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# 52014DC0012

**COMMUNICATION FROM THE COMMISSION GENERAL REPORT ON THE ACTIVITIES OF THE EUROPEAN UNION - /\* COM/2014/012 final \*/**

  

COMMUNICATION FROM THE COMMISSION

GENERAL REPORT ON THE ACTIVITIES OF THE
EUROPEAN UNION -

Chapter 1

Towards political union

In 2013, Europe started to overcome the financial and economic
crisis. The European Union emerged from recession in the second quarter of the
year as the reform push began to produce results. The nascent recovery is
fragile and major work is still necessary to strengthen it, in particular to
bring down high levels of unemployment, in particular among young people, and
to restore bank lending to households and companies, but the firm support for
the Union and the euro shown by political leaders and the EU institutions,
including the European Central Bank (ECB), is starting to bear fruit.

The way to a deep and genuine economic and monetary
union

While the immediate difficulties thrown up by the crisis have been
tackled, the EU has also continued with the major project of rebuilding its
economic and financial architecture. Several programmes have been set up to
support Member States in financial distress, in exchange for reforms,
culminating in the creation of the European Stability Mechanism, a permanent
financial firewall. In order to promote economic growth and prevent crises in
the future, economic and fiscal policies are being coordinated much more
closely at European level. In parallel, a banking union is being built, with a
common system for supervising and resolving banks in the euro area, based on
rules created for all 28 Member States – and open to all of them. This is indispensable
because, as the crisis has clearly demonstrated, Europe’s economies are
fundamentally interdependent.

These efforts are important not just for Europe but for the world at
large. The EU, with its 507 million inhabitants, accounts for 7.3 % of the
world’s population but over 23 % of global gross domestic product (GDP).
The EU’s combined GDP is greater than that of the United States and twice that
of China.

The EU is endowed with many assets, from excellent human capital to
world-class companies, top-quality research and development and
higher-education institutions that attract almost half of the world’s
internationally mobile students. Europe’s model of governance reconciles
national sovereignty with cooperation — including within European institutions,
some of them supranational — and promotes political integration. The European
model is an inspiration to many neighbouring countries. This model continues to
serve the continent well, as in the past, but is being refined based on the
experience gained from the crisis.

The fact that the EU was awarded the Nobel Peace Prize in 2012 highlights
the great example that Europe is setting in terms of reconciliation, peace and
democracy. But if Europe is to maintain its leading role, there is a need to
improve governance and to ensure that institutions and decision-making become
more democratic and transparent. This is indispensable, as more and more
decisions which directly affect the daily lives of citizens are taken at
European level.

On their own, Member States, even the biggest ones, are no longer capable
of facing up to, or adequately responding to, some of the challenges of a
globalised economy. By pooling sovereignty Member States are stronger and they
can wield more influence in the world.

Economic integration in Europe is a unique process. The creation of
economic and monetary union (EMU) was, undoubtedly, one of the major milestones
of European integration. The euro is one of Europe’s defining symbols at home
and across the globe. However, while some of the great aspirations of the EMU
have been realised, others have still to be achieved.

The fundamental response to the crisis aimed at restoring confidence in
the achievements of the single market and the single currency, proving that
they are irreversible. While focusing on individual economic and institutional
reforms, we need to keep the bigger picture firmly in mind; we need to mobilise
the political will to move forward on the road to completing the EMU, leading
ultimately to a full political union.

A continuing
push for integration

Two events in 2013 showed clearly that, despite the challenges posed by
the crisis, the EU and the euro area are determined to continue the push for
closer integration.

First, Croatia became a Member State on 1 July 2013 — a strong signal of
hope and trust less than 20 years after the end of the Balkan wars.

Croatia applied for EU membership in 2003, and was in active negotiations
from 2005 until 2011. In December 2011, leaders from the EU and Croatia signed
the accession treaty. The European Commission’s final monitoring report on
Croatia’s preparations for accession ([1]) was published in March 2013, confirming Croatia’s
readiness to join the Union.

Throughout the interim period until its accession, Croatia had active
observer status in the EU institutions, which allowed it to become familiar
with the working methods of the institutions and to be involved in the
decision-making process.

[PHOTO 001]

The occasion of accession was marked in Croatia’s capital Zagreb by a
ceremony attended by President Martin Schulz for the European Parliament,
President Herman Van Rompuy for the European Council and President José Manuel
Barroso for the European Commission, as well as Commission Vice-President
Viviane Reding and Commissioner Štefan Füle, for the EU
institutions, and President Ivo Josipovic and Prime Minister Zoran Milanovic,
for Croatia, along with thousands of Croatian citizens.

To coincide with accession, a new representation of the European
Commission and a European Parliament information office were inaugurated in the
European Union House in the centre of Zagreb.

[PHOTO 002]

Second, the euro area prepared to welcome its 18th member, with Latvia
adopting the euro as its currency on 1 January 2014. Preparations for the
adoption of the euro were finalised over the course of 2013. In March, Latvia
formally asked the Commission and the ECB to deliver convergence reports to
assess whether the country met the economic and legal criteria for joining the
euro, as defined in the Maastricht Treaty.

In June, the Commission’s convergence report ([2]) concluded that Latvia was ready to adopt the euro.
The ECB’s convergence report ([3]) concluded that, while the longer-term
sustainability of its economic convergence remained a concern, all in all
Latvia was within the reference values of the convergence criteria.

The Eurogroup’s recommendation of 21 June led to the European Council’s
endorsement on 28 June, with the Council’s formal approval in July paving the
way for Latvia to adopt the common currency from the beginning of 2014.

A debate on
the future of Europe

The European Commission presented its ideas for the future of the euro
area in its blueprint for a deep and genuine economic and monetary union ([4]) in 2012, in order to launch a public
debate. The blueprint sets out a political vision and the concrete proposals
needed in the short, medium and long term to underpin the stability of the euro
and the EU as a whole.

This comprehensive approach to deepening the euro area is based on key
principles, as follows.

First, moves towards
further integration should be made within the institutional and
legal framework of the treaties, according to the Community method.
Second, full use should be made of the potential
of EU-wide instruments rather than those in place for the euro area alone.
Third, reforms should be enacted primarily
through secondary legislation, with treaty change contemplated only if
necessary.

The Commission’s vision balances increases in economic and budgetary
responsibility with more solidarity and financial support. The blueprint also says that any transfer of power
to the EU should be matched by more democratic legitimacy and accountability at
the EU level. The blueprint has a strong social dimension and ensures that the
EU progresses on all these fronts at the same time. The subtitle of the
blueprint is ‘launching a European debate’, and 2013 saw the start of one.
Members of the European Parliament, national parliamentarians, governments,
journalists, academics and citizens came together in Brussels for a conference
in May 2013 to discuss what the ideas in the blueprint mean for the citizens of
Europe. The European Council also held several meetings to discuss common
principles and proposals to build a genuine EMU.

A truly Europe-wide debate is necessary to prepare the ground for a deep
political union, which is the end point of fiscal and economic integration. The
EU’s democratic legitimacy and accountability need to keep pace with its
increasing role and power. That is why, in his 2013 State of the Union address ([5]), President
Barroso confirmed his intention to present further ideas on how best to
consolidate and deepen the Community method before the European Parliament
elections. The intention is to set out the principles and orientations that are
necessary for a true political union so they can be subject to a real European
debate.

Engaging
citizens in the debate

And 2013 was a year in which the EU took the debate on the future of
Europe to the citizens. In fact, 2013 was designated the European Year of
Citizens, to mark the 20th anniversary of the establishment of European
citizenship under the Maastricht Treaty. The aim was to give Europeans the
opportunity to learn more about their rights and the opportunities open to them
thanks to EU citizenship.

[PHOTO 003]

A series of citizens’ dialogues, launched in 2012, continued throughout
2013 and will run until March 2014. There will be a total of some 50 events in
all Member States, with the active involvement of the Commission president and
the majority of commissioners. To show that this is about a wider debate, many
dialogues were held jointly with national, regional and local politicians, as
well as MEPs.

The aim is to boost the creation of a true European public space in which
European issues are discussed from a European point of view.

The debates are structured around three main themes:

overcoming the economic crisis;
citizens’ rights and other immediate concerns;
the future of Europe.

The citizens’ dialogues in 2013 were accompanied by thousands of events
linked to the European Year of Citizens (see Chapter 4 for further details).

REACHING OUT
ACROSS THE EU

1.
Map displaying the citizens’ dialogues held
in 2013

[GRAPH 01]

A new
narrative for Europe

In recent years, new challenges have profoundly affected the European
project, citizens’ beliefs and societal values. There is an urgent need for
citizens to regain trust in Europe and to commit to and engage with the project
that was started over 60 years ago by six countries in a divided and devastated
continent.

The post-war leitmotif ‘peace through a common market’ needs a new
‘version 2.0’ that can stand the test of time. A new, all-encompassing
narrative should recall why the European integration process was a necessary
response to the Second World War and how it continues to be relevant in the
present time. It should take into account the evolving reality of the European
continent and highlight the idea that the EU is not solely about the economy
and growth, but also about cultural unity and common values in a globalised
world.

The ‘new narrative for Europe’ is a project proposed by the Parliament
and implemented by the Commission following President
Barroso’s call for ‘more and better Europe’, which he made in his State of the Union address in 2012. The goal of this initiative is to invite artists, writers,
thinkers, scientists and men and women of culture to join the debate and come
up with a vision of Europe that reconnects European citizens to the process of
building the European Union in the present and in the future. In his 2013 State
of the Union address, President Barroso made a rallying call to ‘all those who
care about Europe, whatever their political or ideological position, wherever
they come from, to speak up for Europe’.

The ‘new narrative’ project was launched by President Barroso in April
2013. To implement it, the Commission has set up a cultural steering group to
collect the different contributions into a final document. In July, Warsaw
hosted the first general assembly on ‘Forms of imagination and thinking for
Europe’, which was followed in December by a second assembly in Milan, each
time associating the respective Head of State or Government of the country
where it took place. A third and final general assembly should follow at the
beginning of 2014.

Preparing for
the 2014 European Parliament elections

Inviting citizens to the centre of the debate also served to prepare the
ground for the 2014 European Parliament elections. These elections will be
special for two reasons.

Firstly, they will be the first under the provisions of the Lisbon
Treaty, which enhances the role of EU citizens as political actors in the EU.
It also strengthens the powers of the Parliament, consolidating its role as
co-legislator and giving it additional responsibilities, including the right to
elect the president of the Commission on the basis of a proposal by the
European Council, taking into account the results of the European elections.

Secondly, the upcoming elections are crucial in order to determine the
future course of Europe. With the profound changes set in motion during the
crisis, the EU is at a crossroads. The European Parliament elections provide
the platform for citizens to decide which road they want the Union to take and
what kind of Europe they want for the future.

As part of the preparations for the Parliament elections and the choice
of a Commission president, the Commission published a communication ([6]) and a recommendation ([7]) calling for stronger links between
citizens and the EU by way of the following measures:

before and during elections, national political
parties should make clear to which European political party they are
affiliated;
Member States should agree on a common day for
the European elections;
political parties should make known which
candidate they support for the presidency of the Commission;
political parties should inform voters during the
campaign about their candidate for Commission president and his or her
programme.

These proposals were endorsed by the Parliament in July 2013, with the
date for the elections set for between 22 and 25 May 2014.

Chapter 2

Towards
economic, fiscal and banking union

The major transformation of economic and budgetary coordination in
the EU continued in 2013, demonstrating that the EU is making lasting changes
and tackling the serious budgetary and structural problems that built up over
the last decade or more. The third European semester — the EU’s integrated
cycle for economic and budgetary coordination — allowed Member States’ economic
policies to be assessed in a comprehensive and timely manner, with due
attention paid to interdependencies and spillovers across countries.
Furthermore, the introduction of the ‘two-pack’ legislation strengthened
budgetary surveillance in the euro area.

Member States worked hard in 2013 to get public finances under
control and succeeded in halving the EU’s overall budget deficit from its peak
in 2009. They also engaged in structural reforms — the fundamental economic
reforms to pension and tax systems, labour laws or product and service markets.
These have changed the way economies function and can enhance Member States’
potential to grow and create jobs. Ireland became the first country to exit its
economic adjustment programme.

In addition to reinforced capital requirements for banks, which
entered into force on 1 January 2014, the EU has made significant progress
towards the completion of a banking union in the euro area in order to increase
financial stability and protect taxpayers’ interests. The banking union is open
to all Member States, also to non-euro area countries. Only a common system
will succeed in breaking the vicious cycle in which sovereigns and their banks
reinforce each other’s difficulties. One central pillar of the banking union —
the Single Supervisory Mechanism (SSM) — was agreed in 2013 and will become
fully operational in 2014. It will be complemented by a second pillar, the
Single Resolution Mechanism (SRM), on which the Parliament and the Council
adopted their respective positions in December 2013 with a view to swift
trilogue negotiations in 2014. These two mechanisms, underpinned by a single
banking rule book common to all 28 EU Member States, will make banks more
stable and avoid the prospect of taxpayers picking up the bill for failing
banks in the future.

Enhancing European economic governance and reinforcing Europe’s growth agenda

The European semester

A key instrument
in the European Union’s economic governance system is the European semester,
which entered its third year in 2013. The semester process ensures the close
coordination of Member States’ budgetary policies under the Stability and
Growth Pact and economic policies in line with the Europe 2020 strategy, the
EU’s long-term growth and jobs plan.

The purpose of the
European semester is:

to identify the major economic and social
challenges for the EU and the euro area, reflecting the growing
interdependence between Member States;
to assess policy progress, detect new policy
challenges early on and, through country-specific recommendations (CSRs),
guide Member States to implement their policies in ways that help the EU
to adjust and grow sustainably, providing jobs and decent living standards
for all.

THE EUROPEAN
SEMESTER PROCESS

[GRAPH 02]

Based on the
guidance given by the Commission in its 2013 annual growth survey, the March
2013 European Council set EU-wide reform priorities for the year ahead. These
priorities remain unchanged from the previous year, partly because major
economic challenges require sustained policy attention, but mainly because the
evidence shows that the EU’s strategy is working. The priorities are:

pursuing differentiated,
growth-friendly fiscal consolidation;
restoring normal lending to the
economy;
promoting growth and competitiveness
for today and tomorrow;
tackling unemployment and the social
consequences of the crisis;
modernising public administration.

[PHOTO 004]

Country-specific recommendations

These priorities
informed the Member States’ economic and fiscal plans over the course of 2013.
In April, Member States submitted their medium-term budgetary plans (stability
or convergence programmes) and planned economic reforms (national reform
programmes) to the Commission for assessment. Based on an integrated analysis
covering fiscal, macroeconomic and structural policies, the Commission proposed
concrete policy advice for each country, or CSRs, at the end of May. The CSRs
were discussed by the Member States, and subsequently endorsed by the June
European Council and adopted by the Council of the European Union in July.
Policy advice was thus given to Member States before they started to finalise
their draft national budgets and reform plans for 2014. The Commission closely
monitored the implementation of the CSRs during the second half of 2013. The Commission
also took action to ensure that EU cohesion policy complemented fiscal
consolidation and structural reforms, by supporting investment in growth and
jobs and the implementation of CSRs.

COUNTRY-SPECIFIC
RECOMMENDATIONS PER MEMBER STATE

[GRAPH 03]

Assessment of euro area draft budget plans

In May 2013, the
‘two-pack’ budgetary legislation for the euro area entered into force. October
2013 marked the first concrete instance of the new rules in action, as euro
area Member States submitted their draft national budgetary plans to the
Commission for its views. The Commission’s overall assessment of these
budgetary plans on 15 November was relatively positive. Most plans were found
to be broadly in line with the debt and deficit commitments made by euro area
countries, including those under the excessive deficit procedure (the EU’s
strengthened monitoring system for countries with deficits over 3 % of
GDP). However, in some countries, the Commission found there was little room
for manoeuvre.

The Commission’s opinions
and the draft budgetary plans themselves were carefully scrutinised and
discussed by finance ministers in the Eurogroup in November. They found that
compliance with the rules of the Stability and Growth Pact was at risk for a
number of countries, but ministers also manifested their full commitment to
addressing this risk. It was agreed that Member States should focus on the
quality and composition of any further fiscal adjustments so as to ensure these
are as growth friendly as possible.

The ‘two-pack’
enters into force

The two regulations constituting the
‘two-pack’ ([8]) complement the Stability and Growth Pact
but apply only to euro area Member States. They entered into force on 30 May
2013 and were applied for the first time with the start of the new European
semester in autumn. They address the need for reinforced budgetary coordination
resulting from the close interconnectedness of the Member States of the
currency union. One of the most important features of this is that the European
Commission assesses national draft budgetary plans and issues recommendations
where necessary. They also create a Union framework for dealing with countries
with financial difficulties. The ‘two-pack’ integrates commitments made in the
Treaty on Stability, Coordination and Governance in the EMU into EU law.

The main features of the ‘two-pack’ are as
follows.

1.
Tighter monitoring and
closer coordination of budgetary policy within the euro area, including a
common assessment of draft budgetary plans in autumn and continuous
surveillance of excessive deficits in the euro area.

2.
Increasing
accountability and responsibility in national policy setting. In this regard,
national independent forecasts will form the basis for national budgets,
thereby increasing reliability and credibility, while national independent
institutions will monitor compliance with national fiscal rules, thus
strengthening ownership of European budgetary commitments.

3.
Enshrining monitoring
principles used in the granting of financial assistance into the Union
framework. This establishes new enhanced surveillance, entailing closer
monitoring than under the normal surveillance processes, and means that the
obligations of countries under a macroeconomic adjustment programme are placed
within the EU framework and that a regime for post-programme surveillance is
introduced.

Early
detection of economic risks

The macroeconomic
imbalances procedure, which came into force in 2011, provides for ongoing analysis of all 28 Member States’ economic policies
throughout the year, allowing for risks such as bubbles forming in housing
markets or losses in competitiveness to be flagged early, before they become a
problem for the wider economy and other Member States.

Monitoring takes
place through a scoreboard of statistical indicators, which is published every
autumn in the alert mechanism report (AMR). This is followed up with more
in-depth analysis if needed.

In 2013, the
Commission concluded that Member States were making
progress in correcting the imbalances that built up before the crisis. A number
of Member States have reduced their deficits and achieved significant
improvements in cost competitiveness. However, further progress is needed to
reduce excessive debt and improve the net international investment position of
the most indebted economies. In the 2014 AMR ([9]),
published in November 2013, the Commission recommended an in-depth review of
developments in 16 Member States facing various macroeconomic challenges and
potential vulnerabilities that could spill over to the rest of the euro area
and the wider EU. The country-specific in-depth reviews will conclude in spring
2014, in time for the Commission to consider whether to propose any specific
action in the subsequent CSRs as part of the European semester cycle.

Economic priorities beyond 2013

The annual growth
survey found that the biggest challenge facing the Union and its Member States
in 2014 will be to nurture and boost the recovery that got underway in 2013.
The survey showed that Member States made progress on the five priorities
identified in 2013 and have begun correcting the imbalances that developed
before the crisis.

Signs of economic
improvement should, therefore, be taken as an encouragement to pursue efforts
with determination, avoiding risks of fall-back, complacency or ‘reform
fatigue’. Fairness considerations and clarity about the goals to be achieved
will be essential to make sure that the efforts made at national and European
level bring tangible results in the medium and long term, and that they are accepted
by citizens.

European
Stability Mechanism

The European
Stability Mechanism (ESM) saw its first full year of operation in 2013. It is a
vital element for safeguarding financial stability within the euro area.
Equipped with a lending capacity of €500 billion, the ESM is a key financial
backstop, providing financial assistance to euro area Member States
experiencing or threatened by financing difficulties. The ESM has already
provided financial assistance to Spain, to help recapitalise its financial
sector, and to Cyprus, to assist in implementing its macroeconomic adjustment programme. Programmes for
Ireland, Greece and Portugal continued to be funded jointly by the European
Financial Stabilisation Mechanism (EFSM), the European Financial Stability
Facility (EFSF) and the International Monetary Fund (IMF).

The establishment
of the ESM is not a stand-alone response to the sovereign debt crisis, but
complements a series of reforms undertaken at national, euro area and EU
levels. The efforts being made by Member States with respect to fiscal
consolidation and structural reforms, along with EU and intergovernmental
initiatives such as the strengthened Stability and Growth Pact, the Treaty on
Stability, Coordination and Governance in the EMU (including a fiscal compact),
the European semester and the banking union, are critically important for
eradicating the roots of the crisis and preventing possible future crises. If,
however, a euro area Member State does require financial assistance, the ESM
will have the capacity and resources to act as a financial backstop and apply a
lending instrument that will bridge the financing needs of that country until
sovereign bond market access is re-established. To fulfil its purpose, the ESM
raises funds by issuing money market instruments  as well as medium- and
long-term debt with maturities of up to 30 years. ESM issuance is backed by
paid-in capital of €80 billion and the binding obligation of ESM Member States
to provide their contribution to the ESM’s authorised capital stock.

The social
dimension of economic and monetary union

The Commission
communication on strengthening the social dimension of EMU ([10]) proposes to establish a new scoreboard of five key employment and
social indicators to help to detect and draw attention to major employment and
social challenges in the EMU that need to be addressed in the collective interest.
The indicators are: unemployment; youth unemployment and inactivity rate; gross
household disposable income; at-risk-of-poverty rate; and income inequalities
(ratio of top 20 % and bottom 20 %). The scoreboard was included
within the 2014 annual growth survey package (joint employment report) and will
feed into the European semester process, potentially shaping CSRs, but without
any sanctions.

OVERVIEW OF THE
RESULTS OF THE LATEST FLASH EUROBAROMETER (NO 368) IN THE 17 EURO AREA
COUNTRIES

57 %
(+ 2 %) of EU citizens living in the euro area say that it is a good
thing. In 2011 this was 56 %; this number then dropped by 1 percentage
point to 55 % in 2012 and is now up to 57 %.

[GRAPH 04]

Financial assistance: details of programmes for
Ireland, Greece, Spain, Cyprus and Portugal

Ireland

Ireland became the
first country to successfully exit its economic adjustment programme in
December 2013. The programme had been formally agreed in December 2010. It
included a joint financing package of €85 billion and covered the period
2010–13.

On 21 November
2010, Ireland officially requested financial assistance from the EU and the
IMF. The economic adjustment programme for Ireland included contributions from
the EU/EFSM (€22.5 billion); euro area Member States/EFSF (€17.7 billion);
bilateral contributions from the United Kingdom (€3.8 billion), Sweden (€0.6
billion) and Denmark (€0.4 billion); and funding from the IMF (€22.5 billion).
Moreover, there is an Irish contribution through the treasury cash buffer and
investments of the National Pension Reserve Fund.

The programme’s
objectives were:

immediate strengthening and
comprehensive overhaul of the banking sector;
ambitious fiscal adjustment to restore
fiscal sustainability, with correction of the excessive deficit by 2015;
growth-enhancing reforms, in
particular on the labour market, to allow a return to a robust and
sustainable growth.

(GR05)->(TABLE1)
Disbursement figures for Ireland

Review || Date || EFSF || EFSM || IMF || Bilateral || Total

1st || Q1 2011 || 3.6 || 8.4 || 5.8 || 0.0 || 17.8

2nd || Q2 2011 || 0.0 || 3.0 || 1.4 || 0.0 || 4.4

3rd || Q3 2011 || 3.0 || 2.5 || 1.5 || 0.5 || 7,4

4th || Q4 2011 || 2.7 || 1.5 || 3.9 || 0.5 || 8,6

5th || Q1 2012 || 2.8 || 3.0 || 3.2 || 0.7 || 9,7

6th || Q2 2012 || 0.0 || 2.3 || 1.5 || 0.5 || 4,2

7th || Q3 2012 || 0.0 || 1.0 || 0.9 || 0.7 || 2,6

8th || Q4 2012 || 0.8 || 0.0 || 0.9 || 0.5 || 2,2

9th || Q1 2013 || 1.6 || 0.0 || 1.1 || 0.7 || 3,43

10th || Q2 2013 || 1.0 || 0.0 || 1.0 || 0.5 || 2,4

11th || Q3 2013 || 2.3 || 0.0 || 0.76 || 0.25 || 3,31

12th || Q4 2013 || 0.0 || 0.8 || 0.6 || 0.0 || 1,4

Total disbursements || 17.7 || 22.5 || 22.5 || 4.8 || 67.5

‘The successful
conclusion of the Irish programme is a strong signal that our common response
to the crisis is delivering results’ — Olli Rehn, Commission Vice-President
responsible for Economic and Monetary Affairs and the Euro.

Ireland exits programme

Euro area finance ministers endorsed the
12th and final review of the Irish adjustment programme in December 2013. The
endorsement was based on the Commission’s draft compliance report released in
November 2013. The Commission supported the Irish government’s decision to exit
the adjustment programme in December as planned, and without a pre-arranged
precautionary credit facility. The Eurogroup commended the Irish authorities
for their steadfast implementation of the programme and noted that the then
imminent completion of the Irish programme was proof that the EU’s strategy for
responding to the crisis was delivering results. Final disbursements to Ireland
by the EFSF, the EFSM and the IMF are ongoing.

Greece

Since May 2010,
the euro area Member States and the IMF have been providing financial support
to Greece through a Greek Loan Facility (GLF) in the context of a sharp
deterioration in Greece’s sovereign financing conditions. The aim is to support
the Greek government’s efforts to restore fiscal sustainability and to
implement structural reforms in order to improve the competitiveness of the
economy, thereby laying the foundations for sustainable economic growth.

On 14 March 2012,
euro area finance ministers approved financing for a second economic adjustment
programme for Greece. The euro area Member States and the IMF committed the
undisbursed amounts of the first programme (GLF) plus an additional €130
billion for the years 2012–14. Whereas the financing of the first programme was
based on bilateral loans, it was agreed that — on the side of euro area Member
States — the second programme would be financed by the EFSF, which had been
fully operational since August 2010.

In total, the
second programme provides for financial assistance of €164.5 billion by the end
of 2014. Of this amount, the euro area commitment amounts to €144.7 billion, to
be provided via the EFSF, while the IMF contributes €19.8 billion. This is part
of a 4-year €28 billion arrangement under the Extended Fund Facility for Greece
that the IMF approved in March 2012.

Additionally, when
launching the second programme it was agreed that there should be private
sector involvement to improve the sustainability of Greece’s debt. The high
participation in Greece’s debt exchange offer in spring 2012 made a significant
contribution to this aim. Out of a total of €205.6 billion in bonds eligible
for the exchange offer, approximately €197 billion, or 95.7 %, were
exchanged.

(GR06)->(TABLE2)
Disbursement figures for Greece

Disbursement || Date || EFSF || IMF || Total

1 || March–June 2012/1 || 74 || 1.6 || 75.6

2.1 || December 2012/2 || 34.3 || — || 34.3

2.2 || January 2013/3 || 7.2 || — || 7.2

2.3 || January 2013 || 2.0 || 3.24 || 5.24

2.4 || February 2013 || 2.8 || — || 2.8

2.5 || May 2013 || 2.8 || — || 2.8

3.1 || May 2013/4 || 4.2 || 1.74 || 5.94

3.2 || June 2013 || 3.3 || — || 3.3

4.1 || July 2013/5 || 2.5 || 1.8 || 4.3

Total disbursements || 133.1 || 8.38 || 141.48

Portugal

The economic
adjustment programme for Portugal was agreed in May 2011. It includes a joint
financing package of €78 billion and covers the period 2011 to mid 2014.

On 7 April 2011,
Portugal requested financial assistance from the EU, the euro area Member
States and the IMF. The economic adjustment programme for Portugal includes a
joint financing package of €78 billion (EU/EFSM €26 billion; euro area/EFSF €26
billion; IMF about €26 billion). It contains reforms to promote growth and
jobs, fiscal measures to reduce the public debt and deficit and measures to
ensure the stability of the country’s financial sector.

The programme’s
objectives are:

structural reforms to boost potential
growth, create jobs, and improve competitiveness;
a fiscal consolidation strategy,
supported by structural fiscal measures and better fiscal control over
public–private partnerships and state-owned enterprises, aimed at putting
the gross ratio of public debt to GDP on a firm downward path in the
medium term and reducing the deficit below 3 % of GDP by 2014;
a financial sector strategy based on
recapitalisation and deleveraging, with efforts to safeguard the financial
sector against disorderly deleveraging through market-based mechanisms
supported by backstop facilities.

(GR07)->(TABLE3) Disbursement
figures for Portugal

Review || Date || EFSF || EFSM || IMF || Total

Approval || Q2 2011 || 5.9 || 6.5 || 6.3 || 18.7

1st || Q3 2011 || 0.0 || 7.6 || 4.0 || 11.6

2nd || Q4 2011 || 3.7 || 1.5 || 2.9 || 8.1

3rd || Q1 2012 || 5.2 || 4.5 || 5.2 || 14.9

4th || Q2 2012 || 2.6 || 0.0 || 1.4 || 4.0

5th || Q3 2012 || 0.8 || 2.0 || 1.5 || 4.3

6th || Q4 2012 || 0.8 || 0.0 || 0.9 || 1.7

7th || Q1 2013 || 2.1 || 0.0 || 0.7 || 2.8

8th (\*) || Q2 2013 || 1.8 || 0.0 || 1.0 || 2.8

9th (\*) || Q3 2013 || 1.9 || 0.0 || 0.9 || 2.8

10th || Q4 2013 || — || — || — || 0.0

11th || Q1 2014 || — || — || — || 0.0

12th || Q2 2014 || — || — || — || 0.0

Total disbursements || 24.8 || 22.1 || 24.8 || 71.7

(\*) 8th and 9th review were merged.

Cyprus

The economic
adjustment programme for Cyprus was formally agreed in May 2013. It aims to
address the financial, fiscal and structural challenges facing the economy in a
decisive manner and should allow Cyprus to return to a sustainable growth path.

Following a
request by Cyprus on 25 June 2012, the Commission, the European Central Bank
(ECB) and the IMF agreed an economic adjustment programme with the Cypriot
authorities on 2 April 2013 for the period 2013–16. The financial package will
cover up to €10 billion, of which the ESM will provide up to €9 billion and the
IMF is expected to contribute around €1 billion.

The programme’s
objectives are:

to restore the soundness of the
Cypriot banking sector and rebuild depositors’ and market confidence by
thoroughly restructuring and downsizing financial institutions,
strengthening supervision and addressing expected capital shortfalls;
to continue the ongoing process of
fiscal consolidation in order to correct the excessive general government
deficit as soon as possible;
to implement structural reforms to
support competitiveness and sustainable and balanced growth, allowing for
the unwinding of macroeconomic imbalances, in particular by reforming the
wage indexation system and removing obstacles to the smooth functioning of
services markets.

(GR08)->(TABLE4)
Disbursement figures for Cyprus

Review || Date || ESM || IMF || Total

1st || Q2 2013 || 2.0 || 0.1 || 2.1

2nd || Q3 2013 || 1.0 || || 1.0

3rd || Q4 2013 || 1.5 || 0.1 || 1.6

4th (\*) || Q1 2014 || 0.1 || 0.1 || 0.2

5th || Q2 2014 || — || — || 0.0

6th || Q3 2014 || — || — || 0.0

7th || Q4 2014 || — || — || 0.0

8th || Q1 2015 || — || — || 0.0

9th || Q2 2015 || — || — || 0.0

10th || Q3 2015 || — || — || 0.0

11th || Q4 2015 || — || — || 0.0

12th || Q1 2016 || — || — || 0.0

Total disbursements || 4.6 || 0.3 || 4.9

(\*) 4th review not yet formally completed.

Spain

Spain requested
financial assistance on 25 June 2012. The financial-sector-specific policy
conditions contain measures to increase the long-term resilience of the banking
sector, thus restoring its market access, and to deal effectively with the
legacy stock of assets stemming from the bursting of the real-estate bubble.
The agreement was endorsed at the Eurogroup meeting in Brussels on 20 July
2012.

The agreement
concluded with Spain includes both bank-specific measures, in line with state
aid rules, and horizontal wider macroeconomic reforms and adjustment. The
financial assistance was provided for the period from July 2012 to December
2013. However, the restructuring of the banks receiving public support under
the state aid rules is expected to take up to 5 years.

The bank-specific
measures have three main components:

firstly, a comprehensive diagnostic as
regards the capital needs of individual banks, based on a comprehensive
asset quality review and valuation process, and bank-by-bank stress tests;
secondly, the segregation of impaired
assets from the balance sheet of banks receiving public support and their
transfer to an external asset management company;
thirdly, the recapitalisation and
restructuring of viable banks and the orderly resolution of ultimately
non-viable banks, with private-sector burden sharing as a prerequisite.

The loans have
been provided to the Fondo de Reestructuración Ordenada Bancaria (FROB), the
bank recapitalisation fund of the Spanish government, and then channelled to
the financial institutions concerned. The funds were disbursed in two tranches
amounting to €41.3 billion ahead of the planned recapitalisation dates. No
further disbursements are planned.

(GR09)->(TABLE5)
Disbursement figures for Spain (\*)

Review || Date || ESM || Total

1st || Q4 2012 || 39.5 || 39.5

2nd || Q1 2013 || 1.9 || 1.9

3rd || Q2 2013 || 0.0 || 0.0

4th || Q3 2013 || 0.0 || 0.0

5th (\*\*) || Q4 2013 || 0.0 || 0.0

Total disbursement || 41.3 || 41.3

(\*) IMF only observer due to nature of programme, did
not contribute to financing.

(\*\*) 5th review still ongoing, no disbursement
foreseen.

Strengthening
economic and monetary union for the future

The Commission’s
blueprint for a deep and genuine EMU, referred to in Chapter 1, sets out the
steps needed to strengthen the single currency over the short, medium and long
term ([11]). Some reforms are already possible under existing secondary
legislation, while some will require further discussion and possible treaty
change. The EU has already started delivering on many on the actions set out in
the blueprint, as shown below.

In March 2013, the Commission
published two communications to flesh out its ideas on the prior (ex ante) coordination of Member States’ major economic
reform plans ([12]) and on a Convergence and
Competitiveness Instrument (CCI) ([13]) to encourage and support priority
reforms.
The ‘two-pack’ legislation is in force
as of May 2013 (see above).
The SSM has been agreed upon and the
ECB has begun its independent valuation of banks’ assets before it takes
up its supervisory role in 2014.
The SRM is on its way to being adopted
following agreement in the Council in December 2013 on the general approach
towards the SRM, including on the establishment and phasing in of a single
resolution fund and the creation of a single resolution board and with the
Parliament also adopting its negotiation position..
In July 2013, the Commission clarified
how to treat certain public investments for accounting purposes under the
Stability and Growth Pact (so-called investment clause).
Following an agreement with the
Parliament, the Commission set up an expert group to look into a debt
redemption fund and eurobills, two ideas contained in the blueprint.
In October the Commission published a
communication on the social dimension of the EMU (as mentioned above) in
response to a call by the December 2012 European Council.

EU leaders at the
December European Council agreed on the main features of a system of mutually
agreed contractual arrangements and associated solidarity mechanisms to
facilitate and support Member States’ reforms in areas which are key for
growth, competitiveness and jobs. Herman Van Rompuy, President of the European
Council, in close cooperation with José Manuel Barroso, President of the
European Commission, has been asked to carry work forward on the basis of these
features and report to the October 2014 summit.

[PHOTO 006]

A strong financial framework for Europe and a banking
union for the euro area

The financial
crisis highlighted the need for better regulation and supervision of the
financial sector. This is the reason why the Commission has since 2010 proposed
around 30 sets of rules to ensure that all financial actors, products and
markets are appropriately regulated and efficiently supervised. These rules are
common to all 28 Member States and underpin a properly functioning single
market for financial services.

The euro area
crisis has added an extra dimension to the EU’s work, highlighting the
potentially vicious circle between banks and sovereigns. For that circle to be
broken, a more robust financial sector is not enough. In particular for
countries which share a currency, a deeper, more integrated approach is
necessary, basically ensuring centralised delivery and enforcement in the euro
area of rules common to all 28 Member States.

This is why EU
Heads of State or Government committed to a banking union in June 2012. The
vision was further developed in the Commission’s blueprint for deep and genuine
EMU in November 2012.

Why a
banking union for the euro area?

Uncoordinated
national responses to the financial crisis have reinforced the link between
banks and sovereigns and led to a worrying fragmentation of the single market
in lending and funding. This fragmentation is particularly damaging within the
euro area, where monetary policy transmission is impaired and the ring-fencing
of funding impedes efficient lending to the real economy and thus growth.

Swift progress
towards a banking union is indispensable in order to ensure financial stability
and growth in the euro area. Building on the strong regulatory framework common
to the 28 members of the single market (single rulebook), the Commission has
therefore taken a holistic approach and proposed a roadmap for the banking
union with different steps, potentially open to all Member States but mandatory
for the 18 Member States currently within the euro area. This roadmap continues
to be followed, with concrete elements coming into force from 2014 onwards.

The Single
Supervisory Mechanism is now set up

Europe’s banks are
in a much better place today than they were 2 years ago. They have raised
substantial amounts of capital on the markets, so that levels of capital for
big European banks are now equivalent to those for American banks. However,
more needs to be done to create a thriving, yet more responsible banking
sector, particularly in the euro area.

On 4 November
2013, slightly over a year after the Commission had proposed to set up a Single
Supervisory Mechanism (SSM) for banks in the euro area, the SSM regulation ([14]) entered into force. This mechanism will be fully operational in
2014.

In the meantime,
the ECB is preparing to take up its new role as supervisor. It is currently
carrying out a comprehensive assessment of all banks that will be under its
direct supervision, including a risk assessment, an asset quality review and a
stress test. In parallel, it will have to recruit high quality supervisory
staff and build up a new supervisory structure that integrates national
supervisors before it commences its activities.

The main features
of the SSM are as follows.

It confers new supervision powers on the ECB over
the euro area banks: the licensing of all banks in Europe and the coherent
and consistent application of the single rulebook in the euro area; the
direct supervision of systemically relevant banks, including all banks
having assets of more than €30 billion or constituting at least 20 %
of their home country’s GDP (around 130 banks); and the monitoring of the
supervision conducted by national supervisors for smaller banks. Although
large banks of systemic importance are at the heart of the European supervisory framework,
recent experience shows that relatively smaller banks can also pose a
threat to financial stability. It is therefore essential that the
supervisory tasks conferred on the ECB can be exercised over all those
banks.
The ECB shall ensure the coherent and consistent
application of the single rulebook in the euro area.
The SSM is open to all non-euro area Member
States.
For cross-border banks active both within and
outside Member States participating in the SSM, existing home/host
supervisor coordination procedures will continue to exist as they do
today.
The governance structure of the ECB will consist
of a separate supervisory board supported by a steering committee, the ECB
Governing Council, with the right to object to supervisory decisions from
the board, and a mediation panel. Danièle Nouy has been appointed as first
chair of the SSM board. Clear separation between the ECB’s monetary tasks
and supervisory tasks is fully ensured.

[PHOTO 007]

Single
Resolution Mechanism

In July 2013, the
Commission proposed a Single Resolution Mechanism (SRM) for banks to complement
the SSM. It will apply the substantive rules of the draft bank recovery and
resolution directive ([15]) in a coherent and centralised way ensuring consistent decisions
for the resolution of banks, and common resolution financing arrangements.

The SRM would
ensure that — notwithstanding stronger supervision — if a bank subject to the
SSM faces serious difficulties, its resolution can be managed efficiently. In
case of cross-border failures, it would be more effective than a network of
national resolution authorities and avoid risks of contagion.

The SRM would take
over if the ECB, as the banking supervisor, were to flag a bank which needed to
be resolved in the euro area or in a Member State participating in the banking
union. Member States reached a political agreement on 19 December, and the SRM
should be finally agreed by the co-legislators before the end of the mandate of
the current Parliament in spring 2014.

Common
recovery and resolution tools

In December 2013,
a political agreement between the Parliament and the Council was reached on the bank recovery and resolution directive. This is a
fundamental step towards the completion of the banking union. The new rules
provide authorities with the means to intervene decisively, either before
problems occur or early on in the process if they do. If, despite these
preventive measures, the financial situation of a bank deteriorates beyond repair,
the new framework ensures that the shareholders and creditors of the bank have
to pay their share. If additional resources are needed, these will be taken
from the national, prefunded resolution funds, which will be financed by the
banking industry and which each Member State will have to establish and build
up so they reach a level of 1 % of covered deposits within 10 years. All
banks will have to pay in to these funds but contributions will be higher for
banks which take more risks.

Strengthening
deposit guarantee schemes

A second strand of
a more robust financial sector is ensuring bank deposits in all Member States
are guaranteed up to €100 000 per depositor per bank if a bank fails. From
a financial stability perspective, this guarantee prevents depositors from
making major withdrawals from their banks that can precipitate a bank run,
thereby preventing severe economic consequences.

The Commission
proposed to strengthen existing rules in this area in 2010 ([16]). While the
€100 000 guarantee remains appropriate, the reform would ensure faster
payouts (a reduction in the payout delay from the current 20 working days to 7
calendar days) and strengthened financing, notably through ex ante
funding of deposit guarantee schemes (with a target level of at least
1.5 % of eligible deposits to be reached over 10 years). A political
agreement was reached in December 2013 between the Parliament and EU Member
States on the new rules on deposit guarantee schemes. A final agreement is
expected in 2014.

Stronger
prudential requirements

The package on
capital requirements and liquidity management rules for banks, the so-called
‘CRD IV’ which transfers, via a regulation ([17])
and a directive ([18]), the new global standards on bank capital (commonly known as the
Basel III agreement) into the EU legal framework, was published in the Official Journal of the European Union on 27 June, 2013.

The new rules,
which apply from 1 January 2014, tackle some of the vulnerabilities faced by
the financial institutions during the crisis, namely insufficient levels of
capital, both in terms of quantity and in quality, which resulted in the need
for unprecedented support from national authorities. The timely implementation
of the Basel III agreement is one of the commitments made by the EU in the G20.

CRD IV sets
stronger prudential requirements for banks, requiring them to keep sufficient
capital reserves and liquidity. This new framework will make EU banks more solid
and will strengthen their capacity to adequately manage the risks linked to
their activities, and absorb any losses they may incur in doing business.

Furthermore, these
new rules will strengthen the requirements with regard to the corporate
governance arrangements and processes of banks. For example, a number of
requirements are introduced in relation to diversity within management, in
particular as regards gender balance. In addition, in order to tackle excessive
risk-taking, the framework imposes tough rules on variable remuneration.

Legislation for credit rating agencies now
in force

Credit rating agencies (CRAs) are major
players in today’s financial markets. Ratings have a direct impact on the
actions of investors, borrowers, issuers and governments. For example, a
corporate downgrade can have consequences on the capital a bank must hold and a
downgrade of sovereign debt can make a country’s borrowing more expensive.
Despite the adoption of European legislation on credit rating agencies in 2009
and 2010, the developments in the context of the euro debt crisis have shown
the need for the regulatory framework to be strengthened. As a result, in
November 2011 the Commission put forward proposals to reinforce the regulatory
framework and deal with outstanding weaknesses. The new rules entered into
force in June 2013.

Restoring benchmark confidence

The manipulation of the London interbank
offered rate (LIBOR) and the Euro interbank offered rate (Euribor) resulted in
multimillion euro fines on several banks in Europe and the US. Allegations of
manipulation of commodity (e.g. oil, gas and biofuel) and exchange-rate
benchmarks are also under investigation. The prices of financial instruments
worth trillions of euros depend on benchmarks, and millions of residential
mortgages are also linked to them. As a result, benchmark manipulation can
cause significant losses to consumers and investors, distort the real economy
and undermine market confidence.

That is why, in September 2013, the
Commission proposed draft legislation to help restore confidence in the
integrity of benchmarks. A benchmark is an index (statistical measure),
calculated from a representative set of underlying data, that is used as a
reference price for a financial instrument or financial contract, or to measure
the performance of an investment fund. The new rules will enhance the
robustness and reliability of benchmarks, facilitate the prevention and
detection of their manipulation and clarify responsibility for and the
supervision of benchmarks by the authorities. They complement the Commission’s
proposals, agreed by the Parliament and the Council in June 2013, to make the
manipulation of benchmarks a market abuse offence subject to strict
administrative fines.

All the aforementioned proposals aim at
adapting EU rules to the new market reality, notably by extending their scope
to include all financial instruments which are traded on organised platforms
and over the counter (OTC) and adapting rules to new technology. Since the
sanctions currently available to supervisors often lack a deterrent effect,
sanctions will be tougher and more harmonised. Possible criminal sanctions were
the subject of a separate but complementary proposal on which negotiations
between the Parliament and the Council concluded at the end of 2013. This
political agreement is due to be confirmed by the Parliament in plenary in
2014.

State aid

The restoration of
a healthier financial sector capable of financing the real economy is
indispensable for Europe’s recovery. In 2013, the Commission continued to use
state aid control to help rebuild a sound financial sector. Even when banks
have relied heavily on state aid, they can be allowed to remain in business
when there is a realistic prospect that they can return to viability and function
without public support in the future. This means these banks have to reduce
their size considerably and change their business model substantially to become
viable again. The Commission continued in 2013 to ensure that bank support
through taxpayers’ money is kept to a minimum, that the banks’ owners bear a
sufficient part of the burden of the restructuring and that distortions of
competition created through state aid are minimised.

The special EU
state aid crisis rules, in force since 2008, were materially revamped in August
2013 and have been applied since then. The new rules introduce three main
changes: firstly, before resorting to taxpayers’ money, banks should tap
internal resources and ask for contributions from shareholders, holders of
hybrid securities (which combine characteristics of equity and debt) and junior
debt holders; secondly, bank recapitalisations or asset relief measures will in
general only be allowed after Commission approval of the bank’s restructuring
plan; thirdly, a cap on executive pay for all banks in receipt of aid aims to
set the right incentives for management to implement the restructuring in good
time and avoid the need for state support, as well as to implement agreed
restructuring plans.

In 2013, the
Commission adopted 50 decisions. For example, the Commission approved the restructuring plans of Caixa Geral de
Depósitos, BPI and Millenium BCP (all Portugal) ([19]);
the liquidation plans of Hypo Alpe Adria Group (Austria) ([20]) and ATE
(Greece) ([21]); the restructuring plans of several Slovenian banks ([22]); and the new Portuguese scheme ([23]) providing state
guarantees for banks that guarantee EIB loans granted to companies in Portugal.

Shadow banking

Shadow banking is
the system of credit intermediation that involves entities and activities that
are outside the regular banking system. Shadow banks are not regulated like
banks, yet engage in bank-like activities. The Financial Stability Board (FSB)
has roughly estimated the size of the global shadow banking system at over €50
trillion. This represents 25–30 % of the total financial system and half
the size of total bank assets. Shadow banking is therefore of systemic
importance for Europe’s financial system.

Since the
beginning of the financial crisis, the Commission has been undertaking a
comprehensive reform of the financial services sector in Europe. However, risks
must not be allowed to accumulate in the shadow banking sector, particularly if
new banking rules push certain activities into the less strictly regulated
shadow banking sector.

As one key group of actors in the shadow banking system, money market
funds are an important source of short-term funding for financial institutions,
businesses and governments. In Europe, around 22 % of short-term debt
securities issued by governments or by the corporate sector are held by money
market funds. They hold 38 % of short-term debt issued by the banking
sector. Because of this systemic interconnectedness of money market funds with
the banking sector and with corporate and government finance, they have been at
the core of international work on shadow banking.

As a follow-up to
its 2012 Green Paper on shadow banking ([24]),
in September 2013 the Commission adopted a communication on shadow
banking ([25]) and proposed new rules for money market funds aimed at
ensuring that they can better withstand pressure in stressed market conditions
by enhancing their liquidity profile and stability.

Consumer protection in financial services

Mortgage credit directive

A proposal ([26]) for a directive aiming to create a responsible, efficient, healthy
and competitive pan-European market for mortgage credit that works to the
benefit of consumers was adopted by the Parliament and the Council in December
2013. The Commission had tabled it as a proposal in 2011.

The financial
crisis has shown the damage that irresponsible lending and borrowing practices
can do to consumers and lenders, as well as to the financial system and the
economy at large. This is particularly important in today’s integrated EU
marketplace. The now-adopted mortgage credit directive is aimed at ensuring
that such practices are not repeated in the future and helping consumers to
regain confidence in the financial system.

Upon its entry
into force, borrowers will enjoy a higher level of protection through robust
rules concerning advertising, pre-contractual information, advice,
creditworthiness assessment and early repayment. The requirement for banks to
provide personalised information to the consumer through a European
standardised information sheet will allow consumers to compare mortgage
conditions from different providers.

Bank accounts initiative

In today’s world,
European citizens cannot fully participate in society without a basic bank
account. Bank accounts have become an essential part of everyday life,
facilitating among other things the payment of utility bills and online
shopping.

Whilst single
market legislation has ensured that banks can operate throughout the European
Union and offer their services across borders, this mobility is not mirrored
for citizens who are often unable to open an account in another Member State or
to switch easily from one bank to another. Furthermore, consumers often pay
over the odds for the services they receive from their bank and are charged
banking fees that are not fully transparent.

It is in this
context that the Commission published in May 2013 its proposal for a directive on the transparency and comparability of payment account
fees, payment account switching and access to a basic payment account ([27]) in May 2013.

The Commission proposals tackle three areas:

comparability of payment account fees, by making
it easier for consumers to compare the fees charged for payment accounts
by banks and other payment service providers in the EU;
payment account switching, by establishing a
simple and quick procedure for consumers who wish to change from their
payment account to one with another bank or payment service provider;
access to payment accounts, by allowing EU
consumers who want to open a payment account, without being residents of
the country where the payment service provider is located, to do so.

Moreover, these
provisions will allow all EU consumers, irrespective of their financial
situation, to open a payment account that allows them to perform essential operations,
such as receiving their salary, pensions and allowances, or payment of utility
bills, etc.

[PHOTO 008]

Long-term investment funds

Honouring its
commitments announced in the Single Market Act II
communication ([28])
in October 2012 and in the Green Paper on long-term
financing of the European economy ([29]), the Commission proposed a new investment fund framework in June
2013 ([30]) designed for investors who want to put money into companies and
projects for the long term ([31]). These private European long-term investment funds (ELTIFs) would
only invest in businesses that need money to be committed to them for long
periods of time.

The new funds
would be available to all types of investor across Europe, subject to certain
requirements set out in EU law. These requirements include the types of
long-term assets and firms that the ELTIFs are allowed to invest in, for
example infrastructure, transport and sustainable energy projects; how they
have to spread their money to reduce risks; and the information they have to
give to investors.

[PHOTO 005]

Proposal to protect the euro and other
currencies against counterfeiting

In February 2013, the Commission proposed to strengthen the
protection of the euro and other currencies against counterfeiting through
criminal law measures ([32]). These proposals include strengthening cross-border investigations
and introducing minimum penalties, including imprisonment, for the most serious
counterfeiting offences. The proposal will also enable the analysis of seized
counterfeits during judicial proceedings in order to detect further counterfeit
euros in circulation. The
European Parliament's Committee on Civil Liberties, Justice and Home Affairs
(LIBE) backed the proposal in December, paving the way for negotiations with
the Council of Ministers which had reached agreement on the rules in October.

Financing the future: securing sustainable public
revenue through improved tax policy coordination

Financial transaction tax under enhanced cooperation

Following the
request of 11 Member States ([33]) to establish enhanced cooperation between them in order to apply a
financial transaction tax (FTT), the Commission in February 2013 adopted a
proposal for a Council directive implementing enhanced cooperation for an
FTT ([34]).

When applied by the 11 Member States, it is estimated that this FTT will
deliver revenues of €30–35 billion a year. The FTT
would have low rates, a wide base and safety nets against the relocation of the
financial sector.

There are three
core objectives for the FTT: firstly, it would strengthen the single market by
reducing the number of divergent national approaches to financial transaction
taxation; secondly, it would ensure that the financial sector makes a fair and
substantial contribution to public revenues; thirdly, it would support
regulatory measures in encouraging the financial sector to engage in more
responsible activities, geared towards the real economy.

Fairer taxation

The fight against
tax fraud was very high on the Union’s political agenda in 2013. Developments
fuelled by the outcome of the ‘offshore leaks’ affair confirmed the urgency for
more and better action against tax evasion. The May 2013 European Council
committed to accelerating work in the fight against tax fraud, tax evasion and
aggressive tax planning.

Priority was given
to promoting and broadening the scope of the automatic exchange of information
at all levels. Within the EU, the Commission proposed in June to extend the
automatic exchange of information between EU tax administrations. Under the
proposal, dividends, capital gains, all other forms of financial income and
account balances would be added to the list of categories which are subject to
automatic information exchange within the EU. Following the December European
Council, unanimous agreement on this proposal should be reached in early 2014.
This paves the way for the EU to have the most comprehensive system of
automatic information exchange in the world.

The issue of base
erosion and profit shifting (BEPS), mechanisms under which companies shift their
profits to low-tax jurisdictions, also received a lot of attention from EU and
G20 ministers of finance in 2013. Work was carried out at EU level on the
Commission’s recommendations on aggressive tax planning. A new platform, with
members of EU tax authorities, businesses and civil society, was set up to
monitor progress in this area. In September, the G20 ministers of finance fully
supported the OECD action plan on BEPS ([35]).
According to the G20 ministers of finance, ‘Profits should be taxed where economic
activities deriving the profits are performed and where value is created. In
order to minimise BEPS, we call on member countries to examine how our own
domestic laws contribute to BEPS and to ensure that international and our own
tax rules do not allow or encourage multinational enterprises to reduce overall
taxes paid by artificially shifting profits to low-tax jurisdictions.’

Other initiatives
were taken in 2013 for fairer taxation: the Council agreed in July on a
quick-reaction mechanism to fight VAT fraud ([36]);
following the mandate received by the Council in May, the Commission started
talks on stronger savings tax agreements with our closest neighbours (Andorra,
Monaco, Liechtenstein, San Marino and Switzerland); the debate on taxing the
digital economy was launched at the European Council of October; and in
November the Commission proposed amendments to the parent–subsidiary directive
to safeguard against abusive tax planning ([37]).

Chapter 3

Towards
economic recovery, growth and jobs

Europe’s economy emerged from recession in 2013, paving the way for
a more robust recovery in 2014. Still, many Member States continued to grapple
with severe unemployment, especially among young people.

To boost the economy and job creation beyond the immediate efforts
to deal with the effects of the crisis, the EU redoubled its efforts in
implementing Europe 2020, a comprehensive growth and jobs strategy. In a
context where the economic and financial crisis has revealed and exacerbated
some entrenched growth bottlenecks, Europe 2020 has identified three key levers
on which to act at EU and national level, namely smart, sustainable and
inclusive growth.

The strategy is supported by five headline targets for the EU and
Member States to meet by 2020 in five areas: employment, research and
development, climate change/energy, education and social inclusion, and a range
of flagship initiatives. The ambition is to build solid conditions and
foundations for growth.

At EU level, the stronger budgetary and economic rules that apply
during the European semester will help to deliver the Europe 2020 targets. The
EU’s next 7-year budget, the multiannual financial framework (MFF) 2014–20,
will also be closely aligned with the goals of the strategy to support Member
States as they strive to meet their targets.

At national level, wide-ranging economic reforms are being carried
out in all five target areas. The reforms are monitored throughout the year by
the European Commission, with country-specific recommendations made in spring
each year to highlight the most pressing reforms.

While the Europe 2020 strategy draws on the strengthened economic
governance and the reinforced coordination of economic policies described in
Chapter 2, this chapter gives an overview of the actions taken to secure future
growth in various policy areas and sectors from industry to fisheries. It also
shows how we have been strengthening and deepening two major sources of growth
— the single market and trade — and how the EU is using its financial resources
to boost the economy over the coming years.

EU policies
for growth – Europe 2020

EUROPEAN GROWTH
MAP 2014

[GRAPH
10]

Education and training

One of the goals of the Europe 2020 strategy is for 75 %
of those aged 20–64 to be employed by the end of the decade. However, the
crisis has resulted in high unemployment across Europe, with youth unemployment
reaching 24 % across Europe and more than half of young people being
unemployed in countries such as Greece and Spain. At the same time, there are
some 2 million unfilled vacancies in Europe and it is clear that there is a
skills mismatch. The Commission is addressing this in several ways, following
on from the rethinking education initiative and the measures announced at the
end of 2012 to fight youth unemployment (including the youth guarantee
scheme) ([38]).

[PHOTO
009]

The existing lifelong learning programme provides support for
learning mobility through the Erasmus (higher education), Leonardo da Vinci
(vocational education), Comenius (schools) and Grundtvig (adult education)
schemes. Erasmus and Leonardo da Vinci together support around 140 000 job
placements a year with companies and other organisations ([39]). Four million people, mostly
young people, are due to receive grants under the new Erasmus+ ([40]) programme to study, train or
volunteer abroad in 2014–20, compared with 2.5 million beneficiaries under
existing EU mobility programmes. This international experience boosts skills
and employability.

The Commission also launched the European Alliance for
Apprenticeships ([41]) in July, to help fight youth
unemployment by improving the quality, supply and image of apprenticeships. It
will promote partnerships between countries and stakeholders so they can
identify the most successful apprenticeship schemes in the EU and apply bespoke
solutions.

The EU High-Level Group on the Modernisation of Higher
Education published a report ([42]) outlining a broad range of practical and
affordable recommendations for how teaching can be improved in higher
education, including a proposal to establish a European academy of teaching and
learning, which would act as a platform for the exchange of best practices for
Member States and higher education institutions.

Making full use of the opportunities offered by information
and communication technologies and by open educational resources is also
essential for efficient educational systems. In September, the Commission
published a communication on opening up education ([43]), thus paving the way for more
innovative teaching and learning through the use of technologies and access to
digital content to help deliver high-quality education and the digital skills
which 90 % of jobs will require by 2020. In particular, massive open
online courses (MOOCs) are a striking development in this context. The Commission
helped to launch the first pan-European MOOCs, making 40 university courses
available for free and enabling people to access quality education from their
homes.

This initiative also ties in with the Grand Coalition for
Digital Jobs ([44]), a multi-stakeholder platform tackling
the lack of information and communication technology (ICT) skills and up to
900 000 unfilled ICT-related vacancies (see the ‘Employment and social
inclusion’ section).

Employment and social inclusion

Youth employment

The Commission, together with the European Parliament, the
Council of the European Union and stakeholders, has been working to tackle all
aspects of youth employment and to build upon the youth employment package it
proposed in December 2012.

Youth guarantee

The Commission has urged every Member State to put in place a
youth guarantee ([45]). This seeks to ensure that all young
people up to age 25 receive a quality offer of a job, continued education, an
apprenticeship or a traineeship within 4 months of leaving formal education or
becoming unemployed. For many Member States this will require structural
reforms, including the development of vocational education and training
systems. The youth guarantee should be rolled out in Member States from 1
January 2014.

Member States will receive help for funding this from the
European Social Fund (ESF) — which is currently worth €10 billion every year.
The ESF has provided targeted support for youth employment since long before
the crisis, and has been essential in helping to tackle the current rise in
youth unemployment, with 68 % of its budget going towards projects that
can also benefit young people. The future ESF regulation ([46]) includes a dedicated ESF
investment priority targeting the sustainable labour-market integration of
young people not in employment, education or training (NEETs). Member States
facing high youth unemployment rates are expected to identify NEETs as a
specific target group for ESF funding and provide them with ways into the
labour market. To make the youth guarantee a reality, Member States also need
to prioritise youth employment measures in their national budgets.

BREAKDOWN OF YOUTH
UNEMPLOYMENT RATE PER MEMBER STATE

[GRAPH
11]

Youth employment initiative

To focus financial support still further on the regions and
individuals struggling most with youth unemployment and inactivity, the
European Council agreed in February 2013 to create a dedicated youth employment
initiative (YEI) ([47]), to be supported by €3 billion from the
ESF and €3 billion from the EU budget. The Commission has pressed for the €6
billion to be committed in 2014 and 2015 rather than over the 7-year period of
the MFF. This will target individual NEETs and regions experiencing a youth unemployment
rate above 25 %. The YEI supports the implementation of the youth
guarantee. Member States that will benefit from the YEI were asked to put
forward their plans for the implementing youth guarantees by the end of
December 2013. All other Member States should submit their plans by spring
2014.

European Alliance
for Apprenticeships

Aside from the youth guarantee, the Commission is developing
a number of EU-level tools to help Member States tackle youth unemployment. As
apprenticeships and work-based learning make it easier for young people to
transition from education and training into work, the Council, the Commission
and the European social partners launched the European Alliance for
Apprenticeships ([48]) in July. The aim is to improve the
quality and supply of apprenticeships across the EU and change mindsets towards
apprenticeship-type learning.

The alliance is a platform that brings together public
authorities, businesses, social partners, vocational education and training
providers, youth representatives and other key actors, such as chambers of
commerce, in order to coordinate and scale up different initiatives for
successful apprenticeship-type schemes, as well as to promote national
partnerships for dual-vocational training systems. The strands of action are:
targeted knowledge transfer and support for reform of apprenticeship systems;
promoting the benefits of apprenticeships; and making smart use of EU funding
and resources.

Quality framework
for traineeships

A current major concern is that some traineeships have a low
learning component or misuse young people as a cheap labour force. In December,
the Commission proposed guidelines to enable trainees to acquire high-quality
work experience under safe and fair conditions and to increase their chances of
finding a good quality job. The proposal for a Council recommendation on a
quality framework for traineeships ([49]) calls on Member States to
ensure that national law or practice respects the principles set out in the
guidelines and to adapt their legislation where necessary. The guidelines
require traineeships to be based on a written agreement covering learning
content and working conditions, including whether trainees are paid or
otherwise compensated and whether they qualify for social security.

Action teams

Further progress was made in 2013 by the Commission’s youth
employment action teams. These teams, composed of national and Commission
officials, were set up in February 2012 for the eight Member States with the
highest levels of youth unemployment, Ireland, Greece, Spain, Italy, Latvia,
Lithuania, Portugal and Slovakia. The action teams were tasked with mobilising
EU Structural Funds (including from the ESF) that were still available for the
2007–13 programming period to support job opportunities for young people and to
facilitate the access of small and medium-sized enterprises (SMEs) to finance.
Work continued over summer 2013 to implement decisions and to readjust
programmes where needed, for example in Spain and Lithuania.

As a result of the work done by the action teams, by the
beginning of 2013 around €16 billion of EU funding (from the ESF and the
European Regional Development Fund (ERDF)) had been targeted for accelerated
delivery or reallocation. By November 2013, the ESF alone had reallocated €4.2
billion to specific actions expected to benefit more than 1 million young
people.

EURES and ‘Your
first EURES job’

With a view to boosting mobility and providing access to job
opportunities, the Commission has launched a reform of the European Network of
Public Employment Services (EURES) with the aim of establishing a true
pan-European job placement and recruitment network. A EURES decision ([50]) was adopted in November 2012
to maximise the operational functioning of EURES. EURES aims in particular at
facilitating transparency in vacancy handling, improving the interoperability
of labour markets and skills-based matching processes, boosting services and
enhancing cooperation between public and private service providers to increase
the EURES outreach. The goal of the ‘Your first EURES job’ scheme is to assist
young people to find their first job in any of the 28 Member States and to
assist companies to recruit young people from another EU country. ‘Your first
EURES job’ is a small-scale initiative with a budget of €12 million over 3
years. It aims at testing the effectiveness of tailor-made services for young
mobile jobseekers aged 18–30, combined with some financial support.

Programme for
employment and social innovation

In December, the Council of Ministers adopted the new EU
programme for employment and social innovation (EaSI), which will make €920
million available for the 2014–20 period. It will support innovative social
policies and promote labour mobility (for example by strengthening ‘Your first
EURES job’), as well as facilitating access to microcredits and encouraging
social entrepreneurship. EaSI integrates and extends the coverage of three
existing financial instruments: the programme for employment and social
solidarity (Progress), EURES and the European Progress Microfinance Facility.

 [PHOTO
010]

Posted workers

On 9 December, the Council agreed a general approach on the
Commission’s March 2012 proposal ([51]) to improve enforcement of the safeguards
for posted workers laid down in the 1996 posted workers directive ([52]), paving the way for a likely
agreement by the Parliament and the Council before the European Parliament
elections. The proposal would:

set more ambitious standards to raise the
awareness of workers and companies about their rights and obligations;
establish rules to improve cooperation between
national authorities in charge of posting;
clarify the definition of posting;
define Member States’ responsibilities to verify
compliance with the rules laid down in the 1996 directive;
require posting companies to designate a contact
person for liaison with the enforcement authorities and to keep basic
documents available for the record;
improve the enforcement of rights and the
handling of complaints;
ensure that administrative penalties and fines
imposed on service providers by one Member State’s enforcement authorities
for failure to respect the requirements of the 1996 directive can be
enforced and recovered in another Member State.

Quality framework
for restructuring

Best practices for anticipating company restructuring and
minimising its impact on workers and social conditions were outlined by the
Commission in December in the form of an EU quality framework for anticipation
of change and restructuring (QFR). The quality framework offers guidance to companies,
workers, trade unions, employers’ organisations and public administrations in
order to facilitate the process of restructuring for businesses and workers via
better anticipation and investment in human capital, while minimising the
social impact. The Commission urges Member States to support and promote the
implementation of the quality framework and to consider applying it to public
sector employees. It also calls on all stakeholders to cooperate on the basis
of these guidelines.

Public employment services

Effective public employment services are essential for the
practical implementation of employment policies at national level. For example,
public employment services are well placed to advise individual jobseekers on
training, apprenticeships, traineeships and further education opportunities
adapted to their situation and to employers’ requirements.

With a view to improving their efficacy, the Commission came
forward with proposals ([53]) to create a network of public employment
services that could:

compare the performance public employment
services against relevant benchmarks;
identify best practices;
foster mutual learning.

The network would also provide support for the practical
implementation by Member States of employment policies, such as the youth
guarantee.

European Social
Fund 2014–20

The regulation on the European social fund for the period
2014–20 ([54]), with its 19 investment priorities
across four thematic objectives, provides a catalogue of concrete policy
intervention areas, much more explicit than in the previous round (2007–13).
The focus is on active labour market and inclusion measures, as well as on
education and public administration reform. In addition, each Member State must
ensure that at least 20 % of the ESF’s resources will be dedicated to
social inclusion.

The ESF is fully aligned to support the Europe 2020 strategy
and the implementation of the country-specific recommendations, and to
contribute to the achievement of the headline targets on employment, education
and poverty reduction. For this reason, the ESF in the next programming period
will amount at least to 23 % of cohesion policy funding.

Thematic concentration should guarantee that the focus of the
funding is placed on a few key policy priorities. In addition, a major effort
has been made towards simplification of procedures and better spending to
achieve more results.

Migration as a
tool for growth

EU migration legislation, such as the blue card directive ([55]), which facilitates the entry and residence of non-EU nationals taking up highly qualified employment, contributes towards
attracting certain categories of migrants. Co-legislators agreed on a compromise text on the seasonal workers’
directive ([56]), to be adopted in early 2014.
Negotiations on the intra-corporate
transferees’ directive ([57]) made progress, but further efforts are needed
by the Parliament and the Council to agree. The Commission also hopes for swift
progress on its proposal setting out rules for non-EU nationals coming to the
EU for studies,
scientific research and other exchanges ([58]). Above all, Member States must ensure that effective
measures are in place to promote integration ([59]). Migrants should be able to develop their full potential in an
environment where their fundamental rights are fully respected and where they
can participate actively in society.

The
correct implementation by Member States of the single permit directive ([60]), which gives certain equal rights to non-EU workers, will also be important.

Social
investment package

The social investment package (SIP) was adopted by the
Commission in February 2013. It sets out an integrated framework for social
policy reforms that Member States need to undertake to modernise their welfare
systems. The SIP provides policy guidance on how to ensure adequate standards
of living, supported by adequate benefits and quality services, and on how to
make social spending more effective and efficient. The SIP also stresses the
importance of activating and enabling policies to improve social inclusion and
access to the labour market. Preparing people to confront risks throughout
their lives, rather than simply repairing the negative consequences, is the key
to the social investment approach. The package provides policy guidance in a
number of areas where targeted investment, notably from the ESF, can make a
real difference.

Research, development, innovation

Innovation union

A report on the state of the innovation union 2012 ([61]) provided an update on
progress on the 34 commitments made under the innovation union flagship,
showing that more than 80 % of commitments were on track.

The innovation union is one of the seven flagship initiatives
of the Europe 2020 strategy for smart, sustainable and inclusive growth, which
contains 34 actions that aim at three goals:

making Europe a world-class performer in science;
removing obstacles to innovation such as
expensive patenting, market fragmentation, slow standard-setting and skills
shortages, which currently prevent ideas getting quickly to market; and
revolutionising the way the public and private
sectors work together.

Following a request from the European Council, the Commission
in September presented a new indicator of innovation output to benchmark
national innovation policies and monitor the EU’s performance against its main
trading partners. It measures the extent to which ideas stemming from
innovative sectors are capable of reaching the market, providing better jobs
and making Europe more competitive.

The 2013 innovation union scoreboard, published in
March ([62]), showed that innovation performance in
the EU has improved year on year, in spite of the economic crisis, but the
innovation divide between Member States is widening. The ‘Innovation union
competitiveness report 2013’ ([63]) was released in December and showed that
Europe remains a main knowledge production centre of the world, but lags behind
North America and Asia in fast-growing technologies of the future.

Support for
research and innovation from EU cohesion policy

Research and innovation continued to benefit from investments
under the EU’s Structural Funds in 2013 (approximately 25 % of available
funding is currently invested in this area). The reform of cohesion policy
agreed in December will require for the first time that all EU regions devote a
minimum percentage of the funds available during 2014–20 to research and
innovation, as well as developing ‘smart specialisation strategies’ for each
region.

[PHOTO
011]

Seventh
framework programme

The seventh framework programme for research, technological
development and demonstration activities (FP7), which was launched in 2007,
concluded in December. Over its 7 years, it helped fund more than 22 000
research projects for an EU budget contribution exceeding €40 billion,
including around 4 000 beneficiaries of European Research Council grants.
The ‘Sixth FP7 monitoring report’ ([64]), published in August, showed
that roughly 17 % of all participants were SMEs.

Horizon 2020

The legislation for Horizon 2020[65], the European Union’s
programme for research and innovation for the period 2014–20, was adopted in
December. With a budget of nearly €80 billion, some 30 % more in real
terms than the previous framework programme (FP7), and with simpler rules for
participation, Horizon 2020 is the biggest EU research programme yet, and one
of the biggest publicly funded research programmes worldwide.

Horizon 2020 will help secure the future knowledge base of
the European economy and make a long-term contribution to growth and jobs.
Built on three pillars — excellent science, industrial leadership and societal
challenges — it will fund all types of activities, from frontier science to
close-to-market innovation.

The programme for the first time brings all EU-level funding
for research and innovation under one roof with a single set of rules, and will
radically slash red tape. The overarching goal of a more coherent, simpler
programme should make it easier to participate, especially for smaller research
organisations and small businesses.

Future emerging technology flagships

The future emerging technology (FET) flagships have been
conceived to have a transformational impact on science, technology and society
overall. They are highly ambitious and rely on cooperation between a range of
disciplines, communities and programmes, requiring sustained support of up to
10 years. After very selective preparation, two initiatives — ‘Human Brain
Project’ and ‘Graphene’ — were selected in 2013 within FP7 ([66]). Both initiatives have huge
potential to create a revolution in the next generation of products and
materials in many fields, providing a competitive advantage in a wide range of
sectors including health and ageing, medicine, chemicals, electronics and ICT.

Destination Europe

With a view to attracting highly skilled
researchers to Europe, the EU organised three ‘Destination Europe’ events in
the United States in 2013. These events showcased the excellence of European
research and innovation and raised awareness of the career and funding
opportunities available through EU initiatives such as the European Research
Council and the Marie Skłodowska-Curie actions, as well as Member States’
programmes.

[PHOTO 012]

Innovation
investment package

In July, the Commission adopted the innovation investment
package, proposing to establish formal partnerships in research and innovation
with industry and Member States in key strategic sectors, such as bioeconomy,
aeronautics and electronics. Together, the six public–private partnerships and
four public–public partnerships would have a proposed budget of some €22
billion, of which around €8 billion from Horizon 2020 would secure €10 billion
from industry and €4 billion from Member States. The initiatives will boost the
competitiveness of EU industry in sectors that provide high-quality jobs and
will also find solutions to major challenges for society.

The digital agenda

The ‘connected continent’ legislative package: creation of
a single telecommunications market in the EU

As the world moves rapidly towards an Internet-based economy
— directly affecting everything from traditional services such as banking and
insurance to new sectors such as online retail, and from industrial production
to energy supply — ICT is increasingly seen as a source of the smart, sustainable
and inclusive growth envisaged in Europe 2020 ([67]).

However, the EU lacks a genuine single market for electronic
communications. The EU is fragmented into distinct national markets and as a
result is losing out on a major source of potential growth, according to the
Commission’s annual digital agenda scoreboard ([68]).

The Commission has adopted a legislative package for a
connected continent ([69]), aimed at building a connected,
competitive continent and enabling sustainable digital jobs and industries in
response to a European Council request to create a single telecommunications
market, in order to address the problems confirmed in the scoreboard.

[PHOTO
013]

Less digging equals cheaper broadband

The Commission proposed new rules ([70]) to cut the cost of rolling
out high-speed Internet by 30 %. Civil engineering, such as the digging up
of roads to lay down fibre-optic cables, accounts for up to 80 % of the
cost of deploying high-speed networks. This proposal may save companies €40–60
billion.

The objectives of the proposed regulation are to
substantially reduce the civil engineering costs and the costs caused by
unnecessary administrative burden, and to enhance the efficiency of deploying
high-speed electronic communications infrastructure by scaling up existing best
practices across the EU and improving the conditions for the establishment and
functioning of the internal market in an area supporting the development of
virtually all sectors of the economy.

E-invoicing

E-invoicing is an important step towards paperless public
administration (e-government) in Europe — one of the priorities of the digital
agenda — and offers the potential for significant economic as well as
environmental benefits. The Commission estimates that the adoption of
e-invoicing in public procurement across the EU could generate savings of up to
€2.3 billion. To further foster the uptake of e-procurement in Europe, the
Commission on 26 June presented a proposal for a directive on e-invoicing in
public procurement ([71]). This initiative would eliminate the
fragmentation of the internal market by promoting the use of e-invoicing in the
public sector (business-to-government (B2G) e-invoicing) and enhancing the
interoperability of national e-invoicing systems.

Support for the
digital agenda from EU cohesion policy

ICT continued to benefit from investments under the EU’s
Structural Funds in 2013. Around €14.6 billion has been invested since the
start of the current programming period, helping to connect some 4.7 million
more citizens to broadband. The reform of cohesion policy agreed in December
will require for the first time that all EU regions devote a minimum percentage
of the funds available during 2014–20 to investments linked to the EU’s digital
agenda.

Industrial policy and SMEs

Small and medium-sized enterprises — unleashing Europe’s
entrepreneurial potential

After 5 years of having to deal with an uncertain economic
environment, 2013 was the first year since 2008 that SMEs displayed a combined
increase in aggregated employment and value added. Viewed against the
unparalleled depth and complexity of the crisis, such a turnaround demonstrated
the resilience of the SME sector ([72]).

To return to growth and higher levels of employment, Europe
needs more entrepreneurs. New companies, including SMEs, create more than 4
million new jobs every year — 85 % of all new jobs in the EU’s private
sector. Recognising the integral role entrepreneurs play in economic recovery,
in January the Commission launched the ‘Entrepreneurship 2020 action
plan’ ([73]). A combination of investments,
regulatory advances and educational opportunities, the action plan will assist
the drive for growth and jobs.

[PHOTO
015]

Moving forward to an industrial renaissance to overcome
economic crisis

One lesson that has been learned from the crisis is that
Europe needs to keep a strong industrial sector as a central part of its
economy, as it is key to innovation, value creation and jobs. While industrial
performance has stabilised, industry’s share of Europe’s gross domestic product
(GDP) declined from 15.5 % in 2012 to 15.1 % in summer 2013 ([74]). The convergence between the
EU’s industrially most competitive countries and the moderate performers is
stalling. In this context, Europe must build upon its strengths.

EU industry remains a global leader in a range of
manufacturing sectors, including the chemicals, machinery, metals and
automotive sectors.
The EU share of global exports has diminished in
recent years, but overall has remained remarkably resilient despite the
strong growth of China and other emerging economies.

Commission measures to help businesses
overcome the crisis

Support for the steel industry

In June, the Commission proposed an action
plan for the European steel industry ([75]). It proposes specific policy actions for the steel
sector, which is facing serious challenges. One way is to support the demand
for EU-produced steel both at home and abroad, by acting to ensure EU steel
producers have access to non-EU markets through fair trade practices. Also,
costs for the industry need to be reduced, including those arising from EU
regulation. Innovation, energy efficiency and sustainable production processes
are vital for the next-generation steel products that are essential for other
key European industries. The action plan also provides for targeted measures to
support employment in the sector and accompany the restructuring to ensure that
highly skilled labour is retained in Europe.

Support for the construction industry

Construction companies wishing to expand
their business to another EU Member State need to know the challenges they
might face. Employment, environmental and safety requirements may differ, in
the same way as those for construction materials and products. In 2013, the
Commission launched several initiatives to help the construction industry. One
example is the new construction products regulation ([76]), which entered into force in July. It
will help enterprises overcome these difficulties, equipping construction
companies with the information they need to be successful in other EU
countries ([77]).

Support for the defence and security
industry

The EU’s defence industry employs around
400 000 people and had a turnover of around €96 billion in 2012. It drives
innovation and develops the capabilities which are needed to safeguard Europe’s
security and defence. At the same time, the sector suffers from budget
constraints and market fragmentation. In July, the Commission issued an action
plan ([78]) including proposals for fostering
innovation, growth and jobs through the promotion of civilian/military
synergies and measures to support defence-related SMEs. This communication was discussed at the European
Council in December 2013, together with the following three main themes: a
genuine internal market for defence; a comprehensive industrial policy that
creates opportunities for all Member States and industries of all sizes
throughout the EU; and synergies between civil research programmes, Horizon
2020, and those coordinated by the European Defence Agency ([79]). On that basis, the European Council has identified a
number of priority actions built around three axes: increasing the effectiveness,
visibility and impact of the common security and defence policy; enhancing the
development of capabilities; and strengthening Europe’s defence industry ([80]).

Reduced fees for SMEs under EU chemical
legislation

The Commission
lowered the fees and charges that SMEs have to pay to register chemicals. This
step should help SMEs that produce or trade chemicals to remain competitive
during the current difficult market situation. Depending on the size of the
company, SMEs could benefit from reductions of 35–95 % in relation to
standard registration fees and 25–90 % in relation to standard fees for
authorisation requests.

Improving SMEs’
access to finance

Access to finance is still among the top concerns of the EU’s
SMEs. Younger and smaller firms are the worst affected according to the 2013 access to finance survey ([81]). About one third of the SMEs
surveyed did not manage to get the full financing they had planned for during
2013, and 15 % of survey respondents saw access to finance as a
significant problem for their companies. Over the last few years, the
Commission has been constantly working to improve their situation. With a
budget of €1.1 billion, Commission-funded guarantees under the competitiveness
and innovation framework programme (CIP) helped mobilise loans worth more than
€13 billion up to the end of 2012, boosting nearly 220 000 small
businesses across Europe. These efforts will continue in the new programming
period 2014–20 with the help of the programme for the competitiveness of small
and medium-sized enterprises (COSME).

European
Investment Bank capital increase

In January, all 27 Member States unanimously approved a €10
billion fully paid-in capital increase for the European Investment Bank (EIB).
The capital increase will allow Europe’s long-term lending institution to
provide up to €60 billion in additional lending, over a 3-year period, for
economically viable projects across the EU. SMEs will be one of the four
priority sectors to be targeted by the additional lending, the other three
being innovation and skills, clean energy and modern infrastructure.

The additional capital was paid in by each Member State
according to its current shareholding. It comes on top of the EIB’s €50 billion
in regular annual lending.

[PHOTO
016]

Support for
small and medium-sized enterprises from EU cohesion policy

SMEs continued to benefit from investments under the EU’s
Structural Funds in 2013. Support has been provided to more than 73 500
start-ups, and 263 000 jobs in SMEs have been created since the start of
the current programming period. The reform of cohesion policy agreed in
December will require for the first time that all EU regions devote a minimum
percentage of the funds available during 2014–20 to support for SMEs. The
objective is to double the current support to around €140 billion for 2014–20,
partly through the increased use of financial instruments.

Tackling
cross-border tax obstacles

As a reply to the main concerns expressed by businesses, in
late 2013 the Commission proposed a new standard VAT return, which could cut
costs for EU businesses by up to €15 billion a year ([82]). The aim of this initiative
is to slash red tape for businesses, ease tax compliance and make tax
administrations across the Union more efficient.

As such, it fully reflects the Commission’s commitment to
smart regulation and is one of the initiatives set out in the regulatory
fitness and performance programme (REFIT) to simplify rules and reduce
administrative burdens for businesses.

Combating late payments

Both inside and outside their own borders, European SMEs are
particularly vulnerable to late payments; this is the cause of one in four
bankruptcies in Europe. The lack of protection for SMEs not only cripples
businesses and stalls economic growth, but might also discourage would-be
entrepreneurs from taking chances. The EU rules, decided in 2011, on combating
late payment in commercial transactions ([83]) were applied by Member States
to their national laws in 2013. They oblige public authorities to pay for goods
and services within 30 calendar days or, in very exceptional circumstances,
within 60 days. Businesses are now obliged to pay their invoices within 60
calendar days.

REFIT — making EU law lighter, simpler and cheaper

Regulating at EU level adds value in areas such as
competition, trade and the internal market to build a level playing field that
creates opportunities for businesses and consumers. It also protects the
health, safety and rights of citizens. EU legislation creates a common
framework by replacing or aligning 28 different national laws. It allows the EU
Member States to work together to deal with problems that do not respect
national borders.

However, ensuring that EU legislation is ‘fit for purpose’ is
essential for putting Europe back on track towards more growth and jobs. In his
2013 State of the Union address ([84]), in September, José Manuel Barroso,
President of the Commission, stressed the importance of smart regulation and
declared that the EU needs to be ‘big on big things and smaller on small
things’.

The Commission has made a concerted effort over the past few
years to streamline legislation and reduce regulatory burdens. Since 2005, the
Commission has approved 660 initiatives aimed at simplification, codification
or recasting. More than 5 590 legal acts have been repealed.

The top 10 consultation of SMEs on the most burdensome EU
laws has fed into the priorities in the Commission’s regulatory fitness agenda.
The consultation revealed in March that the most burdensome rules for SMEs were
the registration,
evaluation, authorisation and restriction of chemicals (REACH), value added
tax, product safety, the recognition of professional qualifications, data
protection, waste, the labour market, recording equipment for road transport,
public procurement and the modernised customs code.

Following up on the commitments in the communication on EU
regulatory fitness ([85]) in December 2012, which launched the
REFIT programme, the Commission set out in October, policy area by policy area,
where it will take further action to simplify or withdraw EU laws, reduce the
burden on businesses and make sure that implementation of EU laws is becoming
easier.

The October communication ([86]) includes the results of a
screening of all EU legislation and defines a wide range of actions which are
either already being implemented or which are proposed to the Parliament and
the Council. In addition, the Commission announced that it will publish a
scoreboard to track progress at European and national level.

Space policy and satellite navigation

Galileo

Until now, global navigation satellite system (GNSS) users
around the world have had to depend on American GPS or Russian Glonass signals.
The EU’s Galileo gives users a new and reliable alternative, run by civil, not
military authorities.

While European independence has been a key goal behind the
creation of the new system, Galileo is nevertheless 100 % interoperable
with GPS and Glonass, making it a fully integrated new element in the worldwide
global navigation satellite system, a powerful cornerstone that will allow more
accurate and more reliable positioning, even in high-rise cities where
buildings can obscure signals.

[PHOTO
017]

Galileo is creating a range of new business opportunities for
equipment manufacturers, application developers and providers of
reliability-critical services.

In 2013, tests of the signals produced by the EU’s four
global navigation satellite system satellites already in orbit proved that
signals are of an excellent quality and accuracy, even beyond expectations.
Galileo should provide its first services by the end of 2014 or early 2015.

The Commission intends to combine the system to be
established under the Galileo programme with its United States counterpart,
GPS, to increase flight safety. A bilateral agreement EU-US with a worldwide
impact, this synergy will help make air travel safer and help establish
much-needed international standards for air navigation systems.

Copernicus

In December 2013, Copernicus — Europe’s Earth observation
system — launched a new open-data dissemination regime, which provides free,
full and open access to a wealth of important environmental data. This access
will support the development of useful applications for a number of different industry
segments (e.g. agriculture, insurance, transport and energy). Copernicus is
already partly operational — mainly through data acquired from existing
satellite missions and sensors on the ground, at sea and in the air — and
providing the world with great benefits. When typhoon Haiyan hit the
Philippines on 8 November 2013, the Copernicus Emergency Response Service was
immediately activated and delivered the first damage-assessment maps ([87]). The same service was also
activated in order to assist the rescue teams in the floods that hit Sardinia
in late November 2013.

Regional and cohesion policy

In April, the Commission presented a second strategic report
on the progress of the 2007–13 cohesion policy programmes in the Member
States ([88]). The progress report looked at results
from the European Regional Development Fund (ERDF), the Cohesion Fund and the
European Social Fund (ESF).

With regard to the ERDF, the report noted progress and
improvements for citizens in several different areas. As a result of the investments
made since the beginning of the current period, 1.9 million more people now
have access to broadband, 2.6 million more people are served by water supply
and 5.7 million more by waste-water projects. Some 53 240 research and
technical development (RTD) projects and 16 000 business research projects
have received investment, and 53 160 start-ups have been supported.

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018 (1)]

A major reform of cohesion policy for the 2014–20 funding
period was approved in December ([89]). Cohesion policy will invest €325
billion (2011 prices) in the Union’s Member States, their regions and cities to
deliver the EU-wide goals of growth and jobs, as well as tackling climate
change, energy dependence and social exclusion.

The main elements of this reform were: the targeting of ERDF
investments at key growth sectors linked to the Europe 2020 objectives
(innovation and research, the digital agenda, support for SMEs and the
low-carbon economy); fixing clear, transparent, measurable aims and targets for
accountability and results; introducing conditions before funds can be
received; establishing a common strategic framework for the five European
Structural and Investment Funds (ERDF, Cohesion Fund, ESF, European
Agricultural Fund for Rural Development and Fisheries Fund); cutting red tape
and simplifying the use of EU investments; enhancing the urban dimension of the
policy; reinforcing cooperation across borders; strengthening the link between
cohesion policy and economic governance; and encouraging the increased use of financial
instruments to give SMEs more support and better access to credit.

STRUCTURAL FUNDS
(ERDF AND ESF) ELIGIBILITY 2014–20

[GRAPH
12]

Connecting Europe Facility

The Connecting Europe Facility is a crucial instrument for
achieving the objectives of Europe 2020 and was adopted in November 2013, after
the final agreement on the MFF 2014–20. It has an overall budget of €29.3
billion for 2014–20 to help fund trans-European transport, energy and
telecommunications networks. The facility should accelerate the completion of
trans-European networks and leverage funding from both the public and the
private sectors. It will help to build railways, inland waterways, ports,
electricity grids and gas pipelines. It will also contribute to the digital
single market to facilitate the mobility of citizens and businesses by
providing seamless cross-border public services such as e-procurement, e-health
or access to open data. The programme will also fund a limited number of
broadband projects, together with the EIB.

TRANS-EUROPEAN
NETWORKS (TENs)

[GRAPH
13]

Trans-European transport network

The EU aims to put in place a powerful trans-European
transport network (TEN-T) across 28 Member States, connecting east with west
and replacing today’s transport patchwork with a network that is genuinely
European. The Connecting Europe Facility will make €26 billion available for
this network, tripling the financing currently available.

An agreement between the institutions on the TEN-T was
reached in May. The regulation ([90]) sets 2030 as the deadline to make this
core network fully connected, multimodal and operational. The core network will
consist of nine major cross-border corridors that will improve links between
different parts of the EU, making it easier and faster for goods and people to
circulate across Europe.

In October, the Commission published new maps showing the
nine major corridors which will help to implement the core network through
better coordination between Member States, regions, infrastructure managers and
other stakeholders, under the leadership of European coordinators.

Justice for growth

EU justice
scoreboard

The quality, independence and efficiency of justice systems
are important structural components of sustainable growth and social stability
in all Member States and are fundamental to the effective implementation of EU
law. To promote improvement of the quality, independence and efficiency of
judicial systems, the Commission introduced in 2013 the EU justice
scoreboard ([91]), a new comparative tool which provides
objective, reliable and comparable data on the functioning of the justice
systems in the Member States. The EU justice scoreboard is also a priority in
the European semester, the EU annual cycle of economic policy coordination.

Effective justice systems are crucial for growth. As it is
national courts that play an essential role in upholding EU law, the
effectiveness of national justice systems is also fundamental to the effective
implementation of EU law and the functioning of the single market.

A common
European sales law to boost Europe’s growth

In 2013, the Commission continued to advance its work with
the Parliament and the Council for the adoption of the proposal for a
regulation on a common European sales law ([92]). At a time when Europe is
recovering from a deep economic and financial crisis, the EU must do all that
it can to expand opportunities for businesses to export into new markets and
increase consumer confidence. The common European sales law offers an optional
set of EU-wide contract law rules that businesses can use no matter where they
trade in the EU, thereby enabling them to cut costs to trade across borders.
The proposal facilitates the online trade of digital content, in particular
digital content which can be downloaded from the cloud.

No more costly
and bureaucratic stamps for public documents

In April 2013, the Commission adopted a proposal for a
regulation aiming at promoting the free movement of citizens and businesses by
simplifying the administrative formalities required for the cross-border
acceptance of public documents between EU Member States ([93]). These simplifications would
apply to public documents relating to birth, death, names, marriage, registered
partnerships, parenthood, adoption, residence, citizenship, nationality, real
estate, legal status and representation of a company or other undertaking,
intellectual property rights and absence of a criminal record. Under the
proposal, public documents falling under its scope would be exempt from
legalisation or similar formalities. A Member State would thus have to accept
as authentic public documents issued in another Member State without them
having to bear an authenticity stamp. The proposal also introduces Union
multilingual standard forms which citizens or businesses may request instead of
the equivalent domestic public document concerning birth, death, marriage,
registered partnerships, and legal status and representation of a company or
other undertaking.

New insolvency
rules

The Commission proposals on insolvency ([94]) are currently under
discussion. They aim at modernising the current rules on cross-border
insolvency, which date from 2000. The new rules will develop a new approach to
helping businesses overcome financial difficulties in order to avoid
liquidation so that they can stay in business, while protecting the right of
creditors to get their money back. The Legal Affairs Committee of the European
Parliament voted to support the Commission's proposal in December.

European
account preservation order

In December, the Justice and Home Affairs Council reached an
agreement on a general approach to the Commission proposal to create a European account
preservation order to facilitate cross-border debt recovery in civil and
commercial matters ([95]). The proposal facilitates cross-border
debt claims and gives creditors more certainty about recovering their debt,
thereby increasing confidence in trading within the EU’s single market.

An open and fair internal market

The Single Market Acts I and II: progress
made

Europe must act to create more
prosperity and jobs, and it must do this urgently in the wake of the financial
crisis. That is why the Commission adopted the Single Market Act (SMA), a
series of measures to boost the European economy and create jobs.

Since 1992, the single market has brought tremendous benefits
and created new opportunities. However, free movement of goods, services,
capital and people does not always happen smoothly. There is no truly
integrated European market in some fields. Pieces of legislation are missing,
and administrative obstacles and a lack of enforcement leave the full potential
of the single market unexploited.

Confidence in the single market also needs a strong boost to
help stimulate economic growth. Europe needs to act with more force and
conviction to show that the single market brings social progress and can be beneficial
for consumers, workers and small enterprises.

The SMA presented by the Commission in April 2011 ([96]) set out 12 levers to boost
growth and strengthen confidence. In October 2012 the Commission proposed a
second set of actions (SMA II) ([97]) to further develop the single market and
exploit its untapped potential as an engine for growth.

The Commission has tabled proposals for all 12 SMA I key
actions and 48 of the 50 complementary actions. Of the 12 key actions, eight
have been formally adopted to date: legislation on a European standardisation
system; legislation setting up the unitary patent; legislation on venture
capital funds; legislation on social investment funds; legislation on
alternative dispute resolution; simplification of the accounting directives;
revision of the professional qualifications directive; and infrastructure
funding (energy and transport). The modernisation of public procurement rules
was at an advanced stage by the end of 2013.

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020 (1)]

Negotiations in the Parliament and the Council are still
ongoing on three proposals: e-identification and signature; the posted workers
implementing directive; and revision of the energy tax directive.

On the SMA II, the Commission has tabled proposals for all
nine legislative key actions that require approval from the Parliament and the
Council. It has adopted communications and implementing rules on the remaining
three key actions not requiring Parliament and Council action.

All nine proposals for legislative key actions are currently
subject to negotiations in the Parliament and the Council. The European Council
agreed that these proposals should be given the highest priority with a view to
their adoption by the end of the current parliamentary cycle.

Professional qualifications

As the working age population in many
Member States shrinks, demand for highly skilled people between now and 2020 is
projected to rise by over 16 million jobs. If Europe is to meet this demand,
gaps in labour shortages need to be filled, for example by mobile and well-qualified
professionals from other EU Member States. They can be a key source of growth,
but only if they can easily go to where jobs are, and this requires their
qualifications in the EU to be recognised in a fast, simple and reliable way.
That is why the Commission put forward a proposal ([98]) to modernise the professional qualifications
directive ([99]).

The revision, which was adopted by the
Parliament and the Council, simplifies rules for the mobility of professionals
within the EU by offering a European professional card to all interested
professions, which would allow easier and faster recognition of qualifications.
At the same time, the directive reinforces safeguards for citizens and patients
by introducing an alert mechanism for health professions and professionals
dealing with children. The directive will enter into force in January 2014.
Member States will have to transfer it into national legislation within 2 years
from its entry into force, namely by the beginning of 2016.

Public procurement

Each year, public authorities spend
18 % of GDP on goods, services and works. Given the current budgetary
restrictions and economic difficulties in most Member States, public
procurement policy must, more than ever, ensure the optimal use of funds in order
to foster growth and job creation, and thereby help to achieve the objectives
of the Europe 2020 strategy. The Commission’s proposals for the revision of the
public procurement directives ([100]) formed part of an overall programme to
thoroughly modernise public tendering, including concessions, in the EU. In
June 2013, a political agreement was reached between the Parliament and the
Council on the proposals. Following the political agreement, the legal
conformity between the texts of the new directives has been ensured in view of
the Parliament vote in plenary scheduled for January 2014.

A
single market for transport

Fourth railway
package

The Commission is promoting better quality and more choice in
railway services in Europe. Far-reaching measures proposed in the fourth
railway package ([101]) in January encourage more innovation in
EU railways by opening EU domestic passenger markets to competition, as well as
technical and structural reforms. The Commission identified the fourth railway
package as a key initiative to generate growth in the EU when adopting its
Single Market Act II in October 2012.

The reforms would make the European Railway Agency a one-stop
shop issuing EU-wide vehicle authorisations, which would allow a 20 %
reduction in the time to market for new railway undertakings and a 20 %
reduction in the cost and duration of the authorisation of rolling stock.
Overall, this should lead to a saving for railway undertakings of €500 million
by 2025.

To encourage innovation, efficiency and better value for
money, the Commission is proposing that the market for domestic passenger
transport services by rail be opened up to competition from December 2019. And
to ensure fair access for all to railways, independent track (‘infrastructure’)
managers must run networks in an efficient and non-discriminatory manner, and
coordinate at EU level to underpin the development of a truly European network.

[PHOTO
022 ???]

A ‘blue belt’ for a single market for maritime transport

In July, the Commission set out plans to ease customs
formalities for ships, reducing red tape, cutting delays in ports and making
the sector more competitive, reducing the administrative burden for intra-EU
maritime transport to a level that is comparable to that of other transport
modes. Today, freight forwarders and exporters complain that if they choose to
send goods across Europe by short sea shipping, the heavy administrative burden
at ports causes additional costs and significant delays — ships can wait for
hours and sometimes days in ports for customs clearance. This makes the
maritime sector less attractive compared to other forms of transport,
especially road, unnecessarily bringing more trucks onto our already congested
roads.

The communication ‘Blue belt, a single transport area for
shipping’ ([102]) sets out two key proposals to ease formalities
for shipping by amending the existing Customs Code.

Easing customs formalities for intra-EU shipping
companies using a regular route within the EU and transporting mainly EU
goods.
Easing customs formalities for ships carrying
both EU and non-EU goods and which call at ports in non-EU countries.

[PHOTO
018 (2)]

Framework on
the future EU ports policy

The Commission presented proposals to enhance the efficiency
and overall quality of port services, improving port operations and onward
transport connections at 319 key seaports along Europe’s coastline. They are
designed to help port operators upgrade their services, as well as giving them
more financial autonomy. The European economy could save up to €10 billion by
2030 and help develop new short sea links upon implementation.

Revision of the
action programme on inland waterway transport

In revising the Naiades action programme in support of inland
waterway transport, the Commission focused on concrete actions to boost the
contribution of inland waterways to sustainable and efficient transport. The
actions relate to infrastructure, integration in multimodal logistic chains,
measures to reduce emissions, increasing training standards and information
exchange. Inland waterway transport is a safe mode of transport with low costs,
a lot of spare capacity, no congestion, low noise levels, low energy
consumption and a low carbon footprint.

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020 (2)]

E-vehicles and smart grids: first EU–United
States interoperability centre inaugurated

The first of the twin centres designed to
promote common standards in electric mobility and smart grids on both sides of
the Atlantic was inaugurated in 2013 near Chicago. Converging standards and
interoperability between smart grids and electric vehicles will allow for
deeper penetration of renewable energies into electricity systems. The launch
of the Interoperability Centre for Electric Vehicles and Smart Grids is the
fruit of 18 months of dedicated work by the Commission’s in-house science
service — the Joint Research Centre (JRC) — and the United States Department of
Energy (DOE). The second centre will be opened in the EU, at the JRC sites in
Petten, the Netherlands and Ispra, Italy, in 2014.

[PHOTO
021]

Urban mobility

In December, the Commission presented a package for more
competitive and sustainable urban mobility ([103]), outlining relevant
Commission initiatives for the years 2014–20. The package also sets out how the
Commission will strengthen its actions on sustainable urban mobility in areas
where there is EU added value and encourages Member States to take more
decisive and better-coordinated action. Urban areas are central to Europe’s
growth and jobs. Some 72 % of EU citizens live in urban areas, and 85 %
of EU gross domestic product (GDP) originates from them. At the same time,
urban areas are more exposed to the negative effects of transport, such as
congestion, poor air quality and high noise levels.

Air transport

In June, the Commission proposed to speed up the reform of
Europe’s air traffic control system, for better safety and oversight and better
air traffic management performance. The so-called ‘single European sky
2 +’ package ([104]) aims to head off the capacity crunch as
the number of flights is expected to increase by 50 % over the next 10 to
20 years. Currently, inefficiencies in the EU’s fragmented airspace inflict extra
costs of close to €5 billion each year upon airlines and customers. Airspace is
currently structured around national boundaries and so flights are often unable
to take direct routes. On average, in Europe, aircraft fly 42 km longer
than strictly necessary, causing longer flight time, delays, extra fuel burn
and CO2 emissions. By comparison, the United States controls the
same amount of airspace, with more traffic, at almost half the cost. With a
view to achieving improvements in these areas, the proposal aims at updating
the four regulations creating the single European sky (SES) and amending rules
governing the European Aviation Safety Agency (EASA).

Passenger rights

For the first time, in 2013, millions of holidaymakers
travelling in the EU were protected by comprehensive passenger rights
legislation, whether travelling by air or rail, by ship, bus or coach.

Since January, passenger rights apply to passengers of ships,
including large ferries and cruise ships on the sea or on rivers, lakes or
canals. They include non-discrimination based on nationality regarding tariffs
and other contract conditions, non-discriminatory treatment for disabled
persons and persons with reduced mobility, and adequate and accessible
information for all passengers before and during their journey.

In March, a regulation on bus and coach passenger
rights ([105]) became applicable, providing bus and
coach travellers throughout the EU with very similar new rights. The regulation
also imposes a number of obligations on bus and coach companies and terminal
managers concerning their responsibility towards passengers.

Also in March, the Commission proposed a revision ([106]) of legislation on air
passengers’ rights. The revision aims at ensuring better application of
passenger rights by clarifying the rights in case of denied boarding, long
delays of flights or cancellations. The Commission then adopted a
communication ([107]) on passenger protection in the event of
airline insolvency. It lists the measures that Member States may take and that
are liable to enhance the protection of passengers in case an airline goes
bankrupt. It also points out that passengers with stand-alone air tickets,
although not covered by the package travel directive, enjoy rights pursuant to
air passenger rights legislation.

Getting well informed before setting out on
a trip

Research shows that two thirds of
passengers are not aware of their rights. Therefore, in June, the Commission
launched a new campaign to inform the many people gearing up to travel during
the summer about their passenger rights, and how to exercise them if needed. In
addition, a mobile app is available covering all transport modes. The app is
available in 22 EU languages. For each potential problem, the app explains the
passenger’s rights and provides information on whom to contact in order to
complain.

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042]

Road safety

As vehicle checks are fundamental to road safety, the
Commission in July 2012 proposed the roadworthiness
package ([108]), a set of new rules to toughen up the
testing regime, to widen its scope and to increase the frequency of testing.
The new legislation is designed to improve the quality of vehicle tests,
including for scooters and motorbikes, by setting common minimum standards for
deficiencies, equipment and inspectors and clamping down on mileage fraud with
registered mileage readings.

In June, the Commission adopted two proposals ([109]) to ensure that, by October
2015, new cars will automatically call emergency services in case of a serious
crash. The eCall system automatically dials 112 — Europe’s single emergency
number — in the event of a serious accident. It communicates the vehicle’s
location to emergency services, even if the driver is unconscious or unable to
make a phone call. It is estimated that it could save up to 2 500 lives a
year. At a cost of less than €100 per car, eCall would speed up emergency
response times by 40 % in urban areas and by 50 % in the countryside.

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Since January 2013, all new driving licences issued across
the EU have been in the form of a plastic ‘credit card’, with a standard
European format and tougher security protection. The new European licence will
progressively replace the more than 100 different paper and plastic models
currently in use by more than 300 million drivers across the EU.

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044]

Clean transport

Much of today’s air pollution is caused by petrol and diesel
used by motor vehicles. Less pollution, less dependence on oil and fulfilling
greenhouse gas reduction targets can only be achieved with alternative fuels.
This is why, in January, the Commission proposed the clean power for transport package ([110]) to ensure the development of
alternative fuel stations across Europe. The proposals aim to break a vicious
circle: refuelling stations are not being built because there are not enough
vehicles; vehicles are not sold at competitive prices because there is not
enough demand; consumers do not buy the vehicles because they are expensive and
the stations do not exist. The communication proposed targets in Member States
for a minimum level of infrastructure for clean fuels such as electricity,
hydrogen and natural gas, as well as common EU-wide standards for equipment
needed to allow driving across the continent in ‘alternative’ vehicles.

In line with new European legislation (called the ‘Euro VI’
norm) ([111]), effective from the beginning of 2013,
nitrogen oxides and dust emitted from new types of trucks and buses will be
lowered. There will be a reduction of 80 % in emissions of nitrogen oxides
and 66 % in particulate matters. In addition to health and the
environment, the new legislation will also have a positive impact on industry:
the legislation introduces worldwide harmonised test procedures and standards
which should help boost European automotive industry exports.

The new recreational craft directive ([112]), approved by the Parliament
in October 2013, will reduce new boats’ annual emissions of nitrogen oxides and
hydrocarbons by 20 % and emissions of particulate matters by 34 %.
This is valid for several million motor boats, sailing boats, jet skis and
other recreational craft that navigate the European shores, lakes and rivers.
In summer, concentrations of nitrogen oxides from recreational craft can be
significant in water tourist resorts.

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Climate
action

Green Paper on a
2030 framework for climate and energy policies

In March, the Commission published a Green Paper to launch a
debate on EU climate and energy policies up to 2030 ([113]). The Green Paper raised a
range of issues for consideration and served as the document of reference for a
3-month public consultation which attracted 560 responses from stakeholders,
Member States and individuals.

The European Council welcomed the Green Paper at its meeting
on 22 May, and said it would return to the issue at its meeting in spring 2014
after the Commission comes forward with more concrete proposals. The Commission
intends to do so in January 2014.

EU strategy on
adaptation to climate change

The strategy’s overall objective is to make the EU more
resilient to the inevitable impacts of climate change by anticipating and
adapting to them. Adaptation to climate change needs to go hand in hand with
continued reductions in greenhouse gas emissions. The adaptation
strategy ([114]) was presented by the Commission in April
and was welcomed by the Council in June.

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037]

The strategy has three key goals:

promoting action by Member States;
climate-proofing EU-level policies and spending by taking into account adaptation
needs;
improving decision-making related to adaptation.

Progress in cutting greenhouse gas emissions

Reports published by the Commission ([115]) and the European Environment
Agency ([116]) in October showed the EU succeeded in
cutting its greenhouse gas emissions by 17 % between 1990 and 2011 even as
the economy grew by 45 % over that period. Estimates for 2012 indicate the reduction
since 1990 improved to 18 %.

With the help of the 2009 climate and energy package of
legislation ([117]), the Union is well on track to achieve
its Europe 2020 headline target of a 20 % emissions reduction. Member
States’ latest projections show that total emissions in 2020 will actually be
21 % below 1990 levels.

Greenhouse gas emissions from aviation

In October 2013, years of pressure by the EU paid off when
the Assembly of the International Civil Aviation Organisation (ICAO) agreed to
develop a global market-based mechanism to address international aviation
emissions. The measure will be developed by 2016 and applied by 2020.

In response to this positive result, and to give further
momentum to the global discussions, the Commission rapidly presented a proposal ([118]) to amend the scope of the EU Emissions Trading System’s application to aviation
emissions. The Commission proposes that only the part of a flight that takes
place in the regional airspace of the 31 European Economic Area (EEA) countries
would be covered by the system. The change would apply from the beginning of
2014 until the global market-based mechanism enters into force.

CO2 emissions from road vehicles

Following trilogue agreements with the Parliament, the
Council approved legislation setting the modalities for reaching the 2020
limits on carbon dioxide (CO2) emissions from new cars and vans, as
well as confirming the 2020 limit for vans. For new cars the CO2
limit will fall to 95 g/km from 130 g/km in 2015. In 2020, 95 %
of new cars will have to meet the limit, and from 2021 all new cars will have
to do so. For vans the limit will drop from 175 g/km in 2017 to
147 g/km in 2020. For both cars and vans the limit is averaged across the
entire new vehicle fleet.

The trilogue agreements still require confirmation by a
plenary session of the Parliament in early 2014.

Maritime emissions

In June, the Commission proposed legislation to establish a
system of monitoring and reporting of carbon dioxide emissions from the
shipping industry ([119]). The proposal targets large ships using
EU ports. It represents the first of the three steps in a strategy for reducing
emissions from the sector that the Commission set out in a communication ([120]) also adopted in June. The EU
monitoring and reporting system, which would start in 2018, is designed to be a
building block for a global system to address shipping emissions through the
International Maritime Organisation.

EU emissions trading

In December, the Parliament and Council approved an amendment
to the EU emissions trading directive ([121]) clarifying that the timing of
auctions of emission allowances may be changed to ensure the orderly
functioning of the carbon market. The amendment opens the way for the
Commission to postpone the auctioning of 900 million allowances until towards
the end of this decade. This ‘backloading’ initiative is intended to help
reduce the impact of the surplus of allowances in the EU emissions trading
system.

Support for the
low-carbon economy from EU cohesion policy

The reform of cohesion policy agreed in December will require
for the first time that all EU regions devote a minimum percentage of the funds
available during 2014–20 for the low-carbon economy (20 % of available
funds in more developed regions, 15 % in transition regions and 12 %
in less developed regions). This will ensure a minimum investment of at least
€23 billion for 2014–20 from the European Regional Development Fund, while
additional investments through the Cohesion Fund will further support the shift
towards a low-carbon economy.

Energy

Consumer rights

Gas and electricity price rises are a cause for concern and
need deep analysis. The Commission has undertaken a study on energy prices and
costs. This will analyse the composition of energy prices for household and
industrial consumers in the EU, the energy costs in industry and in households,
and price developments in the EU vis-à-vis price developments in other major
economies.

With a view to improving consumers’ awareness of their rights
and thereby increasing their active role in the energy market, the Commission’s
services prepared a reader-friendly list of European energy consumers’ rights.
This list includes consumer-protection provisions as specified in the
electricity ([122]) and gas ([123]) directives, the energy
efficiency directive ([124]) and the energy performance of buildings
directive ([125]).

The Vulnerable Consumer Working Group, organised under the
auspices of the Citizens’ Energy Forum ([126]), finalised a guidance report
that addresses the legislative requirements of the electricity and gas
directives for defining the concept of vulnerable customers and addressing
energy poverty where identified. The main drivers of vulnerability and examples
of Member State instruments and practices are provided with the aim of sharing
information and practices between Member States to mitigate the risk of energy
poverty and vulnerability in the energy sector.

Ecodesign and energy labelling

The main priority of the working plan 2012–14 under the
ecodesign directive ([127]) was to clear the backlog of 29 measures
from earlier work programmes under the previous directive ([128]). During 2012 and 2013, 24
ecodesign and energy labelling measures and an ecodesign guidance document were
finalised. The total savings generated by the regulations already adopted are
estimated at 760.5 TWh per year by 2020. With the rebound effects and
overlaps with other legislation factored in, these measures have contributed to
around one third of the Europe 2020 target.

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May 2013 European
Council

The strategic debate on energy held at the May European
Council highlighted the five priorities for Member States and the Commission in
the area of energy policy: the single energy market, investments,
diversification of energy sources, energy efficiency and competitiveness.

The Heads of State or Government reaffirmed their commitment
to delivering a true single European energy market by 2014 and stated that no
country should be left unconnected to the common grid by 2015. The leaders
pointed out in particular that significant investment in a new and intelligent
energy infrastructure is needed to secure the uninterrupted supply of energy at
affordable prices. It is also vital for jobs and sustainable growth and will
further help enhance competitiveness.

In the summit conclusions, the leaders outline that it
remains crucial to further intensify the diversification of Europe’s energy
supply and to develop indigenous resources to ensure security of supply, reduce
the EU’s external energy dependency and stimulate economic growth.

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Nuclear safety

The comprehensive and transparent risk and safety assessments
(stress tests) of EU nuclear plants, which were launched by the Commission and
the European Nuclear Safety Regulators Group (Ensreg) just after the Fukushima
nuclear accident in March 2012, confirmed that the standards of safety of
nuclear power plants in Europe are generally high. Nevertheless, the stress
tests have revealed that further improvements in nuclear safety in the EU are
needed. National nuclear safety regulators have set up national action plans
for the implementation of the necessary actions and the Commission is closely
following the progress made.

Following the Fukushima nuclear accident in Japan, the
European Council mandated the Commission to review the existing legal and
regulatory framework for the safety of nuclear installations. The Commission
made a proposal for a revised nuclear safety directive in October 2013 ([129]), the overall legislative
objective of which is to maintain and promote the continuous improvement of
nuclear safety and its regulation at EU level. Since the adoption of the first
basic safety standards directive more than 50 years ago, a significant body of
EU legislation on radiation protection has been built up and regularly updated.
Following the Commission’s proposal in 2012 ([130]), the new basic safety
standards directive is now close to being adopted by the Council. The directive
offers better protection for workers and the public as well as for patients and
strengthened requirements on emergency preparedness and response.

The Commission aims to further enhance its cooperation with
the International Atomic Energy Agency (IAEA). To this end, in September 2013
the Commission signed a memorandum of understanding (MoU) on nuclear safety
with the IAEA, creating an enhanced framework for extensive cooperation and
further synergies, and avoiding the duplication of effort. The MoU also
highlights the need to improve the visibility of the actions financed by the EU
or implemented with substantial technical assistance.

Offshore safety

The directive on safety of offshore
oil and gas operations ([131]) establishes minimum requirements for
preventing major accidents and limiting their consequences. The new rules will
make sure that the highest safety standards are followed at every offshore oil
and gas platform operated pursuant to the licence granted by the Member State.
It will also ensure that there is an effective and prompt reaction should an
accident occur. This would help minimise the possible damage to the environment
and the livelihoods of coastal communities. Member States must transfer the
directive into national law by July 2015.

Environment

The seventh environment action programme, ‘Living well,
within the limits of our planet’, will guide environment policy up to 2020. The
proposal ([132]), adopted by the Parliament and the
Council in November, aims to enhance Europe’s ecological resilience and
transform the EU into an inclusive and sustainable green economy. Protecting
and enhancing natural capital, encouraging more resource efficiency and
accelerating the transition to the low-carbon economy are key features of the
programme, which also seeks to tackle environmental causes of disease. The
results should help stimulate sustainable growth and create new jobs to set the
Union on a path to becoming a better and healthier place to live.

Bathing water report

Europe’s bathing waters continue to improve. Some 94 %
of bathing sites in the European Union meet minimum standards for water
quality, according to the European Environment Agency’s 2013 edition of the
annual report on bathing water quality in Europe ([133]). Water quality is excellent
at 78 % of sites, with 2 % more sites meeting the minimum
requirements compared to the 2012 report. Cyprus and Luxembourg stand out, with
all listed bathing sites achieving excellent water quality. Eight other
countries have excellent quality values above the EU average: Malta
(97 %), Croatia (95 %), Greece (93 %), Germany (88 %), Portugal
(87 %), Italy (85 %), Finland (83 %) and Spain (83 %). This
is an improvement on 2012’s results and follows a positive trend since
monitoring began in 1990. Quality is now monitored under the updated bathing
water directive ([134]).

Plastic bags

In some Member States, citizens use 500 single-use plastic
bags each year; in others they use four. In November, the Commission proposed
an obligation for all Member States to reduce their consumption of lightweight
plastic bags ([135]), giving them a free choice of the
measures they use.

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Sustainable timbering

The timber regulation ([136]) became applicable in March
2013, meaning all timber on the EU market has to be legally sourced. The new
law affects both imported and domestically produced timber and timber products,
and covers a range of products, from paper and pulp to solid wood and flooring.
The aim is to put in place procedures to minimise the risk of illegal wood
being traded.

Invasive alien species

In September 2013, the Commission proposed legislation to
tackle the issue of invasive alien species (IAS) in the EU ([137]). IAS are species that have
moved out of their natural range as a result of human action, reproducing and
spreading with negative consequences for the environment, the economy and
society. They are now the second most important cause of biodiversity loss in
Europe, after habitat loss. Managing the problem in the EU currently costs at
least €12 billion per year.

Ecolabel

The European Ecolabel, a voluntary scheme with a distinctive
flower label that promotes products and services that are kinder to the
environment, was extended to cover bathroom taps and showerheads ([138]), flushing toilets and
urinals ([139]) and imaging equipment such as
photocopiers ([140]).

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Air quality

EU policy has brought substantial improvements to air quality
in recent decades. Despite these advances, air pollution remains the principal
environmental cause of ill health in the EU, and poor air quality is still
having negative effects on many natural areas. In December, the Commission
proposed a new air strategy ([141]), with an agenda for further EU action.
The strategy was accompanied by a legislative proposal for a revised national
emission ceilings directive ([142]) and a proposal for a directive ([143]) which will, for the first
time, control emissions from medium-sized combustion plants and help achieve
the necessary emissions reductions. The strategy also contains non-regulatory
support measures to enhance capacity and cooperation at all political levels,
with priority areas including urban air pollution, research and innovation, and
the international dimension of air policy.

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Intellectual and industrial property
rights

Trade marks

In March, the Commission presented a package of initiatives[144] to make trade mark
registration systems all over the EU cheaper, quicker, more reliable and more
predictable. The proposed reform would improve conditions for businesses to
innovate and to benefit from more effective trade mark protection against
counterfeits, including fake goods in transit through the EU’s territory.

Patents

In December 2012, the regulations creating unitary patent
protection in the EU were adopted in enhanced cooperation between 25 Member
States (all Member States except Italy and Spain) [145]. An international agreement
among the Member States setting up a Unified Patent Court (the ‘UPC agreement’)
was signed in February 2013. In order for the UPC agreement to enter into force
and for the regulations to apply, the agreement must be ratified by at least 13
Member States, including the three Member States that had the highest number of
European patents. An amendment of Regulation (EC) No 1215/2012 ([146]) on jurisdiction and the
recognition and enforcement of judgments in civil and commercial matters is
also necessary in order to allow the entry into force of the UPC agreement and
to ensure coherence between both instruments. The Commission proposed the necessary
amendments in July 2013 ([147]). The Council reached agreement on them
in December and the European Parliament's is expected for March 2014.With the
whole system in place, it will be possible to obtain a European patent with
unitary effect — a legal title ensuring uniform protection for an invention
across 25 Member States — on a one-stop-shop basis, providing cost advantages
and reducing administrative burdens.

Trade secrets

There are substantial differences in the laws in place in EU
countries on the protection of undisclosed know-how and business information
(trade secrets). Some countries have no specific laws on the issue. Businesses
find it difficult to understand and access the systems of other Member States
and, when they become victims of misappropriation of confidential know-how,
they are reluctant to bring civil court proceedings as they are not sure the
confidentiality of their trade secrets will be upheld by the courts. The
current fragmented system has a negative effect on cross-border cooperation
between business and research partners and is a key obstacle to using the EU
single market as an enabler of innovation and economic growth.

That is why, in December 2013, the Commission proposed new
rules on the protection of trade secrets against their unlawful acquisition,
use and disclosure ([148]). The draft directive introduces a common
definition of trade secrets, as well as means through which victims of
trade-secret misappropriation can obtain redress. It will make it easier for
national courts to deal with the misappropriation of confidential business
information and remove from the market products that infringe trade secrets,
and make it easier for victims to receive damages for illegal actions.

Fair competition in the single market

Competition policy can help the
EU to overcome sluggish economic performance and boost sustainable growth. It
promotes innovation, makes sure that every economic actor plays by the same
rules, and keeps markets open and contestable. It not only benefits consumers
but also preserves a level playing field for every company that does business
in the EU. Specifically, the Commission fights anticompetitive behaviour such
as cartels and abuses of a dominant position, reviews mergers and state aid and
encourages liberalisation.

Companies in cartels that control prices or divide up markets
are protected from competitive pressure to launch new products, improve quality
and keep prices down. Consumers end up paying more for lower quality. If a
major player in a market abuses its dominant position to squeeze its
competitors out of the market, competition may be eliminated because of its
actions, resulting in higher prices or reduced choice for consumers.

The Commission also has the duty to review state aid in order
to prevent governments from spending public money to support local industries
or individual companies, thereby giving them an unfair advantage and damaging
competition and distorting trade.

Mergers may allow companies to develop new products more
efficiently or reduce production or distribution costs. Through increased
efficiency the market becomes more competitive, and consumers benefit from
better goods at fairer prices. But some mergers may reduce competition, for
example by creating or strengthening a dominant player. This is likely to harm
consumers through higher prices, reduced choice or less innovation.

Antitrust policy

The Commission has proposed a directive
on how citizens and companies can claim damages when they are victims of
infringements of the EU antitrust rules ([149]). The proposal is designed to
remove procedural obstacles that prevent all those that have suffered damage in
Europe from obtaining compensation for losses caused by anticompetitive
behaviour. It proposes clarity on what types of damages can be claimed and who
can claim them, making it more difficult for infringers to keep crucial
evidence from the court, clarifying the deadline for bringing compensation
claims and simplifying the way the amount of damages is calculated.

In 2013, the Commission adopted eight antitrust decisions.

The Commission fined Telefónica and Portugal
Telecom a total of €79 million for agreeing not to compete in the Iberian
telecommunications market between September 2010 and February 2011 ([150]).
The Commission imposed a €561 million fine on Microsoft for failing to comply with its
commitments to offer Windows users a choice of web browser with its
Windows 7 Service Pack 1, from May 2011 until July 2012 ([151]).
Legally binding commitments
by CEZ, the Czech electricity incumbent, to address concerns that it was
abusing its dominant market position by reserving capacity in the
transmission network in order to prevent competitors from entering the
market ([152]). In response, CEZ offered to divest
significant generation capacity, which the Commission has accepted.
Legally binding commitments from Star Alliance members Air Canada, United Airlines and
Lufthansa to alleviate concerns that the parties’ cooperation under a
revenue-sharing joint venture may be in breach of EU antitrust rules and
harming premium passengers on the Frankfurt to New York route ([153]). The parties have offered to make
slots available at Frankfurt and New York airports and to enter into
agreements with competitors, allowing them to offer more attractive
services.
The Commission has accepted commitments given by Penguin to address the concerns it had
that the company was engaged in anticompetitive practices aimed at
limiting retail price competition for e-books in the European Economic
Area (EEA), completing commitments already offered in 2012 by four other publishers
and Apple ([154]).
The Commission fined the Danish pharmaceutical
company Lundbeck and several producers of generic medicine a total of
€146 005 000 for having agreed to delay the market entry of
cheaper generic versions of Lundbeck’s brand Citalopram, a blockbuster antidepressant ([155]).
In the same vein, in December the Commission
imposed fines of €10 798 000 on the US pharmaceutical company
Johnson & Johnson and €5 493 000 on Novartis of Switzerland for
having delayed the entry onto the market of a generic version of a
powerful pain killer, Fentanyl ([156]).
The Commission accepted the commitments offered
by the German railway incumbent Deutsche Bahn regarding its pricing system
for traction current in Germany and made them legally binding ([157]). Traction current is the electricity
used to power locomotives.

The Commission also issued statements of objections in
antitrust cases in 2013 to Motorola Mobility
concerning its potential misuse of mobile phone standard-essential
patents ([158]); and to Romanian power exchange operator OPCOM about its practice of requiring
electricity spot-market participants to hold a Romanian VAT registration ([159]). The Commission sent
statements of objections to 13 investment banks,
the International Swaps and Derivatives Association (ISDA) and Markit in a
credit default swaps investigation concerning possible collusion to prevent
exchanges from entering the credit derivatives business ([160]). A statement of objections
was also sent to Altstoff Recycling Austria AG
regarding possible abuse of its dominant position on the markets for the
management of packaging waste in Austria ([161]).

The Commission market tested commitments from Visa Europe relating to multilateral interchange fees
(MIFs) for transactions with consumer credit cards in the EEA ([162]). Other market tests of commitments
were carried out in the Deutsche Bahn ([163]), Google ([164]) and Samsung ([165]) cases.

The Commission opened three formal antitrust proceedings in
2013: AB Lietuvos geležinkeliai (the Lithuanian
rail incumbent) ([166]), MasterCard ([167]) and Bulgarian
Energy Holding ([168]). A cartel investigation was also opened to investigate
whether several
container shipping companies have engaged in concerted practices ([169]).

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Cartels

The Commission issued three decisions on cartels.

In July, the Commission fined several automotive
suppliers a total of €141 791 000 for operating five cartels for
the supply of wire harnesses to Toyota, Honda, Nissan and Renault ([170]). Wire harnesses conduct electricity
in cars, for instance to start the motor, to open windows or to switch the
air conditioner on.
In December, in the framework of the
LIBOR/EURIBIOR case, the Commission fined eight international financial institutions
a total of €1 712 468 000 for participating in illegal
cartels in markets for financial derivatives. Four of these institutions
participated in a cartel relating to interest rate derivatives denominated
in euros. Six participated in one or more bilateral cartels relating to
interest rate derivatives denominated in Japanese yen. Both decisions were
adopted under the Commission’s cartel settlement procedure; the companies’
fines were reduced by 10 % for agreeing to settle.
Also in December, four European North Sea shrimp
traders were fined a total of €28 716 000 for operating a
cartel ([171]).

The Commission sent two statements of objections to companies
suspected of involvement in cartels in the synthetic rubber ([172]) and smart card chip ([173]) sectors, and also made
unannounced inspections in 2013 in the biofuel ([174]) and sugar ([175]) industries and online
distribution of consumer electronic products and small domestic appliances.

Mergers

In early December, the Commission adopted a package ([176])to simplify its procedures for
reviewing concentrations under the EU merger regulation ([177]). The package widens the scope
of its simplified procedure to review unproblematic mergers, bringing the total
ratio of cases treated under this procedure to 60–70 %. The amount of information
required for notifying transactions in all cases is also reduced, bringing
significant benefits for businesses and advisers in terms of preparatory work
and related costs. This initiative is a concrete step towards the goals of the
Commission’s REFIT programme to make rules and procedures less burdensome for
businesses.

During 2013, 257 mergers were notified to the Commission and
217 cases were cleared unconditionally ([178]). Ten mergers were cleared
with commitments in phase 1 and a further two with commitments in phase II. The
Commission prohibited two mergers: UPS/TNT ([179]) and Ryanair/Aer Lingus ([180]).

Mergers which were cleared unconditionally in first phase
investigation included, amongst others: the acquisition of Invensys’s railway
signalling division by Siemens; the creation of Penguin Random House, combining
parts of the publishing businesses of Bertelsmann and Pearson; the acquisition
by Intercontinental Exchange of the stock exchange NYSE Euronext; and the
acquisition by Vodafone of the biggest German cable network, Kabel Deutschland.
Two cases were cleared without conditions after a second phase investigation:
Olympic/Aegean and Nynas/Shell/Harburg refinery, both relying on a failing-firm
analysis.

Examples of mergers cleared conditionally include: the
acquisition of Belgian potato processor Lutosa by McCain, subject to the
divestment of Lutosa’s branded retail business in the EEA (which would have
reduced competition on the Belgian retail market for French fries); the merger
of Munksjö and Ahlstrom’s label and processing paper business, subject to
certain commitments by the parties; and the acquisition of the Italian aviation
equipment company Avio by General Electric, raising the concern that General
Electric could have been able to block export sales of the Eurofighter and
authorised under commitments to ensure that General Electric will not have
access to strategic information of the Eurojet consortium so that the
Eurofighter can continue to participate in future campaigns for export sales.

The two prohibitions in 2013 concerned UPS’s proposed
acquisition of TNT Express, prohibited on the grounds that the takeover would
have restricted competition in 15 Member States by reducing the number of
significant players in the market for express delivery of small packages to two
or three, and Ryanair’s proposed takeover of Aer Lingus, which would have
combined the two leading airlines operating from Ireland, with overlaps on more
than 40 routes.

State aid

In 2013, the Commission made progress on the state aid modernisation initiative ([181]), announced in 2012, to review
and consolidate the current state aid rules. State aid rules will be simpler
and leave greater room for aid measures without prior notification to the
Commission. The aim is to improve the focus of enforcement on the cases with
the biggest impact. This will be accompanied by improved evaluation and control
of compliance. As part of the initiative, in December the Commission adopted a
revised regulation on small aid amounts that fall outside the scope of EU state
aid control because they are deemed to have no impact on competition and trade
in the internal market (de minimis) ([182]). It will significantly reduce
the administrative burden on companies and Member States.

To accompany the legislative changes that will lead to the
banking union, the Commission reformed the special state aid rules for banks in
distress that have been used over the past 5 years.

The rules contain three main changes: a burden-sharing
requirement whereby banks must bear a larger share of the burden; no state aid
in the form of recapitalisation or impaired-asset relief will be approved
before the burden sharing takes place and the restructuring plan is approved by
the Commission; and a cap on executive pay for all aided banks (see Chapter 2
for further details on banking legislation).

Customs

The Parliament and the Council formally adopted the new
regulation on the customs enforcement of intellectual property rights
(IPRs) ([183]), an important aspect of ensuring that
European business is protected from fraudsters, and thereby protecting
employment.

The scope of IPRs that can be legitimately controlled and
protected at the borders is thereby extended. For example, counterfeit goods
sent in small consignments are now covered. This is of major importance since
postal and courier packages accounted for around 70 % of customs
interventions in 2012. This will keep the EU at the forefront of border
enforcement of IPRs, while also simplifying the work of customs. In 2012, EU
customs services detained almost 40 million products suspected of violating
IPRs. Although this is less than the 2011 figure, the value of the intercepted
goods is still high, at nearly €1 billion.

In December, the Parliament and the Council formally adopted
the regulations on the monitoring of trade in drug precursors within the EU and
between the EU and non-EU countries ([184]) [only one regulation shown in
the footnote, whereas this talks about multiple. Please provide info]. This
initiative will provide a major contribution to the international efforts
against the diversion of drug precursors and, therefore, will be a great
achievement in the fight against the manufacturing of illicit drugs. In
December the Commission also proposed a framework to harmonise customs infringements
and align the 28 national sets of related sanctions ([185]).

Union Customs Code in force

In October, the Parliament and the Council
formally adopted the Union Customs Code ([186]), which will ensure that customs continues its vital
work, but in an even more efficient, cost-effective way. The new code will
offer greater legal certainty to businesses, and increased clarity for customs
officials throughout the EU. It streamlines and simplifies customs rules and
procedures, and facilitates more efficient customs transactions in line with
modern-day needs.

Among the improvements that will be
introduced are measures to complete the shift by customs to a paperless, fully
electronic environment and provisions to reinforce swifter customs procedures
for reliable traders.

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Strategy to
step up the fight against the illicit tobacco trade

In June 2013, the Commission adopted a comprehensive
package ([187]) aiming at stepping up the fight against
the illicit trade in tobacco products, especially cigarette smuggling. This
strategy sets out a number of coordinated measures at national, EU and
international level and proposes specific actions in four key areas:

measures to decrease incentives for smuggling
activities;
measures to improve the security of the supply
chain;
stronger enforcement of customs, police and
border authorities; and
heavier sanctions for smuggling activities.

The contribution of trade to economic growth

Trade has become an important means of achieving growth and
creating jobs for the EU’s economy. Trade links Europe to the new global growth
centres and acts as a source of productivity gains. The contribution of
external demand to GDP is currently the EU’s most important source of growth,
as domestic demand components, both public and private, remain weak. The EU
benefits very significantly from globalisation and is well placed to gain even
more from growth in trade.

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The core objective of the EU’s common trade policy is to
maintain and, where necessary, reinvent Europe’s place in global supply chains.
While manufacturing in the EU remains of pivotal importance, it has to be
acknowledged that in many sectors countries are less able to make products on
their own. Trade is more and more about adding layers of value, from
R & D and design to manufacturing of components, assembly and
logistics.

In 2013, the EU pursued its ambitious agenda of bilateral
trade negotiations in line with the ‘global Europe’ policy change of 2006. The
EU started to negotiate deep and comprehensive free trade agreements with key
trade partners such as the United States and Japan.

In October 2013, José Manuel Barroso, President of the
Commission, and Stephen Harper, Prime Minister of Canada, reached a political
agreement on the key elements of a comprehensive economic and trade agreement.
It will be the first free trade agreement between the EU and a G8 country. It
will remove over 99 % of tariffs between the two economies and create
sizeable new market access opportunities in services and investment. Based on
the political agreement, technical negotiations will have to be completed so as
to finalise the legal text of the agreement.

In 2012, Canada was the EU’s 12th most important trading
partner, while the EU is Canada’s second-largest trading partner, after the
United States. In 2012, the value of bilateral trade in goods between the EU
and Canada was €61.8 billion. An economic study jointly released by the EU and
Canada before the negotiations showed that a comprehensive trade agreement
could increase their bilateral trade by over €25 billion.

Transatlantic trade and investment
partnership

The EU–United States trade relationship is
already the biggest in the world. Every day we trade goods and services worth
€2 billion, therefore every trade barrier we remove could result in significant
economic gains. The transatlantic trade and investment partnership (TTIP) that
is presently being negotiated between the EU and the United States aims at
removing trade barriers in a wide range of economic sectors to make it easier
to buy and sell goods and services between the EU and the United States. On top
of cutting tariffs across all sectors, the EU and the United States want to
tackle barriers behind the customs border, such as differences in technical
regulations, standards and approval procedures. These often cost unnecessary
time and money for companies who want to sell their products on both markets.

The EU continued its work in multilateral trade forums such
as the World Trade Organisation (WTO) in Geneva, which culminated at the ninth
WTO Ministerial Meeting held in Bali, Indonesia, in December 2013.

WTO conference in Bali

The successful outcome of the WTO
conference in Bali is a small but significant step towards the completion of
the Doha development agenda (DDA), bringing renewed hope that the world’s
poorer countries will not be left outside the mainstream of the global economy.

The conference achieved significant success
in three areas: it sealed a deal that will make trading around the world much
smoother by simplifying customs procedures; it made sure food supplies can be
secured for the poorest; and it secured arrangements that will benefit
least-developed countries. This provides the basis for furthering the
now-stalled DDA.

The trade facilitation agreement alone
stands to create an additional €50 billion worth of trade per year worldwide,
and will help traders save around €325 billion per year in costs related to red
tape at customs. If you compare this to the expected benefit of the TTIP (an
additional €119 billion in GDP growth for the EU and €95 billion for the United
States), the magnitude of the trade facilitation agreement becomes clearer.

The transitional regulation on Member States’ bilateral
investment treaties (BITs) ([188]) entered into force in early 2013 and is
in the implementation phase. The EU is competent for negotiating investment
protection provisions. It will therefore include the latter in its free trade
agreements or other international trade agreements and thereby create a
‘package’ of market access and protection rules that responds in a more
adequate manner to the tight linkage between trade and investment created by
ever more widespread global value chains.

Agricultural policy, and fisheries and maritime
policies

A reformed common agricultural policy for
intelligent and green growth in rural areas

In June, the Parliament, the Council and the Commission
reached a political agreement on reforming the common agricultural policy (CAP)
post-2013, which was confirmed by the deal sealed on the MFF in December. This
was a major achievement after almost 2 years of negotiations between the three
EU institutions.

The legislative package includes four basic regulations for
the CAP: (i) on direct payments ([189]); (ii) on the single common
market organisation (sCMO) ([190]); (iii) on rural development ([191]); and (iv) on a horizontal
regulation for financing, managing and monitoring the CAP ([192]).

The package will lead to far-reaching changes, making direct
payments fairer and greener, strengthening the position of farmers within the food
chain and making the CAP more efficient and more transparent. The CAP is aimed
at ensuring the competitiveness of European agriculture, not only from the
point of view of food security and the quantity, quality and diversity of food
products, but also in terms of sound management of natural resources. This new
direction, proposed by the Commission in October 2011, has been widely
supported both in the Parliament and in the Council, where almost all Member
States supported the reform. The reform will come into force progressively.

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The outlines of the agreement are the following.

A fairer CAP — The distribution of the CAP budget
will ensure that no single Member State receives less than 75 % of
the Union average by 2019. Within a given Member State or region,
divergences in the level of aid will be reduced from one holding to the
next; basic aid per hectare may in principle not be less than 60 % of
the average of the aid disbursed by 2019 in a single administrative or
agronomic area. Member States will be able to increase support for small
and medium-sized farms by allocating higher levels of aid for the ‘first
hectares’ of a holding. This adaptation will help to valorise the
diversity of the agricultural sector across the Union, better answering
the expectations of EU citizens in terms of the quality of their food.
A greener CAP — All Member States, all rural
areas and all farmers will take simple, proven steps to promote
sustainability and combat climate change. Between 2014 and 2020, over €100
billion will be invested to help farming meet the challenges of soil and
water quality, biodiversity and climate change. One third of direct
payments will be directly linked to climate- and environment-related
actions; one third of the budget for rural development programmes will
have to be allocated to agri-environmental measures, support for organic
farming or projects associated with environment-friendly investment or
innovation measures.
A more efficient CAP — Considerable improvements
have been made to the functioning of the single Common Market Organisation
(CMO) in order to improve the competitiveness of EU producers. Amongst the
most important of these improvements are the enhancing of producer
cooperation in order to improve their position in the food chain, the end
to the sugar quota regime on 30 September 2017 and the confirmation of the
end of the system of wine planting rights at the end of 2015, with the
introduction of a system of authorisations for new vine planting from
2016. Other amendments to the single CMO rules aim to improve the market
orientation of EU agriculture in light of increased competition on world
markets while providing an effective safety net for farmers in the context
of external uncertainties (together with direct payments and options for
risk management under rural development).
A better-targeted CAP — Young farmers are a
central concern under the new CAP. Special measures are directed at young
farmers and are compulsory for Member States. In addition, a specific
voluntary instrument for small farms has been set up. The amount of
funding to support research, innovation and knowledge sharing will also be
doubled, to boost the competitiveness and the sustainability of the
European farming sector.
A more efficient and transparent CAP — The CAP
instruments will allow each EU Member State to fulfil the common
objectives in an efficient and flexible manner, taking into account the
diversity of the 28 Member States. Rural development programmes will be
better coordinated with other European funds, and the sector-based
approach will be replaced by a more adaptable national or regional
strategic approach. Information on all the beneficiaries, including
natural persons, of all CAP aid will be made public, with the exception of
the very small amounts allocated to small farmers.

Common fisheries policy

Common fisheries policy reform

The year 2013 saw the much anticipated reform of the common
fisheries policy (CFP) ([193]). Political agreement between the
Parliament and the Council was reached in May and the reforms will come into
effect on 1 January 2014, with a structured and progressive timetable for
implementation.

The reforms present a robust plan of action that places
greater emphasis on environmental, economic and social sustainability. The aim
is to support the long-term growth of the fishing sector, create job
opportunities in coastal areas and, ultimately, provide EU citizens with a
healthy and sustainable supply of fish.

Sustainable and responsible fishing

To rebuild a vibrant fishing economy in Europe, fish stocks
need to return to a healthy state. In order to achieve this, fishing will
progressively be managed according to maximum sustainable yield (MSY) levels,
and the setting of quotas will respect scientific advice. MSY refers to the
largest catch that can be taken from a fish stock over an indefinite period
without harming it. Managing stocks according to MSY will mean going from
fishing desperately on smaller fish stocks to fishing rationally on abundant
ones. It will lead to larger stocks, and thus higher catch potential, higher
profit margins and higher return on investment

Discarding, the practice of throwing unwanted fish overboard,
is estimated at 23 % of total catches. Discards will now be phased out,
according to a precise timeline for implementation (progressively between 2015
and 2019). This ban will lead to more reliable data on fish stocks, support
better management and improve resource efficiency. It is also an incentive for
fishermen to avoid unwanted catches by means of technical solutions such as
more selective fishing gear.

These same principles of sustainability, conservation of fish
stocks and reliance on scientific knowledge applied at home will also be core
elements of the EU’s sustainable fisheries partnership agreements (SFPAs),
which allow the EU fleet to operate in foreign waters.

Taking
decisions at the right level

The new CFP will bring decisions on technical and
conservation measures closer to the fishing grounds, in particular to national
administrations, fishermen and other interested groups — those with the local
expertise to make decisions in the best interest of fish and fishermen alike.

Small-scale fisheries represent a significant proportion of
the industry — 77 % of the total EU fleet — and are central to the future
sustainable development of European fishing. This is why the reform offers
support to this part of the sector and extends the right for Member States to
restrict fishing in a zone within 12 nautical miles of the coastline.

The up-to-date information on prices and market trends
provided by the European Market Observatory for Fisheries and Aquaculture
Products (Eumofa) ([194]), a new web tool launched by the
Commission in 2013, will enable producers to better meet demand and increase
the market value of their products.

Consumer-friendly labels

Recognising how confusing product labelling
can be, and as part of the new common organisation, the Commission has
introduced new guidelines on labelling for fish and aquaculture products in the
EU to help consumers make informed decisions on the food they eat. Labels will
include details of where the fish was caught and by whom, and how it was
produced, as well as the date of minimum durability and whether it has been
defrosted or not.

Aquaculture

A better framework for aquaculture will contribute to
increased production and supply of seafood in the EU, reduce the dependence on
imported fish and boost growth in coastal and rural areas.

The Commission, in cooperation with Member States, introduced
strategic guidelines for aquaculture ([195]) to address the challenges
facing the sector and identify areas, such as administrative simplification,
spatial planning, market organisation, and better labelling and information, to
help market forces unlock the potential of the EU aquaculture sector.

[PHOTO
027]

European
maritime policy

The priority in 2013 was the implementation of the blue
growth agenda, with a particular focus on those areas with the greatest
economic potential. The Marine knowledge 2020 initiative has moved from the
pilot phase to the operational phase with over 100 organisations in Europe
having agreed to open up their data on our seas and coasts, which was
previously not widely available.

The proposal for a directive on maritime spatial planning
(MSP) and integrated coastal management (ICM) ([196]) is in its final stages of
discussion by the Parliament and the Council. This is a cornerstone of the EU’s
blue growth agenda, as MSP and ICM are expected to boost sustainable maritime
growth by facilitating the spatial development of emerging sectors, such as
renewable energy or aquaculture, whilst taking into account the health of
marine ecosystems.

By working with the relevant regional stakeholder, the
Commission was also able to address the specific needs of different sea-basins.
The Atlantic action plan ([197]) adopted this year reflects the
sea-basin’s importance to the EU’s integrated maritime policy in terms of its
potential for delivering growth. It provides a template for how the EU’s
Atlantic Member States, their regions and the Commission can help create
sustainable growth in coastal regions.

The importance of marine research in the Atlantic was
underlined by the Galway Statement on Atlantic Ocean Cooperation ([198]) between the European Union,
the United States and Canada signed on May 2013. Its aim is to extend the depth
and breadth of research into the workings of the Atlantic Ocean and its
interaction with the Arctic.

Elsewhere, progress has also been made in other areas,
notably in the Baltic Sea. The Baltic action plan ([199])recognises that the region
should build on its assets and maximise its potential from its leading
innovation and research sector, strong maritime clusters, a proactive approach
towards marine environment challenges, and well-established cooperation.

Budget

The multiannual financial framework
2014–20

On the way to
adoption

The negotiations among EU Member States followed the
presentation of the Commission proposals for the MFF 2014–20 on 29 June
2011 ([200]). They culminated in an important
agreement reached between the Heads of State or Government at the European
Council on 7 and 8 February 2013. EU Member States agreed to limit the maximum
possible expenditure to €959.99 billion in commitment appropriations (2011
prices). The ceiling for overall payment appropriations was set at €908.40
billion (2011 prices).

Under the provisions of Article 312(2) of the Treaty on the
Functioning of the European Union (TFEU), the Council adopts the MFF regulation
by unanimity after obtaining the consent of the Parliament, given by a majority
of its component members. This meant that the consensus in the European Council
still had to be subject to a vote in the Parliament.

The Parliament’s position was set down in a resolution
adopted in March 2013 ([201]). The key issues identified by the
Parliament were the need for a compulsory and comprehensive revision of the MFF
following the coming into office of the next Parliament and the new Commission
after the 2014 European elections; maximum overall flexibility between and within
headings and between financial years of the MFF; a reform of the own resources
system; and the unity of the EU budget and more transparency on the financial
and budgetary consequences of Union activities. The Parliament did not contest
the overall levels of commitments and payments that had been agreed by the
European Council.

The negotiation process intensified in May and June and a
political agreement was reached on 27 June 2013 in a trilateral meeting between
the President of the Parliament, the Irish Presidency of the Council and the
President of the Commission. The Commission agreed to undertake a mid-term
review of the MFF by 2016 at the latest, which should be accompanied by
legislative proposals for a revision of the MFF regulation. The Council agreed
to increased flexibility on the carrying forward of unexecuted payment margins
to later years, and to a rollover of unused margins for commitment
appropriations from 2014–17 to be made available from 2016 onwards for policy
objectives related to growth and employment. The Parliament’s concern to ensure
strong support for measures on youth employment, education, research and SMEs
was recognised by the inclusion of a provision on the frontloading of
expenditure in these areas in 2014 and 2015. On own resources, there was an
agreement on a roadmap to further address this important issue in a high-level
group of representatives from the three institutions that would be convened for
this purpose. The Council also agreed to adopt as a matter of urgency the €7.3
billion amendment of the 2013 EU budget.

The deal on the 2014 EU budget and on the various pending
amending budgets for 2013, reached in the conciliation procedure of 12 November
2013, was important for the Parliament’s consent regarding the EU’s long-term
financial plan that was expressed soon after, on 19 November. The Council then
formally adopted the regulation laying down the MFF for 2014–20 on 2 December
2013.

COMMITMENT
APPROPRIATIONS ACCORDING TO BUDGETARY HEADINGS

[GRAPH
14]

€1 trillion to
invest in Europe’s future

Through the MFF, the European Union will invest almost €1
trillion in growth and jobs between 2014 and 2020. One single year’s budget
represents more money — in today’s prices — than the whole Marshall plan in its
time. This modern, future-oriented budget can make a real difference to
people’s lives. It will help to strengthen and sustain the recovery underway
across the EU. There is funding so we can build our way out of the crisis,
financial support for those below the poverty line or looking for a job,
investment opportunities for small companies and assistance for local
communities, farmers, researchers and students.

The MFF 2014–20 is geared towards investment in the 28 Member
States on common challenges: boosting growth and creating jobs across the EU,
making Europe safer and increasing the EU’s influence in the world. It does not
seek to fund what national budgets could finance themselves, but focuses on
where European funding makes a real difference. It funds what would not be funded
or what would be more expensive to fund from national budgets.

The MFF 2014–20 is a modern, long-term financial plan for the
EU in the 21st century. It brings the following important innovations, showing
the EU budget’s clear European added value.

There will be a significant contribution to job
creation. At least €70 billion (about €10 billion per year) will be
available under the ESF to help people search for a job. The new Youth
Employment Initiative  linked to the ESF is worth at least €6 billion and
will support the implementation of the youth guarantees in 2014 and 2015.
The reformed cohesion policy will make up to
€366.8 billion ([202]) available to invest in Europe’s
regions, cities and the real economy. It will be the EU’s principal
investment tool for delivering the Europe 2020 goals.
More young people than ever before can plan their
stay abroad with support from the EU’s new Erasmus+ programme, which
provides almost €15 billion ([203]) to develop skills and mobility.
European culture, cinema, television, music,
literature, performing arts, heritage and related areas will benefit from
increased support under the EU’s new ‘Creative Europe’ programme, with a
budget of almost €1.5 billion ([204]).
EU-funded research and innovation will do more to
improve Europeans’ quality of life and to enhance the EU’s global
competitiveness. Horizon 2020, the new programme for research and
innovation, is equipped with a budget of almost €80 billion ([205]), around 30 % more than in the years 2007–13
in real terms.
SMEs are the backbone of Europe’s economy,
accounting for around 99 % of all European businesses and providing
two out of three private sector jobs. Support for SMEs under the ERDF is
set to double from €70 billion to €140 billion over the 7 years, and the
new COSME programme, the first EU programme targeted at SMEs, will provide
€2.3 billion ([206]) to ease SMEs’ access to markets and
offer loan guarantees and risk capital.
Growth and jobs in Europe crucially depend on
investment in infrastructure. The new €33.3 billion ([207]) Connecting Europe Facility will help build roads,
railways, electricity grids and gas pipelines, and the infrastructure and
services for the digital single market, by providing the crucial financial
support needed to close the missing links in Europe’s infrastructure
networks that otherwise would not be built (€26.3 billion for
transport ([208]), €5.9 billion for energy, and €1.1
billion for digital).
Scarce public money increases the need to unlock
other sources of finance, and thus generate a leverage effect for the EU
budget compared to direct funding by grants. This is precisely the purpose
of financial instruments, such as loans, guarantees, equity and other
risk-sharing instruments, which can be used more widely in the MFF 2014–20.
At least 20 % of the entire budget will be
spent on climate-related projects and policies. This commitment could yield as much as €180
billion in climate finance in all major spending areas, including
Structural Funds, research, agriculture, maritime policy and fisheries,
and development.
The reformed CAP is a strong response from the EU
to the big challenges of today, such as food safety, climate change, and sustainable growth and job creation in
rural areas. It also responds better to people’s expectations: direct
payments will be fairer and greener, with a budget of €312.7 billion ([209]), while there will be €95.6
billion ([210]) set aside for rural development.
The funding rules will be much simpler and
therefore easier for beneficiaries to understand and less prone to errors.
Altogether, around 120 simplification measures are going to be introduced.
An open and safer Europe is crucial for its citizens.
The future budget will help ensure that EU activities which stimulate
economic, cultural and social growth can develop in a stable, lawful and
secure environment. It will help people feel at ease when living,
travelling, studying or carrying out business in other Member States.
As a responsible global player, the EU will
continue its engagement with the rest of the world. Relations with the
immediate neighbourhood, to the east and south, and with the EU’s
strategic partners will remain a top priority. EU funding will focus even
more on helping the poorest in the world by concentrating support on fewer
countries (like those in sub-Saharan Africa) and fewer sectors (like
sustainable and inclusive growth and good governance).

Further information on the MFF 2014–20 and the new generation
of EU expenditure programmes can be found in a comprehensive way on the
Commission’s website ([211]).

[PHOTO
028]

Resources of
the next multiannual financial framework

No significant changes were approved to the way the next MFF
would be financed. However, the agreement on the setting up of a high-level
group with members from the Parliament, the Council and the Commission means
the discussion on this issue will continue. In 2014, a first assessment will be
made available. National parliaments will have the opportunity to assess the
outcome of the work in the context of an interparliamentary conference in 2016.

COMPARISON BETWEEN
THE NEW AND LAST TWO FINANCIAL FRAMEWORKS

[GRAPH
25]

Evaluation
of the EU budgets for 2011 and 2012

In April 2013, the Parliament granted discharge to the
Commission for the implementation of the 2011 budget. This positive and
important decision concluded a period of several months when both arms of the
budgetary authority (the Parliament and the Council), as well as the Court of
Auditors, scrutinised how the resources from the 2011 budget were used. The Commission’s
consistent efforts over recent years to improve the management and control of
EU funds were recognised by the discharge. The Commission welcomed in
particular the calls from the Parliament and the Council for further
simplification of the rules and processes in order to reduce the risk of errors.
As usual, in the context of the budgetary discharge procedure, the Parliament
as the budgetary discharge authority, as well as the Council and the Court of
Auditors, issued several requests and recommendations with regard to EU
financial management, which are being implemented by Commission services.

In November 2013, the Court of Auditors published its report
on the implementation of the budget concerning the financial year 2012. In this
report, the Court stated that, in 2012, the overall quantified error rate for
EU spending was 4.8 %. This was higher than the error rate in 2011. However,
as the Court itself acknowledged, this was partly due to the updating of its
sampling approach. The error rate in cohesion policy, energy and transport was
in line with the improved rates from previous years, which confirmed the
improved functioning of the system achieved in the current programming period.

The
EU budget for 2013

The 2013 EU budget reflected the growth- and
innovation-oriented goals of the Europe 2020 strategy. At the same time, it
reflected the continued difficult economic situation in many Member States. The
Commission had expressed concerns that the budget would in all likelihood not
be sufficient to pay all the incoming bills, as the budget adopted was well
below the Commission estimates necessary for 2013. That is why the Commission
proposed in March 2013 an amending budget for an extra €11.2 billion, required
to reimburse the beneficiaries of EU-funded programmes that were completed
across Europe in 2012, as well as to honour the cohesion policy claims that
would fall due in 2013. The amending budget was approved in November 2013.

The
EU budget for 2014

The EU budget for 2014 was adopted on 20 November 2013 as the
first budget of the new MFF 2014–20. It amounts to €142.6 billion in commitment
appropriations and €135.5 billion in payment appropriations. The 2014 budget is
6.2 % lower than the EU budget for 2013 for both commitments and payments.

Putting in
place the new programmes under the 2014–20 multiannual financial framework

The start of the new programming period 2014–20 provides the
occasion to launch new programmes that respond better to the current challenges
and focus on stimulating growth, employment and competitiveness. Despite cuts,
the 2014 budget shows a 3.3 % increase in commitments in the
‘Competitiveness for growth and jobs’ area as the EU’s reduced resources focus
on measures to tackle unemployment and generate growth. These include Horizon
2020 — the EU’s new funding programme for research and innovation (€9 billion),
the YEI (€3.6 billion), the Connecting Europe Facility (close to €2 billion)
and support measures for Europe’s businesses, in particular for SMEs.

Fulfilling the
EU’s obligations

Apart from planning the budget for new expenditure programmes
the EU has to meet its past and present obligations vis-à-vis the beneficiaries
of EU funding programmes prior to 2014. Only €10.3 billion is provided to cover
the new obligations the EU will enter into in 2014. Out of the overall amount
of €135.5 billion provided for payments, €71.1 billion (more than 50 %)
will go to honour the outstanding payment obligations for programmes prior to
2014.

BREAKDOWN BY
HEADINGS OF THE 2014 BUDGET APPROPRIATIONS IN COMMITMENTS AND CURRENT PRICES

[GRAPH
15]

Restraint on
administrative expenditure

For the second year running, the Commission proposed a
1 % reduction in its staff numbers (excluding the impact of the accession
of Croatia) as part of its proposal to reach a 5 % reduction in staff over
5 years. The Commission also proposed a 1.1 % cut in discretionary areas
of its own administrative expenditure. The overall decrease in the EU budgetary
heading on administration, however, was lower (– 0.2 %), mainly due
to the growing number of pensions to be covered from the EU budget and the
costs relating to the accession of Croatia.

Chapter 4

Towards a Europe of citizens, rights,
justice and security

To mark the 20th anniversary of the establishment of European Union
citizenship under the Maastricht Treaty, 2013 was designated the European Year
of Citizens. This European Year has given Europeans the opportunity to learn
more about their rights and opportunities open to them as EU citizens.

As Europe overcomes the financial and economic crisis, it is taking
steps towards closer integration that were unthinkable just a few years ago. More and more decisions that have a direct
impact on people’s lives are being taken at European level, making it important for institutions and decision-making processes to become more democratic and
transparent.

This will require bold changes, but before considering any new structures,
we will need to have a broad debate. It is the voice of citizens that will
count in this debate about the future of Europe. That is why the European
Commission launched a series of citizens’ dialogues to hear from people across
the Union what they expect, and to make clear that at the upcoming European
Parliament elections they will have a real choice on what kind of Europe they
want. In this context, the Commission considers it appropriate to continue
actions related to the European Year of Citizens into 2014.

Europe is for citizens, and in 2013 the EU continued to ensure that
their rights were upheld and strengthened, whether by protecting fundamental
rights or tackling citizens’ everyday concerns. And the EU continued to build a
true European area of freedom, justice and security at the service of citizens
— one of the Union’s key objectives as stated in the Treaty of Lisbon.

2013 — The
European Year of Citizens

The official
launch event for the European Year of Citizens took place in Dublin on 10
January, to coincide with the opening of the Irish Presidency of the Council.
It was immediately followed by the first citizens’ dialogue of the year.

[PHOTO 029]

Events such as the
Commission’s series of citizens’ dialogues, but also exhibitions, seminars and
workshops, have been taking place across the EU to include the general public
in a debate about the future of the EU and to discuss with them their concerns,
hopes and expectations regarding their EU citizenship. These events have been a
valuable catalyst to help engage with the general public across the EU.

A number of
documents were adopted during the European Year of Citizens to help ensure a
lasting, meaningful impact for citizens long after the European Year is over.
The first of these was the 2013 edition of the EU citizenship report ([212]), adopted on 8 May, which received a warm welcome from the Member
States in a set of Council conclusions on 6 December ([213]).

Then, on 13
December, a set of policy recommendations was published by the European Year of
Citizens Alliance (EYCA), a large network of civil-society organisations active
in promoting civic engagement and fostering European integration. The EYCA
policy document provides important insights from the point of view of organised
civil society.

The closing event
on 13 December in Vilnius, organised together with the Lithuanian Presidency of
the Council, showcased the key outputs of the European Year of Citizens. A
citizens’ dialogue in Vilnius took place on the same day, with the
participation of Viviane Reding, Commission Vice-President responsible for
Justice, Fundamental Rights and Citizenship.

During the year,
36 citizens’ dialogues took place in 21 Member States, involving numerous
Members of the European Parliament, almost all commissioners and
representatives from national, regional and local governments. Politicians met
and debated with citizens from all walks of life at each event; many more
citizens followed each debate via live web streams or participated through
social media. The citizens’ dialogues focused on how the EU is overcoming the
crisis, citizens’ rights and the future of Europe. The events triggered
substantial media interest and broadened the debate to include a much wider
audience.

The entire series
of citizens’ dialogues runs from September 2012 to March 2014, with some 50
events in all 28 Member States. The Commission is set to present a document on
the dialogues in 2014.

Religious and philosophical dialogue

The Bureau of
European Policy Advisers (BEPA) intensified the dialogue with churches,
religious communities, and philosophical and non-confessional organisations,
based on Article 17 of the Treaty on the Functioning of the European Union; a
dialogue the Commission has conducted over several decades.

[PHOTO 030]

The presidents of
the Parliament, European Council and Commission held meetings with religious
leaders and with representatives of philosophical and non-confessional
associations. In the context of the European Year of Citizens, and with a view
to the Parliament election in May 2014, discussions focused on ‘Putting
citizens at the heart of the European project in times of change’. In addition,
three dialogue seminars were held on the topic of EU citizenship and populism.

Fundamental
rights

The Charter
of Fundamental Rights
of the European Union

Report on the application of the charter

Three years after
it became legally binding, the impact of the EU Charter of Fundamental Rights
is increasingly clear. It is becoming a point of reference not only for the EU
institutions when drawing up legislation, but also for the European and
national courts, making fundamental rights a reality for citizens in Europe.

The 2012
report ([214]) gives a comprehensive overview of how fundamental rights have been
implemented in the EU over the past year. It highlights, for example, how the
rights enshrined in the charter are taken into careful consideration by the EU
institutions when proposing and adopting EU legislation, while Member States
are bound by the charter only in cases where they implement EU policies and
law. The report address the six titles of the EU Charter of Fundamental Rights:
‘Dignity’, ‘Freedoms’, ‘Equality’, ‘Solidarity’, ‘Citizens’ rights’ and
‘Justice’.

Where the EU has
the competence to act, the Commission can propose EU legislation that gives
concrete effect to the rights and principles of the charter, such as:

the proposed major reform of the EU’s rules on
the protection of personal data;
the proactive approach taken to accelerate
progress towards a better gender balance on the corporate boards of
European companies listed on stock exchanges;
the steps taken to safeguard procedural rights
and victims’ rights.

AWARENESS
OF THE RIGHTS THAT A CITIZEN OF THE EUROPEAN UNION HAS, 2007–12 — THE RIGHT TO
RESIDE IN ANY MEMBER STATE OF THE EUROPEAN UNION, SUBJECT TO CERTAIN CONDITIONS

[GRAPH 16]

State of
play of EU accession to the European Convention on Human Rights

The accession of
the EU to the European Convention for the Protection of Human Rights and
Fundamental Freedoms (ECHR) became possible with the entry into force of the
Lisbon Treaty, which imposes an obligation on the EU institutions and on Member
States to undertake all necessary steps in order to achieve that objective. A
draft accession agreement to be concluded between the EU and the existing
contracting parties to the convention, namely the 47 member countries of the
Council of Europe, was agreed upon at negotiator level in April 2013. In July
2013, the Commission, for the sake of legal certainty, requested an opinion
from the Court of Justice on the compatibility of that draft accession
agreement with the EU treaties.

Data protection

Revelations about
large-scale United States surveillance programmes served as a wake-up call and
provided a push for the negotiations of the data protection reform
package ([215]) presented by the Commission in 2012. The Parliament’s Civil
Liberties Committee voted on the package in October, agreeing on a compromise
found between the political parties and strongly backing the Commission’s proposals.
European Heads of State or Government committed to the ‘timely’ adoption of the
new rules.

The aim of the
package is to make the EU data protection rules from 1995 fit for the Internet
age. The reform will strengthen citizens’ rights, for example the right to data
portability, while at the same time slashing red tape for businesses, for
instance by replacing 28 national laws with one strong, uniform set of rules.
Crucially, the reform will ensure that every company offering its products and
services to European citizens will have to abide by European rules, regardless
of where it is based — in the EU or outside it. National data-protection
authorities will be able to fine companies that violate these rules up to
2 % of their global annual turnover. The reform will also establish clear
rules for data transfers: if non-EU country authorities want to access the data
of EU citizens outside their territory, they will have to use a legal framework
that involves judicial control.

The spying
scandals also severely damaged trust in the transatlantic partnership, which
now needs to be restored. The Commission made very clear  that the mass
surveillance of citizens is unacceptable. At the end of November, it set out a
series of actions that would strengthen data protection in transatlantic
relations. This includes 13 recommendations on how to improve, by summer 2014,
the ‘safe harbour’ scheme that allows companies to send data to the United
States for commercial purposes. It also made clear that it expects the United
States to work towards a swift conclusion of the negotiations on an EU–United
States data protection ‘umbrella’ agreement. Such an agreement has to give
European citizens concrete and enforceable rights, notably the right to
judicial redress in the United States whenever their personal data are being
processed there.

Free movement

Free movement is
one of the pillars of our Union. The right for people to circulate freely
around the EU is one of the four freedoms enshrined in the treaty. Moreover,
free movement brings economic benefits. This right comes with obligations,
however. It does not confer the right to circulate into Member States’ social
security systems. In the light of concerns voiced by several Member States, the
Commission therefore offered help and guidance to national and local
authorities on the effective implementation of free-movement rules.

To this end, in
November the Commission adopted a communication on free movement of EU citizens
and their family members, stressing the need to safeguard this fundamental
right while at the same time making clear it stands ready to support Member
States in dealing with potential abuses ([216]).
The document clarifies EU citizens’ rights and obligations, as well as the
possibilities offered by EU law and generally by EU tools to combat abuses of
free movement. It sets out five actions to help Member States and their local
authorities to apply EU laws and tools to their full potential. This includes
the full use of EU Structural Funds and Investment Funds, a handbook on
marriages of convenience and the commitment to promote the exchange of best
practices between local authorities. As agreed at a Council meeting in December[217], the Commission and Member States will continue to work together on
the basis of the five actions.

Proposal to better ensure the free
movement of workers

While EU rules on
the free movement of workers are long established, the way in which they are
applied in practice can give rise to barriers and discriminatory practices
(perceived or real) for EU migrant workers when working or looking for work in
another Member State. In April, the Commission proposed measures to ensure the
better application of EU law on the right of EU citizens to work in another
Member State. In December, the Parliament and the Council reached a provisional
agreement on the proposal, which, if agreement is finally reached (expected in
early 2014), would help to ensure the real and effective application of
existing legislation. Member States would be required to:

create national contact points providing
information, assistance and advice so that mobile EU citizens, and
employers, are better informed about their rights;
provide appropriate means of redress at national
level;
allow labour unions, non-governmental
organisations (NGOs) and other organisations to launch administrative or
judicial procedures on behalf of individual workers in cases of
discrimination;
give better information for mobile EU citizens
and employers in general.

EU CITIZENS
LIVING AND WORKING IN AN EU MEMBER STATE OTHER THAN THEIR OWN (AS A SHARE OF
TOTAL EMPLOYMENT)

[GRAPH 17]

Directive on facilitating free
movement through better conditions for the acquisition and preservation of
supplementary pension rights

Eliminating
barriers to the free movement of workers is part of the solution to tackling
unemployment. Protecting occupational pensions can help workers to seek jobs
across borders. An agreement was reached in the course of the year on the
Commission’s April 2013 proposal ([218]), paving the way
for the adoption of the directive before the 2014 European elections. The proposal provides for workers’
occupational pension rights to be granted after no more than 3 years of an employment relationship and preserved after they leave
the pension scheme. Under the compromise agreement, the
directive would only apply to workers who move between Member States;
however, Member States may extend these standards also to workers
who change jobs within a single country.

The fight
against discrimination

Gender equality

In 2013, the
Commission published the annual report on progress on equality between women
and men ([219]). It carried out a mid-term review of the strategy for equality
between women and men ([220]), which found that, halfway through the strategy’s 5-year time
scale, the Commission is delivering on its commitments. It has taken action on
the majority of areas covered, in particular on improving the gender balance in
economic decision-making, tackling female genital mutilation, promoting equal
pay and promoting equality within the EU’s overall economic strategy.

The Commission
also reviewed the application of the equal pay directive ([221]). Moreover, it presented reports on The gender gap in pensions
in the EU ([222]) and on Women and men in leadership positions in the European
Union 2013 ([223]). The third European Equal Pay Day, an annual event to raise
awareness of the fact that a wage gap between women and men still exists, took
place on 28 February 2013. In May, the Commission adopted a report on the
Barcelona objectives ([224]) which measures progress towards the targets agreed by EU leaders
in 2002 for the availability and accessibility of childcare services.

The Commission
also adopted the communication ‘Towards the elimination of female genital
mutilation’ ([225]). It builds on work the EU has done over many years and on a report
from the European Institute for Gender Equality (EIGE) ([226]). It also benefits from the input of a high-level round-table on
female genital mutilation that took place on 6 March 2013, contributions to a
public consultation ([227]) and a written opinion of the EU Advisory Committee on Equal
Opportunities for Women and Men ([228]).

GENDER PAY GAP
IN UNADJUSTED FORM

The unadjusted
gender pay gap (GPG) represents the difference between average gross hourly
earnings of male paid employees and of female paid employees as a percentage of
average gross hourly earnings of male paid employees. The population consists
of all paid employees in enterprises with 10 employees or more in NACE Rev. 2
aggregate B to S (excluding 0) — before reference year 2008: NACE Rev. 1.1
aggregate C to O (excluding L). The GPG indicator is calculated within the
framework of the data collected according to the methodology of the structure
of earnings survey (Regulation (EC) No 530/1999). It replaces data which
was based on non-harmonised sources.

[GRAPH 18]

Recommendation on Roma inclusion

Member States
unanimously adopted a Commission proposal for a Council
recommendation ([229]), the first EU legal instrument for Roma inclusion.

This aims at
reinforcing the process started with the EU framework for national Roma integration
strategies agreed by all Member States in
2011. The proposal the Commission presented in June 2013 invites EU Member
States to enhance the effectiveness of measures to achieve Roma integration in
the four key areas (education, employment, healthcare, housing), and also in
the areas of the fight against discrimination and stereotypes and the
protection of Roma children and women. It is recommended that Member States
take action to bridge the gaps between the Roma and the rest of the population.

Access City Award 2014

On the European Day for
People with Disabilities (3 December), Gothenburg was announced as the winner
of the Access City Award for its outstanding work towards increasing
accessibility for disabled people and the elderly. The award is an annual competition
established to recognise the efforts and achievements of cities with over
50 000 inhabitants which take exemplary initiatives to improve
accessibility in the urban environment. The award is organised by the
Commission in partnership with the European Disability Forum.

Citizenship

Citizenship
report 2013

The EU citizenship
report 2013 sets out 12 concrete actions to remove obstacles citizens still
encounter when exercising their EU rights, in particular free movement and
political rights. It follows the first citizenship report from 2010, and serves
both as a tool to inform EU citizens about their rights and the benefits
attached to their status as EU citizens, and as a motor to develop new
initiatives to achieve a common area of rights for all EU citizens.

Since it was first included in the treaties in 1993, EU citizenship has
been evolving. But it is not yet fully mature; people still face obstacles
exercising their rights in everyday life. The Commission receives over 1
million enquiries every year from citizens on issues that relate to their
rights. That is why it is necessary to act to reinforce citizens’ rights in
everyday situations.

This report was
based on far-reaching consultations with citizens, civil society and
experts ([230]). Other institutions took a keen interest in the report and
followed up with events and opinions. The Council adopted conclusions[231] which were presented at the closing event of the European Year of
Citizens in Vilnius. Some actions put forward in the report have already been implemented
by the Commission: the quality framework for traineeships (action 2, adopted in
December 2013); the package on procedural rights (action 7, proposal adopted in
November 2013); and the revision of the small claims procedure (action 8,
proposal adopted in November 2013).

TWELVE NEW KEY
ACTIONS TO IMPROVE EU CITIZENS’ LIVES

In its 2013 EU
citizenship report the Commission is putting forward 12 new actions in six key
areas to further remove obstacles standing in the way of citizens’ enjoyment of
their EU rights.

[GRAPH 19]

The European
citizens’ initiative (ECI)

Since the new
instrument came into force in April 2012, 22 initiatives have been launched,
collecting statements of support from signatories across the EU. They cover a
wide range of topics such as the environment, telecommunications, mobility and
citizens’ rights ([232]).

In November 2013,
the first initiatives that were launched in 2012 arrived at the end of their
collection period. Three initiatives have announced that they have reached the
required number of signatories (1 million overall and minimum quotas in at
least seven Member States).

First of them,
‘Right2water’, which states that ‘water is a public good, not a commodity’, was
officially submitted to the Commission on 20 December 2013, after the competent
national authorities had positively concluded the verification of the collected
statements of support. The Commission has to answer this initiative by 20 March
2014, indicating in a communication whether it will propose the legislation requested
or not and for what reasons.

Two other
initiatives, ‘One of us’, which seeks to end EU financing of activities which
presuppose the destruction of human embryos, and ‘Stop vivisection’, which
seeks an end to live animal experimentation, provided that the verification of
the statements of support by the competent national authorities confirms their
success, are likely to be submitted to the Commission in the first months of
2014, provided the validation of the collected statement of support.

Justice

Rule of law

The European Union
is built on key fundamental values. It relies on the rule of law, and the
Commission has been called upon to intervene when the rule of law has seemed
under threat in Member States. As announced by José Manuel Barroso, President
of the European Commission, in his 2013 State of the Union address ([233]), the Commission is working on a framework to allow for a
consistent response to such situations, based on objectivity and the principle
of equality between Member States. It would be activated only in situations
where there is a serious, systemic risk to the rule of law, and would be
triggered by pre-defined benchmarks ([234]).

Following earlier
exchanges with the Hungarian authorities regarding laws adopted under Hungary’s
new constitution, the Commission expressed its concern about the conformity of
the fourth amendment to the fundamental law of Hungary with EU law and with the
principle of the rule of law. The Commission consequently conducted a detailed
legal analysis of the amendments. In November, the Commission formally closed
the legal proceedings launched against Hungary on 17 January 2012 over the
country’s forced early retirement of around 274 judges and public prosecutors,
as the country took the necessary measures and adopted changes to its law.

The cooperation and verification mechanism

The Commission continued to work with the
Romanian authorities to address the issues raised in its report in July 2012
under the cooperation and verification mechanism (CVM) ([235]). The Commission reported in January 2013
on Romania’s progress and on measures taken to restore respect for the rule of
law and the independence of the judiciary in Romania ([236]). The assessment showed that Romania has
implemented several but not all of the Commission’s recommendations.
Cooperation continues with the Romanian authorities in the context of the CVM.

The Commission continued to monitor
progress under the CVM both in Bulgaria and in Romania and is due to report in
early 2014 on the reform process.

Assises de
la justice — the future of EU justice policy

The Commission
launched a broad debate on the future of justice policy in the EU, with a call
for contributions and a high-level conference, the Assises de la Justice ([237]), held in November 2013. It assembled senior
European- and national-level policymakers, judges and other stakeholders. The
joint reflection served to develop thoughts and ideas which will contribute to
the shaping of the Union’s future justice policy. The Commission will follow
this up with a communication in 2014.

Photo XX

JUDICIAL
INDEPENDENCE (PERCEPTION — HIGHER VALUE MEANS BETTER PERCEPTION)

[GRAPH 20]

Judicial
cooperation in civil and commercial matters

Proposal for a revision of the
regulation on small claims

In November, the
Commission adopted a proposal ([238]) to revise the small claims regulation ([239]). The European small claims procedure ([240]) offers a cheap and easy way to resolve cross-border disputes for
amounts below €2 000, without complicated legal procedures. As such, it
improves access to justice for consumers and small businesses in small-value
cross-border disputes. The revision of the legislation aims at achieving a more
widespread use of the procedure, in particular by raising the threshold to
€10 000.

Revision of the EU directive on
package travel

In July, the
Commission proposed ([241]) to revise the 1990 EU directive on package travel ([242])
with a view to updating rules that apply when consumers book holiday packages
with combinations of, for example, flights, hotels or car rentals. The
protection includes the right to receive all necessary information before
signing the contract, making sure that a party is liable for the performance of
all services in the package and the reassurance of repatriation in case a tour
operator goes bust. The current rules need to be modernised, given that more
and more combinations of travel services are put together in a customised
fashion, especially on the Internet, and since, in such cases, holidaymakers
are often not sure of protection if something goes wrong.

Criminal
justice

Legislative package on procedural
rights

The Commission moved towards completing its roadmap on procedural rights
in criminal proceedings with a number of proposals. The
aim of all these measures is to guarantee fair trial rights for all citizens,
wherever they are in the EU. Once adopted, the proposals will help to increase
mutual trust in Member States’ judicial systems and therefore ensure the smooth
functioning of the European area of justice.

There are over 9
million criminal proceedings in the EU every year. Since 2010, the Commission
has been steadily working to set common EU standards in all criminal
proceedings.

[PHOTO 031]

In November 2013, the Commission presented a
proposal for a directive on the strengthening of certain aspects of the
presumption of innocence and of the right to be present at trial in criminal
proceedings ([243]). As part of the same package it proposed a directive on procedural
safeguards for children suspected or accused in criminal proceedings ([244]) and a directive on the right to provisional legal aid for suspects
or accused persons in criminal proceedings and for persons sought in European
arrest warrant proceedings ([245]). In addition, it adopted a recommendation on the right to legal
aid for suspects or accused persons in criminal proceedings ([246]) and a recommendation on procedural safeguards for vulnerable persons
suspected or accused in criminal proceedings ([247]).

Access to a lawyer

One central measure in this effort to secure fair trial rights for all
citizens was adopted by the Parliament and the Council in the autumn: the
directive on the right of access to a lawyer and the right to communicate upon
deprivation of liberty ([248]), which the Commission had presented in
2011 ([249]). The new law
means anyone who is a suspect — no matter where they are in the European Union
— will be guaranteed the right to see a lawyer from the earliest stages of
proceedings until their conclusion. The new rules would also ensure that anyone
arrested has the opportunity to communicate with their family. If they are in
another EU country, citizens would have the right to be in contact with their
country’s consulate.

The Commission oversees compliance with
treaties

The Commission launched the so-called
‘Article 39 procedure’ against Croatia, which provides for the activation of
the justice and home affairs safeguard clause in Croatia’s accession treaty.
The decision was taken in view of the continued non-compliance by Croatia with
the European Arrest Warrant framework decision ([250]). In response, Croatia committed to amend its
legislation by 1 January 2014 at the latest, so as to comply with the framework
decision.

Drugs
package

Drugs are a complex social and health problem that affects millions of
individuals in the EU. Each year, around 6 500 persons in the EU die
because of a drug overdose. In addition to controlled drugs, subjected to restriction
measures under the UN conventions on drugs, a growing number of new
psychoactive substances, which imitate the effects of UN-controlled drugs, are
emerging and spreading fast in the internal market. The Commission presented in
2013 a package of two legislative proposals aiming at enhancing the
effectiveness of EU action on new psychoactive substances ([251]). Under the rules, harmful psychoactive substances will be
withdrawn quickly from the market without jeopardising their various legitimate
industrial and commercial uses.

Establishment of a European Public
Prosecutor’s office to protect the financial interests of the Union

In July, the
Commission delivered on its promise to apply a zero tolerance policy towards
fraud against the EU budget, presenting a proposal ([252]) to establish a European Public Prosecutor’s Office. This is an essential tool to improve
Union-wide prosecution of criminals who defraud EU taxpayers. When it comes to
taxpayers' money, every euro counts – even more so in today's economic climate.

The exclusive task of the European Public Prosecutor's Office will be to
investigate and prosecute and, where relevant, bring to judgement – in the
Member States' courts – crimes affecting the EU budget. The European Public
Prosecutor's Office will be an independent institution, subject to democratic
oversight.

The Commission also presented proposals to reform
Eurojust, the European
Union's Judicial Cooperation Unit.

Presently, there is a very uneven level of
protection and enforcement across the EU when it comes to tackling fraud
against the Union’s budget. The European Public Prosecutor's Office will ensure
that protecting the EU budget is given proper priority throughout Europe. It
will bridge the gap between Member States' criminal systems, whose competences
stop at national borders, and Union bodies that cannot conduct criminal
investigations.

The Commission
proposed to set up the European Public Prosecutor's Office as a decentralised
structure, integrated into national judicial systems. Delegated European
prosecutors would carry out the investigations and prosecutions in the
respective Member State, using national staff and applying national law. Their
actions would be coordinated by the European public prosecutor to ensure a
uniform approach throughout the EU.

Following a
thorough analysis of the reasoned opinions received from 14 national
parliamentary chambers in 11 Member States on the basis of the principle of
subsidiarity, the Commission in November confirmed that its proposal complies
with the principle of subsidiarity as enshrined in the EU treaties and decided
to maintain it.

Home affairs

Migration

Lampedusa tragedy

The 2013 migration
tragedies in the Mediterranean, particularly off the Italian island of
Lampedusa, triggered a very wide and emotional reaction across Europe, with
citizens asking for solutions to be found to prevent such incidents. Building
on the existing migration management framework and tools, the Commission has
set up the Mediterranean Task Force — comprising the Commission, the Member
States and EU agencies — with a view to developing and implementing both
operational short-term measures and medium-term innovative ideas to avoid
further loss of lives in the Mediterranean.

[PHOTO 032]

Eurosur

A new regulation
from October 2013 ([253]) established a European Border Surveillance System (Eurosur), with
the aim of increasing coordination within and between Member States to
reinforce border surveillance, prevent and tackle serious crime, such as drug
trafficking and the trafficking of human beings, and diminish the unacceptable
death toll of migrants at sea. Eurosur started to become operational from the
beginning of December 2013.

Trafficking in human beings

In May, in a bid
to promote the role of civil society and enhance cooperation amongst relevant
actors, the Commission launched the EU Civil Society Platform on Trafficking in
Human Beings. The EU-wide platform will serve as a forum for civil society
organisations working at European, national and local levels in the field of human
rights, children’s rights, women’s rights and gender equality, migrants’ rights
and shelters. Participants will be able to interact, expand their networks and
exchange concrete ideas on how best to assist victims and prevent others from
falling victim to this crime, as well as becoming better informed about the EU
policy framework.

In 2013, the
Commission also published the document The EU rights of victims of
trafficking in human beings ([254]).
It provides clear, user-friendly information on the labour, social, victim and
migrant rights that victims of trafficking in human beings have under EU law.
Such an overview will be used by victims and those working in the field (such
as NGOs and police), and will contribute to the effective realisation of these rights
by helping authorities in Member States to deliver assistance and protection.

In line with the
new directive on trafficking in human beings ([255]),
which had to be transferred
into national law by Member States by April 2013, the
Commission is continuing to work with the Member States on the implementation
of the EU strategy towards the eradication of trafficking in human
beings ([256]). It also closely monitors the efforts taken by the Member States
to transfer the directive into
national law.

External dimension

In line with the
global approach to migration and mobility (GAMM), the EU continues to engage
with non-EU countries and regions and to strengthen cooperation and dialogues
(see Chapter 5 for more details).

Mobility
partnerships were signed between the EU and Morocco in June 2013 and between
the EU and Tunisia and the EU and Azerbaijan in December. Another one has
started with Jordan.

Dialogues and
cooperation with strategic non-EU countries continued in 2013. This is the case
with regard to the EU–China Dialogue on Mobility and Migration, which resumed
its activities with a high-level meeting in October 2013.

In addition, the
EU pursues its dialogues with other regions in the world. In this regard, a
Silk Routes Partnership for Migration was established in April 2013, which aims
at promoting dialogue and cooperation in managing the mixed migration flows
originating from the ‘silk route countries’ (in particular Afghanistan, Iran,
Iraq and Pakistan). Cooperation on migration and asylum has also been further
developed in the context of the Eastern Partnership, with a first Eastern
Partnership justice and home affairs ministerial meeting in October 2013 in
Luxembourg ahead of the third Eastern Partnership Summit in November 2013 in
Vilnius.

As regards visas and
readmission, a visa liberalisation dialogue was launched with Turkey and a
readmission agreement was signed on 16 December 2013. Readmission and visa
facilitation agreements ([257]) have been concluded with Armenia and Cape Verde. A visa
facilitation agreement was signed with Azerbaijan on 29 November 2013, at the
occasion of the Eastern Partnership Summit in Vilnius. Upgraded visa
facilitation agreements with Moldova and Ukraine entered into force on 1 July
2013. Visa liberalisation dialogues with Georgia, Moldova and Ukraine
continued. The Commission reports on the fulfilment of the visa liberalisation
action plan benchmarks by these countries ([258])
were adopted on 15 November 2013.

[PHOTO 034]

External
borders — Schengen area

New Schengen rules to better protect
citizens’ free movement

In October, new
rules were adopted which will become applicable within a year. These rules
allow for sound Schengen governance, reinforcing the EU area of free movement,
based on clear and transparent European rules that will make the system more
efficient. The Commission is given a central role when it comes to monitoring
and evaluation and, in close cooperation with experts from the Member States,
will have the competence to ensure that the Schengen rules are respected. In addition,
the new rules will also ensure that, in cases where, exceptionally, border
controls need to be reintroduced at internal borders, such decisions take into
account the interests of the Union and all its Member States.

SCHENGEN AREA
AS OF 1.7.2013

[GRAPH 21]

Schengen Information System (SIS II)

The second
generation Schengen Information System (SIS II) ([259])
entered into operation in April. SIS II is an
information system that allows national border control, customs and police
authorities that are responsible for checks within the Schengen area to
circulate alerts about wanted or missing people and objects, such as stolen
vehicles and documents. SIS II will continue to play a crucial role in
facilitating the free movement of people within the Schengen area while
enhancing its security.

Progressive roll-out of the Visa
Information System (VIS)

Following the
roll-out of the VIS in north Africa, the Near East and the Gulf region, the VIS
was deployed in central and west Africa in March, in east and southern Africa
in June, in South America in September, and in central and south-east Asia and
in Palestine in November. While successfully handling millions of visa
applications and operations from external crossing points and worldwide
consulates, the incident-free deployment of the VIS in these regions shows that
the system has matured to a very satisfactory level and that it can sustain
operations in subsequent regions.

Smart borders

In February, the
Commission proposed a ‘smart borders package’ ([260])
to speed up, facilitate and at the same time reinforce border-check procedures
for foreigners travelling to the EU. The package consists of an entry/exit
system (EES) ([261]) to record the time and place of entry and exit of non-EU nationals
travelling to the EU and a registered traveller programme (RTP) ([262]) to allow certain groups of frequent travellers from non-EU
countries to enter the EU using simplified border checks.

[PHOTO 33??
FRONTEX]

Rules on Frontex sea operations

On 12 April, the
Commission proposed the establishment of clear rules for joint patrolling as
regards interception, search and rescue and disembarkation for sea operations
coordinated by Frontex ([263]). This proposal responds to the Court judgment ([264]) annulling Council Decision 2010/252/EC on procedural grounds.

Common
European Asylum System

The Common European Asylum System (CEAS) ([265]) was adopted on World Refugee Day (20 June 2013). The new system
will provide better access to the asylum procedure for those who seek
protection, will lead to fairer, quicker and better quality asylum decisions,
will ensure that people in fear of persecution will not be returned to danger
and will provide dignified and decent conditions both for those who apply for
asylum and for those who are granted international protection within the EU.

The
new CEAS instruments comprise:
the revised asylum procedures directive[266], which aims at fairer, quicker and
better quality asylum decisions;
the revised reception conditions directive[267], which ensures that there are humane
material reception conditions (such as housing) for asylum seekers across
the EU;
the revised qualification directive[268], which clarifies the grounds for
granting international protection;
the revised Dublin regulation[269], which enhances the protection of
asylum seekers during the process of establishing the state responsible
for examining the application and clarifies the rules governing the
relations between states.

NUMBER OF
ASYLUM APPLICANTS IN THE EU-28

[GRAPH 22]

Organised
crime, police cooperation and terrorism

Joint anti-terrorism exercise at EU level

On 17 and 18
April, the EU Member States’ anti-terrorist police forces united as part of the
EU-sponsored Atlas Network, which carried out the most complex preparation and
crises response simulation so far at European level. The simulation involved
simultaneous terrorist attacks in nine different EU Member States (Belgium,
Ireland, Spain, Italy, Latvia, Austria, Romania, Slovakia and Sweden). A number
of other detection activities and practical detection trials were also launched
in different domains with the aim of developing preventive approaches to
terrorist attacks.

Internal security strategy

The second report
on the implementation of the internal security strategy (ISS) ([270]), presented in April, highlights that organised crime is still a
major challenge for the internal security of the EU. Cybercrime, trafficking in
human beings and the increase in violent extremism are also major security
threats that the EU continues to face, together with money laundering and
corruption. New priorities for the fight against serious and organised
international crime within the EU policy cycle were established for 2014–17.

Europol

On 27 March, the
Commission proposed to make the EU law enforcement agency (Europol) more
effective at collecting information, analysing it and sharing these analyses
with the Member States ([271]). This will enable Europol to provide more concrete and targeted
support to national law enforcement authorities in cross-border cooperation and
investigations. At the same time, the proposal increases Europol’s
accountability to the European Parliament and national parliaments, and
strengthens the protection of personal data. The Commission proposal also
reinforces the link between training/support and operational cooperation by
merging the European Police College (CEPOL) within Europol.

Strategy
against illegal firearms trafficking

On 21 October, the
Commission presented suggestions for how to reduce gun violence in
Europe ([272]). It identifies actions at EU level, through legislation,
operational activities, training and EU funding, to address the threats posed
by the illegal use of firearms.

Cybersecurity

Taking or misusing
personal data is listed as the top concern for Internet users by 40 % of
Europeans. The threat of cybercrime undermines consumer confidence and affects
citizens’ readiness to shop or bank online. It creates a significant obstacle
to the digital internal market. Since January 2013, the
new European Cybercrime Centre
(EC3) ([273]) has been up and running to help protect European citizens and
businesses against threats from cybercriminals. The EC3 pools expertise and information,
supports criminal investigations and promotes EU-wide solutions, while raising
awareness of cybercrime issues across the Union.

In February, a cybersecurity strategy ([274])
was presented that outlines the EU’s comprehensive
vision on how best to prevent and respond to cyber disruptions and attacks. The
Commission and Catherine Ashton, the High
Representative of the Union for Foreign Affairs and Security
Policy/Vice-President of the European Commission (HR/VP), have jointly adopted this strategy alongside a directive proposed
by the Commission on network and information security (NIS) ([275]). Specific actions are aimed at enhancing the cyber resilience of
information systems, reducing cybercrime and strengthening the EU’s
international cybersecurity policy and cyber defence.

Easing citizens’
everyday concerns

Citizens’
health and their rights as consumers

Consumer protection

Alternative dispute resolution/online
dispute resolution

In April, the EU
adopted rules ([276]) on alternative dispute resolution. They will ensure that consumers
can turn to quality alternative dispute resolution entities for almost all
kinds of contractual disputes that they have with traders, no matter what they
purchased and whether they purchased it online or offline, domestically or
across borders. An EU-wide online platform will be set up to facilitate the online resolution of consumer disputes that arise from online transactions.

Safety of non-food products in Europe

In February, the
Commission adopted the product safety and market surveillance package ([277]). The package contains
solutions on how to improve the safety of consumer
products circulating in the single market and to step up market surveillance
concerning all non-food products, including those imported from non-EU
countries.

In addition, in
2013 the Rapid Alert System for Non-food Dangerous Products (RAPEX) further
improved the efficiency of information sharing among Member States and the
Commission on dangerous products found across Europe. Cooperation with China
and the US also remained an
important part of Europe’s product safety work.

Safety of cosmetics

The new cosmetics
regulation ([278]) was applicable from 11 July 2013. It strengthens consumer
protection while simplifying the life of economic operators. For example, labels on cosmetic products
must now include information on the name and address of a person responsible
for compliance with the rules.

In March the full
EU ban on animal testing for cosmetics entered into force. This was the last
deadline to be phased out, and as of this date cosmetics tested on animals
cannot be marketed in the EU.

Entry into force of new lower roaming price caps from 1 July

The EU has achieved
retail price reductions across calls, text messages and data of over 80 %
since 2007. Data roaming is now up to 91 % cheaper compared to 2007, and
the volume of the data roaming market has grown by 630 % since 2007. This
year, visitors to Croatia enjoyed significant savings as the cost of data was
almost 15 times cheaper than before ([279]).

THE MOST YOU’LL
PAY WHEN ROAMING WITHIN THE EU

[GRAPH 23]

Promotion
of agricultural and food products

The Commission
presented a draft reform of the information and promotion policy for European
agricultural and food products ([280]). This new promotion policy, which benefits from a more substantial
budget (€200 million in 2020) and will in the future be supported by a European
executive agency, is intended to act as a key for opening up new markets. With
the slogan ‘Enjoy, it’s from Europe’, the policy aims to help the sector’s
professionals break into international markets and make consumers more aware of
the efforts made by European farmers to provide quality products, based on a
genuine strategy established at European level.

‘EU stop fakes’ campaign

To meet the challenges to health and the
economy posed by counterfeiting and piracy of products, in 2013 the Commission created the ‘EU stop fakes’
campaign ([281]). Counterfeit goods
damage brand reputations, steal revenue from companies and subsidise organised
crime. Fake medicines, alcohol and toys are particularly ruinous — sold without
the health and safety protection that we take for granted under EU law when we
buy real goods. As part of the implementation of the Europe 2020 flagship
initiative for industrial policy, the campaign’s objective is to stop the production and circulation
of counterfeit goods by promoting closer cooperation between the Commission,
national authorities and trade associations. Most importantly, it aims to make
consumers aware of the damage counterfeiting does and remind them that they
have the power to combat this activity through their own actions and choices.

Citizens’ health

Tobacco products

‘Tobacco products
should look and taste like tobacco products’ is the premise behind the revision
of the tobacco products directive ([282]), which aims to improve the functioning of the internal market and
to discourage young people from starting to smoke. The legislative process for
the proposal for the revision of this directive, tabled at the end of 2012,
continued at a rapid pace throughout 2013, and political agreement was reached
between the Parliament and EU Member States on 18 December 2013.

Key measures endorsed
by the Parliament and the Council include large mandatory photo and text
warnings covering 65 % of the front and back of packs of cigarettes and
roll-your-own tobacco, and no characterising flavours (e.g. fruit, menthol,
candy) allowed in these products. Also endorsed is the first ever EU-wide
tracking and tracing system to combat the illicit trade in tobacco products. On
e-cigarettes, the most contentious element of the proposal, it was agreed that
for products not falling under the definition of medicinal products in the
corresponding directive ([283]), mandatory safety and quality requirements will be set, for
example on nicotine content, ingredients and devices, as well as refill
mechanisms.

Clinical trials

Political
agreement was reached on 20 December 2013 on another important file for
people’s health: the revised rules on clinical trials[284]
[provide reference]. Clinical trials are indispensable
for developing and improving medicines and ensuring that EU patients can have
access to the most innovative and effective treatments, under high safety and
ethical standards. The revised rules take the form of a regulation, which means
that once that they are formally approved by the Parliament and the Council
they will be directly applicable throughout the EU. In addition to boosting
patient safety, these new rules will ensure that the EU remains an attractive
location for clinical research — which is of vital importance for Europe’s
competitiveness and innovation capacity.

[PHOTO 035]

Chemicals

The use of chemicals
in Europe has become safer since the REACH regulation ([285]) entered into force. More readily available information about
chemical substances on the market and better-targeted risk management measures
mean that risks from substances registered under REACH have decreased.

Healthily nourished schoolchildren

In March, the Commission adopted the final
allocation of EU funds for the distribution of fruit and vegetables in schools
— under the ‘school fruit scheme’ — for the 2013/14 school year. Twenty-five
Member States are participating in the programme. With €90 million of EU funds
available, the main beneficiaries of the scheme in 2013/14 will be Italy (which
is set to receive over €20.5 million), followed by Poland (€13.6 million),
Germany (€12 million), Romania (€4.9 million), France (€4.7 million), Hungary
(€4.5 million), Spain (€4.4 million) and the Czech Republic (€4.2 million).

Cross-border healthcare

The directive on
patients’ rights in cross-border healthcare ([286])
was due to be transferred into
national law by all Member States in October 2013. This
new EU law clarifies patients’ rights to access safe and good quality treatment
across EU borders and to be reimbursed for it. It also provides reinforced
cooperation among Member States’ healthcare systems. Guidelines foreseen by the
directive, on a patient summary data set for electronic exchange across EU
borders, were agreed on 20 November 2013. The guidelines aim to enhance
continuity of care and ensure safe and high-quality healthcare. In June, the
rules on health technology assessment (HTA) were established, providing
policymakers with information on the benefits and comparative value of health
technologies and procedures. This is a key tool when planning healthcare
budgets and is vital for the long-term sustainability of Europe’s healthcare
systems.

Cross-border health threats

The decision on
serious cross-border health threats ([287])
aims to better protect EU citizens from a wide range of health threats through
strengthened preparedness planning, enhanced risk assessment and improved
response coordination at EU level. It covers serious cross-border threats
caused by communicable diseases and chemical, biological and environmental
events. Special health issues
such as antimicrobial resistance and healthcare-associated infections are also
covered.

Additional monitoring of medicinal
products

From 1 September,
a black inverted triangle will appear on the inside leaflet of certain
medicinal products on the EU market. The symbol will allow patients and
healthcare professionals to easily identify medicinal products that are
undergoing additional monitoring. The accompanying text will encourage them to
report unexpected adverse reactions through national reporting systems.

[PHOTO 036]

Transplant alert system

In 2013, the
safety of patients undergoing transplantation and medical procedures involving
human tissues and cells was greatly improved, following the launch of a
web-based rapid alert system used by national authorities. A high volume of
tissues and cells are donated and transplanted every year in the EU, and the
system allows rapid information exchange on any alert in the field.

Electromagnetic fields

In June, the
Commission’s proposal for a directive to update and improve EU rules to protect
workers from electromagnetic fields in their workplace was adopted by the
Parliament and the Council ([288]). The new directive will protect workers such as doctors and nurses
giving patients magnetic resonance imaging scans (MRIs), people working with
radar, welders and workers repairing power lines. Member States will have to
implement the directive in their national law by 1 July 2016.

Food and feed
safety and animal health

In response to the
detection of an undeclared fraction of horsemeat in products labelled as
containing beef, the Commission adopted a recommendation ([289]) establishing an EU-wide coordinated programme testing products for
the presence of horse meat as well as for residues of phenylbutazone, a
veterinary drug that must not be used in food-producing animals. On 16 April
2013, the Commission published the results of this coordinated testing
programme, which revealed that less than 5 % of tested products had horse
DNA and that about 0.5 % of the equine carcasses tested were found to be
contaminated with phenylbutazone. The Commission has also drawn up a five-point
action plan to strengthen the EU system and restore consumer confidence in the
areas of official controls, penalties, origin labelling and horse passports.

Smarter rules for safer food

The animal, plant and control package
‘Smarter rules for safer food’ ([290]) is the most important piece of food-chain
legislation proposed in 2013. It involves a substantial simplification and
modernisation of the existing body of legislation. It covers animal health,
plant health, plant reproductive material and controls to streamline the
processes and make procedures easier for the all actors involved in the food
chain.

The new rules on animal health aim to
sharpen the economic competitiveness of the sector by prioritising action where
the risks are higher and by improving the tools to fight serious animal
diseases. The driving principles behind the review are that prevention is
better than cure and that economic losses due to disease outbreaks will be
reduced. The new plant health rules aim to prevent the entry of new pests into
the EU brought about by globalisation and climate change, to put in place
surveillance in all Member States for outbreaks of new pests and to mount early
action in the event of such outbreaks. Enhanced synergy is created between the
plant health and plant reproductive material proposals. This aims to ensure
quality, healthy and identifiable plant-propagating material for users, while
supporting innovation and contributing to the conservation and sustainable use
of plant genetic resources.

The review of rules on official controls
aims to deliver more effective and efficient controls, which will be risk
based. Financial penalties for wilful acts of food fraud will be dissuasive and
will amount to a sum that is at least equal to the gain expected from the fraud
that was committed.

A restriction on
the use of three pesticides belonging to the neonicotinoid family entered into
force on 1 December 2013. These pesticides (clothianidin, imidacloprid and
thiametoxam) were identified by the European Food Safety Authority (EFSA) as
being harmful to Europe’s honeybee population. These measures form part of the
Commission’s overall strategy to tackle the decline of Europe’s bee population.

A regulation to
revise the framework legislation on foods for particular nutritional uses
(‘dietetic foods’) ([291]) was adopted by the Parliament and the Council in June 2013. As of 2016, this new regulation will
abolish the obsolete concept of ‘dietetic food’ and set clear rules to protect
specific vulnerable groups of consumers like infants
and young children. Simpler rules will guarantee more legal clarity, a better
environment for operators, better application of the rules by national
authorities and better protection for vulnerable consumers.

Two proposals for
directives on animal cloning ([292]) and a proposal to revise the novel food regulation ([293]) were adopted by the Commission on 18 December 2013. The two
proposals for directives will ban the use of the cloning technique in the EU
for farm animals ([294]) and the imports of these animal clones. The marketing of food from
animal clones, such as meat or milk, will also be banned. The revision of the
novel food regulation aims to improve the access of new and innovative food to
the EU market, while still maintaining a high level of consumer protection.

Culture and
media

European culture,
cinema, television, music, literature, performing arts, heritage and related
areas will benefit from increased support under the Commission’s new ‘Creative
Europe’ programme ([295]) adopted in 2013. With a budget of €1.46 billion ([296]) over the next 7 years — 9 % more than current levels — the
programme will provide a boost for the cultural and creative sectors, which are
major sources of jobs and growth. ‘Creative Europe’ will provide funding for at
least 250 000 artists and cultural professionals, 2 000 cinemas, 800
films and 4 500 book translations. It will also launch a new financial
guarantee facility enabling small cultural and creative businesses to access up
to €750 million in bank loans ([297]).

Marseille (France)
and Košice (Slovakia) were the two European Capitals of Culture in 2013 ([298]). The Council also formally designated Aarhus (Denmark) and Paphos
(Cyprus) as European Capitals of Culture for 2017 and Valletta (Malta) as
European Capital of Culture 2018.

Harpa, Reykjavik
won the European Union Prize for Contemporary Architecture — Mies van der Rohe
Award for 2013; Nave de Música, Madrid was awarded the Emerging Architect
Special Mention ([299]). The EU Prize for Contemporary Architecture is the most
prestigious award for European architecture. The prize wins €60 000 and
the special mention wins €20 000, with both receiving a sculpture that
evokes the Mies van der Rohe Pavilion of Barcelona, the symbol for this prize:
excellence and innovation in conceptual and constructive terms.

The winners of the
2013 European Union Prize for Cultural Heritage/Europa Nostra Awards were
honoured in June at a ceremony in the Odeion of Herodes Atticus, at the foot of
the Acropolis in Athens. Among the 30 laureates for 2013 were the seven Grand
Prize winners, each of which received €10 000: the Propylaea Central
Building, Athens (Greece); Tallinn Seaplane Harbour (Estonia); Roman Theatre of
Medellin (Spain); Strawberry Hill, Twickenham (United Kingdom); Restoration of
the Exceptional Machines of Wielemans-Ceuppens Brewery, Brussels (Belgium);
Association for the Promotion of Art and Culture in the Eastern Part of
Germany, Berlin (Germany); and SOS Azulejo Project, Loures (Portugal).

The winners of the
2013 European Union Prize for Literature ([300]),
recognising the best emerging authors in Europe, were announced in September at
the opening of the Gothenburg Book Fair in Sweden.

Acclaimed Danish
film director Thomas Vinterberg is the winner of the 2013 European Union Prix
MEDIA ([301]). The prize is awarded to the best new film project with box-office
potential eligible for support from the EU MEDIA programme for cinema. The
award was presented to Vinterberg at the Cannes Film Festival. Vinterberg
shares the award with co-writer Tobias Lindholm and his producers Sisse Graum
and Morten Kaufmann for their new film project Kollektivet (‘The
Commune’), which tells the story of life in a Danish commune in the 1970s.

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Ethics and
sciences

Ethics

The European Group on Ethics (EGE)

The European Group
on Ethics (EGE) is an independent, pluralist and multidisciplinary body which
advises the Commission on ethical aspects of science and new technologies in
connection with the preparation and implementation of EU policies and legislation.
Following the request of the president of the Commission, the EGE adopted its
opinion on the research, production and use of energy ([302]) in early 2013. The opinion built upon an intense series of
meetings with experts and stakeholders ([303])
(including industry, civil society, NGOs, academia and the chairpersons of the
EU-27 national ethics councils). In its opinion, the EGE proposed an integrated
ethics approach for the research, production and use of energy in the EU. In
February 2013, the EGE started the work on its opinion on the ethics of
security and surveillance technologies, as requested by the president of the
Commission.

The European Commission
International Dialogue on Bioethics

The European
Commission International Dialogue on Bioethics (IDB) took place in September
2013. It brought together the presidents of the national ethics councils from
Member States and non-EU countries across all continents to share experiences
and reflect together on the topic of research security and security research. On
this fifth occasion, the international dialogue forum fully played its role as
a platform of mutual learning between these bodies, also enabling interactions
and linkages between them and the Commission.

Sciences

Following the
establishment of the post of chief scientific adviser to the president in 2012,
the Commission has further strengthened its commitment to evidence-based
policymaking by establishing the president’s Science and Technology Advisory
Council (STAC). Made up of eminent scientists, it aims to provide advice on the
importance of science and technology in: (i) society and policymaking; (ii) a
future vision for Europe; (iii) jobs and growth; and (iv) foresight and horizon
scanning of major breakthroughs.

Chapter 5

Towards a stronger role for the EU in the
world

The European Union plays a unique role in addressing global issues.
By acting together, the 28 countries of the EU are better able to defend the
interests of citizens and the Union is able to project stability, security,
prosperity and peace in its neighbourhood and beyond.

One of the most significant events of the year was a deal over
Iran’s nuclear programme. Catherine Ashton, the High Representative of the
Union for Foreign Affairs and Security Policy/Vice-President of the European Commission
(HR/VP), played a crucial role in bringing about this agreement. She also
worked to maintain a political dialogue in Syria, with the goal of achieving a
settlement of the devastating conflict there. While continuing to apply
sanctions on the Syrian regime, the EU and its Member States remained the
world’s most important source of humanitarian assistance for the people
affected by the conflict.

The year 2013 saw a renewed engagement to foster sustainable
stability and democracy in Europe’s neighbourhood, both to the south in north
Africa and with a renewed impetus on the partnership with eastern Europe. This
was combined with continued efforts to strengthen existing and emerging
partnerships around the world.

The year also saw an EU-facilitated agreement between Kosovo ([304]) and Serbia that
opened the door to a normalisation of their relations, which will benefit the
people of these countries, the western Balkans and Europe more widely.

The EU’s foreign service, the European External Action Service (EEAS),
now in its third year of operation, ensures that Europe’s policies and values
are represented and projected globally through its network of 141 delegations
worldwide.

The European
neighbourhood

European
neighbourhood policy

The European
neighbourhood policy (ENP) remains the basis for establishing an area of
prosperity with the EU’s neighbours, notably through enhanced political
association, economic integration and close cooperation. The EU continued its
efforts to support and encourage democratic transitions in the region through
political engagement, economic support and cooperation with regional
organisations, and made available altogether about €1.3 billion in new
commitments for the region. The EU remains the single most important trade
partner for almost all countries in the neighbourhood.

Southern
neighbourhood

The EU continued
to be fully engaged in efforts to facilitate political and economic transition.
The EU has been particularly involved in overcoming the deepening polarisation
in Egypt. The EU will observe the upcoming electoral cycle, starting with the
referendum on the constitution in January 2014.

EU assistance to
Egypt has been reviewed in light of the difficult situation in the country and
the outbreaks of violence following the ousting of President Mohamed Morsi. As
mandated by the Foreign Affairs Council in August, the assistance focused on
the socio-economic sector benefiting people most in need, and in favour of
civil society.

Syria continued to
be embroiled in an armed conflict that has caused a humanitarian catastrophe
impacting on the stability of the neighbouring countries, in particular Lebanon
and Jordan. The HR/VP has played an important role in maintaining a political
dialogue with stakeholders to bring about a political settlement in Syria, and
took active part in the preparations for the peace conference in Syria (Geneva
II). In 2013, the EU decided to modify its sanctions regime to the benefit of
the Syrian population and the opposition while maintaining the pressure on the
regime. The EU has actively supported the implementation of United Nations
Security Council (UNSC) Resolution 2118 on the elimination of chemical weapons
in Syria and has provided material support to the UN–OPCW (Organisation for the
Prohibition of Chemical Weapons) mission ([305]).

In June, the joint
communication ʻTowards a comprehensive EU approach to the Syrian
crisis’ ([306])
was adopted, announcing an additional €400 million assistance package to
address the consequences of the crisis. The package includes development
programmes benefiting Syrian refugees and host communities in Lebanon and
Jordan. The EU and its Member States remain the largest donors of humanitarian
assistance (over €2 billion).

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The EU is a key
partner supporting Libyan democratic transition process through a comprehensive
programme. Important challenges however remain, with security being the most
pressing concern. The civilian CSDP integrated border
management mission started in May 2013 and is providing support for enhancing the security of Libya's land, sea and air
borders. The cooperation portfolio with Libya is largely
addressing the security sector through various programmes – in complementarity
with the CSDP mission.

In relations with
Tunisia, EU policy dialogue and development cooperation continued to focus on
supporting the transition process. Despite political deadlocks on the
appointment of a new government, which contributed to some delays, an
association committee met in June 2013 and a political agreement on a mobility
partnership was reached in November.

The new 2013–17
EU–Morocco action plan for the implementation of the advanced status was
formally adopted in December. The launch of negotiations for an EU–Morocco deep
and comprehensive free trade agreement (DCFTA) commenced on 1 March 2013 and
the first ever mobility partnership in the southern neighbourhood region was
signed in June.

High-level
political dialogue with Algeria continued, especially in view of the security
challenges in the Sahara/Sahel region. A memorandum of understanding
establishing a strategic partnership with Algeria in the energy domain was
signed in July 2013.

Eastern
Partnership

Significant
progress was made in the implementation of the Eastern Partnership (EaP) in
2013.

The EaP Summit in
Vilnius in November was a milestone in the EU’s relationship with the EaP
countries. Negotiations on association agreements, including a DCFTA, with
Moldova and Georgia were substantively completed and the agreements initialled.
Negotiations continued with Azerbaijan. However, initialling the association
agreement with Armenia was impossible due to the incompatibility with Armenia’s
declared wish to join the customs union with Belarus, Kazakhstan and Russia.

PHOTO 050

The government of
Ukraine took a decision to suspend preparations for the signature of the
association agreement with the EU a week before the summit. The EU remains
ready to sign the association agreement on the basis of determined action and
tangible progress on the EU’s benchmarks. To this end, important progress has
already been achieved.

The EU remained
committed to a policy of critical engagement towards Belarus. This included
cooperation through the multilateral track of the EaP and technical dialogues
on specific topics of common interest, as well as support for civil society and
for the Belarusian population as a whole. At the same time, the EU has extended
the restrictive measures for 1 year.

The EU welcomed
steps taken by Georgia to deliver reforms in areas such as the judicial system.
The smooth conduct of presidential elections in October was an important step
for Georgia’s democratic consolidation. EU–Georgia relations continued to
deepen. Georgia reconfirmed the objectives of political association and
economic integration with the EU following its second political transition and
the intention to sign the association agreement as soon as possible in 2014.
Cooperation on common security and defence policy (CDSP) matters was enhanced
by the signature of the framework agreement allowing for Georgia’s
participation in EU-led crisis management operations. Georgia also signed the
protocol on participation in EU programmes. The EU continued to show its active
support for Georgia’s territorial integrity and expressed concern about
intensified ʻborderisationʼ along the administrative boundary line.

EU–Moldova
relations continued to deepen, particularly after the formation of a new
government in May, which confirmed the objectives of political association and
economic integration with the EU and the intention to sign the association
agreement by September 2014. Significant efforts were consented to and
resources made available to implement agreements concluded in previous years in
the areas of aviation, agriculture, civil protection, participation in EU
agencies and programmes, and CSDP cooperation.

Enlargement

Croatia

Croatia joined the
EU as its 28th Member State on 1 July 2013 (see Chapter 1).

Iceland

Following the 27
April 2013 general elections, the Icelandic government decided to put EU accession
negotiations on hold and has indicated that the negotiations will not be
continued unless approved through a referendum.

Turkey

Turkey remains a
key country for the EU, considering its dynamic economy, its strategic location
and its important regional role. The Commission underlined that it is in the
interests of both the EU and Turkey that accession negotiations regain
momentum, ensuring that the EU remains the benchmark for reforms in Turkey. The
Council agreed in 2013 on the opening of one chapter, namely Chapter 22 on
regional policy. On 16 December, the Commission and Turkey signed the EU–Turkey
readmission agreement, and initiated the EU–Turkey visa liberalisation
dialogue. In order to support and complement the process of accession
negotiations, the ‘positive agenda’ is to promote, inter alia, alignment with
the EU acquis in many
areas.

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Montenegro

Accession
negotiations were opened in June 2012. The meetings on the analytical
examination of the EU acquis (screening) were completed in June 2013. Two negotiating chapters
(25 — Science and research and 26 — Education and culture) were opened and
provisionally closed. The rule of law chapters (23 — Judiciary and fundamental
rights and 24 — Justice, freedom and security) were opened at the intergovernmental
conference of December 2013, as well as chapters 5 — Public procurement, 6 —
Company law and 20 — Enterprise and industrial policy.

Serbia

A new phase was
opened in relations between the EU and Serbia. The European Council decided in
June to open accession negotiations, and the framework for negotiations with
Serbia was adopted in December by the Council. The Commission started the
analytical examination of the EU acquis in September. The stabilisation and association agreement between
the EU and Serbia entered into force on 1 September. Serbia took significant
steps in the normalisation of its relations with Kosovo. It also reinvigorated
the momentum of reforms and positively contributed to regional cooperation,
including by stepping up high-level contacts with neighbouring countries.

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The former
Yugoslav Republic of Macedonia

The high-level
accession dialogue with the Commission, launched in 2012, continued in 2013 and
served as a catalyst for accelerating reforms. Meetings took place in April
2013. As requested by the Council in December 2012, with a view to a possible
decision on the opening of accession negotiations, the Commission issued a
report in April 2013 ([307])
which assessed the implementation of reforms within the framework of the
high-level accession dialogue and promotion of good neighbourly relations. In
light of the lack of progress on implementing the 1 March political agreement
between the main political parties, designed to address the political crisis
caused by events in the national parliament on 24 December 2012, the Council
did not take a position in June 2013 on the Commission’s outstanding
recommendations ([308]).
In December, it broadly shared the Commission’s assessment that the political
criteria continue to be sufficiently met, took note of the Commission’s
recommendation to open negotiations and stated that it will come back to the
issue in 2014 on the basis of an update from the Commission.

Albania

Albania adopted
key measures that had been identified in the areas of rule of law, public
administration reform and the rules of procedure of parliament, and continued
making progress towards fulfilling the 12 key priorities of the 2010
opinion ([309]).
Moreover, Albania scored highly in the conduct of its parliamentary elections.
In October, the Commission acknowledged the progress made and recommended that
the Council grant Albania the status of candidate country on the understanding
that Albania continues to take action in the fight against organised crime and
corruption. Furthermore, the Commission identified five
key priorities for the opening of accession negotiations and indicated its
readiness to support Albania’s efforts towards meeting them by engaging in a
high-level dialogue.

Bosnia and
Herzegovina

Limited progress
has been made by Bosnia and Herzegovina towards meeting the Copenhagen
political criteria and the requirements of the roadmap for the entry into force
of the stabilisation and association agreement and for a credible membership
application. The country needs to engage urgently on the implementation of the
EU agenda. Amending Bosnia and Herzegovina’s constitution to remove
incompatibilities with the European Convention on Human Rights is the most
important first step forward. So far there has been little progress in
achieving more functional, coordinated and sustainable institutional
structures. The EU continues to engage with Bosnia and Herzegovina using all
available instruments.

The Council in
December expressed concern for this limited progress on the EU path due to the
lack of political will on the side of political leaders of Bosnia and
Herzegovina, which also led to a loss of a significant amount of 2013
Instrument for Pre-Accession Assistance funds for the country.

Kosovo

Further to the
Council’s authorisation at the end of June, the Commission started negotiations
on a stabilisation and association agreement with Kosovo in October 2013. The
Council’s authorisation followed a joint report by the Commission and the HR/VP
in April ([310]),
which confirmed Kosovo had addressed the key priorities identified in the
Commission’s 2012 feasibility study and had continued to participate
constructively in its EU-facilitated dialogue with Serbia. In April, the
Commission issued its recommendation to the Council to sign and conclude a
framework agreement allowing Kosovo to participate in EU programmes ([311]).

The Commission
issued its progress report on Kosovo on 16 October ([312]). The report
confirmed Kosovo’s progress towards the normalisation of relations with Serbia,
notably the first agreement of principles agreed in April. The report also
noted that Kosovo continued to make progress on European integration-related
issues. However, many important challenges remain, notably the rule of law,
public administration reform, electoral reform, the integration of communities
and the economy. Two rounds of stabilisation and association agreement
negotiations took place between September and December.

Belgrade–Pristina
dialogue

Serbia and Kosovo
participated actively and constructively in the dialogue facilitated by the
HR/VP. Twenty meetings between the prime ministers have taken place to date.
These discussions resulted in the ‘First agreement on principles governing the
normalisation of relations’, supplemented in May by a comprehensive
implementation plan with a clear timeline to the end of 2013. This landmark
achievement represented a fundamental change in relations between the two
sides. The parties also reached agreements on energy and telecommunications in
September. The implementation of other agreements reached in the dialogue to
date has continued. In her 16 December report to the Council, the HR/VP
stressed that the implementation of all elements of the April agreement has
been completed in substance.

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Strategic
partnerships

Working
with strategic partners

United States

The EU–United
States relationship continued to strengthen with the launch of negotiations of
a ground-breaking new agreement, the Transatlantic Trade and Investment
Partnership (TTIP) in June 2013 (see chapter 3).

[PHOTO
054]

Revelations of
surveillance activities by the National Security Agency (NSA) led to the
establishment of an EU–United States ad hoc working group on data protection to
clarify the legal base, safeguards and oversight applicable to such
surveillance programmes. While recognising the critical nature of the EU–United
States partnership for security in Europe and beyond, the EU conveyed to the
United States its concerns and recommendations regarding the data protection rights
of EU citizens.

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As with his
predecessor, the HR/VP developed an effective and productive relationship with
the US Secretary of State, John Kerry, allowing for close and intense EU-US
cooperation on many foreign and security policy issues, both in the European
neighbourhood and beyond.

Canada

EU–Canada
relations reached a key juncture, with the announcement in October 2013 of an
agreement on the finalisation of a comprehensive economic and trade agreement
(CETA). The CETA will further boost the bilateral trade and investment flows.
The political agreement on the CETA creates the right conditions for a swift
conclusion of the negotiations of the strategic partnership agreement (SPA),
which will provide the overall framework for the EU–Canada relationship. The
SPA will enshrine the EU and Canada’s joint values and aim at taking relations
to another level by deepening and strengthening ties in many fields of
bilateral cooperation.

Russia

The EU continued
to engage with Russia as an indispensable yet often challenging partner. A
successful visit by the College of Commissioners to the Russian government in
March gave fresh impetus to EU–Russia cooperation in a wide range of areas, and
also launched formal dialogues in new fields. The EU–Russia energy roadmap 2050
was signed, a significant step in our energy cooperation.

The 31st EU–Russia
Summit took place in June 2013 in Yekaterinburg. It confirmed the determination
of both sides to further develop EU–Russian cooperation, in particular in view
of Russia’s interest in modernisation, but it also made it clear that
differences remain where further work is needed.

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The EU closely
followed certain developments in Russia's domestic situation, characterised by
further steps to restrict civil society and intimidate the opposition. The EU’s
concerns in this regard were raised both publicly and in political dialogue
including at highest level. An amnesty granted in some emblematic human rights
cases and the release of Mikhail Khodorkovsky towards the end of the year was a
welcome step but the need to address systemic rule of law issues remains.

China

The year 2013 was
marked by the completion of the Chinese leadership transition and the 10th
anniversary of the EU–China comprehensive strategic partnership. The EU was
successful in establishing links with the new Chinese administration and in
laying the groundwork for EU–China relations over the next decade. The HR/VP
started the process by paving the way with a visit to China in April, while the
16th EU–China Summit in November established the EU–China 2020 strategic agenda
for cooperation, for enhanced collaboration over the coming years in a
comprehensive way. The new agenda focuses especially on strategic issues,
investment, innovation, urbanisation, climate change and environmental
protection, people-to-people exchanges, and defence and security matters. A
major urbanisation forum and exhibition was held in Beijing during the summit,
involving city mayors from both sides.

Human rights
remained at the top of the EU’s agenda with China. The latest round of the
human rights dialogue was held in June. Stavros Lambrinidis, the EU Special
Representative for Human Rights, visited China, including Tibet, in September.

Japan

With Japan, 2013
was marked by the launch, in March, of parallel negotiations on a framework
agreement covering political, sectorial and global issues and a free trade
agreement. This has the potential to dramatically change the level and
intensity of cooperation between the two sides and is expected to bring
significant mutual benefits. The 21st EU–Japan Summit held in Tokyo in November
provided an opportunity for leaders to reaffirm their strong commitment to the
early conclusion of these ambitious agreements and to give political impetus to
cooperation on a range of issues such as science and technology, disaster
preparedness and regional security issues.

South Korea

The EU and South
Korea celebrated 50 years of diplomatic relations in 2013, and worked together
to consolidate their strategic partnership founded on the framework agreement
and the free trade agreement signed in 2010. The seventh bilateral summit in
November set the future direction of EU–Korea cooperation under the new Park
administration.

India

The EU and India
continued to work closely together with a view to strengthening the economic,
political and sector policy dimensions of their relations, while intensifying
their efforts to conclude the negotiations on a free trade agreement. However,
the start of the election campaign in India in September 2013 put further
progress on hold in this area.

Brazil

The sixth
EU–Brazil Summit (Brasilia, January) confirmed mutual satisfaction at the work
achieved through more than 30 ongoing dialogues on areas of common interest.
Both sides expressed their willingness to further strengthen the strategic
partnership, in particular in areas such as science, technology and innovation,
education, climate change, energy, sustainable development and millennium
development goals (MDGs), as well as human rights and UN matters.

Mexico

For Mexico and the
EU, the year started with a meeting between Herman Van Rompuy, President of the
European Council, José Manuel Barroso, President of the European Commission,
and Enrique Peña Nieto, the new President of Mexico, in the margins of the
EU–CELAC (Community of Latin American and Caribbean States) Summit in Santiago
de Chile. Confirming the excellent state of the bilateral relationship, the
presidents agreed to establish a working group to analyse the scope and options
for modernisation of the EU–Mexico global agreement. A working group met in
October to explore the options for modernising the trade pillar of the
agreement ([313]). Meetings for a full review of all three pillars of the agreement
— political dialogue, cooperation and trade — are under preparation in 2014.

South Africa

The EU and South
Africa held their sixth annual summit in July in Pretoria. This year the summit
was held on Nelson Mandela International Day and allowed both President Van
Rompuy and President Barroso to honour his legacy by participating jointly in
the traditional 67 minutes of community service (1 minute for every year of
Mandela’s struggle). Presidents van Rompuy and Barroso
also attended the state memorial service held for Nelson Mandela in Soweto on
10 December 2013.

The
EU–Africa partnership — celebrating the 50th anniversary of the African Union
and preparation of the EU–Africa summit scheduled for 2014

At the continental
level, the EU’s main partner in Africa is the African Union (AU), which
celebrated its 50th anniversary in May 2013. Relations between Africa and the
EU are framed within the context of the joint Africa–EU strategy (JAES). The
JAES opened a new phase in EU–Africa relations, setting out a shared vision for
a partnership of equals: achieving benefits for both sides through enhanced
bilateral cooperation on economic and political issues, through working jointly
in the international arena to tackle global challenges and through more
people-to-people contacts.

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Regional
policies

The Middle
East and the Gulf

The Middle East peace process

Concerning the
Middle East peace process, Council conclusions adopted in December 2012 ([314]) and July 2013 ([315]) reaffirmed the EU’s commitment to the two-state solution. The EU signalled
its full support for the resumption in August 2013 of direct negotiations
between the Israeli and Palestinian sides. In December 2013, Council
conclusions ([316]) outlined that the EU will provide an unprecedented package of
European political, economic and security support to both parties in the
context of a final-status agreement.

The adoption of
the new EU–Palestine action plan in April 2013 marked a new milestone in
EU–Palestine relations. As the main donor to Palestine, the EU continued its
support to the institution-building and reform efforts of the Palestinian
Authority and the HR/VP hosted the Ad Hoc Liaison Committee (AHLC) meeting of
donors on 19 March in Brussels.

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Progress in
EU–Israel relations was registered through the entry into force of the
agreement on conformity assessment and acceptance of industrial products
(January 2013) and the signature of the ‘open skies’ agreement (June 2013). In
July, the Commission published guidelines on the eligibility of Israeli
entities and their activities in the territories occupied by Israel after June
1967 for EU-funded grants, prizes and financial instruments from 2014 onwards.
In November, negotiations were concluded on Israel’s participation in the EU’s
Horizon 2020 programme on research and development. The EEAS and Commission
services continued their work on the origin labelling of settlement products.

The Arabian Peninsula, Iran and
Iraq

Iran

The EU remains
fully committed to seeking a diplomatic solution to the Iranian nuclear issue.
Throughout 2013, the E3+3 (France, Germany and the United Kingdom, along with
China, Russia and the United States), led by the HR/VP, were engaged in
diplomatic efforts to seek agreement with Iran on initial measures aimed at
achieving a comprehensive, negotiated, long-term settlement which would build
international confidence in the exclusively peaceful nature of the Iranian
nuclear programme while respecting Iran’s legitimate right to the peaceful use
of nuclear energy in conformity with the non-proliferation treaty, and fully
taking into account resolutions of the UN Security Council and International Atomic Energy Agency (IAEA) Board
of Governors.

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The election of a
new Iranian government under President Hassan Rouhani, which embarked on a more
constructive approach to the nuclear talks, together with the E3/EU+3ʼs
diplomatic commitment and unity, based on the dual-track approach, led to an
interim agreement with Iran in November in Geneva. Known as the joint plan of
action, both sides regard it as a first step towards such a settlement.

The agreement
includes a voluntary commitment by Iran to suspend a number of its nuclear
activities, in return for limited sanctions relief and a commitment not to
pursue further sanctions. For the EU, this means the suspension of certain
sanction measures, while core sanctions remain in place. Work on the
implementation arrangement for the Geneva joint plan of action is ongoing, with
the aim of quickly starting the implementation of the initial measures for a
6-month period. The proper implementation of this agreement will be the key to
achieving a long-term diplomatic resolution.

The EU continued
to raise concerns over the human rights situation in Iran. In public statements
the EU condemned in particular the large number of executions (over 400 in
2013), as well as Iran’s bad record in the respect of fundamental freedoms,
such as freedom of expression, assembly, and religion or belief. In September,
the HR/VP welcomed the release of 2012 Sakharov Prize winner Nasrin Sotoudeh
and other prisoners of conscience, expressing hope that this positive step
would pave the way for an improvement of the human rights situation in Iran
under the new government.

Iraq

The EU and Iraq
began implementation of the partnership and cooperation agreement, based on
provisional application of those parts that relate to trade and sectorial
cooperation. Meetings of the three subcommittees on energy, trade and
trade-related matters, and human rights took place and were an opportunity for
focused and open discussions on a series of priority areas and actions. The
first meeting of the Cooperation Committee also took place in Baghdad in
November, to make the point about progress regarding implementation and to set
the future agenda. The HR/VP visited Iraq in June to discuss ways of tackling
rising sectarian violence and to give impetus to bilateral cooperation.

Yemen

The EU has fully
supported the national dialogue process that was launched in March in close
cooperation with Member States and the international community at large. The
October Council conclusions ([317]) supported the process, reiterating that progress has to be made
while at the same time expressing concern about spoilers frustrating the
process.

Central
Asia

The EU continued
to strengthen its relations with central Asian countries (Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan and Uzbekistan) throughout 2013 on the basis of the
EU’s central Asia strategy and the review of the strategy and progress report.
Cooperation continued to develop, notably in the regional initiative areas of
education, the rule of law and the environment/water, as well as on energy, the
promotion of human rights and anti-drugs trafficking. A first EU–Central Asia
High-Level Security Dialogue was held in Brussels in June at the level of
deputy foreign ministers, reflecting the increased importance of security
issues in relations. In November, the revised EU–Central Asia action plan on
drugs was concluded; this was welcomed by the EU–Central Asia Ministerial
Meeting on 20 November in Brussels.

Asia and
the Pacific

The 2013 was one
of consolidation of the EU’s relations with its Asian and Pacific partners. In
the context of a series of transitions at leadership level in several
countries, the EU’s objectives were to reaffirm its engagement with its four
Asian strategic partners (China, India, Japan and South Korea). At the same
time, the EU continued to play its role in terms of support for the stability
and security of the region. The high-level dialogue, as well as the regular
political dialogue and the assistance provided to Asia and the Pacific,
remained at its highest intensity. The EU–Pacific interim economic partnership
agreement with Papua New Guinea was further implemented, while talks with all
Pacific ACP countries continued.

The Asia-Europe Meeting (ASEM)

The ASEM process in
2013 focused on internal consolidation, aiming to make the Asia-Europe Meeting
more effective. The 11th ASEM Foreign Ministers meeting held in November
in New Delhi allowed for a frank dialogue between Europe and Asia on key
strategic issues, among which financial and economic issues as well as
non-traditional security challenges were high on the agenda.

Association
of Southeast Asian Nations (ASEAN)

In 2013, EU–ASEAN
cooperation was further strengthened through the implementation of the Brunei
plan of action 2013–17. Working towards a more ambitious EU–ASEAN political
partnership, several high-level visits and meetings took place that confirmed
the positive momentum.

In the ASEAN
Regional Forum (ARF), ASEAN and the EU, together with other partners, have
continued to address regional and international security issues of common
interest and concern. The HR/VP took part in the 20th ARF Ministerial Meeting
in Brunei Darussalam (July), setting out the EU’s stance on the nature of the
main security challenges affecting the region and on the need for comprehensive
and rules-based solutions. She also reiterated the EU’s ambition to take part
in the East Asia Summit.

Myanmar/Burma

The EU continued
to encourage and support the ongoing transition in Myanmar/Burma in 2013. The
joint statement by President Van Rompuy, President Barroso and President U
Thein Sein, issued during the latter’s visit to Brussels in March, marked an
important milestone in EU–Myanmar relations by setting out a vision to build a
lasting partnership and contribute to plans for democratisation, national
reconciliation and economic liberalisation. In April, the EU lifted all
sanctions against Myanmar/Burma, with the exception of the arms embargo, in
recognition of the positive changes taking place and in the expectation that
they will continue. Furthermore, the EU reinstated the generalised scheme of
preferences (GSP) trade preferences for Myanmar/Burma in July, after the
country’s efforts to improve the political, social and labour environment ([318]). In July, EU foreign ministers agreed the EU comprehensive
framework for Myanmar/Burma which sets out the EU and Member States’ goals and
priorities towards building a lasting partnership and promoting closer
engagement. It is a collective effort involving actions by EU Member States and
EU institutions to support peace, democracy, development and trade.

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An EU–Myanmar Task
Force took place in Yangon and Nay Pyi Taw from 13 to 15 November and brought
together the full range of the EU’s resources (political, development and business). The EU–Myanmar Task Force aims to provide comprehensive EU
support to Myanmar/Burmaʼs transition by drawing on the entire range of EU
resources. The task force will act as the main vehicle for turning into reality
the ambition of ‘building a lasting EU–Myanmar partnership’, as expressed in the
joint statement by the three presidents on 5 March, and will follow up on the
provisions of the Council conclusions of April 2013 ([319]).

Finally, the EU
upgraded its diplomatic presence in the country by opening a fully fledged
delegation in Yangon in 2013.

Afghanistan

The Council
conclusions of June ([320]) reaffirmed the long-term commitment of the EU and its Member
States to support Afghanistan during transition and the decade of
transformation. In May, the Council prolonged the mandate of the EUPOL
Afghanistan mission in support of civilian policing and the rule of law until
31 December 2014. In 2013, the EU committed €196.5 million in support to local
development and governance, credible and transparent elections, regional
cooperation by Afghanistan with its neighbours, agricultural development and
the police.

Pakistan

The EU worked
closely with Pakistan in order to support the ongoing electoral cycle reform in
the country. An EU electoral observation mission, led by Chief Observer Michael
Gahler MEP, was established in the field for Pakistan’s general elections in
May 2013. The outcome of Pakistan’s historic elections were welcomed by the
Council as marking a strengthening of democracy owing to the first ever
handover in the country from one civilian government to another.

North Korea

The EU has worked
closely with the international community and the main regional players to
prevent further development of North Korea’s illegal missile and nuclear
programmes. In line with the UNSC’s unanimous resolutions, the EU adopted new
restrictive measures in April. The EU continued to work with key actors in
order to promote a peaceful and lasting solution for the denuclearisation of
the Korean Peninsula and to resume talks on a credible basis. The EU has not
changed its policy of critical engagement with North Korea, but direct dialogue
in 2013 was hampered by the deterioration of the situation on the peninsula
during the first half of the year. The EU continued to be highly concerned by
the dire human rights situation in the country and has supported the
establishment of a UN commission of inquiry to investigate violations of human
rights in North Korea.

Latin
America and the Caribbean

The EU’s strategic
partnership with Latin American and the Caribbean (LAC) as a whole is structured
through biennial summit-level meetings and a joint action plan adopted in 2010.
The seventh bi-regional summit took place on 26–27 January in Santiago de Chile
under the theme ‘Alliance for sustainable development: promoting investments of
social and environmental quality’. It was the first summit held with CELAC,
heralding a new phase in bi-regional relations. Leaders adopted a political
declaration and expanded the existing action plan to include two new areas of
activity: gender and investments.

The very good
state of bilateral relations with the Andean countries was reflected by a
number of high level visits, including by the HR/VP to Peru (and Chile) and by
President Barroso to Colombia. The ambitious and comprehensive multiparty trade
agreement concluded with Peru and Colombia in 2012 provisionally entered into
force in March and August 2013 respectively. This trade agreement is giving
further impetus to relations with Colombia and Peru. It is expected to bring
savings in tariffs for exporters of more than €500 million a year, and even
bigger gains through the creation of a stable framework for trade and
investment.

Africa

The EU’s policy
priorities towards Africa on the political and security side, i.e. promoting
peace, democracy and stability, were increasingly balanced with efforts on the
economic and global front in areas such as trade and investment, and climate
change.

The EU has
invested in building political relations with the African Union, the Economic
Community of West African States (Ecowas) and the South African Development
Community (SADC), as well as closer economic ties with the East African
Community (EAC) and Ecowas. It has been engaged in finding solutions to
political problems in countries under Article 96 of the Cotonou Agreement
(Guinea, Guinea-Bissau, Madagascar and Zimbabwe). It has also sent election
observation missions to Guinea, Kenya and Mali and electoral expert missions to
Djibouti, Guinea-Bissau and Rwanda, and has provided assistance to the
electoral processes in Burkina Faso, Comoros, the Democratic Republic of the
Congo, Kenya, Libya, Madagascar, Malawi, Mali, Sierra Leone, Tunisia, Zambia
and Zimbabwe, as well as to the Southern Africa Development Community Election
Support Network (SADC-ESN) to prevent electoral violence in southern African
countries. The EU and four eastern and southern Africa (ESA) states (Zimbabwe
and the Indian Ocean nations of Madagascar, Mauritius and Seychelles) took
steps to ensure the implementation of the economic partnership agreement in
2013, while negotiations continued with other sub-Saharan African regions,
marked by two visits by Karel De Gucht, Commissioner for Trade.

Development

Implementation
of the agenda for change

In 2013, the EU
worked at implementing policy recommendations put forward in the agenda for
change ([321]). As from the first steps of the programming process of the future
financial instruments (2014–20), clear instructions were given to delegations
and EU services, through programming guidelines, to make differentiation,
concentration and a joint EU approach a reality. The EU will also make
increased use of innovative financial instruments in its external cooperation
during the next multiannual financial framework. A thorough follow-up of
in-country programming was organised to ensure that EU action focuses on a
maximum of three sectors and that these focus sectors are part of the policy
priorities identified in the agenda for change, i.e. human rights, democracy
and the other aspects of good governance, and support for sustainable and
inclusive growth. Plans for joint programming with EU Member States and other
donors were taken forward in over 40 countries.

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Communications
on the post-2015 development framework

The year 2013 was
important in building a European position on the post-2015 development
framework.

Following a public
consultation held in summer 2012, the Commission in February 2013 released its
first policy paper on the post-2015 issue ([322]).
The paper advocates a single overarching post-2015 framework bringing together
development (the MDG process) and environmental (the Rio+20 process, including
the elaboration of sustainable development goals) concerns. In April 2013, the
‘European report on development — Post-2015: global action for an inclusive and
sustainable future’ ([323]) was released and subsequently presented in a wide number of
forums. The development and environment ministers endorsed in May and June 2013
the Council’s conclusions on the overarching post-2015 agenda ([324]), which were subsequently adopted on 25 June 2013 by the General
Affairs Council.

ACP–EU
partnership

The EU and the
African, Caribbean and Pacific Group of States (ACP) agreed in June 2013 to
approve the request by Somalia for accession to the EU–ACP Partnership
Agreement and to grant observer status to Somalia until the accession process
is completed. Thus, Somalia will become the 79th ACP state signatory to the
Cotonou Agreement.

Africa

Somalia and the Horn of Africa — a
new deal for Somalia

The EU has been a
long-time partner to Somalia, with more than €1.2 billion provided since 2008
to support the Somali people’s basic needs and improve security in the country.
On 16 September 2013, the landmark EU–Somalia conference in Brussels endorsed a
new-deal compact for Somalia and raised an additional €1.6 billion (including
€650 million provided directly by the EU) to implement the most pressing
priorities for rebuilding the Somali state during the period 2013–16.

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Budget support in fragile
situations: state-building contracts in Côte d’Ivoire and Mali

A state-building
contract of €225 million for Mali was signed in May as part of the €523.9
million aid package announced by the Commission at the international donor
conference ‘Together for a New Mali’. This budget support helps the government
to ensure the provision of basic services and restore the rule of law for the
whole population.

The state-building
contract for Côte d’Ivoire, worth €115 million, is a key component of the
general EU strategy aimed at stabilising the country, restoring the state’s
authority and promoting inclusive growth. The most tangible results achieved so
far include the proper functioning of all courts of first instance in the
country in which civil and criminal hearings take place and the proper
functioning of 90 % of police stations in the country.

AL-Invest regional aid programme

The year 2013 saw
the end of the fourth phase of AL-Invest, an emblematic programme of the EU for
the promotion of small and medium enterprises (SMEs) in Latin America.
AL-Invest facilitated the internationalisation of Latin American SMEs in
collaboration with European partners. With an EU contribution of €50 million in
its last (fourth) phase from 2009 to 2013, it contributed substantially to the
strong economic growth in Latin America.

Long history of
success

AL-Invest generated over
€500 million worth of intraregional trade and investment between 1994 and its
fourth phase in 2013. The EU committed a total of €144 million to AL-Invest
during this period.

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Blending instruments in the region

The year 2013 saw
the consolidation of the Latin America Investment Facility (LAIF) as an
efficient instrument blending grants and loans, mainly for large infrastructure
projects.

LAIF creates a
strong leverage effect, i.e. it channels additional funds into areas of
strategic importance for development. From 2009 to 2013 it mobilised more than
€5 billion in 25 projects in Latin America, with a total EU contribution of
€192.15 million.

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The Caribbean
Investment Facility (CIF) was officially launched on 22 March 2013 in Barbados.
With an initial budget of €40 million, the purpose of this facility is to
leverage funding by blending grants and loans in order to develop the
infrastructure and private sectors in Caribbean countries.

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WATER??]

Food and
nutrition

The EU is the
world’s largest donor of food and nutrition security and agricultural
development, providing at least €1 billion for food and nutrition security each
year (not counting emergency food aid in response to crises). EU support is
aimed at fighting undernutrition, increasing food availability and improving
access to food for people who are at risk of hunger. In March 2013, a
communication on ‘Enhancing maternal and child nutrition in external
assistance’ ([325]) was adopted by the Commission, and endorsed by the Council in May.
A key element of the communication is the commitment to support partner
countries in reducing stunting in children under 5 by at least 7 million
children in 2025. A nutrition action plan describing the steps to be taken to
attain this target is expected to be finalised by the first half of 2014.

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The year 2013 was
also when the final evaluation on the implementation of the €1 billion Food
Facility was released. This facility reached a total of 59 million people,
mainly smallholder farmers, with spillover effects on an additional 93 million.
The activities of the EU on food security were recognised by the international
community in 2013, when the Commission was selected as joint winner of the very
first Jacques Diouf Award. This award recognises that the EU was the first
major donor to help break a trend stretching back more than 40 years, during
which agriculture and food security were low on the political agenda. EU
efforts have helped bring sustainable agricultural development and food and
nutrition security right up the global development agenda.

Responding to
humanitarian crises and emergencies

Worldwide, natural
disasters are increasing in frequency, complexity and severity, and are
aggravated by challenges such as climate change, rapid urbanisation and underdevelopment.
Armed conflicts and protracted crises also show worrying trends across the
globe. As one of the the world’s leading humanitarian donors, the EU— 
hasthroughout 2013 responded with determination to these challenges. The relief
assistance provided by the Commission alone amounted to
over €1.3 billion, helping nearly XX million people in more than 90 countries.

In November 2013,
tropical cyclone Haiyan hit the Philippines. The cyclone, which is among the
strongest ever recorded, caused massive destruction, left thousands dead,
around 4 million displaced, and affected over 14 million people altogether.
Teams of EU humanitarian and civil protection experts were deployed to the
worst hit areas within hours after the disaster to support relief efforts and
assess the most acute needs. To ensure coordination of the European relief
efforts and facilitate logistics, the EU Civil Protection Mechanism was
activated. The EU and its Member States provided considerable humanitarian aid
and in-kind assistance, exceeding €150 million in the immediate aftermath of
the disaster. The Commission also committed support to assist in medium-term
rehabilitation, thus helping the population in the struggle to rebuild their
lives.

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In Syria, an
estimated 9.3 million people, nearly half of them children, are affected by the
ongoing violence and require humanitarian assistance. Around 6.5 million people
are internally displaced, whilst the number of refugees in neighbouring
countries — more than 2.3 million and growing — underlines the complex,
regional dimension of the disaster. European assistance is reaching up to
80 % of the population affected by the crisis and is bringing concrete and
tangible results with an immediate impact for those affected by the Syria
crisis. The Commission in 2013 mobilised an additional €350 million for
humanitarian aid, bringing the EU’s total response to more than €2 billion
since the end of 2011. Moreover, material assistance (such as ambulances,
heaters, blankets and hygiene parcels) has been provided to neighbouring
countries hosting the Syrian refugees. This includes support from other Member
States to Bulgaria, which faced an increasing influx of Syrian refugees over
the year.

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Across the Sahel,
vulnerable households are struggling to recover after the severe food and
nutrition crisis that hit the region in 2012. Aggravated by the ongoing armed
conflict in Mali, almost 16 million people remain at risk from lack of food,
among them 8 million in need of emergency food assistance. Building resilience
for the most vulnerable communities to withstand future crises has also been a
priority in 2013. To this end, the Commission was a driving force in
establishing the AGIR-Sahel initiative, which brings together all stakeholders
around the pursuit of a ‘zero hunger’ goal for the Sahel over the next 20
years.

The EU is also
committed to helping those caught up in the world’s forgotten crises,
dedicating around 15 % of its humanitarian aid budget to meeting the needs
of people that largely escape the attention of media and donors. The Central
African Republic is experiencing a catastrophic humanitarian situation, which
has for too long been ignored by the wider international community.
Inter-communal violence escalated dramatically towards the end of 2013, forcing
hundreds of thousands in the capital Bangui and throughout the country to flee
their homes. The Commission allocated €39 million of humanitarian aid to CAR -
making it the country's main donor. Moreover, the EU organised repeated airlift
into the country to support the transport of humanitarian relief and aid
personnel in the very challenging security environment.

Three years after
the devastating 2010 earthquake, the humanitarian needs in Haiti remain high.
The EU remains fully committed, and in 2013 scaled up humanitarian aid by €30.5
million to help those still homeless as a result of the earthquake, cholera victims
and those badly affected by hurricane Sandy. Backed by EU funding, humanitarian
organisations carried out a wide range of emergency operations.

EU children of peace: echoing the Nobel
Prize into the future

Children are among the most vulnerable
victims of conflict. Upon receiving the 2012 Nobel Peace Prize for its
achievements in peace on the European continent, the EU decided to dedicate the
prize money to help girls and boys around the world who are deprived of growing
up in peace. In Colombia, children benefit from a project that prevents child
recruitment by armed groups. In South Sudan, the funds are used to help
children begin new lives following years of conflict. In Pakistan, the EU Nobel
Prize initiative supports education and protection for children displaced by
conflict. Altogether, over 28 000 girls and boys benefit from the
initiative. In November 2013, the EU confirmed its decision to continue the
‘Children of peace’ initiative ([326]) by announcing additional funds for new
projects in 2014.

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International
cooperation is vital in the ever more challenging humanitarian landscape.
Throughout 2013, the EU continued to use its strong voice in multilateral
forums. Taking a leading role in the transformative agenda, the EU is aiming to
enhance the collective humanitarian response through improved global
coordination, leadership and accountability. Embracing the motto ‘acting
together for those in need’, the EU, through the Commission, is chairing the
OCHA Donor Support Group (ODSG) in the period from July 2013 to July 2014. This
is an important mechanism for humanitarian donor consultation on the activities
of the United Nations Office for the Coordination of Humanitarian Affairs
(OCHA).

Civil
protection

Natural and
man-made disasters, acts of terrorism, and technological, radiological and
environmental accidents can strike anywhere, at any time. When they happen, the
role of the EU Civil Protection Mechanism is to ensure a rapid and coordinated
response to help people caught up in disasters by drawing on the expertise and
capacity available across the Union.

In situations like
tropical cyclone Haiyan, which hit the Philippines in November, the
Commission’s Emergency Response Coordination Centre (ERCC) was the operational
heart of the EU response. The centre operates 24 hours a day, 7 days a week.
Launched in May 2013, it further strengthens the EU’s disaster response
capacity inside the Union and globally. The ERCC collects real-time information
on disasters, monitors hazards and ensures that interventions are effectively
coordinated. In the Philippines, the ERCC facilitated the delivery of over 20
participating states’ personnel and relief material supplies, as well as
supported the transport of civil protection assets to the region.

The assistance to
fight forest fires in Albania, Bosnia and Herzegovina, Greece, Montenegro and
Portugal in 2012 and 2013 and the help provided to refugees in Syria’s
neighbouring countries are other recent examples of emergency responses to help
people in distress inside and outside the Union.

The EU Civil
Protection Mechanism has reacted to over 180 disasters worldwide since its
creation in 2001. All EU Member States, as well as the former Yugoslav Republic
of Macedonia, Iceland, Liechtenstein and Norway, participate in the mechanism.
Action focuses on those areas where a common European approach is more
effective than separate national interventions.

Human rights
and democracy

Human
rights

The EU has
continued to strive to place human rights and democracy at the centre of its
activities. Progress has been made in the implementation of actions included in
the EU action plan on human rights and democracy ([327]),
in particular: completion of a worldwide network of human rights and democracy
focal points; progress on economic social and cultural rights; a rights-based
approach to development; revised guidelines on the death penalty; children’s
and women’s rights; and establishing guidelines on lesbian, gay, bisexual,
transgender and intersex (LGBTI) people and freedom of religion or belief
(FoRB). Throughout the year, the EU continued to actively support civil society
organisations and specific human rights dialogues were held with over 20
countries. In addition, the work of the EU special representative for human
rights has enhanced the coherence and visibility of human rights in the EU’s
foreign policy.

The EU has
continued to be a committed actor on human rights at the UN, contributing
towards building and defending strong standards and mechanisms for the
promotion and protection of human rights. In particular, the EU actively
participated in the work of the Human Rights Council and the UN General
Assembly (UNGA), and presented several initiatives on countries of concern as
well as important thematic issues.

Support
for democracy and democratisation

In 2013, the EU
continued to support electoral processes around the globe by sending election
observation missions (EOMs) and electoral expert missions (EEMs), as well as
providing electoral assistance and support to domestic observers. EOMs were
deployed to Jordan (legislative elections on 23 January), Kenya (general
elections on 4 March), Paraguay (general elections on 21 April), Pakistan
(parliamentary and provincial elections on 11 May), Mali (presidential
elections on 28 July, further deployment for legislative elections on 24
November and 15 December), Guinea (legislative elections on 28 September),
Madagascar (presidential and legislative elections on 25 October and 20
December), Kosovo (municipal elections on 3 November), Nepal (constitutional
assembly/legislative elections on 19 November) and Honduras (presidential and
legislative elections on 24 November). EEMs were sent to Bhutan, Cambodia,
Maldives, Mauritania, Rwanda, Swaziland, Togo and Zimbabwe.

In addition, the
follow-up to EOM recommendations is a high priority (as per the human rights
action plan). So far, regular reporting by heads of mission has started and
guidelines for EOMs and delegations are being developed; follow-up missions
have been sent to Malawi (December 2012), Bolivia (March 2013) and Mozambique
(May 2013).

Among the actions
included in EU action plan on human rights and democracy is the completion of
work on nine pilot projects developing new methods of work in support of
democracy/democratisation.The pilot countries were Benin, Bolivia, Ghana,
Indonesia, Kyrgyzstan, Lebanon, Maldives, Mongolia and Solomon Islands. The
work was done jointly by the EEAS, DG Development and Cooperation — EuropeAid and
EU delegations, and focused on the six action areas identified in Council
conclusions from 2009: country-specific approach, dialogue & partnership,
EU coherence and coordination, mainstreaming, international cooperation and
visibility.

Concrete deliverables
per country were a democracy profile and a democracy support action plan. To
the extent the local context permits, the work is ongoing in order to deepen
cooperation between the EU, the EU Member States, the partner governments and
other key actors. A second generation of pilot projects was launched towards
the end of 2013, building on the results of the first and aiming at a global
roll-out by the end of 2015.

Multilateral
governance and global challenge

Multilateral

The EU in the United Nations

As a staunch
supporter of multilateralism, the EU continued to work towards strengthening
the UN. The EU focused on the promotion of international peace and security,
sustainable development and human rights, democracy and the rule of law, as
well as on the improvement of the effectiveness of the UN.

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Within the
framework of the UNGA the EU contributed actively to several high-level
meetings with an impact on development, notably the Special Event on MDGs, the
High-Level Meeting on Disabilities and Development, the first meeting of the
High-Level Political Forum (HLPF) on Sustainable Development agreed at Rio+20
and the High Level-Meeting on Migration and Development. The meetings resulted
in the adoption of outcome documents, for which the EU provided relevant input.
The EU has also contributed to the negotiations and adoption of several UNGA
resolutions with a direct impact on development, human rights, disarmament and
non-proliferation, peacekeeping and peacebuilding.

The outcome
document from the UNGA Special Event on MDGs was adopted by the UNGA in October
2013.This is a good basis for continued discussions and
also provides a roadmap for the process ahead: an intergovernmental process as
of the 69th UNGA leading towards a summit in September 2015, during which the
post-2015 development agenda will be adopted. The EU is working in order to
ensure that the new development agenda will properly integrate topics like
peace, security and fragility, as well as human rights, good governance and the
rule of law.

Cooperation in promotion of peace
and security

In 2013, the EU
continued its close cooperation with the UN in military and civil crisis
management in various countries, in particular in the Democratic Republic of
the Congo, Kosovo, Libya, Mali and Somalia. The EU–UN Steering Committee on
Crisis Management met in April in Brussels and in November in New York to
discuss current crisis situations and concrete cooperation between the EU and
the UN both in the headquarters and in the field. The implementation of the
plan of action to enhance CSDP support for UN peacekeeping has seen steady
progress. The finalisation of joint EU–UN planning guidelines, for cases in
which both organisations operate in the same field, will facilitate
significantly the cooperation between the EU and the UN during the planning of missions
and operations.

The EU in other multilateral forums

Organisation
for Security and Cooperation in Europe

The EU continued
its strong engagement in the Organisation for Security and Cooperation in
Europe (OSCE) in 2013, including by resisting attempts by some participating
states to lower the OSCE commitments and by providing support for its various
regional and thematic priorities. The EU supports the work of the OSCE’s
autonomous institutions and continues to work closely with the OSCE field
missions notably in the western Balkans, south Caucasus and central Asia. The
EU continued strongly to support the OSCE’s efforts to advance in the talks on
the Transnistrian settlement, the conflict in Georgia and the Nagorno-Karabakh
conflict.

NATO

EU–NATO cooperation
continued well, including in the context of the ‘Berlin plus’ arrangements.
There are frequent staff-to-staff contacts between the EU and NATO on
operational engagements, on planning and on capability development. The HR/VP
regularly meets with the NATO secretary general, and in several theatres NATO
and CSDP missions and operations work side by side. The European Council of
December 2013 recognised the importance of the EU–NATO relationship. The EU
continues to strive towards a genuine organisation-to-organisation
relationship.

Council of Europe

The EU pursued its
cooperation with the Council of Europe, notably in the area of the European
neighbourhood policy (with special focus on the EaP and southern Mediterranean
dimension) and the western Balkans. In particular, it continued to enjoy good
cooperation with the Council of Europe on justice and home affairs issues
within the framework of the implementation of the EU’s Stockholm programme, as
well as in the areas of the rule of law and democracy, by means of close
cooperation with the Venice Commission on constitutional reforms and electoral
law issues. Negotiations for EU accession to the European Convention on Human
Rights reached an important milestone in April 2013 with the conclusion of an
agreement at technical level on a draft accession agreement.

G7, G8 and G20

The Commission
participated in a number of summits and meetings of these three forums in 2013,
inter alia to discuss the global economy and, at the G8 summit at Lough Erne in
June, the ‘three T’ priorities: trade, taxation and transparency. The main
focus of the development-related work of the G8 continued to be on agriculture
and food security. The New Alliance for Food Security and Nutrition was
expanded. The EU continues to play an active role with other G8 leaders to
build the partnership between partner governments in Africa, G8 countries and
the private sector to lift 50 million people out of poverty in the next 10
years by supporting agricultural development. During 2013, the EU provided
strong support to the UK initiative on trade in Africa. A
UK-led G8 transparency initiative covered several important areas, including:
the Extractive Industries Transparency Initiative, aid transparency, tax
transparency, reducing money laundering and improving tax systems in developing
countries. These are all areas where the EU is very active.

[PHOTO 067]

In 2013, four
meetings of G20 finance ministers and central bank governors took place. The
meetings focused on the global economic situation and the actions needed to
strengthen the recovery. At the summit in Saint Petersburg, G20 leaders
committed inter alia to work together to manage any spillovers onto other
countries from unconventional monetary policies.

This G20 summit
also cemented the global paradigm shift towards fairer taxation by endorsing
the establishment of the automatic exchange of tax information. The EU played a
pivotal role in ensuring that this this new standard will be implemented as
from 2015 among G20 members. The G20 countries are taking action to make sure
that companies and individuals pay the taxes that are due and that are badly
needed in difficult times for investment in the future.

Global
challenges

Non-proliferation and conventional
weapons

The EU continued
to support the UN process leading to the Arms Trade Treaty (ATT), to strengthen
responsibility and transparency in the conventional arms trade. The EU actively
participated in the final UN Diplomatic Conference on the ATT (18–28 March 2013
in New York) and welcomed the adoption of the ATT by the UNGA on 2 April 2013.

The EU has
enhanced its support for the IAEA in Vienna. It remains a key donor to the IAEA
Nuclear Security Fund, with more than €31 million committed since 2004. A new
Council decision to provide for more than €8 million in support of that fund
was approved on 21 October 2013 ([328]).

In 2013, there
were important developments in the area of space safety, security and
sustainability. The EU held, on 16–17 May in Kiev and on 20–22 November in
Bangkok, open-ended consultations on its proposal for an international code of
conduct for outer space activities, to broaden international support for the
code with a view to its adoption possibly in the course of 2014. The code is
designed to contribute to transparency and confidence-building measures (TCBMs)
in outer space activities. The EU has also supported awareness raising about
the importance of norms of behaviour and TCBMs in outer space through regional
seminars. Besides a meeting in Kuala Lumpur in 2012, additional meetings were
held in 2013 in Addis Ababa (Ethiopia), Almaty (Kazakhstan) and Mexico City .

Climate change and security

The security
aspects of climate change remained high on the EU’s agenda in 2013.

In June 2013, the
Foreign Affairs Council adopted conclusions ([329])
on ways to further strengthen EU climate diplomacy with a view to helping to
bring about political conditions that are conducive to progress towards the
2015 agreement. Throughout the year, the EU pursued and intensified efforts to
stimulate and support ambitious climate action in partner countries, drawing on
all foreign policy instruments.

The UN climate
change conference held in Warsaw in November marked a step forward in the
international fight against climate change. Responding to a key EU demand, the
conference agreed a timeline for countries to table their contributions to
reducing or limiting greenhouse gas emissions under a new global climate
agreement to be adopted in 2015. It also agreed ways to accelerate efforts to
deepen emission cuts over the rest of this decade, set up a mechanism to
address losses and damage caused by climate change in vulnerable developing
countries and agreed decisions which enhance the implementation of a range of
measures already agreed at international level, including finance to support
developing countries and combating tropical deforestation.

[PHOTO 068]

In 2013, the
Commission committed an additional €47 million to finance nine new Global
Climate Change Alliance (GCCA) interventions in Chad, Comoros, Djibouti, Haiti,
Malawi, Mauritania, Myanmar/Burma, São Tomé e Principe and Tanzania. With
these, the portfolio has increased from four pilot projects in 2008 to 48
national and regional programmes across 38 countries and eight regions and
subregions, with an envelope of close to €300 million.

Migration

The external
dimension of EU migration policy, and more specifically cooperation with non-EU
countries in the area of migration, is a clear priority for the EU. The EU is
placing migration systematically on the agenda of its political, economic and
social dialogues with non-EU countries. Strategic dialogues on migration issues
have been developed with a series of key partners, such as China, India, Russia
and the United States, as well in the framework of several regional
initiatives, such as the EU–Africa Partnership on Migration, Mobility and
Employment, the Rabat process, the EaP, the ‘silk routes’ and EU–CELAC
cooperation. Such dialogues address various dimensions of the migration
phenomenon, such as the migration and development nexus, mobility issues, curbing
illegal migration, readmission and human trafficking. The EU is also actively
participating in discussions held within the framework of various international
forums and has developed close cooperation with various international actors
working on migration.

In May, the
Commission adopted a new communication on ‘Maximising the development impact of
migration’ ([330]), both serving as the basis for the EU’s position for the UN
High-Level Dialogue on International Migration and Development in October 2013
and making proposals for a more ambitious approach to migration and development
at EU level.

Water diplomacy

In 2013, the EU
conducted an EU water security mapping project aiming to obtain a snapshot of
who does what from the EU and Member States on main regional and transboundary
water security challenges around the world. The results demonstrated a great
degree of engagement by the EU and Member States and a great depth of
initiatives and activities across the world.

Building on this
mapping project, in July 2013 the Foreign Affairs Council adopted, for the
first time ever, Council conclusions on water diplomacy ([331]) aiming to enable the EU to become more engaged in water security
challenges around the world. The Council conclusions recognise proactive
engagement in transboundary water security challenges as a concrete objective
of water diplomacy, with the aim of promoting collaborative and sustainable
water management, and identified the Nile and central Asia as immediate water
diplomacy priorities. The Council conclusions also
encouraged the promotion of international agreements on water cooperation and
relevant International water conventions as well as building international
partnerships in promoting regional and trans-boundary water cooperation.

Energy diplomacy

Building on the
increased engagement by the HR/VP and the EEAS on energy diplomacy, the Foreign
Affairs Council discussed external energy policy and energy security in April
2013 with the EU foreign Ministers focusing on how foreign policy can help the
EU energy policy objectives, and more particularly on the Southern Corridor.

Cybersecurity

In February 2013,
the HR/VP and the Commission adopted a joint communication on an EU
cybersecurity strategy ([332]), the first comprehensive policy document produced by the EU on
this rapidly expanding issue. The strategy focuses on an imminent need to step
up EU-wide preventive efforts in the area of cybersecurity and seeks to improve
horizontal cooperation between different policy areas in the EU: cyber resilience,
cybercrime, EU international cyberspace policy and CSDP issues. The strategy
sets out clear priorities for EU international cyberspace policy: to preserve
freedom and openness in cyberspace; to develop norms of behaviour and apply
existing international law in cyberspace; to raise cybersecurity capacity in
non-EU countries; and to foster international cooperation in cyberspace issues.

Implementation of
the strategy has continued throughout 2013. The EEAS has increased engagement
in cyber issues with EU key strategic partners. The development of norms of
behaviour in cyberspace has continued and agreement has been reached on a first
set of confidence-building measures in the OSCE. The EEAS has engaged in global
capacity building focused on enhancing the rule of law in cyberspace and
incident response. Funding for this work is to increase over the next 5 years,
and engagement with international partners and organisations, the private
sector and civil society has begun to find an appropriate model to support capacity
building.

Counterterrorism

The threat of
terrorism remains significant and is constantly evolving. Recent attacks
highlight the continued threat and global challenge of terrorism, as evidenced by the terrorist attacks in
Boston, Algeria and Kenya and the developments in Mali and the Sahel region.
The year 2013 has seen the increased decentralisation of terrorism. The diffuse
and pervasive nature of terrorism requires a multilateral response to enhance
global coordination to prevent attacks, intercept criminal networks and block
avenues of financing for decentralised, sophisticated terrorist networks and
disaffected individuals.

As part of a
comprehensive approach, the EEAS developed political dialogues on
counterterrorism with many key partners and international organisations, thus
contributing to deepening the international consensus and enhancing
international efforts to combat terrorism. Specific dialogues were held with
the UN, Canada, Pakistan, Russia, Saudi Arabia, Turkey,
the United Arab Emirates and the United States.

Peace and
security

Common
security and defence policy

The year 2013 saw
many developments in the area of CSDP. The EU launched two new missions, the EU
Training mission in Mali and the EU Border Assistant Mission in Libya. In total,
the EU deployed more than 7 000 civilian and military personnel in 2013,
in 12 civilian missions and four military operations.

Security and
defence also gained prominence on the EU’s agenda through the preparation of
the European Council on Security and Defence in December 2013. The main aim of
a thematic discussion among leaders was to strengthen the effectiveness and
impact of the CSDP, to enhance the development of defence capabilities and to
strengthen Europe’s defence industry.

In the run-up to
the December European Council, the Commission presented a communication on the
European defence and security sector in July ([333]),
while the HR/VP (the head of the European Defence Agency) presented a major
report on CSDP in October. The Council adopted conclusions in November ([334]), which were endorsed by the December European Council.

EU-led missions
all over the world

[GRAPH 24]

In Libya,
following a specific request from the Libyan authorities, the EU launched EUBAM
Libya, a civilian CSDP mission designed to provide much-needed integrated
border management capacity for the Libyan authorities. In addition the EU
commissioned projects addressing reform in the police and justice sectors,
secure storage and stockpile management of conventional weapons and ammunition
and the rebuilding of Libya’s criminal investigative capacity, and continued a
broad package of support in terms of strengthening public administration,
vocational training, good governance, health, education and civil society.

[PHOTO 069]

In response to the
2012 coup d’état in Mali, the Council established in January 2013 a CSDP
mission to advise the Malian defence authorities and train tactical units. The
EU Training Mission in Mali (EUTM Mali) is a response to an official request
from the Malian authorities and to UN Security Council Resolution 2071, which
calls upon regional and international partners, including the EU, to provide
assistance in order to improve the capacity of the Malian armed forces. EUTM is
one of several instruments, part of the EU comprehensive approach, in
accordance with the strategy for security and development in the Sahel.

[PHOTO 070]

The EU action in
the Horn of Africa is another prime example of how combined use of various EU
instruments can achieve results.

The EU naval operation
Eunavfor-Atalanta is a recognised leader in the international fight against
piracy, and collective efforts led to a dramatic reduction in the number of
attempted and successful pirate attacks in the Gulf of Aden and the western
Indian Ocean. In 2013, there were fewer than 20 attacks and suspicious events
off the Somali coasts. No large ship has been attacked by pirates since May
2012.

At the same time, the civilian
mission EUCAP Nestor is building the capacities of partner countries in the
region to assist them in ensuring the maritime security of their waters.

[PHOTO 071]

On land, EUTM Somalia has now
successfully trained over 3 000 Somali soldiers, an important contribution
to allow the liberation of Mogadishu and the subsequent transition to a new political
beginning in Somalia. In this context, the mission also started its new role
this year of providing strategic advice to Somali authorities on restructuring
their armed forces.

Comprehensive
approach/conflict prevention

The Union has at
its disposal many external relations policies and tools — spanning diplomatic,
security, defence, financial, trade, development and humanitarian aid, as well
as the external dimension of EU internal policies — to deliver the end result
that Member States and the international community seek. This is the EU’s main
strength as an international actor.

In December 2013,
the Commission and the HR/VP adopted a joint communication on ‘The EU’s
comprehensive approach to external conflict and crises’ ([335]) with a view to further increasing its efforts to make its global
action more effective and cohesive, drawing on the full range of its
instruments and resources.

Chapter 6

The European institutions and bodies at
work

The heavy workload of the Union's institutions in 2013 substantially
reflected the challenges of the European economy. They continued with the
legislative work of rebuilding the economic and monetary union (EMU). Very
substantial progress was made on economic governance, financial regulation and
supervision as well as the creation of the banking union.

Given that economic recovery took root in 2013, the institutions
focus shifted more towards the growth and jobs agenda, including the fight
against youth unemployment. The major work that was concluded over the course
of the year on the multiannual financial framework (MFF), the Union's budget
for 2014 to 2020, put a strong focus on growth-oriented policies and measures,
so as to continue to support a positive employment friendly agenda.

Many other topics occupied the institutions and bodies of the Union
in 2013, from the fight against organised crime and corruption, to foreign
affairs, to international trade, to fundamental and citizens' rights.

The European
Parliament

The major issues
of economic and monetary union (EMU), the banking union and financial services
played a substantial role in the Parliament’s deliberations during 2013. In the
context of various key debates, such as on European Councils and on Presidency
programmes, the plenary paid sustained and strong attention to the next steps
in deepening EMU and the right economic policy mix to get Europe out of the
crisis. Ensuring a social dimension to EMU and finding the right balance in
terms of fiscal consolidation and growth were key preoccupations for the Parliament
throughout all these debates, with the issue of youth unemployment
progressively taking centre stage.

[PHOTO 072]

The legislative
output in the economic and monetary field was also significant, with the
approval of first-reading agreements reached with the Council on key files such
as the ‘two-pack’, credit rating agencies, the CRD IV ([336]) and the transparency[337]
and accounting[338]
directives. The Parliament also sought to push the other institutions for more
action; a debate querying the Commission and the Council on alleged delays with
proposals on financial services was added to the agenda in June.

In particular,
following the plenary debates held in May, Parliament voted on the Single
Supervisory Mechanism dimension of the banking union. The vote was preceded by
a Commission statement and a debate on the state of play of the banking union,
and by an oral statement by Martin Schulz, President of the European
Parliament, on the general agreement reached on the interinstitutional
agreement between the Parliament and the European Central Bank (ECB) detailing
the procedures for the democratic accountability of the ECB’s supervisory
function. President Schulz drew attention to the strengthening of Parliamentary
control, and considered the result of negotiations a ‘quantum leap’ in European
politics. This was followed in September by a joint declaration by President
Schulz and Mario Draghi, President of the ECB, the endorsement by Parliament of the Single Supervisory Mechanism
legislation and its entry into force in November. This provided the basis for
the ECB to advance with the preparations to take up its prudential supervision
tasks.

Pushing ahead with
the other remaining pillars of the banking union, and notably the Single
Resolution Mechanism (SRM), remained a repeatedly voiced aspiration of the
Parliament throughout the year, backing the Commission, whilst at the December
session — in various debates and adopted texts — concerns and criticism were
raised over the intergovernmental turn taken by the Council discussions on the
SRM.

An important
non-legislative contribution in this area came in the form of the report on the
feasibility of introducing stability bonds, which sought to provide a
‘framework for reflection’. Likewise, the resolution adopted by the plenary in
May on future legislative proposals on economic and monetary union contained
important messages in response to the Commission’s communications on ex ante
economic policy coordination ([339]) and on the Convergence and Competitiveness Instrument ([340]). It stressed the importance of parliamentary oversight and called,
inter alia, for a proposal to adopt a convergence code under the European
semester, based on the Europe 2020 strategy and including a strong social
pillar.

Similarly, in July
the Parliament also adopted an own-initiative report on reforming the structure
of the banking sector, promoting a principle-based approach which recommended
the separation of essential activities from speculative ones (although with
Members of the European Parliament (MEPs) expressing a multitude of views in
the debate on how the separation should be achieved).

A dedicated debate
was held on the European semester in October, with the main political groups
welcoming the results of the 2012–13 cycle and many recalling the importance of
ensuring enhanced ownership by Member States. MEPs were divided on the optimal
degree of the country-specific recommendations being ‘prescriptive’ while also
emphasising different priorities, for example fiscal consolidation versus
social dimension.

[PHOTO 073]

State of the Union address

In September, José Manuel Barroso,
President of the European Commission, delivered his third and last State of the
Union address under the current term before the European Parliament. The
president argued that the upcoming European elections offer the opportunity —
and the obligation — for pro-European forces across party lines to speak up and
make the case for Europe. They could explain the determined and increasingly
successful response that the Union has given to the financial and economic
crisis over the last 5 years. Moreover, the Parliament could use the remaining
8 months of the legislature to agree on the most important pieces of
legislation on the table.

Reactions by the political groups already
somewhat reflected their endeavour to profile themselves against each other in
view of the upcoming elections, and they differed widely on the question of how
successful Europe’s strategy to fight the crisis was.

Legislation

In an overall
perspective, one of the features of the year was the rejection, in April, of
the report on backloading (timing of auctions of greenhouse gas emissions).
Following the Parliament’s rules of procedure, the report was sent back to the
competent committee which then presented to the plenary a reworked version in
July. After the Council had accepted the text as amended by the Parliament, the
file came back to the plenary for a second time in December, when the plenary
endorsed the agreement reached with Council. Similarly, the report on ground
handling also came to the plenary twice; after an original rejection and
referral back to the committee in December 2012, the reworked version was
approved in April.

The report on
further macro-financial assistance for Georgia was approved in conciliation in
October, with the Parliament offering overwhelming support for the final
agreement and the rapporteur applauding the solution found to finally unblock
the long interinstitutional battle. The Commission had previously withdrawn its
proposal.

Regarding the
fisheries partnership agreement with Mauritania, rejection was avoided as the
plenary turned around the Parliament’s position, voting in favour — contrary to
the proposal of the PECH Committee in the lead — of granting consent.

The plenary also
voted against several attempts coming from committees to oppose draft
Commission implementing measures. Among these, the issue of flight-time
limitations proved to be particularly sensitive and provoked a great deal of
interest.

In the case of the
report on the regulation regarding third countries whose nationals are subject
to or exempt from a visa requirement [is this COM(2013) 853? If not please
provide correct reference], the plenary supported with a rather narrow majority
the text agreed with Council, in support of a first reading agreement, despite
clear warnings from both President Schulz and the Commission about the risky
legal position taken in relation to delegated and implementing acts, whilst the
Commission explicitly stated that it reserved its right to seek legal remedy
from the Court of Justice.

In several fields,
the Parliament adopted own-initiative reports asking the Commission to come
forward with a legislative proposal. Among these, one report called on the
Commission to submit a legislative proposal on a statute for a European mutual
society, while another report called for legislation on a European law of
administrative procedure. A third report called for minimal social rules for
restructuring via a proposal for a legal act on information and consultation of
workers, anticipation and management of restructuring. Furthermore, the report
on single market governance requested that the Commission submit a proposal for
an act aimed at strengthening the governance of the single market, including
the idea of ‘defining a single market pillar for the European semester’.

Following the
Commission’s intention to withdraw its 2005 proposal on the mandatory marking
of origin on imported products, the plenary debate and the ensuing resolution
demonstrated that all groups regretted the Commission’s intention, but the
Commission pointed to the blockage in the Council and to the fact that the new
World Trade Organisation (WTO) rules were not reflected in the original
proposal.

In various cases,
the Parliament adopted its amendments while postponing the vote on the
legislative resolution, thus sending a strong message on its position but
leaving the door open for an agreement with the Council via informal (trilogue)
negotiations. Such cases included the Parliament’s reports on the banking
union, but also on flag state responsibilities, European statistics on
demography, ship recycling, the road worthiness package, UCITS V, medical
devices, the environmental impact assessment directive and the long-awaited tobacco
directive.

Also, in
application of the Parliament’s revised rules on interinstitutional
negotiations (Articles 70 and 70a), some files were subject to a plenary
debate, before the actual committee report was adopted, with a view to gaining
political endorsement (a mandate) from the plenary for the Parliament’s
negotiating position. The first such case concerned the files composing the
common agricultural policy reform package.

[PHOTO 074]

Non-legislative
work — political and other topical issues

The Parliament’s
own-initiative reports, deemed to have strategic importance and reflecting the
Parliament’s priorities, were subject to full debates. These included topics
such as access to finance for SMEs, corporate social responsibility, the energy
roadmap for 2050, the implementation of the youth strategy, youth unemployment,
the annual reports on competition policy and on EU public finances, equal
treatment between men and women and the millennium development goals (MDGs).

The single market
was given special prominence throughout the year, with a whole series of
debates and reports dedicated to the various aspects: completing the digital
single market (July), the internal market for services (September), the
internal energy market (September), completing the European research area
(October) and electronic communication/recent proposals to complete the digital
single market (October).

The Special
Committee on Crime adopted its temporary report in June and then its final
report in October, addressing the issue of organised crime, corruption and
money laundering. Members urged, in both the debate and the report, the
creation of a uniform regulatory framework, as well as stronger sanctions on
mafia-tool organisations and tailor-made investigative methods; in this latter
context they also offered support to the establishment of the European Public
Prosecutor’s Office.

The issue of the
fight against corruption was also subject to a dedicated debate in January,
wherein MEPs welcomed the prospect of a European Public Prosecutor and saw a
need to further improve the management of EU funds by national administrations.
The issue of tax fraud and tax havens gained importance thanks to the related
discussion in the May European Council. The plenary adopted a report in May asking
for a clear definition of tax havens and the establishment of a European
blacklist of tax havens ([341]). In December, the plenary came back to the issue and adopted a
resolution calling for ambitious targets to reduce tax fraud and evasion, at
least halving the tax gap by 2020.

Non-legislative
issues were also examined in the form of oral questions put to the Council and
the Commission or statements requested from the Council and/or Commission.
Foreign trade and fisheries issues were particularly well represented among
these, while such occasions were used to query the Commission’s stance and seek
clarifications on various issues such as the ‘one-bag rule’ in aircraft, the
cross-border authorisation of mega trucks, state aid modernisation, measures
aiming at the recovery of European industry and the follow-up to the horsemeat
scandal.

In the political
context, the Parliament continued to look at several country-specific issues —
mostly leading to lively debates dominated to a great extent by politics — such
as the constitutional modifications in Hungary, the political situation in
Bulgaria or the closure of the Greek national broadcasting company. Hungary
featured for a second time in July when the plenary adopted a report on the
situation of fundamental rights in Hungary. The report concluded that ‘the
systemic and general trend of repeatedly modifying the constitutional and legal
framework in very short time frames, and the content of such modifications, are
incompatible with the values referred to in Article 2, Article 3(1) and Article
6 TEU and deviate from the principles referred to in Article 4(3) TEU’. It
reiterated the Parliament’s call for the ‘establishment of a new mechanism to
ensure compliance by all Member States with the common values enshrined in
Article 2 TEU’. It also called on the Commission to create ‘an “Article 2
TEU/alarm agenda”, i.e. a Union values monitoring mechanism, to be dealt with
by the Commission with exclusive priority and urgency, coordinated at the
highest political level’.

Furthermore, the
Parliament also immediately reacted to the US surveillance programme issue
(PRISM), with all political groups expressing strong concerns about breaches of
fundamental rights. In July, the plenary adopted a joint resolution on the
impact on citizens’ right to data protection, and later on, in October, the
Parliament adopted a resolution calling for the suspension of the SWIFT
agreement, after having held a heated debate on the issue the previous month.

Similarly, the
tragic events in Lampedusa and in Syria prompted very strong interest in the
Parliament and the issue of refugees, both from the Mediterranean and from
Syria, as well as migration policy in general, were at the centre of various
plenary debates in the autumn. A resolution adopted in October (follow-up to
Syria) called on the Member States and the Commission, inter alia, to work on
contingency planning, including the possibility of applying the temporary
protection directive ([342]), and to establish a more coherent approach based on solidarity
with Member States facing particular pressure. Another resolution, also from
October (follow-up to Lampedusa), welcomed the establishment of a task force
for the Mediterranean and called inter alia for consideration of the idea of an
EU coastguard.

The Parliament
invited several prime ministers and Heads of State to address the House,
setting out their vision on the future of Europe. Werner Faymann, Chancellor of
Austria (January), François Hollande, President of France (February) and Jyrki
Katainen, Prime Minister of Finland (April) participated in such debates, and
MEPs generally praised this new format as a model for making the hemicycle a
hub for European democracy and political debate.

Furthermore,
several formal sittings were also held, with an address from high-level
visitors (the presidents of Israel, Mali, Portugal, Senegal, Slovenia and
Tunisia) but with no ensuing debate.

Budgetary
affairs

In the budgetary
field, the year was dominated by the discussions on the multiannual financial
framework (MFF) 2014–20. The Parliament maintained pressure until the end,
postponing its final vote of consent from October to November. After protracted
and difficult negotiations, in which there was a complex entanglement between
the MFF and the amending budgets for the 2013 budget, the negotiations over the
2014 budget and the creation of a high-level group to examine the system of EU
own resources, the Parliament finally gave its consent in November to the
Council resolution establishing the MFF 2014–20 and to the related
interinstitutional agreement. This paved the way for votes on a large number of
further MFF-related sectorial legal bases in the November and December
sessions.

Alongside the MFF
vote, the Parliament also approved the 2014 budget. The result was largely
interpreted as the best possible compromise that could be reached under the
difficult economic and fiscal conditions in Member States. At the same time, it
was criticised by all parties (except those on the far right) as too tight to
face the challenges of the Union, especially given the very slim margins for
unforeseen expenditure, and insufficient to solve the payment problems that had
accumulated over previous years. Thus, the 2014 budget was seen by many as the
first clear proof of the insufficient means foreseen under the new MFF for the
tasks that the treaty attributes to the Union and that the citizens expect of
it.

Institutional
matters

The Parliament
also dealt with several appointment procedures. Most importantly, in June it
approved by an overwhelming majority the appointment of Commissioner-designate
Neven Mimica to become the first Croatian commissioner as of 1 July 2013. He is
in charge of consumer policy. Under the terms of Croatia’s accession treaty,
the Parliament needed to be officially consulted by the Council on the
nomination.

[PHOTO 075]

Similarly, in July
the Parliament elected Emily O’Reilly as the new European Ombudsman (as of 1
October 2013), and subsequently held a debate with the outgoing Ombudsman P. Nikiforos Diamandouros in September. He
believed that, during his term of office of the last 10 years, the EU
institutions had become more service oriented and more transparent, and also
noted with satisfaction that citizens had been increasingly turning to the
Ombudsman.

On the other hand,
the nomination of the Croatian Member of the Court of Auditors caused some
trouble, as his nomination was confirmed by Croatia and the Council despite the
Parliament’s negative vote on him. This provoked a debate (held in October) in
which MEPs challenged the Council and sought the best way to make it bound by
the Parliament’s recommendation. In December, the appointment of five new
Members to the Court (Greece, France, Luxembourg, the Netherlands and the
United Kingdom) was endorsed by the Parliament.

In June, the
Parliament approved the draft decision of the European Council on the
composition of the European Parliament, which caters for the accession of
Croatia, taking into account the number of seats in the Lisbon Treaty (751).
The pragmatic approach to the numerical composition, as proposed by the
Parliament — taking away one seat from 12 current middle-sized Member States,
whereas no country would gain any new seats — was approved without changes by
the European Council.

The Parliament
also gave its consent (in May) to the draft Council decision fixing the dates
of the 2014 Parliament elections for 22–25 May instead of 5–8 June 2014. The
Parliament also adopted a report on practical arrangements for the holding of
the European elections in 2014. The text suggested creating a stronger and more
direct link between voters and the outcome of the elections (including that
each political family should nominate a candidate for Commission president), as
well as facilitating voters’ participation and their identification with
European parties (use of Parliament party logos and affiliations, an EU-wide
campaign, synchronised publication of results, etc.).

In November, the
Parliament also adopted, with a very clear majority, a report on the location
of seats of the EU institutions, calling for an ordinary treaty change
procedure to give Parliament the right to determine its own seat.

As every year, the
Commission’s work programme for the following year was discussed in the plenary
in November. The groups generally welcomed the work programme as containing
clear and focused priorities for the remainder of the legislature.

Future-oriented institutional
issues featured high on the agenda in December, with the plenary debate and
adoption of the reports on multitier governance and on the relations between
the Parliament and the institutions representing the national
governments, providing
analysis of the institutional evolutions reflecting the further deepening of
EMU, the question of differentiated integration and of the evolving role of the
European Council, and the resulting necessary steps for the Parliament to
ensure appropriate follow-up and control. The second report also addresses as
key issues the nomination of the next Commission president (in particular how
the European Council will respect the choice of European citizens in the coming
European elections) and a proposed (second) State of the Union debate, with the
president of the European Council and Catherine Ashton,
the High Representative of the Union for Foreign Affairs and Security
Policy/Vice-President of the European Commission (HR/VP).

Foreign
affairs

In the field of
foreign affairs, the Parliament discussed a significant number of topical
issues, such as the situation in Syria, with a particular focus on the armed
conflict, diplomatic efforts and the humanitarian situation. Another recurrent
subject was Mali: the French intervention, but also the stabilisation and
reconstruction of the country. Preparations for the Eastern Partnership Summit
in Vilnius, as well as internal developments in Egypt and Turkey, were also
high on the agenda. The situation in Bangladesh was discussed in the context of
industrial disasters. The Parliament gave its consent to the partnership and
cooperation agreement with Iraq. It also debated ongoing negotiations on the
EU–Afghanistan Cooperation Agreement for Partnership and Development, as well
as EU strategies for the Arctic and the Horn of Africa.

Ukraine came under
the spotlight in December following the massive protests against the
government’s refusal to sign an association agreement with the EU. In an emotionally charged debate, MEPs from the main political groups
stressed that the EU should keep its doors open to Ukraine and that the role of
the EU should at present be to engage in mediation and use all instruments at
its disposal to avoid the use of violence against protesters.

Moreover, the
Parliament discussed more long-term and structural questions: the 2013 review
of the organisation and functioning of the European External Action Service
(EEAS) ([343]); the second amendment to the Cotonou Agreement; the MDGs; the
‘Annual report on the common foreign and security policy’, implementation of
the common security and defence policy; and the annual report on human rights
and democracy in the world ([344]).

Like each year,
the Parliament debated the Commission’s enlargement reports on specific
countries (Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav
Republic of Macedonia, Iceland, Kosovo ([345]), Montenegro, Serbia and Turkey).

The Parliament’s
Sakharov Prize was this year awarded to Malala Yousafzai. Ceremonies were held
to honour laureates of the Sakharov Prize who had been unable to collect it in
previous years: Aung San Suu Kyi (laureate in 1990), Ladies in White (2005) and
Guillermo Fariñas (2010).

[PHOTO 076]

International
trade

The Parliament
monitored and supported EU trade negotiations. On the Transatlantic Trade and
Investment Partnership (TTIP), MEPs called for assurance of full respect for
the protection of personal data and for the exclusion of cultural and
audiovisual services from the negotiations. The Parliament also supported the
EU–China negotiations for a bilateral investment agreement and asked the
Commission to ‘respond positively to Taiwan’s willingness’ to launch
negotiations on a similar agreement. In addition, MEPs renewed their support
for the trade negotiations with Mercosur and for a positive outcome of the Doha
Development Round ahead of the WTO Ministerial Conference.

Parliamentary
questions

in comparison to the
previous year, in 2013 the number of questions from MEPs to the Commission
increased by 21.34%, leading to a
total of 13.448 written
questions - the highest ever. ‘Question time’ with the
Commission was held only once in 2013 and was devoted to innovation, research and development, especially within the
framework of Horizon 2020. Within the scope of the
topic decided beforehand, MEPs spontaneously asked questions to a group of
Commissioners (the ‘catch-the-eye’ procedure). While the experience of the new
format was positive on the whole, further improvements in conducting ‘question time’ could still be
expected in the context of the revision of Parliament’s rules of procedure giving effect to the new ‘question time’ system.

The European
Council

The European
Council had a particularly active year which produced far-reaching decisions
and delivered fast responses to rapidly evolving European and international
events. Under the chairmanship of its president, Herman Van Rompuy, the European
Council met six times throughout 2013. Additionally, one meeting of the Euro
Summit took place.

The past few years
were extremely challenging and largely dominated by the financial and economic
crisis. Therefore, in 2013, the critical issues on the European Council’s
agenda were growth and employment. These priorities were the main focus of
European Council meetings.

[PHOTO 077]

At its meeting in
February, the European Council agreed on the EU’s MFF 2014–20. The agreed
budget shows a clear focus on mobilising resources to support growth,
employment, competitiveness and convergence. The European Council also
confirmed the Commission’s ambitious trade agenda.

In March, the
European Council set the priorities for economic policies for the year ahead and
confirmed the overall economic strategy proposed by the Commission in its
annual growth survey. Given the social situation in Europe, especially among
young European citizens, the European Council agreed on a particular focus on
topics with a high potential for delivering growth and jobs. The social
dimension was also mentioned, while reflecting on continuous work on EMU.

In May, the
European Council focused on stronger competitiveness, with dedicated
discussions on energy and on effective steps to fight tax evasion and tax
fraud, the latter being a particularly sensitive issue at a time when many
European citizens were asked to contribute to the general economic effort. The
Council addressed Europe’s dependence on imported energy and its costs, which
are borne, and increasingly felt in the context of the crisis, by many
households and businesses.

In June, the
European Council paid particular attention to the social situation across the
Union and to the risk it poses, devoting the summit to youth employment and
strengthening competitiveness. European leaders also agreed on a set of actions
promoting jobs for youth and helping the key European employers, SMEs. The
youth employment initiative received a budget of €8 [10?] million, while SMEs
were promised a credit increase from both the EU and the European Investment
Bank (EIB).

At the October
European Council, leaders addressed the digital economy, economic and social
policy, EMU, the Eastern Partnership and migration flows.

The European
Council in December addressed strengthening the competitiveness of Europe’s
defence industry.

The Council
of the European Union

The 2013 rotating
Presidencies of the Council of the European Union were held by Ireland and
Lithuania, in the first and second half of 2013 respectively. The priorities of
the Irish Presidency during the first half of 2013 were securing stability and
ensuring that it led to jobs and growth. In the second semester of 2013,
Lithuania assumed the Presidency of the Council for the first time, seizing the
opportunity to present the country and strengthen links to Europe. Lithuania
focused its efforts on working towards a credible, growing and open Europe.

In the course of
these two Presidencies, the Council met under 9 of its 10 configurations: the
General Affairs Council; the Economic and Financial Affairs Council; the
Justice and Home Affairs Council; the Employment, Social Policy, Health and
Consumer Affairs Council; the Competitiveness (internal
market, industry, research and space) Council; the
Transport, Telecommunications and Energy Council; the Environment Council; the
Education, Youth, Culture and Sport Council; and, under the chairmanship of the
High Representative of the Union for Foreign Affairs and Security Policy, the
Foreign Affairs Council.

[PHOTO 078]

The agendas of the
different Council configurations reflected a wide variety of legislative
proposals and non-legislative debates. The agenda items reflected, to a large
extent, the challenging events in Europe and issues to which the EU had to react
speedily, notably economic developments, financial regulation and supervision,
deepening EMU and the legislative proposals on the new generation of funding
instruments for the EU’s MFF 2014–20. The negotiations on most of the MFF
instruments were concluded to make new funding available as of early 2014. In
November, the Council approved the agreement with the Parliament on the 2014
budget.

The European
Commission

The Commission
used its right of initiative and its pivotal role in economic governance to support
the economic recovery and to take additional steps towards a genuine EMU.
Building on the blueprint for a deep and genuine EMU of November 2012 ([346]), it put forward two communications on mechanisms designed to
strengthen economic policy coordination and integration in the euro area ([347]). Together with the recommendations made in
its communication on the social dimension on EMU ([348]), they fed into the Commission’s contribution to the European
Council debate on EMU in December. The Commission pursued efforts to create a
banking union. It ensured the adoption of the Single Supervisory Mechanism and
worked with the Parliament and the Council on the adoption of the proposal for
the Single Resolution Mechanism that the Commission presented in July ([349]). In order to facilitate democratic scrutiny, the Commission
supported the pragmatic steps for stronger involvement of the European
Parliament and national parliaments in the European semester process.

Also in 2013, the
agreement on the MFF 2014–20 brought to an end negotiations which the
Commission had facilitated for 2 years. The Commission also stepped up its
efforts to simplify EU legislation. In the communication ‘Regulatory fitness
and performance (REFIT): results and next steps’ ([350]), it completed a comprehensive screening of all existing EU
legislation and explained what has been achieved, what further steps it counts
on taking and why this is important for growth and jobs. After the Council gave
its green light to start trade and investment negotiations with the United
States in June, the Commission led the negotiations on a comprehensive
transatlantic trade and investment partnership (TTIP) in two rounds in the
second half of the year.

[PHOTO 079]

The Commission
welcomed Neven Mimica, who was named by Croatia as commissioner-designate.
After the necessary consultation of the Parliament earlier in June, the Council
appointed the new commissioner by common accord with the president of the
Commission, so as to allow him to take up his post on 1 July. President Barroso
assigned to Mr Mimica the portfolio of consumer protection.

In 2013, the
number of infringement procedures initially launched against Member States for
alleged breach in the implementation of EU law amounted to [\_\_\_] (the figure
represents the first stage of the procedure when a letter of formal notice is
sent according to Article 258 of the Treaty on the Functioning of the European
Union (TFEU)). Those policy areas which saw a higher proportion of inquiries
being launched were transport, environmental issues, and health and consumers,
representing about [\_\_] % of the total.

The Commission continued its efforts concerning the modernisation of public administrations
across Europe, as this can lead to more and better digital services for
citizens and enterprises and to cost savings in the public sector. A global
approach is crucial for success; horizontal, cross-border initiatives
encompassing all layers of public administration (European, national and
regional) will have a strong impact. The Commission’s programme for
interoperability solutions for European public administrations (ISA) ([351]), can provide a wide range of solutions
and tools to support the modernisation of public administrations. Some
solutions that have been developed by ISA in 2013 are listed below.

·
The machine translation tool MT@EC ([352]), developed by the
Commission, offers machine translation in all the official languages of the EU.
It is currently being implemented in a number of e-government solutions to
establish roughly the content and relevance of documents provided before
passing them on to the right authority/contact person. The use of MT@EC is also
available to interested Member States through pilot schemes. The tool builds on
the Commission’s huge language resources and linguistic expertise (currently
more than 650 million sentences in 23 languages) and will be made available to
other public authorities in 2014.

·
Semantic efforts ([353]) undertaken by the
Commission have led to a number of specifications which are by now recognised
by and integrated into the standardisation process of international standards
organisations.

·
The e-invoicing tool e-Prior ([354]), available to all
interested public administrations free of charge, is used by 48 commission
directorate-generals and executive and regulatory agencies. Belgium has decided
to take up this solution as its national e-invoicing solution ([355]), estimating that
potential benefits could reach €2 million for suppliers and €7.5 million for
the public on a yearly basis.

The Court of
Justice of the European Union

The Court of
Justice and the General Court made important rulings which cover a great
variety of areas of EU law and have implications for a wide range of rights and
activities in the EU.

[PHOTO 080]

Fundamental
rights

In the Radu case, the Court ruled that the Charter of Fundamental
Rights does not allow refusal to execute a European Arrest Warrant (EAW) if the
person was not heard by the issuing authority. The Court highlighted that the
EAW facilitates and accelerates judicial cooperation and therefore serves the
objective set for the EU to become an area of freedom, security and justice
based on mutual trust and the high degree of confidence which should exist
between the Member States. It follows that in principle the Member States must execute
a EAW. The possibility to refuse to execute an EAW when the rights of the
defence during trial have been infringed therefore only applies to cases where
the trial led to the imposition of a criminal sentence in absentia. An
infringement of the right to be heard by the authorities issuing an EAW does
not fall under the exceptions ([356]).

In the Kadi
case, the Grand Chamber of the Court of Justice sought to ascertain the content
of the procedural rights of suspected terrorists and strike a balance between the
imperative need to combat international terrorism and the protection of the
fundamental rights and freedoms of suspected terrorists. In proceedings
relating to listing or maintaining the listing of the name of an individual on
the list of persons suspected of being associated with terrorism, the Court
held that the competent EU authority must disclose to the individual concerned
the evidence underpinning its decision. Furthermore, that EU authority must
ensure that the individual is placed in a position in which he may effectively
make known his views of the grounds relied on against him and must examine, in
the light of comments made by the individual concerned, whether those reasons
are well founded ([357]).

In the Åkerberg
Fransson case ([358]),
the Court clarified the criteria for the application of the charter under its
Article 51, which concerns whether a Member State is implementing EU law. The
Court held that a Member State is implementing EU law once a partial link is
established between the national measure and EU law. In other words, the
reference to Member States ‘implementing’ EU law in Article 51 of the charter
goes beyond national measures that are adopted for the specific purpose of
giving effect to a provision of EU law. Since the fundamental rights guaranteed
by the charter must be complied with where national legislation falls within
the scope of EU law, the applicability of EU law entails the applicability of
the fundamental rights guaranteed by the charter.

In the Melloni
case ([359]),
the Court confirmed that the fundamental constitutional principle of primacy of
EU law also applies in the relationship between the charter, on the one hand,
and national constitutional provisions on fundamental rights, on the other. A
Member State may not invoke a provision of its constitution allegedly providing
for a higher level of protection of a fundamental right than the charter as a
ground for not applying a clear provision of an EU legislative act.

In the ZZ
case ([360]),
the Court pointed out that under Directive 2004/38/EC, the person concerned by
the decision refusing entry on the grounds of public policy or security must be
notified in writing, and in such a way that he is able to comprehend the
content of the decision and the implications for him and must be informed,
precisely and in full, of the grounds which constitute the basis of it, unless
this is contrary to the interests of state security. The Court specified that
the invocation of national security by a Member State does not prevent the EU
from taking action in areas of EU competence, in particular to safeguard the
application of EU law.

Consumer
protection

The Court ruled
that Directive 93/13/EEC on unfair terms in consumer contracts ([361]) must grant a consumer the opportunity to seek the suspension of any
enforcement procedure while that consumer questions the validity of the
contract that is being enforced, or any of its terms. The Court also held that
the national judge has to examine the legal situation of the consumer, taking
into account the applicable national law in the absence of an agreement by the
parties, in order to determine the existence of a ‘significant imbalance’. The
Court reiterated that the annex of Directive 93/13/EC contains only an
indicative and non-exhaustive list of terms, which may be regarded as unfair.
The Court considered that it is for the national courts to assess whether the
specific clauses contained in a mortgage loan are fair ([362]).

The Court ruled,
as regards Directive 2005/29/EC on unfair business-to-consumer commercial
practices ([363]), that a commercial practice that misleads consumers is unfair and
therefore prohibited, and there is no need to show that it is contrary to the
requirements of professional diligence ([364]).

The Court
concluded that Directive 2005/29/EC on unfair business-to-consumer commercial
practices must be interpreted to the effect that the definition of a ‘trader’
in the unfair commercial practices directive includes a public body and a body
performing a public function. Consumers will, therefore, be protected from the
unfair commercial practices of such bodies ([365]).

The Court decided
that the term ‘advertising’, as defined in Article 2(1) of Directive 84/450/EEC
on misleading advertising ([366]) and Article 2(a) of Directive 2006/114/EC on misleading and comparative
advertising ([367]), also covers the use of a domain name and that of metatags in a
website’s metadata. By contrast, the registration of a domain name, as such, is
not encompassed by that term ([368]).

Equal
treatment

The Court
developed its interpretation of the concept of disability for the purposes of
the protection from discrimination provided for by Directive 2000/78/EC ([369]). It ruled that disability includes a condition caused by an
illness where that illness entails a long-term limitation that results in
particular from physical, mental or psychological impairments which in
interaction with various barriers may hinder the full and effective
participation of the person concerned in professional life on an equal basis
with other workers. In this context, the state of health of a person with a
disability who is fit to work, albeit only part-time, is thus capable of being
covered by the concept of ‘disability’. The Court reached this conclusion after
recalling that, since the EU has approved the UN Convention on the Rights of
Persons with Disabilities, Directive 2000/78/EC had to be interpreted according
to the convention ([370]).

Non-discrimination

The Court
interpreted the rule on the sharing of the burden of proof of Directive
2000/78/EC, as applied to the prohibition of discrimination based on sexual
orientation. The case concerned the statements of
George Becali, who presented himself as being the ‘patron’ of FC Steaua Bucureşti,
a professional football club based in Bucharest, who stated in an interview he
would never hire a homosexual player. The Court considered the directive
applicable to the situation, since it involved statements concerning the
‘conditions for access to employment … including … recruitment conditions’,
covered under the directive ([371]).

Free
movement

The Court ruled in
several cases regarding the granting of study grants that Articles 20 and 21
TFEU must be interpreted as precluding national legislation that makes the
award of an education or training grant to a national resident for a course
pursued in another Member State subject to the requirement that the course in
question lead to a vocational qualification equivalent to that provided by a
vocational school in the state awarding the grant. This restriction of the
right of free movement and residence cannot be justified by the objective of
avoiding an unreasonable financial burden. The Court also held that a condition
of uninterrupted residence of 3 years is likely to dissuade nationals from
exercising their right to freedom of movement and residence in another Member
State, given the impact that exercising that freedom was likely to have on the
right to the education or study grant ([372]).

The European
Central Bank

Against the
background of downside risks to the economic outlook for the euro area and low
inflation pressures over the medium term, the ECB cut interest rates twice in
2013: the first time on 2 May, the second time on 7 November.

On both occasions,
the ECB’s interest rate on the main refinancing operations of the Eurosystem
was lowered by 25 basis points, thus reaching a historic low of 0.25 %.
The interest rates on the marginal lending facility were cut by different
amounts, by 50 basis points and 25 basis points respectively in May ([373]) and November ([374]), to 0.75 %, while the rate on the deposit facility remained
unchanged at 0.00 %.

Both decisions
were in line with the forward guidance provided after its meeting in July 2013,
when the ECB communicated that it continued to expect its key interest rates to
remain at present or lower levels for an extended period of time, given the
broad-based weakness of the economy and subdued monetary dynamics, and the
resulting overall subdued outlook for inflation extending into the medium term.
At its November meeting the Governing Council of the ECB reiterated this
stance.

[PHOTO 081]

The ECB also took
other measures aimed at restoring the proper functioning of the transmission
mechanism of monetary policy. The aim of these so-called non-standard monetary
policy measures is to ensure that interbank rates across the euro area are
aligned with the interest rates set by the ECB. As part of these measures, the
ECB continued to provide ample liquidity to the banking sector via fixed rate
full allotment (FRFA) procedures in all refinancing operations, and will
continue to do so at least until July 2015. This means that financial
institutions can obtain all the funds they need from the ECB, provided that
they have adequate collateral to back the loans and that they are willing to
pay the set interest rates.

They can do so by
participating, for example, in the main refinancing operations (MROs), which
provide funds in euros for 1 week, or in other special-term refinancing
operations, which provide funds with other maturities, for example with the
maturity of one maintenance period (roughly 1 month, as specified in a detailed
calendar). They can also obtain funds through the 3-month longer-term
refinancing operations (LTROs) ([375]), which the ECB has announced will continue to be conducted also as
fixed-rate tender procedures with full allotment until at least 24 June 2015.

As market
functioning improved and the bank deleveraging process continued, banks’ demand
for the ECB refinancing operation has in fact declined since September 2012.

Given the
importance of interbank reference rates such as Euribor
for the implementation of monetary policy, the ECB
welcomed the Commission’s intention to systemically regulate important reference
rates and its plans to introduce the power to compel mandatory submissions for
systemically important reference rates. The ECB also encouraged banks to
participate further in reference rate panels ([376]).

The ECB is also
making sure that the banking system can access liquidity in other currencies,
when and if needed. At the end of October, the ECB, together with the Bank of
Canada, the Bank of England, the Bank of Japan, the Federal Reserve and the
Swiss National Bank, announced that their existing temporary bilateral
liquidity swap arrangements were being converted to standing arrangements, that
is, arrangements that will remain in place until further notice.

In this context,
the ECB announced that it is continuing, also until further notice, to conduct
regular operations providing liquidity in US dollars with maturities of
approximately 1 week and 3 months.

Furthermore, in
October 2013 the ECB announced the establishment of a bilateral currency swap
agreement with the People’s Bank of China. From the perspective of the
Eurosystem, this arrangement is intended to serve as a backstop liquidity
facility and to reassure euro area banks of the continuous provision of Chinese
yuan.

In February, the
ECB decided to publish the Eurosystem’s holdings of securities acquired under
the securities markets programme (SMP) ([377]). The SMP was introduced in 2010 with the objective of addressing
the ‘malfunctioning of securities markets and restore an appropriate monetary
policy transmission mechanism’ ([378]) and discontinued in September 2012.

Following its
decision to keep the assets it holds under the SMP until maturity, the ECB in
December 2013 was still managing €184 billion ([379]) in securities as part of the SMP. It was also managing
respectively €41.9 billion and €15.4 billion ([380]) as part of its covered bond purchase programmes 1 and 2, which
were both terminated earlier on.

The ECB
furthermore adapted its collateral framework in order to maintain collateral
adequacy while preserving collateral availability for Eurosystem monetary
policy operations. Firstly, the ECB adopted Decision ECB/2013/6 which prevents,
as of 1 March 2015, the use as collateral in Eurosystem monetary policy
operations of uncovered government-guaranteed bank bonds issued by the
counterparty itself or an entity closely linked to that counterparty ([381]). Secondly, the ECB reviewed its risk control framework, allowing
for new treatment of asset-backed securities and retained covered bonds ([382]). Third, the ECB took decisions related to the eligibility of
marketable debt instruments issued or guaranteed by the Republic of
Cyprus ([383]), in line with what had been done for other programme countries.

As regards
banknotes, the ECB started the introduction of a second series of euro
banknotes, the ‘Europa’ series, by issuing new €5 banknotes as of 2 May 2013 in
the euro area countries.

The new banknotes
are to be introduced gradually over several years, in ascending order. The
denominations remain unchanged: €5, €10, €20, €50, €100, €200 and €500. On 10
January 2013, Mario Draghi, President of the ECB, unveiled the new €5 banknote
at the Archaeological Museum in Frankfurt am Main. The ECB and the national
central banks of the Eurosystem are conducting an information campaign about
the Europa series and the new €5 banknote. The aim is to help the public
recognise the new note and its security features. The campaign includes a dedicated website ([384]).

Regarding payment
systems, the ECB released recommendations for the security of Internet
payments ([385]). It also launched public consultations on payment account access
services and on oversight requirements for systematically important payment
systems ([386]). In this domain, it also published its first SEPA migration
report, in which it warned against the risks of late migration ([387]).

In the field of
international cooperation, the ECB completed a Eurosystem cooperation programme
with the National Bank of the Republic of Macedonia (NBRM), funded by the
European Union ([388]), and a central bank cooperation programme with the National Bank
of Serbia (NBS) ([389]), also EU funded.

The ECB has also
continued to participate in the review missions in countries receiving
financial assistance from the EU and the International Monetary Fund
(IMF) ([390]) and has continued to take decisions related to the provision of
emergency liquidity assistance by Eurosystem national central banks to domestic
counterparties.

As part of its
communication activities targeted at the public, the ECB launched a third
educational game ‘Top floor — Make your way up!’, available on the ECB’s
website in 22 languages of the EU ([391]).

Furthermore, the
ECB together with the national central banks of the euro area conducted the
Generation €uro Students’ Award. This is a competition about monetary policy,
held annually and organised at national level in a number of euro area
countries by the national central banks.

The European
Court of Auditors

The European Court of
Auditors (ECA) is the independent audit institution of the EU. The ECA’s audit
reports and opinions are an essential element of the EU accountability chain.
Its output is used to hold to account — notably within the annual discharge
procedure — those responsible for managing the EU budget. This is mainly the
Commission, but also concerns the other EU institutions and bodies. Member
States also play a major role in shared management.

Its annual report on the EU budget for 2012 financial year ([392]) was published in November 2013. In most
spending areas of the EU budget the report found that the legislation in force
was still not fully complied with. As a result, the ECA called for a rethink of
EU spending rules and recommended simplifying the legislative framework.

Looking at the EU budget as a whole, the ECA’s estimate of the error rate
for spending was 4.8 % for the 2012 financial year (3.9 % in 2011).
All operational spending areas were affected by material error in 2012. The
estimate of the error rate is not a measure of fraud or waste but an estimate
of the money that should not have been paid out because it was not used in
accordance with the legislation concerned. Typical errors include payments for
beneficiaries or projects that were ineligible or for purchases of services,
goods or investments without proper application of public purchasing rules. In
2012 the EU spent €138.6 billion, of which approximately 80 % is jointly
managed by the Commission and the Member States. The ECA was critical of Member
States’ authorities where they had had sufficient information available to have
detected and corrected errors before claiming reimbursement from the EU budget.
The rules for the 2007–13 spending period provided limited incentives for
Member States to use financial management systems more effectively. The ECA’s
audit findings and opinions addressed how to improve EU financial management.
The ECA therefore recommended that they should be fully taken into account when
completing the rules governing the management and control of the 2014–20
financial framework.

[PHOTO 082]

The European
Economic and Social Committee

In 2013, at its
nine plenary sessions, the European Economic and Social Committee (EESC)
delivered 206 opinions, of which 35 were own-initiative opinions and 10 were
exploratory opinions (4 requested by the Commission and 6 by the Council
Presidencies).

[PHOTO 083]

On 17 April 2013,
the EESC elected its new president, Henri Malosse (Employers’ Group/FR), for
the second 2½-year term of the current mandate (2013–15). He replaced Staffan
Nilsson (Various Interests/SE), who was president during the first half of the
5-year mandate of the EESC. Jane Morrice (Various
Interests/UK) was elected vice-president for communication and Hans-Joachim
Wilms (Workers Group/DE) became vice-president for budget matters. The
procedure for the election of a new secretary-general of the EESC was launched
at the end of 2013. The new EESC president put an emphasis on reforming working
methods: focus on a few important subjects, instead of
spreading its work too much over secondary subjects; more selectivity and
improved quality with regard to own-initiative opinions; and strengthening of
the EESC’s anticipation
capacity.

In 2013, the EESC
was particularly involved in the discussions on the implementation of the
Europe 2020 strategy as well as the European semester, namely through its
Europe 2020 Steering Group. Many discussions were dedicated to the financial
crisis and the response to it, and also unemployment, with a special focus on
youth unemployment. The EESC debated the Union’s major policy deliverables,
such as a modernised common agriculture policy post-2013 and a future cohesion
policy. The EESC was active in deliberations on the MFF after 2013.
Furthermore, the energy sector and the role of SMEs featured prominently on the
EESC’s agenda.

In December, a
political and administrative agreement of cooperation was signed between the
Parliament and the EESC.

The Committee
of the Regions of the European Union

At its five
plenary sessions in 2013, the Committee of the Regions of the European Union
(CoR) presented 73 opinions, of which 15 were initiative opinions and 1 were
outlook opinions (0 requested by the Commission and 4 by the Council
Presidencies).

Through its Europe
2020 Monitoring Platform, the CoR continued to assess the strategy for growth
and employment from the point of view of EU regions and cities. It put much
emphasis on strengthening the role of local and
regional authorities in the European semester. The CoR also
published the ‘Fourth CoR monitoring report on Europe 2020’ ([393]) and organised a series of conferences on
the 7 flagship initiatives of the Europe 2020 strategy that will feed into the
Athens Summit of Regions and Cities in March 2014 and the mid-term review of
the Europe 2020 strategy. Some other issues, such as negotiations on the MFF
2014–20, and the cohesion policy in the context of the MFF, were also
frequently subjects for discussion. No less focus was on the financial crisis,
with a strong emphasis on youth unemployment and the future of the EU — the
Commission’s blueprint on EMU. The CoR prepared a report on its institutional
and political role, to be presented in April 2014 on the occasion of the 20th anniversary of the CoR, on how to
strengthen its institutional and political role beyond 2015.

A number of
important events were organised by the CoR in 2013. A 2013 open days event,
organised jointly with the Commission, was held under the slogan ‘Europe’s
regions and cities taking off for 2020’. It gathered numerous participants from
administrative and academic circles to participate in hundreds of seminars and
workshops, with President Barroso delivering the opening speech. Furthermore,
the Subsidiarity Conference was organised in the Bundesrat in Berlin in
December. The CoR has also followed up on its White Paper on multilevel
governance ([394]), issuing scoreboards and organising follow-up meetings.

[PHOTO 084]

In December 2013,
a political and administrative agreement of cooperation was signed between the
Parliament and the CoR. [tbc]

The European
Investment Bank

The EIB, owned by
and representing the interests of the 28 Member States, works closely with
other EU institutions to implement EU policy. The EIB is the largest
multilateral borrower and lender by volume in the EU/world, providing finance
and expertise for sound and sustainable investment projects which contribute to
furthering the Union’s policy objectives. The EIB also implements the financial
aspects of the EU’s external and development policies. The EIB group includes
the European Investment Fund (EIF), which focuses on innovative financing for
SMEs.

The EIB group
played an enhanced role in boosting the financing of the economy in 2013,
following the capital increase of €10 billion agreed in 2012. EIB lending
activity reached €[…] billion in 2013, up […] % from the previous year.
The EIB’s activities focused on key EU priorities, such as SMEs, innovation and
skills, resources efficiency and strategic infrastructures.

[PHOTO 085]

In 2013, to
respond to SMEs’ difficulties in financing themselves adequately, the
Commission prepared, together with the EIB and the EIF, an initiative for
facilitating SMEs’ access to financing. At the same time, following the request
of the June 2013 European Council, the Commission, the EIB and the EIF are
assessing options to increase the EIF’s credit enhancement capacity.

In parallel, the
Commission and the EIB finalised the preparation of joint risk-sharing
financial instruments to be carried out under the MFF 2014–20, notably under
the Connecting Europe Facility, Horizon 2020 and the programme
for the competitiveness of small and medium-sized enterprises (COSME). This also includes the follow-up to the pilot phase of the
EU–EIB project bond initiative, an evaluation of which was started in 2013.

In 2013, the
Commission made a legislative proposal for the next EIB external mandate
covering the period 2014–20. The Commission proposed an overall volume of €28
billion for EIB financing operations under EU guarantee, of which €3 billion
would be optional and decided at mid-term.

European
Ombudsman

The Commission, by
the nature of its powers and the fact that many of its decisions and proposals
have a direct or indirect impact on citizens, continued to be the institution
most concerned by complaints to the European Ombudsman.

In 2013,
62,7 % of the inquiries which the Ombudsman opened concerned the
Commission. The Commission received 173 new enquiries from the Ombudsman and
replied to 278 of the Ombudsman’s enquiries, including those launched in
earlier years, which were still ongoing in 2013.

The complaints
investigated by the Ombudsman concerned several areas of activity, including
the following: lawfulness (application of substantive and/or procedural rules);
requests for information; fairness and reasonable time limit for taking
decisions; requests for public access to documents.

On 14 March 2013,
P. Nikiforos Diamandouros announced his intention to retire after having
completed 10 years in office. For the post of European Ombudsman, six
admissible candidates were heard by the Petitions Committee of the Parliament:
Dagmar Roth-Behrendt (MEP), Ria Oomen-Ruijten (MEP), Francesco Enrico Speroni
(MEP), Emily O’Reilly (Ombudsman of Ireland), Alex Brenninkmeijer (Ombudsman of
the Netherlands) and Markus Jaeger (official at the Council of Europe).

[PHOTO 086]

The election of the
new Ombudsman took place on 2 July 2013 and Emily O’Reilly was elected. She
took office on 1 October 2013. Ms O’Reilly considers that one of her proactive
roles as Ombudsman will be to highlight citizens’ concerns and help bridge the
gap between them and the EU institutions. She wishes to rethink the focus of
the Ombudsman and enhance its impact and visibility.

Decentralised
agencies

The Commission
pursued the implementation of its roadmap on the follow-up to the common
approach of the Parliament, the Council and the Commission on EU decentralised
agencies, adopted in 2012, in close cooperation with the network of agencies.

In its progress
report adopted in December, it reviewed progress in all areas covered by the
common approach. In particular, the five deliverables considered as priorities
by the Commission were either finalised (guidelines on the prevention and
management of conflicts of interest, guidelines on headquarter agreements,
guidelines on activity-based budgeting/activity-based management) or are well
advanced and will be finalised at the beginning of 2014 (guidelines on
programming documents and key performance indicators, as well as guidelines on
evaluations). Other finalised deliverables were the revision of the staff
regulations and of the framework financial regulation to simplify the rules
applicable to agencies, guidelines for agencies’ anti-fraud strategies and
guidelines for agencies’ communication strategies.

The implementation
of the roadmap will continue into 2014 and beyond, in accordance with the
deliverables and deadlines set out in it. In addition, the Commission proposed
to adapt the governance of seven existing decentralised agencies on the
occasion of the revision of their founding acts: the European Railway Agency
(ERA); the European GNSS Supervisory Authority (GSA); the Office for
Harmonization in the Internal Market (OHIM); the European Aviation Safety
Agency (EASA); the European Union’s Judicial Cooperation Unit (Eurojust); and
the European Police College (CEPOL) and European Police Office (Europol), for
which a merger was proposed.

The EU’s
decentralised agencies employ more than 7 000 people and received a
contribution from the EU budget of €727.5 million in 2013.

National
parliaments and their role on the European scene

In 2013, the
political dialogue with national parliaments remained a key feature of the
Commission’s interinstitutional agenda.

In January 2013,
the first European Parliamentary Week took place, during which MEPs and
national parliamentarians met in Brussels to debate the European semester.

The necessity for
stronger democratic legitimacy and accountability in the economic governance of
the EU was one of the key topics on which the Conference of Parliamentary
Committees for Union Affairs of Parliaments of the European Union (COSAC)
focused at its plenary meetings in Dublin, Ireland and Vilnius, Lithuania. In
its contribution, adopted at the Dublin meeting, COSAC called on the Commission
to agree to a series of measures in order to strengthen the political dialogue,
including giving more specific replies to reasoned opinions, giving special
attention to issues raised by at least one third of national parliaments and
considering individual or collective requests from national parliaments for new
legislative proposals. In its reply, the Commission confirmed its commitment to
providing timely and appropriate replies and explained that it naturally takes
particular note of comments or concerns widely shared by national parliaments
and takes them into account for the purposes of the legislative process. The
Commission also confirmed that it will be ready to consider whether there is a
need for new or modified rules in the related policy field. The main topic of
the COSAC plenary meeting in Vilnius (its 50th jubilee plenary meeting) was the
role of national parliaments, especially in the context of EMU.

The first meeting
of the newly established interparliamentary conference under Article 13 of the
fiscal compact was held in Vilnius in October.

The great majority
of national parliaments’ opinions continue to focus on the substance of
Commission proposals and non-legislative documents rather than on subsidiarity
aspects.

In 2013, for the
second time, national parliaments triggered a so-called ‘yellow card’
procedure ([395]), this time on the Commission’s proposal for a regulation on the
establishment of the European Public Prosecutor’s Office ([396]). Within the deadline of 8 weeks, the Commission received reasoned
opinions from 14 chambers (accounting for 18 votes), which concluded that the
Commission proposal did not respect the principle of subsidiarity. In the
subsequent review, the Commission carefully assessed the subsidiarity arguments
put forward in these reasoned opinions, but in its communication of 27 November
2013 ([397]) came to the conclusion that the national parliaments had not
demonstrated that the proposal was in breach of the principle of subsidiarity.
The Commission, therefore, decided to maintain the proposal.

Overall, in 2013,
national parliaments sent 592 opinions to the Commission, approximately as many
as the year before. However, the number of reasoned opinions stating an alleged
breach of subsidiarity was slightly higher (15 % instead of 13 %).

Transparency

Over the past few
years, the Commission has put a lot of effort into enhancing transparency
concerning the expert groups it uses to collect external expertise when drafting
proposals/rules and conceiving policies. In particular, the Online Register of
Commission Expert Groups and Other Similar Entities ([398]) has been improved in terms of information provided and it has
become a more user-friendly tool.

In 2013 the Parliament
and the Council endorsed a Commission proposal to incorporate into EU
legislation the deposit of the historical archives of the EU
institutions ([399]) at the European University Institute (EUI) in Florence,
Italy ([400]). All the EU institutions ([401]) will be obliged to deposit their historical archives at the EUI
once they have been opened to the public after 30 years. The regulation,
furthermore, includes a strong commitment by the EU institutions to make their
archives available to the public by electronic means and to facilitate their
consultation on the Internet.

([1])            Commission
communication — Monitoring report on Croatia’s accession preparations
(COM(2013 171).

([2])            Commission report — Convergence report 2013
on Latvia.

([3])            European
Central Bank report — Convergence report June 2013 (https://www.ecb.europa.eu/pub/pdf/conrep/cr201306en.pdf).

([4])            Commission communication — A blueprint for a deep and genuine
economic and monetary union — Launching a European debate (COM(2012) 777).

([5])            http://europa.eu/rapid/press-release\_SPEECH-13-684\_en.htm

([6])            Commission
communication — Preparing for the 2014 European elections: further enhancing
their democratic and efficient conduct (COM(2013) 126).

([7])            Commission
recommendation on enhancing the democratic and efficient conduct of the
elections to the European Parliament (C(2013) 1303).

([8])            Regulation
(EU) No 472/2013 on the strengthening of economic and budgetary
surveillance of Member States in the euro area experiencing or threatened with
serious difficulties with respect to their financial stability (OJ L 140,
27.5.2013).        
Regulation (EU) No 473/2013 on common provisions for monitoring and
assessing draft budgetary plans and ensuring the correction of excessive
deficit of the Member States in the euro area (OJ L 140, 27.5.2013).

([9])            Commission
report — Alert mechanism report 2014 (COM(2013) 790).

([10])            Commission
communication — Strengthening the social dimension of the economic and monetary
union (COM(2013) 690).

([11])            A
high-level debate on EMU architecture took place on 19 June at the major annual
economic conference, the Brussels Economic Forum (http://ec.europa.eu/economy\_finance/bef2013/teaser/03/index.html).

([12])            Commission
communication — Towards a deep and genuine economic and monetary union — Ex
ante coordination of plans for major economic policy reforms
(COM(2013) 166).

([13])            Commission
communication — Towards a deep and genuine economic and monetary union — The
introduction of a convergence and competitiveness instrument
(COM(2013) 165).

([14])            Regulation
(EU) No 1024/2013 conferring specific tasks on the European Central Bank
concerning policies relating to the prudential supervision of credit
institutions (OJ L 287, 29.10.2013).

([15])            Proposal
for a directive establishing a framework for the recovery and resolution of
credit institutions and investment firms (COM(2012) 280).

([16])            Proposal
for a directive on deposit guarantee schemes (COM(2010) 368).

([17])           Regulation
(EU) No 575/2013 on prudential requirements for credit institutions and
investment firms (OJ L 176, 27.6.2013).

([18])           Directive
2013/36/EU on access to the activity of credit institutions and the prudential
supervision of credit institutions and investment firms (OJ L 176,
27.6.2013).

([19])           http://europa.eu/rapid/press-release\_IP-13-738\_en.htm

([20])           http://europa.eu/rapid/press-release\_IP-13-811\_en.htm

([21])           http://europa.eu/rapid/press-release\_IP-13-401\_en.htm

([22])           http://europa.eu/rapid/press-release\_IP-13-1276\_en.htm

([23])           http://europa.eu/rapid/press-release\_IP-13-617\_en.htm

([24])           Commission
Green Paper — Shadow banking (COM(2012) 102).

([25])           Commission
communication — Shadow banking — Addressing new sources of risk in the
financial sector (COM(2013) 614).

([26])           Proposal
for a directive on credit agreements relating to residential property
(COM(2011) 142).

([27])           Proposal
for a directive on the comparability of fees related to payment accounts,
payment account switching and access to payment accounts with basic features
(COM(2013) 266).

([28])           Commission
communication — Single Market Act II — Together for new growth
(COM(2012) 573).

([29])           Commission
Green Paper — Long-term financing of the European economy (COM(2013) 150).

([30])           Proposal
for a regulation on European long-term investment funds (COM(2013) 462).

([31])           Proposal
for a regulation on European long-term investment funds (COM(2013) 462).

([32])           Proposal
for a directive on the protection of the euro and other currencies against
counterfeiting by criminal law (COM(2013) 42).

([33])           Belgium,
Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and
Slovakia.

([34])           Proposal
for a directive implementing enhanced cooperation in the area of financial
transaction tax (COM(2013) 71).

([35])           http://www.oecd.org/ctp/BEPSActionPlan.pdf

([36])           Directive
2013/42/EU amending Directive 2006/112/EC on the common system of value added
tax, as regards a quick reaction mechanism against VAT fraud (OJ L 201,
26.7.2013).

([37])           Proposal
for a directive on the common system of taxation applicable in the case of
parent companies and subsidiaries of different Member States (COM(2013) 814).

([38])            Education,
Youth, Culture and Sport Council conclusions, 15.2.2013.

([39])            http://europa.eu/rapid/press-release\_IP-12-379\_en.htm

([40])            http://ec.europa.eu/education/erasmus-plus/index\_en.htm

([41])            http://ec.europa.eu/education/news/20130702\_en.htm

([42])            ‘Improving
the quality of teaching and learning in Europe’s higher education institutions’
(http://ec.europa.eu/education/higher-education/doc/modernisation\_en.pdf).

([43])            Commission
communication — Opening up education: innovative teaching and learning for all
through new technologies and open educational resources (COM(2013) 654).           
See also: http://europa.eu/rapid/press-release\_IP-13-859\_en.htm

([44])            http://ec.europa.eu/digital-agenda/en/grand-coalition-digital-jobs-0

([45])            Proposal
for a recommendation on establishing a youth guarantee (COM(2012) 729).     
http://ec.europa.eu/social/main.jsp?catId=1079&langId=en

([46])            Proposal
for a regulation on the European Social Fund (COM(2011) 607).

([47])           http://ec.europa.eu/social/main.jsp?langId=en&catId=1036

([48])           http://ec.europa.eu/education/apprenticeship/index\_en.htm

([49])           Proposal
for a recommendation on a quality framework for traineeships (COM(2013) 857).

([50])           Decision
implementing Regulation (EU) No 492/2011 as regards the clearance of
vacancies and applications for employment and the re-establishment of EURES
(OJ L 328, 28.11.2012).

([51])           Proposal
for a directive on the enforcement of Directive 96/71/EC concerning the posting
of workers in the framework of the provision of services (COM(2012) 131).

([52])           Directive
96/71/EC concerning the posting of workers in the framework of the provision of
services (OJ L 18, 21.1.1997).

([53])           Proposal
for a decision on enhanced cooperation between public employment services (PES)
(COM(2013) 430).

([54])           Regulation
(EU) No 1304/2013 on the European Social Fund (OJ L 347, 20.12.2013).

([55])           Directive
2009/50/EC on the conditions of entry and residence of third-country nationals
for the purposes of highly-qualified employment (OJ L 155, 18.6.2009).               
See also: http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/immigration/work/index\_en.htm

([56])           Proposal
for a directive on the conditions of entry and residence of third-country
nationals for the purposes of seasonal employment (COM(2010) 379).

([57])           Proposal
for a directive on conditions of entry and residence of third-country nationals
in the framework of an intra-corporate transfer
(COM(2010) 378).

([58])           Proposal
for a directive on the conditions of entry and residence of third-country
nationals for the purposes of research, studies, pupil exchange, remunerated
and unremunerated training, voluntary service and au pairing
(COM(2013) 151).         
See also: http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/2013/20130325\_01\_en.htm

([59])           http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/immigration/integration/index\_en.htm

([60])           Directive
2011/98/EU on a single application procedure for a single permit for
third-country nationals to reside and work in the territory of a Member State
and on a common set of rights for third-country workers legally residing in a
Member State (OJ L 343, 23.12.2011).

([61])           Commission
communication — State of the innovation union 2012 — Accelerating change
(COM(2013) 149).

([62])           http://ec.europa.eu/enterprise/policies/innovation/files/ius-2013\_en.pdf

([63])           Commission
document — Innovation union competitiveness report 2013 (http://ec.europa.eu/research/innovation-union/pdf/competitiveness\_report\_2013.pdf).

([64])           http://ec.europa.eu/research/evaluations/pdf/archive/fp7\_monitoring\_reports/6th\_fp7\_monitoring\_report.pdf

[65] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:347:0965:1041:EN:PDF

([66])           http://ec.europa.eu/digital-agenda/en/news/graphene-and-human-brain-project-win-largest-research-excellence-award-history

([67])           http://ec.europa.eu/europe2020/index\_en.htm

([68])           http://ec.europa.eu/digital-agenda/en/scoreboard

([69])                  http://ec.europa.eu/digital-agenda/en/connected-continent-legislative-package

([70])                  Proposal for a regulation on measures to reduce the cost of
deploying high-speed electronic communications networks (COM(2013) 147).
http://europa.eu/rapid/press-release\_IP-13-281\_en.htm

([71])           Proposal
for a directive on electronic invoicing in public procurement
(COM(2013) 213).

([72])                  See the statistics from the 2013 Small Business Act performance
review (http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index\_en.htm).

([73])           Commission
communication — Entrepreneurship 2020 action plan — Reigniting the
entrepreneurial spirit in Europe (COM(2012) 795).

([74])                  Commission document — European competitiveness report 2013 — Towards
knowledge-driven reindustrialisation (http://ec.europa.eu/enterprise/policies/industrial-competitiveness/competitiveness-analysis/european-competitiveness-report/files/eu-2013-eur-comp-rep\_en.pdf).

([75])           Commission
communication — Action plan for a competitive and
sustainable steel industry in Europe (COM(2013) 407).

([76])           Regulation
(EU) No 305/2011 laying down harmonised conditions for the marketing of
construction products (OL L 88, 4.4.2011).

([77])           http://ec.europa.eu/enterprise/magazine/articles/industrial-competitiveness/article\_11074\_en.htm

([78])           Commission
communication — Towards a more competitive and efficient defence and security
sector (COM(2013) 542).

([79])           http://ec.europa.eu/commission\_2010-2014/president/news/archives/2013/12/20131219\_1\_en.htm

([80])           http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/en/ec/140214.pdf

([81])                  Commission
document — 2013 SMEs’ access to finance survey (http://ec.europa.eu/enterprise/policies/finance/files/2013-safe-analytical-report\_en.pdf).

([82])           Proposal
for a directive amending Directive 2006/112/EC on the common system of value
added tax as regards a standard VAT return (COM(2013) 721).

([83])           Directive
2011/7/EU on combating late payment in commercial transactions (OJ L 48,
23.2.2011).

([84])           http://europa.eu/rapid/press-release\_SPEECH-13-684\_en.htm

([85])                  Commission
communication — EU regulatory fitness (COM(2012) 746).

([86])           Commission
communication — Regulatory
fitness and performance (REFIT): results and next steps (COM2013) 685).

([87])           http://europa.eu/rapid/press-release\_IP-13-1067\_en.htm

([88])           Commission
report — Cohesion policy: Strategic report 2013 on programme implementation
2007–13 (COM(2013) 210).

([89])           OJ L
347, 20.12.2013.

([90])           Proposal
for a regulation on Union guidelines for the development of the trans-European
transport network (COM(2011) 650).

([91])           Commission communication — The EU justice scoreboard — A tool to
promote effective justice and growth (COM(2013) 160).

([92])           Proposal
for a regulation on a common European sales law (COM(2011) 635).

([93])           Proposal
for a regulation on promoting the free movement of citizens and businesses by
simplifying the acceptance of certain public documents in the European Union
(COM(2013) 228).

([94])           Commission
communication — A new European approach to business failure and insolvency (COM(2012) 742).    
Proposal for a regulation amending Regulation (EC)
No 1346/2000 on insolvency proceedings (COM(2012) 744).

([95])           Proposal for a regulation creating a
European account preservation order to facilitate cross-border debt recovery in
civil and commercial matters (COM(2011) 445.

([96])           Commission
communication — Single Market Act — Twelve levers to boost growth and
strengthen confidence — ‘Working together to create new growth’
(COM(2011) 206).

([97])           Commission
communication — Single Market Act II — Together for new growth
(COM(2012) 573).

([98])           Proposal
for a directive amending Directive 2005/36/EC on the recognition of
professional qualifications and regulation on administrative cooperation
through the Internal Market Information System (COM(2011) 883).

([99])           Directive
2005/36/EC on the recognition of professional qualifications (OJ L 255,
30.9.2005).

([100])           Proposal
for a directive on procurement by entities operating in the water, energy,
transport and postal services sectors (COM(2011) 895).
Proposal for a directive on public procurement (COM(2011) 896).

([101])           http://ec.europa.eu/transport/modes/rail/packages/2013\_en.htm

([102])           Commission
communication — Blue belt, a single transport area for shipping
(COM(2013) 510).

([103])           Commission
communication — Together towards competitive and resource-efficient urban
mobility (COM(2013) 913).
Commission document — A call to action on urban logistics (SWD(2013) 524). 
Commission document — Targeted action on urban road safety
(SWD(2013) 525).         
Commission document — A call for smarter urban vehicle access regulations
(SWD(2013) 526).   
Commission document — Mobilising intelligent transport systems for EU cities
(SWD(2013) 527).

([104])           http://ec.europa.eu/transport/modes/air/single\_european\_sky/ses2plus\_en.htm

([105])           Regulation
(EU) No 181/2011 concerning the rights of passengers in bus and coach
transport (OJ L 55, 28.2.2011).

([106])           Proposal
for a regulation amending Regulation (EC) No 261/2004 establishing common
rules on compensation and assistance to passengers in the event of denied
boarding and of cancellation or long delay of flights and Regulation (EC)
No 2027/97 on air carrier liability in respect of the carriage of
passengers and their baggage by air (COM(2013) 130).

([107])           Commission
communication — Passenger protection in the event of airline insolvency
(COM(2013) 129).

([108])           Proposal
for a regulation on periodic roadworthiness tests (COM(2012) 380).      
Proposal for a regulation on technical roadside inspections
(COM(2012) 382).    
Proposal for a directive amending Directive 1999/37/EC on registration
documents for vehicles (COM(2012) 381).

([109])           Proposal
for a decision on the deployment of the interoperable EU-wide eCall (COM(2013) 315). 
Proposal for a regulation concerning type-approval requirements for the
deployment of the eCall in-vehicle system (COM(2013) 316).

([110])           http://ec.europa.eu/transport/themes/urban/cpt/index\_en.htm

([111])           Regulation
(EU) No 582/2011 of 25 May 2011 implementing and amending Regulation (EC)
No 595/2009 with respect to emissions from heavy duty vehicles (Euro VI)
(OJ L 167, 25.6.2011).

([112])           Proposal
for a directive on recreational craft and personal watercraft
(COM(2011) 456).

([113])           Commission
Green Paper — A 2030 framework for climate and energy policies
(COM(2013) 169).

([114])           Commission
communication — An EU strategy on adaptation to climate change (COM(2013) 216).

([115])           Commission
report — Progress towards achieving the Kyoto and EU 2020 objectives
(COM(2013) 698).

([116])           European
Environment Agency report — Trends and projections in Europe 2013 — Tracking
progress towards Europe’s climate and energy targets until 2020 (http://www.eea.europa.eu/publications/trends-and-projections-2013).

([117])           http://ec.europa.eu/clima/policies/package/documentation\_en.htm

([118])           Proposal
for a directive amending Directive 2003/87/EC establishing a scheme for
greenhouse gas emission allowance trading within the Community, in view of the
implementation by 2020 of an international agreement applying a single global
market-based measure to international aviation emissions (COM(2013) 722).

([119])           Proposal
for a regulation on the monitoring, reporting and verification of carbon
dioxide emissions from maritime transport (COM(2013) 480).

([120])           Commission
communication — Integrating maritime transport emissions in the EU's greenhouse
gas reduction policies (COM(2013) 479).

([121])           Proposal
for a directive establishing a scheme for greenhouse gas emission allowance
trading within the Community, in view of the implementation by 2020 of an
international agreement applying a single global market-based measure to
international aviation emissions (COM(2013) 722).

([122])           Directive
2009/72/EC concerning common rules for the internal market in electricity
(OJ L 211, 14.8.2009).

([123])           Directive
2009/73/EC concerning common rules for the internal market in natural gas
(OJ L 211, 14.8.2009).

([124])           Directive
2012/27/EU on energy efficiency (OJ L 315, 14.11.2012).

([125])           Directive
2010/31/EU on the energy performance of buildings (OJ L 153, 18.6.2010).

([126])           http://ec.europa.eu/energy/gas\_electricity/forum\_citizen\_energy\_en.htm

([127])           Directive
2009/125/EC establishing a framework for the setting of ecodesign requirements
for energy-related products (OJ L 285, 31.10.2009).

([128])           Directive
2005/32/EC establishing a framework for the setting of ecodesign requirements
for energy-related products (OJ L 191, 22.7.2005).

([129])           Proposal
for a directive amending Directive 2009/71/Euratom establishing a Community
framework for the nuclear safety of nuclear installations (COM(2013) 715).

([130])           Proposal
for a directive laying down basic safety standards for protection against the
dangers arising from exposure to ionising radiation (COM(2012) 242).

([131])           Directive
2013/30/EU on safety of offshore oil and gas operations (OJ L 178,
28.6.2013).

([132])           Proposal
for a decision on a general Union environment action programme to 2020 —
‘Living well, within the limits of our planet’ (COM(2012) 710).

([133])           Available
at: http://www.eea.europa.eu/publications/european-bathing-water-quality-2012

([134])           Directive
2006/7/EC concerning the management of bathing water quality (OJ L 64,
4.3.2006).

([135])           Proposal
for a directive amending Directive 94/62/EC on packaging and packaging waste to
reduce the consumption of lightweight plastic carrier bags
(COM(2013) 761).

([136])           Regulation
(EU) No 995/2010 laying down the obligations of operators who place timber
and timber products on the market (OJ L 295, 12.11.2010).

([137])         Proposal
for a regulation on the prevention and management of the introduction and
spread of invasive alien species (COM(2013) 620).

([138])         Decision
2013/250/EU establishing the ecological criteria for the award of the EU
Ecolabel for sanitary tapware (OJ L 145, 31.5.2013).

([139])         Decision
2013/641/EU establishing the ecological criteria for the award of the EU
Ecolabel for flushing toilets and urinals (OJ L 299, 9.11.2013).

([140])         Decision 2013/806/EU establishing the
ecological criteria for the award of the EU Ecolabel for imaging equipment
(OJ L 353, 28.12.2013).

([141])         Commission
communication — A clean air programme for Europe (COM(2013) 918).

([142])         Proposal
for a directive on the reduction of national emissions of certain atmospheric
pollutants (COM(2013) 920).

([143])         Proposal
for a directive on the limitation of emissions of certain pollutants into the
air from medium combustion plants (COM(2013) 919).

[144] http://ec.europa.eu/internal\_market/indprop/tm/index\_en.htm

[145]            See http://ec.europa.eu/internal\_market/indprop/patent/documents/index\_en.htm

([146])         Regulation
(EC) No 1215/2012 on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters (OJ L 351, 20.12.2012).

([147])         Proposal
for a regulation amending Regulation (EU) No 1215/2012 on jurisdiction and
the recognition and enforcement of judgments in civil and commercial matters
(COM(2013) 554).

([148])         Proposal
for a directive on the protection of undisclosed
know-how and business information (trade secrets) against their unlawful
acquisition, use and disclosure (COM(2013) 813).

([149])         Proposal
for a directive on certain rules governing actions for damages under national
law for infringements of the competition law provisions of the Member States
and of the European Union (COM(2013) 404).

([150])         http://europa.eu/rapid/press-release\_IP-13-39\_en.htm

([151])         http://europa.eu/rapid/press-release\_IP-13-196\_en.htm

([152])         http://europa.eu/rapid/press-release\_IP-13-320\_en.htm

([153])         http://europa.eu/rapid/press-release\_IP-13-456\_en.htm

([154])         http://europa.eu/rapid/press-release\_IP-13-746\_en.htm

([155])         http://europa.eu/rapid/press-release\_IP-13-563\_en.htm

([156])         http://europa.eu/rapid/press-release\_IP-13-1233\_en.htm

([157])         http://europa.eu/rapid/press-release\_IP-13-1289\_en.htm?locale=en

([158])         http://europa.eu/rapid/press-release\_IP-13-406\_en.htm

([159])         http://europa.eu/rapid/press-release\_IP-13-486\_en.htm

([160])         http://europa.eu/rapid/press-release\_IP-13-630\_en.htm

([161])         http://europa.eu/rapid/press-release\_IP-13-711\_en.htm

([162])         http://ec.europa.eu/competition/elojade/isef/case\_details.cfm?proc\_code=1\_39398

([163])         http://ec.europa.eu/competition/elojade/isef/case\_details.cfm?proc\_code=1\_39678

([164])         http://ec.europa.eu/competition/elojade/isef/case\_details.cfm?proc\_code=1\_39740

([165])         http://ec.europa.eu/competition/elojade/isef/case\_details.cfm?proc\_code=1\_39939

([166])         http://europa.eu/rapid/press-release\_IP-13-197\_en.htm

([167])         http://europa.eu/rapid/press-release\_IP-13-314\_en.htm

([168])         http://europa.eu/rapid/press-release\_IP-13-656\_en.htm

([169])         http://europa.eu/rapid/press-release\_IP-13-1144\_en.htm

([170])         http://europa.eu/rapid/press-release\_IP-13-673\_en.htm

([171])         http://europa.eu/rapid/press-release\_IP-13-1175\_en.htm

([172])         http://europa.eu/rapid/press-release\_IP-13-179\_en.htm

([173])         http://europa.eu/rapid/press-release\_IP-13-346\_en.htm

([174])         http://europa.eu/rapid/press-release\_MEMO-13-435\_en.htm

([175])         http://europa.eu/rapid/press-release\_MEMO-13-443\_en.htm

([176])         http://europa.eu/rapid/press-release\_IP-13-1214\_en.htm

([177])         Regulation
(EC) No 139/2004 on the control of concentrations between undertakings
(OJ L 24, 29.1.2004).

([178])         As
of the end of November 2013.

([179])         http://europa.eu/rapid/press-release\_IP-13-68\_en.htm

([180])         http://europa.eu/rapid/press-release\_IP-13-167\_en.htm

([181])         http://ec.europa.eu/competition/state\_aid/modernisation/index\_en.html

([182])         Regulation
(EU) No 1407/2013 on the application of Articles 107 and 108 of the Treaty
on the Functioning of the European Union to de
minimis aid (OJ L 352, 24.12.2013).

([183])         Regulation
(EU) No 608/2013 concerning customs enforcement of intellectual property
rights (OJ L 181, 29.6.2013).

([184])         Regulation (EU)
No 1259/2013 amending Regulation (EC) No 111/2005 laying down rules
for the monitoring of trade between the Community and third countries in drug
precursors (OJ L 330, 10.12.2013).

([185])              Proposal for a directive on the
Union legal framework for customs infringements and sanctions (COM(2013) 884).

([186])         Regulation (EU) No 952/2013
laying down the Union Customs Code.

([187])         Commission
communication — Stepping up the fight against cigarette smuggling and other
forms of illicit trade in tobacco products — A comprehensive EU strategy (COM(2013) 324).

([188])         Regulation
(EU) No 1219/2012 establishing transitional arrangements for bilateral
investment treaties between Member States and third countries (OJ L 351,
20.12.2012).

([189])         Regulation
(EU) No 1307/2013 establishing rules for direct payments to farmers under
support schemes within the framework of the common agricultural policy
(OJ L 347, 20.12.2013).

([190])         Regulation
(EU) No 1308/2013 establishing a common organisation of the markets in
agricultural products (OJ L 347, 20.12.2013).

([191])         Regulation
(EU) No 1305/2013 on support for rural development by the European
Agricultural Fund for Rural Development (EAFRD) (OJ L 347, 20.12.2013).

([192])         Regulation
(EU) No 1306/2013 on the financing, management and monitoring of the
common agricultural policy (OJ L 347, 20.12.2013).

([193])
        http://ec.europa.eu/fisheries/reform/index\_en.htm

([194])         http://ec.europa.eu/fisheries/market-observatory

([195])         http://ec.europa.eu/fisheries/cfp/aquaculture/official\_documents/com\_2013\_229\_en.pdf

([196])         Proposal
for a directive establishing a framework for maritime spatial planning and
integrated coastal management (COM(2013) 133).

([197])         Commission
communication — Action plan for a maritime strategy in the Atlantic area —
Delivering smart, sustainable and inclusive growth (COM(2013) 279).

([198])         http://ec.europa.eu/research/iscp/pdf/galway\_statement\_atlantic\_ocean\_cooperation.pdf

([199])         http://www.balticsea-region-strategy.eu

([200])         Proposal
for a regulation laying down the multiannual financial framework for the years
2014–20 (COM(2011) 398).

([201])         European
Parliament resolution of 13 March 2013 on the European Council conclusions of
7/8 February concerning the multiannual financial framework.

([202])         Current
prices: Equivalent in 2011 prices: €325 billion.

([203])         Current
prices. Equivalent in 2011 prices: €13 billion.

([204])         Current
prices. Equivalent in 2011 prices: €1.3 billion.

([205])         Current
prices. Equivalent in 2011 prices: €70 billion.

([206])         Current
prices. Equivalent in 2011 prices: €2 billion.

([207])         Current
prices. Equivalent in 2011 prices: €29 billion.

([208])         This
consists of €15 billion from heading 1A and €11.3 billion ring-fenced for the
Connecting Europe Facility in the Cohesion Fund under heading 1B (in current
prices).

([209])         Current
prices. Equivalent in 2011 prices: €277.85 billion.

([210])         Current
prices. Equivalent in 2011 prices: €84.9 billion.

([211])         http://ec.europa.eu/budget/mff/figures/index\_en.cfm

([212])            Commission
report — EU citizenship report 2013 — EU citizens: your rights, your future
(COM(2013) 269).

([213])            Justice
and Home Affairs Council conclusions, 5/6 December 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/en/jha/139938.pdf).

([214])            Commission
report — 2012 report on the application of the EU Charter of Fundamental Rights
(COM(2012) 271).

([215])            http://ec.europa.eu/justice/newsroom/data-protection/news/120125\_en.htm

([216])            Commission
communication — Free movement of EU citizens and their families: five actions
to make a difference (COM(2013) 837).

[217]

http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/en/jha/139938.pdf

([218])            Proposal
for a directive on measures facilitating the exercise of rights conferred on
workers in the context of freedom of movement for workers (COM(2013) 236).

([219])            Commission
document — Report on progress on equality between women and men in 2012 (SWD(2013) 171).

([220])            Commission
communication — Strategy for equality between women and men (2010–15)
(COM(2010) 491).

([221])           Directive
2006/54/EC on the implementation of the principle of equal opportunities and
equal treatment of men and women in matters of employment and occupation
(OJ L 204, 26.7.2006).

([222])           http://ec.europa.eu/justice/gender-equality/files/documents/131118\_pension\_gap\_report\_en.pdf

([223])           http://ec.europa.eu/justice/gender-equality/files/gender\_balance\_decision\_making/131011\_women\_men\_leadership\_en.pdf

([224])           Commission
report — Barcelona objectives — The development of childcare facilities for
young children in Europe with a view to sustainable and inclusive growth (COM(2013) 322).

([225])           Commission
communication — Towards the elimination of female genital mutilation
(COM(2013) 833).

([226])           Female genital mutilation in the European Union and Croatia
(http://eige.europa.eu/sites/default/files/EIGE-Report-FGM-in-the-EU-and-Croatia\_0.pdf).

([227])           The
results of the consultation are available at: http://ec.europa.eu/justice/newsroom/gender-equality/opinion/130306\_en.htm

([228])           ‘Opinion
on an EN initiative on female genital mutilation’ (http://ec.europa.eu/justice/gender-equality/other-institutions/advisory-comittee).

([229])           Proposal
for a recommendation on effective Roma integration measures in the Member States
(COM(2013) 460).

([230])           See
the summary on the website of DG Justice: http://ec.europa.eu/justice/citizen/index\_en.htm

[231] http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/en/jha/139959.pdf

([232])           http://ec.europa.eu/citizens-initiative/public/initiatives/ongoing

([233])           http://europa.eu/rapid/press-release\_SPEECH-13-684\_en.htm

([234])           http://europa.eu/rapid/press-release\_SPEECH-13-677\_en.htm

([235])           Commission
report on progress in Romania under the Cooperation and Verification Mechanism
(COM(2012) 410).

([236])           Commission
report on progress in Romania under the cooperation and verification measure
(COM(2013) 47).

([237])           http://ec.europa.eu/justice/events/assises-justice-2013/index\_en.htm

([238])           Proposal
for a regulation amending Regulation (EC) No 861/2007 establishing a
European small claims procedure and Regulation (EC) No 1896/2006 creating
a European order for payment procedure (COM(2013) 794).

([239])           Regulation
(EC) No 861/2007 establishing a European small claims procedure (OJ L
199, 31.7.2007).

([240])           https://e-justice.europa.eu/content\_small\_claims-42-en.do

([241])           Proposal
for a directive on package travel and assisted travel arrangements
(COM(2013) 512).

([242])           Directive
90/314/EEC on package travel, package holidays and package tours (OJ L
158, 23.6.90).

([243])           Proposal
for a directive on the strengthening of certain aspects
of presumption of innocence and of the right to be present at trial in criminal
proceedings (COM(2013) 821/2).

([244])           Proposal
for a directive on procedural safeguards for children
suspected or accused in criminal proceedings (COM(2013) 822).

([245])           Proposal
for a directive on provisional legal aid for suspects
or accused persons deprived of liberty and legal aid in
European arrest warrant proceedings
(COM(2013) 824).

([246])           Commission
recommendation on the right to legal aid for suspects
or accused persons in criminal proceedings (C(2013) 8179).

([247])           Commission
recommendation on procedural safeguards for vulnerable
persons suspected or accused in criminal proceedings (C(2013) 8178).

([248])           Directive
2013/48/EU on the right of access to a lawyer in criminal proceedings and in
European arrest warrant proceedings, and on the right to have a third party
informed upon deprivation of liberty and to communicate with third persons and
with consular authorities while deprived of liberty (OJ L 294,
22.10.2013).

([249])           Proposal
for a directive on the right of access to a lawyer in criminal proceedings and
on the right to communicate upon arrest (COM(2011) 326).

([250])           Decision
2002/584/JHA on the European arrest warrant and the surrender procedures
between Member States (OJ L 190, 18.7.2002).

([251])           Proposal for a directive amending Decision 2004/757/JHA laying down
minimum provisions on the constituent elements of criminal acts and penalties
in the field of illicit drug trafficking, as regards the definition of drug (COM (2013) 618). 
Proposal for a regulation on new psychoactive substances (COM(2013) 619).

([252])                  Commission communication — Better protection of the Union's
financial interests: setting up the European Public Prosecutor's Office and
reforming Eurojust (COM(2013) 532) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0532:FIN:EN:PDF).

([253])           Regulation
(EU) No 1052/2013 establishing the European Border Surveillance System
(Eurosur) (OJ L 295, 6.11.2013).

([254])           Available
at: http://ec.europa.eu/anti-trafficking/EU+Policy/EU\_rights\_victims

([255])           Directive
2011/36/EU on preventing and combating trafficking in human beings and
protecting its victims (OJ L 101, 15.4.2011).

([256])           Commission
communication — The EU strategy towards the eradication of trafficking in human
beings 2012–16 (COM(2012) 286).

([257])           http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/borders-and-visas/visa-policy/index\_en.htm#facilitation

([258])           Commission
report — First progress report on the implementation by Georgia of the action
plan on visa liberalisation (COM(2013) 808).
Commission report — Fifth report on the implementation by the Republic of
Moldova of the action plan on visa liberalisation (COM(2013) 807).             
Commission report — Third report on the implementation by Ukraine of the action
plan on visa liberalisation (COM(2013) 809).

([259])           http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/borders-and-visas/schengen-information-system/index\_en.htm

([260])           http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/2013/20130228\_01\_en.htm

([261])           Proposal
for a regulation establishing an entry/exit system (EES) to register entry and
exit data of third country nationals crossing the external borders of the
Member States of the European Union (COM(2013) 95).

([262])           Proposal
for a regulation establishing a registered traveller programme
(COM(2013) 97).

([263])           Proposal
for a regulation establishing rules for the surveillance of the external sea
borders in the context of operational cooperation coordinated by the European
Agency for the Management of Operational Cooperation at the External Borders of
the Members States of the European Union (COM(2013) 197).

([264])           Court
of Justice ruling of 5.9.2012 in Case C‑355/10 Parliament
v Council (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-355/10).

([265])           http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/2013/20130612\_01\_en.htm

[266] Directive 2013/32/EU of the European Parliament and of the Council
of 26 June 2013 on common procedures for granting and withdrawing international
protection (OJ L 180, 29.6.2013)

[267] Directive 2013/33/EU of the European Parliament and of the Council
of 26 June 2013 laying down standards for the reception of applicants for
international protection (OJ L 180, 29.6.2013)

[268] Directive 2011/95/EU of the European Parliament and of the Council
of 13 December 2011 on standards for the qualification of third-country
nationals or stateless persons as beneficiaries of international protection,
for a uniform status for refugees or for persons eligible for subsidiary protection,
and for the content of the protection granted (OJ L 337, 20.12.2011)

[269] Regulation (EU) No 604/2013 of the European Parliament and of the
Council of 26 June 2013 establishing the criteria and mechanisms for
determining the Member State responsible for examining an application for
international protection lodged in one of the Member States by a third-country
national or a stateless person (OJ L 180, 29.6.2013)

([270])           Commission
communication — Second report on the implementation of the EU internal security
strategy (COM(2013) 179).

([271])           Proposal
for a regulation on the European Union Agency for Law Enforcement Cooperation
and Training (Europol) (COM(2013) 173).

([272])           Commission
communication — Firearms and the internal security of the EU: protecting citizens
and disrupting illegal trafficking (COM(2013) 716).

([273])           http://ec.europa.eu/dgs/home-affairs/what-is-new/news/news/2013/20130109\_01\_en.htm

([274])           Joint
communication — Cybersecurity strategy of the
European Union — An open, safe and secure cyberspace (JOIN(2013) 1).

([275])           Proposal
for a directive concerning measures to ensure a high common level of network
and information security across the Union (COM(2013) 48).

([276])           Directive
2013/11/EU on alternative dispute resolution for consumer disputes (OJ L
165, 18.6.2013).           
Regulation (EU) No 524/2013 on online dispute resolution for consumer
disputes (OJ L 165, 18.6.2013).

([277])           http://ec.europa.eu/consumers/safety/psmsp

([278])           Regulation
(EC) No 1223/2009 on cosmetic products (OJ L 342, 22.12.2009).

([279])           http://europa.eu/rapid/press-release\_IP-13-611\_en.htm
http://ec.europa.eu/digital-agenda/en/roaming

([280])           Proposal
for a regulation on information provision and promotion measures for
agricultural products on the internal market and in third countries
(COM(2013) 812).

([281])           http://ec.europa.eu/commission\_2010-2014/tajani/stop-fakes/index\_en.htm

([282])           Proposal
for a directive on the approximation of the laws, regulations and
administrative provisions of the Member States concerning the manufacture,
presentation and sale of tobacco and related products (COM(2012) 788).

([283])           Directive
2001/83/EC on the Community code relating to medicinal products for human use
(OJ L 311, 28.11.2001).

[284] The reviewed clinical trials directive  2001/20/EC will become a
regulation in 2014..

([285])           Regulation
(EC) No 1907/2006 concerning the registration, evaluation, authorisation
and restriction of chemicals (REACH), establishing a European Chemicals Agency
(OJ L 396, 30.12.2006).

([286])           Directive
2011/24/EU on the application of patients’ rights in cross-border healthcare
(OJ L 88, 4.4.2011).

([287])           Decision
No 1082/2013/EU on serious cross-border threats to health (OJ L 293,
5.11.2013).

([288])           Directive
2013/35/EU on the minimum health and safety requirements regarding the exposure
of workers to the risks arising from physical agents (electromagnetic fields)
(OJ L 179, 29.6.2013).

([289])           Commission
recommendation on a coordinated control plan with a view to establishing the
presence of fraudulent practices in the marketing of certain foods
(2013/99/EU).

([290])           http://ec.europa.eu/dgs/health\_consumer/pressroom/animal-plant-health\_en.htm

([291])           Regulation
(EU) No 609/2013 on food intended for infants and young children, food for
special medical purposes, and total diet replacement for weight control
(OJ L 181, 29.6.2013).

([292])           Proposal
for a directive on the cloning of animals of the bovine, porcine, ovine,
caprine and equine species kept and reproduced for farming purposes
(COM(2013) 892).       
Proposal for a directive on the placing on the market of food from animal
clones (COM(2013) 893).

([293])           Proposal
for a regulation on novel foods (COM(2013) 894).

([294])           Cattle,
pigs, sheep, goats and horses.

([295])           http://ec.europa.eu/culture/creative-europe/index\_en.htm

([296])           €1.46
billion taking account of estimated inflation. This is the equivalent of €1.3
billion in ‘fixed’ 2011 prices.

([297])           http://ec.europa.eu/culture/creative-europe/index\_en.htm

([298])           http://ec.europa.eu/culture/news/20130114-opening-events-ecoc\_en.htm

([299])           http://ec.europa.eu/culture/news/20130429-prize-for-architecture\_en.htm

([300])           http://ec.europa.eu/culture/news/20130924-literature-prize\_en.htm

([301])           http://europa.eu/rapid/press-release\_IP-13-419\_en.htm?locale=en

([302])           http://ec.europa.eu/bepa/european-group-ethics/docs/publications/opinion\_no\_27.pdf

([303])           http://ec.europa.eu/bepa/european-group-ethics/welcome/activities/index\_en.htm

([304])            This
designation is without prejudice to positions on status and is in line with
UNSCR 1244/99 and the International Court of Justice opinion on the Kosovo
declaration of independence.

([305])            Following
urgent requests by EU Member States and the United States, on 18 December 2013,
the EU pledged €12 million to the Organisation for the Prohibition of Chemical
Weaponʼs (OPCW) Special Trust Fund set up for the destruction of the
Syrian chemical weapons. The EU pledge together with the contributions by
others (notably Norway and Japan) has enabled the OPCW to launch the necessary
tender process on 20 December as planned. The EU contribution is to be financed
through the Instrument for Stability.

([306])            Joint communication — Towards a comprehensive EU
approach to the Syrian crisis (JOIN(2013) 22) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=JOIN:2013:0022:FIN:EN:PDF).

([307])            Commission communication — The former Yugoslav Republic of
Macedonia: implementation of reforms within the framework of the high level
accession dialogue and promotion of good neighbourly relations
(COM(2013) 205).

([308])            In
October 2013, the Commission repeated its recommendation to open accession
negotiations, deeming that moving to the next stages of the enlargement process
is essential in order to consolidate and encourage further reforms as well as
to strengthen inter-ethnic relations.

([309])            Commission
opinion on Albania’s application for membership of the European Union
(COM(2010) 680).

[310])             Joint report on Kosovo’s progress in addressing issues
set out in the Council conclusions of December 2012 in view of a possible
decision on the opening of negotiations on the stabilisation and association
agreement (JOIN(2013) 8).

([311])            Proposal for a decision on the conclusion of a
framework agreement between the European Union and Kosovo on the general
principles for the participation of Kosovo in Union programmes
(COM(2013 219).

([312])            http://ec.europa.eu/enlargement/pdf/key\_documents/2013/package/brochures/kosovo\_2013.pdf

([313])           Since
the conclusion of the EU–Mexico free trade agreement, total bilateral trade has
doubled, moving from €21.7 billion in 2000 to €47.1 billion in 2012.

([314])           Foreign
Affairs Council conclusions, 10 December 2012 (http://www.consilium.europa.eu/uedocs/cms\_Data/docs/pressdata/EN/foraff/134140.pdf).

([315])           Foreign
Affairs Council conclusions, 22 July 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/138293.pdf).

([316])           Foreign
Affairs Council conclusions, 16 December 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/140097.pdf).

([317])           Foreign
Affairs Council conclusions, 21 October 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/139093.pdf).

([318])           The
EUʼs trade preferences had been suspended in 1997 as a result of the
countryʼs serious and systematic violations of core international
conventions on forced labour.

([319])           Foreign
Affairs Council conclusions, 22/23 April 2013 (http://www.consilium.europa.eu/uedocs/cms\_Data/docs/pressdata/EN/foraff/136921.pdf).

([320])           Foreign
Affairs Council conclusions, 24 June 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/137590.pdf).

([321])           Commission communication — Increasing the impact of EU
development policy: an agenda for change (COM(2011) 637).

([322])           Commission communication — A decent life for all: ending poverty and
giving the world a sustainable future (COM(2013) 92).

([323])           http://www.erd-report.eu/erd/report\_2012/index.html

([324])           General
Affairs Council conclusions, 25 June 2013 (http://www.consilium.europa.eu/uedocs/cms\_Data/docs/pressdata/EN/foraff/137606.pdf).

([325])           Commission communication — Enhancing maternal and child
nutrition in external assistance: an EU policy framework (COM(2013) 141) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0141:FIN:EN:PDF).

([326])           http://ec.europa.eu/echo/files/aid/countries/factsheets/thematic/eu\_children\_of\_peace\_en.pdf

([327])           http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/131181.pdf

([328])           Decision
2013/517/CSFP on the Union support for the activities of the International
Atomic Energy Agency in the areas of nuclear security and verification and in
the framework of the implementation of the EU strategy against proliferation of
weapons of mass destruction (OJ L 281, 23.10.2013).

([329])           Foreign
Affairs Council conclusions, 24 June 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/137593.pdf).

([330])           Commission communication — Maximising the development
impact of migration — The EU contribution for the UN high-level dialogue and
next steps towards broadening the development–migration nexus
(COM(2013) 292) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0292:FIN:EN:PDF).

([331])           Foreign
Affairs Council conclusions, 22 July 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/138293.pdf).

([332])           Joint
communication — Cybersecurity strategy of the European Union: an open, safe and
secure cyberspace (JOIN(2013) 1).

([333])           Commission
communication — Towards a more competitive and efficient defence and security
sector

([334])           Education,
Youth, Culture and Sport Council conclusions, 25/26 November 2013 (http://www.consilium.europa.eu/uedocs/cms\_data/docs/pressdata/EN/foraff/139719.pdf).

([335])           Joint
communication — The EU’s comprehensive approach to external conflict and crises
(JOIN(2013) 30).

([336])         Regulation (EU) No 575/2013 on prudential
requirements for credit institutions and investment firms (OJ L 176,
27.6.2013).
Directive 2013/36/EU on access to the activity of credit institutions and the
prudential supervision of credit institutions and investment firms (OJ L
176, 27.6.2013).

([337])
        Directive 2013/50/EU of the European Parliament
and of the Council of 22 October 2013 amending Directive 2004/109/EC of the
European Parliament and of the Council on the harmonisation of transparency
requirements in relation to information about issuers whose securities are
admitted to trading on a regulated market, Directive 2003/71/EC of the European
Parliament and of the Council on the prospectus to be published when securities
are offered to the public or admitted to trading and Commission Directive
2007/14/EC laying down detailed rules for the implementation of certain
provisions of Directive 2004/109/EC

([338])
        Directive 2013/34/EU of the European Parliament and of the Council of
26 June 2013 on the annual financial statements, consolidated financial
statements and related reports of certain types of undertakings, amending
Directive 2006/43/EC of the European Parliament and of the Council and
repealing Council Directives 78/660/EEC and 83/349/EEC

([339])         Commission communication — Towards a deep and genuine
economic and monetary union — Ex ante coordination of plans for major
economic policy reforms (COM(2013) 166).

([340])         Commission communication — Towards a deep and genuine
economic and monetary union — The introduction of a Convergence and
Competitiveness Instrument (COM(2013) 165).

([341])         See
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2013-0205+0+DOC+XML+V0//EN&language=EN

([342])         Directive 2001/55/EC on minimum standards for giving temporary
protection in the event of a mass influx of displaced persons and on measures
promoting a balance of efforts between Member States in receiving such persons
and bearing the consequences thereof (OJ L 212, 7.8.2001).

([343])         ‘EEAS review’ (http://eeas.europa.eu/library/publications/2013/3/2013\_eeas\_review\_en.pdf).

([344])         ‘EU annual report on human rights and democracy in the
world in 2012’ (http://register.consilium.europa.eu/pdf/en/13/st09/st09431.en13.pdf).

([345])                This designation is without prejudice to positions on status, and is
in line with UNSCR 1244/99 and the International Court of Justice opinion on
the Kosovo declaration of independence.

([346])         Commission communication — A
blueprint for a deep and genuine economic and monetary union — Launching a
European debate (COM(2012) 777).

([347])         Commission communication — Towards a deep and genuine
economic and monetary union — The introduction of a Convergence and
Competitiveness Instrument (COM(2013) 165).         
Commission communication — Towards a deep and genuine economic and monetary
union — Ex ante coordination of plans for major economic policy reforms
(COM(2013) 166).

([348])         Commission communication — Strengthening the social
dimension of the economic and monetary union (COM(2013) 690).

([349])         Proposal for a regulation establishing
uniform rules and a uniform procedure for the resolution of credit institutions
and certain investment firms in the framework of a Single Resolution Mechanism
and a Single Bank Resolution Fund (COM(2013) 520).

([350])         Commission communication — Regulatory fitness and performance (REFIT): results and next steps
(COM2013) 685).

([351])         http://ec.europa.eu/isa

([352])         http://ec.europa.eu/isa/actions/02-interoperability-architecture/2-8action\_en.htm

([353])         https://joinup.ec.europa.eu/community/semic/description

([354])         http://ec.europa.eu/isa/actions/01-trusted-information-exchange/1-7action\_en.htm

([355])         http://ec.europa.eu/isa/news/2013/e\_invoicing\_en.htm

([356])         Court of Justice ruling of
29.1.2013 in Case C‑396/11 Radu (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-396/11).

([357])         Court of Justice ruling of 18.7.2013 in Joined Cases C‑584/10 P,
C‑593/10 P and C‑595/10 P Commission and Others v Kadi (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-584/10%20P).

([358])         Court
of Justice ruling of 26.2.2013 in Case C‑617/10 Åkerberg Fransson (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-617/10).

([359])         Court
of Justice ruling of 26.2.2013 in Case C‑399/11 Melloni (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-399/11).

([360])         Court
of Justice ruling of 4.6.2013 in Case C‑300/11 ZZ
(http://curia.europa.eu/juris/liste.jsf?language=en&num=C-300/11).

([361])         Directive 93/13/EEC on unfair terms in consumer contracts
(OJ L 95, 21.4.1993).

([362])         Court of Justice ruling of
14.3.2013 in Case C‑415/11 Aziz (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-415/11).

([363])         Directive 2005/29/EC concerning unfair
business-to-consumer commercial practices in the internal market (OJ L
149, 11.6.2005).

([364])         Court of Justice ruling of
19.9.2013 in Case C‑435/11 CHS Tour Services (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-435/11).

([365])         Court of Justice ruling of 3.10.2013 in Case C‑59/12
Zentrale zur Bekämpfung unlauteren Wettbewerbs (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-59/12).

([366])         Directive 84/450/EEC relating to the approximation of the
laws, regulations and administrative provisions of the Member States concerning
misleading advertising (OJ L 250, 19.9.1984).

([367])         Directive 2006/114/EC concerning misleading and
comparative advertising (OJ L 376, 27.12.2006).

([368])         Court of Justice ruling of 11.7.2013 in Case C‑657/11
Belgian Electronic Sorting Technology (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-657/11).

([369])         Directive 2000/78/EC establishing a general framework for
equal treatment in employment and occupation (OJ L 303, 2.12.2000).

([370])         Court of Justice ruling of 19.9.2013 in Case C‑579/12 RX II
Commission v Strack (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-579/12%20RX).

([371])         Court of Justice ruling of 25.4.2013 in Case C‑81/12
Asociaţia Accept (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-81/12).

([372])         Court of Justice rulings of 18.7.2013 in Joined Cases C‑523/11
and C‑585/11 Prinz and Seeberger (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-523/11), and of 24.10.2013 in Case C‑220/12 Thiele Meneses (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-220/12) and in Case C‑275/12 Elrick (http://curia.europa.eu/juris/liste.jsf?language=en&num=C-275/12).

([373])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130502.en.html

([374])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr131107.en.html

([375])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130502\_2.en.html

([376])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130208.en.html

([377])         https://www.ecb.europa.eu/press/pr/date/2013/html/pr130221\_1.en.html

([378])         http://www.ecb.europa.eu/press/pr/date/2010/html/pr100510.en.html

([379])         Data as of 9 December 2013. In February 2013, the
Governing Council decided to publish the Eurosystem’s holdings of securities
acquired under the SMP, in line with the envisaged transparency stance for the
OMTs as communicated on 6 September 2012 (http://www.ecb.europa.eu/press/pr/date/2013/html/pr130221\_1.en.html).

([380])         Data as of 9 December 2013.

([381])              http://www.ecb.europa.eu/press/pr/date/2013/html/pr130322.en.html

([382])              http://www.ecb.europa.eu/press/pr/date/2013/html/pr130718.en.html

([383])              http://www.ecb.europa.eu/press/pr/date/2013/html/pr130705.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130628\_1.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130502\_3.en.html

([384])         http://www.new-euro-banknotes.eu

([385])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130131\_1.en.html

([386])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130607.en.html

([387])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130321\_1.en.html

([388])         http://www.ecb.int/press/pr/date/2013/html/pr130710.en.html

([389])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130131.en.html

([390])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130204.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130207\_1.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130315.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130325.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130415.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130418.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130509.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130603.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130708.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130718\_1.en.html
http://www.ecb.europa.eu/press/pr/date/2013/html/pr130731.en.html

([391])         http://www.ecb.europa.eu/press/pr/date/2013/html/pr130417.en.html

([392])         http://www.eca.europa.eu/Lists/ECADocuments/AR12/AR12\_EN.pdf

([393])         https://portal.cor.europa.eu/europe2020/SiteCollectionDocuments/4th%20MR.pdf

([394])         Opinion of the Committee of the Regions — The Committee of
the Regions’ White Paper on multilevel governance (OJ C 211, 4.9.2009).

([395])                The first yellow card procedure was triggered in May 2012 on the
proposal for a regulation on the exercise of the right to take collective
action within the context of the freedom of establishment and the freedom to
provide services (COM(2012) 130).

([396])                Proposal for a regulation on the establishment of the European Public
Prosecutor’s Office (COM(2013) 534).

([397])         Commission communication on the review of the proposal for
a Council Regulation on the establishment of the European Public Prosecutor's
Office with regard to the principle of subsidiarity (COM(2013) 851).

([398])                http://www.cc.cec/regexp/welcome.do

([399])         Proposal for a regulation amending Regulation
(EEC/Euratom) No 354/83, as regards the deposit of the historical archives of
the institutions at the European University Institute in Florence
(COM(2012) 456).

([400])                The adopted regulation will come into force after approval by the
national parliaments of two Member States that had a parliamentary scrutiny
reserve.

([401])                An exception was made for the Court of Justice of the European Union
and the ECB, which may deposit their historical archives on a voluntary basis
but are not obliged to do so.

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