Proposal for a Council Regulation (EC) on the European Regional Development Fund
Date: 1998-03-18
Institutions: European Commission
Subjects: European Regional Development Fund, Structural Funds, operation of the Institutions, structural policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

M 

M 

' _ V. 

, 

-A. 

Brussels, 18.03.1998 
COM(1998) 131  final 

98/0090 (AVC) 
98/0114 (SYN) 
98/0115 (SYN) 
98/0116 (CNS) 

Proposal for a 
COUNCIL REGULATION (EC) 
laying down general provisions on the Structural Funds 

Proposal for a 
COUNCIL REGULATION (EC) 
on the European Regional Development Fund 

Proposal for a 
COUNCIL REGULATION (EC) 
on the European Social Fund 

Proposal for a 
COUNCIL REGULATION (EC) 
on structural measures in the fisheries sector 

(presented by the Commission) 

REFORM OF THE STRUCTURAL  FUNDS 

Contents 

Introduction: The need to revise the Regulations 

Part I: The political approach to the reform of the Structural Funds 

A. 

B. 

The political priority  of economic and social cohesion 

The Community priorities for  the structural  policies 

C. 

A clear division of responsibilities 

1. 
2. 

3. 

Deeper and broader partnership 
Re-focusing  the Commission's  responsibilities 

Wider responsibility in the hands of the Member States 

D. 

Balanced  proposals 

Reliable financial management  and control systems 
Integrated strategic programming 
Decentralised and simplified  assistance 
More effective,  better supervised  monitoring 

1. 
2. 
3. 
4. 
The layout of the Structural Fund  Regulations 

E. 

1. 

2. 

Legal basis 

The new architecture of the Regulations 

Part Two: The general Regulation governing the Structural Funds 

A. 

A general attempt at concentration 

1. 

2. 

The three  Objectives 
The Community  Initiatives 

A limited number of priority  Objectives 
(a) 
(b) 
Greater concentration 
(a) 
(b) 
(c) 

Concentration by theme 
A progressive geographical  concentration 
Financial  concentration 

B. 

Simplification  and decentralisation 

1.  Clearer  division  of  tasks  and  responsibilities  in  a  broader  and  deeper 

partnership 
Integrated strategic programming 

2. 
3.  Decentralised  programming 
4.  Accountable and transparent  monitoring 
5.  Simpler and more exacting financial management by the Commission 
6.  Special rules for Community  Initiatives 

C. 

Greater efficiency 

1.  A Negotiated  additionality 
2.  A tighter definition  of eligible expenditure 
3.  More developed financial  engineering 
4.  Full integration of evaluation 
5.  A new incentive to efficiency:  the performance  reserve 
6.  The role of advisory and management  committees 

D. 

Improved  controls 

1.  Reliable inspection systems 

2.  Effective  financial  corrections 

Part Three: The Regulations specific to each Structural Fund 

A. 
B. 
C. 
D. 

The ERDF 
TheESF 
EAGGF support to rural development 
The Regulation specific to structural operations in the fisheries sector 

EXPLANATORY  MEMORANDUM 

Introduction 

The need to revise the Regulations 

Almost  a  decade  has  elapsed  since  the  1988  reform  of  the  Structural  Funds.  The 
adjustments  to the legal framework carried  out  in  1993 were  designed  to  consolidate 
and  improve  the new  structures  which  were  created  in  1988 rather  than  to  constitute 
another root-and-branch reform before  a thorough review had been undertaken. 

The  Commission  had  the  opportunity  to  undertake  such  a review  in  the  First  Report 
on Economic and Social Cohesion in November  1996, from which conclusions can be 
drawn about the situation with regard to economic and social cohesion, about the way 
in  which  this  process  is  developing  and  about  the  influence  on  it  of  the  Union's 
structural  policies.  It  also  proposed  initial  ideas  on  making  the  Union's  structural 
policies more  effective. 

As  far  as  economic  and  social  convergence  is  concerned,  disparities  in  per  capita 
income  between  the  Member  States  have  been  substantially  reduced  over  the  last 
decade,  mainly  because  the  four  "cohesion  countries"  have  caught  up  considerably, 
with their incomes rising from 66% to 74% of the Community  average. Disparities  in 
incomes between regions have remained broadly unchanged over that period  although, 
taking  the  less  prosperous  (Objective  1)  regions  together,  average  net  per  capita 
income  has  increased  by  2.5  percentage  points,  from  64.6%  of  the  Union  average 
to 67.2%. 

The  situation  with  regard  to  disparities  in  income  within  the  Member  States  and  to 
employment  is,  however,  less  favourable.  Disparities  have  increased  in  virtually  all 
the Member  States and the creation  of some  7 million net jobs  since  1983 has  barely 
reduced the number out of work in the Union while the range of regional variations  in 
the  unemployment  rate  has  grown  sharply.  Furthermore,  unemployment  tends  to 
weigh most heavily on the weakest social groups: young people, among whom  one in 
five  is without  work,  women,  whose  unemployment  rate  is  considerably  higher  than 
that  for  men, and those without  qualifications.  Half the unemployed  have been  so  for 
more than  a year. It is not surprising, therefore,  that  a growing number  of people  live 
below the poverty line and this poverty, a matter of concern for the future  of European 
society, is growing fastest  in some of the most prosperous and urbanised countries. 

The  inclusion  in  the  Treaty  of  Amsterdam  of  a  Title  on  employment  constitutes 
progress  in  this  respect.  It  highlights  the  promotion  of  employment  in  the  Union, 
sustainable development  and equal opportunities for men and women. The desire for a 
policy strongly in favour  of equal opportunities is reflected  in the desire to  incorporate 
this principle into the structural policies. 

The  Union  is  also  facing  major  challenges  in the  form  of  globalisation,  the  speed  of 
technological progress, the introduction  of economic  and monetary union and its  own 
enlargement. In addition it needs to promote a people's Europe. 

This  is the general background  which requires cohesion  to be  further  strengthened.  It 
is true that market  forces  and the entrepreneurial  spirit  are essential  factors  in  seizing 
new  opportunities  but  solidarity  and  mutual  support  are  vital  complements  to  them, 
not  only  for  social  reasons  but  because  they  promote  competitive  development  and 
sustainable  growth  and  create  extra  jobs  and  income.  These  factors  generate  trade 
which has an effect  not only on the regions assisted but throughout the Union. 

This was why, in its communication "Agenda 2000 - for a stronger and wider Union", 
the Commission  made a proposal that  economic  and  social  cohesion  should  remain  a 
high  political priority.  It  is made  still more necessary  by the  impending  accession  of 
countries at a low level of development  since it pursues the major  objective,  set out in 
Article  130a  of  the  Treaty,  of  reducing  disparities  in  development.  A  number  of 
instruments help attain this goal of cohesion, including  in the context  of  enlargement: 
they are the Structural Funds (ERDF, ESF, EAGGF  Guidance  Section  and the FIFG), 
the  Cohesion  Fund  and  the  Pre-accession  Structural  Instrument.  The  Commission's 
proposals  for  the  Structural  Funds  are  arranged  in  three  main  themes  set  against  a 
general  background  of  budget  discipline  and  intended  to  continue  support  to  the 
regions  and  social  groups  in  difficulty  in  the  15 Member  States  and  to  integrate  the 
applicant countries into the Union. 

The  first  is  to  maintain  financial  solidarity  for  2000-06  at  the  1999  level  of 
286.4 billion euros (at  1999 prices), the equivalent  of ECU 275 billion at  1997 prices. 
This  includes  218.7  billion  euros, the  equivalent  of  ECU  210 billion  at  1997  prices, 
from  the  Structural  Funds  for  the  15  existing  Member  States.  The  former  sum 
therefore  equates  to  the  allocation  of  0.46%  of  the Union's  GDP  to  the  objective  of 
economic and social cohesion. 

The  second  is  to  continue  the  effort  decided  on  at  the  Edinburgh  European  Council 
(ECU 200 billion at  1997 prices for  1993-99 or ECU 208 billion in  1999 prices). This 
reflects  the  desire  that  the  Union  should  participate  in  the  efforts  made  by  the 
Member States  to  promote  the  development  and  conversion  of  the  regions  while 
taking account of the need to contribute to their policies of budgetary rigour. This can 
be  done  provided  that  the  Funds'  assistance  also  becomes  more  targeted.  This 
targeting  is  all  the  more  necessary  because  some  regions  have  made  significant 
progress  towards  convergence  and  for  reasons  of  the  efficiency  of  structural 
assistance. 

Thirdly, the way in which the reformed  Structural Funds operate should ensure greater 
cost-effectiveness  by  clarifying  the  roles  of  the  various  parties  involved  in  regional 
development, through simplification,  evaluation and monitoring. 

These  guidelines  of  the  Commission,  which  appear  in  Agenda  2000,  are now  set  out 
in  detail  in  a proposal  for  a new  general  Regulation  concerning  the  Structural  Funds 
and Regulations dealing with the particular aspects of each Fund. 

PARTI 

The political approach to the reform of the Structural  Funds 

A. 

The political priority of economic and social cohesion 

The  goal  of  economic  and  social  cohesion  was  introduced  by  the  Single  European 
Act, which paved the way for the  1988 reform  of the Structural Funds. The Treaty on 
European  Union  made  cohesion  one  of  the  three  pillars  of  European  construction, 
alongside EMU and the single market. 

The Treaty of Amsterdam confirmed  cohesion's leading role, advanced still further  by 
the priority  given  to  the  fight  against  unemployment  through  the  inclusion  of  a  new 
Title on employment. 

The political priority granted to economic and  social cohesion must be  unequivocally 
maintained,  and  this  means  continuing  the  efforts.  The  prospect  of  enlargement  to 
include  new  countries  with  very  different  levels  of  development  makes  this  all  the 
more vital. 

Solidarity  within  Europe  will  become  increasingly  imperative  if  the  major  reduction 
in development disparities called for in Article 130a is to remain our target. 

Solidarity  makes  an  essential  contribution  to  the  stability  of  the  Union  and  the 
promotion  of  a  high  level  of  employment  and  of  equal  opportunities  for  men  and 
women.  The  work  of  the  Structural  Funds  must  therefore  stimulate  competitive, 
environmentally  sustainable  development,  lasting  growth  which  is  job-creating, 
economic  and  technological  innovation  and  the  provision  of  a  skilled  and  flexible 
labour-force  while ensuring the removal of inequalities. 

B. 

The Community priorities for the structural  policies 

Ensuring  the  conditions  for  sustainable  economic  development:  growth, 
competitiveness  and employment 

The  Structural  Funds  are  a  leading  instrument  for  reducing  disparities  and  so  for 
promoting  growth  and  sustainable  employment.  The  impact  on  employment  should 
affect  their three main  areas  of assistance  - infrastructure,  the development  of  human 
resources  and  support  for  the productive  sector  - in both the  short  and the  long  term: 
in the short term because assistance will stimulate demand  for goods and services and 
in the long term by improving the links connecting human and physical resources with 
the productive environment  and the operation of the labour market. 

Responsibility  for  most  of the policy  areas which  affect  the  employment  situation  in 
the  EU  rests,  however,  primarily  with  the  Member  States,  whose  macroeconomic 
policies exert a determining influence  in creating the climate for economic growth and 
jobs.  And  indeed,  these  policies  have  led  in  difficult  circumstances  to  some  notable 
improvements  in the economic  fundamentals  in the Member  States. This is  especially 
true,  for  example, with regard  to interest rates  and price stability, where  interest  rates 

6 

have converged  towards  the  lowest  level  in thirty  years. Most Member  States have 
taken  action  to  increase  innovation  and  the  rate  of  new  business  formation  and  to 
improve the efficiency  of the labour market with a battery of new measures to help 
match supply and demand. 

However,  despite  their  successes, policies  pursued  at national  level  have  their  own 
limits and there is a general consensus amongst Member States that further  potential 
for job-creation remains to be exploited at local and regional level. In this context, the 
main  aim  of  Structural  Fund  assistance  is  to  help  establish  the  conditions  for 
sustainable economic development through growth, competitiveness and employment. 
Only by ensuring such conditions are in place can the paramount aim of  safeguarding 
and creating jobs be fully realised. 

Increasing competitiveness and innovation and supporting SME development 

This  means  that  the  key  tasks  of  the  Funds  should  be  to  address  major  structural 
adjustment  and  the reduction  of disparities  in  respect  primarily  of  inadequate  basic 
infrastructure  (mainly in Objective  1 regions), a poorly qualified  labour force and low 
innovative capacity, including  limited research and technological  development.  This 
gives rise to problems in terms of competitiveness and prevents businesses, especially 
small  and  medium-sized  enterprises,  from  creating  the  impetus  to  redress  the 
situation.  Reducing  economic  dependency  on  a  very  few  sectors,  diversifying  the 
economic  fabric  through  the  creation  and  development  of  innovative  SMEs,  the 
capacity to adapt to new technologies  and changes in production  systems as well as 
enhanced  administrative  capacity  will  be  essential  to  improving  the  levels  of 
competitiveness necessary to increase economic development and employment. 

Employment: developing human resources 

The  conclusions  of  successive  European  Councils  have  provided  a  Union-wide 
framework  setting priority themes for investment in employment and human resource 
development  initiatives.  The  Amsterdam  European  Council  has  been  of  crucial 
importance for employment policies within the Community and, by adopting the new 
Title on employment, the Council recognised that this should be regarded as a matter 
of common interest. 

The new Treaty has started a process which enables the Member States to look at the 
employment  situation each year and adopt  guidelines  for  their national  employment 
policies. These will form part of an integrated approach based on the pursuit of sound 
macroeconomic policies, a single market which is working well, thorough reform  of 
the labour market on the basis of a certain number of priorities  agreed in guidelines 
for  the  employment  policy  of  the  Member  States  and  systematic  attention  to 
employment in all Community policies, but particularly the structural policies, which 
represent a powerful tool for achieving these aims. 

The  Structural  Funds  should  contribute  to  bolstering  the  four  cornerstones  of  the 
European  strategy  on  employment  (entrepreneurial  spirit,  having  the  right  skills, 
flexibility  and  equal  opportunities)  which  will  underpin  the  development  of human 
resources. 

The environment and sustainable development 

The  principle  of  sustainable  and  environmentally  sound  development  and  the 
integration  of environmental protection requirements  into other policies is enshrined 
in the Treaty on European Union (Article 2) and is further  strengthened in the Treaty 
of  Amsterdam1.  Articles  1 and  2  of  the  draft  general  regulation,  dealing  with  the 
objectives, means and tasks of the Structural Funds, relate these Treaty principles to 
the action of the Funds. A number of other Articles throughout the regulation set out 
proposals  to  increase  the  Structural  Funds'  contribution  to  the  objectives  of 
sustainable development and environmental protection and improvement. 

In this regard, the environmental situation in urban areas will be one of the criteria for 
eligibility under Objective 2. Furthermore, beside the financial aid directly addressed 
towards  the  environment  sector,  such  as  basic  environmental  infrastructures,  the 
Funds  will  be  giving  emphasis  to  economic  and  social  measures,  which  by  their 
distinctly preventive nature, are especially valuable in terms of sustainability. These 
would  include  material  environmental  investment  in  industry  such  as  renewable 
energies, energy or water saving technologies, or waste minimisation  and re-use, and 
support to firms for respecting mandatory standards.  The revised regulations  reflect 
the increased importance to be given to such aspects through the scope to  differentiate 
rates of assistance. 

Additional changes include a strengthening of the ex-ante evaluation requirements, the 
information  required  in  respect  of  large  projects  and  an  enhanced  role  for  the 
environmental authorities in the preparation and implementation of programmes. 

Equal opportunities 

Follow-up  work  on  the  Madrid  commitment  to  equal  opportunities,  the  Treaty  of 
Amsterdam  and  a  Council  resolution2  have  all  called  on  the  Commission  and  the 
Member States to make a continued, deepened and determined effort  to "mainstream" 
the principle of equal opportunities for women and men into operations supported by 
the Structural Funds. 

Establishing Community guidelines 

In  order  to  give  effect  to  the  types  of  priority  outlined  above,  the  proposed 
Regulations  will  contain  specific  provision  for  the  Commission  to  establish 
Community guideline priorities for each of the Objectives. These are to be issued both 
before the presentation of plans by the Member States and before the mid-term review 
of  programmes.  They  will  provide  a  general  policy  and  priority  framework  for 
drawing up Structural Fund programmes and" making later adjustments to them. 

New Article 2 - "The Community shall have as its task to promote throughout the Community 
a harmonious, balanced and sustainable development of economic activities ..." 
New Article 6 - "Environmental protection requirements must be integrated into the definition 
and implementation of the Community policies and activities  ... in particular with a view to 
promoting sustainable development". 
OJ C 386/1 of 2 December 1996 on mainstreaming equal opportunities for men and women 
into the European Structural Funds. 

8 

C. 

A clear division of responsibilities 

For  ten  years  now,.the  Structural  Funds  have  been  implemented  on  the  basis  of  an 
innovative policy approach based on the four  principles  of concentration,  partnership, 
programming  and  additionality  and  underpinned  by  a  high  degree  of  financial 
solidarity,  as reflected  in two  decisions  of the European  Council  on the  multi-annual 
financial perspective.  It  seems  essential  to  continue  to base the  structural  policies  on 
these  four  major  principles  of  proven  relevance  and  to  learn  lessons  from  the 
experience  gained  so that their  application  can be overhauled  to make them yet  more 
credible, effective  and transparent. 

The reform  is also based on the need to reform  the principle of partnership, requiring a 
clearer  division  of  responsibilities  between  the  Member  States  and  the  Commission. 
The  responsibilities  of  each  of  the  partners  (Member  State,  region,  Commission)  in 
this  contract  will  have  to  be  defined  so  as  to  implement  better  the  principle  of 
subsidiarity  and  permit  improved  application  of  Article  205,  under  which  the 
Commission is responsible for implementation of the Community budget. 

In this way, a high degree of decentralisation  and simpler procedures will  accompany 
the  requirement  for  greater  efficiency,  transparency  and  rigour  characterised  by 
enhanced evaluation of results and supervision. 

Introducing  a  fifth  principle,  efficiency,  into  part-financing  by  the  Structural  Funds 
should  reassure  people  that  the  public  money  allocated  to  Community  structural 
assistance is being well used. 

1. 

Deeper and broader partnership 

The principle of partnership was introduced in  1988 as a means of ensuring the 
efficiency  of  the  Funds.  This  particular  method  of  operation  enables  all 
concerned  to  be  involved  in  the  preparation,  implementing,  monitoring  and 
evaluation  of  Community  funding,  providing  a  check  that  the  strategy, 
priorities  and  development  measures  are  relevant  and  increasing  credibility 
through  the  consensus  it  facilitates  when  decisions  are  taken  and  during 
programme  implementation. 

Naturally,  this  partnership  must  take  place  with  full  regard  to  the  respective 
competences of each of the partners. In practice, there still remains much to be 
done, both to deepen partnership and to widen it. 

Deepening  the  partnership  simply  means  that  involvement  of  the  partners 
should  be  the  rule  throughout  the  process  of  financing  from  the  Funds:  from 
the design  of the strategies  to ex post  evaluation  of  assistance. At  present,  the 
partnership  actually  concentrates  on  a few  specific  stages which  are  generally 
restrictive  and  subject  to  very  tight  time  constraints.  The  Commission  is 
proposing  a  number  of  major  adjustments  to  this  end:  for  example  the 
development plans submitted by the Member States should be accompanied  by 
the opinion  of the partners on it and the closer  involvement  of the  Monitoring 
Committees in programming decisions and in evaluation work. 

It  is  also  essential  to  broaden  the  partnership.  While  significant  progress  has 
been made in involving regional authorities, in particular in the Member  States 
where  régionalisation  is  least  developed,  the  involvement  of  the  local 
authorities  most  directly  concerned  and  environmental  authorities  is  still  very 
patchy, or the consultation of bodies committed  at local level or  implementing 
operations  supported  by  the  Structural  Funds  (the  social  partners,  local 
voluntary  associations,  non-governmental  bodies,  etc.).  Some  of  these  bodies 
are  also  dealing  with  matters  of  major  concern  to  the  Community,  such  as 
employment,  sustainable  development  and  equal  opportunities  for  men  and 
women.  The  Commission  is  therefore  proposing  explicit  provisions  for  these 
partners  to  be  involved  in  concertation  on  the  implementation  of  the 
Structural Funds  at national, regional  and  local  level. However,  to  ensure  that 
this principle does not  slow procedures  down, it is proposed  that the operation 
of partnership should where necessary be adjusted  in line with the involvement 
of the partners in financing  assistance. 

2. 

Re-focusing  the Commission's  responsibilities 

The  Commission's  role  in  implementing  the  structural  policies  needs  to  be 
rethought  and  reorganised.  The  implementation  system  has  become  too 
complicated,  slow  and cumbersome  and the value  added by procedures  which 
are regarded as over-bureaucratic is frequently rightly questioned. 

As  in  the  case  of  the  Member  States,  the  political  responsibility  of  the 
Commission  must  be  better  defined.  At  present,  an  inadequate  definition  of 
responsibilities  and  a  degree  of  confusion  in  the  operation  of  the  partnership 
assigns  responsibilities  to  the  Commission  which  it  is  unable  to  fulfil.  This 
confusion,  which  has  resulted  in  a  tangle  of  administrative  procedures,  must 
not  end  up  concealing  the  genuine  benefits  stemming  from  the  structural 
policies. 

This means  that  the  Commission's  institutional  and political  responsibility  as 
guarantor of the Community interest must be more clearly identified.  Its prime 
responsibility  is  to  ensure  that  Structural  Fund  assistance  helps  to  realise  the 
objective  of  Article  130a  of  reducing  regional  development  disparities.  That 
responsibility  also  derives  directly  from  Article  205,  which  gives  the 
Commission  the  general  and  exclusive  power  to  implement  the  Community 
budget.  It must  also  ensure  that  the  actions  financed  by  the  Structural  Funds 
conform  with  the  other  provisions  in  the  Treaty  as  well  as  with  Community 
policies. 

It  is  in  such  a  spirit  that  the  Commission's  political  responsibility  must  be 
clearly  affirmed  and  re-focused  on  strategic  programming,  the  respect  for 
Community  priorities  and  the  verification  of  results  though  monitoring, 
eveluation  and  financial  control.  On  these  points,  it  is  not  a  matter  of joint 
management  with  the  Member  States.  This  should  also  help  to  dispel  some 
ambiguities  resulting  from  the practice  of partnership  in the past  which  led  to 
the Commission taking on responsibilities which it is unable to assume. 

10 

Similarly, measurement of the final results achieved should have consequences 
for the final allocation of appropriations, which would no longer be automatic. 
A  reserve  fund  to  be  used  at  the  mid-term  point  would  also  allow  the 
Commission  to  decide  on  final  financial  allocations  according  to  the 
performance of programmes as revealed by the outturn up to that stage. 

3.  Wider responsibility in the hands of the Member States 

The need for  increased  efficiency  must be translated  into  improved  targeting 
on  priorities  that  favour  structural  development  and  greater  added  value  at 
Community level. 

Community  financial  participation  in  support  of  national  or  regional 
development  priorities  is  no  guarantee  in  itself  of  concrete  results. 
It  is 
necessary in particular  that the partners benefiting from the  Structural  Funds 
assume  greater  responsibility.  The role  of  the  national  governments  and  the 
regions  in the implementation  of programming  must  be marked  to  a greater 
extent  by  a  genuine  decentralisation.  At  the  same  time,  they  must  become 
more  responsible  to  the  Community  for  monitoring,  verification  and  the 
evaluation of results. 

This  will  make  evaluation  and  monitoring  into  key  instruments  in  the 
management of the Structural Funds. 

D. 

Balanced proposals 

A  clear  division  of  responsibilities  between  the  national  governments  and  the 
Commission  will  form  the  basis  for  the  renewed  political  contract,  guided  by  two 
principles:  concentration  of  assistance  from  the  Structural  Funds  and  simpler  and 
more decentralised  implementation  in accordance with arrangements offering  greater 
guarantees of effectiveness  and control. 

1.  More concentrated assistance from the Structural Funds 

The effectiveness  of the Structural Funds depends on seeking concentration at 
four levels: 

concentration  on  three  priority  Objectives  and 
Initiatives; 

three  Community 

concentration on areas of priority assistance which encourage an integrated 
approach to development rather than a fragmentation of operations, aimed 
at both regional and national needs and the Community priorities; 

geographical  concentration  so  that  in  2006,  after  a  series  of  transition 
periods, some 35 % to 40 % of the Community population will be covered 
compared to 51 % at present; 

il 

financial concentration  which  continues  to  give  priority  to  the  regions 
whose  development  is  lagging  behind,  at  a  level  equivalent  to  that 
currently prevailing. 

2. 

Integrated strategic programming 

If  all  the  operations  part-financed  by  the  Funds  are  to  achieve  the  required 
level  of  economic  effectiveness,  the  various  strategies  and  development 
priorities must include all development  and restructuring  operations. If this is 
not done, there is a real danger of seeing the operations supported by the Funds 
undertaken  in  an  isolated  and  disparate  fashion,  which  could  severely 
undermine their results and their impact in development terms. It is  therefore 
proposed that, with the reduction in the number of Objectives and Community 
Initiatives,  Community  regional  actions  should  be  integrated  into  a  single 
regional  programme  at  an  appropriate  territorial  level,  that  of  the  region 
(NUTS  II).  At  that  level,  all  the  Funds  (ERDF,  ESF,  EAGGF  and  FIFG) 
involved  in  an  Objective  would  contribute  in  a  coherent  and  mutually 
supportive  manner  to  the  goals  to  be  achieved.  In  this  way,  the  integrated 
approach gradually introduced by the 1988 reform would be applied in a much 
broader and more systematic way. 

3. 

Decentralised and simplified assistance 

Fund assistance needs to be simplified by a clarification  of the responsibilities 
of the Commission and the Member States. 

Acting  on  a  proposal  from  the  Member  States  and  after  consulting  in 
partnership,  the  Commission  will  decide,  with  the  Member  States,  on  the 
the  programming 
development  strategies  and  priorities  contained 
decouments and will allocate Structural Fund appropriations accordingly. 

in 

On  that  basis  the  Member  States  will  then  decide  on  programme 
implementation  as well  as its management,  monitoring  and  evaluation.  They 
will report back to the Commission. 

4.  More effective, better supervised monitoring 

For  the  Commission,  the  essential  counterpart 
to  simplification  and 
decentralisation,  must  be the  assurance  that  endeavours  to  cement  solidarity 
within the Union are as effective  as possible and monitored at all levels. 

In  this  connection,  the  Commission  and  the  Member  States  will  meet  in 
various  types  of  forum  with  the  intention  in  particular  of  ensuring  that 
implementation  is  consistent  with  the  strategic  priorities  and  respect  for 
financial  control; 

12 

£. 

1. 

The layout of the Structural Fund Regulations 

Legal basis 

The Regulations adopted in 1988 and reviewed in 1993 were predicated on the 
Single European Act. Article  130d stipulated that the Commission was to put 
forward  a proposal for a framework regulation and Article  130e required that 
three implementing regulations were to be adopted, one for each Fund  These 
two  Articles  laid  down  differing  adoption  procedures.  An  additional 
implementing  regulation,  the  "coordinating  regulation",  was  adopted  under 
Article  130e in furtherance  of the framework regulation. These two "general" 
regulations overlap and duplicate each other at numerous points as a result. 

The attached proposals for regulations  are once more based on Articles  130d 
and  130e, as  amended  by  the Treaty  on European  Union.  Article  130d now 
provides  for  the  adoption  of  general  rules  to  "define  the  tasks,  priority 
objectives  and the organisation" of the Funds and to define "the general rules 
applicable to them  and the provisions necessary to ensure their  effectiveness 
and the coordination of the Funds with one another and with the other existing 
financial instruments".  Article  130e  still  provides  for  the  adoption  of  a 
regulation  to  govern  each Fund  using  different  procedures  to those provided 
for in Article 130d. 

Once  the  Amsterdam  Treaty  has  been  ratified,  the  Commission  will  adapt 
these proposals to the new legal basis. However, the proposals already include 
and promote the principles stressed in the Treaty of Amsterdam, in particular 
the priority for employment, equal opportunities and sustainable development. 

2. 

The new architecture of the Regulations 

With  a view to simpler  and more transparent  legislation,  the  Commission  is 
proposing,  still  in  line  with  the  Treaty,  to  amalgamate  the  two  general 
regulations, to keep the separate regulations for  each Fund and to introduce a 
clear distinction between the single general regulation and the regulations  for 
each Fund, which  are reduced to provisions  specific  to them. The FIFG will 
become a fully fledged Structural Fund. 

The  general  regulation  will  thus  define  the  Structural  Funds'  general 
principles,  i.e.  their  priority  goals  and  tasks,  general  organising  principles, 
coordination  among  the  Funds  and  the  various  other financial instruments, 
programming  and financial management  methods  and  the  tools  to  achieve 
effectiveness, which include monitoring. 

Each Fund régulation will consist of rules specific  to it, mainly governing the 
scope of its assistance. 

13 

PART TWO 

The general Regulation governing the Structural Funds 

A. 

A general attempt at concentration 

1. 

A limited number of priority Objectives 

(a) 

The three Objectives 

To  increase  the  visibility  and  effectiveness  of  the  Structural  Funds,  it  is 
proposed that the current seven Objectives  should be reduced to three, two of 
which  are  regional-based  and  the  third,  dealing  with  human  resources, 
is horizontal. 

Regions whose development is lagging behind (Objective 1) 

The purpose  of the first Objective  will  continue  to be to  help  those  regions 
whose  level  of  development  (measured  in  terms  of  GDP  per  head  in 
purchasing  power  parities  at  NUTS  Level  II)  is  less  than  75%  of  the 
Community  average to close their  development  gap. The  calculation  will be 
based  on figures for  the three most recent  years  available from Eurostat, the 
Statistical Office of the European Communities. 

These regions should continue to have the same priority they currently  enjoy. 
They are faced with the most serious problems of lack of economic potential, 
employment,  infrastructure,  and  skills  levels  in  the  workforce.  The  first 
Cohesion  Report  has  confirmed  that  substantial  gaps  remain  in  both 
infrastructure  and human resources. Even though these gaps  are  less now in 
fields such  as telecommunications,  eliminating  them  entirely  will be  a long-
term process given the amount of investment required. 

The  most  remote  regions  (the  French  overseas  departments,  the  Azores, 
Madeira  and  the  Canary  Islands)  form  a  special  group,  given  their  many 
combined structural problems. Their situation has been acknowledged in a new 
Treaty  Article  and  Protocol,  which  justifies  making  them  eligible  under 
Objective  1. It is proposed that the regions currently eligible under Objective 6 
which have a per capita GDP of less than the 75% threshold will be eligible in 
their entirety under Objective  1. The other currently existing Objective 6 areas 
will be eligible for Objective  1  and will receive fair financial treatment. 

A strict application of the rules of eligibility means that the Commission will 
draw up the list of Objective  1 regions  for  the seven-year period 2000-06 as 
soon as the new regulations  are adopted by the Council. As the  Commission 
has noted, there will also have to be a complete overlap of the regions whose 
development is lagging behind and whose per capita GDP is less than 75% of 
the  Community  average with  the regions  aided by the Member  States under 
Article 92(3)a of the Treaty. 

14 

The four  Structural Funds  (ERDF, ESF, EAGGF Guidance Section and FIFG) 
will assist the development of the Objective  1 regions. 

The  current  Objective  1 regions  that  no  longer  quality  for  the  list  will  have 
their  assistance  phased  out  gradually.  It  will  end  altogether  on  31  December 
2005  for the ERDF but will be extended  to 31 December  2006  for  those  areas 
that  meet  the  eligibility  criteria  for  Objective  2.  In  2006,  the  other  areas 
the  ESF, 
covered  by  phasing-out  will  benefit  from 
EAGGF Guidance  Section  and the FIFG  under  the programme  decided  at  the 
outset. 

the  support  of 

Areas undergoing economic and social conversion (new Objective 2) 

The  Union  must  continue  to  support  the  economic  and  social  conversion  of 
areas  experiencing  structural  difficulties,  including  those  in  the  wealthiest 
Member  States. Many  types  of  area  in  the Union  are  in need  of  restructuring 
because  their  economic  base  is  not  sufficiently  diversified.  This  concerns 
industrial,  rural,  urban  and  fisheries-dependent  areas  facing  structural 
problems  of  socio-economic  restructuring,  including  the  restructuring  of 
services. 

As under Objective  1, the focus  should be on the most seriously affected  areas. 
The  Commission's  current  role  in  designating  the  eligible  areas  must 
accordingly be maintained,  in partnership  with  the Member  States  concerned, 
and  simple, transparent  eligibility criteria that  are specific  to the various  types 
of area covered by Objective 2 should be used. 

Once  the  Council  has  adopted  the  new  regulations,  the  Member  States  will 
propose to the Commission the areas they consider the most  seriously  affected 
by  social  and  economic  conversion.  In  general,  the  Member  States  must 
propose  for  Objective  2  status  only  those  areas  that  they  also  propose  for  a 
derogation  under  Article  92(3)(c)  of  the  Treaty,  in  accordance  with  the 
Commission  communication 
the  Member  States  on  regional  and 
competition policy. 

to 

The population  covered by Objective  2 over the whole period  2000-06  should 
be no more than  18% of the Union  figure.  The  Commission  will  fix  a  ceiling 
for  eligible  population  for  each Member  State  according  to  objective  criteria. 
In  order  to  ensure  that  each  Member  State  contributes  to  the  overall  effort 
towards  concentration  the maximum  possible  reduction  in population  covered 
by  the  new  Objective  2  in  2006,  including  the  areas  receiving  transitional 
support  under  Objective  1 which  meet  the  Objective  2 eligibility  criteria,  will 
be  limited  to  one-third  compared  to  coverage  under  the  current  Objectives  2 
and 5b. 

The list  of areas will be  established  in  a partnership  between  the  Commission 
and  the  national  authorities.  In  order  to preserve  the  Community  character  of 
Objective  2, particular  importance  will  be  attached  to  the  industrial  and  rural 
regions identified,  at NUTS III level, as Community priorities according to the 
latest  harmonised  statistical  information  available  to  the  Commission.  The 

15 

population  of  the  industrial  and  rural  areas  eligible  under  the  purely 
Community  criteria  must  be  at  least  half  of  the  total  population  eligible  for 
Objective  2  assistance  within  each  Member  State  where  this  is  objectively 
possible. 

the 

the 
In  addition,  within 
Member States  may  make  other  proposals  based  on  the  remaining  criteria  in 
the  regulation  including  those  for  urban  areas  and  areas  dependent  upon 
fishing.  The criteria must be applied at an appropriate geographical level. 

limits  of  the  national  population  ceiling 

A fair allocation should be ensured between the various types of area. In terms 
of  the  total  population  of  the Union,  on  an  indicative  basis  the  industrial  and 
service  sector  areas  should represent  10%, the rural  areas  5%, the urban  areas 
2% and those dependent on fishing  1%. 

The  list  of the most  seriously  affected  areas  in  the  Community  as  designated 
by the Commission will remain valid for seven years, for Objective  1. 

The  experience  of  the  previous  two  programming  periods  was  that  the 
Member States did not wish to modify  the list of eligible areas in the course of 
the  periods.  However,  to  tackle  any  serious  regional  crisis  it  is  proposed  to 
retain  the  option  of  amending  the  list  during  2003,  at  the  request  of  any 
Member State, within the limits of population coverage initially decided. 

Three  Structural  Funds  (ERDF,  ESF  and  FIFG)  and  the  EAGGF  Guarantee 
Section  will  assist  the  restructuring  of  these  areas  under  a  single  programme 
per region at NUTS level 2. 

Lastly,  to  avoid  serious  upsets  to  the  conversion  process  assisted  by  the 
Structural Funds, the areas currently  eligible  for  Objectives  2 and  5(b) that  no 
longer  meet  the  criteria  of  this  new  Objective  2  will  see  their  entitlement  to 
ERDF  assistance  gradually  reduce,  to  end  on  31 December  2003.  From  2000 
they  will  receive  aid  from  the  ESF  under  Objective  3  and  from  the  EAGGF 
Guarantee  Section  and  the  FIFG  under  their  operations  including  structural 
actions for fisheries, throughout the Community. 

The development of human resources (new Objective 3) 

This new Objective  3 (part-funded  by the ESF) will support the adaptation  and 
modernisation  of  policies  and  systems  relating  to  education,  training  and 
employment.  It will  fund  this outside the areas concerned  by Objectives  1 and 
2  and  will  serve  as  a  policy  frame  of  reference  for  all  the  human  resources 
local 
operations 
circumstances. 

in  a  Member  State,  paying  due  regard 

to  specific 

In this regard, it will be necessary to ensure an integrated  approach under  each 
of  the  three  Structural  Fund  Objectives,  through  improved  coordination  of 
their  respective  assistance.  The  development  of  human  resources  will  play  a 
pivotal  role  in  Community  and  national  strategies,  based  in  particular  on  the 
reference  frameworks  drawn up in partnership  under Objective  3 and  applying 

16 

as a result to assistance under Objectives  1 and 2. It will take  as its  starting 
point the new Title on employment introduced by the Amsterdam Treaty, the 
European  employment  strategy  developed  since  the  European  Council  in 
Essen  and  -  in  accordance  with  the  new  Title  on  employment  -  the  new 
procedure for drawing up national action plans on employment. 

Objective  3 should be implemented with sufficient flexibility to take account 
of  the  wide  variety  of  employment  policies,  practices  and  needs  in  the 
Member States.  As  a  result,  and  given  the  seven-year  lifespan  of  the  new 
regulations, the eligible measures have been quite broadly defined  to  facilitate 
effective  dovetailing between the assistance provided  and the national  action 
plans  for  employment  and  to  ensure  that  the  funding*is  appropriate  to  the 
national and regional priorities and policies of each Member State. 

(b) 

The Community Initiatives 

The current  thirteen  Community  Initiatives  are clearly  too many. They have 
given  rise  to  over  400  programmes,  as  many  as  all  the  other  structural 
operations  put  together.  The  Commission  is  proposing  three  Community 
Initiatives:  trans-national,  cross-border  and  inter-regional  cooperation  to 
stimulate  regional  economic  development  and  encourage  harmonious  and 
balanced  regional  planning,  rural  development  and  new  trans-national 
cooperation to fight all sorts of discrimination and inequality preventing access 
to employment. 

The  Commission  intends  that  Community  Initiatives  should  play  a  specific 
role  in  implementing  measures  of common  interest  in priority fields for  the 
Union as a whole through cooperation between the regions, the Member States 
and the various economic and social partners. With an eye on  simplification, 
each Initiative will be financed by a single  Structural  Fund, whose  scope  for 
assistance can be extended to include that of the other Funds  as required  for 
the implementation of the measures. 

Allocating  5%  of  the  resources  of  the  Structural  Funds  among  these  three 
Community  Initiatives  will  enable  important  measures  of  interest  to 
the  Community  to  be  undertaken,  even  outside  the  areas  concerned  by 
Objectives  1  and 2 in the case of the first two Initiatives mentioned. 

Furthermore,  to  continue  improving  the  quality  of  the  assistance  under 
Objectives  1, 2 and 3, innovative measures will be supported at the initiative of 
the Commission. Their implementation as studies, pilot projects or the pooling 
of  experience,  should  take  greater  account  of  the  need  for  simplification, 
transparency  and  sound  financial  management.  With  regard  to  regional 
development, a special effort  will be made to encourage financial  engineering 
in the regions most deficient  in that  area.  In total, some  1% of resources in 
global  terms  will  be  allocated  to  innovative  actions  (0.7%)  and  technical 
assistance (0.3%). 

17 

2. 

Greater concentration 

(a) 

Concentration by theme 

Experience  indicates  that  activities  assisted  by  the  Community's  Structural 
Funds must continue to meet the real needs of beneficiaries, because that is the 
yardstick for the effectiveness  of every structural conversion and development 
measure.  The  local,  regional  and  national  actors  must  thus  remain  the  real 
initiators of measures. To concentrate Community assistance, and also increase 
its effectiveness, the Union has nevertheless set itself a number of priorities for 
action in the Treaty and elsewhere that all the partners and players covered by 
the Funds must take into account. 

The Structural Funds must thus endeavour to translate some of the principles 
set out in Article 2 of the Treaty  in a direct  and concrete manner.  Examples 
are:  a  high  level  of  competitiveness  and  innovation,  a  high  level  of 
employment,  balanced  and  sustainable  economic  development  and  equal 
opportunities for men and women. 

The Commission's partners do not always find it easy to apply these priorities 
in their operations on the ground. The Commission therefore proposes to draw 
up guidelines setting out the Community priorities  for  each of the  Objectives 
before  programming  starts at local, regional  and national  level. The value of 
these guidelines will be two-fold:  they will  encourage  future  beneficiaries  to 
concentrate their activities on the priorities of the Community as a whole and 
they  will  facilitate  the  partnership  between  Member  State  and  Commission 
when  setting  the  joint  priorities  to  be  included  in  the  final  programme 
documents. 

(b)  A progressive geographical concentration 

The  eligible  population  in  the  Objective  1  and  2  areas  of  the  fifteen 
Member States  should  be  reduced  from  51%  to  a figure between  35% and 
40%, below the level for eligible areas under Articles 92(3)(a) and 92(3)(c) of 
the Treaty, which must also be reduced as of  1 January 2000 and which was 
set at 42.7% for the period 2000-06. 

However,  the  introduction  of  extended  transitional  support  -  six  years  for 
Objective  1  and four years for Objective 2 - will prevent any adverse effects of 
that reduction in regions whose development and conversion since 1988 justify 
their no longer being eligible from 2000. 

Geographical  concentration  should  affect  Objectives  1  and  2  more  or  less 
equally.  The regions  eligible  under  Objective  1 should  account  for  no more 
than  20% of  the  Union's  population,  as  against  the  current  25%. The  same 
should  be  true  of  the  Objective  2  areas  whose  eligible  population  in  1999 
should  not  exceed  20%,  including  about  2%  for  the  areas  eligible  for 
Objective  1  transitional  aid  between  2000  and  2005  and  which  meet  the 
eligibility criteria for Objective 2. 

18 

(c) 

Financial  concentration 

The European  Council  in Edinburgh  decided  to allocate roughly  two  thirds  of 
the Structural Funds to regions whose development is lagging behind. 

While  these  regions  have  made  tangible  progress  in  catching  up,  thanks  to 
Structural  Fund  assistance,  much  remains  to  be  done,  especially  as  regards 
infrastructure  provision  and  the  need  to  reduce  an  unemployment  rate  that  is 
60%  higher  than  the  Community  average.  This  is  why  two  thirds  of  the 
Structural  Funds  should  to  be  concentrated  on  these  regions,  including  those 
where  assistance  will  be  transitional,  which  is  a  similar  proportion  to  that 
applying on average during the current programming period. 

Within  the  budgets  to  be  set  by  the  Commission  for  Objectives  1,  2  and  3 
respectively,  an  indicative  allocation  by  Member  State,  based  entirely  on 
objective criteria, will concentrate funding  on the regions in greatest  difficulty, 
including  the  outermost  regions  and  regions  where  the  assistance  will  be 
transitional.  These  objective  criteria  will  be  similar  to  those  used  now, 
i.e. eligible  population,  national  and  regional  prosperity  and  the  relative 
seriousness of structural problems, in particular  unemployment. 

B. 

1. 

Simplification  and  decentralisation 

Clearer  division  of  tasks  and  responsibilities 
deeper partnership 

in  a  broader  and 

Partnership is one of the key principles of the way the Structural Funds  operate 
and  primarily  involves  the  Commission  and  the  Member  States.  Through  it, 
the  partners  most  concerned  can  also  be  involved  in  the joint  action  of  the 
Community  and  its  Member  States.  It  guarantees  the  commitment  and 
necessary  consensus  between  actors  which  are  vital  for  the  success  of  any 
development  operation.  However,  the  Commission  believes  that  additional 
progress is needed in two directions: broadening and deepening, resulting  from 
a clarification  of the principle of partnership. 

Broadening the  partnership 

regional 

It  is still too often  the case that national  and regional  authorities  involve  other 
economic and social development  partners in Fund  activities  only  sporadically 
or  at  the  last  moment,  and  this  will  usually  be  inadequate  for  the  required 
authorities, 
effectiveness.  The  participation  of 
environmental  authorities  and  economic  and  social  partners, 
including 
non-governmental  organisations,  must  be  guaranteed  by  the  Member  State. 
The  latter  will  maintain  a  central  role  and  will  ensure  that  national 
administrative  rules  are  fully  respected.  In  effect,  these  are  all  either  project 
promoters  or  partners  whose  advice  is  valuable  for  developing  the  economic 
and  social  activities  necessary  for  sustainable  growth  and  employment.  The 
recent  territorial  employment  pacts  are proof  of the need  for  involving  parties 
the 
beyond 

institutional  circles.  The  Commission  believes 

local 

that 

and 

is 

it 

19 

responsibility  of  the  Member  States,  as  a trade-off  for  the  decentralisation  of 
implementation, to guarantee that broadening of the partnership. 

A clear division of  responsibilities 

Before  simplification  of  the  method  of  operation  can  be  achieved  there  is  a 
need  for  a  clear  division  of  responsibilities.  This  will  also  help  guarantee  a 
genuine  deepening  of  the  partnership.  The  current  operation  of  the  Funds 
contains  too  many  provisions  to  be  applied  "in  the  context  of  partnership" 
without  stating  clearly  which  authority  - the  Commission,  Member  State,  ... -
has  actual  responsibility 
the  preparation  and 
implementation  of  Fund  programmes.  This  dilution  of  responsibilities  means 
every partner is ultimately associated with every decision, whatever its stage or 
significance,  and  this  considerably  increases  the  ponderousness  of  the  whole 
edifice.  The  Commission  therefore  wants  the  responsibilities  of  the  various 
partners to be specified  at all stages of the operation of the Funds. 

for  a  certain  part  of 

As  indicated  above  the  Commission  will  be  publishing  a  summary  of  the 
guidelines  to  be  used  in  the  preparation  of  national  development  plans.  The 
development  plans  are  to  be  established  by  the  competent  authorities  in  the 
Member  States  after  the  partnership  has  actually  been  introduced  in  the 
Member  State.  The  content  of  the  assistance  packages  adopted  by  the 
Commission  will  be  more  strategic  and  will  be  centred  on  the  goals  and 
priorities  in  each  programming  document.  In  return,  the  Member  States  will 
remain guarantors for monitoring, management, evaluation and control. On the 
other  hand,  the more  detailed  content  of programmes  and the management  of 
operations will be the full  and  sole responsibility  of the Member  States. Their 
obligations  to  account  for  that  management  will  be better  defined  as  a  result. 
This  presupposes  that  it  will  be  possible  to  effectively  simplify  and 
decentralise the programming. 

2. 

Integrated strategic  programming 

Fewer but integrated  operations 

Reducing  the  number  of  Objectives  and  Community  Initiatives  is  an  initial 
contribution  to  the  substantial  simplification  of  the  operation  of  the  Funds. 
Implementation of a single Structural Fund integrated programme per region is 
à  second.  In  principle,  the  regional  level  concerned  is  NUTS  level  II.  A 
programme  must  contain  the  integrated  measures  promoted  via  all  the 
Structural Funds, whether under Objective  1  or Objective 2. 

This  rationalisation  has  several  advantages:  the  additional  effectiveness  and 
synergy  due to integration  of the Funds, the reduction  in the number  of  initial 
and  amending  decisions,  the  flexibility  it  introduces  to  the  benefit  of  local 
managers and, lastly, the effective  harmonisation of Fund methods. 

More specifically,  the Commission is proposing that Objectives  2 and 3 should 
always  be  implemented  in  the  form  of  single  programming  documents 
bringing  together  all  the  Funds,  including  the  EAGGF  and  the  FIFG  for 

20 

Objective  2, while  Community  support frameworks will  remain  the  general 
rule  for  Objective  1 because of the  scale of the  funding  and the  opportunity 
they offer to implement multiregional programmes relating to a particular topic 
or sector, including the development of human resources. 

More strategic content taking account of Community priorities 

Fund programmes  have often  been  criticised from the aspect  of  subsidiarity. 
Many  partners  have  felt  that  the  Community  should  concentrate  more  on 
strategic  choices  and  decentralise  Fund  management.  The  Commission  is 
therefore  proposing  to  make  programming  into  two  parts:  one  which  will 
continue  to  require  a  decision  at  Community  level,  and  for  which  the 
Commission  will  be  responsible,  and  one which  will  henceforth  be the  sole 
responsibility of the Member States. 

The programming  decisions  adopted  at  Community  level  will  be  centred  on 
quantified  strategic  targets,  priorities  and  funding  allocations  to  them,  a 
description of the measures and the necessary guarantees relating to the rules 
of implementation  in a strengthened partnership. Such strategic decisions can 
be amended by the Commission. 

3. 

Decentralised programming 

Within that part of the programming decided at Community level, the detailed 
programming  will be  entirely  the responsibility  of the Member  States. They 
will  allocate funding  to different  operational  measures, quantify  their targets, 
designate the final beneficiaries and define criteria for selecting projects. 

Each Member State will appoint a managing authority which will take on that 
responsibility  along with ensuring correct  implementation.  The authority will 
have a broad degree of autonomy; it will prepare, adopt and' amend that part of 
the  programming  which  it  forwards  to  the  Commission.  It  will  have 
responsibility  for  the  entire  process  of  implementing  the  assistance  of  the 
Funds,  including  guaranteeing  compliance  with  Community  policies  and 
quality  of  implementation.  To  that  end  it  will  manage  financing  plans  at 
measure  level  and  put  in  place  management,  monitoring  and  evaluation 
systems under its authority. 

In cases where the full  involvement of local actors is vital to the  effectiveness 
of  the  Funds  (local  development,  revitalisation  of  depressed  urban  areas, 
employment  pacts,  etc)  use  of  a  "global  grant"  entrusted  to  specified 
intermediaries (local authorities, development  agencies, specialist NGOs, etc) 
may be particularly relevant. 

21 

4. 

Accountable and transparent monitoring 

Monitoring Committees 

Monitoring  the  implementation  of  the  programmes  will  continue  to  be  the 
responsibility of a Monitoring Committee, chaired by the managing authority. 
In  addition,  so as to guarantee the broadest  possible partnership, all types of 
partners - local and environmental  authorities, economic and social partners -
must  be  represented  on  the  Monitoring  Committees.  A  distinction  will  be 
made between partners participating directly in financing and those who have 
advisory roles. 

The  role  of  Commission  representatives  will  be  a  new  one.  So  as  not  to 
conflict  with the decentralisation of management it is proposed that they only 
participate in an advisory capacity. To preserve its institutional responsibility, 
the  Commission  will  nevertheless  satisfy  themselves  that  the  strategic 
programming is being complied with and ensure that Community assistance is 
being used properly. 

Lastly, it is proposed that the Monitoring Committees be more involved in the 
quality  of implementation  of the assistance. Firstly, they will now give their 
approval to the additional programming proposed by the authority responsible 
for the programme before the latter body forwards  it to the Commission. As a 
result,  they  will  also  approve  any  amendments.  In  addition,  they  should 
periodically  discuss  the  implementation  of  the  strategic  guidelines  and 
assistance priorities  and should do so more frequently than they currently do 
because  they  are  too  often  involved  in  management.  To  that  end  they  will 
examine the programming  evaluations  so that  they  can propose, with  all the 
facts  at  their fingertips, the  necessary  adjustments  resulting  from  changing 
local  conditions.  They  will  also  approve  the  annual  implementation  report 
drawn up by the managing authority before it is forwarded to the Commission. 

Transparent implementation 

The decentralisation  of  financing  must not  conflict  with the Treaty principle 
making  the  Commission  responsible  for  execution  of the budget.  As part  of 
that responsibility the Commission must guarantee transparency of the funding 
granted and account for this to the budget authority and the citizens of Europe. 
To  be  able  to  do  this  it  must  be  informed  about  the  utilisation  of  budget 
appropriations by those responsible for managing the funds. Several provisions 
are included to achieve this: 

The  annual  implementation  report:  this  must  contain  adequate 
information on the progress of the assistance and its results and impact 
in the Member States. 

22 

Data  collection  and  indicators;  these  play  a  crucial  role  for  both  the 
Commission  and  the  management  authorities  in  ensuring  efficient 
monitoring;  in  particular,  they  will  permit  monitoring  in  areas  of 
Community  interest  such  as  those  of  equality  between  men  and 
woman, enterprise support or transEuropean networks 

An  annual  monitoring  meeting  between  the  Commission  and  the 
managing authority. The aim should be to examine the results  achieved 
over  the  past  year.  The  meeting  may  result  in  recommendations  for 
improving management  quality. 

An  annual  meeting  between  the  Commission  and  the Member  States' 
inspection  authorities; the aim  of this will be to  evaluate  the results  of 
controls carried out, the observations of other inspection bodies and the 
measures taken or planned to put right any shortcomings  detected. 

An  in-depth  mid-term  examination  of  all  Funds  assistance;  this  is 
needed  because  of  the  length  of  the  forthcoming  programming  period 
(seven years) and the allocation of the performance  reserve. 

A  special  information  and  publicity  effort  aimed  at  both  potential 
beneficiaries  and  the  general  public,  so  as  to  inform  them  of  the 
opportunities  offered  and  of  the  role  played  by  the  Community  in 
promoting cohesion. 

5. 

Simpler and more exacting financial  management by the  Commission 

The current method of managing appropriations  and payments for  programmes 
part-financed  by the  Structural  Funds  is complex. It  also has  the  drawback  of 
producing  blockages  and  delays  in  disbursements  when  there  is  a  problem 
even  in  a  small  part  of  a  programme.  The  Commission  feels  that  it  is  both 
possible and desirable to improve the current provisions  decisively. 

The  Commission  firstly  proposes  a  simpler  and  more  automatic  system  for 
budget  commitments.  The  first  annual  commitment  will  be  made  at  the  time 
the  assistance  package  is  approved.  Subsequent  annual  commitments  will  be 
triggered  automatically  at  the  beginning  of  each  new  programme  year. 
However,  in  order  to  minimise  the  drawback  of  delays  in  the  payment  of 
commitments, the Commission  is proposing  automatic  decommitting of  those 
parts of commitments  still not used  after  the end of the second year  following 
the commitment  year.  Atthe  same time, the possibility  for  a  rebudgetisation 
of  commitment  appropriations,  not  used  in  the  year  2000,  is  proposed  in  the 
framework of a new inter-institutional  agreement.  This provision will also be 
an encouragement to use assistance  efficiently. 

On  payments,  the  Commission  feels  that  the  general  principle  should  be  the 
reimbursement  of  actual,  certified  expenditure.  However,  in  order  that  the 
implementation  of programmes  can  start  thanks  to  Community  part-financing 
it  is necessary  to provide  for  a lump-sum  advance  of the order  of  10% of  the 
total planned contribution, to be paid by the Commission when the programme 
is adopted.  This  system  of  a single  advance  and  then  regular  reimbursements 

23 

staggered  throughout  the  year  is  both  more  simple  and  more  exacting.  The 
reimbursements must satisfy  a number of special conditions: availability of the 
programming  supplement  and  of  annual  reports,  and 
the  absence  of 
irregularities in the management or implementation of measures. 

This simplification  of financial  management  will be helped by a new  indexing 
system. This will be flat-rate and will be  set before  the programming  process. 
It  can,  if necessary, be  subject  to  a mid-term  review  to take  account  of  actual 
inflation  rates. 

6. 

Special rules for Community  Initiatives 

Because  of  their  special  nature,  focusing  on  cooperation  and  innovation, 
Community  Initiative  programmes  will have  a different  scope by  comparison 
with  assistance  under  the  priority  Objectives.  For  simplification,  a  single 
source of financing  (a single Fund) for each Initiative is provided  for. 

Their Community  interest provides the justification  for  Commission playing a 
more  central  role  in  preparing  and  implementing  them.  Simple  structures  for 
coordination  and  exchanges  between  the various  regions  concerned  would  be 
valuable  for  profiting  from  all  the  advantages  of  cross-border  and  inter 
regional  cooperation.  These  structures,  placed  under  the  responsibility  of  the . 
Commission,  should, of course, also contain representatives  from  the  Member 
States. 
In  addition,  in  so  far  as  crossborder  and  transnational  cooperation 
involves  external  regions  supported  by  PHARE,  TACIS  and  MEDA,  they 
would need to be adapted  accordingly. 

In  contrast,  those  responsible  for  preparing  and  managing  operational 
measures,  defined  as  laid  down  in  guidelines  drawn  up  by  the  Commission, 
should be the authorities or partners most directly involved on the ground. 

C. 

Greater  efficiency 

Clarifying  responsibilities  and decentralising  ought  to lead to greater efficiency  in the 
Structural  Funds,  a requirement  that  should  be  applied  throughout  the  programming 
process. 

1. 

A Negotiated addition ality 

The  additionality  principle,  which  is  intended  to  prevent  Structural  Funds 
money  being  substituted  for  a Member  State's  public  or  equivalent  structural 
expenditure, is a necessary  condition  for  securing  an  economic  impact  in  real 
terms in eligible regions. 

Experience  has  shown  that  verifying  additionality  is  a  complex  business, 
principally  because  it  is  carried  out  for  each  Objective  and  because  it  is 
difficult  to  identify  eligible  expenditure,  especially  for  small  geographical 
areas.  In  addition,  verification  would  be  more  effective  if  it  had  practical 
consequences.  Compliance  with  additionality  should  therefore  be  taken  into 
account when the performance  reserve is allocated. Its implementation  should 

24 

be simplified  by reducing its frequency and the number of levels  at which it is 
assessed. 

The level of structural expenditure to which each Member  State commits  itself 
will  be  agreed  between  it  and  the  Commission.  It will  have  to  be  at  least  the 
same  as  that  achieved  during  the  previous  programming  period  so  as  to 
maintain that Member State's effort  in those regions. 

The number of verifications  will be reduced  to three: one ex ante  verification, 
one  at  mid-term  and  one  before  the  end  of  the  programming  period.  In 
Objective  1, eligible  expenditure  will  be  public  structural  expenditure  and  in 
Objectives  2  and  3  it  will  be  expenditure  on  active  labour  market  policies. 
Lastly,  the  geographical  verification  levels  will  be  reduced  to  two:  regions 
eligible  under  Objective  1,  which  usually  cover  a  large  part  of  national 
territory, and joint national verification  of Objectives 2 and 3. 

2. 

A tighter definition  of eligible  expenditure 

Decentralising  management  presupposes  that  the  authorities  responsible  for  it 
know  the  rules  to  apply.  They  are  set  out  in  a  general  way  in  the  Structural 
Fund regulations. However,  the work  carried  out under  SEM 2000 has  shown 
that in some cases more detailed rules on eligibility  of expenditure  are needed 
which  the  Fund  regulations  cannot  specify  precisely.  It  is  therefore  proposed 
that: 

the Fund  Regulations  continue  to  define,  as  at present,  the  scope  which 
provides the basis for detailing the measures to be financed by the Funds 
under each assistance package; 

beyond that definition  of the Funds'  scope, relevant national rules should 
apply  to  eligible  expenditure  unless  the  Commission  issues  common 
to 
eligibility  rules, 
programming documents in 1997. 

the  current  "eligibility  sheets"  attached 

like 

The principles  to  be  applied  are  thus  rendered  more  transparent  to  operators: 
the  eligibility  of  measures  is  defined  in  the  Regulations;  the  eligibility  of 
expenditure  to  implement  these  measures  is  regulated  by  national  law  except 
in a small  number  of cases where common  rules  are desirable  on  the basis  of 
the experience of managers and inspection bodies. 

In  the  light  of  previous  experience,  the  Commission  will  undertake  an 
evaluation before  mid  1999 on the application by the Member  States of the 22 
existing  datasheets  in order to determine  those which  can be usefully  retained 
and given legal status for the new programming period. 

In  addition,  two  particular  areas  have  caused  problems  in recent  years  : these 
concern,  on  the one  hand,  the  délocalisation  of productive  investments  which 
have  received  publically-funded  assistance  to  set  up,  and,  on  the  other  hand, 
the  privatisation  of  infrastructures  which  have  received  support  in  the 
construction  phase.  In both cases, on the basis of more precise  and  simplified 

25 

regulatory provisions  and while respecting market forces, the Member  States 
and the Commission must seek to ensure that for a predefined period (5 years) 
aid from the Funds is not diverted from its original purpose and does not lead 
to  undue  advantages.  Such  undue  advantages  could  be  to  the  benefit  of 
enterprises  if  they  délocalise  an  activity  prematurely  for  which  they  had 
received aid for the creation of permanent jobs, or, as a result of the purchase 
of  equipment  under  conditions  which  give  rise  to  an  implicit  aid.  A 
comparable problem could involve public authorities, who, after the sale of an 
infrastructure  facility,  gain a financial benefit  of a kind not  initially  foreseen 
by the Structural Funds. 

3.  More developed financial engineering 

The Commission states in Agenda 2000 that as a result of various criticisms, 
such as by the Court of Auditors, the leverage of structural  assistance should 
be reinforced  by forms  of assistance other than  straight  grants. Two motives 
are at the back of this greater concern for financial efficiency:  a more adequate 
response to economic needs and greater consideration of the return on projects 
based  on the revenues  expected thus also permitting  closer cooperation  with 
the EIB and the EFI. Three amendments to the rules are proposed here: 

The general Regulation will  specify  that, during the implementation  of 
measures,  Fund  participation  can  take  differentiated  forms  other  than 
direct aid: reimbursable aid, preferential  interest rates, guarantees, equity 
stakes, etc. 

The  Regulation  will  also  provide  for  a  greater  variation  in  rates,  by 
specifying  the  special  treatment  to  be  given  to  infrastructure  projects 
producing  substantial  revenues  and  to  investment  in  businesses.  In 
addition, this will give an encouragement to use part of the Community 
assistance in a form other than direct aid. In order to promote the greatest 
possible use of private sources of finance in supporting projects aided by 
the Funds (public-private partnerships), and with a view to transparency 
with regard to the management authority in the context of decentralised 
programming,  reduced  rates  are  proposed  for  these  two  investment 
categories. 
In  the  case  of  infrastructure,  the  notion  of  'substantial 
receipts'  could  be  defined  on  an  indicative  basis  as  net  receipts 
equivalent to at least 25 % ot the total cost of the investment concerned. 

Lastly,  the major  projects, which  are still  included  in the programmes, 
will  be  subject  to  separate  approval  permitting  an  ex ante  verification 
both  of  their  conformity  with  the  programme  objectives  pursued  and 
Community  policies  and  of  their  funding  package,  if  necessary  in 
consultation with the EIB. 

26 

4. 

Full integration of evaluation 

Following  the general  adoption of evaluation  in the Member  States during  the 
previous programming periods, it should  continue  to play  an enhanced  role in 
assisting decision-making  and sound management  of national  and  Community 
assistance. To properly fulfil  this operational role, evaluation must be based on 
a  clear  division  of  responsibilities  among  those  commissioning  it.  This  will 
in  the  preparation  of 
cover  greater  integration  of  ex  ante  evaluation 
development  plans  and  the  quantification  of  targets  to  be  achieved,  the 
systematic  provision  of  mid-term  evaluations  to  accompany  adjustments  in 
programming  and  the  implementation  of  ex post  evaluations  to  capitalise  on 
experience gained. 

inclusion  of 

lessons  gained 

The 
from  evaluations  during  previous 
programming periods in the preparation of new development plans will help to 
spread  "best  practice"  and  therefore  contribute  to  a  greater  socio-economic 
return on public expenditure. 

5. 

A new incentive to efficiency:  the performance  reserve 

The aim of the mid-term performance  reserve is to enhance the efficiency  with 
which  each  operational  programme  or  SPD  uses  its  available  funding  to 
achieve  the  targets  it  sets  and  an  additional  economic  impact  in  real  terms. 
The  aim  is  to  encourage  the  best  possible  utilisation  of  national  and 
Community public funds.  To that end, on the basis of a Commission proposal, 
the performance  reserve will be  awarded  to  operational  programmes  or to  the 
SPDs which  are judged  to be performing  well  or very well  according  to  their 
score on a limited number of measurable indicators assessed at the mid-term in 
comparison to targets established  at the outset.  The indicators will be  defined 
so  as  to  guarantee  that  assistance  achieves  the  expected  results  (quality 
programming),  that  proper  administrative  rules  guaranteeing  the  correct 
management  of  the  measures  undertaken  are  put  in  place  (monitoring 
financial  control,  project  selection,  evaluation)  that  the  mobilised  funds  are 
spent at the rate specified  in the programmes  (financial  absorption)  and that an 
effort  has  been  made  to  ensure  a  leverage  effect  with  respect  to  the 
involvement of private capital. 

The  results  of  the  mid-term  verification  of  additionality  will  determine  the 
final percentage of the reserve allocated to the programmes performing  well or 
very  well.  Programmes  in Member  States  where  undertakings  with  regard  to 
additionality  have not been respected  will  experience  a reduction  in  favour  of 
other programmes. 

6. 

The role of advisory and management  committees 

The  Commission  is  proposing  continuation  of  the  existing  five  committees 
(the Advisory Committee on the Development  and Conversion of Regions, the 
ESF  Committee,  the  Management  Committee  on  Agriculture  Structures  and 
the  Management  Committee  of  the  Fisheries  and 
Rural  Development, 
for  Community 
Aquaculture  sector  and 

the  Management  Committee 

27 

Initiatives)  even  though  a  reduction  in  their  number  might  have  seemed 
desirable. However, such a reduction runs up against  legal problems which the 
general Regulation on its own cannot resolve. 

D. 

Improved  controls 

Improved  checking  of  Structural  Fund  assistance  in  the  Member  States  is 
another quid pro  quo for decentralising its implementation. 

1. 

Reliable financial management and control systems 

the 
Better  controls  require  a  clearer  definition  of  responsibilities  of 
Commission  and the Member  States. As a continuation  of the work  leading  to 
the  recent  adoption  by  the  Commission  of  a  Regulation  on  this  subject,  and 
without prejudicing  the institutional  competences  of the Commission,  the  fact 
that  there  must  be  no  doubt  as  to  the  principle  that  prime  responsibility  lies 
with  the  Member  States  is  an  indispensable  prerequisite  for  guaranteeing  the 
efficiency  and  correctness  of  financial  management  and  for  preventing, 
detecting  and  correcting  irregularities.  At  all  stages  of  programming  the 
Commission  is  proposing  special  provisions  enabling  it  to  verify  that  those 
requirements  are  being  met.  In  the  event  of  shortcomings  or  irregularities 
being  detected,  the  Commission  will  have  the  facility  to  make  the  financial 
corrections. 

The  Commission  also  intends  to  strengthen  the  links  between  programme 
monitoring,  financial  management  and  controls.  As  is  the  case  for  the 
monitoring  and  evaluation  systems,  it  will  ask  for  guarantees  from  Member 
States  on the  effectiveness  of  their  management  and  inspection  systems.  The 
Commission  itself  will  have  powers  to  suspend  the  reimbursement  of 
expenditure  if  the  efficiency  and  correctness  of  expenditure  or  programme 
implementation  is  compromised.  Regular  meetings  between  the  managing 
authorities and the inspection departments in the Commission and the Member 
States and regions will guarantee that the effectiveness  of implementation  is in 
accordance  with  the  programmes'  objectives,  Community  policies  and  the 
principles of sound financial management. 

these  principles  have  already  been  debated  at 

All 
the 
Member States as part of the SEM 2000 exercise, particularly in the context  of 
(EC)  No 2064/97  on 
the  preparation  of  Commission  Regulation 
implementation of the current Article 23 of the Coordination  Regulation. 

length  with 

2.  Effective  financial  corrections 

In  maintaining  the  present  system,  it  will  be  necessary  to  develop  more 
operational and transparent means for undertaking financial corrections. 

As  for  controls,  the  principle  must  be  clearly  reinforced 
that  prime 
responsibility  for  the  necessary  financial  corrections  in  the  event  of  mistakes 
or  irregularities  being  identified  rests  with  the  Member  States.  Where  the 
Member  States  does  carry  out  such  financial  corrections  the  Community 

28 

assistance  concerned  must  be  reusable  for  other  purposes  within  the  same 
programme. 

As  at  present,  where  a «Member  State  does  not  make  corrections  for 
infringements  of  Community  law,  irregularities  or  mistakes  or  where  the 
Community  assistance  is  no  longer justified,  in  whole  or  in  part,  or  where 
shortcomings  in  the  management  or  inspection  systems  cause  systematic 
irregularities, it will be for the Commission to make duly justified  corrections. 
As at present, a Member State must have the opportunity to submit comments 
within a specified  time limit. Corrections  are in principle made by deducting 
the aid available to the Member State in question. A correction may be limited 
to the irregularity detected or made larger if the infringement  or irregularity is 
the  result  of  a  more  general  shortcoming  in  the  management  or  inspection 
system. 

Lastly, financial  corrections will continue to be necessary where irregularities 
have  no  precise financial value  (for  example,  in  the  event  that  a particular 
aspect of Community law is not respected). 

29 

PART THREE 

The Regulations specific  to each Structural  Fund 

A. 

TheERDF 

In  accordance  with  the  overall  architecture  of  its  proposals,  the  Commission  is 
proposing  that  the Regulation  concerning  the European  Regional  Development  Fund 
should  cover  only those rules  specific  to  that Fund,  i.e.  its  general  scope.  Moreover, 
this Regulation  has proved  itself over the past  ten years  so the  Commission  does  not 
propose altering it radically, but merely to spell out some details. 

As part of its more clearly defined  task (to promote economic and social cohesion) the 
ERDF  should  continue  to  participate  in  four 
types  of  financing:  productive 
investment, investment  in infrastructure  differentiated  according to the type of region, 
support  for  endogenous  development,  and  support  for  innovative  measures  and 
technical assistance. 

With regard to the ERDF's participating in the financing of endogenous  development, 
more  attention  will  be  given  to  new  forms  of  financial  engineering  and  to  local 
services  so  as  to  provide  instruments  better  adapted  to  innovation  in  the  field  of 
business investment and local development and employment initiatives. 

ERDF  funding  should  be  used  to  meet  the  development  needs  of  eligible  regions 
while pursuing Community assistance priorities. For this reason the ERDF Regulation 
distinguishes between a number of fields assisted by the ERDF, such as the productive 
technological  development,  protection  and 
sector  environment,  research  and 
improvement  of 
local  economic  development,  equality  of 
the  environment, 
opportunity  for men and women  and Europe-wide  cooperation  in the field of regional 
development. 

Lastly,  the  ERDF  Regulation  should  specify  the  scope  of  assistance  specific  to 
innovative  measures  supported  by  the  Fund  so  as  to  further  bolster  the  programmes 
financed under the priority Objectives of the Structural Funds. 

B. 

The ESF 

Relationship  to General Regulation 

The Regulation governing the European Social Fund (ESF) conforms  with the logic of 
the  overall  package  of  Structural  Fund  Regulations  set  out  in  the  Introduction.  Set 
within  the  general  context  of  the  General  Regulation,  the  ESF  Regulation  sets  out  a 
range of provisions which apply specifically  and uniquely to the ESF. 

Political  context 

The  role  of  the  ESF  within  the  revised  Structural  Funds  takes  as  its  starting  point  a 
new  Employment  Chapter  in  the  Amsterdam  Treaty,  the  employment  strategy 
developed  since  the  Essen  European  Council,  and  the  new  process  -  initiated  by  the 
Council  in  anticipation  of  the  Amsterdam  Treaty  -  of  developing  annual  national 
30 

action plans  for  employment.  ESF  implementation  also has to be  sufficiently  flexible 
to  take  into  account  the  great  diversity  of  policies,  practices,  and  needs  regarding 
employment  and  human  resource  development  across  the  Member  States.  To  that 
extent, and given that the Regulation  applies  for  a 7-year period, the definition  at this 
stage  of  the  measures  fundable  is  relatively  wide  in  order  to  facilitate  an  effective 
linkage with the annual employment guidelines and to ensure that every Member  State 
can find appropriate categories for  funding. 

The  overall  thrust  of  the  approach  is  to  look  for  policy  rather  than  programme  or 
project  additionally, and to seek to identify  in what way Member States are proposing 
to use ESF money to further  develop, improve or totally change their employment  and 
human  resource  policies  in  line  with  the  employment  guidelines  foreseen  in  the 
Amsterdam Treaty. 

It is very important to ensure appropriate articulation  of,  on the one hand, this  overall 
ESF  framework  and its connection with the employment  strategy  and  guidelines  and, 
on  the  other  hand,  the  operation  of  regionalised  ESF  funding.  The  Commission  is 
committed to an integrated approach across all three Structural Fund Objectives  and to 
considerably  strengthened  co-ordination  between  the  interventions  of  the  different 
Funds, particularly in respect of human resource development. 

The  importance  of  human  resource  development  is  such  that  it  cannot  be  seen  in 
isolation from an overall national and European strategy, and the agreements  between 
Member  States  and  the  Commission  on  Objective  3  will  be  an  important  reference 
point for discussions on specific human resource activities within Objectives  1 and 2. 

The content of ESF activities 

ESF activity is based on five policy  fields: 

Active labour market policies  to fight unemployment 
Promoting social inclusion 
Lifelong  education and training systems to promote  employability 
Anticipating  and facilitating  economic and social change 
Equal opportunities for  men and women. 

The  aim  is  to  ensure  a  minimum  participation  of  the  Social  Fund  in  all  five  fields 
while  at the  same time permitting  each Member  State to  decide  its own  priorities  for 
ESF  investment.  The  exact  distribution  across  the  five  headings  has  to  take  into 
account  the  ex  ante  evaluation  as  well  as  the  overall  scale  of  funding  available  in 
relation to the programme objectives. The draft  Regulation proposes  a minimum  level 
of  investment  within  each  intervention  for  the  activities  mentioned  under  4.  and  5. 
above. 

A  particular  emphasis  should  be  given  to  the  policy  fields  set  out  in  Article  2.1  (d) 
and (e),  i.e.  improving  systems  for  anticipating  and  facilitating  economic  and  social 
change  as  well  as  improving  the  participation  of  women  in  the  labour  market.  In 
practice  there  shall be  an indicative  target  of  at least  15 % of the  fund  appropriations 
available for each of these two policy fields. 

31 

Member  States are obliged to ensure that ESF money is invested in a focused  manner 
with  clearly  verifiable  impact  and visibility.  These  latter points  cannot  be  dictated  in 
terms of the measures, but will be defined  in terms of the outcome of the negotiation. 
This  enables  Member  States  to  select  carefully  measures  best  adapted  to  their  own 
particular  situation,  which  fit  in  with  the  employment  strategy  and  the  employment 
priorities  agreed  jointly  between  Member  States  and  the  Commission,  at  European 
level. 

The end result for each Member State is a "framework  of reference" decided as part of 
either  national  Objective  3 programming  or within  the  relevant  Community  Support 
Framework  (with  regional  programming  where  necessary).  This  framework  will 
identify:  (i) the allocation of money across the five policy goals; (ii) a defined  number 
of  priorities  for  expenditure  within  those  five  categories;  (iii)  the  mechanisms  for 
identifying  the precise outcomes and outputs from the programme  expenditure  for  the 
purposes  of  monitoring  and  evaluation;  and  (iv)  defined  targets  which  allow 
performance  to be measured  (and where results will  feed  into the mid-term  allocation 
of the Reserve). 

C. 

Support for rural development from the EAGGF 

The  new  regulation  on  support  for  rural  development  from  the  EAGGF  provides  the 
basis  for  a coherent  rural  development  policy.  Its  aim  is  also  to  complement  market 
policies  by  ensuring  that  agricultural  expenditure  will  make  a  greater  contribution 
than previously to territorial development  and to nature protection.  An important part 
of  its  financial  resources  come  from  a  transfer  from  the  Guidance  Section  to  the 
Guarantee Section of the EAGGF. 

The  text,  which  combines  all  rural  development  measures  financed  by  the  EAGGF 
within  a  single  framework,  gives  the  Member  States  the  opportunity  to  define 
priorities  themselves  and  to  make  their  own  choices  from  among  the  measures 
contained 
in  the  regulation.  These  choices  would  be  set  within  an  overall 
programming  approach. 

The  financial  and  administrative  provisions  under  the regulation  on  support  for  rural 
development  from  the EAGGF  corresponds  to the Agenda  2000 proposals  in  relation 
to rural development measures: 

programming  within the framework of the Structural  Funds  in regions  eligible 
for support under Objectives  1 and 2; 

financing  either  by  the  Guarantee  or  Guidance  Section  of  the  EAGGF 
according to measure or region. 

Measures  for  modernisation  and  diversification  follow  an  approach  differentiated 
according  to the regional  context.  In Objective  1 and 2 regions, they will be  included 
in  the  regional  programmes  and  contribute  in  that  way  to  economic  and  social 
cohesion  policy.  With  regard  to  the  necessary  legal  provisions,  the  regulation  on 
support  for  rural  development  from  the EAGGF  forms  part  of the general  framework 
for  the  Structural  Funds,  with  a  specific  reference  to  the  General  Regulation  on  the 
Structural Funds. 

32 

D. 

The Regulation specific to structural operations in the fisheries sector 

The regulation specific to structural operations in the fisheries  sector which is part of 
this proposal for legislation is restricted to establishing the affiliation  of the Fund with 
both the common fisheries policy and economic and social cohesion policy. Under the 
latter, the operations contribute to Structural Fund Objectives 1  and 2. 

The detailed rules'for the Community financial contribution to structural operations in 
the fisheries sector will be established  at a later date by the Council  in  a regulation 
based on Article 43 of the Treaty. The procedure is absolutely identical to that applied 
in  1993  when  within  a  few  months  the  Council  adopted  Regulation  (EEC) 
No 2080/933, which must be replaced by the regulation  specific  to fisheries which is 
part of this proposal, and Regulation (EEC) No 3699/934. 

Programming  measures  to  accompany  the  restructuring  of  fishing  fleets  is 
incompatible with the exclusively "regional" nature of Objective 2 programming. The 
measures  in  question5  are  aimed  at  implementing  the  multiannual  guidance 
programmes  to  adjust  fishing  effort  (MAGP), which  set  precise  targets  for  fishing 
capacity  reduction  by  means  of  restrictive  rules.  However,  they  do  so  for  each 
Member  State,  with  no  possibility  of  a  breakdown  into  regions.  In  those  regions 
affected by Objective  1  the present approach will be maintained. 

It is for that reason that we are not proposing to integrate measures to accompany the 
restructuring  of  fishing  fleets  into  Objective  2  programming.  For  such  measures 
there will  be  a  separate  special  programming  covering  all  the  regions  outside 
Objective  1, including  the  Objective  2  regions.  The  resources  will  come from the 
EAGGF Guarantee  Section.  All  the  other  measures  in  the  sector  (aquaculture 
modernisation,  product  processing,  port  facilities,  etc.)  will  continue  to  be 
programmed in Objective 2. 

Where  Objective  1  regions  are  concerned,  all  measures  in  the  sector,  including 
measures to accompany the restructuring of fishing fleets, will be programmed within 
that Objective. 

Lastly, and in line with the Agenda 2000 proposal, the Community will be able to act 
outside the Objective  1 and 2 regions in all parts of the sector using funds from the 
EAGGF Guarantee Section. 

OJ L  193, 31.7.1993, p. 1. 
OJL  346, 31.12.1993, p. 1. 
Without prejudging  the decision of the Council under Article 43 of the Treaty, such measures 
currently  include  all premiums  and  aid  paid  to  owners  of  fishing  boats  as  well  social  aid  to 
workers in the fishing  industry affected  by the restructuring. 

33 

Proposal for a 
COUNCIL REGULATION  (EC) 
laying down general provisions on the Structural Funds 

•J  i 

Proposal for a 
COUNCIL REGULATION  (EC) 
laying down general provisions on the Structural Funds 

98/0090 (AVC) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Union,  and  in  particular 
Article  13 Od thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the assent of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

Having regard to the opinion of the Committee of the Regions4, 

(1)  Whereas  Article  130a  of  the  Treaty  states  that,  in  order  to  strengthen  its 
economic  and  social  cohesion,  the  Community  shall  aim  at  reducing 
disparities  between  the  levels  of  development  of  the  various  regions  and  the 
backwardness  of  the  least  favoured  regions,  including  rural  areas;  whereas 
Article  130b  provides  for  that  action  to  be  supported  through  the  Structural 
Funds,  the  European  Investment  Bank  (EEB)  and 
the  other  existing 
financial instruments; 

the  other  existing  financial 

(2)  Whereas  Article  19  of  Council  Regulation  (EEC)  No 2052/885,  as  last 
amended by Regulation  (EC) No 3193/946 of 24 June  1988 on the tasks of the 
Structural Funds  and their effectiveness  and on coordination  of their  activities 
between themselves  and with the operations of the European Investment  Bank 
and 
to 
re-examine  that  Regulation  on  the  basis  of  a  Commission  proposal  before 
31 December  1999;  whereas,  in  order  to  improve  the  transparency  of 
Community  legislation,  it  is  desirable  to  bring  together  all  the  provisions 
concerning  the  Structural  Funds  into  a  single  Regulation  and  to  repeal 
Regulation  (EEC) No 2052/88 and Council Regulation  (EEC) No 4253/887, as 
last amended by Regulation (EC) No 3193/94; 

instruments,  requires 

the  Council 

1 
2 

4 
5 
6 
7 

OJ... 
OJ... 
OJ... 
OJ... 
OJL  185, 15.7.1988, p. 9. 
OJL  337, 24.12.1994, p. 11. 
OJ L 374, 31.12.1988, p. 1. 

OK 

(3)  Whereas, by  virtue  of  Article  5 of  Protocol  No  6  on  special  provisions  for 
Objective 6 in the framework of the Structural Funds in Finland and Sweden, 
attached  to  the  Act  of  Accession  of  Austria,  Finland  and  Sweden,  the 
provisions  of  that  Protocol  should  be  re-examined  before  the  end  of  1999, 
simultaneously with Regulation (EEC) No 2052/88; 

(4)  Whereas in order to increase the concentration  and simplify  the operation of 
the  Structural  Funds the number  of priority  Objectives  should be reduced  as 
compared  with  Regulation  (EEC)  No  2052/88;  whereas  those  Objectives 
should be redefined  as developing and promoting the structural  adjustment  of 
regions whose development is lagging behind, economic and social conversion 
of  areas  facing  structural  difficulties  and  adapting  and  modernising  policies 
and systems of education, training and employment; 

(5)  Whereas in its efforts  to strengthen economic and social cohesion through the 
Structural  Funds  the  Community  also  seeks  to  promote  the  harmonious, 
balanced and sustainable development of economic activities, a high degree of 
competitiveness, a high level of employment, equal opportunities for men and 
women and a high  level  of protection  and  improvement  of the  environment; 
whereas  those  efforts  should  in particular  help  to  eliminate  inequalities  and 
promote  equal  opportunities  for  men  and  women  and  to  integrate  the 
requirements of environmental protection  into the design and implementation 
of the action of the Structural Funds; 

(6)  Whereas  the  European  Regional  Development  Fund  (ERDF)  is  the  primary 
contributor  to  attaining  the.objective  of  developing  and  promoting  those 
structural adjustment  of the regions whose development is lagging behind and 
economic and social conversion of areas facing structural  difficulties; 

(7)  Whereas the tasks of the European  Social Fund  (ESF)  should be adjusted  in 
order  to  take  account  of  and  to  implement  the  Community's  strategy 
for employment; 

(8)  Whereas  the  structural  aspects  of  the  common  fisheries  policy  have 
been integrated  as  a  full  structural  policy  under  the  rules  governing  the 
Structural  Funds  since  1993; whereas implementation  should  continue under 
the Structural Funds through the Financial Instrument  for Fisheries Guidance 
(FIFG); 

(9)  Whereas the Community has undertaken a reform  of the common agricultural 
policy  which  includes  structural  and  accompanying  measures  for  promoting 
rural  development;  whereas  in  this  context  the  Guidance  Section  of  the 
European  Agricultural  Guidance  and  Guarantee  Fund  (EAGGF)  should 
continue to  contribute  to  attaining  the priority  objective  of the  development 
and structural adjustment of the regions whose development is lagging behind, 
by  improving  the  efficiency  of  the  structures  of  production,  processing  and 
marketing of agricultural and forest products and developing local potential in 
rural areas; whereas the EAGGF Guarantee Section should  also contribute to 

«J  'J 

attaining  the  priority  Objective  of  economic  and  social  conversion  of  areas 
facing  structural  difficulties,  in  accordance  with  Council  Regulation  (EC) 
No [....] on  Support  for  Rural  Development from the  European  Agricultural 
Guidance and Garantee Fund (EAGGF)8; 

(10)  Whereas  the  specific  rules  applicable  to  each Fund  are to  be  set  out  in  the 
implementing  decisions  adopted  under  Articles  43,  125  and  130e  of 
the Treaty; 

(11)  Whereas  the  criteria  for  designating  eligible  regions  and  areas  should  be 
specified;  whereas, to this end, it is appropriate that the identification  of the 
priority regions and areas at Community level should be based on the common 
system  of  classification  of  the  regions,  referred  to  as  the  "Nomenclature  of 
Territorial  Statistical  Units  (NUTS)" established  by  the  Statistical  Office  of 
the  European  Communities  in  cooperation  with  the  national  institutes 
for statistics; 

(12)  Whereas regions whose development  is lagging behind  should  be defined  as 
those  whose  per  capita  GDP  is  less  than  75% of  the  Community  average; 
whereas,  in  order  to  ensure  an  effective  concentration  of  assistance,  the 
Commission  should  apply  this  criterion  strictly,  using  objective  statistical 
data; whereas the most remote regions  and areas with  a very  low population 
density  covered  by  Objective  6 as  set  out  in Protocol  No  6  attached  to  the 
Act of  Accession  of  Austria,  Finland  and  Sweden  for  the  period  1995-99 
should also be covered by Objective 1 under this Regulation; 

(13)  Whereas  the  areas  undergoing  economic  and  social  conversion  should  be 
defined as those which include areas undergoing socio-economic change in the 
industrial  and  service  sectors, declining rural  areas, urban  areas  in  difficulty 
and depressed areas dependent on fisheries; whereas this assistance should be 
properly concentrated on the most seriously affected  parts of the Community; 
whereas  these  areas  should  be  designated  by  the  Commission  acting  on  a 
proposal from the Member States and in close concertation with them; 

(14)  Whereas, to ensure the Community nature of the operations of the Funds, the 
areas  undergoing  socio-economic  change  in  the  industrial  sector  and  the 
declining rural areas should be designated on the basis of objective  indicators 
defined  at Community  level; whereas,  furthermore,  the indicative  population 
covered by this Objective  in the case of the industrial  areas should  constitute 
about  10% of the population  of the Community,  5% in the case of the rural 
areas, 2% in the case of the urban  areas  and  1% in the case of  the  fisheries 
areas;  whereas,  in  order  to  ensure  that  each  Member  State  makes  a  fair 
contribution to the overall effort  towards concentration, the maximum possible 
reduction in population covered by Objective 2, set out in this Regulation, in 
2006 shall not exceed one-third compared to the coverage under Objectives 2 
and  5b,  set  out  in  Regulation  (EEC)  No  2052/88,  in  1999, including  areas 

O J L . .. 

37 

receiving transitional  support  under Objective  1 which  fulfil  the Objective  2 
eligibility criteria; 

(15)  Whereas,  in  the  interests  of  efficient  programming,  the  regions  whose 
development is lagging behind where per capita GDP is less than 75% of the 
Community  average  should  be  the  same  as  the  areas  assisted  by  the 
Member States  under  Article  92(3)(a)  of  the  Treaty;  whereas,  similarly,  in 
accordance with the communication of the Commission to the Member States 
on  regional  policy  and  competition  policy9,  the  areas  undergoing  economic 
and social change should correspond as closely as possible to the areas assisted 
by the Member States under point  (c) of Article 92(3) of the Treaty, and the 
areas  that  the  Member  States  accordingly  propose  as  eligible  for  assistance 
towards economic and social conversion should essentially only be those areas 
notified to the Commission under point (c) of Article 92(3) of the Treaty; 

(16)  Whereas the objective  of  adapting  and modernising  policies  and  systems  of 
education,  training  and  employment  is to provide financial assistance  in the 
regions  and  areas not  covered  by  the  other  two priority  objectives;  whereas 
this objective  should  also provide a frame of reference  to ensure consistency 
with all operations for human resources in a given Member State; 

(17)  Whereas the regions covered by a priority objective in  1999 which no longer 
satisfy  the  eligibility  criteria  should  receive  a  gradually  declining  level  of 
transitional support; 

(18)  Whereas  there  should  be  provisions  for  allocating  shares  of  the  available 
resources; whereas  these  resources  should  be  allocated  annually,  with  some 
two-thirds  being  concentrated  on  regions  whose  development  is  lagging 
behind, including those receiving transitional support; 

(19)  Whereas the Commission  should work  out  indicative  allocations  for  90% of 
the available commitment appropriations under each of the priority objectives, 
basing  itself  entirely  on  appropriate  objective  criteria;  whereas  the  10% of 
appropriations  not  allocated  in  this  way  should  be  allocated  by  the 
Commission at the mid-term point; 

(20)  Whereas  5%  of  the  total  commitment  appropriations  available  should  be 
devoted  to  the  Community  initiatives,  1%  to  innovative  schemes  and  to 
technical assistance; 

(21)  Whereas  the  appropriations  available  to  the  Structural  Funds  should 
be  indexed  on  a flat-rate  basis  for  programming  purposes  and,  if  necessary, 
a  technical  adjustment 
indexation  should  be  made  before 
31 December 2003; 

that 

to 

OJL... 

0  8 

(22)  Whereas the main principles of the 1988 reform  of the Structural Funds should 
continue to govern the Funds until 2006; whereas, however, experience to date 
has demonstrated  the need for  improvements  to make these principles  simpler 
and  more  transparent;  whereas  effectiveness  should  in  particular  be  regarded 
as a fundamental  principle; 

(23)  Whereas,  if  the  operations  of  the  Structural  Funds  are  to  be  effective  and 
transparent" the  responsibilities  of  the Member  States  and  of  the  Community 
should be precisely defined;  whereas those responsibilities  should be  specified 
for  each  stage  of  programming,  monitoring,  evaluation  and  supervision; 
whereas,  in  accordance  with  the  principle  of  subsidiarity,  and  without 
prejudice  to  the  powers  vested  in  the  Commission,  implementing  and 
monitoring  assistance  should  be  primarily 
the 
Member States; 

the  responsibility  of 

(24)  Whereas  the  action  of  the  Community  should  be  complementary  to,  or 
intended to contribute to, the action of the Member States; whereas, in order to 
ensure  significant  added  value,  partnership  should  be  strengthened;  whereas 
this  concerns  the  regional  and 
local  authorities,  the  other  competent 
authorities,  including  those  responsible  for  the  environment  and  for  the 
promotion  of  equality  between  men  and  women,  the  economic  and  social 
partners  and  other  competent  bodies;  whereas  all  the  partners  shall  be 
associated in the preparation, monitoring and evaluation of assistance; 

(25)  Whereas  the  programming  process  should  be  laid  down  from  original 
conception to final beneficiary,  and should be facilitated  in the Member  States 
by  guidelines  drawn  up  by  the  Commission  setting  out  the  Community's 
priorities for the operations of the Structural Funds; 

(26)  Whereas programming  should  ensure  the coordination  of the  Structural  Funds 
with one another and with the other existing financial instruments  and the EIB; 
whereas that coordination extends to combining grants and loans; 

(27)  Whereas  the  activities  of  the  Funds  and  the  operations  which  they  help  to 
finance should  be  compatible with the other  Community  policies  and  comply 
with  Community  legislation; whereas  specific  provisions  should be  laid  down 
in this field; 

(28)  Whereas  simpler  criteria  and  detailed  rules  for 

the  verification  and 

implementation of the principle of additionality should be laid down; 

(29)  Whereas the system of programming  should be simplified  by fixing a  uniform 
lifetime  for  programming  of  seven  years;  whereas  to  that  end  the  forms  and 
number  of  assistance  schemes  should  be  limited  and  should  normally  consist 
of  a  single 
integrated  assistance  for  each  region,  by  making  single 
programming  documents  the norm  for  some  of  the priority  objectives  and  by 
including major projects  and global grants in the other forms of assistance; 

39 

(30)  Whereas, in order to reinforce  the integrated  approach  to development,  steps 
should  be  taken  -  with  due  regard  to  the  specific  features  of  the  regions 
concerned - to ensure consistency between the operations of the various Funds 
and the Community priorities, the strategy for employment, the economic and 
social  policies  of  the  Member  States  and  the  regional  policies  of  the 
Member States; 

(31)  Whereas,  in  order  to  speed  up  and  simplify  programming  procedures,  the 
responsibilities  of the Commission should be distinguished from those of the 
Member  States;  whereas,  therefore,  provision  should  be  made  for  the 
Commission,  acting  on  a  proposal  from  the  Member  States,  to  adopt  the 
strategies  and development  priorities  that  are to  govern  the programming  as 
well  as the  size  of  the  financial  contribution from the  Community,  and  the 
implementing  arrangements  linked  to  them  while  the  Member  States  are to 
decide  on  their  application;  whereas  the  content  of  the  various  forms  of 
assistance should also be specified; 

(32)  Whereas  such  decentralised  implementation  of  the  operations  of  the 
Structural Funds by the Member States should provide sufficient  guarantees as 
to the details and quality of implementation, the results of operations and their 
evaluation and sound financial management and its supervision; 

(33)  Whereas  the  Commission,  in  association  with  the  EIB  where  appropriate, 
should  approve major  investment  projects  whose financial volume exceeds a 
specified  sum with a view to evaluating their impact and the proposed use of 
Community resources; 

(34)  Whereas  there  should  be  provision  for  operations  of  Community  interest 
carried  out  at  the  initiative  of  the  Commission  to  supplement  those 
implemented under the priority objectives; 

(35)  Whereas  these  Community  initiatives  should  concentrate  on  promoting 
cross-border,  transnational  and  inter-regional  cooperation,  to  be financed by 
the  ERDF,  rural  development,  to  be  financed  by  the  EAGGF  Guidance 
Section,  and  the  development  of  human  resources  in  the  context  of  equal 
opportunities,  to  be financed by  the  ESF;  whereas  consistency  should  be 
ensured  between  operations  of  cross-border,  transnational  and  inter-regional 
cooperation and operations under Council Regulation (EEC) No 3906/8910, as 
last amended by Regulation (EC) No 753/9611; 

(36)  Whereas the Structural Funds should provide support for studies, pilot projects 
and exchanges  of experience in order to promote  innovative  approaches  and 
practices through simple and transparent implementation; 

OJL  375, 23.12.1989, p. 11. 
OJL103,  26.4.1996, p. 5. 

40 

(37)  Whereas, in order to strengthen the leverage effect  of Community resources by 
favouring as far as possible recourse to private sources of financing and to take 
better  account  of  the  profitability  of  the  projects,  the  forms  of  assistance 
available  from  the  Structural  Funds  should  be  diversified  and  the  rates  of 
assistance  differentiated  with  a  view  to  promoting  the  Community  interest, 
encouraging  the  use of  a wide range  of  financial  resources  and  limiting  the 
contribution  of  the  Funds  by  encouraging  the  use  of  appropriate  forms  of 
assistance;  whereas,  to  that  end,  reduced  rates  of  intervention  should  be 
established  in  the  case  of  investments  in  firms  and  infrastructure  projects 
which  generate  substantial  revenue;  whereas  for  the  purpose  of  this 
Regulation,  substantial  net  revenue  should  be tentatively  defined  as  revenue 
higher than at least 25% of the total cost of the investment concerned; 

(38)  Whereas, in accordance with the principle of subsidiarity, the rules on eligible 
expenditure  should  be  the  relevant  national  rules  where  there  are  no 
Community rules, although they may be laid down by the Commission where 
they  are clearly needed  for  the uniform  and equitable  implementation  of the 
Structural  Funds  across  the  Community;  whereas, however,  the  starting  and 
closing dates for the eligibility of expenditure should be defined  and it should 
be  stipulated  that  investment  projects  may not  undergo  major  modification; 
that, consequently, in order to ensure the efficiency  and durable impact of the 
Funds' interventions, all or part of the assistance from a Fund should remain 
attached to an operation only where its nature or its implementation conditions 
do not undergo a substantial modification  which would result in diverting the 
assisted operation from its original objectives; 

(39)  Whereas  the  rules  and  procedures  for  making  commitments  and  payments 
should be simplified; whereas to that end budget commitments should be made 
once a year in accordance with the multiannual financial  perspective and with 
the financing plan for assistance, whilst payments should be made in the form 
of an advance followed  by the reimbursement  of actual expenditure incurred; 
whereas, in accordance with established  case law, any interest  earned  on the 
advance  payment  should  be  regarded  as  resources  for  the  Member  State 
concerned,  and  in order  to  strengthen  the  impact  of  the  Funds,  it  should be 
allocated to the same purpose as the advance payment itself; 

(40)  Whereas  sound financial management  should  be  assured  by  providing  that 
expenditure  is to be duly justified  and certified,  and by  linking payments to 
compliance  with  essential  responsibilities  as 
the  monitoring  of 
programming, financial controls and the application of Community law; 

to 

(41)  Whereas, 

to  ensure  sound  management  of  Community 

resources, 
improvements  should  be  made  to  the  forecasting  and 
implementing 
expenditure; whereas to this end the Member States should regularly send the 
Commission  their  forecasts  of  the  use  of  Community  resources,  and  any 
delays in financial implementation should give rise to repayment of advances 
and to automatic decommitments; 

41 

(42)  Whereas,  throughout  the  transitional  period  from  1  January  1999  to 
31 December  2001,  all  references  to  the  euro  should  normally  be  read  as 
references to the euro as a monetary unit as referred  to in the second sentence 
of Article 2 of Council Regulation (EC) No .../98u; 

(43)  Whereas one way of ensuring that the operations of the Structural  Funds are 
effective  is efficient  monitoring; whereas monitoring should be improved and 
responsibilities in this field better defined; whereas, in particular, management 
functions should be distinguished from monitoring functions; 

(44)  Whereas there should be a single managing authority for each assistance, with 
defined  responsibilities;  whereas  these  responsibilities  should  primarily 
include  collecting  data  on  outcomes  and  reporting  this  data  to  the 
Commission, ensuring sound financial implementation, organising evaluations 
and  complying  with  obligations  relating  to  publicity  and  Community  law; 
whereas  accordingly  there  should  be  provision  for  regular  meetings 
between  the  Commission  and  the  managing  authority  to  monitor  the 
assistance; 

(45)  Whereas it should be stipulated that the Monitoring  Committees  are national 
bodies  supervising  assistance,  checking  on how  it  is being  managed  by  the 
managing  authority,  ensuring  compliance  with  its  own  guidelines  and 
implementing rules and reviewing evaluations; 

(46)  Whereas  indicators  and  annual  reports  on  implementation  are  essential  for 
monitoring and should be better defined so as reliably to reflect the progress of 
assistance schemes and the quality of programming; 

(47)  Whereas,  in  order  to  guarantee  efficient  and  correct  implementation,  the 
obligations  of  the  Member  States  should  be  laid  down  with  regard  to 
management  systems  and  controls,  the  certification  of  expenditure  and  the 
prevention, detection  and correction of irregularities  and of infringements  of 
Community law; 

(48)  Whereas, without prejudice  to the Commission's responsibilities  for  financial 
control, cooperation between the Member  States and the Commission  in this 
regard  should  be  improved,  in  particular  through  provision  for  regular 
consultations between the Member States and the Commission to consider the 
measures taken by the Member States and to permit the Commission to request 
corrective measures where necessary; 

(49)  Whereas the responsibility of the Member States for the pursuit and correction 
of  irregularities  and  infringements,  and  that  of  the  Commission  where  the 
Member States do not comply with their obligations, should be specified; 

O J L .. 

(50)  Whereas the effectiveness  and impact of the operations of the Structural Funds 
depends  on 
the 
responsibilities of the Member States and the Commission  in this regard and 
arrangements to ensure the reliability of evaluation should be laid down; 

thorough  evaluation;  whereas 

improved  and  more 

(51)  Whereas  assistance  schemes  should  be  evaluated  with  a  view  to  their 
preparation  and adoption, revisions  at the mid-term  point  and  assessment  of 
their  impact,  and  the  evaluation  process  should  be  incorporated  into  the 
monitoring  of  assistance;  whereas  to  this  end  the  aims  and  content  of  each 
stage  of  evaluation  should  be  defined,  and  the  evaluation  of  environmental 
aspects and of the impact on equal opportunities  for men and women should 
be improved; 

(52)  Whereas, on the basis of the mid-term evaluation and withholding part of the 
original  appropriations  as  a  reserve,  it  becomes  possible  to  allocate 
supplementary  funding  which  depends  on  the  performance  of  assistance; 
whereas such allocations should be based on objective, simple and transparent 
criteria which reflect  efficiency  and the quality of management  and  financial 
execution; 

(53)  Whereas  a report  is  to be presented  every  three years  on the progress made 
towards  economic  and  social  cohesion,  which  should  include  an  analysis  of 
the  situation  of  the  regions  of  the  Community  and  their  economic  and 
social development; 

(54)  Whereas,  in  the  interests  of  a  good  working  partnership  and  the  proper 
promotion  of  Community  assistance,  the  broadest  possible  information  and 
publicity about it should be provided; whereas the authorities responsible  for 
managing assistance should be responsible for this aspect and for keeping the 
Commission informed of measures taken; 

(55)  Whereas rules should be laid down for the operation of the committees called 

upon to assist the Commission in implementing this Regulation; 

(56)  Whereas  detailed  transitional  provisions  should  be  laid  down  to  allow 
preparation  of  new  programming  immediately  on  entry  into  force  of  this 
Regulation  and to ensure that  assistance  to Member  States is not  interrupted 
pending the production of regional development plans and assistance schemes 
in accordance with the new system, 

10 

43 

HAS ADOPTED THIS REGULATION: 

TITLE I 

GENERAL PRINCIPLES 

CHAPTER I:  OBJECTIVES AND TASKS 

Article 1 - Objectives 

through 

the  Structural  Funds,  the  Cohesion  Fund, 

the 
Community  action 
European Agricultural  Guidance  and  Guarantee  Fund  (EAGGF)  Guarantee  Section, 
the European Investment Bank (EIB) and the other existing financial instruments shall 
support the achievement of the general objectives set out in Articles  130a and 130c of 
the Treaty. The Structural Funds, the EIB and the other existing financial instruments 
shall  each contribute  in appropriate  fashion  to the attainment  of the following  three 
priority objectives: 

1. 

2. 

3. 

promoting  the  development  and  structural  adjustment  of  regions  whose 
development is lagging behind, hereinafter referred to as "Objective 1"; 

supporting  the  economic  and  social  conversion  of  areas  facing  structural 
difficulties, hereinafter referred to as "Objective 2"; 

supporting  the  adaptation  and  modernisation  of  policies  and  systems  of 
education, training and employment, hereinafter  referred  to as "Objective 3". 
This Objective  shall provide  financial  assistance  outside the regions  or areas 
covered by Objectives  1 and 2 and provide a policy frame of reference  for all 
measures to promote human resources in a national territory without prejudice 
to the specific features of each region. 

In pursuing these Objectives,  the Community,  through the Funds, shall promote the 
harmonious,  balanced  and  sustainable  development  of  economic  activities,  and  in 
particular the development of competitiveness and economic innovation, especially in 
small  and  medium-sized  enterprises,  the  development  of  employment  and  human 
resources, the protection and improvement of the environment, and the elimination of 
inequalities, and the promotion of equality, between men and women. 

Article 2 - Means and tasks 

1. 

For  the  purposes  of  this  Regulation,  "Structural  Funds"  shall  mean  the 
European  Regional  Development  Fund  (ERDF),  the  European  Social  Fund 
(ESF),  the  European  Agricultural  Guidance  and  Guarantee  Fund  (EAGGF) 
Guidance Section and the Financial Instrument for Fisheries Guidance (FIFG), 
hereinafter referred to as "the Funds". 

n 

44 

2. 

In accordance  with  Articles  39,  123  and  130c  of  the Treaty,  the  Funds  shall 
contribute, each according to the specific  provisions  governing  its operations, 
to the attainment of Objectives 1,2 and 3, as follows: 

(a) 

Objective 1 : ERDF, ESF, EAGGF Guidance Section and FIFG; 

(b) 

Objective 2: ERDF, ESF and FIFG; 

(c) 

Objective 3: ESF. 

3. 

4. 

5. 

The  EAGGF  Guarantee  Section  shall  also  contribute  to  the  attainment  of 
Objective 2  in  accordance  with  Regulation  (EC)  No  ....  [concerning  the 
support from EAGGF to rural development]. 

Each  Fund  shall  contribute  to  financing  Community  initiatives  and  to 
supporting innovative measures and technical assistance. 

Technical assistance measures shall be carried out within the framework of the 
programming  defined  in  Articles  12  to  26  or  at  the  initiative  of  the 
Commission under Article 22. 

The other resources of the Community budget which may be used to attain the 
Objectives  referred  to  in  Article  1 are  in  particular  those  allocated  to  other 
structural measures and to the Cohesion Fund. 

The Commission and the Member States shall ensure that the operations of the 
Funds  are  consistent  with  other  Community  policies  and  operations,  in 
particular  in  the  areas  of  employment,  equality  between  men  and  women, 
social  policy  and  vocational  training,  the  common  agricultural  policy,  the 
common  fisheries  policy,  transport  and the trans-European networks  and the 
incorporation  of  the  requirements  of  environmental  protection  into  the 
definition and implementation of the operations of the Funds. 

6. 

The  EIB  shall  cooperate  in  attaining  the  Objectives  set  out  in  Article  1,  in 
accordance with the procedures laid down in its Statute. 

The other existing financial instruments which may contribute, each according 
to the specific  provisions governing its operations, to attaining the Objectives 
referred  to  in  Article  1  include  the  European  Investment  Fund  and  the 
European  Atomic  Energy  Community 
(loans,  guarantees), 
hereinafter "the other financial instruments". 

(Euratom) 

12 

4 K 

CHAPTER II:  GEOGRAPHICAL ELIGIBILITY FOR THE 
PRIORITY OBJECTIVES 

Article 3 - Objective 1 

1. 

The regions  covered  by  Objective  1 shall be regions  corresponding  to  level  II 
of the Nomenclature  of Territorial  Statistical Units (NUTS level II) whose per 
capita GDP, measured in purchasing power parities and calculated on the basis 
of Community figures for the last three years available, is less than 75% of the 
Community average. 

The  most  remote  regions  (the  French  overseas  departments,  the  Azores,  the 
Canary  Islands  and Madeira)  and the  areas  eligible  under  Objective  6 for  the 
period  1995-99 pursuant  to Protocol No  6 to the Act  of Accession  of Austria, 
Finland and Sweden shall also be covered by this Objective. 

2. 

The  Commission  shall  draw  up  the  list  of  regions  covered  by  Objective  1 
strictly  in  accordance  with  the  first  subparagraph  of  paragraph  1,  without 
prejudice to Article 6(1)., 

This list shall be valid for seven years from 1 January 2000. 

Article 4 - Objective 2 

1. 

2. 

The  regions  covered  by  Objective  2  shall  be  those  areas  facing  structural 
problems  of  socio-economic  conversion  whose  population  or  area  are 
sufficiently  substantial.  They  shall  include  areas  undergoing  socio-economic 
change  in the  industrial  and  service  sectors, declining  rural  areas, urban  areas 
in difficulty  and depressed areas dependent on  fisheries. 

The Commission  and the Member States shall seek to ensure that assistance is 
genuinely  concentrated  on  the  areas  most  seriously  affected  and  at  the  most 
appropriate  geographical  level.  The  population  of  the  areas  referred  to  in 
paragraph  1 shall  not  exceed  18% of  the  total  population  of  the  Community. 
Accordingly,  the  Commission  shall  lay  down  a  population  ceiling  for  each 
Member State on the basis of the following  factors: 

(a) 

(b) 

the total population in the NUTS III areas of each Member State which 
meet the criteria referred  to in paragraphs 5 and 6; 

the  severity  of  the  structural  problems  at  national  level  in  each 
Member State  as  compared  with  the  other  Member  States  concerned. 
Such severity shall be assessed on the basis of total unemployment  and 
long-term  unemployment  outside 
regions  eligible  under 
Objective  1; 

the 

13 

4G 

(c) 

the need to ensure that each Member  State makes a fair contribution to 
the  overall  concentration  effort  as  defined  in  this  subparagraph; 
the  maximum  reduction  in  the  population  covered  by  Objective  2, 
to  in  the  second  subparagraph  of 
including  the  areas  referred 
Article 6(1),  shall  not  exceed  one  third  compared  to  the  population 
covered  by  Objectives  2  and  5b  as  set  out  in  Regulation  (EEC) 
No 2052/88, in 1999. 

The  Commission  shall  provide the Member  States  with  all  the  information  it 
has available about the criteria set out in paragraphs 5 and 6. 

Subject  to  the  ceilings  referred  to  in  paragraph  2,  the  Member  States  shall 
propose to the Commission a list of significant  areas representing: 

(a) 

(b) 

the NUTS  level III regions, or the most  seriously  affected  areas within 
each  of  these  regions,  which  satisfy  either  the  criteria  set  out  in 
paragraph 5 or those set out in paragraph 6; 

the other areas most seriously affected  under the other criteria set out in 
paragraphs  7,  8  and  9;  for 
these  criteria, 
Member States may  also take as a reference  basis  the  specific  realities 
influencing 
the  actual  activity  rate  or  employment  rate  of  the 
population. 

the  application  of 

The  Member  States  shall  provide  the  statistics  and  other  information,  at  the 
most  appropriate  geographical  level,  which  the  Commission  requires  to 
evaluate these proposals. 

On the basis of the information  referred  to in paragraph  3, the Commission,  in 
close  concertation  with the Member  State concerned,  shall  draw up the  list  of 
areas eligible under Objective  2 with due regard to national priorities, without 
prejudice to Article 6(2). 

The  industrial  and rural  areas meeting  the  criteria  in paragraphs  5 and  6 must 
contain  at  least  50%  of  the  population  covered  by  Objective  2  in  each 
Member State, except where duly justified  by objective  circumstances. 

The  industrial  areas  referred  to  in  paragraph  1 shall  represent  or  belong  to  a 
NUTS level III territorial unit whiph satisfies the following  criteria: 

(a) 

(b) 

an  average  rate  of  unemployment  over  the  last  three  years  above  the 
Community average; 

a percentage share of industrial employment  in total employment  equal 
to  or  greater  than  the  Community  average  in  any  reference  year  from 
1985 onwards; 

14 

47 

(c) 

an  observable  fall  in  industrial  employment  compared  with  the 
reference  year chosen in accordance with (b). 

The rural areas referred  to in paragraph  1 must represent  or belong to a NUTS 
level III territorial unit which satisfies the following  criteria: 

(a) 

either  a  population  density  of  less  than  100  people  per  km2,  or  a 
percentage  -share  of  agricultural  employment  in  total  employment 
which is equal to, or higher than, twice the Community  average in any 
reference year from 1985 ; 

(b) 

either an average unemployment rate over the last three years above the 
Community average, or a decline in population since  1985. 

The urban  areas referred  to in paragraph  1 shall mean densely populated  areas 
which also meet at least one of the following  criteria: 

(a) 

a rate of long-term unemployment higher than the Community average; 

(b) 

a high level of poverty, including precarious housing conditions; 

(c) 

a particularly damaged  environment; 

(d) 

a high crime rate; 

(e) 

a low level of education among the population. 

The  areas dependent  on fisheries  referred  to in paragraph  1 shall mean  coastal 
areas in which  the number  of jobs  in the  fisheries  industry  as  a percentage  of 
total employment is significant  and which are facing  structural  socio-economic 
problems  relating  to the restructuring  of  the  fisheries  sector which  result  in  a 
significant  reduction in the number of jobs in that sector. 

Community  assistance  may  extend  to  areas  whose  population  or  area  is 
significant  which fall into one of the following  categories: 

(a) 

(b) 

(c) 

areas meeting  the criteria  set  out  in paragraph  5 which  are  adjacent  to 
an  industrial  area,  areas  meeting  the  criteria  set  out  in  paragraph  6 
which  are  adjacent  to  a rural  area,  areas which  meet  either  the  criteria 
set  out  in  paragraph  5  or  those  set  out  in  paragraph  6  which  are 
adjacent  to a region covered by Objective  1; 

rural  areas  with  socio-economic  problems  arising  from  the  ageing  of 
the agricultural working population; 

areas  facing  or  threatened  by  a  high  level  of  unemployment  arising 
from  an  ongoing  or  planned  restructuring  of  an  activity  of  key 
importance for the agricultural, industrial or service sector. 

15 

48. 

10.  Any one area may be eligible  for  assistance  under only  one of  Objectives  1 

or 2. 

11. 

The list of areas shall be valid for seven years from 1 January 2000. 

Where  there  is  a  serious  crisis  in  a  region,  the  Commission,  acting  on  a 
proposal from a Member  State, may  amend  the list  of  areas  during  2003 in 
accordance with paragraphs  1 to  10 without  increasing the proportion  of the 
population within each region referred to in Article 12(2). 

Article 5 - Objective 3 

The  areas  eligible  for financing under  Objective  3  shall  be  those  not  covered  by 
Objectives  1  and 2, without prejudice to Article 6(2). 

Article 6 - Transitional support 

1. 

Notwithstanding Article 3, the regions covered by Objective  1 in  1999 under 
Regulation  (EEC)  No  2052/88  which  are  not  referred  to  in  the  second 
subparagraph of Article 3(1) and Article  3(2) of this Regulation shall continue 
to  receive  support from the  Funds  under  Objective  1 on  a transitional  basis 
from 1 January 2000 to 31 December 2005. 

At the time of adoption of the list referred  to in Article 3(2), the Commission 
shall  draw  up  in  accordance  with  Article  4(5)  and  (6)  a  list  of  the  NUTS 
level II areas belonging to those regions which are to receive support from the 
Funds under Objective  1 on a transitional basis in 2006. 

The areas of the regions not on the list referred to in the second subparagraph 
shall continue to receive in 2006 support from the ESF, FIFG and the EAGGF 
Guidance Section only, within the same form of assistance: 

2. 

Notwithstanding  Article  4,  the regions  covered  by  Objectives  2  and  5(b)  in 
1999 under Regulation (EEC) No 2052/88 which are not on the list referred to 
in Article 4(4) of this Regulation  shall receive support from the ERDF,  from 
1 January  2000  to  31  December  2003,  under  Objective  2  under  this 
Regulation, on a transitional basis. 

Such areas shall receive support from 1 January  2000 to 31 December  2006 
from the  ESF  under  Objective  3  and  from  the  EAGGF  Guarantee  Section 
under  its  support  to  rural  development  and  its  structural  measures  in  the 
fisheries  sector in all parts of the Community. 

16 

49 

CHAPTER III:  FINANCIAL PROVISIONS 

Article 7 - Resources and  concentration 

1. 

The resources available for commitment from the Funds for the period 2000 to 
2006 shall be 218.4 billion euros at  1999 prices. 

2. 

3. 

4. 

5. 

6. 

The annual breakdown of those resources is shown in the Annex. 

A considerable proportion  of budgetary resources  shall be concentrated  on the 
regions  covered  by  Objective  1. The  resources  available  for  commitment  for 
those  regions  shall  be  about  two-thirds  of  the  appropriations  available  to 
the Funds. 

transparent  procedures, 

the  Commission  shall  make 

indicative 
Using 
breakdowns  by  Member  State  of  90%  of  the  commitment  appropriations 
available  for  the  programming  referred  to  in  Articles  12  to  18,  taking  full 
account,  for  Objectives  1 and  2,  of  one  or  more  objective  criteria  similar  to 
those  covered  by Regulation  (EEC) No  2052/88, namely:  eligible  population, 
regional  prosperity,  national  prosperity  and  the  relative  severity  of  the 
structural problems, especially the level of unemployment. 

For Objective  3, the breakdown by Member State shall be based principally  on 
the  eligible  population,  the  employment  situation  and  the  severity  of  the 
problems,  such  as  social  exclusion,  education  and  training  levels,  and 
participation of women in the labour market. 

These  breakdowns  shall  distinguish  allocations  of  appropriations  to  regions 
and  areas  benefiting  from  transitional  support.  These  allocations  shall  be 
determined in accordance with the criteria referred  to in the first subparagraph. 
The annual breakdown of these appropriations shall be degressive. 

The  10%  of  commitment  appropriations  not  allocated  under 
the  indicative 
breakdown  referred  to  in paragraph  3 shall be  allocated  at the mid-term  point 
by the Commission in accordance with Article 43. 

to 

the  period  referred 

For 
in  paragraph  1,  5%  of  the  commitment 
appropriations  for  the  Structural  Funds  referred  to  in  paragraph  1  shall  be 
devoted  to  funding  the  Community  Initiatives.  1  %  of  the  appropriations 
referred  to in paragraph  1 shall be devoted to funding  innovative measures and 
technical assistance as defined  in Articles 21 and 22. 

For  the  purpose  of  their  programming  and  subsequent  inclusion  in  the 
Community  budget,  the  sums  referred  to  in  paragraphs  1  and  2  shall  be 
indexed as from 1  January 2000 at 2% per year. 

17 

^ 

Indexation  of the allocations  for 2004 to 2006 shall be reviewed,  if necessary, 
by 31 December 2003 at the latest for technical adjustment  by the  Commission 
on  the  basis  of  the  latest  economic  information  available.  The  difference 
relative to the initial programming shall be reallocated  for inclusion in the sum 
referred  to in paragraph 4. 

CHAPTER IV:  ORGANISATION 

Article 8 - Complementarity  and partnership 

1. 

Community  action  shall  complement  or  contribute  to  comparable  national 
operations. They shall be drawn up in close consultations, hereinafter  referred 
to  as  the  "partnership",  between  the  Commission  and  the  Member  State, 
together with: 

(a) 

the regional and local authorities and the other competent  authorities; 

(b) 

the economic and social partners; 

(c) 

the other competent bodies. 

Each  Member  State  shall,  within  its  own  institutional,  legal  and  financial 
system,  choose  and  designate  the  most  representative  partners  at  national, 
regional,  local  or other  level referred  to in the  first  indent  through  as wide  an 
association  as  possible,  including  where  appropriate  the  bodies  active  in  the 
field  of  environment  and  in  the  promotion  of  equality  between  men 
and women. 

All  the  designated  parties,  hereinafter  referred  to  as  the  "partners",  shall  be 
partners pursuing a common goal. 

The  Member  States  shall  ensure the  association  of  each  of  the partners;  such 
association  shall cover  all  stages of programming  at the appropriate  territorial 
level.  Partnership  shall  cover  the  preparation,  financing,  monitoring  and 
evaluation of assistance. 

In  pursuance  of  the  principle  of  subsidiarity,  and  without  prejudice  to  the 
powers  vested  in  the  Commission,  the  implementation  of  assistance  shall  be 
primarily  the responsibility  of the Member  States  at the  appropriate  territorial 
level. 

The  Member  States  shall  cooperate  with  the  Commission  to  ensure  that 
Community  funds  are used in accordance with the principle of sound  financial 
management. 

Each  year,  the  Commission  shall  consult  the  European-level  organisations 
representing the social partners about the structural policy of the Community. 

2. 

3. 

4. 

5. 

18 

n 

Article 9 - Programming and coordination 

1. 

For the purposes of this Regulation: 

(a) 

(b) 

(c) 

"programming" means the organising, decision-making  and  financing 
process  carried  out  in  a  number  of  stages  to  implement  on  a 
multiannual  basis  the  joint  action  of  the  Community  and  the 
Member States to attain the objectives referred to in Article 1 ; 

"development plan" means the analysis of the situation prepared by a 
Member State in the light of the objectives referred  to in Article  1  and 
the  priority  needs  for  attaining  those  objectives,  together  with  the 
strategy,  the  planned  action  priorities,  their  specific  goals  and  the 
related indicative financial resources; 

"Community  support framework" means  the  document  approved  by 
the  Commission  following  appraisal  of  the  development  plan 
submitted by a Member State and containing the strategy and priorities 
for  action, their specific  objectives, the contribution  of the Funds and 
the  other  financial  resources.  This  document  shall  be  divided  into 
priorities  and  implemented  by  means  of  one  or  more  operational 
programmes; 

(d) 

"assistance"  means  the  forms  of  assistance  provided  by  the  Funds, 
namely: 

(i) 

operational programmes or single programming documents; 

(ii) 

Community Initiative programmes; 

(iii) 

support for technical assistance and innovative measures; 

(e) 

to 

"operational  programme"  means  the  document  approved  by  the 
Commission 
implement  a  Community  support  framework, 
composed of a consistent set of priorities which comprise multiannual 
measures  and which may be implemented  through recourse to one or 
more Funds, to one or more of the other existing financial instruments 
and  to  the  EIB.  An  "integrated  operational  programme"  means  an 
operational programme financed by more than one Fund; 

(f) 

"single  programming  document"  means  a  single  document  approved 
by the Commission and containing the same information to be found in 
a Community support framework and operational programme; 

19 

K  O 

(g) 

(h) 

(i) 

(j) 

"priority"  means  one  of  the  priorities  of  the  strategy  adopted  in  a 
Community  support  framework  or  by  way  of  assistance.  To  it  is 
assigned a contribution from the Funds and other financial instruments 
and the relevant  financial  resources of the Member State and a set of 
specified targets; 

"measure" means the means by which a priority is implemented  over 
several years which enables operations to be financed. Any aid scheme 
under Article 92 of the Treaty or any aid granted by bodies designated 
by the Member States is defined as a measure; 

"operation"  means  any  project  carried  out  by  the  final  beneficiaries 
of assistance; 

"final  beneficiaries"  means  the  bodies  and  public  or  private  firms 
responsible for  commissioning  operations. In the case of  aid  schemes 
under Article 92 of the Treaty and in the case of aid granted by bodies 
designated by the Member States, the final beneficiaries  are the bodies 
which grant the aid. 

Coordination  between  the  various  Funds  shall  be  carried  out  in  particular 
through: 

(a) 

the guidelines referred to in paragraph 4; 

(b) 

the Community support  frameworks; 

(c) 

financial programming and the implementation of assistance; 

(d) 

the monitoring and evaluation of assistance under an objective. 

The  Commission  shall,  in  a  manner  consistent  with  the  principle  of 
partnership, ensure coordination of assistance from the different  Funds among 
themselves and with the assistance from the EIB and other existing  financial 
instruments. 

In order to maximise the stimulus provided by the budget resources deployed, 
making  use  of  appropriate  financial  instruments,  the  Community  assistance 
provided in the form  of grants shall be combined  in an appropriate way with 
loans. This combination shall be determined in conjunction with the EIB when 
the Community support framework or single programming document is being 
drawn up. It shall take account of the balance in the proposed financing plan, 
the contribution from the Funds and the development goals pursued. 

20 

** 

* 

4. 

1. 

2. 

Before  the submission of development plans and before  the mid-term review 
referred  to  in  Article  41, the  Commission  shall  draw  up  guidelines  setting 
out Community priorities  for  each of the Objectives  referred  to in Article  1. 
These  guidelines  shall  be  published  in  the  Official  Journal  of  the 
European Communities. 

The Member States and the Commission shall take account of the guidelines at 
the various stages of programming. 

Article 10 - Additionally 

In  order  to  achieve  a  genuine  economic  impact,  the  appropriations  of  the 
Funds may not replace public or other equivalent structural expenditure. 

In  the  Community  support frameworks and  single  programming  documents 
for  Objective  1,  the  Commission  and  the  Member  State  concerned  shall 
determine the level of public or similar structural expenditure that the Member 
State  is  to  maintain  in  all  the  regions  covered  by  Objective  1  during  the 
programming period. 

In the single programming documents for Objectives 2 and 3, the Commission 
and the Member State concerned shall determine the level of expenditure on 
active labour market policy which the Member State is to maintain at national 
level during the period 2000-2006. 

As a general rule, the average annual  level  of expenditure referred  to in the 
first and second subparagraphs must be at least equal to the level achieved in 
the programming period covered by Regulation (EEC) No 2052/88. 

3. 

Additionality shall be verified at three points during the programming period: 

(a) 

(b) 

an ex ante verification  when the Community support frameworks and 
single programming documents are adopted, to provide a baseline  for 
the whole programming period; 

a mid-term  verification  by  31 December  2003,  following  which  the 
Commission  and the Member  State may  agree to  revise  the  level of 
structural  expenditure  to  be  attained  if  the  economic  situation  has 
resulted  in  changes  in  public  revenue  or  in  employment  in  the 
Member State  which  diverge  significantly  from  expectations  at  the 
time of the ex ante verification; 

(c) 

a verification by 31 December 2005. 

The Member State shall provide the Commission with appropriate information 
at  the  time  when  development  plans  are  submitted  and  when  the  mid-term 
verification and the verification before 31 December 2005 are made. 

21 

54 

Independently  of  those  verifications,  the  Member  State  shall  inform  the 
Commission  at  any  point  during  the  programming  period  of  developments 
likely  to  impair  its  ability  to  maintain  the  level  of  expenditure referred  to  in 
paragraph 2. 

Article 11 - Compatibility 

Operations  financed  by  the  Funds  or  receiving  assistance  from  the  EIB  or  from 
another  financial  instrument  shall  conform  to  the  provisions  of  the  Treaty,  to 
instruments  adopted  under  it  and  to  Community  policies,  in  particular  those 
concerning  the rules on competition  and especially  those  on  State  aids, on the  award 
of  public  contracts,  on  environmental  protection  and  improvement  and  on  the 
elimination of inequalities and the promotion of equality between men and women. 

TITLE II 

PROGRAMMING 

CHAPTER I:  GENERAL PROVISIONS CONCERNING OBJECTIVES 1,2 AND 3 

Article 12 - Geographical  coverage 

1. 

2. 

3. 

Regional  development  plans  submitted  under  Objective  1 shall,  as  a  general 
rule,  cover  a  single  region  at NUTS  level  II.  However,  Member  States  may 
submit  a  general  development  plan  for  all  their  regions  included  in  the  list 
referred  to  in  Article  3(2)  and  6(1),  provided  that  such  plans  comprise  the 
features  listed in Article  15. 

Regional  conversion  plans  submitted  under  Objective  2  shall  normally 
comprise all the areas covered by Objective 2 in a single NUTS level II region, 
included  in  the  list  referred  to  in  Article  4(4)  and  Article  6(2).  Plans  shall 
distinguish between operations in areas covered by Objective  2 and  operations 
elsewhere  and  shall  demonstrate  that  the  operations  are  consistent  with 
policies being carried out at regional level. 

Development  plans  submitted  under  Objective  3  shall  cover  the  whole 
territory of a Member State in respect of assistance outside the regions or areas 
covered by Objectives  1 and 2, and shall provide, for the whole of the national 
territory,  a  framework  of  reference  for  developing  human  resources  without 
prejudice to specific regional circumstances. 

Article 13 - Duration  and  revision 

1. 

Each  development  plan,  Community  support 
framework,  operational 
programme  and  single  programming  document  shall  cover  a period  of  seven 
years, without prejudice to Article 6. 

The programming period shall begin on  1  January 2000. 

22 

55 

2. 

1. 

2. 

3. 

Development plans, Community support frameworks, operational  programmes 
and  single  programming  documents  shall  be  revised  in  accordance  with  this 
Chapter  following  the  mid-term  evaluation  refened  to  in  Article  41  and  the 
allocation of the performance reserve refened  to in Article 43. 

They  may  also be  similarly  revised  in  the  event  of  significant  changes  in  the 
socio-economic situation and the labour market. 

Article  14 - Preparation  and approval 

The  development  plans  for  Objectives  1,  2  and  3  shall  be  drawn  up  by  the 
national,  regional  or  other  authorities  designated  for  this  purpose  by  the 
Member  State  and  submitted  by  the  Member  State  to  the  Commission  once 
the opinions of the partners have been secured. 

Each partner  shall  express  its opinion  within  a period  of time  consistent  with 
the deadline set under the third  subparagraph. 

Unless  otherwise  agreed  with  the  Member  State  concerned,  development 
plans  shall be submitted  not later than three months after  the establishment  of 
the lists of eligible areas referred  to in Article 3(2) and Article 4(4). 

The  Commission  shall  appraise  the  plans  to  determine  whether  they  are 
consistent  with  the  aims  of  this  Regulation,  including  the  framework  of 
reference  referred  to  in Article  1(3), with  the  guidelines  referred  to  in  Article 
9(4),  with  other  Community  policies  and  with  Article  40.  The  Commission 
shall  take  account  of  the  arrangements  taken  to  associate  the  partners  and  of 
their opinions issued during the consultations referred to in paragraph  1. 

The  Commission  shall  also  appraise  each  Objective  3  plan  submitted  to 
determine whether the measures planned  are consistent  with the national  plan 
to implement the European strategy for employment referred  to in point  (b) of 
Article 15(2). 

On  the  basis  of  the  development  plans,  the  Commission  shall  draw  up  the 
Community support frameworks relating to Objective  1, in agreement with the 
Member  State concerned  and in accordance  with  the procedures  laid  down  in 
Articles  47  to  50.  The  EIB  shall  be  involved  in  the  preparation  of  the 
Community support frameworks. The Commission shall take a decision on the 
contribution  from  the  Funds  not  later  than  six  months  after  receiving  the 
relevant plan  or plans provided  they  contain  all the information  referred  to  in 
Article  15. 

23 

56 

The  Commission  shall  appraise  the  proposed  operational  programmes  for 
Objective  1 submitted  by the Member  States  to  determine whether  they  are 
consistent with the aims of the corresponding Community support  framework 
and compatible with other Community policies. It  shall  adopt  a decision on 
the  contribution  of  the  Funds  in  accordance  with  Article  27(1)  and  in 
agreement  with  the  Member  State  concerned,  provided  that  the  proposals 
include all the information referred to in Article 17. 

In order to expedite the examination of applications and the implementation of 
programmes, the Member  States may  include  in their plans  applications  for 
financial  contributions to operational programmes. When adopting its decision 
on a Community  support framework, the Commission  shall  also  approve, in 
accordance  with Article  27(1), the operational  programmes  submitted  at the 
same  time  as  the  development  plans,  provided  that  they  include  all  the 
information referred to in Article 17. 

Where Article 15(1) applies, the Commission shall adopt a single decision on 
a single programming document covering the points referred to in Articles 16 
and 17 and the contribution of the Funds referred to in Article 27(1). 

4. 

On the basis  of  the  development  plans,  the  Commission  shall  draw  up  thé 
single programming documents for Objectives 2 and 3, in agreement with the 
Member State concerned and in accordance with the procedures laid down in 
Articles 47 to 50. The EIB shall.be involved in the preparation  of the single 
programming documents. The Commission shall take a single decision on the 
contribution of the Funds pursuant to Article 27(1), not later than six months 
after  receiving  the  relevant  plan  providing  it  contains  all  the  information 
referred to in Articles 16 and 17. 

programme 

5.  Within  three  months  following  the  Commission  decision  approving  an 
the 
operational 
managing  authority 
programming 
information, with the  agreement  of the Monitoring  Committee  referred  to in 
Article  34, which  it  shall  send  to  the  Commission  within  one  month  of the 
Commission's  decision,  in  a  single  document,  referred  to  hereinafter  as  the 
"programming supplement." 

supplementary 

programming 

document, 

single 

adopt 

shall 

all 

or 

6. 

The  Commission  decisions  on  a  Community  support framework or  single 
programming  document  shall  be  published  in  the  Official Journal  of  the 
European  Communities.  At  the  request  of  the  European  Parliament,  the 
Commission  shall  transmit  to  it these decisions  and the  Community  support 
frameworks  it has approved. 

24 

57 

CHAPTER II:  CONTENT OF THE PROGRAMMING FOR OBJECTIVES 1,2 

AND3 

Article 15 - Development plans 

1. 

In  the  case  of  Objective  1,  where  the  Community  allocation  is  less  than 
or  does  not  substantially  exceed  EUR  1 billion,  the  Member  States  shall 
submit a plan as a single document containing the information  referred  to in 
paragraphs 2, 3 and 4 and in Article 17. 

In the case of Objectives 2 and 3, the Member States shall likewise submit a 
plan as a single document containing this information. 

In  any  case,  the  plans  shall  distinguish  between  the  financial  packages 
allocated  to  areas  receiving  transitional  support  and  those  allocated  to  the 
other areas covered by Objectives 1  or 2. 

2. 

The plans  submitted  under  Objectives  1, 2  and  3  shall  take  account  of  the 
guidelines referred to in Article 9(4) and the priorities expressed by the regions 
concerned, and shall include: 

(a) 

(b) 

quantified  description  of  the  current  situation  either  with  regard  to 
disparities, gaps and potential for development  in the regions covered 
by  Objective  1,  or  in  terms  of  conversion  in  the  areas  covered  by 
Objective  2  or  in  terms  of the development  of human  resources  and 
employment  polices  in  the  Member  State  and  the  areas  covered  by 
Objective  3; the financial  resources  deployed  and the main results of 
operations undertaken in the previous programming period with regard 
to the evaluation results available; 

a description of an appropriate strategy to attain the Objectives  referred 
to  in  Article  1  and  the  priorities  selected  for  the  development  and 
sustainable conversion of regions and areas, including rural areas, and 
the  related  development  of  human  resources  or  the  adaptation  and 
modernisation  of  policies  and  systems  for  education,  training  and 
employment;  the  result  of  the  ex  ante  evaluation  referred  to  in 
Article 40; 

In addition to those items listed, the plans submitted under Objective 3 
shall ensure the overall consistency of the strategy for employment and 
development  of  human  resources  throughout  the  territory  of  the 
Member State concerned, with particular regard to the national plan for 
implementing the European strategy on employment; they shall contain 
a description of the main aims of that strategy and the main means of 
attaining them; 

25 

58 

(c) 

an indication of the planned use of the financial contribution from the 
Funds,  the  EIB  and  the  other financial instruments;  in  the  case  of 
Objective  1, this  information  shall be  supplemented  by  an  indicative 
overall financing table summarising the national public and private and 
Community  financial  resources  allocated  and  corresponding  to 
each priority  adopted  in  the  plan;  the  expected  requirement  for 
technical assistance; 

(d) 

the results of the consultations carried out in accordance with Article 
14(1) and the arrangements taken and provisions envisaged to involve 
the partners. 

For regions covered by Objective  1, the development  plans shall  include all 
measures  for  economic  and  social  conversion,  the  development  of  human 
resources  having  regard  to  the frame of  reference  referred  to  in  point  3 of 
Article 1, and rural development. 

Where  a  Member  State  is  covered  in  its  entirety  by  Objective  1,  the 
development plan  shall cover the items  listed  in the second  subparagraph  of 
point (b) of paragraph 2. 

Member States shall indicate the particulars relating to each Fund, including 
the  amount  of  the  financial  contribution  requested  and  an  outline  of  the 
operational programmes planned with particular regard to their specific  aims 
and the main types of measure planned. 

Article 16 - Community support frameworks for Objective 1 

Community support frameworks under Objective  1  shall provide coordination 
of all Community structural assistance in the regions concerned, including, in 
accordance with point 3 of Article 1, assistance for the development of human 
resources,  in  particular  where  a Member  State  is  covered  in  its  entirety  by 
Objective 1. 

3. 

4. 

1. 

2. 

Each Community support framework shall include: 

(a) 

a  statement  of  the  strategy  and  priorities  for  joint  Community  and 
national  action,  their  specific  objectives,  quantified  where  they  lend 
themselves to quantification,  an evaluation  of the expected  impact in 
accordance  with  Article  40,  together  with  information  on  their 
consistency with the Community guidelines referred  to in Article 9(4) 
and  economic  policies,  the  strategy  for  employment  and  the 
development of human resources and, where appropriate, the regional 
policies of the Member State concerned; 

(b) 

an  indication  of  the  nature  and  the  duration  of  the  operational 
programmes not decided at the same time as the Community  support 
framework,  including their specific aims and the priorities selected; 

26 

59 

(c) 

an indicative financing plan specifying,  in accordance with Articles 27 
and  28,  for  each  priority  and  each  year  the  financial  allocation 
envisaged  for  the  contribution  of  each  Fund,  the  EIB,  the  other 
financial  instruments  where they  contribute  directly  to  the  financing 
plan concerned and total amount of eligible national public and private 
funding relating to the contribution of each Fund; 

this  financing  plan  shall  distinguish  the  funding  planned  for  the 
regions receiving transitional support; 

to 

without  prejudice 
the 
the  degressivity 
third subparagraph of Article 7(3), the total contribution  of the Funds 
planned for each year for each Community support framework shall be 
compatible with the relevant financial perspective; 

referred 

in 

to 

(d) 

an ex ante verification  of additionality  in accordance with Article  10 
and  appropriate  information  concerning  the  transparency  of  the 
relevant  financial  flows,  in  particular  from  the  Member  State 
concerned to the beneficiary regions; 

(e) 

the  provisions  for  implementing  a  Community  support framework 
shall include: 

(i) 

(ii) 

designation by the Member State of a single authority or body 
responsible  for  managing  the  Community  support  framework 
as referred to in Article 33; 

in  cooperation  with 

the  definition  and  utilisation 
the 
Commission of compatible computer systems for management, 
monitoring  and  evaluation.  These  systems  must  ensure 
effective  management  and  reliability  of  the  information  on 
implementation  and  results  and  comply  with  Articles  35, 41 
and 42; 

(iii) 

the planned arrangements for involving the partners; 

(f) 

where appropriate, information  on the resources required for measures 
to prepare, monitor and evaluate assistance. 

Article 17 - Operational programmes for Objective 1 

As a general rule, assistance covered by a Community support framework for 
Objective  1  shall  be  provided  in  the  form  of  an  integrated  operational 
programme for each region. 

27 

X?  ^ 

Each operational programme shall contain: 

(a) 

(b) 

(c) 

the  specific  priorities  of the  operational  programme,  their  consistency 
with  the  relevant  Community  support  framework,  their  quantified 
specific  targets,  an  evaluation  of  the  impact  expected  in  accordance 
with Article 40 and their consistency with the guidelines referred  to in 
Article 9(4); 

a  description  of  the  measures  planned  to  implement  the  priorities, 
including  the  information  needed  to  check  the  compliance  with  aid 
schemes  under  Article  92  of  the  Treaty;  where  appropriate,  the 
measures  required  to  prepare,  monitor  and  evaluate  the  operational 
programme; 

a  financing  plan  specifying  for  each  priority  and  each  year,  in 
accordance  with  Article  27, the  financial  allocation  envisaged  for  the 
contribution of each Fund, the EIB, the other financial  instruments and 
the total amount of eligible national public and private funding  relating 
to the contribution of each Fund; 

this  financing  plan  shall  distinguish  the  funding  planned  for  the 
regions receiving transitional  support; 

without  prejudice 
third 
to  the  degressivity  referred 
subparagraph  of  Article  7(3),  the  total  contribution  of  the  Funds 
planned  for  each  year  shall  be  compatible  with  the  relevant  financial 
perspective; 

the 

to 

in 

(d) 

the  provisions  for  implementing  an  operational  programme  shall 
include: 

(i) 

designation by the Member  State of a single authority  or body 
responsible  for  managing 
the  operational  programme  as 
referred  to in Article 33; 

(ii) 

a description  of the arrangements  for managing  the  operational 
programme; 

(iii) 

a description of the systems for monitoring and evaluation; 

(iv) 

in  cooperation  with 

the  definition  and  utilisation 
the 
Commission of compatible computer systems for  management, 
monitoring  and  evaluation.  These  systems  shall  ensure 
effective  management,  reliability  and  availability  of 
the 
information  on  implementation  and  results,  and  shall  comply 
with Articles 35, 41 and 42; 

28 

{J1 

(v) 

(vi) 

a definition  of the rules on the mobilisation  and circulation of 
funding to ensure that flows are transparent; 

the  specific  measures  for  checking  on  the  operational 
programme, including a definition of the roles of the parties; 

(vii) 

the  respective  roles  and  responsibilities  of  the  partners  in 
monitoring and evaluating the operational programme. 

3. 

The programming supplement shall contain: 

(a) 

the  measures  implementing  the  corresponding  priorities  in  the 
operational programme; their ex ante evaluation under Article 40; the 
relevant monitoring indicators in accordance with Article 35; 

(b) 

definition of the types of final beneficiary of measures; 

(c) 

(d) 

the criteria  for  selecting  the operations financed under  each measure, 
including the method for appraising their viability in advance; 

the financing plan  specifying,  for  each  measure,  in  accordance  with 
Articles  27  and  28,  the  financial  allocation  envisaged  for  the 
contribution  of  each  Fund,  the  EIB,  the  other  existing  financial 
instruments  and  the  amount  of  eligible  national  public  and  private 
funding  relating  to  the  contribution  of  the  Funds;  the  percentage 
contribution of a Fund to a measure shall be determined in accordance 
with Article 28 and the total amount of community funds  allocated to 
the priority concerned; 

this  financing  plan  shall  distinguish  the  funding  planned  for  the 
regions receiving transitional support; 

(e) 

the measures planned to ensure adequate publicity  for  the operational 
programme in accordance with Article 45. 

Where a number of partners are contributing to the finance  of assistance at national, 
regional, local or other level, their respective commitments shall be the subject  of an 
agreement  among  them  designed  to  ensure  that  the  funds  are  made  available 
efficiently  and  in  accordance  with  the  plan  for financing. This  agreement  shall  be 
attached to the programming supplement. 

Article 18 - Single programming documents for Objectives 2 and 3 

In  accordance  with  the  second  subparagraph  of  Article  15(1),  assistance  under 
Objectives 2 and 3 shall take the form of single programming documents. 

« 

62 

An  Objective  2  single  programming  document  shall  provide  coordination  of  all 
Community  structural  assistance,  including  assistance  for  the  development  of  human 
resources  and  rural  development,  in  the  areas  covered  by  Objective  2  within  each 
region  referred  to  in  Article  12(2), and  including  areas  receiving  transitional  support 
from the ERDF. 

An  Objective  3  single  programming  document  shall  provide  coordination  of  all 
Community  structural  assistance  for the development  of human resources  in the  areas 
refened  to in Article  5, including the areas receiving  support from the ESF under  the 
second subparagraph of Article 6(2). 

CHAPTER III:  COMMUNITY INITIATIVES 

Article 19 - Content 

1. 

The Community Initiatives shall cover the following  fields: 

(a) 

cross-border,  transnational  and  inter-regional  cooperation  intended  to 
encourage  the  harmonious  and  balanced  development  and  spatial 
planning of the European territory; 

(b) 

rural  development; 

2. 

1. 

2. 

3. 

(c) 

trans-national  cooperation  on  new  means  of  combatting  all  forms  of 
discrimination and inequalities in access to the labour market. 

Programmes  approved  under  the  first  two  indents  of  paragraph  1 may  cover 
areas other than those referred  to in Articles 3 and 4. 

Article 20 - Preparation, approval and  implementation 

In accordance with the procedure referred  to in Article  51,  and  after  notifying 
them  for  information  to  the  European  Parliament,  the  Commission  shall  lay 
down  guidelines  describing,  for  each  Initiative,  the  aims,  scope  and  the 
appropriate method  of implementation. Those  guidelines  shall be published  in 
the Official Journal of the European  Communities. 

Each area referred  to in Article  19(1) shall be financed  by a single Fund,  either 
the  ERDF,  the  EAGGF  Guidance  Section  or  the  ESF.  The  decision  on  the 
contribution  of  a Fund  may  amplify  the  scope  of  each  Fund  as  defined  in  the 
Regulations  specific  to  each  Fund,  but  without  broadening  it,  to  include  all 
the  Community  Initiative  programme 
measures  required 
concerned. 

to  implement 

On the basis  of proposals  drawn up in  accordance with the guidelines  and  the 
ex ante  evaluation  carried  out in accordance  with  Article 40, the  Commission 
shall  decide  on  Community  Initiative  programmes  in  accordance  with 
Article 27. 

30 

83 

The  Community  Initiative  programmes  shall  be  revised  by  the  Commission 
after the mid-term evaluation referred  to in Article 41. 

CHAPTER IV:  INNOVATIVE MEASURES AND TECHNICAL ASSISTANCE 

Article 21 - Innovative  measures 

1. 

At  the initiative  of the  Commission,  and  subject  to  a ceiling  of  0.7%  of  their 
respective  annual  funding,  the  Funds  may  finance  innovative  measures  at 
Community  level.  These  shall  include  studies,  pilot  projects  and  exchanges 
of experience. 

Such  innovative  measures  shall  contribute  to  the  preparation  of  innovative 
methods  and  practices  designed  to  improve  the  quality  of  assistance  under 
Objectives  1,  2  and  3.  They  shall  be  implemented  in  a  simple,  transparent 
fashion  and in accordance with the principles of sound financial management. 

2. 

Each field for pilot projects  shall be financed by one Fund  only. The  decision 
on the contribution  of a Fund may amplify  the  scope of each Fund  as  defined 
in the Regulations  specific  to each Fund, but without broadening it, to  include 
all measures required to implement the pilot project  concerned. 

Article 22 - Technical  assistance 

At  the  initiative  or on behalf  of the Commission,  and  subject  to  a ceiling  of  0.3%  of 
their respective annual allocation, the Funds may finance the preparatory,  monitoring, 
evaluation  and checking measures necessary  for implementing  this Regulation.  These 
shall include: 

(a) 

(b) 

studies,  including  studies  of  a  general  nature,  concerning  the  operations  of 
the Funds; 

measures  of technical  assistance, the  exchange  of  experience  and  information 
aimed  at the partners, the final beneficiaries  of assistance  from  the Funds  and 
the general public; 

(c) 

the  installation,  operation  and  interconnection  of  computerised  systems  for 
management, monitoring and evaluation. 

Article 23 - Approval of innovative measures and technical  assistance 

The  Commission  shall  appraise  applications  for  a contribution  from  the  Funds  under 
Articles 21 and 22 on the basis of the following  details: 

(a) 

a  description  of  the  proposed  assistance,  its  scope,  including  geographical 
coverage, and specific  aims; 

31 

84 

(b) 

an ex ante evaluation; 

(c) 

(d) 

the  bodies 
the beneficiaries; 

to  be 

responsible 

for 

implementing 

the  assistance  and 

the  timetable  and  financing  plan,  including  contributions  from  any  other 
source of Community finance; 

(e) 

provisions to ensure efficient  and correct  implementation; 

(f) 

any  other  information  necessary  to verify  compatibility  with  the  Community 
policies and with the guidelines referred  to in Article 9(4). 

The Commission shall approve the contribution of the Funds when this  information 
enables it to appraise the application. 

CHAPTER V:  DEFINITION OF MAJOR PROJECTS 

Article 24 -  Definition 

As  part  of  any  assistance,  the  Funds  may  finance  expenditure  in  respect  of  major 
projects, namely those: 

(a) 

(b) 

1. 

which comprise an economically indivisible series of works fulfilling  a precise 
technical function  and which have clearly identified  aims, and, 

whose  total  cost  taken  into  account  in  determining  the  contribution  of  the 
Funds exceeds 50 million euros. 

Article 25 - Approval and implementation 

During  the implementation  of assistance, where  a Member  State  or  managing 
authority proposes that the Funds contribute to a major  project,  it shall  inform 
the Commission in advance and provide the following  information: 

(a) 

the body to be responsible for  implementation; 

(b) 

the nature of the investment and a description of it, its financial volume 
and location; 

(c) 

the timetable for implementing the project; 

(d) 

a  cost-benefit  analysis,  including  financial  costs  and  benefits,  and  a 
risk  analysis;  for  investments  in  infrastructure,  an  analysis  of  the 
socio-economic costs and benefits, including an indication of the likely 
rate of use; 

32 

65 

(e) 

information  on  the  economic  viability  of  the  project;  in  the  case  of 
investment  in  production  facilities,  the  analysis  shall  include  the 
market  prospects  in the  sector  concerned  and  an  analysis  of the  likely 
return on the project; 

(f) 

the direct and indirect effects  on employment; 

(g) 

(h) 

(i) 

information  allowing  an  evaluation  to  be  made  of  the  environmental 
impact  and  the  implementation  of  the  precautionary  principle  and  the 
principles  that  preventive  action  should  be  taken,  that  environmental 
damage  should  as  a  priority  be  rectified  at  source  and  that  the 
polluter should  pay,  and  compliance  with  the  Community  rules  on 
the environment; 

information  needed  to  assess  compliance  with  competition  rules, 
especially rules on State aids; 

in  the  case  of  investments  in  infrastructure,  the  foreseeable  impact  on 
the  development  or  conversion  of  the  region  concerned,  and  the 
application of Community rules on public contracting; 

(j) 

an  indication  of  the  influence  of  the  contribution  of  the  Funds  on 
whether the project will be implemented; 

(k) 

the  financing  plan  and  the  total  financial  resources  expected  from  the 
contribution of the Funds and any other source of Community  finance. 

2. 

The Commission  shall appraise the project, consulting the EIB if necessary, in 
the light of the following  factors: 

(a) 

the 
type  of 
revenue expected; 

investment  planned  and,  where  applicable, 

the 

(b) 

.  the results of the cost-benefit  analysis; 

(c) 

the evaluation of the impact on the environment, 

(d) 

consistency with the priorities in the corresponding  assistance; 

(e) 

compliance with other Community policies; 

(f) 

(g) 

the  expected  economic  and  social  benefits,  particularly  in  terms  of 
employment, having regard to the financial resources deployed; 

the  coordination  of  the  financial  instruments  and  the  combination 
of  assistance  and  loans  referred  to  in  the  second  subparagraph  of 
Article 9(3). 

33 

66 

3. 

1. 

2. 

3. 

Within  three  months  of  receipt  of  the  information  referred  to  in  paragraph  1, 
the  Commission  shall  confirm  or  amend  the  level  of  the  Community 
contribution.  If  it  considers  that  the  project  appears  not  to justify  either  part 
or all  the  contribution  of  the  Funds,  it  may  withhold  part  or  all  of  that 
contribution. 

CHAPTER VI: GLOBAL GRANTS 

Article 26 - Global grants 

In  agreement  with  the  Commission,  a  Member  State  or  managing  authority 
may decide to entrust to appropriate intermediaries, including local authorities, 
regional  development  bodies  or  non-governmental  organisations, 
the 
implementation  and  management  of  part  of  the  assistance,  hereinafter 
referred  to as a "global  grant",  and preferably  one to assist  local  development 
initiatives. 

In the case of Community Initiative programmes  and innovative measures, the 
Commission  may  decide  to  employ  a  global  grant  for  all  or  part  of  the 
programme. 

The  intermediaries,  who  must  provide  guarantees  of  solvency  and  have  the 
necessary  administrative  capability,  shall  be  present  or  represented  in  the 
regions  concerned,  shall  operate  in  the  public  interest  and  shall  properly 
involve  the  socio-economic  interests  directly  affected  by  the  implementation 
of the planned measures. 

The choice of a global grant  shall  appear in the corresponding  decision  on the 
contribution  of  the  Funds  as  a  special  implementing  provision  as  defined  in 
point  (d) of Article  17(2). The procedures  for  the use of global  grants  shall be 
agreed between the managing authority and the intermediary body  concerned. 

In the case of Community Initiative programmes  and innovative measures, the 
procedures  for  the  use  of  global  grants  shall  be  the  subject  of  an  agreement 
intermediary  body  concerned.  The 
between 
programming 
the 
single programming document for the assistance dealing with the global grant. 

the  Commission  and  the 

that  part  of 

supplement 

shall  not 

relate 

to 

4. 

The procedures for the use of the global grant shall detail in particular: 

(a) 

the measures to be implemented; 

(b) 

the criteria for choosing  beneficiaries; 

(c) 

the conditions and rates of assistance from the Funds, including the use 
of any interest accruing; 

(d) 

the arrangements for monitoring and evaluating the global grant; 

67 

(e) 

where  applicable,  any use  of  a bank  guarantee,  with  the  agreement  of 
the Commission. 

TITLE III 

CONTRIBUTIONS AND FINANCIAL MANAGEMENT  BY THE  FUNDS 

CHAPTER I:  FINANCIAL CONTRIBUTIONS BY THE FUNDS 

Article 27 - Decision on a Funds  contribution 

1. 

Provided  that  all  the  requirements  of  this  Regulation  are  fulfilled, 
the 
Commission  shall adopt  in a single decision  the contribution  of  all the Fundus, 
as a general rule within  six months of receipt  of the application  for  assistance. 
The  decision  shall  distinguish  clearly  the  regions  and  areas  receiving 
transitional  support. 

A maximum  contribution  from  the Funds  shall be  set  for  each priority  in  the 
assistance. 

For any given period, a measure may not receive a financial  contribution  from 
more than one Fund at a time. 

No  operation  may  benefit  simultaneously  from  a  contribution  from  a  Fund 
under Objectives  1, 2 or 3 and under a Community Initiative. 

The  contribution  of  the  Funds  to  operational  programmes  undertaken  in 
implementing  a  Community  support  framework  shall  be  consistent  with  the 
financing plan laid down in the corresponding  Community support  framework 
concerned. 

In implementing  measures, the contribution  of the Funds may take one of the 
following  forms:  non-repayable  direct  assistance  (hereinafter  referred  to  as 
"direct assistance"), repayable assistance, an interest-rate subsidy, a guarantee, 
an equity holding, a venture-capital holding or another form of finance. 

Assistance  repaid  to  the  managing  authority  or  to  another  public  authority 
shall be reallocated to the same purpose. 

Article 28 - Differentiation  of the rates of contribution 

2. 

3. 

1. 

The  contribution  of  the  Funds  shall  be  differentiated 
the  following: 

in  the  light  of 

(a) 

the gravity of the specific problems, in particular of a regional or social 
nature, to be tackled by the assistance; 

35 

68 

(b) 

(c) 

(d) 

(e) 

(f) 

the  financial  capacity  of  the  Member  State  concerned,  taking  into 
account  in  particular  its  relative  prosperity  and  the  need  to  avoid 
excessive increases in budget expenditure; 

the  importance  attaching  to  the  assistance  and  the  priorities  from  the 
Community  viewpoint,  as  refened  to  in  the  second  paragraph  of 
Article  1,  in  particular  for  the  elimination  of  inequalities,  and  the 
promotion  of equality, between men and women  and for  the protection 
and 
the 
application  of  the  precautionary  principle,  of  the  principle  of 
preventive action, and the polluter-pays principle; 

the  environment,  principally 

improvement  of 

through 

the  importance  attaching  to  the  assistance  and  priorities  from  the 
regional and national viewpoint; 

the  particular  characteristics  of  the  type  of  assistance  and  priority 
concerned; 

the  optimum  utilisation  of  financial  resources  in  the  financing  plans, 
including  the  combination  of  public  and  private  resources,  and  the 
use  made  of  appropriate  financial  instruments  in  accordance  with 
Article 9(3). 

The  contribution  from  the  Funds  shall  be  calculated  in  relation  to  either  the 
total  eligible  cost  of,  or  the  total  public  or  similar  eligible  expenditure 
(national, regional or local, and Community) under, each assistance. 

The contribution of the Funds shall be subject  to the following  ceilings: 

(a) 

a maximum  of  75%  of the total  eligible  cost  and,  as  a general  rule, at 
least 50% of eligible public expenditure in the case of measures  carried 
out  in  the  regions  covered  by  Objective  1.  Where  the  regions  are 
located  in  a  Member  State  covered  by  the  Cohesion  Fund,  the 
Community  contribution  may  rise,  in  exceptional  and  duly  justified 
cases,  to  a  maximum  of  80%  of  the  total  eligible  cost  and  to  a 
maximum of 85% of the total eligible cost  for the most remote  regions 
and  for  the  outlying  Greek  islands  which  are under  a handicap  due  to 
their distant  location; 

(b) 

a maximum  of  50% of the  total  eligible  cost  and,  as  a general  rule,  at 
least 25% of eligible public expenditure in the case of measures carried 
out in areas covered by Objective 2 or Objective 3. 

The contribution of the Funds shall comply with the ceilings on the rate of aid 
and on combinations of aid set in the field of State aids. 

69 

Where  the  assistance  concerned  entails  the  financing  of  revenue-generating 
investments,  the  contribution  from  the  Funds  to  these  investments  shall  be 
determined  in  the  light  of  their  intrinsic  characteristics,  including  the  size  of 
the  gross  self-financing  margin  which  would  normally  be  expected  for  the 
class  of 
the  macroeconomic 
in 
circumstances  in  which  the  investments  are  to  be  implemented,  and  without 
there  being  any  increase  in  the  national  budget  effort  as  a  result  of  the 
contribution by the Fund. 

investments  concerned 

light  of 

the 

The contribution of the Funds shall be subject to the following  limits: 

(a) 

in  the  case  of  investment  in  infrastructure  generating  substantial 
revenue: 

(i) 

40%  of  the  total  eligible  cost  in  the  regions  covered  by 
Objective  1, which may be increased by not more than an extra 
10% in the Member States covered by the Cohesion Fund; 

(ii) 

25% of the total cost in the areas covered by Objective 2; 

(iii) 

these  rates  may  be  increased  by  an  amount  obtained  by  using 
forms  of finance  other than direct  assistance, provided  that  this 
increase does not exceed  10% of the total eligible cost; 

(b) 

in the case of investments in firms: 

(i) 

(ii) 

(iii) 

35%  of  the  total  eligible  cost  in  the  regions  covered  by 
Objective  1; 

15%  of  the  total  eligible  cost  in  the  areas  covered  by 
Objective 2; 

in  the  case  of  investments 
in  small  and  medium-sized 
businesses, these rates may be increased by an amount  obtained 
by using forms  of finance other than direct assistance, provided 
that this increase does not exceed  10% of the total eligible cost. 

References  in  paragraphs  3  and  4  to  the  regions  and  areas  covered  by 
Objective  1 and  2  shall  also  be  construed  as  references  to  regions  or  areas 
receiving transitional support under Article 6(1) and 6(2) respectively. 

The  measures  carried  out  on  the  Commission's  initiative  referred  to  in 
Articles  21  and  22  may  be  financed  at  a rate  of  100% of  the  total  cost.  The 
measures  carried  out  on  behalf  of  the  Commission  referred  to  in  Article  22 
shall be  financed  at  a rate  of  100% of the  total  cost.  The rates  in this  Article 
shall  apply  to  technical  assistance  measures  within  the  framework  of 
programming and the Community initiatives. 

37 

70 

1. 

2. 

3. 

4. 

1. 

2. 

Article 29 - Eligibility 

Expenditure in respect of operations shall be eligible for  a contribution from 
the Funds only if these operations form part of the assistance concerned. 

Expenditure may not be considered eligible for a contribution from the Funds 
if  it  has  been  paid  by  the  final  beneficiary  before  the  date  on  which  the 
application for  assistance reaches the Commission. That date shall constitute 
the starting date for the eligibility of expenditure. 

The  final  date  for  the  eligibility  of  expenditure  shall *be laid  down  in  the 
decision  to  grant  a contribution from the Funds. It  shall  relate  to payments 
made by the final beneficiaries. It may be extended by the Commission at the 
duly justified  request  of  the  Member  State  in  accordance  with  Articles  13 
and 14. 

The relevant national rules shall apply to eligible expenditure except where, as 
necessary,  the  Commission  lays  down  common  rules  on  the  eligibility  of 
expenditure in accordance with the procedures referred to in Articles 47 to 51. 

The Member States shall ensure that an operation shall retain the contribution 
from  the  Funds  only  if  that  operation  does  not  undergo  a  substantial 
modification: 

(a) 

(b) 

affecting  its nature or its implementation conditions or giving to a  firm 
or a public body an undue advantage; 

and resulting before the end of a period of 5 years, as the case may be, 
either  from  a  change  in  the  terms  of  ownership  in  an  item  of 
infrastructure  or  a  cessation  or  change  of  location  in  a  productive 
activity. 

Where such a change occurs, Article 38 shall apply. 

CHAPTER H:  FINANCIAL MANAGEMENT 

Article 30 - Budget commitments 

Budget commitments of Community funds  shall be made on the basis of the 
decision to grant a contribution from the Funds. 

Commitments in respect of assistance to be carried out over a period of two or 
more years shall, as a general rule, be effected  annually. The first commitment 
shall  be  made  when  the  Commission  lays  down  its  decision  approving  the 
assistance.  Subsequent  commitments  shall  be  effected  as  a  general  rule  by 
30 April each year. 

38 

71 

3. 

1. 

The Commission  shall automatically  decommit  any part  of  a commitment  for 
which it has not received  an acceptable payment  application by the end of the 
second  year  following  the year  of commitment  or by  the  end  of  the  deadline 
for  the  transmission  of  the  final  report  referred  to  in  Article  36(1);  the 
contribution  from  the  Funds  to  that  assistance  shall  be  reduced  by  that 
amount. 

For  assistance  to be  carried out over  a period  of less than two years, the  total 
amount  of  the  contribution  from  the  Funds  shall  be  committed  when  the 
Commission adopts its decision granting a contribution from the Funds. 

Article 31 - Payments 

Payment  by  the  Commission  of  the  contribution  from  the  Funds  shall  be 
made,  in  accordance  with  the  corresponding  budget  commitments,  to  the 
national, regional  or local  authority  or body  designated  for  the purpose  in the 
application  submitted  through  the  Member  State  concerned  (the  "paying 
authority" for the purposes of this Article). 

Payments shall relate to the earliest commitment made under Article 30. 

Payment may take the form  of advances, interim payments or payments of the 
final  balance.  Interim  payments  and  payments  of  the  balance  shall  relate  to 
expenditure actually paid out, which must correspond to payments effected  by 
invoices  or  accounting 
the  final  beneficiaries,  supported  by  receipted 
documents of equivalent probative value. 

As  a  general  rule,  the  Commission  shall  make  interim  payments  within  no 
more than two months from receipt of an acceptable  application. 

The  paying  authority  shall  ensure  that  final  beneficiaries  receive  payment  of 
their  contribution  from  the  Funds  as  quickly  as  possible  and  in  full.  No 
deduction,  retention  or  further  specific  charge  which  would  reduce  these 
amounts shall be made. 

2. 

When the first commitment  is made, the Commission  shall pay  an advance  to 
the  paying  authority.  This  may  not  exceed  10%  of  the  contribution  of  the 
Funds  to  the  operation  in  question.  The  payment  may  be  subdivided  if 
necessary  over  several  budget  years  depending  on  the  availability  of 
budget  funds. 

Throughout  the  lifetime  of  assistance,  the  paying  authority  shall  use  the 
advance  to  disburse  the  Community  contribution  to  expenditure  actually  paid 
and declared to the Commission in accordance with paragraph 3. 

All  or  part  of  the  advance  shall  be  repaid  by  the  paying  authority  if  no 
payment  application  is  sent  to  the  Commission  within  18  months  of  its 
decision to grant a contribution from the Funds. 

39 

72 

Any  interest  earned  on the advance payment  shall be  allocated  to  the  form  of 
assistance concerned. 

Interim payments  shall be made to reimburse  expenditure  actually  paid  under 
the  Funds  as  certified  by  the paying  authority.  Such  payments  shall  relate  to 
measures contained in the programming  supplement  and the financing plan  for 
the assistance and shall be subject to the following  conditions: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the  programming  supplement  containing  all  the  information  specified 
in Article  17(3) has been presented to the Commission; 

the  annual  implementation  report  for  the previous  year  containing  all 
the  information  specified  in  Article  36  has  been  transmitted  to  the 
Commission by the required deadline; 

the  information  required  to  carry  out  the  mid-term  evaluation  of  the 
assistance referred  to in Article 41 has been transmitted; 

decisions  taken  by  the  managing  authority  and  the  Monitoring 
Committee  are  consistent  with  the  total  amount  of  the  contribution 
from the Funds granted to the priorities  concerned; 

action has been taken within the time laid down in response to requests 
for  adjustments  as  referred  to  in  Article  33(3)  or  the  requests  for 
corrective measures as referred  to in Article 37(4); 

first  subparagraph  of 
no  suspension  of  payments  under 
Article 38(2)  has  been  decided,  and  no  decision 
to  launch  an 
infringement  procedure under Article  169 of the Treaty has been  taken 
by  the  Commission,  concerning  the  measure  within  the  assistance 
in question. 

the 

The Member State and the designated authority shall be informed  immediately 
if one of these conditions is not fulfilled  and they shall take the necessary  steps 
to remedy the situation. 

Member  States  shall  ensure,  as  far  as  possible,  that  applications  for  interim 
payments  are presented  to  the  Commission  in batches  three  times  a year,  the 
last application being presented no later than 31 October. 

Applications  for  interim  payments  shall  distinguish,  for  each  priority,  the 
expenditure incurred in regions and areas receiving transitional  support. 

The  combined  total  of  the  payments  referred  to  in  paragraph  2  and  in  this 
paragraph which are made in respect  of an assistance shall not  exceed  95% of 
the contribution from the Funds to that package. 

40 

73 

4. 

The final balance of the assistance shall be paid if: 

(a) 

(b) 

(c) 

the paying authority submits to the Commission, within six months of 
the  deadline  for  payment  laid  down  in  the  decision  granting  a 
contribution  from  the  Funds,  a  certified  statement  of  expenditure 
actually paid; 

the final report on implementation has been submitted to and approved 
by the Commission; 

the Member State has sent the Commission the statement referred to in 
the sixth indent of Article 37(1). 

The final payment of the balance may no longer be corrected at the request of 
the Member State if the designated authority has not sent an application to the 
Commission within nine months from the date of transfer of the final balance. 

The  Member  States  shall  designate  the  authorities  empowered  to  issue  the 
certificates and declarations referred to in paragraphs 3 and 4. 

No  later  than  30  April  of  each  year,  the  Member  States  shall  send  the 
Commission  their  updated  forecasts  of  applications  for  payment  for  the 
current year and the year following. 

The  Commission  shall  lay  down  appropriate  payment  procedures  for 
innovative  measures  referred  to  in  Article  21  and  the  measures  referred  to 
Article 22. 

Article 32 - Use of the euro 

5. 

6. 

7. 

Commission decisions, commitments and payments shall be denominated and carried 
out in euros in accordance with the arrangements to be drawn up by the Commission 
under the procedures referred to in Articles 47 to 51. 

TITLE IV 

EFFECTIVENESS OF ASSISTANCE FROM THE FUNDS 

CHAPTER I:  MONITORING 

Article 33 - Management by the designated authority 

1. 

The authority or body designated by the Member State to manage assistance, 
hereinafter  referred  to  as the  "managing  authority"  for  the  purposes  of  this 
Regulation,  shall be responsible  for  the  efficiency  and correctness  of overall 
management and implementation, and in particular: 

41 

74 

* 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

for setting up a system to gather financial and statistical information  on 
implementation  and  monitoring  indicators  as referred  to  in  Article  35 
and for making these available in accordance with arrangements  agreed 
with the Commission; 

for  preparing  the  financing  plan  for  the  assistance,  in  particular 
including  details  of  the  funds  made  available  by  the  partners 
contributing  to  the  financing  under  an  agreement  as refened  to  in  the 
second subparagraph of Article 17(3); 

for installing and using compatible computer  systems for  management, 
monitoring  and  evaluation  which  will  ensure  effective  management 
and the reliability  and  availability  of the  information  referred  to  at  (a) 
and which comply with Articles 35, 41 and 42; 

for  drawing  up  and  submitting  to  the  Commission  the  annual 
implementation report  and, where appropriate  and without prejudice  to 
Article 31, the payment applications; 

for organising, together with the Commission, the mid-term  evaluation 
referred to in Article 41 ; 

for  ensuring  that  other  bodies  taking  part  in  the  management  and 
implementation  of the assistance maintain  either a separate  accounting 
system  or  an  adequate  accounting  code  for  all  transactions  relating  to 
the package; 

the  correctness  of  operations  financed  under 

the 
for  ensuring 
assistance,  particularly  by  implementing  internal  controls  in  keeping 
with  the principles  of  sound  financial  management  and  acting  on  any 
conclusions  or  recommendations  made  under  paragraph  3  of  this 
Article or under Article 37(4); 

for ensuring compliance with other Community policies; in the context 
of  the  application  of  Community  rules  on  the  award  of  public 
contracts,  notices  sent  for  publication  in  the  Official  Journal  of  the 
European Communities shall specify  those projects  in respect of which 
a contribution from the Funds has been applied for or granted; 

(i) 

compliance  with  the  obligations  concerning  information  and  publicity 
referred  to in Article 45. 

With  the  agreement  of  the  Monitoring  Committee,  the  managing  authority 
may,  if necessary,  adapt  the programming  supplement,  without  changing  the 
total  amount  of  the  contribution  from  the  Funds  granted  to  the  priority 
concerned  nor  its  specific  targets.  It  shall  inform  the  Commission  of  its 
decision within one month. 

42 

75 

Amendments to the contents of the decision on the contribution of the Funds 
shall  be  decided  by  the  Commission,  in  agreement  with  the  Member  State 
concerned, after the Monitoring Committee has delivered its opinion. 

3. 

The Commission and the managing authority shall review the main outcomes 
of  the  previous  year  at  least  once  a  year,  particularly  when  the  annual 
implementation report referred to in Article 36 is presented, in accordance with 
arrangements to be defined by common accord with the Member State and the 
managing authority concerned. 

After this review, the Commission shall make comments or recommendations 
addressed to the Member  State and the managing  authority. Where relevant, 
these shall be accompanied by requests for adjustments aimed at improving the 
quality  or  effectiveness  of  the  monitoring  or  management  of  the  assistance 
and, where applicable, to implement the conclusions formulated  under Article 
37(4).  The  managing  authority  shall  adapt  the  programming  supplement 
accordingly in line with paragraph 2, within a period of time laid down by the 
Commission.  If  necessary,  the  assistance  in  question  shall  be  reviewed  in 
accordance with Articles 12, 13 and 14. 

Article 34 - Monitoring Committees 

1. 

Each  Community  support framework or  single  programming  document  and 
each operational programme shall be supervised by a Monitoring Committee. 

Monitoring Committees shall be set up by agreement between the designated 
managing  authority  and  the  partners.  The  partners  shall  seek  to  ensure 
balanced participation of women and men. 

The Monitoring Committees shall be set up within no more than three months 
of the decision on the contribution of the Funds. 

The acts of the Monitoring Committee shall be the legal responsibility of the 
Member State. 

2. 

A representative of the Commission and, where appropriate, of the EIB, shall 
participate in the work of the Committees in an advisory capacity. 

The representatives of all the partners which contribute to the financing of the 
assistance and, in the case of human resources, the representatives of the other 
partners, shall have the right to vote when the Committee adopts its decisions. 
The representatives of the other partners shall serve in an advisory capacity. 

The  Monitoring  Committee  shall  be  chaired  by  a  representative  of  the 
managing authority. 

43 

76 

3. 

The  Monitoring  Committee  shall  satisfy  itself  as  to  the  effectiveness  and 
quality  of  the  implementation  of  assistance  in  order  to  attain  the  specific 
objectives  and the Objectives referred  to in Article  1. To that end: 

(a) 

(b) 

their  consistency  with 

it  shall  discuss  the  strategic  guidelines  and  priorities  for  assistance, 
ensuring 
in 
Article 9(4),  with  the  economic,  social  and,  where  appropriate, 
regional  policies  of  the  Member  State,  with  the  frame  of  reference 
referred  to in Article  1(3) and with the Community policies; 

the  guidelines  referred 

to 

implementation,  particularly 
it  shall  examine 
achievement of the quantified  targets set for the different  measures and 
the mid-term evaluation referred  to in Article 41. 

results  of 

the 

4. 

1. 

The  Monitoring  Committee  may  propose  to  the  managing  authority  any 
adjustment  or  review  of  the  assistance  likely  to  expedite  attainment  of  the 
Objectives  referred  to  in  Article  1.  Such  adjustments  shall  be  made  in 
accordance with Article 33(2). 

Article 35 - Monitoring  indicators 

The  managing  authority  and  the  Monitoring  Committee  shall  carry  out 
monitoring  by  reference  to  physical  and  financial  indicators  specified,  in 
particular,  in the programming  supplement  on the basis  of the  Commission's 
proposals on methodology. The indicators  shall relate to the specific  character 
of  the  assistance  concerned,  its  objectives  and  the  socio-economic,  structural 
and  environmental  situation  of  the  Member  State  and  shall  take  account, 
where  appropriate,  of  the  existence  of  regions  or  areas  receiving  transitional 
support. These indicators shall include, in particular, those used  for  allocating 
the reserve referred  to in Article 43. 

2. 

The monitoring indicators shall be arranged and quantified  in such a way as to 
show, for the assistance in question: 

(a) 

(b) 

the specific  quantified  targets for the measures and priorities, and their 
mutual consistency; 

the  stage  reached  in  the  priorities  and  measures  in  terms  of  physical 
implementation, results, and impact; 

(c) 

the progress of the financing plan. 

Where the nature of the assistance permits, the statistics shall be broken  down 
by  sex.  The  financial  and  physical  indicators  shall  be  broken  down  in 
accordance  with  a  regional  and  sectoral  nomenclature  proposed  by  the 
Commission. 

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77 

3. 

Major  projects  shall  be  the  subject  of  separate  financial  and  progress 
indicators designed to take account of their specific characteristics. 

Article 36 - Annual implementation report 

1. 

For all multiannual assistance, the designated managing authority shall submit 
a progress report to the Commission within six months of the end of each full 
calendar  year  of  implementation.  A  final  report  shall  be  submitted  to  the 
Commission at the latest six months of the final date of eligibility. 

For all assistance to be implemented over a period of less than two years, the 
authority designated for the purpose by the Member State shall submit a report 
to  the  Commission  within  six  months  of  the  last  payment  made  by  the 
paying authority. 

The  report  shall  be  examined  and  approved  by  the  Monitoring  Committee 
before it is sent to the Commission. 

2. 

All annual and final implementation reports shall contain at least the following 
information: 

(a) 

(b) 

(c) 

in  particular 

a  description  of  the  context  in  which  the  assistance  is  being 
implemented, 
trends, 
consistency  with  other  national,  regional  or  sectoral  policies  and  the 
frame of reference  referred  to  in point  3 of Article  1 and the mutual 
consistency  of assistance from the different  Funds and other  financial 
instruments; 

the  main  socio-economic 

the  progress  in  the  implementation  of  priorities,  measures  and 
operations,  when  the  assistance  takes  such  a  form,  for  each  of  the 
Funds, priorities and measures, in relation to their specific targets, with 
a quantification  of the physical indicators and indicators of results and 
impact referred to in Article 35; 

the  financial  implementation  of the  assistance,  summarising  for  each 
measure the expenditure actually paid out by the paying authority and 
payments received from the Commission and quantifying  the  financial 
indicators  referred  to  in  Article  35; financial implementation  in  the 
areas  transitional  support  shall  be  presented  separately  in  respect  of 
each priority; 

(d) 

the  steps  taken  by  the  managing  authority  and  the  Monitoring 
Committee to ensure the quality and effectiveness  of implementation, 
in particular: 

(i) 

the monitoring and supervision of operations; 

(ii) 

the use made of technical assistance; 

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(iii) 

the  evaluation  systems  set  up,  especially  the  results  and  the 
gathering of the information  needed for monitoring; 

(iv) 

the reliability of the management  system; 

(v) 

the  action  taken  on  the  recommendations,  the  requests  for 
adjustments  made  under  Article  33(3)  or  the  requests  for 
corrections made under Article 37(4); 

(vi) 

the  measures  taken  to  ensure  publicity  for  the  assistance  in 
accordance with Article 45; 

(e) 

the steps taken to ensure compliance with other Community policies; 

(f) 

a separate section, where appropriate, on the progress  and  financing  of 
major  projects. 

CHAPTER H:  FINANCIAL CONTROL 

Article 37 - General provisions 

1. 

The  financial  control  of  assistance  shall  be,  in  the  first  instance,  the 
responsibility  of  the  Member  States.  To  that  end,  the  measures  they  take 
shall include: 

(a) 

verifying  that  management  and  supervision  arrangements  have  been 
set  up  and  are being  implemented  in  such  a way  as  to  guarantee  that 
Community funds are being used efficiently  and correctly; 

(b) 

providing the Commission with a description of these arrangements; 

(c) 

(d) 

(e) 

ensuring  that  assistance  is  managed  in  accordance  with  all  the 
applicable  Community  rules, including  when  an  initiating  letter  or  a 
reasoned  opinion  is  sent  pursuant  Article  169  of  the  Treaty,  and  that 
the  funds  placed  at  their  disposal  are  used  in  accordance  with  the 
principles of sound financial management; 

guaranteeing  that  the  declarations  of  expenditure  presented  to  the 
Commission  are accurate and result from accounting  systems based  on 
verifiable  supporting documents; 

preventing,  detecting  and  corcecting irregularities,  and notifying  these 
to  the  Commission,  in  accordance  with  the  rules,  keeping  the 
Commission  informed  of  the  progress  of  administrative  and  legal 
proceedings; 

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(f) 

(g) 

(h) 

presenting  to the  Commission, when  each assistance  is  wound  up, a 
declaration  drawn  up  by  a  person  or  department  having  a  function 
independent  of  the  designated  managing  authority.  This  declaration 
shall  summarise  the  conclusions  of  the  checks  carried  out  during 
previous  years  and  shall  assess  the  validity  of  the  application  for 
payment  of the final balance  and  the  legality  and  correctness  of the 
transactions  covered  by  the  final  certificate  of  expenditure.  The 
Member States may attach their own opinion to this certificate  if they 
consider it necessary; 

cooperating with the Commission to ensure that Community funds are 
used in accordance with the principles of sound financial management; 

recovering  any amounts lost as a result of an irregularity detected and, 
where appropriate, charging interest on late payments. 

The Commission shall ensure that Member States have smoothly  functioning 
management and supervision systems which guarantee that Community  funds 
are efficiently  and correctly used. 

To  that  end,  without  prejudice  to  checks  carried  out  by  Member  States 
themselves  in accordance  with national  laws, regulations  and  administrative 
provisions,  Commission  officials  or  servants  may  carry  out  on-the-spot 
checks, including sample checks, on the operations financed by the Funds and 
on management  and control  systems.  Without  prejudice  to paragraph  4, the 
Commission shall give notice to the Member State concerned with a view to 
obtaining  all  the  assistance  necessary.  Officials  or  servants  of  the 
Member State concerned may take part in such checks. 

The  Commission  may  require  the  Member  State  concerned  to  carry  out  an 
on-the-spot  check  to  verify  the  correctness  of  one  or  more  transactions. 
Commission officials  or servants may take part in such checks. 

The  Commission  may  undertake  on-the-spot  checks  without  giving  notice. 
Officials  or  servants  of  the  Member  State  concerned  may  take  part  in 
such checks. 

The  Commission  and  the  Member  States  shall  cooperate  to  coordinate 
programmes and methods relating to checks so as to maximise the  usefulness 
of those carried  out. They shall  immediately  exchange the results  of checks 
carried out. 

The  Commission  and  the  Member  States  shall  cooperate  to  examine  and 
evaluate  at  least  once  a  year  and,  in  all  events,  before  the  annual  review 
provided for in Article 33(3): 

(a) 

the  results  of  the  checks  carried  out  by  the  Member  State  and 
the Commission; 

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(b) 

(c) 

any  comments  made  by  other  national  or  Community  supervisory 
bodies or institutions; 

the financial impact of the irregularities noted, the steps already taken 
or still required to correct them  and, where necessary, adjustments  to 
the management and control systems. 

Following this examination and without prejudice to the measures to be taken 
immediately  by  the  Member  State  under  this  Article  and  Article  38,  the 
Commission  shall  draw  up  conclusions,  particularly  regarding  the  financial 
impact of any irregularities detected. These conclusions shall be addressed to 
the Member  State and the managing  authorities  of the assistance  concerned. 
They shall be accompanied, where necessary, by recommendations or requests 
for  corrective  measures,  to  be  taken  within  a  time  limit  laid  down  by  the 
Commission,  to  remedy  the  management  shortcomings  found  and  correct 
those irregularities detected which have not already been corrected. 

The  Member  State  and  managing  authorities  concerned  shall  take  the 
necessary measures within the deadline set to comply with the Commission's 
recommendations or requests. 

5.  Without prejudice to this Article, the Commission may suspend all or part of 
an interim  payment  if  it finds that the  expenditure  concerned  is  linked  to a 
serious irregularity which has not been corrected and that immediate action is 
needed. The Commission shall inform the Member State concerned. 

6. 

1. 

For  a  period  of  three  years  following  the  last  payment  in  respect  of  any 
assistance, the responsible authorities shall keep available for the Commission 
all  the  supporting  documents  regarding  expenditure  and  checks  on  the 
assistance  concerned.  This  period  shall  be  interrupted  either  in  the  case  of 
legal proceedings or at the duly motivated request of the Commission. 

Article 38 - Financial corrections 

The  Member  States  shall,  in  the  first  instance,  bear  the  responsibility  for 
investigating irregularities, drawing the consequences from any major change 
affecting  the nature of or conditions for the implementation or supervision of 
assistance and making the financial corrections required. 

The corrections made by the Member States shall consist in cancelling all or 
part  of the  Community  contribution.  The Community  funds  released  in this 
way  may  be re-used  by  the  Member  State  for  the  assistance  concerned,  in 
compliance with arrangements to be defined under Article 53. 

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2. 

The Commission  shall suspend the interim payments in question and request 
that the Member State submit its comments within a specified  period of time 
if it considers: 

(a) 

(b) 

(c) 

(d) 

that  a  Member  State  has  not  complied  with  its  obligations  under 
paragraph 1 ; or 

that all or part of an operation justifies neither part nor the whole of the 
contribution from the Funds; or 

that there are shortcomings in the management or supervision systems 
which are likely to result in systemic irregularities; 

that there is, after  the necessary verifications,  a reasonable doubt that 
there has been an infringement  of Community law. 

At  the  end  of  the  period  referred  to  in  the  first  subparagraph,  if  the 
Member State has not made the corrections, the Commission may: 

(a) 

reduce the advance referred to in Article 31 (2); or 

(b) 

cancel  all  or  part  of  the  contribution  of  the  Funds  to  the  assistance 
concerned. 

The Commission  shall decide the amount of a corcection, to take account of 
the type of irregularity or change and the extent of the potential impact of any 
shortcomings in the management or supervision systems. 

3. 

Any  sum  received  unduly  and  to  be  recovered  shall  be  repaid  to  the 
Commission, together with interest on account of late payment. 

4. 

This Article shall apply without prejudice to Article 31. 

CHAPTER HI:  EVALUATION 

Article 39 - General provisions 

1. 

2. 

In order to gauge its  effectiveness,  Community  structural  assistance  shall be 
the subject of ex ante, mid-term and ex post evaluation designed to appraise its 
impact  with respect  to the  Objectives  set  out  in Article  1 and  to  analyse  its 
effects on specific structural problems. 

The  effectiveness  of  the  operations  of  the  Funds  shall  be  measured  at 
three levels: 

49 

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8: 

3. 

4. 

5. 

1. 

(a) 

their overall  impact  on the goals  set out  in Article  130a of the  Treaty, 
and in particular the strengthening of the economic and social cohesion 
of the Community; 

(b) 

the  impact  of  the  priorities  proposed  in  the  development  plans  and 
incorporated in each Community support framework; 

(c) 

the impact of the specific priorities in the assistance schemes. 

In line with the cases referred  to in Articles 40, 41 and 42, evaluation  shall be 
the main responsibility  either of the Member  State or of the Commission,  and 
shall  be  carried  out  within  the  framework  of  partnership.  The  competent 
authorities  in  the  Member  States  and  the  Commission  shall  assemble  the 
appropriate  resources  and  collect  the  data  required  to  ensure  that  this 
evaluation can be carried out in the most effective  manner. In this  connection, 
evaluation  shall  make  use  of  the  various  particulars  that  the  monitoring 
arrangements  may  yield,  supplemented  where  necessary  by  the  gathering  of 
information  to improve its relevance. 

On  the  initiative  of  the  Member  States  or  the  Commission,  supplementary 
evaluations, if appropriate on a specific  topic, may be launched with a view to 
identifying  transferable  experience. 

The evaluation reports shall be available to the public. 

The  principles  and  procedures  pertaining  to  evaluation  shall  be  laid  down  in 
the Community support frameworks and assistance schemes. 

Article 40 - Ex ante evaluation 

The  purpose  of  ex  ante  evaluation  shall  be  to  prepare  and  adopt  the 
development plans, of which  it  shall  form  part. It  shall involve  an analysis  of 
the strengths, weaknesses  and potential  of the Member  State, region  or  sector 
concerned.  It  shall  assess  the  consistency  of  the  strategy  and  aims  selected 
with  the  specific  features  of  the  regions  or  areas  concerned,  including 
demographic  trends,  and  the  expected  impact  of  the  planned  priorities  for 
action,  quantifying,  where  they  lend  themselves  to  quantification, 
their 
specific targets in relation to the starting situation. 

It  shall  analyse  especially  the  situation  in  terms  of  competitiveness  and 
innovation,  especially  in small  and medium-sized  enterprises,  of  employment 
and  human  resources,  of  the  environment  and  of  equality  between  men  and 
women, and it shall include in particular: 

50 

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(a) 

(b) 

an  ex  ante  evaluation  of  the  environmental  situation  of  the  region 
concerned  and  of  the  arrangements  to  integrate  the  environmental 
dimension  in  the  assistance  and  to  ensure  compliance  with  the 
Community  rules  on  environment.  The  ex  ante  evaluation  shall 
include: a quantified description of the starting situation; the objectives 
to be achieved  at short  and at mid-term taking  into account national, 
regional  or  local  plans  for  the  management  of  the  environment,  the 
financial  resources  deployed  and  the main results from the previous 
programming  period;  an  evaluation  of  the  expected  environmental 
impact  of  the  strategy  and  of  the  assistance  on  the  environmental 
situation; 

an ex ante evaluation of the situation in terms of equality between men 
and women, including the specific  constraints  on each group  and the 
results of the measures taken during the previous programming period; 
an  evaluation  of  the  expected  impact  of  the  strategy  and  assistance, 
particularly  on  the  integration  of  women  and  men  into  the  labour 
market, on education and vocational training, on the establishment of 
women  in  business  and  on  the  reconciliation  of  private  and 
working life. 

The  ex  ante  evaluation  shall  verify  the  quality  of  the  implementing  and 
monitoring arrangements and consistency with Community policies and with 
the guidelines referred to in Article 9(4). 

It  shall  take  account  of  the  lessons  learned  from  evaluations  of  earlier 
programming periods. 

Evaluation  shall  be  the  responsibility  of  the  authorities  responsible  for 
preparing the plans. Using criteria it has defined  in advance, the Commission 
shall appraise the development plans in accordance with Articles  14 and  15, 
with particular regard to the relevance and quality of the ex ante evaluation. If 
necessary, it shall seek additional information. 

Evaluation  of  the  measures  in  the  programming  supplement  document  shall 
demonstrate consistency with the aims of the corresponding priorities, quantify 
their specific targets and verify the relevance of the selection criteria. 

2. 

3. 

Article 41 - Mid-term evaluation 

1.  Mid-term  evaluation  shall  examine  the  initial  results  of  the  assistance,  their 
consistency  with  the ex ante evaluation,  the relevance  of the targets  and the 
extent to which they have been attained. It shall  also assess the soundness of 
the financial management and the quality of monitoring and implementation. 

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2. 

3. 

1. 

2. 

1. 

2. 

Mid-term  evaluation  shall  be  the  responsibility  of  the managing  authority,  in 
cooperation  with  the  Commission.  It  shall  cover  each  Community  support 
framework  and  each  assistance.  It  shall  be  carried  out  by  an  assessor 
independent  of  the  managing  authority,  be  submitted  to  the  Monitoring 
Committee  for  the  Community  support  framework  or  assistance  concerned  in 
accordance with Article 34(3), and then sent to the Commission  not  later than 
31  December  2003  with  a  view  to  the  annual  review  referred  to  in 
Article 33(3). 

The  Commission  shall  examine the relevance  and quality  of the evaluation  on 
the  basis  of  criteria  it  has  defined  beforehand,  with  a  view  to  reviewing  the 
assistance and allocating the reserve referred  to in Article 43. 

Article 42 - Ex post  evaluation 

Ex post  evaluation  shall cover the utilisation of resources and the  effectiveness 
and  efficiency  of  the  assistance  and  its  impact  and  its  consistency  with  the 
ex ante  evaluation,  and  shall  draw  conclusions  regarding  economic  and  social 
cohesion.  It  shall  cover  the  factors  contributing  to  the  success  or  failure  of 
implementation and the achievements and results, including their durability. 

As  a  continuation  of  the  mid-term  evaluation,  an  initial  assessment  of  each 
Community  support  framework  and  assistance  shall  be  carried  out  and 
completed by 31 December 2005 in order to prepare  for  subsequent  assistance 
operations. 

Ex  post  evaluation  shall  be  the  responsibility  of  the  Commission, 
in 
collaboration with the Member State and the managing authority. It shall cover 
the assistance  schemes and be carried out by independent  assessors. It shall be 
completed not later than three years after the end of the programming period. 

CHAPTER IV:  PERFORMANCE RESERVE 

Article 43 - Allocation of the performance  reserve 

At  mid-term,  the  Commission  shall  allocate  the  commitment  appropriations 
referred to in Article 7(4) on the basis of compliance with additionality and the 
level  of  performance  in  implementing  operational  programmes  or  single 
programming documents in each Member State. 

The  Commission  shall  verify  additionality  at  mid-term  in  accordance  with 
Article  10(3),  separately  for  Objective  1  and  for  Objectives  2  and  3  taken 
together,  assessing  the performance  of each  of the operational  programmes  or 
single programming documents on the basis of a limited number of monitoring 
indicators which reflect  efficiency,  management  and  financial  implementation 
and measure the mid-term results in relation to the specific  initial targets of the 
operational programmes or single programming documents. 

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These  indicators  shall  be  defined  on  the  basis  of  methodological  proposals 
from  the  Commission  and  shall  be  quantified  in  annual  implementation 
reports, particularly  the report  for  the third  year  of  implementation,  and  the 
mid-term evaluation report. 

The  appropriations  in the reserve  shall be  allocated  under  each  Objective  to 
operational  programmes  or  single  programming  documents  which  have 
attained  a  satisfactory  level  of  performance,  with  of  a  reduction  where  a 
Member  State has not complied with its obligations  as regards  additionality. 
The Commission  shall  adopt its decision not  later than  31 March  2004. The 
operational programmes or single programming documents shall be adapted in 
accordance with Articles 12,13 and 14. 

TITLE V 

REPORTS AND PUBLICITY 

Article 44 - Reports 

Under  Article  130b  of  the  Treaty,  the  Commission  is  required  to  submit  a 
report  at three-yearly  intervals  to  the European  Parliament,  the  Council, the 
Economic  and  Social  Committee  and  the  Committee  of  the Regions  on  the 
progress  made  towards  economic  and  social  cohesion  and  the  contribution 
made to  this by  the Funds, the  Cohesion  Fund,  the EIB  and  other  financial 
instruments. This report shall review in particular: 

(a) 

(b) 

(c) 

progress  in  achieving  economic  and  social  cohesion,  including  the 
socio-economic situation of the regions and any changes observed; 

the role of the Funds, the Cohesion Fund, the EIB and other  financial 
instruments  as well  as the  impact  of  other  Community  and  national 
policies in accomplishing this process; 

any  proposals  concerning  Community  measures  and  policies  which 
may  need  to  be  adopted  in  order  to  strengthen  economic  and  social 
cohesion. 

Before  1  November  of  each  year,  the  Commission  shall  transmit  to  the 
European Parliament,  the Council, the Economic  and  Social  Committee and 
the  Committee  of  the  Regions  a  report  on  the  implementation  of  this 
Regulation during the preceding year. This report shall review in particular: 

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(a) 

(b) 

(c) 

the activities of each Fund, the utilisation of their budget resources and 
the concentration  of assistance, the deployment  of the other  financial 
instruments  for  which  the  Commission  has  responsibility  and  the 
concentration  of  their  resources;  this  review  shall  include  an 
annual breakdown by Member State of appropriations  committed and 
paid  in  respect  of  each  Fund,  including  Community  Initiatives  and 
technical assistance; 

the  coordination  of  assistance  from  the  Funds  among  themselves 
and with  the  assistance  granted  by  the  EIB  and  the  other  existing 
financial instruments; 

the results of the evaluation referred to in Articles 39 to 42, indicating 
any  revisions  to  assistance  schemes,  and  an  evaluation  of  the 
consistency  of  measures  taken  by  the  Funds  with  the  Community 
policies refened to in Article 11. 

(d) 

a list of the major projects to which the Funds have contributed; 

(e) 

(f) 

the  results  of  checks  carried  out  and  the  lessons  to  be  drawn 
from  them, 

information  on  the  opinions  of  Committees  delivered  in  accordance 
with Articles 47 to 51. 

Article 45 - Information and publicity 

1. 

2. 

For the purposes of consultation as referred to in Article 14(1), Member States 
shall ensure that adequate publicity is given to development plans. 

Without  prejudice  to  Article  22(1),  the  management  authority  shall  be 
responsible for ensuring that adequate publicity is given to the package, and 
particularly for informing: 

(a) 

potential  final  beneficiaries,  trade  and  professional  bodies,  the 
economic and social partners, bodies promoting equality between men 
and  women  and  non-governmental  organisations  about 
the 
opportunities afforded by the assistance; 

(b) 

the  general  public  about  the  role  played  by  the  Community  in  the 
assistance concerned and its results. 

3. 

In  accordance  with  Article  36,  the  Member  States  shall  consult  the 
Commission and inform  it each year of the initiatives taken for  the purposes 
set out in paragraphs 1  and 2. 

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TITLE VI 

COMMITTEES 

Article 46 - General provisions 

1. 

2. 

3. 

4. 

In  implementing  this  Regulation,  the  Commission  shall  be  assisted  by 
five  committees. 

The  Commission  shall  send  to  these  committees  the  reports  referred  to  in 
Article  44.  It  may  seek  the  opinion  of  the  committees  on  any  matter 
concerning  assistance  under  the  Funds  apart  from  those  referred  to  in 
this Title. 

The opinions of each committee shall be brought to the attention of the other 
committees referred to in this Title. 

The  European  Parliament  shall  be  regularly  informed  of  the  work  of 
the committees. 

Article 47 - Advisory Committee on the Development 
and Conversion of Regions 

An Advisory Committee on the Development and Conversion of Regions, made up of 
Member  States'  representatives  and  chaired  by  a  Commission  representative,  is 
hereby  set  up  under  the  auspices  of  the  Commission.  The  EIB  shall  appoint  a 
non-voting representative. 

The  Commission  representative  shall  submit  draft  decisions to  the  Committee. The 
Committee  shall  deliver  its  opinion  on  the  draft  within  a  time  limit  which  the 
chairman may lay down according to the urgency of the matter, where appropriate by 
taking a vote. 

Its opinions  shall be recorded  in the minutes. In  addition,  each Member  State shall 
have  the  right  to  request  that  its  position  be  recorded  in  those  minutes.  The 
Commission  shall  take  the  utmost  account  of  the  opinions  delivered  by  the 
Committee. It shall inform the Committee of the manner in which it takes account of 
its opinions. 

The Committee shall deliver opinions on draft  Commission decisions concerning the 
Community  support frameworks under  Objective  1  and  the  single  programming 
documents under Objective 2, and on the drawing-up and revision of the list of areas 
eligible under Objective 2. The matters referred  to in Article 21 may also be referred 
to it by the Commission. 

The Committee shall draw up its own rules of procedure. 

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Article 48 - Committee under Article 124 of the Treaty 

The  Committee  set  up  under  Article  124 of  the  Treaty  shall  be  composed  of  two 
government representatives, two representatives of the workers' organisations and two 
representatives  of  the  employers'  organisations  from  each  Member  State.  The 
Member of the Commission responsible for chairing the Committee may delegate that 
responsibility to a senior Commission  official. 

For  each  Member  State,  an  alternate  shall  be  appointed  for  each  category  of 
representative  mentioned  in  the  first  paragraph.  In  the  absence  of  one  or  both 
members, the alternate shall be automatically entitled to take part in the proceedings. 

The  members  and  alternates  shall  be  appointed  by  the  Commission  acting  on  a 
proposal from the Member State concerned, for a period of three years. They may be 
reappointed.  The  Commission  shall,  as regards  the  composition  of  the  Committee, 
endeavour  to  ensure  fair  representation  of  the  different  groups  concerned.  For  the 
items on the agenda affecting  it, the EIB shall appoint a non-voting representative. 

The Committee shall deliver opinions on the draft  Commission decisions relating to 
single programming documents under Objective 3 and, in the case of support from the 
ESF,  on  the  Community  support frameworks and  single  programming  documents 
relating to Objectives  1  and  2. 

For their adoption, the opinions of the Committee shall require an absolute  majority 
of the votes validly cast. The Commission shall inform the Committee of the manner 
in which it takes account of its opinions. 

The Committee shall draw up its own rules of procedure. 

Article 49 - Management Committee on Agricultural Structures 

and Rural Development 

A Management Committee on Agricultural Structures and Rural Development, made 
up of Member States' representatives and chaired by a Commission representative, is 
hereby  set up under the auspices of the Commission. The EIB shall  appoint  a non 
voting representative. 

The Commission  representative  shall  submit  draft  decisions  to the  Committee. The 
Committee  shall  deliver  an  opinion  on  the  draft  within  a  time  limit  which  the 
chairman may lay down according to the urgency of the matter under consideration. 
The  opinion  shall  be  delivered  by  the  majority  stipulated  in  Article  148(2)  of  the 
Treaty in the case of decisions which the Council is requested to adopt on a proposal 
from the  Commission;  when  a matter  is put  to  the  vote within  the  Committee, the 
votes of the Member States' representatives  shall be weighted  as provided  for  in the 
said Article. The chairman shall not vote. 

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The  Commission  shall  adopt  measures  which  shall  apply  immediately.  However,  if 
they are not in accordance with the opinion delivered by the Committee, they shall be 
communicated  forthwith  by  the  Commission  to  the  Council.  In  that  event,  the 
Commission may defer  application of the measures which it has decided  for  a period 
of not more than one month from the date of such communication. 

The  Council, acting by  a qualified  majority,  may take a different  decision  within  the 
period provided for in the third  subparagraph. 

The  Committee  shall  deliver  opinions  on draft  Commission  decisions  relating  to  the 
establishment  of  the  list  of  areas  eligible  under  Objective  2  and  to  single 
programming documents under this Objective. 

The  Committee  shall  also  be  consulted  on  operations  concerning  agricultural 
structures  and rural development  included in the draft  Commission  decisions  relating 
to  the  Community  support  frameworks  or  single  programming  documents  for  the 
Objective  1  regions. 

The Committee shall draw up its own rules of procedure. 

Article 50 - Management Committee on Fisheries and Aquaculture 

A Management Committee on Fisheries and Aquaculture, made up of Member States' 
representatives  and  chaired  by  a  Commission  representative,  is  hereby  set  up  under 
the auspices of the Commission. The EIB shall appoint a non-voting representative. 

The  Commission  representative  shall  submit  draft  decisions  to  the  Committee.  The 
Committee  shall  deliver  an  opinion  on  the  draft  within  a  time  limit  which  the 
chairman  may  lay  down  according  to the urgency  of the matter  under  consideration. 
The  opinion  shall  be  delivered  by  the  majority  stipulated  in  Article  148(2)  of  the 
Treaty in the case of decisions which the Council  is requested  to adopt on a proposal 
from  the  Commission;  when  a  matter  is  put  to  the  vote  within  the  Committee,  the 
votes  of the Member  States' representatives  shall be  weighted  as provided  for  in  the 
said Article. The chairman shall not vote. 

The  Commission  shall  adopt  measures  which  shall  apply  immediately.  However,  if 
they are not in accordance with the opinion delivered by the Committee, they shall be 
communicated  forthwith  by  the  Commission  to  the  Council.  In  that  event,  the 
Commission  may defer  application  of the measures which  it has decided  for  a period 
of not more than one month from the date of such communication. 

The  Council,  acting by  a qualified  majority,  may take a different  decision  within  the 
period provided  for in the third  subparagraph. 

The  Committee  shall  deliver  opinions  on  draft  Commission  decisions  relating  to  the 
establishment  of  the  list  of  areas  eligible  under  Objective  2  and  to  single 
programming documents under this Objective. 

57 

^ 

• • -» 

The  Committee  shall  also be  consulted  on  operations  concerning  fisheries  structures 
included  in  the  draft  Commission  decisions  relating  to  the  Community  support 
frameworks or single programming documents for the Objective  1  regions. 

The Committee shall draw up its own rules of procedure. 

Article 51 - Management Committee for Community  Initiatives 

A  Management  Committee  for  Community  Initiatives,  made  up  of  Member  States' 
representatives  and  chaired  by  a  Commission  representative,  is  hereby  set  up  under 
the auspices of the Commission. The EIB shall appoint a non-voting representative. 

The  Commission  representative  shall  submit  draft  decisions  to  the  Committee.  The 
Committee  shall  deliver  an  opinion  on  the  draft  within  a  time  limit  which  the 
chairman  may  lay  down  according  to the urgency  of the matter  under  consideration. 
The  opinion  shall  be  delivered  by  the  majority  stipulated  in  Article  148(2)  of  the 
Treaty in the case of decisions which the Council  is requested to  adopt  on a proposal 
from  the  Commission;  when  a  matter  is  put  to  the  vote  within  the  Committee,  the 
votes  of the Member  States' representatives  shall be  weighted  as provided  for  in  the 
said Article. The chairman shall not vote. 

The  Commission  shall  adopt  decisions  which  shall  apply  immediately.  However,  if 
they are not in accordance with the opinion delivered by the Committee, they shall be 
communicated  forthwith  by  the  Commission  to  the  Council.  In  that  event,  the 
Commission  may defer  application  of the measures which it has decided  for  a period 
of not more than one month from the date of such communication. 

The  Council,  acting by  a qualified  majority,  may take  a different  decision within  the 
period provided for in the third  subparagraph. 

The  Committee  shall  deliver  opinions  on  the  Commission  proposals  to  the 
Member States referred  to in Article  21. 

The Committee shall draw up its own rules of procedure. 

TITLE VII 

FINAL  PROVISIONS 

Article 52 - Transitional  provisions 

1. 

This Regulation shall not affect  the continuation or modification,  including the 
total  or partial  cancellation,  of  assistance  approved  by  the  Council  or  by  the 
Commission  on  the  basis  of  Council  Regulations  (EEC)  Nos  2052/88  and 
4253/88  or  any  other  legislation  which  applied  to  that  assistance  on 
31 December  1999. 

58 

31 

2. 

3. 

4. 

5. 

Applications  for  a contribution from the Funds towards operations which are 
submitted  under  Council Regulations  (EEC) Nos 2052/88  and 4253/88  shall 
be  considered  and  approved  by  the  Commission  on  the  basis  of  those 
Regulations no later than 31 December 1999. 

In  drawing  up  Community  support frameworks and  assistance  schemes, the 
Commission  shall  take  account  of  any  measure  already  approved  by  the 
Council or by the Commission before  the entry into  force  of this Regulation 
and having financial repercussions during the period covered by those support 
frameworks  and  assistance  schemes. These  measures  shall  not  be  subject  to 
compliance with Article 29(2). 

Notwithstanding  Article  29(2),  expenditure  submitted  to  the  Commission 
between  1 January  and  30 April  2000  and  fulfilling  all  the  conditions  laid 
down in this Regulation may be regarded  as eligible for  a contribution from 
the Funds from 1  January 2000. 

Partial  sums  committed  for  operations  or  programmes  approved  by  the 
Commission before  1  January 1994, but in respect of which no application for 
final payment  has been  received  by  31 March  2001, shall  be  automatically 
decommited no later than 30 September 2001, giving rise to the repayment of 
amounts unduly paid, without prejudice  to  operations  or programmes which 
have been suspended on account of legal proceedings. 

Partial  sums  committed  for  operations  or  programmes  approved  by  the 
Commission  between  1  January  1994  and  31  December  1999,  but  in 
respect of  which  no  application  for  final  payment  has  been  received  by 
than 
31 March  2003,  shall  be  automatically  decommited  no 
30 September  2003,  giving  rise  to  the  repayment  of  amounts  unduly  paid, 
without prejudice to operations or programmes which have been suspended on 
account of legal proceedings. 

later 

Article 53 - Implementation 

The  Commission  shall  adopt  detailed  rules  to  implement  this  Regulation  in 
accordance with Articles 47 to 51. 

Article 54 - Repeal 

Regulations  (EEC)  Nos  2052/88  and  4253/88  are  repealed  with  effect  from 
1 January 2000. 

References  to  the  repealed  Regulations  shall  be  construed  as  references  to 
this Regulation. 

59 

Article 55 - Review clause 

The  Council  shall  review  this  Regulation  on  the  basis  of  a  proposal  from  the 
Commission by 31 December 2006 at the latest. 

It shall act on the proposal in accordance with the procedure laid down in Article 130d 
of the Treaty. 

Article 56 - Entry into force 

This Regulation shall enter into force on the third day following that of its publication 
in the Official Journal of the European Communities. 

Articles 27, 30 and 31 shall apply from 1 January 2000. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all 
Member States. 

Done at Brussels, 

For the Council 
The President 

60 

93 

Commitment appropriations for 2000-2006 

ANNEX 

Euro Millions  -
1999 price 
Structural Funds 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Total 

32 600 

33 430 

32 600 

31560 

30 410 

29 370 

28 430 

218 400 

61 

94 

Proposal for a 
COUNCIL REGULATION  (EC) 
on the European Regional Development Fund 

Proposal for a 
COUNCIL REGULATION (EC) 
on the European Regional Development Fund 

98/0114 (SYN) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 130e thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the Economic and Social Committee2, 

Having regard to the opinion of the Committee of the Regions3, 

Acting in accordance with the procedure laid  down in Article  189c in cooperation  with the 
European Parliament4, 

(1)  Whereas, under Article 130c of the Treaty, the European Regional Development Fund 

(ERDF) is intended to help redress the main regional imbalances in the Community; 

(2)  Whereas  Article  2(2)  of  Council  Regulation  (EC)  No  [...]5  [laying  down  general 
provisions  on  the  Structural  Funds]  states  that  the  main  task  of  the  ERDF  is  to 
contribute to the attainment  of Objectives  1 and 2, as referred  to in Article  1 of that 
Regulation; whereas Articles 18 and 19 of that Regulation provide that the ERDF is to 
contribute  to  financing  transnational,  cross-border  and  inter-regional  cooperation 
under the Community Initiatives; whereas Articles 20 and 21 state that it is to support 
innovative measures at Community level and technical assistance measures; 

(3)  Whereas the provisions common to the Structural Funds are set out in Regulation (EC) 
No [...]; whereas  the  type  of measures  which  may  be financed by  the  ERDF  under 
Objectives  1 and  2,  the  Community  Initiatives  and  innovative  measures  should  be 
defined; 

OJ... 

OJ... 
OJ... 
OJL... 
OJL... 

96 

(4)  Whereas  the contribution  of the ERDF, in pursuit  of  its  task  of promoting  regional 
development, to the harmonious, balanced  and sustainable development  of economic 
activity,  to  a  high  degree  of  competitiveness,  to  a  high  level  of  employment,  to 
equality between men and women and to a high level of protection and improvement 
of the environment should be defined; 

(5)  Whereas,  as part  of  its  tasks, the ERDF  should  support  the productive  environment 
and  the  competitiveness  of  enterprises,  especially  in  small  and  medium-sized 
enterprises, local economic development, research and technological development, the 
development of and the provision of suitable access to trans-European networks in the 
transport  infrastructure,  telecommunications  and  energy  sectors,  the  protection  and 
improvement  of  the  environment  on  the  principle  that  preventive  action  should  be 
taken, that  environmental  damage should  as a priority be rectified  at source and that 
the polluter should pay and by fostering  the clean, efficient  utilisation  of energy and 
the development of renewable energy sources, and equality between men and women 
in the field of employment, 

(6)  Whereas  the  ERDF  should  play  a  particular  role  in  favour  of  local  economic 
development, in the context of raising the quality of life and developing the territory, 
especially by promoting territorial employment pacts; 

(7)  Whereas  measures  of  Community  interest  undertaken  at  the  initiative  of  the 
Commission  have  an  important  role  to  play  in  achieving  the  general  objectives  of 
Community  structural  action  referred  to  in  Article  1  of  Regulation  (EC)  N°  .... 
(General Regulation); 

(8)  Whereas  the  ERDF  also  contributes  to  support  for  innovative  measures  and 
assistance  in  accordance  with  Articles  21  and  22  of  Regulation  (EC)  N°  .... 
(General Regulation); 

(9)  Whereas it is appropriate to lay down the powers for the adoption of the implementing 

provisions and to set out transitional provisions; 

(10)  Whereas 

it 

is  necessary 

to  repeal  Council  Regulation  (EEC)  4254/88  of 
19 December 1988  laying  down  provisions  for  implementing  Regulation  (EEC)  No 
2052/88  as  regards  the  European  Regional  Development  Fund6,  as  amended  by 
Regulation (EEC) 2083/937, 

OJL  374, 31.12.1988, p. 15. 

OJL  193, 31.7.1993, p. 34. 

97 

HAS ADOPTED THIS REGULATION: 

Article 1 - Tasks 

Under  Article  130c  of  the  Treaty  and  [the  general]  Regulation,  the  European  Regional 
Development Fund (ERDF) shall contribute towards the financing  of assistance as defined  in 
Article 9(1)  of  that  Regulation  to  promote  economic  and  social  cohesion  by  correcting 
regional imbalances and participating in the development  and conversion of regions. To that 
end, the ERDF shall also contribute to promoting  sustainable development  and the creation 
of jobs. 

Article 2 - Scope 

1. 

As part  of  its tasks  as  defined  in  Article  1, the  ERDF  shall  contribute  towards  the 
financing  of: 

(a) 

productive investment to create and safeguard permanent jobs; 

(b) 

investment in infrastructure: 

(i) 

(ii) 

in regions designated under Objective  1, investment in infrastructure  to 
which the ERDF may contribute shall be investment towards increasing 
the  economic  potential,  development,  structural  adjustment  and 
sustainable employment of those regions, including that contributing to 
the establishment  and development  of trans-European  networks  in the 
areas of transport, telecommunications and energy infrastructures; 

in  regions  and  areas  designated  under  Objectives  1  and  2  and  the 
Community Initiative for cooperation  as referred  to in Article 19(1) of 
[the  general]  Regulation,  investment  in  infrastructure  to  which  the 
ERDF may contribute  shall be investment relating to the regeneration 
of  areas  suffering  from  industrial  decline,  the  renewal  of  depressed 
urban  areas  and  to  the  revitalisation  of  and  improved  access  to  rural 
areas  and  areas dependent  on fisheries; areas whose modernisation  or 
regeneration  is  a  prerequisite  for  the  creation  or  development  of 
communications 
job-creating 
infrastructure  and  other  links  on  which  the  development  of  these 
activities is dependent; 

economic 

activities, 

including 

(c) 

the  development  of  endogenous  potential  by  measures  which  encourage  and 
support  local  development  and  employment  initiatives  and  the  activities  of 
small and medium-sized enterprises, involving in particular: 

(i) 

(ii) 

assistance towards services for enterprises, in particular in the fields of 
management,  market  studies  and  research  and  services  common  to 
several enterprises; 

financing  the  transfer  of  technology,  including  in  particular  the 
collection  and  dissemination  of  information  and financing innovation 
in enterprises; 

98 

(iii) 

(iv) 

improvement of access for enterprises to finance and loans, by creating 
and developing appropriate financing instruments; 

direct  aid  to  investment  as  defined  in  Article 27(3)  of  [the  general] 
Regulation where no aid scheme exists; 

(v) 

the provision of small-scale infrastructure; 

(vi) 

aid for structures providing neighbourhood  services to create new jobs 
but excluding measures financed by the ESF; 

(d) 

technical  assistance  measures  as  referred  to  in  Article 22  of  [the  general] 
Regulation. 

In  the regions  designated  under  Objective  1, the ERDF may  contribute  towards  the 
financing  of  investment  in  education  and  health  that  is  beneficial  to  the  regions' 
structural  adjustment. 

In accordance with paragraph  1, the financial  contribution of the ERDF shall support 
the following areas in particular: 

(a) 

(b) 

the  productive  environment,  in  particular  to  increase  competitiveness  and 
sustainable  investment  by  firms,  especially  the  small  and  medium  sized 
enterprises,  and to make regions more attractive, particularly by improving the 
standard of their infrastructure; 

research  and  technological  development  with  a  view  to  promoting  the 
introduction  of  new  technologies  and  innovation  and  strengthening  research 
and  technological  development  capacities  where  this  is  necessary  for 
regional development; 

(c) 

the development of the information society; 

(d) 

(e) 

(f) 

the  protection  and  improvement  of  the  environment  taking  account  of  the 
principles of precaution  and of preventive  action in the support  to economic 
development  and the fostering  of clean, efficient  utilisation  of energy and the 
development of renowable energy sources; 

equality  between  men  and  women,  in  the  field  of  employment  principally 
through  the  establishment  of  firms  and  the  reconciliation  of  family  and 
working life; 

transnational,  cross-border  and 
development. 

inter-regional  cooperation  on  regional 

99 

Article 3 -  Community Initiative 

1. 

2. 

Pursuant  to  Article  19 of  Regulation  (EC) N°  ....  (General  Regulation),  the  ERDF 
shall,  in  accordance  with  Article  20(1)  of  that  Regulation,  contribute  to  the 
implementation  of  the  Community  Initiative  for  cross-border,  transnational  and 
inter-regional  cooperation  intended  to  encourage  the  harmonious  and  balanced 
development and spatial planning of the European territory. 

In accordance with Article 20(2) of [the general] Regulation, the scope laid down in 
paragraph 1  of this Article may be extended by the decision on the Funds contribution 
to the  financing  of measures  eligible under the  Council Regulations  [ESF, EAGGF, 
FIFG]8 9 10 with a view to implementing all the measures in the Community Initiative 
programme concerned. 

Article 4 - Innovative measures 

1. 

In  accordance  with  Article  21(1)  of  [the  general]  Regulation,  the  ERDF  may  also 
contribute to  financing: 

(a) 

(b) 

(c) 

studies  on  the  Commission's  initiative  to  analyse  and  identify  regional 
development  problems  and  solutions,  particularly  in  connection  with  spatial 
planning and the European Spatial Development Perspective; 

pilot  projects  to  identify  or  test  new  regional  development  solutions  with  a 
view to their inclusion in assistance after demonstration of their feasibility; 

exchanges  of  experience  relating  to  innovation  with  the  aim  of  turning  to 
account and transferring experience gained in the regional development  field. 

2. 

In accordance with Article 21(2) of [the general] Regulation, the scope laid down in 
paragraph  1  of this Article may be extended by the decision on the Funds contribution 
to the financing of measures eligible under the [ESF, EAGGF, FIFG] Regulations with 
a view to implementing all the measures in the pilot project concerned. 

Article 5 - Implementing rules 

The detailed  implementing rules for  this Regulation  shall be adopted by the Commission in 
accordance with the procedure laid down in Article 47 of [the general] Regulation. 

9 

10 

OJ L... 
OJL... 

0 J L- 

i OO 
lu  'J 

Article 6 - Repeal 

Regulation (EEC) No 4254/88 is hereby repealed with effect from 1 January 2000. 

References to the repealed Regulation shall be construed as references to this Regulation. 

Article 7 - Review clause 

On  a  proposal  from  the  Commission,  the  Council  shall  review  this  Regulation  by 
31 December 2006. 

It  shall  act on this proposal  in  accordance with the procedure  laid  down  in Article  130d of 
the Treaty. 

Article 8 - Transitional provisions 

The transitional  provisions  referred  to  in Article  52 of  [the general] Regulation  shall  apply 
mutatis mutandis. 

Article 9 - Entry into force 

This Regulation shall enter into force on the third day following  that of its publication in the 
Official Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

iCi 

Proposal for a 
COUNCIL REGULATION  (EC) 
on the European Social Fund 

^n°. 

.-* 

\j 

98/0115 (SYN) 

Proposal for a 
COUNCIL REGULATION (EC) 
on the European Social Fund 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular 
Article 125 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the Economic and Social Committee2, 

Acting  in  accordance  with  Article  189c  of  the  Treaty  in  cooperation  with  the 
European Parliament3, 

(1)  Whereas  Council  Regulation  (EC)  No  ...  [general  Regulation]4  replaced 
Regulation  (EEC)  No  2052/885,  as  last  amended  by  Regulation  (EC) 
No 3193/946 and Council Regulation (EEC) No 4253/887, as last amended by 
Regulation (EC) No 3193/94; whereas it is necessary also to replace Council 
Regulation"(EEC) No 4255/88 of  19 December  1988 laying down provisions 
for  implementing  the  European  Social  Fund8  (herinafter  referred  to  as 
"the Fund"), as last amended by Regulation (EC) No 2084/939; 

(2)  Whereas Regulation  (EC) No  ........  (General Regulation)  defines  the general 
arrangements  governing  the  Structural  Funds  as  a  whole  and  that  it  is 
necessary to define the nature of the activities which the European Social Fund 
(hereinafter  "the Fund")  may finance within  Objectives  1,  2,  and  3,  in  the 
Community  Initiative  combating  discrimination  and  inequalities  in  access to 
the labour market, and under innovative measures and technical assistance; 

(3)  Whereas  it  is necessary  to  define  the mission  of the Fund  in relation  to  the 
tasks prescribed in the Treaty and in the context of the priorities agreed by the 
Community in the fields of human resource development and employment; 

1 
2 
3 
4 
5 
6 
7 
8 
9 

OJ... 
OJ... 
OJ... 
OJL... 
OJL  185, 15.7.1988,p. 9. 
OJL  337, 21.12.1994, p. 11. 
OJL  374, 31.12.1988, p. 1. 
OJL  374, 31.12.1988, p. 21. 
OJL  193, 31.7.1993, p. 39. 

103 

(4)  Whereas the Conclusions of the European Council in Amsterdam in June 1997 
and its Resolution  on growth and employment10  initiated  the  implementation 
of the European employment strategy, the Annual Guidelines on Employment, 
and the process of establishing national action plans for employment, 

(5)  Whereas  it  is  necessary  to  re-define  the  scope  of  the  Fund,  in  particular 
following  the  re-structuring  and  simplification  of  the  Objectives  of  the 
Structural  Funds  and  following 
the  implementation  of  the  European 
employment  strategy  and the National  Action Plans  for  Employment  related 
to it; 

(6)  Whereas it is necessary to define a common framework for Fund interventions 
in  all  three  Structural  Fund  Objectives  so  as  to  ensure  consistency  and 
complementarity  of actions across those Objectives  to improve the workings 
of the labour market and to develop human resources; 

(7)  Whereas  the  Member  States  and  the  Commission  should  ensure  that 
programming  and implementation  of the actions financed by the Fund in the 
context of all the Objectives  contribute to the promotion  of equality between 
women and men; 

(8)  Whereas the Member States and the Commission should ensure that the social 
and  labour  market  dimension  of  the  Information  Society  is  duly  taken  into 
account in implementing actions financed by the Fund; 

(9)  Whereas  it  is  necessary  to  ensure  that  operations  relating  to  industrial 
adaptation  should  meet  the general  needs  of  workers  of  either  sex  resulting 
from  industrial  change  and  changes  in  production  systems  identified  or 
predicted and are not designed to benefit  a single firm or a particular industry; 
whereas  particular  attention  should  be  devoted  to  small  and  medium-sized 
enterprises  and 
improving 
work organisation; 

to  enhancing  access 

training  and 

to 

to 

(10)  Whereas  it  is  necessary  to  ensure  that  the  Fund  continues  to  strengthen 
employment  and job  qualifications  by  supporting  anticipation,  counselling, 
networking  and  training  operations  throughout  the  Community  and  that  the 
activities  funded  must  therefore  be  horizontal,  covering  the  economy  as  a 
whole, without a priori reference to specific industries or sectors; 

(11)  Whereas  it  is necessary  to  redefine  eligible  actions  in  order  to  increase  the 
effectiveness  of  the  implementation  of  policy  aims  in  the  context  of  all 
Objectives  under  which  the  Fund  takes  action;  whereas  it  is  necessary  to 
define  expenditure  eligible  for  Fund  assistance  within  the framework of  the 
partnership; 

(12)  Whereas  it  is  necessary  to  supplement  and  specify  the content  of plans  and 
forms of assistance, especially following the redefinition of Objective 3; 

OJ 0 236,2.8.1997, p. 3. 

104 

(13)  Whereas it is necessary to ensure that the support of the Fund is concentrated 
under  each  Objective  on  the  most  important  needs  and  the  most  effective 
operations; 

(14)  Whereas it is necessary to introduce arrangements whereby local groups may 
gain  simple  and rapid  access to Fund  support  for  operations  concerned with 
combating  social  exclusion  and thereby build  up their capacity  for  action  in 
that  field; 

(15)  Whereas measures  of major  importance to the Community  undertaken  at the 
initiative of the Commission have an important  role to play  in achieving the 
general objectives  of Community  structural  action referred  to  in Article  1 of 
Regulation  (EC) No 
; whereas such initiatives  should primarily promote 
policy innovation and transnational cooperation; 

(16)  Whereas  the  Fund  also  contributes  to  support  for  technical  assistance, 
innovative  measures,  and  preparatory,  monitoring,  evaluation  measures  and 
control  in  accordance  with  Articles  21  and  22  of  Regulation  (EC)  No 
(General Regulation); 

(17)  Whereas  it  is  appropriate  to  lay  down  the  powers  for  the  adoption  of  the 

implementing provisions and to set out transitional provisions; 

(18)  Whereas it is necessary to repeal Regulation (EEC) 4255/88, 

HAS ADOPTED THIS REGULATION: 

Article 1 - Mission 

Within  the  framework  of  the  task  entrusted  to  the  European  Social  Fund 
(hereinafter referred  to as "the Fund") by Article  123 of the Treaty  and of the tasks 
entrusted to the Structural Funds pursuant to Article 130b of the Treaty and laid down 
in  Regulation  (EC)  No  ....  (General  Regulation),  the  Fund  shall  support  human 
resource  development  measures  to  promote  a high  level  of  employment  and  social 
protection, equality between men and women, sustainable development, and economic 
and social cohesion. In particular, the Fund shall contribute to the actions undertaken 
in  pursuance  of  the  European  Employment  Strategy  and  the  Annual  Guidelines 
on Employment. 

Article 2 - Scope of Intervention 

1. 

The Fund shall support and complement the activities of Member States in the 
following  policy  fields,  in  particular  in  the  context  of  their  multi-annual 
National Action Plans for employment: 

(a) 

developing active labour market policies to combat unemployment, to 
prevent  both  women  and  men  from  moving 
long-term 
unemployment,  to  facilitate  the  re-integration  of  the  long-term 
unemployed  into  the  labour  market,  and  to  support  the  occupational 
integration of young people and of returners to the labour market; 

into 

105 

(b) 

(c) 

(d) 

(e) 

promoting social inclusion and equal opportunities for all in accessing 
the labour market; 

developing education and training systems as part of lifelong  learning 
policy to enhance and sustain employability, mobility, and integration 
into the labour market; 

improving  systems  to  promote  a  skilled,  trained  and  adaptable 
workforce,  foster  innovation  and  adaptability  in  work  organisation, 
support  entrepreneurship  and  employment  creation,  and boost  human 
potential in research, science and technology; 

improving the participation  of women  in the labour market  including 
their career development, their access to new job opportunities and to 
entrepreneurship,  and  reducing  vertical  and  horizontal  segregation  in 
the labour market. 

2. 

3. 

The  Fund  shall  contribute  to  promoting  local  development,  including  local 
employment initiatives and territorial employment pacts. 

The social and labour market dimensions of the Information  Society shall be 
taken into account, notably by developing policy and programmes designed to 
harness  the  employment  potential  of  the  Information  Society  and  to  ensure 
equal access to its facilities and benefits. 

Article 3 - Eligible activities 

1. 

The  financial  support  of  the  Fund  shall  in  particular  be  devoted  to  the 
following activities: 

(a) 

assistance to persons: 

(i) 

education and vocational training (including vocational training 
equivalent  to  compulsory  schooling),  pre-training,  including 
provision  and  up-grading  of  basic  skills  (including  literacy), 
guidance and counselling; 

(ii) 

employment aids and aids for  self-employment; 

(iii) 

in the field of research,  science  and technology  development, 
post-graduate  training  and  the  training  of  managers  and 
technicians at research establishments and in enterprises; 

(iv) 

development of new sources of employment; 

10G 

(b) 

assistance to structures and systems: 

(i) 

development  and  improvement  of  the  quality  and  content  of 
training,  education  and  qualification  systems,  including  the 
training of teachers, trainers and staff, and improving the access 
of workers to training and qualifications; 

(ii)  modernisation  and 

improved  efficiency  of  employment 

services; 

(iii) 

(iv) 

development of links between the world of work and education, 
training, and research establishments; 

development  of systems  for  forward  planning  and  anticipation 
of changes in employment and skills development, particularly 
in  relation  to  patterns  of  work  and  new  forms  of  work 
organisation; 

(c) 

accompanying measures: 

(i) 

assistance  in  the  provision  of  services  to  beneficiaries, 
including  the  provision  of  care  services  and  facilities  for 
dependants, healthcare and legal assistance; 

(ii) 

capacity-building,  in  particular  to  facilitate 
approach to labour market integration; 

the  pathway 

(iii) 

awareness-raising, information and publicity. 

2. 

3. 

1. 

2. 

The activities under paragraph  1  above may be combined or complemented as 
part of a pathway approach to labour market integration. 

The  Fund  may  finance  activities  in  pursuit  of  Articles  21  and  22  of 
Regulation (EC) No .... (General Regulation). 

Article 4 - Concentration of assistance 

In order to maximise the efficiency  of Fund  support, its interventions within 
each  of  the  priority fields referred  to  in  paragraph  1 of  Article  2  will  be 
concentrated  to  cover  a  limited  number  of  areas  or  themes  and  be  directed 
towards  the most  important  needs  and  the most  effective  operations,  having 
due  regard  to  the  relevant  ex ante evaluations.  To  support  these  needs  and 
operations, variable co-financing rates should be used within the limits defined 
in Article 28 of Regulation (EC) No .... (General Regulation). 

The  programming  of  Fund  interventions  shall,  subject  to  the  results  of  the 
ex ante evaluations,  ensure that  measures relating  to  each  of the five policy 
fields  referred  to  in  paragraph  1  (a)  to  (e)  of  Article  2  above  will  be 
undertaken. Fund appropriations available for the intervention in question shall 

107 

3. 

1. 

2. 

1. 

give a particular emphasis to the policy fields set out in paragraph 1  (d) and (e) 
of Article 2. 

Where the financial  scale of the programme is insufficient  to support  effective 
policy intervention within each of the five policy fields set out in paragraph 1 
of Article 2, the strategy set out in the programming of the activities  financed 
by  the  Fund  must  nevertheless  take  explicit  account  of  all  of  those 
policy  fields. 

The  programming  of  Fund  interventions  shall  provide  that  at  least  1%  of 
the  Fund  appropriations  available  for  the  intervention  in  question  shall 
be  available,  in  conformity  with  Article  26  of  Regulation  (EC)  No  .... 
(General Regulation),  for  the  distribution  by  intermediary  organisations  of 
small  grants  with  special  access  arrangements  for  non-governmental 
organisations. 

Article 5 - Community Initiative 

Pursuant  to  Article  19 of Regulation  (EC)  No  ....  (General  Regulation),  the 
Fund shall, in accordance with Article 20(1) of that Regulation, contribute to 
the implementation of the Community Initiative for combating discrimination 
and inequalities in access to the labour market. 

In  conformity  with  Article  20(2)  of  Regulation 
.... 
(General Regulation),  the  decisions  on  the  contribution  of  the  Fund  to  the 
Community  Initiative  may  extend  the  scope  of  assistance  referred  to  in 
Article 3 of this  Regulation  to  cover  measures  which  can be  funded  by  the 
[ERDF, EAGGF, FIFG] Regulations11 n  13 so as to permit the implementation 
of all the measures foreseen in the Initiative. 

(EC)  No 

Article 6 - Innovative measures and technical assistance 

In  conformity  with  Article  21(2)  of  Regulation  EC)  No 
(General Regulation),  the  Commission  may finance preparatory,  monitoring 
and evaluation operations in Member States or at Community level which are 
necessary  for  the  implementation  of  the  operations  referred  to  the  present 
Regulation. They may include: 

(a) 

(b) 

(c) 

operations of an innovatory nature and pilot projects concerning labour 
markets, employment, and vocational training; 

studies, technical assistance and the exchange of experience which has 
a multiplier  effect; 

technical assistance for the preparation, monitoring, and evaluation, as 
well as control of operations financed by the Fund; 

12 

OJL 
OJL 
OJL 

108 

(d) 

operations  directed,  within  the framework of  social  dialogue,  at  staff 
from enterprises  in  two  or  more  Member  States  and  concerning  the 
transfer  of  special  knowledge  relating  to  areas  of  intervention  by 
the Fund; 

(e) 

informing  the  various  partners  involved,  the  final  beneficiaries  of 
assistance from the Fund and the general public. 

2. 

In  accordance  with  Article  21(2)  of Regulation  (EC)  No  ... [general Funds 
Regulation],  the field for projects covered by point (a) of paragraph  1 of this 
Article  is  extended  by  the  decision  for  the  participation  of  the  Funds  to 
measures  that  can  be financed under  Regulations  (EC)  No  [ERDF,  FIFG, 
EAGGF]  in order to implement  all the measures envisaged by the innovative 
actions concerned. 

Article 7 - Applications for assistance 

Applications  for  a  contribution  from  the  Fund  shall  be  accompanied  by  a 
computerised  form,  drawn up by the Commission  in  consultation  with  the Member 
States,  listing  the  operations  regarding  each  form  of  assistance  so  that  it  can  be 
followed through from budgetary commitment to final payment. 

Article 8 - Implementing provisions 

The  detailed  implementing  rules  for  this  Regulation  shall  be  adopted  by  the  . 
Commission  according to the procedure laid down in Article 53 of Regulation  (EC) 
No.... (General Regulation). 

Article 9 - Transitional provisions 

The  transitional  provisions  set  out  in  Article  52  of  Regulation  EC)  No  .... 
(General Regulation) shall apply mutatis mutandis to the present Regulation. 

Article 10 

On  a  proposal from the  Commission,  the  Council  shall  review  this  Regulation  by 
31 December 2006. 

It  shall  act  on  this  proposal  in  accordance  with  the  procedure  laid  down  in 
Article 130d of the Treaty. 

Article 11 -Repeal 

Regulation  (EEC)  4255/88  as  amended  by  Regulation  (EEC)  2084/93  is  hereby 
repealed as from 1 January 2000. 

References 
this Regulation. 

to  the  repealed  Regulation  shall  be  construed  as  references  to 

109 

Article 12 - Entry into force 

This Regulation shall enter into force on the third day following that of its publication 
in the Official Journal of the European Communities. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all 
Member States. 

Done at Brussels, 

For the Council 
The President 

110 

Proposal for a 
COUNCIL REGULATION (EC) 
on structural measures in the fisheries sector 

111 

98/0116 (CNS) 

Proposal for a 
COUNCIL REGULATION (EC) 
on structural measures in the fisheries sector 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty  establishing  the European  Community,  and  in particular  Article 
43 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the Economic and Social Committee3, 

(1)  Whereas  the  common fisheries policy  supports  the  general  objectives  of  Article  39  of 
the  Treaty;  whereas,  in  particular,  Council  Regulation  (EEC)  No  3760/92  of 
20 December 1992  establishing  a Community  system  for fisheries and  aquaculture4,  as 
amended by the Act of Accession  of Austria, Finland  and Sweden, contributes towards 
achieving a balance between conservation and the management of resources, on the one 
hand,  and fishing effort  and  the stable  and rational  exploitation  of  those resources, on 
the other; 

(2)  Whereas structural measures in the fisheries and aquaculture sector ("the sector") should 
contribute to the attainment of the objectives of the common fisheries policy and those of 
Article 130a of the Treaty; 

(3)  Whereas  the  incorporation  of  structural  measures  in  the  sector  into  the  operational 
framework of  the  Structural  Funds  in  1993  improved  the  synergy  of  Community 
operations and enabled a more coherent contribution to be made to the strengthening of 
economic and social cohesion; 

(4)  Whereas  Council  Regulation  (EC)  N° 

laying  down  general  provisions  on  the 
Structural Funds5 institutes a comprehensive review of the operational  arrangements  for 
the structural policies to take effect from 1  January 2000; whereas the structural measures 
in the sector will form part of priority Objectives  1  and 2 of the Structural Funds in force 
from that  date; whereas  Regulation  (EEC)  No  2080/93  of  20  July  1993  laying  down 
provisions  for  implementing  Council  Regulation  (EEC)  No  2052/88  as  regards  the 
financial  instrument for fisheries guidance6 should therefore be repealed [and replaced by a 
new  regulation]  providing  in  particular  for  arrangements  that  will  ensure  a  transition 
which avoids any interruption of the structural measures; 

1 
2 
3 
4 

6 

OJC... 
OJC... 
OJC... 
OJ L 389, 31.12.1992, p. 1 
OJ... 
OJL  193, 31.7.1993, p.l. 

112 

(5)  Whereas  there  is  incompatibility  between  the  exclusively  regional  nature  of  the 
programming planned for Objective 2 of the Structural Funds, on the one hand, and the 
programming of the supporting measures for the restmcturing of the fishing fleets, on the 
other hand; whereas the problem does not arise in the case of Objective 1; 

(6)  Whereas it is appropriate therefore not to include in the programming for Objective 2 the 
supporting measures for the restructuring of the fishing  fleets; whereas it is necessary to 
allocate  to  those  measures  resources  from  the  Guarantee  Section  of  the  European 
Agricultural Guidance and Guarantee Fund (EAGGF) so that they can be implemented in 
all regions  in  addition  to  those  covered by  Objective  1, including  in  areas covered by 
Objective 2; whereas this separate treatment will not affect the implementation of the other 
structural measures in the sector which will continue to be programmed under Objective 2; 

(7)  Whereas  furthermore  the Community  must be  able to make  a financial contribution  in 
regions  and  areas  other  than  those  covered  by  Objectives  1 and  2,  in  respect  of  all 
structural measures in the sector; whereas it is necessary also to allocate to this measure 
resources from the Guarantee Section of the EAGGF, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

The  structural  measures  implemented  with  Community financial assistance  under 
this Regulation  in the fisheries and  aquaculture  sector  and the industry  processing 
and marketing their products (hereinafter referred to as "the sector") shall support the 
general objectives of Articles 39 and 130a of the Treaty and the Objectives set out in 
Regulations (EEC) No 3760/92 and (EC) No [general Funds Regulation]. 

2. 

The tasks of the measures referred to in paragraph 1  shall be: 

(a) 

(b) 

(c) 

to contribute to achieving a sustainable balance between fishery resources and 
their exploitation; 

to  strengthen  the  competitiveness  of  structures  and  the  development  of 
economically viable enterprise in the sector; 

to  improve  market  supply  and  the  value  added  to  fishery  and  aquaculture 
products; 

(d) 

to contribute to revitalising areas dependent on fishing. 

3. 

4. 

Community financial assistance may be granted for the implementation of measures 
in support of one or more of the tasks referred to in paragraph 2, in accordance with 
the provisions of Articles 2 and 3. 

Under the procedure referred to in Article 5, the Council shall establish the fields of 
intervention for the structural actions referred to in paragraph _1  of this Article. 

113 

Article 2 

1. 

2. 

3. 

A financial instrument for fisheries guidance is hereby established, hereinafter  called 
the "FITFG". 

Measures implemented with assistance from the FIFG shall form part of Objectives 1 
and 2 of the Structural Funds. They shall include all structural measures in the sector, 
with the exception of those referred to in Article 3. 

In  addition,  and  in  accordance  with  Articles  21  and  22  of  Regulation  (EC)  No 
[general Funds]', the FIFG shall contribute towards: 

(a) 

innovative  action  including  transnational  operations  and the establishment  of 
networks  for  those  operating  in  the  sector  and  coastal  areas  dependent 
on  fishing; 

(b) 

technical assistance measures. 

In accordance with Article 21(2) of Regulation (EC) No [general Funds Regulation], 
the field for pilot projects covered by the first subparagraph of point (a) is extended 
by the decision  for  the participation  of the Funds to measures that can be  financed 
under Council Regulations  (EC) No  .../987, No  .../988  and EC No  .../989  in order to 
implement all the measures envisaged by the innovative actions concerned. 

The Guarantee Section of the EAGGF shall contribute towards: 

Article 3 

(a) 

(b) 

supporting measures for the restructuring  of the fishing fleets  in regions not covered 
by Objective 1 of the Structural Funds, 

all structural measures in the sector in regions not covered by Objectives  1  and 2 of the 
Structural Funds. 

Article 4 

The financial contribution granted to each individual operation under the measures referred to 
in Article  1(3) may not exceed a maximum amount to be determined in accordance with the 
procedure referred to in Article 5. 

Article 5 

Without  prejudice  to Article  6, the  Council,  acting  on  a proposal from the  Commission  in 
accordance with the procedure laid down in Article 43 of the Treaty, shall adopt, not later than 
[31  December  1998],  the  detailed  rules  and  conditions  for  the  Community  financial 
contribution to the structural measures referred to in Articles 2 and 3. 

OJ L ...[ERDF]. 
OJ L ... [ESF]. 
OJL... [EAGGF]. 

A 
1  j„  4 

Article 6 

1. 

2. 

Council Regulations  (EEC) No 4028/8610 and  (EEC) No  4042/8911 shall  continue  to 
apply to applications for aid submitted before  1  January  1994. 

Portions  of sums committed  as assistance  for projects by the Commission between  1 
January  1989 and 31 December  1993 under Regulation  (EEC) No 4028/86  for which 
no  final  application  for payment has been  submitted  to the  Commission  at the  latest 
six  years  and  three  months  after  the  date  the  aid  is  granted  shall  be  released 
automatically  by  the  Commission  at  the  latest  six  years  and  nine  months  after  the 
date the aid is granted, giving rise to the repayment  of amounts unduly paid,  without 
prejudice to projects which have been suspended on legal grounds. 

Article 7 

Regulation (EEC) No 2080/93 is hereby repealed with effect  from  1  January 2000. 

References  to the repealed Regulation shall be understood as references  to this Regulation. 

Article 8 

The  transitional  arrangements  provided  for  in  Article  52  of  Regulation  (EC)  No  [general 
Funds]  shall apply mutatis mutandis to this Regulation. 

Article 9 

This Regulation  shall enter into  force  on the third  day  following  that of its publication  in the 
Official Journal  of the European  Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

10 
u 

OJL 376, 31.12.1986, p. 7. 
OJ L 388, 30.12.1989, p. 1. 

115 

FICHE SMEs 

1.  Why is the legislation necessary? What are its aims? 

The legislation is based on the Articles of the Treaty governing economic and social 
cohesion, in particular Articles 130a, b and c, which provide for the Community to act 
to reduce regional disparities and contribute to the development of the  least-favoured 
the  Structural  Funds  and  other 
regions 
Community  financial  instruments.  This  new  proposal  is  necessary  as  the  current 
Regulations  governing the Structural Funds must be re-examined  by the Council by 
31 December 1999  (Article  19  of  Regulation  (EEC)  No  2052/88,  as  revised  by 
Regulation (EEC) No 2081/93). 

rural  areas 

including 

through 

Article  1 of  this  proposal  sets  out  the  overall  objectives  of  Community  Structural 
Policy: 

(i) 

(ii) 

(iii) 

promoting  the  development  and  structural  adjustment  of  regions  whose 
development is lagging behind (Objective 1); 

supporting  the  economic  and  social  conversion  of  areas  facing  structural 
difficulties  (Objective 2); 

supporting  the  adaptation  and  modernisation  of  policies  and  systems  of 
education, training and employment. This Objective  3 shall provide  financial 
assistance outside the regions or areas concerned by Objectives  1  and 2. 

2.  Who will be affected by this legislation? 

The financial support  provided  through  the  Structural  Funds  complements  national 
actions undertaken in the Member States. A key principle underpinning the action of 
the Structural Funds is partnership between the Commission, Member States, regional 
and  local  authorities,  environmental  authorities,  economic  and  social  partners  and 
other  competent  authorities  including  those  responsible  for  promoting  equality 
between men  and women. The partners  are to be designated  by the Member  States 
and all are to be involved in the various stages of preparation  and implementation of 
the Structural Funds. 

3.  What will business have to do to comply with the legislation? 

No direct action is required by business to comply with the Regulation once adopted 
by  the  Community.  In  order  to  receive  assistance  from  the  Structural  Funds, 
businesses will have to fulfil  a number of conditions  laid down by the authorities in 
the Member States responsible for the implementation of the Structural Funds. 

1 i h 

4.  What economic effects is the proposal likely to have? 

The budgetary resources being proposed by the Commission for the Structural Funds 
are of the order of ECU 210 billion for the period 2000-06. This will have important 
economic impacts especially in the regions eligible under Objective  1 for which the 
Commission  is  proposing  to  reserve  around  two-thirds  of  the  total  resources.  In 
general,  Structural  Fund  assistance  will  have  an  impact  on  the  overall  business 
environment through improvements in infrastructure,  services to firms, investment in 
human  resources,  assistance  to  help  anticipate  and  facilitate  economic  and  social 
change  in businesses  as well  as  a direct  impact  on business  through  assistance  for 
productive investment. 

5. 

Does  the  proposal  contain  measures  to  take  account  of  the  specific 
situation of SMEs? 

In the guidance papers that the Commission has issued to assist programming for the 
current  1994-99 period, emphasis has been put  on the role the Structural Funds can 
play to support the development  of SMEs. Commission  services estimate  that  some 
15  to  20%  of  Structural  Fund  resources  for  the  current  programming  period 
(around ECU 150 billion) are being devoted to support for SMEs. The level of support 
can be expected to be at least as significant,  if not more important, in the next period 
and  this  priority  will  be  emphasised  in  the  guidelines  for  the  Structural  Funds  the 
Commission  is  proposing  in  Article  8(4)  of  the  draft  general  Regulation.  The 
Commission  is  currently  carrying  out  an  evaluation  of  the  impact  of  current 
Structural Fund support on SMEs, the result of which could assist the development of 
approaches to SME support in the new programming period. 

6. 

Conclusion 

At this  stage there has been no formal  consultation  outside the  Commission  on the 
present proposals, although the Agenda 2000 proposal  of July  1997, which outlined 
the basic principles of the reform  of the Structural Funds, has been widely discussed 
throughout  the  Union.  Following  the  adoption  of  the  draft  proposals  for  new 
Regulations  by  the  Commission,  there  will  be  wide-ranging  consultating  and  the 
proposal  makes  specific  proviosion  for  the  association  of  economic  and  social 
partners in the implementation of the actions. In addition, each year the Commission 
proposes to consult the social partners organised  at European  level on the structural 
policy of the Community. 

in 

ISSN 0254-1475 

COM(98) 131 final 

DOCUMENTS 

EN 

10  01  13  03 

Catalogue  number  :  CB-CO-98-184-EN-C 

ISBN  92-78-32411-6 

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118