WRITTEN QUESTION E-1553/00 by Paulo Casaca (PSE) to the Commission. Market prices and values.
Date: 2000-05-18
Institutions: European Parliament, Provisional data
Subjects: EU statistics, purchasing power parity

6.3.2001

EN

Official Journal of the European Communities

C 72 E/75

(2001/C 72 E/088)

WRITTEN QUESTION E-1551/00

by Paulo Casaca (PSE) to the Commission

(18 May 2000)

Subject: Validity of the application of purchasing power parity (PPP)

In its reply to Written Question E-0275/00 (1) the Commission stated that, with reference to the meeting of
the working party on PPPs held in Luxembourg on 21 and 22 June 1999, (cid:145)neither during this meeting in
Luxembourg, nor after the meeting, did the Portuguese delegation make any statement (or complaint) on
the validity of PPPs and their use in Community regulations(cid:146).

Nevertheless, the Commission makes no reference to statements and complaints made before the meeting.
Is it not
the Portuguese national statistical authorities questioned
(cid:145)the validity of PPPs and their use in Community regulations(cid:146)?

the case that, on 5 May 1998,

Is it not the case that the Luxembourg meeting of the working party on PPPs did not result in any
significant changes to the situation and that, consequently, the Portuguese authorities did not express any
change of opinion on the matter?

(1) OJ C 303 E, 24.10.2000, p. 169.

Answer given by Mr Solbes Mira on behalf of the Commission

(10 July 2000)

Despite detailed investigation, it has not been possible to find any trace of such a statement which the
Honourable Member claims to have been made by the Portuguese national statistical authorities.

(2001/C 72 E/089)

WRITTEN QUESTION E-1553/00

by Paulo Casaca (PSE) to the Commission

(18 May 2000)

Subject: Market prices and values

In its reply to Written Question E-0273/00 (1) the Commission appears to be confusing two different
phenomena: the existence of price differences resulting from administrative and/or macroeconomic policy
measures, generally considered on the basis of the classic text (cid:145)The Purchasing Power of Money(cid:146) by Irving
Fisher, and differences in market value for equal or similar goods and services arising from differences in
supply and/or demand best summed up by John Maynard Keynes.

Keynes quotes Dr Watson on a visit to the Isle of Skye, when he says (and I quote from memory) that, if
the eggs on your miserable island are cheap, it is not because there is an abundance of eggs but because
money is scarce.

The problem posed here is impossible to resolve in the context of statistical method, because it belongs to
the field of economic theory.

As conceived by Fisher, PPPs represent the appropriate method for looking beyond price differences which
do not stem from market mechanisms, which is not the case when the market itself attaches different
values to goods.

As Dr Watson realised using his own common sense, the value of goods and services varies not only
according to conditions of supply but also according to conditions of demand, especially where their
mobility is low.

That being so, does the Commission not consider it absurd to correct the overall income of a particular
geographical area using the assumed market value of goods and services in that area, to the extent that
possible differences in prices do not reflect administrative measures?

C 72 E/76

Official Journal of the European Communities

EN

6.3.2001

Does the Commission not believe that it would be appropriate to use an in-depth knowledge of economic
theory as a basis before proposing measures to correct income in real terms, such as PPPs?

(1) OJ C 330 E, 21.11.2000, p. 114.

Answer given by Mr Solbes Mira on behalf of the Commission

(10 July 2000)

The Honourable Member seems to allude to the distinction between changes in price level (i.e. inflation),
on the one hand, and changes in relative prices, on the other hand. The first is mainly a consequence of
macroeconomic policies, in particular monetary policy, and the latter is an outcome of demand and supply
conditions of markets. Within a monetary union, differences in inflation rates are usually low because of a
single monetary policy and a co-ordinated economic policy, but differences in relative prices can still be
considerable due to transaction costs which prevent arbitrage, in particular for non-traded goods. There-
fore, in a monetary union, the main differences in purchasing power of money (PPPs) between countries
arise from different relative prices.

(2001/C 72 E/090)

WRITTEN QUESTION E-1555/00

by Hanja Maij-Weggen (PPE-DE) to the Commission

(18 May 2000)

Subject: Freedom of religion in Macedonia

Can the Commission confirm that the constitutional court in Macedonia has banned prayers from being
said in schools in Macedonia?

Can the Commission explain the reasons for this ban?

Does the Commission consider that this ban is in line with the European principle of freedom of religion?

What possibilities are open to the Commission to bring about discussion of this ban in Macedonia?

Answer given by Mr Patten on behalf of the Commission

(19 June 2000)

The Commission can confirm that the Constitutional Court of the former Yugoslav Republic of Macedonia
has annulled by its decision No U.br. 195/99 (published in the official Gazette of the former Yugoslav
Republic of Macedonia No 36/2000 of 12 May 2000), an Act of the Ministry of Education establishing a
prayer at the occasion of the yearly inaugural classes in elementary and secondary schools of the school
year 1999/2000.

The ruling of the Constitutional Court was based, in substance, on Article 19 of the Constitution of the
former Yugoslav Republic of Macedonia that reads that (cid:145)The Macedonian Orthodox Church and other
religious communities and groups are separate from the state and equal before the law(cid:146). This principle of
separation between religions and the state was the main reason behind the ruling of the Court.

This ruling is in line with the European principle of freedom of religion (as established, inter alia, in
Article 9 of the European Convention for the Protection of Human Rights and Fundamental Freedoms),
which is guaranteed in the former Yugoslav Republic of Macedonia. Article 9 of the constitution of the
former Yugoslav Republic of Macedonia reads that (cid:145)Citizens of the Republic of Macedonia are equal in
their freedoms and rights, regardless of sex, race, colour of skin, national and social origin, political and
religious beliefs, property and social status(cid:146), and Article 19 that (cid:145)The freedom of religious confession is