European Parliament resolution on the situation of the European economy: preparatory report on the broad economic policy guidelines for 2006 (2006/2047(INI))
Date: 2006-04-04
Institutions: Committee on Economic and Monetary Affairs, European Parliament, Provisional data
Subjects: EU employment policy, business policy, competitiveness, economic policy, innovation, investment

2.12.2006

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Underlines the need for institutional reforms to improve the functioning of the WTO, on the basis

57.
inter alia of the recommendations contained in the above-mentioned Sutherland Report;

Stresses the importance of the work of the Parliamentary Conference on the WTO in strengthening
58.
the democratic dimension of the WTO; notes, however, the lack of consideration given to its Final Declar-
ations by WTO negotiators; notes the effort made by EU negotiators to address the Parliamentary Confer-
ence on the WTO but deplores the lack of engagement of other WTO negotiators;

States its willingness to contribute positively to the negotiating process through the various contacts

59.
its Members have with their counterparts from countries with which the EU shares common interests;

60. Welcomes the strong spirit of unity among the three major EU institutions present in Hong Kong
and underlines the benefit of maintaining a close collaboration between them in these crucial months of the
negotiations; calls on the Council and the Commission to continue to keep Parliament properly involved
and fully informed on the EU post-Hong Kong strategy and the progress of the negotiations, also during the
next General Council meeting in Geneva;

61.
Stresses the importance of Parliament being represented at all WTO meetings at which major steps in
the negotiations are taken and where ministers are involved and not only on the occasion of official Minis-
terial Conferences; requests, therefore, that a small delegation of members of the Parliament be meaningfully
involved in the meetings to be convened in Geneva with a view to meeting the 30 April and 31 July 2006
deadlines set in the Hong Kong Declaration; invites the Council to extend an invitation to such a delegation
of members of the Parliament to participate, as observers,
in at least one of the meetings of the 133
Committee to be organised in Geneva at the end of April 2006; calls on the Commission to support this
initiative and to ensure that members of the Parliament receive appropriate information on the progress of
negotiations during their stay in Geneva;

62.
Reiterates the importance of a parliamentary dimension of the WTO in order to enhance democratic
legitimacy and transparency in the WTO negotiations, since members of parliament can constitute an
important link with citizens, in particular as a source of information and response to their concerns; wel-
comes the results of the Hong Kong session of the Parliamentary Conference on the WTO; calls on the
Commission and the Council to support actively a reference in the final document of the Doha Round
which highlights the role of legislators in trade policy-making;

Instructs its President to forward this resolution to the Council and the Commission and to the
63.
parliaments of the Member States, the acceding countries and the applicant countries, the Director-General
of the WTO and the President of the Inter-Parliamentary Union.

P6_TA(2006)0124

Broad economic policy guidelines for 2006

European Parliament resolution on the situation of the European economy: preparatory report on
the broad economic policy guidelines for 2006 (2006/2047(INI))

The European Parliament,

— having regard to the Commission's Integrated Guidelines for Growth and Jobs (2005-2008) (COM

(2005)0141) (the Integrated Guidelines),

— having regard to Article 99(2) of the EC Treaty,

— having regard to the Commission's Economic Policy Committee's Special Report No 4/2005, ‘The 2005
EPC projections of age-related expenditure (2004-2050) for the EU25 Member States: underlying
assumptions and projection methodologies’,

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— having regard to the 25 Member States' Lisbon National Reform programmes for growth and jobs

2005-2008 (NRPs),

— having regard to the Commission's Annual Progress Report (APR) on the Lisbon Strategy of 25 January

2006,

— having regard to its resolutions of 15 May 2003 on the Commission recommendation on the Broad
Guidelines of the Economic Policies of the Member States and the Community (for the 2003-2005
period) (1), of 22 April 2004 on the Commission recommendation on the 2004 update of the Broad
Guidelines of the Economic Policies of the Member States and the Community (for the 2003-2005
period) (2), and of 26 May 2005 on the Commission recommendation on the broad guidelines for the
economic policies of the Member States and the Community in the framework of the integrated guide-
lines for growth and jobs (2005-2008) (3),

— having regard to the Council Presidency's Key Issues Paper for the Ecofin Council in view of the Spring

European Council of 7 February 2006,

— having regard to the Commission's Economic forecasts (4),

— having regard to Articles III-179 and III-206 of the Treaty establishing a constitution for Europe, signed

on 29 October 2004 (Constitutional Treaty),

— having regard to the Commission White Paper, ‘European Transport Policy for 2010: Time to Decide’

(COM(2001)0370),

— having regard to the Commission Non-Paper of 7 July 2004 on a common consolidated EU corporate

tax base,

— having regard to the European Charter for Small Enterprises, approved by the Santa Maria da Feira

European Council on 19 and 20 June 2000 (SME Charter),

— having regard to the Code of Conduct on Direct Business Taxation, endorsed by the Ecofin Council on

1 December 1997,

— having regard to the OECD's Programme for International Student Assessment (PISA),

— having regard to the Presidency Conclusions of the Lisbon European Council of 23 and 24 March
2000, the Göteborg European Council of 15 and 16 June 2001, the Barcelona European Council of
15 and 16 March 2002, and the Brussels European Councils of 20 and 21 March 2003, 25 and
26 March 2004, and 22 and 23 March 2005,

— having regard to the report of November 2004 by the Commission's High Level Group chaired by Wim
Kok, ‘Facing the Challenge — The Lisbon strategy for growth and employment’ (the Kok Report),

— having regard to Rule 45 of the Rules of Procedure,

— having regard to the report of the Committee on Economic and Monetary Affairs (A6-0077/2006),

A. Whereas a considerable number of recommendations formulated in the Parliament's last three resol-
utions on the broad economic policy guidelines (BEPGs) have not been taken on board; whereas new
and significant factors have arisen since the adoption of the Parliament's latest resolution; whereas
many of the previously identified long-term challenges have acquired a new urgency; whereas the EU's
economy continues to experience slower growth and seems less well prepared for globalisation than
those of its main competitors,

B. Whereas globalisation is a revolutionary phenomenon that questions our conventional use of available
resources, allows emerging economies to import capital, skills and technology and to compete in an
increasingly interconnected world, increases migratory flows, changes the traditional patterns of inter-
national trade, and gives the financial economy an unprecedented importance over the real economy;
whereas the importance of the financial economy makes ‘confidence’ a key factor and creates a new
need for efficient supervision and closer cooperation in order to guarantee economic stability;

(1) OJ C 67 E, 17.3.2004, p. 295.
(2) OJ C 104 E, 30.4.2004, p. 1061.
(3) Texts adopted, P6_TA(2005)0209.
(4) Autumn 2005, No 5/2005.

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C. Whereas the following new significant factors have arisen since the Parliament's last resolution on the
BEPGs was adopted in May 2005: difficulties concerning the ratification of Constitutional Treaty; the
adoption by the European Council of the EU's 2007-2013 Financial Perspective without the agreement
of the Parliament; the first two interest rate rises by the ECB in over 5 years; the reform of the Stability
and Growth Pact with 12 Member States having budget deficits of over 3 %; the adoption of the
Member States' NRPs; a raised awareness of the world-wide energy shock and related geopolitical ten-
sions; the negotiations concerning Estonia, Lithuania and Slovenia's applications to join the euro zone
in 2007; and the need to boost the priorities of the Doha WTO round following the slowdown of
negotiations in Hong Kong;

D. Whereas the relative decline of the European economy can be linked to: an inappropriate regulatory
framework combined with a lack of structural reform, which renders our economy less flexible than
those of our main competitors, stagnant domestic demand, a lack of business dynamism and weak
labour markets as a result of slow demographic growth, low employment rates, and poor productivity
growth; whereas poor growth is caused by lack of investment, insufficient innovation and a misalign-
ment of labour supply and demand on account of the incapacity of our poorly financed educational
and training systems to adapt our workers to an ever-shifting world;

E. Whereas, moreover, since the adoption of the Parliament's last resolution, the following challenges have
gained greater recognition: the ever-increasing ageing of the population; migratory tensions at the EU's
borders and internal problems because of insufficient assistance for the integration of second-generation
immigrant populations; the exponential growth of third-country imports in some sectors as well as
business delocalisation and outsourcing; an increasing demand for resources such as crude oil, natural
gas, coal and iron by China and other emerging economies;
increasing EU dependence on energy
imports coming from unstable regions; and risks caused by global macroeconomic imbalances;

1.
Calls on the Commission, the Council and the Member States to adopt those recommendations
included in the Parliament's last three resolutions on the BEPGs but not yet taken on board, namely, the
transposition of the internal market directives; the adoption of deficit-reducing measures by Member States
with excessive deficits; a common communication policy on citizens' insecurity as regards globalisation;
a structural reform action plan, comprising the obstacles to tackle, the actions to take, and a time line; the
full implementation of the SME Charter, in particular as regards a more favourable tax regime and more
investment in research and innovation for SMEs;

2. Welcomes the Key Issues paper for the Ecofin Council and supports the Commission's choice in
focusing on four fundamental areas (knowledge and innovation; business potential; globalisation and demo-
graphic change; and an efficient energy market), which should be implemented through the Integrated
Guidelines; moreover, shares the view that higher and sustainable growth in our economies will only come
about through the mutual reinforcement of stability and growth-oriented macro-economic policies and
structural reforms, including more effective economic coordination; welcomes the Commission's intention
to propose a roadmap outlining the steps required and key dates for the completion of these four actions by
the end of 2007;

Institutional reforms

3.
Believes that the ongoing period of reflection on the Constitutional Treaty should tackle: the current
framework of macroeconomic governance, such as it was already discussed by the Convention's Economic
Governance Group; the economic and social objectives of the EU; the extension of co-decision procedures
to economic policy issues; the responsibility of the ECB, while respecting its independence; the co-ordi-
nation of economic policies and the role of the Eurogroup in this context; the procedure to handle excessive
deficits; the competence of the EU in tax matters; the implementation of a call-back right for the Parliament
in the context of the comitology procedure by 1 April 2008 at the latest; and the representation of the euro
zone within international institutions;

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4. Welcomes the merger in the Integrated Guidelines of the BEPGs and the employment guidelines but
considers that the Commission's APR on the Lisbon process and other documents linked to the Open
Method of Coordination should also be combined and debated together; believes that the BEPGs must be
given the same legislative status as the employment guidelines and that the roles of the Parliament and the
Commission in this respect need to be redefined;

5.
Asks the Commission to investigate the feasibility of adopting EC legislation in order to achieve a
uniform definition of tax residence — applicable to EU citizens resident within and outside the EU — linked
to the concept of citizenship of the EU; an EU Convention on double taxation (mirroring Article 293 of the
EC Treaty); and the inclusion in EC law of the principle of non-discrimination with regard to taxation as
defined in the judgments of the Court of Justice of the European Communities;

6. Welcomes the obligation that Member States now have to present annual NRPs structured around the
24 Integrated Guidelines; considers that economic performance in this regard could be further improved if
the Commission identified and promoted best practices derived from NRPs and by establishing an annual
league table showing the best and worst performing countries, as proposed in the Kok Report; calls for a
deeper analysis of the structural reform policies of the last decade in order to clarify the reasons for ongoing
slow growth and insufficient productivity; calls for a ‘smart-growth strategy’, bringing together the EU's
fragmented economic policy approaches into a coherent strategy, in order to strengthen the EU's potential
with respect to a new generation of products and production methods, integrating information and com-
munication technologies and resource-efficient technologies for sustainable development;

7.
Regrets that the December 2005 European Council agreement on the Financial Perspective is less
ambitious than was Parliament's proposal, particularly as it focuses on traditional policies and pays insuffi-
cient regard to policies that provide added value to citizens; deplores the reduction in commitments for
research and science as well as competitiveness and growth, SMEs, citizenship, freedom, justice and external
actions; asks the Council to renegotiate with Parliament an agreement that reinforces the EU's prosperity,
competitiveness, employment and cohesion;

8. Welcomes the well-balanced conclusions of the Spring European Council in March 2006, respecting
the supportive multi-sectoral approach of the re-focused Lisbon Strategy; calls on the Member States to
implement the NRPs speedily and accurately,
involving national parliaments and other interested stake-
holders, such as the social partners, and to provide timely information to the Parliament, the Council, and
the Commission; invites the Council and the Commission to establish, together with the Parliament, a Code
of Conduct to allow a scrupulous joint follow-up of these programmes; regrets however, that neither a clear
timetable nor a code of conduct was agreed upon, which would ensure appropriate cooperation and the full
involvement of the three main EU institutions concerned in the follow-up to the Integrated Guidelines, as
key instruments of the Lisbon Strategy; furthermore, recalls, in this context, the importance of the equal
involvement of all the main Council formations concerned and the enhanced role of the General Affairs
Council in coordinating this input;

Macro-economic, monetary and fiscal policy

Calls on the Commission to adhere to a strict interpretation of the renewed Stability and Growth Pact,
9.
not allowing the use of temporary measures or creative accounting; urges Member States to foster competi-
tiveness and to pursue an annual improvement in their cyclically adjusted budget deficits and to ensure
higher adjustment efforts in economically prosperous times; believes that wage increases should be consist-
ent with the trend in productivity over the medium term; calls for a moderate and responsible pricing
policy, in particular in cases of monopolistic or oligopolistic markets, which dampens inflationary pressures
and keeps interest rates down at levels that do not endanger the current economic recovery;

Urges Member States to make additional efforts to reduce public debt burdens and improve the
10.
quality of their public finances, which will lead to fewer resources being used on interest payments and
amortisation and more on education, vocational training, infrastructure, and research and innovation; under-
lines that, consistently with ensuring financial stability, there is an overriding need for a general review of
taxation in Member States in order to strengthen competitiveness, which implies constrained and/or more
efficient public spending and sustainability, which implies effective and refocused spending schemes;

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Notes that low economic growth, excessive debt and high unemployment dramatically increase the
11.
problems resulting from demographic change; therefore underlines that the full
implementation of the
Lisbon Strategy to create an inclusive, high-employment, high-productivity society is essential in order to
face this challenge successfully; calls on the Commission to launch a major debate in order to identify best
practices and the most profitable methods to manage the forthcoming developments;

12.
Points out that imbalances in certain euro zone countries are particularly alarming given the size of
the trade deficits and the observed inflation differential of some of them and calls on the Member States to
adopt the economic policies necessary to remedy matters, stressing the need for a budget policy capable of
off-setting the ill effects of these imbalances;

Calls on the Member States to refrain from harmful, exaggerated cross-border tax competition that

13.
reduces budgetary capabilities for public investment in tangible and intangible assets;

Business environment

Calls for the promotion of the entrepreneurial spirit — in other words, the opportunity to put a
14.
business idea into practice — in Member States' secondary education systems by reinforcing the entrepre-
neur's role in society and stressing the importance of concepts like corporate governance and corporate
social responsibility;

15.
Calls on the Commission to apply the principle of affirmative action in favour of SMEs, and to take
steps to help to: create companies electronically; appropriately simplify the regulatory environment; promote
SME access to finance during the first years of existence via Risk Capital or ‘Business Angel’ formulae;
enhance the roles of the EIB and EIF; increase SME access to ITC, acknowledging that the gap in competi-
tiveness between the EU and the USA is found not only in high-technology sectors but also in distribution
channels and in the retail sector; promote cooperation structures and foster their internationalisation by
adopting its proposal for a 14th company law directive on the cross-border transfer of the registered office
of limited companies and by discussing the added value of a future statute of a European private company
for SMEs;

16.
Recalls its backing for the Code of Conduct on Direct Business Taxation, under which Member States
agreed to terminate harmful tax competition; supports the Commission's Common Consolidated Corporate
Tax Base proposal; urges the Council to conclude an agreement on the Commission proposals to simplify
VAT obligations; supports efforts to simplify and reduce taxation as stated in the SME Charter; in this regard,
supports the Commission's recent Home State Taxation scheme for SMEs and invites the Commission to
study the possibility of changing the principle of place of destination by the principle of place of origin with
regard to VAT due by these companies, including fair revenue-sharing rules;

17.
Strongly recommends that the NRPs deal with planned and existing measures in order to reduce red
tape and regulatory obstacles for SMEs, and to highlight decisions at local, regional, and national level,
which could serve as benchmarks for other Member States' authorities;

Calls on the Member States and their local and regional authorities to develop a common scheme for
18.
evaluating the distributive and regional effects of their individual taxation and subsidy schemes, given the
fact that tax policies at local, regional, national and EU level are often not coordinated, and recalls the
increasingly important role of local communities for the economic, social and political wellbeing of the EU;

19.
Believes that the elimination of export quotas has profoundly changed international trade, obliging
policymakers to react against unfair competition from third countries, namely by fighting counterfeiting and
protecting intellectual and industrial property rights; therefore calls on the Commission and the Member
States to establish an efficient EU patent system through a Community patent and other appropriate instru-
ments;

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Employment and human capital

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20.
Believes that to improve the ratio of the working-age population over the total population, it is
necessary: to adopt ambitious birth rate policies; to improve child-care facilities; to promote schemes seeking
to improve the work-life balance; to integrate immigrants into the labour market as well as to combat illegal
immigration by strategies promoting sustainable development in third countries as well as by the imple-
mentation of a common EU-wide immigration policy; and to set up incentives to encourage workers to
delay voluntary retirement;

Emphasises the potential of ‘flexicurity’ (flexibility and security) for increasing labour market partici-
21.
pation, in particular that of women, older workers, young people, the long-term unemployed, and immi-
grants;

22.
Considers that in order to increase the ratio of the employed people over the working-age popu-
lation, it is necessary to adopt measures specifically aimed at groups having difficulties in accessing the
labour market, namely, young people, women, the over-55s, and the disabled, to develop a life-cycle
approach to work and working time, which is highly respectful of individual needs and, in particular, to
set up incentives to encourage older workers to offer their work experience; therefore invites Member States,
together with the social partners, to promote measures aimed at adapting labour relations and working time
to the specific needs of these social groups;

23.
Considers that to discourage the black economy it is necessary to reduce non-wage labour costs,
especially for low-skilled jobs; in this context, welcomes the Council's decision to extend the reduced VAT
scheme to labour-intensive services and suggests that the Commission be given a mandate to launch a new
study on how reduced VAT rates influence the prices of taxed services, the reduction of the shadow econ-
omy, and overall tax revenues, including contributions to social insurance systems;

Stresses that Europe's sluggish growth rates reflect the dearth of effective measures to reduce unem-

24.
ployment, to increase the active population, and to boost low productivity;

25.
Calls on the Commission to bear in mind that EC legislation should be compatible with that of our
competitors in order to avoid a negative effect on the competitive position of the EU and the innovative
potential of EU businesses on the global market;

26.
Believes that to improve the quality of education, and given that in years to come many children of
immigrants with relatively low levels of education will enter the school system, it is necessary to: increase
the supply of places in primary schools; improve the knowledge of foreign languages, mathematics and
sciences in primary and secondary education in the light of our underperformance compared with our
competitors, as highlighted in the PISA report; achieve an integrated model of professional training through
ongoing updating of knowledge;

27.
Calls on the Member States to adopt measures to improve the mobility of researchers and to provide
a better infrastructure in order to attract more students to scientific careers; furthermore, calls for measures
to equip Europe's universities to match the highest standards of research, to strengthen cooperation between
universities and the industrial and commercial sectors, to adapt educational supply to labour market
demand, emphasising qualifications in engineering and high-technology, and to ensure a better communi-
cation, diffusion and application of the outcome of research;

28.
Believes that EU and Member State budgets should better reflect the priorities of the Lisbon Strategy
by reinforcing the EU's capacity for innovation and research and by expanding lifelong learning efforts,
including the use of additional financial resources;

Infrastructures, transport and energy

29.
Believes that underinvestment is one of the causes that explains our difference in competitiveness
compared to that of the USA and thus calls on Member States to encourage private investment and to
refocus investment expenditure on those investments that enhance economic efficiency and productivity,

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such as infrastructure, R&D, education, lifelong learning, as well as to reform their taxation systems to foster
growth and private investment in new sustainable technologies;

Urges Member States to adhere strictly to execution deadlines of transport infrastructure projects
30.
(Trans-European Networks), by simplifying appropriate administrative procedures, and devoting, if necessary,
more investment, given that, at the current speed, such projects will take 20 years to complete, according to
the Commission's White Paper on Transport;

31.
Urges the Member States to decide on a new coherent EU energy policy during the 2006 Spring
European Council, with three main objectives: a secure energy supply, sustainable development, and econ-
omic competitiveness; therefore suggests, first, launching common action to reinforce political and econ-
omic links with supplier countries as well as to create an EU internal energy market in a competitive and
non-discriminatory environment for energy suppliers and distributors, second, setting a balance between
internal and external sources of supply, third, focusing on avoiding double price/exchange rate volatility by
invoicing commodities and energy supplies in euros, fourth, improving energy efficiency, and fifth, phasing
out oil dependency by stepping up the EU's research aiming at the achievement of a new sustainable energy
regime based on wind, hydro, biomass, solar and geothermal energy;

Innovation and R&D

32.
Believes that competition from imports from emerging countries and the temptation by businesses to
outsource activities can only be fought with the support of an enormous research and innovation effort;
calls on the Commission to table proposals regarding the financing of research within the EU; calls on
Member States to allocate more resources to research and innovation while guaranteeing the efficient pro-
tection of intellectual property rights, and to establish tax incentives for businesses and universities investing
in R&D, knowing that, compared with direct subsidies, such incentives better guarantee that public resources
will be used to support successful ventures;

33.
Believes that a coordinated EU innovation policy is one of the main cornerstones of wealth creation,
growth and jobs, strengthens the EU's competitiveness, and contributes to achieving the overall policy aim
of sustainable development;

More competition and reform of services markets

34.
Believes in a robust competition policy; asks for a revision of the allocation criteria for competition
cases between national competition authorities and the Commission, as well as a revision of national legis-
independence of regulators; transparency and
lation in order to guarantee:
accountability; and coherence with EC law;

legal security; the political

Observes that it is essential to achieve a single European services market in accordance with the EC
35.
Treaty, so as to underpin a sector that is vital to the European economy as a whole, and, in particular, to the
economic development of the new Member States with a balance between market opening, public services
and social and consumer rights;

36. Welcomes the Commission's State Aid Action Plan and believes that more transparent and effective
State aid can benefit the EU, particularly with regard to innovation and R&D; at the same time, believes that
tax incentives need also to be revised insofar as they constitute an alternative to grants or direct subsidies;

37.
Calls for a forward-looking financial services agenda focusing on: achieving a Single Euro Payments
Area by 2010; a review of insurance solvency (Solvency II); a proposal to revise the provisions in the
financial services directives concerning the discretionary powers of regulators in the case of cross-border
mergers, to facilitate consolidation and to avoid conflicts between home and host supervisors; a proposal on
mortgage credit; and the adoption of the consumer credit directive;

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38.
Considers that, in an integrated financial market, and given how quickly companies change head-
quarters, the exponential growth of international capital flows and the speed at which investments are
made, efficient supervision and close cooperation among the regulatory and supervisory bodies of different
Member States are indispensable, notwithstanding the need to reflect further on the most appropriate EU
supervisory, regulatory and control model for banking, insurance and securities;

*

*

*

Instructs its President to forward this resolution to the Council, the Commission, the governments

39.
and parliaments of the Member States, and the social partners.

P6_TA(2006)0125

European food aid programme for the most deprived

Declaration of the European Parliament on supplying approved charities working to implement the
European food aid programme for the most deprived

The European Parliament,

— having regard to Rule 116 of its Rules of Procedure,

A. whereas at least 40 million Europeans in the 25 Member States of the European Union do not have

enough to eat,

B. whereas meeting the food needs of all Europeans is one of the priorities of the common agricultural

policy and one of the founding principles of the EC Treaty,

C. whereas the European food aid programme for the most deprived has proved its worth and is now vital

for millions of Europeans,

D.

concerned about the future of this operation because Community public intervention stocks are steadily
disappearing physically and the programme is thus losing its legal basis,

1.

(a)

Calls on the Commission and the Council to

recognise the fact that there are undernourished people in the European Union and acknowledge the
need to meet their food requirements,

(b) place the European food aid programme on a permanent footing and provide a global multiannual

budget allocation,

(c) open the measure up to new sectors such as pork, poultry and eggs,

(d)

include in the programme innovative measures to ensure the distribution of balanced food rations,

(e)

regard food aid as part of the aim of reducing poverty,

(f) modify the rules so as to allow:

— for the stocks reserved for the programme to be built up, i.e. set aside for and allocated to the

most deprived,

— for the bartering procedure to be extended,
— for products that are not available as part of intervention stocks to be bought on the Community

market;

Instructs its President to forward this declaration, together with the names of the signatories, to the

2.
Council, the Commission and the governments of the Member States.