WRITTEN QUESTION E-1554/00

by Paulo Casaca (PSE) to the Commission

(18 May 2000)

Subject: Comparison between the market value of products in the same monetary area

In its reply to Written Question E-0273/00(1), the Commission sets out detailed and interesting considerations on comparisons between the market value of products within the same monetary area. Leaving aside the major differences between an economic and monetary union and the use of a common monetary standard (whether it be gold, silver, gold-standard pounds, gold-standard dollars or dollars), the examples given by the Commission (a comparison between Argentina and the US and Belgium and Luxembourg) are of interest in seeking to understand the issue.

Nevertheless, I would draw the Commission's attention to a number of other examples which are closer to hand and indeed more significant. If we compare prices for equivalent accommodation in different parts of Brussels in accordance with existing methods for recording statistical data, differences in market value of a factor of 200, 300 or even 400 percentage points will quickly become apparent. Carrying out the same exercise on a selection of every-day consumer goods (in particular fruit and vegetables, clothing and shoes) in various parts of Brussels will also reveal extremely significant differences in market values.

In fact, if anyone were to devote themselves to comparing market values in the various parts of Brussels by means of the methods and statistical techniques used by Eurostat to calculate PPPs for the various countries, I am fully convinced that they would find variations which are just as or even more significant than those found by Eurostat when comparing the various countries of the European Union.

Supposing an analysis of this kind concluded that the difference in market values between the richest and least rich areas of Brussels stood at around 50 %, would the Commission consider the Brussels authorities to be justified if they were to adjust the distribution of funds between the various areas of the city by the same indicator?

In other words, does the Commission believe that, in those circumstances, the Brussels authorities would have any legal, scientific or methodological basis for allocating to the residents of the poorest area only half of the appropriations allocated to residents of the richest area?

Does the Commission not believe that the absurd hypothetical situation described above in the case of Brussels is identical to what the Commission is actually doing at European level?

(1) OJ C 330 E, 21.11.2000, p. 114.

Answer given by Mr Solbes Mira on behalf of the Commission

(7 July 2000)

The Commission agrees that the price for the same good, in particular a non-traded good, may vary considerably between national, regional or local markets due to transaction costs which prevent arbitrage. In theory, it might thus be desirable to calculate purchasing power of money (PPPs) for territorial units that are smaller than Member States. In practice, however, price surveys which are needed to calculate PPPs are rather expensive and these costs would multiply if calculated at regional or local level.

However, the Commission will carefully investigate the options to achieve regional PPPs at reasonable cost in order to be able to make use of accurate regional PPPs before 2006, when the new list of eligible regions will be decided, possibly on the basis of criteria similar to those laid down in Article 3.1 of Council Regulation (EC) No 1260/99 of 21 June 1999 laying down general provisions on the Structural Funds(1).

(1) OJ L 161, 26.6.1999.