Communication from the Commission - The structural funds and their coordination with the cohesion fund - Revised indicative guidelines
Date: 2003-08-25
Institutions: European Commission
Subjects: Cohesion Fund, EU policy, Structural Funds, economic and social cohesion, regional development

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 25.8.2003
COM(2003) 499 final

COMMUNICATION FROM THE COMMISSION

THE STRUCTURAL FUNDS AND THEIR COORDINATION WITH THE
COHESION FUND

REVISED INDICATIVE GUIDELINES

TABLE OF CONTENTS

The European Councils - the follow up by the Commission ....................................... 5

Employment and human capital investment ................................................................ 5

Sustainable development, risk prevention and environment........................................ 8

Research and Development........................................................................................ 10

Information society .................................................................................................... 11

Enterprise policy ........................................................................................................ 12

Policies that have undergone modification of their regulatory framework since
adoption of the indicative guidelines in 1999 ............................................................ 13

Agriculture and rural development policy ................................................................. 13

Fisheries ..................................................................................................................... 15

Energy ........................................................................................................................ 16

Competition................................................................................................................ 17

Research and development......................................................................................... 19

Community policies in the process of being amended............................................... 19

Trans-European energy networks .............................................................................. 19

Transport policy ......................................................................................................... 20

For more efficient implementation of structural policy ............................................. 21

Impact of simplification on the mid-term review ...................................................... 21

Public-private partnership .......................................................................................... 22

Financing large projects ............................................................................................. 22

1.

1.1.

1.2.

1.3.

1.4.

1.5.

2.

2.1.

2.2.

2.3.

2.4.

2.5.

3.

3.1.

3.2.

4.

4.1.

4.2.

4.3.

2

LEGAL FRAMEWORK

Under  Article  10(3),  of  Council  Regulation  (CE)  n°1260/19991  laying  down  general
provisions on the Structural Funds, the Commission on 1 July 1999 adopted general indicative
guidelines2 on the Structural Funds based on the relevant agreed Community policies. These
guidelines were aimed at assisting national and regional authorities in the Member States in
preparing  their  programming  strategies  under  Structural  Fund  Objectives  1,  2  and  3  and  in
terms  of  their  links  with  the  Cohesion  Fund.  In  this  way  the  Commission  made  known  its
priorities  in  the  light  both  of  past  experience  in  implementing  the  programmes  and  of
Community policies linked to structural measures.

The  said  Article  requires  the  Commission  to  revise  these  guidelines  prior  to  the  mid-term
review. Such revision is a crucial stage in the seven-year programming period (2000-2006). It
is aimed at allowing the Member States to adapt their programming documents while taking
account  of  possible  changes  in  the  socio-economic  situation  or  labour  market  and  of  the
findings of the mid-term review referred to in Article 42 of the same Regulation.

The Commission asks the Member States to make revisions in duly substantiated cases. As a
general rule the 1999 guidelines remain valid. The only objective of these revised guidelines
is  to  offer  Member  States  an  complementary  set  of  guidelines  which  will  facilitate  the
identification  of  coherent  and  balanced  priorities  for  the  development  of  measures.  The
revised  guidelines  aim  to  implement  the  major  changes  that  have  occurred  in  those  EU
policies with possible impact on programming of the Structural Funds. They will be of help to
the competent national and regional authorities in reviewing their measures.

Thus the mid-term review will lead to qualitative shifts in a number of priority fields. While
the  Structural  Funds  primarily  seek  to  enhance  factors  of  competitiveness,  and  hence
investment,  it  is  also  clear  that  the  economic  climate  has  deteriorated  markedly  since  the
adoption  of  the  indicative  guidelines.  Analysis  suggests  that  the  Community  Support
Framework  is  essentially  made  up  of  public  investment.  These  have  a  limited  impact  upon
national budget balances. Nevertheless, the budgetary situation in Member States could lead
to greater selectivity of projects and programmes.

The  mid-term  review  will  also  benefit  from  the  major  advances  made  in  the  context  of  the
exercise  carried  out  by  all  the  relevant  authorities  aimed  at  simplifying,  clarifying,
coordinating  and  making  more  flexible  the  management  of  the  Structural  Funds.  This
question is dealt with in this document.

Also  Article  7(7)  of  the  Regulation  requires  the  Commission  to  review,  if  necessary,  the
indexation of the allocations for 2004, 2005 and 2006 as a technical adjustment on the basis
of  the  last  economic  information  available.  The  Commission  made  the  calculations  for  the
annual  technical  adjustment  of  the  financial  perspectives  for  2004.  The  divergence  between
the theoretical Structural Funds deflator (10.4%) and the effective cumulated deflator (10.7%)
is  particularly  low.  If  adjustment  to  mid-term  inflation  were  carried  out  on  this  basis,  this
would mean a Structural Funds supplement of 90 million for each of the last three years of the
programming  period,  amounts  which  should  be  distributed  pro  rata  to  all  the  programmes
co-financed  in  the  fifteen  Member  States.  Given  the  slight  divergence  recorded,  the

1

2

OJ L 161 of 26.6.1999 p.1
COM(1999) 344 final of 1 July 1999

3

                                                
Commission concludes there is no need to carry out a revision of the indexation basis for the
Structural Funds.

The four main principles identified by the Commission for revising the mid-term guidelines
are as follows:

–  the European Councils – the follow up by the Commission;

–  the amendment of the legal framework of policies;

–  the Community policies for which the Commission has proposed changes;

–  the  measures  aimed  at 

increasing 

the  effectiveness  of 

the  Structural  Funds’

implementation.

It  should  be  stressed  that  these  guidelines  constitute  one  of  the  elements  of  the  mid-term
review. It is up to the management authorities and the Member States to submit proposals for
amendments of measures to be concluded in agreement with the Commission, notably taking
into account the results of evaluations. The attention of the Member States is drawn to the fact
that any changes to programming documents will have to include, if necessary, an update of
the “state aid scoreboards”.

The Commission also adopted3 additional indicative guidelines for the applicant countries to
take account of their specific situation as well as the reduced duration of their programming
period for the Structural Funds.

3

COM (2003) 110 final of 12 March 2003

4

                                                
1.

THE EUROPEAN COUNCILS - THE FOLLOW UP BY THE COMMISSION

Certain  Community  priorities  were  highlighted  just  after  the  start  of  the  current
programming  period.  The  Commission  considers  that  they  should  be  developed
further  in  the  framework  of  the  mid-term  review,  particularly  in  the  light  of
developments at various European Councils.

Thus the European Council of Lisbon of 23-24 March 2000 defined a new strategic
objective  for  the  European  Union  in  the  coming  decade  of  becoming  “the  most
competitive  and  dynamic  knowledge-based  economy  in  the  world,  capable  of
sustainable economic growth with more and better jobs and greater social cohesion”.
Achieving  this  goal  requires  an  overall  strategy  “to  enable  the  Union  to  regain  the
conditions for full employment, and to strengthen regional cohesion in the European
Union".

The reprogramming of the Structural Funds is a potential opportunity to consolidate
the  Community  contribution  to  this  strategic  objective,  particularly  through  the
cofinancing  of  investments  aimed  at  improving  employment,  economic  and  social
cohesion  as  well  as  the  competitiveness  of  the  Union’s  different  regions.  This  aim
could  be  pursued  by  adapting  the  programming  documents  so  as  to  put  more
emphasis  on  competitiveness  factors  such  as  accessibility,  knowledge  society,
innovation,  research  and  development,  the  environment,  employment,  social
integration and life-long education and training, especially in a context of economic
and  social  restructuring  resulting  from  technological  changes  and  a  process  of
economic catch-up in the Union.

Also  the  impact  of  the  Lisbon  objective  on  certain  policies  should  be  noted
(following sections).

1.1.

Employment and human capital investment

The  new  European  Employment  Strategy  has  been  refocused  as  a  key  tool  to
underpin  the  Lisbon  strategy  in  the  enlarged  EU.  The  new  guidelines,    adopted  in
July  2003,  are  designed  with  a  medium-term  horizon  and  are  intended  to  remain
stable until 2006. They pursue the three overarching objectives of the Lisbon reform
agenda: full employment, including the Lisbon employment targets; the promotion of
quality and productivity at work, reflecting the need for better jobs in a knowledge-
based economy and the need to promote EU competitiveness; and fostering cohesion
and  inclusive  labour  markets,  reducing  social  and  regional  disparities  in  relation  to
employment. Ten priority areas for action are also identified, underpinning the three
objectives: activation and prevention; job creation and entrepreneurship; adaptability
and mobility; human capital and lifelong learning; labour supply and  active ageing;
gender  equality;  integration  of  people  at  a  disadvantage;  making  work  pay;
undeclared  work;  and  regional  disparities.  The  Guidelines  call  for  effective
implementation including at regional and local level; the importance of efficient and
effective operational services is stressed in the context of  an improved  governance.
Member States are invited to fully exploit the potential of Structural Funds to support
the  delivery  of  policies  and  to  strengthen  the  institutional  capacity  in  the  field  of
employment.

5

The mid-term review provides an opportunity to better contribute to the priorities of
the  revised  EES  and  to  the  achievement  of  the  Lisbon  targets  while  taking  into
account  the  experience  of  the  current  programming  period  and  the  specificities  of
each Member State.

Strengthening active and preventive labour market policies to promote employment

The  funds  could  be  further  used  to  support  the  three  steps  preventive  and  active
approach  and  the  corresponding  targets  defined  under  the  revised  Guidelines,
starting  with  personalised  services  at  an  early  stage  of  the  unemployment  spell,
followed by a  "new  start"  before the 6 and  12 months thresholds and by  activation
measures  for  the  long-term  unemployed.  Activation  measures  should  be  made
accessible to all non-employed persons - both registered unemployed and inactive -
in order to better re-integrate them into the labour market. More attention could also
be given to people at risk of unemployment notably in the context of restructuring.

The Funds' should continue to support the modernisation and increased efficiency of
public employment services in Member States, including their activities in the fields
of  information,  brokerage  and  labour  market  adjustments  and  their  monitoring  and
evaluation capacity .

Increasing labour supply and supporting integration in the labour market of the most
disadvantaged people

The Funds should support initiatives leading to increased labour market participation
by  using  the  potential  of  all  groups  of  the  population,  notably  women  and  older
workers, for example through improved working conditions or work organisation. In
line  with  the  declaration  of  2003  as  the  European  Year  of  the  Disabled,  increased
attention should be given to measures that promote the access or re-integration of the
disabled in the labour market. Equally, the Structural Funds could be further used to
increase  the  labour  force  participation  of  legal  immigrants,  and  ethnic  minorities,
particularly  women,  who  often  face  particular  difficulties  in  terms  of  access  to  the
labour market.

The Funds should continue to pay attention to the long-term unemployed since long
spells  in  unemployment  often  lead  to  an  increased  risk  of  poverty  and  social
exclusion.  Finally,  the  Structural  Funds  should  also  enhance  co-operation  between
the  social  re-integration  services  and  the  employment  services  in  order  to  facilitate
the integration of the socially excluded into the labour market.

Promoting human capital, life-long learning and active ageing

While the development of life-long learning cuts across some priorities within the
present assistance programmes, this priority area could be reinforced: the Funds can
further  contribute  to  improving  training  and  education  systems  and  to  providing
individuals and employers with the necessary incentives to invest in human capital.

The Funds should support the necessary investments in the design and enhancement
of training and education systems, especially in regions with a lack of sufficiently
skilled labour, to provide young people with the necessary competencies to face the
challenges  of  a  knowledge-based  society  and  economy.  In  line  with  the  Lisbon
objective of halving by 2010 the number of early school leavers, particular attention

6

should  be  given  to  ensuring  higher  education  attainment  of  young  people  with
learning difficulties and to reduce the rate of school drop-out.

Against the background of an ageing population and widespread early retirement, it
is essential to provide for the necessary incentives to increase the working  capacity
of  older  workers  and  retain  workers  longer  at  work.  The  Funds  could  support
incentives  to  invest  in  lifelong  learning  and  training  of  adults  and,  in  particular,  of
older workers, to update their skills  with  the  objective of promoting  active ageing
and increasing their labour participation.

Foster entrepreneurship, adaptability and mobility

Innovation  and  entrepreneurial  activity  are  key  drivers  for  increased  competition,
growth and job creation. The Structural Funds should be fully exploited to promote
the  job  creation  potential  of  enterprises,  notably  new  enterprises,  firms  in  the
service  sector  and  firms  engaged  in  R§D  exploitation.  This  requires,  inter  alia,  a
more active promotion of entrepreneurial and managerial skills, and support services
for the establishment of businesses, notably by women and the unemployed.

Structural  action  should  continue  to  focus  on  promoting  individuals'  and
employers’  adaptability  to  economic  and  social  restructuring  and  increasingly
changing  work  environment.  Improved  access  of  workers  to  continuing  training
should  be  promoted,  especially  for  low  skilled  workers  and  workers  employed  in
SMEs.  Innovative  forms  of  work  organisation  contributing  to  internal  flexibility,
improved  productivity  and  quality  at  work  should  be  encouraged,  for  example
through  the  provision  of  training  and  advisory  services  to  employers.  For  this
purpose,  it  would  be  appropriate  to  continue  the  efforts  with  a  view  of  offering
employees  and  in  particular  to  those  of  SMEs,  training  services  and  advice  taking
into account all the benefits of new technologies.

The  commitment  and  full  involvement  of  the  social  partners  is  essential  to  ensure
quality of jobs and risk prevention. The  activities training  and awareness-raising of
the  workers  and  contractors  on  health  and  safety  at  work  should  receive  close
attention.

The Funds should also be engaged in initiatives supporting the anticipation and the
positive  management  of  economic  restructuring.  Occupational  and  geographical
mobility should be promoted by the Funds.

Equal opportunities

The dual approach to promoting gender equality must be continued and reinforce4:
while  gender  mainstreaming  is  required  in  all  actions  supported  by  the  Structural
Funds, positive action should complement this mainstreaming exercise.

Child-care  and  elderly  care  responsibilities  remain  a  major  obstacle  to  women's
integration into the labour market. The Funds should support Member States' efforts
towards  improving  access  to  such  services  and  in  particular  towards  attaining  the
targets on childcare provisions set at the Barcelona Council.

4

COM (2002) 748-final of 20.12.2002, on the implementation of gender mainstreaming in the Structural
Funds programming documents 2000-2006

7

                                                
The  Funds  can  play  a  major  role  in  tackling  further  structural  inequalities  of  the
labour market. These might include specific awareness-raising actions on the need to
reduce  gender  segregation  in  sectors  and  occupations  and  to  reduce  the  gender
pay  gap.  Furthermore  the  Funds  can  support  efforts  undertaken  by  Member  States
and  regions  to  promote  female  entrepreneurship.  The  Commission  has  already
identified a number of  good  practices  in  the  EU  and  EFTA-EEA  countries5,  which
can serve as examples when conceiving such support measures.

The Funds should increase their focus on promoting the re-integration and upgrading
the  skills  of  older  women,  whose  integration  into  the  labour  market  is  hampered
notably by both gender and age discrimination.

Regional employment disparities

Tackling regional employment and unemployment disparities remains a key priority.
The  Funds  should  support  initiatives  to  exploit  the  local  job  creation  potential,
notably in the social economy. Favourable conditions for private sector activity and
investment  in  regions  lagging  behind  should  be  supported.  Public  investment  in
human capital as well as adequate infrastructure is necessary.

1.2.

Sustainable development, risk prevention and environment

Sustainable development

the  European  Council  adopted 

In  June  2001, 
in  Göteborg  a  sustainable
development  strategy  for  the  EU.  The  sustainable  development  strategy  is  a
response  to  the  political  commitment  of  the  Lisbon  strategy  to  achieve  sustainable
development.

The  sustainable  development  strategy  offers  the  European  Union  a  positive  long-
term vision of a society that is more prosperous and just. In practice this requires that
economic growth supports social progress and respects the environment, that social
policy  underpins  economic  performance,  and  that  environmental  policy  is  cost-
effective6.  The  Commission  has  subsequently  launched  a  new  Impact  Assessment
tool  to  improve  the  quality  and  coherence  of  its  policy  development  processes.
Impact  Assessment  identifies  the  key  positive  and  negative  impacts  of  proposed
actions  and  highlights  inconsistencies  between  competing  objectives.  It  will  be
implemented gradually from 2003 for all major initiatives7 .

By decision 1600/2002/EC of the European Parliament and Council of 22.7.2002 the
6th  Environmental  Action  Plan  (EAP)  was  adopted.  This  EAP  has  given  the
Commission  a  framework  for  implementing  the  environmental  pillar  of  the
sustainable development strategy.

Against this background the Commission launched an evaluation of the contribution
of the Structural Funds to sustainable development. The purpose was to identify how

5

6

7

See http://europa.eu.int/comm/enterprise/entrepreneurship/craft/craft-women/bestproject-women.htm
"A sustainable Europe for a better world:  A  European  Union  Strategy  for  Sustainable  Development",
Communication from the Commission, COM (2001) 264 of 15.5.2001.
"Impact Assessment", Communication from the Commission, COM (2002) 276 of 5.6.2002

8

                                                
to achieve better  integration of  the economic, social and  environmental  dimensions
of sustainable regional development in the programming of Structural funds.

For example, problems were identified in the field of the impact of road building on
land  use  and  emissions;  the  impact  of  green  field  development  on  biodiversity  and
emissions and the impact of tourism on natural habitat.

But interventions can also improve more than one dimension of development at the
same  time:  investment  in  disused  land  and  buildings  leading  to  economic
development as well as an improved environment; human capital investments, which
leads to both economic development and social inclusion; investment in eco-tourism
leading to economic development as well as environmental improvements.

Many regions have already moved towards a more sustainable path in their Structural
Funds programming. It is recommended the mid-term review be approached with a
more  explicit  consideration  of  measures  that  improve  more  than  one  dimension  of
development  at  the  same  time.  Further,  it  is  advisable  to  review  the  management
processes governing project generation and project selection with a view to achieving
the goal of sustainable development. In addition, certain rural development measures
are already directly targeted  at promoting sustainable development  in  rural  areas in
line with the Göteborg agenda: for example support for farm investments which aim
to  preserve  and  improve  the  natural  environment,  or  for  protection  of  the
environment  in  connection  with  agriculture,  forestry  and  landscape  conservation
under Article 33 measures of EC Regulation n° 1257/1999 of 17 May 19998.

Prevention of risks

Natural  disasters,  especially  during  2002  and  affecting  several  regions  of  Member
States  and  applicant  countries,  led  the  Commission  to  propose  to  the  Council
adoption of a Regulation setting up a Community solidarity fund.

The  aim  would  be  to  help  disaster  regions  so  as  to  allow,  notably,  the  immediate
restoration of damaged infrastructure and equipment. Thus its vocation is "curative",
aimed at repairing damage caused by major (mainly natural) disasters.

Ecological disasters such as the Erika and Prestige also led the Community to boost
its legislative arsenal for combating flags of convenience and protecting Europe from
oil slicks, especially through accelerated creation of a European agency for maritime
safety.  These  initiatives  include  creation  of  an  additional  compensation  fund  for
damage from oil slicks (COPE) currently being examined by the Council. The impact
of recent disasters on the economic fabric of the affected regions exceeds, however,
the  capacity  of  existing  compensation  mechanisms.  Also  by  way  of  prevention,
improvement of the monitoring of traffic will require that Member States boost and
coordinate  their  measures,  e.g.  by  creating  ports  of  refuge.  Structural  financial
instruments should make a contribution to this new policy priority.

Nevertheless the frequency of such disasters is increasing, even if all are not of the
same  gravity.  Therefore  the  Commission  believes  the  required  measures  must  be
taken  to  avoid  that  the  efforts  being  made  by  regions,  communes  and  cities,
sometimes with the support of the Structural Funds, to revitalise their economies and

8

OJ L160 of 26.6.1999 p. 80

9

                                                
rehabilitate their areas come to nothing due to these disasters. Regional development
must include the prevention of natural, technological and environmental hazards. The
Commission,  will  shortly  be  proposing  a  European  strategy  for  the  prevention  of
risks, but is already encouraging the Member States to adopt measures in the field
of prevention. The mid-term review  could  enable the  Member States  to  give more
attention to this area.

Such  measures  should  relate  in  particular  to  collective  economic  assets.  Indeed
reinforcement of the economic fabric of a territory can only succeed in the presence
of a  healthy environment that is  preserved for  its  inhabitants.  The  Structural  Funds
could  thus  be  mobilised  to  co-finance  measures  aimed  at  preventing  natural  risks.
This  could  include,  e.g.,  carrying  out  geological  or  stabilisation  surveys  or  the
creation  under  rural  development  measures  of  forest  fire  prevention  actions  or
measures  to  protect  agricultural  land  from  natural  disasters  such  as  flooding.  It
should  also  be  stressed  that  natural  risk  prevention  plans  are  a  priority  tool  for
implementing preventive action.

Environment

One  of the  important  priorities  of  the  6th  environmental  action  plan  is  the  creation
and  protection  of  the  Natura  2000  network.  Investments  and  measures  aimed  at
protecting these sites could be the subject of cofunding under the Structural Funds.

Beyond this, the Water Framework Directive (WFD)9 introduces a new model for
water  protection  based  on  integrated  management  at  the  level  of  river  basins.
Therefore,  while  specific  measures  targeted  at  waste-water  treatment  and  drinking
water provision will continue to be a priority, such actions must be seen as part of an
overall strategy for ensuring the ecological status and chemical quality in the entire
river  basin.  Integrated  programmes  for  river  basin  management,  including  the
development of the management plans foreseen under the WFD will also be eligible
for support.

1.3.

Research and Development

The  implementation  of  the  Lisbon  objectives  called  for  the  Structural  Funds
programmes to adopt a more strategic approach to the promotion of innovation and
research and development at the regional level. At the start of 2003, 122 regions out
of  a  total  of  156  had  put  in  place  a  programme  under  the  heading  of  “innovative
actions”. These actions are based on a strategy developed by the regional partnership
to  boost  competitiveness  and  influence  the  content  of  mainstream  Structural  Funds
programmes  in  the  fields  of  R&D,  the  information  society  and  sustainable
development. The mid-term review would provide the  occasion  for  an extension of
this type of intervention to all remaining regions.

Individual regions should also ensure that their mid-term review takes account of the
experience gained via the existing innovative actions programmes, and examine how
good practices can be incorporated into the mainstream. In this regard, three specific
network  programmes  (one  for  each  priority  field  in  the  innovative  actions

9

Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a
framework for Community action in the field of water policy, OJ L 327 , 22/12/2000 p. 1

10

                                                
guidelines10) have been set up to provide a more systematic exchange of experience
between regions. This type of co-operation could be extended to regions in the future
Member States.

A further area of interest in the framework of the mid-term review is that provided by
the developing project of the European Research Area (ERA)11. In October 2001 the
Commission  adopted  a  communication  on  “The  Regional  Dimension  of  the
European Research Area”12. The underlying idea is that of establishing a local, tailor-
made  research  and  innovation  policy  taking  into  account  the  variety  of  regional
situations.  The  ERA  concept  implies  that  efforts  should  be  deployed  effectively  at
different administrative and organisational layers: at European, national, regional or
even  local  level.  In  this  way,  measures  would  not  only  be  mutually  consistent  but
better adapted to the potential of the regions themselves. By re-examining the role of
each of the players (including public and private actors), establishing synergies and
taking  advantage  of  complementarities  among  European,  national  and  regional
instruments, a reinforced partnership among all those involved can be achieved.

In  addition,  synergies  should  be  sought  between  the  6th  Community  RTD
Framework Programme (2002-2006) and the Structural Funds.

At  the  Barcelona  European  Council  in  2002,  which  reviewed  progress  towards  the
Lisbon  goal,  it  was  agreed  that  research  and  technological  development  (R&D)
investment in the EU must be increased with the aim of approaching 3 % of GDP by
2010, up from 1.9 % in 2000. An increase of the level of business funding was also
called for, which should rise from its current level of just above half, to two-thirds of
total R&D investment. The regions should play a substantial role towards achieving
this goal13. An Action  Plan  comprising  actions at Community  level  and  identifying
recommendations to Member States was adopted on April 30th 200314.

1.4.

Information society

The Seville European Council (22 June 2002) agreed the 2005 e-Europe Action Plan
linked  to  the  Lisbon  Strategy.  The  overarching  objective  is  to  make  broadband
network  access  and  related  internet-based  services  widely  available  throughout  EU
territory. The Action Plan notes that the bulk of investment into broadband networks
should come from the private sector. Structural funds can provide support in pursuit
of this objective in less favoured regions, with particular attention being paid to rural
and remote areas.

The mid-term review provides an opportunity for Member States to  further  support
the  development  of  the  electronic  communications  sector,  notably  broadband  fixed
and  wireless  infrastructure,  in  order  to  combat  the  increasing  digital  divide  among
European regions.

10

11

12

13

14

COM(2001) 60 of 30.1.2001
"Towards a European Research Area", COM(2000) 6 of 18 January 2000
COM(2001) 549 final of 3.10.2001
See SEC(2003) 813/2 of 8.07.2003 : "An initiative for growth : investing in Trans European Networks
and major R & D projects"
COM(2003) 226 final of 30.4.2003, “Investing in Research: an Action Plan for Europe”

11

                                                
In this regard, adaptations to current programmes should seek to place infrastructure
development within the context of a regional strategy for the information society that
balances  demand  (content  and  services)  and  supply-side  measures  (infrastructure)
taking  account of  local  circumstances  and needs. Structural Funds investments  will
be undertaken in compliance with competition rules as well as the new framework on
electronic communications while ensuring technological neutrality.

Member  States  are  encouraged  to  adopt  appropriate  regional  indicators  and
benchmarking systems (particularly on ICT demand) reflecting regional development
agendas  and  using,  where  possible,  Europe  2005  indicators.  The  criteria  and
modalities  of  implementation  of  structural  funds  in  support  of  the  electronic
communications sector has been defined in  greater detail in the Commission’s staff
working  paper  ”Guidelines  on  Criteria  and  Modalities  of  implementation  of
Structural Funds in support of Electronic Communications “ (SEC(2003) 895 of 28
July 2003.

1.5.

Enterprise policy

In the Commission’s Competitiveness Reports of 2001 and 200215 weaknesses were
identified in the business sector in Europe including insufficient innovative activity
and  weak  diffusion  of  information  and  communications  technologies,  which,  as
key  determinants  of  Europe’s  under-performance  in  productivity  growth,  may
jeopardise the objective set by the Lisbon European Council. The regional dimension
of these weaknesses will be addressed in the Competitiveness report of 2003, which
in  turn  should  provide  additional  information  on  the  problems  that  remain  to  be
addressed at regional level.

Enterprise  policy  has  also  been  stimulated  by  the  endorsement  of  the  European
Charter  for  Small  Enterprises  at  the  Feira  European  Council  of  20  June  2000.  The
Charter  calls  upon  public  authorities  to  take  action  to  support  and  encourage  small
enterprises  in  ten  key  areas,  such  as  education  and  training  for  entrepreneurship;
cheaper  and  faster  start-up,  better  regulation  or  strengthening  the  technological
capacity  and representation of small enterprise interests.  With the Charter, Member
States and the Commission have committed themselves to putting small businesses’
concerns at the heart of their policies. The use of Structural Funds should therefore
better  focus  on  small  and  micro  businesses’  needs.  A  better  understanding  and
analysis  of  small  business  needs  as  well  as  an  increased  dissemination  of  good
practice are in this regard key elements. Another area where progress is needed is the
promotion  of  entrepreneurship.  Building  on  recent  analysis  of  progress  in  Europe,
the  Green  Paper  on
including 
Entrepreneurship17  has  opened  a  wide  debate  on  how  to  encourage  entrepreneurial
activity  and  tackle  the  barriers  to  business  creation  and  growth.  The  debate  should
lead to an action plan setting out the relevant policy measures at different levels.

implementation 

the  Charter 

report16, 

Moreover, a major pillar of enterprise policy has been set up by the Communication
on Industrial Policy18 that identifies  innovation and  entrepreneurship  as key drivers
of European competitiveness. The Communication also underlines the importance of

15

16

17

18

SEC(2001) 1705, 29.10.2001, SEC(2002) 528, 21.05.2002
COM(2001) 122 final of 7.3.2001, COM(2002) 68 final of 6.2.2002, COM(2003) 21 final of 21.1.2003
COM(2002) 27, 21 January 2003
"Industrial policy in an enlarged Europe" COM(2002) 714 of 11 December 2002

12

                                                
the  sectoral  dimension  of  industrial  policy  and  the  impact  on  industry  from  other
policies,  including  cohesion  policy.  As  a  first  follow-up,  the  Communication  on
Innovation19 builds on the systemic approach to develop strategies that will improve
Europe’s innovative performance. Drawing on the European Innovation Scoreboard,
the adoption of targets and priorities could also be promoted.

The  Structural  Funds  could  thus  contribute  to  boosting  innovation,  SMEs  and
industrial and regional competitiveness, in particular through:

–  encouragement  and  facilitation  of  the  emergence  of  regional  or  local  “clusters”
and  of  innovative  production  networks;  to  this  end  cluster-specific  investment
could  be  encouraged  in  the  following  fields:  physical  infrastructure,  knowledge
infrastructure,  education,  vocational  training,  network  link-up,  financial  support
for business projects, etc.;

–  the  creation  of  technological  platforms  to  ensure  synergy  between  public
authorities,  users,  regulatory  authorities,  industry,  consumers  and  poles  of
excellence (points where theoretical research and technology transfer  are  closely
linked);

–  promotion  of  effective  financing  instruments  for  companies  and  adoption  of

services in support of business, especially small companies.

Lastly,  it  should  be  noted  that  the  Commission  has  adopted  a  recommendation
amending  Recommendation  96/280/EC  on  the  definition  of  small  and  medium-
sized enterprises20.

2.

POLICIES  THAT  HAVE  UNDERGONE  MODIFICATION  OF  THEIR  REGULATORY
FRAMEWORK SINCE ADOPTION OF THE INDICATIVE GUIDELINES IN 1999

The section below details the main modifications of the regulation which could have
an impact on the implementation of the programmes.

2.1.

Agriculture and rural development policy

Policy  developments  at  Community  level  since  the  adoption  of  Commission
indicative  guidelines  have  reinforced  the  important  role  that  rural  development
policy  needs  to  play  in  promoting  the  modernisation  and  diversification  of  the
agricultural sector and the development of the  wider rural economy,  accompanying
the on-going process of CAP reform and ensuring the protection and enhancement of
Europe’s diverse countryside.

The  Strategy  for  Sustainable  Development  adopted  at  the  Gothenburg  European
Council  made  particular  reference  to  the  CAP  and  its  future  development,  which
should “contribute to achieving sustainable development by increasing its emphasis
on  encouraging  healthy,  high  quality  products,  environmentally  sustainable
production methods, including organic production, renewable raw materials and the

19

20

"Innovation policy: updating the Union’s approach in the context of the Lisbon strategy", COM(2003)
112 final of 11.3.2003
Recommendation EC 361/2003 of 6 May 2003, OJ L 124 of 20.5.2003, p. 36

13

                                                
protection  of  biodiversity”.  Implementation  of  these  conclusions  requires  increased
emphasis on the second pillar of the CAP (rural development).

In July 2002, the Commission adopted a Communication on the mid-term review of
the  common  agricultural  policy21  followed  in January  2003  by  the  publication  of  a
package of detailed legislative proposals22. The CAP reform proposals reflected the
objectives  of  the  Gothenburg  Sustainable  Development  Strategy  as  regards
agricultural  policy.  They  also  took  into  account  the  conclusions  of  the  Brussels
European Council of October 2002, which determined the future financial framework
for  the  first  pillar  of  the  CAP  until  2013.  The  Brussels  Summit  also  recalled  the
importance  of  less-favoured  regions  and  the  multifunctional  nature  of  agriculture,
confirming  the  importance  of  the  rural  development  policy  delivered  under  the
second pillar of the CAP.

The  Commission  proposals  on  CAP  reform  have  been  discussed  within  the
Institutions  as  well  as  in  wider  civil  society.  The  Agriculture  Council  reached  a
political  agreement  in  June  2003.  As  far  as  rural  development  is  concerned,  apart
from  the  introduction  of  new  measures,  this  agreement  includes  also  modifications
aiming  at  strengthening  existing  measures  and  start  of  modulation  of  1st  pillar  aids
already  in  2005  allowing  shifting  of  additional  resources  to  the  2nd  pillar  as  from
2006. This arrangement would require a minor adaptation of the financial perspective
2000-2006.

The  political  agreement  on  CAP  reform  aims  to  establish  a  clear  long-term  policy
perspective for the CAP and focuses on:

–  enhancing  the  competitiveness  of  EU  agriculture  (by  further  reform  of  certain

market regimes under the first pillar of the CAP);

–  promoting  a  more  market-orientated,  sustainable  agricultural  sector  (by  the
decoupling  of  direct  payments  to  farmers  under  the  first  pillar  from  production
and  their  replacement  with  a  single  farm  payment,  linked  to  strict  land
management obligations on farmers as part of new cross-compliance requirements
to prevent land abandonment);

–  strengthening  rural  development  by 

the  current
programming period certain new measures to encourage farmers to participate in
quality schemes, to meet Community standards for food security, animal welfare,
environment  and  working  conditions,  and  to  promote  animal  welfare  beyond
standards throughout the EU, and also by reinforcing already existing measures.

introducing  within 

When  defending  this  CAP  reform  package  the  Commission  has  once  again
underlined the long-term policy trend towards a further strengthening of the second
pillar of the CAP in both financial terms and scope.

Member  States  and  regions  are  therefore  being  asked  to  examine  in  the  mid-term
review  their  Structural  Fund  programming  to  determine  whether  their  current  rural
development  programming  and  the  range  of  measures  offered  are  well-suited  to

21

22

COM (2002) 394 final of 10.7.2002.
CAP  Reform  –  A  long  term  policy  perspective  for  sustainable  agriculture  (COM  (2003)  23  final  of
21.1.2003.

14

                                                
helping both farmers  and other rural actors adapt  to the new direction of long-term
policy  for  agriculture  outlined  above.  In  this  context,  attention  should  be  paid  to
sectors  where  regulations  are  being  amended.  Reinforcement  of  rural  development
policy may be needed in some areas that are particularly dependent on agriculture or
re-targeting of the range/content of the measures offered may be required in others.

In addition, the Commission has drawn up a draft "block exemption Regulation" for
State  aid  in  agriculture,  which  will  allow  the  Member  States  to  grant  agricultural
State  aid  without  having  to  ask  for  clearance  from  the  Commission.  Following
consultation  with  Member  States  and  stakeholders,  the  Commission  plans  to
implement this Regulation from January 2004.

2.2.

Fisheries

Reform  of  the  Common  Fisheries  Policy  (CFP)  was  ratified  by  the  Council  on  20
December 2002, leading to adoption of three new Regulations:

–  on the conservation and sustainable exploitation of fisheries resources23;

–  establishing an emergency Community measure for scrapping fishing vessels24;

–  on Community structural assistance in the fisheries sector25.

These  new  measures  took  effect  on  1  January  2003.  The  Regulations  covering
conservation  and  sustainable  exploitation  of  fisheries  resources  replace  those
governing the CFP since 1993:

–  the aims of this management are to reorient towards the sustainable exploitation of
fisheries  resources,  on  the  basis  of  substantiated  scientific  opinions  and  the
principles of precaution. A longer-term approach to the management of fisheries
has  thus  been  adopted  with  the  drawing  up  of  multiannual  stock  reconstitution
plans for stocks below biological safety limits and multiannual management plans
for other stocks;

–  a  simpler  system  for  limiting  the  fishing  capacity  of  the  Community  fleet  has
been  adopted.  It  replaces  the  old  multiannual  guidance  programme  (MGP).  It
confers  more  responsibility  on  the  Member  States  to  reach  a  better  balance
between fishing capacity and available resources;

–  this  system  is  supplemented  by  provisions  on  emergency  measures  for  the
protection of fisheries resources or marine ecosystems, especially by granting aid
for the temporary cessation of fishing activity.

The new Regulation creating an emergency fund to encourage the scrapping of boats
backs up this mechanism. It increases by 20% premiums for scrapping vessels whose
fishing  activity  is  reduced  by  more  than  25%  due  to  adoption  of  a  stock
reconstitution plan. The financial implications of this new Community measure will
be  evaluated  by  the  Commission  once  the  Member  States’  applications  have  been

23

24

25

Regulation (EC) n°2371/2002 of 20 December 2002
Regulation (EC) n°2370/2002 of 20 December 2002
Regulation (EC) n°2369/2002 of 20 December 2002, amending Regulation (EC) n°2792/1999

15

                                                
received. However Article 7 of the Regulation requires new financial resources to be
made available  for the 2004-06 period within the framework  of the reprogramming
of the Structural Funds at the time of the mid-term review.

With regard to the new measures on Community structural measures in the fisheries
sector:

–  aid  for  the  renewal  of  fishing  vessels  and  aid  for  their  export,  including  in  the
framework of the training of mixed fishing companies will only be granted for 2
years  (2003  and  2004)  and  will  be  limited  to  Member  States  that  have  attained
capacity  goals  under  MGP  IV.  Also  it  will  be  subject  to  various  conditions
relating in particular to vessel size;

–  aid  for  the  modernisation  of  vessels  will  also  be  subject  to  different  eligibility
criteria aimed especially at improving safety and working conditions on board, the
selectivity of fishing operations and the quality of products;

–  aid for the temporary cessation of fishing activity due to unforeseen circumstances
is  maintained  and  remains  subject  to  strict  limits,  especially  regarding  the  total
amount  of  the  funds  that  can  to  be  devoted  to  it.  The  latter  can  however  be
increased where accompanied by a scrapping plan;

–  socio-economic measures in favour of fishermen aimed at helping them reconvert
to  other  activities  are  extended  to  permit  diversification  of  activities  while
allowing fishermen to continue fishing part-time.

An action plan to mitigate the social, economic and regional consequences of the
restructuring of the  EU’s fisheries sector26  has been adopted  by the Commission.  It
shows that following these changes and the growing needs resulting from scrapping
plans and  accompanying  socio-economic  measures, the  Member  States  and  regions
whose  fleets  are  most  affected  by  the  adoption  of  multiannual  reconstitution  or
management  plans  will  need  take  advantage  of  the  mid-term  review  to  carry  out
reprogramming of the actions part-financed by the Structural Funds.

2.3.

Energy

Directive  2001/77/EC  on  the  promotion  of  electricity  produced  from  renewable
energy sources, in the internal electricity market was adopted on 27 October 200127.
The  Directive  set  an  indicative  average  target  of  22%  for  the  contribution  of
renewable energy to gross electricity consumption by 2010.

Furthermore  Parliament  and  the  Council  on  16  December  adopted  Directive
2002/91/EC28  on  the  energy  performance  of  buildings.  The  Directive  aims  at
reducing energy demand for heating, cooling and lighting of private and commercial
buildings by up to 20% by 2010, through energy efficiency measures and integration
of renewable energy. The Directive applies to new and existing buildings, the latter
requiring considerable additional financing, mainly in renovating old urban areas.

26

27

28

COM (2002) 600 of 6.11.2002
OJ L 283, 27.10.2001, p. 33.
OJ L 1, 4.1.2003, p. 65.

16

                                                
Finally, the EP and Council have reached an informal agreement  on  a Commission
proposal  on  the  promotion  of  biofuels  for  transport.  The  Directive  2003/30/EC,
adopted  on  8 May 2003, set  an  indicative  target of 5.75% of  biofuels in the  global
volume of fuels for road transport sold in Member States by 2010.

The Structural Funds could be mobilised to help meet these targets.

2.4.

Competition

There are five particularly important points as regards competition in the context of
the mid-term review:

–  Amendments to the Guidelines on national regional aid29

The  amendments  introduced  greater  flexibility  into  the  Guidelines  as  regards  the
outermost regions. Operating aid which is not both progressively reduced and limited
in  time  may  be  granted  not  only  in  those  outermost  regions  eligible  for  the
derogation provided for in Article 87(3)(a) of the Treaty, but also in those eligible for
that provided for in Article 87(3)(c) in so far as it is intended to offset the additional
costs  arising  in  the  pursuit  of  economic  activity  from  the  factors  identified  in
Article 299(2)  of  the  Treaty,  the  permanence  and  combination  of  which  severely
restrain the development of such regions (remoteness, insularity, small size, difficult
topography and climate, and economic dependence on a small number of products).
Proposed  aid  will  have  to  be  justified  in  terms  of  its  contribution  to  regional
development and its nature and its level will have to be proportional to the additional
costs it is intended to offset.

–  Community guidelines on State aid for environmental protection30

These  replace  the  1994  Guidelines  that  have  now  expired  and  take  account  of
developments in the field of the environment at the initiative of the Member  States
and  the  Community  and  at  world  level,  in  particular  following  the  adoption  of  the
Kyoto Protocol. Changes  compared with the previous rules  affect, in particular, aid
in  the  field  of  energy  (energy  saving,  combined  heat  and  energy  production,
renewable  sources  of  energy).  The  current  Guidelines  also  maintain  positive
discrimination for assisted regions in the form of a bonus for firms located there.

–  State aid and risk capital31

The rules on State aid were not  suited  to  the  types of measure implemented by the
authorities  of  the  Member  States  to  stimulate  the  growth  of  risk  capital.  The
Communication  therefore  describes  the  way  that,  in  accordance  with  the  rules  on
State  aid,  measures  intended  to  promote  risk  capital  will  be  assessed.  The  public
authorities can adopt a range of measures that do not constitute State aid in order to
promote  risk  capital.  Where,  on  the  other  hand,  public  assistance  constitutes  State
aid,  the  Commission  will  ensure  that  the  measure  serves  to  alleviate  a  recognised
market  failure.  This  condition  will  be  deemed  to  be  fulfilled  in  the  case  of  small
transactions (maximum of €500 000, €750 000 and €1 000 000 respectively in those

29

30

31

OJ C 258, 9.9.2000, p. 5.
OJ C 37, 3.2.2001, p. 3.
OJ C 235, 21.8.2001, p. 3.

17

                                                
regions  eligible  for  regional  aid  under  Article 87(3)(c)  or  (a)  of  the  EC  Treaty).
Where it is recognised that there is a market failure, the Commission will assess the
measure  in  the  light  of  certain  criteria,  in  particular  the  size  of  targeted  enterprises
(preferably small enterprises in their start-up or other early stages), the existence of
safeguards  to  ensure  that  any  distortion  of  competition  between  investors  is
minimised, whether decisions  to  invest  are  profit-driven  (which could be  indicated,
in particular, by the fact that a measure envisages a significant proportion of capital
from private investors).

–  Multisectoral framework on regional aid for large investment projects32

In  the  interests  of  simplification,  the  new  framework  recasts  the  sectoral  rules
previously  set  out  in  specific  instruments  for  the  car,  synthetic  fibre  and  iron  and
steel  industries,  and  significantly  reduces  the  number  of  projects  that  have  to  be
notified by establishing an automatic system for determining the intensity of aid.

The new system will also reduce the levels of aid in accordance with a scale based on
the amount of the investment. Under the new framework, the actual intensity of aid
that may be granted for a major project will be adjusted automatically according to a
reduction  scale  operating  like  a  progressive  tax  rate:  pre-defined  maximum  aid
intensities  are  progressively  reduced  for  each  subsequent  investment  bracket.
However,  Member  States  are  required  to  notify  every  case  of  aid  above  the
maximum allowable aid that an investment of €100 million can obtain. No aid can be
granted  to  such  projects  if  the  beneficiary  enterprise  would  increase  its  production
capacity by more than 5% of the market or would account for more than 25% of the
market. However, the new framework also recognises that large investment projects
can  indeed  contribute  to  regional  development.  That  is  why  it  includes  a  cohesion
bonus  that  will  be  granted  to  large  projects  part-financed  by  the  Community
Structural  Funds.  For  such  projects,  the  permitted  aid  intensity  calculated  in
accordance with the above scale will be multiplied by a factor of 1.15. In so doing,
the  new  system  will  take  into  consideration  the  value-added  of  these  large  part-
financed  projects  for  the  economic  and  social  cohesion  of  the  Community.  This
approach  strikes  a  good  balance  between  the  aim  of  reducing  the  most  distorting
types of State aid and the cohesion objectives laid down in the Treaty.

–  Commission  Regulation  (EC)  No 2204/2002  of  12 December  2002  on  the
application of Articles 87 and 88 of the EC Treaty to State aid for employment33

This Regulation introduces a block exemption system for aid for job creation and for
the  recruitment  of  disadvantaged  and  disabled  workers  up  to  certain  ceilings,
meaning that Member States will not need to notify such aid to the Commission for
clearance.  The  Regulation  also  lays  down  the  criteria  for  assessing  other  forms  of
aid, such as aid to maintain people in existing jobs or for the conversion of temporary
or fixed-term employment contracts into contracts of indeterminate duration, which
must continue to be notified to the Commission.

Under  the  new  Regulation,  Member  States  may  grant  additional  aid  for  the
employment  of  the  long-term  unemployed  and  other  disadvantaged  workers,  up  to

32

33

OJ C 70, 19.3.2002, p. 8.
OJ L 337, 13.12.2002, p. 3.

18

                                                
the  equivalent  of  50%  of  one  year’s  wage  costs  and  compulsory  social  security
contributions. Member States can cover up to 60% of those costs in the case of the
employment  of  disabled  persons.  It  should  be  stressed  that  the  percentages  of  aid
increase where  the aid  for  the  net  creation  of  employment  is  granted  in  an  assisted
region.

2.5.

Research and development

Seizing  the  opportunities  offered  by  the  Sixth  Framework  Programme:  in  the  mid-
term  review,  synergies  with  R&D  activities  implemented  under  one  of  the  new
instruments of the Sixth Framework Programme (in particular the new instruments,
Networks of Excellence and Integrated Projects, under the seven priorities) should be
sought  in  the  form  of  complementary  financing  or  direct  part-financing  for
researchers in Objective 1 regions. In particular, organisations in Objective 1 regions
whose  proposals  are  accepted  after  evaluation  can  receive  a  bonus  from  the
Structural  Funds,  in  accordance  with  Council  Regulation  (EC)  No 1260/1999  and
fully in accordance with the rules on State aid34.

Finally,  further  synergies  should  be  sought  with  Framework  Programme  actions
relating  to  the  structuring  of  the  European  research  area,  notably  as  regards  R&D
infrastructures,  innovation  activities,  activities  concerning  SMEs  (cooperative  and
collective research), regional foresight as well as actions to promote the mobility of
researchers. In addition, regional authorities should explore the potential of the ERA-
NET35 scheme, designed specifically to support coordination and the mutual opening
up of research policies at regional, national and European level.

3.

COMMUNITY POLICIES IN THE PROCESS OF BEING AMENDED

The  following  policy  developments  in  certain  sectors  will  have  implications  for
Structural Fund programmes:

3.1.

Trans-European energy networks

On 20 December 2001, the Commission proposed an action plan designed to remove
congestion  and  bottlenecks  in  the  distribution  of  gas  and  electricity  in  the  Union.
This  action  plan  will  improve  the  operation  of  the  internal  market  while  ensuring
secure supplies for consumers and will aim to reduce disparities between regions.

The construction and/or strengthening of cross-border connections between national
networks  is  the  priority  set  by  the  action  plan.  The  emphasis  should  be  placed  on
investments  in  the  12 priority  projects  under  the  trans-European  energy  networks,
both  by  the  national  authorities  and  by  the  Community  financial  instruments,
including  of  course  the  Structural  Funds.  In  addition,  the  Commission  proposed
increasing  the  maximum  rate  of  aid  to  20%  of  the  eligible  costs  under  State  aid
schemes, a  measure likely  to  result  in  adjustments  to  measures  implemented  in  the
regions in which these priority projects will be carried out.

34

35

See Annex III to Decision 1513/2002/EC of 27 June 2002 concerning the Sixth Framework Programme,
OJ L 232 of 29.8.2002, p. 1.
http://europa.eu.int/comm/research/fp6/era-net.html.

19

                                                
In addition, in March 2001 the Commission put forward new measures to ensure the
opening  up  of  gas  and  electricity  markets  in  the  Union  by  2007,  amending  the
Directives  governing  the  internal  markets  for  gas  and  electricity  and  proposing  the
following timetable:

2003: Freedom for all industrial customers to choose their electricity supplier.

2004: Freedom for all industrial customers to choose their gas supplier.

2007:  All  consumers,  without  exception,  should  be  able  to  choose  their  gas  and
electricity suppliers.

The mid-term  review  should make  it  possible, as markets  are  progressively opened
up,  to  redirect  some  Structural  Fund  assistance  to  priority  projects  under  the  trans-
European energy networks, taking account of the increase in the maximum rates for
State aid.

3.2.

Transport policy

In its White Paper on “European transport policy for 2010: time to decide”, adopted
in  September  2001,  the  Commission  proposed  a  series  of  measures  to  rebalance
modes  of  transport,  remove  bottlenecks  and  improve  the  quality  of  transport  for
users.

The  Commission  has  undertaken  a  revision  of  the  trans-European  network
guidelines, which should lead to the presentation of a proposal based on the work of
a  High-Level  Group  of  representatives  of  the  Member  States  and  the  applicant
countries, chaired by Mr Karel van Miert. The results from the work of the high level
group  were  published  on  30  June  200336.  The  Commission  will  now  conduct  a
detailed impact study of the recommended programme; in autumn it will propose a
revision of the decision on the guidelines for the development of the trans-European
transport network.

This  revision  will  make  it  possible  to  target  projects  with  higher  European  value-
added  likely  to  contribute  to  the  development  of  intermodal  transport  on  the  major
routes.  This  should  result  in  priority  being  given  to  infrastructures  with  a  real
potential  for  transferring  goods  traffic  from  road  to  rail,  waterways  and  maritime
transport and for developing the  trans-European  high-speed passenger  rail  network,
including airport connections.

The  Structural  Funds  will  aim  to  support  this  change  in  the  priorities  of  transport
policy37 but also  to improve the secondary networks and their connection to the
major routes of the trans-European network identified by the future guidelines.

The  Commission  has  also  initiated  a  general  review  of  the  financing  of  the  trans-
European  network.  On  the  one  hand,  the  effectiveness  and  coordination  of  the
different  Community  sources  of  financing  need  to  be  strengthened  and,  on  the
other,  the  feasibility  of  new  legal  and  financial  instruments  needs  to  be  explored,

36

37

http://europa.eu.int/comm/ten/transport/revision/hlg_en.htm
See SEC(2003) 813/2 of 8.07.2003 : "An initiative for growth : investing in Trans European Networks
and major R & D projects"

20

                                                
inter  alia,  to  encourage  public-private  partnerships.  The  Commission  is  due  to
present a Communication in the near future

In  order  to  place  users  at  the  heart  of  a  transport  policy  based  on  sustainable
transport,  the  Commission  has  put  forward  a  Directive  to  improve  safety  in  very
long road tunnels. Other measures to increase road  safety  will  also  be  encouraged
(the introduction of new technology, regulations). Improving the quality of transport
also  means  reducing  the  harmful  effects  of  urban  transport  by  promoting  public
and new forms of transport. The aim is  to  develop  quality  public  transport  and  put
forward better practices. Additional measures should be taken to promote alternative
forms of energy and introduce substitute fuels, in accordance with the Commission’s
strategy.

The Commission intends to promote the following measures:

–  support  for  pioneer  cities  and  regions  adopting  integrated  approaches  based  on

packages of innovative measures;

–  increased use of clean vehicles using substitute fuels;

–  the  introduction  of  public  transport  systems  available  to  all  users  (including
people with reduced mobility) as regards both urban and regional railway services
and infrastructure management;

–  the identification and dissemination of best practices in urban transport systems.

Structural  Fund  programmes  could  therefore  also  be  amended  in  the  light  of  the
above.

4.

FOR MORE EFFICIENT IMPLEMENTATION OF STRUCTURAL POLICY

4.1.

Impact of simplification on the mid-term review

The mid-term review is a chance to introduce a degree of simplification, in the spirit
of  the  communication  the  Commission  adopted  recently38,  in  particular  by  taking
into account the principle of "proportionality" in the implementation of the Structural
Funds.

terms  of  simplifying  programme  management,  programming  documents
In 
(operational  programmes  and  single  programming  documents)  could  be  shortened,
reducing by details, so as not to duplicate the information given in the programming
complement, which generally provides sufficient detail. The main advantage of this
reduction in the size of documents would be to reduce the number of applications for
amendments  concerning  elements  that  should  normally  not  be  included  in
programmes but simply identified in programming complements.

As  the  mid-term  review  focuses  on  the  assistance/programming  document,  the
Commission will endeavour to ensure overall consistency. Consistency is required at

38

Communication  "Simplification,  clarification,  coordination  and  flexibility  of  structural  policy
management in the period 2000-2006" of 25 April 2003, C(2003) 1255.

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several  levels:  between  the  Structural  Funds;  between  the  Member  States;  between
forms  of  assistance.  So  when  it  is  planned  to  amend  a  Commission  Decision  for
reasons  of  sound  management,  including  financial  management,  or  to  introduce
measures or instruments designed to achieve the strategic goals of the assistance and
the Community policies with which that assistance must comply, the public, national
and Community financial commitments have to be maintained without infringing the
regulatory provisions concerning the financial management of the Structural Funds.

The Commission and the managing authorities will take account of the preliminary
results of the mid-term evaluation (the first of which were available in June 2003) in
their preparations for the mid-term review. In any event, the Commission should not
initiate  internal  procedures  for  decisions  to  amend  programmes  before  it  has
officially  received  the  final  evaluation  report  on  the  assistance  concerned  and
assessed  its  quality.  Interventions  will  be  modified  only  once  in  order  to  take  into
account the allocation of the performance reserve and the mid-term review.

4.2.

Public-private partnership

In  the  mid-term  review,  the  Commission  will,  where  possible,  encourage  the
establishment  of  public-private  partnerships  in  the  implementation  of  assistance
supported by the Structural Funds.

The  use  of  PPPs  could  be  encouraged,  in  particular,  in  trans-European  transport
network (TEN) projects, enabling their implementation to be speeded up.

On  the  basis  of  the  experience  of  PPP  contracts  financed,  in  particular,  via  the
Instrument for Structural Policies for Pre-Accession (ISPA) and the Cohesion Fund,
the Commission has drawn up a set of Guidelines for Successful Public - Private
Partnerships39.

4.3.

Financing large projects

In July 2002, the Commission presented to the Committee on the Development and
Conversion  of  Regions  a  note  on  simplification,  transparency  and  coherence  in  the
evaluation of large projects, drawn up in close cooperation with the Member States.
This note detailed four basic rules for the level of Community co-financing of public
infrastructure projects supported by the ERDF, the Cohesion Fund and ISPA. These
rules are as follows:

–  application  of  a  financial  discount  rate  of  a  maximum  of  6%  in  real  terms
(possibly  increased  to  8%  for  certain  projects).  The  beneficiary  Member  State
must be consistent in deciding on the economic discount rate for each project;

–  no  provisions for  uncertainties,  or  provisions  counted  only  in  the  eligible  cost
but not in the total cost used to determine the rate of Community aid and limited
to 10% of the total cost excluding provisions;

39

Available on the Inforegio webpage: htpp//europa.eu.int/comm/regional_policy.

22

                                                
–  in certain duly justified cases, possibility of derogation from the strict incremental
method40 in the  financial analysis by  taking the balance  of  historical  costs  into
account, calculated as the amount of loans still to be repaid;

–  for waste disposal and management, application of the modified "financing gap”

method, which promotes application of the polluter-pays principle.

These rules apply for the two methods of financial analysis presented in the “Guide
to cost-benefit analysis of investment projects”41.

Their application, agreed from the start of 2003, will increase the leverage effect of
Community  aid  while  seeking  a  better  balance  between  Community  subsidies  and
national  sources  of  financing  and  encouraging  the  application  of  the  polluter-pays
principle. For certain Member States, this will translate into a change in the rate of
Community assistance for large environmental projects compared with the situation
to date. This should be reflected in the mid-term review.

40

41

Difference in revenue and expenditure between the scenario with the project and that without it.
The Guide is available at:
http://europa.eu.int/comm/regional_policy/sources/docgener/guides/guide_en.htm.

23