Opinion of the Committee of the Regions on the ‘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: 2005-02-23
Institutions: European Committee of the Regions
Subjects: Community budget, EU policy, multiannual financial framework

C 164/4

EN

Official Journal of the European Union

5.7.2005

Opinion of the Committee of the Regions on the ‘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’

(2005/C 164/02)

THE COMMITTEE OF THE REGIONS,

Having regard to the 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’,
COM (2004) 101 final;

Having regard to the European Commission's request of 18 March 2004 for its opinion on this subject
under Article 265(1) of the Treaty establishing the European Community and according to the cooperation
protocol of September 2001 between the European Commission and the Committee of the Regions, which
encourages the Committee of the Regions ‘to draw up strategic documents reviewing matters which the Commis-
sion regards as important’;

Having regard to the decision of its President of 26 May 2004, to entrust the Commission for Territorial
Cohesion Policy with the task of drawing up the opinion and the decision of its Bureau of 15 June 2004
to set up a working group with the task of assisting the rapporteur in his task;

Having regard to the conclusions of the first (7 July 2004) and the second (16 November 2004) meetings
of the working group held in Brussels and the contributions of the representatives of its internal commis-
sions;

Having regard to the supplementary Communication from the Commission to the Council and European
Parliament ‘Financial Perspectives 2007-2013’, COM (2004) 487 final, intended to develop a first set of
detailed policy proposals;

Having regard to the report of the Committee on Budgets of the European Parliament on the Communi-
cation of the European Commission COM (2004) 101, A5-0268/2004, Rapporteur: Mr Terence Wynn;
and the complementary opinion of the Committee on Regional Policy adopted on 18 March 2004,
Rapporteur: Samuli Pohjamo;

Having regard to its outlook report on ‘Governance and simplification of the Structural Funds after 2006’
(CdR 389/2002 fin); (1)

Having regard to its opinion (CdR 120/2004) of 12 June 2004 on the Third Cohesion Report (2);

Having regard to its draft opinion (CdR 162/2004 rev.3) adopted on 26 November 2004 by its Commis-
sion for Territorial Cohesion Policy (rapporteur: Cllr Sir Albert Bore, Birmingham City Council (UK, PES));

Having regard to the European Parliament Resolution on the Financial Perspectives, adopted on
2 December 2004;

Having regard to the Communication of the European Commission to the European Spring Council on 2
February 2005,‘Working together for growth and jobs: a new start for the Lisbon Strategy’, COM (2005) 24;

(1) OJ C 256, 24.10.2003, p. 1
(2) OJ C 318, 22.12.2004, p. 1

5.7.2005

EN

Official Journal of the European Union

C 164/5

Whereas the key yardstick for the Committee's assessment continues to be the objectives set out in Articles
2 and 158 of the EC Treaty (1). Strengthening economic and social cohesion and solidarity in order to
promote the overall harmonious development of the Community and to reduce differences between
regions particularly in respect of reducing the development shortfalls of the most disadvantaged areas, will
make a significant contribution to strengthening the role of regional and local authorities in Europe, and
contribute to the achievement of the Lisbon and Gothenburg agendas;

Whereas Article III-116 of the Draft Treaty establishing a Constitution for Europe strengthens the cohe-
sion objective by introducing a territorial dimension, ‘In order to promote its overall harmonious development,
the Union shall develop and pursue its action leading to the strengthening of its economic, social and territorial cohe-
sion’.

adopted the following opinion at its 58th plenary session, held on 23/24 February 2005 (meeting of
23 February):

1. Building our common future issues relevant to local

and regional authorities

THE COMMITTEE OF THE REGIONS

1.1.5
recognises that the challenge to defend and sustain
the European social model based on growth, competitiveness
and solidarity is faced, in the context of increasing public doubt
about its efficacy as well as a situation of global instability, and
needs coordinated action across all spheres of governance;

welcomes the adoption by the European Commission of a
communication on the financial perspective for the period
2007-2013 ‘Building our Common Future: Policy Challenges and
Budgetary Means of the European Union.’ (2)

1.1 Priorities and challenges of the enlarged Union

1.1.1
supports the Commission's proposals which respond
to the needs and challenges facing an enlarged European Union
of 27 Member States, including Bulgaria and Romania in line
with the complementary objectives of the Lisbon and Gothen-
burg strategies for sustainable growth and sustainable environ-
mental development agreed by member state governments to
respond to the current and future demands of a single market;

1.1.2
behind its main economic competitors since 1995 (3);

points out that the European Union has been lagging

1.1.3
notes that, since enlargement on 1 May 2004, the EU
is the world's largest economic and trade bloc, housing many
of
the world's most productive and innovative cities and
regions, but at the same time the EU is an economic area with
a growth rate significantly below the global average;

1.1.4
highlights that unless all components of the European
economy adapt to the structural changes enforced by globalisa-
tion, the European economy will decline further during the
2007-2013 period,
jeopardising the prosperity, stability and
security of our cities and regions;

(1)

‘In order to promote its overall harmonious development, the Community
shall develop and pursue its actions leading to the strengthening of its
economic and social cohesion. In particular, the Community shall aim at
reducing disparities between the levels of development of
the various
regions and the backwardness of the least favoured regions or islands
including rural areas’
(2) COM (2004) 101 final
(3)

‘since 1995, the growth rate for the EU15 has averaged 2.2 %,
compared to a global average of 3.6 % and 3.2 % for the United
States.’ COM(2004) 101 final pp.3

this enlargement has

also points out that

the reunification of Europe
1.1.6
through enlargement must continue to lead to renewed soli-
darity and a diversity that adds to the potential of the European
Union. Nevertheless,
simultaneously
resulted in new and increased economic and social disparities
in cities and regions. If left unchecked, these will threaten the
cohesion and success of the single market and our shared
Treaty objectives. Securing and strengthening the spirit of Euro-
pean solidarity is therefore a necessary precondition for a
successful cohesion policy and for advancing the European
Social Model;

1.1.7
acknowledges the Commission's view that an intensi-
fication of financial effort is required in order to redress the
asymmetric impact of enlargement on the Community budget,
bridging the gap between policy ambitions and addressing
present incapacities to meet targets;

1.1.8
perspective that
engages with local and regional authorities;

supports the Commission's proposals for a financial
is responsive to modern governance and

1.1.9
is of the view that this requires recognition of the
need for multi-level ownership, coordinated joint action and
accountability across Member States in order to maximise effi-
ciency, visibility of
the EU, added value for citizens and
multiply the potential return of each euro of public money
spent.

C 164/6

EN

Official Journal of the European Union

5.7.2005

1.2 Budgetary means

the Commission's proposals

1.2.1 welcomes
to take
account of existing policy commitments and match limited
financial resources to a realistic assessment of what is needed
and affordable to meet the objectives of the EU;

1.2.2
highlights that with enlargement, there has been a
5 % increase in Community GDP compared to an increase in
population of 20 %;

1.2.3
points out that the average GDP per capita of the EU
25 has decreased by 12.5 %, reflecting the fact that with enlar-
gement, income disparities have doubled and levels of depriva-
tion have significantly worsened;

notes that although the Commission proposes to
1.2.4
increase the payment appropriations to an average of 1.14 %
GNI, commitment appropriations would average 1.22 % over
the period. The own resources ceiling of 1.24 % GNI is retained
for the financial perspectives 2007-2013 — the same level as
the 2000-2006 period (1);

1.2.5
also points out that this contrasts with the increase
in the ceiling of own resources of the EU over the first two
financial perspectives but not for the current one.

1988-1992 1.15% to 1.20% GDP

1993-1999 1.24% to 1.27% GDP

2000-2006 1.27% GDP (or) 1.24% GNI;

highlights that enlargement has dictated a policy reac-
1.2.6
tion by the Commission which (together with other external
influences)
is reflected in the commitment appropriations.
There is an increase in commitments for cohesion and competi-
tiveness (sustainable growth), there is a reduction in commit-
ments for ‘on farm’ (sustainable agriculture) and an increase in
commitments for ‘off-farm’ (rural development);

1.2.8
notes that the 1.14 % GNI payment appropriations
for the financial perspective 2007-2013 include the European
Development Fund and the Solidarity Fund. 1.14 % GNI
is
to approximately 1.10 % GNI payment
therefore equivalent
appropriations for the period 2000-2006;

1.2.9
acknowledges that the Commission's proposals are
the subject of some disagreement and that a number of net
contributor states have called for a more rigorous expenditure
level not exceeding commitment appropriations of 1 % GNI
(including pre-quantified commitments such as agricultural
spending) (2);

is concerned that

in
1.2.10
payments at 0.9 % GNI and that the average annual figure for
2007-13 would therefore be significantly lower than the agreed
payments figure for 2006 which is 1.09 % of GNI;

the position would result

1.2.11
points out that this would represent a restrictive
budgetary envelope which could prejudice policies with specific
Treaty status and those with significant multiplier effects and
effects which would also impact on the expectations of the
new Member States;

believes that

1.2.12
the Commission's proposals are a
logical response to such budgetary concerns in Member States
whose own resources are currently compounded by low
economic growth rates across Europe and, accordingly, this
Committee takes a similar view to that of the European Invest-
ment Bank in supporting a shift of resources towards the chal-
lenges of tomorrow;

1.2.13
notes that at 1.24 % of GNI, the EU budget amounts
only to around 2.5 % of total public expenditure in the Union;

1.2.14
agrees with the Commission that it is unrealistic to
expect more Europe for less money — new policy areas at EU
level imply new financial requirements;

points out, however, that in this way, the inevitable
1.2.7
costs of enlargement are to be met by reducing the margin
between payment appropriations and the own resources
ceiling, available in previous financial perspectives for unfore-
seen expenditure;

(1) The figure for commitments is higher than for payments because it
represents resources which are committed to programmes lasting
more than one year and which, therefore, may not be spent in the
year for which budgeted. Payments are expected to be disbursed in
the budget year to which allocated. Member State payments are
calculated annually on the basis of payment appropriations entered
into the budget. The ceiling of own resources is fixed by a Council
decision and establishes a maximum amount of Member State
contributions.

1.2.15
notes that, as there can be no financial perspective
without an agreement between the European Parliament and
the Council, as the existing Treaty foresees no obligation to
have a financial perspective and only provides for annual
budgets,
the disagreements between member states on the
financial perspectives need to be resolved swiftly. It would be
unwise to repeat the delays which occurred when adopting
Agenda 2000. Protracted negotiations would result in disrup-
tion to the future Structural Funds programmes;

(2) REFERENCE TO LETTER BY SIX HEADS OF STATE ‘Average
expenditure during the next financial perspective should in our
view be stabilised around current expenditure levels, and should
not exceed 1.0 % of GNI, including agricultural spending within the
ceiling set by the European Council in October 2002.’

5.7.2005

EN

Official Journal of the European Union

C 164/7

1.2.16
believes that on the timeframe for the financial
perspective 2007-2013, a seven-year phase is logical given the
major structural challenges involved. Moreover,
it offers the
opportunity to establish workable mechanisms and instruments
for further phases. Guaranteed European funding for seven
years, as compared with shorter-term funding that often
features with 4-5 year national mandates, offers cities and
regions the timescale necessary to undertake long-term strategic
approaches to sustainable economic and social development.

acknowledges that proposals for future phases of
1.2.17
five-years could coincide with the European Parliament and
Commission term of office and therefore bring more demo-
cratic legitimacy to the Financial Perspectives.

— efficient, when EU action offers better value for money; and

— complementary,

through leverage,
thereby
action in the national, regional or local sphere.

generating

believes that the EU model is a balance between indi-
1.3.6
vidual and society, state and decentralised authority, market
gain, rules and regulations. As such, the Commission's prioriti-
sation of policy headings within the financial perspective sets
out the possibility for future sustainable growth of the model
that has delivered stability and growth in Europe over the past
50 years;

1.3 Expenditure approach

1.3.1
is of the view that the three main priorities outlined
by the Commission within its communication on the financial
perspective 2007-2013 are appropriate. Namely:

— sustainable development;

— giving full content to European citizenship; and

— the EU as a global partner;

1.3.2
considers that the financial perspective 2007-2013
should recognise the need to broaden European-wide consensus
on the common policy challenges it identifies, by clearly setting
out the European dimension of these issues, highlighting simul-
taneously the added value of EU action but also, in line with
the principle of subsidiarity, the distinct contribution made by
each sphere of government — local, regional and national;

1.3.3 welcomes the Commission's consideration of
the
added value of action at the EU level and the issue of better
governance in the implementation of EU policy across each of
the budgetary headings of its financial perspective 2007-2013,
as developed in its later communication;

1.3.4
agrees with the Commission's objective in this regard
that the financial perspective 2007-2013 should not transfer
funds to the EU level as an end in itself;

1.3.5
endorses the views of the Commission that expendi-
ture in the next financial perspectives should ensure that action
at the EU level will be:

1.3.7
feels that the Commission has adopted a balanced
strategy for cohesion policy across policy headings giving par-
ticular emphasis to the needs of the new Member States by
striking a careful balance between the economic, social and
territorial disparities across the whole of the EU;

1.3.8
is of the view that across these policy headings there
are key examples of the EU model delivering added value. EU
investment in research and development, cross border exchange
and infrastructure projects, join up Lisbon-Gothenburg objec-
tives with a partnership approach that can lever in growth,
convergence,
competitiveness and long-term sustainability.
Another element of Europe's partnership approach to research
and development is widely spread education and research infra-
structure that enables the high educational
level of Europe's
population and growth potential to be exploited to the full.
Market-based solutions alone do not offer the sustainable future
that Europe is seeking;

1.3.9
recognises that affordability and budget discipline are
motivating factors behind the negotiating process, wherein
there are two approaches to the methodology of setting a
financial perspective:

— identifying what is needed and allocating resources accord-

ingly; and

— identifying what
accordingly.

is affordable and allocating priorities

1.3.10
recognises that the Commission has advocated the
first approach from a bottom-up perspective, constructed from
an evaluation of bottom-up needs;

— effective, when results can be achieved only through action

at the EU level;

1.3.11
rejects the logic that the second approach could
deliver a sustainable response to the economic, social, and
democratic challenges for the EU.

C 164/8

EN

Official Journal of the European Union

5.7.2005

1.4 Financial framework

welcomes the Commission's proposals to reconstruct a new
financial framework around a limited number of policy goals:

— emphasises that to deliver a sound macro-economy geared
to sustainable growth, the programmes within these pillars
must be directed explicitly to achieving the Lisbon-Gothen-
burg objectives.

— (1a) Competitiveness for growth and employment;

— (1b) Cohesion for growth and employment;

— notes that the Lisbon Strategy was designed to promote
sustainable economic growth and to strengthen social cohe-
sion, with the following goals:

— (2)

Sustainable management and protection of natural
resources;

— (3) Citizenship, freedom, security and Justice; and

2010;

— to increase the employment rate to at least 70 % by

— (4)

European Union as a global partner.

The Committee's main observations relate to the sustainable
development chapter, 1(a), 1(b) and (2).

— to bring European productivity levels in line with the

performance of the world's top companies;

1.4.1 Su st a i na b le g r ow th

— recognises the economic coherence and political logic of
using sustainable development as the budgetary vehicle for
the three complementary pillars: convergence; competitive-
ness and employment; and territorial cooperation;

— welcomes the proposal

for a Structural and Cohesion
Policy budget of EUR 336.2 billion for 2007-2013
compared to Structural and Cohesion Funds of EUR 213
billion for 2000-2006, noting that 78 % (EUR 262.3
billion) is allocated to the convergence objective for regions
is lagging behind, 18 % (EUR 68.5
whose development
billion) is allocated to regional competitiveness and employ-
ment, and 4 % (EUR 13.5 billion) allocated to the territorial
cooperation objective for cross border and inter-regional
development (1).

— notes that the single budget line of EUR 262.3 billion allo-
cated to the convergence objective, for regions where per
capita GNI is less than 75 % of the EU25 average, EUR 22
billion is available to the EU15 cohesion countries currently
eligible but who will no longer satisfy this criterion for
purely statistical
regions). This
amounts to 66 % of the amount they would have received
over 2007-2013 as full convergence regions.

(phasing out

reasons

— notes that the single budget line of EUR 336.2 billion is
equivalent to 0.41 % of GNI (or EUR 344.9 billion, 0.46 %
of GNI, including the Solidarity Fund administrative costs
and other actions).

(1) The convergence objective concerns the regions whose per capita
GNI is less than 75 % of the EU25 average and transitional support
to the EU15 ‘phasing out’ regions with per capita GNI less than
90 % of the EU15 average. The 2000-2006 Cohesion Fund is
EUR 18 billion and the four structural funds EUR 195 billion
(ERDF, ESF, Financial Instrument for Fisheries Guidance and the
Guidance Section of the European Agricultural Guidance and Guar-
antee Fund).

— to identify the challenges of the information society and

set up a European research area;

— to bring investment in research up to 3 % GDP.

— notes that

the supplementary communication from the
Commission acknowledges that we have fallen well short of
meeting the goals for growth and a reduction in disparities,
which underpin the Lisbon-Gothenburg Strategy. In part,
this is a consequence of pressures to respond to global
competition, productivity issues, an ageing population and
increasing expectations for health care, with corresponding
pressures on public expenditure;

— believes that critical success factors need to be identified
and measured in order to monitor and deliver Lisbon-
Gothenburg objectives as well as ways forward to mobilise
civil society, regional and local authorities, and business
leaders — all those with a stake in Lisbon's success so as to
deliver a Lisbon-Gothenburg strategy for all.

the

proposed

Commission,

— recognises that if the expenditure levels in the financial
perspective are reduced below the 1.14 % GNI payment
the
by
appropriations
programmes that would be lost would be those relating to
the sub heading ‘supporting regional competitiveness and
employment outside the less prosperous regions within 1b)
Cohesion for growth and employment heading’. The
problem of regional disparities would be aggravated. Conse-
quently, it would not be possible for all regions to partici-
pate on an equal footing to improve the competitiveness,
growth and employment of the EU as a whole.

5.7.2005

EN

Official Journal of the European Union

C 164/9

— has consistently supported the application of competi-
tiveness and employment measures to ensure that the entire
regional territory of the EU can be fully responsive to the
Lisbon-Gothenburg Strategy, but questions to what extent
the programmes within the pillar comprehensively deliver
the Lisbon-Gothenburg objectives when lack of regional
prosperity is the only indicator for funding;

— understands, as the Third Cohesion Report recognises, that
GDP as the main indicator has a number of weaknesses and
that it has been repeatedly demonstrated that disparities
within regions — for example, clearly visible within the
large and medium-sized cities (1)- are often more acute than
disparities between regions;

is compounded by the reduced level of

— regrets therefore, that the problem within and between
regions
the
budgetary envelope allocated to this new ‘objective 2’
compared to previous programming periods, an 18 %
budgetary envelope in 2007-2013 as compared to 23.8 %
in 2000-2006 (2);

— welcomes the increased acknowledgement of the potential
of major urban areas as drivers of economic growth, but
believes that the proposed regulations for each national
framework should contain an explicit reference to sustain-
able urban development to reflect the role of urban centres
as economic drivers of the European economy;

— regrets that while there is proper recognition of the impact
of ageing populations, through the Lisbon strategy, in redu-
cing growth rates and lowering GDP — and the measures
needed to combat these effects — there is not a similar
recognition of the potential of young people in the delivery
of a competitiveness and growth agenda.

(a) Competitiveness for growth and employment

— Promoting the competitiveness of enterprises in a fully inte-

grated single market

— recognises the need to relaunch industrial policy in
Europe by creating a business-friendly environment;

— urges the need to harness and encourage the potential
for development of the SME sector as building blocks
for growth in the single market in recognition that
SMEs represent perhaps the greatest untapped potential
of the single market;

— observes that in applying the rules of the single market
to cohesion policy to stimulate small business, measur-
able added value can be identified through the increase

(1) According to the Urban Audit 2004.
(2) 11.5 % Objective 2 and 12.3 % Objective 3

in intra-community trade between less developed
regions and the rest of the EU, since around one quarter
of expenditure under competitiveness driven cohesion
policy returns to the rest of the Union in the form of
increased exports;

— believes that in the reform of State Aid rules, hori-
zontal exemption regulations are required to support
Research and Technological Development and for SMEs;

regional

— believes that the introduction of impact assessments to
better target State Aid — allowing greater flexibility for
national,
to adopt
measures that have limited effect on competition and
trade at the EU level, but that tackle real market failures
— contribute to the development of areas that are
lagging behind and promote entreprenurship;

and local

authorities

— Strengthening the European effort in research and technolo-

gical development

— Is of the view that if the EU is to become a dynamic
knowledge based economy then a number of measures
and financial support arrangements are required–parti-
cularly, creating poles of excellence from Europe's
widely spread education and research infrastructure that
regional economies, disseminate
would drive wider
excellence and increase competitiveness throughout the
EU;

— agrees with the European Commission that

the
strengthening of EU effort in Research and Technolo-
gical development constitutes a major objective of the
enlarged EU, but with a proper balance between public
and private financing (3);

— endorses, therefore, the decision of the Barcelona Euro-
pean Council to increase Research and Development
expenditure to 3 % of EU GDP by 2010.

— Connecting Europe through EU networks

— Agrees with the European Commission proposal

to
increase the scale of financial resources associated with
developing trans-European networks. Giving particular
priority to cross-border projects which encourage inter-
modality and the use of sustainable forms of transport,
especially the concept of motorways of
sea,
provided that these fit into a comprehensive sustainable
transport scheme;

the

(3)

‘The EU is currently spending only 2 % of GNP on Research and
Development expenditure, about 1/3 less than in the USA. 80 % of
this gap is due to under investment in Research and Development
from the private sector.’ Paragraph 3.31 of the Communication of
the European Commission to the European Spring Council COM
(2005) 24 ‘Working together for growth and jobs: a new start for the
Lisbon Strategy’, 2 February 2005.

C 164/10

EN

Official Journal of the European Union

5.7.2005

— highlights the role that TEN-Ts, especially ‘motorways
of the sea’ in the specific case of islands, can play in
overcoming the difficulties which regions with natural
and demographic handicaps have in accessing the
internal market under fair conditions;

— acknowledges the limited capacity of member states to
raise the required infrastructure investment sums at a
time when they are trying to cut back on public expen-
diture with a view to complying with the Stability and
Growth Pact rules;

— underlines that TEN-T funding from local and regional
authorities can only remain peripheral given the heavy
commitments to other infrastructure investments which
are often vital to the smooth operation of TEN-Ts and
the functioning of the local economy and social infra-
structures;

— observes that

facilitating competitiveness encourages
the recognition of core interdependencies between cities
and regions, which can in turn create critical masses
capable of levering extensive growth across areas that
are impossible to attract or establish by a city or region
alone. Strategic European urban networks
such as
URBACT are good examples of this and should be facili-
tated at European level to ensure the exchange of best
practice and expertise between territorial areas and the
to deliver Lisbon-Gothenburg
necessary investments
objectives.

— Improving the quality of education and training

— underlines that

local and regional human capital
formation and training are vitally important for the
development of the European single market and the
implementation of the Lisbon strategy. Actions taken
across
the EU to support mobility will have real
economic impact. Taken individually and as a whole,
these measures represent extremely good value for
money. Their additional cost to the budget should be
acknowledged as essential to the smooth functioning
and development of an integrated labour market and
common European learning area.

— Helping European society to anticipate and manage social

change

(b) Cohesion for growth and employment

— recognises, that Community added-value is not generated
by funding alone but through the Community Method that
designs programmes to take account of and deliver regional
framework can
strategies. Only a European institutional
guarantee a complementarity of sectoral policies and finan-
cial instruments that deliver the Community objectives of
economic, social and territorial cohesion;

— recognises that the convergence objective must be priori-
tised with enlargement as an act of solidarity with new
Member States and the weakest regions in the ‘old’ Member
States to ensure that funds are channelled to regions and
cities lagging the furthest behind;

— points out that the Commission's proposal for funding the
EU Structural Funds in the next funding period also consti-
tutes a fair compromise for the regions of the EU-15, in
that EUR 109.8 billion are being set aside for the new
Objective 1 and EUR 56.6 billion are being made available
the new Objective 2 in the ‘old’ Member States
for
(compared to EUR 154 and EUR 46.6 billion respectively
in the current funding period);

— warns against undermining the principles of partnership
and solidarity in respect of those Member States which will
no longer be eligible for the Cohesion Fund as a result of
the statistical effect of enlargement;

— recognises the reasons for the introduction of an absorp-
tion ceiling of 4 % of national GDP, for all Member States,
in the allocation from the ERDF, ESF and Cohesion Fund,
including resource transfers as part of rural development
and fisheries re-structuring (1). The reduction of economic
and social disparities must remain a top priority of the
European Union and these funds are necessary to assist
those regions and Member States lagging behind in their
economic and social development;

— accepts that the principle of the Berlin formula — the less
developed the region, the more assistance it should receive
— was well founded and should continue to be applied in
the future. Consequently, the anomalies that arise with the
application of the 4 % absorption ceiling of national GDP at
a Member State level need investigation;

— cautions, however,

that any adjustment

to the overall
payment appropriations will occur outside of this 4 % cap
and, therefore, while cohesion funding will be guaranteed
within the new Member States, this impact will seriously
undermine the principle of a Lisbon-Gothenburg agenda for
all;

— endorses the Commission's view that there must be an
appropriate regulatory framework for businesses and
workers to establish social standards and basic rights.

(1) The transfer of financial resources to the European Agricultural
Fund for Rural Development and the European Fund for Fisheries is
calculated after application of the ceiling in order to be budget
neutral.

5.7.2005

EN

Official Journal of the European Union

C 164/11

— recognises the importance of improving capacity building
within the decentralised authorities of member states and
new neighbouring countries. Considerable progress can be
cooperation
made
through the exchange of knowledge and expertise between
experts from local and regional authorities.

and interregional

in cross border

1.4.2 Conse r v a ti on
r e sou r c e s

a nd ma na g e me nt

of

na tu r a l

welcomes recognition within the financial perspectives of the
need to diversify activities within the countryside: enhance the
environment; and improve quality of life, as a vital balance to
achieving territorial cohesion within the sustainable develop-
ment objectives of the Lisbon-Gothenburg Strategy;

expresses its concern that growth and development indicators,
including employment, industry and diversity, are consistently
lower in rural areas, undermining their liveability;

welcomes the potential of urban programmes to drive devel-
opment into the wider countryside through specific research
and development, entrepreneurial and social change initiatives
although it is recognised that the more remote rural areas are
unlikely to benefit from such initiatives;

emphasises, nevertheless, the need for balanced solutions to
the different situations of rural areas,
including those with
natural handicaps and specific environmental constraints;

emphasises also the imperative of respecting territorial diver-
sity within which the concept of an underlying urban/rural
paradigm for growth and cohesion marks the movement away
from industrial/agricultural models that are no longer respon-
sive to challenges of globalisation;

in all

encourages the recognition given to protecting the environ-
its aspects: global, regional, urban, rural and
ment
marine, as a horizontal element across programmes. In this
context, the local and regional authorities responsible for main-
taining NATURA 2000 sites should be assured appropriate
funding from the relevant policy instruments.

areas across the European Union as stated in the preamble to
the Charter (1);

recognises correctly that the challenges posed by immigration
and asylum can no longer be met adequately by measures
taken by Member States and emphasises that many local and
regional authorities now provide front-line support measures
and facilities;

underlines that both Europe's major cities and rural areas have
extensive and growing experience of migrant labour and new
settlements. Therefore this knowledge and experience of inte-
gration of migrants should be reflected in the provisions of the
regulations being submitted on these matters by the Commis-
sion;

recognises that the current consumer, food safety and health
programmes do not match the expectation of Europe's citizens;

supports accordingly, the introduction of two instruments: a
food-safety programme and a consumer policy and public
health programme.

1.4.4 E x te r na l p oli c i e s

agrees with the recognition made by the financial perspective
2007-2013 that with enlargement and growing local and
regional imperatives, the EU should strengthen its capacity to
safeguard human rights, promote democracy and combat
poverty, in the new neighbourhoods of the EU through both
multilateral and bilateral policies;

supports the Commission's view that there should be a coher-
ence and consistency of external actions, to achieve more and
better with the resources available;

welcomes the view of the Commission that there should be a
new neighbourhood policy to build on positive cross-border
developments that have been taking place since 1989 or
earlier, the scope of which should be support for measures
aimed at progressive economic integration, deeper political
cooperation and the development of common infrastructure;

1.4.3 Ci ti z e nsh i p , fr e e dom, se c u r i ty, j u sti c e

improving capacity building
emphasises the importance of
within the decentralised authorities of new Member States and
neighbouring countries.

is pleased that the Commission wants to develop and give
substance to the issues of European Citizenship, and to address
in a managed way the difficult issues of migration and integra-
tion, freedom, security and justice which affect urban and rural

(1)

‘The Union contributes to the preservation and to the development of these
common values while respecting the diversity of the cultures and traditions
of the peoples of Europe as well as the national identities of the Member
States and the organisation of their public authorities at national, regional
and local levels’

C 164/12

EN

Official Journal of the European Union

5.7.2005

1.4.5 Cor r e cti ve me ch a ni sm

growth to be undertaken without violating the financial disci-
plines of the Pact;.

understands that the negotiations on the financial perspective
2007-2013 will clearly involve mechanisms for the overall
funding of the Union and the extent of contributions made by
individual Member States. The Commission has made a sepa-
rate proposal, which would end the existing UK rebate and
introduce a generalised corrective mechanism to reflect the
relative prosperity of a Member State;

suggests that another approach would be to improve the
enforcement mechanism of the Stability and Growth Pact in a
manner which takes into account the proper economic situa-
tion of each Member State so that the medium term objective
of a balanced budget would be differentiated for each Member
State to take into account
investment, debt
dynamics, sustainability of public finance and potential growth.

the level of

believes that a fair system needs to be introduced to meet the
Union's budgetary needs; and that this system should eliminate
the rebate arrangements with some of the Member States;

the European Commission that

endorses the view of
this
approach provides the opportunity to eliminate corrective
mechanisms introduced in previous financial periods presently
adjusting the excessive negative net balances arising for some
Member States in relation to contributions to payment commit-
ments from the EU budget. If this were to be accomplished,
excessive fiscal burdens on individual member states would be
avoided and EU-level solidarity maintained.

1.4.6 Sta bi li t y a nd Gr ow th Pa ct

1.5 Delivery instruments and governance

1.5.1 A r oa dma p

notes that the final chapters of the financial perspective 2007-
2013 are concerned with the efficiency of delivery instruments
and appropriate governance arrangements, matters of impor-
tance to local and regional authorities;

points out that the communication does not elaborate on the
distinctive contribution which each sphere of government —
local, regional, national and European — could make to the
resolution of the current deficiencies;

recognises that, currently, the terms and conditions of the
Stability and Growth Pact and its restrictive implementation,
which does not allow a Member State to exceed 3 % of GDP
limit on its budget deficit or 60 % for debt, only address stabi-
lity concerns based on the economic conditions of the late
1990s, while the pressing need today is to move towards and
properly address a more growth orientated policy framework.
Without a focus on growth, it will be impossible to factor in
the social and environmental facets of the Lisbon-Gothenburg
strategy;

highlights
that national action, coordination and public
spending through EU budgets require the right combination of
these measures at the right time. The Open Method of Coordi-
nation (OMC), underlying the Lisbon-Gothenburg strategy, sets
goals, establishes indicators and benchmarks, sets national and
regional policies through National Action Plans, and instigates
periodic monitoring, evaluation and peer-review and as such is
capable of bringing added value to the objectives through the
transfer of knowledge and experience accumulated at local and
regional levels;

supports the European Commission's proposals for reforming
the Stability and Growth Pact where reforms provide a flexible
way of conducting economic policy so as to reduce problems
arising within the economic cycle, but without ignoring the
importance of having a stable economy. This will provide more
room for manoeuvre so that countries can make provision for
increased public spending and tax cuts during periods of
economic downturns;

believes however, that the process in its current form has not
proved sufficiently effective in delivering the Lisbon-Gothen-
burg objectives. There has been little coordination of policies
across Member States and no peer pressure to achieve the
Lisbon goals. Moreover the OMC has failed to involve local and
regional authorities who have a vital role to play in realising
the city-region and regional competitiveness that can stimulate
the peer pressure required;

suggests that one approach could be to introduce a mechanism
investments in accord with certain areas of
whereby capital
Community competence and agreed within the Lisbon strategy
would be exempt from normal budgetary accounting proce-
dures. This would enable necessary public investments aiding

is of the view however, that OMC remains an alternative to
supranational decision-making and is capable of being re-
shaped into an effective delivery process if there is a simplifica-
tion of the myriad of existing requests away from unilateral
discussions between the Member States and the Commission
on individual policy themes;

5.7.2005

EN

Official Journal of the European Union

C 164/13

believes that this would suggest the need to explore new, flex-
ible methods; developing a tripartite model approach through
contractual activity-based methods of
involving local and
regional government in delivering policy objectives to add bite
and purchase to delivery mechanisms. This should not add
complication nor represent more than abstract ideas, but repre-
sent real systematic dialogue with local and regional authori-
ties;

strongly recommends that
the roadmap proposed by the
Commission — a shared programme involving actions and
funding at national and EU level — must involve the local and
regional authorities. The territorial component of framework
programmes is important to the realisation of cohesion objec-
tives between and within Member States;

restates that Tripartite Pacts are a way of embracing local and
regional authorities into the governance arrangements of the
EU. Delivery of framework programmes greatly depends on the
engagement of local and regional actors.

1.5.2 Poli c y a nd p r og r a mme s

notes that the financial perspective 2007-2013 and the supple-
mentary communication proposes that the instruments avail-
able to the EU to further its policy goals will, as far as possible,
be consolidated and rationalised into one instrument per policy
area and one fund per programme;

welcomes that Cohesion policy programmes will be supported
through single funds (Cohesion Fund, ERDF and ESF), with
activities concerning agriculture and fisheries now to be
resourced under the Sustainable Management and Protection of
Natural Resources heading;

welcomes that the urban dimension has been mainstreamed
across cohesion policy programmes, for the benefit of all urban
areas, strengthening the importance of partnerships between
cities and regions;

recognises that a new regulation will establish a structure for
CAP funding with a single fund for each pillar: the European
Agricultural Guarantee Fund (EAGF) and the European Agri-
cultural Fund for Rural Development (EAFRD);

welcomes that all rural development measures are to be
regrouped under a single instrument
to deliver a single
programme with attention given to coherence between rural
development and cohesion measures:

— increasing the competitiveness of
through support for re-structuring,

the agricultural sector

— enhancing the

environment
support for land management,

and countryside

through

— enhancing the quality of life in rural areas,

— promoting diversification of economic activities;

welcomes the Commission's efforts towards simplification
with the creation of a Financial Instrument for the environment
(LIFE+), but would highlight the difficulty in identifying real
opportunities for financing environmental projects through the
various financial instruments that will be in place for 2007-
2013. It is essential to coordinate the various types of funding
in order to cover the different priorities and Community inter-
vention arrangements;

is concerned that the Commission wishes to devolve a very
significant part of the LIFE+ budget (75 %-80 % of the instru-
ment) to the various Member States without establishing the
arrangements and conditions for this ‘devolvement’
in the
proposed Regulation;

is proposed,
notes that a new neighbourhood instrument
aimed at cross border cooperation between the EU and neigh-
bouring countries, underlining the added value of the EU in
promoting stability and prosperity beyond its external borders
through sustainable economic and social development;

welcomes the creation of the EFF as a single instrument for
the restructuring of the fisheries sector, closely linked to cohe-
sion instruments and providing:

— sustainable development of coastal areas,

— adaptation of fishing fleets; aquaculture and fish processing

industries;

considers that these proposals will assist in the transparency
of the financial perspective for citizens.

2. The Committee of the Regions recommendations

2.1 Partnership

demands that

2.1.1
the principle of partnership linking
local, regional, national and trans-national spheres is a hori-
zontal strand permeating all of the Commission's proposals.
This principle needs to be acknowledged and implemented
with some urgency by both the European Commission and the
Council of Ministers and also communicated consistently across
Member States and throughout the media, to demonstrate the
added value of the EU;

calls for the consistent application of the partnership
2.1.2
principle in the detailed regulations being submitted by the
Commission on all policy elements identified within the finan-
cial perspective 2007-2013;

C 164/14

EN

Official Journal of the European Union

5.7.2005

2.1.3
urges that the partnership principle be fully embedded
in the new regulations dealing with programmes, in particular
trans-European cooperation, and that these programmes should
recognise the knowledge and expertise held by the relevant
local and regional authorities.

tion of the Lisbon-Gothenburg agenda. Future EU growth and
competitiveness across all parts of Europe will be promoted by
a continuation of EU cohesion policy rather than by a re-natio-
nalisation of this policy– confirming the positive impact to
date of EU regional policy in strengthening the Community's
social, economic and territorial cohesion;

2.2 Coherence

insists on the crucial

importance of increasing the
2.2.1
coherence between cohesion policy and specific sectoral Euro-
pean policies, notably those on agriculture,
research and
competition, environment and transport, allowing for area-
based approaches. Alongside the application of the partnership
the new programmes need to demonstrate the
principle,
commitment of both the Commission and the Council of
Ministers to joined up government across all spheres of govern-
ance — local, regional, national and EU.

2.3 Tripartite Pacts and Agreements

2.3.1
recommends that the application of Tripartite Pacts
and Agreements be extended so as to give substance to the
governance of in the financial perspectives 2007-2013 and
should represent an engagement of elected members of in local
and regional authorities with the proposed roadmap, especially
for the territorial component of framework programmes neces-
sary for the realisation of cohesion objectives both between
and within Member States;

2.3.2
suggests that local and regional engagement with the
roadmap process, with regional strategies being part of the
national strategy, would ensure not just greater coherence in
delivery of a sustainable growth agenda, but also more visibility
of European cohesion policy and the prioritising of resources
to where they are needed most;

2.3.3
emphasises that these arrangements could be intro-
duced without undermining the urgent need to simplify and
streamline the shaping and delivery of Competitiveness and
Cohesion programmes;

2.3.4
impact-
recommends an inter-institutional, critical
assessment evaluation to assess what has been done and what
works across diverse public policy within Member States. A
single audit arrangement would assist in determining whether
strategic goals are being achieved — aligned to the Lisbon-
Gothenburg Strategy — in prioritising resources where they are
needed most.

insists that all National Action Programmes

2.4.2
for
growth and employment drawn up by Member States and the
Commission reflect consultation and engagement with local
and regional authorities. Urban and regional strategic plans
must shape the commitments and targets set by the National
Action Programmes;

2.4.3
equally suggests that a facilitating mechanism should
be set up for creating programmes through which two or more
regions could participate in those activities that have a real
influence on increasing local competitiveness;

insists that

the Competitiveness for Growth and
2.4.4
Employment pillar of
the financial perspective 2007-2013
cannot be the adjustment variable for negotiations on payment
appropriations for the next framework period; while accepting
that within cohesion headings, priority should be given to the
Convergence objective, the CoR however, is of the opinion that
the EU should back the Competitiveness objective in order to
anticipate and promote change to reach the objectives of the
‘new’ Lisbon strategy;

2.4.5
urges that cohesion policy is funded at not less than
0.41 % of EU GNI to ensure that the objectives of cohesion
policy are fully met in the EU-25;

2.4.6
supports the need for coherence between the applica-
tion of the 4 % absorption ceiling of national GDP at a Member
State level and the implications of the Berlin formula for the
less developed regions;

that

2.4.7
demands
development
closely integrated with cohesion policy
programmes are
programmes and should not become surrogate agricultural
programmes as a result of own resources pressures;

sustainable

rural

urges that

2.4.8
the regional allocation criteria for the
competitiveness and employment pillar be based on a mix of
indicators that reflect regional and local needs, accessibility and
opportunities, and are able to measure intra-regional dispari-
ties;

2.4 Cohesion policy

2.4.1
re-emphasises the inextricable linkage between an
effective European-wide regional policy and the implementa-

demands that the opportunities offered by cities for
2.4.9
the social and economic development of the whole EU be
recognised and factored into strategic planning at national
level;

5.7.2005

EN

Official Journal of the European Union

C 164/15

2.4.10
urges that the Committee of the Regions is actively
consulted through participation at the Spring European Coun-
cil's annual examination of competitiveness and cohesion
agendas. This would provide local and regional authorities with
opportunities to bring forward issues and good practice as
required for improved functioning of the open method of coor-
dination in the implementation of Lisbon and Gothenburg
agendas.

Lisbon Gothenburg objectives,
greater political ownership;

thereby giving the strategy

2.5.8
also recommends that in the mid-term review of the
Lisbon-Gothenburg objectives, a European Youth Pact is drawn
up, focussing on the problems of unemployment, and social
and professional
integration, complementing actions in the
Lisbon-Gothenburg agenda for ageing populations;

2.5 Lisbon-Gothenburg Strategy

urges that a more coherent approach is taken to the
2.5.1
introduction of macroeconomic measures, employment and
social action and environmental and research initiatives as a
means of revitalising the strategy and to guide Member State
National Action Programmes;

2.5.9
urges that progress in meeting the Lisbon-Gothenburg
objectives should be subject to annual reports at both the
national and EU levels, about which the Committee of the
Regions would be consulted and enable the Spring European
Council Meeting to focus on key policy issues to keep the
Lisbon-Gothenburg objectives on track;

2.5.2
calls for radical improvement in the governance of the
Lisbon-Gothenburg Strategy to make it more effective and
more easily understood;

2.5.10
urges that following enlargement, the single currency
and the single market, the next great project for the EU should
be to maximise growth and employment — through a renewed
focus on the Lisbon-Gothenburg agenda.

2.5.3
calls therefore, for the mid-term review of the Lisbon
Strategy to include a critical assessment of the implementation
of governance and an analysis of the impact of the decentralisa-
tion of administration on the effectiveness of the implementa-
tion of the Lisbon Strategy;

2.5.4
emphasises that although the general picture with
regard to implementing the Lisbon strategy is gloomy and
pessimistic, some Member States have managed to achieve
objectives in a large number of policy areas. The Committee of
the Regions considers that the factors underlying this should be
analysed more closely and taken into account when applying
the Open Method of Coordination;

2.5.5
demands, specifically, that critical success factors at
local and regional level are identified and measured across the
EU and input to the framework of fourteen indicators and
targets suggested by the Wim Kok report (1) that are to be used
to identify good performance and bad performance at
the
Member State level;

2.5.6
to achieve social cohesion and environmental sustainability;

emphasises that economic competitiveness is essential

2.5.7
urges that a greater role is given to local and regional
government to diffuse the knowledge and introduce the innova-
tion and enterprise required to successfully deliver on the

(1) Facing the Challenge, the Lisbon Strategy for Growth and Employ-
ment, report from the High Level Group chaired by Wim Kok,
November 2004.

2.6 Research and technological development

2.6.1
requests that in the regulations relating to research
and technological development, an area with a proposed
substantial
financial resources,
there must be a clear recognition of the territorial components
of the framework programme for research;

increase in the allocation of

that

demands

2.6.2
research
national
programmes and policies are coordinated to create a real Euro-
pean Research Area, capable of sustaining competitiveness and
growth objectives;

regional

and

2.6.3
calls for the development of Mutual Learning Plat-
forms and Innovation Poles to help create and sustain regional
research strategies
and regional knowledge development
models fostering the involvement of universities with their
local economies. These platforms and networks should be
designed to facilitate the fast application of new ideas and
products;
to encourage spin-outs from basic and applied
research; and to shorten the time between innovation and
application;

urges that Member States should delineate in their
2.6.4
National Action Programmes the measures that will be taken to
bring about the 3 % of GDP target for investment in research
and development.

C 164/16

EN

Official Journal of the European Union

5.7.2005

2.7 Mobility

2.10.2 warns of the potential dangers that may arise from a
compromise budget;

2.7.1 welcomes the proposals to treble the number of
Erasmus students and to increase the number of school student
mobility actions and vocational training placements.

2.8 Governance

2.8.1 welcomes the proposals to strengthen partnership
arrangements and to introduce simplified decision-making
instruments — from local, regional, national and EU — across
and between all spheres of government, but urges that these
measures are introduced with some urgency;

that

recommends,

in the delivery of

2.8.2
the Lisbon-
Gothenburg objectives, National Action Plans should be evalu-
ated annually by the European Commission and with the
spatial aspects of such evaluations engaging local and regional
authorities;

also recommends, that there should be an annual
2.8.3
statement by the European Commission on the progress
towards the policy challenges set within the financial perspec-
tive 2007-2013 and of the contribution by each sphere of
government — local, regional and national — to provide an
to economic reform and the greater
impetus,
engagement and accountability of all agencies, local, regional
and national governments.

if necessary,

2.9 EU Citizenship

underlines that apart from the increase in resources
2.9.1
proposed by the Commission for actions with regard to citizen-
ship, freedom, security and justice, there needs to be a full
recognition that the work of Justice and Home Affairs is not
simply a matter of negotiation between Brussels and Member
States in respect of subsidiarity at a local and regional spheres
of government. Particular attention should be paid to recog-
nising local and regional authorities from new Member States
in this regard;

2.9.2
requests that the visibility of mechanisms that identify
the added value of EU programmes is stepped up across local
and regional government,
in order to raise public awareness
and support for European policies delivered locally.

2.10.3
supports the European Parliament, which believes
that the current financial perspectives are part of an overall
interinstitutional agreement, which can only be renewed in an
atmosphere of mutual trust among the institutions and on the
basis of common agreement with the two branches of the
budgetary authority;

2.10.4
insists that those seeking reductions in the commit-
ment appropriations are most likely to focus on Structural fund
programmes, relating to regional competitiveness and employ-
ment within the sub heading (1b) Cohesion for Growth and
Employment. Disproportionate budget reductions in this area
would effectively re-nationalise regional policy for the majority
of the former EU-15;

2.10.5
insists that any pressure on Commitment appropria-
tion sub-headings within the Competitiveness for Growth and
Employment pillar are explicitly resisted in regard to research
and technological development initiatives so as to respect and
maintain Member States' commitment to the Barcelona objec-
tives and an increase in research and development expenditure
to 3 % of GDP by 2010;

2.10.6 warns that delays to the start of the programming
period as a result of protracted negotiations will lead to finan-
cial disruption and instability across the local and regional
authorities of the EU;

urges that the outcome of the negotiations guaran-
2.10.7
tees the maintenance of
the solidarity principle which has
guided EU policy since the creation of structural policy in
1973-1975, namely that the EU supports all regions in need of
support, whether they are in richer countries or poorer ones.

2.10.8
calls on Member States to work in collaboration
with their cities and regions to find a political solution for
those Member States who will no longer be eligible for the
Cohesion Fund in future as a result of the statistical effect of
enlargement.

2.10 Financial Perspective 2007-2013

2.11 Single fund approach

2.10.1
reiterates its agreement with a 1.24 % of GNI own
resources budgetary ceiling for the financial perspective 2007-
2013 as this ceiling reflects the need for budgetary discipline
and community added value, and as this resource figure is the
only means to deliver cohesion and competitiveness, the single
market and our shared Treaty obligations;

the move towards

2.11.1 welcomes
for
various policy areas, including cohesion policy, rural develop-
ment, environmental programmes and restructuring of the fish-
eries sector as this approach will harmonise the administrative
requirements
implementing these measures and make
implementation simpler.

single

funds

for

5.7.2005

EN

Official Journal of the European Union

C 164/17

2.12 State Aid

2.12.1
calls on the European Commission to provide a
supportive framework for territorial differentiation in the State
Aid rules and regulations, to allow for targeted public invest-
ment where this can correct
failure without
distorting competitive conditions or provide more scope to
support research and innovation particularly in small and
in order to achieve the territorial
medium sized businesses,
cohesion objective;

real market

2.12.2
urges that there should be a new State Aid regu-
lation that is responsive to the new cohesion and regional
policy regulations to allow State Aid to be permissible in areas
that are no longer eligible for cohesion funding — depending
on the level of problems they face;

requests the Commission to clarify the future of
2.12.3
regional aid under Article 87 (3)(c)
in terms of distinctions
between regions eligible under the heading ‘supporting regional
competitiveness and employment’ outside the less prosperous
areas of heading ‘Convergence’;

2.12.4
is of the view that sustainability is also an impor-
tant consideration and public investment through State Aid
should be broadly in line with sustainability principles.

2.13 Corrective mechanism

2.13.1
advocates the suggestion by the Commission to
open a debate on the shortcomings of the current financing
system for the EU;

Brussels, 23 February 2005.

2.13.2
of a new, fairer corrective mechanism.

endorses the Commission proposal for the creation

2.14 Stability and growth

2.14.1
urges that as the implementation of the Stability
and Growth Pact has been lacking consistency and credibility
there is a considerable need for the Pact to take account of the
present economic reality of the EU by improving the economic
rationale of the Stability and Growth rules. The consistency
between national and EU processes must be strengthened and
national institutions must be better involved in the multi-lateral
surveillance of economic policy and improvements made in
ensuring coherency between fiscal and monetary policy;

the most

suggests that as major problems are emerging in
2.14.2
Member States' budgets through the current low growth of the
European economies, which compound high unemployment
levels and continuing social difficulties in many regions and
localities,
important way for the Commission to
address this problem would be to revise the implementation of
the Stability and Growth Pact to ensure the sustainability of
economic policy. After all, the EU will not achieve the level of
growth, employment and social cohesion it needs unless the
European macroeconomic context
is also in step with the
Lisbon Strategy and the coordination of Community instru-
ments improved.

The President

of the Committee of the Regions

Peter STRAUB