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No C 339/64 Official Journal of the European Communities 31. 12. 91

November 1990: European Parliament adopts package of measures covering integration of the five new
Federal Lander into the Community.

December 1990: EC Council approves the Community measures.

December 1990: Rome European Council approves food aid worth ECU 750 million to USSR. Aid to other
Central and Eastern European countries increased.

December 1990: EC Council authorizes the Commission to initiate association negotiations with Poland,
Hungary and Czechoslovakia. The negotiations begin in February 1991.

January 1991: Commission announces that Romania now qualifies for aid under the Group of 24 support
programme for reformist Eastern European states.

March 1991: Commission adopts the joint support plan for the new Federal Lander, which will receive
Community aid totalling DM 6 000 million in the 1991-1993 period.

June 1991: Council for Mutual Economic Aid (Comecon) disbanded.

August 1991: Failed putsch in the Soviet Union followed by an acceleration in the process of transforming
the USSR into a Federation of Democratic States.

Opinion on the economic situation in the Community in mid-1991

(91/C 339/13)

On 26 February 1991 the Economic and Social Committee, acting under the fourth paragraph
of Article 20 of its Rules of Procedure, decided to draw up an Opinion on the economic
situation in the Community in mid-1991.

The Section for Economic, Financial and Monetary Questions, which was responsible for
preparing the Committee's work on the subject, adopted its Opinion on 10 September 1991.
The Rapporteur was Mr B.N.J. Pompen.

At its 289th plenary session (meeting of 26 September 1991), the Economic and Social
Committee adopted the following Opinion by a majority vote in favour and six votes against,
with 15 abstentions.

1. Introduction

1.1. _General trends_

Using a number of indicators, this section provides an
account of economic developments over the six-year
period from 1989 to 1994 (see Table 1) ( [2] ). The projec

(*) Because of serious statistical problems the economic data for
the EC and Germany do not include the former GDR.

tions for 1991 and 1992 are the European Commission's,
while figures from the Netherlands Central Economic
Planning Office _(Nederlands Centraal Planbureau)_ have
been taken for 1993/1994 in order to broaden the basis
of the policy assessment. Naturally, these projections
are fraught with major uncertainties, some of which
are discussed in 1.4.

31. 12.91 Official Journal of the European Communities No C 339/65

Table 1: Key International Indicators 1989-1994

1991

( b )

0,1

3,8

1,4

-0,5

4,1

1,4

4,0

2,3

5,5

_6,6_

2,2

8,7

-1,8

1,7

-4,6

- 0, 3

0,9
-0,6

7,75

6,75

9,00

1992

( a )

1,0

4,1
2,5

0,7

4,3

3,0

5,7

2,0

4,8

6,7

2,3

8,8

-1,9

2,2
-3,6

-1,4

1,9
-0,7

—

1992

( b )

1,6

4,1
2,3

1,4
4,6

2,7

4,7

2,0

4,8

6,6

2,2

9,2

- 2, 4

2,0

-4,4

-0,9

1,0
-0,8

7,5

_6,5_

9,3

1993/1994

3,75

4,25

3,25

3,25

4,25

3,0

3,75

2,25

4,25

( [c] )

5,75

2,25

8,75

( [c] )

-1,75

3,25

-3,5

( [c] )

-0,5

1,0
-0,5

( [c] )

7,5

6,5

8,0

1990

1,0

_5,6_

2,7

0,5

5,8

2,8

4,1
1,9
5,6

5,4

2,1

8,2

- 2, 4

2,2

- 4, 1

-1,8

1,2

-0,2

8,5

7,4

8,8

1991

( a )

0,3

4,2

2,2

- 0, 1

4,2

2,3

5,5

2,1
5,5

6,1

2,2

8,8

-2,3

2,5

- 4, 1

-1,8

1,6

-0,8

—

GDP (volume changes)

USA

Japan

EC

Domestic demand

(% changes)

USA

Japan

EC

Inflation

(GDP % changes)

USA

Japan

EC

Unemployment
(% level)

USA

Japan

EC

Government budget balance ( [d] )
(% level)

USA

Japan

EC

Balance of current transactions

(% level)

USA

Japan

EC

Long-term interest rate
(% level)

USA

Japan

FRG

1989

2,8

4,9

3,3

2,2

5,7

3,7

3,8

1,5

5,1

5,3

2,3

8,9

- 1, 7

1,8

-3,0

-1,9

2,1

-0,1

8,5

5,1

7,0

( [a] ) November 1990 projection.
( [b] ) May 1991 projection.
( [c] ) 1994 level.
( [d] ) Lending and borrowing.

_Sources:_ — EEC Commission (May 1991) for 1989-1992 period.

— Netherlands Central Economic Planning Office (March 1991) for 1993/1994 period and the long-term interest

The past year has shown how the economic situation
and related expectations can change appreciably over
a relatively short period. This is apparent from Table 1:
between November 1990 and May 1991, the Commission significantly revised its projections with regard
to 1991 and 1992 in a number of respects. In the short
term these modifications indicate lower growth and
higher unemployment in the Community, although its
medium term growth prospects are considered to be
quite favourable.

The modifications were partly prompted by a number
of important developments:

— the slowdown in both extra- and intra-Community
growth in 1990 which had a greater impact than
expected,

— the temporary oil-price rise and increased economic
uncertainty resulting from the Gulf Crisis, with only
a gradual revival of confidence,

No C 339/66 Official Journal of the European Communities 31. 12. 91

— a less restrictive trend in US budgetary policy,

— major growth in the Federal German budget in the
wake of German unification,

— the difficult transition to a market economy in the
Soviet Union and Eastern Europe, in some cases
involving political and socio-economic disintegration.

1.2. _Outside the European Community_

The Commission expects economic growth of only 1 %
in non-Community countries of the Organization for
Economic Co-operation and Development (OECD) this
year. In 1992, the rate of growth could rise to 2,0/2,5 %
as a result of lower oil prices and a certain revival of
confidence. Further recovery is expected in 1993 and
1994. Results will, of course, largely be determined by
the USA and Japan. The OECD's _Economic Outlook_
No 49 of June 1991 mentions improved growth prospects [volume of the Gross Domestic Product (GDP)]
for the USA (13,1) and a rather more moderate improvement _(3,5)_ for Japan in 1992. The corresponding
inflation forecasts (% GDP) are 3,6 and 1,9. One welcome forecast is the reduction in the balance of current
transactions' differences between the major OECD
countries.

Overall, US production is expected to fall further in
1991, essentially as a result of the major uncertainties
which obtained in 1990. Nevertheless, a recovery seems
possible in the course of the year—aided by such
favourable factors as moderate interest rates and relatively low oil prices. The export growth-rate and domestic consumption could increase. The Federal budget
deficit is expected to fall only gradually, persisting until
1996 at the earliest. The balance-of-payments deficit
will be less than 1 % of GDP in 1991 and thereafter.

Interest rates on the capital market will probably be
approximately 8,5%. The dollar rate seems likely to
pick up in the wake of the positive balance-of-payments
trend.

Although less optimistic than in previous years, Japan's
economic development forecasts remain favourable for
the period 1992-1994. GDP is expected to grow at a
rate of 4 % and the surplus on current transactions will
stabilize at around 1 % of GDP. The budget surplus
will still be approximately 2 % of GDP, inflation will
fall to 2 % and interest rates will remain around _6,5_ %.

1.3. _Inside the European Community_

The European Commission's 1991 and 1992 projections
for growth, inflation and wage costs, unemployment,

government lending and borrowing and current
accounts are explained and spelt out below. The forecasts for 1993 and 1994 are taken from a recent publication of the Netherlands Central Economic Planning
Office.

A mixture of converging and diverging national trends
forms the basis for the Community economy as a whole.
Below we shall examine not only the Community averages but also the sharp divergences from these averages.
For a more correct assessment, account should be taken
of differences in Member States' economic structures
and underlying positions. The distinctive features of
Member States' economies will be discussed in the
national reports. The Committee has devised special
arrangements for delivering Opinions on these reports.

GDP volume

GDP in the Community as a whole is not expected to
grow by more than 1,4% in 1991. The main reason for
this will be the low growth rate of 0,8 % in the first
half of the year. In particular, real growth in gross fixed
capital formation will fall from 6,7 % in 1989 and 4,3 %
in 1990 to 0,8 % in 1991. In the UK, gross fixed capital
formation will deteriorate markedly from —1,9% in
1990 to -10,4% in 1991. The Commission considers
the underlying climate for growth in Community GDP
to be basically sound. Growth in GDP will pick up in
the second half of 1991 and in 1992, reaching an expected 2,3 %. A further revival to 3,25 % is forecast for
1993 and 1994.

While the UK will be the Member State worst hit by
the recession in 1991 ( — 2,2%), GDP in Germany,
Spain, Portugal and the Benelux is expected to rise by
more than 2,5 %. A general upturn is expected in 1992,
except in Germany and the Netherlands where a slowdown is forecast.

Inflation (GDP) and wage costs

Inflation is expected to fall. However, the fall — which
will be mainly due to external factors such as the drop
in oil prices—will be slight (4,8 % in 1992 down from
5,5% in 1990). The gaps between Member States are
narrowing. Inflation will level out and then rise slightly
in those where it is already low (2,5 % to 4%), will fall
slightly in countries where it is currently running at
6-7% and is expected to decline in countries with
high inflation. The picture is somewhat different in
Germany, where inflation is low at the moment but
will rise.

Nominal wage increases will speed up on average in
1990/1991, with real unit labour costs rising again by

31. 12. 91 Official Journal of the European Communities No C 339/67

1%, after falling steadily for years. Wage cost trends
will also differ sharply from Member State to Member
State.

U n e m p l o y m e n t

The Commission expects unemployment in the Community to rise again in 1992 to 9,2% of the labour
force. This renewed rise after the steady fall in recent
years is a serious problem.

Unemployment is rising most steeply in the UK, increasing from _5,7%_ in 1990 to 10,8 % by 1992. It will remain
high (15-16%) in Spain and Ireland. Elsewhere it is
levelling out or rising slightly.

G o v e r n m e n t budget balance

Italy and Greece still have large deficits (at least 10%
of GDP), while Germany will have a 5% deficit in
1991 owing to the costs of unification. The UK budget
balance will also deteriorate from +1 % of GDP in

1989 to - 2 % in 1991.

C u r r e n t a c c o u n t s

The Community's current account will register small
deficits in 1991 (0,5% of GDP) and 1992 (0,8%). The
disappearance of Germany's traditional surplus will
weigh heavily. The relatively highest surpluses will be
in Luxembourg (25% of GDP) and the Netherlands
(4% of GDP), while Greece will have the relatively
highest deficit (4% of GDP).

1.4. _Uncertainties_

Because of their major repercussions, such imponderables as oil prices, the dollar rate and world trade
developments warrant special attention. Oil prices are
expected to remain around 20 US dollars/barrel. At the
same time, it seems likely that oil supplies will be more
plentiful than estimated because of the Middle East's
great need for foreign currency earnings and internal
disagreements within the Organization of the Petroleum
Exporting Countries (OPEC) on strategy. This will
push oil prices down, perhaps to 15 US dollars/barrel.
For oil-consuming countries, this means an improvement in terms of trade, greater purchasing power,
reduced inflation and increased production.

The dollar rate is also an imponderable. An increase in
the value of the dollar would lead to reduced inflation,
lower growth in production and higher unemployment
in the USA. It would also push up the government
deficit along with the deficit on the balance of current

transactions. This would strongly revive the prospect
of the so-called double deficit.

Whilst the expansion of world trade is expected to
decline to 3,5% this year, the Netherlands Central
Economic Planning Office thinks that a return to the
1989 level (7%) is possible in 1993/1994. Nevertheless,
unforeseen economic developments in the industrialized
countries, or the failure of the Uruguay Round could
lead to very different results which would, in turn, have
a major impact on the Community's economy.

2. The European Community on the threshold of 1993

2.1. _Historical background_ ( _[l]_ _)_

The Community now stands on the threshold of a new
phase in its still young existence. A brief look at the
past can help to put this new phase in its historical
perspective and clarify its significance.

The Benelux Union, which was a forerunner of the
Community, was created in 1944, and now numbers
20 million inhabitants in three countries.

The European Community was established in 1957 by
the six founder members (Benelux, Germany, France,
Italy) with a total population of 180 million.

In 1972, the Community expanded northwards (to
include Denmark, Ireland and the UK), bringing its
total population to 260 million.

Greece acceded in 1981 followed by two southern
countries, Spain and Portugal, in 1986. This produced
a total Community population of 320 million, a figure
since increased to _336_ million by German unification
in 1990.

The Community's objectives are equally significant.
Economic cooperation leading to the creation of a
common market was the idea from the very start. Many
instruments have been devised and deployed to serve
this end. Economic and Monetary Union has gradually
emerged as the goal. In a parallel development, objectives of a political nature have been mentioned in the
Treaty and elsewhere. Recently, these objectives have
been incorporated in plans for Political Union. It is now
possible to speak of a kind of European legal order
with its own objectives, its own powers and decisionmaking procedures and its own administrative, supervisory and legislative bodies. The Community is based
on the principles of human rights, pluralism, regular

_(_ _[l]_ _)_ The data in 2.1 and 2.2 are taken from _Economics_ _of European_
_Integration_ — _Theory,_ _Practice_ _and_ _Policy_ by W.T.M. Molle
(Dartmouth, Aidershot, UK) and from the _Economisch_ _Statis-_
_tische Berichten_ (December 1989, pp. 1271-1273) Netherlands
Economics Institute, Rotterdam.

No C 339/68 Official Journal of the European Communities 31. 12. 91

elections, the market economy as the principal form of
economic organization and an allocation of common
functions based on the principles of checks and bal
ances.

The division of responsibilities between the Community
and the Member States must be based on the principle
of subsidiarity in areas which do not fall within the
former's exclusive jurisdiction.

This historical sketch reveals a remarkable regularity
in the enlargement of the Community at approximately
14-year intervals (1944, 1958, 1972, 1986). Article 237
of the Treaty entitles any European State to apply for
membership. The accession of the countries of the
European Free Trade Association (EFTA) with a total
population of 30 million seems possible before the year
2000. The longer-term could see the accession of the
countries of Central and Eastern Europe (excluding the
USSR: 120 million inhabitants). It seems desirable in
extending the Community's internal structure, with its
specific objectives, divisions of power and types of
institutions to bear in mind its projected longer-term
size.

The results of a study conducted by Eurodata Survey
in March 1991 may help to shed light on this brief
account of the Community's internal and external
development. Among European citizens (EC-EFTA),
68% favour closer union and 60% a single Community
currency and foreign policy, with only 14% being
opposed to the accession of Eastern European countries.

2.2. _Freedom of movement_

If, in accordance with the objectives of the Treaty,
the free movement of individuals, goods, services and
capital has become a reality by 1 January 1993, the
volume of these movements seems likely to increase
substantially over the next decade.

Thus, it is forecast that intra-Community trade in goods
wil increase from 8% of GDP in 1970 to 20% by the
year 2000, and that intra-Community trade in services
will grow from 4% of GDP to 20%, too, over the same
period.

The proportion of Community nationals employed in
another Member State has remained at approximately
2% for 30 years. There is no indication that the number
of Community nationals with a permanent residence in
another Member State is likely to increase significantly.

Immigration into the Community could, however,
increase. This topic will be dealt with in a separate
Opinion.

The share of investment in other Member States has so
far been relatively slight. Between 1970 and 1985, the
share of foreign investment by and in Member States
fluctuated around 1% of total investment, and in recent
years income from investment in other Member States
has represented 2% of GNP. These percentages are
expected to shoot up in the coming decade.

The further development of such movements will
depend on the establishment of the requisite conditions
in good time. Specifically, this means that the 283
proposals in the White Paper must be enshrined in
European regulations or transposed into national legislation on the basis of directives, thereby becoming
applicable in the Member States.

Some 213 of these proposals have already reached this
stage at Community level. The remaining 70 are awaiting further examination or final Council approval. If
1993 is to constitute a genuine departure, the new
Community decision-making procedure must be agreed
in 1991.

In this connection, the Community fully endorses the
call made at the Rome European Council on 14-15
December 1990 for every effort to be made to ensure
that all measures necessary for the completion of the
internal market are adopted in time to be operational
by 1 January 1993.

The Committee is particularly concerned about progress with regard to:

— the harmonization of indirect taxes, following the
agreement in principle reached by the ECOFIN
Council on 24 June 1991,

— the free movement of persons,

— transport,

— veterinary and plant-health measures.

If restrictions necessitating intra-Community border
checks still exist in any one of these areas, a free internal
market will be out of the question.

2.3. _European Political Union_

2.3.1. Balance between economic a n d p o l itical s t a t u s

European Political Union is important for the Community's relations with third countries as an independent entity. The Community's increasing economic
importance in the world context and in international
organizations [General Agreement on Tariffs and Trade
(GATT), International Monetary Fund (IMF), International Labour Organization (ILO)] is producing a

31. 12. 91 Official Journal of the European Communities No C 339/69

corresponding increase in its political significance. The
Gulf Crisis, the stance taken on agricultural policy
during the Uruguay Round and the recent events in
Yugoslavia revealed the need for the Community to
improve its decision-making. This makes it absolutely
essential to strike a balance between the Community's
economic and political unity.

This balance is all the more necessary against he background of the sweeping political and economic changes
now taking place in the wider European context. A
European Community with recognizable features and
identifiable objectives is an essential element in the
context of efforts to guide the future development of
this part of the world.

2.3.2. The role of the Economic and

Social C o m m i t t e e

The form and substance of the democratic allocation
of powers and responsibilities within the Community
is of great importance to the Committee. The Committee also thinks it important to have efficient and
transparent decision-making machinery, especially at
the Council. The economic and social sectors must
know which rules they have to observe and how these
rules are conceived.

At present, the Committee is purely an advisory body.
It is not seeking to expand this function with a view to
participating in decision-making, since it thinks that,
in accordance with the tradition of parliamentary
democracies in the Member States, the European Parliament should be the body to participate in decisionmaking.

The Committee does, however, think that it should be
an independent, fully-fledged advisory body. This view
is based on the following considerations:

— the advisory function involves social and economic
interests which play an extremely important part in
policy implementation and in the formulation of
that policy,

— the advisory function makes it possible to exploit
the knowledge and expertise of the groups concerned,

— the advisory function creates a European forum in
which representatives of the different economic and
social interest groups can hold a regular and systematic exchange of views on important economic and
social questions.

The implementation of these functions increases the
effectiveness of policies, enlarges their European basis
and promotes mutual understanding between economic
and social interest groups.

In this connection, the Committee would draw attention to the many elements in the Community's existing
socio-economic advisory structure (ESC, consultative
committees, joint committee, direct advice from the
Committee of representatives of European employers'
and workers' organizations). The main resultant problems are a lack of cohesion, co-ordination and the
absence of procedural transparency of the whole structure. The Committee would warn against proliferation
in this respect and is concerned that this lack of coordination and transparency may lead to a duplication
of activity or the exclusion of individual socio-economic
advisory bodies.

2.4. _Economic and Monetary Union_

2.4.1. Main objectives of economic and
social policy

In its Opinions of 9 October 1989 and 27 February
1991 (Doc. ESC 1135/89 and Doc. ESC 273/91), the
Committee commented in detail on economic and monetary union. All Member States should participate in
the work of the European Central Bank System (itself
responsible for regulating the ECU money supply and
formulating a common monetary policy) and should be
involved in the co-ordination of economic and budgetary policies. As was the case with the exchange-rate
mechanism after its introduction in 1979, waivers could
be provided for at the beginning of the third stage
whereby the exchange rates of Member States failing
to attain the requisite convergence would be allowed
to go on fluctuating against the ECU.

The Committee continues to regard the completion of
the internal market and full Economic and Monetary
Union as two sides of the same coin and as conditions
to be satisfied by the Community itself.

Nevertheless, it wishes to give more detailed consideration to one key aspect, namely the co-ordination or
'convergence' of national/social and economic policies.

The 1990/1991 Annual Economic Report states that
while economic convergence has significantly improved
since the beginning of the Eighties, it fared badly
between 1988 and 1990. However, according to the
Commission, convergence requirements will be tightened in the context of multilateral surveillance.

The Committee fully recognizes the difficulties surrounding economic policy convergence in the twelve
Member States, each with its own history and unique
circumstances. The necessary convergence can, however, be achieved more easily the higher the rate of

No C 339/70 Official Journal of the European Communities 31. 12. 91

sustained economic growth in the EC, provided that
price stability is maintained.

Inadequate progress towards convergence could delay
the introduction of Economic and Monetary Union or
implementation of the proposed timetable.

The Committee seeks to contribute to the establishment
and maintenance of economic and social policy coordination in the Member States.

It does this by examining the major economic and social
policy objectives and considering the role it might play
in their implementation.

Point 4 of the Opinion of 27 February 1991 covers many
aspects of convergence and, in particular, calls on the
Member States to agree on the main economic and
social policy objectives. The Committee therefore calls
for the general objectives of Community economic and
social policy to be clearly spelt out in their relationship
to each other. These goals can serve as a Community
reference framework. They can also be used to test the
multi-annual guidelines periodically laid down by the
Council of Economic and Finance Ministers.

These major objectives are set out in a number of EC
Treaty articles. Article 2 refers to a continuous and
balanced expansion, an increase in stability and an
accelerated raising of the standard of living. Article 104
mentions the equilibrium of the Member States' overall
balance of payments, a high level of employment and
a stable level of prices. Articles 130 A and 130 B are
concerned with economic and social cohesion, whilst
Article 130 R covers environmental protection and
improvement.

If these widely scattered objectives can be clearly
collated and brought to the attention of Europe's citizens or at least of the economic and social interest
groups representing them, the Community's central
goals should gain greater recognition beyond the circle
of policy-makers directly involved. This should enhance
the Community's social acceptability among its citizens.

Agreement on such objectives is also extremely
important for the discussion of economic policy, where
the emphasis can shift from arguments about irreconcilable ideological differences to the objective testing of
potential measures.

These central objectives are therefore summarized in
this Opinion.

In the Committee's view, the main goals of economic
and social policy include:

a) Sustained and balanced economic growth, i.e. economic growth which ensures the earth's survival and
continuing productivity.

b) Full employment, i.e. work for all who are willing
and able to work. This goal should not be confined
to giving individuals a better chance to participate
in the productive process but should also be aimed
at giving them opportunities to better themselves.

c) Price stability. Attainment of this objective is the
principal task of the European System of Central
Banks in the context of Economic and Monetary
Union. In its Opinion of 27 February 1991, the
Committee defined the objective even more precisely as 'price level stability' or 'stability in the
value of money'.

d) Balance of payments equilibrium. This requirement
is important for the Community's overall position
in relation to third countries.

e) Economic and social cohesion. This essentially concerns the definition of the concept of European
citizenship in the social and economic sense. Examination of this topic has identified the following
factors:

— the spread of affluence: Treaty Articles 130 A
to 130 E inclusive establish a Community framework for this objective, _inter alia_ by stressing
the need to develop backward economic regions,

— integration of the social dimension in the
Internal Market through the acceptance by 11
of the 12 Member States of the Community
Charter of Fundamental Social Rights and its
implementation in an action programme,

— development of the social dialogue, in which
workers' and employers' organizations can contribute to Community development in line with
their important positions in society.

The question of economic and social cohesion was
discussed in detail in the Committee's May 1991
Opinion on Social Developments in the Community in
1990 _1})._

2.4.2. Role of the ESC in the c o n t e x t of

convergence

As already indicated in point 2.4.1, the convergence of
Community socio-economic policy is a very difficult

(!) OJ No C 191, 22. 7. 1991, p. 10.

31. 12. 91 Official Journal of the European Communities No Q339/71

undertaking. It must proceed from differences in the
socio-economic history and present situation of the
Member States. It also involves a re-allocation of

responsibilities between the Member States and the
Community on monetary/economic matters, whilst the
Member States must eventually be prepared to give up
such an important right as the control of exchange

rates.

The Committee thinks it can play a part in promoting
the co-ordination of social and economic policies.

As is well known, the Committee represents a variety
of social and economic interests within the Community.
These interests give the Committee numerous functional contacts with the Member States. On the other

hand, by virtue of operating in the European context,
in which many social and economic questions are discussed, the Committee and its members appreciate the
Community implications of social and economic policy.
In its dual capacity as a representative of national
interests and an advisor on Community policy, the
Committee can fulfil a consultative function in the co
ordination of economic and social policy.

The Committee has already commented on this involvement in the co-ordination of economic and social policy
in its Opinion on Economic and Monetary Union in
which, in particular, it asked to be consulted on projected multi-annual guidelines and national reports. It
repeated this request in its Opinion on the 1990/1991
Annual Economic Report. The Committee would also
like this functional involvement to be formally recognized by means of a Council decision. In the meantime,
it will seek to make a concrete contribution in the

follow-up to Member States' economic reports.

In this context, its aim will be to discuss the national
reports with economic and social interests groups in
the countries concerned.

The Committee intends to conduct this exchange of
views with national representatives in the context of
its six-monthly Opinions on the social and economic
situation in the Community.

3. Particular economic and social considerations

3.1. _German unification_ (*)

In its Opinion of 20 November 1990 (Doc. ESC 1378/
90), the Committee dealt fully with the expected social
and economic implications of unification. The causes
of the problems which are now coming to the fore are
identified in that Opinion.

In the former GDR industrial plant and equipment is
obsolete and the environmental situation is cata
strophic; major sales outlets have been lost in the Soviet
Union and Eastern Europe; the population prefers
Western products, infrastructure is grossly inadequate
and neither the authorities nor the private sector are
professional enough to operate a social market economy; the question of ownership remains uncertain in
some respects, and productivity is low.

However, despite the terrifying increase in unemployment to 2 million, there have been some positive developments.

Thus, many new businesses are being established
every month; more than one million new jobs have
been created since 1 July 1990; business will invest
DM 26 million in the new Lander in 1991; Federal
government aid totalled DM 50 000 million in 1990,
will rise to roughly DM 100 million in 1991 and, on
present estimates, will amount to approximately DM
400 000 million over the period 1990-1994; DM 50 000
million is to be invested in the rail network and the

same amount in telecommunications by 1994; money is
earmarked for 280 000 jobs in the health and social
services sector and a retraining programme for 550 000
individuals is planned.

Germany should take responsibility for further action
in the new Lander. The Committee is authorized to

comment only in the context of the rules governing
Community policy (e.g. the structural funds). Nonetheless, the consequences of unification for Federal
Government policy will also clearly affect the economic
situation in the Community.

3.2. _European Economic Area (EEA)_

The establishment of the European Economic Area can
be regarded as both a goal in itself and as an interim
stage in the enlargement of the Community to include
all or some EFTA countries (Austria and Sweden having
applied for membership in the meantime). The EEA
deserve support in either case. The EFTA countries
operate on the same political and socio-economic bases
as the Community. As a Community trading partner,
EFTA is as large as Japan and the USA combined.

The Committee hopes that these periodic contacts will
have a favourable impact on mutual attitudes, and ( (') The information given in 3.1 is taken from a press conference
trusts that this will further social and economic policy given by the German Parliamentary State Secretary, A. Pfeifer,
co-ordination in the Member States. on 4 June 1991.

No C 339/72 Official Journal of the European Communities 31. 12. 91

The Committee is aware that a number of issues remain
open. These concern aspects of competition and agricultural policy, the protection of fishing grounds, transit
traffic, aid to less-developed regions and influence on
Community decision-making. In view of the common
history and interests, the Committee feels confident
that agreement can be reached on these issues.

3.3. _Central and Eastern Europe i_ _[1]_ _)_

After the dreams and ideals of the 1989 revolution,
Central and Eastern Europe is now facing harsh sobering reality. The transition to a market economy is
coupled with negative economic growth for the time
being. Because of the financial and economic crisis in
the Soviet Union, the Central and Eastern European
nations are being forced to speed up their quest for
other export markets. Transforming State enterprises
into market-oriented businesses is also difficult. Unemployment is rising significantly, foreign trade is declining, inflation rising, debts increasing and productivity
falling, while technology is obsolete, the infrastructure
neglected and the environment polluted. There is also
great concern about the preservation of social stability.

During these times of change, these countries are looking to Western Europe, and in particular, to the European Community from which they are seeking a favourable response and a constructive contribution.

The Committee welcomes the Community's rapid
adoption of numerous initiatives and measures in
response to events in Central and Eastern Europe, and
would mention the following in particular:

— the Commission's coordinating role in establishing and implementing the aid programme for
24 countries,

— the establishment in May 1990 of a European Bank
for Reconstruction and Development with an initial
capital of ECU 10 000 million,

— the adoption of an action plan totalling up to ECU
500 million in 1990, ECU 900 million in 1991 and
more than ECU 1 000 million in 1992,

— the establishment of a European Training Foundation,

— the rapid conclusion of trade and cooperation agreements and the application of the most favoured
nation clause to the countries concerned,

— the opening of discussions on so-called association
agreements,

( [J] ) Point 3.3 is based on a speech given by Commission VicePresident F.H.Y.Y. Andriessen in The Hague on 21 March
1991.

— commitments totalling ECU 27 500 million (March
1991), including ECU 5 700 million in subsidies,
9 000 million in loans and 8 000 million in capital
from the European Investment Bank, the World
Bank and the European Coal and Steel Community,

— the proposed Pan-European Energy Charter.

The Committee thinks that the Community must continue to give this positive response and make this constructive contribution. In this context, the general objectives should be greater access to Western markets, support for improved standards of training and education
and for environmental and infrastructure measures and
economic reorganization based on market economy
principles. The Committee would stress that the course
now being pursued in Central and Eastern Europe must
be supported and safeguarded.

The overriding consideration, however, must be that
these countries must in the final analysis solve their
own problems, giving priority to the establishment of
a sound infrastructure and the creation of legal certainty
and political stability. This would encourage Western
businesses to invest in these countries. In view of its
possible expansion, the Community must stress the allembracing need for human rights to be respected, the
rule of law acknowledged, a variety of political parties
permitted, and the market economy accepted, that is for
acceptance of the values forming part of the democratic
heritage. The Committee is preparing a separate
Opinion on the Community's relations with the
countries of Central and Eastern Europe.

The present Opinion takes no account of the consequences of the recent events in the USSR. The moves
towards democracy and a market economy appear to
have been reinforced rather than undermined so that
additional Community efforts are both necessary, and
justified as a means of helping to ensure their continuation.

3.4. _GATT_

The results of the eighth round of GATT negotiations
are of particular importance for the Community's
longer-term future.

GATT exists to reduce tariffs and other trade barriers

and end discrimination in international trade.

Free international trade is of major concern to the
Community, which must remain an active participant
on the world market as both an importer and exporter.

31. 12. 91 Official Journal of the European Communities No C 339/73

The free movement of goods and services is also one
of its internal objectives. Free trade promotes world
prosperity and the international development of more
backward countries. The Committee therefore thinks
it essential for the eighth GATT round to produce
positive results.

A variety of topics are on the agenda for these negotiations. In addition to the attainment of such general
objectives as the reduction and elimination of tariffs
and non-tariff measures and the greater freedom of
trade, discussion will cover the inclusion of the textiles
and clothing sectors within the GATT, revision of the
safeguard rules, improved arbitration procedures, the
commercial aspects of intellectual property rights, the
inclusion of services within the GATT and the
reduction of all forms of agricultural support.

The discussions have so far been blocked by failure to
agree on arrangements for trade in agricultural products, which is so far only partially covered by the GATT
rules.

It is clear from the agenda that a variety of Community
interests are at stake in different sectors. In this general
Opinion on the economic situation the Committee
would therefore stress that the consequences for the
Community of the success or failure of these negotiations must be assessed in this broad context, within
which agricultural policy forms a significant but not
dominant element.

The Committee will deliver separate Opinions on the
results of the GATT negotiations and the agricultural
policy to be implemented in and by the Community.

3.5. _Developing countries_

The external position of many (oil-importing)
developing countries deteriorated significantly in 1990.
The causes for this were: falling demand for raw materials, worsening terms of trade due in part to higher
oil prices and high international interest rates. These
countries' real export earnings are hardly expected to
increase this year, and more cash will flow from
developing to industrialized countries than vice-versa.
In some cases, the huge foreign debt is also a major
obstacle to social and economic development. Developments in Africa are a particular source of concern.

Making co-operation with and support for the
developing countries a Community policy objective
seems increasingly necessary. This will require:

— the assignment to the Community by the Treaty of
joint responsibility for co-operation with and aid to
these countries,

— the coordination of this policy in the Member States,

— the reduction and, if necessary, writing-off of
developing countries' debts if they are prepared to
carry out economic reforms and policy adjustments,

— reforms of the Generalized System of Preferences to
allow the developing countries broad access to the
internal market.

3.6. _Demographic trends_

Demographic trends over the next 20 to 30 years will
be extremely important for the social and economic
development of the Community.

In absolute terms, the world's population is still increasing and will rise from 2 500 million in 1950 and 5 000
million in 1990 to 8 000 million by the year 2020.
Relatively speaking, however, and notwithstanding an
increase in average life expectancy, the rate of growth
will decline—from 100% in 1950-1985 to _65_ % in 19852020. This slowdown is a virtually universal demographic phenomenon, caused by the general tendency
for women to have fewer children. At present, the
average is Europe 1,5, Far East (including Japan) 2,2,
South America 3,5 and the Indian sub-continent 4,7.
Africa, where the average is approximately 6, is the
only continent defying the trend.

In 1950, 35% of the world's population lived in the
USA, Japan and what is now the EC; in 2010, this
figure will be 15 %. By the latter date, Africa's present
population of 650 million will be the same as China's,
i.e. 1 250 million.

The principal consequences of these far-reaching developments will be:

— migratory movements, with Europe being particularly affected by influxes from African countries
bordering on the Mediterranean,

— the formation of new world-power centres in such
areas as China, India, Indonesia, Brazil and Mexico,

— environmental damage resulting from increased
C0 2 emissions, deforestation and water pollution.

The Community will face the major challenge of an
ageing population, a phenomenon affecting nearly all
the Member States, though at different rates.

No C 339/74 Official Journal of the European Communities 31. 12. 91

This development will essentially affect:

— the labour market: although the labour force will
continue to account for the same share of the total

population for the time being, this share will eventually shrink. The increasing average life expectancy
of the working population will make it essential for
countries to devise new schemes for the discharge
of tasks, keep people at work for longer, tap new
sources off labour or replace the factor labour by
capital,

— the financing of pensions: whilst the proportion of
pensioners will eventually double, the number of
employed persons responsible for generating
society's wealth will decline,

— new patterns of consumption: older people's needs
will become increasingly important, in particular
through a growing demand for health services and
special accommodation.

The decreasing numbers of young and increasing numbers of old people will oblige the Member States to
introduce a number of economic and social measures

which ought to be coordinated at Community level.

4. Conclusions and recommendations

4.1. _Conclusions_

The Committee notes that:

a) the Commission's analysis shows that the marked
slowdown in economic development in the second
half of 1990 and the first half of 1991 is now being
reversed but that the gap on the US and Japan will
not be closed;

b) there are great differences from country to country,
and the national reports remain extremely
important;

c) after falling for several years, unemployment will
rise to 9,2 % in 1991/1992. This level is unacceptably
high, both in itself and in relation to the USA
(6,6%), Japan (2,2%) and the EFT A countries
(2,5%);

d) real unit labour _costs_ rose by a total of 1 % in 1990/
1991 after falling between 1982 and 1989;

e) the growth in investment will fall from 6,7% in
1989 and 4,3% in 1990 to 0,8% in 1991.

4.2. _Recommendations_

The Committee makes the following recommendations:

4.2.1. As r e g a r d s t h e C o m m u n i t y

a) The principal goals of economic and social policy
should be set out in relation to each other so as to

provide a reference framework for Member States
in their efforts to achieve the convergence sought in
Economic and Monetary Union.

b) The Committee should be involved in shaping this

convergence.

c) The promotion of employment opportunities and
steps to reduce unemployment should be given top
priority in Community and Member States' policies.

d) Attention should be given to fighting inflation and
curbing production costs. The profitability and
growth of investment and the improvement of productivity are matters which call for a sustained
effort.

e) The consequences of the demographic process in
the Community should be dealt with at a policy
level.

4.2.2. As r e g a r d s r e l a t i o n s w i t h n o n C o m m u n i t y c o u n t r i e s in E u r o p e

f) The Community should, in principle, remain open
to new members. Nevertheless, it must first develop
a democratic and efficient decision-making process
which takes account of many more members. In
addition, candidates must accept the status quo in
the internal market and the results of the current

Intergovernmental Conference and be able to contribute to their implementation.

g) The European Economic Area should be regarded
as a form of co-operation _per se_ but also as a stage
on the way to a fully-fledged Economic Community.
Implementation thereof in the short term should be
given support.

h) A positive attitude towards the countries of Central
and Eastern Europe should be maintained and
actively strengthened. The recent historical developments should be supported.

4.2.3. As r e g a r d s n o n - C o m m u n i t y
c o u n t r i e s i n s i d e a n d o u t s i d e

E u r o p e

i) An enormous effort should be made to secure a new
GATT agreement. GATT is very important for the
Community as the world's largest trading entity.

31. 12. 91 Official Journal of the European Communities No C 339/75

j) The Community's joint responsibility for cooperation with and aid to developing countries should
be recognized in the Treaty.

k) Steps should be taken within the framework of
international monetary organizations (IMF, G 7,
etc.) to initiate an analysis and possible reform of

Done at Brussels, 26 September 1991.

the existing international monetary system, which
many see as contributing to the world's, and thus
to the Community's, present economic difficulties.

1) Consideration should be given to the likely influx of
immigrants, in particular from Central and Eastern
Europe and North Africa.

_The_ _Chairman_

_of the Economic and Social_ _Committee_

Francois STAEDELIN

Opinion on the Communication from the Commission to the Council and the European
Parliament on the Common Fisheries Policy

(91/C 339/14)

On 11 January 1991 the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Economic Community, on the
Communication from the Commission to the Council and the European Parliament on the
Common Fisheries Policy.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 5 September. The Rapporteur was
Mr Silva.

At its 289th plenary session (meeting of 26 September 1991), the Economic and Social
Committee adopted the following Opinion _nem. con._ with two abstentions.

I. INTRODUCTION

1. Support for a global policy

1.1. _Adjustment_

1.1.1. The Committee welcomes the Commission

Communication and its intention to bring the Common
Fisheries Policy (CFP) into line with the new situation.

1.2. _Consultation_

1.2.1. The Committee stresses that the Commission

document takes the form of a Communication, and will

be followed by a report which the Commission is to
submit to the Council by 31 December 1991. The Commission wishes to weigh up its stance against that of
the Member States' authorities and of those involved

in the sector at national and EC level.

1.3. _A global policy_

1.3.1. The fisheries sector as a whole is highly complex. For this reason, a global policy is to be preferred
embracing all aspects (stocks, prices and markets, structures, social aspects).