Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination COM(2006) 135 final — 2006/0042 (COD)
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: disclosure of information, dissemination of information, purchasing power parity, statistical method, statistics

23.12.2006

EN

Official Journal of the European Union

C 318/45

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council establishing common rules for the provision of basic infor-
mation on Purchasing Power Parities and for their calculation and dissemination

COM(2006) 135 final — 2006/0042 (COD)

(2006/C 318/07)

On 20 July 2006 the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for the Committee's work on the subject, adopted its opinion on 20 July 2006. The rapporteur was Mr
Santillán.

At its 429th plenary session, held on 13 and 14 September (meeting of 13 September), the European
Economic and Social Committee adopted the following opinion by 182 votes to 3 with 12 abstentions.

1. Conclusions and recommendations

1.1
The EESC welcomes the proposal for a Regulation estab-
lishing a legal basis for the implementation of Purchasing Power
Parities (PPP), since this will improve the transparency, timeliness
and quality of the whole process of PPP production, at both
Community and national level.

and should be reduced. Similarly, since the frequencies stipulated
in the draft Regulation for the provision of basic information
are minimum frequencies (2),
information on prices should if
possible be supplied every two years (3) (the draft stipulates a
minimum of three years).

1.5
Generally speaking, it should be stressed that an effort is
needed to increase the efficiency of the EU's statistical apparatus,
in terms of both technical and human resources and coordina-
tion between Eurostat and national statistical institutions, which
have important responsibilities in the calculation of PPPs.

Given the importance of

1.2
the issue addressed by this
proposal and the need for binding rules that define the compe-
tences of the Commission and Member States and establish
uniform bases for the calculation and dissemination of informa-
tion on PPP,
the immediate
the Committee recommends
approval of this draft Regulation.

2. Purchasing Power Parities (PPPs)

1.3
Nevertheless, the EESC notes that currently, due to cost
reasons, the Commission (Eurostat) calculates PPPs by countries,
not by regions (1). However, these calculations are used,
inter
alia, to evaluate the economic performance of regions. Existing
information shows that — within the Member States — there
are sometimes considerable regional differences in the prices of
goods and services. Although the statistical institutes that gather
it is essential that
basic information apply spatial correctors,
such correctors adequately prevent distortions in calculating
PPPs. Therefore, it is recommended that Member States make
every effort possible, both economically and technically,
to
ensure that spatial correction coefficients reflect as precisely as
possible geographical differences in prices.

1.4
For the reasons stated above, the minimum period of six
years for the revision of the spatial coefficients seems too long

(1) There are 254 NUTS 2 regions. Regulation (EC) No 1059/2003, annex

1.

2.1
The Eurostat-OECD PPP Programme was established in
the early 1980s to compare, on a regular and timely basis, the
GDP of the Member States of the European Union and of the
OECD (4). As such, PPPs are types of currency conversion rates
that convert economic indicators expressed in nominal national
currencies to a common artificial currency called Purchasing
Power Standard (PPS), which equalises the purchasing power of
different national currencies.

2.2
Economic volume aggregates in PPS are obtained by
dividing their original value in national currency units by the
respective PPPs. GDPs of countries expressed in PPS by using
PPPs as conversion factors reflect a pure volume comparison,
since the price level component has been eliminated.

(2) Annex I, Methodology, 2.1.
(3) The prices in question are ‘prices of consumer goods and services and
‘prices of equipment goods’ and

related representativity indicators’,
‘prices of construction projects’.

(4) Nevertheless, the origins of international price and volume compari-
sons of GDP can be traced back to the experimental comparisons
carried out by the Organisation for European Economic Cooperation
(OEEC) in the 1950s.

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Official Journal of the European Union

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PPPs are both price deflators and currency converters.
2.3
With the launch of the euro in the euro-zone Member States,
for the first time prices can be compared directly between those
countries, although the euro has a different purchasing power,
depending on national price levels. Therefore, for the non-euro-
zone countries PPPs are currency converters and eliminate the
effects of different price levels, while for the euro-zone countries
they fulfil only the latter, price-deflator function.

PPPs are calculated using a basket of comparable goods
2.4
and services, taking into account, inter alia, the Classification of
Individual Consumption by Purpose (COICOP (5))and the Classifica-
tion of Products by Activity (CPA). The groundwork is carried out
in one or various cities within the economic territory (generally
only in the capitals of Member States). Most Member States
apply spatial correctors in order to take account of regional
differences, although there are some Member States that only
take into account data from the capital because their small
geographic area means that there are no regional differences.

3. PPPs and Gross Domestic Product (GDP)

3.1
GDP reflects the results of all activities of economic
operators within a given economic territory and within a given
period, usually a year. GDP is calculated in accordance with a
system of national accounts, which, for the EU, is the European
system of integrated economic accounts 1995 (ESA-95). GDP
can be measured from the production, the expenditure and the
income side. For PPP purposes the expenditure measure is parti-
cularly important. It reveals the extent to which the goods and
services produced (or imported) by the economy of a country
are used for private consumption, public consumption, capital
formation or exports.

3.2
In order to obtain a real comparison, it is necessary to
use conversion factors (spatial deflators), which reflect the differ-
ences in the level of prices between countries. Exchange rates
cannot be used as they usually reflect elements other than price
differences alone.

Therefore, PPPs between various countries' currencies
3.3
have been specifically developed to be appropriate for use as
spatial conversion factors.

4. Uses for PPPs

Initially the major users were international organisations
4.1
such as Eurostat, the IMF, the OECD, the World Bank and the
United Nations. But over time the use of PPP statistics has
spread and now there are many users: government agencies,
universities, research institutes, as well as public and private
enterprises. Banks use PPPs for their economic analyses and to
monitor exchange rates;
individuals and their employers use
them to calculate remuneration when they move from one
country to another.

(5) System used by international bodies (United Nations, IMF etc.).

PPPs may also be used in transnational collective bargaining on
wages.

indicators for

PPPs are vital

4.2
the EU from both the
economic and political angles. Firstly, the rules state that they
are to be used for the Structural Funds (6). Secondly, they are an
obligatory benchmark for the Cohesion Fund (7). Nevertheless, it
should be pointed out that in the first case (Structural Funds)
the calculation is based on per capita gross domestic product
(GDP), while in the second (Cohesion Fund) it is based on gross
national product (GNP). The draft Regulation under considera-
tion here refers only to GDP (8).

4.3
PPPs are also used for establishing the correction coeffi-
cients to be applied to the remuneration and pensions of offi-
cials and other servants of the European Communities (9).

5. Proposal for a Regulation

The purpose of the proposed Regulation is to fill a legal
5.1
vacuum by establishing a legal framework for the calculation of
PPPs. It is aimed at improving transparency and the quality of
the data provided by the Member States, through common rules
for the provision of basic information (Art. 1). The intended
objective would not only benefit Eurostat as coordinator of the
results, but also the statistical institutions of each country.

5.2
Definition of roles and responsibilities. The Commission
is to be responsible, through Eurostat, for coordinating the basic
information, calculating and publishing PPPs and adjusting
methodology in consultation with Member States (Art. 4.1),
issue
while Member States are to provide basic information,
written certification of the survey results and ensure the validity
of the data (Art. 4.2).

(6) According to Council Regulation 1260/1999, the Structural Funds
apply to those regions whose per capita GDP, measured in PPPs, is less
than 75 % of the Community average. This is also the case for those
countries that have subsequently joined the EU (Annex II of the 2003
Act of Accession).

(7) With regard to the Cohesion Fund, Article 2(1) of Council Regulation
(EC) 1164/1994 of 25 May 1994 states that the Fund applies to
‘Member States with a per capita gross national product, measured in
purchasing power parities, of
less than 90 % of the Community
average’.

(8) Article 3 includes the following definition: ‘“Purchasing Power Parities”
or “PPPs” means spatial deflators and currency converters, which elimi-
nate the effects of the differences in price levels between countries, thus
allowing volume comparisons of GDP components and comparisons
of price levels’.

(9) The Staff Regulations of Officials of the European Communities and
the Conditions of Employment of other Servants of the European
Communities, Annex XI, Art.1 (‘The economic parities shall be calcu-
lated in such a way that each basic component can be (…) checked by a
direct survey at least once every five years’.

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C 318/47

The statistical

institutions of the Member States are to
5.3
transmit the basic information to Eurostat in accordance with
common parameters and in a common technical format (Art. 5
and Annex I).

The draft Regulation does not require Member States to
5.6
undertake surveys solely for the purpose of establishing the
correction coefficients to be applied to the remuneration and
pensions of Community officials and other servants (Art. 10).

The statistical units are those defined in Council Regu-
5.4
lation (EC) No 696/1993 or others to be established at a later
date (Art. 6), and the Commission and the Member States are to
set up a quality control system (Art. 7).

Eurostat calculates PPPs once a year (Art. 8) and will be
5.5
responsible for publishing these at an aggregated level for each
Member State (Art. 9).

Temporal and spatial adjustment coefficients. PPPs are
5.7
calculated from the national annual average prices (Article 2
(2)). Given that ‘data collection may be limited to one or more loca-
tions within the economic territory’ and furthermore ‘to a specific
period of time’, Member States should apply a temporal adjust-
ment coefficient (dating back no more than one year) and a
spatial adjustment coefficient (dating back no more than six
years) (Annex I Methodology, sections 2 to 4).

Brussels, 13 September 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Proposal for a Decision of the
European Parliament and of the Council on a paperless environment for customs and trade

COM(2005) 609 final — 2005/0247 (COD)

(2006/C 318/08)

On 17 January 2006 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 12 July 2006. The rapporteur was Mr Burani.

At its 429th plenary session, held on 13 and 14 September (meeting of 13 September), the European
Economic and Social Committee adopted the following opinion by 190 votes with three abstentions.

1. Introduction

of the single window and the one-stop shop into practice.
These two objectives will make customs procedures easier, faster
and less costly for operators, and facilitate risk management
controls by customs authorities.

1.1
The Commission's proposal concerns a new electronic
customs project which should ultimately make the European
customs system fully automated, interoperable, secure, accessible
and efficient, on a completely electronic and paperless basis.
This is the necessary adjunct to implementation of the new
Community Customs Code proposed by the Commission (1), on
which the EESC has issued a separate opinion.

Adopting the proposed computerised system requires a
1.2
joint and coordinated effort by all the Member States, with
respect not just to customs, but also to border agencies other
than customs, which will have the task of putting the concepts

(1) COM(2005) 608 final.

The Member States have already invested substantially in
1.3
setting up computerised customs systems, but there are consid-
erable differences between these, in terms both of their level of
sophistication and of rules and data used. Thus the current state
of harmonisation is inadequate, and there is the even more
serious problem, as yet unresolved, of lack of interoperability
between systems.