Opinion of the Economic and Social Committee on 'EC instruments for investment support in third countries'
Date: 1998-07-01
Institutions: European Economic and Social Committee
Subjects: EU programme, Lomé Convention, fund (EU), investment aid, third country

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Opinion of the Economic and Social Committee on ‘EC instruments for investment support
in third countries’

(98/C 284/14)

At its meeting on 29 January 1998 the Economic and Social Committee, acting under the third
paragraph of Rule 23 of the Rules of Procedure, decided to draw up an opinion on ‘EC
instruments for investment support in third countries’.

The Section for External Relations, Trade and Development Policy, which was responsible
for preparing the Committee’s work on the subject, adopted its opinion on 11 June 1998. The
rapporteur was Mr Henri Malosse.

At its 356th plenary session of 1 and 2 July 1998 (meeting of 1 July) the Committee adopted
the following opinion unanimously.

Recommendations

I. Mindful of:

The existence of numerous Community investment

1.
support instruments in third countries.

The apparent lack of meshing between these

2.
instruments and the Union’s priorities.

The wide variety of ways in which these instru-

3.
ments operate.

II.

Considering:

1.
The Committee’s Own-initiative Opinion on the
Global harmonization of direct investment regulations
(CES 260/96).

The new external relations responsibilities of the
2.
European Union following the entry into force of the
Maastricht and Amsterdam Treaties.

3.
The importance of direct foreign investment if it
serves the goal of sustainable economic and social
development.

Europe’s ambition to promote the highest social

4.
and environmental standards.

5.
The need to promote the development of small
and medium-sized enterprises in Europe — a factor of
paramount importance in wealth — and job-creation.

The context of multilateral negotiations on invest-

6.
ments.

7.
The aim of simplifying Community procedures to
make EC instruments more accessible to all operators.

The Economic and Social Committee makes the

III.
following proposals in this own-initiative opinion:

The European Commission needs to make its
1.
investment support instruments in third countries part

and parcel of an overall strategy that encompasses
simultaneously the essential principles of cooperation;
social regulations and environmental standards; and the
legitimate interests of Europe, notably in respect of
reciprocity, employment and competitiveness.

This strategy must be the subject of a political
2.
Communication by the Commission, accompanied by
specific measures to ensure transparency, consistency
and coordination.

To this effect the Committee proposes that a
3.
distinction be made between specialized instruments
with simple, clearly defined rules, and programmes
geared to each of the regions in question.

The Committee proposes that the strategy be
4.
reinforced in the countries of central and eastern Europe
and the Mediterranean basin, which should be regarded
as preferential areas of cooperation and partnership.

The Committee would draw attention to the
5.
importance of these Community instruments comp-
lementing the actions of the Member States and makes
operational proposals to this effect.

The Committee advocates a simplification of the
6.
rules governing the administration of investment support
instruments. This could be achieved first and foremost
by merging the Commission services involved and
tightening up vetting and assessment procedures. The
Committee also proposes the setting-up of an Obser-
vatory to measure the economic and social impact of
such instruments. An Observatory of this kind would
operate with the participation of the social partners and
the ESC.

1.

Introduction

For more than twenty years the European Com-
1.1.
mission has been developing instruments to facilitate
European investment in a number of third countries,
notably through support for joint ventures. Such instru-
ments, which operate today in almost all countries of
the world, are still highly heterogeneous since they stem
the Lomé
from policies of quite differing origin:

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Convention with the countries of Africa, the Caribbean
and the Pacific; cooperation with Latin America and
Asia; the Mediterranean policy; the opening up of the
countries of central and eastern Europe. Despite this, the
Community’s investment support instruments constitute
an array of mechanisms which have become increasingly
familiar to European operators who are tending to use
them as an alternative to more traditional national
mechanisms in promoting investments and exports.

The aim of this own-initiative opinion is to
1.2.
analyze the scope of these instruments, study their social,
economic and other effects, and make recommendations
on priority actions and on administrative and oper-
ational considerations with a view to achieving greater
clarity and simplification.

1.3.
This aim is particularly opportune since Europe
has just embarked on the process of deepening and
widening the Union — deepening it with Economic and
Monetary Union centred round the introduction of a
single currency, and widening it to eventually embrace
Cyprus and ten countries of central and eastern Europe.
These radical changes will inevitably have an effect
on the European Union’s external policy,
including
investment policy.

1.4. Our aim also coincides with the challenges arising
out of the globalization of economic and commercial
relations, a phenomenon which is particularly relevant
to the question of investments, what with the debate on
the OECD’s proposed Draft Agreement on Investments
(AMI), and the ever-increasing importance of environ-
mental considerations and social regulations whenever
questions of trade and investment are discussed.

2. Community instruments

2.1. Centre for the Development of Industry and the

Lomé Convention

2.1.1.
Under the Lomé Convention the Centre for the
Development of Industry (CDI) is a joint EU/ACP
institution providing financial and technical assistance
to European and ACP entrepreneurs engaged in the
setting up of industrial projects in the ACP countries.
The CDI provides assistance to ACP and European
companies in the form of four facilities: identification
of partners; assistance in preparatory work; advice on
the structuring of the project (financial and legal);
support during the take-off phase. The EU may also
finance investment projects under the Lomé Convention
in the form of loans, interest-rate subsidies and the
provision of risk capital.

2.1.2.
In its Opinion on the Green Paper on the future
of the Lomé Convention (CES 775/97) the Committee
recommended that the CDI be subject to a radical reform
and urged that its role be extended so that greater
assistance could be given to the development of local
ACP enterprises to improve the quality and marketing
of their products, particularly under the new heading of
a Centre for the development of enterprises (CDE).
The Committee also proposed more rigorous financial
engineering measures to encourage investment and
industrial cooperation with the EU.

2.2. The ECIP programme

Launched in 1988 on the initiative of Commissioner
Claude Cheysson, the ECIP programme (European
Community Investment Partner) aims first and foremost
to facilitate Community investment in Asia, Mediter-
ranean third countries, and Latin America. The pro-
gramme, which was allotted ECU 50 million for the
1996-1999 period, operates through five facilities:

— Facility No 1: The funding of preliminary project-
identification studies or of seminars to arrange
meetings between EU enterprises and enterprises of
countries eligible under the ECIP programme,

— Facility No 2: Reimbursable, non interest-bearing
advances for studies prior to the setting up of a joint
venture between the EU and one of the countries
eligible under the ECIP programme,

— Facility No 3: The acquisition of equity holdings
and the provision of loan capital to fund new joint
ventures, or the expansion of existing enterprises, or
new investment by local enterprises working under
license with enterprises of the European Union,

— Facility No 4: Reimbursable, non interest-bearing
advances for training or for assistance in joint
ventures,

— Facility No 1B: This is a new facility designed
to finance preparations for the privatization of
infrastructure and environment-sector enterprises in
eligible countries. The Committee notes that this
new Facility lies outside the range of normal ECIP
programme objectives since there is no direct involve-
ment of European enterprises at this stage.

2.3. The JOPP programme (Phare and Tacis)

With the development of EU cooperation with the
countries of central and eastern Europe, the Commission
launched the JOPP instrument in 1991. Modelled on the
ECIP programme, JOPP is earmarked for countries

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eligible under the Phare and Tacis programmes (central
and eastern Europe and the ex-USSR) and is aimed at
European entrepreneurs who can count on the support
of EU financial institutions in creating joint ventures in
Phare and Tacis countries. It comprises four facilities:

2.5.1. We might also cite the launch in 1997 of a
new Asia-Ecobest programme aimed at improving the
environment in Asia, notably by encouraging investment
and the transfer of know-how from European operators.

— Facility No 1: Assistance in the establishment of

contacts between potential partners,

2.6. The MEDA programme

— Facility No 2: Co-funding of feasibility studies on
joint-venture projects involving EU enterprises on
the one hand and Phare and Tacis enterprises on the
other. This takes the form of advances which are
converted into subsidies if the project is successful,

— Facility No 3: Funding of the capital needs of joint
ventures in the form of equity holdings or long-term
loans (a facility which is the process of being
dropped),

— Facility No 4: Co-funding, in the form of reimburs-
able, non interest-bearing advances, of training and
technical assistance schemes for recently created
joint ventures.

2.4. The AL-Invest programme

The European Union has set up an AL-Invest instrument
to encourage industrial cooperation between the EU and
Latin America. This encompasses meetings between
individual enterprises; specialized meetings on questions
of sub-contracting; the creation of centres of cooperation
involving enterprises in Latin America; the use of
computerized systems for cooperation between enter-
prises; and AL-partnership meetings. The Union decided
to earmark ECU 41 million for this programme for the
1996-2000 period.

2.5. The ASIA-Invest programme

In 1997 the European Union launched an Asia-Invest
programme along the lines of AL-Invest with an esti-
mated budget of ECU 45 million for the 1997-2002
period. This comprises three facilities:

— the Business Priming Fund, the first task of which is
to co-fund (up to a ceiling of 50 %) joint studies on
market prospects in Asia carried out by Chambers
of Commerce or by trade associations in several
Member States. The Business Priming Fund also
supports training programmes for European entre-
preneurs in the language and culture of Asian
countries, as well as technical assistance missions in
specific sectors based on European know-how and
geared to the least developed Asian countries;

— meetings between enterprises (Asia-Interprise or

Asia-Partnership);

— Asia Investment Facility: the aim here is to finance
sectoral studies by country and by industrial sector
in order to identify, evaluate and promote specific
investment opportunities for EU enterprises in Asia.

As far as the Mediterranean basin is concerned, the
Committee notes that since the 1996 ‘freezing’ of the
MED-Invest programme following major adminis-
tration problems and delays in implementing MEDA,
there is uncertainty today about the nature of the specific
instruments earmarked for this area. These countries
are however eligible for ECIP, for loans from the
European Investment Bank and for certain enterprise
partnership actions of the MED-Enterprise and MED-
Partnership type.

2.6.1. However, on 20 and 21 May 1996 the first
Euro-Mediterranean Conference on industry closed with
the adoption of a declaration on industrial cooperation.
An Action Plan was approved on the basis of this
declaration, providing for the establishment of two
working groups, the first calling itself ‘The development
of the industrial and entrepreneurial fabric’, the second
‘The legal and administrative framework.’

This Action Plan enables specific measures to be taken
to assist the region in question, e.g. action designed to
develop industrial areas (Guide of best practices, training
and management programmes ...). At the same time the
Committee understands the expectations of operators
on both sides of the Mediterranean who might have
legitimately hoped to see an Asia-Invest or AL-Invest-
type programme for an area which is one of the Union’s
top priorities.

2.7. Other ‘multi-country’ instruments

To complete this list (even if it is not exhaustive) and to
illustrate the full range and heterogeneity of these
Community investment support instruments, we might
also mention the following:

2.7.1.
The European Investment Bank, which has a
growing role to play in the Union’s trading partner
countries (Central and Eastern Europe; ACP countries;
Latin America and Asia) by financially supporting the
development of infrastructure and industries in these
countries and by giving preferential treatment to partner-
ships with operators in the Union.

2.7.2.
The establishment of a ‘Centre for Industrial
Cooperation’ in Bosnia-Herzegovina, ‘European Busi-
ness Information Centres’ (EBIC) in Asia, ‘Eurocentros’
in Latin America, ‘Business Cooperation Centres’ in
the Tacis countries, and a Centre for EU/Japanese
cooperation.

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2.7.3.
The application of international cooperation
schemes under Community research and development
programmes.

3.4. Re consistency with other Community policies

3. Questions raised by the Economic and Social Com-

mittee

3.1. Re the diversity of Community instruments

this wide range of

For the economic operator, as well as for the ordinary
citizen,
instruments with their
different rules and different operating arrangements,
might appear to be going too far even if differentiation
is understandable in view of the type of problems posed
and the politico-economic context. The Committee
accordingly urges transparency (drawing up of a vademe-
cum) and genuine rationalization. In certain regions
(e.g. Asia) competing procedures would seem to coexist
in some fields (e.g. Asia Invest and ECIP). There are
also some surprising procedural disparities, e.g. advances
to finance joint-venture feasibility studies in Asia, Latin
America and the Mediterranean basin (ECIP Facility
No 2) must be reimbursed whereas in Phare and Tacis
countries (JOPP/JVP Facility No 2) they are regarded
as subsidies if the project is successful, even though the
same types of studies are involved.

3.2. Re the eligibility of small and medium-sized enter-

prises

Whilst most Community instruments according to the
Community definition, seem to be applicable first and
foremost to small and medium-sized enterprises, there
is some latitude depending on the instruments in
question. This question needs to be clarified and
consideration given to the prioritization of Community
action.

3.3. Re the objectives of investment support instru-

ments

The Committee asks what the real objectives of these
instruments are: to facilitate the economic development
of the partner countries; to encourage European invest-
ment in these countries; to promote a European presence
and the establishment of European enterprises there; to
develop industrial, technical and scientific cooperation;
to promote the export of European know-how? By
replying to these questions and establishing some order
of priorities, the Union must make these investment
support instruments serve a global strategy that takes
into account the Union’s international cooperation and
development aid objectives and commitments as well as
its own internal political and economic interests.

All these instruments appear in quite different contexts.
The question to be asked today is therefore to what
extent such instruments are consistent with major
Community policies and more especially EU trade
policy, with concerted action on employment, with
sustainable economic and social development, with the
common agricultural policy, and with the competi-
tiveness of European industry, etc.

3.4.1. R e t r a d e p o l i c y

Whilst trade policy falls largely within the remit of the
Community, the actual promotion of exports continues
to remain an area of national competence in accordance
with the principle of subsidiarity. The only action taken
by the Community in this area (Exprom programme,
action focused on Japan) has been particularly low key.
The attempt to include export promotion in the Treaty
failed at the last Intergovernmental Conference. There
may therefore be a temptation to present or use
investment support instruments as the sole Community
tool for the promotion of trade policy; in this light they
must therefore appear to be tools of development where
the most disadvantaged countries are concerned, or else
market penetration incentives, above all in the case of
markets which are particularly sealed off from Europe.

As far as the penetration of new markets is
3.4.1.1.
concerned the Committee believes that there is need for
close cooperation with the authorities of those Member
States which have marketing units and trade offices
abroad. The Commission should concentrate its support
on European-scale initiatives, particularly those emana-
ting from European trade associations. As a back-up to
this, the Union should encourage greater coordination
of national marketing activities, for example by ensuring
that information about market and investment oppor-
tunities identified by national trade offices is circulated
throughout Europe. This twin approach is a credible
and reasonable alternative to the establishment, with
the support of the Commission, of a European presence
abroad in competition with the services and Chambers
of Commerce of the Member States.

3.4.1.2.
Through trade policy and its own invest-
ments, the Union must also seek to promote fair trading
rules. It is also absolutely essential for investment
support instruments to include information campaigns
which will alert European investors to the problem of
counterfeit goods and familiarize them with industrial

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and intellectual property right systems, anti-dumping
activities, rules of origin, etc.

3.4.2. R e

t r a d e p o l i c y a n d s u s t a i n a b l e
e c o n o m i c a n d s o c i a l d e v e l o p m e n t

In the field of trade policy the European Union must
promote compliance with the social Conventions of the
International Labour Organizations (ILO) as well as
respect for the environment. The Treaty on European
Union has fixed sustainable economic and social devel-
opment as the goal of cooperation policy (Article 130u).
It is therefore essential for the Union, in using its own
instruments, to not only comply with but also promote
these principles. Of particular concern here are environ-
mental questions (cf. The multilateral environmental
agreements and especially the commitments entered into
at the Rio and Kyoto Conferences) and social conditions,
notably the effective application of ILO Conventions
(particularly on non-discrimination, trade union rights,
forced labour and child labour). And as the Committee
pointed out in its opinion on the global harmonization
‘the
of direct investment regulations (CES 260/96),
opportunity should also be grasped to restrict attempts
to attract FDI on the basis of low labour standards not
to be confused with low wage levels.’

3.4.3. R e t h e i m p a c t o n e m p l o y m e n t

a very negative effect on employment in Europe. Projects
should therefore include estimates which make it possible
to assess this impact whilst any a posteriori evaluation
of projects should include elements which are of major
importance and are quantitatively significant
from
this point of view. The Committee calls upon the
Commission to set up studies of the employment impact
on regions and priority sectors in order to confirm such
trends, where necessary, and draw up more sophisticated
criteria for the selection of projects in line with this
priority.

3.4.4. R e E u r o p e a n c o m p e t i t i v e n e s s

The international competitiveness of European industry
is an important factor in ensuring growth and improved
job prospects, especially in a context of liberalized
international trade. At the same time, any analysis of
competitiveness must take into account the assets of the
European Union — and notably its highly skilled labour
force. It is therefore legitimate to ask whether there is
not a case for evaluating the aims of these cooperation
instruments from the point of view of their impact on
the competitiveness of European enterprises. Investment
and cooperation with third countries may of course be
beneficial to growth and employment in Europe under
certain conditions, notably when there is an offensive
strategy (winning of markets) or sectoral strategies
aimed at achieving complementarity with neighbouring
areas. In its draft opinion on a Plan of action to increase
the competitiveness of the European textile and clothing
industry (CES 1479/97) the Committee accordingly
recommended that Europe should invest, under certain
conditions, in central and eastern Europe and in the
Mediterranean basin. Such investments must also be
consistent with the Union’s internal structural policy,
particularly ERDF investment aid, so as not to lead to
the overcapacity of production in certain industrial
sectors.

The effects on jobs of employing these Community
investment support
instruments is rarely discussed
centre-stage (except in the JOPP programme). The
Committee however recognizes that this question raises
a whole host of complex problems: direct or indirect
effects, direct or indirect employment, short-term or
long-term effects, etc. The question however cannot be
evaded. It is important to know to what extent such
instruments really promote the economic and social
development of the partner countries and to find out
what effects they have on employment in the Member
States of the European Union. Developing the activities
of a Community firm in a third country may have
positive effects on employment in the Union through
the creation of added value, services and maintenance,
the need for plant and equipment, and indirect growth
opportunities. Much investment, however, simply takes
the form of relocating means of production in the search
for less burdensome fiscal or social conditions and has

3.5. Re consistency between national and Community

actions and the financial impact

The Committee notes that European operators are
turning more and more to Community instruments,
e.g. when there are prospects of promoting European
interests abroad. This situation might lead to confusion
or overlapping, especially since the promotion of exports
is still in principle the province of national authorities.

3.5.1.
The Committee proposes a method for achiev-
ing greater consistency, complementarity and trans-
parency. This method should also cover the question of

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European representation in third countries since there
is some degree of competition between national orga-
nizations (Chambers of Commerce located abroad) and
Union initiatives. Efforts to achieve consistency should
also be extended to include relations with international
organizations such as UNIDO (the United Nations
Industrial Development Organization), UNCTAD and
the World Bank. Member States of the Union hold a
majority share of the capital of UNIDO and preponder-
ant share (35 %) of the capital of the World Bank, as
against only 15 % held by the USA.

3.5.2.
As far as funding is concerned, it is not always
possible to know precisely what amounts are earmarked
by the EU for these instruments either because of the
very nature of the funding when it is a question of loans,
or because certain instruments are an integral part of
bigger financial envelopes, as is the case with MEDA. It
would therefore help if there was greater clarity about
funding levels and their complementarity with national
schemes. This could take the form of an updated
synopsis of EC and national
instruments and the
corresponding funding levels broken down into major
geographical areas.

4. A framework for an integrated and coordinated

approach

After having analyzed these matters and questioned the
principal European Commission departments respon-
sible, the Committee takes the view that a framework
should be created for an integrated and coordinated
approach.

4.1. Priority objectives

Some degree of integration is needed if the instruments
in question are to dovetail with major Community
priorities and policies. To this end a global strategy
should be developed containing a number of objectives
which would be modulated or strengthened according
to the particular geographical area in question, its level
of development and the closeness of its political ties
with the European Union. These objectives would be as
follows:

4.1.2.
To facilitate the transition from a centrally-
planned economy to a market economy, and to increase
industrial cooperation within the context of preferential
partnership arrangements, or some form of integration,
in the case of CEECs and Mediterranean countries.

To encourage European investment in emer-
4.1.3.
ging markets, or markets with a promising future, where
a large-scale Community drive might be needed to boost
even further the activities of European firms.

4.2. The incorporation of these objectives into a world

strategy

This strategy should form one of the strands of current
debates about an international agreement on invest-
ments. The Committee might support such an initiative,
but only if account was taken of a certain number of
principles and conditions such as those set out by the
European Parliament in a resolution on AMI presented
by the deputy Kreissl-Dorfler and adopted on 11 March
1998. The Committee also believes that under such an
agreement ‘greater discipline should be sought when
using fiscal incentives and direct incentives to attract
FDI, which also has implications for financing from
recipient states’ (Opinion on The global harmonization
of direct investment regulations). The aim in particular
would be to avoid the development of free export zones
which discriminate against national enterprises and
often show a complete disregard for any basic social or
environmental standards.

4.3. The principles underlying an integrated approach

The Committee believes that an overall strategy of this
nature should be accompanied by measures which ensure
that Community instruments are more transparent and
modernized in line with the following principles:

4.3.1.
It is necessary to draw a distinction between a)
macro-economic measures in the fields of taxation or
the security of investments, b) measures to support
intermediate structures such as chambers of commerce
or development agencies, and c) measures directly
connected with investment proper.

To promote sustainable growth (together with
4.1.1.
social progress and environmental protection) as well
as a climate conducive to investment (stable political,
legal and economic context), in the case of developing
countries and first and foremost those with the closest
links to the European Union (ACP countries in par-
ticular).

It is necessary to ensure that European policy
4.3.2.
objectives form an integral part of the main criteria for
approving projects, viz:

— the incorporation of social and environmental cri-

teria in investment projects,

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— a study of the impact on employment in the European

Union,

— the opening-up of programmes

to investors

in developing
countries
from other developing
countries or neighbouring areas (Mediterranean
partners in sub-Saharan Africa for example) whilst
preserving programmes in the emerging markets of
Latin America and Asia exclusively for operators in
the European Union.

4.3.3.
The Committee believes that a genuine indus-
trial partnership strategy needs to be developed with the
applicant countries, the other countries of central and
eastern Europe and the Mediterranean basin and would
like to see extra funds earmarked for this policy within
the MEDA, Phare and Tacis envelopes.

The Committee proposes harmonization of
4.3.4.
the rules governing the operation of the different
instruments: rules on participation (eligibility, definition
of a SME ....), financial conditions (mechanisms govern-
ing the allocation of funds, possible reimbursement), the
merger of the Commission services involved, common
assessment and vetting mechanisms. These reforms
should be slanted towards simplification in order to
ensure that EU operators, and particularly small and
medium-sized enterprises, have easier and more direct
access to the instruments in question. The operational
rules must be spelt out clearly and precisely in a single
vademecum covering all procedures and all countries.

4.3.5.
The Committee proposes new working
methods which would guarantee real complementarity
by identifying first and foremost those projects conducive
to the coordinated use of different Community instru-
ments. These new working methods would permit a
distinction between macro-economic measures in the
field of taxation or the security of investments, measures
to support intermediate structures such as chambers
of commerce, trade organizations and development
agencies, and direct investment support.

4.3.6.
The Committee finally advocates practical
implementation of the principle that investment support,
just like any other form of aid, should be conditional on
compliance with political, economic and social criteria.

5. Concrete suggestions regarding a framework for

genuine consistency of action

In order to rationalize current instruments, the Com-
mittee proposes that a distinction be made between
technical instruments and specific action programmes
for individual geographical areas. By making such a

distinction it should be possible to ensure that the
different technical instruments are modulated in accord-
ance with the Union’s priorities, which would in turn
be integrated with other Community policies and set
out as part of an overall strategy.

5.1. Homogeneous technical instruments

Current instruments are at present highly incongruous
and need to be transformed into a range of complemen-
tary measures tailored to local situations and the needs
of operators and subject to uniform operating rules.
According to the Committee this would include the
following instruments:

5.1.1.
Technical assistance programmes to be used
in a macro-economic context (developing countries,
Euro-Mediterranean area).

— Mechanisms for supporting intermediate structures
in the form of partnership programmes (basically
focused on training) involving similar EU institutions
and geared to enterprise support services and the
development of industrial cooperation centres.

— Instruments of direct aid to enterprises, i.e.:

• The training of European business leaders in
the culture of partner countries (particularly for
developed countries).

• Meetings between enterprises along the lines of
Europartnership and Interprise but run on more
professional lines with a better selection of partici-
pants on both sides.

• Support for collective market research and sectoral
studies, aimed first and foremost at emerging
markets.

• Funding of feasibility studies on investment pro-
jects and the creation of joint ventures, with
harmonized rules covering all areas.

• Use of a technical assistance centre for investments

in the most difficult countries.

— Training schemes and the upgrading of the skills of

persons employed in third countries.

— Programmes to encourage female business entre-

preneurs (training, access to credit).

— Mobilization of EU financial instruments (EIB, but
also the European Investment Fund, EIF) and of
banking networks, with the use of financial engineer-
ing mechanisms (risk capital, guarantee funds, inter-
est-rate support) differentiated according to a ‘coun-
try/risk’ criterion in order to encourage investment,
particularly in central and eastern European
countries and the Mediterranean area. These finan-
cial support programmes must be implemented

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by the banking networks
themselves and be
accompanied by a project identification and infor-
mation mechanism run by intermediate orga-
nizations: a radically restructured CDI, industrial
cooperation centres, chambers of commerce and
trade associations.

Interprise, technical assistance in the implementation
of reforms, the consolidation of local
intermediate
structures through training programmes, the promotion
of European investments in strategic areas (energy,
tourism ...), aid from the EIB, EIF and banking networks
accompanied by financial engineering, technical assis-
tance for local enterprises with a CDI type centre.

5.2. Geographical action programmes

The Committee proposes that use of the different
instruments be modulated according to the geographical
area in question and that consistency be achieved
through action programmes. Asia-Invest would seem to
be the most appropriate example in this respect since it
already encompasses a coherent range of instruments.
The Committee would therefore propose the following
action programmes:

5.2.1.
A substantial AL-Invest programme for Latin
America, encompassing the ECIP instrument, new train-
ing programmes in the cultures of the Latin American
continent, technical assistance for developing countries
in the area, assistance in collective and sectoral studies
along the lines of the Business Priming Fund and
Investment Facility as developed in Asia-Invest.

5.2.2.
The expansion of Asia-Invest to include the
ECIP instrument (to avoid overlapping) and to also
cover technical assistance for developing countries.

5.2.3.
An East-Invest programme for the CEEP and
Tacis countries, to include specific instruments for
European integration, the consolidation of intermediate
structures, cooperation between SMEs, the promotion
of European investment in strategic areas (wood, energy
sources, aeronautics ...) through support from the EIB,
EIF and various banking networks (with Community
support in the form of financial engineering), use of the
JOPP instrument for feasibility structures, EU/CEEP
industrial cooperation centres managed jointly by the
EU and local intermediate organizations.

An ACP-Invest programme comprising the
5.2.4.
ECIP instrument (for which ACP countries are currently
ineligible for no real reason), technical assistance in the
implementation of reforms, the consolidation of local,
regional and occupational intermediate structures, a
radically reworked CDI transformed into a centre for
the development of enterprises (CDE) in order to help
ACP enterprises become part of international trade,
Europartnership and Interprise instruments, aid from
the EIB, EIF and banking networks and a global system
of intermediate networks offering support and back-up
services.

5.2.6.
A US-Invest and Japan-Invest programme
geared solely to learning about the culture of these
countries, and the use of Europartnership and Interprise
instruments.

5.3. Rules on management, follow-up and monitoring

5.3.1.
The Committee recommends the introduction
of a common mechanism for the regular and frequent
evaluation and monitoring of these instruments. This
would include an obligation on project beneficiaries to
provide long-term information over a period of at least
ten years. In carrying out the evaluation, account
would have to be taken of the economic and social
consequences, particularly in terms of employment
within and outside the EU, as well as the implications
for sustainable development, competitiveness and the
long-term commercial interests of the European Union.

5.3.2.
The Committee also recommends the exchange
of best practices (benchmarking) in respect of instru-
ments and programmes, particularly in terms of results,
consistency with objectives, and integration with other
Community policies. The Commission departments
concerned should be merged to ensure operational
consistency and the exchange of best practices.

5.3.3.
It is essential to strengthen anti-fraud mecha-
nisms and make widespread use in Europe of the budget
control powers of the European Parliament and the
Court of Auditors.

5.3.4.
These provisions for the evaluation and moni-
toring of instruments and for the combating of fraud
must be applied without excessive bureaucracy and with
a permanent eye on simplifying procedures. The best
results can be obtained by making operators as respon-
sible as possible (evaluation of individual objectives; a
posteriori monitoring).

A new MEDA-Invest programme comprising,
5.2.5.
in addition to the ECIP instruments, Europartnership,

The Committee also proposes the establish-
5.3.5.
ment of an Observatory, involving the social partners

C 284/90

EN

Official Journal of the European Communities

14.9.98

and the ESC, to monitor the socio-economic impact
of investment support instruments. The Observatory
would have particular responsibility for measuring
the employment impact in the European Union, the
promotion of social regulations and environmental
standards, and sustainable development in the benefi-
ciary countries.

5.4. Financial resources and complementarity with

national activities

The Committee also recommends, in the inter-
5.4.1.
ests of consistency between national and Community
actions,
that national authorities and the relevant
organizations (chambers of commerce, trade associ-

ations) be closely involved in monitoring and following
up programmes affecting their particular country. The
Committee recommends in this respect the drawing-up
of a synopsis of national and Community actions,
broken down by geographical area.

5.4.2.
The Committee recommends that a substantial
proportion of the funds available under cooperation
programmes be devoted to these instruments, particu-
larly in Europe and the Mediterranean basin. To make
up for low budget ceilings and ensure complementarity
with national activities, additional activities co-financed
by the EU and Member States could be launched to
speed up this necessary integration (the participation of
operators from other Member States being treated as
part of the Community’s contribution).

Brussels, 1 July 1998.

The President

of the Economic and Social Committee

Tom JENKINS