Opinion of the European Economic and Social Committee on the ‘Third report on economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation’ (COM(2004) 107 final)
Date: 2004-06-30
Institutions: European Economic and Social Committee
Subjects: competitiveness, cooperation policy, economic and social cohesion, economic growth, regional development, regional disparity, structural policy

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Opinion of the European Economic and Social Committee on the ‘Third report on economic and
social cohesion – A new partnership for cohesion: convergence, competitiveness, cooperation’

(COM(2004) 107 final)

(2004/C 302/14)

On 8 December 2003, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the ‘Third report on
economic and social cohesion – A new partnership for cohesion: convergence, competitiveness, coopera-
tion’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 8 June 2004. The rapporteur
was Mr Barros Vale.

At its 410th plenary session (meeting of 30 June 2004), the European Economic and Social Committee
adopted the following opinion with 115 votes in favour and five abstentions.

1. Introduction

2. Part 1 – Cohesion, competitiveness, employment and

growth – Situation and trends

1.1
The third report on economic and social cohesion,
entitled A new partnership for cohesion - convergence, compe-
titiveness, cooperation, takes stock of cohesion policy in the
in particular progress achieved on
European Union (EU),
economic, social and territorial issues and future prospects.

The document is divided into four main parts and also
1.2
includes an executive summary at the beginning of the report
and a proposal for a reformed cohesion policy, presented in
the conclusions:

— Part 1 – Cohesion, competitiveness, employment and

growth – Situation and trends;

— Part 2 – The impact of Member State policies on cohesion;

— Part 3 – Impact of Community policies: competitiveness,

employment and cohesion;

— Part 4 – Impact and added value of structural policies.

and

The

European

Economic

Social Committee
1.3
welcomes both the results attained over the last few years in
social cohesion, one of
the European Union's fundamental
policy areas, and the proposals put forward in the report, corre-
sponding as they do to the objectives defined by the EESC in
the many documents it has adopted over the years.

2.1
On the basis of various statistics, the report addresses
the cohesion situation in Europe in economic, social and terri-
torial terms, particularly in terms of the positive impact on
convergence.

Using data for 2001 and 2002, the document assesses
2.2
in some detail progress made towards real convergence in the
‘cohesion countries’, and outlines a number of future prospects.
The document also analyses the potential cohesion situation in
an enlarged Europe.

2.3
This part of the report addresses growth in GDP and
employment in the cohesion countries over recent years rela-
tive to that in the rest of the EU and looks at how disparities
between regions in the EU15 have changed over the past
decade, with particular focus on the Objective 1 regions. It also
analyses recent economic developments in the new Member
States, in particular the way that economic performance varies
within these countries and the fact that if these countries are to
attain income levels close to the EU average, they will need to
sustain high rates of growth for a prolonged period.

The report also highlights Europe's ageing population
2.4
and factors determining competitiveness, growth and employ-
ment, such as innovation and knowledge, along with environ-
mental protection in the context of the Gothenburg objectives.

1.3.1
For this reason, the EESC welcomes the fact that the
Commission has rejected certain moves to renationalise cohe-
sion policy.

2.5 General aspects

1.4
Owing to the complexity and diversity of the issues
addressed in the report, and with a view to ensuring that the
opinion presents these issues clearly, it was decided to structure
this document along the same lines as the Commission report
and conclude by assessing progress achieved and also inter-
preting future prospects.

2.5.1
Over the last decade, and in particular since the
second half of the 1990s, national and regional cohesion has
improved significantly, with a narrowing of disparities both
between countries and between regions in the EU. Nonetheless,
there has been greater cohesion between Member States than
between regions.

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Despite the positive contribution of

2.5.2
the Structural
Funds and progress achieved, some very significant differences
remain in terms of prosperity and economic performance,
reflecting structural weaknesses in some countries and regions.

2.5.3
There also remain a number of problems relating to
the competitiveness of less prosperous regions. Some European
regions are still too isolated and fall short in terms of skilled
labour, investment and the resources necessary to gain proper
access to the information society.

2.5.4
social cohesion and employment:

Less progress seems to have been made in terms of

2.5.4.1
unemployment;

it is proving difficult to make a dent in long-term

2.5.4.2
the limited increase in employment in the EU15 in
2001, combined with a fall in employment in the accession
countries in recent years, has further exacerbated regional
disparities;

2.5.4.3
natural population growth has fallen in various
European regions and is set to decline even further in the
future (demographic projections predict a decline in the
Member States and accession countries, with a few exceptions);

2.5.4.4 more relevant for employment, the population of
working age is likely to begin to shrink before the total popula-
tion does. Projections suggest that by 2025, people aged 50
and over will account for 35 % of the working age population
in the EU15, as against 26 % in 2000. This will be accompa-
nied by a continuing increase in the number of people aged 65
and over;

the data available point to a rise in old-age depen-
2.5.4.5
dency rates. In the EU15, the number of people aged 65 and
over currently amounts to almost 25 % of the working-age
population — i.e. there are four people aged 15 to 64 for
every one of retirement age. By 2025, the figure will have risen
to 36 %, i.e. less than three people of working age for each one
in retirement. In the accession countries, the ratio will increase
from under 20 % to over 30 %.

2.5.4.6
The report does, however, point out that these statis-
tics do not reveal how many people of working age will be in
employment to support those aged 65 and over (in 2002, 64 %
of the working-age population was actually in employment in
the EU15, compared to only 56 % in the accession countries,
with marked differences both between countries and regions).

have lower levels of GDP per capita and,
employment than the EU15 average.

in many cases,

2.5.6
Given the growing interdependence in trade and
investment, economic development in the new Member States
will sustain high levels of growth throughout the EU. The bene-
fits of this will be felt in Germany and Italy in particular.

2.5.7 With enlargement, the Member States can be divided
into three groups according to GDP per capita expressed in
terms of purchasing power standards (PPS):

— a first group consisting of twelve of the present fifteen
Member States, where GDP per capita in PPS is above the
EU average (10 percentage points or more);

— a

seven countries,

second group of

comprising the
remaining three present Member States (Spain, Portugal and
Greece) plus Cyprus, Slovenia, Malta and the Czech
Republic, where GDP per capita in PPS is between 73 %
and 92 % of the EU25 average;

— and finally, a third group of eight countries (including
Romania and Bulgaria), where GDP per capita is below
60 % of the Community average.

The section on territorial cohesion acknowledges that
2.5.8
cooperation between the regions – at cross-border,
trans-
national and inter-regional level – has played an important role
in promoting balanced development across the EU.

2.5.9
tiveness, the report notes that regional disparities persist:

As regards factors determining growth and competi-

— in terms of human resources, the less prosperous regions
have high numbers of early school leavers while participa-
tion in continuing training is much lower in the cohesion
countries,
Ireland apart, and in many cases significantly
lower in the accession countries;

— the report presents several statistics which demonstrate
major disparities between EU15 countries in terms of inno-
vation. Figures for R&D expenditure confirm that Objective
1 regions are lagging behind (firms' R&D expenditure as a
percentage of GDP is well below the European average, at
just over a fifth of the EU average).

2.5.9.1
In the accession countries, much less is spent on
R&D as a proportion of GDP than in most of the current
Member States, but only slightly less than in Objective 1
regions.

The report warns that disparities in both income and
2.5.5
employment will widen still further, across countries and across
regions, when the new Member States join the EU in May
2004. These countries have experienced high growth but still

2.5.9.2
As in the EU15, in the accession countries too there
is a relative concentration of R&D expenditure in the most
prosperous regions.

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2.5.9.3
information and communication technologies (ICT).

Disparities also remain in terms of regional access to

what has happened since 2001, as this is the last year for
which regional figures are available.

2.5.10
According to the report, it is necessary to create the
right conditions for regional development to be sustained and
also to pursue employment-promoting strategies. At national
level, there is a need for a macroeconomic environment condu-
cive to stability and growth, and a tax and regulatory system
that encourages business. At regional level, the need is for basic
infrastructures and a skilled labour force - especially in the
Objective 1 regions and the accession countries, which are
seriously lacking in both at present. Basically, the report points
to the need for the regions to meet a set of conditions which
relate more directly to the intangible factors of competitiveness,
such as innovation, R&D and the use of ICT,
in order to
achieve the objectives set out in the Lisbon Strategy.

2.5.11
The report also mentions the substantial differences
between Member States and between regions as regards envir-
onmental protection,
in terms of achieving the Gothenburg
objectives.

2.6 Cohesion countries

The detailed analysis of convergence of GDP per
2.6.1
capita, employment and productivity in the cohesion countries
reveals that these countries are continuing to catch up, their
growth being well above the EU average during the 1994-2001
period. The report highlights the case of Ireland, which force-
fully demonstrates the positive contribution of Structural Fund
support when combined with growth-oriented national poli-
cies.

2.6.2
The report points out that economic growth in the EU
has slowed appreciably since publication of the last report. This
has inevitably affected cohesion, not only because it has led to
a rise in unemployment, but also because it has created a
climate which is not conducive to a further reduction in
regional disparities in both income and employment.

the Member States. Of

The economic slow-down in the EU has affected
2.6.3
nearly all
the cohesion countries,
Portugal seems to have been the worst hit. According to data
for 2001, and if the forecasts for 2004 are confirmed, Portugal
could reverse its convergence course and start to move away
from the EU average.

Up until 2001, the gap in income levels (GDP per
2.6.4
capita) between the least prosperous regions in the EU (which
have been the main focus of cohesion policy) and the other
regions was narrowing. It is not yet possible, however, to say

2.7 Accession countries

2.7.1
Regional disparities in GDP per capita have widened
significantly in the accession countries. In the Czech Republic
and Slovakia, the 20 % of the population living in the most
prosperous regions have a GDP per capita twice as high as the
20 % living in the least prosperous regions.

2.7.2
If these countries are to attain income levels close to
the EU average, they will need to sustain high growth levels for
a prolonged period. Growth in these countries would increase
growth in the EU as a whole, reducing unemployment and
strengthening social cohesion.

Since 2001, economic growth has slowed in the acces-
2.7.3
sion countries, in part because of the fall-off in growth in the
EU, their main export market, leading to a fall in employment.

In 2002,

2.7.4
the average employment rate in the ten
accession countries was 56 %, much lower than the EU15
average of around 64 %.
the accession countries,
In all of
except Cyprus, the employment rate was below the targets for
Europe defined in the Lisbon Strategy (67 % in 2005 and 70 %
in 2010).

2.8 Enlargement

Enlargement will

2.8.1
increase the disparity between the
most and least prosperous Member States. Although the new
Member States have recently grown faster than the EU15, the
gap in GDP per capita remains quite pronounced. In 2002,
only Malta, Cyprus, the Czech Republic and Slovenia had a
GDP per capita in PPS above 60 % of the EU15 average. In
Poland, Estonia and Lithuania it was around 40 %, in Latvia,
almost 35 % and in Bulgaria and Romania, around 25 % of the
average.

Enlargement will have an even greater effect on dispa-
2.8.2
rities between regions than between countries. According to
the latest estimates (2001), around 73 million people (repre-
senting some 19 % of the EU15 population) live in regions
where GDP per capita is below 75 % of the EU average. Enlar-
increase the number of people living in such
gement will
regions to almost 123 million in the EU of 25. If Bulgaria and
Romania are included in the calculation, this figure rises to
153 million, i.e. more than double the current number.

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2.8.3
The statistical effect of enlargement will be to reduce
average GDP per capita. If the criteria for determining Objec-
tive 1 status were to remain unchanged, some regions would
no longer be eligible for such status, even though their GDP
per capita will not have changed. This will affect, for example,
various regions in Germany, Spain, Greece, Italy and Portugal.

Though incomplete, data suggest
investment

that a dispropor-
3.1.6
tionate amount of
inflows tends to go to the
economically stronger regions both within countries and across
the EU as a whole.

3. Part 2 – The impact of Member State policies on cohe-

sion

Part 2 of

the report examines the extent

3.1
to which
national policies complement the EU's cohesion policy, in the
sense that both try to bring about not only a fairer distribution
income and life chances between the regions, but also
of
towards more balanced territorial development at national level
and across the EU as a whole.

3.1.1
The Commission points out that constraints imposed
to reduce public expenditure entail an incentive to improve the
quality of expenditure programmes, though it is impossible to
say how far this has resulted in more effective policies for
regional cohesion.

3.1.2
Though incomplete, public expenditure statistics in
the various Member States clearly indicate that a large part of
public expenditure in the EU Member States, in particular on
social protection, is associated with the European Social Model
and, deliberately or not, makes a major contribution to redu-
cing disparities in income levels and life chances.

3.1.3
As regards changes in the composition of public
expenditure, despite an ageing population and growing number
of pensioners, between 1995 and 2002 there was a downward
trend in spending on social benefits as a proportion of GDP
throughout the EU, except in some countries such as Germany,
Greece, Portugal and – to a lesser extent – Italy.

3.1.4
In the section on regional development policy in
Member States, the report points out that the approach to terri-
in part
torial development differs between Member States,
reflecting institutional factors (essentially the degree to which
economic development policy is decentralised) as well as
different views about the factors determining economic devel-
opment.

3.1.5
Because foreign direct investment (FDI) brings jobs
and is a mechanism for transferring technology and know-how,
policies to attract FDI are an important part of the regional
development strategy.
Indeed, a significant aim of regional
support is precisely to make regions more attractive to foreign
investors.

3.1.7
This poses a particular dilemma for governments in
the cohesion countries and also in the accession countries,
where there is a potential trade-off between the need to attract
investment for the less developed regions and the fact that
investment tends naturally to home in on the most dynamic
regions.

4. Part 3 – Impact of Community policies: competitive-

ness, employment and cohesion

The second cohesion report outlined the contribution of
4.1
Community policies to cohesion. This part of the third report
sets out the main changes occurring since 2001 in terms of the
Lisbon and Gothenburg objectives.

4.1.1
The results of the various initiatives launched under
the Lisbon strategy reveal the progress that has been made,
particularly in the use of new technologies (e.g. schools online
and the development of government services online in all of
the accession countries, some of which are more advanced in
certain areas than some current Member States).

Despite differences between the Member States, the
4.1.2
report highlights
the European
the positive impact
Employment Strategy (EES) has had on the labour market
(reducing the average unemployment rate in the EU and
increasing the rate of participation in the workforce amongst
the working-age population).

that

Regarding the role of other Community policies in
4.1.3
strengthening economic and social cohesion,
in particular
transport, telecommunications, energy, agriculture and fisheries
and environmental protection policy, the report highlights the
development of trans-European transport, communications and
energy networks. These have improved accessibility, particu-
larly since 1991, and even greater improvements are expected
over the coming years, especially in the accession countries.

4.1.4
Given that in line with the Kyoto Protocol, sustainable
development is one of the priorities for energy policy, the
report points out that the development of new energy sources
would enable outlying regions to diversify their energy sources
and improve quality of
in environmental
protection may also have a highly positive impact on job crea-
tion.

Investment

life.

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4.1.5
The report also acknowledges the complementarity
between state aid and cohesion policy and points out that strict
control of state aid is necessary to achieve the Lisbon and
Gothenburg objectives. The Member States have therefore been
called upon to redirect aid to horizontal areas.

Finally, the report refers to the need to guarantee a
4.2
secure environment in which the rule of law is respected, as an
essential precondition for sustainable economic development.

5. Part 4 – Impact and added value of structural policies

This part of the report presents the results of cohesion
5.1
policy intervention for the 1994-1999 period and the preli-
minary results on programme implementation during the
2000-2006 programming period. Various aspects of cohesion
policy are examined, such as the contribution of structural poli-
cies to supporting sustained growth in lagging regions, the
effects of these policies outside Objective 1 regions, the specific
role of the European Social Fund (ESF) in promoting education,
employment and training,
the role of structural polices in
encouraging cooperation and the contribution made by pre-
accession support in the new Member States.

The Committee would like to highlight the following

5.2
results in particular:

5.2.1
Between the 1989-1993 and 1994-1999 periods,
there was a marked increase in public investment in almost all
the countries eligible for support under Objective 1.

The Structural Funds have provided support for the
5.2.2
development of trans-European transport networks, increasing
the attractiveness of
the regions concerned and boosting
economic activity.

5.2.3
It is recognised that investing in infrastructure and
equipment is not in itself sufficient to develop a knowledge-
based economy. Over the past decade therefore, structural poli-
cies have also aimed to increase R&D capacity, particularly in
Objective 1 regions.

5.2.4
positive contribution to environmental protection.

intervention measures have also made a

Structural

Recent empirical studies have analysed real conver-
5.2.5
gence between regions and show that there is a positive corre-
lation between the amount of structural aid provided and GDP
growth in real terms.

5.2.6
Using simulations of the macroeconomic effects of
structural policies in the 1994-1999 period, it has been esti-
mated that, as a result of structural intervention, GDP in real
terms in 1999 was 2.2 % higher in Greece, 1.4 % higher in
Spain, 2.8 % higher in Ireland and 4.7 % higher in Portugal.
These differences reflect the varying degree of openness of their
economies, the latter two being the most open.

5.2.7
Structural intervention is associated with a significant
increase in investment, particularly in infrastructure and human
capital, which in 1999 was estimated to be 24 % higher in
Portugal and 18 % higher in Greece.

5.2.8
Experience has shown that, in some cases, the Struc-
tural Funds have favoured national convergence (Ireland), while
in others they have tended to counteract the effects of a polari-
sation of economic activities (Spain). Experience also indicates,
however, that the extent to which a trade-off between regional
and national convergence exists depends above all on the
spatial distribution of economic activity and settlements in the
country in question.

5.2.9
The Structural Funds have helped promote greater
economic integration. European economies have become more
closely integrated, reflecting growing trade and investment
flows between them. Trade between the cohesion countries and
the rest of the EU has more than doubled over the past decade.
This situation also reflects the fact that other EU countries have
benefited from structural aid to less prosperous regions. Esti-
mates suggest that for the 2002-2006 period, almost a quarter
(24.1 %) of such expenditure returns to the rest of Europe in
the form of increased exports to cohesion countries, particu-
larly exports of machinery and equipment. This percentage is
particularly high for Greece and Portugal (42.3 % and 35.2 %
of structural aid respectively).

In addition to assisting Objective 1 regions, Struc-
5.2.10
tural Fund intervention also helps to support economic devel-
opment in other EU regions suffering from structural problems
(e.g. areas hit by industrial decline, rural areas). The report
presents the results of recent evaluation studies on the main
effects of this intervention during the 1994-1999 period. Com-
industries,
munity support helped to restructure traditional
diversify economic activity and create jobs
in the areas
receiving assistance during this time.

5.2.11
Detailed analyses indicate that R&D expenditure on
innovation and technology transfer seems to have been particu-
larly effective in creating new jobs as well as in saving existing
ones. Nevertheless, with a few exceptions, the capacity to main-
tain a steady flow of innovation in these regions is considerably
lower than in the most developed regions of the EU. This
contrasts with the extent to which they are endowed with infra-
and telecommunication
transport
structure,
systems, and human capital. Substantial efforts have also been
made to reconvert old industrial sites and improve the environ-
ment, especially in urban areas.

in particular

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5.2.12
As regards support for agriculture, rural development
and fisheries, the report presents, inter alia, the results of the
measures implemented under Objective 5a and 5b programmes
over the 1994-1999 period.

disparities persist in terms of economic and social development.
The EESC also warns that enlargement will exacerbate these
disparities, thus posing a major challenge for cohesion policy.

5.2.13
In addition to supporting Objective 1 regions, a
substantial part of ESF resources have gone towards helping
other regions in the EU. In the 1994-1999 period, ESF support
for Objective 3 and 4 regions helped cut back unemployment
(in particular long-term unemployment), assist ethnic minorities
and foster equal opportunities between men and women.

6.3
The EESC agrees that enlargement will significantly
expand the Community's internal market, bringing new oppor-
tunities. The impact of this will, however, vary across the EU.
Given the growing interdependence in trade and investment,
economic development in the new Member States will sustain
high levels of growth throughout the EU (it has been shown
that the Structural Funds help promote greater economic inte-
gration, reflecting growing trade and investment flows).

5.2.14
A number of Community initiatives to promote
cooperation and networking have done much to complement
cohesion policy. INTERREG II helped to encourage networking
between countries, the exchange of experience between regions
and the dissemination of knowledge. Nonetheless, in terms of
reducing isolation, results have been mixed, i.e. land-based links
and port facilities have improved significantly in some border
areas (e.g.
in Greece, Germany and Finland), while in others
(e.g. in Portugal and Spain) the effects have been more limited.

5.2.15
The report also highlights the contribution of the
URBAN Community initiative to developing urban areas and
improving quality of life.

The report points out that enlargement will pose a
5.2.16
major challenge for cohesion policy.
It acknowledges that
Structural Fund support will be of central importance to the
new Member States in terms of strengthening their competi-
tiveness and aligning their GDP per capita on the rest of the
EU, but stresses that these countries must also make careful
preparations in terms of administrative capacity and managing
the funds they receive. Pre-accession assistance is, in part, an
exercise for the countries concerned in how to use financial
support
funds.
However, administrative capacity must be further strengthened
and programme implementation further decentralised after
2006.

receiving much larger

effectively, before

6. Views of the European Economic and Social Committee

The results set out in the report demonstrate that cohe-

6.1
sion policy has had a very visible, positive impact.

6.4
The EESC also points out that the Structural Funds do
not benefit the economies of eligible regions alone. A substan-
tial part of aid earmarked for regions lagging behind in devel-
opment returns to the most developed regions of the European
Union in the form of increased exports. Estimates suggest that
this will happen with almost a quarter (24.1 %) of structural
aid under Objective 1 in the 2000-2006 period. In the long
term, the development generated in these regions will also
open up new markets for regions and countries that are net
contributors, thereby benefiting their economies too.

6.5
Data suggest that a disproportionate amount of invest-
ment inflows tends to go to the economically stronger regions
both within countries and across the EU as a whole. This poses
a particular dilemma for governments in the cohesion countries
and, in particular, in the accession countries.

The coordination of various sector-specific Community
6.6
policies, especially agriculture, fisheries, transport, research and
technology and education and vocational training policy, has
had a positive effect on cohesion.

6.7
The report also acknowledges the importance of Com-
munity support for non-Objective 1 regions in terms of redu-
cing economic and social disparities.

6.8
This economic slow-down has, in general, had negative
repercussions on employment. The employment rate in the
EU15 is still well below the ambitious objective set by the
Lisbon European Council. However, the average rate masks
substantial differences across the EU.

that
The EESC is, however, concerned by the fact
6.2
measures to achieve cohesion policy objectives have met with
more visible success in boosting cohesion between Member
States than between regions. Despite some progress, regional

Demographic trends,

in particular the ageing labour
6.9
force, will have a significant impact on the EU's future labour
market and demonstrate the need to improve lifelong training
and learning.

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6.10
Demographic projections highlight the importance of
reaching a high level of employment in the coming years to
prevent an increase in social tension. This must go hand in
hand with a sustained increase in productivity.

6.11
There is agreement on the need to focus the European
economy more on activities based on know-how, innovation
and new information and communication technologies,
in
order to make it more competitive, increase employment and
improve quality of life - in short, so as to achieve the objectives
laid down in the Lisbon Strategy.

7. Cohesion policy priorities

7.1
The EESC welcomes the new architecture that has been
devised for EU cohesion policy after 2006. This is organised
around a limited number of priority themes (I – Convergence;
II – Regional competitiveness and employment; III – European
territorial cooperation) and will be put into practice primarily
by implementing the Lisbon and Gothenburg strategies at
national and regional level.

The EESC believes that the data presented in the report
7.2
clearly demonstrate the need to put an even greater effort into
pursuing the cohesion objective in an enlarged EU. It therefore
agrees that the convergence objective should focus first and
foremost on those regions whose GDP per capita is less than
75 % of the Community average and welcomes the special
treatment that will be given to regions affected by the ‘statistical
effect’. Such regions will now benefit from more support than
they would have received under the ‘phasing out’ arrangements
adopted in 1999.

towards

The EESC welcomes the proposal to channel Cohesion
7.3
Fund resources
and
considers that allocation of these resources should continue to
be determined by national criteria (i.e. Member States with GNI
below 90 % of
the Community average) rather than more
restrictive regional criteria.

convergence objective

the

7.4
The EESC agrees with the approach to be adopted for
cohesion policy outside the least developed Member States and
regions (namely to promote competitiveness, reduce disparities
between regions, and back up the European Employment
Strategy) and it is in favour of focusing the approach on a
limited number of key competitiveness-related themes (e.g. the
knowledge
and
accessibility,
services of general interest).

environment

economy,

the

7.5
The EESC also agrees that, where the second priority is
concerned, special treatment should be given to those regions
which are currently eligible for Objective 1 support but do not
fulfil the eligibility criteria for the convergence priority. Such
regions will benefit from a higher level of support during a
transitional period (‘phasing in’).

Support

for cross-border,

7.6
trans-national and inter-
regional cooperation has played a key role in European terri-
torial
integration. The EESC therefore supports the Commis-
sion's proposal, building on the experience of the INTERREG
to create a new territorial cooperation objective,
initiative,
maintaining cooperation on cross-border,
inter-regional and
trans-national issues and continuing to allow Member States to
include maritime regions in cross-border cooperation. More-
over, regions that share a border with the new Member States
must adapt to the new situation; a special programme should
therefore be created for them. The EESC therefore agrees that
the financial resources earmarked for the European territorial
cooperation objective should be significantly higher than those
allocated in the past to INTERREG.

7.7
The EESC welcomes the Commission's intention to
propose a new legal instrument in the form of ‘cross-border
regional authorities’, designed to facilitate cooperation between
the Member States and local authorities and step up links with
the EU's external borders,
in particular with its new neigh-
bours.

The

EESC shares

7.8
view that
programmes should generally provide an integrated response to
specific territorial characteristics, and must take account of the
need to combat the various forms of social discrimination.

the Commission's

urban measures

The EESC welcomes the importance attached to urban
7.9
issues, whereby
in the
programmes, giving particular emphasis to the problems facing
cities and acknowledging the latter's role in promoting regional
development. The EESC agrees with the Commission that coop-
eration between cities is a key component of territorial coop-
eration.

included

are

7.10
The EESC attaches particular importance to the guar-
antee that new instruments deployed in rural areas will be
incorporated into the Common Agricultural Policy, maintaining
the current
focus on assisting the less developed
regions and countries covered by the convergence programmes.
The EESC stresses that support for rural areas must not be
limited to agricultural projects, but must include other projects
which promote rural development.

level of

8. Management system

8.1
instru-
The EESC agrees that the number of financial
ments available for cohesion policy should be limited to three
(ERDF, ESF and Cohesion Fund) and that both the objectives
and the associated financial instruments should be limited. This
would allow for simpler and more effective programming.

The EESC is

8.2
in favour of enhancing cooperation
between the Member States, local authorities and the economic
and social partners.

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The EESC agrees that it is important to conduct regular
8.3
assessments of
regional policy,
including trade impact assessments, as recommended by the
Commission.

the territorial

impact of

8.4
The EESC also believes that it is important for future
Commission reports to give more prominence to equal oppor-
tunities between men and women and to assessing how cohe-
sion policy helps achieve this objective.

As regards the management system,

8.5
the EESC is in
favour of retaining the four principles (Programming, Partner-
ship, Concentration and Additionality) and simplifying the
system through increased decentralisation. The EESC is,
however, of the view that more decentralisation must not in
any way affect the need for the Commission to closely monitor
programme implementation, thus ensuring that regional policy
is consistent across the EU and preventing any slippage which
might undermine the respective objectives. The Commission
must therefore keep a very close eye both on whether funds
are used properly, in order to ensure there is no slippage, and
on whether programmes receiving funding serve the purpose
for which they were set up.

9. The partnership for implementing the Structural Funds

9.1
The EESC reiterates the views expressed in its opinion
on the Partnership for implementing the Structural Funds (1)
and highlights the following points in particular:

9.5
The Committee considers it vital to guarantee that the
party evaluating a specific programme is independent from the
national authority that is responsible for implementing it. Here
too, the institutional and socio-economic partners can play a
greater role, thanks to the knowledge acquired with regard to
the practical results of the various measures.

9.6
The Committee considers that the selection of the part-
ners is vital, and that their role and responsibilities must be
made quite clear.

9.7
A question arises about the compatibility (or otherwise)
of partners being involved in the various stages of programme
implementation when they are also project promoters. In such
circumstances, rules must be established for selecting the part-
ners so as to ensure that the partnership does not include
bodies which are dependent on the state and whose ability to
act independently would therefore be functionally or structu-
rally limited.

Alongside those bodies which traditionally make up the
9.8
industrial and agri-
socio-economic partners (trade unions,
cultural organisations, trade and craft associations, the coopera-
tive and non-profit sector, etc.), a greater role in Community
structural policies should be given to autonomous bodies such
as chambers of commerce, universities, public housing associa-
tions, etc.

9.9
Problems may arise with regard to the membership of
the partnership and possible ineffectiveness of the procedures,
owing to the accumulation of functions that are incompatible
with transparency and independent decision-making (e.g. invol-
vement of the same people in the programming, monitoring
and evaluation stages, when in many cases these people are
also beneficiaries of the programmes concerned).

9.2
Thought must be given to the monitoring committees
established under Article 35 of the Structural Funds regulation.
The mechanisms for involving the social partners must be
revised in the light of the new and important duties to be
carried out by these committees or those that replace them.

There often appears to be potential incompatibility or
9.10
conflicts of interest in cases where a decision-taker may also be
a beneficiary of the Structural Funds.

First and foremost,

the involvement of

9.3
the socio-
economic partners on the monitoring committees must be
made mandatory, and must be strengthened by giving them the
right to vote so that their position on the issues discussed by
the monitoring committees is quite clear.

9.4
The Commission should commission a new study of the
different types of participation models that have been used at
national and regional
level. Practices which are less well
known, but which could be important for the future, could
then be evaluated and disseminated more widely.

(1) Point 9 is taken from the EESC's Opinion on the Partnership for
implementing the Structural Funds - OJ C 10 of 14.1.2004, p. 21.

9.11
The Committee thinks that the socio-economic part-
ners should have access to financing and training in order to
help them play their full role. This is rarely the case at present.

9.12
In some cases, the partners are unable to play their
proper role because they lack high-calibre technical experts to
play an active part in Fund-related forums, where they could
and should have a role.

9.13
The Committee thinks that the Member States must
make every effort to cut red tape wherever possible. Overly
complex administrative procedures frequently jeopardise the
whole partnership principle, erecting barriers and introducing
practices that often prove counterproductive.

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9.14
The Committee considers that it would be very helpful
to set a minimum participation threshold, laid down by a Com-
munity regulation but leaving the Member States to establish
detailed participation levels in their own national law or provi-
sions. The rules to be established should allow for more infor-
mation and more intensive, stable and permanent ways of
involving the economic and social partners.

9.15
The role of the socio-economic partners, the content of
the proposals and the participation procedures necessarily
differ at the preparatory, financing, monitoring and evaluation
stages of Community structural measures. It is therefore neces-
sary to clarify what is expected of the partners, what the part-
the programmes are as
ners need to do to ensure that
successful as possible, at what
the partnership is
conducted, and the political and technical bodies in which the
partners should be involved.

levels

towards the cohesion objective, particularly in areas such as
R&D, the information society and transport;
it endorses the
view that consistency between cohesion and competition poli-
cies is a key issue in the various Community policies.

Given that over 50 % of R&D expenditure is concen-
10.2.2
trated in a very small number of EU regions, the EESC stresses
that a complementary approach between sector-specific policies
is essential to offset this excessive degree of concentration and
provide more incentives for technology transfer between the
regions.

9.16

The partnership is of crucial importance at two stages:

10.3 Budget

— at the ‘political’ stage of Fund programming and when
general decisions are taken, at both Community and
national level;

— at the monitoring and evaluation stage.

10. The EESC's contributions to the current debate and to
preparations for A new partnership for cohesion -
convergence, competitiveness, cooperation

10.1 Cohesion policy priorities

In view of the high expectations that Member States
10.3.1
the enlargement and Lisbon
place on the EU in terms of
strategy objectives,
it is unreasonable to think that financial
resources can be maintained at the same level. A number of
EESC opinions issued over the last few years have asked for the
Community budget ceiling to be raised. Given that
the
Commission has proposed a ceiling of 1.24 % in the financial
perspective for the 2007-2013 period, the EESC considers that
the 0.41 % earmarked for cohesion policy (0.46 % before trans-
fers to rural development and fisheries) is simply the result of
setting the maximum ceiling for all resources at a level that the
EESC feels is too low to achieve the ambitious objectives
proposed.

10.1.1
The EESC welcomes the Commission's intention,
within the convergence objective, to set up a specific compen-
sation mechanism covering all the handicaps of the outermost
regions, as well as regions with permanent structural handi-
caps.

10.3.1.1
Against this background, and bearing in mind that
more financial resources will be needed to address the increase
in regional disparities after enlargement, it will essentially be
the regions currently benefiting from cohesion policy that will
bear the cost of enlargement, through a fall
in Community
support allocated to them.

As part of

the support strategy for the various
10.1.2
regions, the EESC recommends analysing how faithfully the
quantitative data available reflect economic and social progress
and whether they have been influenced at all by the statistical
impact of external factors that very often bear no relation to
economic and social conditions in these regions. One example
of this is system headquarters being located offshore, which
distorts the indicators used.

10.3.1.2
It is the EESC's view that this situation cannot be
sustained from either a political or an economic point of view,
because it goes completely against any principle of fairness in
distributing the costs of enlargement.

10.2 Complementary nature of the various sector-specific Community

policies

10.2.1
The EESC points to the complementary nature of the
various sector-specific Community policies in terms of working

10.3.1.3
The EESC therefore fails to understand how it will
be possible to meet the unanimously agreed political objective
of EU enlargement while at the same time maintaining or even
reducing the financial contribution that the Member States will
be required to make. The EESC opposes such a narrow view of
the European venture, which can only be explained by
economic difficulties and by the fact that some of the most
important stakeholders in this process lack long-term vision.

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11. Other recommendations

The EESC believes it

is absolutely essential

11.1
for the
economic, social and territorial criteria used to distribute
resources earmarked for the ‘Regional competitiveness and
employment’ priority among the Member States to be defined
as objectively and rigorously as possible and to take particular
account of social indicators and not just economic ones.

As regards the deployment of funds, the EESC believes
11.2
that increasingly there is a need to find new ways of involving
the authorities and the economic and social partners beyond
mere participation in planning, management, monitoring and
assessment bodies.

11.3
In this regard, the mechanisms linked to the global
grants need to be consolidated further by requiring Member
States to adopt this type of model, at least in a few of their
Community Support Frameworks. The potential benefits of
such action would be to cut back on red tape, speed up proce-
dures and reduce pressure on Member States' budgets; this is
particularly important in the light of current constraints on
public finances in general.

11.4 Moreover, public-private partnerships must be encour-
aged as a way of overcoming these public finance constraints
and safeguarding their funding in the long term.

11.5
The EESC believes that rules governing abuses in busi-
ness relocation should be made stricter, in particular by intro-
ducing penalties which serve as an example and requiring any
incentives received to be given back if it can be proven that the
reason for a business pulling out is not that the production
unit is no longer viable but simply that the business concerned
has decided to relocate in order to benefit from yet more
grants.

Brussels, 30 June 2004.

11.6
The EESC also believes it would be a good idea for
more business support to be made available to SMEs in recog-
nition of both their important socio-economic role, particularly
in terms of job and wealth creation, and their greater ‘commit-
ment’ to the development of the region where they are located.

11.7
Finally, the ambition to pursue a policy promoting
economic, social and territorial cohesion in an enlarged Europe
is, without a doubt, one of the greatest challenges that the EU
will ever face. Given that cohesion policy is a key pillar for
integration between the people and regions of the European
Union, the EESC calls on the Member States to carry this
reform forward successfully, especially in the light of recent
failures in moves to achieve closer European integration, so
that the general public will once again start believing in the
European venture.

The EESC believes it is essential for the Member States
11.8
to continue and indeed step up their efforts in matters of cohe-
sion policy, regardless of what the EU's policies in this area
might entail.

The structure and priorities of EU cohesion policy have
11.9
changed in response to enlargement and the limited resources
available, and not really because regional and social discrepan-
cies no longer exist. Some Member States and regions that up
until now have been major beneficiaries of EU cohesion policy
will therefore gradually become ineligible for support under a
considerable number of
available. This
obviously does not mean that they have already reached the
desired level of development and cohesion; it is therefore essen-
they are given due consideration under national
tial
budgetary policies.

instruments

that

the

The President

of the European Economic and Social Committee

Roger BRIESCH