WRITTEN QUESTION P-2730/97 by Esko Seppänen (GUE/NGL) to the Commission (30 July 1997)

Subject: Net contributors to EU funding

The enlargement of the EU to the east and the Agenda 2000 programme involve a redistribution of financial contributions to the EU among the various countries. In the past too, some Member States have been net contributors and others net recipients.

How, in the Commission's view, are the Member States now to be divided into net contributors and net recipients?

How, for example, does the customs revenue which the Netherlands has reported to the EU affect its position in these comparisons?

Is the Commission preparing a reform under which countries would be permitted to keep their customs revenue and EU membership contributions would be levied solely on the basis of percentages of VAT and GDP?

Answer given by Mr Liikanen on behalf of the Commission (12 November 1997)

Enlargement will inevitably involve costs for the current 15 Member States, and Agenda 2000 has explicitly recognized this. Agenda 2000 has made it clear that 'enlargement will inevitably provoke a deterioration in the budgetary positions of all the current Member States' and it went further warning that this deterioration 'cannot come as a surprise and should not give rise to claims for compensation'. However, over the same period, the maintenance of the current financing arrangements and the effects of the reform of the main Community policies are not expected to lead to major changes in the relative budgetary positions of the Member States.

The current system of Community financing balances two elements, namely each Member State's contributive capacity to the Community budget and the need to finance the common policies which constitute the foundation of the Community. With regard to the first element, it is essential that the system of financing is fair and equitable. Indeed, according to a recent review of these issues by the Commission, equity, measured by contributions to the budget relative to the size of each Member State's economy in the Community total, has improved and it is expected to improve even further. This improvement has been the result of the 1988 and 1992 reforms which raised the importance of gross national product (GNP), and limited that of value added tax (VAT), as a base for financing the Community. It is forecast that by 1999 the share of the GNP resource will exceed 50% of the budget.

Community expenditure reflects a political consensus between the Parliament, the Council and the Commission regarding the Community's common policies, especially the common agricultural policy (CAP) and the structural funds. While contributions are proportional to the Member State's GNP, expenditure is not strictly related to GNP and, as a result, it plays a major role in the determination of the balance between contributions to and receipts from the budget.

Many of these issues are addressed in 'Budget contributions, EU expenditure, budgetary balances and relative prosperity of the Member States', a paper presented by the Commission at the Ecofin Council of 13 October 1997 ((SEC(97) 1918. )). It is important to note that the Commission does not prepare data on the net budgetary positions of the Member States, neither does it consider such data represent accurately the benefits from membership of the Community.

The contribution of traditional own resources (TOR), that is customs and agricultural duties and sugar levies, to the financing of the Community budget has declined significantly. They still play a more than proportional role for some Member States which have particularly important port facilities through which foreign goods enter the Community. Thus, for example, in 1996 contributions from TOR collected by the Netherlands amounted to 11.9% of total TOR receipts, while the Netherlands' share in Community GNP was 4.6%.

As noted in Agenda 2000, there are no plans to review the system of own resources at this stage. However, the Commission has also recognized that it may be appropriate to replace contributions from TOR with contributions based on GNP. Agenda 2000 mentions that with the declining importance of TOR in the budget, 'the balance between their advantages and disadvantages as a source of Community finances shifts towards the latter. In particular, their collection and recovery procedures are very complicated, exposed to fraud and very constly in terms of controls. This would not mean that the Union could ignore the effective collection of customs duties by Member States since these duties constitute an instrument of Union trade policy, but would modify substantially the perspective of its involvement in this complex area'.