Commission report on the measures to implement Article 299(2) - the outermost regions of the European Union
Date: 2000-03-14
Institutions: European Commission
Subjects: EU aid, Structural Funds, peripheral region, regional cooperation, report

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 19.5.2000
COM(2000) 147 final/2

CORRIGENDUM
Annule et remplace les pages 38 et 47
du document COM(2000) 147 final
du 14.3.2000. Concerne uniquement EN.

COMMISSION REPORT

ON THE MEASURES TO IMPLEMENT ARTICLE 299(2)

THE OUTERMOST REGIONS OF THE EUROPEAN UNION

TABLE OF CONTENTS

Introduction................................................................................................................ 7

I. Achievements .............................................................................................................. 9

A. WORK UNDERTAKEN UNDER THE FINANCIAL INSTRUMENTS ............... 9

1. The activities of the Structural Funds ..................................................................... 9

Implementation of the programmes........................................................................... 11

Evaluation ................................................................................................................ 11

2. European Investment Bank loans ......................................................................... 13

B. IMPACT OF THE POLICIES.............................................................................. 15

1. Agriculture........................................................................................................... 15

Market organisations ................................................................................................ 15

The agricultural strand of the Posei programmes....................................................... 15

– Specific supply arrangements................................................................................. 16

– Specific measures in favour of local agricultural products...................................... 16

2. Fisheries .............................................................................................................. 17

3. Taxation............................................................................................................... 18

4. Customs............................................................................................................... 19

5. State aids.............................................................................................................. 19

State aids other than aids to agriculture..................................................................... 19

State aid to agriculture .............................................................................................. 21

6. Aid to small businesses, craft firms and tourism................................................... 21

7. Energy ................................................................................................................. 23

General measures ..................................................................................................... 23

A specific measure ................................................................................................... 24

8. Transport ............................................................................................................. 24

Air transport ............................................................................................................. 24

Sea transport............................................................................................................. 25

9. Research and development ................................................................................... 25

10.

11.

The information society.............................................................................. 26

Environment............................................................................................... 27

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12.

Regional cooperation.................................................................................. 27

C. GENERAL ASSESSMENT................................................................................. 29

II. The future.................................................................................................................. 33

Article 299(2) ........................................................................................................... 33

A sustainable development strategy for the outermost regions .................................. 33

A. THE BASIS PROVIDED BY TRADITIONAL PRODUCTION.......................... 35

1. Agriculture........................................................................................................... 35

2. Fisheries .............................................................................................................. 37

B. GIVING A FRESH BOOST TO THE ECONOMIES OF THESE REGIONS ...... 39

1. The Instruments ................................................................................................... 39

a. Structural funds.................................................................................................... 39

b. The loans of the European Investment Bank......................................................... 40

c. State aids.............................................................................................................. 41

State aids in sectors other than agriculture, fisheries and transport ............................ 41

State aids to agriculture ............................................................................................ 42

State aids to the fisheries sector ................................................................................ 42

State aids to transport ............................................................................................... 42

d. Taxation............................................................................................................... 43

Indirect taxation........................................................................................................ 43

Direct taxation .......................................................................................................... 46

e. Customs............................................................................................................... 46

2. The strategic areas................................................................................................ 47

a. Support for SMEs, craft firms and tourism ........................................................... 47

b. Transport ............................................................................................................. 50

c. Energy ................................................................................................................. 52

d. Environment ........................................................................................................ 53

e. The information society ....................................................................................... 54

f. Research and development ................................................................................... 56

C. THE INTERNATIONAL ENVIRONMENT AND REGIONAL COOPERATION57

CONCLUSION ........................................................................................................ 59

ANNEXES ............................................................................................................... 61

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4

INTRODUCTION

The Cologne European Council called on the Commission to present a report to the Council
on the measures to implement the new Article 299(2) of the EC Treaty concerning the
outermost regions.

The Commission has itself received memoranda on this subject from the seven outermost
regions acting together, in March 1999, and from each of the three Member States concerned,
in November/December 1999. In addition, the Commission organised a partnership meeting
on this subject on 23 November 1999, which was attended by representatives of the Member
States and regions concerned.

The Commission has examined these memoranda carefully and has taken due note of what
was said at the partnership meeting. All these elements have been very useful in enabling the
Commission to assess the situation in the regions, the measures taken so far by the European
Union, and the future prospects.

This report constitutes the Commission’s reply to the European Council’s request.

The outermost regions

The European Union includes seven regions classified as “outermost”:

–

–

–

the autonomous Spanish community of the Canary Islands;

the four French overseas departments: Guadeloupe, Martinique, French Guiana
and Réunion;

the Portuguese autonomous regions of the Azores and Madeira.

These regions occupy a unique and complex position within the European Union. The main
features of their natural environment are their island nature (six of the seven are actually
islands and French Guiana is an enclave in the Amazon Forest), their tropical and sub-tropical
climate and a terrain which is often extremely rugged and volcanic, their situation far from
continental Europe and,
their proximity to less developed non-member
countries. With just one exception, their population density is fairly high – more than 210
people to the km2 in the Canary Islands and 320 in Madeira, and between 240 and 360 in the
French overseas departments with the exception of French Guiana, which has fewer than two
people per km2.

in most cases,

Their demographic, economic and territorial clout is relatively weak compared with that of
the Union as a whole: their population totals 3.7 million, i.e. exactly 1% of that of the
European Union, and less than 0.5% of the EU’s surface area, excluding French Guiana, or
more than 3% if French Guiana is included. In socio-economic terms, their GDP averages
59% of that of the Community (almost 75% in the Canary Islands, but no more than 40 to
55% in the others), and most of them have a very high rate of unemployment, especially
among young people.

The isolation of these regions, along with their scattered location, as in the case of the Azores,
acts as a very serious check on development, particularly since their small size makes heavy
investments unprofitable and does not permit economies of scale. Their “imports” – including

5

supplies from their respective mainland territories, which represent their main source, e.g.
80% in the case of the French overseas departments – are several times higher than what they
themselves send abroad. To put it in a nutshell, six of them (with the exception of the Canary
Islands) rank among the seven poorest regions in the European Union in terms of GDP per
capita, and five of them run the highest unemployment rates, on average twice the EU level,
and even not far short of three times if we exclude Madeira and the Azores, whose
unemployment rates are around half the Community average.

The European Union’s policy on its outermost regions

The European Union has recognised “remoteness” as a concept and taken account of the
specific features of these regions so that they can play a full part in Europe and benefit from
Community policies while cooperating with neighbouring countries and territories. The
guidelines for this approach were set out in the "programmes of options specific to the remote
and insular nature" of the French overseas departments (Poseidom, in 1989), the Canary
Islands (Poseican, in 1991) and the Azores and Madeira (Poseima, in 1991). For the Canary
Islands, mention should also be made of the Regulation on the application of the provisions of
Community law to the Canary Islands (Regulation No 1911/91). The idea was to use the
structural funds and various adapted forms of common policies to support work being done by
the regions and Member States themselves, and to promote development and productive
employment in the regions. It was intended that this development be both ecologically
sustainable, socially balanced and based on a long-term strategy. Implementation was based
on the principle of partnership between the Commission, the Member State and the regions
concerned.

The three Posei programmes are the backbone of the policy for supporting the outermost
regions. The underlying aim is to take full account of the specific features and difficulties due
to the “remoteness” factor, in other words the distinctive features which set them apart from
other insular regions which are less far away and the other regions targeted by Objective 1;
the intended approach is an across-the-board one, to be taken into account in all Community
action.

However, over time and as a result of the changes which the European Union has undergone,
the need to provide a more solid legal basis for dealing with “remoteness” has emerged. This
was introduced by the Treaty of Amsterdam, whose new Article 299(2) updates and
strengthens the earlier Article 227(2) (which applied only to the French overseas departments)
and covers all the outermost regions. This new legal basis should make it easier to consolidate
what has been achieved under the Posei programmes and provide a firmer basis for addressing
the future prospects of European integration.

This report reflects this approach. The first part (dealing with “achievements”) describes
action taken by the Community to date and its effects on the development of these regions:
action has been effective, but needs to be continued because the handicaps of remoteness are
lasting ones. The second part (dealing with the future) deals with the measures planned under
Article 299(2) to continue and strengthen earlier measures.

6

I.

ACHIEVEMENTS

Policy on the outermost regions under the Posei programmes has developed through measures
of two types. The activities of the Structural Funds have been of great importance, and the
Community has adjusted its various policies to address the specific problems encountered by
these regions. Annex I sets out the main measures which have been adopted.

A.

1.

WORK UNDERTAKEN UNDER THE FINANCIAL INSTRUMENTS

THE ACTIVITIES OF THE STRUCTURAL FUNDS

The seven outermost regions qualify for assistance under the Structural Funds and have
benefited, under Objective 1 of the regional policy, from programmes part-financed by the
European Union in the periods 1989-93 and 1994-99. As provided for under the Poseidom
programme, structural measures take account of the additional handicaps arising from the
regions’ remote and insular situation.

The resources allocated to the outermost regions under Objective 1 have achieved a
particularly high level. Tables 1 and 2 below show the overall allocations from the Structural
Funds to each region for the two periods, and a comparison of levels of intensity of aid from
the Union compared with that allocated to the other Objective 1 regions and to all the areas
eligible. What they show is that aid has virtually doubled over the latter period, and that, in
terms of inhabitants,
the aid received by the Canary Islands and the French overseas
departments was some 20% over that for other Objective 1 regions, and was more than 100%
higher in the case of the Azores and Madeira.

For the outermost regions, the new principles arising from the 1989 reform have encouraged
the definition of medium-term development strategies which take account of their specific
handicaps. The preparation and implementation of regional development plans have permitted
extension of the partnership with the regional authorities. It should be noted that
the
programming documents adopted for each region and for each of the two programming
periods reflected the concerns expressed at regional and local level.

7

TABLE 1

FUNDING FROM THE STRUCTURAL FUNDS

(ERDF, ESF, FIFG, EAGGF-Guidance Section)

(EUR million)

Canary Islands

Azores

Madeira
Guadeloupe
French Guiana
Martinique
Réunion

TOTAL

1989-1993
Objective 1 + IC
860

1994-1999
Objective 1
1 622

1994-1999
Regis II
231

357

319
200
92
192
432

616

369
360
172
344
688

2 452

4 171

81

64
62.5
29
62.5
119

649

1994-1999
TOTAL

1 853

697

433
422.5
201
406.5
807

4 820

TABLE 2

INTENSITY OF EUROPEAN AID

(period 1994-1999)

Canary Islands

Azores - Madeira

French overseas departments

Objective 1 (total)

Other regionalised Objectives
(2, 5(b) and 6) (total)

Population
(’000)

1 526

494

1 454

92 151

94 502

Funding from the
Structural Funds
(EUR million)
1 836

1 109

1 792

93 972

22 919

per capita
(EUR)

1 203

2 245

1 232

1 019

243

8

Implementation of the programmes

Because of the structural handicaps facing the most remote regions and the shortfall in their
development, the programmes part-financed by the European Union for each region in the
periods 1989-93 and 1994-99 set as their priorities an increase in the provision of
infrastructure, the development of the productive, job-creating sectors and the improvement
of human resources. In addition, in 1989 the Commission established a specific Community
Initiative for these regions, Regis. This Initiative was extended in 1994 with funding up from
ECU 200 million for 1989-93 to ECU 600 million for 1994-99. The priorities in the
programmes reflect the development choices made at regional level.

The construction or improvement of infrastructure for improved access from the outside
world is the most striking and symbolically the most important of the operations part-financed
by the European Union in each of the regions. These operations make a direct contribution to
reducing the handicaps deriving from their insular location and isolation by improving air and
shipping services for all of them. Measures have also been taken with regard to advanced
communications technologies (teleconferencing, distance diagnosis, data transmission and
network cabling). Domestically, all the regions have enjoyed substantial road improvements
and in some cases measures to improve public transport. In a number of areas, infrastructure
to support economic activities has been improved to meet changing needs. The protection of
the environment has received particular attention through the reduction of pollution, with
special attention being paid to the management and treatment of waste and liquid effluent
from both industrial and household sources.

A large share of Community finance has gone to modernising and improving the productive
sectors to help create or preserve jobs. This aid has gone to quite a wide range of measures:
besides traditional direct aid to investment, there has been, over recent years – albeit at a low
level as yet – financial engineering (guarantee systems, support for equity, subsidised interest
rates, etc.) which have a multiplier effect in mobilising resources on the capital markets; aid
from public funds has also gone to measures to support economic activity by businesses:
business premises, the preparation of business parks, the provision of shared services, the
development of applied research projects and transfers of technology and the use of new
communications technologies.

Specific measures have been taken to support traditional forms of agriculture (bananas, sugar
cane, sugar and rum) and encourage diversification and applied research and experimentation.
All the most remote regions have benefited from finance for fisheries and aquaculture through
projects for ship-building and modernisation, aquaculture, improvements to fishing ports,
processing and marketing.

The high rates of unemployment in many of the outermost regions and the needs for skilled
staff generated by changes in the productive sectors require the modernisation and rapid
adjustment of provision for vocational training. In all the regions, training facilities have been
built to enlarge capacity and meet the specific needs of certain sectors, and courses have been
set up.

Evaluation

In 1989-93 and 1994-99, the programmes part-financed by the European Union were fully
implemented in all
less substantial
amendments. The evaluations carried out in each region showed that appropriate monitoring
and management procedures had been established; this had facilitated development of a

regions, although sometimes following more or

9

partnership with the local authorities. So how have these jointly financed programmes
impacted on the economic and employment situation in the outermost regions?

As regards infrastructure provision, it should be noted first of all that access to each region
has clearly improved to the benefit of both residents and tourism. The improvement and
modernisation of port infrastructure has also helped reduce freight handling costs for the
economies of the islands. The situations as regards water resources and the production of
energy are similar. In addition, work on the construction of large-scale infrastructure has
made a significant contribution to progress in the building and public works sector or to
keeping it in operation.

In the field of human resources, progress in the supply of training will produce results which
all too often can only be analysed over the medium and long term. Unemployment still gives
cause for concern in the Canary Islands and in the French overseas departments, some of
which have the highest rates in the Union. In the French regions, this situation is also linked
to movements of population to and from mainland France.

The work carried out in the productive sectors has helped boost productivity and has brought
supply into line with outlets both locally and on export markets; this is particularly true of
agriculture and agri-foodstuffs, where considerable sums of money have been spent on
modernising traditional industries (bananas, sugar cane, sugar and rum), both to keep them in
existence and to achieve the diversification which helps improve the self-sufficiency of the
local market. However, public aid to encourage firms to develop or modernise their
productive processes cannot operate independently of the specific limitations from which the
economies of these regions suffer. It requires account to be taken of all the factors which
underlie investment decisions, such as application of the rules on competition, taxation,
welfare costs and technical rules. Financial assistance from the Structural Funds cannot be
considered apart from all the other policies of the European Union.

10

2.

EUROPEAN INVESTMENT BANK LOANS

Over the period 1994-98, the EIB made individual loans, in most cases to public institutions
in the outermost regions, to the tune of EUR 553 million, EUR 195 million of which were
made in 1998.

TABLE 3

INDIVIDUAL LOANS PER REGION IN 1998 AND 1994-98
(IN EUR MILLION)

1994 -1998

1998

Canary Islands

Azores

Madeira

Guadeloupe

French Guiana

Martinique

Réunion

TOTAL

248

6

166

38

-

-

95

553

47

6

74

-

-

-

68

195

Much of this funding was made available for infrastructure projects, e.g. the construction or
improvement of roads, airports, etc.

As to the intensity of use of EIB loans in the outermost regions, Table 4 below sets out the
quantum of individual loans per capita alongside details of loans made by the EIB for regional
development in all regions of the European Union.

11

TABLE 4

INDIVIDUAL LOANS PER CAPITA
(PERIOD 1994 - 1998)

Population
(in thousand
inhabitants)

Loans
(in EUR million)

Loans per capita
(in EUR)

Canary Islands

Azores and Madeira

French overseas departments

All Objective 1

1 526

494

1 454

92 151

248

172

133

24371

162.5

348.2

91.5

264.4

The above figures show that, with the exception of the Portuguese regions, the quantum of
loans per capita in the outermost regions has been distinctly below the average for the EU as a
whole. Moreover, a comparison of loan intensity between the outermost regions and the
respective mainland territories shows, in all cases, that the outermost regions have made much
less use of the loans.

EIB loans have to be applied for, and the projects have to comply with banking criteria. The
fact that infrastructure work in the outermost regions receives more funding under the (non-
reimbursable) Structural Funds might militate against the more widespread use of repayable
forms of funding.

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B.

IMPACT OF THE POLICIES

The Posei programmes are based on the dual principle of the outermost regions’ being part of
the Community and a recognition of their regional reality, which is characterised by specific
features and constraints which set them apart from the rest of the European Union.

Over 700 legislative instruments have been adopted (see the table setting out the most
important Community measures in Annex I). Each Commission initiative was preceded by
partnership contacts with the Member States and regions concerned. Policies are, of course,
first and foremost those set out in the Posei programmes (e.g. agriculture, fishing, taxation,
State aid discipline, transport etc.). In addition, though, and in line with the principles set out
in the programmes, any new Community action in new fields has gone hand in hand with
special attention on the part of the Community to ensure that they are applied in the outermost
regions too. This is true, for instance, of measures favouring small and medium-sized
undertakings and similar measures to facilitate access to the information society. One final
point is that, in some cases, these regions have benefited from exceptional measures which,
by their very nature, may result in a loss of revenue for the Community budget.

1.

AGRICULTURE

Its substantial share in regional GDP means that agriculture is of key importance; it also plays
a vital role as regards social balance and stable employment, land-use planning and the
environment.

Agricultural production in the outermost regions benefits from the full application of the CAP
through the various market organisations and a substantial agricultural strand under the Posei
programmes, which aim to tailor the common policies to the specific needs of these regions.

Market organisations

Local agricultural production (beef and veal, milk, cereals, etc.), like all Community production,
is covered by the market organisations established under the common agricultural policy. These
market organisations also cover more typical products such as bananas, sugar, rice and pineapples.
The market organisation for bananas in particular strives to safeguard Community interests by
means of a compensatory aid scheme which supports the incomes of Community producers.
These measures account for substantial budgetary resources (e.g.
the 1999 banana market
organisation cost EUR 178 million; the 2000 PDB makes provision for EUR 252 million).

The agricultural strand of the Posei programmes

The agricultural strand of the Posei programmes is a permanent key component. It is tailored to
the structural handicaps of the outermost regions (topography and climate, remoteness, small size
of holdings, etc.) and to the specific constraints experienced there (lack of economies of scale,
economic dependence, very high production costs, etc.). It is financed by the EAGGF-Guarantee
Section (around EUR 200 million per year) and is based on two types of measure in the main1.
The extent to which these measures are used and their scale differs from region to region, in line
with economic development choices and the local situation (see table in Annex II).

1

Derogations from veterinary and plant health measures and structural matters, and a graphic symbol
have also been introduced under these regulations.

13

– Specific supply arrangements

Each marketing year, a forecast supply balance is adopted for agricultural products necessary
for human consumption and local processing (local agricultural production and/or agri-food
industries); this may be amended in the course of the year. Imports originating outside the
Community are exempt from customs duties, while supplies of products originating in the
Community benefit from aid equivalent to the benefit arising from this exemption.

The aim of this measure is to offset the additional costs arising as a result of remoteness and
isolation and to bring down prices for end users by promoting competition between sources of
supply. These benefits must be passed on to end users. The specific supply arrangements are
designed to prevent disruption of traditional trade flows and ensure that the proportion of
products supplied by the Community is preserved.

Products benefiting from the arrangements may not be re-exported to third countries or
redispatched to the rest of the Community. However, where they are processed in the region
concerned, this ban does not apply to traditional exports or shipments to the rest of the
Community within given limits.

Examination of the results of the arrangements shows an improvement in their administration,
with local needs tending to stabilise. There is now guaranteed supply to these regions and
prices have fallen thanks to competition between sources of supply. This measure has had a
positive impact on economic development in the regions concerned.

However, the changes generated by the recent reform of the common agricultural policy and
the Community’s undertakings under the Uruguay Round, and gradual alignment of world
prices and Community prices mean that the unit aid rates (essentially based on export prices)
for supplies of some Community products, cereals in particular, have fallen.

Within the limits of the current rules, the Commission has endeavoured to manage the impact
of these changes in the international context. It has also launched a series of external
evaluations as part of the SEM 2000 project to evaluate the difficulties encountered in
applying the arrangements and justify any changes which need to be made and to prepare
Commission reports to the Council and the European Parliament on the way the arrangements
have been implemented.

– Specific measures in favour of local agricultural products

The Posei programmes rest on the general principle of applying the common agricultural
policy in full while taking account of the specific constraints of the regions.

To this end a series of complementary measures have been introduced on top of the general
measures laid down by the market organisations, such as supplements to the premium for
male bovine animals and the suckler cow premium, and flat-rate aid for sugarbeet production.

Changes have also been made to the way in which the market organisations and
complementary measures are implemented, such as the derogation to the stocking density
factor in the livestock sector and the decision not to apply the coresponsibility levy in the milk
sector and the grubbing-up premiums in the wine sector.

A number of specific aids have also been introduced, such as aid for potatoes for human
consumption, vanilla and vetiver; and for sugar cane cultivation and restructuring and general
programmes in the livestock sector.

14

Only by examining each individual measure is it possible to analyse whether the goals of
maintaining and expanding production, diversification and structural improvements, raising
product quality and better marketing have been achieved, and understand the impact of these
aids on production costs with a view to making these products more competitive.

The agricultural strand of the Posei programmes is very substantial, innovative and adapted to
specific local constraints. On the whole, these measures have been found to offset some of the
constraints which raise production costs. By complementing the support provided under the
CAP, these measures have helped improve the quality and quantity of local production.

2.

FISHERIES

The Community has been carrying out long-terms measures in the fisheries sector since 1992.
The measures adopted on the basis of the Posei programmes have helped resolve a number of
problems arising in the fisheries sector which have been brought
to the Commission’s
attention by the competent bodies in the Member States concerned (national and regional
authorities) and subjected to appropriate analysis. They meet the wishes of the regions
concerned in a satisfactory manner, and a policy of active partnership has been established.
The process of implementation has also proved satisfactory, given that the expected results
have been obtained. These can be summarised as follows:

–

–

–

–

–

–

–

better integration into the mechanisms of the common organisation of the markets in
fishery products;

collection of scientific data vital to the conservation and management of fishery
resources in the exclusive economic zones adjacent to these regions;

collection of data on structural aspects (improvement of conditions under which the
sector operates and transport conditions) and market aspects (positioning of products,
promoting local species, etc.);

improved supply conditions
(temporary suspension of customs duties), sale of products and price modifications;

for products intended for

internal consumption

with respect to structural policy in the fisheries sector, in some cases the specific
characteristics of regional fleets have been taken into account in the process of
drawing up multiannual guidance programmes;

technology transfers in the aquaculture sector;

in all regions, the Community system of support for marketing more common species
lasting stability to the sector, affording the economic operators
has brought
acceptable margins for their activities and providing them with conditions similar to
those enjoyed by their partners on the European continent. It has also been
instrumental in maintaining employment in regions where alternatives are extremely
the requirements of the
limited. This system, which dates from 1992, has met
operators concerned in full, in terms of both eligible production and the operation of
the scheme. The benefits to operators from this scheme have helped maintain
satisfactory production and development levels in the various sectors concerned.
However, the conditions which are at the root of the higher production costs are not
likely to change as they stem from the very location of the outermost regions.

15

These additional costs will therefore remain, which completely justifies maintaining the
system of compensation. The importance of exports of species covered by the scheme,
underlined by the Regulation extending the arrangements from 1998 onwards, is clear from
the amount allocated to the system (EUR 17.3 million), which accounts for more than half of
the total expenditure currently relating to the operation of the common organisation of
markets in fishery products.

3.

TAXATION

The Posei programmes have taken the specific characteristics of the outermost regions into
account in terms of taxation. They have been implemented by means of various indirect
taxation measures tailored to each of the regions in question. The overall goal of these
measures is to promote economic and social development in these regions by compensating
for the handicaps due to their remoteness.

These regions generally have their own indirect taxation system, which has evolved from a
traditional inherited fiscal system. The indirect taxation of the French overseas departments
was based on the former Article 227(2) of the EC Treaty, while the legal basis for the Canary
Islands and Madeira and the Azores is the Act of Accession of Spain and Portugal to the
European Communities.

The Canary Islands and the French overseas departments therefore fall outside the scope of
application of the Sixth VAT Directive. However, apart from French Guiana, the French
overseas departments apply a VAT system similar to the Community system but with a
number of modifications (reduced rates). In contrast, the Azores and Madeira archipelagos
apply the Community VAT system with a number of alterations (reduced rates above all).
These regions also apply specific indirect taxes: the Impuesto General Indirecto Canario
(IGIC), Arbitrio insular especial and Arbitrio tax on production and imports (APIM) in the
Canary Islands, and dock dues in the French overseas departments. The new dock dues, under
Council Decision 89/688/EEC, have been endorsed by the Court of Justice, which has
confirmed that this Decision is compatible with the Treaty.

The Commission has, temporarily, authorised France to apply, on its metropolitan territory,
special rates of excise duty on traditional rum, and reduced rates on an annual quota.

These fiscal derogations mean that local production is totally or partially exempt from tax,
under Commission supervision. When delivering its judgements on dock dues, the Court of
Justice stated that such exemptions must be necessary, proportional and specific.

These derogations from Community law help contain some of the additional costs resulting
from remoteness and insularity. But excluding the Canary Islands and the French overseas
departments from the scope of Community VAT rules also means that they miss out on the
process of Community tax harmonisation and have to bear the costs of maintaining fiscal
frontiers.

France and Spain have also been authorised not to apply the general arrangements for
products subject to excise duty and on the holding, movement and monitoring of such
products in the Canary Islands and the French overseas departments respectively. The
Member States may therefore modify the legislation on these taxes in these two regions, with
modulation where this is considered essential to local needs. The excise directives apply in

16

Madeira and the Azores, with provision for some modifications to the general arrangements
(reduced rates).

4.

CUSTOMS

With the exception of the Canary Islands, all of the outermost regions have been an integral
part of Community customs territory since the date on which their respective countries joined
the Community. The Canary Islands were only incorporated in 1991, and the CCT is being
gradually introduced in a process due for completion on 31 December 2000.

On the basis of the Posei programmes, and over and above the exceptional measures taken
under the special arrangements for agricultural and fisheries products, some derogations have
been introduced from the general customs rules in these regions. These measures essentially
involve:

–

–

–

–

to apply the normal economic conditions in cases of inward
the decision not
processing in the free zones in the regions in question, to promote the development
of small businesses and the productive sector as a whole; so far this measure has only
a limited impact since only one of the most remote regions – Madeira – has working
free zones, while a free zone is currently being set up in the Canary Islands;

specific tariff measures with respect to certain sensitive industrial products imported
through the temporary suspension of the autonomous
into the Canary Islands,
Common Customs Tariff duties; these measures have helped modulate the gradual
introduction of the CCT over a transitional period ending on 31 December 2000 and
ease the impact of this process by taking account of the specific difficulties in certain
sectors of the economy in the region in question;

the temporary suspension of CCT duties for certain goods intended to equip or for
processing in the free zones of the Azores and Madeira; the aim of this preferential
tariff treatment, which is subject to certain conditions, was to help launch industrial
activities in the only operational free zone in these regions (i.e. the Madeira harbour
zone) and promote permanent installation of industries to process non-originating
materials (other than agricultural products or products obtained from the processing
thereof), imported free of customs duties and destined for the Community market; an
initial review of this scheme is scheduled for this year;

finally, some measures derogating from commercial policy in the Canary Islands,
such as the decision not to apply quantitative restrictions on imports of certain
textiles and clothing where these products are intended exclusively for the Canary
Islands market.

5.

STATE AIDS

State aids other than aids to agriculture

In its scrutiny of State aids, the Commission has always been attentive to the special situation
of the outermost regions. As long ago as the 1989 Poseidom programme, provision was made
for the Commission to examine aid to the regions concerned in the light of their specific
situation.

17

Business support systems

The criteria which the Commission formulated for examining whether or not regional State
aid was compatible with the Treaty, especially Article 87(3)(a)2, have enabled the Member
States and the regions to set up business support systems; these are diversified and on a major
scale. According to the latest figures available to the Commission, they represent annual
budget expenditure exceeding EUR 1 600 million.

For the Canary Islands, there is a special “economic and tax scheme”, which comprises tax
aids to investment and operating aids. These are limited in time and are degressive, e.g. a
lower tax base on profits provided they are earmarked for reinvestment in the Canary Islands.

The special Canary Islands zone offers tax aid for a limited period and on a degressive scale
in the form of reduced taxation starting from 1% and going up to a ceiling of 5% on profits
made by local firms.

The main measure in Madeira is the “free zone”. The Commission has given authorisation for
a total exemption on all direct taxes up to 2011, from which date on the exemption will
become partial. The arrangements are available to new firms setting up in business in the free
zone.

Various forms of
tax exemption have been made available in the French overseas
departments, more especially the “Pons law”, which makes it possible to deduct overseas
investments from taxable income.

Other measures

The rules formulated by the Commission have enabled the Member States and the regions to
set in place a range of measures.

In the Azores, for instance, there is a system of aid to encourage regional products (covering
in particular the additional transport costs for exported products).

In the French overseas departments, there is the guarantee fund, which was recently approved
by the Commission, and which was set up to counterbalance the higher cost of taking up loans
in these regions. Other measures include profit-sharing funds, low-interest loans etc.

The criteria used for determining whether State regional aid is compatible with the common
in the context of Article 87 were recently amended by the Commission. Some
market
schemes had to have undergone re-examination by 1 January 2000, but the new regional aid
guidelines (1998) make it possible for the outermost regions to continue to enjoy the EU’s
most favourable treatment.

Currently, each one of the seven outermost regions qualifies under the derogation provided
for in Article 87(3)(a) of the Treaty. This will continue to be the case in 2000-2006, since
their GDP per inhabitant is less than 75% of the Community average.

2

This makes it possible to authorise aid which is intended to promote the economic development of areas
where the standard of living is abnormally low or where there is serious underemployment; Article
87(3)(c) allows aid to be granted which is intended to facilitate the development of certain economic
activities or of certain economic areas, where such aid does not adversely affect trading conditions to an
extent contrary to the common interest.

18

The derogation under Article 87(3)(a) of the Treaty allows them to:

–

–

qualify for the highest ceilings on aid intensity in the Union;

exceptionally, receive operating aid in certain cases, provided such aid is limited in
time and is degressive.

In addition, the outermost regions benefit from a specific approach under the new guidelines
for State regional aid, viz.:

–

–

special ceilings on aid intensity by virtue of their very status as outermost regions: in
the case of Article 87(3)(a) regions, a net grant equivalent of 65% instead of the
standard ceiling of 50% under Article 87(3)(a);

the possibility of receiving, for an unlimited period, non-degressive operating aid to
partially offset additional transport costs, whether the region qualifies under Article
87(3)(a) or 87(3)(c) of the EC Treaty.

State aid to agriculture

By virtue of Article 36 of the Treaty, the provisions of Articles 87 to 89 are applicable to
agriculture only where this is stipulated in Council Regulations. Nearly all the relevant
Council instruments include provisions to that effect.

In the last ten years, a scrutiny of State aids to agriculture in the outermost regions has not
brought to light any specific problems. First of all, the regions concerned are treated in
exactly the same way as less-favoured farming areas, which means that they can receive
higher amounts of aid for most agricultural investment, at the level both of individual
holdings (a top rate of 35% to 75%) and of the processing and marketing of agricultural
products (a top rate of 55% to 75%). Secondly, where the State aid concerns measures other
than investment (R&D, promotion and publicity, technical assistance, natural disasters, etc.),
the flexibility of the Commission's policy is such as to allow the granting of high levels of aid
(up to 100% in some cases).

While still opposed in principle to operating aid to agriculture, the Commission decided not to
raise any objection to three aids for the outermost regions; in the case of the French overseas
departments and the Azores, the aid is transport-related and is intended to cover some of the
additional costs of transporting local produce by sea; in the case of the Canary Islands, the aid
notified concerns special economic and tax arrangements for, inter alia, agriculture and
includes several types of operating aid. The Commission took the view that the aids - aimed at
offsetting the clearly negative effects of the insular and remote nature of the regions
concerned, but with no effect on the internal market - were justified.

6.

AID TO SMALL BUSINESSES, CRAFT FIRMS AND TOURISM

Most of the action in this field, which is crucial for employment and hence for social
development, has been undertaken in the context of the Structural Funds (see above, in
particular as regards the productive sectors and human resources). In the outermost regions,
relatively little use has, on the whole, been made of the instruments available to small
businesses and craft firms under the three multiannual programmes (1990-93, 1993-96, 1997-
2000).

19

The instruments used include the Euro Info Centres, whose work among firms in those
regions has tended to focus on training in and raising awareness of new technology, the
changeover to the euro and access to the Structural Funds. For its part, the Interprise
programme has, in the outermost regions, covered cooperation between small businesses,
pilot schemes in the field of tourism and craft trades, and seminars and conferences. Tourism
occupies a vital and growing position in virtually all the outermost regions. It benefits from
better transport facilities, but it does have its problems, more especially in terms of the
environment.

There are also major variations in the extent to which each multiannual programme is used. In
addition, small businesses still find it difficult to obtain bank loans.

As regards EIB loans to businesses (in these regions, this normally means SMEs), the system
takes the form of global loans working through financial intermediaries in the regions. Here
again, take-up has been very poor: EUR 105.4 million over the period 1994-98, including
EUR 57.8 million in 1998. It has to be pointed out that these loans require the assistance of
banks on the ground, who have to be willing to bear the risk of the operation.

20

TABLE 5

BREAKDOWN OF GLOBAL LOANS BY REGION
(in EUR million)

1994 –1998

93

0.2

0.9

-

-

11.3

-

105.4

1998

57.1

0.2

0.1

-

-

0.4

-

57.8

Canary Islands

Azores

Madeira

Guadeloupe

French Guiana

Martinique

Réunion

TOTAL

7.

ENERGY

The outermost regions are heavily dependent on oil supplies for energy, are far from the
major energy grids and pay a higher cost for electricity generation by virtue of the average
(often very small) size of the grids being supplied.

In addition to these problems, the cost of supplying the Azores and Madeira with oil is also
higher because of their remoteness from the refineries.

These difficulties aside, however, there is significant potential in the outermost regions for
using renewable sources of energy such as biomass, solar, geothermal, water and wind power.
The regions also have significant scope for making energy savings. Renewable energy and
energy saving both offer real benefits to these regions, where the costs of producing energy
from conventional sources are among the highest around.

General measures

Under its energy policy, the European Community has mostly assisted the establishment of
regional energy programming in the regions and/or the establishment of regional energy
agencies (in the Azores and Madeira, the Canary Islands, Guadeloupe and French Guiana)
through the SAVE programme.

Under its research and technological development (RTD) policy, support has been provided
through the Thermie programme for technical and economic demonstration projects for
innovative energy technology.

Under regional policy for over a decade now and through successive programmes, the ERDF
has consistently assisted the regions’ studies and specific projects to improve energy supply
and electricity production and to harness the local potential for renewable energy and energy
efficiency.

21

A specific measure

Specific Community assistance linked to the remoteness element was decided on when the
Poseima programme for the Azores and Madeira was adopted. This is known as the “energy
measure”; it compensates the two regions for the additional costs they incur for oil supplies.

The specific aid provided for under this measures was calculated on the basis of the cost of
transporting oil products from mainland Portugal to the main storage depots on the Azores
and Madeira in 1991, 1992 and 1993. It was granted on condition that at least 50% of the aid
would be used for promotional measures and for energy-saving or renewable energy projects
in the region.

The funding for this specific aid for the entire period amounted to EUR 25 million, divided
between the Azores (EUR 15 million) and Madeira (EUR 10 million) and paid in annual
instalments under the budget headings for Thermie in 1992, Poseima-Energy in 1993 and
ERDF – transitional provisions in 1994.

The evaluation of the Poseima energy measure indicates that the funding was used for its
intended purpose, i.e. it helped to check the increase in energy consumption and enabled a
series of renewable energy projects and measures to be funded. However, it has not yet
proved possible to continue the measure after 1994 for lack of dedicated funding (following
the deletion of the Poseima budget heading) and because of the eligibility rules for the
Structural Funds (under which it was considered operating aid, and therefore ineligible).

Community part-funding of the investment projects on energy saving and renewal energy in
the Azores and Madeira has continued from 1994 to 1999 under the Structural Fund
programmes (CSF II and Regis II Initiative).

8.

TRANSPORT

is of strategic importance to the outermost regions, given their geographical
Transport
situation. Maintaining political, economic and social links with the rest of Europe very much
depends on air and sea transport services. In addition, the fact that some of the regions
concerned are archipelagos makes them even more dependent on those services. The
additional costs resulting from remoteness and the need to provide a regular service are also a
major handicap in terms of economic development, added to which air transport is a key
factor in the growth of tourism.

Air transport

in the Community. The fact

The most remote regions have greatly benefited from the impact of the measures to liberalise
that Community carriers operating on intra-
air transport
Community routes can freely set
fares, as laid down by Council Regulation (EEC)
No 2409/92 has resulted in an appreciable reduction in fares between those regions and the
rest of Europe. Those between France and the French West Indies are currently among the
cheapest intercontinental fares in the world. For its part, the principle, enshrined in Council
Regulation No 2408/92, of freedom to provide services on intra-Community routes has
fostered competition between airlines and the emergence of new transport services,
in
particular between the Canary Islands and Spain. Airports in the Azores were temporarily
exempted from the application of the principle of the freedom to provide transport services.
That exemption, under Article 1(3) of Regulation (EEC) No 2408/92, expired on 30 June
1998.

22

The rules on fares and market access allow Member States to impose a public service
obligation “in respect of scheduled air services to an airport serving a peripheral region”.
Such an obligation applies to services between France and its overseas departments, to
services between Portugal and Madeira and the Azores, and to internal services in French
Guiana, the Azores and Madeira.

Sea transport

The rules on transport by sea also take account of the specific characteristics of the outermost
regions. Under Article 4 of Regulation (EEC) No 3577/92, Member States may conclude
public service contracts with shipping companies participating in regular services to, from and
between the regions concerned, or
impose on them public service obligations as a
precondition for providing cabotage services. Existing public service contracts can remain in
force until they expire. By virtue of the Community guidelines on State aid to maritime
transport, financial compensation paid to companies which are the subject of a public service
obligation does not, in principle, constitute aid within the meaning of Article 87(1) of the
Treaty and need not be notified.

Moreover, in order to avoid the disruption which might otherwise have resulted from the
application, from 1 January 1993, of the freedom to provide maritime transport services
within Member States, Article 6 of Regulation (EEC) No 3577/92 granted a derogation to
cabotage services in the Canary Islands, the Azores and Madeira and the French overseas
departments from the application of that Regulation until 1 January 1999.

9.

RESEARCH AND DEVELOPMENT

The outermost regions are not the subject of specific measures under the Framework
Programme for Research and Technological Development. They are dealt with in the
same way as other regions covered by Objective 1 of the Structural Funds, in other words,
their remoteness has thus far been a feature of the general coordination between the RTD and
innovation policy and the policy of economic and social cohesion.

Altogether, these regions took part in specific RTD framework programme measures on no
fewer than 204 occasions in 1988-99. The highest rate of participation was recorded in the
Canary Islands, followed by the Azores and Madeira. The lowest rates, which were recorded
by the French overseas departments, reflect the fairly low level of investment in RTD in those
regions.

Since 1989, the Structural Funds have financed numerous scientific and technical facilities
and a great many measures relating to RTD and innovation. The outermost regions which
have benefited from the funds include the Canary Islands, which received ECU 15.6 million
in 1994-99 for the funding of two technology transfer centres and the Canary Islands
Technology Institute, and ECU 33.12 million for the Astrophysics Centre. In the case of the
French overseas departments, funding was made available, mainly in the fields of applied
research, genetic research facilities and direct assistance to businesses (ECU 9.5 million).
French Guiana has received funds for setting up a tropical forest research station (ECU 5.4
million) and Martinique has received funding for applied research in banana production
(ECU 5.4 million). For its part, Madeira has received assistance for technological facilities
and innovative projects.

Finally, the Fifth Framework Programme (Decision No 182/1999/EC of 22 December
1998) introduced a specific recital to the effect that: “it is necessary to promote and facilitate

23

the participation of
appropriate mechanisms adapted to their particular situation”.

the ultrapheripheral regions in Community RTD actions through

10.

THE INFORMATION SOCIETY

The European Union has supported the efforts deployed by the regions and the various
players – both public and private – to modernise telecommunications infrastructure, develop
the services needed for achieving the information society, and integrate those services in the
best possible way in a regional context. While the latter may at times prove very difficult, it is
an essential component of economic development at local level.

Although there are still major disparities compared with the regions of continental Europe,
there has been a considerable improvement
in telecommunications infrastructure in the
outermost regions in terms of the number of new regional, national and international lines.
Similarly, data transmission services have been developed in order
to provide better
information to users of public and private services. Moreover, a general reduction in charges
following the opening up of markets and the growth of the Internet are close to bringing about
a considerable change in the use of the infrastructure and services concerned.

The Structural Funds have played a big part in this improvement, which has sometimes
concentrated only on certain points and has not overcome all
the problems, although
technological progress suggests further positive developments in the years to come, provided
the investment still required is forthcoming.

However, the outermost regions organised in a cooperation network have already benefited
from exchanges of experience and of knowhow. This is the case with Guadeloupe, which
belongs to the Maris regional network, concerned with demonstration and promotion work in
the use of new information technologies and remote processing applications in the maritime
sector (fishing, harbour logistics, vessel manufacture and maintenance, navigation and traffic
management).

Some of the outermost regions have also been involved in European information society
programmes under the RTD framework programme. They took part
in four telematics
application projects (TAP) in the field of administration, research and medicine, and in
various ESPRIT (European Strategic Programme for Research and Development
in
Information Technologies) projects. These projects were mainly involved with education and
vocational training, research, innovation, modernisation of production techniques and the
environment.

That being said, even despite the improved infrastructure and the initiatives, the potential of
information technology and telecommunications is not always exploited in an optimum or
sustained manner, through insufficient awareness of the economic opportunities available, the
unsuitability of the services on offer, the fact that potential users do not have the necessary
training or their qualifications are not
in keeping with the requirements of the areas
concerned.

24

11.

ENVIRONMENT

The programmes of options specific to the remote and insular nature of the regions – Posei –
do not refer explicitly to environmental issues. Concrete measures in this area have been
financed by the Structural Funds or other financial instruments.

However, three factors have caused the financial arrangements to be made more mindful of
the environment:

–

–

–

the problems posed by the fragility of the regions’ ecosystems and their prevailing
geological and weather conditions (which increase the risk of natural disasters);

their adherence to Community environmental standards (and the extra costs
entailed);

the close links between the environment and various aspects of socio-economic
development.

A budget heading B2-245 (Environment) has been created, in response to the European
Parliament’s initiative, to fund environment protection and nature conservation measures as
part of the Poseidom, Poseican and Poseima programmes. Four programmes have received
Community assistance, totalling EUR 10 000.

12.

REGIONAL COOPERATION

Title IV of the Poseidom programme stresses the need for better regional cooperation between
the French overseas departments and the neighbouring countries and territories. Such regional
cooperation should help the French overseas departments to integrate better into their
geographical setting by overcoming traditional shortcomings (competing economies, lack of
trade, etc.) and by engaging instead in dialogue and establishing joint projects that take
account of the complementarities and development needs of the various partners, regardless
of their legal status.

This cooperation has focused since 1989 on relations between the French overseas
departments, the overseas countries and territories and the ACP States. To this end, the
provisions of Title IV of the Poseidom programme supplement and affirm those taken under
Title XII of the fourth Lomé Convention, prior to 29 February 2000, and of the ACP-EC
Partnership Agreement after that date, and under Title XII of the Decision on the association
of the overseas countries and territories with the European Economic Community.

As in Lomé IV, the ACP-EC Partnership Agreement stipulates that the funding in question is
to be added to the funding for the ACP States under the Agreement and that particular
attention will be paid to speeding up economic diversification so as to encourage
complementarity of production and intensify cooperation and development between the ACP
States themselves and between them, the overseas countries and territories and the French
overseas departments.

Because of the geographic location of the Canary Islands, Madeira and the Azores, Poseican
and Poseima do not contain provisions on regional cooperation.

Consultation between the French overseas departments, the ACP States and the Commission
in particular is the most developed of the three strands making up the “Regional Cooperation”

25

section of the Poseidom programme. On the other hand, the second strand, on regional trade
agreements, is almost non-existent at present. Joint regional projects and programmes under
the third strand have been established in Réunion (Indian Ocean) but have not yet been
established in the French departments in the Americas, despite some unsuccessful attempts.

This progress report on the measures to assist the French overseas departments, and the
contrasting results achieved in the Caribbean and Indian Ocean, lead one to conclude that the
mixed success of regional cooperation is in part due to political resolve, or the lack of it.
While the competent local authorities regularly pin their hopes on regional cooperation, they
remain critical of each other or adopt protective measures. There are, of course, structural
reasons for their reticence because the regional economies compete with, rather than
complement, each other. They compete both for trade and available Community funding.

26

C.

GENERAL ASSESSMENT

There are two basic, interlinked, questions which need to be asked:

–

–

Have the various Community instruments – the Structural Funds and the
specially adapted polices – worked satisfactorily?

Since the inception of the Posei programmes, what kind of economic and social
development have the outermost regions experienced, given that
these
instruments were designed to give such development a kick start?

The foregoing analysis was largely concerned with the first question. Action taken by the
European Union has, on the whole been effective, despite the numerous difficulties on the
ground. The partnership set-up has, generally speaking, worked well.

support under

Over the two programming periods 1989-93 and 1994-99, the seven outermost regions have
received financial
regional economic
development to the tune of EUR 7.2 billion (accounting for 2.5% of money allocated to all the
regions) for a population of 3.5 million. Because of their specific handicaps, these regions
have received per capita Community aid under the Structural Funds of about a third more than
the average for the Objective 1 regions (see Table 2: Intensity of European aid 1994-99).

the Structural Funds

their

for

Adapting Community policies has also brought tangible results, without however jeopardising
the coherence and unity of Community law and the internal market. While it is true that some
of the objectives set out in the Posei programmes have not been fully achieved (e.g. regional
cooperation – the responsibility for which does not lie principally with the Community) or
pursued (e.g. compensation for the high cost of energy in the Azores and Madeira), the overall
picture nonetheless remains very positive.

In reviewing the situation, we have to bear in mind that the European and international
contexts have changed substantially over the 1990s: for instance, the internal market is now a
reality and there is more rigour, for example, in the field of taxation; reforms have been made
to the CAP and to the Structural Funds, and there are new rules set out in Agenda 2000,
particularly financial ones. There have also been more prominent roles for GATT and the
WTO,
(Lomé, Mexico, OCT association
agreements, South Africa). All this, of course, had consequences for the outermost regions.

international agreements

the signature of

As for the second question, some of the answer is to be found in the sixth report on the
economic and social development of the regions, published by the Commission in March
1999, which attempted a general evaluation of the situation of the regions on the basis of GDP
data.

A comparison between the figures for 1986-88 and 1996 show that all the seven regions
experienced strong regional GDP growth above the European average (more than 2.7% per
year, compared with the average of 2.1%). Since demographic pressure is marked in many of
them, it is a useful exercise to base comparisons on per capita GDP. The regions have,
generally speaking, experienced significant growth in their per capita GDP over the last ten
years compared with the average growth for other regions of the European Union; this is
brought out in Table 6 below: the highest rate of growth has been for Madeira, the Azores and
French Guiana, while the lowest has been for the Canary Islands, though their GDP was the
highest of the seven.

27

TABLE 6

GDP PER INHABITANT – COMPARISON 1986 - 1996

European average = 100
(Source: Eurostat)

Madeira

French Guiana

Azores

Réunion

Martinique

Guadeloupe

Canary Islands

1986

40%

37%

40%

40%

49%

37%

72%

1996

54%

48%

50%

46%

54%

40%

74%

Variation

+14%

+11%

+10%

+6%

+5%

+3%

+2%

The growth in per capita GDP in all the outermost regions reflects a general trend of
convergence of the local economies towards the average level for the regions of the European
Union. Their relative growth compared with the other regions of Europe likewise reflects the
impact of public development policies in these regions, with the high level of financial
intensity per inhabitant resulting largely from co-financing measures under the Structural
Funds.

Encouraging as this growth may be, it does not, however, mask the specific handicaps which
these regions face, the fact that their productive sectors are dependent on trends in unreliable
markets, and the fragility of their social fabric. The standard of living per inhabitant remains
50% below the average level for the European Union, and the various regions, with the
exception of the Canary Islands, feature among the ten poorest regions in the EU, justifying
the continuation of national and European financial input.

Assessing the general impact of European programmes on the employment situation is a more
delicate task. In all the regions, migration tends to weigh on the employment market, while in
is demographic pressure which explains the high levels of
the four French regions,
unemployment. Nonetheless, it has to be said, between 1987 and 1997, the unemployment
rate fell in the five regions where it used to be highest, but increased in the other two,
although the levels there were and still are low compared with the other European regions.

it

28

TABLE 7

UNEMPLOYMENT AS A PERCENTAGE OF THE ACTIVE POPULATION
(Source: Eurostat)

Martinique

Canary Islands

Guadeloupe

French Guiana

Réunion

Madeira

Azores

1987

32.1%

25.5%

31.1%

24%

36.9%

4.8%

2.2%

1997

27.2%

20.9%

29.3%

22.4%

36.8%

5.4%

5.4%

Variation

- 4.9%

- 4.6%

- 1.8%

- 1.6%

- 0.1%

+ 0.6%

+ 3.2%

What all these elements indicate is that, in most of the outermost regions, there has been
significant economic growth which has, however, been partially offset by demographic
growth in some of the regions. For instance, the population in French Guiana grew by 37%
between 1990 and 1999, compared with 18% in Réunion, 9% in Guadeloupe and 6% in
Martinique, while the growth rate in mainland France was no more than 3.18%.

What part has been played by the Structural Funds and by Community policies in the overall
performance of these regions? It seems clear that the effects have been very substantial, not to
say decisive,
in a number of areas, such as transport infrastructure (one of the crucial
problems in the outermost regions), fishing and agriculture (two of their essential productive
sectors), which has helped push them towards convergence with the rest of the European
Union.

It is not easy, though, to find a really precise answer to the question, since Community action
is true that, generally
is intended to complement national and regional efforts. While it
speaking, the results have been very good, the fact remains that changes and different
practical arrangements have to be considered. The important thing is to make all these efforts
more energetic and targeted, and to gear them to the new European and global context.
Overall, the current policy should be continued and improved.

One essential aspect which continues to demand special attention is that of mass
unemployment, a problem which is of course linked to more general factors – e.g. the
revolution, globalisation, demographic growth in the French overseas
technological
departments etc. – but whose repercussions, apart from in the Azores and Madeira, are
particularly serious, with unemployment rates which, although slightly down (cf. Table 7),
are twice and in some cases three times the Community average. It has to be said that, without
action on the part of the Community, the problem would be even more acute.

Finally, we have to be aware of the historic dimension of the outermost regions issue: it is not
simply a matter of helping them to catch up economically and socially – there is also an
important political challenge. The Canary Islands, for instance, took some time to decide on
integrating fully into the European Union, and we have to meet the promises that were held

29

out to them when they took their decision. The Azores and Madeira took on all the obligations
of Community integration when Portugal joined the EU, and they now have to derive benefit
from the EU’s advantages and sense of solidarity. The French overseas departments are
outposts of Europe in other continents.

Against this background, we have to be mindful of the fact that these regions give the
European Union a global dimension and constitute its furthest frontier. Some of their
constraints, such as their remoteness from mainland Europe and the physical and human
proximity of the ACP countries, the Mercosur and other regional geographic centres, are not
just constraints, but also offer potential. Against the backdrop of globalisation, the European
Union is the only entity which has a presence in the heart of the Indian Ocean and the
Caribbean, and in South America, by dint of its outermost regions. They all have extensive
maritime waters, occupy a valuable geo-economic position, and are strategically situated for
leading-edge activities and for research which will be fundamental to the future of the planet.
In other words, the potential benefits for the European Union are undoubtedly high, although
they are by definition impossible to quantify.

30

II. THE FUTURE

ARTICLE 299(2)

The purpose of the new Article 299(2) of the EC Treaty is to enable the outermost regions to
integrate fully into the Community of which they form, while at the same time taking account
of their specific features. This Article now provides a single common legal basis for measures
to help these regions. The scope of application is broader than that of Article 227(2), which it
replaces, since it covers the Azores, Madeira and the Canary Islands as well as the French
overseas departments. Special measures to help these regions may be taken in very broad
areas covering several Community policies, the list of which is not exhaustive. The final
innovative element is that the specific measures for the outermost regions will be taken by the
Council acting by a qualified majority (Article 299(2) of the Treaty).

The Article is therefore not simply declaratory, nor does it provide a generalised “opt-out”; it
leads instead to the establishment of specific arrangements which take account of all the
burdens which their remote location imposes on these regions, without undermining the
coherence of Community law and the internal market. It confirms and reinforces the approach
taken by the European Union since 1989 under the Posei programmes.

Specifically, Article 299(2) will enable the European Union to continue, consolidate and
improve its work. In what direction?

A SUSTAINABLE DEVELOPMENT STRATEGY FOR THE OUTERMOST REGIONS

The Commission has considered the work carried out so far, the sometimes spectacular results
achieved and the shortcomings in terms of the objectives laid down in the Posei programmes.
It is at any rate clear that the approach was the right one, although the handicaps persist and
the work has to continue.

Taking as its cue the political will reflected in Article 299(2), future action must take the form
of a general strategy for the outermost regions.

This is the quantum leap made by Article 299(2). Future strategy must address the sustainable
development of these regions, and must, in the Commission’s view, comprise three elements:

–

firstly, in terms of traditional economic activities – generally directed towards the
primary and agri-food sectors – special measures to assist agriculture and fishing.
Seen in overall terms, these measures have worked satisfactorily. They should be
continued, subject to review where appropriate. In agriculture in particular, they must
be

• upgraded, so as to preserve the benefit of existing measures, whose impact is lessening for
reasons which are both proper to the Community (e.g. the CAP reform) and externally
driven (e.g. changes in world trade patterns, international and bilateral agreements);

• adapted or intensified in certain fields, in the light of experience;

31

–

secondly, promoting growth as a result of diversified economic activity. The
approach is different. The objective is to upgrade other activities and attract
investment and innovation. The important thing, then, is

• on the one hand, to coordinate the way existing instruments are used: the Structural Funds,

loan facilities, State aid discipline, taxation, customs duties etc.;

• on the other, to coordinate the application of these instruments to support new productive
sectors and the SMEs. The stress must, however, be on strategic fields in terms of global
competition: not just transport, energy and the environment, but also the information
society, research and development;

–

the relations between the outermost

regions and their geographic
thirdly,
environment largely dictate the way they develop. The geographic proximity of
developing countries – most of them having advantageous agreements with the
Community – and the fact that they produce largely the same range of goods places
them in a difficult competitive situation. At the same time, they occupy the position
of “bridgeheads” for the European Union in the presence of emerging regional and
subregional blocs, of which they form a geographical part or with which they have
historical links. This “frontier” position could prove an advantage if it is put to
proper use. The European Union must pay heed to these two facets of the outermost
regions. It is an aspect which influences the full range of the EU’s policy vis-à-vis
the outermost regions.

How should we implement this strategy?

The Commission has examined the ideas and requests put forward in the memoranda from the
Member States3 and the regions4. It has listened carefully to the various positions which were
explained at a partnership meeting the Commission organised on 23 November 1999, and
which was attended by representatives of the Spanish, French and Portuguese governments
and of the seven outermost regions.

It has taken into account of all these elements in pinpointing what action needs to be taken to
put this strategy into practice, as set out below.

3

4

Memoranda from the Spanish government of November 1999, the Portuguese government of November
1999, and the French government of 10 December 1999.
Joint memorandum from the outermost regions, 5 March 1999.

32

A.

1.

THE BASIS PROVIDED BY TRADITIONAL PRODUCTION

AGRICULTURE

The Commission, using the long-standing legal bases at its disposal, has already established
for the agricultural sector an appropriate and significant framework for the application of the
CAP in these regions. This has been done in particular through the Posei agricultural chapter
which is ambitious, substantial and innovative.

This framework is in itself an appropriate response to the handicaps of these regions. In the
spirit of this new Article 299(2) of the Treaty the Commission's intention is to continue with
its approach of taking due account of the outermost regions and their specific characteristics
and constraints.

The requests submitted by the Member States

The requests presented in the memoranda can be summed up as follows.

Generally speaking, these requests seek initially to consolidate and strengthen the agricultural
chapter of the Posei, and then to improve the current system. It is also asked that there be
sufficient budget cover for the reform of Posei agricultural chapters. Lastly, with regard to the
common organisation of the markets, a guarantee is asked that due account will be taken of
the specific features of these regions, particularly in the banana sector.

In more detailed terms, the requests relate to improving the specific supply arrangements
(SSA) on three points:

–

–

–

revision of the list of eligible products and, in addition, examination of the inclusion
of non-agricultural products (e.g. fertilisers, packaging, etc);

revision of the calculation method, particularly in order to stabilise aid, ensure that it
offsets extra costs, and to take account of the effects of the problem of “double
insularity”;

improvement of the conditions for re-exporting or re-despatching products processed
from raw materials having benefited from the SSA.

The requests seek also to improve specific aid to local production on two points:

–

–

modulation of the CAP (adapting the conditions of eligibility, reviewing the level of
additional aid, adapting quantitative limits, etc);

guaranteeing that products will be marketed (improvement of the competitiveness of
local production, aid for local or external marketing, etc).

Each state, it should be noted, has composed a list of tangible demands on the products which
concern each region.

33

Lastly, the requests also cover structural derogations. The structural derogations of the Posei
were done away with under the reform of the funds because of the flexibility of the new
regulation (1257/1999). Only recital 53 of the "rural development" regulation refers to the
specific needs of these regions, but there is no arrangement in the text of the regulation.
Requests for flexibility, adaptation or derogations have been formulated by the Member
States.

The Commission's reactions

While it is not possible to answer each specific request, the Commission can already give a
timetable and a guideline for the examination and consideration of these requests.

reports on the
the Commission will
In response to these requests,
implementation of the agricultural strands of the Posei programmes in these regions since
1992 and proposals to amend the Council Regulations establishing them where this appears
necessary. The requests will have been assessed when the achievements were examined and
will have been processed in conjunction with each of the three Member States.

in 2000 submit

In formulating its answers, the Commission will seek to consolidate and adapt the acquis, and
will look into ways of improving the current agricultural framework for these regions, albeit
always within the constraints of the appropriations available under the financial perspectives.

In the case of the specific supply arrangements, the list of products covered will have to be
reviewed for each region as a function of changing needs, as will the quantities of products
needed to cover the increase in local requirements and the conditions of the SSA when the
products are processed.

An examination will be made of the resources mobilised to meet the objectives of the supply
arrangements to offset the additional costs of supplying the regions and reduce prices by
stimulating competition between the sources of supply.

Measures for agricultural products cannot be fully effective unless they are adapted to local
circumstances and coherent both internally and with the SSA. A scatter-gun approach is
useless: the measures should reflect an integrated development strategy.

Agricultural production support measures which have proved unsuited to regional
circumstances need to be examined in order to make them more attractive and more effective.
The specific conditions of eligibility for measures should receive particular attention, as
should the level of aid and the quantitative limits for products having a low rate of supply. An
examination will also have to be carried out of the conditions of application of the CAP in the
different sectors in order to check the extent to which, and keeping an open mind, derogations
might prove necessary.

Where necessary, consideration should be given to the implementation of new measures to
take account of special local features and needs whilst complying with the Posei objectives.
Such agriculture is facing the globalisation of its economic environment and its main products
are exposed to competition from similar products from neighbouring countries (ACP,
overseas territories, developing countries) which enjoy favourable social costs and other
conditions of production. They are exposed to competition both on their own local markets
and elsewhere in the Union, where products from non-member countries enjoy preferential
rates of duty. This situation requires vigilance and greater monitoring.

34

Regular monitoring and, where necessary, the rapid adjustment of these measures may be
required to respond to developments in the CAP or the international context which have an
effect on these types of agriculture.

It will be important to ensure that management of these arrangements is simplified and that
they are made more transparent without impeding their monitoring and control.

As part of Community production, local production in these regions will be concerned not
only by the agricultural aspects of the POSEI programmes but also by the forthcoming
reforms of market organisations, particularly those for rice, sugar and bananas. The impact of
these reforms on the agriculture of these regions will have to be considered.

Requests concerning structural derogations will be examined at single programming
document (SPD) or operational programme (OP) level in order to ascertain what the actual
problems are, what specific features need to be taken into account, and any solutions that need
to be introduced.

2.

FISHERIES

Because of the role it plays in the local productive fabric, the fisheries sector is of the utmost
importance for the socio-economic development of the outermost region.

In terms of their economies, this sector generates a variety of activities providing work for a
large section of the population, particularly through family businesses. These activities
represent existing experience in the sector and none of the regions offers many alternatives in
terms of diversification of employment. The fisheries sector includes a wide range of
activities related to the trade: catching, processing, marketing, and distribution and
consumption. Stress should be placed on the prospects likely to provide an adequate response
to the needs of the sector.

The Commission has now embarked on the process of considering the adjustments to the
common fisheries policy required by the 2002 deadline. It hopes to make use of this deadline
to promote a broad discussion on the improvements which should be made to the various
aspects of the common fisheries policy so that it can cope with the challenges it faces.

In view of the new Treaty provision on the outermost regions, the Commission will look
closely at the different strands of the common fisheries policies in the light of the specific
measures already adopted. It will in 2001 propose suitable adjustments to the measures in
force and may, if need be, propose specific new measures for the outermost regions.

As regards more specifically the requests contained in the memoranda submitted by the
Member States:

–

–

the arrangements for offsetting the extra costs incurred in selling certain fishery
products work very well and in 2000 the Commission will, once it has made an
evaluation of the arrangements, put forward proposals to extend them;

proposals specifically concerning the fleet could have consequences for
sustainable use of resources and therefore warrant a cautious approach;

the

35

–

–

the proposal on the possibility of re-shipping products which have benefited from
import duties needs to be examined very carefully
temporary suspension of
considering the scale of activity in the waters in question (the Canaries),
the
quantities landed and the fact that the products covered by the current arrangements
involve a broad range of species;

lastly, research is a vital part of any policy on the conservation and management of
resources and the feasibility of Community funding will depend on the overall
budget which will be defined by the Council for this area.

36

B.

1.

a.

GIVING A FRESH BOOST TO THE ECONOMIES OF THESE REGIONS

THE INSTRUMENTS

Structural funds

It should be recalled that the whole of the regional and structural policy of the European
Union is a response to the specific handicaps facing the outermost regions. This approach is in
line with Articles 158 and 159 of the EC Treaty, which set the goal of "economic and social
cohesion" and give regional policy the aim of reducing the gaps in development between the
least developed regions of the Union and the rest. Financial assistance from the Union
therefore makes a major contribution to establishing development strategies in all the regions.

the
For the period 2000-2006, as in the two previous periods, 1989-93 and 1994-99,
outermost regions are eligible under Objective 1. Eligibility under Objective 1 guarantees
these regions a substantial financial contribution from the European Union, since almost 70%
of assistance from the Structural Funds will go to such regions during the new programme
period. Such funding reflects the desire to concentrate the Community effort on the least
developed regions. Eligibility under Objective 1 also has the advantage that the regions
concerned can benefit from the broadest possible scope for eligibility under each of the
Structural Funds, including, for example, education and health under the European Regional
Development Fund, and higher rates of part-financing. For the future, the Commission intends
to consider what would be the best way of reflecting the special situation of these regions -
which is recognised by Article 299(2) - in terms of eligibility for the Structural Funds.

The new guidelines laid down by the Commission for the structural measures and regional
policy for the 2000-2006 programming period are of particular relevance to these regions,
especially in terms of:

–

–

–

–

the quest
for high level of competitiveness as a condition for growth and
development; this presupposes a balance between provision of the main items of
infrastructure and direct aid to the development of the productive sectors;

the quest for sustainable agricultural and rural development which takes account of
the needs of these regions arising from their geographical location and specific
handicaps;

the prospect of sustainable development with priority given to the preservation of the
environment in regions characterised by island location, small size, and in one case,
the sensitivity of the ecosystem of the Amazonian forest. There more than elsewhere
there must be a constant search for balance between the development required for
economic activity which creates jobs and the constraints of the local environment;

the strategic priorities of the policy on employment and human resources in regions
which usually suffer from strong demographic pressure, a high rate of unemployment
(among the highest in the Union) and the need to adjust skills to opportunities in the
economies of each region;

37

–

the crucial role of small firms in island and isolated economies where the constraints
on production and the small size of local markets restrict profitability. Here it would
appear desirable to make use of all the resources for financial engineering permitted
by the regulations governing the Structural Funds, as detailed in the SEM 2000
datasheets. This should provide a response to the pressing needs for finance which
have surfaced in these regions over the past 10 years.

regions,

the outermost

these guidelines should be supplemented by better

For
local
geographical integration through regional cooperation (see below). Expanding the economic
horizon of these regions is one of the keys to their future development. A response to these
concerns should be sought in strand B of the INTERREG III Initiative, which opens the way
to multinational strategic reflection. The SPDs/Programmes to be adopted under Objective 1
will permit regional cooperation with neighbouring countries in each geographical area
concerned. There should be much greater attention than in the past to ensuring that economic
development has a place in the content of these measures. Strand B includes specific areas for
cooperation among the outermost regions with priorities which take account of their special
features.

As regards the implementation of the Structural Funds Regulations, and bearing in mind the
requests put forward by the Member States in their memoranda, consideration will be given to
the following points:

–

–

increase in the seven regions in the Funds' contribution to investment in SMEs from
35% to 50%;

equal treatment for all seven regions through extension to the four French regions of
ceilings to Structural Fund assistance equal to those applying to the outermost
regions eligible under
the Cohesion Fund: 85% instead of 75% throughout
Objective 1.

In addition, when it comes to prepare and negotiate with the Member States concerned the
Community support frameworks (CSFs) and single programming documents (SPDs) for the
seven outermost regions, the Commission will, in accordance with the guidelines it adopted
for the 2000-2006 period, introduce and consolidate financial arrangements for companies,
particularly financial engineering arrangements such as risk capital. It will also promote and
support craft industry, develop projects for energy savings and the production of renewable
energy, set up projects for the environment, and develop transport and energy networks.

This could also be the time to consider financial intervention to further the prevention of
natural disasters (e.g. upgrading to storm-resistant standards) in order to safeguard the
durability of major infrastructures and productive investment, and in order to help to repair
these in the event of natural catastrophe.

b.

The loans of the European Investment Bank

On the loan instruments front, there should be more extensive use of individual loans from the
European Investment Bank (global loans intended for SMEs are handled in point 2) to finance
productive investment in the public and private sectors. It should be stressed that the EIB
devotes over 2/3 of its financing to projects located in the less advantaged regions.

In addition to the traditional sectors (infrastructure, transport, etc.), the EIB has in recent years
broadened out the eligible sectors. Education, health, the natural and urban environment

38

(waste treatment, water management, etc.) are examples of sectors eligible for loans and in
which the outermost regions have substantial needs.

In addition, the EIB is also active in funding projects for the rational use of energy. The
Bank's interventions in the renewable energy sector (solar, wind, geothermal, etc.) would
contribute to make good the energy shortfall in the outermost regions.

The extended reimbursement periods (5-12 years in the case of loans for industrial and
commercial activities, and 15 and even 30 years for infrastructure funding) and the periods of
grace (3-6 years) are a very considerable advantage. Furthermore, the significant fall in
interest rates in recent years should boost use of these loan instruments. Nevertheless, it is as
well to remember that the loans have to be applied for (by way of comparison, it should be
noted that EUR 34 million of loans were granted by the EIB to the ACP countries of the
Caribbean in 1998, while no operation was signed in the French overseas departments of the
region).

c.

State aids

State aids in sectors other than agriculture, fisheries and transport

The adoption of the new Article 299(2) is a strong signal and the Commission is accordingly
determined to take the utmost account of it on the basis of Article 87 of the EC Treaty.

The present Community framework, which is in the same spirit as that established by the
Amsterdam Treaty, has already proved flexible and adaptable to the special circumstances
obtaining in the outermost regions.

This is clearly illustrated by the wide-ranging measures to encourage development in these
regions, targeted on businesses by the European Union, the Member States or the regions
themselves.

The Commission will therefore in the coming weeks amend its guidelines on State aids for
the regions on two essential points.

Firstly, the granting of operating aid which is not digressive and is not limited in time will be
feasible in the outermost regions eligible for regional aid when this aid is intended to reduce
the additional costs arising in the pursuit of the economic activity from the handicaps
identified in Article 299(2). The proposals for aid will be examined on the basis of the level of
development achieved and the way in which they contribute to the future development of the
region. The evaluation of the handicap, which is a matter for the Member State, and the
examination of the aid envisaged could take account of the specific features of certain
economic sectors.

Secondly, and so that all the outermost regions can benefit from this new possibility, the
benefit of the derogation 87.3.c of the Treaty will be extended to them by virtue of their being
an outermost region, but in full respect of the national population ceiling.

The Commission has carefully studied the other requests formulated in the memoranda of
the Member States and the regions.

Certain requests seem to contradict the current policy of Community control of State aid
based on proportionality of the aid authorised as a function of the relative development lag of
the region (proposal for automatic qualification for derogation 87.3.a for the outermost

39

the link with the characteristics of an outermost

regions) or of the size of the company (in this case, the risk is that the broadening of the
definition of SME could end up giving an advantage to the branches of major groups), and
have as a consequence been rejected. Other requests have failed to convince the Commission
that
region as defined in the new
Article 299(2) is close enough to warrant separate treatment of these regions (e.g. request for
consideration for the specific condition of outermost region in all the Community texts on
State aid, specific conditions for notification). Lastly, the Commission will examine in greater
detail certain requests (e.g. the maintenance of the activities of the French Development
Agency or the system of offsetting the extra costs of transport to the Azores) before taking a
final decision.

State aids to agriculture

In November 1999 the Commission adopted new guidelines on State aids in the agriculture
sector. These have been in force since 1 January 2000 and include specific provisions on State
aids in the outermost regions.

Since approval for certain types of operating aids for these regions is a recent development in
the context of the policy approach to agricultural State aids, consideration should be given to
inserting an appropriate legal basis to amend the current Posei regulations to take account of
the specific handicaps of these regions.

State aids to the fisheries sector

The special features of the outermost regions have already been incorporated in the provisions
on the Structural Funds by authorising higher State aid rates in this sector. When revising the
guidelines for examining national aid in the fisheries and aquaculture sector, the Commission
will consider whether any further specific provisions are required.

State aids to transport

The financing of transport infrastructure

The Commission generally considers that the public funding of infrastructure open to all
current and prospective users is not an aid within the meaning of Article 87(1) of the Treaty.
This approach should nevertheless take due account of recent trends in the transport market,
characterised in particular by the persistent trend for the number of private operators to
increase. It cannot therefore be ruled out that the public funding of a transport infrastructure
can give a direct or indirect competitive advantage to one or more companies and may thus
constitute an aid to them. When it comes to examine infrastructure situated in an outermost
region, the Commission will accordingly take the utmost account of how compatible the
measure is in relation to the rules governing State aids and of how positive the impact of this
infrastructure is on the development of the region.

A consistent and global approach to transport aids

The rules applicable to State aids already make provision for taking account of the needs of
the outermost regions.

Article 87(2)(a) of the Treaty enables the Commission to authorise measures to provide
residents in the outermost regions with cheaper air and sea connections between these regions
and the Member State in question and between the islands of the archipelago.

40

As mentioned earlier, the regional aid framework authorises the offsetting of the extra
transport costs which hamper the development of local industries.

The application of these arrangements nevertheless has limits. It is impossible, for instance, to
benefit from transport investment aids in these regions under the regional aid framework, and
in the absence of a de minimis rule in this sector notification has to be given of all aid
measures in the transport sector.

The permanent structural handicaps of the outermost regions need a consistent overall
approach to aids to transport to, from and in these regions for the air, sea and land sectors.
The Commission is accordingly looking at the feasibility of a sectoral structure specific to the
outermost regions.

d.

Taxation

Indirect taxation

Article 299(2) replaces former Article 227(2) of the Treaty. Commitments based on that
Article therefore remain valid.

The new Article 299(2) of the Treaty authorises measures in favour of the outermost regions
in the field of taxation as long as the requests are justified in view of the region's handicaps.

The Commission is examining the future of the fiscal measures applicable to the outermost
regions on the basis of the requests contained in the memoranda submitted by France, Spain
and Portugal.

It feels that in each case the instruments most appropriate to the regional development and
support of these regions should be sought, including by fiscal derogations, possibly with
provision for application on a long-term basis. However, this would not be a substitution for a
specific evaluation of requests, in line with the procedures in force. The requests must be
processed in conjunction with each of the three Member States in an open spirit of co-
operation and pursuant of the objective defined in Article 299(2) of the EC Treaty. In each
case, the measures proposed should be the most appropriate for attaining the objectives
defined in this provision of the treaty. This was the basis for examining the fiscal strand of the
three memoranda and for envisaging a response to the specific requests.

France's requests and the Commission's reaction

France asks that the system of dock dues which will expire on 31 December 2002 be
maintained, given the economic and social situation of the overseas regions.

France also requests the maintenance of the specific fiscal status of her overseas departments
whereby these departments remain outside the field of application of the sixth Directive
establishing the common VAT system.

Lastly, France is asking for an extension of the fiscal regime applicable to the traditional rums
of the overseas departments on the French market and which is due to expire on 31 December
2002.

France basis its arguments on the persistence and even the worsening of the handicaps which
prejudice the economic development of the overseas departments.

41

With regard to dock dues, authorised by a Council Decision of 22 December 1989, this
measure has up to now been considered as an instrument of development. Indeed the
Commission on 24 November 1999 adopted an interim report which was forwarded to the
Council and the European Parliament, describing the system of dock dues and observing that
these dues are an essential instrument for the maintenance of the level of development in
these departments. It should nevertheless be pointed out that the application of the Council
Decision of 1989 has given rise to procedural problems which have prompted the
Commission to enter into negotiations with the French authorities with a view to adopting a
code of conduct covering the procedure to be respected when submitting notifications. This
project has not yet come to fruition.

Article 3 of Decision 89/688/EEC of 22 December 1989 and the report of 24 November 1999
stipulate that in 2001 the Commission will submit a new report to the Council on dock dues,
analysing the impact of exemption measures on the economy of the overseas departments and
the way in which they contribute to promoting or maintaining local economic activities.

This evaluation should therefore be conducted in conjunction with the French authorities
which could provide the Commission with the elements they used as a basis to formulate the
request contained in their memorandum. The renewal of the dock dues will be considered on
the basis of the criteria of need, proportionality and the detailed nature of the measures
adopted. In the light of the conclusions of this evaluation, the Commission will submit an
appropriate proposal to the Council.

As for the system applicable to the traditional rum of her overseas departments, France
argues that the production of rum has, thanks to this measure in particular, safeguarded the
situation and also contributed to maintaining the cane-sugar-rum trade, the importance of
terms in the overseas departments makes the measure
which in economic and social
indispensable.

The French request has to be examined in relation to the steps taken on overseas departments'
rum, particularly through regional policy financial instruments, the Poseidom agricultural
measures and any additional measures implemented nationally. It is up to France to analyse
the situation accurately on the basis of these elements.

Furthermore, the broader evaluation of the economic and social situation of the cane-sugar-
rum trade should also take into consideration the conditions applicable to sugar in the
overseas departments in the context of the market organisation of sugar

Generally speaking, France considers that the specific measures adopted for her overseas
departments should henceforth be based on a long term footing rather than setting at the
outset a cut-off date for their application, and that an evaluation arrangement should be
introduced whereby at regular intervals and on the basis of pre-established criteria their
impact on the economic and social development of the region could be gauged. This solution
does not allow the adoption of appropriate measures at the Community level based on the
temporary nature of fiscal derogations, but considering the need to create for the economic
operators concerned a climate of security which is essential to the development of their
activities, a protracted duration of the derogations will be envisaged along with evaluation
reports to prepare the extension or adjustment of the measures.

42

Spain's requests and the Commission's reaction

Spain is asking that the existing fiscal measures for the Canary Islands be extended, i.e. an
extension of the so-called APIM tax on production and imports, the IGIC (general indirect
Canaries tax) and the special tariff for island tax applicable in this territory because of the
exclusion of this territory from the common VAT system. Spain is nevertheless willing to
envisage the introduction of a neutral tax which would take account of the need to achieve a
certain level of development of production of goods in the Canary Islands.

In order to appreciate these requests, it should be remembered that the APIM tax is due to end
on 31 December 2000. However, the Council Regulation of 13 December 1999 suspended the
reduction of APIM rates and stipulates that before that date the Commission will examine
with the Spanish authorities the impact of the suspension of the withdrawal of the tax on the
economic sectors concerned, and, in particular, on the sensitive products belonging to the
most vulnerable sectors covered by this regulation; these are products belonging to various
foodstuffs sectors, tobacco, chemicals, paper, textiles, metalworking industries and other
manufactured goods. The Council calls upon the Commission to submit to it if necessary,
depending on the results of this examination, a proposal on the measures to be taken on the
basis of the Treaty in order not to compromise the existence of certain local production
activities which are particularly vulnerable, while ensuring in the long term the withdrawal of
the tax in force.

There is no way this evaluation can be dispensed with. But it is also necessary to examine and
if necessary implement the alternative proposal formulated by Spain, a proposal which is
interesting but not set out in detail at this stage, and which envisages the introduction of a
specific neutral tax which takes account of the development features of the Canary Islands.

At this stage there are therefore various options which could be gone into in greater detail in
conjunction with the Spanish authorities. On this basis, the Commission will submit during
the second half of this year an appropriate proposal.

Portugal's requests and the Commission's reaction

Portugal asks that the current reduced VAT rates for rum products and fruit liqueurs be
maintained for the autonomous region of Madeira.

Portugal also asks that the reduced excise rates on fuel consumed in the region be maintained
in order to offset the extra costs generated by the transport of fuel to the region.

For Madeira, Portugal is also requesting authorisation to apply rate reductions of upwards of
50% for rum produced in the region (claiming that the current reduction is not enough to
guarantee the continued viability of rum production), for liqueurs based on subtropical fruits,
and for rum-based Poncha and Macia.

The reduced rates applied by Portugal are an implementation of Article 12(6) of
Directive 77/388/EEC on the common VAT system. As this measure comes under the sixth
VAT directive which does not discriminate between imported products and local products, it
is not the Commission's intention at this time to propose to amend or repeal it.

As it stands, Article 7(3) of Directive 92/84 authorises Portugal to apply, in the autonomous
regions of Madeira and the Azores, reduced rates of excise duty not falling more than 50%
below the national rates levied on the products covered by the Portuguese memorandum. The
Commission is not against maintaining these reduced rates. However, as regards the

43

additional request to be allowed to apply reduced rates of more than 50% on rum, liqueurs
based on subtropical fruits, Poncha and Macia in the region of Madeira, the Commission first
needs more information before expressing an opinion. It therefore calls on Portugal to supply
all the available material to back up its request.

The reduced rates of excise on fuel consumed in the region are granted on the basis of
Article 8(4) of Directive 92/81/EEC and have been authorised until the end of 2000. The
derogations granted in application of this arrangement are periodically reviewed and their
extension is subject to the agreement of the Council. The Commission at present sees no
reason to object to a fresh extension of this measure.

Direct taxation

The code of conduct for business taxation annexed to the conclusions of the Council meeting
(Economic and Financial Affairs) of 1 December 1997 was designed to consider potentially
harmful tax measures that might affect the location of business activity in the Community.
The "Code of Conduct" group set up by the Council has considered some 250 business
taxation measures that may fall within the scope of the code, including eight relating to the
outermost regions.

Those eight measures were assessed in accordance with the provisions of the code,
paragraph G of which includes the following guidance: "insofar as the tax measures are used
to support the economic development of particular areas, an assessment should be made of
whether the measures are in proportion to, and targeted at, the aims sought. In assessing this,
particular attention will be paid to special features and constraints in the case of the outermost
regions […], without undermining the integrity and coherence of the Community legal order,
including the internal market and common policies".

The Council is now examining the Group's findings, and developing its strategy: where it
considers a measure potentially harmful, the approach may involve abolishing it, requesting
the Member State to adjust it, or restricting its application. Depending on these results, it will
be up to the Commission to decide on follow-up and guidelines.

e.

Customs

As regards the Canaries, the Spanish authorities at the beginning of 1999 requested – a
request reiterated in the memorandum – a general exemption from CCT duties on industrial
products for the free zones and on raw materials for processing in these free zones, using it as
a basis the measures previously granted to the Portuguese free zones. The only free zone set
up is the port of Las Palmas.

the Spanish authorities are examining what

This request has already met with a preliminary positive reaction from the Commission. At
types of companies and industrial
present,
activities will in principle set up and develop in that free zone, in order to be able to
subsequently determine the lists of products and raw materials which should benefit from the
exemption.

In parallel with this, the Spanish authorities have just requested that certain products the raw
materials for which have undergone processing, be considered as being in free circulation.
The Commission intends to examine this request in the overall context of the previous
request, i.e. on condition that the processing in question is carried out in the free zones and in
accordance with rules to be established there.

44

In addition, the permanent maintenance of tariff exemptions on the importation of sensitive
and ultra-sensitive industrial products for the internal market of the Canaries beyond the
transitional period established for the gradual introduction of the CCT has also been requested
by Spain.

Just as a reminder, these products currently benefit, in accordance with the provisions of
Regulation 1911 and particularly Regulation 527/96, from a temporary suspension – and a
more flexible phasing-in than for other products, of CCT customs duties for a transitional
period which is to end on 31 December 2000, the point being to take account of the
difficulties of certain processing and trade sectors. As things currently stand, the rates of
duties applicable to the Canaries amount to 60% of the CCT rates for sensitive products, and
35% for ultra-sensitive products. The rates of duties applicable must be equivalent to 100% of
the CCT rates as from 1 January 2001.

The Commission's view is that permanent maintenance of the tariff exemptions – the
introduction of which is, moreover, at an advanced stage – would be detrimental to the
consistency of Community law and the internal market insofar as the integral application of
Common Customs Tariff duties in relations with non-Member countries is one of the essential
pillars of the customs union.

Be that as it may, they are ready to study and envisage a limited extension of the tariff
exemptions after examination on a case-by-case basis and provided that it is properly justified
from the economic and social point of view, and proportional in relation to the objective
pursued of full integration of this region into the Community.

The French overseas departments are put at a competitive disadvantage by their geographical
proximity to the ACP States and to countries enjoying concessionary tariffs under the
Generalised System of Preferences (GSP). Not only are products from neighbouring countries
that undergo substantial processing imported into the Community, and thus into the overseas
departments, under preferential arrangements; the overseas departments also have to face
duties or quantitative restrictions when exporting their own products to their neighbours.

It should be possible under Article 299(2) of the Treaty to compensate for this extremely
unfavourable situation by taking specific measures similar to those adopted for Madeira and
the Azores. However, such measures are linked to the existence of free zones in the French
overseas departments; at the moment, there is no free zone in operation in any of them.

Lastly, the measures taken in the Portuguese outermost regions (the Azores and Madeira), and
which consist of general exemption from CCT duties for both products for the free zones and
for raw materials for substantial processing in these free zones, and for which an extension
has been requested in the Portuguese memorandum, will be examined by the Commission this
year in order to determine their impact on the economy of the Madeira and the Azores
archipelagos. Extensions, and possibly expansion, of the measures in question will be
considered in the light of this examination.

45

2.

a.

THE STRATEGIC AREAS

Support for SMEs, craft firms and tourism

The Euro

The introduction of the Euro on 1 January 2002 will have several positive effects on the
companies of the outermost regions. It will make public and private investment easier through
a more transparent financial market and thanks to lower interest rates than in previous years.
It is worth stressing that the cost of bank loans in certain of the outermost regions is far higher
than equivalent operations in the respective continental territories. The introduction of the
Euro will also favour the development of investment capital and capital flow to these regions.
The Euro likewise will be a factor economic and monetary stability in relation to their
neighbouring and competitor regions (Brazil, Venezuela, etc.) which have experienced severe
monetary crises in the past.

On the trade front, the establishment of a Euro zone with a single currency with no exchange
risks or conversion costs will stimulate trade between the outermost regions and all the
countries of the Union. The Euro will for the same reasons bring companies in the tourism
sector a comparative advantage in relation to the other destinations of the world.

As for the costs of adapting to the Euro, the Commission, in association with the Member
States, will ensure that the outermost regions receive special attention in awareness raising
and training campaigns in order to smooth over the switchover to the single currency.

In the case of the Island of Saint Martin, where the dollar is dominant, the use of the Euro and
the trial of strength against the American currency should be monitored closely.

Financing

The significant fall in interest rates in the past few years and the extended reimbursement
periods should boost use of EIB global loans by SMEs (particularly in the French overseas
departments in the context of the abandoning of the rediscount mechanism resulting from the
disappearance of the French Franc in due course).

Inadequate own resources and guarantees are major hurdles for the creation and development
of SMEs in craft industries. There is therefore a need to continue efforts to consolidate
financial resources through the use of financial engineering techniques and programmes (risk
capital, mutual guarantee systems, etc.). The new regulation of the Structural Funds also
encourages efforts in this direction.

The Commission, the EIB and the European Investment Fund have set up a programme
(Amsterdam special action programme) to develop innovative companies5 or which are in a
phase of rapid growth, through risk capital instruments (own resources and other forms of
quasi-capital: subordinated loans, convertible loans, etc.). The "SME counter" appears well
adapted to help diversification of the companies of the outermost regions which are

5

Considering the technology lag and the small scale of companies in the outermost regions, it would be
wise to accept the criterion of innovation in the broad sense (innovation is anything which can
contribute to improving the competitiveness of a company through improving its equipment,
its
manufacturing processes or its management, etc.).

46

excessively rooted in traditional activities. This programme also provides for guarantee
mechanisms for the SMEs.

The EIB's overall loans and the risk capital operations have to be applied for by companies.
They are concluded in cooperation with banks or specialised intermediaries. Increased
knowledge and use of these initiatives by companies and the local financial networks is
necessary. By way of comparison, it should be noted that EUR 27 million of global loans
were granted by the EIB to SMEs in the ACP countries of the Caribbean in 1998, while the
value of loans granted to SMEs in the French overseas departments of the region was only
period.
during
EUR

million

same

0.7

the

47

A more favourable environment for the SMEs

In order to promote economic initiative and employment, the Commission intends to take
steps to give the outermost regions the widest coordinated access possible to measures in
favour of SMEs. Certain of these measures are described in the chapters of this report.

–

–

–

The BEST action plan includes action to be taken by the Commission and by the
Member States and is implemented in conjunction with the latter in order to improve
the environment of companies;

In the context of the Structural Funds, which provide support for national actions in
the assisted regions of the Union, the Commission’s guidelines call upon Member
States to give priority in their programmes to the SMEs;

There must be greater, and even exclusive, space for SMEs in other Community
programmes, e.g.

–

–

–

R&D, ADAPT, Leonardo, MET-Startup, JEV, CREA, the e-Europe initiative,
proposed by the Commission at the Lisbon Extraordinary European Council
(23-24 March 2000)

The process, launched as part of the ‘concerted actions’, for exchange of
experience and good practice on SME support policies and measures;

The multiannual programme for
the SMEs (1997-2000) and the new
multiannual programme for companies (2001-2005) which the Council should
adopt by 31.12.2000.

The common denominator of all these initiatives is that they seek to achieve excellence in the
policies targeting companies, particularly the smallest, through co-ordination mechanisms.
The outermost regions are encouraged to use them.

The Commission also intends to promote better quality of SME support services and better
access to these services for the smallest companies, something which is important for the
companies of these regions.

The Commission has improved information on its programmes and feedback from companies,
particularly through Community networks such as the Euro-Info-Centres, the Innovation
Relay Centres and the European Enterprise and Innovation Centres (CEEI-BIC). It hopes to
extend network cooperation and Internet use. In this connection, the recent creation of the
“One-Stop-Internet-Shop for business” is particularly relevant for the SMEs of the outermost
regions which would like to operate in the single market and thus mitigate the effects of
remoteness.

Tourism

On the basis of a Commission proposal the Council at its meeting on 21 June 1999 gave new
impetus to activities relating to quality and to sustainable tourism, which will certainly be of
benefit to the outermost regions.

Future "direct action" in the field of tourism could involve, amongst other things, projects to
promote the incorporation of best quality-management practice, covering also the

48

environmental aspects. Experience of such practice could be shared through an electronic
benchmarking network.

“Indirect action” can provide a way of taking action under other Community policies,
especially those concerning employment, regional development, rural development and the
environment. In this connection, the guidelines for programmes for the period 2000-2006
recommend that the Structural Funds should support the development of sustainable and
quality tourism through detailed planning incorporating economic, social and environmental
considerations; they concentrate on the modernisation of infrastructure, the improvement of
occupational profiles, encouragement for partnership, and efforts to avoid overcrowding in
tourist destinations.

It is also worth mentioning work in progress on recommendations at Community level to
promote sustainable tourism in the areas covered by the Natura 2000 network set up as part of
the environment policy.

b.

Transport

location of

transport has great strategic
these regions means that
The geographical
importance. Maintaining political, economic and social links with the rest of the European
continent depends largely on air and sea links. In addition, the fact that most of these regions
are part of the archipelago increases their dependence on the services. The extra costs of
transport arising both from the remoteness of these regions and from the need to ensure
regular services are also a major handicap to the economic development of local companies.
Lastly, air and sea passenger links are key factors in the development of tourism.

The Commission feels that the specific handicaps of the outermost regions call for a global
and coherent response. It will therefore take account of Article 299(2) of the Treaty to
incorporate the remoteness of these regions in all the strands of the common transport policy
which have an impact on the development of these regions. A common transport policy can
no longer be regarded merely as a factor in the completion of the internal market and must
also increasingly be considered as a key factor in regional and social development and the
cohesion of the Union.

The Commission observes that certain aspects of the common transport policy are particularly
important
trans-European
networks

to the development of the outermost regions. These include:

Trans-European networks

The Treaty stresses the importance of the trans-European transport networks for improving
access to the islands and outlying regions of the Union. Better integration of the airports and
ports of the outermost regions in the trans-European networks is vital if the specific needs of
these regions are to be met.

The Community guidelines for the trans-European transport networks already identified
certain projects of common interest specific to the outermost regions with regard to airports.
Road projects are not identified individually but are part of the TEN concept when they are
essential for access to an airport or a port. The Commission's proposal for guidelines for the
"ports" is currently being discussed by the European Parliament and the Council. Guidelines
on the TEN are also examining projects for traffic management infrastructure and some relate

49

to the outermost regions directly or indirectly through participation in national or European
systems.

The TEN guidelines and the identification of projects of common interest make it possible to
steer towards these projects Community funding and financial intervention by the Member
States and private operators.

In the outermost region where infrastructure needs are particularly great, Community funding
comes essentially from the ERDF and the Cohesion Fund for the regions which are eligible.

The TEN budget heading is mainly used for actions on air traffic management infrastructures,
particularly in the Azores and the Canaries (which are integrated into the project for a new
national air traffic control system known as SACTA/FOCUS).

In addition, under the EGNOS (European Geostationary Navigation Overlay Service) project,
Portugal receives TEN funding for the purposes of the RIMS (Ranging and integrating
monitoring stations) for terrestrial observation stations of GPS (Global Positioning System)
and GLONASS (Global Navigation Satellite System) satellite constellations. This initiative is
used in particular to build up a demonstration installation in the island regions, the locations
for which still remain to be established. In the long run, the development of the Galileo
system will re-use these installations and will have a positive impact on the whole of the
outermost regions by inter alia improving safety at sea and air traffic control on the routes
linking Europe to these regions.

The Commission intends to review before long the Community guidelines for the trans-
European transport and energy networks. This review will be an opportunity for the
Commission to implement the policy priority it gives to projects for these regions when they
reach a satisfactory stage of maturity.

Public service obligations

The common transport policy should provide an adequate framework for maintaining and
expanding transport services (including those at local and regional level) which, while not
necessarily yielding a profit in strictly financial terms, make a substantial contribution in
socio-economic terms.

The need to ensure regular, continuous and frequent transport services to link continental
Europe with the outermost regions and within those regions may justify the conclusion of
public service contracts which impose on the operator obligations which he would not accept
if he were motivated solely by economic considerations. The Commission considers that the
reimbursement of operating losses resulting from public service obligations imposed on a
carrier does not constitute aid within the meaning of Article 87 EC.

This is, for instance the case of air transport when the procedure described in Article 4 of
Regulation (EC) 2408/92 is followed. However, due caution musts be exercised in defining
the level of air service required for the region in order to obtain the optimum effect on the
regional economy in relation to the compensation needed to ensure this level of service.

As for the maritime sector, the Community guidelines on State aids for sea transport stipulate
the criteria which must be met if the compensation resulting from meeting public service
obligations are not to trigger the notifications required under Article 87(3) of the Treaty. If the
Member States concerned opt not to put out a call for tenders, the Commission will check that

50

the compensation is not directly linked to the features of these regions, particularly their
extreme remoteness and the need to ensure territorial continuity.

The Commission acknowledges how important the principle of territorial continuity is and to
convert it into public service obligations. It will ensure that the rules of the common transport
policy enable the Member States to maintain these obligations in full respect of the principle
of freedom of provision of services.

c.

Energy

The main thrusts of energy development for the outermost regions are:

• the development and modernisation of transport and distribution networks;

• the development of electricity generation using renewable energy sources, mainly wind

and solar power;

• the promotion and development of energy efficiency and energy management;

• integration into the trans-European networks, if appropriate, by introducing natural gas
(LNG terminal), and, possibly, the construction of undersea cables between the islands
(depending on the distance and cost involved).

Oil

Specific Community assistance linked to remoteness was decided on when the Poseima
programme for the Azores and Madeira was adopted. This is known as the “energy measure”.
The measure compensates the two regions for the additional costs they incur for oil supplies.

However, it has not yet proved possible to continue the measure after 1994 for lack of
dedicated funding (following the deletion of the Poseima budget heading) and because of the
eligibility rules for the Structural Funds (under which it was considered operating aid, and
therefore ineligible).

The Commission will look into the feasibility of co-funding from the Structural Funds,
avoiding the funding of operating aid which would not be linked to specific investments for
the development of new energies.

Gas

The isolation of the outermost regions limits the advantages of the liberalisation of the
markets and the benefits of increased competition. A Community commitment is therefore
needed for the economic and regional development of these regions whose geographical
circumstances confront them with a number of natural handicaps.

In these regions bottled gas still plays a major role in final energy consumption because of the
absence of alternative solutions. The liberalisation of the energy markets should therefore
have a positive impact on prices to the final consumer thanks to greater competition at the
supply stage.

While the long-term objective is to seek integration of the gas networks across the island and
continental systems,
the industry itself will pursue this
objective, even in return for favourable financing conditions and despite the Community

is nevertheless unlikely that

it

51

interest, as long as conditions of economic viability are not met. Depending on what the
market outlook is, providing financial help towards the construction of LNG terminals would
appear to be the more realistic option at least for the near future.

Electricity, renewable energies and energy savings

The development and modernisation of electricity transport and distribution networks, and the
connection to these networks of renewable electricity generation plants will continue to
receive Community support, essentially through the ERDF.

A number of instruments exist
to favour the deployment and integration of renewable
energies, and the development of energy efficiency in the islands or isolated locations, and
thus in the outermost regions. These are the Altener II, Save II programmes and the Fifth
R&D Framework Programme (Energy Programme).

When the Altener II programme is reviewed, it might perhaps be possible to introduce a
special mention on the outermost regions. Similarly, the Energy (R&D) work programme for
the years 2001 and 2002 is currently being reviewed. This would be an opportunity to look at
the feasibility of including specific references to the outermost regions in the new calls for
proposals.

d.

Environment

A central element of Community action for the outermost regions will be the protection of the
natural environment and the improvement of people's quality of life. This will be done by
applying the acquis communautaire on the environment, by the mainstreaming of
environmental policy objectives in other policies, and by the creation of the requisite
infrastructures (e.g. waste water and solid waste treatment facilities, soil
environment
conservation).

Preservation of the environment must take its place as one of the main priorities of economic
development programmes being part-financed by the European Union in the outermost
regions during the period 2000-2006. These regions, which are usually relatively small but
very densely populated, have particularly fragile ecosystems. In one case, French Guiana,
more than 80% of the area is covered by the Amazonian forest, which has again drawn the
attention of the Community authorities. Tourism, which is crucial to the economies of all
these regions, makes it essential to preserve and even improve their natural setting. It is
important
to try to devise economic development strategies which take account of
is also vital for environmental protection to remain
environmental
compatible with the human and physical resources of these regions, particularly their small
size, their distance from continental Europe, and the additional cost of equipment.

imperatives, and it

In order to deal with the outermost regions' environmental problems as described in Part I of
this document, the following measures could be financed by the Structural Funds:

–

–

–

measures for the management of nature conservation areas, with a view to integrating
them into the development process while safeguarding their special features;

promoting the use of alternative sources of energy (solar and wind energy) on the
basis of renewable energy plans;

tourism plans adapted to available resources (regional planning);

52

–

–

–

–

–

–

–

–

measures to encourage farming methods adapted to the climate and the land,
combined with the aim of soil conservation;

measures to combat erosion, with specific support for restoring plant cover and
indigenous afforestation;

regional planning, e.g. measures relating to buildings and other constructions acting
as windbreaks to reduce sand blowing, or integrated and coordinated development of
coastal areas (harbours);

integrated sustainable development programme (in all sectors),
in particular on
certain islands declared to be world heritage sites; the experience gained could serve
to establish models of island development; this approach is still possible, and should
be considered for the outermost regions;

waste treatment measures, in particular urban waste, special waste, dangerous waste
(selective collection, treatment, transfer points);

efforts to ensure a proper water supply, and to promote more efficient use of water
for the various purposes to which it is put, through integrated management, action to
combat waste, and economic use of treated water;

encouragement for businesses to adapt to Community standards relating to public
facilities, for example waste treatment and industrial equipment, particularly with
regard to pollution emissions, by providing financial assistance (with due regard for
the rules on State aids);

organisation of pilot projects in the field of sustainable development, and
encouragement of
regional cooperation with neighbouring countries in each
geographical area on subjects linked to the environment.

e.

The information society

The development of the information society through the growth of telecommunications
networks, multimedia services and technological innovation presents a real opportunity for
the outermost regions. By reducing the barriers of time and distance, the new information and
telecommunications technologies are helping to change their socio-economic environment,
even though their feelings of isolation have not completely disappeared.

In order to seize that opportunity, those involved at local level, with the active support of the
public authorities and private partners, must look at the needs that these new technologies
could satisfy and devise measures to take advantage of the changes now taking place in the
field of information in all areas of human activity.

Bringing the outermost regions into the information society would offset some of the
handicaps caused by their geographical position and:

–

–

in the social sphere, would allow changes in the fields of public information, health,
education and training and culture;

the development of certain forms of
in the economic sphere, would permit
teleworking and the creation of new service activities. Using electronic data
transmission, a region can connect to and benefit from world markets, providing that

53

consideration is given to the whole information chain,
including those aspects
relating to electronic commerce and the reduction of freight costs. Steps must be
taken to ensure the viability of the measures implemented, which must be based on
local strengths and abilities. Reaching a wider market could increase the potential of
traditional activities, such as tourism.

These few possibilities illustrate the potential for improving socio-economic conditions in the
outermost regions, but they will only become a reality if local people are involved and given
the necessary support from the public authorities concerned (in particular under appropriate
European programmes dealing with this type of problem). In view of the weakness of most of
the economies concerned, support must be given when new projects are implemented
(infrastructures and services, training), but it is also important to ensure that communications
tariffs are competitive with those paid by socio-economic players in the more developed
regions and permit equitable access to markets.

Integrated, long-term pilot measures, involving local players and adapted to actual needs,
must be implemented in all these regions. The aim must be to promote the spread of IT and
telecommunications tools throughout the socio-economic fabric, where they can help create
new services and activities and play a structural role in the development of the outermost
regions, integrating them more closely and more effectively with the rest of the world.

The European Union is actively supporting the development of the information society by
means of various instruments relating to promotion (the Promise programme), research and
development (the IST programme) and the introduction of information technology in the
regions.

A number of pilot projects are being implemented. These activities could be extended in the
future to the outermost regions.

An initiative for Mediterranean non-member countries receiving funding under the Meda
programme could also serve as an example. Under the programme, the Commission works in
cooperation with designated focal points in each partner country and provides financing for
projects in five priority sectors:

–

–

–

–

–

communications and information technology in education,
learning;

including distance

electronic commerce and economic cooperation;

health networks (links between hospitals, remote diagnosis, joint databases, etc.);

multimedia access to cultural and tourist resources;

information and communications technology in industry and for innovation.

Participants in the projects will be grouped in consortia and include companies, universities,
public authorities, hospitals, etc. in the Mediterranean countries and in Member States. These
measures could be adapted for the outermost regions taking account, of course, of their
particular needs and expectations.

Great emphasis has always been placed in these activities on dialogue and the exchange of
experience, both before and during implementation.

54

In order to define needs and expectations, under the Promise programme or the IST research
programme, and/or with support from the Structural Funds and the regional funds, we could:

–

–

–

–

establish some form of systematic consultation between the Commission,
the
national authorities of the Member States concerned and the outermost regions
(forum) to define priority needs;

provide support for the creation of lightweight structures to disseminate information
and act as catalysts and points of exchange for local initiatives;

develop a network of contacts with other measures in these fields, such as digital
cities, distance learning or other specific measures;

draw up integrated pilot projects adapted to actual needs, involving those active on
the ground (small firms, universities, hospitals, local authorities, etc.).

The aim must be to promote the incorporation of IT and telecommunications tools into the
socio-economic fabric in order to develop services and new activities which can play a
structural role in the development of the outermost regions, integrating them more closely and
more effectively with the rest of the world.

f.

Research and development

The substantial contributions from the Structural Funds to the outermost regions have allowed
them to catch up to a certain extent in terms of their scientific and technological potential, and
this must be continued.

In order to maximise the effectiveness of measures financed by the Structural Funds in the
area of research, the Commission proposed the development, in partnership with the Member
States and the regions, of integrated regional RTD and innovation strategies (communication
entitled "Reinforcing cohesion and competitiveness
technological
development and innovation"). The outermost regions will be able to benefit, in the same way
as the Union's other less-favoured regions, from measures to disseminate information and, in
particular, from access to the Commission's website, created to permit the exchange of best
practices in the fields of RTD, innovation and economic development between the less-
favoured regions and other regions.

through research,

The experience gained through the RIS (regional innovation strategies - Article 10 of the
ERDF Regulation) and RITTS (regional innovation and technology-transfer strategies - an
innovation programme carried out under the Framework Programme) pilot projects will be
directly accessible to the outermost
Innovation
Observatory) database now being developed.

regions via the RINNO (Regional

During the preparation of structural measures for the period 2000-06, in cooperation with the
Member States and the regions concerned, the Commission will determine the best way of
implementing the integrated regional RTD and innovation strategies in the outermost regions.
the closest possible participation of those regions in the
The strategies should permit
Community Framework Programme on RTD.

55

C.

THE
COOPERATION

INTERNATIONAL

ENVIRONMENT

AND

REGIONAL

Owing to their geographical position in the Caribbean, the northern edge of South America,
the eastern Atlantic in the vicinity of the African coast, and the Indian Ocean, the outermost
regions are situated close to third countries tied to the European Union by association
agreements (e.g. ACP, Morocco, Mexico, South Africa) or
independent preferential
arrangements (e.g. Latin America). The integration of the outermost regions within their
their economic
overall
development. The similarity of many types of agricultural and artisanal production with
activities in neighbouring countries may pose certain problems of competition for these
regions, as a result of differences in wage levels, although the same situation may also
provide scope for cooperation in the search for outlets. There is also the problem of access for
the products of outermost regions to the regional markets in their geographical areas.

regional geographical context

the conditions

is one of

for

The Commission therefore remains committed to encouraging regional cooperation between
its outermost regions on the one hand and the ACP countries and overseas countries and
territories (OCTs) on the other hand. This commitment
is already found in the Lomé
Convention and its successor, the ACP-EC Partnership Agreement, as well as in the OCT
Association Decision. This dimension also constitutes a priority of the Interreg III initiative,
strand "B", for the period 2000-2006. In more concrete terms, simultaneous operations under
the European Development Fund and the European Regional Development Fund are a
possibility. The Commission is prepared to examine and support pilot projects submitted to it.
research and technological development, energy and
It notes that
telecommunications have been mentioned as areas in which regional cooperation is
considered to be particularly important. The same applies to cooperation with other countries,
especially in Latin America. The Commission is also in favour of its outermost regions
participating in the various regional cooperation organisations, in line with the regions' own
wishes.

the environment,

In the past regional cooperation has been one of the priorities of the programme covering the
French overseas departments, but not of those for the Canary Islands, the Azores or Madeira.
Nevertheless, the Commission is quite open to the development of the regional cooperation
strand for the outermost regions of Spain and Portugal.

In general, it is important for regional cooperation with the neighbouring countries to be
based on the situations of the outermost regions. Up to now, most of these regions' trade has
been between them and their Member States. The same is doubtless true of investment. In
future, what is needed is a more open approach to neighbouring countries or territories, even
if this is bound to pose problems in the regions concerned, particularly in terms of labour
costs and migratory movements. But it is essential to give the outermost regions a greater
presence in their geographical areas.

What we should remember is that the trade situation in the outermost regions will evolve in
line with the current process of economic integration in their geographical areas, and the
resulting impact must be regularly assessed. The signing of economic partnership agreements
between the European Union and the ACP countries, for example, can progressively open up
the ACP markets to the outermost regions. In the meantime, the Commission is inclined to
have an independent analysis carried out of the impact of the ACP-EU Partnership Agreement
on the outermost regions. This would respond to the requests made by the Member States and
regions concerned.

56

Against this background, the report adopted by the European Parliament on relations between
the Overseas Countries and Territories, the ACP States and the ultraperipheral regions of the
European Union advocates that "in trade matters, local arrangements be made for the
reciprocal opening up of ACP/OCT/ultraperipheral region markets, so as to boost and
strengthen regional integration and thus facilitate, in due course, the gradual transition of the
region as a whole towards the establishment of free trade with the entire Union". At the same
time, the Community must respect the obligations entered into through the World Trade
Organisation. At first sight, a making a distinction between the trade arrangements applied by
outermost regions and those applied by the Community itself seems incompatible with the
integrity and coherence of the customs union. At the same time any preferential treatment
granted for trade with a neighbouring country of an outermost region, in the absence of an
economic integration agreement in the WTO sense or of a waiver, should be regarded as
incompatible with the WTO's fundamental principle of non-discrimination, unless the same
preferential treatment is also granted for trade with any other trading partner which is a
member of the WTO. However, the Commission is prepared to examine these matters
together with experts from the Member States and the outermost regions themselves.

The European Union's possible future action in this field will therefore follow two main lines
of approach:

• regional cooperation: it will be necessary to encourage cooperation between the outermost
regions on the one hand, and the ACP countries, OCTs and other partners on the other
hand. Cooperation should be achieved, in particular, by simultaneous action under both the
European Regional Development Fund and the European Development Fund, as well as by
using other financial resources available under cooperation or association agreements; the
Commission is also keen to encourage the outermost regions to play an active part in
establishing cooperation structures in the geographical areas in which they are located;

• the international environment: it will be necessary to analyse the possibilities and questions
connected with ongoing economic integration within the geographical areas in which the
outermost regions are located; the Commission is inclined to have an analysis carried out
of the impact on the outermost regions of the new ACP-EU Partnership Agreement, in
order to draw up any appropriate compensatory measures for producers in those regions.

57

CONCLUSION

This report, and the memoranda presented by the Member States and regions concerned, show
that the action taken so far by the European Union in favour of the outermost regions has
produced solid results, with considerable support for socio-economic development. They also
show that the method devised ten years ago and used for the Posei programmes adopted by
the Council in 1989 and 1991 was the right one. In the face of ongoing handicaps, it must
therefore be maintained.

However, in a European Union which is now preparing itself for the important changes that
enlargement will bring and which is facing the challenge of globalisation, such action must be
better targeted, more flexible and more effective. The new Article 299 (2) is an important
political
in this connection. The three action programmes (Poseidom, Poseima,
Poseican) will continue to play an essential role in the light of the new Article.

lever

On this basis, the Commission will develop the measures described in Part II of this report,
and will present the Council with proposals in the course of 2000. It will ensure continuity
where existing measures are extended. Where permanent measures are not possible, it will
endeavour to ensure the long-term nature of the proposed measures, subject of course to
regular checks. Each year, it will also draw up a programme of initiatives planned with
regard to these regions. The Commission's proposals with budgetary implications will receive
special attention, pursuant to Article 299(2), under the financial perspective included in the
interinstitutional agreement of 6 May 1999.

In order to respond to the constant changes in Community and international circumstances,
the Commission will endeavour, wherever it proves necessary, to adapt the policies laid down
under the Posei programmes.

It is determined to continue the partnership between the Commission, the Member State
and the region, in accordance with the principles laid down in the Posei programmes, when
preparing new initiatives. Furthermore, in order to ensure an ongoing and comprehensive
dialogue between the Community institutions and the outermost
regions, an overall
partnership meeting could take place on a regular basis, for example once a year, to permit a
broad exchange of views on all the issues affecting those regions.

Finally, the Commission has taken steps to ensure that its internal organisation is able to
deal effectively with dossiers relating to the outermost regions. These dossiers involve nearly
all the Members of the Commission and nearly all the Commission departments. However,
there is also a need for effective coordination, sustained effort and contacts with the central
and regional authorities concerned. This was true in the past and will be even more so in the
future, because of the global approach that follows from Article 299 (2). This is where the
interdepartmental group responsible for these regions comes in. It has proved its worth,
and the Commission wants it to continue and intensify its work.

One point in particular should be stressed. The Commission will not just examine individual
requests concerning these regions; when considering any new Community legislation, it will
first look at whether there are any issues affecting the outermost regions which require
attention. In fact, in connection with each and every policy, consideration should be given to
the possible implications, whether direct or indirect, positive or negative, for these regions.
The Commission, and particularly the interdepartmental group, will ensure that this is done.

58

The future of the outermost regions will be determined, to a large extent, by the success of the
this success will also be of considerable
strategy proposed in this report. However,
importance for the European Union as a whole, which will thus have proved its ability to deal
successfully with one of the most complex challenges existing within it.

59

ANNEXES

ANNEX I - MAIN MEASURES TAKEN SINCE ADOPTION OF THE POSEI PROGRAMMES

REGIONAL POLICY - STRUCTURAL FUNDS

FOD

CANARY
ISLANDS

MADEIRA

AZORES

Financial assistance under Objective 1 89-
93/94-99/2000-2006

Financial assistance under Regis I and II
89-93/94-99

Financial assistance under Interreg IIIB
2000-2006

Financial assistance under Leader and
Equal 2000-2006

Financial assistance under the Cohesion
Funds 94-99/2000-2006

X

X

X

X

Community
maximum of 75 %

assistance

limited

to

a

X

Community
maximum of 85 %

assistance

limited

to

a

Grant per inhabitant increased from 25 to
100% compared with the average for the
Objective 1 regions

Definition of specific regional cooperation
zones under Interreg IIIB 2000-2006

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

French overseas departments.

60

*
*
*
*
*
AGRICULTURE6

FOD

Canary
islands

Madeira Azores

X

X

X

X

X

X

Martinique

French Guiana

Council Reg.
3763/918

Council Reg.
1601/92

Council
Reg.
1600/92

Council
Reg.
1600/92

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

MEASURES

COM7

Bananas (Council Reg. 404/93)

Sugar (Council Reg. 2038/99)

Pineapples (Council Reg. 525/77)

Rice (Council Reg. 3072/95)

AGRICULTURE STRAND, Posei

DEROGATIONS

Non-application of customs duties to a tobacco
quota (20.000 t)

Non-application of
premiums, density factor (cattle)

regional ceiling,

individual

Milk production aid, non-application of quota

Non-application of vine grubbing and distillation

Regional aid authorisation, tobacco

Limitation (April/October) on potato entries (end of
1999)

Non-application of co-responsibility levy on cereals

Structural derogations (5a)

ADDITIONAL AID

Aid/ha tobacco production

Additional aid

Premiums for adult male cattle and dairy cows

6

7

8

In the case of temporary measures, their expiry date is given in parentheses, in bold.
COMs which specifically concern the outermost regions, either in terms of the type of production or
because they contain a specific adaptation to these regions, are noted here in order to present an overall
picture of how the CAP has been adapted.
As amended by Council Regulation No 2598/95.

61

= (EUR 50/head)

Additional aid for
heavy/light lambs)

AD HOC AID

sheep and goats

(= diff.

SSA (Specific supply arrangement)

Animal feed supply aid for French Guiana

Supply of breeding animals

Supply of cattle for fattening (up to mid-1997)

Possibility of traditional export/shipping

Additional aid for dairy cows (max. 78 000 head,
EUR 40/head)

Aid for human consumption of dairy products

Aid for private storage of traditional cheeses

X

X

X

X

X

Aid for the fruit, vegetables and flowers initiative
programme

(end 95)

Aid for local marketing of fruit, vegetables and
flowers

Aid for the production of green vanilla and essential
oils (vetiver, geranium)

Aid for marketing to the EEC of fruit, vegetables
and flowers

Aid for local processing of fruit and vegetables

Study of the fruit and vegetable sector

Aid for pineapple production (EUR 1/kg)

for

Aid
improvement

sugar-cane

restructuring

and

land

Aid for sugar-cane processing into rum or syrup

Aid/ha beetroot

Aid for local processing of beetroot
sugar (EUR 20/t)

into white

Aid for ageing of desert wines (max. 20 000
hl/year)

Aid for production of quality wines psr (= EUR
500/ha)

X

X

X

X

X

X

X

62

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Aid for purchase of concentrated grape must and
wine alcohol in EEC

Aid/ha for production of potatoes for consumption

(= EUR 500/ha)

Aid/ha for production of seed potatoes and chicory
(= EUR 500/ha)

Aid for marketing of seed potatoes to EEC

Aid/ha for rice production (mid-1996)

Aid for marketing of rice from French Guiana

(20 000 t)

Aid for olive oil processing in the Canary Islands

Aid for honey production (= EUR 20/hive, limit
5 0000 hives)

for Réunion

and Martinique

Breeding
(1996/2000)

aid

Logo

AD HOC / DEROGATIONS

Plant health provisions

Veterinary provisions

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

63

FISHERIES

FOD

CANARY
ISLANDS

MADEIRA

AZORES

X

X

X

X

Marine resources
exploitation programme
(statistics, oceanography and environment,
thunnidae, demersals) – Dec. 92/448 (1992-
93)

Setting up of aquaculture experimental centre
– Dec. 92/448 (1992-93)

Fixing of carry-over premium for sardines -

X

X

X

Regulation 1674/92 (1992)

Construction of oceanographic research ship –
Dec. C(93)2032 (1993)

Contribution to the acquisition of equipment
for this ship – Dec. C(93)3167 (1993)

Study of sea and land transport conditions for
fishery products – Dec. C(93)3157 (1993-96)

Enhanced
organisations – Reg. 1603/92 (1992-97)

system for

aid

producers'

Plan to promote wild tropical shrimps in
French Guiana – Dec. C(93) 3157 (1993-96)

Aquaculture programme (technology transfer
and technical centre) – Dec. C(93) 3157
(1993-96)

Study of fresh tuna market - Dec. C(93) 3157
(1993-96)

Support
1658/93, 712/97 (1993-97)

for cephalopod marketing – Reg.

Study on a standard boat design – Dec. C(93)
3157 (1993-97)

Study of the position of fish on the European
market for exotic sea products – Dec. C(93)
3157 (1993-97)

Temporary suspension of import duties on
fishery products – Reg. 3621/92 (1992-2000)

X

X

X

X

X

X

X

X

X

X

X

64

for

Compensation
costs
the
involved in marketing certain species – Dec.
92/448, 92/449, R. 1503/94, 2337/95, 1587/98
(1992-2001)

additional

Acceptance of representative ports for prices –
Reg. 1672/92

Application of specific price for sardines –
Reg. 1673/92

X

X

X

X

X

X

65

TAXATION

MEASURES

77 /388

Exclusion from the scope of the sixth
the
Directive
common system of VAT (Article 3 of
Directive 77/388/EEC and Article 4 of
Regulation (EEC) No 1911/91).(1)

establishing

FOD

Canary
Islands

Madeira Azores

X

X

(1)

Taxes on production and imports (APIM)
and special import tariffs (Articles 5 and
6.4 of Regulation (EEC) No 1911/91,
Articles 1 and 2 of Regulation No
2674/99,
and Articles 1 and 2 of
Regulation No 564/93)

31 December 2000

X

Tax on production and imports
Dock dues (Council Decision 89/688)

31 December 2002

Reduced rates of duty on rum

(Council Decision of 30.10.95)

31 December 2002

X

X

(1) The regions subject
categories of local produce.

to the common system of VAT apply reduced rates to certain

66

CUSTOMS

FOD

Canary
Islands

Madeira Azores

MEASURES

Derogations

Inward processing operations in free zones
not subject to economic conditions

X9

X10

X

X10

(Article 173 of Reg. 2913/92)

Temporary suspension / progressive
introduction of customs duties on certain
industrial products

(Reg. 1605/92 : end of 1996 - Reg. 527/96 :
end of 2000)

Non-application of antidumping measures for
industrial products

(Reg. 1602/92: up to end of 1996)

Temporary suspension of customs duties on
ECSC products

(Dec. 92/319: up to end of 1995)

Temporary suspension of customs duties on
equipment for free zones

(Reg. 1657/93: up to end of 2000)

Non-application
products for processing in free zones

customs

of

duties

on

(Reg. 122/96: up to end of 2005)

Non-application of quantitative restrictions
on certain textile products

(Reg. 1087/97)

X

X

X

X

X

X

X10

X10

9

In practice, this measure is not applied as there are no free zones in this region.

67

REGIONAL COOPERATION INITIATIVES

INITIATIVES

OUTERMOST
REGIONS

LEGAL BASIS

Study to select
the main sectors for
joint regional projects (EDF + ERDF
financing)

Caribbean/French
depart-
overseas
ments
the
Caribbean

in

Lomé IV a, Title XII Regional
cooperation (more particularly
Articles 156-158), cf. Annex
XXXII ;

Regional programmes on tourism, the
trade
fisheries
environment,
development
(participation in management
committees; provision of premises by
Réunion)

and

Indian Ocean
(IOC)/Réunion

[+ ERDF Regulation]

Lomé IV a, Title XII Regional
cooperation (more particularly
Articles 156-158), cf. Annex
XXXII

Study on the impact on Réunion of the
negotiations
area
free-trade
a
for
between the EC and South Africa

Indian Ocean/
Réunion

EC budget

Safeguard clause for outermost regions
in the Agreement between the European
Community and South Africa

All outermost
regions

Council Decision No
1999/753/EC of 29 July 1999
concerning the provisional
application of the Agreement on
Trade, Development and
Cooperation between the
European Communities and the
Republic of South Africa, Article
24(2), OJ L 311, 4.12.99

Caribbean
Indicative
Regional
Programme (CRIP) of 1997 providing
for coordination of ACP/ OCT/French
overseas department economic policies
and
overseas
department measures covered by the
EDF/ERDF respectively

ACP/OCT/French

Caribbean/French
overseas
departments
the Caribbean

in

Lomé IV a, Title XII Regional
cooperation (more particularly
Articles 156-158), cf. Annex
XXXII

Cooperation between French overseas
departments
of
(OECS)
Eastern Caribbean States
(regular meetings)

and Organisation

Caribbean/French
overseas
departments
the Caribbean

in

Lomé IV a, Annex XXXII

68

STATE AIDS

List of “State aids” decisions concerning the schemes in force at 1 January 2000 or subject to
the procedure for beneficial measures concerning regional schemes10

NAME OF MEASURE

FOD

CANARY
ISLANDS

MADEIRA

AZORES

X

X

N 144/96 REF Canary Islands economic
and tax scheme (up to 31 December 2006)

N 708/98 ZEC Special Canaries area (up
to 31 December 2006)11

N 363/99 - French overseas department
guarantee fund (up to 31 December 2006)

NN 121/93 - Six tax measures

(in the process of being re-examined)

N 131/92 - Regional enterprise and
employment fund (in the process of being
re-examined)

N 197/87 - Exemption from business tax
in the French overseas departments (in the
process of being re-examined)

E 19/94 - Madeira free zone

(in the process of being re-examined)

N 394/96 - Measures to promote tourism
– SITRAA (up to 31 December 2001)

X

X

X

X

X

X

10

11

When this table was prepared, certain schemes concerning Madeira or the Azores had been submitted to
the Commission, but it had not yet made a decision on them.
The Special Canaries Area (ZEC) came into effect on 1 January 2000.

69

EAGGF GUARANTEE EXPENDITURE 1992/1999 (EUR million)

Budget year

1992

1993

1994

1995

1996

1997

1998

1999 Average

Marketing
year

1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 98/99 1995-1999

ANNEX II

Poseidom – French overseas departments

Expenditure

of which 1 830 crop products

8.4

8.4

of which supply

of which other aids

of which 2 510 animal products

0

of which supply

of which other aids

Appropriations entered in initial
budget

of which 1 830 crop products

of which 2 510 animal products

45

42

3

Poseima – Madeira and Azores Portugal

Expenditure

of which 1 831 crop products

0.8

0.8

of which supply

of which other aids

of which 2 511 animal products

0

of which supply

of which other aids

Appropriations entered in initial
budget

11.5

of which 1 831 crop products

of which 2 511 animal products

1.5

10

Poseican - Canary Islands

Spain

38.0

37.2

23.1

14.1

0.8

0

0.8

47

45

2

36

27.9

27.3

0.6

8.1

6.2

1.9

55

33

22

34.1

32.2

17.2

15

1.9

0

1.9

50

47

3

41.7

26.9

25.8

1.1

14.8

7.2

7.6

55

34

21

31.9

30.2

14.0

16.2

1.7

0.6

1.1

35

31

4

40

22.7

18.5

4.2

17.3

7.6

9,7

55

32

23

26.3

23.7

7.5

16.2

2.6

0.6

2

61

48

13

43.1

16.3

10.7

5.6

26.8

8.7

18.1

58

34

24

25.1

17.3

5.1

12.2

7.8

0.2

7.6

49

36

12.6

24.2

13.8

10

3.8

30.7

20.9

4

16.9

9.8

0.6

9.2

34

22

12

30.2

14.3

8.8

5.5

10.4

15.9

7.9

2.5

46

25.2

20.4

6.5

9.4

36

18

18

41.4

29

10.3

18.7

12.4

0.1

12.3

45

33

12

40.2

15.5

11.9

3.6

24.7

8

16.7

40

21

19

31

24

8

16

7

0

6

36

17

12

5

19

8

11

Total
expenditure

of which 1 832 crop products

of which supply

of which other aids

of which 2 512 animal products

of which supply

of which other aids

0

0

0

Appropriations entered in initial
budget

9.5

of which 1 832 crop products

1.5

of which 2 512 animal products

8

TOTAL EXPENDITURE

Total appropriations entered in initial budget

110.1

140.1

137.9

115.8

104.3

92.6

120.6 114

44.2

32.7

11.5

93.7

89.2

4.5

215

95

120

184

318

30.9

19.8

11.1

84.9

80.5

4.4

147

52

95

216

322

34.8

23.6

11.2

69.5

65.3

4.2

117

40.8

75.8

210

305

25.8

20.6

5.2

66.8

62.6

4.2

104

37

67

185

266

37.7

35

26.1

11.6

25

10

82.9

80

78.5

4.4

106

38

68

154

211

75

4

154 202

174 191

30.1

29.9

0.2

80

76.8

3.2

216

91

125

43.8

38.5

5.3

96.3

92.2

4.1

217

89

128

9

66

70

Non-execution

% non-execution

57

86%

134

42%

106

33%

95

81

57

21

-11

31%

30%

27% 12% -6%

71