Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Regulation of the European Parliament and of the Council on the European Regional Development Fund
Date: 2006-06-13
Institutions: European Commission
Subjects: European Regional Development Fund, economic and social cohesion, less-favoured region, regional development, regional policy, sustainable development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.06.2006 
COM(2006) 309 final 

2004/0167(COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council on the European Regional Development Fund 

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2004/0167(COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Regulation of the European 
Parliament and of the Council on the European Regional Development Fund 

1. 

BACKGROUND 

Date of transmission of the proposal to the EP and the Council 
(document COM(2004) 495 final – 2004/0167(COD)): 

15 July 2004 

Date of the opinion of the European Economic and Social Committee: 

6 April 2005 

Date of the opinion of the Committee of the Regions: 

13 April 2005 

Date of the opinion of the European Parliament, first reading: 

6 July 2005 

Date of adoption of the common position: 

12 June 2006 

2. 

OBJECTIVE OF THE COMMISSION PROPOSAL 

The purpose of the Commission’s proposal was to define the tasks of the European Regional 
Development Fund and the scope of its assistance with regard to the “Convergence”, Regional 
Competitiveness and employment”, and European Territorial cooperation” objectives. It also 
laid  down  specific  rules  applicable  to  the  territorial  cooperation  programmes  between  more 
than one Member States. 

Together  with  the  proposals  for  Regulations  on  the  Cohesion  Fund,  the  European  Social 
Fund, the European Grouping for territorial cooperation and on the general rules applicable to 
all  the  Funds,  it  represents  the  Community  legal  framework  for  the  implementation  of  the 
Cohesion policy in the period 2007-2013. 

3. 

COMMENTS ON THE COMMON POSITION 

The  Common  position  was  adopted  on  12  June  2006  by  unanimity.  The  Commission  can 
endorse it because it considers it an appropriate compromise which fulfils the objectives of its 
initial proposal, and takes into account a number of the European Parliament’s amendments.  

The main changes concern the extension of the scope for the interventions of the ERDF which 
include the partial eligibility of VAT, the financing of housing projects in the EU10, Romania 
and Bulgaria and the scope of intervention for the regional competitiveness and employment 
objective.  

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3.1. 

VAT 

The  initial  proposal  from  the  Commission  regarding  the  Community  contribution  to 
operational programmes was that VAT (recoverable and non-recoverable) was ineligible. The 
European  Council  agreed  in  December  2005  that,  for  Member  States  whose  average  per 
capita GDP between 2001 and 2003 was below 85% of the EU25 average, non-reimbursable 
VAT shall count as eligible expenditure for the purpose of calculating the contribution from 
the Funds.  

In  the  context  of  the  negotiations  for  an  Inter  Institutional  agreement  on  the  Financial 
Perspectives, the REGI Committee of the European Parliament had asked that the regulations 
set  up  one  system  for  all  the  Member  States  and  do  not  create  different  rules  for  different 
categories  of  Member  States.  The  Common  position  reflects  this  request  and  provides  that 
non-recoverable  VAT  which  is  genuinely  and  definitively  borne  by  the  beneficiary  shall  be 
eligible for all Member States.. 

3.2. 

Housing  

The  European  Parliament  amendment  N.  82  asked  for  eligibility  of  expenses  related  to  the 
renovation of social housing with a view to saving energy and protecting the environment in 
the  context  of  sustainable  urban  development.  The  Common  position  incorporates  this 
amendment,  for  housing  projects  in  the  EU10,  Romania  and  Bulgaria  .  It  also  defines  the 
amounts of money which can be allocated to housing-related expenditure, provides that such 
expenditure  shall  be  part  of  an  integrated  urban  development  plan,  and  is  limited  to  multi-
family and publicly-owned housing. 

3.3. 

Extension  of  the  scope  of  the  “Regional  competitiveness  and  employment” 
Objective 

Article  5  of  the  draft  ERDF  Regulation  lays  down  the  primary  scope  of  the  “Regional 
competitiveness  and  employment”  Objective  and  modifies  the  Commission’s  proposal 
because it states that such a scope is not exclusive.  

4. 

COMMISSION DETAILED COMMENTS 

Nine amendments of the European Parliament have been accepted, either totally or partially. 
following the modification of the text of the draft regulation. Seven amendments are outdated 
and  therefore  could  not  be  incorporated.  The  purpose  of  twenty  amendments  that  were  not 
incorporated as such was achieved by a change in the wording of Article 5. The other ones 
have  been  rejected  for  the  reasons  explained  hereafter.  As  a  modified  proposal  was  not 
adopted by the Commission, the Commission has informed the Council of its position on the 
amendments of the European Parliament. 

4.1. 

Amendments incorporated in full or in part in the common position 

Amendment  4  concerning  the  rewording  of  the  reference  to  the  rules  of  eligibility  in  the 
recital (4) has been integrated. Amendment 10 concerning the coordination with the seventh 
framework programme has been incorporated in recital (10). 

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Amendment 12 concerning the territorial specificities is included in the recital (13). 

On the scope of the objective “Convergence”, Article 4 (1) takes into account the first part of 
the proposal made under amendment 27 on the integration of the research and technological 
development capacities into the European Research Area.  

The  purpose  of  the  amendment  60  is  included  in  Article  5  (2)  d)  relating  to  the  “Regional 
competitiveness  and  employment”  with  the  reference  to  “promoting  clean  and  sustainable 
public transport”.  

For the scope of the “European territorial cooperation”, the environmental activities have been 
added  in  the  priorities  of  the  objective,  as  proposed  by  amendment  65.  The  first  part  of 
Amendment 80 on the inter-regional co-operation is in the common position (Article 6 (3) a)).  

Amendment 82 : The European Parliament proposed to enlarge the eligibility of expenditure 
to  expenses  which  relate  to  renovation  of  social  housing  with  a  view  to  saving  energy  and 
protecting the environment in the context of sustainable urban development.  

The  Common  position  recognizes  the  eligibility  of  the  expenditure  of  housing  under 
conditions laid down in the Regulation. It limits the amounts of money which can be allocated 
to housing-related expenditure, demands that such expenditure is part of an integrated urban 
development  plan,  and  is  limited  to  multi-family  and  publicly-owned  housing.  The 
Commission’s  implementing  regulation  will  clarify  in  detail  the  criteria  for  identifying  the 
urban areas facing or threatened by social distress and physical deterioration and the precise 
list of eligible measures.  

The reference to the inter-regional co-operation is also taken in Article 19 (2) on the selection 
of operations as proposed by Amendment 108.  

4.2. 

Amendments not incorporated in the common position 

The amendments 44 to 59 and 61 to 64 for article 5 adding new fields of intervention for the 
ERDF within the “Regional competitiveness and employment” objective were not accepted as 
such. However, in order to extend the scope of the objective “Regional competitiveness and 
employment”,  the  Common  position  modified  Article  5  so  that  ERDF  shall  focus  its 
assistance primarily (and not exclusively) on the three priorities listed 

A number of amendments proposed to enlarge the purpose and the scope of intervention of 
the ERDF (amendments 18 to 24) and the priorities identified in the Commission proposal for 
the objectives “Convergence” and “European territorial cooperation” (amendments 25, 26 and 
28 to 43 for article 4 on the scope of the “Convergence” objective; amendments 66 to 72, 73, 
75 to 79 and 81 for article 6 on the “European territorial cooperation”). They have not been 
incorporated.  

In order to maintain a stricter concentration of interventions on a number of priority themes, 
the proposed amendments for Articles 8, 9, 10 and 11 on the treatment of particular territorial 
features (amendments 83 to 90) were also not accepted.  

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Given  that  the  content  of  the  operational  programmes  for  the  “European  territorial 
cooperation” objective has to be as close as possible to that of the operational programmes of 
the two others objectives, the amendments 91 to 100 on Article 12, which extend the requests 
for the content of these operational programmes, have not been incorporated.  

Amendment 103 : the provisions of the regulation must respect the institutional organisation 
of each Member States and the powers of the Monitoring committees. The reinforcement of 
the partnership is really important. However, the designation of the partners participating in 
the Monitoring Committee is in the field of the competence of the Committees.  

4.3. 

The outdated Amendments  

Insofar  as  the  recital  (10)  has  been  changed  in  the  common  position,  the  Amendment  8 
concerning the programmes co-financed by the ERDF and their support to the diversification 
of the rural economies is not incorporated. Amendments 104 and 105 go beyond the field of 
the ERDF regulation and cannot be accepted. The rules for the acceptance of the operational 
programmes are treated in the general regulation. Transparency rules with regard to the final 
beneficiaries  are  laid  down  in  another  Regulation.  The  Commission’s  proposal  for  a 
Regulation laying down general provisions for the execution of the programmes co-financed 
by  the  Funds  foresees  obligations  of  information  and  publicity  and  the  Commission’s 
implementing regulation seems to be the most appropriate legal basis to foresee the obligation 
of the publication of the name of the final beneficiaries. 

Following the changes of the text, amendments 101 and 102 are now without subject.  

The designation of the controller is of the competence of the managing authority. Therefore 
Amendments 106 and 107 to article 15 and article 16 are without subject. 

5. 

CONCLUSION 

While  it  would  have  preferred  to  keep  the  initial  scope  of  the  Regulation,  the  Commission 
considers that the common position adopted on 12 June 2006 by unanimity largely follows the 
aims and approach of its proposal and incorporates some significant EP amendments and so 
can  support  it.  When  examining  with  the  Member  states  the  Operational  Programmes  for 
adoption,  the  Commission  shall  pay  attention  to  verifying  that  the  value  added  of  the 
Community co-financed cohesion policy is preserved and that the share devoted to investment 
for innovation and growth is appropriate. 

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