Opinion of the Committee of the Regions on the ‘Third Report on Economic and Social Cohesion’
Date: 2004-06-16
Institutions: European Committee of the Regions
Subjects: EU regional policy, Structural Funds, economic and social cohesion, regional cooperation, report

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II

(Preparatory Acts)

COMMITTEE OF THE REGIONS

55th PLENARY SESSION ON 16 AND 17 JUNE 2004

Opinion of the Committee of the Regions on the ‘Third Report on Economic and Social Cohesion’

(2004/C 318/01)

THE COMMITTEE OF THE REGIONS,

Having regard to the Communication from the Commission — Third Report on Economic and Social
Cohesion (COM(2004) 107 final);

Having regard to the European Commission's request of 18 February 2004 for its opinion on this subject
under Article 265(1) of the Treaty establishing the European Community;

Having regard to the decision of its President of 27 January 2004, to entrust the Commission for Territorial
Cohesion Policy with the task of drawing up the opinion;

Having regard to its opinion on The structure and goals of European regional policy in the context of
enlargement and globalisation: opening of the debate (CdR 157/2000 fin); (1)

Having regard to its opinion on the Communication from the Commission — Second Report on Economic
and Social Cohesion (CdR 74/2001 fin); (2)

Having regard to its opinion on the Communication from the Commission — First Progress Report on
Economic and Social Cohesion (CdR 101/2002 fin); (3)

Having regard to its opinion on the Communication from the Commission — Second Progress Report on
Economic and Social Cohesion (CdR 391/2002); (4)

Having regard to its own-initiative opinion on Territorial cohesion of 10 April 2003 (CdR 388/2002
fin); (5)

Having regard to its outlook report on ‘Governance and simplification of the Structural Funds after 2006’
(CdR 389/2002 fin); (6)

Having regard to the draft opinion (CdR 120/2004 rev.1) adopted on 5 May 2004 by its Commission for
Territorial Cohesion Policy (rapporteurs: Vito D'Ambrosio, President of the Region of Marche (IT, PSE) and
Michael Schneider, State Secretary, representative of the Land Saxony-Anhalt to the Federal Government
(DE, EPP);

(1) OJ C 148, 18.5.2001, p. 25.
(2) OJ C 107, 3.5.2002, p. 27.
(3) OJ C 66, 19.3.2003, p. 11.
(4) OJ C 256, 24.10.2003, p. 13.
(5) OJ C 244, 10.10.2003, p. 23.
(6) OJ C 256, 24.10.2003, p. 1.

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Having regard to the European Commission's Communication of 12 May 2004 entitled European neigh-
bourhood policy — Strategy paper;

Whereas the Third Cohesion Report is a further step towards drawing up proposals for the shape of Euro-
pean cohesion policy post 2006 in the context of EU enlargement;

Whereas in the light of the Structural Funds regulations announced for July this year, the CoR is called
upon to comment fully on the proposals of the European Commission;

Whereas the key yardstick for the Committee's assessment continues to be the objective set out in Article
158 of the EC Treaty, i.e. strengthening economic and social cohesion in order to promote the overall
harmonious development of the Community. Reducing differences in the level of development of the
various regions and reducing the development shortfall of the most disadvantaged areas is also the most
significant contribution to strengthening the role of regional and local authorities in the European Union;

Whereas the draft of the EU Constitution strengthens the objective of cohesion by introducing its territorial
dimension, as called for by the Committee of the Regions on several occasions;

Whereas the European Commission's Third Cohesion Report makes clear that regional and structural
policy must continue to be a joint task for Member States, local and regional authorities and the European
Union;

Whereas the efforts already made must be continued, in order to reduce Rückstände in competitiveness
and to ensure more balanced territorial distribution of all the factors contributing to competitiveness

adopted the following opinion at its 55th Plenary Session on 16 and 17 June 2004 (meeting of 16 June).

The Committee of the Regions

General aspects

1.
welcomes the Third Report on Social and Economic
Cohesion. This, like the Second Report, is a complete document
providing detailed information above all on the policies
followed by the EU;

2.
judges as positive the results attained in recent years with
cohesion and the positive impact of the regional policy of the
European Union with respect to strengthening the Communi-
ty's social and economic cohesion as a whole; it also reiterates
that the cohesion policy endorsed by the Treaties is the most
powerful and important instrument used to implement princi-
ples of solidarity and cooperation, thus representing one of the
main cornerstones of integration between the people and terri-
tories of the Union;

3.
takes account of the fact that with EU enlargement the
European Union will increase its population from 380 million
(EU-15) to 454 million (EU-25) or 485 million (EU-27) inhabi-
tants. But compared with this increase in population of around
20 %, EU GNP will increase by only 5 %! The average GDP per
capita will decrease by 12.5 %. Instead of currently 84 million
inhabitants,
live in
regions lagging behind;

in future 123 million EU citizens will

4.
welcomes the priority given by European cohesion policy
to the new Member States, confirming the commitment of the

European Union to reduce the socio-economic disparities in an
enlarged European Union. This approach has been supported
by the Committee of the Regions from the beginning as an act
of solidarity with the new Member States;

takes note of the fact that despite the progress achieved,
5.
many socio-economic problems in the regions of the former
EU-15 will remain, as is clearly shown in the Third Cohesion
Report. This relates inter alia to the lag in terms of GDP/per
capita, high unemployment,
lack of
R&D expenditure and foreign direct investment;

low economic growth,

6.
points out that in a Europe of 25 or even 27 Member
States the socio-economic unbalance will be even greater,
making it necessary to follow a policy of territorial, social and
economic cohesion that takes into account the effects of globa-
lisation on the economy and its consequences in terms of the
progressive liberalisation of international trade;

7.
affirms that the regional dimension of cohesion policy, in
terms of the harmonious development of the Union as a whole
by strengthening social and economic cohesion as provided for
in Article 158 of the European Community Treaty,
is today
the CoR
more than ever valid and appropriate; Moreover,
would stress the importance of making systematic allowance
for the regional dimension in Community and national policy-
making;

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8.
supports the proposals for strengthening partnership and
cooperation between local, regional, national and Community
authorities in the whole programming,
implementation and
evaluation process for the Structural Funds and Cohesion Fund;
and calls on the Commission to encourage Member States to
make use of the possibility for concluding tripartite agreements,
where necessary;

notes further that the work on achieving the Lisbon stra-

9.
tegy's objective is behind schedule;

Resources for the future cohesion policy

also welcomes the fact

15.
the regulations for the
current Objective 1 will be kept and will be applied throughout
the enlarged Union;

that

16.
supports the proposal for the inclusion of the Cohesion
Fund in the new Convergence Objective. This applies to both
the application of the 90 %-criteria for selecting the Member
States eligible for aid from the Cohesion Fund as well as the
linking of the Objective 1 programmes with the Cohesion Fund
measures in the field of infrastructure. Because the Cohesion
Fund is financed from Objective 1 funds, payments from this
Fund must be taken into account when sharing out the rest of
the Objective 1 resources; for those Member States which will
no longer be eligible in future as a result of enlargement a poli-
tical solution can only be found between the Member States;

considers that the Commission's financial proposal to
10.
allocate 0.41 of Gross National Income (increasable to 0.46
with the inclusion of aid for rural development and fishing)
and earmarking EUR 336.3 billion for financing the three
Objectives
(78 % Convergence Objective; 18 % Regional
Competitiveness and Employment Objective and 4 % Territorial
Cooperation) is an acceptable compromise for future cohesion
policy;

demands that the distribution of the resources in the
17.
new Objective 1 continue to be carried out by taking into
account objective and transparent criteria based on the
the assisted regions. The formulas
problems and needs of
defined in Berlin and Copenhagen for the current
funding
period should in principle continue to be used. However,
regional wealth and unemployment should be taken into
account more than now;

11.
believes, moreover, that if a cohesion policy matching
the Union's ambitions for the Lisbon Strategy is to be achieved,
no less than 0.46 % of GNI may be allocated for this purpose,
as occurred in 1999 with an EU of 15;

12.
agrees with the European Commission that the budget
proposed by the latter is sufficient to maintain support for the
regions in the current European Union and at the same time to
assist the new Member States on an equal basis if it can be
guaranteed that the resources are shared out fairly and are
concentrated on the most serious problems;

13.
welcomes the fact that for the financial transfers to the
new Member States an absorption ceiling of 4 % of national
GDP is maintained and that the resources transferred as part of
the rural development policy and fisheries policy are recognised
in that calculation;

Convergence Objective (1) for supporting growth and job creation in
the most lagging Member States and regions

14.
welcomes the proposal in the Cohesion Report that the
new Convergence Objective should include besides regions (at
NUTS II
level) with a GDP/per capita below 75 % of EU
average (EU-25), those regions affected by the so-called statis-
tical effect;

Statistical effect

18.
takes note of the current data of the European Commis-
sion according to which 17 regions with around 19 million
inhabitants would lose the ‘traditional’ Objective 1 support
solely because the EU average of GDP/per capita will fall as an
effect of enlargement (so-called statistical effect);

19.
welcomes the proposal of the Commission to find a
solution for these regions within the new Convergence Objec-
tive;

notes the proposal of the Commission that the transi-
20.
tional arrangement for lagging regions affected by the statistical
effect will end in 2013. The Committee would, however, stress
that on grounds of equal treatment the regions affected should
not be automatically excluded from possible phasing-in support
under the new Competitiveness and Employment Objective in
the funding period after 2013. Any future phasing-in support
should be determined by the socio-economic situation of these
regions at the end of the next funding period;

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21.
sees as an acceptable compromise the proposal made by
Commissioner Barnier that these regions would be entitled at
the beginning of the next funding period to 85 % of the alloca-
tion for ‘classic’ Objective 1 regions, reducing by the end of the
this entails allocating adequate
funding period to 60 % if
budgetary resources,
in accordance with the Commission's
proposals for the 2007-2013 financial perspective. At the same
time it also endorses the Commission's intention of including
in its future proposal for a regulation a provision whereby
these regions might obtain 100 % funding if
the funds
earmarked for the Objective 1 regions were not fully utilised;
such unused funds would be placed on reserve which could be
redistributed within each Member State half way through the
2007-2013 programming period;

Control of State aid

22.
takes note of the proposal of the European Commission
that those regions in the old and new Member States which fall
under the new Convergence Objective will be eligible for state
aid in accordance with Article 87(3)(a) of the EU-Treaty in the
future too;

calls for all the regions affected by the statistical effect to

23.
fall under Article 87(3)(a) for the whole aid period;

24.
calls for all the regions affected by natural effect (the
‘phasing-in’ regions) to have a transition from Article 87.3(a) to
Article 87.3(c) over the course of the aid period;

Regional competitiveness and Employment Objective (2)

approves the Commission's proposal to create an Objec-
25.
tive for all the regions that do not fall under the Convergence
Objective typologies and points out that special attention could
be given to regions with significant socio-economic problems
and major and structural adjustment requirements, defined
according to uniform criteria; it also approves the fact that this
new objective is to apply to the regional level as a whole;

supports the choice of the Commission to base the
26.
intervention of
the new Competitiveness and Employment
Objective on an approach involving the entire regional territory
and issues related to the Lisbon and Gothenburg strategies
without overlooking services of general interest; however, the
range of possible measures must be broad enough to accom-
modate the variety and diversity of European regions in an
integrated approach to regional policy;

27.
in pursuit of the Lisbon strategies, calls on the Commis-
sion to identify and apply good practice learned in previous
Innovative Actions programmes as guidance for ‘innovation

and the knowledge economy’ interventions, to avoid costly and
wasteful reinventing the wheel;

28.
approves the fact that the regions no longer eligible for
support under the (new Convergence Objective) because of
their positive development will now be incorporated into the
new Competitiveness and Employment Objective, under the
heading ‘phasing in’, The Committee asks that a procedure
similar to that established in the same circumstances for the
period 2000-2006 be applied to regions which naturally
exceed the threshold of 75 % of the average per capita GDP of
the EU 15. This would allow for a more flexible use of funds,
so as to consolidate the economic development achieved by
regions no longer eligible owing to natural effect;

approves the link between the European employment
29.
in accordance with the
strategy and ESF measures; affirms,
subsidiarity principle, the need for greater and better involve-
ment of regions and local authorities in programming and
implementing ESF measures. These interventions should be
consistent with the European Employment Strategy and its
national component, the National Plan for Employment. They
should also be consistent with other regional plans impacting
on regional
labour markets and include initiatives currently
being implemented under the Equal programme;

30.
demands that the resources of the new competitiveness
strand be distributed among the Member States on the basis of
social, economic and territorial
objective and transparent
criteria according to the problems and needs in the assisted
the
regions; calls
resources of
strand
among their regions to take account of territorial development,
regional competitiveness and EU wide social and economic
indicators;

for
the competitiveness and employment

the Member States' distribution of

Control of State aid

31.
asks the European Commission to submit proposals
urgently for the future of the state aids provided for in Article
87(3)(c) of the Treaty and to consider how territorial differen-
tiation can be worked into the rules and regulations by using
appropriate reliable indicators, because it is necessary to main-
tain territorial differentiation as a part of state aid policy, which
allows for targeted public investment where this can correct
market failure in order to achieve the territorial cohesion objec-
tive care should be taken to avoid excessive discrepancies
between the permissible aid ceilings fixed for neighbouring
regions;

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32.
asks for the non-convergence regions to be provided
with aid rules so that these regions can also further their struc-
tural development and reduce inter-regional differences in line
with the subsidiarity principle. This would require retaining the
provisions of Article 87 III c) for regions with structural adjust-
ment requirements, defined according to uniform criteria;

39.
judges as positive the creation of a ‘new neighbourhood
instrument’ and emphasises the importance of activating this
new instrument rapidly in order to use it in the new program-
ming period, based on the experience currently being garnered
under the Interreg programme;

33.
urges that regions with structural disadvantages arising
from their geographical or demographic situation should even-
tually benefit from the provision under Art. 87 (3) c of the EU-
Treaty;

European Territorial Cooperation Objective (3)

34.
expresses appreciation for the creation of a specific
transnational, cross-border and interregional
Objective for
cooperation and for the share of the appropriations proposed
for territorial cooperation;

35.
supports the recognition of the maritime borders within
the framework of cross-border cooperation and considers that
the regions should participate, along with the Member States,
in the process of defining and selecting the maritime borders
eligible for assistance;

36.
demands that interregional cooperation continue to be
supported in the EU. It is worrying that the Cohesion Report
provides for support for interregional cooperation only in the
framework of the regional programmes. The reference to aid
possibilities under the regional programmes is of little help as
the promotion of complex cooperation programmes is then
dependent on the definition of internal regional policy strate-
gies.
In addition steps must be taken to ensure that cross-
border cooperation can also occur at external and internal
borders, including the ‘old’ borders;

requests that, notwithstanding point 36, regions which
37.
so wish should be able to integrate the management of
programmes
serving the cooperation objective with their
regular programmes;

40.
calls upon the European Commission to propose a new
legal instrument to facilitate decentralised, inter-regional coop-
eration, decided at regional and local level;

recommends that

41.
the various territorial cooperation
instruments promote the establishment and strengthening of
networks of towns and the extension initiatives establishing
decentralised cooperation between local authorities;

Measures for specific territorial characteristics

welcomes the fact that as in the past the European
42.
Commission proposes in accordance with Article 299(2) of the
Treaty (a) the inclusion in the new Convergence Objective of a
specific programme to compensate for the handicaps of all
outermost regions and (b) the creation of a Grand Voisinage
Action for these regions in the new ‘European territorial coop-
eration’ programmes, with the objective of providing them
with the economic resources needed to play their role effec-
tively as an active EU border and thus contribute to European
invites the European Commission to
integration. However,
make clear proposals for the coordination of such provisions
with the newly proposed Grand Voisinage Initiative and the
objective of territorial cooperation;

43.
expresses appreciation for the effort made to consider
urban problems within the framework of a broader regional
and national strategy, but invites the European Commission to
better define the criteria of urban areas eligibility, bearing in
mind the role that second and third tier towns play in ensuring
balanced development within regions;

44.
believes that the urban dimension of regional policy
should not only address urban regeneration but also the role of
urban areas as economic drivers for the region, and the urban-
rural relationship;

38.
welcomes the proposal to set up a ‘new legal instrument’
for cross-border cooperation and invites the European Commis-
sion to better define its tasks and importance and also to
ensure that this does not lead to any delay in launching and
implementing the new programmes and that existing coopera-
tive efforts continue;

supports the proposals of the European Commission to
45.
step up the participation of the cities in the implementation of
the urban dimension,
in accordance with the principle of
subsidiary;

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welcomes the Commission view of the regions with
46.
structural handicaps,
linked to their geographical or demo-
graphic situation, such as upland, underpopulated and island
regions. The Committee would also urge that, where justified
and with due regard for the seriousness of the prevailing condi-
tions, specific measures be adopted with the aim of integrating
these regions into the internal market under fair conditions.
The high cost of guaranteeing essential services to the popula-
tion of some regions owing to their territorial and demographic
features should be taken into account as a criterion;

Links with other sector-based policies

47.
affirms that cohesion policy must be considered as a
horizontal policy in support of economic and social cohesion
based on sustainable development, and plays an essential role
in the process of integration between the people and territories
of the Union. All Community policies must play a part in
achieving this cohesion objective;

48.
notes the European Commission's intention to integrate
the Leader + initiative into the mainstream, but expresses
concern for the inclusion of rural development in the second
pillar of the PAC due to its modest level of regionalisation and
the predominate role of agricultural production and urges the
European Commission to ensure that wider rural areas are
given maximum encouragement
to participate in measures
under the Accessibility and Services of General Interest heading
of the Competitiveness strand;

that

thinks

49.
the programming must be coordinated
between rural development expenditure under the second pillar
of the common agricultural policy and expenditure under the
new Objective 2 (regional competitiveness and employment),
and that this coordination should take place at regional level;

50.
welcomes the fact that a single instrument is to be
created for developing rural and fishing areas; the Committee
calls on the Commission to clarify how this instrument is to
operate outside the convergence objective and believes that the
instrument should give priority to measures tackling the most
harmful aspects of rural areas, such as depopulation, an ageing
population and the lack of potential for locally-generated devel-
opment;

calls for the measures under the EU Regulation on rural
51.
development to be extended to agricultural and agriculture-
related areas,
including agricultural services. When resources
are distributed, steps must be taken to ensure that account is

also taken of convergence objectives and the need for resources
to pay for the measures arising from the tasks assigned under
the CAP reform;

Simplification of Structural Funds management

52.
welcomes the proposal of the European Commission to
maintain central elements of the programming and manage-
ment system for future Structural Funds implementation, such
as a multi-annual framework, a strategic approach within a
framework and the promotion of public-
single coherent
private-partnerships at regional level and the strengthening of
partnership between the different spheres of government: local,
regional, national and European;

53.
requests that regions be involved more closely in an
effective and transparent system for monitoring the allocation,
distribution and use of Structural Funds' monies;

54.
notes that the Commission has taken on board many
proposals from local and regional authorities to simplify the
administration of the Funds by:

— limiting the definition of the programmes to priority level
only and therefore abandoning the programme comple-
ment;

— in future operating the programmes only as mono-fund
programmes and allowing the ERDF and ESF to finance
residual activities related to human and physical capital;
and

— following a single programming system for the Cohesion
Fund and for ERDF transport and infrastructure projects;

— decentralisation of financial control in the interest of simpli-
fication and in accordance with the principle of proportion-
ality;

55.
stresses that simplifying the programming procedure for
the Commission should not lead to difficulties for regional and
local authorities or for project owners. Thus the creation of
single fund programmes in the new Objective 1 for example
could lead to the creation of more programmes, which would
not facilitate the task of the regions. It would be better for the
current rules for operational programmes to be kept and only
give up the requirement for integration of the Funds in the case
of the priority themes and programme measures. Furthermore,
operational programmes should continue to be allowed to
cover neighbouring regions, including joint financial planning;

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urges the Commission, in simplifying regional policy, to

56.
take account of the ‘user viewpoint’;

asks the European Commission to clarify what role the
57.
proposed political framework document will play in relation to
the programming phase at national/regional
level, and what
consequences the yearly drafting of national progress reports
will have; the CoR assumes that the constitutional situation of
the Member States will be taken into consideration and asks for
assurance that the preparation of these political
framework
documents will be based on an equal partnership in accordance
with the subsidiarity principle;

considers it sufficient for the European institutions to
58.
address priorities and results at most every two years. This

Brussels, 16 June 2004.

examination could take place at the Spring European Summit,
which is to focus on the Lisbon and Gothenburg Agenda. In
this way the implementation of the programmes at regional
level will not be delayed and their structure will not be
changed;

notes that the European Commission has not taken on
59.
board the CoR proposal to modify the n+2 rule with an n+3
rule as it would reduce the problems linked to the implementa-
tion of large-scale projects and calls on the Commission to
reconsider these proposals (of local and regional authorities)
and provide a full explanation should it decide to reject them.

The President

of the Committee of the Regions

Peter STRAUB

Own-initiative opinion of the Committee of the Regions on ‘Low-cost airlines and territorial
development’

(2004/C 318/02)

THE COMMITTEE OF THE REGIONS,

Having regard to the decision of its Bureau on 19 March 2004, and the fifth paragraph of Article 265 of
the Treaty establishing the European Community to draw up an opinion on the role played by low-cost
airlines in territorial development, and to instruct the Commission for Territorial Cohesion Policy to under-
take the preparatory work;

Having regard to the opinion (CdR 388/2002 fin) of 9 April 2003 on Territorial Cohesion (rapporteur: Mr
Ramón Luis Valcárcel Siso, President of the Autonomous Community of Murcia (ES/EPP));

Having regard to its opinion of 15 May 2002 on the Proposal for a Regulation of the European Parliament
and of the Council on the granting of Community financial assistance to improve the environmental
performance of the freight transport system (COM(2002) 54 final — 2002/0038 COD) (CdR 103/2002
fin) (1);

Having regard to its outlook opinion on The capacity of regional airports (CdR 393/2002) (2) adopted on 2
July 2003 (rapporteur: Mr Bob Verburg, Vice-Governor of the Province of Noord-Holland, NL, EPP);

Having regard to the Guidelines for the Application of Articles 92 and 93 of the EC Treaty and Article 61
of the EEA agreement to State aids in the aviation sector COM(1994) 350 final;

Having regard to the rulings of the Court of Justice C-159/91 and C-160/91 of 17 February 1993 on
‘Christian Poucet v Assurances Générales de France and Caisse Mutuelle Régionale du Languedoc-Rous-
sillon’ and C-82/01 of 24 October 2002 on ‘Aéroports de Paris v Commission of the European Commu-
nities’;

(1) OJ C 278 of 14.11.2002, p. 15.
(2) OJ C 256 of 24.10.2003, p. 47.