Opinion of the European Economic and Social Committee on "The contribution of other Community policies to economic and social cohesion"
Date: 2003-09-25
Institutions: European Economic and Social Committee
Subjects: EU policy, EU regional policy, economic and social cohesion

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EU intervention should provide real added value and should
draw on successful experiences and cooperation between
regions. This added value will help the least developed regions
to play their part in the major Community policies.

make the EU the most competitive knowledge-based economy
in the world and allow all regions to play a full part using their
own particular assets.

5.2.
The Committee calls for a radical reform of economic
and social cohesion policy methods and priorities to meet the
challenges posed by enlargement and the knowledge-based
economy. The new cohesion policy for 2007-2013 must tie
in with the Lisbon strategy as a matter of priority, in order to

This reform should be built on the principles of
5.3.
competitiveness and cooperation between regions. Its success
will be secured through new methods of governance based on
transparency, simplification of procedures and a genuine
partnership with the local and regional socio-economic
players.

Brussels, 25 September 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on ‘The contribution of other
Community policies to economic and social cohesion’

(2004/C 10/20)

On 23 July 2002, Mr Michel Barnier, European Commissioner responsible for regional policy, acting on
behalf of the Commission, asked the European Economic and Social Committee to draw up an opinion
on ‘The contribution of other Community policies to economic and social cohesion’.

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 11 September
2003. The rapporteur was Mr Dassis.

At its 402nd plenary session on 24 and 25 September 2003 (meeting of 25 September), the European
Economic and Social Committee adopted the following opinion by 66 votes to 21, with ten abstentions.

1.

Introductory remarks

European Constitution, along with EMU and the completion
of the internal market.

1.1.
Highly significant recent events have demonstrated
that the road to political union is still going to be a long and
arduous one. Certain European governments seem to have
forgotten the stance that was constantly promoted in the
1970s and 80s, i.e. that European integration was the only
option for European countries, as none of them could influence
world developments alone.

There are certain factors in the current environment, primarily:

— the intensification of market globalisation,

— EU enlargement and its opening up to the countries of

central and eastern Europe,

— the predominance of a knowledge-based society and

economy, and

However, economic and social cohesion is one of the basic
aims laid down by the Treaties and confirmed in the draft

— the more general social and political features of the 21st

century,

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that call for efforts to establish a more up-to-date approach to
the issue of economic and social cohesion.

2. Definition of cohesion

1.2.

These efforts should centre on:

— analysing the commitments of Member States and of the
Community regarding economic and social cohesion that
originate in the Treaties establishing the European Union
and the European Community, with a view to providing
the fullest possible explanation of the meaning of the
relevant Treaty provisions and regulations,

— enumerating and examining Community and Member
State practice in interpreting and implementing the
cohesion-related provisions and regulations of the Treat-
ies and of the European Constitution when it enters into
force,

— identifying the impact on economic and social cohesion
of current Community and Member State practice in
interpreting and implementing the relevant Treaty pro-
visions and regulations, and

2.1.
The cohesion-related provisions and regulations are to
be found in part III of the draft European Constitution, where
they are more detailed and substantive.

2.2.
Under the provisions of the Treaty, the Member States
and the Union must also consider the economic and social
cohesion factor before making any decisions relating to any
Community policies and activities. In other words, the need to
bolster economic and social cohesion is not just limited to
specific Community policies and activities, but permeates all
of them.

A more detailed analysis might lead us to the following

2.3.
three conclusions:

— identifying any need to shift from current practice in the
interpretation and implementation of cohesion-related
Treaty provisions. Such a shift may be approached as a
matter of changing priorities or of finding additional
options during the planning, mapping out and implemen-
tation of each individual Community policy.

2.3.1.
First: the Treaty articles mention economic and social
cohesion, but without clarifying in specific provisions the
meaning of the ‘economic’ and ‘social’ dimension of cohesion.
However, the fact remains that the articles of the relevant
treaty provisions do not refer just to cohesion generically, but
distinguish two dimensions: economic and social.

1.3.
The EESC has already produced relevant opinions,
including one on The future of cohesion policy in the context
of enlargement and the transition to a learning society (1), in
which it expanded on the issue of the consequences for
cohesion of the shift to a knowledge-based economy, and on
the EU’s economic and social cohesion strategy (2), in which it
emphasised the contribution of the structural policies conduc-
ted under Article III-111 of the draft Constitution to strength-
ening cohesion.

1.4.
The present opinion is of a complementary nature and
aims, for reasons that will be explained below, to make an in-
depth analysis and evaluation of other, non-structural policies,
i.e.
the draft
the policies listed under Article III-112 of
Constitution, in relation to economic and social cohesion.

(1) OJ C 241, 7.10.2002, p. 66.
(2) OJ C 241, 7.10.2002, p. 151.

2.3.2.
Second: the only provision that contains a generic
reference to cohesion (i.e. combining the economic and social
dimensions) is Article 158 (overall harmonious development
of the Community, reducing regional disparities and addressing
the backwardness of the poorer regions).

If the provisions of Treaty Article 159 were not
2.3.2.1.
clear, the following questions might arise. Should other, non-
structural, Community policies — before they are announced,
but while they are being finessed and implemented — be
forced to conform to the requirement of furthering economic
and social cohesion, which would probably make it impossible
to derive the anticipated general benefits from their implemen-
tation? Or should other, non-structural, Community policies
be implemented with the exclusive objective of deriving the
maximum anticipated benefit for the Community as a whole
from their implementation, regardless of whether their full and
uncompromising implementation increases regional dispari-
ties, exacerbates the development lag of the poorer regions
and ultimately creates regional divergence and new disparities
rather than cohesion?

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But these questions do not arise, because of the
2.3.2.2.
way Article 159 is formulated: other policies must be adapted,
as they are framed and implemented, to the requirements of
cohesion, which means it may not always be possible to derive
maximum benefits for the Community as a whole, if those
benefits would increase regional disparities and exacerbate the
relative position of the Community’s poorer regions.

The basic issue is to clarify the acceptable (tolerable)
3.4.
sequence for attaining the two (complementary) aspects of
cohesion. The question could be framed as whether economic
cohesion should be given priority over social cohesion.

2.3.3.
Third: the issue of how the Community has so
far interpreted and implemented in its activities the Treaty
provisions relating to cohesion has not yet been clarified. As
the Community has followed a
will be discussed below,
different approach so far. When other, non-structural, Com-
munity policies are being designed, framed and implemented,
no account is taken and no assessment is made of their
potential implications for cohesion (i.e. for reducing regional
disparities and backwardness); only their impact on the
Community as a whole is assessed. This approach means that
the Community accepts the risk that a widening of regional
disparities, i.e. economic and social divergence, not cohesion,
will result from the implementation of certain Community
policies (e.g. competition policy, internal market policy, mon-
etary policy) and subsequently takes steps, by drawing up and
implementing structural policies, to eliminate or limit and
mitigate the effects of other policies that are harmful to
cohesion. In Community practice, therefore, ensuring econ-
omic and social cohesion appears, like structural policy, to
follow after other Community policies.

3.5.
This question must be approached on the basis of the
explicit terms of Articles 158-162 of the Treaty establishing
the European Community, and not random theoretical debates
or decisions. In other words, it is necessary to clarify whether
the terms of Articles 158-162 require parallel and concurrent
pursuit of both economic and social cohesion in the context
of framing and applying Community policies in general, or
whether on the contrary there is an order of priority of
economic over social cohesion.

3.6.
Per capita GDP is an average, and measuring cohesion
exclusively with this quantitative indicator means importing
the known distortive effects of statistical averages into findings.

3. Combining economic and social cohesion

3.7.
As a result, trends in cohesion cannot be assessed on
the basis of per capita GDP alone. Other parameters and
criteria must also be taken into account when assessing the
true and precise scale of cohesion and its development
(convergence or divergence).

The term ‘economic cohesion’

3.1.
regional
especially indicators relating to GDP per capita.

convergence of

specific

implies the cross-
indicators,

economic

The purpose here is to produce a more representative

3.8.
indication of cohesion, and this requires:

In principle,

3.2.
‘social cohesion’ means the system of
social protection and social welfare that is included within the
European social model.

— first, deciding on other, non-GDP parameters to be
assessed. The new cohesion indicator should be a com-
posite: in addition to GDP, it should include parameters
such as employment and unemployment levels, the extent
of social protection, the level of access to general interest
services etc.,

The combined reference to the two concepts in the
3.3.
Treaty, and more specifically in Articles 158-162, without
clarifying any differences in meaning between them, was not
the best solution, because it makes it very difficult to look
specifically at the substance and scope of one or the other.

— second, the issue should also be addressed of how each
factor should be weighted in the composite cohesion
indicator as a whole.

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4. General assessment of the implications of structural

policies for economic and social cohesion

4.1. With respect to defining, researching and evaluating
regional policy, there is a clear connection between regional
policy and structural policies.

Expert studies have been done and are still ongoing to

4.2.
measure the impact of the structural policies.

This has made it possible to flesh out the Second
4.3.
Report with a wide variety of reliable data, as well as a well-
rounded overall picture of the contribution of the structural
policies to cohesion:
in the 1988-1999 period, the four
poorest countries’ 32 percentage-point (68 %) disparity in
relation to average European per capita GDP, was reduced by
a third, i.e. to 21 percentage points (79 %).

4.4.
In other words, over an 11-year period (1988-1999),
the disparity between the average per capita GDP of the four
cohesion countries and that of the EU shrank at an average
rate of 1 % per year.

It is important to avoid undermining the process of
5.4.
strengthening economic and social cohesion in regions no
longer eligible for Objective 1 support after enlargement.
There are two ways of achieving this, and they are not mutually
exclusive:

5.4.1.
first, the regions can be allowed to stay within
Objective 1 by lowering the 75 % threshold for Community
per capita GDP, and

5.4.2.
policies to economic and social cohesion can be increased.

second, the contribution of the other, non-structural

If

the first option is not

5.5.
feasible, application of
Article 159 and use of other, non-structural policies to bolster
economic and social cohesion (in the poor European regions
in particular) could be particularly effective.

6.

Inconsistencies in the implementation of other Com-
munity policies — adapting them without calling
them into question

5. General assessment of the contribution of other
Community policies to economic and social cohesion

It should be made clear that no Treaty provision allows

6.1.
a Community policy to be reversed.

5.1.
The claim that regional policy is connected with
structural measures is based on the observed lack of any kind
of statistical data on the impact of other, non-structural
policies on economic and social cohesion.

The issue is how to use the experience of choosing
5.2.
indicators and quantitative measurements that has already
been gained in the field of structural measures and apply it to
other Community policies.

5.3.
The need to apply Article 159 after EU enlargement
is becoming more urgent. Published estimates predict that
Community per capita GDP will fall by 13 % with the accession
to the EU of the new members, which would mean the
probable exclusion of 15 European regions from Objective 1
support. If this happens, the structural policies will play a less
important role in strengthening economic and social cohesion
in those regions.

6.2.
In the specific context of the Treaties, it makes no
obvious sense to consciously obstruct the operation of a
specific Community policy: any Community policy may
involve positive or possibly negative consequences (e.g. with
the introduction of a single currency it might be assumed that
there will be certain negative consequences, but these do not
overshadow its broader beneficial effects).

6.3.
This implies that the Community policies listed in
Article 159 very probably — to a certain extent — have
contradictory consequences and results; while the overall
effects for the EU as a whole may be beneficial, it cannot be
ruled out that there may be unfavourable consequences for
certain regions.

6.4.
In addition, the effects of the remaining, non-structural
Community policies can be expected to differ, sometimes
widely, from one region to another.

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The Second Report on Economic and Social Cohesion
6.5.
points out that while convergence is observed between the
Member States, disparities may be noted between the European
regions.

These differences lead the European regions to
6.9.2.
specialise in different production sectors on the basis of their
specific comparative advantage.

The European Commission’s study on employment (1)
6.6.
goes much further, stating that the years since 1950 can be
divided into three periods, each with different characteristics.

In the period from 1950 to 1970, there was clear
6.7.
convergence between European regions,
in terms both of
income per capita and of productivity levels, with poorer
regions developing over four times more rapidly than richer
regions.

The reverse is true of the following periods (post

6.8.
1970). More specifically:

6.8.1.
In the period 1971-1994 (and even more so between
1995 and 1999), there was a clear slowdown in convergence
between regions, with the poorer regions failing to catch up
with the richer areas.

Likewise, the final period (1994-1999) was a period
6.8.2.
of growth for Europe, but it is clear that not all the European
regions benefited from that growth. On the contrary, the
European regions present different results:

— in growth in per capita GDP (measured in PPS terms),

— in productivity,

— in employment, and

— in unemployment.

6.9.3.
This specialisation, however, leads to a variety of
further consequences depending on the specialisation in
question; sectors that are more knowledge-intensive have the
greatest advantage, as well as lower costs and increased labour
mobility.

6.10.
As a result, technological development and the per-
sistence of certain features of the economy (high unemploy-
ment, low per capita income and the sectoral composition of
output) not only depend on the distribution of production
factors between regions and their mobility, but also contribute
to shaping production factors in a highly dynamic process.

6.11.
The Employment in Europe 2002 report also places
considerable emphasis on ‘asymmetric shocks’, i.e. shocks in
demand for certain products or types of labour. These shocks,
which are a decisive factor in the development of regional
inequalities, affect particular regions rather than the EU as a
whole, since they are related to the structure of each region’s
economy.

The regions hit by these shocks enjoy less favourable
6.12.
conditions and are less productive than other
regions,
especially if adjustment is slow, for instance because unskilled
or poorly skilled workers are less flexible than those with more
skills.

It is significant to note that European integration is

6.9.
hindered by differences existing between regions:

— in productive capacity,

6.13.
It follows that the interdependence of the various
elements (production factors, skills, geographical situation,
technological development, asymmetric shocks) means that
the various regions have differing capacity to generate new
jobs and to promote growth.

— in skill structures and labour force specialisation,

— in the sectoral specialisation of the products produced,

and

— in employment and functioning of the labour market.

6.9.1.
At the same time, the geographical situation in each
region influences its capacity to gain access to big markets and
to knowledge spill-overs.

(1) Employment in Europe 2002, Chapter 4.

6.14.
The same report also observes that if the poorer
regions do not manage to cross a threshold of strategic inputs
(human resources, public infrastructure, etc.) they can become
trapped in situations of low economic growth and may not be
able to catch up with the richer regions.

Europe’s regions are therefore obliged to follow
6.15.
different paths, with the result that, in principle, convergence
will be achieved only within the context of ‘clubs’ of regions,
whose upper and lower limits are determined by the strategic
factors available to them.

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Attempts to bridge the gap between the European
6.16.
regions are essential preconditions for strengthening cohesion
throughout the EU, providing that this is done in such a way
as to avoid all possibility of aggravating regional inequalities
and disparities.

6.23.
issue, for example:

There are various possible ways of addressing this

6.23.1.
policy under Article 159.

First measure the impact by region of Community

It is not always clear whether the planning, framing
6.17.
and, above all, implementation of the Community policies
listed under Treaty Article 159 lead to benefits for all the
European regions, or whether on the contrary they help only
regions whose structures are more suited to reaping the
benefits of European integration.

After considering the various characteristics of the
6.18.
European regions and their various labour markets,
the
Employment in Europe 2002 report identifies five ‘regional
clubs’ that are characterised by different patterns of utilisation
of human resources and labour skills.

6.19.
However, over and above the differences in patterns
of utilising human resources and labour skills, the further
inequalities between the European regions are so great that
there is a clear difference between the results and consequences
of the Community policies listed under Article 159, by region
and by regional club.

6.20.
The discussion does not end here however. Under
Article 159 of the Treaty we must not just identify but also
measure the positive and negative effects of Community policy
on economic and social cohesion for each region. So far these
have not been measured or more specifically, the task has not
been undertaken.

6.23.2.
Second, on no account question Community policy
as a whole, even if it has unfavourable consequences for
regional cohesion.

6.23.3.
Third, adapt this Community policy for an individ-
ual region, or apply it gradually (over a specified transitional
period) in that region, so as to measure its effects.

Fourth, if adapting or gradual (transitional) appli-
6.23.4.
cation of the Community policy in one or more regions is not
feasible or not considered effective, or jeopardises the expected
benefits of the Community policy for the EU as a whole,
then decide to implement complementary policies in specific
regions (including policies of a structural nature), so as to
eliminate, or mitigate the negative effects for cohesion in these
regions.

6.24.
practice requires:

It should be stressed that putting the above into

6.24.1.
be assessed beforehand;

first, that the effects of the complementary policies

6.24.2.
second, that the complementary policy for eliminat-
ing negative consequences for one or more regions is effective,
i.e. that it covers all the negative consequences and that these
have been assessed.

As a result, it is also clear that it is not satisfactory to
6.21.
make general and rather vague statements of the kind that
competition policy helps to generate new jobs. A statement of
this kind must be backed up with specific measurements of
potential new jobs per region, so that it can be ascertained
whether new jobs really have been created.

6.25.
It should be noted that the Employment in Europe
2002 report uses a number of indicators to measure regional
performance and thus to group the regions into ‘regional
i.e. groups of regions with similar characteristics,
clubs’,
systems and performance.

6.22.
It is also possible that the EESC did not back up
certain statements in earlier opinions to a sufficient degree
with statistics, e.g. the statement that disadvantaged regions
are affected by concentrations.

Chapter 4 of the Employment in Europe 2002
6.25.1.
report could be very useful for drawing up a set of indicators
that would provide a statistical evaluation and description of
the effectiveness of other, non-structural Community policies
in strengthening cohesion.

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7. Relationship between the structural policies (Treaty
Article 158) and the remaining Community policies
(Treaty Article 159)

These are difficult questions,

to which definitive
7.7.
answers have yet to be found. A greater effort must be made
to answer these questions, in view also of enlargement.

It has been observed (1) that the Community Support

7.1.
Frameworks (CSFs) work in three ways:

— by improving basic economic infrastructure,

8. Specific shortcomings of other Community policies

with respect to economic and social cohesion

— by enhancing human capital (by improving skills and the

general education of the workforce), and

8.1. Common agricultural policy — partial reform of the CAP

and economic and social cohesion

— by directly strengthening the private sector through

investment support.

7.2.
Studies to assess the impact of the structural policies
have measured the effects of the first two approaches by
designing specific models.

7.3.
It was found that the structural policies contributed to
growth — increase in per capita GDP — to differing degrees
in each of the four cohesion countries, with Greece and
Portugal benefiting more from the structural policies than
Ireland and Spain.

7.4.
The same studies found that the benefits of the single
market were not so great for Greece and Portugal as for Ireland
and Spain.

This raises the question of how the impact of structural

7.5.
policies relates to that of the other Community policies.

7.6.
To arrive at a definite answer to the question of the
combined effects of the single market and the CSFs, the Single
Market Review states that it is necessary to choose among a
series of alternative scenarios, for instance:

— to what extent, if at all, is the increased flow of foreign
direct investment recorded for instance in Spain the result
of the European single market?

— is financing through the structural policies and the CSFs

temporary or permanent?

— are the economic mechanisms that generate the long-

term supply responses to CSF support strong or weak?

The common agricultural policy was the first real
8.1.1.
introduced by the founding Treaty of
Community policy,
Rome. This policy was completely successful in addressing the
food shortages that followed the end of the second world war
and made a genuine contribution to strengthening economic
and social cohesion (2).

8.1.2.
One of the main features of the common agricultural
policy reform adopted on 26 June 2003 is the decoupling —
or partial decoupling — from production of compensatory
payments, in particular crop payments, premiums by head of
cattle and compensatory payments for milk after 2005. The
link between the compensatory payments and the current
calculation method (by head of cattle or by hectare), will be
replaced — or partly replaced — by a system of income
support payments for farmers (payment by farm). The Member
States decide in each case which form of decoupling to use.

8.1.3.
The EESC notes that other CAP instruments, such as
those for managing the supply of agricultural products (e.g.
quota arrangements), have an important
function. These
arrangements go a considerable way towards curbing the
process whereby agricultural production is concentrated in the
most favourable areas. This is in the interest of small farms
and is also necessary to secure production in disadvantaged
areas.

8.1.4.
Any appraisal of the CAP and its contribution to
economic and social cohesion should take into account that
the reforms implemented in 1992 and 1999 brought decisive
changes. Market support payments have fallen substantially,
while payments according to farm size and head of livestock
have become much more widespread. As these are intended to
compensate falling producer prices for agricultural produce,
there has been no significant shift in transfers between regions
or types of production. Some cases of unfavourable bias have
remained, e.g. against arable land, which the EESC has criticised
on a number of occasions.

(1) The Single Market Review — Subseries VI: Vol. 2, ‘The cases of

Greece, Spain, Ireland and Portugal’.

(2) EESC opinion on the Communication from the Commission to
the Council and the European Parliament — Mid-Term Review of
the Common Agricultural Policy, OJ C 85, 8.4.2003, p. 76.

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The Agenda 2000 reform drew together the various
8.1.5.
flanking market policy support measures in the Rural Develop-
ment Policy programme, the so-called second pillar. The EESC
has expressed its approval for this new focus of the CAP in a
number of opinions, as it can make an important contribution
towards securing the multifunctionality of European agri-
culture and the viability of rural areas. The EESC has therefore
repeatedly called for improved funding of the second pillar.

In its opinion on the CAP reform of 14 May 2003 (1)
8.1.6.
the Committee underscored inter alia the need to take account
of the impact on economic and social cohesion when undertak-
ing further reforms. The extent to which this actually happens
is significantly affected by the transposition of reform measures
by the Member States.

8.1.7.
Since second-pillar measures have an important
function for economic and social cohesion in rural areas,
fully be met even with the
actual requirements cannot
proposed redistribution under so-called modulation. This is
why the Committee’s opinion of 14 May 2003 advocated
deploying additional resources for rural development.

8.1.8.
The improvement in cohesion expected with the new
CAP must be assessed statistically and measured by region, in
accordance with Treaty Article 159.

8.2.

Economic policy: Stability and Growth Pact and introduction
of the single currency

Although this reasoning is theoretically sound, it can
8.2.3.
be objected that there are no data measuring the probable
impact of applying the cohesion criteria on each country’s
GDP growth per capita.

8.2.4.
indicators for measuring specific economic parameters, e.g.

This deficiency could be corrected by introducing

— the fall in demand caused by applying the Stability and

Growth Pact;

— effects on economic productivity of reduced demand;

— effects on investment spending of reduced demand;

— effects of reduced productivity in reducing jobs and

increasing unemployment;

— statistical correlation between reduced demand and job

losses/higher unemployment;

— statistical correlation between the level of unemployment
and any change (rise or fall)
in salaries and wages
(introducing such an indicator means accepting the
principle that any increase or decrease in wages must be
related to a concurrent inverse — and measurable —
change in the employment and unemployment indi-
cators).

8.2.1.
The Second Report on Economic and Social
Cohesion notes (Synthesis, Part II) that in order to sustain high
rates of economic growth in the regions of the Union that are
lagging,
it is important for structural policies (i.e. policies
covered by Article 158) to be allied with macroeconomic
policies which ensure financial stability (i.e. policies covered
by Article 159).

In the same section of

8.2.5.
the Second Report on
Economic and Social Cohesion, the general, abstract argument
was advanced that introducing the single European currency
had reduced inflation and would enhance financial stability,
with positive effects on cohesion. However, no further statisti-
cal evidence is provided in support of these claims. The
Commission should carry out a quantitative study on this
matter.

8.2.2.
At the same point, the report argues that nominal
convergence has been accompanied by real convergence, in so
far as there was a substantial decrease in inflation during the
1990s matched by a rise in GDP (above the European average
in the four cohesion countries during the second half of the
1990s).

8.2.6.
A correct approach would require selecting and
elaborating a series of statistical indicators, such as for instance:

— correlating inflation with changes in per capita GDP by

region;

(1) COM(2003) 23 final — 2003/0006+0007 (CNS).

— correlating inflation (and/or per capita GDP) with changes
in employment, unemployment or poverty by region.

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Recent discussions about the need to gradually shift
8.2.7.
the fiscal priority from budget deficit limits to public debt
limits must not be confined to mere statements of opinion and
result in rash political choices. Correct political decisions are
always preceded by assessment of their implications.

— free capital assistance,

— or various combinations of tax, credit, or capital measures

and aids.

8.2.7.1.
As regards the consequences of the Stability and
Growth Pact, and in particular the application of the specific
criteria (budget deficit or public debt), it is necessary to try and
provide a quantitative assessment of the effects to date of
prioritising the first criterion (budget deficit), and to evaluate
the anticipated impact of this, in the context of the current
economic situation, on economic and social cohesion.

8.3.5.
poorest regions in each country,
development measures and assistance must also aim to:

In addition to supporting the development of the
the choice of specific

— boost employment, and

— strengthen comparative regional and national advantage.

8.2.7.2. Moreover, switching the priority to public debt
requires an evaluation of the relevant effects of this change on
social cohesion.

It should be emphasised that these calculations and
8.2.8.
evaluations must be used not just to establish the extent of
change generally but also to compare rates of development by
region, focusing in particular on the poorer regions.

8.3. Competition policy

8.3.1.
The Second Report on Economic and Social
Cohesion contains a clear reference to the effects of national
policies on the widening of disparities, with the obvious
purpose of highlighting the need to coordinate national and
Community policies in order to avoid exacerbating disparities
within the Member States.

8.3.2.
In fact, in the second paragraph on page V of the
report a distinction is drawn between disparities between
Member States and disparities between regions, and it is noted
that the latter have narrowed by less, partly because of the
widening of gaps between regions within certain Member
States.

8.3.6.
It should be noted that the composition of these
development aid packages is in each case overseen by the EU
authorities with the aim of avoiding any potential conflict with
Community policies. However, the aim of conformity to
Community legislation does not include prior evaluation of
the implications for enhancing economic and social cohesion.

8.3.7.
followed to date and endeavour to:

It is now also necessary to change the approach

— provide a prior statistical estimate in each case of the
positive and negative effects of aligning national packages
of development incentives to the requirements of the
relevant Community rules on enhancing cohesion and

— correct as necessary the relevant adjustments of national
policies so as to avoid any decision being taken that
would widen disparities or fail to enhance cohesion.

8.3.8.
At the same time it should be noted that in many
cases supporting a particular business or sector essentially
amounts to supporting a specific region, which means that
discontinuing or reducing support ultimately exacerbates the
economic and social lag of the region concerned.

8.4. Trade policy — the internal market

National development policies

8.3.3.
implemented by
adopting country-specific laws based on national character-
istics and needs include special development assistance pack-
ages with various combinations of development incentives.

8.4.1.
The Internal Market Strategy approved by the Helsin-
ki Council is particularly important because it provides for
ongoing review and improvement of the functioning of the
internal market.

8.3.4.

These incentives may take the form of:

— tax exemptions and reductions,

8.4.2.
As part of this process it would be helpful to assess
the utility of specific and predetermined comparative indicators
of regional disparities.

— special credit terms (reduced interest or interest-free),

8.4.3.
extent to which the cohesion goals have been achieved.

Such assessments would ultimately establish the

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8.5. Transport policy

so that all EU policies take into account their impact on the
regions and their development.

8.5.1.
Transport policy is one of the most basic growth
factors for the EU’s peripheral regions. The lack of inter-
regional links (road, air and sea links) is for many regions a
major hindrance to growth. Not only has the liberalisation of
transport failed to improve the position of the peripheral
regions, but in certain cases there is a danger of their becoming
economically isolated.

8.6.

Education and vocational training policy

8.6.1.
The skills and vocational knowledge that are embed-
ded in a region’s workforce, in conjunction with the type of
in
employment available,
shaping regional competitiveness, particularly in the light of
the Lisbon Strategy (1).

is described as a ‘key variable’

8.6.2.
Furthermore, the European Council in Nice stressed
that the pursuit of the goal of full employment implied
ambitious policies for increasing the employment rate and for
reducing regional disparities.

8.6.3. More specifically, the Nice European Council pointed
out the local and regional dimensions of the employment
strategy that required a concerted approach at all
levels
(Community too), with policies tailored for each region, in
terms of content and objectives, as a precondition for achieving
the Lisbon goals and strengthening cohesion between the
European regions.

8.6.4.
Before the European Council’s comments can be
turned to account, a detailed approximation and assessment
must be made of existing labour skills against what
is
required in each region, and the necessary support mechanisms
developed for disadvantaged regions, so as to fill the skills gaps
at the pace required by the production base.

9. Conclusions

9.1.
Although the economic situation and more generally
the standard of living in the peripheral regions of the EU has
improved over the last
in many cases the
disparities remain the same or have worsened.

two decades,

9.2.
If economic and social cohesion policy is to be
effective, European regional policy must be a horizontal policy

9.3. Without underestimating the role of the remaining
Community policies, transport policy and competition policy
rules on state aids aimed at regional development must be
reviewed. Inasmuch as there is not yet a common policy on
taxation, national fiscal policies should take serious account of
the regional dimension with a view to strengthening cohesion,
with due regard for competition policy.

9.4.
Inequalities in income are always accompanied by
other, not directly income-related disparities and inequalities
that make the situation even worse for the poorer regions. It is
useful to note that in the Second Report on Economic and
Social Cohesion (page XI), there is an explicit reference to the
fact that lower per capita GDP is linked with:

— lower production per employee,

— lower levels of education and training,

— fewer research, development and innovation activities,

— slower introduction of new information and communi-

cation technologies.

9.5.
The weaknesses of the Community policies listed under
Article 159 (namely all the non-structural policies) should be
identified in terms of a quantitative assessment of their impact
on economic and social cohesion.

A procedure should be established for measuring the
9.6.
impact of the Article 159 policies on economic and social
cohesion, and more specifically on the profile of GDP per
capita per region, employment per region, unemployment per
region and poverty per region (a procedure that is already
applied for the Article 158 structural policies).

There is also a need for a special study to be carried
9.7.
out to establish the package of ex ante and ex post indicators
for measuring the effectiveness of the remaining policies,
similar to the package that is applied for measuring the
effectiveness of the structural policies (2), with the distinction
that the choice of recommended indicators cannot be general
for all the policies but must be specific to each individual
policy.

(1) Employment in Europe 2002, Chapter 4.

(2) European Commission — DG XVI: The new programming period
2000-2006, Methodological working papers, no 3, Indicators for
monitoring and evaluation: an indicative methodology.

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The establishment of a procedure for measuring the
9.8.
impact of the Article 159 policies and the drawing up of a
special study to establish a package of indicators for measuring
the effectiveness of
tie in with the
framework provided for in the Second Progress Report on
Economic and Social Cohesion, and more specifically:

these policies must

by the stability pact national economies, in conjunction with
the differing social and regional developments in the actual
economy in each case, so as to prevent possible retrograde
trends or so as not to exacerbate recession at Community level
and also to minimise the risks of undermining cohesion at
regional level.

— with the Commission’s commitment to conduct further
research on the coherence and consistency of Community
policies, so as to secure the necessary compatibility of all
policies in the new programming period (2007-2013)
with the objective of economic and social cohesion, and

— efforts to keep to the deadlines for adopting the new
legislative instruments before the end of 2005, so that
2006 can be devoted to negotiating with the Member
States and the regions on the 2007-2013 programming
period (1).

9.9.
There is a need to establish a procedure, for the three-
yearly review and evaluation of the impact of the Stability Pact,
both for the EU as a whole and for the individual European
regions. The aim of this evaluation should be the prompt and
effective review of the prospects and commitments imposed

(1) ‘Second Progress Report on Economic and Social Cohesion’,
COM(2003) 34 final, 30.1.2003: III — The main topics of the
debate on future cohesion policy — Other aspects — The
contribution of other policies and IV — Future deadlines.

Brussels, 25 September 2003.

9.10.
The connection between the remaining, non-structur-
al Community policies, and above all economic policy, with
the objectives of cohesion is a fairly complex issue. An in-
depth study is required and in any event oversimplifications
must be avoided.

In 1999,

the Community resources available for
9.11.
strengthening cohesion amounted to 0,45 % of EU GDP. The
level of cohesion in the regions of the 15-member EU has
undoubtedly improved. However, in the light of the accession
of ten new States, the EESC believes that a careful study must
be made of both the level of the resources necessary to
promote further cohesion and their rational use.

9.12.
The EESC, in the context of its responsibilities, could
examine this subject in further depth and attempt to answer
the following questions:

— Which Community policies contribute towards cohesion?

— How can real improvements be made to economic and
social cohesion within the boundaries of the European
Union?

The President

of the European Economic and Social Committee

Roger BRIESCH

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendments were rejected during the debate (Rule 54(3) of the RP):

Point 6.21

Amend point 6.21 as follows:

‘As a result, it is also clear that it is not satisfactory to make general and rather vague statements of the kind that
competition policy helps to generate new jobs in all regions (Second Report on Cohesion). A statement of this kind
must be backed up with periodic evaluations of the impact of competition policy on employment’.

Reason

To avoid an unrealistic expectation that the impact of competition policy can readily be measured in terms of the
impact on jobs.

Result of the vote

For: 28, against: 53, abstentions: 6.

Points 6.24, 6.24.1 and 6.24.2

Delete.

Reason

To avoid an unrealistic expectation of these as practical proposals. The principle is outlined in 6.23.4.

Result of the vote

For: 31, against: 49, abstentions: 9.

Point 8.2.3

Replace this point with the following text:

‘The impact of the introduction of the single currency and the Stability and Growth Pact on economic trends in
Europe’s regions should consequently be examined in greater detail’.

Result of the vote

For: 38, against: 52, abstentions: 3.

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Point 8.2.4

Delete.

Reason

The connection with the Stability and Growth pact is over-simplified and the search for economic indicators of the
sequence envisaged would be unrealistic.

Point 8.2.4 establishes in advance a number of arguable cause-effect relations. Moreover, it proposes a specific
methodology – the creation of certain arithmetical ‘indicators’ – which may not be the most appropriate compared
with other methods such as surveys, check-lists or a wide range of types of econometric model. It seems unreasonable
to ask the Commission’s specialist services to carry out a study and also to tell them which methodology they must
use.

Result of the vote

For: 39, against: 48, abstentions: 2.

Point 8.2.6

Delete.

Reason

The linkage that may be significant is that between the stability of the single currency and the impact on cohesion.
The references to causation through inflation do not seem to be appropriate.

It is for the Commission’s specialist services to decide on the methodology.

Result of the vote

For: 37, against: 52, abstentions: 4.

Point 8.3.7

Delete first indent.

Reason

This would be difficult, if not impossible, to implement. The possible benefits would be exceeded by the costs and
conceptual difficulties of the exercise whether retrospectively or in anticipation.

Result of the vote

For: 31, against: 53, abstentions: 2.

Point 8.3.8

Delete entire point.

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Reason

Damaging to equal opportunities on the Single Market.

Result of the vote

For: 23, against: 58, abstentions: 4.

Opinion of the European Economic and Social Committee on ‘Industrial change: current situation
and prospects — An overall approach’

(2004/C 10/21)

On 22-23 January 2003, the European Economic and Social Committee decided, under Rule 29(2) of its
Rules of Procedure, to draw up an Opinion on Industrial change: current situation and prospects — An
overall approach.

The Consultative Commission on Industrial Change (CCIC), which was responsible for drawing up the
Committee’s work on the subject, adopted its opinion on 1 September 2003. The rapporteur was Mr Van
Iersel and the co-rapporteur was Mr Varea Nieto.

At its 402nd plenary session (meeting of 25 September 2003), the European Economic and Social
Committee adopted the following opinion by 53 votes in favour and one vote against.

1.

Introduction and objective

1.1.
As the expiry date of the ECSC Treaty approached, the
Member States asked the European Commission to present its
ideas on the future of structured dialogue (1). A body within
the EESC was proposed (2) with a remit not limited to the coal
and steel sectors but extended to encompass all aspects relating
to industrial change, particularly in the light of enlargement (3).

The Consultative Commission on Industrial Change was set
up by an EESC Plenary Assembly decision of 24 October
2002. This decision acknowledges the enrichment and added
value the CCIC can bring to the EESC. The CCIC has
24 members from the EESC and 30 external delegates who
have initially been drawn from the former ECSC Consultative
Committee members. Subsequently membership may be
extended in the future to other sectors.

1.2.
The establishment of the Consultative Commission on
Industrial Change opens up new prospects. It will now be
possible to examine questions relating to industrial change in
all their complexity — from an economic and social point of
view as well as in terms of protection of the environment and
sustainable development, with particular emphasis on the
problems encountered by the future Member States.

1.3.
The former ECSC Consultative Committee did a great
deal of useful work for the sectors in question. In the history
of European integration it was a model
for consultation
between the social partners and government and for Com-
munity responsibility for development in these sectors, on the
basis of a specific form of industrial policy. Some of the main
results of this ongoing consultation are listed below:

— Community analysis of markets and market conditions

over the years leading to restructuring processes,

— programmes for regions particularly hard hit by unavoid-

able restructuring,

(1) Industry Council of 18.5.2000.
(2) Communication of 27.9.2000 (COM(2000) 588 final).
(3) Simultaneously with the opinion, the CCIC is drafting an opinion
on: The restructuring of heavy industry in the enlargement
countries.

— Community R&D programmes, (part of financing now
comes from paying back of loans to enterprises and for
housing of workers),