Opinion of the European Economic and Social Committee on the "Second progress report on economic and social cohesion" (COM(2003) 34 final)
Date: 2003-07-16
Institutions: European Economic and Social Committee
Subjects: EU regional policy, economic and social cohesion, report

30.9.2003

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Official Journal of the European Union

C 234/45

Opinion of the European Economic and Social Committee on the ‘Second progress report on
economic and social cohesion’

(COM(2003) 34 final)

(2003/C 234/12)

On 30 January 2003 the Commission decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 23 June 2003.
The rapporteur was Mr Barros Vale.

At its 401st Plenary Session on 16 and 17 July 2003 (meeting of 16 July), the European Economic and
Social Committee adopted the following opinion by 114 votes to one, with three abstentions.

1.

Introduction

1.2.

Economic and social cohesion: current situation and trends in
an enlarged Europe

1.1. General comments

On 30 January last, the Commission published the
1.1.1.
Second progress report on economic and social cohesion
containing an extensive and interesting set of statistics that
provide an overview of the situation in Europe, particularly in
respect of the relevant indicators for analysing this important
subject.

1.1.2.
The report is part of preparations for the Com-
mission’s proposals for the future of cohesion policy after
2006. The first part of it contains an update of the analysis of
the cohesion situation set out
in the Second Report on
Economic and Social Cohesion and in the First Progress
Report; the second part summarises the debate to date in the
EU on the future of cohesion policy.

In addition to the data compiled and processed for
1.1.3.
this second report and set out in an appendix thereto, the
Commission has taken a look at the current developments in
the debate on cohesion now and in the future;
this is
particularly important at the moment, in the run-up to the
post-2006 regional policy reform.

Recently a whole raft of contributions have been
1.1.4.
made by a variety of parties on ways to put together this
regional policy of the future; these include papers from the
Council, Parliament, European Economic and Social Com-
mittee and the Committee of the Regions. There have also
been seminars on the Union’s regional priorities, priorities
relating to employment and social cohesion, mountain areas
and urban areas.

1.2.1.
Despite the progress achieved towards greater
cohesion over the last few years, the report notes that the
disparities between Member States and, essentially, between
regions remain considerable and that these will markedly
deteriorate in an enlarged Europe of 25 Member States.

1.2.2.
The data provided in the report indicate that the
disparities in income levels between the most and least
prosperous regions will double. In fact, the ratio between the
per capita income of the richest 10 % of regions (defined as
those with a higher income, accounting for 10 % of the
population) and that of the poorest 10 % of regions (defined
as those with a lower income, accounting for 10 % of the
population) stands at 2.6 in the EU of 15, rising to 4.4 in an
EU of 25 and to 6 in an EU of 27.

According to the report, 48 regions in the current
1.2.3.
Member States (accounting for 18 % of the EU’s population)
have a per capita income (in PPS) below the threshold of 75 %
of the EU 15 average (data for 2000). Once Europe is enlarged
to 25 Member States, a total of 67 regions (accounting for
26 % of the population) will have a per capita income level
below the 75 % threshold, and only 30 regions in the current
Member States (12 % of the current EU 15’s population) will
be eligible for Objective 1 support.

1.2.4.
In an enlarged Europe, the regional disparities in
employment will also worsen. The average unemployment
rate will be 2,4 % for the 10 % of the population living in the
richest regions and 22,6 % for the 10 % living in the poorest
regions.

The fact that the population is ageing in some
1.2.5.
European countries will introduce even more changes in the
new circumstances generated by an enlarged Europe.

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1.2.6.
Incorporating the acceding countries into the EU will
have the effect of depressing the EU’s employment rate and
will have a significant impact on the sectoral composition of
employment. The relative size of agricultural employment will
climb from 4,4 % in the EU of 15 to 5,5 % in an EU of 25
(7,6 % in an EU of 27), while the relative size of the services
sector will fall and that of the industrial sector will remain the
same.

to qualify for this category these regions’ per capita GDP must
be below 75 % of the EU average, calculated on the basis of
In the meantime, a number of
purchasing power parity.
suggestions and ideas have been put
forward aimed at
supplementing those criteria with others relating to the
employment situation, how quickly population levels are
falling, productivity and the actual level of financial implemen-
tation, as well as the peripheral nature of the region in
question.

The report also notes the persistent divergences
1.2.7.
between countries and regions in terms of various factors
determining real convergence and it shows up the markedly
disadvantageous situation of the current cohesion countries.

1.2.8.
Thus a lower per capita income is linked to lower
levels of education and training and fewer research, develop-
ment and innovation activities. Data on the number of patents,
applications for patents in high tech sectors and the level of
R&D expenditure reveal huge disparities between the various
Member States, to the detriment of the southern European
countries, for which the indicators are lower in a variety of
areas; the disparities are even more marked at regional level.

On the other hand, the report highlights the econ-
1.2.9.
omic potential of an enlarged Europe, due to the fact that the
acceding countries generally have a higher growth rate than
current Member States and overall will help raise the average
level of education in the Union.

1.3.

The debate on the future of cohesion policy

1.3.1.
The summary of the discussions in the second part
of the report highlights the importance of the debate on the
future of cohesion policy.

1.3.2.
The discussions have mainly dealt with the objectives
of cohesion policy and the contribution of other Community
policies to cohesion.

Nevertheless, the general view is that implementing
1.3.4.
this priority should not mean dropping the actions the EU has
been carrying out to date in non-lagging regions. There has
been much talk in these regions about the need to focus efforts
on problem areas such as crisis-hit urban areas, certain more
depressed rural areas and other areas requiring help because of
inadequate employment, innovation, education, training or
research, among other factors.

The EESC feels that continuity of support for the
1.3.5.
regions receiving non-Objective 1 support, in addition to being
fair in terms of actually ensuring cohesion, constitutes a key
political objective for sharing out resources between the
various countries, whether or not they are net beneficiaries
under the Community’s budget.

The report notes that only two (1) of the four options
1.3.6.
mentioned in the Second Report on Cohesion, proposing
different solutions for the difficulties which will crop up after
enlargement, met with any substantial support; in the course
of the debate in 2002, most support went to the first option.

1.3.7.
According to the Commission, the representatives of
the outermost, mountain and island regions in the EU feel that
these regions should continue to be included in the category
of less developed regions, even if their income levels exceed
the eligibility threshold. Account must, however, be taken of
the fact
in some circumstances (e.g. when offshore
businesses are based in such regions) the wealth generated is
more apparent than real.

that

1.3.8.
There is support from some quarters for the idea of
maintaining support for non-lagging regions, either because
there are persistent restructuring and economic development
problems in many areas or because the Structural Funds
represent a vital instrument of support for regional develop-
ment potential throughout the EU. Some proposals advocate
more decentralisation of current cohesion policy instruments.

There seems at present to be general agreement that
1.3.3.
priority should be given to helping the less developed regions
by earmarking most of the financial resources available under
this policy for them. This priority is all the more important
given that after enlargement, a large majority of the new
regions will fall within the category of ‘regions whose develop-
ment is lagging behind’. According to the current criteria (in
place since 1989) which most parties seem to want to retain,

(1) The first option involves retaining the current threshold of 75 %
of the average per capita GDP in an enlarged EU, backed up by
transitional differentiated arrangements for those regions which,
as a result of convergence, will no longer be able to be considered
to be less developed in an EU of 25, and other more generous
arrangements for most of the regions falling foul of the statistical
effect. The second option involves stipulating an eligibility thres-
hold above 75 % so as to mitigate or eliminate the consequences
of the statistical effect.

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1.3.9.
The sharing of knowledge through cooperation and
exchange of experiences has been described as a key element
in improving the implementation of cohesion policy at all
levels and above all as a way of ensuring that good practices
and solutions spread; these, being most diverse, have been
developed throughout Europe.

role; it highlights the substantial economic benefits gained in
the three least prosperous Member States (Portugal, Greece
and Spain), where average per capita income rose from 67.8 %
of the Community average in 1988 to 78.1 % in 2001.

issue concerns

One fundamental

1.3.10.
the financial
resources available, particularly in view of enlargement. There
already seems to be broad consensus about targeting 0,45 %
of the Community’s GDP for the regional policy budget, as a
basis for the new requirements, that is, as a minimum level.

In terms of the Union’s general political aims, there
1.3.11.
also seems to be ample support for the idea that cohesion
policy should itself tie in with all aspects of the Lisbon strategy,
as part of a common ambition to further the development of
European society.

1.3.12.
Lastly, the report stresses the need to simplify
the management of European programmes, respecting the
principles of responsibility, efficiency and good financial
management, to pursue action aimed at cross-border and inter-
regional cooperation targeting more balanced development
throughout the EU and also to step up the contribution of
other Community policies to achieving economic and social
cohesion.

1.3.13.
The aim seems to be to achieve greater coherence
with other Community policies and to try to set up genuine
convergence between different actions and instruments, tar-
geting the same objective. Farming, fisheries, competition and
research policy are, for example, still far from being perfectly
tied in with cohesion policy, although there have been calls
for such a link-up for some time now.

2. The EESC’s comments

2.1.
The EESC welcomes the way the report has been
drafted and structured, allowing it to be easily read and
analysed. It is objective, concise and clear. It also recognises
together a
that the Commission has endeavoured to put
document with high technical and statistical standards.

Ireland provides another example of the success of
2.4.
Community cohesion policy, having achieved what is by any
standards a remarkable improvement, in particular as regards
the rise in its GDP relative to the Community average.

2.5.
Despite the progress achieved, the EESC is concerned
about the significant regional disparities persisting within the
EU and, above all, about the fact that these disparities will
worsen once the EU is enlarged.

2.6.
It would seem sensible, when allocating resources in
the future under each of the cohesion objectives, to give
preference to those regions with the highest unemployment
rates.

2.7.
The EESC also deems it important that significant
funds be earmarked for productive and production-generating
areas, so as to boost sustained economic growth by supporting
key economic activities.

2.8.
Lastly, the EESC agrees that there is a need to step up
cross-border, trans-national and inter-regional cooperation in
order to promote more balanced development throughout
Europe, to boost synergies between cohesion policy and other
Community policies and to ensure that each operates in a
complementary fashion to the other so that all policies
contribute to the aim of economic and social cohesion, while
still, of course, pursuing the main objectives for which they
were devised.

The EESC feels that the data on national and regional
2.9.
disparities cited in the report clearly show the need to step up
efforts to boost cohesion in an enlarged EU; the EESC therefore
supports the Commission’s proposal that cohesion policy
should continue to give priority to less developed regions.

The EESC is positive in its assessment of the results
2.2.
achieved in promoting economic and social cohesion in the
EU over the last few years.

2.3.
In fact, the statistics presented in the report clearly
show that the Community’s cohesion policy has played a key

2.10.
The EESC advocates a cohesion policy which meets
the specific needs of the most disadvantaged regions in the
acceding countries and which at the same time takes account
of the continuing economic development requirements in the
less favoured regions of the current EU 15, even though they
might appear less serious in relative terms. The EESC also
recommends that, as part of the future cohesion policy,
account be taken of the specific circumstances of regions
which suffer from permanent geographic disadvantages.

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2.11.
Thus the EESC is pleased that the options advanced
in the 2002 debate on the eligibility criteria for obtaining
Objective 1 status favoured retaining the current eligibility
criterion while introducing special arrangements for those
regions which, due to the statistical effect of enlargement
(because of the arrival of countries whose GDP is lower than
the current Community average), would no longer qualify for
Objective 1 support, despite continuing to suffer significant
economic development disadvantages.

The EESC considers that the discussion about the
2.12.
need to supplement the current eligibility criteria, in order
to take specific circumstances into account,
is worthy of
consideration, especially in view of the objectives traced out at
the Lisbon summit and the current labour market prospects,
in particular the way that the unemployment rate in some of
the current Objective 1 regions has been rising and will
continue to do so over the next few years.

Irrespective of the matter of the Objective 1 eligibility
2.13.
threshold, the EESC considers that the 0,45 % of Community
GDP earmarked for cohesion policy funding may be inadequate
to cope with the needs of the acceding countries and of the
existing Member States which have still not achieved high
levels of development.

2.14.
In fact, a mere EUR 80 billion more have been
allocated for meeting the needs of ten new countries. In spite
of the fact that some of the current regions will no longer be
eligible, the EESC feels that EUR 340 billion (compared to
EUR 260 billion for the 2000 — 2006 period) will probably
not be enough to achieve the objective of improving economic
and social cohesion policy for all the regions concerned, both
current and future.

2.15.
The EESC therefore advocates increasing the volume
of funding to a level equal to or higher than the current 0,45 %
of Community GDP, in order to avoid the risk of there being a
sharp drop in Community support for the most disadvantaged
regions as of 2007.

2.16.
In fact, should the minimum share of Community
GDP earmarked for cohesion policy be maintained at 0,45 %,
at a time when more financial resources will be needed to cope
with the increase in regional disparities after enlargement, it
may well be the most disadvantaged regions of the EU 15
which will bear the full cost of enlargement in cohesion policy
terms, as a result of the drop in Community support allocated
to them.

2.17.
Indeed, a significant share of support funds for the
weaker regions are already passed on to the richer regions,
since goods and services for carrying out projects are often
purchased from abroad, namely from the richer countries and
regions (which are net contributors to the Structural Funds).
Although on the one hand the richer countries put money
into the structural funds, on the other, when the beneficiaries
of these funds are carrying out the projects concerned, the
richer countries get part of this money back by providing the
relevant goods and services.

2.18.
It is the EESC’s view that this situation cannot be
sustained from either a political or economic point of view,
because it goes completely against any principle of fairness in
distributing the costs of enlargement.

2.19.
In fact, under the first and second Delors packages,
funds doubled without there being any enlargement. Given the
fact that the EU is now being enlarged, the Commission’s
stance appears rather modest.

Nevertheless, the need for economic growth should
2.20.
not be forgotten, since only thus can the minimum objective
of 0,45 % of GDP be achieved. The EESC feels that particular
attention should be paid to this matter, by creating the right
conditions for boosting economic growth in the near future.

2.21.
In short, it will be one of the EU’s greatest challenges
in the near future to pursue an economic, social and territorial
cohesion policy which fulfils not only the specific needs of the
most disadvantaged regions in the acceding countries, but
also the requirements for economic development which will
continue to exist in the least favoured regions in the current
EU of 15, even though these regions will see their prosperity
increase in statistical terms in an enlarged Europe.

2.22.
Although the report does highlight some fundamental
points, the EESC considers that the debate on the future of
cohesion policy is still far from over. Since cohesion policy is
the EU’s peoples and
a key pillar for the integration of
territories, it is clear that this policy needs to have adequate
financial resources available so that it can cope with the
requirements flowing from the new context of enlargement,
thus ensuring its credibility.

The EESC considers it vital that, in matters pertaining
2.23.
to cohesion, special attention be paid to the economic and
social partners’ involvement in implementing this important
policy. This is an area where little progress has been made and
the more so since
where much remains to be done, all
organisations representing civil society are best placed to bring
decision-making into line with the actual situations that they
are endeavouring to improve.

2.24.
The importance of such partnership has, moreover,
been acknowledged by the Commission itself, which has
already asked the EESC to draft an exploratory opinion on
how the partnership actually works in implementing the
Structural Funds.

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2.25.
The EESC’s work in this field could also explore the
functionality, simplification and transparency of the processes
In addition it should include an unprecedented
involved.
analysis of the likely challenges arising from enlargement, as
well as outlining trends in the factors determining genuine
convergence, notably the so-called ‘dynamic competitiveness
factors’, and ways to stimulate them.

2.26.
Lastly, the EESC considers it vitally important for the
Commission to give serious thought to the possibility that
there might not be enough funds to maintain the Community’s
cohesion policy at current levels, which could mean a need to
keep up cohesion policy efforts for much longer, entailing
higher costs and poorer results for which public opinion might
have much less understanding.

Brussels, 16 July 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
Council amending Directive 92/79/EEC and 92/80/EEC, authorising France to prolong the
application of lower rates of excise duty to tobacco products released for consumption in
Corsica’

(COM(2003) 186 final — 2003/0075 (CNS))

(2003/C 234/13)

On 5 May 2003, the Council decided to consult the European Economic and Social Committee on the
above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 23 June 2003.
The rapporteur was Mr Burani.

At its 401st Plenary Session on 16 and 17 July 2003 (meeting of 16 July), the European Economic and
Social Committee adopted the following opinion by 107 votes to four, with eight abstentions.

1. Gist of the Commission proposal

The proposal concerns a request

from France to
1.1.
prolong until 31 December 2009 the derogation allowing the
application of a lower excise duty on tobacco products in
Corsica than that applied in mainland France. The derogation
was granted in a statement in the Minutes of the Council
meeting that adopted Directive 92/79/EEC on cigarettes and
Directive 92/80/EEC on manufactured tobacco other than
cigarettes. It was originally granted until 31 December 1997,
subject to the excise duty applicable in Corsica being gradually
raised to the national level by that date, and was extended once
more to 31 December 2002, at the request of France, in
Directive 1999/81/EC.

the

aside

Leaving

involved

technicalities

1.2.
in
implementing the directives, which are only a minor consider-
ation in examining the request, the derogation would mean
that the retail price of cigarettes in Corsica would be one third
lower than in mainland France, whereas cigars, cigarillos and
manufactured tobacco other than cigarettes would be 15 %
cheaper.

1.3. When it submitted the request, France also presented a
package of tax measures it intends to introduce in order to
bring excise duty on tobacco in Corsica gradually in line with
that imposed in the rest of the country by the end of the
transitional period requested.