Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Decision establishing a general framework for community activities in favour of consumers` () (98/C 235/17)

On 12 February 1998 the Council decided to consult the Economic and Social Committee, under Article 129A of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Protection of the Environment, Public Health and Consumer Affairs, which was responsible for preparing the Committee's work on the subject, set up a study group and appointed Mr Koopman as rapporteur.

At its 355th plenary session (meeting of 28 May 1998), the Economic and Social Committee appointed Mr Koopman as rapporteur-general and adopted the following opinion by 94 votes in favour, 8 against and 3 abstentions.

1. Introduction

1.1. In its explanatory memorandum the Commission mentions the strengthening of consumer policy in the last decade, culminating in the Treaty of Amsterdam. So far, there has not been a basic act for the financing of Community actions undertaken in support of consumer policy.

1.2. The draft Parliament and Council Decision presents a 'basic act` () for activities which require financial support from the Union Budget for Consumer Policy and Consumer Health Protection. It establishes a framework for activities in the period 1999-2003, rather than a list of all the activities to be undertaken in that period, as it is not possible to anticipate precisely all the action that may be needed from the consumer perspective in that period.

1.3. The proposed Decision is based on Article 129 A of the EC Treaty. However, the Commission states that it may re-examine its proposal and base it on the new Articles 152 and 153 to be inserted by the Amsterdam Treaty, which broaden the ambit of consumer policy, if the proposal has not yet been adopted before the new Treaty comes into force.

1.4. The Commission groups the activities which may necessitate financial support into four categories:

- health and safety of consumers;

- protection of economic interests;

- educating and informing consumers about their rights;

- and the promotion and representation of consumers' interests.

An indicative list of these activities is given in an Annex.

1.5. The proposal covers three types of actions: those launched by the Commission itself, those in support of activities of the European consumer organizations and specific projects primarily presented by consumer organizations in the Member States.

1.6. The total budget allocation over these five years is estimated at ECU 114 million.

1.7. The financial support for activities of European and national consumer organizations which are related to the areas mentioned (see 1.4) may not in principle exceed 50 % of the expenditure involved in implementing the projects.

1.8. The conditions for granting financial support are listed in Articles 7 to 9 of the proposed decision. Criteria pertaining to cost-effectiveness, the multiplier effect and dissemination are dealt with in Article 7. The procedures related to the application for and approval of projects, which results in the conclusion of a contractual relationship, are set out in Article 8 and the requirements for monitoring, supervision and documentary evidence are mentioned in Article 9.

1.9. In the Financial Statement an indicative breakdown of the total budget allocation over the five-year period is given as well as a provisional distribution into the different areas for the three types of activity.

2. General remarks

2.1. The Committee is pleased that consumer policy has gradually been gaining importance in the course of the Community's development. Its origin may perhaps be traced back to 1961 when Commissioner Mansholt for Agriculture for the first time called on consumer representatives to discuss matters of mutual concern. The first distinct unit dealing with consumer policy issues was created within DG IV in 1968. In 1973 a Service for Environmental and Consumer Policy was established which was transformed into DG XI in 1981. A separate Consumer Policy Service came into existence in 1989 - the predecessor of DG XXIV, which was established in 1995. The extension of its tasks to health issues in 1997 mark the latest organizational developments. These changes were the result of the increased relevance of and need for consumer policy within the European Community.

2.2. The Committee can agree with the reasoning of the Commission to establish a basic act for financing actions in favour of the consumer policy of the Community, although it would like to note that so far the absence of such an act has never prevented the Commission from funding such projects.

2.2.1. The establishment of a basic act is in conformity with Article 22 of the Financial Regulation which states that the implementation of budgetary appropriations entered for significant Community action needs to be preceded by the enactment of a basic act.

2.2.2. In addition, the establishment of a basic act in conjunction with the determination of a budget allocation over a five-year period may also create more clarity and certainty with respect to the size of the funds that DG XXIV has at its disposal for the execution of its policies. In the past, the process in which its annual budget was determined (cf. Article 203 of the Treaty) left much to be desired, as the budget was always subject to the power play between the Council (reducing it) and the European Parliament (proposing an increase).

2.2.3. In the same way, the establishment of a basic act for the allocation of funds may provide a welcome opportunity to firmly establish expedient, efficient and unambiguous procedures for the funding of projects and to give an adequate definition of the conditions to be fulfilled by the recipients in order to meet warranted accounting objectives in a transparent manner. Fortunately, for 1998 the procedures for funding have already been much improved in comparison to those of preceding years.

2.2.4. Furthermore, the proposal also paves the way for a proper definition of the criteria that consumer organizations have to meet in order to qualify for financial support. An important factor in this context is the representativeness of these organisations. The Commission may however apply further criteria.

2.3. Whilst agreeing with the need to establish a basic act as such, the Committee would like to note that this can be done in two distinct ways: i) through a framework featuring indicative activities by area along the lines of the present Commission proposal or ii) through a framework in which a more concrete medium term policy programme plays a pivotal role. The Committee disagrees with the reasoning of the Commission that such a multiannual programme cannot play that role, as, according to the Commission, 'it is not possible in the field of consumer protection to anticipate precisely and for a period of five years, all the problems which would necessitate Community intervention.`

2.3.1. Firstly, it is not necessary to know the future precisely in order to draw up a multiannual programme. The details of activities to be undertaken in the course of time may be included later as may be witnessed in so many Community (framework) programmes. Secondly, EU-consumer policy has always, since its inception in 1975, been conducted within the context of a medium term programme: the first and second (5-year) consumer protection programmes, the 'new impetus`programme, the first and second 3-year action plans and finally the present 'Priorities for Consumer Policy (1996-1998)`.

2.3.2. The Committee regrets that the new multiannual action programme has not yet been finalized, as it could and should have given further directions to the allocation of funds for the proposed actions and activities in the near future. In this manner, a discussion could have taken place on all the issues which are encompassed by the triangle: basic act, programme of activities and (total) budget allocation.

2.3.3. The submission of such a multiannual action programme would also have been more in line with Article 1 of the Declaration by the European Parliament, the Council and the Commission of 6 March 1995 on the incorporation of financial provisions into legislative acts (), which refers to 'multiannual programmes` rather than to (indicative) 'policy frameworks`.

2.3.4. The Committee nevertheless endorses the framework as it seems to be sufficiently flexible to fully embrace the planned multiannual consumer action programme, provided that an explicit reference to this action programme is included in the proposed framework itself. In this manner the Commission would achieve the indispensable link between the required basic act for the implementation of budget appropriations in the field of consumer policy and its multiannual programme. This action programme should also commence on 1 January 1999 and its duration should, in principle, correspond with the time span of the framework. The Committee will not discuss the activities mentioned in the Annex to the proposal now, as it intends to give its comprehensive views on the planned action programme. This programme will provide a much better basis for discussion on the future course of EU consumer policy than the proposed framework.

2.4. The Committee would welcome a re-examination of the proposal on the basis of the relevant new Treaty provisions following from the Amsterdam Treaty, should this opportunity be offered. It urges the Commission to present its ideas on how these new responsibilities may influence actions in the area of consumer policy as quickly as possible in order to commence discussions on this issue simultaneously with this proposal. The Commission would then be able to present a modified proposal, or to propose an amendment to the Decision, immediately after the entry into force of the Treaty of Amsterdam. In any case, the new action programme in development ought to be based on these new provisions.

2.5. The Committee is aware of the Declaration mentioned above (see 2.3.3) according to which the budgetary authority and the Commission will not depart from the total financial allocation 'unless new, objective, long-term circumstances arise ....`. It notes, however, that given the horizontal nature and the continuous development of consumer policy as well as the unpredictability of future events, and this in relation to the limited budget available, the loss of flexibility that the adoption of a financial framework entails should not be taken lightly.

2.5.1. Therefore, the Committee wishes to stress the need for flexibility in allocation of funds in the case of unforeseen events in the areas of activity covered by the proposed Decision. In its annual reports to the European Parliament and the Council (article 12.1 of the proposed Decision), the Commission may indicate, if this happens to be the case, major deficiencies in consumer activities resulting from a lack of funds. Such information would give the EP and the Council the chance to allocate further funds to specific areas.

2.5.2. The Committee would moreover like to suggest leaving sufficient room for the introduction of a new basic act to earmark new financial provisions in order to take appropriate action in the case of events in areas not covered by this framework.

2.6. The Committee understands that the allocation of funds for the three types of action and the four categories of policy concerns is provisional. It hopes that the considerations upon which this distribution has been based, or any new distribution, will be made visible in the new action programme.

2.7. The Committee notes with satisfaction that the framework is open to the participation of the associated countries of central and eastern Europe and Cyprus and understands that funds for this participation will be made available outside the financial scope of this framework. The Committee expressed its views on the significance of consumer policy for these countries in transition in an earlier opinion () and hopes, also in the light of the necessary steps to be taken in the process of enlargement, that sufficient support can be given to the development and implementation of mutually beneficial projects.

3. Specific remarks

Recitals in the preamble

3.1. In the eleventh recital mention is made of the integration of the consumer policy aspects into other Community policies. Two observations are in order. In the first place, especially in the light of the new Article 153(2), reference to other important policies should also be made, such as: public services, financial and monetary matters (Euro), agriculture and external trade (WTO). Secondly, reference to these issues does not necessarily imply that financial commitments for such actions should follow from the budget of DG XXIV. The essence of integration policy in the final analysis is that those responsible for these other policies are also responsible and accountable for the integration - in this case - of consumer interests. This responsibility also includes, in principle, the financial component of the action involved (). This notion should be reflected in the proposal.

Article 1: financial allocation

3.2. Comparing the annual budget allocations proposed for the 1999-2003 period with the annual allocations over recent years, the Committee unfortunately must conclude that for a large number of activities the figures represent a decrease. This is the result of the addition of new fields of action to the budget of DG XXIV, stemming mainly from the BSE-crisis. It notes that this decrease stands in contradiction to the growing importance of Community consumer policy as reflected, among other things, in the Amsterdam Treaty. The Committee therefore urges the Commission and the Budgetary Authority to increase the consumer budget for the 2000-2003 period beyond the very modest growth (determined by reference to the growth in Community GDP) proposed by the Commission (). The Committee takes the view that the multiannual programme being drawn up by the Commission may provide additional arguments for such an increase.

3.3. In this context the Committee would like to stress the importance of financial support to consumer organizations as these organizations have to play an active role in shaping the Single Market. Their contribution will enhance the confidence of the Community's 370 million consumers in the functioning of the Single Market.

Article 2: Types of action

3.4. Following the remarks made in point 2.3.4 on the need to link up the action programme with the legal framework, the Committee proposes the following amendment to Article 2 (a):

'actions taken by the Commission to support and supplement the policy conducted by the Member States, and to develop, update and monitor it in the context of a multiannual programme under the conditions set out in (new) Article 5;`

3.4.1. In this new Article 5 the conditions for the drafting of a multiannual programme should then be spelled out in more detail, for example as regards the following aspects: the duration of the programme, a reference to its priorities, evaluation aspects and the existence of a financial paragraph.

3.5. An explicit financial allocation of the total budget over the three types of action is not given, but may be derived from the indicative breakdown in the Financial Statement in the Annex by those intimately involved with consumer policy. Acknowledging the provisional character of these figures, more transparency on this distribution would nevertheless be desirable.

Article 3: Integrating consumer interests into other policies

3.6. Notwithstanding the observations made in point 3.1 on the responsibility for integrating consumer interests into other policies, it is the responsibility of the Commissioner for consumer policy to secure consistency between the manner in which these consumer aspects are treated elsewhere and the way the activities are pursued under this general framework. The ESC urges the Commission to present adequate mechanisms enabling DG XXIV to take better account of other relevant policy intentions at an early stage and to contribute to the consistency and the complementarity of Community policies. In this context it draws attention to a number of Council Resolutions on the need for increased integration of consumer policy considerations into other areas as well as to numerous opinions in which the Committee referred to this aspect ().

3.6.1. The Committee invites the Commission to evaluate relevant measures taken to date. In this context the integration efforts made by DG XI (e.g. the system of 'environmental correspondents` in other DGs) should serve as an example. Furthermore, attention should also be paid to applying the concept of consumer impact statements.

Article 4: Areas of action

3.7. These areas are in complete accordance with the objectives set out in new Article 153(1) and meet the full approval of the Committee. Although subjects such as the enforcement of consumer legislation or the legal position of the consumer are not mentioned explicitly, they may constitute important elements of the stated areas. The Annex gives an indicative list of activities by area. It is not clear to what extent this list is a determining factor in selecting projects from consumer organizations for financial support. The Committee asks the Commission to shed light on this issue. The Committee expects that the Commission, in drawing up the new action programme and defining its priorities, will take into account the new directions presented in its Communication 'Priorities for Consumer Policy (1996-1998)` () and its state of progress.

Present Article 5: eligibility criteria for European consumer organizations

3.8. The Committee is pleased with the definition of European consumer organizations given in Article 5.1. This definition would ensure that only active and independent organizations with a strong representational base will be eligible for EU-funding.

Article 6: eligibility criteria for national organizations

3.9. The Committee disagrees with the broad definition of national organizations which may qualify for financial support. The Commission is of the opinion that not only consumer organizations, but also other organizations may submit worthwhile projects in the interest of the consumer. Although the Committee does not deny that these other organizations may propose interesting projects, it firmly believes that it is better to confine this article to the (conditional) support of consumer organizations: granting financial support to consumer organizations in one area also strengthens these organizations in a broader sense and is thus also conducive to the pursuance of other consumer policy objectives. It should be noted that the view that strengthening consumer organizations is valuable in itself is in line with the Commission's reasoning in point 9.2 of the Financial Statement of the proposal.

3.9.1. The Commission may participate in the cost of projects proposed by other organizations, such as research institutes, universities, or centres of excellence if these projects are to contribute to the pursuance of its own goals. Such support should however be based on a separate article in the proposed framework and accounted for in a separate budget line.

3.10. The Committee is of the opinion that national consumer organizations should satisfy a number of conditions in order to qualify for support from the Commission ().

3.10.1. As stated before, these organizations should meet certain criteria of representativeness. These criteria differ in Member States and the principle of subsidiarity dictates that the definition of such criteria must be left to them (). In the absence of national criteria, the Commission is free to apply its own qualifications for the test of representativeness. Important factors in this context are:

- The statutory objective of the organization should be the representation and pursuance of the consumer interest.

- The organisation's policy independence from government should be statutory and it should be financially independent from business. It should have full legal competence and a certain internal organization for a number of years.

- Its organization and financial basis should express its viability.

- Its membership, which can be composed of individuals or organizations, should be significant in comparison with other such organizations.

3.10.2. A further factor may be the role the organization plays in representing consumers in policy making. In addition, these organizations should constitute a relevant factor beyond the mere local or regional level.

3.11. The Committee expresses the hope however that these criteria will be available soon in all the Member States. It is moreover the view of the Committee that consumer organizations from Member States in which consumer representation is less developed should qualify more easily than those from Member States in which the consumer movement is more advanced, analogous to the principles guiding EU cohesion policy.

Articles 5 and 6: the volume of financial support

3.12. Paragraph 5.3 and 6.3 state that financial support shall 'not in principle, exceed 50 % of the costs`. According to the additional information the Commission provided for applicants for Community support for consumer projects in 1998, these applicants have to argue why more support is justified in the absence of further criteria. The Committee invites the Commission to explain, in as far as possible, under which circumstances this percentage may be exceeded, as it may help to reduce the number of requests which may have to be turned down. Perhaps the funding of ANEC (), which so adequately represents consumer interests in standardization and which receives a much higher proportion of its costs, may help the Commission to define these conditions more explicitly. The Commission should, on the basis of past experiences, give a further indication of the considerations which may permit a funding in excess of 50 % of the costs of a project in its subsequent calls for tender.

The term 'operating expenses` also needs to be elucidated. It is the view of the Committee that infrastructure costs do not constitute part of these operating expenses and should therefore be reimbursable.

Article 7: project selection criteria

3.13. Although the Committee can largely agree with the proposed criteria, it takes the view that they need to be further elaborated in order to provide more concrete guidance (further clarification could for instance be given on the meaning of the word 'lasting`). The Committee understands that this will be done in the annual calls for tenders published by the Commission (see Article 8 point 1). In view of the call for tender for the funding of projects in 1998, the Committee would like to observe that, although clarity has improved much in comparison with the past, further efforts will remain necessary. The Committee is sceptical about the introduction of criteria which require applicants to predict outcomes of projects, as these outcomes cannot always be safely predicted at the outset. Finally, the Committee points out that dissemination of results entails costs which should be included in the total cost of the projects submitted for financial support.

Article 8 and 9: procedures

3.14. The Committee urges the Commission to set timetables also for its own activities such as the assessment and selection of projects, the notification of applicants, the conclusion of contracts and the actual payment of projects. In the past there have been long delays, especially for payments. Timetables will make for transparency and discipline for grantor and grantee alike and thus allow for orderly planning. Finally, a provision should be made for the funding of projects covering more than one year, in order to achieve more continuity and effective use of funds. The Commission may consult its Consumer Committee on the contents of the note it refers to in Article 8.1.

3.15. The Committee is pleased with the efforts of the Commission to reduce bureaucratic procedures regarding auditing requirements and thus save the valuable time of (especially small) organizations. The provisions of Article 9.1 are an important step in the right direction. It expresses the hope that further improvements will be made in order to achieve a better balance between the benefits and the administrative burden of smaller projects.

Article 12: reporting

3.16. The Committee suggests that the annual report that the Commission will send to the European Parliament and Council should be confined to eventual problems and mere description of facts. Bureaucratic paper work has to be avoided. It understands that the evaluations of some projects only will be included in these reports as part of the Commission's ongoing evaluation process. If this is the case, the Commission would be well advised to express these intentions more precisely. The Committee is pleased that an evaluation report on the functioning of the 'general framework` will be submitted by end June 2002 at the latest. These findings should constitute the basis for drafting the proposal for the subsequent 'framework`. Furthermore, the Committee is of the opinion that, also in line with the remarks made with respect to the insertion of a new Article 5, an evaluation of the multiannual programme should be part of the aforementioned report.

Brussels, 28 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS

() OJ C 108, 7.4.1998, p. 43.

() Within the meaning of Article 22 of the Financial Regulation (in its consolidated version of 20 December 1996 - SG B.4 (96) p. 674).

() OJ C 102, 4.4.1996.

() See the ESC opinion on the Commission Communication 'Priorities for consumer policy (1996-1998)`: OJ C 295, 7.10.1996, p. 14, point 2.9.

() This principle has, for instance, been reflected in the allocation of EU-funds for New Car Assessment Programmes which establish safety ratings of vehicles. It should however be followed on a much larger scale.

() Obviously within the limits of the 1,27 % ceiling.

() Notably in its opinion on the Single Market and Consumer Protection, see its paragraph 3 (OJ C 39, 12.2.1996, p. 120).

() See the ESC opinion on the Commission Communication 'Priorities for consumer policy (1996-1998)`: OJ C 295, 7.10.1996, point 1.9.

() Sectoral consumer organizations (for instance for public transport and public utilities) could also be financially supported by those DGs which are responsible for these affairs, depending on the contribution those organizations make to the pursuance of the policy objectives of the DGs in question.

() See also Article 3 of the common position of the Council on the proposed Directive on injunctions for the protection of consumer interests (OJ C 389, 22.12.1997). This Article states that the 'qualified entities` must be 'constituted according to the law` of the Member States. It should be recognised however that in some Member States public bodies and not consumer organisations have been designated as qualified entities. Moreover, not every Member State has defined criteria of representativeness.

() The European association for the co-ordination of consumer representation in standardisation.