Opinion of the Committee of the Regions on the 'Proposal for a Council Regulation (EC) on the European Regional Development Fund'
Date: 1998-11-18
Institutions: European Committee of the Regions
Subjects: EU initiative, EU programme, European Regional Development Fund, cross-border cooperation, regional development

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II

(Preparatory Acts)

COMMITTEE OF THE REGIONS

Opinion of the Committee of the Regions on the ‘Proposal for a Council Regulation (EC) on
the European Regional Development Fund’

THE COMMITTEE OF THE REGIONS,

(1999/C 51/01)

having regard to the Proposal for a Council Regulation (EC) on the European Regional
Development Fund of 18 March 1998 [COM(98) 131 final — 98/0114 (SYN)] (1);

having regard to the decision taken by the Council on 19 May 1998, under Article 130e and
the first paragraph of Article 198c of the Treaty establishing the European Community, to
consult the Committee of the Regions on the matter;

having regard to the decision taken by the Bureau of the Committee of the Regions on 13 May
1998 to instruct Commission 1 — Regional Policy, Structural Funds, Economic and Social
Cohesion, Cross-border and Inter-regional Cooperation — to draw up the relevant opinion;

having regard to the draft opinion adopted by Commission 1 on 30 September 1998 (CdR 240/98
rev.) (rapporteurs: Mr Chaves Gonza´lez and Mr Kauppinen);

referring to its opinion on the role of the regional and local authorities in the partnership
principle of the Structural Funds (CdR 234/95) (2);

referring to its opinion on the Structural Funds innovatory measures 1995-1999 — guidelines
for the second series of actions under Article 10 of the ERDF Regulation (CdR 303/95)(3);

referring to its opinion on strengthening the Mediterranean policy of the European Union:
proposals for implementing a Euro-Mediterranean partnership (CdR 371/95) (4);

referring to its opinion on the northern dimension of the European Union and cross-border
cooperation on the border between the European Union and the Russian Federation and in
the Barents region (CdR 10/96 fin) (5);

referring to its opinion on current and future EU policy on the Baltic Sea region with specific
reference to local and regional aspects (CdR 141/96 fin)(6);

(1) OJ C 176, 9.6.1998, p. 35.
(2) OJ C 100, 2.4.1996, p. 72.
(3) OJ C 100, 2.4.1996, p. 124.
(4) OJ C 126, 29.4.1996, p. 12.
(5) OJ C 337, 11.11.1996, p. 7.
(6) OJ C 42, 10.2.1997, p. 6.

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referring to its opinion on the Interreg IIC Community initiative and the potential role for
local and regional authorities (CdR 108/97 fin) (1);

referring to its opinion on decentralized cooperation and the Euro-Mediterranean partnership
(CdR 125/97 fin) (2);

referring to its opinion on views of the regions and local authorities on arrangements for
European structural policy after 1999 (CdR 131/97 fin)(3);

referring to its opinion on Agenda 2000: the financing of the European Union after 1999 taking
account of enlargement prospects and the challenges of the 21st century (CdR 303/97 fin) (4);

referring to its opinion on the Proposal for a Council Regulation (EC) laying down general
provisions on the Structural Funds (CdR 167/98 fin) (5),

adopted the following opinion at its 26th plenary session held on 18 and 19 November 1998
(meeting of 18 November).

1. General comments

1.1.
Regional and structural policy is of key import-
ance to the development of a united Europe. A third of
the EU budget is channelled via the Structural Funds
into levelling out differences in degrees of development
and creating conditions conducive to development in
regions which are lagging behind. The European
Regional Development Fund, ERDF, is crucial to this
process.

1.2.
The European Commission’s proposals for new
Structural Fund rules are an important component in
the drive to promote balanced and sustainable economic
and social development in Europe and to remove regional
differences in the level of development.

The revision of the rules is happening at a time
1.3.
when regional and local authorities are facing major
changes brought about by the rapid pace of social and
technological development and the challenges these
changes bring, namely how to avoid the problems
development entails and to make the most of the
possibilities it offers.

The COR feels that it is also important to see
1.4.
EU structural policy in practical terms as part of the
all-embracing development work being carried out by
the Member States, their regional and local authorities
themselves.

1.5.
It is equally vital from the outset to perceive the
importance of the interaction of players at different
regional levels.

(1) OJ C 244, 11.8.1997, p. 19.
(2) OJ C 64, 27.2.1998, p. 59.
(3) OJ C 64, 27.2.1998, p. 5.
(4) OJ C 64, 27.2.1998, p. 40.
(5) OJ C 373, 2.12.1998, p. 1.

Economic globalization is bringing about radical
1.6.
changes in the social and economic structure of localities
and regions. In this connection, the local and regional
authorities have a responsibility to ensure harmonious
and balanced development.

1.7.
The European Commission’s proposals make up
a coherent whole, representing a departure from normal
practice in that a proposal for a Council Regulation
(EC) on the general rules governing the Structural Funds
has now been drawn up as a common basis covering all
funds, in addition to specific proposals on the European
Regional Development Fund, the European Social Fund,
the European Agricultural Guidance and Guarantee
Fund and the Financial Instrument for Fisheries Guid-
ance.

2. The overall task of the European Regional Develop-

ment Fund

2.1.
This opinion on the ERDF makes reference to a
separate opinion on the proposal for a Regulation (EC)
laying down general provisions on the Structural Funds.

2.2.
Article 130c of the EC Treaty lays down that
the European Regional Development Fund (ERDF) is
intended to help to redress the main regional imbalances
in the Community.

2.3.
According to the proposed general provisions on
the Structural Funds, the main task of the ERDF is to
support Objectives 1 and 2 within the meaning of
Article 1 of the above-mentioned regulation and to
take a part in funding cross-border, transnational and
inter-regional cooperation. The fund also supports
innovative measures and technical assistance at Com-
munity level.

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3. The tasks of the ERDF analyzed according to the

Commission proposal

3.1. Objective 1

3.1.1.
The aim of Objective 1 is to promote the
development and adjustment of regions whose develop-
ment is lagging behind. According to the proposal,
Objective 1 regions comprise those NUTS level II regions
where the per capita GNP, 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. This Objective also
covers the most remote regions and Objective 6 regions
for the period 1995-1999. The Commission would
confirm the Objective regions for the period 2000-2006.

3.1.2.
Those regions which qualify as Objective 1
regions during the current programme period but no
longer do so in the period about to start will receive
transitional support under Objective 1 for a period of
six years.

3.2.3.
A number of individual provisions in respect
of Objective 2 need to be revised along the lines of
the proposals set out in the Committee’s opinion
of November 1997 and its opinion on the draft general
Structural Funds regulation.

Defining Objective 2 areas will be a difficult
3.2.4.
task at national
level. For the regional and local
authorities, it is important that decisions are based
on the most open possible statistical and qualitative
examination and on achieving a balance between regions
and between the different areas that make up these
regions.

3.3. The new Community Initiative for cross-border,
transnational and inter-regional cooperation

The number of Community Initiatives is limited
3.3.1.
to three in the proposals in such a way that one initiative
is supported by each structural fund. The COR would,
however, reiterate its call for a collateral instrument for
industrial and sectoral structural change and military
conversion, so that an appropriate response can be made
to unforeseen crises.

3.1.3.
The COR is aware of the difficulty involved
in defining Objective 1 regions, but feels that the
Commission has submitted a balanced proposal in line
with the position taken by the COR in November 1997.

3.3.2. With ERDF funding, the Commission proposes
transnational and inter-
promoting cross-border,
regional cooperation intended to encourage harmonious
and balanced regional development and planning.

3.2. Objective 2

According to the proposal, Objective 2 regions
3.2.1.
comprise four different types of area facing structural
problems of socio-economic conversion whose popu-
lation or area are sufficiently substantial. They include
areas undergoing socio-economic change in the indus-
trial and service sectors, declining rural areas, urban
areas in difficulty and depressed areas dependent on
fisheries. The population of these regions must not
exceed 18 % of the total population of the Community.
The grouping of different types of problem (rural and
urban areas, socio-economic change, dependence on
fisheries) within Objective 2 demonstrates the Com-
mission’s wish to simplify Community assistance and
make it more transparent. The COR reiterates its
concern that the effects of this simplification should also
be felt at local level by the players responsible for
implementing the Structural Funds.

This new Initiative

3.3.3.
constitutes an
important part of the ERDF’s mission. The COR will
closely monitor the effectiveness of the Community
Initiative in practice.

thus

3.3.4.
Each Community initiative project is financed
from a single fund. However, as is customary, the
regulation allows financing to be extended to all
measures needed for the implementation of the project
in question.

3.4.

Innovative measures

3.4.1.
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 Com-
munity level. These shall include studies, pilot projects
and exchanges of experience.

3.2.2.
The areas eligible for Objective 2 are deter-
mined by the Commission and Member States working
in tandem. Those areas presently covered by Objectives 2
and 5(b) which are not eligible to become new Objective 2
areas, will receive transitional support for a period of
four years under the new Objective 2 rules.

3.4.2.
Each field for pilot projects shall be financed
by one fund only. The regulation allows for the
traditional scope of financing to be amplified to include
all measures required to implement the pilot project
concerned.

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3.5. Technical assistance

At the initiative or on behalf of the Commission,
3.5.1.
and subject to a ceiling of 0,3 % of their respective
annual allocation, the funds may be used to finance
the preparatory, monitoring, evaluation and checking
measures necessary for implementing Structural Fund
measures.

3.5.2.
in Article 22.

The details of technical assistance are set out

4. The purpose and gist of the proposed ERDF Regu-

lation

4.1.
According to the proposal, this regulation is
intended to specify the kind of measures which may
be funded by the ERDF and the tasks of regional
development.

4.2.
Apart from the preamble, the draft regulation
consists of only nine articles, of which five deal with
general administrative provisions. Articles 1-4 define the
tasks of the fund, Article 2 the scope, Article 3 the
Community Initiative rules and Article 4 the rules on
innovative measures.

4.3.
The COR is pleased to note the structural clarity
which has been achieved between the general Regulation
and the regulations on the separate funds.

5. Assessment of the draft ERDF regulation

5.1. Preamble

5.1.1.
The COR feels that the preamble forms a
coherent whole. It is also clear from the draft regulation
that there are several funds, each with its various tasks.
Thus, for instance, point 4 refers to funding granted for
the harmonious, balanced and sustainable development
of economic activity. However, within regional develop-
ment as a whole, other aspects of society should also be
looked at. At present, action on some of these aspects is
funded through the European Social Fund. Owing to
the difficulties inherent in the present state of affairs,
the COR feels that coodination between the different
Structural Funds should be improved so as to facilitate
development planning in general.

5.1.2.
Point 5 states the environmental objectives and
conditions in more detail than elsewhere. For the sake
of clarity, a specific reference should be made in this
point to aiding the internationalization of SMEs up to a
global level in all cases as part of support for the
competitiveness of enterprises. Mention should also be
made of the importance of securing adequate water
resources to slow down and combat soil degradation

and erosion, and to ensure sustainable development in
large areas of the EU.

5.1.3.
Since the ERDF is specifically designed to
promote economic and social cohesion by redressing
regional imbalances and contributing to the development
and conversion of regions, the Committee thinks that
the criteria should include insularity and the backward-
ness of rural areas — in accordance with Article 158 of
the Amsterdam Treaty — as these are factors which
give rise to a number of structural disadvantages.
Mention should also be made of the ‘outermost regions’
criterion — in accordance with Article 299 of the
Amsterdam Treaty — which takes account of the
remoteness and permanent disadvantages faced by the
regions concerned. Finally, reference should also be
made to the criterion of remoteness, firstly because of
the disadvantages suffered by remote areas, and secondly
because of the specific need to link-up and structure
such areas in keeping with their territorial make-up and
position within Europe.

5.2. Article 1 — Tasks of the Fund

The wording of the Article is sufficiently
5.2.1.
general, but at the same time quite precise, and the COR
has no comment to make on it.

5.3. Article 2 — Scope of the Fund

5.3.1.
This is the most important article in the draft
regulation as it sets out the categories and areas which
are eligible for ERDF funding. The COR feels that, under
the proposal, Europe’s regional and local authorities are
free to act in those areas which they feel are appropriate
for promoting balanced and sustainable economic and
social development in line with their potential.

5.3.2. On the basis of each locality’s and region’s
particular features, and taking into account progress
towards European integration, the list of areas to be
given priority support should include reforms of the
production and service structure, in particular to help
small and medium-sized businesses to adapt competi-
tively to the single market and the euro.

5.3.3.
The COR stresses the importance of joint
funding of infrastructure investments by the ERDF.
However, it does not understand the Commission’s
attitude towards the wish of local and regional auth-
orities to participate in such investments,
including
if they consider that
in declining industrial areas,
modernization of
is
infrastructure
necessary.

transport

the

5.3.4.
Bearing in mind the major importance of
culture to the identity and vitality of regions and
localities, it is essential in a world which is becoming
more and more globalized to make sure that cultural-
economic activities and their various forms of expression

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are taken into account in regional development. The
COR therefore proposes that cultural activities with
structural policy implications — including the cultural
heritage and the development of cultural tourism — be
added to the list of areas to be given support under
Article 2.

5.3.5.
In addition to the trans-European networks,
the Committee believes that the ERDF should extend its
sphere of activities to cover regional and inter-regional
infrastructure in the transport, telecommunications and
energy sectors, paying attention to the island, outermost,
rural uplands and remote regions suffering specific
structural disadvantages.

5.4. Article 3 — Community Initiative on cross-border,
transnational and inter-regional cooperation

5.4.1.
The Community Initiative, the revised Interreg
programme, is concerned with cross-border, transna-
tional and inter-regional cooperation intended to encour-
age the harmonious and balanced development and
spatial planning of the European territory.

5.4.2.
Funding of the programme is only through the
ERDF but the action receiving funding may also be of
the kind traditionally within the competence of other
Structural Funds.

5.4.3.
The COR is pleased to note the Commission’s
proposals on content and funding. Financing coming
from a single fund may make implementation more
straightforward. The proposed procedure also provides
a good opportunity to test the single-fund principle in
practice. The Interreg programmes have been largely
effective apart from a few shortcomings, and the
need for cross-border, transnational and inter-regional
cooperation is great.

5.4.4.
As detailed draft rules are only just being
drawn up, the COR would draw attention to certain
issues which should be borne in mind in the new rules
and in the Commission’s measures.

5.4.5.
The Community Initiative consists of three
parts: cross-border, transnational and inter-regional
cooperation. The COR would like to see this programme
focus particularly on encouraging the participation of
localities and regions in cross-border and inter-regional
cooperation since there are many opportunities at
national level to foster transnational cooperation.

sub-units, thus promoting the formation and establish-
ment of new functional, economic and social units
integrated in relation to their position within Europe’s
territorial structure.

5.4.7.
In the field of cross-border cooperation, the
COR would pay special attention to removing the
problems now affecting inter-regional cooperation
across the EU’s external borders.

5.4.8.
Action under the MEDA, Phare and Tacis
programmes to promote cross-border cooperation on
the EU’s external borders has come up against numerous
problems in practice. This has affected cooperation.
Hence there is a need for a clarification of procedures
so that action under the new ERDF initiative is better
coordinated with the Phare, MEDA and Tacis pro-
grammes, especially where their cross-border elements
are concerned.

Bearing in mind that regional and local authorities are
essential players in cross-border cooperation, the COR
offers to collaborate in this process to find practical
solutions.

Cooperation between Phare programmes and
5.4.9.
the new Initiative for cross-border, transnational and
inter-regional cooperation is now of particular import-
ance in the run-up to EU enlargement. Good cooperation
will also serve to remove the problems which may arise
in the EU’s border regions in the course of enlargement.

5.4.10.
By the same token, coordination between the
new Initiative and the MEDA programme should be
improved to enable the regional and local authorities to
participate more effectively in the Euro-Mediterranean
Association Agreement concluded at the Barcelona
Conference in November 1995. In this way, and through
decentralized cooperation, they can help to bring about
an area of peace, stability and progress in the Mediter-
ranean.

5.4.11.
In conjunction with the new Community
Initiative, cross-border cooperation under the Tacis
programme may be a more effective means of bringing
about interaction between Russia and the EU’s border
regions. It is in these European border regions that the
most marked differences in levels of development are
found, both in terms of living standards and the
effectiveness of democratically elected regional and local
administrations.

5.4.6.
The COR believes that this Community initiat-
ive should pay special attention and lend special support,
both in quantitative and qualitative terms, to regional
cooperation and structuring processes designed to forge
closer relations between respective economic and social

5.4.12.
The COR also takes the view that this new
initiative must give priority attention to those areas
and regions whose common minority language and/or
culture straddles the border between them.

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5.4.13.
Inter-regional cooperation is one of the key
aspects involved in building Europe. The COR would
place particular emphasis on the importance of such
cooperation. In order to foster cohesion in Europe, it is
essential to achieve a good level of mutual understanding
within Europe. The new Community Initiative offers
the means to achieve this objective.

5.5.4. On the subject of innovative measures, the
COR wishes to draw attention to the fact that, recently,
the Commission has decided to give priority to economi-
cally more substantial projects, thus reducing the number
of projects co-financed. The COR understands the
background to this, but is resolutely opposed to the
trend.

5.4.14.
The rules of the new Initiative on cross-border,
transnational and inter-regional cooperation should also
allow for combinations of cross-border and inter-
regional cooperation in particular in the programmes to
be drawn up.

5.4.15.
The Committee believes that the initiative on
cross-border, trans-national and inter-regional cooper-
ation should make provision for specific inter-regional
cooperation measures between the outermost regions.

5.5. Article 4 — Innovative measures

Innovative measures comprise studies on the
5.5.1.
Commission’s initiative, pilot projects and exchanges of
experience relating to innovation.

The COR supports the Commission’s proposal
5.5.2.
in that innovative measures have proved important for
regional and local authorities. Projects carried out on
the Commission’s initiative have had a major impact.
Furthermore, regional and local authorities have been
able to establish a close relationship with the Com-
mission, thereby helping to increase mutual under-
standing.

5.5.3.
It is also particularly pleasing to note that
innovative measures can be financed from the ERDF by
extending the scope to the spheres of other Structural
Funds. The proposal demonstrates the Commission’s
lack of prejudice as well as an understanding of the
needs of regional and local authorities. The COR
ventures to hope that the Commission will establish
simple and effective procedural rules, in particular by
simplifying the rules on eligibility of expenditure, setting
up some kind of retrospective financial control and
establishing mechanisms for pooling the risks incurred
by the smallest-scale projects.

Brussels, 18 November 1998.

5.5.5. Many European regions and localities are very
small and, when the policy is for large-scale projects,
they have minimal chances of participating. It is therefore
essential that the Commission also gives a chance to
small-scale innovative projects, including those originat-
ing from civil society. Small regions and localities also
need innovations to cope with the furious pace of
development.

The COR would like to see inter-regional
5.5.6.
cooperation encouraged as part of
the innovative
measures. Specifically, it supports continuity and an
improvement
the Ecos-
Ouverture and Recite programmes, with a view to
improving coordination between the measures financed
by the ERDF and those included in the MEDA, Phare
and Tacis Programmes.

in the procedures under

5.6. Articles 5-9

5.6.1.
articles.

The COR has no comments to make on these

6. Conclusion

This opinion stands as an independent complement to
the COR’s opinion on the general regulation, and the
COR would ask the Commission to review its proposal
for a Council regulation on the European Regional
Development Fund taking account of the recommen-
dations made by the COR. The COR would also ask
the Commission to take account of the proposals made
by the COR in this opinion when drawing up detailed
rules for the new Initiative on cross-border, transnational
and inter-regional cooperation and innovative measures,
and to review the MEDA, Phare and Tacis rules
accordingly so as to create an effective system for
drafting and implementing cross-border and inter-
regional programmes.

The President

of the Committee of the Regions

Manfred DAMMEYER