Communication from the Commission to the Council and the European Parliament - Building our common Future - Policy challenges and Budgetary means of the Enlarged Union 2007-2013
Date: 2004-02-26
Institutions: European Commission
Subjects: Community budget, EU policy, EU relations, European citizenship, enlargement of the Union, sustainable development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.2.2004 
COM(2004) 101 final/2 

Corrigendum 
Table des matières EL et FI. 
page 29 EN. 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Building our common Future 

Policy challenges and Budgetary means of the Enlarged Union 2007-2013 

EN 

   EN 

 
 
 
  
 
TABLE OF CONTENTS 

I.  Priorities for the enlarged European Union .................................................................... 6 

A.  Sustainable development ......................................................................................................... 6 
1.  Competitiveness for Growth and employment: the need to implement Lisbon ........................... 6 
2.  A greater Cohesion for growth and employment .......................................................................... 14 
3. 
Sustainable management and protection of natural resources: agriculture, fisheries and 
environment ............................................................................................................................................... 17 

B.  Giving full content to European citizenship......................................................................... 19 
1. 
The area of freedom, security, and justice ..................................................................................... 19 
2.  Access to basic goods and services.................................................................................................. 20 
3.  Making citizenship work: fostering European culture and diversity.......................................... 21 

C.  The EU as a global partner.................................................................................................... 22 
EU and its neighbourhood policy.................................................................................................... 23 
The EU as sustainable development partner ................................................................................. 24 
The EU as a global player................................................................................................................ 24 
The policy mix .................................................................................................................................. 25 

1. 
2. 
3. 
4. 

II.  Matching resources to objectives ................................................................................ 26 
1. The legacy of existing commitments .................................................................................................... 26 
2. The new financial requirements ........................................................................................................... 27 

III. 

Ensuring the objectives are met: Instruments and governance ................................ 30 

A.  A roadmap .............................................................................................................................. 30 

B.  Simplifying instruments to improve delivery....................................................................... 31 

IV. 

The new financial framework (2007-2013)................................................................ 34 

A.  Covering an adequate period ................................................................................................ 34 

B.  Classification of expenditure and development of expenditure ......................................... 34 

C.  Flexibility................................................................................................................................. 35 

V.  The financing system....................................................................................................... 36 

A.  Own resources structure........................................................................................................ 36 

B.  Correction of budgetary imbalances .................................................................................... 37 

Annexes 

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“As to the future, the task is not to foresee it, but to enable it.” 

Antoine de Saint-Exupéry 

INTRODUCTION 

The European Union stands on the threshold of its greatest achievement since the process of 
European  integration  began  in  the  aftermath  of  the  Second  World  War  –  the  historic 
reunification of the continent. Following the successful creation of the single market and the 
introduction of the single currency, Europe will now be reunited in the pursuit of democracy, 
freedom, peace and progress.  

This  enlarged  European  Union  offers  unprecedented  opportunities  for  improving  the 
prosperity and  quality of life of our  citizens  and the  world  in  which  they and their children 
live.  The  challenge  now  facing  us  is  to  turn  this  ambition  into  a  reality  and  ensure  that  the 
European Union seizes the full potential of enlargement and meets public expectations.  

The  obligation  to  adopt  new  Financial  Perspectives  from  2006  onwards  presents  an 
opportunity  to  give  the  enlarged  European  Union  a  real  sense  of  political  purpose  together 
with  the  means  to  achieve  its  ambitions,  with  actions  at  European  and  at  national  level 
working in tandem.  

Our shared objective should be a Europe that celebrates the cultural and national diversity of 
each Member State, remains attached to national identity, yet is also committed to the value of 
European identity and the political will to achieve common goals. A Europe of solidarity and 
partnership,  which  gives  people  the  opportunity  to  build  a  lasting  prosperity  in  common.  A 
Europe  whose  citizens  have  confidence  for  the  future.  A  Europe  with  a  voice  that  is  heard 
worldwide. 

Of  course,  we  face  this  challenge  against  the  background  of  a  troubled  world  and  internal 
uncertainty,  and  recent  events  have  generated  doubts  about  the  European  Union’s  ability  to 
act.  

To give Europe a Constitution is a powerful and symbolic act, but it is as yet unrealised. The 
European Union must continue down the path of integration, and avoid the trap of unwieldy 
inter-governmentalism. This is why we need the Constitution, and the instruments to decide 
and act quickly, so that we can move forward while maintaining the checks and balances of 
the  community  method.  Agreement  on  a  new  Constitution  therefore  remains  essential  to 
Europe’s future. 

Economically, Europe must rise to the challenge. Our citizens expect the European Union to 
build on economic integration and turn the biggest economic and trade entity in the world into 
an  area  generating  more  growth  and  prosperity.  Europe’s  economic  performance  has  been 
poor  in  relative  terms.  Since  1995,  the  growth  rate  for  the  EU-15  has  averaged  2.2  %, 
compared to a global average of 3.6% and 3.2% for the United States. The evidence suggests 
that – unless action is taken now – European economy will decline. The longer the European 
economy underperforms, the more doubts are raised about its ability to deliver one of the key 
foundations  of  political  legitimacy  prosperity.  Robust,  coordinated  and  coherent  action  is 
needed to reverse this trend. 

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To  fight  for  peace  and  against  terrorism  worldwide  is  a  field  where  Europe  must  make  a 
strong  contribution,  but  divisions  over  key  international  issues  poured  cold  water  on  these 
hopes. 

Addressing  these  issues,  or  losing  its  way:  this  is  the  real  challenge  for  the  Union  and  its 
Member States. The costs of inaction are great, and will become even greater. 

A new commitment is needed to agree the objectives of the European project for the enlarged 
Union over the years ahead and give it the means required to deliver them. Without this, all 
Member States stand to lose. Joint action is needed by all public authorities, at both European 
and national level, to optimise the value added at each level and bring tangible benefits to all.  

The  Union’s  value  added  lies  in  transnational  and  Europe-wide  action.  Here,  national 
authorities  are  ill-equipped  to  take  into  account  the  full  benefits  or  costs  of  their  actions. 
Effectiveness requires large critical masses beyond the reach of national governments alone, 
or in networking efforts made at national level.  

Common policies, as established by the Treaties, can deliver these benefits, through a mix of 
regulation, coordination, and financial resources. 

The  choices  to  be  made  on  the  next  financial  perspectives  are  not  just  about  money.  It  is  a 
question of political direction, to be made on the basis of a clear vision of what we want to do. 
These choices will determine whether the European Union and its Member States are able to 
achieve in practice what European people expect.  

This  means  a  new  phase  for  the  Union’s  budget.  It  is  not  about  redistributing  resources 
between Member States. It is about how to maximise the impact of our common policies so 
that we further enhance the added value of every euro spent at European level. 

* 

* 

* 

Successive  financial  perspectives  have  reflected  a  political  project.  For  Agenda  2000, 
covering  2000-06,  the  project  focused  on  gearing  up  Europe  to  make  enlargement  possible. 
With enlargement now a reality, even if much work remains to be done to integrate the new 
Member States, Europe needs to find a new dynamism and meet new expectations. 

Europe  must  work  together  for  higher  growth  with  more  and  better  jobs.  There  is  no 
magic  solution  to  boost  economic  growth  in  Europe  and  to  set  it  on  a  sustainable  path. 
Nonetheless,  it  is  clear  that  part  of  the  problem  lies  with  the  fact  that  innovation  and 
technology do not yet drive growth in European economies. Since Lisbon, the EU has sought 
to  transform  the  European  Union  into  a  dynamic  knowledge-based  economy  with  a  solid 
industrial base, with targets implying growth raised to around 3 percent per year. The inability 
of the Union and its Member States to reach this target shows how the action taken so far has 
fallen short. 

The Lisbon strategy and the Internal Market require effective economic governance to deliver 
the balanced package of economic, social and environmental benefits which lies at the heart 
of sustainable development and allows Europeans to face change with confidence.  

Growth  must  be  underpinned  by  solidarity.  Competitiveness  and  cohesion  reinforce  each 
other.  The  Union’s  cohesion  policy  exists  to  ensure  solidarity  between  all  regions  and 

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citizens.  It  has  proved  itself  in  the  past,  and  must  now  work  in  a  Union  that  will  be 
economically more varied than ever before. This means concentrating its actions on selected 
initiatives, and taking into account relative differences and needs. 

The  fruits  of  growth  must  be  channelled  so  as  to  help  Europeans  through  the  process  of 
change.  The  European  social  dialogue  should  therefore  be  reinforced  and  better  integrated 
into public policy so as to help all economic actors to both anticipate and manage change. 

European citizenship must serve to guarantee concrete rights and duties, in particular, 
freedom, justice and security, and ensure access to basic public services at European level. 
The  benefits  of  membership  for  citizens  now  extend  beyond  market  freedoms,  and  these 
issues must be prioritised. It is an area where public liberties and individual rights and duties 
at  European  level  are  developing,  while  cultural  diversities  remain  strong  and  must  be 
constantly supported and encouraged. Cultural diversity sustains European unity. The Union 
has  therefore  to  complement  Member  States’  efforts  and  ensure  that  the  benefits  of  Europe 
without frontiers are available and accessible to everyone on an equal basis.  

Europe must be a strong global player. No one can question the importance of the role that 
Europe has to play in the world, starting from its responsibility vis–à-vis its neighbours. This 
has  been  taken  for  granted,  for  example,  in  the  future  of  Europe  debate.  Be  it  development 
assistance, trade policy, foreign and security policy or external aspects of other policies, the 
expectations for Europe are growing.  

It is equally evident that on the global scene Europe is acting way below its economic weight 
and political potential. Only through the existence and efficiency of common action can we 
translate our values and political declarations into reality. We will never be able to properly 
respond  to  crisis  in  Europe  or  elsewhere  without  common  instruments  and  the  resources  to 
make  them  work.  As  a  continental  and  global  player,  the  EU  must  rise  to  the  growing 
challenges and responsibilities of its regional leadership. 

* 

* 

* 

The future financial framework of the European Union should offer the stability to support the 
political  objectives  of  the  Union  on  a  multi-annual  basis.  It  must  be  targeted  to  deliver 
concrete,  selected  priorities  that  benefit  Member  States  and  citizens.  This  means  optimising 
the relationship between action at national and Union level. 

Common  policies  can  and  must  continue  to  be  central  to  achieving  the  objectives  of  the 
enlarged Union. Common policies are not an optional extra: in these fields, only joint action 
at European level can succeed. 

Traditionally  EU  policies  have  been  centred  on  the  agriculture  sector,  on  cohesion,  on  the 
creation of an integrated internal market and on the achievement of macroeconomic stability. 
In  those  areas,  they  have  had  great  success.  It  would  be  a  mistake  to  disengage  from  those 
fields, where policies have already been adjusted to build on their success and to address new 
needs. The agreement on agricultural reform and its financing shows that the Member States 
share this view. The Union must now further rationalise its action in those fields and extend it 
to  the  new  Member  States.  But  since  enlargement  will  have  an  asymmetric  impact  on  the 
Community  budget  –  increasing  expenditure  more  than  revenues  –  even  the  simple 
preservation of the ‘acquis’ implies an intensification of financial effort. 

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The gap between ambitious, highest-level political commitments and a failure to implement 
them cannot be allowed to grow any wider. In many of these new priority areas, the capacity 
of the Union to deliver on the promises of the Member States is crippled by a lack of political 
will to act and by insufficient resources. The political aims and expectations set for the Union 
must  be  matched  by  adequate  means,  including  financial  resources.  The  goal  must  be  to 
maximise the efficiency of public spending and make national and European efforts more than 
the sum of the parts. 

I. 

PRIORITIES FOR THE ENLARGED EUROPEAN UNION 

3 priorities for the next financial perspectives: 

(1) 

(2) 

(3) 

The Internal Market must be completed so that it can play its full part in achieving the 
broader  objective  of  sustainable  development,  mobilising  economic,  social,  and 
environmental  policies  to  that  end.  This  encompasses  competitiveness,  cohesion  and 
the sustainable management and protection of natural resources. 

The political concept of European citizenship hinges on the completion of an area of 
freedom, justice, security and access to basic public goods. 

Europe should project a coherent role as a global partner, inspired by its core values 
in  assuming  regional  responsibilities,  promoting  sustainable  development,  and 
contributing to civilian and strategic security. 

A. 

Sustainable development 

The internal market objective provides the basis for growth. But increasing European citizens’ 
prosperity  according  to  European  values  requires  the  transformation  of  the  European  Union 
into  a  dynamic  knowledge-based  economy,  with  sustainable  economic  growth  and  greater 
social  cohesion.  This  is  precisely  what  the  Lisbon  Agenda,  launched  in  2000,  completed  in 
the Göteborg European Council of 2001, is all about. 

Reinforcing  and  delivering  the  Lisbon  agenda  entails  addressing  the  mutually  reinforcing 
aspects of competitiveness and cohesion. These are dealt with in the subsequent sections. 

Increasing European citizens’ prosperity in a sustainable way requires: 

•  Transforming  the  European  Union  into  a  dynamic  knowledge-based  economy  geared 

towards growth. 

•  Pursuing greater cohesion in the context of an enlarged Union. 

•  Reinforcing  the  competitiveness  of  our  agriculture,  strengthening  rural  development, 

ensuring sustainable exploitation of fish resources and the quality of the environment. 

1. 

Competitiveness for Growth and employment: the need to implement Lisbon 

Giving  priority  to  growth  requires  a  new  orientation  for  the  national  as  well  as  EU  policies 
and  budgets.  What  is  needed  now  is  a  more  dynamic  and  better  connected  Europe.  This 
requires  a  substantial  change  in  policies  to  support  the  Union’s  physical  and  knowledge 
infrastructure.  This  means  action  to  improve  research,  boost  enterprise  and  innovation,  and 

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establish networks at European level, and to enhance the role of education. This is a condition 
of  maintaining  a  competitive  industrial  base.  Simultaneously,  this  requires  new  collective 
guarantees  for  employees  and  a  new  effort  to  anticipate  and  adjust  in  time  to  a  changing 
global economic and trade environment. 

The objectives: 

•  Promoting the competitiveness of enterprises in a fully integrated single market, 

•  Strengthening the European effort in research and technological development, 

•  Connecting Europe through EU networks, 

•  Improving the quality of education and training, 

•  Social policy agenda: Helping European society to anticipate and manage change. 

a) 

Promote the competitiveness of enterprises in a fully integrated single market 

In  order  to  meet  its  ambitious  goals  of  enhancing  growth  promoting  cohesion  and 
environmentally-friendly  investment,  Europe  needs  to  develop  a  coherent  competitiveness 
approach  to  unlock  the  untapped  potential  of  the  Internal  Market.  The  Union  can  be  the 
catalyst and coordinator of Member States’ efforts and it can contribute to, and complement 
their achievements. 

European  Union  actions  to  improve  the  business  environment  and  to  increase  productivity 
could address the following strands: 

–  Completing,  improving  and  managing  the  Internal  Market.  Further  legislative  work 
will aim  to remove the  remaining obstacles to full market integration. In some particular 
areas like network industries or services, the single market is still far from being a reality. 
Managing the Internal Market in areas like pharmaceutical or chemical products, whether 
through  agencies,  or  through  European  standardisation,  will  continue  to  involve  a 
significant  effort  in  the  enlarged  Union.  An  additional  challenge  will  be  to  extend  it  to 
neighbouring countries. 

–  Preserving  and  enhancing  the  competitiveness  of  industry,  aiming  at  higher 
productivity  growth  and  improved  international  competitiveness.  This  includes  a  new 
approach to Community and national legislation, with the full use of “better lawmaking” 
principles,  including  the  assessment  of  the  impact  of  legislation  and  of  the  regulatory 
environment on the competitiveness of the European enterprises. 

–  Fostering  entrepreneurial 

initiative  and  small  business  development.  Further 
improving the access to finance through Community financial instruments, as well as the 
availability  of  European  business  support  services,  will  contribute  to  the  fitness  of 
enterprises to do business in the enlarged internal market and to compete abroad. 

–  Mobilising  relevant  actors  and  resources  to  help  realise  the  innovative  potential  of 
enterprises.  Promoting  technology  transfer  through  knowledge  flows  and  innovation 
networks  will  bring  benefits  to  firms,  in  particular  to  young  innovative  enterprises. 
Innovation policy will also foster investment in innovation, in organisational change and 
in innovative design solutions. Facilitating common approaches, cross-border and regional 

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activity  as  well  as  networking  throughout  the  EU  can  contribute  to  the  development  and 
diffusion of an innovation friendly regulatory environment. 

–  More  systemic  approaches  to  the  information  society  based  on  a  mix  of  research, 
regulatory and deployment policies are a prerequisite for cutting the gap in productivity 
growth,  since  public  and  private  investment  in  information  and  communication 
technologies play a major role in improving productivity, competitiveness and increasing 
efficiency. 

–  Investment  in  information  and  communication  technologies  in  public  services  in  the 
Member  States  is  estimated  to  be  around  50  Billion  Euro  up  to  2011  for  purely  national 
actions. An additional effort will be necessary to ensure the uptake and adoption of those 
technologies  in  pan-European  public  services  in  order  to  improve  their  efficiency, 
effectiveness  and  interoperability.  This  covers  public  sector  areas  such  as  health, 
environment, culture, education and security. 

–  Promoting  the  take-up  of  eco-efficient  technologies,  which  can  reduce  environmental 
impacts  while  contributing  to  competitiveness  and  growth.  Many  potentially  significant 
environmental  technologies  exist,  but  are  underused,  due  to  lock-in  to  existing 
technologies,  difficult  access  to  finance,  low  investor  awareness,  distorted  price  signals. 
Based on the Environmental Technologies Action Plan, environmental technologies can be 
promoted through market-based instruments as well as targeted policy initiatives aiming at 
pushing innovation in this area. EU instruments in the field of research, demonstration, and 
innovation,  as  well  as  regional  policy  and  external  cooperation,  should  integrate  this 
dimension. 

b) 

Strengthening the European effort in research and technological development 

An  obvious  area  where  the  EU  budget  can,  and  should,  make  a  difference  is  research  and 
technology. The European research effort remains too fragmented, too compartmentalised and 
insufficiently  connected  to  international  cooperation.  Moreover,  Europe  devotes  only  2%  of 
its  GDP  to  research,  compared  with  2.7%  in  the  United  States  and  more  than  3%  in  Japan. 
Europe has not been able to attract the best world’s researchers, and many excellent European 
scientists still chose to work in US. This is a critical issue to improve our productive sector’s 
capacity to benefit from the new international division of labour. 

To help Europe to become a beacon of excellence attracting researchers and investments, we 
must  remove  the  barriers  to  excellence  arising  from  segmented  national  programmes.  But 
quality  improvements  will  not  be  enough.  Increasing  the  research  effort  will  also  be 
necessary.  This  implies  that  the  Union  must  pursue  simultaneously  three  related  and 
complementary goals:  

•  Realise  a  “European  research  area”,  acting  as  an  internal  market  for  research  and 
technology, as well as a space for a better co-ordination of national and regional research 
activities and policies, to overcome the present fragmentation and duplication of research 
efforts in Europe; 

•  Help raise the European effort on research to 3% of Union GDP by 2010; with 1% to 

come from public sources, and 2% from the private sector. 

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•  Support  and  strengthen  research  throughout  Europe  by  providing  direct  financial 
support at European level to complement national programmes helping to achieve the first 
two objectives. 

Financial  support  at  EU  level  offers  a  high  added  value  in  research  by  helping  to  create 
critical  masses  of  financial  and  human  resources,  stimulating  excellence  and  creativity 
through  exchange,  networking,  collaboration  and  competition  at  European  scale,  and 
increasing the visibility of European capacities and performances.  

There  is  hence  a  strong  case  for  a  significant  increase  in  EU  research  funding  currently  at 
0.04%  of  GDP,  as  a  contribution  to  bridging  the  remaining  gap  towards  the  1%  target  of 
public  investment,  as  a  complement  to  national  efforts  and  in  close  relationship  with  them. 
The  Union’s  action  should  concentrate  on  5  main  themes  corresponding  to  5  major  issues 
Europe is facing in research: 

•  Stimulating the dynamism, excellence, creativity and productivity of European research by 
giving  financial  support  to  projects  carried-out  by  individual  research  teams  selected 
on  a  competitive  basis  at  European  rather  than  at  national  scale,  in  particular  in  basic 
research,  to  explore  new  scientific  avenues  and  topics,  in  close  relationship  with  the 
scientific community. 

To that end a European facility would be established along the lines of, for instance, the 
National  Science  Foundation  in  US,  for  awarding  grants  to  the  highest  level  individual 
research teams in competition at European level, in fields such as advanced mathematics 
or quantum physics in the perspective of new breakthroughs in informatics and software. 

•  Strengthening  European  research  capacities  by  supporting  the  design,  development  and 
use  of  key  research  infrastructures  of  European  dimension  and  interest,  as  well  as  the 
development  of  human  resources  in  research  and  technology,  by  supporting  training, 
helping  remove  the  obstacles  to  pan-European  scientific  careers,  and  promoting 
researchers’ transnational mobility. These actions would need to be coordinated with those 
under cohesion policy. 

Research capacities of this kind would be, for instance, European large lasers and neutrons 
sources  facilities  for  the  exploration  of  matter  and  biomedical  applications;  or  European 
bio  data-banks  in  genomics  and  the  upgrade  of  Europe’s  research  networking  and 
computing  infrastructure.  Support  to  improve  human  research  resources  would  include 
large scale support programmes for European young and established scientists. 

•  Setting up pan-European public/private partnerships for technological research through 
joint  initiatives  based  on  the  technological  platforms  concept  which  brings  together 
public  and  private  stakeholders,  to  set-up  and  implement  common  research  agendas  in 
fields of industrial relevance, on the model followed in the European Growth Initiative. 

Examples  of  these  partnerships  would  include  the  development  of  a  new  generation  of 
clean and economic aircrafts at the horizon 2020; the development of hydrogen networks 
and  fuel  cells,  mastering  electronics  at  the  nano-scale,  investment  in  future  mobile  and 
wireless technologies and applications, enhancement of joint efforts in embedded systems, 
as well as new technologies in solar energy, and European co-ordinated effort in advanced 
chemistry, for multiple industrial applications and social purposes. 

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•  Stimulating the development of European “poles of excellence” based on networking and 
collaboration at laboratory level by supporting transnational medium-scale networks and 
projects  through  the  new  instruments  used  in  the  6th  Union  Research  Framework 
Programme improved on the basis of experience. 

This  strand  involves  supporting  European  poles  of  excellence  in  fields  such  as 
environment and climate research, information communication technologies, medical and 
food  research,  or  research  on  new  materials  and  industrial  processes,  by  creating  and 
supporting the cooperation of European high-level laboratories in European “networks of 
excellence” and joint research towards precise and well targeted objectives in “integrated 
projects”. 

•  Improving,  through  specific  networking  mechanisms,  the  co-ordination  of  national  and 
regional  research  programmes  and  policies,  to  create  critical  masses  of  resources, 
strengthen the complementary character of national activities, and improve the coherence 
of  public  research  agendas  throughout  Europe.  It  involves  stimulating  exchanges,  the 
mutual opening of programmes and the launch of common initiatives. 

National  research  programmes  would  be  pooled  in  areas  like,  for  instance,  cancer, 
Alzheimer  and  emerging  diseases,  nanotechnologies,  or  research  on  the  main  social  and 
economical challenges, like demography, education, employment and innovation. 

In  close  link  with  its  action  in  research,  the  Union  should  support  the  development  of  a 
coherent  and  strong  effort  at  European  level  in  two  fields  in  which  science  and  technology 
play a key role: 

•  Space, in support of a European space policy aiming at greater coherence of European and 
national  private  and  public  efforts,  and  focusing  on  the  development  of  applications  in 
fields  such  as  positioning  and  navigation,  earth  observation  and  monitoring,  and 
telecommunications, co-ordinating R&D investments at various levels and helping the EU 
to  better  realise  its  policy  objectives  in  partnership  with  existing  space  powers  such  as 
Russia, and emerging ones like China, India and Brazil. 

Action  in  this  area  will  rely  on  the  implementation  of  a  European  space  programme 
strengthening EU space projects (such as the GMES – Global Monitoring for Environment 
and Security). 

•  Security, in support of the implementation of Union policies, by fostering research needed 
to increase security in its different dimensions in Europe as a follow-up of the preparatory 
action launched in this field, in which US investments are five times higher than Europe’s. 
This  constitutes  a  Commission  contribution  to  the  wider  EU  agenda  to  address  Europe’s 
challenges  and  threats  as  set  out,  inter  alia,  in  the  European  Security  Strategy  that  was 
endorsed by the European Council in December 2003. It is complementary to the actions 
and efforts that are being deployed by the Member States and the other EU institutions. 

It  would  involve  the  development  of  knowledge  and  technologies  with  European  added 
value to successfully anticipate, monitor and mitigate new security threats, such as those 
related  to  bio-terrorism,  cyber-crime  and  global  security,  and  to  ensure  the  European 
position in the complex research networks. 

EU action in the field of dissemination of research results will be strengthened accordingly, 
and European participation and leadership in global initiatives will be reinforced. 

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c) 

Connecting Europe through EU networks 

Ten  years  after  the  launch  of  the  trans-European  networks  initiative,  the  development  of  a 
spine  of  major  axes  across  the  European  Union  is  stagnating.  However,  traffic  on  the 
networks is continuing to grow, and enlargement will generate additional growth in traffic on 
the road, rail and energy infrastructures. The cost of congestion is estimated to represent 1 % 
of GDP, which will double by 2020. If nothing is done, most of the increase will fall on roads 
leading  to  very  negative  consequences  in  terms  of  congestion,  the  environment,  safety  and 
quality of life. If nothing is done, Europe will not be connected, and it will pay the price of a 
failing infrastructure on its potential for growth. 

High-performing  trans-European  networks  are  an  essential  catalyst  for  the  sustainable 
mobility  of  goods,  citizens  and  energy  in  an  enlarged  EU.  This  not  only  contributes  to 
competitiveness,  it  also  offers  a  tangible  symbol  of  European  integration.  The  untapped 
potential for people and for businesses resulting from better transport connections is estimated 
at  0.23%  of  GDP,  meaning  about  one  million  permanent  jobs.  Projects  like  high  speed  rail 
lines or the European satellite navigation system Galileo will boost European industries at the 
cutting edge of high technology. 

So action to create an efficient and sustainable transport system and a reliable energy supply 
is critical to economic performance. Inaction would bring real costs. 

The  return  on  this  investment  goes  beyond  national  boundaries.  This  encourages  national 
governments’  failure  to  take  a  European  perspective  and  their  reflex  to  put  national 
programmes first, especially in times of intense pressure on national budgets. European Union 
coordination and participation in financing with a special emphasis on cross-border sections 
can  bring  coherence  on  a  continental  scale,  long-term  stability,  and  can  leverage  greater 
private sector participation.  

•  For  example,  “Motorways  of  the  sea”  could  take  freight  off  the  roads  (for  example,  
7.6 million tonnes could be taken between Rotterdam and Bilbao each year, equivalent to 
10 % of road freight on this route). But it can only work through EU coordination. 

•  The Mont-Cenis rail tunnel between Lyon and Turin would treble the current capacity and 
link some of Europe’s most dynamic regions with the core of the new Member States. But 
it cannot be kick-started without EU backing. 

The  cost  of  the  whole  trans-European  network  is  estimated  at  €600  billion.  The  new 
guidelines for the trans-European networks welcomed by the European Council in December 
2003 offer better coordination between Member States and a tighter focus on a list of defined 
priority projects with precise dates. 

This included  interconnecting national high speed rail networks  by 2012, developing a core 
rail  freight  network  in  central  Europe  by  2015,  and  a  package  to  connect  ports  and  land 
transport by 2010. 

The overall level of investment required to realise the 26 priority transport projects amounts 
to 220 billion Euros up to 2020, with funding to peak between 2007 and 2013. It is estimated 
that  the  private  sector’s  share  in  financing  this  projects  should  be  around  20%  of  funding 
requirements, the rest being financed jointly by national budgets, and the Community budget 
contributing up to 20%. 

11 

 
 
  
 
European funding is also required to ensure that Europe’s energy supply is delivered across 
national  frontiers  and  to  develop  renewable  energy  and  clean  fuel,  with  costs  estimated  at 
some 100 billion euros. Community initiatives are needed to  raise the  impact  and appeal of 
renewable  energy  and  energy  efficiency  and  to  meet  agreed  targets  like  providing  22%  of 
electricity from renewable sources by 2010. 

The  Union  will  also  need  to  pursue  its  efforts  to  remove  the  barriers  hindering  the 
development of an Internal Market for telecommunications and to ensure the availability of a 
secure broadband network infrastructure in all regions, devoting particular attention to the risk 
of digital divide between urban and remote and rural areas. 

d) 

Improving the quality of education and training in the Union 

Human capital is one of the major determinants of growth. One additional year of schooling 
can increase the aggregate productivity by 6.2% for a typical European country. Yet over the 
period 1995–2000, public investment in education and training as a proportion of GDP fell in 
most Member States. The EU lags behind its competitors in terms of the number of graduates, 
the skills achieved when leaving school, and participation in lifelong learning. There are also 
huge variations in performance from one Member State to another. In view of these declining 
indicators  there  is  an  urgent  need  to  speed  up  the  pace  of  reform  and  modernisation  of 
Europe’s  education  and  training  systems.  Globalisation,  technological  and  demographic 
change require a flexible and mobile workforce with relevant and continually updated skills.  

Education  policies  are  an  area  where  closeness  to  the  individuals  and  cultural  diversity  are 
very  important,  and  hence  where  national  and  local  authorities  have  a  primary  role.  The 
overall modernisation of the Community's education and training systems is a centrepiece of 
the Lisbon strategy. Consequently, the European Council has adopted common objectives and 
a  work  programme  to  transform  education  and  training  systems  into  efficient  life-long 
learning  systems  accessible  to  all  citizens  and  to  promote  convergence  in  order  to  raise 
standards overall. The focus is on improving the quality of education and training (curriculum 
reform, new teaching methods, quality assurance), increasing access to education and training 
at  all  stages  of  life  (including  e-learning)  and  opening  education  and  training  up  to  outside 
influences ranging from labour markets to worldwide competition. 

This  work  requires  Union  support,  since  the  benefits  are  spread  Europe-wide  and  Members 
States  individually  do  not  have  the  appropriate  means.  Besides  cohesion  policy  support  to 
infrastructure and basic education and training, the Union contribution takes two main forms: 
supporting  individual  mobility  (such  as  students,  teachers,  academics  or  trainers):  and 
promoting  partnerships/networks  between  schools,  universities  and  training  providers  in 
different  countries.  At  the  heart  of  this  objective  will  be  mobility  of  students,  teachers, 
academics,  trainers,  and  not  least  of  ideas  and  best  practices.  Multilateral  cross-border 
mobility  is  an  area  that,  although  recognised  by  all  to  be  crucial,  cannot  be  efficiently 
organised  or  funded  at  the  national  level.  EU  action  only  can  provide  the  framework  and 
financial support, for which demand under the current programmes far exceeds supply. 

The following targets would include: 

The participation of 3 million university students in mobility programmes by 2010 (the figure 
of 1 million was achieved in 2002) implying that some 10% of university students are offered 
the possibility to get exposure to and benefit from studying abroad; 

The involvement of 150,000 vocational trainees a year in mobility actions by 2013; 

12 

 
 
  
 
Involving  10%  of  the  Community's  school  population  (pupils  and  teachers)  in  mobility 
actions throughout the programme period; 

The participation of 50,000 adults in lifelong learning mobility actions by 2013. 

The result must be a major contribution to re-establishing Europe as a pole of educational and 
training excellence. 

e) 

A Social policy agenda: Helping European society to anticipate and manage change 

The  rapid  change  in  international  competitive  conditions  leads  to  a  new  division  of  labour 
which  impacts  on  all.  Its  benefits  are  widespread  but,  combined  with  weak  growth,  it  may 
result  in  increased  unemployment  and  exclusion.  Against  this  background,  the  EU  must 
anticipate and accompany forthcoming changes: this is the essence of the European model of 
social cohesion and economic growth.  

The Union needs to adapt, trigger and absorb change. By dynamically addressing challenges 
related  to  rapid  change  in  international  competitive  conditions,  the  Social  Policy  Agenda  is 
the Union's roadmap for policy and action in the employment and social sphere, as part of the 
overall  Lisbon  Strategy.  Through  the  combination  of  legislation,  the  open  method  of 
coordination  and  social  dialogue,  and  EU  budget  support,  the  agenda  is  instrumental  in 
modernising the European social model.  

The Social Policy Agenda should help Europe reach its full potential by strengthening social 
policy as a productive factor and addressing the cost of non-social policy. 

The EU must provide the appropriate regulatory framework to create a level playing field for 
businesses and workers by establishing adequate social standards and basic rights. EU action 
also acts as a catalyst by facilitating the definition and implementation of reform measures by 
Member States in their labour market and social policies and, as such, brings about important 
policy developments with modest financial means. The EU level is also the most appropriate 
place to successfully promote social dialogue, as foreseen by the Treaty.  

•  In order to face the new challenges common to all Member States and to manage change in 
the  context  of  enlargement,  globalisation  and  demographic  ageing,  the  Social  Policy 
Agenda should be further strengthened.  

•  In  its  latest  Spring  report,  the  Commission  called  for  the  establishment  of  European 
Partnerships  for  change,  tripartite  mechanisms  aiming  at  identifying  common  challenges 
and  giving  appropriate  responses  in  terms  of  harnessing  change.  Collective  agreements 
tend  to  cover  an  increasingly  broad  range  of  issues  beyond  the  classical  topics  of  wages 
and working time and are being developed into instruments for anticipating and managing 
change. These partnerships should also address questions related to the new international 
division of labour stemming from globalisation, with a particular sector by sector focus. 

Action at EU level is warranted as: 

•  The EU provides the appropriate framework to create a level playing field for businesses 

by establishing common social standards and rights and free movement of workers. 

Promoting  prevention  and  setting  minimum  health  and  safety  standards  significantly 
reduced occupational diseases and accidents. However, the total cost to the economy still 

13 

 
 
  
 
amounts to between 2.6% and 3.8% of GNP, testimony of the high economic costs of not 
having appropriate legislation in place. The Commission has called for a target of a 15 % 
overall reduction in the incidence rate of accidents at work in each Member State. 

Currently  30  million  people  benefit  from  social  security  co-ordination  provisions  at  EU 
level during a temporary stay in another Member State. The target of at least 100 million 
persons  should  be  achieved  through  the  deployment  of  the  European  health  insurance 
card. 

•  EU policy coordination acts as a catalyst bringing about important policy developments in 

Member States with modest financial means. 

The  European  Employment  Strategy  brings  about  structural  reforms  to  Member  States’ 
labour  markets.  Further  bridging  the  performance  gap  between  the  current  employment 
rate  and  the  full  employment  goal  amounts  to  almost  16  million  jobs.  Tapping  the 
potential  of  older  workers  alone  would  total  7  million  jobs.  The  total  cost  of  the 
underutilisation  of  the  labour  force  is  estimated  at  around  9%  of  the  EU's  GDP,  or  825 
billion Euro. 

•  The  EU  level  is  also  the  most  appropriate  place  to  successfully  enhance  the  quality  of 

industrial relations and promote social dialogue as foreseen by the Treaty. 

The European Works Council Directive aims at fostering the information and consultation 
of workers at transnational level. By increasing the coverage of employees to 80% (from 
65%  currently)  an  additional  2.5  to  3  million  employees  could  benefit  from  these 
mechanisms,  thus  attaining  around  21.5  million  workers  across  Europe  and  facilitating 
restructuring. 

In the light of the above, here is a financial illustration for section 1: 

COMMITMENT 
APPROPRIATIONS 

1a. 
Competitiveness 
growth and employment 

2006
(a) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

for 

8.791  12.105  14.390  16.680  18.965  21.250  23.540  25.825 

2. 

A greater Cohesion for growth and employment 

Through  its  cohesion  policy,  the  Union  has  made  a  significant  contribution  to  harmonious, 
balanced  and  sustainable  development. By  mobilising  Europe’s  unused  potential,  cohesion 
policy has also boosted economic performance overall at the same time as reducing economic 
and social disparities. 

The added value of cohesion policy 

Key  features  in  the  success  of  European  cohesion  policy  in  raising  the  economic 
performance  of  the  future  Member  States  and  regions  are  the  following,  which  should  be 
strengthened in the future: 

14 

 
 
  
 
 
 
 
 
 
•  The  concentration  of  resources  on  investment  in  order  to  increase  and  improve  the 
stock  of  physical  and  human  capital  and  hence  to  have  maximum  impact  on 
competitiveness and growth. It is this concentration that has permitted the majority of the 
less  developed  regions  in  the  four  poorest  countries,  the  principal  beneficiaries  of  the 
policy in financial terms, to achieve an average growth rate above the  EU average over 
the period 1995-2001; 

•  The respect for the rules of the single market, for example, in relation to competition 
policy and public procurement. A measurable effect of this can be seen in the increase in 
intra-Community trade, notably between the least developed Member States and regions 
and the rest of the EU. In the case of cohesion policy, this means that around one quarter 
of expenditure under the programmes for these areas returns to the rest of the Union in the 
form of increased exports; 

•  The emphasis on job creation in new activities to help deal with the effect of economic 
and  social  change,  because  of  the  new  international  division  of  labour.  For  example, 
outside  the  less  developed  regions,  the  previous  generation  of  programmes,  1994-99, 
assisted some 300 000 small businesses, contributing to the creation of 500 000 new jobs; 

•  The  contribution  to  partnership  and  good  governance.  The  system  of  multi-level 
governance 
local  authorities  and 
stakeholders helps to ensure that actions are adapted to circumstances on the ground and 
that there is a genuine commitment to success (“ownership”); 

involving  Community,  national,  regional  and 

•  The leverage effect as a result of co-financing rules that mobilise additional resources for 
new  investment  from  national  public  and  private  resources.  Each  euro  of  expenditure 
from  the  Union’s  budget  for  cohesion  policy  levers  in  on  average  €  0.9  in  the  least 
developed (“Objective 1”) regions and € 3 in the other (“Objective 2”) regions. 

•  The successful support to the Union’s other sectoral policies.  

o  by investing in the implementation of Community legislation, cohesion policy 
helps less favoured regions to meet EU standards, for example in the field of 
environment.  

o 

in sectors like education, transport and energy, cohesion policy offers large 
scale support to new investments, especially the least developed Member 
States and regions. 

For  the  future,  it  remains  essential  to  maintain  an  effective  policy  at  European  level  to 
promote  modernisation  and  faster  growth  in  the  less  developed  regions  and  to  bring  more 
people into productive employment across the Union as a whole. But the policy also needs to 
undergo reform in order to respond better to the new challenges. 

An  unprecedented  challenge  for  the  competitiveness  and  internal  cohesion  of  the  Union  is 
presented by enlargement. In the enlarged Union, average GDP per capita will be more than 
12% lower than in the Fifteen, while income disparities will double overall. 

The reform must focus on competitiveness, sustainable development and employment as set 
out at the European Councils of Lisbon and Göteborg in a context of increased competition, 
globalisation  and  a  generally  ageing  population.  For  the  future,  the  challenge  is  to  ensure 
that the Lisbon and Göteborg objectives and anticipation of change stemming from the 

15 

 
 
  
 
new international division of labour are systematically incorporated from the outset into 
the design of all national and regional development strategies. 

In an effort to improve the quality of expenditure for the next period in accordance with the 
Lisbon  and  Göteborg  objectives,  the  Commission  proposes  that  cohesion  policy  should  be 
guided  by  an  overall  strategy.  To  this  end,  the  Commission  intends  to  present  a  strategic 
document to Parliament and to the Council setting out priorities for cohesion policy, including 
measures considered necessary in anticipation of economic and social change. 

The  Commission  also  envisages  a  more  simplified  and  transparent  priority  framework,  in 
order to deliver the Lisbon and Göteborg agendas in a way that is differentiated according to 
circumstances, with three priorities (replacing the current objectives) as follows: 

–  Convergence.  The  main  effort  must  focus  on  the  less  developed  Member  States  and 
regions  of  the  enlarged  Union.  This  would  also  include  those  regions  that  have  not 
completed the process of convergence but would no longer be eligible for support because 
their  level  of  income  per  head  is  higher  in  relative  terms  in  the  enlarged  Union  (the  so-
called “statistical effect”). Efforts under the convergence programmes would be devoted to 
modernising  and  increasing  physical  and  human  capital,  in  order  to  increase  long-term 
competitiveness, foster environmental sustainability and provide  a greater contribution to 
the Union's overall economic performance while developing best practices in governance 
and institutional capacities. 

–  Regional  Competitiveness  and  Employment.  The  regional  competitiveness  and 
employment  programmes  would  cover  the  other  Member  States  and  regions,  since 
significant  needs  will  persist  throughout  the  Union  as  a  result  of  economic  and  social 
restructuring  and  other  handicaps.  To  ensure  the  added  value  of  Community  actions, 
interventions would need to concentrate on a limited number of policy priorities linked to 
the  Lisbon  and  Göteborg  agenda,  where  they  can  provide  added  value  and  a  multiplier 
effect on national or regional policies. The employment programmes will be organised at 
national  level.  The  regional  development  programmes  would  be  simplified  including  the 
abandonment  of  the  current  system  whereby  the  Commission  must  select  small  areas  at 
sub-regional  level.  Rather,  an  appropriate  balance  would  be  determined  between 
geographical  and  thematic  targeting  of  interventions  in  the  context  of  drawing  up  the 
multi-annual  development  plan.  Support  to  regions  no  longer  meeting  the  criteria  for 
convergence  programmes,  even  in  the  absence  of  the  statistical  effect  of  enlargement, 
would be included under this heading. 

–  European  territorial  cooperation  in  the  form  of  cross-border  and  transnational 
programmes. The programmes would seek to address the particular problems that exist in 
achieving  a  competitive  and  sustainable  economy  in  areas  of  Member  States  that  are 
divided  by  national  borders.  The  emphasis  would  be  on  the  promotion  of  exchanges  of 
experience  and  good  practices,  contributing  to  economic  integration  across  the  Union’s 
territory and to more harmonious and balanced development. 

In the light of the above, here is a financial illustration for section 2: 

COMMITMENT 
APPROPRIATIONS 

2006
(a) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

1b.  Cohesion  for  growth  and  38.791  47.570  48.405  49.120  49.270  49.410  50.175  50.960 

16 

 
 
  
 
 
 
 
employment 

3. 

Sustainable  management  and  protection  of  natural  resources:  agriculture, 
fisheries and environment 

The  new  Member  States  (and  more  to  come)  mean  75  million  additional  consumers,  
4  million  extra  farmers  in  the  European  Union.  Enlargement  means  a  much  larger  market, 
more  competition,  and  a  challenge  to  meet  high  standards  in  terms  of  quality  and  safety  of 
products, and environmental protection. The early decision of the Member States to replace 
their respective, costly and partly contradictory national policies by a common policy defined 
in the Treaty was dictated by the expected value added in terms of ensuring free circulation of 
agricultural  goods  and  avoiding  distortion  of  competition  within  the  European  Community, 
promoting the stability of supply, and enhancing competitiveness on the internal and external 
markets.  

Since  then,  the  policy  has  evolved  taking  on  board  additional  public  concerns  such  as 
production quality, the environment, animal welfare and a living countryside, which accounts 
for  80%  of  European  territory.  It  also  has  taken  account  of  the  need  to  support  farmers 
producing and conserving public goods in the most efficient way. Consequently, the CAP has 
actually been producing value added over time at a lesser cost than would have been the case 
had the Member States continued with their separate agricultural policies. 

A fundamental reform of the Common Agricultural Policy (CAP) was decided last June and is 
being completed with a second package to be followed by a proposal on sugar in mid-2004. 
This is designed to secure a stable framework for the sector until 2013.  

The  reform  is  aimed  at  meeting  the  objectives  of  competitiveness,  solidarity  and  better 
integration of environmental concerns thus becoming a key step in the Lisbon and Göteborg 
development strategy. It involves: 

•  A  substantial  simplification  for  the  market  support  measures  and  direct  aid  payments  by 

decoupling the direct payments to farmers from production.  

•  Further strengthening the rural development by transferring funds from market support to 
rural development through reductions in direct aid payments to bigger farms (modulation) 
thus  linking  the  two  pillars  of  the  CAP  that  are  complementary  in  enhancing  the 
sustainable development of farming and farming communities.  

•  A financial discipline mechanism in line with the decision of the European Council to set a 

ceiling on expenditure on market support and direct aid between 2007 and 2013. 

Contributing to the objectives of sustainable development and having been strengthened, the 
future rural development policy after 2006 will be focusing on three main objectives: 

–  increasing the competitiveness of the agricultural sector through support for restructuring 
(for instance investment aids for young farmers, information and promotion measures); 

–  enhancing  the  environment  and  countryside  through  support  for  land  management, 
including  co-financing  of  rural  development  actions  related  to  Natura  2000  nature 
protection  sites  (for  instance  agri-environment,  forestry  and  Least  Favoured  Areas 
measures); 

17 

 
 
  
 
 
–  enhancing  the  quality  of  life  in  rural  areas  and  promoting  diversification  of  economic 
activities  through  measures  targeting  the  farm  sector  and  other  rural  actors  (for  instance 
qualitative reorientation of production, food quality, village restoration). 

The Common Fisheries Policy (CFP) is the condition for equal treatment and equal economic 
chances  for  fishermen  and  the  coastal  regions  of  the  Member  States,  and  it  is  becoming 
increasingly important to ensure sustainable fishing as fish stocks dwindle, taking account of 
environmental, economic and social aspects in a balanced manner 

Since  1  January  2003,  the  new  reformed  Common  Fishery  Policy  focussing  more  on  the 
sustainable  exploitation  of  living  aquatic  resources  based  on  sound  scientific  advice  and  on 
the precautionary approach to fisheries management together with aquaculture has now been 
firmly integrated within the Community's policy on sustainable development. 

The  achievement  of  Lisbon  and  Göteborg  policy  goals,  namely  the  development  of  a 
European economy that delivers growth while reducing negative impacts on the environment, 
requires  continued  commitment  to  sustainable  use  and  management  of  resources  and 
environment  protection.  Environment  policy  is  a  fundamental  complement  to  the  single 
market  and  enhances  quality  of  life.  European  citizens  increasingly  see  access  to  a  clean 
environment  as  a  right  and  they  look  to  the  EU  to  guarantee  that  right  and  to  ensure  that 
Member  States  implement  environment  policy  correctly.  Important  activities  for  the  2006-
2012 period within these priorities include: 

•  Implementation of the EC Climate Change Programme, including a range of measures to 
ensure  that  the  Kyoto  Protocol  target  for  EC  greenhouse  gas  emission  reductions  is 
achieved; 

•  Implementation of the thematic strategies which address specific environmental priorities 
e.g.  soil;  air  quality;  pesticides;  the  marine  environment;  the  urban  environment; 
sustainable use and management of resources; and waste recycling; 

•  Implementation of the Environmental Technology Action Plan (‘ETAP’) to harness the full 
potential  of  environmental  technologies,  reducing  pressures  on  natural  resources,  and 
aiming 
life  of  European  citizens  while  stimulating 
competitiveness and economic growth, further promoting the leading role the EU takes in 
developing and applying environmental technologies. 

the  quality  of 

improve 

to 

•  Development and implementation of the Natura 2000 network of sites to protect European 

bio-diversity as well as implementation of the biodiversity action plan. 

In  the  light  of  the  above,  the  commitments  undertaken  must  be  respected  and  the  European 
Union must manage its natural resources as a translation of the European model of growth and 
cohesion into the management of its environment. 

In the light of the above, here is a financial illustration for section 3: 

COMMITMENT 
APPROPRIATIONS 

2. Sustainable management and 
protection of natural resources 

2006
(a) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

56.015  57.180  57.900  58.115  57.980  57.850  57.825  57.805 

18 

 
 
  
 
 
 
 
B. 

1. 

Giving full content to European citizenship 

The area of freedom, security, and justice 

Freedom,  Security  and  Justice  are  core  values  which  constitute  key  components  of  the 
European model of society. 

Through the integration of the Charter of Fundamental Rights into the Constitutional Treaty 
the Union will have a legal obligation to ensure that fundamental rights are not just respected, 
but actively promoted as well. 

It is now clearly recognised that the challenges posed by immigration, asylum, and the fight 
against crime and  terrorism  can no  longer be met  adequately  by  measures  taken  only  at  the 
national level only.  

In  this  context,  developing  this  dimension  of  the  European  Union  is  the  new  frontier  for 
integration: a true area of Freedom, Security and Justice is an indispensable building block of 
the European Union, at the heart of the political project for an enlarged Union.  

Action  at  the  Union  level  ensures  a  fair  share  of  responsibilities  including  financial  burden 
sharing, and raises awareness of shared issues and values, thus facilitating the emergence of 
common approaches. 

Enlargement will increase the number of citizens who expect to benefit from living in an area 
of  freedom,  security  and  justice  on  an  unprecedented  scale,  and  it  will  also  bring  particular 
challenges, for example in terms of the security of our external borders. 

(i) External borders/immigration 

•  The  Union  must  manage  its  external  borders  in  an  integrated  way,  to  welcome  legal 
immigration  in  a  coordinated  manner  and  protect  from  illegal  entrants  external  borders 
stretching  to  approximately  6.000  km  on  land  and  more  than  85.000  km  of  maritime 
borders after enlargement.  

A  key  objective  in  this  area  is  the  European  Border  Agency  to  pave  the  way  for  the 
creation  of  a  European  Border  Guard  Corps  with  adequate  means  to  execute  tasks  of 
surveillance and border control in support of national authorities. 

•  The EU will continue to face the challenge of ensuring respect for international protection 
obligations in a context of migration flows and asylum seekers. A common asylum policy 
based on a fair sharing of responsibility and financial burden between Member States will 
ensure  uniform  conditions  for  the  reception  of  more  than  400.000  people  applying  for 
asylum in the enlarged Union per year, while discouraging those with unfounded claims.  

•  A  common  policy  on  immigration  for  an  effective  management  of  the  sustained 
migration flows needed to meet the needs of the labour market. In the light of demographic 
change, migrants will contribute to economic growth, competitiveness and the sustainable 
development  of  the  EU.  In  this  respect,  the  Union  must  implement  measures  within  this 
policy domain,  to  provide  incentives and support for  the action of Member States with a 
view to promoting the integration of third country nationals residing in their countries. 

19 

 
 
  
 
 
The successful integration of immigrants is thus both a matter of social cohesion and a pre-
requisite for economic efficiency. Third country nationals already living in the EU total 14,3 
million people, with an estimated yearly inflow of 1,5 million persons. 

EU financial intervention should aim at complementing and support the actions of Member 
States and aiming at coordination in an area where issues are transnational by nature: 

Involving  at  least  5  %  of  legally  resident  third  country  nationals  (10  %  through  indirect 
impacts)  into  programmes  and  actions  such  as  access  to  services,  self-empowerment  in 
social  life,  creation  of  networks,  exchange  of  best  practices  between  operators.  Also,  a 
specific target as regards integration would be to provide specific integration services to 20 
% of newly arrived third country nationals (orientation courses, language courses). 

Developing a common instrument for the return of illegally resident third country nationals 
or persons irregularly migrating towards the EU would be the necessary complement for a 
policy fostering sustainable migration. 

(ii) Justice/security 

•  Ensuring security through preventing and fighting crime and terrorism will remain a key 
challenge  for  the  Union.  Priorities  will  include:  action  to  develop  and  reinforce  Europol, 
and  the  European  Police  College  to  strengthen  cooperation  and  exchange  between  the 
practitioners  concerned;  and  a  stronger  focus  on  crime  prevention  activities,  notably 
emerging  forms  and  means  of  serious  and  organised  criminality,  to  address  the  need  for 
security  as  a  pre-requisite  for  the  administrative,  social  and  economic  sustainability  of 
European societies. Example of actions at EU level are: 

–  Achieving  10  %  of  senior  police  officials  with  the  training  provided  by  the  European 
Police  College,  and  indirectly  affecting  60  %  of  police  officials  in  the  EU  through  the 
diffusion of common training modules. 

–  Increase  in  the  volume  of  exchanges  of  relevant  information  between  national  law 

enforcement authorities and Europol by 75 % in 2013. 

•  An effective area of justice is the natural complement to effective freedom of movement 
by providing legal certainty to back up cross-border transactions, and dealing with cross-
border  legal  difficulties  involving  personal  and  family  situations.  Action  is  needed  to 
ensure  access  to  effective  justice  and  close  judicial  cooperation  as  well  as  common 
criminals.  
denying 
approaches 

havens’ 

against 

crime 

‘safe 

for 

by 

Eurojust will be further strengthened in order to reinforce the coordination and cooperation 
investigators  and  prosecutors  dealing  with  serious  cross-border  crime. 
between 

2. 

Access to basic goods and services 

Europeans also expect access to the levels of goods and services of general interest associated 
with the European economic and social model: 

•  The  protection  of  citizens  against  risks  as  diverse  as  natural  disasters,  health  and 
environmental  crises  is  one  area  where  the  Union  can  provide  added  value  where 
individual action by a Member State cannot provide an effective response to risks that have 

20 

 
 
  
 
 
 
transnational  consequences  or  where  the  scale  of  the  crisis  concerned  calls  for  European 
solidarity: 

–  Developing  this  strand  means  reinforcing  safety  and  security  standards  to  achieve  clean 
energy and transport systems, as well as applying environmental standards to ensure that 
the basic natural amenities (air, water, soil) are free from substances hazardous to health.  

–  Citizens look to the EU for protection against large-scale disasters. Over the medium term 
the EU will be increasingly be called upon to enhance its response capability in the event 
of  disasters  that  overwhelm  national  capacities,  and  maximise  the  effectiveness  of  the 
resources available across the EU. 

–  As  consumers,  citizens  depend  on  suppliers  and  on  public  authorities  to  ensure  that  the 
goods  and  services  they  are  offered  are  safe.  Better  information  and  clear  messages  are 
required  so  that  citizens  can  make  properly  informed  choices  about  their  purchases  and 
lifestyles. The Union must commit itself to ensure, together with national authorities, the 
safety of goods. This is particularly important for the safety, quality and nutritional value 
of  its  food  supply  as  well  as  guarantees  regarding  the  way  it  is  produced,  and  the 
appropriateness of the information which is conveyed to citizens about the food they buy, 
or eat.  

–  But health also generates wealth. Improving health drives progress, empowers individuals 
through  a  longer,  better  and  more  productive  life,  and  is  a  precondition  for  economic 
prosperity.  As  individuals,  people  expect  to  receive  authoritative  information  and  advice 
about their basic health choices. The Union can serve to help national authorities empower 
individuals to improve their health, and facilitate cross-border access for patients to health 
services. In a modern world with frequent, global transport and trade, health crises expand 
quickly across borders, calling for joint EU-action. 

•  Furthermore, in the European model of society citizens expect access to an adequate level 
of  basic  services  of  general  interest,  such  as  health  and  education,  energy  supplies, 
transport, telecommunications or postal services. This may require a common framework 
designed to give Member States guarantees to help make the relevant policy choices. 

3. 

Making citizenship work: fostering European culture and diversity 

The EU is about to undergo the most significant enlargement in its history. Immigration has 
already  increased  the  Union’s  cultural  diversity  and  demographic  trends  mean  that  this  will 
continue.  The  future  Union  will  therefore  be  characterised  by  immense  social  and  cultural 
diversity.  Mutual  knowledge  and  understanding  between  its  citizens  becomes  essential. 
European citizens need to know and be able to experience what they have in common. 

The framework for dialogue and exchange between citizens of the Member States, to promote 
mutual  understanding  and  a  shared  European  identity,  and  actions  to  promote  European 
citizenship is designed to complement Member States actions and promote cultural diversity 
in a Union of 25 and more Member States and many minorities.  

It  involves  supporting  European  cultural  co-operation,  helping  overcome  the  obstacles  to 
cross-border  exchanges  and  structures  in  the  European  audiovisual  industry  and  fostering 
youth  exchanges,  voluntary  service  and  informal  learning  as  well  as  language  learning  and 
training  for  language-based  professionals.  It  is  above  all  through  the  involvement  of  young 
people that the Europe will assure its future. 

21 

 
 
  
 
Other examples are: 

–  The obstacles to cultural co-operation at EU level – for example through the circulation of 
works  of  art  or  artists,  the  setting  up  of  networks  of  museums,  opera  houses  or  other 
cultural institutions –stem from fragmentationbetween Member States.  

–  The  situation  is  similar  as  far  as  the  circulation  of  European  films  and  television 
programmes is concerned: due to linguistic, cultural and social specificities, the European 
audiovisual  industry  is  still  largely  structured  on  a  national  basis  and  relies  mainly  on 
national markets.  

One could aim at the following goals: 

A  substantial  increase  in  the  number  of  citizens’  initiatives  for  intercultural  dialogue  and 
exchange  and  in  the  number  of  trans-national  co-operation  projects,  with  1.500  cultural 
institutions networking and reaching millions of citizens each year; 

Increase the rate of European films distributed outside their country of origin from the current 
11%  of  the  market  to  20%  in  2013,  double  the  number  of  cinemas  programming  European 
films by 2010 and training 35,000 audiovisual professionals by 2013; 

Implement  40.000  projects  with  young  people  (e.g.  youth  exchanges)  and  5.000  projects 
(training, information and exchange of good practices) for youth workers over the programme 
period, and increase participation in the European Voluntary Service to 10.000 volunteers per 
annum. 

The result will be a major contribution to the realisation of the EU's goal of reaching unity in 
diversity. 

In the light of the above, here is a financial illustration for section 4: 

COMMITMENT APPROPRIATIONS 

2006
(a) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

3.  Citizenship,  freedom,  security  and 
justice 

1.381  1.630  2.015  2.330  2.645  2.970  3.295  3.620 

C. 

The EU as a global partner 

With more than 450 million inhabitants and a quarter of world output, the Union of 25 – and 
soon  27  -  members  should  wield  considerable  influence  over  the  long-term  political  and 
economic choices determining prosperity and stability in Europe and the wider world, which 
in their turn influence the well-being and security of Europeans. 

There is, however, a gap between its economic weight and its political clout. The Union is not 
a  State,  but  coherent  external  relations  can  increase  its  influence  far  beyond  what  Member 
States can achieve separately or even along parallel lines of action. 

The Union has developed a broad, though incomplete, spectrum of external relations tools in 
the  shape  of  the  common  trade  policy,  cooperation  under  bilateral  and  multilateral 
agreements, development cooperation, humanitarian aid and financial assistance as well as the 

22 

 
 
  
 
 
 
 
external aspects of internal policies (energy, environment, transport, justice and home affairs, 
etc).  

EU external action including the Common Foreign and Security policy, common trade policy 
and  cooperation  with  third  countries  provides  a  framework  both  for  integrating  all  EU 
instruments – bearing in mind their specific institutional and operational characters – and for 
developing  gradually  a  set  of  common  actions  based  on  common  positions  in  the  broader 
sphere of political relations, including security. 

Enlargement  will  entrust  EU  with  even  greater  responsibilities,  as  regional  leader  and  as 
global partner. It should therefore strengthen its capacity to promote human rights, democracy 
and  the  rule  of  law  as  well  as  its  capacity  to  focus  on  the  fight  against  poverty,  both  in  its 
neighbourhood and  through  its multilateral and bilateral policies which are mainly aimed at 
sustainable development and political stability. By that means, the EU will achieve genuine 
consistency  between  its  domestic  and  its  external  agendas  contributing  thereby  to  global 
security and prosperity. 

1. 

EU and its neighbourhood policy 

The EU’s role as a regional leader is critical not only for itself and its neighbourhood, but also 
as  a  stepping  stone  for  its  contribution  to  sustainability  and  stability  at  the  world  scale. 
Building on the successful features of previous enlargements, the expanded EU will stabilise 
its  wider  neighbourhood  and  support  its  development  through  narrow  cooperation  and 
through  a  level  of  integration  as  high  as  appropriate  to  the  needs  and  possibilities  of  the 
candidate and pre-candidate countries and their immediate neighbours. Liberalising trade and 
investment, promoting a suitable degree of regulatory convergence, connecting its transport, 
energy and communication networks with them will support their own internal development 
strategies which remain the key to success. Enhanced cooperation in education and training, 
which  is  already  a  success  of  EU’s  neighbourhood  policy,  will  be  essential  to  support  this 
integration.  Jointly  agreed  policies  on  immigration  will  rest  on  the  one  hand,  upon  jobs 
creation in the emigration countries, and, on the other, upon integration of legal migrants in 
the widened EU. In other words, this stability circle means a common space, a community of 
“everything but the institutions”. 

Environmental and nuclear safety and energy security are also major issues for the EU in its 
dealings  with  its  neighbours.  Illegal  immigration,  organised  crime,  trafficking  of  various 
kinds, terrorism and communicable diseases are also serious threats which call for concerted 
action with these countries. Expanding the four freedoms of the Single Market throughout the 
area while stepping up security requires a high degree of cooperation and integration.  

Beyond the specific interests uniting those Member States which share a border with the EU's 
neighbours  to  the  North  and  South,  the  EU  has  a  collective  interest  in  consolidating 
democracy  and  the  rule  of  law  and  in  vigorously  encouraging  economic  reforms  and 
integration throughout the area formed by the EU with Russia and its neighbours, the Balkans 
and  the  Mediterranean  through  to  the  Persian  Gulf.  Extending  the  benefits  of  intensive  and 
balanced trade with a 25-member EU to the whole of this area by integrating these countries 
into  an  area  founded  on  common  values  and  a  larger  market  structured  by  interconnected 
networks  and  common  rules  and  standards  is  an  enormous  challenge.  The  growing  gaps  in 
income  and  differing  historical  experiences  have  created  a  considerable  divide  between  the 
EU and its neighbours, a divide that must be bridged by joint efforts over a long period. 

23 

 
 
  
 
Its partners to the East and the South can no longer put off the political and economic reforms 
on which depend the industrialisation/reindustrialisation and development of services needed 
to  create  the  millions  of  jobs  necessary  to  improve  living  standards  and  address  the 
frustrations  of  young  people.  Keeping  the  Copenhagen  criteria  in  mind  as  reference,  the 
conditions attached to EU co-operation and assistance and the loyalty shown by the Member 
States  to  the  EU  in  bilateral  dealings  with  these  countries  are  important  in  getting  things 
moving in the right direction. 

In its neighbourhood and beyond, the EU cannot, however, confine itself to the economic and 
political spheres; it also increasingly needs to be able to guarantee stability, prevent conflicts 
and manage crises on its own doorstep, if as a last resort by using force under a UN mandate. 

2. 

The EU as sustainable development partner 

The  main  contribution  that  the  EU,  at  this  point  in  its  integration,  can  now  make  to  world 
security  is  to  work  actively  for  sustainable  development  through  global  governance  and 
through its bilateral relations.  

As  a  global  economic  player,  the  EU  can  make  global  governance  more  effective  in 
generalising sustainable development across the planet through a combination of international 
cooperation and good domestic policies. The cooperation with developing countries will focus 
on  the  eradication  of  poverty,  and  –  consistent  with  commitments  taken  at  the  multilaterial 
level – the EU can and should make a strong and coherent contribution to progress towards 
reaching  the  Millennium  Development  Goals,  set  at  the  2000  United  Nations  General 
Assembly.  A  common  development  policy  focused  on  the  fight  against  poverty  would 
provide the appropriate framework.  

The widened EU, already a leading trade power, the biggest aid donor globally, and an active 
partner in the negotiation of multilateral norms, will see its role considerably upgraded and its 
influence  further  enhanced  in  the  three  pillars  of  the  economic  governance  system  –  trade, 
finance and norms setting – when it ensures everywhere a single external representation.  

By  promoting  common  positions  agreed  by  qualified  majority,  it  will  secure  a  sense  of 
direction  in  multilateral  negotiations,  and  will  instil  a  well-needed  coherence  in  the 
governance system.  

But the cohesion of the widened Europe and the consistency of its action in global economic 
affairs will eventually rest upon a strong consensus inside the EU on a European development 
model, compatible with open and competitive markets.  

The  leverage  of  EU  financial  assistance  and  of  trade  bilateral  preferences  would  be 
considerably  increased  by  such  a  unified  presence  in  the  organs  of  multilateral  economic 
governance such as World Bank, IMF and UN economic agencies: in particular, the value for 
each euro spent in this new context, would rise substantially. 

3. 

The EU as a global player 

The  Union  should  play  its  full  role  in  global  political  governance  in  support  of  effective 
multilateralism.  It  should  also  contribute  to  strategic  security  as  defined  in  the  European 
Security  Strategy  endorsed  by  the  European  Council  in  December  2003.  This  concerns 
protection  against  threats  as  well  as  ensuring  civilian  security  and  the  protection  of 
populations inside and outside Europe. 

24 

 
 
  
 
Strategic security: In the face of fundamental threats - terrorism, the proliferation of weapons 
of mass destruction and the failed states, internal and regional conflict - the EU has to operate 
in its region, at the level of the international order and at the level of frontline action beyond 
its  borders  (for  instance  through  crisis  management  operations).  These  operations  call  for 
appropriate combinations of civil and military means. 

Civilian  security:  in  today’s  world,  characterised  by  openness  and  instability,  civilian 
populations  are  increasingly  exposed  to  risks  such  as  conflicts,  national  disasters,  and 
pandemics. The EU, as a continent without frontiers, lends itself to the consequences of such 
risks and threats. Consistent with its role as a leading partner in the promotion of sustainable 
development,  human  values  and  global  governance,  the  Union  must  also  take  appropriate 
external  action,  and  effectively  support  international  efforts,  which  affect  not  only  the 
physical security of civilian populations and their potential for development, but also overall 
security and stability. 

To raise the EU's capacities in this regard, further efforts must be made to increase available 
resources and to pool them more effectively. In order to strengthen military capabilities, there 
is  a  need  for  increased  security-related  research  and  reinforced  civilian  crisis  management, 
diplomatic and intelligence capabilities. 

The added value of EU assistance 
The comparative advantage of an EU approach to external action crises is well illustrated by 
the cases of the Western Balkans, Afghanistan and East Timor. 

In the W. Balkans, EU assistance helped to underpin the proximity policy that is the 
Stabilisation and Association Process. Both because of the size of the funds given to the 
region and the nature of the assistance, directed largely towards democratic stabilisation 
measures (refugee return, institutional building, Human Rights and Rule of Law), the EU 
achieved an impact which it is unlikely that the combined action of the individual Member 
States' bilateral programmes could have achieved. 

Community assistance for Afghanistan demonstrates a level of coherence which could not be 
achieved even through optimal coordination of individual national  programme. In 2001, the 
Community made one single significant pledge for 5 years. The conditions for this long term 
commitment have been comprehensively laid down in a Country Strategy Paper and an annual 
review  provides  flexibility  to  adapt  the  assistance  given  to  the  situation  on  the  ground. 

The Community effort in East Timor has contributed, in concrete terms, to the emergence of 
the country through the challenging first years of independence. 

4. 

The policy mix 

Moving  towards  a  common  co-operation  and  assistance  policy  also  requires  an  improved 
policy mix to improve coherence in bilateral relations or in international institutions devising 
for  each  partner  country,  region  or  institution  the  appropriate  policy  mix  according  to  our 
priorities, to partners’ needs or to global challenges, and to translate it into the most efficient 
mix of instruments.  

For  neighbouring  countries  the  policy  mix  will  mainly  focus  on  sharing  stability  and 
prosperity  and  take  account  of  the  important  impact  of  EU  internal  policies.  For  other 
countries, the policy mix will depend inter alia on an assessment of the interest of the Union 
and of our partners, and of the geopolitical situation. 

25 

 
 
  
 
 
 
 
Setting up a single policy framework and a unique programming per partner country and per 
thematic  policy,  leading  to  co-ordinated  and  co-financed  implementation,  should  pave  the 
way for effective complementary actions between the Union and Member States: a common 
development policy would provide the appropriate framework. 

In the light of the above, here is a financial illustration for section 5: 

COMMITMENT 
APPROPRIATIONS 

2006
(a) 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

4. The EU as a global partner 

11.232  11.400  12.175  12.945  13.720  14.495  15.115  15.740 

II. 

MATCHING RESOURCES TO OBJECTIVES 

Sound  financial  planning  means  matching  resources  to  needs.  As  financial  resources  are 
limited, financial decisions are essentially about choices to be made and priorities to be fixed. 

This communication has sought to explain how the Union’s goals can be realised. It has laid 
out  a  political  project  based  on  the  key  concept  of  sustainable  development:  nurturing  the 
Union’s natural resources, building competitiveness and solidarity, making Europeans across 
the Union safer and more prosperous. 

Turning our priorities into action and statements into deeds needs action at both national and 
Union level. Neither is equipped to provide all the answers. But if the Union is to make its 
contribution, it needs an adequate budget.  

At  a  time  of  intense  pressure  on  public  finance  at  the  national  level,  the  demand  that  the 
Union  applies  rigour  and  restraint  to  its  funding  is  fully  justified.  But  it  is  an  illusion  to 
believe  that  cutting  spending  at  EU  level  guarantees  value  for  money:  each  euro  of 
expenditure  from  the  Union  budget  can  lever  in  several  euros  at  national  level,  as  cohesion 
policy has already shown (see section A.2). 

The evolution of the Community budget in recent years  shows that the Union has reined in 
expenditure. But the gap between the demands on the Union and the resources at its disposal 
has grown too wide. To saddle the Union with a set of goals and then deny it the resources 
required would be to condemn it to the justified criticism of citizens denied their legitimate 
expectations.  

1. The legacy of existing commitments 

In 2006, the commitment appropriations ceiling of the current financial perspective for a 25-
member  Union  will  account  for  1.11%  of  the  EU's  gross  national  income  (GNI). 
Commitments under the 9th EDF would add on average another 0.03 % of GNI.  

The evolution of expenditure for the period 2007-2013 is already partly determined by some 
decisions and the premises of the exercise:  

•  The  European  Council  agreed  the  spending  for  market  related  and  direct  payments  in 

agriculture until 2013.  

26 

 
 
  
 
 
 
 
•  Cohesion policies in the ten new Member States, whose level of prosperity is significantly 

lower than in the EU-15, will require increased expenditure.  

•  Accommodating  two  additional  new  Member  States  with  large  agricultural  activity  and 
significantly  lower  income  per  head  will  clearly  add  to  expenditure  requirements  on  the 
basis of the acquis.  

•  Many  EU  policies  –  such  as  the  internal  market,  competition  policy,  customs,  statistics, 
transport,  nuclear  safety,  audiovisual,  youth,  culture  and  information  policy  –  have 
resource consequences which flow directly from the Treaties and from EU law.  

It should also be noted that another relevant change would be the “budgetisation” of the EDF 
to enhance the consistency and effectiveness of the Union’s development policy. 

These commitments cannot be ignored. Nor can we overlook the pressing need to inject some 
financial support to bolster competitiveness for growth and employment, to develop the area 
of citizenship, freedom, security and justice, or to make the EU an effective global partner. 

A  ceiling  around  1%  of  GNI,  would  fail  to  meet  the  European  Council  commitments  on 
agricultural  payments,  would  undermine  the  phasing-in  of  cohesion  policy  in  the  10  new 
Member  States,  and  would  jeopardise  the  existing  levels  in  other  policies,  let  alone  to 
implement the new priorities. Under such a scenario, the EU would have to:  

•  reduce its efforts in terms of external aid,  

•  reduce support for rural development, one of the key objectives of CAP reform, 

•  renege on international commitments and pledges 

•  drastically  decrease  cohesion  support  in  the  current  Member  States  in  the  face  of  major 

problems of lagging development, unemployment and social exclusion  

•  retreat from commitments it has already made, its new neighbourhood policy or justice and 

security tasks, and jeopardise further enlargement.  

Alternatively, cuts would be needed across the board, and existing agreements would have to 
be  re-opened,  including  the  amounts  decided  at  the  Brussels  European  Council  of  October 
2002, and in particular the re-orientation of the CAP towards rural development. 

In brief, the message would be that the Union has given up on these tasks. 

2. The new financial requirements 

The significance of the challenges identified above would require a very substantial increase 
of  financing  capabilities  at  EU  level.  But  sticking  to  the  existing  ceilings,  they  can  be 
accommodated by a combination of shifts in the balance between different spending priorities, 
careful costing, and only limited increases in the current size of the budget. A credible plan to 
meet the Union’s needs can be drawn up within the current budgetary disciplines, represented 
by the own resources ceiling of 1.24% of GNI.  

This framework would allow: 

27 

 
 
  
 
•  A complete phasing-in of new Member States for agriculture, fisheries and management of 

other environmental resources and the implementation of CAP and CFP reform; 

•  A boost to competitiveness for growth and employment, covering research, education and 

training, and EU networks; 

•  The  resources  required  to  meet  solidarity  commitments  and  focus  further  on  growth  and 

employment post-enlargement; 

•  Fresh action in the area of citizenship, freedom, security and justice; 

•  The EU to become an effective neighbour and a stronger global partner in support of the 

Millennium development goals. 

The result would respect a ceiling of 1.24% of GNI, but a rebalancing of  the budget would 
allow space for the new priorities. A significant proportion of EU resources would focus on 
objectives such as competitiveness for growth and employment (16%) and Europe as a global 
partner (7%). 

The capping of financial transfer at 4 % for cohesion policy will be maintained, with amounts 
transferred  to  the  new  rural  development  and  fishery  instruments  still  included  in  the 
calculation. 

The  European  Development  Fund  would  be  integrated  into  the  EU  budget.  At  present  it 
accounts for 0.03% of GNI. 

In order to optimise the use of expenditure and develop more effective delivery mechanisms, 
the resources would therefore be phased in over the period, as is normally the case.1 

This threshold is a compromise between needs and budgetary stability. It falls short of fully 
meeting  repeatedly  stated  needs  and  the  capacity  of  the  Union  to  contribute  to  these  needs. 
Public investment in research in Member States is planned to increase up to 0.88% of GDP by 
2010, below the 1% agreed target for the public spending share of the 3% target. The gap of 
0.12%,  to  be  borne  by  the  Union  budget,  is  only  partly  covered  under  the  present  scenario. 
Similarly, the EU could contribute more to the 600 billion Euros necessary to build the Trans-
European Networks, or extend the educational mobility programmes to a wider share of the 
student  and  academic  population.  The  Union  could  well  take  a  share  of  the  commitments 
made by Member States at Monterrey. Finally an order of magnitude of 3 billion Euros for 
research  on  security  could  be  envisaged.  In  all  these  areas,  Union  action  could  offer  real 
benefits and lighten the load for national budgets: an alternative framework of 1.30% would 
have allowed the Union to better respond to those needs and still be moderate. 

The following table provides an illustration of the framework described above. 

1 Commitment appropriations would average 1.22% over the period. Payments would average 1.14% (including 

EDF). 

28 

 
 
  
 
                                                 
 OVERVIEW OF THE NEW  FINANCIAL FRAMEWORK 2007-2013

Million € at 2004 prices
COMMITMENT APPROPRIATIONS

1. Sustainable growth 

2006 (a) 

2007 

2008 

2009 

2010

2011

2012

2013

47.582

59.675

62.795

65.800

68.235

70.660

 73.715 

76.785

   1a. Competitiveness for growth and employment

8.791

12.105

14.390

16.680

18.965

21.250

23.540

25.825

   1b. Cohesion for growth and employment   (b)

38.791

47.570

48.405

49.120

49.270

49.410

50.175

50.960

2. Sustainable management and protection of natural resources

56.015

57.180

57.900

58.115

57.980

57.850

57.825

57.805

of which : Agriculture - Market related expenditure and direct payments

43.735

43.500

43.673

43.354

43.034

42.714

42.506

42.293

3. Citizenship, freedom, security and justice

1.381

1.630

2.015

2.330

2.645

2.970

3.295

3.620

4. The EU as a global partner (c)

11.232

11.400

12.175

12.945

13.720

14.495

15.115

15.740

5.  Administration (d)

Compensations

3.436

1.041

3.675

3.815

3.950

4.090

4.225

4.365

4.500

Total  appropriations for commitments

120.688 133.560

138.700

143.140

146.670

150.200

154.315

158.450

Total appropriations  for payments (b)(c)

114.740

124.600

136.500

127.700

126.000

132.400

138.400

143.100 Average

Appropriations for payments as a percentage of GNI 

Margin available

Own resources ceiling as a percentage of GNI

1,09%

0,15%

1,24%

1,15%

0,09%

1,24%

1,23%

0,01%

1,24%

1,12%

0,12%

1,24%

1,08%

0,16%

1,24%

1,11%

0,13%

1,24%

1,14%

0,10%

1,24%

1,15%

0,09%

1,24%

1,14%

0,10%

1,24%

(a)  2006 expenditure under the current financial perspective has been broken down according to the proposed new nomenclature for reference and to facilitate comparisons.
(b)  Includes expenditure for the Solidarity Fund (€ 1 billion in 2004 at current prices) as from 2006. However, corresponding payments are calculated only as from 2007.
(c)  The integration of EDF in the EU budget is assumed to take effect in 2008.  Commitments for 2006 and 2007 are included only for comparison purposes. Payments on commitments before 
2008 are not taken into account in the payment figures. 
(d)  Includes administrative expenditure for institutions other than the Commission, pensions and European schools. Commission administrative expenditure is integrated in the first four 
expenditure headings.

29 

 
 
  
 
 
 
 
 
   
 
   
III. 

ENSURING THE OBJECTIVES ARE MET: INSTRUMENTS AND GOVERNANCE 

The success of policies relies on the efficiency of delivery instruments and, more broadly, in 
the appropriate system of economic governance. This involves an adequate apportionment of 
tasks  between  the  Union  and  Member  States,  adequate  focus  and  consistency  of  shared 
objectives, consensus and partnership between the actors involved, and reviewing the delivery 
instruments for consistency and simplicity.  

To this end, the guiding principles are: 

–  Concentrating  the  Community  resources  on  few  major  initiatives:  higher  financial 
transparency,  scope  for  improved  quality  and  effectiveness  of  expenditure,  possibility  to 
better assess Community value added.  

–  Consistency between different strategic goals, targets and instruments. 

–  Partnership with all actors involved, above all between the Union and the Member States 

concerned. 

To  maximise  performance,  not  only  there  is  a  need  for  strengthened  cooperation  and 
partnership, but also for simplified instruments, replacing the existing variety of complex 
decision-making powers and policy instruments, ranging from local and regional to national 
and EU levels.  

In the light of the above, there are two main building blocks: 

•  a roadmap  

•  A simplification of the instruments of expenditure management. 

A. 

A roadmap 

A  roadmap  should  bring  together  goals,  objectives,  instruments  and  indicators,  as  well  as  a 
stringent timetable to assess whether agreed benchmarks have been reached and be oriented 
towards  the  ultimate  aim  of  sustainable  development  based  on  harmonious  interaction 
between growth, cohesion and environment.  

As  explained  above,  strategic  goals  (e.g.  strengthening  European  effort  in  research  and 
technological  development),  are  articulated  through  few  specific  objectives  (e.g  .the 
establishment of grant scheme for individual research teams) and, where appropriate, further 
detailed actions (e.g. specific projects on nanotechnology). 

The instruments of implementation (legislation, coordination, expenditure) should be defined 
together with progress indicators and sufficient incentives to secure the positive outcome. 

Concerning the sustainable development strategic goals, as established in the Lisbon process, 
it is clear that they are to be pursued through actions both at Member States and at the Union 
level.  

Therefore,  the  roadmap  should  be  a  shared  programme  involving  actions  and  funding  at 
national and Union level. A process should be launched – in partnership with Member States 
–  to  complement  the  suggested  priorities  and  objectives  with  a  detailed  action  plan  and 

30 

 
 
  
 
timetable on the use of the policy instruments and with a mechanism for effective monitoring 
of  the  implementation  phase.  The  suggested  process  should  be  capable  of  ensuring  the  full 
commitment of all concerned parties to the achievement of the agreed goals. It could act as a 
basis for the preparation of the mid-term review of the Lisbon strategy. 

The  performance  of  the  Union  and  its  Member  States  is  at  present  assessed  annually  in  the 
context  of  the  Spring  European  Council  cycle.  To  allow  the  European  Council  to  provide 
guidance,  the  Commission  has  already  reunified  its  sectoral  contributions  into  a  single 
document  (the  Synthesis  Spring  Report)  and  streamlined  the  process  leading  to  Broad 
Economic Policy Guidelines and Employment Guidelines. 

This exercise could be further improved and made more effective along the following lines: 

•  defining  a  better  and  more  visible  interaction  between  actions  and  budgetary  means 

implemented at Member States level and at Union level, 

•  assessing against this background: 

–  the  contribution  Member  States  budgets  and  the  EU  budget  can  make  to  the 
achievement  of  the  policy  objectives  and  recommendations  set  in  the  Broad 
Economic Policy Guidelines and Employment Guidelines and the broader Lisbon 
strategy in general, 

–  the performance of action at Union level in order to activate/orientate use of the 
Growth Adjustment Fund (see below, point IV.C). This would allow the Union to 
adjust  priorities/to  respond  to  new  needs  and  to  back  them  up  by  budgetary 
resources. 

This approach will also give a concrete contribution to the system of economic governance of 
the  Union,  taking  fully  into  considerations  the  impact  of  actions  needed  to  reach  shared 
objectives.  It  will  provide  for  a  greater  consistency  of  cohesion  policy  with  the  Broad 
Economic  Policy  Guidelines  and  the  Employment  Guidelines,  thus  better  integrating  it  into 
the European agenda for sustainable growth. 

B. 

Simplifying instruments to improve delivery  

The  instruments  available  to  the  Union  to  further  its  policy  goals  include  regulation, 
coordination  and  budgetary  support.  The  relative  share  of  Union  and  Member  States’ 
expenditure is not the same in each policy area. It represents the large majority of financial 
support granted to a sector (e.g. Agriculture) or a significant share of resources allocated to a 
certain  objective  (e.g.  cohesion  in  lagging  regions).  In  other  fields,  European  Union 
expenditure  are  usually  of  more  limited  size  by  comparison  to  the  resources  provided  by 
Member States: in such cases the role is rather one of acting as a catalyst. 

Depending on the different role of expenditure amongst the other instruments supporting the 
policy  in  question,  different  arrangements  can  be  envisaged  in  terms  of  mechanisms  for 
selecting the actions to be financed, allocation of resources, budgetary instruments and project 
management. 

There  are,  however,  three  considerations  applicable  across  the  board  for  the  design  and 
implementation of Union expenditure programmes: 

31 

 
 
  
 
–  The choice of budgetary instruments must reflect the criteria of simplicity and consistency. 
There  is  a  need  to  simplify,  as  far  as  possible,  the  budget  structure,  avoid  duplication  of 
instruments  and  provide  beneficiaries  and  partner  managing  authorities  with  a  ‘one-stop-
shop’; 

–  While keeping  the  political  duty to define the strategic objectives and the frameworks of 
expenditure programmes, the Commission will limit the number of cases where it retains 
direct responsibility for their implementation and management; 

–  Proportionality  must  be  maintained  between 

the  amount  of  resources  and 

the 

administrative burden related to their use. 

In the light of the above, the Commission will apply the following principles: 

•  One instrument per policy area, one fund per programme. EU funding instruments will 
as far as possible be consolidated and rationalised so that each policy area responsible for 
operational  expenditure  has  a  single  funding  instrument  covering  the  full  range  of  its 
interventions.  Small  budget  lines  will  be  consolidated  into  sections  of  the  single  funding 
instrument, even if an instrument needs more than one legal base. 

•  The Commission will consider alternatives to in-house direct management. A case-by-
case  assessment  of  policy-  and  cost-effectiveness  should  determine  which  actions  should 
be  (a)  managed  directly  by  traditional  core  departments;  (b)  managed  through  offices  or 
executive  agencies2,  both  under  the  Commission’s  control;  (c)  out-sourced  to  “classical” 
agencies at EU level, functionally independent from the Commission; or (d) managed in a 
decentralised way in partnership with Member States and/or regions. 

The Commission has identified an overall approach on administrative governance, which will 
lead  to  streamlining  and  the  selection  of  the  most  suitable  and  cost-effective  delivery 
mechanism.  The  full  implementation  of  this  approach,  which  is  summarised  in  Annex  1, 
offers the potential for benefits in terms of improved performance and greater efficiency, as 
well  as  a  more  consistent  approach  to  the  successful  achievement  of  tasks  of  an  executive 
nature. 

The Commission will make detailed proposals for simplification in the following months on 
the basis of the above principles. Some examples can be highlighted already for internal and 
external policies: 

(i) Internal policies 

•  The next generation of cohesion policy programmes should be organised in such a way that 
each individual programme would be financed by a single fund, the ERDF or the ESF. In 
the Member States covered by the Cohesion Fund, simplification and consistency would be 
enhanced by programming the interventions in the same framework as those supported by 
the ERDF. 

•  All  rural  development  measures  will  be  regrouped  for  all  regions  (including  the  less 
developed  Member  States  and  regions)  under  a  single  funding,  programming,  financial 

2 Council Regulation (EC) No. 58/2003 of 19 December 2002 OJ L 11, 16.1.2003, page 1. 

32 

 
 
  
 
                                                 
management  and  control  system,  with  the  same  degree  of  concentration  as  at  present  on 
those regions covered by convergence programmes. 

•  A  new  financial  instrument  for  the  environment  would  replace  current  environmental 

funding programmes. 

(ii) In the area of external relations, a simplified architecture will be proposed, based on 6 
instruments, replacing more than 100 different instruments today. 

•  Two new instruments (which could be merged at a later stage) will cover two fundamental 
functions: economic cooperation and development on the one hand, peace and security on 
the  other  hand.  This  should  replace  the  existing  plethora  of  geographic  or  thematically-
based instruments and include the integration of the European Development Fund into the 
EU budget.  

•  A specific instrument for humanitarian aid should be maintained.  

•  A new (unified) pre-accession instrument to replace PHARE, ISPA, and SAPARD3 will be 

introduced.  

•  A  separate  new  neighbourhood  instrument  is  needed  aiming  at  cross-border  co-operation 

between the enlarged Union and neighbouring countries. 

•  Macro-financial assistance would remain unchanged. 

Creating a New Neighbourhood Instrument 

It  is  in  the  interest  of  the  whole  EU  to  avoid  the  emergence  of  new  dividing  lines  on  and 
around  its  external borders and to promote stability and prosperity within and  beyond  these 
external borders. A joined and united effort by EU is vital to achieve this ambitious objective. 
Member States are not well equipped to address this challenge on individual basis. The NNI 
proposed by the Commission will focus in particular on promoting sustainable economic and 
social  development  of  these  border  regions,  ensuring  the  smooth  functioning  and  secure 
management of the future external borders, addressing common challenges facing the EU and 
its  neighbours  like  environment,  public  health,  and  the  prevention  of  and  fight  against 
organised crime, and pursuing people to people co-operation between the EU Member States 
and their neighbours. 

The  cross-border  component  of  the  New  Neighbourhood  Instrument  would  be  implemented 
as simply as possible through a single legal instrument, building on the principles of existing 
European  cross-border  programmes  –  partnership,  multi-annual  programming  and  co-
financing. 

3 In this context, the requirements of the Community policies which the acceding countries have to implement 

will be taken into account. 

33 

 
 
  
 
                                                 
IV. 

THE NEW FINANCIAL FRAMEWORK (2007-2013) 

A. 

Covering an adequate period 

The  period  covered  by  the  new  financial  framework  must  be  long  enough  to  provide  a 
coherent coverage, within reasonable budget limits, for the complete phasing in of reformed 
Community policies and for the successful integration of twelve new Member States. 

The Commission as well as the EP have a five year term. Future financial frameworks should 
become more consistent with this institutional rhythm. Each Commission would participate in 
the finalization of a financial framework part of which it then has to implement. Based on this 
experience,  it  would  also  be  responsible  for  laying  the  ground  for  the  following  financial 
framework. The Parliament would authorise and follow up implementation of annual budgets 
under the financial framework it agreed upon.  

However, the Commission proposes transitionally a seven-year period extending from 2007 to 
2013 before moving to a normal five-year cycle. This would be necessary since the evolution 
of  market-related  expenditure  and  direct  payments  in  agriculture  (EU-25)  has  been  set  until 
2013 and the current implementation of structural funds as well as some adjustments on the 
side of all institutions will take time to implement. 

B. 

Classification of expenditure and development of expenditure 

The  current  classification  of  expenditure  in  the  financial  perspective  is  to  a  large  extent  the 
legacy  of  the  establishment  of  the  first  financial  perspective  and  its  successors.  The  current 
financial perspective is structured in 8 expenditure headings, which become 11 when taking 
sub-headings into account. Ring-fencing of resources in a large number of headings and sub-
headings makes the system rigid and prevents proper adjustment and a more effective use of 
resources to achieve the Union’s policy goals.  

The (legitimate however) objective of budgetary discipline overshadows the ultimate goal to 
have budgetary means at the service of a political/economic objective. 

A more limited number of budgetary headings not only reflect the broad policy goals, but also 
provide  a  necessary  room  for  manoeuvre  for  developments  that  cannot  always  be  precisely 
predicted ten years in advance. For the new financial framework, the Commission  proposes 
five main expenditure headings:  

(1) 

A  first  heading  aimed  at  enhancing  competitiveness  and  cohesion  for  sustainable 
growth with two sub-headings: 

1a. Competitiveness for growth and employment. This sub-heading encompasses expenditure 
for research and innovation; education and training; security and environmental sustainability 
of  EU  networks;  support  for  an  integrated  single  market  and  the  accompanying  policies; 
implementation of the social policy agenda. 

1b.  Cohesion  for  growth  and  employment  with  expenditure  to  enhance  convergence  of  the 
least  developed  Member  States  and  regions,  complement  the  EU  strategy  for  sustainable 
development outside the less prosperous regions, and support inter-regional cooperation. 

34 

 
 
  
 
(2) 

(3) 

(4) 

(5) 

Sustainable  management  and  protection  of  natural  resources.  In  addition  to  the 
expenditure  related  to  the  Common  Agricultural  and  Common  Fisheries  policies4,  it 
will also cover expenditure related to the environment. 

Citizenship,  freedom,  security  and  justice  including  actions  in  the  areas  of  freedom, 
justice and home affairs, and citizenship5.  

European Union as a global partner6. 

Commission  administrative  expenditure  will  be  linked  directly  to  operational 
expenditure,  following  the  logic  of  activity  based  management,  which  is  already  the 
basis  for  the  establishment  of  the  annual  budget,  and  therefore  included  in  the 
appropriations  of  each  of  the  previous  four  headings.  A  residual  Administration 
heading will remain to include expenditure for institutions other than the Commission, 
pensions and European schools. 

Consistency  and  transparency  call  for  the  integration  of  the  Solidarity  Fund  in  the  financial 
framework. This will be done by adding the Solidarity Fund and associated resources to the 
'cohesion' (1b) heading. As in the case of the emergency aid and loan guarantee reserves, to be 
integrated  under  the  heading  European  Union  as  a  global  partner,  the  new  classification 
would  not  prejudge  the  corresponding  budgetary  procedures  or  the  specific  management 
methods. Funds would be mobilised only when required. 

C. 

Flexibility 

Over a period extending ten years from now till 2013, there should be a possibility to adjust 
the priority setting defined by the road map within certain limits.  

•  The procedure to revise expenditure ceilings should remain the main instrument to allow 
adjustments  to  the  financial  framework  when  substantial  and  lasting  changes  in  political 
priorities occur. However, over the last decade the recourse to revisions has proven almost 
impossible.  This  has  contributed  to  the  creation  of  various  ad-hoc  instruments  and 
arrangements  over  the  years  to  meet  new  priorities  or  urgent  demands.  The  Commission 
proposes  an  assessment  of  needs,  e.g.  in  the  form  of  a  trilogue  between  Parliament, 
Council and the Commission ahead of the presentation of each preliminary draft budget. 

•  The  annual  budgetary  procedure  should  allow  for  sufficient  flexibility  within  the  agreed 
financial framework to enable the Commission and the budgetary authority to react quickly 
to short-term emergency crises or to unexpected political or economic events. For the new 
financial framework the Commission proposes a combination of existing instruments with 
a  new  reallocation  flexibility  to  replace  the  existing  'flexibility  instrument'.  This  would 
allow  the  budgetary  authority  to  re-allocate  appropriations  within  certain  limits  between 

4 EAGGF-Guidance and FIFG funds currently included under the structural funds are transferred to this heading. 
However,  the  corresponding  amounts  transferred  will  continue  to  enter  in  the  calculation  of  the  4% 
'capping' for structural and cohesion funds for the new Member States 

5 It also includes border protection and asylum policy, civic empowerment, institution building, access to public 
goods, food safety, public health and consumer protection, culture and the audio-visual sector, youth, 
information and dialogue with citizens. 

6 This heading includes all external actions, including pre-accession instruments, neighbourhood policy, poverty 
reduction,  civil  crisis  prevention  and  management.  It  will  also  include  the  current  reserves  for 
emergency aid and loan guarantee [and the European Development Fund once it is integrated into the 
EU budget] 

35 

 
 
  
 
                                                 
expenditure headings, with the exception of cohesion and rural development appropriations 
for multi-annual programmes. These, of necessity, must be pre-allocated between Member 
States at the beginning of the period.  

•  Furthermore,  the  Commission  proposes  to  increase  the  responsiveness  of  expenditure  to 
changed  circumstances  by  creating  a  growth  adjustment  fund  within  the  ‘sustainable 
growth’  expenditure  heading  (1a)  to  optimise  the  delivery  of  the  growth  and  cohesion 
objectives  identified  in  the  roadmap  for  sustainable  development,  accommodate  the 
necessary flexibility to take account of the uneven progress in the roadmap towards these 
objectives  and  implementing  the  necessary  adjustments  to  cope  with  unforeseen  events 
having significant or harder than foreseen impact on growth and employment. It will also 
enable  the  Union  to  react  to  crises  stemming  from  international  economic  and  trade 
developments. Following the annual assessment of progress delivery of the roadmap made 
in the  Spring  Council,  it will be used  to address the gaps in the  delivery of  the roadmap 
objectives by topping-up expenditure programmes in the competitiveness or cohesion sub-
headings, pushing for investment and public support on key projects. 

Up  to  €1  billion  per  year  will  be  available  within  the  competitiveness  for  growth  and 
employment  heading.  In  addition,  it  is  proposed  to  make  use  of  committed  but  unused 
funds from the two cohesion instruments (ERDF and ESF) in application of the 'N+2 rule' 
up to a maximum of 1 billion euros per year, to be added to the growth adjustment fund. 

V. 

THE FINANCING SYSTEM 

Though the Commission will prepare appropriate specific proposals on own resources in the 
Own Resources Report7 that will submit to the Council by summer 2004, attention is drawn to 
two elements of the current own resources system. 

A. 

Own resources structure 

The  present  own  resources  system  has  been  criticised  for  insufficient  transparency  for  EU 
citizens, and limited financial autonomy, as well as for its complexity and opacity.  

However,  the  current  financing  system  performs  relatively  well  from  a  financial  point  of 
view,  as  it  has  ensured  a  smooth  financing  and  kept  the  administrative  costs  of  the  system 
quite low.  

One way to overcome the shortcomings of the present system is to strengthen the tax based 
resource  in  the  financing  of  the  EU  budget.  A  relatively  major  and  visible  tax  resource 
payable  by  EU  citizens  and/or  economic  operators  could  partly  replace  GNI  contributions. 
That  would  shift  the  Union's  own  resources  system  from  a  financing  system  predominantly 
based  on  national  contributions  towards  a  financing  system  which  would  better  reflect  a 
Union of Member States and the people of Europe. 

In light of the degree of tax harmonisation in the EU, three main candidates could at present 
be envisaged: 1) a tax on corporate income; 2) a genuine VAT resource; 3) an energy tax. In 
each case, the tax burden for citizens need not increase as the EU tax rate could be offset by 
an equivalent decrease of the rate accruing to the national budget in the same tax, or of the 
rates  of  other  taxes.  This  would  be  possible  because  tax-based  resources  would  partially 

7 as laid down in the Own Resources Decision  

36 

 
 
  
 
 
 
                                                 
replace, rather than add to, the payments currently made available by Member States on the 
basis of their respective GNI. Since GNI payments would decrease Member States would be 
able to reduce other sources of revenue by the same amount without jeopardising budgetary 
stability.  

The Commission does not intend to propose a new own resource for the near future. It will 
present  its  analysis  and  conclusions  in  the  own  resources  report,  which  it  will  adopt  before 
summer 2004. Subject to the conclusions of this report, a process could be launched to create 
the basis for a new own resource to replace an important part of national contributions in the 
medium term. 

B. 

Correction of budgetary imbalances  

The  European  Union  is  a  community  of  solidarity  with  parts  of  the  budget  serving  a  clear 
solidarity goal and the allocation of other parts of the budget responding to the specific goals 
of  the  relevant  spending  programmes.  There  will  always  be  net  beneficiaries  of  and  net 
contributors to the EU budget, although the policy benefits accrue to the Union as a whole.  

It is recognised, however, that certain imbalances may give rise to concerns. A correction of 
excessive imbalance may therefore appear necessary, provided it is strictly limited. 

A correction mechanism should be geared to correcting excessive negative net balances and 
aim at a fair treatment of Member States which have a similar capacity to contribute to the EU 
budget.  Since  the  mid-1980s  a  correction  has  existed  for  one  Member  state  only,  and  is 
financed by all other Member States. Since 2002 the financing share of four Member States in 
this compensation has been reduced to 25% of their normal share. The Commission proposes 
to introduce a generalized correction mechanism, which will both correct a budgetary burden 
which is excessive in relation to its relative prosperity (as laid down in the Conclusions of the 
1984  Fontainebleau  European  Council)  and  prevent  the  volume  of  the  mechanism  from 
becoming excessive.  

As a further  result of  enlargement,  the size of the existing correction for one Member State 
will  rise  substantially,  raise  the  financing  cost  to  the  other  Member  States  accordingly  and 
therefore tend to overshoot its objective of correcting a budgetary burden which is excessive 
in relation to its relative prosperity. 

Leaving  the  current  situation  unchanged  would  significantly  increase  a  bias  in  favour  of  a 
single Member State. Merely abolishing the existing correction would neither be perceived as 
acceptable  by  all  Member  States,  nor  bring  closer  the  net  balances  of  Member  States  at 
comparable levels of prosperity. 

A generalised correction mechanism replacing the existing one would be aimed at correcting 
net contributions in excess of a certain pre-defined threshold of adequate 'financial solidarity', 
defined as a percentage of gross national income, in line with relative prosperity. Solidarity 
must remain a cornerstone of the Union and therefore the effect of any modified, generalized 
mechanism  should  be  limited  to  avoiding  excessive  and  unjustified  fiscal  burdens,  and  all 
Member States should contribute to this mechanism.  

A  number  of  parameters  need  to  be  defined  for  such  a  mechanism  to  function  properly, 
including  categories  of  expenditure  and  revenue  to  be  taken  into  account,  the  level  of  the 
threshold  beyond  which  net  budgetary  imbalances  would  be  (partially)  compensated, 

37 

 
 
  
 
percentage  of  the  excessive  negative  imbalance  to  be  corrected,  and  the  related  financing 
rules. All Member States should contribute to this mechanism. 

The Commission will put forward detailed proposals to this effect in the context of the overall 
financial package, which will address both revenue and expenditure issues. 

38 

 
 
  
 
ANNEX 1 

Principles for Administrative Governance: less direct management, better control of 
delivery and greater cost-effectiveness 

One  of  the  fundamental  principles  of  Commission  reform  is  that  the  Commission’s  core 
administration will in future focus on the development and monitoring of policies under the 
Treaty. The  execution  of  these  policies,  as  well  as  other  executive  activities  at  a  European 
level, will where appropriate be delegated to other bodies.  

It  is  essential  that  delegation  to  bodies  other  than  the  Commission’s  core  administration  is 
properly  coordinated.  Recent  decisions  on  delegation  have  shown  that  there  is  a  need  to 
improve  coherence  and  to  streamline  the  criteria  for  such  delegations.  To  this  end,  the 
Commission intends to reinforce the overall coordination when in future deciding to delegate 
an activity (through one of the various means which are at its disposal, cf Section III.B. of the 
Communication).  Insofar  as  existing  activities  carried  out  by  external/delegated  entities  are 
concerned,  the  Commission  will  follow  a  staged  approach,  by  which  it  will  bring  past 
decisions into line with the new framework. 

Different means are available: 

(1) 

Shared management with Member States or delegation to national bodies. Experience 
in  the  agricultural  and  cohesion  policy  fields  already  offer  valuable  lessons  in  this 
respect. Two important criteria for pursuing such an approach are: a) significant local 
content and b) complementarity with regional and national programmes; 

(2) 

Delegated entities, including:  

a) Offices: with the reform, the Commission has introduced Administrative Offices. 
To  date,  Offices  have  been  used  for  executive  tasks  not  directly  connected  to  a 
programme  and  without  a  specific  time-span.  They  present  the  advantage  of  lower 
operating  costs  and  greater  operational  flexibility  through  the  availability  of  a 
separate establishment plan and budget lines. Offices are under the direct control of 
the Commission. 

b) Agencies: currently a variety of bodies are included in this category, whose functions vary 
from providing assistance in the form of opinion and recommendations (e.g. European Food 
Safety  Authority),  through  providing  inspection  reports  (e.g.  European  Maritime  Safety 
Agency),  to  adopting  decisions  which  are  legally  binding  on  third  parties  (e.g.  Office  for 
Harmonisation  in  the  Internal  Market).  The  Commission  is  generally  represented  in  these 
agencies  together  with  Member  States  and,  where  appropriate,  representatives  of  interested 
third parties. The Commission has limited involvement in these agencies, although it is fully 
responsible  for  the  result.  Executive  agencies  are  instead  bodies,  under  the  direct  control  of 
the Commission, whose statute is provided for by a Council regulation8. 

8 Council Regulation(EC) No. 58/2003 of 19 December 2002, O.J. L 11, 16.1.2003, p.1. 

39 

 
 
  
 
                                                 
All this should be reassessed around three strands: 

(1) 

(2) 

(3) 

(4) 

The running of tasks ensuing from programmes of an executive nature, with a specific 
duration  in  time,  could  be  delegated  to  executive  agencies.  The  Commission  will 
retain control of the delivery mechanism. 

A  more  autonomous  agency  –  matching  existing  models  -  can  be  considered  when 
non-binding  advice  is  expected  or  when  the  tasks  attributed  to  the  agency  involve 
the 
actions  falling  outside 
Commission's role appears marginal. Some existing agencies carry out tasks with only 
very  limited  involvement  by  the  Commission,  even  thought  the  Commission  is  fully 
responsible for the result. This situation therefore needs urgent revision. 

the  Commission's  direct  responsibility  or  where 

An Office will be considered for new executive tasks with no specific timespan, or for 
preparatory  activities  on  the  basis  of  which  the  Commission  can  take  regulatory 
decisions for which it is responsible. 

Some existing agencies carry out similar tasks with only very limited involvement by 
the Commission, even though the Commission is fully responsible for the result. This 
situation needs therefore urgent revision. 

40 

 
 
  
 
ANNEX 2 

ROADMAP - An Example 

IMPROVE THE QUALITY OF EDUCATION AND TRAINING IN THE UNION  

Objectives 

Main actions and instruments 

Progress indicators and targets 

1 

Increasing 
quality of 
education and 
training 
provided in 
Europe 

EU Coordination: European Areas of Higher 
Education and of Vocational Training: 
“Objectives” process working groups; 
Bologna and Copenhagen processes; World-
wide benchmarking of education and training 
systems.  

Number of partnerships; progress 
against agreed benchmarks and 
indicators; implementation of quality 
assurance frameworks for higher 
education and vocational education and 
training.  

EU  Expenditure:  Support  for  trans-national 
partnerships of institutions; exchanges of good 
practice;  collection  and  analysis  of  statistics 
for 
Single 
and 
education 
to 
training 
Socrates/Leonardo programmes).  

instrument 
(successor 

indicators: 
and 

2 

Improving 
access to 
education and 
training at all 
stages of life  

EU Legislation: Europass Decision. Follow-
up to Mobility Recommendation.  

EU Expenditure: Single instrument for 
education and training (successor to 
Socrates/Leonardo programmes). 

Number of young people and adults in 
mobility; rate of adoption of credit 
transfer systems in education and 
vocational education and training; rate 
of adoption of transparency instruments 
(Diploma Supplement, Europass, etc)  

Targets: 10% of school pupils and 
teachers in mobility and European 
cooperation activities 2007-13; 3 
million university student placements by 
2010; 150,000 vocational training 
placements and 50,000 adults in 
learning and teaching abroad per annum 
by 2013. 

3  Opening 

up 
EU  education 
and 
training 
systems  to  the 
wider world 

EU  Legislation:  Directive  on  access  for 
students/researchers from third countries. 

Numbers  of 
third  country  students, 
training and scholars coming to Europe  

EU  Expenditure: 
Successor to Tempus programme. 

Erasmus  Mundus; 

Targets:  over  11,000  grants 
for 
mobility  of  students  and  scholars  from 
and to third countries 2004-08. 

41