Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation amending the Statutes of the Galileo Joint Undertaking annexed to Council Regulation (EC) No 876/2002 COM(2006) 351 final — 2006/0115 (CNS)
Date: 2006-10-26
Institutions: European Economic and Social Committee
Subjects: EU programme, administrative structures, company structure, corporate finance, joint venture, legal status, satellite communications

30.12.2006

EN

Official Journal of the European Union

C 324/37

Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation
amending the Statutes of the Galileo Joint Undertaking annexed to Council Regulation (EC) No
876/2002

COM(2006) 351 final — 2006/0115 (CNS)

(2006/C 324/17)

On 19 July 2006 the Council decided to consult the European Economic and Social Committee, under
Article 171 of the Treaty establishing the European Community, on the abovementioned proposal.

On 4 July 2006, the Committee Bureau instructed the Section for Transport, Energy, Infrastructure and the
Information Society to prepare the Committee's work on the subject.

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr Pezzini
as rapporteur-general at its 430th plenary session, held on 25 and 26 October 2006 (meeting of 26
October), and adopted the following opinion by 116 votes with two abstentions.

1. Conclusions and recommendations

1.1
The European Economic and Social Committee reiterates
the great importance it attaches to the success of the Galileo
satellite radio-navigation programme. The EESC has emphasised
in several opinions (1) on the matter that Galileo is the European
Union's flagship scientific and technical project, particularly in
terms of the strategic challenge that the civilian-managed Euro-
pean satellite radio-navigation system represents, not just for the
global system of satellite navigation and positioning, but also for
services to business, citizens, society and for a more globally
competitive European industry.

it

1.2
The Committee believes it is essential that the strategic
value of the Galileo programme should be universally recog-
nised, given that
is the biggest public-private partnership
project ever undertaken thus far on a European scale, and the
first public infrastructure with a constellation of thirty satellites
over three different orbits. It is the property of the European
institutions and can offer a new global public service with a
market that is increasing exponentially (2), and with accurate
space and time positioning over the entire planet.

The Committee cannot conceal its concern regarding the
1.3
delay in completing the development and in-orbit validation
phase for the satellites and ground components of the system,
which was meant to have been concluded under the responsi-

for a Council Regulation on the establishment of

(1) Opinion of the European Economic and Social Committee on the
European satellite navigation programme (Galileo) OJ C 311 of
7.11.2001 p 19.
Opinion of the European Economic and Social Committee on the
Proposal
the
GALILEO Joint Undertaking OJ C 48 of 21.2.2002 p 42.
Opinion of the European Economic and Social Committee on the
Communication from the Commission to the European Parliament
and the Council — Progress report on the GALILEO research
programme as at the beginning of 2004 OJ C 302 of 7.12.2004 p
35.
Opinion of the European Economic and Social Committee on the
Proposal for a Regulation of the European Parliament and of the
Council on the implementation of the deployment and operational
phases of
the European satellite radionavigation programme of
2004, OJ C 221 of 8.9.2005 p 28.
Opinion of the European Economic and Social Committee on the
GALILEO programme: successful establishment of the European super-
visory authority.

(2) By 2020, the annual worldwide turnover of these markets is estimated
at EUR 300 billion, with 3 billion receivers in operation. Within the
European Union alone, it is expected that 150 000 jobs will be created.
Cf. Communication of the Commission to the European Parliament
and the Council on Taking stock of the Galileo programme, COM
(2006) 272 final.

bility of the Galileo Joint Undertaking during 2006 and which
will now last until the beginning of 2009. The successive phases
involving positioning the satellite constellation, full installation
of the ground components and the operating phase — particu-
larly commercial — cannot therefore be completed before the
end of 2010.

The Committee fully agrees with the need to avoid the
1.4
waste of
resources and expertise that would derive from
extending the work of the Galileo Joint Undertaking, which was
tasked with covering the entire development and in-orbit valida-
tion phase, following the establishment of the European GNSS
Supervisory Authority, which already started operations in mid-
2006,
in accordance with the Council Regulation of 12 July
2004 (3).

The Committee believes, however that it is essential, as it
1.5
emphasised in a recent opinion:
‘… for the hand-over period
between the Galileo Joint Undertaking (GJU) and the Galileo
Supervisory Authority (GSA) to be effected smoothly’, and to
ensure:

— legal certainty in the transfer of activities from the GJU to

GSA;

— scope for the GSA to intervene in the development phase;

(3) OJ L 246 of 20.7.2004, the role of the Supervisory Authority is to
manage the public interests connected with the European GNSS
programmes and to be the regulatory authority for these. The bodies of
the Supervisory Authority are the Administrative Board and the Execu-
tive Director. The Administrative Board is composed of one representa-
tive appointed by each Member State and one representative appointed
by the Commission.

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— solutions to the problems deriving from the European Space
Agency/GJU Convention and from the transfer of the activ-
ities carried out by GJU third countries (4) to the GSA;

to manage the development phase or any research work or
activity during such or successive phases, nor does it provide
the human and financial resources required to cope with such
tasks.

— adequate numbers of experienced staff;

— clarity on international

liability for the satellite launching

States.

1.6 While the Committee endorses the guiding principles of
the proposal to amend the statutes of the GJU (5), on which
referral to the EESC is mandatory under Article 171 of the
it would highlight the following points and make the
Treaty,
recommendations outlined below.

1.6.1 While the Committee endorses the amendments to the
above Regulation, it feels it is insufficient to propose modifica-
tions to the annexed statutes alone. It believes it should also
provide for:

— amendment of Article 1 of the Regulation as follows:

‘For
the implementation of the development activities of the Galileo
programme, and their transfer to the GSA, a Joint Undertaking
within the meaning of Article 171 of the Treaty is hereby
set up until 31 December 2006’;

— the addition of a final subparagraph to the said Article 1 of
‘From 1 January 2007 the GSA replaces the
the Regulation:
rights and obligations,
former
including those deriving from the European Space Agency Conven-
tion’;

Joint Undertaking in all

its

— insertion of the following new provision in Article 21 of the
Statutes of the Joint Undertaking:
‘Prior to the start of the
liquidation procedure, agreements will be concluded with the Com-
munity regarding the arrangements for third country members of
the GJU Administrative Board and ESA third countries to take
part in the activities of the GSA’.

1.6.2
Regarding the Galileo Supervisory Authority (GSA), the
EESC believes it is essential to amend the original GSA regu-
lation ‘in order to introduce the tasks transferred from the GJU
to the GSA, such as steering the development and in-orbit vali-
dation phase, managing the activities emerging from the Euro-
pean R&D framework programmes, and monitoring and mana-
ging technical developments in the operational system’.

1.6.2.1
The GSA was established under Council Regulation
No 1321/2004/EC of 12 July 2004 and has been operational
since mid-2006. It was set up to provide for management of
public interests relating to the European EGNOS and Galileo
satellite radio-navigation programmes, and to act as contracting
authority for future satellite radio-navigation services concession
contracts. However, the regulation does not provide for the GSA

(4) A Chinese body, the National Remote Sensing Centre of China, and an
Israeli company, MATIMOP, are members of the GJU. They have seats
on the Administrative Board and have voting rights in proportion to
their financial contribution. They have each provided start-up capital of
EUR 5 million.

(5) Annexed to Regulation 876/2002.

1.6.2.2
The Committee has not been consulted on the Coun-
cil's draft Regulation COM(2006) 261 final of 2 June 2006,
amending Regulation No 1321/2004/EC on the establishment
of structures for the management of
the European satellite
radio-navigation programmes. Consequently, a discussion of its
content is beyond the scope of the present opinion.

1.7
The Committee believes, however, that it is essential to
amend Regulation No 1321/2004/EC in order to ensure the
continuity of
the Galileo programme and the appropriate
transfer of activities from the Galileo Joint Undertaking to the
Supervisory Authority, and to provide the best guarantee of
completion for the development phase of the Programme once
the Joint Undertaking has been wound up. Similarly, the legal,
technical and financial arrangements and questions must be clar-
ified, after 31 December 2006, in order to facilitate the comple-
tion of the various phases and to ensure the system can be fully
operational.

1.8
The Committee would stress the need for ‘the Commis-
sion, the Galileo Joint Undertaking, the European GNSS Supervi-
sory Authority and the European Space Agency to make every
effort to ensure that the Galileo system is fully operational by
the end of 2010’, as called for in the Conclusions of the Trans-
port, Telecommunications and Energy Council of 12 October
2006. The Council also welcomed the Commission's legislative
the
proposals aiming to transfer the remaining activities of
Galileo Joint Undertaking to the Authority during 2006.

The Committee requests that

it be kept updated on
1.9
Galileo Programme developments and on the crucial role of the
ESA in designing and developing European GNSS programmes.
Furthermore, the EESC would like to be consulted on the Green
Paper on Galileo applications which the Commission intends to
publish before the end of 2006 (6).

2. Reasons

2.1
The EESC has followed the creation and development of
the Galileo European satellite radio-navigation and positioning
programme from its very beginnings, recognising the strategic,
fundamental role it plays in the competitiveness of the European
system, both in terms of its innovative, occupational and social
implications, and improved quality of life for citizens.

(6) Cf. Council Conclusions on the progress of the Galileo programme, 12

October 2006.

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The Galileo programme provides for

four successive

2.2
phases:

related products and services. In 2005 this market was worth
EUR 60 billion, with an annual growth rate of 25 %; it gener-
ated, in the EU alone, 150 000 jobs, mainly in the high-tech,
research and services sectors.

— The definition phase, which ran from 1999 to 2001, during
which the system architecture was designed and the five
types of service to be offered (listed below) were identified;
this phase was mainly financed through the 5th RDT Frame-
work Programme 1998-2002.

— The development and validation phase,

launched in 2002
and initially intended to run until 2005, which includes the
development of the system's satellites and ground compo-
nents as well as in-orbit validation; owing to accumulated
delays, it will last until early 2009. Public funding from the
EU and the ESA — initially set at EUR 1.2 billion, in addi-
tion to the EUR 100 million from the 6th RDT Framework
Programme 2002-2006 — will amount to EUR 1.5 billion,
managed until 31 December by the Galileo Joint Under-
taking and, from 1 January 2007, the Supervisory Authority.
The first experimental
satellite, GIOVE A, has already
completed its main mission; some technical issues now need
to be finalised, as they are crucial to carrying the project
forward.

— The deployment phase,

involving the construction and
launching of the constellation satellites as well as the full
establishment of the earth segment of the infrastructure.
This phase was meant to last from 2006 to 2007, but will
be carried out in 2009 and 2010 instead. A total of EUR 2.1
billion of funding was initially earmarked, with one third,
equal to EUR 700 million, coming from the Community
budget, and two-thirds, or approximately EUR 1.4 billion,
from private consortia. The deployment and subsequent
commercial operating phases are covered by a concession
for a period of approximately 20 years. The Supervisory
Authority will be the licensing authority.

— The commercial operating phase cannot begin before the
end of 2010. Estimated annual management and mainte-
nance costs amounting to approximately EUR 220 million
are to be borne entirely by the private sector, except for an
exceptional Community contribution to cover the first years
of this phase, in accordance with decisions taken under the
new Community financial perspectives for 2007-2013.

The Committee is extremely concerned at

2.3
the delays
accumulated in the development and in-orbit validation phase
and, consequently,
in the subsequent commercial exploitation
phases. This is a setback that compromises the general timetable
that was established for the project, and holds up the delivery of
an exceptional
that combines the expertise and
results of European research, and that can provide for successful
participation in the global market for satellite radio-navigation

instrument

As it stressed in a recent opinion (7), the EESC is even
2.4
more concerned about the current uncertainty surrounding the
legal, technical and financial arrangements and questions. This
uncertainty affects both the Galileo Joint Undertaking (GJA) and
the Supervisory Authority (GSA) and could, if not resolved by
the end of 2006, compromise the satisfactory completion of the
different phases which were planned in order to ensure the
system can be fully operational, and which can play a funda-
mental role in delivering a European economy based on more
competitive knowledge, on a global level.

The EESC has previously highlighted the need to involve
2.5
— from the very launch phase of the Galileo Joint Undertaking
— private partners in the development and exploitation of the
system, and to provide continuous support when the project is
underway, given that Galileo is the biggest European public-
private partnership ever.

At the end of the definition phase in May 2002, the
2.6
Galileo Joint Undertaking was established in accordance with
Article 171 of the EC Treaty by Regulation 876/2002/EC, with
the EU and the ESA (8) as founding members, for a four-year
period ‘to ensure the unity of the administration and financial
control of the project for the research, development and demon-
stration of the Galileo Programme and to this end mobilise the
funds assigned to that programme’.

2.7
The Galileo Joint Undertaking was set up to complete
the development phase and to prepare the subsequent phases of
the Galileo programme, with two main tasks:

— to direct and coordinate the necessary development and
research work, through an agreement with the European
Space Agency, tasked with the performance of such duties;

— to manage the procedure for selecting the future concessio-

naire.

In its Resolution on the Action Plan for implementing
2.8
the European Space Policy (9) of 29 January 2004, the European
Parliament also noted the vital
the Galileo
Programme for the development of industry, transport, environ-
mental protection and the delivery of the Lisbon Strategy objec-
tives, and called on the Commission and the Council to provide
Galileo with efficient structures, and for the creation of a Super-
visory Authority to ensure,
in addition to transparent opera-
tions, the safety of the system (10).

importance of

(7) EESC opinion on the GALILEO programme: successful establishment
the European supervisory authority — CESE 1179/2006 of

of
13.9.2006.

(8) ESA: European Space Agency.
(9) European Parliament P5_TA(2004)0054 of 29 January 2004.
(10) Supervisory Authority and safety system, Council decisions of 12 July

2004.

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The

Supervisory Authority was

established under
2.9
Council Regulation No 1321/2004/EC of 12 July 2004 and has
been operational since mid-2006, to provide for management
of public interests relating to the European EGNOS and Galileo
satellite radio-navigation programmes, and to act as contracting
authority for future satellite radio-navigation services concession
contracts.

2.10
The current regulation does not provide scope for
management of the development phase or any research work or
activity during such or successive phases, nor does it provide
the human and financial resources required to cope with such
tasks.

The regulations of

the GJU (11), on the other hand,
2.11
provide for a four-year timeframe, which expired in mid-2006.
The regulation should, therefore, be extended so that the entire
satellite and ground component development phase and the ‘in-
orbit’ system validation phase can be completed, along with
negotiations for selecting the future concessionaire.

In order to avoid any further project delays and any
2.12
uncertainty in relations between the different parties,
the
Committee believes there is a need to proceed with a rapid,
transparent review of both the GJU and the GSA regulations, in
order to provide the parties with clear ground rules when exper-
tise is transferred between the two bodies.

The EESC considers, however, that the content of the
2.14
proposal is inadequate, partly because it confines itself to the
GJU statutes annexed to Regulation 876/2002/EC, and partly
because the proposal should tie in with the review of the GSA
regulation, on which the Committee has not thus far been
consulted.

2.15
Given the current state of play, the Galileo development
phase will not be completed before the end of 2008. Only then
will the four satellites that are to be built and launched by the
European Space Agency as part of the ‘in-orbit validation’ phase
be operational. Consequently, and in accordance with the
current statutes, the Galileo Joint Undertaking should continue
to operate until the end of 2008, i.e. with a lifecycle approxi-
mately three years longer than initially intended.

Furthermore,

the GSA was

set up to provide for
2.16
management of public interests
relating to the European
EGNOS and Galileo satellite radio-navigation programmes, and
to act as contracting authority for future satellite radio-naviga-
tion services concession contracts, but not to manage the devel-
opment phase or any research work or activity during that
phase. In addition, the GSA has not been provided with the
human and financial resources required to cope with such tasks.

2.13
The Committee endorses the objectives of the proposal
under discussion, which aims to avoid the waste of resources
and expertise that would derive from extending the work of the
Galileo Joint Undertaking following the establishment of the
European GSA Supervisory Authority, which already started
operations in mid-2006.

2.17
The Committee shares the Council's stance on ‘the
importance of promoting the European satellite radio-navigation
system in order to achieve commercial success, particularly by
research activities.’ The Council considers
‘the largest
proportion of the economic benefits of Galileo comes primarily
from downstream applications’ (12).

that

Brussels, 26 October 2006.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(11) GJU: Galileo Joint Undertaking.

(12) Cf. Council Conclusions on the progress of the Galileo programme,

Luxembourg, 12 October 2006.