Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council and the European Parliament on VAT rates other than standard VAT rates COM(2007) 380 final — SEC(2007) 910
Date: 2008-04-22
Institutions: European Economic and Social Committee
Subjects: EU Member State, VAT, VAT rate, fiscal policy, single market, tax harmonisation, tax law

19.8.2008

EN

Official Journal of the European Union

C 211/67

Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the Council and the European Parliament on VAT rates other than standard VAT
rates’

COM(2007) 380 final — SEC(2007) 910

(2008/C 211/18)

On 5 July 2007 the Commission decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the

Communication from the Commission to the Council and the European Parliament on VAT rates other than standard
VAT rates.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 28 March 2008. The rapporteur
was Mr Burani.

At its 444th plenary session, held on 22-23 April (meeting of 22 April), the European Economic and Social
Committee adopted the following opinion by 112 votes, nem con with five abstentions.

1. Conclusions and recommendations

1.1
The Committee welcomes the Commission's initiative to
provide a basis for a ‘political debate’ within the European
Parliament and the Council which can produce widely accepted
principles on granting derogations from the VAT regime. Since
the process has a clear political dimension, the deadline of the
end of 2010 set for the adoption of the new rules is entirely
realistic.

1.2
The original objective of the VAT regime was to establish
the pre-requisites for tax harmonisation which would ensure
the smooth operation of the internal market: the numerous
changes which have been made since then, especially the exemp-
tions and derogations, have, however, had the opposite effect,
and the endeavour to standardise derogations is the best that
can be hoped for in the present circumstances.

1.3
Derogations are implemented in each Member State on
the basis of fiscal criteria together with political and social
concerns; they are permitted when they do not have cross-
border
impact or when they meet established Community
policy criteria. The Committee, for its part, believes that, while
these criteria must be observed, derogations should be viewed
first and foremost — although not solely — from the point of
view of their contribution to an income redistribution policy.

1.4
Discussions should focus particularly on local services
that cannot be supplied at a distance and therefore do not
impact on the internal market. This category
have a direct
includes numerous activities which, while undoubtedly econom-
ically and socially beneficial, are controversial
in some
respects or could be subject to other considerations: craft activ-
ities, services provided by restaurants, public and private health
services, unskilled labour-intensive sectors, books and newspa-
pers.

The Committee points out the need for exemptions to be
1.5
granted on the basis of different expenditure for low and
high-income groups. It stresses in particular that exemptions
should be guided by criteria ensuring transparency and take

into account the costs entailed by vague, general regulations
for tax administrations and businesses, which are ultimately
passed on to the end consumer.

1.6
There should be particular focus on direct subsidies as
an alternative to reduced VAT rates: a solution which the
Commission puts forward without, however, taking a particular
stance. The Committee believes that this alternative should be
treated with great caution and adopted sparingly and only in
cases where it is difficult to find other solutions; in any case,
subsidies should never take the form of state aid.

2. Background

The VAT regime is, by its very nature, based on a
2.1
complex system.
It was created in 1977 as a ‘temporary’
regime (1) and is still referred to as such today, after some
30 years! Over the years the regime has been amended countless
times as a result of: changes to temporary or long-lasting situa-
tions, political considerations, developments in the internal
market, and enlargement.

The Commission took the action needed to simplify the
2.2
work of administrations and economic players with the 2006
VAT Directive (2), which tidied up the legislation and consti-
tutes in practice the ‘consolidated text’ on the matter. The direc-
tive is underpinned by the original principles from 1977,
partially revised in 1992: generally speaking,
the normal
minimum rate is 15 % (3) and the tax is generally levied in the
place of origin. Some derogations and exceptions are, however,
provided for: the standard rate can be reduced and some goods
or services can be taxed at destination.

(1) Logically, a ‘definitive’ regime should provide for taxation at destina-
tion, or rather, place of consumption. At the time, various obstacles
prevented general implementation, and these persist to this day.

(2) Council Directive 2006/112/EC of 28 November 2006 on the

Common system of value added tax (OJ L 347 of 11.12.2006).

(3) Articles 96 and 97 of Council Directive 2006/112/EC of 28 November
2006 on a Common system of value added tax (OJ L 347 of
11.12.2006); a maximum rate has never been set.

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2.3
According to the rules, Member States can apply one or
two reduced rates, but only to goods and services listed in the
VAT directive (4). All Member States, with the partial exception
of Denmark, take advantage of this option, but to a different
extent and applied to different goods and services selected from
those permitted. Such inconsistency is far from conducive to
achieving the coordination needed for the smooth operation of
the single market. The Commission now proposes to launch an
‘invitation to the political debate’ in the Council and the
European Parliament — with the participation of
the
Committee, whose opinion has been requested — with a view
to reaching an agreement between the Member States on a new
architecture for reduced VAT rates.

2.3.1
In practice, this involves reviewing the entire frame-
work of specific and temporary derogations that have already
been granted, the former to the Member States that joined less
recently and the latter to the ‘new’ group of Member States, and
rebuilding a framework that takes account of objectives that are
consistent with the logic of the internal market. This is not a
simple process: a jointly accepted balance will have to be
found between all the political, economic and social imperatives
which, over time, have been used to justify the derogations and
exclusions that each Member State has applied according to its
own particular requirements. The Commission is under no illu-
sion as to the difficulties involved here: it does not envisage the
consultation process leading to a new regulation before the
end of 2010.

2.4
A preliminary step that was needed to put all Member
States on an equal footing in terms of derogations was taken
with the draft directive that extends the temporary deroga-
tions granted to new Member States to 31 December
2010 (5). The reason for the proposal, which was adopted on
20 December 2007, lies in the different regimes governing the
derogations: Member States that joined less recently have the
benefit of open-ended derogations whereas those for the new
Member States expired at
the end of 2007. The extension
granted on 20 December 2007 to the latter put everyone on an
equal footing, at least until 2010, by which date the Commis-
sion hopes that the Council and the European Parliament will
have reached agreement on the adoption of a stable, uniform
regime for VAT rates other than the standard rate.

2.5
The communication addressed here aims to provide a
basis for a ‘political debate’ within the European Parliament
and the Council which can produce widely accepted princi-
ples that will enable regulatory proposals to be drafted that
have a very good chance of being accepted. Bearing in mind
past and present experience,
taking a
cautious approach in the statements it makes and is realistic
about the decisions that need to be taken:
it is waiting for
signals to be made. Its communication therefore confines itself
for
to a balanced presentation of all
making a considered assessment, taking its inspiration from
the tried and tested principles of the single market and the

information useful

the Commission is

(4) Cf. Articles 98-101 and Annex III of the directive.
(5) Draft Directive COM(2007) 381 final,

EESC opinion
CESE 1467/2007 on the Proposal for a Council Directive amending Direc-
tive 2006/112/EEC with regard to certain temporary provisions concerning
rates of value added tax (OJ C 44 of 16.2.2008, p. 120).

and

Lisbon Strategy, but without adopting any fixed stance. The
Committee believes that this initiative is crucial to the future of
the internal market in the field of taxation: it is a unique oppor-
tunity whose success will depend on the sense of responsibility
and good will of decision-makers.

3. Gist of the communication

a

The

study

summarises

communication

3.1
by
Copenhagen Economics which, on behalf of the Commission
and in fulfilment of the remit entrusted to it by the Council and
the European Parliament, has analysed the impact of reduced
focusing on the social
VAT rates and related derogations,
aspects (income distribution) and the costs of the system. The
Committee pays tribute to the Commission for the quality of
the document it drew up on the basis of the study. Indeed,
nothing is overlooked in the document and there are no dead
ends: all the necessary information is there to feed the forth-
coming debate.

The Commission starts by setting out its objective ‘to
3.2
ensure equal opportunities for Member States as well as more
transparency, consistency and — above all — a smooth func-
tioning of the internal market, e.g. via fewer obstacles to cross-
border economic activity and lower VAT-induced compliance
costs’ (6).

Specifically,

and with reference

the Commission notes that

to the Copenhagen
3.3
from a purely
Economics study,
economic point of view, the most rational solution would be a
single VAT rate:
it would produce a reduction in operating
costs for administrations and businesses and, in theory, reduce
distortions of competition. As with all rigid regulation, however,
there is a risk that the single rate might not be suited to every
circumstance, and a certain amount of flexibility could therefore
be required: this is what underpins the argument for reduced
rates.

3.4
A reduced rate is a response to economic criteria, but
also partly to social and political criteria. Examples include
labour-intensive services (especially unskilled) and local services
when they do not have a major impact on cross-border traffic.
The thinking here is that lower rates (and therefore lower prices)
will increase productivity and employment: thus, people will be
less likely to indulge in DIY and more inclined to hire a profes-
sional, with the underground economy taking a hit into the
bargain.

The full

3.5
list of goods and services that benefit from
reduced rates (Article 98 of the VAT directive) is contained in
the directive. Labour-intensive services must
Annex III of
comply with three criteria (Article 107):
in addition to those
referred to in the previous point,
these must be services
largely provided directly to end consumers and services of a
local nature, not likely to create distortions of competition.
For goods and ‘normal’ services, the criteria are less explicit, but

(6) See Introduction to Communication COM (2007) 380 final.

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their inherent ‘social’ nature is clear from the list: they are in
fact food and pharmaceutical products, water, publishing, televi-
sion services, etc. The Committee will comment on these
aspects later (see point 4.12).

justice in that

The Commission comments on one of

3.6
the more
common arguments for reduced rates, which is that they would
help to secure greater social
they would
improve income distribution in favour of the less well-off. The
study and, it would seem, the Commission, qualify their endor-
sement of this argument: reduced rates only have a real distribu-
tive effect if the share of consumption expenditure of ‘favoured’
goods
time and creates a real difference
between low and high-income groups. The communication
there are significant differences from
finds, moreover,
the degree of effectiveness of
country to country, and that
reduced rates depends on the extent to which incomes differ
between social classes.

stable over

that

is

3.7
Another important aspect is the cost of the system:
rates which are different from the standard rate create significant
administrative burdens for businesses and tax authorities, espe-
cially when implementation is open to interpretation, which is
almost always the rule.

3.8
Quoting the study, the Commission does not call into
question the reduced rates system, but it does wonder whether
alternative policy tools might be better suited to the objectives
of the Member States. One example is a system of direct
subsidies, which would achieve the same objectives at a lower
cost. This system could be designed to avoid negative spill-over
effects at EU level, ensure greater transparency and be less
expensive for Member State budgets. The Commission notes,
however, that direct subsidies might be of dubious benefit to
businesses: they might be granted arbitrarily or for a temporary
period, depending on national budget imperatives or the policy
direction of the day.

The Commission seems to attribute considerable impor-
3.9
tance to this last alternative, and indeed to any alternative to the
reduced rates system:
in fact it ‘recommends that Member
States carefully examine all the options available’. Without
seeming to take sides,
it notes that ‘often other tools than
reduced VAT rates are more efficient and less costly for
the State budget, and this should be taken into account in the
decision-making-process’.

4. Comments and observations

4.1
The Commission should be congratulated on producing
a rigorous, balanced communication. The Committee is particu-
larly pleased to find confirmation of some of the views it
had expressed originally, which will be recalled in the
the
comments

and with

reference

below.

Firstly,

to

comments made in point 3.9 above, the Committee would
recall that it expressed its concern regarding the system of
derogations in its opinion on the VAT directive (7). It said at
the time that ‘there seems to be no plan [on the part of the
Member States] to discuss the derogations … with a view to abol-
ishing them’. This position is now confirmed and strengthened
by the authoritative Copenhagen Economics study and — it would
appear — also shared by the Commission. However,
is
apparent that as things stand, and barring any sudden change of
heart on the part of the Member States, any suggestions for
alternative solutions remain just suggestions.

it

it

is difficult

VAT is an intrinsically complex tax;

to
4.2
collect, widely evaded and expensive for Member States and
businesses to operate (8). Most importantly, however, it does
not achieve the original objective, which was to create a
definitive tax harmonisation regime. Nevertheless, it must be
noted that harmonisation is not an end in itself but a pre-requi-
site for the smooth operation of the internal market. This
was in any case the intention of its creators, as the Commission
recalled in its communication of
January 1993, which the
Committee considers to be a milestone in the history of VAT; it
regrets that it was not followed up (other than with acceptance
of the minimum rate of 15 %) owing to opposition from some
Member States. Today the situation remains unchanged:
the
Commission's attempt to sort out at least the derogations aspect
the same time it betrays an
is certainly welcome, but at
inability to make more progress towards tax harmonisa-
tion at Community level. To be fair, the Commission cannot
be blamed for this, but nor can the Member States, or at any
rate the Member States alone: the fundamental problem lies
in the very structure of VAT as a ‘temporary regime’, as will
be explained below.

4.3
Basically, there is a need to realise and accept for some
time yet that VAT as it is currently conceived is used by the
Member States to achieve largely fiscal goals and to address poli-
tical and social concerns that lead them to apply a lower or
higher rate than the standard rate. At Community level, then,
harmonisation remains a pipedream;
the communication in
question constitutes an attempt to provide a partial remedy by
harmonising the reduced VAT rate, at least for activities
that have a cross-border impact or comply with accepted
Community policy criteria. For its part, the Committee would
stress that decision-makers should always remember that, while
income redistribution is one of the objectives of a reduced
VAT rate, it must genuinely translate into practice. In other
words, every VAT reduction must be analysed scrupulously to
make certain that it genuinely corresponds to a social criterion
and is not concealing any less palatable aims. Other consi-
derations are simplification of obligations and transparent

(7) Cf. EESC opinion on the Proposal for a Council directive on the common

system of value added tax (Recast) (OJ C 74 of 23.3.2005, p. 21).

(8) Cf. the EESC opinion on the Proposal for a Council Directive amending
Directive 77/388/EEC with a view to simplifying value added tax obligations
for a Council Regulation amending Regulation (EC)
and the Proposal
No 1798/2003 as regards the introduction of administrative cooperation
arrangements in the context of the one-stop scheme and the refund procedure
for value added tax (OJ C 267 of 27.10.2005, p. 45).

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rules: these both make life easier for businesses but they also
make it easier and cheaper for the tax authorities to carry out
inspections.

paying firms; no mention is made of the extent to which the
black economy might benefit. It is clear that the underground
or partially underground economy — not
to mention tax
evasion — will not come to the surface just because it benefits
from a reduced VAT rate. Very different measures are needed to
achieve this.

4.4
Annex III of the VAT directive contains a list of 18 cate-
gories to which the reduced rate applies; each Member State has
the option to choose the categories, make exclusions within
them and determine the amount of the reduction. The commu-
nication in question calls on the Member States ‘to analyse the
different candidates for further reduced rates to determine the
level of distortions that can arise from their — optional — elig-
ibility and to decide if such level of distortion is acceptable’ (9).
From the general context of the communication it does not
seem possible to interpret this as an invitation to extend the list
of goods and services; if anything, it lends itself to the opposite
interpretation. In any case, the Committee is openly opposed to
extending the categories of goods or services to which reduced
rates could be applied: if the idea is to continue to work — at
least ideally, for the moment — towards harmonisation, then
the Member States should actually shorten rather than lengthen
the list contained in Annex III.

The line taken by the Commission is, however, on the
4.5
whole understandable: given that the mirage of
‘a definitive’
regime has been either forgotten or put on the back burner, one
of the priorities is to grant the Member States greater autonomy
to set reduced rates for local services that cannot be supplied
at a distance. The Commission notes that these services ‘are of
no concern for the functioning of the internal market’: this is
not mere pragmatism but rather an acknowledgment of the
political or social
imperatives behind the granting of
exemptions.

Furthermore, affirmations that lend themselves to easy
4.6
generalisations should be studied carefully: if taxation of local
activity does not affect the functioning of the internal market,
then all goods or service produced and consumed locally
would have to be subject to taxation established on a local
basis: this principle would totally undermine the very basis of
the VAT directive. Clearly, the Commission intends neither to
establish nor accept such a principle.

4.7
Turning to the details of the aspects mentioned by the
Commission, some comment is called for as regards the affirma-
tion that
there may be specific benefits from operating a
reduced VAT rate in carefully targeted sectors, increasing overall
productivity and thus, GDP. This category includes locally
supplied services: it is suggested that a reduction in VAT could
persuade consumers to do less DIY and thus devote more time
to their professional activities. However, we need to look at the
facts: DIY is a leisure time activity that is not just socially useful
but also economically beneficial for families, and should there-
fore be encouraged. Moreover, while it is possible that a tax
reduction could lead to larger tax receipts for the treasury, this
would only apply to DIY activity that can be replaced by tax-

4.8
A special reference is made to services provided by
restaurants, which the Commission sees as being ‘in-between’,
or at least controversial. On the one hand, it notes that they are
mainly directed at domestic consumption, but on the other it is
acknowledged that they may be of significant importance to
tourism policy in some countries, and in all countries in border
regions. It will not be easy to reach agreement on this issue, as
the Committee believes it will
past experience has shown:
require a decision of a purely political nature. Factoring in
any other economic or fiscal considerations could prolong the
argument indefinitely: no-one will budge from their position,
justifying it on valid domestic policy grounds.

Still on the issue of

services provided locally,

4.9
the
Committee would draw attention to an area which could
become the subject of important debate, namely public and
private health services, to which — in certain circumstances
— lower rates can already be applied (10). There is a growing
tendency for the citizens of some Member States to take advan-
tage of public medical and surgical services in other countries,
which they consider rightly or wrongly to be more efficient.
This phenomenon has little to do with taxation, but the use in
other countries of services provided by private clinics and
health professionals has greater relevance for tax purposes.
The large differences in the rates charged in the various Member
States create — especially in some areas of healthcare — a diver-
sion from the domestic market towards other countries. The
‘local’ nature of these services is therefore declining as they take
on a transnational appearance for some services and in some
countries. It is not easy to make distinctions here, nor is it
possible to generalise: there is therefore a high risk of contro-
versy.

4.9.1
Reaching an agreement depends on achieving a balance
between different and opposing requirements: on the one hand,
given the eminently social nature of health protection, it would
seem advisable to include these services with those to which a
reduced rate applies; but on the other, competition issues could
arise. The final decision would have to take account of an indivi-
dual's right to seek treatment at the lowest possible cost to the
the
family budget;
citizen/consumer must
take priority over principles of
competition.

in other words,

interest of

the

The application of a reduced VAT rate to unskilled
4.10
labour-intensive sectors
study the
Commission refers to notes that it can lead to a permanent
increase in employment, but that the gains are ‘likely to be

controversial. The

is

(9) Cf. Communication COM(2007) 380 final, point 3.3 ‘Internal Market

imperatives’, second paragraph.

(10) Paragraphs 15 and 17, Annex III of the VAT Directive.

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minor’; this is probably true. It is difficult to reach a decision
here, too: sectors such as these (building, road works, cleaning
firms, markets, etc.) respond to a generally inelastic demand,
and therefore a reduction in VAT for these sectors would have
only very little effect on employment. Furthermore, these are
also the sectors which tend to employ unskilled workers in the
‘black economy’ more frequently. A reduction in VAT would
certainly help to reduce costs for businesses, but the question of
whether this would correspond to a reduction in prices and a
‘real’ increase in employment remains open.

collect. The Committee has already highlighted this fact (11) and
would call here on the Member States to make public their net
revenue from VAT once payments to the Community budget
inspection and combating
and costs for operation, collection,
tax fraud have been deducted. It urges the Commission to take
ownership of this call, in the name of transparency, and also to
consider whether there might be a case for an alternative
tax system (12). It is to be hoped that any rethink of this whole
area will also factor in the payoff (which could be surprising) in
terms of net gains for the treasury: once the ‘real’ results are
known, it could well be the tax authorities themselves that take
the initiative.

4.11 More generally,
the Commission notes that reduced
rates are effective only when the share of consumption expendi-
ture of goods or services is stable over time and differs substan-
tially between low and high-income groups. These differences
are more pronounced in the food, clothing and building sectors:
there are considerable differences from country to country, but
often the most obvious differences (and the most unfair from
the social point of view) are to be found within the individual
Member States. The Committee would recall that in several
Member States the reduced rate is applied by category, without
taking account of the fact that many categories contain mass-
market products while others are decidedly exclusive and priced
many times higher than the former. The problem remains as to
how — and according to what criteria — to apply different tax
rates to goods or services which are in the same category but
which actually target different social classes according to quality
and price. Another problem is how to decide on enduring
distinctions that would not be affected by changes in fashion,
and how to ensure they are complied with without resorting to
costly and complicated inspection. Finally, consideration must
be given to fraud, which is a possibility in all sectors but parti-
cularly in the two considered here: strict, detailed categorisation
could facilitate fraud, and it is extremely difficult to monitor.
The Committee points out the need to apply criteria which
differ according to social considerations:
in other words,
reduced rates should contribute to a social policy of income
redistribution or, where the alternatives referred to in point 4.15
are not feasible, support for major social programmes. In any
case, however, transparency must be ensured in respect of a
country's own citizens and those of other Member States.

4.11.1
The same comment could be made with regard to
books and newspapers, in which category socially valid publi-
cations are sometimes grouped together with others of no
educational or entertainment value or, worse still,
that are
borderline illegal or beyond the realms of common decency.
Although problematic, the distinctions appear necessary and at
any rate justifiable in terms of democratic transparency.

4.12
Finally, the Commission notes that operating several
rates involves significant costs for businesses and tax autho-
rities: that is obvious. The Committee would prefer to speak of
an increase in costs, given that in the field of taxation VAT is
already by far the most expensive tax to implement and

However, the only issue currently being discussed is the
4.13
side-issue of increased costs ‘for business and tax authorities’, or
the administrative and accounting costs of implementing — and
interpreting — rules
from standard. The
that derogate
Committee would point out that any cost increase for busi-
ness is transferred to the end consumer; consequently it will
be necessary to assess, on a case by case basis, whether and to
what extent the application of a reduced rate translates into real
benefits for citizens. At present, the vast majority of the —
countless — cases of dispute are due to the broad scope of
classifications, leading to controversial interpretations, involve-
ment of consultants,
inspections and appeals: the new rules
should therefore be designed to be inexpensive to implement.

For the moment, the system of reduced rates, while
4.14
expensive, is the only one practical. However, given that even
the Commission has defined it as rigid and incoherent (13), the
Committee hopes that
the political discussions between the
Council and the European Parliament will lead to joint decisions

(11) This was first raised by the Committee in its opinion on Combating tax
evasion in the single market (OJ C 268 of 19.9.2000, p. 45) and on
several later occasions, most recently in the EESC opinion on the
Proposal for a Council Directive amending Directive 77/388/EEC with a view
to simplifying value added tax obligations and the Proposal for a Council
Regulation amending Regulation (EC) No. 1798/2003 as regards the intro-
duction of administrative cooperation arrangements in the context of the one-
stop scheme and the refund procedure for value added tax (OJ C 267 of
27.10.2005, p. 45), which has — naturally — fallen on deaf ears.
(12) The Committee also began to draw attention to this point in 2000 in
the opinion referred to in the above footnote, and has continued to
make the point in a number of opinions since. The Committee also
commented on this in its Opinion on the Proposal for a Council Direc-
tive on the common system of value added tax (Recast) (OJ C 74 of
23 March 2005, p. 21).

(13) Cf. EESC opinion on the Proposal for a Council Directive amending Direc-
tive 77/388/EEC with a view to simplifying value added tax obligations and
for a Council Regulation amending Regulation (EC)
the Proposal
No 1798/2003 as regards the introduction of administrative cooperation
arrangements in the context of the one-stop scheme and the refund procedure
for value added tax (OJ C 267 of 27.10.2005, p. 45).

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which, while obviously guided by the principles of
the
internal market, always respect the needs of citizens/consu-
mers, companies and tax authorities.

criteria ensuring transparency, bearing in mind that, in any case,
it would move us further away from the objectives of the
single market.

4.15 With regard to alternatives to reduced rates,
the
Commission asks whether these might be replaced by direct
subsidies: this is a more effective, more transparent and less
expensive policy instrument. The Committee believes
that
national-style alternatives are viable in some specific cases on a
temporary basis, provided that any measures resembling state
aid are avoided. However, any kind of national solution as an
alternative to VAT derogations should be decided on the basis of

4.16
Finally, as a back-up to its numerous opinions on the
subject, the Committee would reiterate a suggestion inspired by
transparency and common sense: the VAT regime should
cease to be called ‘temporary’. This adjective — which is still
used thirty years on and has no medium-term prospects of
becoming definitive — is deceptive and damages the credibility
of EU rules. It also proves, if ever proof were needed, the old
adage that ‘nothing is more definitive than the temporary’.

Brussels, 22 April 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on ‘Strategy for the outermost regions:
Achievements and future prospects’

COM(2007) 507 final

(2008/C 211/19)

On 21 September 2007 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the

Strategy for the Outermost Regions: Achievements and Future Prospects.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 28 March 2008. The rapporteur
was Mr Coupeau.

At its 444th plenary session, held on 22 and 23 April 2008 (meeting of 22 April), the European Economic
and Social Committee adopted the following opinion by 128 votes to three, with five abstentions.

1. Introduction

1.1
Article 299(2) of the EC Treaty recognises the particu-
larity of outermost regions (hereafter ORs), enabling them to
preserve their
special characteristics and to mitigate their
constraints.

Through its Communication of 12 September 2007
1.4
entitled Strategy for the Outermost Regions: Achievements and Future
Prospects, the Commission has launched a public consultation
process to gather the views of all stakeholders on its OR policy
in view of the major challenges to be faced by these regions in
the coming years. This opinion is the EESC's contribution to
that process.

The seven regions classified as outermost regions are the
1.2
autonomous Spanish community of
the
Portuguese autonomous regions of Madeira and the Azores and
the four French departments of Guadeloupe, French Guiana,
Martinique and Réunion.

the Canary Islands,

1.5
The EESC maintains that while the EU's OR financial
policies have had certain beneficial effects, structural difficulties
remain, which must be resolved: these policies must therefore
be stepped up in future.

Since 1989, these regions have benefited from a specific
1.3
programme to support socio-economic development measures
aimed at achieving greater convergence with the rest of the
European Union.

The Committee notes that access to Europe and its
1.6
market is a constant issue for ORs, as a result of their remote-
ness and insularity (except for French Guiana) and their particu-
lar geographical and structural nature.