon.EconomicrelationswiththeUnitedStatesand
withJapanarepassingthroughanexceptionally difficultphase.The
simmeringcrisisrelatedtothegrowingindebtedness ofanumberofimportant
developing countriesreachedanewacuity.TheEuropeanCommunity hasbeen
calledtorespondtotheseevents.Ithasshownitsabilitytomain­
tainitscohesion,andtorespondinatimeLyfashion.
16.AsregardsthesituationinPoland,theCommunity hastakenpractical
stepsinsupportofitsrepeatedcondemnations oftheimposition ofmartial
law.Concessionary salesof
Communityfoodstuffs ceasedbutaidhasbeenmadeavailableswiftlytothe
Polishpopulation,throughtheintermediary ofnon-governmental agencies.
Restrictions ontheexportbytheUSSRofgoodstotheEuropeanCommunity
havebeenintroduced .TheEuropeanCouncil,meetinginMarch1982,hasunder­
linedthegraverepercussions thatthesituationinPolandwillhavefor
securityandco-operation inEurope,aTidforEast-Westrelationsoverall.
Thishasbeenborneoutalreadybythedifficultatmosphere surrounding the
Ministerial meetingsoftheC.S.C.E.inMadridthisyear,andbyanagreement
amongstthemajorWesternindustrialized powerstopursueaprudentcourse
incommercial andfinancialrelationswiththeWarsawPactcountries.The
reclassification oftheUSSRwithintheOECDExportCreditArrangement
isintendedtoreducethesubsidyelementinexportcreditstothatcountry(8).
17.TheFalklandscrisisposedproblemsthatwereparticularlydelicatefor
theCommunity.Nevertheless,theCommunityagreedwithrapiditytothe
impositionofanembargoonexportsfromArgentinatotheCommunity(9)...
Despitethe
Ν
(8)Bull.EC7/8-1982,pt.2.2.17
(9)OJL102of16.4.1982;OJL136of18.5.1982;„„„ /0JL146of25.5.1982'and Bull.EC4-1982,pt.1.1.1etseq.

8.
difficulties insome Member States ,Community solidarity wasadequately
maintained fortheduration ofthemilitary conflict .
18.During 1982 ,relations between theEuropean Community andthe
United States were strained ,notably bytheunilateral decision ofthe
United States toimpose economic sanctions onsome Community enter­
prises .These sanctions were applied toenterprises supplying materials
using licences orcomponents ofU.S. origin for theconstruction ofthe
trans-Siberian gaspipeline .TheEuropean Community hasplayed anactive
role inintensive consultations between theUnited States andher main partners .
Meanwhile the sanctions have been lifted .
Following theWestern Economic Summit held atVersailles inJune 1982 ,-
consultations arealso inprogress
oninterest rates andinternational monetary co-operation ,and onco-operation
inthedevelopment ofhigh technology .Steps have been taken attheMinisterial
meeting ofthe I.M.F. atToronto ,inSeptember 1982 ,toconsolidate the
financing ofworld trade anddevelopment .
»
19. Inthemidst ofaworld recession ,trade disputes areinevitably more
acute .TheCommunity haspursued difficult discussions with theUnited States
ontrade insteel toasuccessful conclusion (10).Negotiations for the renewal of
theMultifibres Agreement have souoht ' " ■" ■
afair balance between the interests oftheCommunity and ofthedeveloping
world .
TheCommunity hasbeen able ,in1982 ,toadopt aglobal common strategy
forthedevelopment oftrading relations with Japan .Atameeting inMarch 1982 ,
aprogramme ofaction wasbegun ,aiming totackle theproblem atitssource ,
namely thelowimport propensity oftheJapanese economy ,andtheneed for
Japan toreflect itsinternational responsibilities intheconduct ofits
macro-economic policy . •.
This year ,theCommunity celebrated the10th anniversary ofthesignature
ofthefree trade agreements w^th E.F.T.A. Relations with these countries
continue todevelop very satisfactorily .
(10)0JL307 of1.11.1982 andBull .EC7/8-1982 ,pt.1.1.1 etseq. ;
Bull .EC10-1982 ,pt.1.3.1 etseq . ./.
IAP

20.RelationsbetweentheEuropeanCommunity andthedeveloping worldasa
wholehavecontinuedtoprogress.Inparticular,theCommunity hasmade
majoreffortsin1982tostrengthenitsactiontocombathungerintheworld.
Anewformofaction,thefoodstrategy(11),isbeingintroducedin
partnership withanumberofcountriesinAfrica.
TheCommunityisactivelypreparing,onthebasisofcommunications
fromtheCommission,ageneralreviewoftheCommunity'srelationswith
thedeveloping world.Discussions havebegunonrelationswiththe
Mediterranean Basinasawhole(12),inviewoftheforthcoming Enlargement .
Discussions arealsobeginning onaMemorandum ontheCommunity'sDevelopment
Policy(13),inviewoftheforthcoming renegotiation oftheLOMEConvention .
However,thefailuretolaunchglobalnegotiations betweentheNorthandthe
SouthdespitetheprogressachievedinthisrespectduringtheWestern
EconomicSummitatVersailles,isacontinuing disappointment .
21.Negotiations ontheThirdEnlargement oftheCommunitytoinclude
SpainandPortugalhavecontinuedtoadvance.Theyhavenowreachedapoint
atwhichtheCommunitymustpreparetoexaminethefewremaining,butmost
difficultmatters.InresponsetoarequestfromtheEuropeanCouncil,
theCommission haspreparedanupdatedreviewofthemostimportantoutstanding
issues.TheCommunityremainsfullyawareofitsobligations towardsthe
newly-established democracies .Nevertheless ,thisaspectofitsexternal
policy,moreeventhananyother,wouldbehelpedbytheadaptation and
development ofanumberofCommunitypolicies.
(11)Bull.EC6-1982,pt.1.3.1etseq.
(12)Bull.EC6-1982,pt.1.2.1etseq.
(13)Bull.EC9-1982,pt.1.1.1etseq.

10.
EUROPEANDTHEEUROPEANS
22.MuchattentionhasbeenfocussedonthedebateswithintheEuropean
Parliament ontheproposeddirective oncompanylawconcerning employee
information andconsultation procedures .TheEuropeanParliamentiscompleting
itsexamination ,anddiscussions maysoonstartinCouncil.
23.TheCouncilhasagreedonthecreationofaEuropeanFoundation,which
isdesignedtoincreaseunderstanding betweenEuropeanpeoples,andfacilitate
theirparticipation inthedevelopment ofaEuropeanUnion.Afurtherstep
hasalsobeentakentowardsthecreationofauniformpassport.However,
despiterenewedcallsforactionfromtheCommission (14),andfromtheEuropean
Parliament,thereisnoprogresstowardsthesimplifying ofchecksatinternal
Communityfrontiers :indeed,insomecases,suchchecksarebeingreinforced .
*****
24.Onceagain,thishasnotbeenagoodyearasregardspublicopinion.
Clearlypublicopinionismoreinfluenced byinternaldissension,andbyits
inabilitytoseetheEuropeanCommunity asaforceforinternaleconomic
recovery,thanbytheCommunity'sundoubtedroleinexternalaffairs.
25.TheCommission viewswithconcernatendencyinpubliclifeto
emphasizethatwhichseparatesnations,ratherthanthatwhichbinds
peoplestogether.TheEuropeanParliament,theCouncil,andtheCommission,
standtoremindEuropeansoftheircommoninterestandidentityinan
increasingly dangerousworld.Therecanbenomorepractical waytodo
thisthantomake1983ayearforprogresstowardsEuropeanUnion.
(14)OJC197of31.7.1982 and
Bull.EC6-1982,pt.2.1.10
Λ