Communication from the Commission - Agenda 2000: the legislative proposals - Overall view
Date: 1998-03-18
Institutions: European Commission
Subjects: enlargement of the Union, interinstitutional agreement, political reform, trans-European network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  18.03.1998 
COM(1998) 182  final 

COMMUNICATION FROM THE COMMISSION 

AGENDA 2000  : THE LEGISLATIVE PROPOSALS 
OVERALL VIEW 

AGENDA 2000 : THE LEGISLATIVE PROPOSALS 
OVERALL VIEW 

Context 

In its Agenda 2000 communication  of  16 July  1997 the Commission  set out  proposals  for 
the  reform  of  existing  EU  policies,  the  process  of  Enlargement  and  the  financial 
framework  for the period 2000-2006. 

The  intensive  discussions  of  the  Commission's  communication  in  the  Council  and  the 
Parliament  allowed  a  technical  examination  of  the  package.  Moreover,  they  enabled  the 
European  Council  in  Luxembourg  in  December  1997  to  agree  on  the  start  of  the 
Enlargement  process.  This  comprises  the  first  meeting  of  the  European  Conference  in 
London on  12 March  1998; the launch of the Accession  Process with all eleven  candidate 
countries  in the margins  of the  General  Affairs  Council  on  30 March  and the  opening  of 
Accession negotiations with six countries on 31 March  1998. 

The  legislative  proposals  adopted  by  the  Commission  today  provide  the  legal  texts  on 
which decisions can be taken  on the policy  reforms  proposed  in Agenda  2000 and  on  the 
new  pre-Accession  aid  instruments.  The  Commission  has  also  adopted  a  report  on  the 
workings  of  the  Interinstitutional  Agreement  on  Budget  Discipline  and  its  proposal  for 
new Financial Perspectives for the period 2000-2006. 

Still  to  come  in the  autumn  of  1998  is the  Commission's  comprehensive  report  on  the 
own  resources  system  which  will  also  address  the  development  of  relative  budgetary 
positions of the Member States. 

The proposals adopted today fall into four main groups as follows: 

•  agricultural Regulations; 

•  Regulations on the Structural and Cohesion Funds; 

•  pre-Accession instruments; and 

• 

the Financial Perspective for  2000-2006 (together  with reports on the operation  of the 
Interinstitutional  Agreement  on  budget  discipline  and  the  Loan  Guarantee  Regulation 
(N° 2728/94)). 

It  should  also  be  noted  that  the  Commission  adopted  today  a  proposal  for  a  revised 
Financial  Regulation  for  Trans  European  Networks,  thus  adding  a  further  dimension  to 
this package in a priority area. 

•  Agriculture 

The main proposals for new agricultural Regulations cover : 

revised  Council  Regulations  for  the  common  market  organisations  for  cereals, 
arable crops, beef, and milk; 

a  revised  Council  Regulation  on  olive  oil  (which  follows  the  recent  proposal  on 
tobacco and will be followed  by a proposal on wine before June  1998); 

a  "horizontal"  Regulation  to  introduce  some  common  provisions  on  cross 
compliance with  environmental  conditions,  modulation  of  payments  linked  to  the 
labour force and an element of degressivity in large payments; 

a revision to the EAGGF Financing Regulation (729/70); 

a new Regulation  on  support  for  rural  development  from  the  EAGGF both  from 
its  Guidance  Section  (in  objective  1  areas)  and  from  the  Guarantee  Section 
(elsewhere). 

The main principles of these proposals follow  the prescription for  further  CAP reform  set 
out  in  Agenda  2000.  Some  adjustments  have  however  been  made  to  take  account  of 
extensive consultations  and  notably  of the first  round  of discussions in the Council  in the 
autumn  of  1997.  In  particular,  it  is  now  proposed  to  have  a  larger  reduction  in 
intervention  prices  for  dairy  products  of  15  %  instead  of  10  %,  which  substantially 
improves  competitiveness  and  marketing  possibilities.  This  will  be  offset  by  a  small 
increase  (2  %)  in milk  quotas  to  be  allocated  in favour  of young  farmers  in  all  Member 
States and to  farmers  in mountainous  and  Nordic  regions.  It  will be further  offset  by the 
retention  of the premium for  maize silage. Because this will also benefit  beef  production, 
there is a corresponding adjustment  in the bull premium. 

The  opportunity  has  been  taken  to  consolidate  and  simplify  the  existing  Regulations 
wherever possible. In accordance with the principle of subsidiarity  more discretion  will be 
left  to the Member States to decide on the allocation of part of the direct payments to beef 
and  dairy  farmers.  Moreover,  the  "horizontal"  Regulation  will  permit  Member  States  to 
reduce  payments  where  cross  compliance  with  national  environment  conditions  has  not 
been  met  and where the agricultural  labour force  has been reduced below  a certain  level 
The  proceeds  of  such  reductions  will  be  available  for  environmental  measures  by  the 
Member  States. The horizontal  Regulation  also  introduces  an element  of degressivity  for 
holdings in receipt of payments in excess of EUR  100,000. 

The  Regulation  on  support  for  rural  development  from  the  EAGGF  (which  consolidates 
nine  existing  Regulations)  will  provide  a  coherent  approach  to  rural  development 
measures across the EU.  In  objective  1 and  2  regions  such  measures  will  be  included  in 
the same programming approach as for the Structural Funds. 

The agricultural  proposals are for the most  part  due to come into effect  in the year  2000 
They represent  a further  major  step in the direction  of the reform  of the  CAP  which  was 
started  in  1992.  As indicated  in  Agenda  2000,  the  further  reductions  in market  support 
prices  proposed  and  the  increase  in  direct  payments  to  farmers  are  designed  to  improve 
the  competitiveness  of  EU  agriculture  on  domestic  and  world  markets  thus  reducing  the 
risk  of  a  return  to  the  production  of  expensive  and  unsaleable  surpluses  while  avoiding 
over  compensation.  Lower  prices  will benefit  consumers  and  leave  more  room  for  price 
differentiation  in favour  of quality  products.  Greater  market  orientation  will prepare  the 
way  for  the  integration  of  new  Member  States  and  reinforce  the  EU's  position  in  the 
coming  WTO  Round.  Moreover,  there  will  be  increased  emphasis  in  the  new  CAP  on 
food  safety  and  environmental  concerns.  The  rural  development  Regulation  will  for  the 
first  time  bring  together  all  the  measures  related  to  the  development  of the  countryside 
which are funded  by the EAGGF. 

•  Structural Funds and  Cohesion  Fund 

The proposals for new Regulations on the Structural  and Cohesion Funds will provide the 
legal framework  for support from  these funds  in the next programming period 2000-2006 
The package has been constructed  around the three principles enunciated  in Agenda 2000, 
namely  concentration,  simplification  and  clarification  of  responsibilities.  The  legal  texts 
proposed  are as follows : 

a  new  general  Regulation  including  provisions  which  apply  to  all  the  Funds  (this 
replaces two existing Council Regulations); 

new "vertical" Regulations  for  each of the four  Funds (ERDF, ESF, FIFG and,  a 
Regulation on support for  rural development  from the EAGGF (see above)); 

a revised Regulation for the Cohesion Fund. 

The key elements are as set out in the Agenda 2000 communication : 

• 

strict  application  of  the  75  %  GDP  per  head  eligibility  criterion  for  objective  1 
Objective  1 regions,  which  will  also  cover  ultraperipheral  regions  and  ex-objective  6 
regions, should continue to receive about 2/3 of the resources for  structural  funds; 

concentration  of  support  in  new  objective  2  regions  (covering  restructuring  areas  of 
industrial  and  rural  decline,  urban  areas  and  areas  dependent  on  fisheries)  limiting EU 
population  covered  to  18 % with  an  equitable  contribution  to  this concentration  from 
the Member  States,  limiting the reduction  per Member  State (including regions phased 
out  from  Objective  1 but  eligible  for  Objective  2)  to  no  more  than  one  third  of  the 
coverage of current Objective 2 and 5b regions; 

objective  3 to  finance  human  resource  programmes  in all other  areas  and to  provide a 
general reference framework for  such policies throughout  each Member State; 

continuation  of  restructuring  of  fishing  fleets  and  socio-economic  accompanying 
measures in areas dependent on fishing; 

phasing  out  arrangements  for  regions  losing  eligibility  to  objectives  1 or  2  over  6-7 
years and 4 years respectively; 

encouragement  for  Structural  Fund  resources  to  be  combined  with  financial 
engineering instruments; 

clarification  and decentralisation  of responsibility  for  programming  and  implementation 
(reducing  the  number  of  decisions  which  need  to  be  referred  to  the  Commission), 
deepening and strengthening of partnership, 

reduction  in  the  number  of  Community  initiatives  from  14  to  3  and  their  share  of 
funding from 9 % to 5 %; initiatives more targeted on Community wide actions, 

simplification  of the verification  of additionally; 

• 

simpler financial arrangements  in  return  for  clearer  Member  State  responsibilities  for 
monitoring, evaluation, control and corrections; 

•  rewards  for  well  run  programmes  through  extra  allocations  from  a  performance 

reserve; and 

•  for  the  Cohesion  Fund,  appropriate  macro-economic  conditionality  for  countries 
participating in the single currency  and streamlined financial management provisions 

Key questions about the eligibility of specific  regions for the different  objectives cannot  be 
answered  until  the  autumn.  Only  then  will  data  become  available  which  will  permit  the 
identification  of those  regions  which  are likely to  qualify  for  the various  Structural  Fund 
objectives.  In the case of objective  1  the Commission will draw up the list of those regions 
whose  GDP  per  capita  was  less than  75% of the  EU  average  in  the  last  three  years  for 
which  statistics  are  available.  In  the  case  of  the  new  objective  2  Member  States  will  be 
invited  to  propose  regions  from  among  those  which  qualify  under  a  range  of  EU  and 
national  criteria included  in the  Structural  Fund  regulations but  within  population  ceilings 
for  each Member State designed to limit eligibility to no more than  18% of the  population 
of  the  EU  overall.  The  Regulations,  which  enter  into  force  from  1.1.2000,  should  be 
adopted by early  1999 at the latest to prevent programming delays in the year 2000 

As proposed  in Agenda 2000, the Commission's intention  is that  the overall  envelope  for 
structural  and cohesion  policies  should  be maintained  at  the level of 0.46%  of GNP over 
the period  2000-2006,  which  equates to  nearly EUR  287 billion  (in  1999 prices).  Of this 
amount  about  EUR  240 billion,  including  EUR  21 billion  for  the  Cohesion  Fund,  will  be 
available in the present  Member  States (compared  with EUR  208 billion  for  1993-99 on 
the  same  price basis)  . The  remaining  EUR  47  billion  will be  for  structural  assistance in 
new Member States and the candidate countries. This represents a substantial  commitment 
to the policy of cohesion which will be further  reinforced  by the intended  concentration  of 
resources  on  the  poorest  regions  and  those  with  the  worst  structural  problems,  in 
particular regarding unemployment. 

A considerable  effort  has been  made  to  simplify  the  existing  procedures  in  a  number  of 
respects  and  to  decentralise  decision  taking  as  far  as  possible  to  the  authorities  in  the 
Member  States  and  regions  concerned.  This  more  decentralised  approach  brings  with  it 
increased  responsibility  for  accurate  monitoring  and  control  of  programmes  at  national 
and  regional  level  and,  where  necessary,  effective  action  on  financial  corrections 
In 
making its proposals in these areas the Commission has drawn on the experience gained in 
recent  years  in  improving  financial  management  and  control  under  the  SEM  2000 
initiative. 

•  Trans-European  Networks 

The  proposed  revision  to  the  TEN  financial  regulation  both  sets  out  to  improve  the 
management  of this programme, through greater  recourse to multiannual planning, (which 
will  facilitate  public  private  partnerships  by  providing  funding  availability  for  the  lifetime 
of a project),  and provides an indication of spending needs totalling EUR  5.5 billion  in the 
period 2000 - 2006, with around EUR 5 billion of this for Transport  TENs. 

•  Pre-Accession instruments 

The instruments for pre-accession aid proposed in Agenda 2000 comprise : 

a  co-ordination  Regulation  to  coordinate  the three  pre-Accession  aid  instruments 
to avoid any overlapping; 

an agricultural pre-accession  instrument; 

an instrument  for  Structural Policies for pre-Accession (ISPA); and 

the existing PHARE Regulation will continue to provide pre-accession aid. 

Actions  under  the  three  pre-Accession  aid  instruments  will  be  integrated  into  the 
Accession  Partnerships  with  each  of  the  candidate  countries  to  ensure  coherence  The 
overall  amount  of pre-Accession  aid  will total  some  EUR  3 billion  a year  for  the  period 
2000-2006 (more than double the amount available in 1999) : 

»  the  PHARE  programme  will  focus  on  accession  by  setting  two  priority  aims  which 
were  endorsed  by  the  European  Council  at  Luxembourg  :  the  reinforcement  of 
administrative  and  judicial  capacity  (about  30  %  of  the  overall  amount)  and 
investments related to the adoption and application of the "acquis" (about  70 %), 

• 

the  agricultural  instrument  will  support  the  modernisation  of the  agriculture  and  food 
industries  through  improved  processing,  marketing  and  quality  control  and  assistance 
for rural development; 

• 

ISPA  will  provide  support  for  transport  networks  and  the  protection  of  the 
environment. 

The three pre-Accession  aid  instruments  will be  operated  in the context  of the  Accession 
Partnerships with each of the candidate countries. These Partnerships will provide a single 
framework  setting  out  the  priorities  to  be  pursued  by  each  country  and  the  various 
financial resources  available  from  the  Community  to  support  the  pre-Accession  process 
Each  candidate  country  has  been  invited  to  draw  up  a  national  programme  for  the 
adoption  of  the  EU  "acquis"  indicating  in  detail  how  it  will  implement  each  of  the 
in  the  Accession  Partnership.  The  monitoring  of  Accession 
priorities 
Partnerships and the related  national  programmes  will provide an  important  input  into the 
Commission's regular reviews of the progress of candidate countries. 

identified 

Financial  Perspectives and Interinstitutional Agreement  (IÎA) 

In accordance with Article 25 of the existing Interinstitutional  Agreement  (II A) on budget 
discipline and the improvement  of the budgetary  procedure the Commission  has adopted a 
report  on  the  working  of  the  IIA  and  proposals  for  the  Financial  Perspective  for  the 
period  2000-2006.  The  proposals  for  the  Financial  Perspective  closely  follow  those  in 
Agenda 2000  : the figures have changed  because they are presented  in  1999 prices  rather 
than  1997  prices.  As  requested  by  the  Luxembourg  European  Council,  the  Financial 
Perspective  is  presented  on  an  EUÎ5  basis,  leaving  sufficient  margin  to  finance 
enlargement,  but  with  an  accompanying  table  to  estimate  the  costs  associated  with 
Enlargement  and their financing under the technical assumptions used by the Commission 

The  main  table  in  the  Financial  Perspective  sets  ceilings  for  the  six  categories  oi 
expenditure  (agriculture,  structural  policies, 
internal,  external,  administration  and 
reserves) 
It  indicates a growing  unused  margin  which  may be  set  aside  for  Enlargement 
within  the ceiling on the  EU's  revenues  (or  "own  resources")  of  1.27  %  GNP  Table 2, 
analyses the amounts which  should  be available for  the  initial  costs  of Enlargement  in the 
period 2000-2006. This still leaves room for  an ample contingency reserve within  the own 
resources ceiling, taking into account its increase due to Enlargement. 

The  report  on  the  operation  of  the  IIA  analyses  how  the  agreement  lias  worked 
in 
practice  since  1993 and  suggests  some improvements which could  be incorporated  into a 
new  agreement  for  the  succeeding  period.  These  would  provide  some  limited  additional 
flexibility  for transfers between the internal  and  external categories of expenditure  and  for 
a  limited  carryover  of  unspent  allocations  from  one  year  to  the  next  to  meet  a  specific 
political  priority.  The  current  rule  providing  for  automatic 
transfers  of  unspent 
commitments  in  category  2  (structural  policies)  to  subsequent  years  will  no  longer  be 
necessary.  The  Commission  will  propose  that  the  new  IIA  should  consolidate  and 
Complete  where  necessary,  all  the  extant  agreements  on  budgetary  matters  between  the 
Parliament,  the Council  (which  make up the two  halves of the Budget  Authority)  and  the 
Commission.  These  cover  such  matters  as  the  classification  of  expenditure,  respect  for 
financial ceilings in legislation,  the  need  for  a  legal  base  for  items  in the  Budget  and  the 
conciliation process in the budget  procedure. 

The Commission  will circulate a working document  with the text  for  a new  IIA for  use in 
the  negotiation  with  the  Budget  Authority.  Further  legislative  proposals  will  be  required 
to amend the Budget Discipline Decision in due course. 

The  Commission  has  also  adopted  a  report  on  the  operation  of  the  Loan  Guarantee 
Regulation  (N° 2728/94)  which  includes  some proposals  for  amending  the Regulation  to 
take  account  of the  experience  gained  since its  adoption.  It  is  proposed  that  the  rate  of 
provisioning  on  new  loans  should  be  reduced  to  6%  and  the  amount  of  the  reserve 
reduced to EUR  150 million from the year 2000 in order to maintain  the existing  capacity 
to make loans. 

*  *  * 

Further details on the contents of the legislative package will be found  in the  explanatory 
memoranda  which  accompany  each  of the  main  groups  of  proposals.  The  Commission 
hopes that the Council and Parliament  will set in hand the necessary  detailed  examination 
of its proposals without  delay.  Although it will not be possible to reach  a final agreement 
until all the missing elements are in place, there are strong arguments for  seeking to  reach 
an overall  settlement,  if possible,  under  the  Austrian  Presidency  before  the  end  of  1998 
Failure  to  adopt  the  proposals  on  the  Structural  Funds  by  then  in  particular  would  be 
likely to result in serious delays in the programming for the new period. Finally, agreement 
on the financial  package is necessary to avoid delays in the Enlargement negotiations 

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COM(98)  182 final 

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