WRITTEN QUESTION E-2218/99

by Paulo Casaca (PSE) to the Commission

(29 November 1999)

Subject: Misuse of PPP in Community legal texts

On 29 October in Brussels and on 30 October at my home in Ponta Delgada, I received the Commission's reply to my question E-1567/99(1) of July 1999. That reply confirms that PPP (purchasing power parity) indicators are used in highly important legal texts such as Regulation (EC) No 1260/1999(2) and Regulation (EC) No 1267/1999(3), although there is no legal basis for such use.

I must make the point that, contrary to what may be inferred from the Commission reply, I do not regard the existence of a specific legal basis for PPPs as desirable. Rather, that indicator should be incorporated into, and subordinated to, the accounts system in force in the European Union (Council Regulation (EC) No 2223/96(4)).

I am genuinely surprised to read that the use of that indicator has not created any major problems, when the Portuguese Statistical Office is known to have rejected the PPPs used by Eurostat on the grounds that there is no established and accepted scientific, legal and methodological basis for the indicator.

Equally surprising is the statement that PPPs are obtained on the basis of bilateral contracts with the Member States' statistical offices, when it is clear that the most important empirical consideration for ensuring that those indicators are credible is precisely that they should be calculated on the basis of uniform criteria.

I must also point out that the most recently published document containing results relating to the indicator in question produced results which would strike even the most casual observer as absurd.

I should therefore like to know if the Commission is prepared to provide the European Parliament with regular, detailed information regarding the progress of the discussion concerning PPPs which, according to the Commission's reply, was launched at the meeting of the Statistical Programme Committee on 25 May 1999.

(1) OJ C 27 E, 29.1.2000, p. 134.

(2) OJ L 161, 26.6.1999, p. 1.

(3) OJ L 161, 26.6.1999, p. 73.

(4) OJ L 310, 30.11.1996, p. 1.

Answer given by Mr Solbes Mira on behalf of the Commission

(21 December 1999)

Purchasing power parities (PPPs) are not referred to in any abusive manner in legal Community texts. The two new legal instruments on regional measures(1) refer to the use of PPPs as conversion factors to be used instead of market exchange rates, which is completely correct and reflects the current practice.

The use of PPPs is based on these texts but what is lacking is a legal basis for the production of PPPs themselves. The Commission considers it advisable to establish one. This is quite a different thing.

The Commission is not aware of any rejection of PPPs by the Portuguese statistical office. The Instituto nacional de Estatátistica (INE) itself provides all the Portuguese statistical input to the calculations, and all the participating Member States, including Portugal, have always given their approval to the annual results. Neither has there been any serious recent criticism of the scientific of methodological basis used by the Commission. The methodological framework applied for the time being is agreed between the Commission and the Organisation for economic cooperation and development (OECD), and is the same as applied in the International comparison programme coordinated by the United Nations and supported by the World Bank.

The Commission coordinates the PPP related work of different national statistical authorities through a working party of national experts and by issuing appropriate guidelines. The Commission is convinced that this approach has secured sufficient coordination even though the contracts are concluded individually.

The Commission cannot adhere to the notion that the last results were absurd. It is worth underlining again that all the results are approved by the experts representing the national statistical authorities taking part in the working group before they are finalized and published.

The Commission takes this opportunity to reiterate that the lack of a specific legal text on PPPs has not created any major problems but that the follow-up of commonly agreed principles would be further strengthened by adoption of a specific legal act. The Commission is ready to keep the Parliament informed of progress concerning PPPs.

(1) Council Regulations (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural funds and Council Regulation (EC) No 1267/1999 of 21 June 1999 establishing on Instrument for structural policies for pre-accession.