Source: EURLEX
Language: en
Format: md

**COMMISSION OF THE EUROPEAN COMMUNITIES**

**COM(94)** **221 final**

**Brussels, 07.09.1994**

**COMMUNITY ACTIONS TO ASSIST SMEs AND THE CRAFT SECTOR:**

**1.** **FOURTH COMMISSION ACTIVITY REPORT ON ENTERPRISE POLICY**

**- YEAR 1993 -**

**2.** **COMMISSION REPORT ON COORDINATION OF THE ACTIVITIES IN**

**FAVOUR OF SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)**

**COMMUNITY ACTIONS TO ASSIST SME'S AND THE CRAFT SECTOR**

_**A**_

On 25 May 1994 the Commission adopted an integrated programme to assist SMEs and
the craft sector.

The aim of this programme is to outline an overall programme for the actions - both
current and new - to assist SME's, and so to improve the effectiveness and the
visibility of the initiatives to be taken both by the Member States and by the European
Union. All the current and new actions were presented in the Integrated Programme in
the form of a table, which is reproduced on the following page.

To meet these requirements of visibility and cohesion, it appeared necessary to
combine the various items of information on the policies of the Union to assist SMEs
which the Commission undertook to provide in the context of the Decision concerning
a multiannual programme (1993-1996) to assist SMEs and the craft sector.

The object of the present communication is to present in detail the current actions
falling under the enterprise policy and other Community policies.

Accordingly, the present document comprises:

the report on the measures carried out in 1993 under the multiannual programme
to assist SMEs, and

the report on the coordination of Community measures to assist SMEs conducted
in the context of other Community policies, with particular emphasis on regional,
research and vocational training measures . This report which includes a
summary, covers the period from 1991 to the end of 1993, and presents
quantitative data on the impact of these programmes on SMEs.

The Commission considers that this overall presentation of the Community measures
and policies to assist SMEs will contribute to improving the visibility and coherence of
the various policies of the European Union to assist SMEs and the craft sector, thus
meeting the concern expressed by the Council and all the parties concerned with
enterprise policy.

1 COM(94)207 final of 3 June 1994
2 Council Decision 93/379/EEC of 14.06.1993, OJ L161, 2.7.1993
3

Report provided for in Article 3 (4) of Decision 93/379/EEC
Report provided for in Article 5 of Decision 93/379/EEC

_**A**_ **<su**

**INTEGRATED PROGRAMME IN FAVOUR** **OF** **SMEs**

_IS._ CONCERTED ACTION _ _ _ _ _ _ _, _ _ _ ^ ^
Objective : SME Environment Contents Financing
_Improving the_ _administrative_ _environment_ New measure :
° Group on Administrative Simplification

U . CONCERTED ACTION ^ _ _
Objective : Support Measures for SMEs Contents Financing
_Stimulating measures in favour_ _of_ _SMEs_ New measures :   ° Forum on services to assist enterprises
° Stimulating demand
2.1 COMMUNITY CONTRIBUTIONS

Objective : SME Environment Contents Financing
_Improving_ _the_ _administrative environment_ Measures being taken :

°
, Business impact assessment system SME Multiannual Programme

                            - New measure : SME Muhiannual Programme
0 Cost benefit analyses

_Improving_ _the_ _legal_ _and_ _fiscal environment_ New measures :
° Examine existing legislation SME Multiannual Programme
0 Transmission of entreprises SME Muhiannual Programme
° Fiscal environment SME Muhiannual Programme
0 Late payments SME Muhiannual Programme
° Local Services SME Muhiannual Programme
_2.1._ COMMUNITY CONTRIBUTIONS .

Objective : Support Measures for SMEs Contents Financing
_Improving access_ _to_ _finance_ _and_ _credit_ Measures being takenj
° SME access to financial instruments : SME Multiannual Programme
i.e. venture capital, mutual guarantee
schemes, secondary markets
New measures :
0 capital markets SME Multiannual Programme
° private capital for RTD 4th Framework Programme RTD
° New financial engineering instruments SME Initiative
° Round Table : analysis and follow up EIB + EIF + SME Initiative
° Improving intervention measures of Structural Funds and EIB Global
Community instruments Loans

_Cooperation_ Measures being taken :
° Partner search networks SME Multiannual Programme
(BC-NET, BRE)
0
Direct partnership : Europartenariat, SME Multiannual Programme
INTERPRISE
° Sub-contracting : market transparency and SME Muhiannual Programme
pilot projects
New Measures :
° Support after initial partnership contact SME Muhiannual Programme (crafts
pilot project) + SME Initiative
° enterprise networks SME Initiative
     - _°_ production and distribution networks SME Initiative
° sub-contracting : trade shows, promotion
centres, networks, quality strategy SME Multiannual Programme + SME
Initiative                                                                
_Management Quality, adapting SMEs_ _to_ Measures being taken :
_structural changes_ _and to the_ _Internal_ ° support pilot project, similar to SME Multiannual Programme

_M_,  - EUROMANAGEMENT
° Small entreprises, craft, retail, social SME Muhiannual Programme

economy
° Creators and young entrepreneurs SME Multiannual Programme
New Measures :
° intermediaries potential for assistance SME Initiative
° support for SMEs with growth potential SME Multiannual Programme + SME
(stimulate pilot projects) Initiative
° assistance for managers and for workers SME Initiative + ADAPT
threatened with industrial change
" Training LEONARDO Programme
_Other actions_ Measures being taken :
_°_ Development and improvement of EIC SME Multiannual Programme
network

New Measures :
° Improved access to RTD 4° Framework Programme RTD
° Information Society and SMEs SME Initiative
Principal Sources of Finance

Multiannual Programme for SMEs 1993-1996: Ecu 112.2 million
Community Initiative for SMEs 1994-1999: Ecu 1 billion
Objective 4 : ADAPT Initiative 1994-1999: various projects for SMEs within Ecu 1.4 billion allocation
Structural Funds 1994-1999: Community Support Framework and other Community Initiatives
4th Framework Programme RTD-1995-1999: various projects for SMEs within Ecu 12.3 billion allocation
EIB Global Loans: Ecu 1 billion for SME competitiveness
Interest rates (2%): Ecu 45 million for 1994    - Ecu 22,75 million for 1995
EIF: Ecu 2 billion for loan guarantees with future possibility of direct participation.

**FOURTH COMMISSION ACTIVITY REPORT**

**ON ENTERPRISE POLICY**

**- YEAR 1993 -**

**4** **C**

INTRODUCTION 5

I. REMOVAL OF UNDUE ADMINISTRATIVE, FINANCIAL AND LEGAL

CONSTRAINTS 7

1.1 Administrative simplification and assessment of the impact of Community
legislation 7

1.2 Improving the financial environment of enterprises 7

1.2.1 Round table of senior members of the banking sector 7

1.2.2 Payment periods in commercial transactions 8

1.2.3 Stimulating the financial environment 9

1.3 Transferring businesses, 9

1.4 Cooperative societies, mutual societies and associations 10

1.5 Improvement of external consultation 10

II. INFORMATION AND SUPPORT FOR BUSINESSES 12

2.1 Information for businesses 12

2.1.1 Euro Info Centre network 12

2.1.2 Development of the Social Economy EIC 14

2.1.3 European Week for Business 14

2.1.4 Miscellaneous information measures 16

2.2 Measures in support of businesses 18

2.2.1 Training and consultancy 18

EUROMANAGEMENT - Preparing SMEs for the internal

market 18
EUROMANAGEMENT - standardization, certification, quality
assurance and safety at work
Small enterprises and craft businesses

2.2.2 Finance 22

Seed capital 22

Mutual guarantee societies 23

2.2.3 Access to markets 23

Euromarketing 23
Helping SMEs to work with central and eastern Europe 24

SMEs and public procurement 25

2.2.4 Technology 26

SMEs and Community RTD activities 26

VALUE-SME pilot action 26

III. PROMOTION OF COOPERATION AND PARTNERSHIP 27

3.1 The Business Cooperation Network (BC-NET) 27

3.2 Business Cooperation Centre (BRE) 32

3.3 Europartenariat and Interprise 33

3.3.1 Europartenariat 33

3.3.2 INTERPRISE .........36

3.4 Subcontracting 38

IV. POLICY ASSESSMENT AND DEVELOPMENT 41

4.1 Improved knowledge of SMEs 41

4.1.1. Statistics .41

4.1.2 Definition of SMEs 42
4.1.3 European SME observatory 42

4.2 Policy development and preparation of new projects 43

4.2.1 Commerce and distribution 43

4.2.2 Cooperatives, Mutual Societies and Associations 46

Annex 1 : List of principal texts adopted in 1993 relating to the Communities' 48

enterprise policy

Annex 2 : EUROPARTENARIAT Methodology 50

Annex 3 : INTERPRISE Methodology 51

**INTRODUCTION**

1993 represented a fundamental stage as regards the objectives, measures and development of
Community enterprise policy.

The entry into force and adoption of several major pieces of legislation mark a new
institutional framework and reinforce and extend Community action to help businesses, and
particularly SMEs, in the European Union. Thus, 1993 saw the birth of a second generation
Community enterprise policy, closely coordinated with the policies of Member States.

A quick glance at the key dates indicates the importance of the past year from three
viewpoints:

**From the institutional viewpoint:**

Entry into force of the European Union Treaty on 1 November 1993: Article 130
makes enterprise policy official (it is currently based on legal autonomy) and the 18th
final declaration commits the Commission to take account, in its legislative proposals,
of costs and benefits to the Member States' public authorities and all the parties
concerned.

**From the general economic viewpoint:**

Commission proposal of 12 January 1993 on the establishment of the European
Investment Fund, which will guarantee loans for investments by SMEs.

Commission proposal of 9 July 1993 on the provision of Community interest subsidies
on loans for SMEs extended by the EIB under its temporary lending facility

Commission White Paper on growth, competitiveness and employment - the challenges
and ways forward into the 21st century. This white paper proposes a complementary
strategy to help enterprises, and particularly SMEs, in order to ensure the proper
mobilisation of economic operators for growth, competitiveness and employment.

From the enterprise policy viewpoint:

Council Decision of 14 June 1993 on a multiannual programme of Community
measures to intensify the priority areas and to ensure the continuity and consolidation
of policy for enterprise, in particular SMEs, in the Community. This decision allocates
a budget of ECU 112.2 million to enterprise policy for 1993-1996.

SME Council Resolution of 11 November 1993 on strengthening the competitiveness of
enterprises, in particular of SMEs and craft enterprises, and developing employment.

Conclusions of the European Council held in Brussels on 10 and 11 December 1993.
encouraging the creation of a fiscal, financial and administrative environment
favourable to SMEs.

This report fulfills the requirement laid down in both Article 6 of the Council Decision of
28.7.1989 on the improvement of the business environment and the promotion of the
development of enterprises, and in particular small and medium-sized enterprises, in the
Community (OJ L 239 of 16.8.1989), and Article 3 of the Council Decision of 14 June 1993
referred to above (OJ L 161 of 2.7.1993).

I. REMOVAL OF UNDUE ADMINISTRATIVE. FINANCIAL AND LEGAL

CONSTRAINTS

1.1 Administrative simplification and assessment of the impact of Community legislation

The Commission continued its work on administrative simplification procedures aimed at
minimizing administrative, legal and financial burdens and costs to business. Particular
reference continued to be paid to the problems for SMEs and the cumulative impact on them
of complying with Community legislation.

The work included consolidating and strengthening the Commission's business impact
assessment system and the improvement of consultation procedures with business
organisations. In line with the Commission's undertaking to improve the transparency and
openness of its working methods, the Commission's proposed legislative programme is now
published in the Official Journal. Advance warning is given of the Commission's intentions
for legislation with an indication of those proposals which will be subject to the completion
of a business impact assessment, and those which will be subject to broad advance
consultation procedures with interested outside parties.

Impact assessments themselves are also made publicly available through notification of their
existence in the Official Journal. Under the impact assessment system around 30 proposals
for legislation from the Commission's 1993 programme were identified as needing an impact
assessment. A number of these proposals were presented by the Commission and discussed at
the regular meetings with the SME business organisations.

On 29 April 1993 the Commission held a working seminar with Member States and business
organisations to discuss the impact assessment system critically and consider possible
improvements. The main outcome of the seminar was the need for the Commission to
consider the use of more sophisticated cost-benefit analysis when considering legislative
proposals, although it was recognised that this would have considerable resource
implications.

1.2 Improving the financial environment of enterprises

1.2.1 Round table of senior members of the banking sector

At the request of the Commissioner for enterprise policy, Mr Vanni d'Archirafi, the
Commission set up a Round Table comprising senior members of the banking sector from
several Member States. This group had two objectives:

_in the medium term:_ to improve the allocation of private finance for SMEs (in
consultation with financial circles, to identify best practices, assess the possibility of
transposing them to Member States, and suggest new approaches fostering effective
partnership between financial institutions and SMEs);

_in the short_ _term:_ to prepare recommendations on the use of the European Investment
Fund (EIF) (with respect to its status and indépendance) and subsidized loans (SME
facility). The main points of the recommendations were submitted to the Council of
Ministers responsible for SMEs at the Council meeting on 11 November 1993.

The services responsible for enterprise policy provided the secretarial services for the Round
Table (organizing 5 members' meetings and the expert working party). Several other
Directorates-General concerned were invited to attend its discussions.

The work led to adoption by the Round Table of the recommendations submitted to the SME
Council on 11 November 1993.

1.2.2 Payment periods in commercial transactions

In order to determine to what extent the question of payment periods should be dealt with at
Community level, and what measures, if any, should be proposed, consultation took place
with the circles concerned during the first half of 1993 on the basis of the Commission staff
working paper SEC (92) 2214.

Over 130 written positions were received by the Commission following publication of the
working paper. The ESC gave its opinion on 30.6.1993. In its Resolution of 21 April 1993
on subcontracting and public procurement, the European Parliament considered that this
question necessitated harmonization at European level and requested the Commission to
submit specific proposals. A public hearing was arranged by the Commission following the
request from the European Parliament on 7-8 July 1993 in Brussels. Some 30 professional
organizations were represented.

Consultations confirm that enterprises face serious problems in most Member States and
sectors, and the situation has recently been deteriorating. The majority of the organizations
consider that Community measures should be envisaged. The results of the consultation are
currently being evaluated internally.

Business circles were pleased that the Commission was taking an interest in a problem of
very practical concern to enterprises and had given all groups concerned the opportunity to
express their point of view.

1.2.3 Stimulating the financial environment

A Communication to the Council was prepared in order to analyse the financial problems
facing small and medium-sized enterprises in the European Community and to indicate
possible solutions worthy of further examination. The Communication was approved by the
Commission on 19.10.1993 [1 ]

The main targets are the Council of Ministers and the governments of the Member States, as
most action will have to be taken at national and/or regional level; financial institutions and
organizations providing advice and training to SMEs are also concerned.

During the preparation, widespread discussions were held with interested parties and within
the Commission services. Formal inter-service consultations were carried out between June

and October 1993; the Article 4 Consultative Committee discussed the draft Communication
on 16th July, 1993, as did the Trade and Distribution Consultative Committee on 22nd
October, 1993.

1.3 Transferring businesses

Every year, too many businesses, and particularly SMEs, disappear because they have been
unable to resolve problems relating to their transfer. Aware of the economic repercussions
which this difficult operation can entail, the Commission is currently examining possible
measures to safeguard the fabric of SMEs. It is basing its ideas on the proposals which
emerged from the symposium which it organized on 29 and 30 January 1993 with around a
hundred experts from all Member States.

These proposals concern mainly measures aimed at reducing tax pressure and creating a legal
environment which facilitates the transfer of an SME in order to ensure its continuity and the
volume of employment.

The conclusions of the symposium were submitted to participants, professional organizations
and the Article 4 Committee.

COM(93)528

The proceedings of the symposium are being prepared.

Other consultations are in progress.

There is growing interest among those concerned in the subject of transferring businesses,
including a proliferation of seminars, conferences, articles, etc.

1-4 Cooperative societies, mutual societies and associations

On 11 March 1992 the Commission submitted to the Council three proposals for regulations
on the statutes for a European Association, a European Cooperative Society and a European
Mutual Society. The purpose of these proposals is to institute European legal statutes
permitting cooperative societies, mutual societies and associations to develop cross-border
activities without losing their specific status as partnerships or suffering discrimination
compared to companies with share capital.

Following the opinion issued by the European Parliament in January 1993, the Commission
submitted amended proposals on 6 July 1993.

During the second half of 1993, the Belgian Presidency provided the necessary impetus to
complete the first technical reading of the "cooperative society" dossier (ECS).

The progress made in finalizing the legislation laying down the statutes of the European
Company permitted faster headway, as it was possible for several of the wordings which had
been approved by the delegations to be reused for the ECS (e.g. transfer of the registered
office, hierarchy of laws applicable, conditions of eligibility for members of the governing
bodies, etc.).

Furthermore, a study was launched in September 1993 on "Direct taxes applicable to
associations".

1.5 Improvement of external consultation

_European business organizations_

In the spirit of openness and transparency which it has applied since its establishment, the
Commission maintained close contact with trade organizations representing the particular
interests of SMEs, craft enterprises, commerce and the social economy.

10

Monthly meetings with representative organizations permitted discussion of the activities of
the services of the Commission and other departments. Representatives of other DirectoratesGeneral were invited to explain their work and discuss it with business people.
Commissioner Vanni d'Archirafi, responsible for enterprise policy, took part in two of the
meetings. Commissioner Flynn came with him to discuss with the organizations the questions
raised by the White Paper on Growth, Competitiveness and Employment.

The Commission was pleased to find that agreement on mutual representation had been
reached among seven European organizations representing SMEs and craft enterprises with a
view to implementing consultation and negotiation procedures under the Protocol on Social
Policy.

_Commerce_

Consultation of the commercial sector on legislation affecting its activitiy continued under
the CCD, which was renewed for 1993-1995. The main subjects considered by the CCD in
1993 were: payment delays, statistics, continuing work on codes of practice, particularly on
new methods of payment, consumer affairs, foreign trade and the problems of commercial
SMEs.

The plenary meeting of the CCD on 5 March 1993 was held on the subject of "Trade, the
pillar of the single market" and was attended by over 250 participants (CCD, experts,
officials from the Commission and Member States, and the press). It was a significant event,
as it is every year: declarations made on this occasion, and contacts established between the
Commission, trade representatives, officials and the press, facilitate better understanding.

_Social_ _economy_

As did the Third Conference, the Fourth Conference on the Social Economy, held on 8 to 10
November 1993 in Brussels, stressed the need for a system of consultation with Community
institutions. Initiatives for the establishment of a Social Economy Forum are in progress.

_Member States_

At the request of Commissioner Vanni d'Archirafi, a first informal meeting was held on 21
June 1993 with the Directors General responsible for SMEs in the Member States, in order
to enable the Commission to conduct an exchange of views on the overall situation of small
and medium-sized enterprises in the Community. In particular, the Commission's activities

11

as regards information and the search for partners, and those relating to the implementation
and development of measures such as those regarding the preparation of managers and the
improvement of the administrative environment for businesses, were reviewed. Similarly, the
various initiatives to assist SMEs at Community and national level, particularly as regards
conditions of access to finance, participation in research and technological development and
the use of the structural funds, were discussed.

This first meeting had already made it possible to place the problems facing SMEs and the
action taken in their favour within the broader context of cooperative management of the
internal market, and that information and simplification were emerging as the preferential
means of action at both Community and national level. The Commission intends to repeat
this type of meeting, in particular in order to permit the development of action coordinated
with Member States.

II. INFORMATION AND SUPPORT FOR BUSINESSES

2.1 Information for businesses

2.1.1 Euro Info Centre network

The creation of the Euro Info Centre (EIC) network in 1993 is directly connected with the
developments which took place regarding recognition of the importance of SMEs for the
revival of the European economy, as defined, in particular, at the European Councils in
Edinburgh in December 1992 and Copenhagen in June 1993. One of the aims of this network
is to introduce new forms of partnership on a triangular basis, as the network becomes more
operational, comprising the Commission, enterprises and their representative organizations at
regional and local level (chambers of commerce and trade, focal points for local
development, trade organizations, etc.).

With this in mind, the EICs aim to encourage European enterprises to become more
European and more international through their various functions (production, marketing,
management, finance, promotion). By means of continuous, interactive dialogue with local
economic operators, the Euro Info Centres have thus found themselves in the front line for
translating the new dimension of enterprise policy into reality. This mission on the ground is
also in perfect synergy with the action of the Member States.

12

From this point of view, the particular activities of the EICs had a threefold mission in 1993:
greater depth, quality and performance.

As regards greater depth, the network improved the EICs' capacity to provide information,
particularly by extending and systemizing the partnership measures between the EICs and the
specialist Directorates-General of the Commission. Four specialist EIC working parties were
set up on the Internal Market, R & D, external relations and Community programmes.
Among other things, these developments enabled the EICs to play an active part in the work
of the VAT Monitoring Committee, to collaborate - on the basis of a detailed questionnaire in monitoring the effective implementation of the internal market, and to contribute directly
to the preparation of sectoral guides on the environment for enterprises. This work enabled
the DirectoratesGeneralconcerned to promote knowledge of their programmes among
businesses, through the EICs, and hence to promote greater participation by businesses in
their initiatives.

This exchange mechanism also permitted emphasis on the EICs' work of providing feedback
while promoting the circulation of targeted, advance information. Finally, it helped to refine
the work of assistance/advice offered through the EICs by encouraging the identification and
selection of the businesses affected by Community initiatives and by stimulating more
informed participation.

The extension of the network to interested third countries continued throughout the year, by
the establishment of Correspondence Centres in Budapest, Sofia, Reykjavik, Nicosia,
Ljubljana, Bratislava, Ankara and Tel Aviv.

As regards the quality of the services provided, special attention was paid to adjusting and
perfecting the information tools and to intensifying and diversifying the continuing training
programmes, with the twofold aim of achieving a more professional network and increasing
the operationality of services to businesses. The monitoring of the work of the EICs was also
stepped up and reorganized by the implementation of quality management, based directly on
the technique of mangement by objectives.

Finally, major technical changes were also made to improve both the speed of information
distribution and the efficiency of the services. In particular, the organization of a Value
Added Network (VANS) covering all Commission networks permitted a significant increase
in

13

possibilities for communicating and transferring files while ensuring greater synergy between
information and cooperation measures for the benefit of enterprises. A "hot line" was
installed to permit direct, continuous consultation between the EICs and the information
service of the central structure of the network on any question relating to Community
policies and programmes. An ad hoc database was developed from a selection of questions
which enterprises put to EICs and questions which EICs put to the central structure (a total
of 5,000 questions in 1993). Finally, a significant effort was made to promote the network in
order to stimulate a direct and systematic exchange between members themselves and with
their sub-networks (over 2500 exchanges listed in 1993).

As a result of the dynamism created by the new Community-level enterprise dimension,, the
EICs thus became talking partners valued by the Commission in its relations with SMEs,
through flexible, multi-purpose instruments. In particular, their field work ensured that
services to businesses were more flexible, faster and more systematic in 1993.

2.1.2 Development of the Social Economy EIC

The ARIES (Social Economy Information Network Association) programme of work was
implemented in 1993 in order to make available to Social Economy enterprises the
information resources specific to this sector.

ARIES covers the following activities:

Database development programme
Information products - standardization system
Seminars, demonstration networks and stands
Development of a standard ARIES member package (training, software, installation
and pilot test networks).

Demonstration sessions were held in the various member countries.

2.1.3 European Week for Business

A second Week for Business was held on 4 to 8 October 1993 to promote the measures and
instruments used by the Commission to assist businesses and encourage their use, particularly
by SMEs.

14

A series of events (lectures, round tables, open days, workshops, media campaigns, fairs and
exhibitions) were organized in the 12 Community countries aimed at SMEs, representative
organizations, local, regional and national authorities and any intermediaries concerned with
SMEs.

2,500 events were organized by members of the networks (EIC, BC-NET, BRE) with the
support and participation of the Commission in almost 600 towns. 60,000 entrepreneurs took
an active part (over 100,000 if one includes the public reached by radio and television
broadcasts).

The events related to all Community programmes and policies with the emphasis on topical
aspects of concern to small and medium-sized enterprises (VAT, environment,
implementation of the internal market, partnership, R & TD, public procurement, etc.).

The Commission's participation took the form of leaflets, posters and, in a small number of
cases, grants for the organization of certain events. Officials from a dozen DirectoratesGeneral took part in over 250 events. Several members of the Commission also gave
lectures, including Mrs Scrivener, Mr Bangemann, Mr Deus Pinheiro, Mr Matutes, Mr
Millan and Mr Vanni d'Archirafi.

In comparison with the results of the first European Week for Business in 1992, the
following conclusions can be drawn:

overall, the events were more specialised, more targeted and geared more closely to the
immediate concerns of businesses (many sessions on VAT, transport and the
environment, for example). At the same time, there were fewer big. general events.
However, these two trends do correspond to the real aim of the services of the
Commission, which is to stimulate a dialogue between specialists at regional and local
level which is as close as possible to the real concerns of businesses;

media coverage was very extensive: several hundred press cuttings have already been
listed, and the number of radio and TV recordings is up;

overall, coverage by country followed the same pattern as in 1992, with Italy the most
active country. More initiatives were seen in Germany, Ireland and Denmark, and
rather fewer in France and Greece (in Greece the decline was due to the proximity of
the general election).

A summary report comprising the comments of officials who took part as speakers, the
press, the organizers and the services of the Commission is being prepared for the purpose of
assessing the results of this Week.

15

Two examples of the most original events:

- Organization of a question and answer project with businesses from the Rhône/Alps
region, coordinated by ERAI (Entreprises Rhône/Alpes International) and the EIC
network information service. This interactive exchange, which extended over
several months, gave rise to daily publication, during the Week, of a selection of
questions and answers in the local press (one topic per day). The nature of the
questions and the diversity of questioners provided the Commission with an
exhaustive view of the needs and concerns of businessmen in the region as regards
the implementation of the internal market.

- Excellent regional coverage by several British EICs such as Leicester, Newcastle
and Liverpool, each of which organized over fifteen events and press campaigns
during the Week. Among the "capillarization" efforts (dissemination of information
at regional level), mention should also be made of the Sligo CCI in Ireland, the
Economic Chambers Liaison Committee of the Languedoc Roussillon Region
(Montpellier EIC) and the Dodecanese CCI in Greece.

2.1.4 Miscellaneous information measures

Information on the European Economic Interest Grouping

Since the beginning of January 1993 the Commission has been circulating a brochure entitled
"European Economic Interest Grouping (EEIG): the emergence of a new form of European
cooperation - report on three years' experience", setting out information and examples of the
use of the European Grouping by economic operators and particularly SMEs. Based on a
survey launched in 1991 among all existing EEIGs, this document reports on the situation
and responds to a need for practical information expressed by SMEs on the nature of this
new form of cooperation and when it is appropriate to use it.

16

Following the interest aroused by this brochure, the services of the Commission decided to
step up their action on EEIGs. A European EEIG Network (called REGIE), which will
collate practical, accurate information on all EEIGs currently in existence, is now being set
up. Ultimately, this will permit compilation of a database which can be used, in particular,
for the benefit of SMEs wishing to develop some of their activities via cross-border
cooperation, using the EEIG.

Practical guide to competition for SMEs

The Commission encourages SMEs to conclude cooperation agreements among themselves
and is particularly concerned to establish and ensure compliance with rules guaranteeing free
competition. The brochure "SMEs and competition - a practical guide", for direct use by
SMEs, provides information on essential points, specifies the mechanisms and states the
principles governing competition law at Community level. Practical examples and tables
make it easy to ascertain whether an agreement concluded with another business is legal or
whether it has to be notified for the purpose of obtaining exemption, and the measures and
procedures applicable (notification, complaints, appeals). This guide is available in the 9
Community languages simply on request.

Continued publication of Euro-Info

Euro-Info is a quick-delivery information bulletin intended for small and medium-sized
enterprises and craft enterprises. It is sent free of charge to enterprises, organizations, trade
associations and groups, BRE correspondents, members of the BC-NET network and the
EICs.

Euro-Info gives concise information on the measures and instruments set up by the services
of the Commission responsible for enterprise policy and the action taken by other
Directorates-General of concern to SMEs and craft enterprises.

Euro-Info is published ten times a year in the nine Community languages, and its circulation
will soon reach 70,000 copies. Special editions on subjects such as craft enterprises and
subcontracting are also planned in the forthcoming months, in view of their special
importance.

Mobile stands

The Commission currently has two modern mobile stands, more adaptable than the previous
one. These stands are used to represent the enterprise policy at fairs and exhibitions,
seminars and conferences for managers of small and medium-sized enterprises or craft
businesses.

17

Twelve activities concerning enterprise policy can be presented visually on a stand measuring
about 30m [2], on panels accompanied by logos and texts in the language of the country being
visited, while a smaller stand is used to display activities relating to information and
cooperation. In addition, a video clip is also shown and both general and targeted
documentation is available to the public in the appropriate language. Finally, there is always
a representative of the Commission's services on hand to give visitors further information.

During 1993, the Commission's services responsible for enterprise policy took part in some
thirty fairs and exhibitions in the countries of the European Union, and also in North Africa
(Tunisia). In all cases, thousands of visitors including many business managers were able to
improve their acquaintanceship with the Commission, and in particular with its activities to
help SMEs and craft industry.

2.2 Measures in support of businesses

2.2.1 Training and consultancy

EUROMANAGEMENT - Preparing SMEs for the internal market

The Commission continued its training activities in order to help SME managers to define a
strategy for their business as the internal market opens up. From this point of view, 1993 not
only saw the finalization of around a hundred training schemes and studies of the impact of
the large market, but also permitted the launch of the Euromanagement network comprising
training and consultancy bodies from all Member States.

On 17 May 1993 a seminar was held in Brussels, attended by 57 training/consultancy bodies
which had taken part in the work of preparing SMEs for the internal market. It had two
objectives: to evaluate all the action taken and to produce guidelines on the characteristics of
the network to be set up.

As regards evaluation, the work done enabled:

SME managers to improve their knowledge of the new opportunities offered by the
large market and to identify specific measures for seizing them;

18

training/consultancy bodies to familiarize themselves with the impact of the internal
market on SMEs and take the initiative in organizing other seminars and activities
downstream, such as establishing businessmen's clubs or marketing consortia.

The conclusions of the seminar were as follows:

the participating bodies unanimously recognized the existence of a need for training in
the process of European integration among most SME managers;

it was established that the main weakness of business managers lies in strategic
management. In order to fill this gap, it is necessary to give them access to rigorously
selected, appropriate information and to improve their ability to exploit that
information and to implement appropriate measures in an effective way;

if the network is to be able to make a useful contribution to the competitiveness of
SMEs, it must encourage the exchange of information ("success stories"), tools and
experts. It should also permit the development of new cross-border measures.

Finally, the participating bodies proposed proceeding with the establishment of the network
by stages: first, a phase in which a relatively flexible structure is consolidated, followed by
opening up the network to new interested bodies.

19

EUROMANAGEMENT - standardization, certification, quality assurance and safety at work

The Commission is pursuing two objectives with this pilot project:

to assess the impact of European standardization, certification and quality assurance on
SMEs;

to provide information and advice to support SMEs' efforts to adapt to the
requirements entailed.

Following an invitation to tender, 52 consultants were selected by the Commission in 1993 to
assess and advise 780 SMEs. In addition, an external coordinator, also selected by invitation
to tender, was given the task of developing the methodology for assessing SMEs, providing
assistance for consultants during the project and preparing a report summarizing the results
achieved by the consultants.

The project began in June with a training seminar aimed at updating the knowledge of
consultants in the field of Community policy on standardization and certification and training
them in methods of assessing SMEs.

The assessments are going well and will be completed in February 1994. The coordinator
will then be able to produce a final summary giving the Commission:

a better idea of the problems of adapting to European requirements regarding
standardization, certification, quality assurance and assurance of safety at work,
encountered by this representative selection of SMEs;

an initial indication of divergences by country and by sector.

AFNOR, the French standards institution, has been chosen as coordinator.

The Commission finances 50% of the assessment costs. Consultants are required to find
other sources of finance, either public or private, e.g. in the form of financial participation
by the SMEs assessed.

**20**

Small enterprises and craft businesses

The measures launched in this field aim to promote the adaptation of small enterprises and
craft businesses to the new parameters of the internal market.

An initial 3 year pilot plan (1991-1993) is followed by the multiannual programme (19931996).

Measures implemented under this initial pilot plan included:

invitations to tender issued in 1991 and 1992 following recommendations made by the
European Conference on Small Enterprises and Craft Businesses and the monitoring of
the performance of the 25 contracts awarded;

organization of the 2nd European Conference on Small Enterprises and Craft
Businesses and 11 preparatory symposia.

In 1993 the main focus was on:

preparing the 2 preliminary symposia (Luxembourg and Rome) for the 2nd European

Conference;
launching the 2 pilot projects concerning meetings of experts from professional
organizations and exchanges between businesses;
preparing SME/craft business guidelines in the Poseidom programme;
issuing an invitation to tender concerning frontier zones;
preparing an invitation to tender concerning cooperation between small enterprises.

Pilot project on vocational training for craftworkers

The purpose of this project, launched in 1990, is to provide young craftworkers with
vocational training to enable them to pursue an occupation in their country of origin or
ultimately to set up their own business. Forty five young people were selected from Greece,
Spain and Portugal, aged 16 to 20 years, who had completed compulsory education in their
country.

These young people receive three to three and a half years' vocational training in Germany
under the "dual" system (alternating periods in training centres and on the job). The training
was preceded by a six-month language course.

21

Several meetings have taken place:

the fourth meeting to assess the pilot project was held in Ohlstadt (Germany) on 18
March 1993, attended by representatives of the young people, master craftsmen, trade
organisations of the countries concerned and the German institution in charge of the
project;

a seminar on cooperation between European craft enterprises in the vocational training
sector (Ohlstadt, 19 March 1993) was attended by the same participants and by
entrepreneurs from the countries concerned;

a conference on "Training for Business Managers" (Luxembourg, 15/16 November
1993) was arranged when the pilot project was presented (140 participants attended).

This is the only Commission project which aims to provide full craft training in a foreign
country.

In this third year, 28 young people are continuing the experiment, which corresponds to the
success rate for their fellow trainees from Germany.

The pilot project is co-financed via the PETRA programme.

2.2.2 Finance

Seed capital

1993 was the fourth year of the Pilot Plan, which covers a five year period (1990-1994) and
aims to encourage the establishment of businesses in the Community and improve new
businesses' chances of survival. 24 seed capital funds were selected by an invitation to
tender. These received reimbursable advances to fund 50% of their operating costs over 5
years and 15 of them additionally benefited from capital contributions.

Investment activity slowed down in 1993 as a result of economic problems.

Three new members joined the network. Several events were organised:

Seville (27/28 May 1993) - 7th network seminar - 55 participants: "The role of the
public sector in early stage investment"

**22**

Brussels (2/3 December 1993) - 8th seminar - 150 participants "Investment in
enterprise creation and growth: raising funds - co-financing    - withdrawal".

The Article 4 Committeee was informed of the progress of the pilot action at its meetings in
February and July 1993.
A progress report was submitted in January 1993.
The Warwick Business School carried out an external assessment in 1992.

After almost four years, the pilot plan has produced the following results:

the 24 seed capital funds disbursed a fund of 40 MECU of which 57 % were provided
by private sources, 37 % by public regional sources and 6 % by the Commission;
20 MECU was invested by the funds in the creation of 187 new enterprises;

161 enterprises of the 187 created were still active at the end of 1993 representing a
failure rate of 14 % over 4 years;
they created 1706 direct jobs and a further number of indirect subcontracting jobs;
75 % of the jobs went into advanced technology sectors.

Mutual guarantee societies

The second congress of the European Mutual Guarantee Association was held in Hamburg on
5 and 6 October 1993. Some 300 people from the Community and from third countries took
part. As a result of this congress, both officials from SME development institutions and
associations representing SMEs were made aware of the role that mutual guarantees can play
in improving SME finance.

The results of a recent comparative study on mutual guarantees and SMEs were presented,
together with a pilot project, with the object of creating a mutual guarantee system in
Portugal. This project is being run in close collaboration between IAPMEL, AECM and
IMPI.

2.2.3 Access to markets

Euromarketing

The purpose of this study (launched via an invitation to tender published in the OJEC of
26.6.91) is to help SME managers to define an appropriate marketing strategy for their
businesses in the context of the internal market.

**23**

EUROMARKETING objectives

To examine marketing policies pursued by SMEs and ways of adapting their methods to
the changing commercial environment.

To identify an optimum Euromarketing strategy for SMEs wishing to seize the new
opportunities offered by the large market.

To draw up a guide for SME managers to help them define their own Euromarketing
strategy.

The study was completed in 1993 and its conclusions were presented in the form of two
documents:

a final report and a summary for the Commission. The latter document - which is to be
widely circulated among Member States' public authorities and bodies - contains the
study's main conclusions and puts forward some suggestions:

for businesses, to enable them to implement a Euromarketing strategy, and

for the Commission and public authorities, to enable them to make a useful
contribution to SMEs in this area.

a guide for SME managers, setting out the details of a Euromarketing strategy,
illustrated by numerous case studies. The guide is intended to give the business
manager some ideas and help him define the most appropriate marketing policy for his
business in the context of the internal market.

Helping SMEs to work with central and eastern Europe

This action is intended to help Community SMEs to find new markets in central and eastern
European countries.

By means of a pilot action launched in 1993, the Commission aims to promote joint action to
compile, disseminate and exchange information and know-how concerning foreign trade,
investment and cooperation: seminars, conferences, staff exchanges and information tools.

**24**

The invitation to tender was finalized in September 1993. 11 contracts were awarded. 10
further contracts are to be awarded subject to an additional budget appropriation.

SMEs and public procurement

In order to improve the opportunities for SMEs to access public procurement markets, the
Commission has commenced work on the preparation of a work programme in order to
insure a follow up of the broad lines of approach indicated in the Communication "SME
Participation in Public Procurement in the Community" - SEC(92) 722 final.

The majority of the considerable amount of preparatory work undertaken has involved the
further examination of obstacles to SME participation already identified and to define all
credible options for action. Consideration has also been given to the effective use in relation
to this problem of the new Community financed instruments agreed by the European Council
in Edinburgh and Copenhagen, as well as the structural and cohesion funds among others
concerned with the development of a certification and testing infrastructure in the less
favoured regions. The Commission's services have launched studies into how to improve the
overall availability of information on the public procurement market, not least through the
information and technical assistance to enterprises network. In this context some of the Euro
Info Center have developed a specialisation in public procurement.

A call for tender has been launched involving the analysis of irregularities in tender notices
published in the Official Journal. In addition preparations are well advanced for a further call
for proposals on the writing of a practical guide to management on effective preparation for
participation in public procurement markets.

A Seminar on SME access to public procurement was organized by the Commission services
on 14/15 January 1994, which was attended by representatives from a broad range of
organizations, public, semi-public and private.

The Advisory Committee on Public Procurement was consulted on these tasks, most recently
on 13 October 1993.

**25**

2.2.4 Technology

SMEs and Community RTD activities

A Commission communication to the Council entitled "SMEs and Community research and
technological development (RTD) activities" was adopted by the Commission on 30.9.93 and
submitted to the Council on 11.11.93.

This document was intended to summarize the situation of SMEs in relation to Community
RTD programmes, and to state the progress achieved and adjustments to be made in order to
increase participation by SMEs.

Between 1.1.1987 and 31.12.1991, only 1140 enterprises with fewer than 500 employees (or
11% of all participants and 13% of the total budget) took part in Community RTD
programmes, excluding information technology. As a result, the Fourth Framework R & D
Programme (FRDP 1994-1998) should bring about a substantial increase in SME
participation in its programmes, among other things by the extension to other research topics
of the system of feasibility/expansion awards, devised under BRITE/EURAM.

Following the adoption of this document, the Commission set up a working party to improve
coordination of the various departments' action concerning SMEs in the context of
Community research.

EUROMANAGEMENT RTD II

After consulting the Advisory Committee on Enterprise Policy (Article 4 Committee), the
Commission decided to launch a second phase of the RTD Euromanagement pilot action in
1994. This new action will aim to identify a substantial number of SMEs (some 1500) which
can take part in calls for tenders under the Fourth FRDP concerning information
technologies, industrial and scientific technologies and bio-technologies. It will also focus
special attention on the exploitation by SMEs of the results of Community RTD.

VALUE-SME pilot action

This action aims to promote the transfer of innovations from Community R&D programmes
to SMEs. The object is to improve the exploitation and dissemination of Community research
results.

26

EXPLORATORY AWARDS: allowances designed to cover travel costs (and directly
associated expenses) incurred by SMEs seeking to conclude a technology transfer
agreement on the basis of Community research results (up to 75% of the actual costs:
Maximum: ECU 7,000).

TECHNOLOGY EXCHANGE AWARDS: allowances designed to cover all costs
(labour, general expenses, equipment, etc.) associated with the assessment of the
feasibility of transferring and using a technology (up to 50% of the actual costs:
Maximum ECU 100,000).

During 1993:

10 contracts were signed for exploratory awards worth a total of ECU 42,000.

5 contracts were signed for technology exchange awards worth a total of ECU
270,000.

10 VACRO-DAYS (Value Crossroads Days) were organised to promote the results of
Community research among SMEs (5 on the ESPRIT programme, 2 on the BAP programme
and 2 on BRITE/EURAM).

HI. PROMOTION OF COOPERATION AND PARTNERSHIP

3.1 The Business Cooperation Network (BC-NET)

Structure of the network

On 15 December 1993 the network had 571 members (advisers and intermediaries). 539 of
them are located in Member States and 32 in 24 non-member countries.

This situation is the outcome of the non-renewal of memberships which were not very active
at the end of 1992 and the selection of new candidates by a call for proposals published in
the Offical Journal in January 1993 (93/C17, 93/S15 of 22.1.93).

These regular revisions of the composition of the network improve its quality while ensuring
that it remains sufficiently large.

**27**

On 15 December 1993 the situation was as follows:

Belgium 35 Italy 91
Germany 91 Luxembourg 3
Denmark 16 Netherlands 28
Greece 35 Portugal 22
Spain 63 United Kingdom 67
France 78 Non-member countries 32

Ireland 10

The gradual opening of the BC-NET to non-member countries, making it possible to monitor
and benefit from the internationalization of the economy, continued.

The membership agreements of Canada and Morocco were officially signed on 2 July 1993
at the annual Conference, PARTENARIAT '93. This extension gives the BC-NET a
stronger presence in the Mediterranean area and an initial foothold in North America. It
currently has a presence in 24 non-member countries.

Activity of the network and results

In 1993, the Central Unit recorded 10 053 CPs ("cooperation profiles"), or an average of
838 CPs per month.

Although the bulk of cooperation requests were still commercial (60.7%), there was a slight
increase in requests for technical cooperation (27%) at the expense of financial cooperation
(6.8%) compared with 1992.

The breakdown of cooperation requests by sector of activity is also stable, with the
manufacturing sector still dominant (65% of requests as at 30 November 1993 compared
with 64% as at 31 December 1992).

Activities of the Central Unit

a. Specialized working parties and sub-networks

The Central Unit set up a working party comprising BC-NET financial bodies. This working
party met in January 1993.

A "Flash Profile" working party also met in January 1993. Its work led to the establishment
of a selective distribution system for FPs.

A "Training" working party met in February 1993. A training programme was redefined on
the basis of its conclusions, presented to the Advisory Working Party for Monitoring in
March 1993.

28

Finally, a "Public Procurement" sub-network is being set up.

b. Advisory Working Party for Monitoring

The Advisory Working Party for Monitoring met in March 1993. As a result, it was decided:

to step up support for members, in particular by continuing the quality management

programme;

to implement a further promotion programme;

to optimize the efficiency of the network (public procurement, amendment of the Code
of Practice, extension to non-member countries).

c. National meetings

In the first half of 1993, BC-NET organized national meetings in Ireland and Denmark, plus

- in connection with Europartenariat - a national meeting in Lille, France (June 1993) and a
meeting of British and Irish members in Glasgow, Scotland (December 1993) [2] .

In addition, the Swedish and Finnish NCPs ("national contact points") arranged a meeting of
their sub-networks, which was attended by the Commission services responsible for
enterprise policy.

Other national meetings, organized jointly by the Central Unit and the members concerned,
are planned in each Member State. The first of this series was attended by Belgian and
Luxembourg members in November 1993.

d. Annual conference

This year, the annual BC-NET conference was extended to the other cooperation activities
promoted by the services responsible for enterprise policy. The conference, entitled
"Partenariat '93 - The dynamics of growth", was attended by BC-NET and BRE members
plus the main partners concerned with Europartenariat, Interprise and Subcontracting.
Altogether, some 744 participants attended.

In December 1992 a Europartenariat meeting of Italian members was organized at Bari.

29

e. Training

Following selection of the new advisers, an initial series of BC-NET training sessions was
organized in the various Member States (11 national training sessions) in May and June
1993.

Training sessions were also organized for the new NCPs in Argentina, Canada, Chile,
Hungary, Morocco, the Philippines, the Czech and Slovak republics and Uruguay, and their
sub-networks.

Supplementary training sessions were organized for the Swedish and Finnish NCP subnetworks and for other members with sub-networks.

A second series of 26 training sessions open to all members began in the fourth quarter of
1993. The training material was fully updated on this occasion.

f. Charges

Charges came into force on 1 January 1993 for Community members [3], which meant that they
had to sign an additional agreement [4] .

g. Quality management

The quality improvement policy continued through various measures, including:

the introduction of charges

renovation of the network with the new selection procedure, including a personal
interview with candidates whose file merits additional information

stepping up the training programmes.

They already applied to the EFTA countries, Israel, Turkey and Australia.

For new members the additional clause is incorporated in the BC-NET agreement.

**30**

The Central Unit has now started a programme of measures to improve operations. In this
context, it launched a Quality Help Desk in the second half of 1993.

h. Use of BC-NET [ f] *• technological innovation

Two measures were launched in connection with adapting BC-NET to technological
innovation:

a short-term project to place certain authorized technical and technological CPs in a
database which can be consulted interactively and accessed via VANS;

a long-term project to review the foundations of the BC-NET system, in particular as
regards requests for technical and technological cooperation.

i. Development of applications - BRS and VANS installations

All the above activities are supported by data-processing developments. Apart from
maintenance of existing applications, several developments were carried out in 1993:

version 4.1 of the BRS software for sub-network members was successfully brought
into service by over 30 intermediaries;
a program known as RPS, which helps members to prepare their half-yearly activity
reports, was produced in 1993;
the BC-NET team developed a consolidated database on the services responsible for
enterprise policy networks (this was used to prepare the consolidated directory of BCNET networks distributed at the European Week for Business, which took place from 4
to 8 October 1993);
a program enabling the Central Unit to charge its members from 1993 onwards was
developed in 1993.

The BRS and VANS installations continued: since 1 January 1993, 42 new BRS installations
have been completed. The Central Unit also arranged a dozen VANS installations and seven
training courses in the use of the services offered by VANS.

31

3.2 Business Cooperation Centre (BRE)

During 1993 the BRE evaluated the results achieved by the qualitative and quantitative
improvements carried out in 1991 and 1992.

The network currently has 412 correspondents in 54 countries.

The 6,580 cooperation profiles received and the continual applications for membership of the
network from new organizations bear witness to the increasing importance and success of our
work.

At the same time, other measures to improve and stimulate the instrument have been set up.

The measures adopted during the year followed the development projects already begun
during 1991 and 1992 and are evolving in three basic areas:

Technical and operational improvement of the network

The computer system was improved.

Working documents were finalized. The work of drafting more detailed information guides,
one for use by correspondents, the other for businesses, was started some while ago.

As regards translation, operational improvements were made and a project is under
consideration for translating advertisements automatically into all Community languages to
speed things up.

Qualitative improvements and enlargement of the network

Members of the network were "evaluated" on the basis of their individual activity in terms of
cooperation offers sent, advertisement circulation capability and participation in the various
network activities.

A "survey" was conducted among correspondents in order to obtain statistics relevant to the
development of the network and to stimulate reactions and/or suggested improvements.
Points covered by the survey included the way in which correspondents work at sectoral or
geographical level, the monitoring of contacts made for clients, and distribution and
promotion methods and techniques.

**32**

A new half-yearly activity report form was made available to network members.

Enlargement continued within the Community and outside. In particular, apart from new
Community members, Costa Rica, Uruguay, Algeria, Lebanon and the Occupied Territories
joined the network during 1993. It is planned to complete geographical coverage for the
Mediterranean and Latin American countries under the MED-INVEST and LA-INVEST

programmes.

Stimulation and leadership of the network

A newsletter on cooperation continues to be produced.

Two closed monitoring meetings were organized.

The plenary meeting was held in Brussels on 1 and 2 July 1993 during the Conference
on Cooperation.

National meetings for French, British and Irish members were organized during the
"Lille" and "Scotland" Europartenariats. Meetings were also organized in Denmark and
Ireland in order to stimulate the activity of members in those countries.

3.3 Europartenariat and Interprise

3.3.1 Europartenariat

Europartenariat, a programme run jointly by the Directorate-General for "Enterprise Policy,
Trade, Tourism and Social Economy" and the Directorate-General for "Regional Policies"
aims to stimulate the development and growth of a less favoured region [5] by cross-border
SME cooperation. The method of arranging Europartenariat events is set out in Annex 2.

Objective 1, 2 or 5b regions.

**33**

**a)** **Analysis of events in 1993**

**Since 1991 the number of events has risen to two per annum.**

_**"Europartenariat North-East**_ _**France"**_

**In 1993, Europartenariat held the Lille event for objective 2 regions:** **Nord-Pas-de-Calais.**
**Picardy.** **Champagne-Ardenne** **and Lorraine. The aim was to promote cross-border**
**partnership between SMEs from the four regions of northern and eastern France and SMEs**
**from Community countries, the Mediterranean perimeter, central and eastern Europe**
**(CEECs) and EFTA.** **,**

**Also,** **under the policy on opening up regions where development is lagging behind, Corsica**
**and the Overseas Departments (Guadeloupe, Martinique, Guyana and** **Réunion)** **took part in**
**the Lille event as host regions.**

**The North-East France Europartenariat was the largest event** **ever** **organized in Europe for**
**inter-firm cooperation, with numerous visiting firms from non-member countries (EFTA,**
**CEECs, Mediterranean countries).**

**At Lille the proportion of listed enterprises concluding cooperation agreements can be**
**expected to exceed 40%. The agreements concluded cover a very wide range (financial,**
**technological, subcontracting and patent agreements, etc.), thus confirming the pattern which**
**has been emerging since the Leipzig Europartenariat in 1991.**

**The figures on the "North-East France Europartenariat" can already be summarized as**
**follows:**

**Number of French businesses selected from North-East: 414**

**Number of businesses selected from Overseas Departments: 63**
**Number of businesses selected from Corsica: 18**

**Number of participating countries: 42**
**Number of visiting businesses recorded:** **1,768**

**Number of meetings requested: 10,650**
**Average number of meetings per French business: 21**

**34**

_"Scotland''_ _Europartenariat_

"Scotland" was the 9th Europartenariat. Altogether, 1,259 visiting businesses from 55
countries - including 626 from the Community - were in Glasgow on 13 and 14 December
1993.

Businesses from North America (United States and Canada), China and the Occupied
Territories took part in this event for the first time.

Some 6,000 meetings were pre-planned with the 334 Scottish businesses selected.

The largest sectors represented were agri-foods, textiles and made-up goods, commercial
services and training, electricity, electronics, optics and opto-electronics.

The initial reactions of the participants testify to perfect logistical organization and excellent
quality business contacts.

b) Programme development

_Quota_ _system_

The quota system was tested for the first time at the "France North-East Europartenariat".
Each national adviser has to arrange the participation of a certain number of businesses in the
event, the number being calculated in proportion to the budget submitted to the principal
contractor. This system not only guarantees that a minimum number of Member States'
businesses will be present, but also ensures additional commitment on the part of national
advisers.

_Internationalization_

The programme is open to the EFTA countries and those of central and eastern Europe.
Thus, PHARE co-finances promotions and business missions organized by national advisers
from those countries.

Similarly, the MED-INVEST programme facilitates support for this type of activity for
advisers from countries bordering the Mediterranean.

_Monitoring_

It is planned to step up the monitoring of events. Thus, a supplementary report will be
requested from the principal organizer one year after the event. This evaluation forms an
integral part of the work programme of the principal organizer and the national advisers.

35

_Structuring_ _effects_

It must be stressed that Europartenariat acts directly on the following points:

improving or developing the image of the region concerned;
the important role of the partnership strategy;
increasing SMEs* awareness of the opportunities offered by the single market;
the need to internationalize business.

_Next_ _events_

The next events will be held in:

Poland: Gdansk, 9 and 10 June 1994;

Spanish Basque country: Bilbao, 21 and 22 November 1994.

3.3.2 INTERPRISE

The purpose of the INTERPRISE programme (Initiative to Encourage Partnership between
Industries and/or Services in Europe) is to support local, regional and national measures
throughout the territory of the Community which are aimed at stimulating direct contact
between businessmen in order to develop cooperation agreements between small and
medium-sized enterprises.

The INTERPRISE objectives and methodology are based on the operation of
Europartenariat, but on a larger scale, involving industrial and developed regions as well as
assisted regions. Projects have to include at least three regions of three Member States of the
Community, although they may extend to regions outside the Community.

Annex 4 provides details of how INTERPRISE events are organized.

This programme facilitates:

cross-border cooperation for small and medium-sized enterprises and guidance with a
view to training them and encouraging them to form partnerships;

36

by means of joint action on the part of the regions, cooperation between trade
organizations, chambers of commerce and industry, development agencies promoting
economic development and the efficient operation of the internal market and the private
sector;

greater contact between businessmen, organizations and political institutions;

the establishment of direct contact between Community measures and businesses,
which can thus be aware of the existence of specific programmes of interest to them, in
particular for the purpose of exploiting the opportunities of the large market.

44 projects involving 290 regions were approved in 1993.

_Participation_ _by_ _Member States_

These projects represent a total of 47 events distributed as follows: France hosted 14 events,
Italy 9, Spain 4, the UK, Germany and Belgium 3, Greece 2, the Netherlands 2, Denmark,
Ireland and Portugal 1. Outside the Community, Poland, Hungary, the Czech and Slovak
Federation and Malaysia each hosted an event.

However, if we analyze the number of co-organizers per project we find that all member
countries play a balanced part in the various projects: France (27 participations), Germany
(22), Spain (22), Italy (21), UK (18), Belgium, (13), Netherlands (13), Denmark (8),
Portugal (7), Greece (7), Ireland (4) and Luxembourg (1).

As regards participation by non-Community partners (EFTA, CEECs, Baltic countries,
Malaysia), the involvement of Sweden (3 times) and Poland (5 times) is particularly
noteworthy.

For example, the "Euro-Malaysian Partnership Days" INTERPRISE has already resulted in
preparation of joint ventures in electronics and motor vehicles, and trade agreements have
reached an advanced stage of negotiation, particularly for pharmaceutical instruments and air
conditioning, in liaison with German, British, Italian and Dutch firms.

_Principal sectors_

Agri-foods, electronics, chemicals, environment, metals, textiles, building, services and
timber were the most popular sectors for cross-border cooperation in 1993. Some

**37**

projects are highly specialized, such as the one on composite materials which led to the
signing of 5 R & D CRAFT dossiers.

_Synergy between instruments_ _on_ _enterprise_ _policy_

EIC: nine Euro Info Centres presented INTERPRISE projects in 1993 and 32 EICs took part
as co-organizers.

BC-NET: the projects sometimes incorporate the use of BC-NET in their methodology in
order to improve the "Arrangement of meetings" phase.

_Quantitative evaluation_

Over 5,500 businesses took part in various events in 1993, while the figure for 1992 was
around 4,200.

An overall evaluation of activities in 1993 is in progress. Attention should be drawn to the
results of a survey based on a questionnaire sent to organizers of projects held in September
to December 1992. The questionnaire, launched in February 1993, related to the outcome of
meetings during the 3 months following the event. The results are as follows:

Number of participating firms: 1876
Number of meetings: 9247
Contracts already signed: 68

_EC-China_ _Seminar_ _(Antwerp._ _6-8_ _December 1993)_

Finally, it should be mentioned that a seminar accompanied by business meetings was
organized for the first time between the Community and China.

The aim was to point out means of access to the Chinese market and to develop cooperation
between SMEs. Thus, 40 Chinese businessmen had a large number of meetings with some
sixty Community businessmen in areas such as magnetic telephone cards and meat
processing.

3.4 Subcontracting

The growing importance attached to subcontracting in the Community was reflected in the
prominent position of activities to promote it in the Council Decision of 14 June 1993 and in
the emphasis placed upon it by the European Parliament in its Resolution on subcontracting.

**38**

In this context, the Commission decided to step up current coordination measures and
develop a range of promotion measures.

Moreover, the guidelines of the Pan-European Forum on Subcontracting, held in Madrid on
14 and 15 December 1992, have been implemented, particularly in the priority areas of
transparency and cooperation networks.

_Improving_ _the_ _transparency_ _of the_ _European market_ _in_ _subcontracting_

Following analysis of the surveys of the economic importance of subcontracting in all
Member States, which showed the need to achieve greater transparency in the subcontracting
market, the Commission continued the statistical exercise in direct liaison with national
statistical institutes and trade organizations. The first phase of this exercise, which aims to
add a subcontracting section to existing statistical instruments, relates to five areas of activity
(motor vehicles, aeronautics, building, textiles/clothing and electronics), for which the
crucial role of subcontracting was demonstrated by the economic surveys.

The Commission is also making the necessary arrangements for regular updating of the
practical guides to the legal aspects of subcontracting, and is examining whether a European
subcontracting contract should be drawn up.

_Communication_ _and_ _improved cooperation between_ _main_ _contractors_ _and_ _subcontractors_

The Commission is pleased with the obvious interest in its subcontracting information policy.
In response to specific requests it sent out some 10,000 documents published by its
departments during the period following the Pan-European Forum in Madrid.

_Quality control_ _and_ _certification_

The Commission also actively supports and participates in an initiative by trade organizations
aimed at mutual recognition of certificates, which should result in the establishment of a
widely accepted code of practice.

On the basis both of the initiatives launched and of the further encouragement from the
Council, the Parliament and trade organizations or subcontracting intermediaries, the
Commission decided to develop a framework of measures to promote subcontracting in the
Community. In view of the increasing importance of well-organized, structured
subcontracting in new inter-industrial relations, its encouragement is a strategic choice for
improving the competitiveness of businesses and hence the growth of the Community

economy.

39

Thus, in order to respond to businesses' growing need for practical measures on
subcontracting, the Commission is carrying out measures to encourage the networking of a
number of subcontracting exchanges and databases in the Community. This decentralised setup will aim to provide businesses with various types of information, e.g. on market
situations, public contracts and legal, technical and certification questions.

In addition, the pilot programme to promote the competitiveness of subcontractors in the
consumer electronics sector was launched at a conference in Brussels on 24 and 25 March

1993, attended by a large number of key figures and businessmen from this sector in the
Community and Japan. A first phase of this programme, comprising a study mission on the
organization of this sector in Japan, has already succeeded in encouraging the use of best
practices by European components producers.

**40**

IV. POLICY ASSESSMENT AND DEVELOPMENT

4.1 Improved knowledge of SMEs

4.1.1 Statistics

The work aimed at obtaining the most recent picture possible of the European enterprise
population, conducted in collaboration with Eurostat, continued with the emphasis on using
existing sources of information.

The European Statistical System on SMEs, i.e. the data on enterprises broken down by size,
was updated (it now contains figures for 1988-1991) and extended to other countries (it
currently covers 22 countries), sectors of activity (the whole economy except agriculture is
now covered) and size classes (it now comprises nine employment classes, and some
countries have supplied data broken down by turnover). The latest figures which it
incorporates are of better quality than before, partly as a result of the methodological
documentation carried out by national statistical institutes.

Research on the construction of a system of cyclical indicators proved fruitful in the three
areas studied, namely demography, employment and output. As regards demography, several
countries already have information on business creations and cessations and are even able to
calculate survival rates. As regards the other two areas, the initial results seem to show that
SMEs follow a separate cyclical trend from that of large companies.

This progress is now being utilised to produce "Enterprises in Europe - Third Report",
scheduled for publication early in 1994.

41

4.1.2 Definition of SMEs

This question underlies all measures to assist SMEs.

Following its 1992 Report to the Council [6], the Commission continued to work with the
Statistical Office on producing updated ratios between the various recommended definition
criteria: turnover, number of employees and balance sheet total.

An update of the list of definitions used in Community measures has been launched.

4.1.3 European SME observatory

Following its launch on 10 December 1992, the European SME Observatory sent the
Commission an initial, independent report on the situation and prospects of small and
medium-sized enterprises in the Community.

This first annual report provides a considerable quantity of useful data, accompanied by a
number of policy recommendations. Since the prime objective of the Observatory is to
provide an overall, horizontal and coherent view of subjects relevant to SMEs, this report
may become a basic reference document for those responsible for enterprise policy and SME
development both at regional and national level and at Community level. In particular, this
report - like those to follow - may be an important source of information on the development
of different types of SME and the conditions under which they operate, and the information
in this report is of considerable potential value for assessing the effects of the implementation
of the single market on small and medium-sized enterprises.

In order to help initiate a general discussion on subjects relating to small and medium-sized
enterprises, the Commission decided to publish its own comments on the Observatory's first
annual report [7] and forward them to the Council, the European Parliament and the Economic
and Social Committee.

In particular, since the main aim of Community action is to ensure a high value added for
Community enterprise policy and to help to relaunch economic activity in a context of
growth generating more jobs, the Commission is pleased to note the convergence between
the analyses, conclusions and recommendations of this report and the guidelines adopted in
the

6 SEC (92) 351 final of 29.4.1992

COM (93) 527 final of 5 November 1993

**42**

new programme of Community measures to intensify the priority areas and ensure the
continuity and consolidation of its policy for enterprise [8] .

4.2 Policy development and preparation of new projects

4.2.1 Commerce and distribution

Commerce 2000

The Commerce 2000 programme aims to promote cooperation links between SMEs by using
modern management methods and new technologies in the commerce and distribution sector.

The programme relates to a number of pilot projects, conferences and project assessments in
connection with a call for tenders launched in 1991 (OJEC 1991 C 209). 11 pilot projects
involving aid worth ECU 1,789,000 were completed in 1993.

An Evaluation Conference was held in Brussels on 14 and 15 June 1993: the completed
projects and their assessment were presented to over 300 participants (businessmen, trade
representatives, officials and the press). A summary of the speeches was produced and 2000
copies were distributed.

A group of professionals and officials from the Commission met after the conference on 14
and 15 June 1993 to assess the resulting action to be taken in the course of the second
initiative.

An Evaluation Report on the first initiative was produced by Deloitte & Touche: "Evaluation
of the Commerce 2000 Programme" dated 30 June 1993.

There was a request for the expression of interest in feasibility studies, and a call for tenders
was issued for pilot projects (OJEC C277/20 of 15.10.1993) for the purpose of continuing
this action, stressing its aim of encouraging cooperation between commercial SMEs
(feasibility studies) and the exemplary way in which they are carried out (project subsidies).

Council Decision 93/379/EEC of 14 June 1993, OJ L 161 of 31 July 1993

**43**

Example of a project under Commerce 2000

The Scheins company (D) conducted an original experiment in cross-border liaison: this
wholesaler is now linked to its suppliers and retailers in the horticultural sector in two
neighbouring countries (L and B) by a bilingual data exchange system (French and
German): this software, which is applicable worldwide, speeds up trade and promotes the
volume of business between partners (total investment cost: ECU 93,000 including ECU
30,000 in Community aid, or 32.3%).

Trade statistics

The main activities are:

Publication : " Retailing in the European market of 1993 ".

This work was submitted to government experts and the Committee on Commerce and
Distribution in February. A mailshot was sent out to over 1200 European commercial
operators to advertise this publication, which was also sent to over 300 representatives
of the trade and the competent authorities.

This publication has been very successful and there have been requests to extend the
study to wholesaling.

Pilot study on forms of selling in Community retailing.

The initial conclusions of the study were presented in the form of a provisional report
in October 1993 (the report will be produced and circulated only in its final form).

Since the existing information does not correspond adequately to current demands, the
Commission has planned a statistical annexe on "commerce" in a regulation on the
structural statistics of enterprises.

Many meetings of statistical experts and a joint meeting between government and trade
experts (GCI/CCD) were held on this subject and led to agreement in principle on the
draft regulation. The need for harmonization was recognized. There was a request that
SMEs should be suitably taken into account by simplifying the questionnaires; "more
rapid implementation of the Commission initiative" was requested.

**44**

Studies on commerce

Over 1,000 copies of five studies completed in 1991 were circulated in 1993. These were
studies on franchising, bulk-buying organizations, new commercial intermediaries, the
impact of new technologies and forms of internationalization.

Two new structural studies were presented on 5 February 1993 at a joint meeting between
government (GCI) and trade (CCD) experts. They concern:

foreign investments in the wholesale and retail trade in the EC (300 copies of the study
circulated in October 1993);

the trend in forms of commerce in the EC and the United States (to be circulated).

A request for a declaration of interest was issued as regards studies on commerce and
distribution (OJEC no. C 123/15 of 5.5.93), followed by two restricted invitations to tender
concerning:

production of 4 brochures on national and Community legislation of direct concern to
commerce: commercial town planning, freedom of establishment, consumer protection
and competition.

trade missions relating to central and eastern Europe: formation of groups of experts
representing the distribution sector in the Community, in order to establish contacts
between businessmen and officials of the EC and the CEECs (cooperation between
operators, support for the creation of trade associations).

The presentation of each year's studies at a joint meeting between government (GCI) and
trade (CCD) experts, to which the press was invited, was very successful and resulted in a
request that the subjects be examined in greater detail.

Circulation of these studies generates the same type of positive reactions.

45

Execution of the work programme

As requested by the conclusions of the Council of 30 June 1992, submitted to the
Commission (Bull. EC 6-1992, no. 1.3.58), a Report to the Council on the progress of the
work programme in the field of Commerce was prepared.

This report aims to analyze the sector's needs in terms of adjustment to the realities of the
single market, in order to redefine the guidelines for Community action and report on the
measures taken.

It was submitted for consultation to government experts, members of the CCD and the other
Commission departments, and to the heads of Member States' Departments of Trade. It
should be included on the agenda of the Council in the second quarter of 1994 under the
Greek Presidency.

4.2.2 Cooperatives. Mutual Societies and Associations Statistics

After the Commission services had sent out a questionnaire in 1992 to associations and
foundations in the 12 Member States, and in view of the large number of replies (2300), the
Social Economy Unit had to call in an outside agency to encode, process and analyze the
replies. The ISG - Sozialforschung und Gesellschaftspolitik company was commissioned to
do this work.

The SPSS (Statistical Package for the Social Science) data processing system which they
intend to use has the advantage of permitting an exchange of information with the John
Hopkins University - Institute for Policy Studies, which is conducting a parallel and
complementary study on the association sector. The MS-DOS data bank will be readable and
compatible with the systems used by the Commission and most external bodies with which it
is in contact, while preserving the anonymity of replies.

The final report was submitted on December 1993.

Classification of social economy enterprises

The Commission ordered several studies to facilitate access for social economy enterprises to
means of financing their investments. These studies led to practical measures to set up a
financial package. It is now essential to identify the most efficient operators in the sector in
order to establish the said financial package on an ideal basis (investor confidence).

46

This was the reason for the initiative entitled "Classification of the 500 largest enterprises
and the 500 most dynamic enterprises in the social economy of the European Community" in
December 1992.

The Social Economy needs to be given a positive image by being presented from two
viewpoints which demonstrate its competitiveness and by selecting 1,000 competitive
enterprises from the social economy, to describe their strong points and potential, publicize
them and quantify their performance. The contractor was selected on the basis of a call for
tenders.

The final report is to be submitted by 30.6.94.

**47**

ANNEX 1

**LIST OF PRINCIPAL TEXTS ADOPTED IN 1993 RELATING TO THE**

**COMMUNITIES'** **ENTERPRISE POLICY**

**COMMISSION**

Proposal for a Council's decision on Community membership of the European
Investment Fund

OJ. C 37 of 11.02.93

Communication from the Commission of 30 September 1993 - SMEs and Community
activity in research and technological development.
COM(93) 356

Communication from the Commission of 5 November 1993 - the European Observatory
for SME comments by the Commission on the first annual report (1993).
COM(93)527

Communication from the Commission of 10 November 1993 on the financial problems
experienced by SMEs.
COM(93)528

Proposal for a Council decision on the provision of Community interest subsidies on
loans for SMEs extended by the EIB under its Temporary Lending Facility.
COM(93)577 11.11.93

**COUNCIL**

Council decision of 14 June 1993 on a multi-annual programme of Community measures
to intensify the priority areas and to ensure the continuity and consolidation of policy of
enterprise in the Community, in particular for small and medium-sized enterprises.
O.J. L 161 of 02.07.93

Presidency Memorandum SMEs: Driving force of European growth (October 1993).

**48**

Council Resolution of 22 November 1993 on strengthening the competitiveness of
enterprises, in particular of small and medium-sized enterprises and craft enterprises,
and developing employment.
O.J. C 326 of 03.12.93

Conclusions of the European Council in Brussels on 10 and 11 of December 1993
encouraging the creation of a tax, financial, and administrative environment favourable
to SMEs.

**EUROPEAN PARLIAMENT**

The opinion of the European Parliament on the Commission proposal for a Council
decision on a multi-annual programme (1993-1996) of Community measures to intensify
the priority areas of policy for enterprise, in particular SMEs in the Community.
OJC 150 of 31.05.93

Resolution of Parliament on the Commission communications: "Towards a European
sub-contracting market" and on "The participation of SMEs in public procurement in the
Community".
O.J. C 150 of 31.05.93

- Report of 31.03.93 by Mr Robert SPECIALE, Member at the EP on sub-contracting.
Session document of EP N° 203.858./final

**ECONOMIC AND SOCIAL COMMITTEE**

Opinion of the Economic and Social Committee on the proposal for a Council decision
on a multi-annual programme (1993-1996) of Community measaures to intensify the
priority areas of policy for enterprise, in particular SMEs, in the Community.
OJ. C 161 of 14.06.93

Opinion of the Economic and Social Committee on the Commission staff "Working
pai>er on the problem of time taken to make payments in commercial transactions"
O.J. C 249 of 13.09.93

49

ANNEX 2

EUROPARTENARIAT Methodology

A Europartenariat is organized as follows:

1. Identification by the Commission of a Community host region requiring specific action
for its development based on requests from interested regions.

2. Identification by the Commission of one or more organizers.

3. Identification and selection by the organizers of a number of SME/SMIs in the host
region which meet very specific criteria such as enterprise size, partnership projects,
ability of the enterprise to conclude a cross-border partnership and financial soundness.

4. Publication of a catalogue in 80,000 copies and 5 Community languages (French,
German, Spanish, Italian and English) introducing the enterprises selected and their
cooperation projects (export promotion is not regarded as an objective).

5. Promotion of the event in all participating countries (EEC, Mediterranean countries,
CEECs, EFTA) through a network of national advisers, the cooperation and
information networks of the Commission (Business Cooperation Centre (BRE),
Business Cooperation Network (BC-NET) and Euro Info Centres (EICs)) and the
network of European business and innovation centres (BICs). The role of the national
adviser is decisive: in addition to his promotion and information activities, he
accompanies enterprises at the event and assists them during meeting days.

6. Organization of two meeting days on the basis of appointments fixed in advance and
submitted by the enterprises themselves.

_Commission support_

1. Two-thirds of the total budget for the operation is provided by the Commission (one
third per Directorate-General) and one third by the host country. In the case of
Europartenariat promotions in Mediterranean countries and CEECs, finance is also
provided by the Directorate-General for External Relations under the MED-INVEST
and PHARE programmes respectively.

2. Representatives of the Commission's services assist and advise the principal organizer
during the various preparatory phases.

50

ANNEX 3

INTERPRISE Methodology

In order to be eligible for the Commission's services responsible for enterprise policy
support, a project must now adhere to the programme's own methodology, which stipulates
the following phases:

1) Identification and selection of at least 15 enterprises per participating region with
genuine cooperation projects (commercial, financial, technical, joint venture, transfer
of know-how, etc. ).

2) Publication and circulation of a catalogue containing the profiles and cooperation
projects of all or some of the participating enterprises (single region or multi-region
catalogue), all other procedures for exchanging information on enterprises and their
cooperation projects between the enterprises themselves being permitted provided that
the principle of choice of meetings by the enterprise is respected.

3) Organization of contact days (logistical aspects, interpreting) and arrangement of
meetings. For this purpose, the partners centralize requests for cooperation from
enterprises and organize a programme of individual meetings on the basis of those
requests.

4) Evaluation and monitoring of meetings to establish the number of cooperation
agreements concluded.

_Criteria_

The following criteria must be respected:

the project may be presented at any time of year, and generally six months before .the
event;
the programme must relate to cooperation between enterprises;
the programme must be organized by at least one body per participating region or
country (minimum of 3 Community regions or countries);
the bodies concerned must make a financial contribution to the programme;
the methodology described above must be followed;
the support of the Commission - Directorate-General XXIII must be mentioned in each
document published in connection with the initiative;
the budget must not show any loss or profit.

_Commission support_

The Commission provides support in two ways:

technical assistance for the organization of the programme on the basis of the
Commission's experience of cooperation programmes;
granting aid, which may not exceed 50% of the organizer's total budget.

51

**COMMISSION REPORT ON COORDINATION OF THE ACTIVITIES IN**

**FAVOUR OF SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)**

**52**

PROLOGUE

The purpose of this present report is to establish an overview of Community interventions
and programmes that favour SMEs but which are not within the framework of the Council
decision relating to the SME multi-annual programme [1] . The coordination of Community
interventions is twofold, on the one hand, it is to ensure that the specific features of SMEs
are better taken into account when defining Community actions and on the other hand, to
increase the participation of SMEs in these programmes.

The report demonstrates that the coordination has borne fruit in fields such as research and
technological development, international cooperation and vocational training. However, the
analysis of the impact the Structural Funds have on the development of SMEs depends on
information which the Member States must furnish notably for the ex-post and ex-ante
evaluations required by the new regulations. The enlarged partnership introduced in the
new regulations can improve the coordination. Therefore, it is incumbent on the
Commission, the Member States, and the economic and social partners to join their efforts
to ensure a tight coordination which is indispensable to the efficiency of the measures
favouring SMEs.

It is useful here to recall the approach of the Community in defining SMEs. In the report of
the Commission to the Council of 29 April 1992 (SEC (92) 351 final), a unique definition
for SMEs at Community level was not considered possible. The report nevertheless
introduced a greater coherence into the Community definitions notably by using certain
criteria. The Commission proposed in that report "to avoid an undue multiplication of
thresholds, the Commission will give preference to those of 250 and 50 employees". The
main definitions presently in use at Community level are shown in the annex at the end of
this report. From this, we can see a certain convergence of the definitions presently in use
at Community level. The Commission will take steps to promote a better transparency of
the definitions used at national level, particularly within the context of Operational
Programmes or global grants which are cofinanced by Structural Funds.

93/379/EEC, OJ L 161 of 02.07.93, p. 68

**^ 3 >**

CONTENTS

SUMMARY WITH ILLUSTRATING TABLE

INTRODUCTION

**I.** **THE COMMUNITY** **FINANCIAL** **INSTRUMENTS AND** SMEs

1.1 THE STRUCTURAL FUNDS AND SMEs

1.1.1 Operations under Objectives 1, 2 and 5b
1.1.2 Operations under Objective 5a
1.1.3 The ESF and SMEs

1.1.4 Community initiatives
1.1.5 An initial evaluation of the use of the structural funds by SMEs
1.2 The EIB and SMEs

1.3 The NCI and SMEs

1.4 The ECSC and SMEs

**H.** **RESEARCH AND TECHNOLOGICAL DEVELOPMENT** **AND** SMEs
II. 1 Participation by SMEs in RTD programmes concerning industrial technologies
and materials, the environment, bio-sciences and technologies and energy
II. 2 Participation by SMEs in research activities on information and
telecommunications technologies
II. 3 Participation by SMEs in programmes to exploit research results
11.4 Participation by SMEs in innovation and technology transfer
11.5 Other Community programmes related to technology and research
II. 6 Coordination between Commission departments

**m.** **VOCATIONAL TRAINING PROGRAMMES AND** SMEs

III. 1 The Eurotecnet programme
III.2 The COMETT programme
III. 3 The FORCE programme
111.4 CEDEFOP
111.5 Local development and employment

IV. **OTHER** COMMUNITY PROGRAMMES

IV. 1 International co-operation
IV.2 Hygiene, health and safety at work
IV.3 New financial techniques and SMEs
IV.4 Transport and SMEs
IV.5 The environment and SMEs
IV.6 Common Fisheries Policy and SMEs

V. CONCLUSION

_**sy**_

List of tables

illustrating tables

table 1 : Table of ERDF commitments per year and accrued from 1989 to 1993

table 2 : Global grants

table 3 : Objective 5b

table 4 : EIB

table 5 : SME participation in Feasability premiums and CRAFT actions under the
BRITE-EURAM Programme

table 6 : SME participation in Framework programmes concerning
telecommunications and information technologies

table 7 : Number of SMEs which have directly benefited from SPRINT

table 8 : Thermie projects involving SMEs

table 9 : ECSC research activities and SMEs

table 10 : Vocational training programmes (EURÔTECNET, COMETT, and
FORCE)

***T.T**

**SUMMARY**

**FINANCIAL INSTRUMENTS, COMMUNITY PROGRAMMES AND** SMEs

The programme concerning enterprise policy (Council decision 93/379/EEC of 14th June
1993) provides for a coordination with other Community policies, apart from a certain
number of specific actions with a budget of ECU 112.2 million for the period 1993-1996,
favouring SMEs. This coordination aims to ensure that the conditions specific to SMEs are
taken into better consideration by the other Community policies and also to encourage the
participation of SMEs in the Community programmes.

**I. THE UNION'S FINANCIAL INSTRUMENTS**

The bulk of support given by the EU to SMEs is carried out through the Structural Funds
in the form of co-financing with the object of assuring economic and social cohesion within
the European Union. The financial support to SMEs is also effected through EIB global
loans and New Community Instrument loans.

THE STRUCTURAL FUND OPERATIONS (ERDF. ESF. EAGGF)

From 1989 until 1993 the estimated amount provided for enterprises from the Community
Support Framework and other measures was **ECU 5 billion** for objectives 1 and 2 and
ECU **1 billion** for objective 5b, being a total of **ECU 6 billion** under these objectives,
which represents 13% of the CSF budget. The growing use by SMEs of the Structural
Funds requires an increased visibility of the measures favouring SMEs, a greater
involvement by SME intermediaries and a simplification of the grant aid proceedures. The
expanded partnership provided for between the Commission, the Member States, the local
or regional authorities and the social and economic partners will improve the Structural
Fund operations in favour of SMEs during the period 1994-1999.

```
THE EUROPEAN INVESTMENT BANK

```

The EIB uses global loans to support small and medium scale investments and particularly
those by SMEs. Since 1988 nearly **36,500** SMEs have benefited from credits amounting to
more than ECU **9.7 billion,** being more than 50% of the finance allocated to industry and
services. In 1992, Italy, Germany, France, and Belgium were the principal beneficiaries of
these global loan credits to SMEs.

THE NEW COMMUNITY INSTRUMENT

As of the 31.12.92 the total loans agreed under NCI III and NCI IV headings rose to ECU
3.5 **billion** of which ECU 682.8 million were under NCI IV. These loans were used to
finance new investments worth ECU 7.2 million corresponding to over 9,600 projects and
contributing to the creation of 60,000 jobs. These loans are concentrated on enterprises
with fewer than 50 employees. Under NCI IV, Italy, Spain, and the UK benefited most.

**XG**

**IL RESEARCH AND TECHNOLOGICAL DEVELOPMENT: R&TD**

R&TD is a key element in competitiveness amongst SMEs. This is why the Commission is
doing its best to encourage greater participations of SMEs in community research
programmes and to set up the means to facilitate the diffusion of new technologies.

Industrial technologies and materials, the environment, bio-science and technologies and

energy

In 1991 and 1992 SME participation in R&TD programmes for all sectors reached a rate of
11.5% and the number of SME contractors reached 1004. The total sum allocated to SMEs

was 167 MECU, 12 % of the global budget.

As far as industrial orientated programmes are concerned, such as BRITE EURAM
(industrial and material technologies), rates of participation are much higher: 32%
involvement of SMEs with an allocation of 25% of available funds. This shows therefore a
growing participation of SMEs in this programme, two specific schemes of which concern
SMEs: "feasibility premiums" and "Cooperative Research Action For Technology" CRAFT. These specific schemes have enabled SMEs to aquire and develop new
technologies and know-how directly linked with their activities and to be involved in a
process of apprenticeship whereby they have had the opportunity to discover the growing
importance of R&TD in increasing their competitiveness.

Information and Telecommunications technologies:

SME participation has been on the increase since the ESPRIT programme took off in 1980.
Now the rate of SME participation in projects has reached 80% for communication
technologies, 65% for information technologies, and 95% for telematics.

Most of the SMEs which are partners in the projects are from high-technology or
technology-intensive sectors of industry. They are R&TD service providers or components
or semi-finished goods manufacturers and are essentially involved in the development of
R&TD applications.

Exploitation of research results: VALUE

300 SMEs have benefited from the VALUE-SME pilot scheme to a total of 2.1 MECU.
The aims of VALUE-SME is to promote the transfer of Community research results to the
SMEs themselves. VALUE-SME is a good example of coordination between Commission
services.

EUROMANAGEMENT-R&TD enabled 657 SMEs to benefit from the intervention of 47
technological advisers who identified more than 1000 R&TD projects. By 1993 these
projects resulted in the submission of 120 research proposals replying to calls to tender
from the commission, of which 30% were eventually selected.

**jr-}**

Innovation and technology transfer: SPRINT

With a budget of 90 MECU for the years 1989-1993 the SPRINT programme has given
support to technological cooperation between SMEs through inter-SME transnational
cooperation networks and technology transfer open days. The diffusion of new technology
has been helped by research and technology networks and specific projects designed to
transfer inter-community technological innovations.

Results concerning SMEs show that since 1989 :

**7200** SME have acquired new technology
**24,000 SME** have tested or evaluated new technology
**64,000** SME have become aware of new technology

Altogether a total of **95,200** have benefited from the SPRINT Programme.

Other research activities outside the R&TD Framework Programme have affected SMEs
for example in the field of energy (THERMIE programme), transports (EURET), and
ECSC.

The effective coordination between these R&TD programmes has made it possible to
establish the SME dimension of the 4th R&TD Framework Programme allowing a greater
transparency in community R&TD actions in the SME sector notably through joint
promotion and coordination among existing networks.

m . VOCATIONAL TRAINING PROGRAMMES

A number of community programmes are designed to raise the level of qualifications
throughout the Union in order to master the process of economic, technological, social, and
cultural change.

Amonst these programmes EUROTECNET (innovation in vocational training as a result of
technological change), COMETT (training and education in technology), and FORCE
(continuing vocational training) relate more directly to the SMEs.

In EUROTECNET, 18% of the projects making up the network are targeted at SMEs. In
COMETT, it is thought that 7000 SMEs are directly involved, giving a 75% rate of SME
participation and a total of 30,000 SMEs benefiting either directly or indirectly from this
training scheme. Under FORCE 1250 SMEs or groups of SMEs are associated with
projects representing a 62% rate of direct participation.

As far as Community action undertaken to develop local employment is concerned, the
programme for Local Employment Initiative for Women (LEI) has given support to 700
women businesses between 1986 and 1990.

**vT**

IV. OTHER PROGRAMMES

Amongst the other programmes in operation it is useful to mention here those which are
designed to promote the internationalisation of SMEs within the framework of cooperation

with third countries.

INTERNATIONAL COOPERATION

Cooperation between SMEs is not limited to the EU territory but it has developed to
include other countries such as those in EFTA who have already participated in the BC-Net
networks and Euro Info Centres (as correspondence centres). Cooperation has also been
developed with Central and East European countries through the PHARE programme, with
the Commonwealth of Indépendant States (CEI) and Georgia as well as with the developing
countries in Asia, Latin America, and the Mediterranean.

Within the PHARE programme the Commission has put in place programmes for SME
development with a budget of ECU 95 M that provide technical assistance to 8 countries
of Central and Eastern Europe and 3 Baltic states. This support provides support services to
SMEs, financial instruments and help in preparing an enterprise policy. The new partners
in the Central and Eastern European countries are progressively getting involved in the
information networks (EIC) and cooperation networks (BC-NET) as well as in the
partnership programmes (Europartenariat, JOPP). The JOPP programme (Joint Venture
Phare Programme) aims at stimulating the creation of joint ventures between SMEs in
PECO. ECU 17 M has been given to SMEs since 1991 for up to ECU 400 M worth of
investments.

The cooperation with the Commonwealth of Indépendant States and Georgia is carried out
through the TACIS programme which has a budget of ECU 20 M in 1992. 7 development
agencies and 9 "Business communications centres - BCC" are to be created and connected
with the BRE and BC-NET networks.

The cooperation with developing countries is effected through the MED-INVEST (ECU
12,2 M from 1993 to 1995) programmes for third countries in the Mediterranean, LAINVEST (ECU 18.5 M from 1993 to 1995) programme for Latin american countries and
ECIP (ECU 20 M in 1992 and ECU 39 M in .1993).

Finally measures to promote Community exports to third countries are equally pursued.

V. CONCLUSION

The consideration given to SMEs in community programmes is increasing and the
Commission will continue its efforts in association with the Member States and the

representatives of SMEs and craft industries to facilitate the full participation of SMEs in
the process of Euro integration highlighted by the measures introduced in the white paper
on "Growth, Competitiveness, and Employment".

##### **^3**

**FINANCIAL INSTRUMENTS, COMMUNITY PROGRAMMES AND SMEs**

number of SMEs

36 500

1004

192 (projects)
255 (projects)

SME

participation as a
% of total budget

13%

12%

25%

100%

100%

19%

SME

participation as a

% of all projects

11,5%

32%

100%

100%

16%

80%

65%

95%

_**0**_

Community interventions

Financial interventions

- Structural Funds (1989-1993)
(estimation of allocations)

- European Investment Bank
global loans (1988-1992)

- New Community Instruments
(NCI III et IV) - loans

Research and Technological Development
Programmes

- all programmes together in 1991 and 1992
among which

  - BRITE-EURAM which includes

   - Feasability premiums

  - CRAFT

 - JOULE

- telecommunications and information

technologies :

  - Communication technologies

  - Information technologies

  - telematic systems

credits allocated

to SMEs in ECU

6Bn

9,7 Bn

3.5 Bn

167 M

5.6 M

26 M

Communitv interventions

- VALUE SME

- EUROMANAGEMENT-RDT

- SPRINT 90 MECU (1989-1993)

- THERMIE (90-93)

- ECSC

Vocational training programmes

- EUROTECNET

- COMETT

- FORCE

International cooperation programmes

- PHARE-SME Programme

- JOPP (1991-1993)

- MED-INVEST (1993-1995)

- LA-INVEST (1993-1995)
- ECIP 1992

1993

credits allocated

to SMEs in ECU

2,1 M

175 M

26 M

95 M

17 M

12,2 M
18,5 M

20 M

39 M

number of SMEs

300

657

95.200

311 projects

46 projects
7000 (direct)
30.000 (indirect)

1250

186 projects

SME

participation as a

% of all projects

100%

100%

59%

18%

75%

62%

100%

93,3%

100%

100%

SME

participation as a
% of total budget

100%.

100%

41%

48%

100%

100%

100%

(X) The reader's attention is drawn on the fact that this table lists community interventions of different nature and therefore, figures are not
always comparable from one line to the other. On the one hand, figures cover different time periods and, on the other, amounts refer to either
grants or loans. Therefore, the amounts allocated to SMEs cannot be added up in columns.

INTRODUCTION

An initial Commission report on _"the_ _coordination_ _of_ _activities in_ _favour of_ _SMEs_ _falling_
_outside the scope of_ _Council Decision_ _89/490/EEC"_ has already been adopted on 26 May
1992 [2] covering the period from July 1989 to the end of 1990. That report met the
requirements laid down by the Council Decision of 28 July 1989 [3], which has since been
replaced by the Council Decision of 14 July 1993 [4] .

Taking account of the information already supplied in the first report, especially the
programme descriptions, which is still valid for the period covered by this report, the
Commission preferred to concentrate its efforts in the present report on the actual
coordination of the Community programmes and initiatives. In addition, aspects not already
covered in the first report, such as evaluation of the impact of the programmes on SMEs,
will be examined.

The purpose of this report is to cover the years 1991 and 1992, plus part of 1993, as far as
possible.

The importance of small and medium-sized enterprises in the recovery of growth and
employment in Europe, generally recognised by Community and national bodies, fully
justifies a horizontal approach to ensure both the coherence of Community action in favour
of SMEs and better integration of the SME dimension in other Community policies and
initiatives. Although, in the face of the changes confronting large enterprises in the
traditional economic sectors, SMEs have potential advantages because of their flexibility,
their capacity to adapt to the needs of the market and their capacity for innovation. They
face serious challenges as well, - completion of the internal market and industrial changes which SMEs must face up to in order to remain competitive. Hence the need to ensure that
SMEs can play a full part in the process of European integration.

This report does not aim to review all the Community programmes or initiatives which
could have a direct or indirect impact on SMEs. Taking account of the diversity of
Community intervention and the horizontal character of SMEs, such an analysis would
amount to studying virtually all the Community programmes. Besides, the action plan for
SMEs established by Council Decisions 89/490/EEC of 28 July 1989 and 93/397/EEC was
subject to separate reports.

Instead, this report centres on four main chapters: SMEs and the structural funds, SMEs
and the research and technological development programmes, SMEs and the vocational
training programmes and finally SMEs and the other Community programmes of obvious
interest to SMEs and craft industries.

2 SEC (92) 704 final.
3 89/490/EEC, OJ L 239 of 16.08.89, p. 33-34.
4 93/379/EEC, OJ L 161 of 02.07.93, p. 68.

_**Gz<**_

**I.** **THE COMMUNITY FINANCIAL INSTRUMENTS AND SMEs**

1.1 THE STRUCTURAL FUNDS AND SMEs

The first period of the reformed Structural Funds ran from 1989 to 1993 and by the end of

this period virtually all of the funds had been committed. The effort to achieve economic

and social cohesion in the Community will continue during the new 6-year programming

period (1994-1999) on the basis of the conclusions of the December 1992 Council of

Edinburgh, which decided on the amount to be allotted to the Structural Funds for the next
few years (141 MMECU), and of the new regulations adopted on 20 July 1993 [s] .

The previous report gave an exhaustive account of the Community's structural measures as

regards their broad principles (concentration, additionality, programming, partnership),

instruments (ERDF, ESF, EAGGF - Guidance), financial resources and mode of operation.

This chapter of the report will deal with Community operations under Objectives 1, 2 and
5b, Community initiatives, the European Social Fund, then the financial instruments of the

European Investment Bank and the New Community Instrument, and finally the lessons

learnt from an initial evaluation of the use of the Structural Funds by SMEs.

**1.1.1** COMMUNITY **OPERATIONS UNDER OBJECTIVES** 1, 2 **AND** 5b

The Community's structural measures for 1989-1993 represented a budget of ECU 60.3

billion (at 1989 prices) by way of structural fund commitment appropriations plus ECU 3

billion for 1991-1993 representing the Community's outlay on the recovery and integration

of the new German _Lander._ Table 1 describes the ERDF-commitments per year, per

country, and accrued from 1989 to 1993.

**OJ L 193 of 31.07.93: Framework Regulation No. 2081/93 (amending Regulation No.**
**2052/88), Coordination Regulation No. 2082/93 (amending Regulation No. 4253/88),**
**Regulation No. 2083/93 (amending Regulation No. 4254/88 on the ERDF), Regulation No.**
**2084/93 (amending Regulation No. 4255/88 on the ESF), Regulation No. 2085/93 (amending**
**Regulation No. 4256/88 on the EAGGF Guidance Section) and Regulation No. 2080/93**
**(establishing the financial instrument of** **fisheries** **guidance).**

**63**

**Table 1**

**Table of ERDF commitments per year and accrued from 1989 to 1993 up to**
**31.12.93 for objectives 1, 2 and 5b and innovative actions (article 10 ERDF)**

**in thousand ECU**

91

74.435

26.122

246.201

882.586

1.741.648

334.898

280.096

1.440.666

2.511

27.473

938.883

590.808

125.223

**6.711.550**

93

93.711

12.074

350.217

1.081.129

2.283.905

761.188

519.472

2.441.724

732

64.414

1.374.600

897.614

152.193

10.032.973

92

48.386

14.216

211.578

1.427.840

1.924.284

621.859

636.022

1.017.014

19.142

56.425

1.497.162

654.559

257.448

8.385.935

accrued

324.021

79.750

1.100.444

4.595.277

8.972.990

2.380.493

2.035.960

6.647.363

25.360

197.451

4.936.934

3.118.117

610.506

35.024.666

90

66.803

18.390

113.941

561.693

1.802.226

442.739

291.997

837.113

2.975

45.677

533.722

469.548

40.747

**5.227.571**

B

DK

D

EL

ESP

FR

IRL

I

L

NL

P

UK

COM

EC

89

40.686

8.948

178.507

642.029

1.220.927

219.809

308.373

910.846

3.462

592.567

505.588

34.895

**4.666.637**

**Source** : Direction General for Regional Policies and Direction General for
Budgets.

_**(o^l**_

**OBJECTIVE 1:** **development and structural adjustment** **of** **regions** **whose**

**development is lagging behind**

The Community aid entered in the Community Support Frameworks (CSFs) of Objective 1

regions under the Structural Funds totals ECU 36,200 million (at constant 1989 prices), to

which should be added the total for other financial instruments: additional lines in the

Integrated Mediterranean Programmes (IMP) and the Specific Programme for the

Development of Portuguese Industry (PEDIP), representing ECU 1,084 million. Both the

IMPs and PEDIP predated the entry into force of the new Structural Funds Regulations.

Most of the operational programmes and other forms of intervention under the CSFs were

approved in 1990 and 1991. Thus, about 300 operational programmes, 63 projects and

major projects as well as 13 global grants have been approuved.

Mention should be made of PEDIP, the specific programme for the development of

Portuguese industry, set up by a Council decision because of its relatively weak position as

regards the rest of industry in the EU. PEDIP covers a wide range of actions to stimulate

the industrial sector, including measures to support small and medium-sized enterprises,

industrial quality and competitiveness. The following actions in favour of SMEs have been

supported: establishment and development of technological centres, centres of excellence

and the dissemination of new technologies, acquisition of testing and metrological

equipment, support for industrial associations, partnership projects between large

enterprises and SMEs and aid for the acquisition of production equipment.

Between 1989 and 1992, direct aid for SME projects under PEDIP totalled ECU 370

million for investments worth ECU 1600 million in over 1300 enterprises. This aid total

represents roughly 21% of total public (national and Community) expenditure on the

programme.

More specifically, intervention of the EAGGF Guidance Section in the case of Objective 1

regions takes place mainly in the form of operational programmes, falling under one fund

or several, and Community initiatives (including LEADER). Total commitments during

1991-1992 came to ECU 978 million for operational programmes. Those allocated to

Community initiatives totalled ECU 174 million, including ECU 124 million for LEADER.

The specific programmes, POSEICAN, POSEIDOM and POSEIMA, received ECU 30

million in commitment appropriations. In addition, ECU 183 million were committed over

the same period for operational programmes carried out in the new German _Lander._

_**CS**_

The main aims of the finance provided are: diversification of production, development of

alternative resources, development of practices which do not harm the environment, and

creation of permanent jobs in rural areas. SMEs are eligible for all the measures described,

and in practice, SMEs and one-man businesses receive almost all the finance made

available for these measures.

As regards the intervention of the European Social Fund, experience over the past 4 years

has made it possible to identify a certain number of operations as regards SMEs,

particularly for the period from the end of 1991 to the present day.

The ESF supports vocational training projects for "persons working in small and medium
sized enterprises". The aim is to enable working people to adapt to the jobs available. The

promotion of retraining and hence occupational mobility upgrades the potential of the

labour force in these regions.

Between 1989 and 1993 over ECU 10 billion were budgeted for vocational training,

employment and the development of human resources in Objective 1 regions. The

expenditure in favour of SMEs mainly takes the form of continued training, which benefits

the staff of SMEs. Although there is not always an "SME" line of action in Objective 1

regions, a great number of projects envisaged in operational programmes and other forms

of intervention support SMEs, especially the major programmes on "Industry and Services"

for Ireland, the "Tourism" and "Business Competitiveness" lines of action in Greece or

PEDIP in Portugal.

_For_ _example,_ _two_ _measures introduced_ _at the end of 1991 in the operational programme on_

_"Industry_ _and_ _Services "_ _in_ _Ireland benefit_ _SMEs._ _These_ _are:_

_- job training schemes: in-service training. These schemes are a new approach to_

_vocational_ _training_ _problems in Ireland_ _and_ _fulfil the_ _expectations_ _of_ _employers who_ _feel_

_that_ _existing structures_ _are not yet_ _sufficiently appropriate_ _to the_ _business_ _world;_

_employment_ _premiums:_ _for the first time, this_ _employment_ _aid should receive financial_

_support from_ _the private_ _sector_ _(25%,_ _the_ _remaining_ _75%_ _coming from the ESF)._

_These_ _two new_ _measures_ _tie in with the_ _conclusions_ _of an ad hoc_ _working_ _party at_ _national_

_level,_ _which stressed_ _the need to_ _exploit the potential_ _of_ _local enterprises_ _in_ _Ireland._

_**GQ**_

**OBJECTIVE** **2:** **conversion of** **regions** **or parts of regions seriously affected by**

**industrial decline**

The first phase CSFs relating to Objective 2 regions covered a 3-year **period (1989-1991)**

and the total allocation was fixed at ECU 3,900 million (constant 1989 prices). **The second**

phase CSFs (1992-1993) relate to a total allocation of ECU 3,354 million **(constant** 1992

prices). More than 200 of the operational programmes and other forms of **intervention** (15

major projects and 4 global grants) included in the CSFs were approved.

_Analysis of 18_ _operational programmes_ _for the United Kingdom shows that aid for the_

_development_ _of_ _enterprises,_ _particularly_ _SMEs,_ _was provided_ _in the_ _objective_ _2 regions._

_The support_ _comprises:_ _business services (financial, management, design and marketing),_

_local employment initiatives promoting new businesses, part-financing of industrial_

_investment_ _in_ _the_ _form of grants or_ _loans_ _and loan_ _guarantee_ _support,_ _services_ _to_ _facilitate_

_access to venture capital and launch_ _capital_ _for the growth and_ _expansion_ _of_ _enterprises._

_The creation or promotion of_ _economic_ _conversion structures or regional development_

_teams including investment in_ _"Enterprise Agencies ",_ _running costs of_ _enterprise_ _centres,_

_the promotion_ _of_ _marketing_ _and_ _exports_ _to facilitate_ _participation_ _by small_ _enterprises_ _in the_

_internal,_ _market._ _This example shows_ _the_ _variety_ _of_ _measures_ _undertaken._

An evaluation of ERDF operations under Objectives 1 and 2 was launched by the

Commission in 1993. It should show the impact on SMEs of Community operations in

these regions.

The European Social Fund intervention for Objective 2 regions is ECU 1,762 million was

scheduled for training and employment in these areas during 1989 to 1993. One of the

priorities of the CSFs renegotiated for 1992-1993 is to strengthen the fabric of SMEs in the

zones concerned, by expanding local industrial subcontracting, encouraging innovation in

SMEs and modernizing the craft sector.

A great many sectors are concerned in both industry (biotechnology, maintenance) and
services (transport, office automation, telecommunications, health care). In the majority of
Member States a priority line of action has been identified in favour of SMEs "to
encourage the creation and development of enterprises" (France, Italy, UK, Luxembourg,
Belgium, Netherlands....), with training funded by the ESF intended to accompany the
modernization and restructuring of enterprises.

**(o** **^|**

In certain cases, priority has been given to vocational training intended to develop a

veritable "enterprise culture" based on training and qualifications, not only for managers

but also for all staff involved in the different functions of business administration and

management.

_Example:_ _in the_ _Basque country_ _in_ _Spain,_ _the_ _National Institute_ _of_ _Industry_ _set up a project_

_in 1992 based on the_ _concept_ _of_ _"integral_ _quality",_ _designed_ _as a_ _management technique_ _to_

_place all aspects of_ _business_ _operation on a profitable basis. The Institute chose an_

_enterprise for_ _this experiment_ _in the_ _capital goods_ _and_ _iron_ _and_ _steel/metallurgy_ _sector._

_All functions (from manual worker to product manager) and all the networks of the_

_enterprise_ _(administration,_ _finance,_ _distribution)_ _are_ _involved._ _Working_ _parties are set up in_

_which the_ _emphasis_ _is on_ _specific activities_ _and methodological problems._

_This process_ _is_ _intended_ _to lead to the_ _systématisation_ _of good practices and a study of each_

_job to promote quality awareness and motivation. In seeking customer satisfaction at_

_minimum_ _cost, the_ _whole enterprise becomes more_ _competitive._

**EUROPEAN ENTERPRISE AND INNOVATION CENTRES:** **CEEIs**

The European Enterprise and Innovation Centres (EC-BIC European Community Business

Innovation Centres) are a particularly important aspect of Community regional policy in

favour of SMEs; they were specially created to promote the establishment or growth of

innovative SMEs and to make optimum use of local potential in the form of human,

physical and financial resources. The Commission supported the formation of the

association "European Business Innovation Centre Network" (EBN), which encourages the

BIC network by training, promotion and information measures. The EBN* s members

include financial institutions, international networks, technical institutes, professional

consultants and international business groups, which improve the network by effectively

coordinating the individual activities.

The BICs have adopted an integrated approach to local economic development in making
available to enterprises a complete programme of efficient services with the aim of
improving their managerial and entrepreneurial capability by preparing a strategic
development plan (business plan) which includes market analysis, a financial package,
technology, and setting up and monitoring the enterprise. Community support for the BICs
is granted in all regions eligible for ERDF finance.

**GY**

Set up in 1984, the BICs now number 92, distributed not only throughout the Community

but also in central and eastern Europe. So far, almost 3000 innovative industrial SMEs

have been set up or developed by the BICs, employing an average of 5.5 persons per

enterprise.

Furthermore, 15 of the existing 25 launch capital funds (supported by the enterprise policy

via repayable advances on their operating costs) have been supported by the BICs, which

contribute towards the funds as shareholders. The launch capital funds comprise the

"European Seed Capital Fund Network" financed jointiy under regional policy and

enterprise policy.

GLOBAL GRANTS

Apart from the operational programmes, one of the innovations introduced by the 1988

reform was the possibility of using global grants. "The Commission may entrust to

appropriate intermediaries, including regional development bodies designated by the

Member State in agreement with the Commission, the management of global grants, which
shall be the preferred method of intervention in favour of local development initiatives" [6] .

14 global grants were awarded in 1991 and 1992: 13 to Objective 1 regions and one to

Objective 2 regions of France. Table 2 shows the amounts granted for each country. In

1991 and 1992 over ECU 238 million were allocated to global grants, which should

engender investment in the order of ECU 756 million. The rate of Community part
financing averages 31%, provided mainly by the ERDF, and 50% in the case of Italy. The

majority of global grants provide for spécifie measures for SMEs.

In Italy, ERDF aid for global grants is devoted to the "Industry, craft activities, services"
line of action of the CSFs of Objective 1 regions (except for a global grant to develop

tourism).

Article 5 (2) of Regulation No. 2052/88.

**69**

##### IHHH

Table 2

ESF

(%)

10%

36.3%

Part-financing
EC (%)

**50%**

**13%**

**52.3 %**

**70%**

**50 %**

**50%**

**40.28%**

**50 %**

**50%**

**50%**

**50%**

**63%**

**50%**

**57 %**

**31.5 %**

ERDF

(%)

90%

100 %

100 %

100 %

100 %

100 %

100 %

100 %

100 %

100%

100%

100 %

100 %

63.7%

Total Cost

(MECU)

**35.02**

**338**

**36.2**

**4**

**20**

**16**

**216**

**6**

**10**

**20**

**12,7**

**12.04**

**13**

**17,5**

**756.46**

**l o**

COUNTRY

1991

FRANCE (Objective 2)
Stride (ANVAR)
SPAIN (Objective 1)
Andalucia (IF A)
Murcia (IFM)

1992

Objective 1

ITALY

"Industry, Crafts, Services"
Apulia (BIC-APULIA)
(IASM)
(GEPI)
"Tourism" (INSUD)
(AFM/Edilizia)
(ENFAPI)

(EFIBANCA)
(UNIONCAMERE)

Sardinia (CONSORZIO 21)
Mezzogiorno (FIME)

IRELAND

Internally Generated Development
Area Management Development Ltd

TOTAL

Amount of

global grant

(MECU)

**17.3**

**46**

**18.9**

**218**

**10**

**8**

**87**

**3**

**5**

**10**

**6.35**

**7.6**

**6.5**

**10**

**238.45**

**Actions in favour of SMEs in this area include the following: creation of a network of**

**agencies to provide data processing services and** **management** **aid for SMEs in the building**

**industry, support for set-ups supplying specialist services for SMEs, support for innovation**

**in SMEs (new processes and products), creation of consortia between SMEs for**

**guaranteeing loans, exports and advanced services, start-up aid and financial services such**

**as venture capital, launch capital, participation premiums and participation loans.**

**The global grant to the Andalucian Development Institution** **(IFA)** **is structured in 5 sub-**

**programmes** **in** **favour of SMEs: productive** **investment** **aid, aid for business services, local**

**development, industrial and craft zones, and technical aid. The global grant** **to** **Murcia,**

**unlike that for** **IFA,** **also contains measures to promote tourism.**

**The global grant to Ireland aims to support internally generated development, i.e. to**

**promote and support local economic development initiatives by aid for the creation and**

**development of enterprises, education and training and, finally, technical assistance.**

**The STRIDE global grant to France, awarded to ANVAR (National Agency for the**

**Exploitation of Research) concerns research** **and"** **the** **transfer of technologies in Objective 2**

**regions of France.**

**s**

**It is still too soon to know** **how** **effective the global grants are for SMEs, since they have**

**only just been awarded. However, as for other actions, it is planned to evaluate these**

**global grants.**

**PARTNERSHIP BETWEEN ENTERPRISES**

**The** **two** **programmes** **linking** **entrepreneurs,** **EUROPARTENARIAT** **and** **the**

**INTERPRISE, are** **described** **in the report on the application of the Council Decision of 28**
**July 1989** **[7]** **. These programmes are coordinated by the regional policy and enterprise policy**

**staff.**

COM (93) 365 final of 23.07.93.

**a/)**

**COMMUNITY OPERATIONS UNDER OBJECTIVE 5 b: DEVELOPMENT OF**

**FRAGILE RURAL AREAS**

1. Reminder of the breakdown of the allocation of the three funds in the CSFs 1989-1993

and state of commitments

Objective 5b concerns 50 zones in 9 Member States. It covers 5% of the population and

17% of the territory of the Community. 73 operational programmes have been approved

under Objective 5b, worth ECU 2,607 million. By 31 December 1993, all the credits

allocated to this objective were committed. Table 3 shows the breakdown by country, the

state of commitments as to 31.12.1993 and the breakdown of ERDF operations under

Objective 5b.

2. Operations of the various funds

The ERDF has acted to diversify economic activity in rural areas. The programmes have

had a spin-off/lever effect on other sources of public or private finance. One "ERDF" ECU

has in fact generated investments worth about ECU 5. Thus, Community aid worth ECU 2

billion has generated projects costing ECU 7.5 billion, of which 2.7 billion came from the

private sector and 4.8 billion from the public sector (Community, national and regional).

The ERDF operations complement those of the EAGGF in the field of agri-foods, timber,

tourism (agri-tourism) and rural infrastructures; and those of the ESF, in helping to create

and renovate professional structures for training.

ESF intervention in 5b areas is scheduled to total almost ECU 450 million duirng 1989
1993. In these regions it is mainly a matter of developing training in new skills and

promoting employment to permit diversification of the economy, particularly in favour of

farmers.

_Example: the renewal of_ _a traditional_ _cutlery industry in France_ _(Laguiole):_ _although the_

_know-how had entirely disappeared, specific training over_ _a_ _9-month period enabled 7_

_trainees_ _to_ _learn_ _their trade from_ _course instructors (professional_ _cutlers)._ _One of them also_

_received management training. A private limited liability company was then set up to_

_assemble_ _parts from Thiers. It employs around twenty people, and its_ _competitiveness_ _is_

_based_ _on the quality of_ _its_ _products._

# **_\c_**

Table 3

**OBJECTIVE** **5b**

Breakdown of the amount alloted to the 3 funds entered in the CSFs (1989-1993)

COUNTRY MECU ('89 prices) Aid per head of population

(ECU)

FRANCE 960 170

GERMANY 525 113

ITALY 385 133

UNITED KINGDOM 350 235

SPAIN 285 289

NETHERLANDS 44 99

BELGIUM 32.5 125

DENMARK 23 215

LUXEMBOURG 2.5 735

TOTAL 2607 158

Commitments as at 31.12.1993

**ERDF**

405,2

288

158,3
290,3

76

29

15,2

15

1,037

**1278**

COUNTRY

FRANCE

GERMANY

ITALY

UNITED KINGDOM

SPAIN

NETHERLANDS

BELGIUM

DENMARK

LUXEMBOURG

TOTAL

**EAGGF**

535

223

231

22,2
204,1

14,2
12,2

3,8

1,604

**1247**

3 FUNDS

1101,2

589

435,3
364,95
324,4

54,7
42,2
28,6
2,693

2943*

s **ESF**

161

78

46

52,45
44,3

11,5
14,8

9,8
0,052

**418**

ERDF 2 MECU not distributed.

**33**

3. Report on ERDF operations

The sectoral breakdown of ERDF operations in Objective 5b programmes shows that the

main beneficiaries are the SMEs and craft enterprises followed by tourism, with 40%

(or over ECU 1 billion) and 32% respectively of the loans.

The ERDF acts to support:

the creation of activity zones, enterprise nurseries, "ateliers-relais" [skill centres],

common services centres, training centres, research and development centres;

productive investments and office automation equipment or robotics;

measures to revive or transfer commercial and craft activities and shop renovation

projects in town centres and villages;

promotion and support measures, such as advice and innovation aid, incentives to

improve training, aid for the relocation of activities in rural areas, promotion of tele
working or the creation of multi-media centres;

financial engineering to encourage an increase in equity capital (acquisition of

holdings, participation loans, launch capital) and to reduce debt (joint guarantee,

interest subsidy, leasing).

Measures to modernize and adapt production machinery, to support the establishment and

expansion of enterprises by using start-up accommodation ["bâtiments-relais"] and activity

zones are obviously implemented more rapidly than "non-material" support such as

business advice, transfer of technologies or financial engineering.

Tourism has been given priority as a line of action in almost all the operational

programmes. However, there are still insufficient funds to meet the growing demand.

Projects funded by the ERDF are concerned mainly with the creation and development of

accommodation, facilities to exploit the full potential of tourist centres and the stimulation

and promotion of tourism.

_**1y**_

However, operations have related principally to accommodation, these being the easiest to

implement.

As regards the environment, some of the ERDF operations have related to investment by

enterprises (SMEs, craft and service businesses) aimed at limiting pollution in their

production systems.

The first programming report reveals a number of shortcomings. In some Member States,

the volume and distribution of the funds were determined in advance and not on the basis

of the needs set out in the development plans. Most of the zones do not readily accept

innovations such as new communication techniques or financial engineering. Thus, under

the "SME support" programme, there was heavy emphasis on material investments, to the

detriment of non-material investments such as advice or training. Furthermore, measures to

promote the integration of SMEs in the single market or to limit the effects of opening up

frontiers and increasing competition (taxation, standardization) are inadequate.

Some partners, particularly enterprises, have been forced to alter their investment

programme because of the downturn in the economy from 1991 onwards. In some Member

States, local authorities have even had to set new priorities to take account of budget

austerity. Thus, in some cases it has not been possible to create productive infrastructures

(industrial areas) or tourist facilities. Measures to stimulate trade and rural craft activities

centred around towns have not always been preceded by an analysis of location priorities.

The concept of a "focal point" is still lacking.

In the light of this first report, analysis of the handicaps of rural zones has identified the
needs of SMEs in rural areas which must be met by the priorities of the new planning
period.

The great majority of rural zones feature the following:

insufficient and inappropriate advisory services and reception structures

remoteness from information and innovation centres;

few subcontracting SMEs

inadequate standard of vocational qualifications

low propensity for executives to move there

shortage of financial instruments.

Thus, the needs of SMEs relate to finance, including public aid, the supply of services,

training and the integration of enterprises into the network.

In the next programming period (1994-1999) support for SMEs should therefore focus on

three priority lines of action:

expanding the supply of services for SMEs, including training and telematics;

helping SMEs to adapt to the constraints of the internal market;

encouraging the participation of local SMEs in a system of organised cooperation

networks.

This general pattern corresponds to the objectives of the enterprise policy.

**1.1.2** **OPERATIONS UNDER OBJECTIVE** 5a: speeding **up** the adjustment of

**agricultural structures and the improvement of the** processing **and marketing**

**of fishery and aquacultural products**

Community financial aid for these operations is granted by the EAGGF Guidance Section.

L Structural aid for the modernization of farms

Community legislation [8] provides for the possibility of granting structural aid to farmers

and/or groups of agricultural producers. The EAGGF Guidance Section aid was in the

order of ECU 983 million in 1992 and concerned the part-financing of three principal

measures, namely:

investment aid at a rate of approx. **50,000** new farmers each year, encouraging the

diversification of activities, greater consideration for the environment and higher rates

of part-financing for backward regions;

compensation in the form of allowances for over 1.2 million farmers in disadvantaged

regions: these may represent over 30% of the income of such regions;

8 Regulation (EEC) No. 2328/91, OJ L 218 of 06.08.91 ; No. 1096/88, OJ L 110 of 29.04.88 and
Regulation (EEC) No. 1360/78, OJ L 166 of 23.06.78.

_^_

start-up and investment aid for young farmers (essential in order to rejuvenate the

agricultural population).

These measures were successful for viable farms and young farmers, and in countries such

as Spain and Portugal which have used them recently in connection with the modernization

of their agriculture.

2. Aid for modernization of the processing and marketing of agricultural and forestry

products

There are two regulations providing for Community support for the modernization of the

processing and marketing of agricultural products (Regulation (EEC) No. 866/90) and

forestry products (Regulation (EEC) No. 867/90). While the first provides for the

possibility of supporting investments by natural or legal persons or groups, the second

gives priority to financing investments which concern SMEs.

In 1991, among the 846 projects supported by EAGGF aid worth ECU 396 million, **506**

SMEs **(almost 60%** **of** **the projects) received Community aid worth** ECU **218 million**

**(or 55% of EAGGF aid).** In 1992, of the 1,137 projects supported, corresponding to

EAGGF aid worth ECU 440 million, **890 SMEs (or 78% of the** projects) received **aid**

**worth** ECU **271 million** (or **62%** **of EAGGF aid).** Although SMEs represent the majority

of the beneficiaries in many projects, they submit smaller projects so that EAGGF aid to

SMEs is proportionately less than for large enterprises.

Furthermore, the importance of SMEs varies greatly from one Member State to another:

for example, 33% of projects in Denmark concerned SMEs as opposed to 100% in Spain

and Greece in 1991. The participation of SMEs increased between 1991 and 1992, rising
from 60% to 78% of projects and from 55% to 62% of EAGGF aid. The average EAGGF

contribution per project carried out by SMEs also varies considerably. In 1991 it ranged
from ECU 61,260 in France to ECU 801,530 in Germany, **the** Community average per
SME project being ECU **431,527** (excluding Luxembourg). In 1992 the difference

between Member States diminished (from 65,649 for the Netherlands to 559,838 for

Ireland) and **the** average per SME project was ECU **304,600.** Finally, in 1991 the

average EAGGF-orientation contribution funded for other projects not concerning SMEs

was 21% higher than for SMEs and over double in 1992.

**^** _*****_

3. Improvement of the processing and marketing of fishery and aquacultural products

Community regulations [9] provide for the possibility of part financing public, semi public,

and private investment projects which involve the improvement of production methods

including the processing and marketing of fishery and aquacultural product. These

investment projects include the construction and modernisation of commercial premises and

infrastructure, the improvement of sanitary conditions, the introduction of new technologies

and the development of new processes and products. Priority is given to projects submitted

by groups of producers and cooperatives, as well as to projects which meet the specific

needs of SMEs. In 1993, ECU 74 M were granted to approximately 60 projects.

1.1.3 THE EUROPEAN SOCIAL FUND AND SMEs

The task of the European Social Fund is to improve job opportunities in the Community.

Essentially, it supports vocational training operations (accompanied, where necessary, by

vocational guidance), employment aid and the development of appropriate training

structures.

As stressed in the previous report, since the 1980s the ESF has placed the emphasis on

supporting vocational training and employment for workers in small and medium-sized

enterprises, in view of their importance in the varied fabric of the economy and in job

creation.

This applies, for instance, to the 1988 [10] regulation, which gives preference to vocational

training and employment aid for the purpose of modernizing SMEs, including co-operatives

and associations.

_**0**_
_**f**_

The new regulations approved on 20 July 1993 [11] further reinforce this trend. SMEs are to

be given special attention under the new Objective 4 (devoted to adapting workers to

industrial change and changes in production systems).

9 Regulation No. 4042/89, OJ L 388 du 30.12.89.
10 Regulation No. 4255/88 of 19 December 1988.
11 Council Regulation (EEC) No. 2084/93 of 20 July 1993 amending Regulation (EEC) No.
4255/88 laying down provisions for implementing Regulation (EEC) No. 2052/88 as regards
the European Social Fund.

For this purpose, training operations are to be linked to the requirements which SME

workers have to fulfil as a result of changes in production systems, the need to promote

quality products and to preserve the environment.

Similarly, under Objectives 1, 2 and 5b, where the Social Fund aims to promote stability

and growth of employment in the regions concerned, it is clearly stated that part-financed

projects will in particular include continuing vocational training, advice and guidance for

workers of either sex in SMEs.

Horizontal Objectives: Objectives 3 and 4

The ESF spent over ECU 7 billion on combating long-term unemployment and integrating

young people into working life during 1989-1993.

In providing vocational training for the long-term unemployed and the young under these

two Objectives, in order to give them basic training associated with work experience and/or

training in new technologies, the ESF aims to raise the standard of qualifications of the

labour force throughout the Community, which could benefit SMEs.

In connection with these Objectives, the ESF also supports vocational training projects in

favour of the most vulnerable people, particularly the disabled, in order to integrate them

into the ordinary, unprotected work environment and enterprises.

_One_ _example_ _in Luxembourg: from_ _market_ _analysis,_ _two foundations_ _confirmed_ _a_ _significant_

_increase in_ _demand_ _for labour in_ _horticulture_ _and gardening (activities most commonly_

_performed_ _by craft_ _enterprises_ _and_ _SMEs,_ _which_ _offer an_ _opportunity_ _to_ _integrate physically_

_or_ _mentally_ _handicapped people into the_ _economy)._

_They set up worker training_ _"under glass "_ _for the physically and mentally handicapped,_

_with ESF support, which reached "cruising_ _speed"_ _in 1991._ _Tfiis_ _type of action is_

_sometimes accompanied by a campaign to increase awareness among employers (by_

_brochures,_ _seminars),_ _in_ _order_ _to_ _encourage them_ _to take on_ _disabled_ _staff"_ _(e.g._ _in the UK)._

The ESF also aims to support the creation of enterprises by the long-term unemployed and

the young.

##### **1 9**

Vocational training part-financed by the ESF aims to eliminate a major obstacle to the

creation of enterprises, namely the lack of theoretical and practical knowledge in this field:

research has shown (e.g. in Belgium) that only the best-trained people want to set up their

own business.

In conclusion, it should be remembered that the operation of the Social Fund is governed

by the principles of Structural Fund reform, and thus by the principle of partnership. In

accordance with this principle, all Member States are responsible for selecting projects

locally and subsequently submitting them for Community funding. In this situation, the

Commission's staff cannot always know about the projects (if they are not the projects

which the Member States themselves chose to emphasize, particularly in the monitoring

committees).

It should also be noted that the principal responsibility for informing the final beneficiaries

of structural operations in the field of training and employment rests with the Member

States; this obligation is reinforced in the new legislation which has just been approved for

the Structural Funds. It is therefore necessary to ensure that Member States improve the

distribution of information on structural operations, particularly for enterprises.

**1.1.4** **COMMUNITY INITIATIVES**

There are two new measures to be added to the Community initiatives presented in the

previous report:

KONVER in favour of areas affected by the reduction in the activities of armament

industries and military bases. Launched at the request of the European Parliament, the

KONVER initiative was adopted on 6 April 1993 under Article 11 of Council Regulation
EEC No. 4253/88. It follows the financing of pilot projects in 1991 and 1992 under the

PERIFRA budget heading. This action is included in the 1993 budget with a credit of ECU

130 million (ECU 85 million for the ERDF and ECU 45 million for the ESF) and will

continue in 1994 and beyond. The new German Lander are eligible. The measures covered

include training, innovation and environmental measures generally used in conversion

programmes. A number of Member States, such as the United Kingdom and Belgium, have

submitted measures in favour of SMEs in their programmes.

_KD_

The RETEX initiative, adopted in 1992 [12], is intended to speed up the economic
diversification of the areas concerned, in order to reduce their dependence on the textile
and clothing sector and to facilitate the adaptation of viable enterprises in all industrial
sectors. The contribution of the Structural Funds is estimated at ECU 100 million up to the
end of 1993 with a budget of ECU 400 million planned for 1994-1997. Partially financed
measures include the improvement of know-how, encourage innovation by means of
advisory services, technical assistance, co-operation programmes, vocational training,
renovation of buildings and improved access to venture capital and loans.

Among the Community initiatives launched, a number can be grouped under the heading of
"integration of the least developed regions into the Internal Market" were of special interest
to SMEs. These are STRIDE, TELEMATIQUE and PRISMA.

STRIDE: ECU 460 million from the ERDF and the ESF (1990-1993) **[13 ]**

STRIDE aims: 1) to increase the capacity for innovation and technological development
of Objective 1 regions, where a lack of facilities and investment has
been identified in relation to Community averages;
2) to increase participation by research centres and institutions and by
enterprises from these regions in Community or international research
programmes and networks.

The initiative is also helping to develop links between industry and research in the regions
of both Objective 1 and Objective 2. 80% of STRIDE resources are allocated to Objective
1 regions.

TELEMATIQUE: ECU 233 million from the ERDF (1991-1993) [14 ]

TELEMATIQUE aims to promote the use of advanced telecommunications services in
Objective 1 regions, including improved access to advanced services located in other
regions of the Community. The initiative reinforces the process begun by the STAR
programme by encouraging SMEs to use advanced telecommunications services and
helping them to establish or develop such services themselves.

12 Commission decision, OJ C 142 of 04.06.92, p. 5.
13 OJ C 196 of 04.08.90, p. 18.
14 OJC 33 of 08.02.91, p. 7.

_**-g^**_

PRISMA: ECU 114 million from the ERDF (1991-1993) **[15 ]**

PRISMA aims to improve infrastructures and services to enterprises in Objective 1 regions

so that enterprises in these regions can participate and obtain full benefit from the

completion of the single market.

Eligible measures concern:

- the creation or expansion of calibration and metrology services for enterprises in order to

contribute towards the quality policy of the enterprises;

- technical assistance to SMEs as regards the opening up of public procurement and to

help them to cope with the abolition of measures within the meaning of Article 115 of

the EC Treaty.

As regards rural development, the leader Community initiative should be mentioned

because of its interest to SMEs, craft industries and tourism.

LEADER - (Links between actions for the development of the rural economy): ECU 450
million from the 3 funds (1991-1993) [16 ]

LEADER aims to encourage a local development approach based on the consideration of

programmes run by local development structures in zones of Objectives 1 and 5b. Part
financing is provided by means of global grants. In this context, LEADER supports

integrated programmes comprising a wide range of eligible measures: stimulation of rural

development, vocational training and employment aid, rural tourism, small and medium
sized enterprises, craft industries and services, developing local agricultural and forestry

products, providing facilities for local development groups, including telecommunications

equipment.

LEADER has benefited 217 local groups. An initial "snapshot" of the programme shows

that 25% of the budgets are devoted to SMEs **and** craft industries with a higher

proportion in 5b zones of France and Italy.

15 OJC 33 of 08.02.91, p. 9.
16 OJC 73 of 19.03.91.

_**•Z**_ _**Z.**_

Support for SMEs and craft enterprises is often supplemented by measures relating to

human resources or the development of local agricultural products. Tourism is the most

highly developed area of action under LEADER, representing over 42% of expenditure.

Tourism can be regarded as also concerning SMEs as this sector consists mainly of SMEs.

The Community initiatives in connection with the Community Human Resources NOW,

HORIZON, and EUROFORM have to be mentioned for which the ESF intervenes. They

emphasize the transnational dimension of the projects funded. More particularly, NOW

(equal opportunities for men and women) aims to promote the creation of businesses by

women.

_Example:_ _under_ _NOW,_ _the project_ _set_ _up in 1991_ _by the Saint_ _Gabriel Family_ _Social_ _Centre_

_near_ _Marseilles,_ _for_ _women wishing_ _to_ _achieve_ _social and_ _occupational_ _reintegration._

_There_ _are_ _plans to_ _create_ _two_ _enterprises_ _in the clothing and_ _catering_ _sectors. At the same_

_time, child-care facilities_ _have_ _been organised for_ _women undergoing_ _training._ _This_ _project_

_is_ _being_ _run_ _in partnership_ _with a similar project in_ _Naples_ _(Italy)._

An evaluation of Community initiatives has been launched, and the conclusions should be

available in 1995.

**THE** **FUTURE** **GENERATION** **OF COMMUNITY INITIATIVES**

On 16.06.1993 the Commission published a green paper on the new generation of
Community initiatives for 1994-1999 which caused widespread discussion of Community
initiatives. All the partners were requested to state their opinion by the end of September
1993. In doing so, Member States' representatives responsible for SMEs (Article 4
Committee) and the professional organisations representing SMEs were also informed and
consulted so that they could express their opinions and, if appropriate, submit proposals for
meeting the specific needs of SMEs, and thus increased the participation of SME
organisations.

By definition, Community initiatives have an obvious value added because.,of their
Community dimension. Unlike the CSFs, they can include measures which extend beyond
national frontiers and offer an appropriate framework for promoting transnational cooperation and the pooling of know-how in areas facing the same problems. They help to
implement innovations by enabling new approaches to be tried out, which can subsequently
become an integral part of the CSFs.

*** 3**

On the 16.02.1994, the Commission adopted its overall approach on the Community

Initiatives for the period 1994-1999. Total resources amount to ECU 13.45 bn being _9%_ of

total Structural Fund resources.

Among the 9 themes proposed by the Commission, there are some which are a continuation

from before. This is so for INTERREG II; internal and external cross border cooperation,

LEADER II, rural development, REGIS II, outmost regions, the initiative for

EMPLOYMENT-HUMAN RESOURCES with NOW and HORIZON, the initiative to

assist regions affected by industrial change RECHAR, RESIDER, RETEX, and KONVER.

Significant initiatives were proposed to respond to industrial change and to follow through

with the measures introduced in the White Paper on "Growth, Competitiveness, and

Employment", for example EMPLOYMENT-YOUTH START, EMPLOYMENT-AD APT,

the URBAN and PESCA initiatives and finally and above all the SME initiative.

The SME initiative with a budget of ECU one billion of which ECU 800 M is directed to

objective 1 areas will fund projects designed to improve production systems, the diffusion

of technological innovations, cooperation between SMEs and access to credit and venture

capital. This initiative will be an integral part of the "2nd generation" of Community

actions favouring SMEs.

The proposed initiatives were submitted to the European Parliament, the Committee of the

Regions, the Economic and Social Committee, as well as the new management committee

for the Community initiatives which is composed of representatives from the Member

States. The Commission decided the initiatives on 15 June and the texts were published in

the Official Journal on 1 July 1994.

1.1.5 AN INITIAL EVALUATION OF THE USE OF THE STRUCTURAL FUNDS

BY SMEs

Structural fund aid is made available to national and regional authorities on the basis of

Community Support Frameworks devised in partnership between the Commission and

Member States. The CSFs are concentrated on a small number of priority lines of action

and do not define specific projects. They therefore do not permit any precise breakdown of

the amounts allocated to SMEs or any indication of the resources which SMEs actually

received during 1989-1993.

**gt-f**

As regards Objective 5b, however, analysis of the services does indicate entirely

satisfactory results. 40% of ERDF operations under objective 5b (for 1989-1993),

namely over ECU 1 billion, concern SMEs and craft industries. This high rate of

intervention in favour of SMEs and craft industries illustrates the importance of the

potential role of SMEs and craft industries in the development of rural areas. On the other

hand, as regards regions eligible under Objectives 1 and 2, there are no figures available to

show the breakdown of ERDF operations in favour of SMEs and craft industries in

particular.

One should however mention the results of a study carried out in February 1993 for the

Commission on "The use of the structural funds by SMEs". This study was based on

national reports and reflects the difficulty in identifying specific projects.

A whole range of measures and instruments have been set up to support enterprises, e.g. in

the following fields: productive investment, access to finance - financial engineering

(venture capital, launch capital, guarantee funds, interest subsidies, etc.), business

modernization and restructuring, establishment of enterprise nurseries, technology parks,

vocational training, technological innovation centres, research, creation and development of

enterprises, advice for enterprises (management, marketing), international promotion,

exports. However, SMEs have not always succeeded in benefiting from the support

intended for them.

The study shows that out of ECU 10 billion reserved for supporting enterprises under CSFs

for the regions of Objectives 1, 2 and 5b (or 20% of the total budget of the CSFs), only

ECU 2.5 to 3 billion was allocated to SMEs in operational programmes, among which

SMEs would actually have received only a small proportion of the available funds,

particularly in regions eligible under Objective 1.

The study proposes a number of recommendations which are worth considering:

involve organizations representing SMEs (such as chambers of commerce and industry,

craft chambers, regional development agencies, and small business federations) in the

preparation, implementation and monitoring of operational programmes. In its contacts

with Member States, the Commission should insist on greater involvement in the

partnership for the professional organisations of SMEs;

simplify Community aid application procedures and make them more transparent for

SMEs, and speed up the allocation of loans;

increase efficiency and diversify the networks of intermediaries who can actually deal

with Community aid applications from SMEs at local and regional level;

persuade national authorities to use the loans and global grants available;

improve structural fund monitoring and evaluation procedures in order to be in a better

position to evaluate the specific impact of Community intervention on SMEs.

However, one finds that the SMEs themselves impede their ability to absorb Community

aid because:

they lack the necessary management capability or business development strategy;

owner-operators are unwilling to dilute their business capital, a pre-condition for

obtaining most forms of venture capital;

SMEs have limited ability to structure their projects in a commercially viable manner

and to supply the information required for evaluating the ventures associated with

granting aid (lack of "business plans").

The situation is complex. The Commission's staff themselves face a number of problems in

measuring the impact of the structural funds on SMEs, particularly because of: the

programming approach, which does not permit identification of projects which might be
submitted by SMEs, the large number of operational programmes (over 500 just for

Objectives 1 and 2) and the actual definition of SMEs, the criteria for which differ from

one Member State to another. It is also difficult, in the CSFs, to distinguish direct

measures in favour of SMEs from measures which could be indirectly beneficial to SMEs.

Moreover, measures in favour of SMEs can be classed under several lines of action:

"industries and services", "business competitiveness", "local development", "research and

technological development", which may benefit SMEs even though not specifically aimed

at them.

**<?C**

Finally, Member States also tend to give preference to infrastructure rather than to

measures to support SMEs, which has the advantage of consuming loans more rapidly and

producing immediate, tangible results, which is not always true of measures in favour of

SMEs.

Nevertheless, the Commission's staff have examined the CSFs and a large number of

operational programmes in regions eligible under Objectives 1 and 2. On this basis, they

have estimated the loans allocated to SMEs. These estimates show that almost ECU 5

billion (1989 prices) has been allocated to direct measures in favour of enterprises,

particularly SMEs. If we add to this ECU 5 billion the amount of intervention under 5b of

ECU 1 billion, **total intervention under Objectives 1, 2** **and** **5b can be estimated at**

**almost ECU 6 billion allocated to SMEs, or almost** **13%** **of the volume of the CSFs** **for**

**these 3 Objectives.**

Taking stock of measures and summarizing budgets in this way is well beyond the scope of

this report and requires closer coordination not only by the Commission's staff but also by

Member States (particularly the regional authorities) responsible for implementing the

programmes.

One possible way of improving knowledge of both the measures actually implemented and

the amounts which in fact benefit SMEs would be to persuade Member States to distinguish

measures in favour of SMEs from other measures. For this purpose, inclusion of a sub
programme or "SME development support" line of action in the CSFs would have the dual

advantage of rendering measures in favour of SMEs more visible and adopting a

differentiated, integrated approach to take account of the specific needs of SMEs. Targeting

action in this way would enable SMEs to be better informed of the possibilities of

Community support, find answers to their problems and thus improve their access to this

aid. This would also make it easier to identify examples of particularly innovative good

practices and transfer them to the regions facing greater problems.

The Commission wishes to improve the visibility of projects carried out in favour of SMEs

as part of regional policies. For this purpose, it is endeavouring to persuade Member States

and responsible authorities to pay special attention to support for SMEs in the new

Community Support Frameworks.

###### **^ 3**

One way of attaining this objective also lies in the implementation of Article 4 of the new

framework regulation, which provides for extending the partnership to "the competent

authorities and bodies - including, within the framework of each Member State's national

rules and current practices, the economic and social partners designated by the Member

State."

In proposing this expanded partnership, the Commission intended to foster participation at

national, regional and local level by competent authorities and bodies which can help to

increase and improve the effectiveness of structural fund operations. While it is clearly up

to Member States to designate the economic and social partners, the implementation of this

partnership could be a chance for businesses, especially SMEs, to gain representation and

hence influence over the use of the Structural Funds in their region.

The framework of the next set of programmes is fixed. It is now up to all the partners to

decide on the role that SMEs might play.

```
1.2 THE EUROPEAN INVESTMENT BANK (EEB) AND SMEs

```

1.2.1 Within the Community

Set up to facilitate the financing of investments encouraging European integration with

funds borrowed on - the capital markets, the European Investment Bank, financial

independent institution of the European Community, has performed as a financial

institution supporting Community policies.

The EIB finances investments fulfilling the objectives of Community policies, the priority

being to support regional development and to help to develop communications networks,

but also to support environmental protection and a better standard of living, and finally to

increase the competitiveness of industry. It also contributes towards policies concerning co
operation with non-member countries.

In order to increase industry's international competitiveness and encourage its integration at
Community level, the EIB finances large-scale investments by means of individual loans
and small-scale investments, particularly by small and medium-sized enterprises, indirectly
via its global loans.

_**•Î-Î**_

The EIB uses global loans to support small and medium-scale investments,

particularly by SMEs, which could not be financed by individual loans on grounds of

administrative efficiency. Global loans are concluded with financial intermediaries

operating at national, regional or even local level, who use them in agreement with the

Bank and according to its economic, technical and financial criteria. Global loans have

gradually extended their scope to adapt to changing needs and the diversification of

Community policies.

Global loans usually fulfil several Community policy objectives and concern:

in disadvantaged areas, small and medium-sized enterprises in industry, services

(especially tourism) and agriculture and small-scale infrastructures;

outside these areas, investments by small and medium-sized enterprises in industry and

tourism;

and whatever their location, small and medium-scale investments which contribute

towards Community objectives in the sphere of environmental protection, energy,

transport and advanced technologies.

**«•**

The EIB collaborates with almost a hundred partners, financial institutions or commercial

banks.

The figures in Table 4 show the importance of the EIB's role in supporting investments by

SMEs.

Since 1988 the EEB has provided considerable support for the funding of SMEs. Thus,

almost 36,500 SMEs have received loans worth a total of over ECU 9.7 billion, or

more than 50% of the finance allocated to industry and services. More than 23,000

operations (ECU 6.4 billion credit) concern investments in assisted areas and about

13,500 projects outside these areas (of which 11,600 and ECU 3 billion represent own

resources, 1,700 and ECU 660 million are NCI resources).

#### **£5**

Table 4

THE EUROPEAN INVESTMENT BANK

The EIB in figures:

The volume of EIB loans totalled:

in 1992: MMECU 17 (up 10.7 % in 1991), of which MMECU 16 was loaned in the
Community and MECU 893 in connection with non-member country
cooperation policies.

in 1991: MMECU 15.3

**The EIB and** regional development:

1992: MMECU 11.8 (93 % in regions eligible for structural fund intervention:
Objectives 1, 2 and 5b).

1991: MMECU 8.49

Between 1989 and 1992, EIB finance in favour of regional development totalled over
MMECU 35, including MMECU 31 in assisted zones (Objectives 1, 2 and 5b).

The EEB and SMEs:

In 1992 the EIB concluded global loans totalling ECU 3,258 million, compared with
3,758 million in 1991. Altogether, 8,788 credits worth 4,071 million were granted in
1992 compared with 10,271 worth 2,991 million in 1991 (of which respectively 17
million and 71 million on global loans of the current NCI).

40 % of the volume of credits under global loans was granted for small and mediumscale investments in the infrastructure and energy sectors, usually carried out by local
authorities.

60 _%_ of credits under global loans go mainly to support SMEs in the least developed
regions. A breakdown of SMEs by the number of persons employed shows a
concentration of enterprises with fewer than 50 employees (over half the amount and
almost 75 % of the number of credits).

Finance granted by the EIB in the Community to support the competitiveness of
enterprises totalled

in 1990: MMECU 3.7 of which almost MMECU 2 was for 7,447 SMEs

in 1991: MMECU 3.3 of which MMECU 2.3 was for 9,548 SMEs (including credits
under global loans from the NCI)

in 1992: MMECU 2.6 of which MMECU 2.1 was for 7,223 SMEs. Italy (MECU
913), Germany (MECU 321), France (MECU 318), Belgium (MECU 183)
and Spain (MECU 162) have benefited most from global loans for SMEs in
1992. Moreover, the EIB supports SME investments as far as the
environment or the rational use of energy are concerned.

**^o**

**(6**

The European Council in Edinburgh on 11 and 12 December 1992, recognising the

importance of the role of the EIB, particularly in the unfavourable economic climate,

requested it to implement **a** temporary loan mechanism totalling ECU 5 billion (for 1993

and 1994), more commonly called the **"Edinburgh facility",** in order to speed up the

funding of infrastructure projects, particularly those relating to trans-European transport

networks, telecommunications, energy and environmental protection. The mechanism is

already in place and the EIB has already granted loans for an amount of ECU 3.5MM in

November.

At the same Council it was also decided to create **a European Investment Fund,** as part of

the European growth initiative, to grant loan guarantees for projects relating to trans
European networks and SMEs. With a capital of ECU 2 billion underwritten by the EIB

(40%), the Commission (30%) and banks (30%), this instrument will be able to grant

guarantees up to an ultimate total of eight times its subscribed capital, or ECU 16 billion.

Later on the EIF could acquire shareholdings. Thus, this new fund will be able to benefit

SMEs throughout the Community by guaranteeing them loans.

The European Council of Copenhagen on 21 and 22 June 1993 requested the EIB, in co
operation with the Commission, to increase the temporary loan mechanism adopted in

Edinburgh (the "Edinburgh facility") by ECU 3 billion and to extend it beyond 1994. Of

these ECU 3 billion, **one billion** will go to improve the competitiveness of SMEs, now

called the **"SME facility".** The loans will have a 2% interest rebate granted within a period

of 5 years. Only investment projects which will ensure job creation will benefit from these

interest rebate.

1-2.2 Outside the European Community

Outside the Community, the EIB operates within the framework of the Policy for

Cooperation with third countries. It provides finance for investments in industry,

agriculture and services, mainly through global loans with financial institutions and

development banks.

In the countries of Africa, the Carribean and the Pacific as well as the overseas countries

and territories the EIB cofinances such investments partly from its own resources and partly

from risk capital from the budget resources.

From 1976 to 1992 within the 4 Lomé Agreements more than ECU 1900 million (57% of
the total assistance) was accorded to investments in the production sectors, of which about
**500 million was given to** **aproximately** **1100 small enterprises** in the private sector.

###### **9/]**

In the countries of the Mediterranean basin various financial protocols in force from 1988

to 1992 permitted the funding of projects in industry, agriculture and services of up to

ECU 400 million (24% of the total) of which **200 million went to 1400 investments by**

**small enterprises** in the private sector, mostly in partnership with enterprises from EU

countries.

In Central and Eastern Europe the activity engaged in since 1990 has permitted the support

of investments mainly in the infrastructural sector and the energy sector. In industry the

progressive development of the banking sector made it possible to provide global loans up

to a total of 290 million (from a total of 890 million at the end of 1992) for about 20 first

credits operations amounting 42 million.

**1.3** **THE** **NEW COMMUNITY INSTRUMENT** **(NCD** **AND SMEs**

To be eligible, the projects which are submitted must comply with the objectives fixed by

the Council in its decisions "enabling the commission to contract loans to promote

investments in the community". These objectives are detailed in the implementation

decisions authorizing the various sets of loans. The Commission and the EIB negociated

cooperation agreements for the mandates given to the Bank to act on behalf of the

community, for the account and at the risk of the community.

The general objectives change little from one NCI tranche to another, and concern the

funding of investment projets contributing to a growing convergence and integration of

economic policies (NCI I, II and III) to industrial change and to the competitiveness of the

Community, notably in the application of new technologies and innovations (NCIIV).

As regards the guidelines, they are more specific and turn the various NCI tranches into

instruments meeting the requirements of the economy of the moment.

Therefore, the implementation decision for NCI II [17] provided for the funding of SME

productive projects together with funding energy and in infrastructural projects.

17 Council decision 82/169/EEC of 15.03.82, JO L 078 of 24.03.82, p. 19.

_**ÏJL**_

The NCI III [18] retains the same priority. The guidelines established by the Commission

ensure that the SME-NCI loans which are not submitted to any geographical limitation,

could be used to complement the EIB operations in non assisted areas.

The NCI IV [19] was confined exclusively to funding projects for SMEs in industry,

particularly those projects that include new technologies and innovation as well as the

rational use of energy. Furthermore, these loans could be used to fund certain intangible

activities such as those connected with patents, know-how, research and development.

The Council of Ministers in their decision empowering NIC IV [20] "invited the EIB to set

aside a fund of ECU 750 M from its own resources" for loans covering the same fields. In

authorising the EIB to intervene in favour of SME projects outside assisted areas with its up

to 750 million, the Council of Bank governors has also authorised the Bank to pursure if

necessary that type of investment beyond that tranche.

_The_ _NCI_ _in_ _figures:_

_On 31.12.1992,_ _loans granted under NCI_ _III_ _and_ _NCI IV_ _totalled_ _ECU 3,544.4 million,_

_of_ _which_ _ECU 682.8_ _million were_ _for_ _NCI_ _IV._ _These loans were_ _used to finance new_

_investments worth ECU 7.2 million,_ _corresponding_ _to over_ _9600projects_ _and_ _helping_ _to_

_create almost_ _60,000 new jobs. In_ _addition,_ _most of the loans are_ _concentrated_ _on_

_enterprises_ _with fewer than 50_ _employees,_ _in_ _terms_ _of both the_ _number_ _of projects_

_financed and the_ _amounts_ _granted._

_The_ _major part of the global_ _loans under the_ _last 3_ _tranches (NCI_ _II, NCI III and NCI IV)_

_went to_ _industrial enterprises_ _(89%),_ _particularly_ _the_ _engineering industry_ _(19%),_ _the_

_food_ _industry_ _(13%),_ _the_ _textile industry (10%)_ _and_ _the_ _paper_ _indsutry_ _(8%). A_

_significant_ _proportion_ _went_ _into services (7.5%)_ _and_ _particularly business services_

_(5.4%)._ _Moreover,_ _the bulk of the_ _individual loans was concentrated_ _in the_ _assisted_

_regions_ _of the_ _Community._ _More_ _particularly,_ _in the case of NCI IV_ _(ECU_ _682.8 million),_

_the_ _breakdown_ _of_ _loans_ _by_ _country shows_ _that Italy_ _received_ _the most_ _(ECU 285.7_

_million),_ _followed_ _by_ _Spain (ECU 132 million)_ _and the UK_ _(ECU_ _96.1 million)._

18 Council decision 83/200/EEC of 19.04.83, JO L 112 of 28.04.83, p. 26.
19 Council decision 87/182/EEC of 09.03.87, JO L 71 of 14.03.87, p. 34.
20 Council decision 87/182/EEC of 09.03.87, JO L 71 of 14.03.87, p. 34.

**3>**

1.4 The ECSC and SMEs

SMEs in some areas of industrial decline benefit preferentially from this type of

Community resources within the context of the loans granted by the ECSC . They are loans

granted under favourable market conditions with interest rebates (max. 3%) in connection

with job creation.

**H** **RESEARCH AND TECHNOLOGICAL DEVELOPMENT (R** & **TD) AND**

THE SMEs

The attention being paid by the Commission to strengthening the cohesion and coordination

between Research and Technological Development (R & TD) policies and action in favour

of SMEs is clearly expressed in the Commission's proposal to the Council on the 4th R &
TD Framework Programme [21] .

R & TD is a key element in the competitiveness of SMEs in a context of heightened

international competition} That is why the Commission has endeavoured to increase the

participation of SMEs in Community research programmes. The Commission has in fact

opened up its R & TD programmes to SMEs and is taking action to disseminate new

technologies.

The communication from the Commission entitled "SMEs and Community activity in
research and technological development" [22] makes a detailed analysis of the participation of

SMEs in existing programmes, particularly those under the 3rd R & TD framework

programme, and sets out the prospects offered by the 4th R & TD framework programme

for the achievement of more effective co-ordination.

In the present report the Commission has concerned itself with R & TD programmes which

have formed the subject of particularly close coordination between the Commission's staff,

especially programmes more specifically aimed at SMEs and programmes in which SMEs

have played an active part.

21 Fourth R & TD framework programme. COM (93) 276/OJ 93/C 230/04.
22 COM (93) 356.
#### **3y**

**II.l** **PARTICIPATION BY SMEs IN R & TD PROGRAMMES CONCERNING**

**INDUSTRIAL TECHNOLOGIES AND MATERIALS, THE ENVIRONMENT,**

**BIO-SCIENCES AND TECHNOLOGIES AND ENERGY**

Under Community framework programmes for research and technological devleopment,

the participation of SMEs is a strategic priority. This priority is reflected in the

implementation of individual specific programmes, which shows an active move to

encourage greater participation by SMEs in all the research projects undertaken. Contracts

signed in 1991 and 1992 under all the specific R & TD programmes, taking all sectors

together, with the exception of information and telecommunications technologies, include:

**1004 contractors (or 11.5%) are SMEs, representing a commitment of ECU 167**

**million (or 12% of the total budget).** The corresponding percentages for industrial

programmes such as **BRITE-EURAM** **industrial and material technologies (32%** **of**

**contractors and 25% of funds) and JOULE non-nuclear energy (16% and 19%)** are

less than the general average, as one might expect. SMEs are playing a growing part

especially in the BRITE-EURAM programme (industrial technology and materials), under

which there are two specific projects aimed at SMEs entitled Feasibility Premiums (FPs)

and "Cooperative Research Action for Technology (CRAFT)".

Feasibility premiums are aimed at individual SMEs with research capacity which wish to

prepare a proposal for the BRITE-EURAM programme. This action grants financial aid up
to a maximum of ECU 30,000 and covering up to 75% of the total cost of feasibility

studies lasting 9 months and intended to test or prove the feasibility of a concept, process

or material for a BRITE-EURAM project.

CRAFT enables SMEs with few if any R & TD resources to gain access to research by the

allocation to a transnational group of industrial SMEs of financial aid equivalent to 50% of

the total cost of an R & TD project carried out by a third organisation (research centre,

university or enterprise). Individual projects must involve a minimum of 4 independent

SMEs from at least 2 Member States and the budget must be between ECU 400,000 and

ECU 1 million over a one or two-year period.

One of the basic criteria for projects under the framework programme is transnational

cooperation (shared-cost research projects, concerted action and accompanying measures).

##### **_3S_**

This cooperation should entail close contact with businesses, universities or research centres

in other regions of the Community. In this context, CRAFT has the specific aim of

stimulating close collaboration between SMEs themselves by bringing together businesses

in a particular sector or from different sectors to consider a common technical problem

which can be dealt with jointly for the benefit of all.

In order to improve access to CRAFT for potential customers of SMEs and to obtain a

support and advice instrument for SMEs wishing to participate in CRAFT, a network of

**"National Focal Points"** has been set up by the Commission, covering all Community and

EFTA countries. This is an informal, flexible network not financed by the Commission,

but it is through this network that information is distributed and many CRAFT

accompanying measures are organised (promotion targeted on SMEs, sectoral studies,

workshops), helping SMEs to identify their R & TD needs and their partners before

submitting their candidature to CRAFT.

The promotion of CRAFT has also been particularly fruitful via the R & TD sub-network

**of the Euro-Info-Centres.** There have been similar contacts between Commission

departments and the VALUE relay centres recently set up.

Apart from programmes aimed specifically at SMEs, other measures are taken in favour of

SMEs, such as the inclusion of special mention in all information documents and wider

circulation of R & TD results among SMEs.

The Feasibility Premiums action implemented since 1989 currently has a budget of ECU 6

million for 1991 to 1993. The CRAFT programme has a budget of ECU 57 million for the

same period. These 2 programmes represent 10% of the BRITE-EURAM programme

budget **and** concern exclusively activities specific to SMEs.

SME participation in Feasibility Premium and CRAFT, actions under the Brite-Euram
programme is shown in Table 5.

Although it has not yet been possible to evaluate CRAFT as the first CRAFT contract did

not start until 1993, experience with a number of pilot projects completed in 1991 and 1992

has proved very positive.

_**3£**_

**Table Summarizing SME Participation** **in** **Feasibility Premium**
**and** **Craft Actions under** **the** **BRITE-EURAM Programme**

**Table** **5**

TOTAL

540

192

5,631,109

TOTAL

393

195

comprising

706 PME

2,720,335

76*

60

23,642,482

From

15.12.92

to

10.09.93

270

93

2,740,392

From

15.01.93

to

31.05.93

237

117

1,645,483

37

29

12,017,087

Number of

proposals

Number of projects
selected

Funds committed in

ECU

Number of

proposals

Number of projects
selected

Funds committed in

ECU

Number of

proposals

Number of projects
rejected

Funds committed in

ECU

Actions

Feasibility
premiums

Actions

Craft

Craft

phase I

Craft

phase II

GLOBAL

BUDGET

6 MECU

(1991-93)

GLOBAL

BUDGET

57 MECU

1991-1993

Up to
15.12.92

270

99

2,890,717

Up to
15.01.93

156

78

1,074,852

39

31

11,625,395

50 proposals + 5 resubmissions

**®>3**

Among the proposals adopted, the following three examples show that CRAFT aims to

meet very specific needs of businesses by enabling them to solve everyday technical

problems: development of a new aluminium cladding system to prevent corrosion (5

partners from 4 different countries), use of microwaves in continuous ovens to manufacture

food products (6 partners from 3 countries), development of a wire impregnated with

synthetic diamond for stone-cutting (10 partners from 3 countries).

The typical profile of an SME participating in CRAFT is a business from a traditional,

low-technology sector, unlike the businesses which belong to the much less numerous

category of what are known as "High Tech'' SMEs.

The impact and advantages of these programmes for SMEs may be summarised as follows:

they are an effective and viable means of developing and acquiring new technologies

and know-how directly linked with their activities;

SMEs are involved in a process of apprenticeship enabling them to discover the value

and increasing importance of R & TD as a factor in maintaining or improving their

competitiveness;

they enable SMEs to gain a better understanding of their technological and competitive

environment, and thus encourage their strategic approach;

they facilitate the establishment of contact networks for future collaboration with a

more direct impact on their business activities.

**H.2** **PARTICIPATION** **BY** SMEs IN RESEARCH ACTIVITIES ON

INFORMATION AND TELECOMMUNICATION TECHNOLOGIES

The Commission has a number of actions relating to pre-normative and pre-competitive

research and technological development of enabling technologies in areas such as

information and communication, industrial and materials technologies. The programmes for

Information Technologies, Communications Technologies, and for the Development of

Telematic Systems in areas of general interest are some examples. They are implemented

by periodic open calls for proposals for trans-national cooperative projects.

The involvement of SMEs in these projects has been increasing since the Commission
started the ESPRIT programme in the early 80s.

#### **3^**

Today, SMEs participate in 80% of the projects in the area of Communication

Technologies, 65% in the area of Information Technologies and approximately 95% of

projects in the Telematic Systems area. Most of the SMEs which are partners in the

projects are from high-technology or technology-intensive sectors of industry. They are

R&TD service providers or components or semi-finished goods manufacturers and are

essentially involved in the development of R&TD applications. SMEs from the traditional

industry sectors also participate as end-users, benefiting from the exploitation and

adaptation of advanced technology.

The pre-competitive research carried out under the above research programmes is helping

to create and improve the specific enabling and generic technologies that are of the utmost

importance in achieving a competitive advantage for EC industry, including SMEs. The

pre-normative research contributes to the development of European and world-wide

standards and is also of interest to SMEs, as it provides them with the means to extend

their potential markets.

The Information Communication Technologies (ICT) programmes have enabled SMEs to

build links with other companies, universities and research centres and have encouraged the

emergence of start-ups and the growth of innovatory SMEs. With their capacity to innovate

and react quickly to market changes, SMEs have actively participated in the ICT

programmes and helped to accelerate the development of new types of products and the

exploitation of leading-edge technologies.

Past experience has, however, highlighted the difficulties faced by SMEs and other
organisations from the peripheral regions of the Community in participating in some
research areas. To cope with this situation, pilot actions were started aiming at
strengthening the ability of local organisations, particularly SMEs, to participate in the
programme, and at reducing the risk of using the research results.

These special actions are primarily devoted to help SMEs to understand and apply EC

R&TD derived technology. They have provided support for the first-time use of technology

(e.g. the use of electronics in production), workshops, training and publication in the Less

Favoured Regions.

**3 ^**

The main activities carried out in these regions are aiming at increasing awareness of

technology and applications and facilitating the exchange of experts with other regions of

the EC, transferring technology from research projects, demonstrating to industry,

particularly SMEs, practical applications of the technology, and supporting research into

advanced topics in preparation for future projects.

As a direct result of the special actions in Spain, Portugal, Greece, Italy and Ireland a number of

SMEs, **the** majority of which had no previous experience with advanced technology, have

acquired or are in the process of gaining new skills. These actions have also contributed to a more

efficient Information Technology infrastructure in the Community and increased the demand for

innovation.

Awareness and promotion activities were also carried out to make sure that SMEs obtain

information on R & TD programmes and procedures for application, and to promote the

cooperation between SMEs and other enterprises, universities and research centres.

Complementary activities in other programmes are also related to the promotion of development

and access to research and technology. Particularly worthy of mention are the activities carried

out by the programme for Trade Electronic Data Interchange Systems, using communications

networks (TEDIS). As EDI - Electronic Data Interchange - is playing an increasing role in

making European firms more competitive and efficient, it has committed funding to a range of

regional centres to promote awareness in the use of EDI, putting particular emphasis on raising

awareness on SMEs throughout the Community and in those countries or regions which are

lagging behind.

Table 6 shows the percentage participation by SMEs in programmes concerning

telecommunications and information technologies.

**H.3** **PARTICIPATION BY** SMEs IN PROGRAMMES TO EXPLOIT RESEARCH

**RESULTS**

VALUE programme: (1989-1993) ECU 38 million - exploitation of the results of Community
research.

VALUE programme II - centralised action 1992-1994 66 MECU.

_**y]^>^>**_

Table 6

**TABLE SUMMARIZING** SME **PARTICIPATION IN FRAMEWORK PROGRAMMES CONCERNING**

**TELECOMMUNICATIONS AND INFORMATION TECHNOLOGIES**

Credits

Allocated to

SMEsO)

407,810,632

13,753,000
16,438,000

43,141,000

1,238,234,559

2,200,000
254,073,000

2,910,156

295,083,000

741,917,706

234,994,000

2,965,200

**3,253,520,253**

SME/Global

Budget (2)

(%)

54 %

8 0 %

9 4 %

9 0 %

8 3 %

13 %

5 4 %

40 %

83 %

7 8 %

9 2 %

4 2 %

74 %

Total

239

43

28

63

418

88

92

109

75

379

134

52

1720

%

58

74

93

87

72

0

55

50

79

64

94

60

6 5 %

Credit

Committed

750,000,000

17,187,000

17,442,000

47,867,000
1,500,348,062

17,000,000
468,401,000

7,276,890

356,025,000

949,676,756

255,865,000

7,060,000

**4,394,148,708**

Frame

work

I

II

III

Programme

ESPRIT

AIM

DELTA

DRIVE

ESPRIT

EUROTRA

RACE

VALUE I (3)

COMM, TECH

INFO, TECH

TELEMATIC

VALUE IIW

**TOTAL**

%

29

31

44

32

38

0

23

47

28

32

33

58

3 3 %

Participations***

Projects*

SMEs

139

32

26

55

300

0

51

55

59

243

126

31

1117

SMEs

226

71

88

133

844

0

129

101

173

515

520

78

2878

Partners**

SMEs

159

61

70

81

545

0

95

93

128

382

385

66

2065

%

18

26

43

30

22

0

16

49

21

19

31

60

23 %

Total

551

197

160

254

1453

35

421

197

480

1182

1173

113

6216

Total

1264

277

203

442

3769

134

881

205

812

2699

1699

131

12516

**0**

(1) Budget for projects with SME participation. NB: these figures are a guide, since subsidiaries of large undertakings, for example, are included
among SMEs. The amounts indicated for Value I and Value II concern the projects introduced by SMEs.
(2) % of the budget for projects with SME participation/Global budget.
(3) Projects for exploitation of Research (1989-92).
(4) Projects for exploitation of Research (1992-93).

 - Number of contracts.
** Partners: there may be several SME partners in the same project.
*** Participation: an SME may participate in several projects.

The VALUE programme aims to promote the dissemination and efficient use of the results

of research in science and technology in order to help improve the competitiveness of

European industry, and particularly that of SMEs. The support provided for contractors

participating in Community research, and particularly SMEs, involves financing market

research and feasibility studies, and the preparation of business plans for SMEs seeking

venture capital or other forms of finance.

The centralized operations approved by the Council on 29 April 1992 [23] for the diffusion

and exploitation of the results from the Community R&TD activities (VALUE II) put in

motion actions which directly or indirectly benefited SMEs. Amongst these the following

are notable:

grants to SMEs interested in exploiting the results from Community R&TD

(exploratory awards or exchange of technology awards) to facilitate the use of the

results in the SMEs environment and to exploit the results from Community R&TD

programmes;

direct assistance to promote the exploitation of Community R&TD results (exploitation

projects);

the setting up of a network of 27 relay centre within the Member States to improve the

level of information, particularly for SMEs, on the activities of Community R&TD and

on the results and resulting knowledge;

the organisation within this network of thematic actions to promote the results

(VACRO DAYS) among the Industry fabric of Community regions and in particular

SMEs.

The CORDIS information system, comprising several data bases, centralizes and updates

key information on R & TD activities and their results. It gives SMEs access to the

information through Euro Info Centres, for instance (which should thus have electronic

access to application forms for every Community R & TD programme), or VALUE relay

centres set up in 1992.

23 Council decision 92/272/EEC of 29.04.92, JO L 141 of 23.05.92, p. 1

4o2

VALUE SME is a pilot action launched in 1991 which aims to promote the transfer of

Community research results to SMEs and to exploit the research results obtained by SMEs

under a Community programme. VALUE SME offers premiums for exploration (for the

conclusion of an agreement) and the transfer of technologies. Some 300 SMEs have

benefited from the activities of VALUE-SME. The budget for this pilot action is ECU 2.1

million. In view of the encouraging results achieved in 91 and 92, the action was renewed

in 93.

The VALUE programme will organize a series of seminars to promote the results of

Community research among SMEs which benefited from the EUROMANAGEMENT 
R & TD Audits pilot action. It will be recalled that the EUROMANAGEMENT - R & TD

Audits action enabled 657 SMEs to benefit from the intervention of 47 technological

advisers, who identified over 1,000 R & TD projects which, early in 1993, led to 120

research proposals addressed to the Commission in response to invitations to submit

proposals for the third framework programme; 30% of them were selected. This action

should be repeated in 1994 for the 4th Framework Research and Development Programme.

**H.4** **PARTICIPATION** **BY SMEs IN INNOVATION AND TECHNOLOGY**

**TRANSFER**

**,s**

SPRINT programme: (1989-1993) ECU 90 million.

The Community SPRINT programme [24] promoting innovation and technology transfer is

one of the instruments set up by the Community to improve the ability of SMEs, including

craft enterprises, to absorb technologies.

Sprint has three main lines of action.

- to strenthen the European innovation and technology support service infrastrucutre;

- to facilitate the diffusion of new technologies and other resources to firms;

24 Council decision 89/286/EEC of 17.04.89, OJ L 112 of 25.04.89, p. 12.

**O'O^**

- to improve the awareness and understanding of innovtion and the exchange of

experiences on national and community innovation policies.

Since April 1989, a series of actions have been launched corresponding to each of these

three lines of action.

A. European Infrastructure of Innovation Support Services

In order to strengthen the European Infrastructure of Innovation Support Services and

further develop these Services throughout Europe, SPRINT has promoted the establishment

of transnational networks of innovation support services, working in cooperation and

disseminating the "best practice" in their fields.

The programme currently supports

- 50 networks involving in total more than 300 technology agencies, liaison services,

regional development agencies, Chambers of Commerce and Science Parks spread

throughout Europe;

- the EUROTECH network, which has brought together twelve National Research and

Development Organisations including ANVAR (F), British Technology Group (UK),

CDTI (ES), CNR (IT), Fraunhofer Gesellschaft (D), TNO (NL), etc;

- 50 networks of collective sectoral research centres - "centres techniques industriels" in

France, "Forschungsgemeinschaften" in Germany - grouping in total 200 such

associations, i.e. one third of all such centres in Europe, in either traditional industries

such as construction, textiles and wood or concerned with trans-sectoral technologies

such as laser and information technology.

Moreover, to build upon the extensive experience developed within those networks,

SPRINT has launched an integrated coordinated programme to identify and disseminate

"Best Practice". This project will contribute to strengthening professionalism and

management of the networks, establishing quality standards and enhancing transnational

links between participants.

In addition to the above networks the SPRINT programme was instrumental in launching

the European Association for Contract Research Organisations (EACRO) which currently

gathers more than fifty contract research organisations in Europe.

**4o**
**V**

The aim objective of this mega network, similarly to the European Venture Capital

Association (EVCA) and the European Association for the Transfer of Technologies,

Industrial Information and Innovation (Til) which were launched during the pilot phase of

the programme, is to become the forum of Europe for the organisations it represents and

provide them with the services necessary for their development such as training and

exchange of information.

Finally, the programme, on an experimental basis, has been helping local and regional

authorities to design and plan Science Parks and Innovation Centres better by providing

them with European expertise and best practice in this area. Three calls for expression of

interest were launched in this context. The first one resulted in the selection of more than

100 experts in designing, planning and managing Science Parks, the second and third ones

in the selection of 82 Science Park developments which could benefit from the experience

of a small group - 3 to 5 - of experts referred to above.

As an indirect result SPRINT has become the focal point for European expertise in this

area.

B. Intra-Community diffusion of technological resources

In order to facilitate the Intra-Community diffusion of [s] technological resources and

competences to companies, the programme provides, on an experimental basis, support for

specific industrial large-scale technology transfer projects which demonstrate the means of

adapting and applying new available technologies in sectors or regions where they are not

yet used. Projects which directly involve industrial firms, both large and small ones, are

designed to act as catalysts for trans-regional or trans-sectoral technology transfer.

Feasibility studies on forty of these specific projects are currently underway and it is

expected that thirty projects t will proceed, with Community support, through to full

implementation.

Moreover, in order to develop awareness amongst SMEs as to the access and the use of

new techniques for innovation and technology management, the programme has launched

the MINT initiative. MINT (Managing the Integration of New Technology) has been

developed as a Community-wide experimental diagnostic consultancy scheme, providing

EC financial support to 1000 SMEs throughout the Member States, who will receive

consultancy to facilitate their adoption of new technology.

**^ I**

Several actions have been launched concerned with the dissemination of information and

innovation management techniques. Examples of such actions are the support for

transnational cooperation schemes between Research and Technology Organisations, 
referred to above as networks - to disseminate technical and economic information

concerning new technologies and innovation management techniques as well as to promote

the effective adoption by companies of Advanced Manufacturing Technologies, and quality

management, control and assurance procedures. It is estimated that through these

cooperation schemes more than 100,000 industrial SMEs, mostly in traditional

industries, are reached annually.

To support the better use of design as an innovation management tool, the programme has

launched during its experimental phase the European Community Design Prize. Three

awards have already taken place with a total of 1000 SME applications throughout the

Community. The next ECPD will take place in 1994.

In addition, the programme has continued to provide support for actions which aim at

reducing the transaction costs for the transnational acquisition of technology and/or

technical interfirm cooperation. Examples of such actions are the 70 networks of brokerage

and liaison service whose task it is to facilitate transnational acquisition of technology by

companies or establish technological cooperation between them. More than 300 interfirm

agreements have been identified as a direct result of these networks. Another example is

the Technology Transfer Days, which put selected companies in a particular region,

seeking partners in other countries, in contact during one or two days with technology

brokers from other regions. 16 Technology Transfer Days have already been held and 16

more will be organised over the next two years enabling more than 1,300 firms to present

their requests/opportunities for technological cooperation to technology brokers and liaison

services all over Europe.

Finally, two schemes concerned with the financing of innovation have been launched. The

first one - called Transnational Investment Fora - brings together entrepreneurs of

innovative growth companies looking for sources of funding with financiers, also from

several Member States, looking for investment opportunities. 8 Investment Fora have

already been held bringing together a total of 300 innovative high tech SMGEs. Over the

next two years 10 such fora will be organised, bringing together in total 800 innovative

companies with more than 1000 financiers, mostly venture capitalists, from all over the

Community.

**/)** **o G**

The second, known as the "Plan for financing technology according to performance"

(F.T.P.) aims to facilitate the acquisition of new technologies by enterprises, and

particularly SMEs, by improving liquidity and strengthening the competitiveness of

European suppliers of new technologies, which are often also SMEs. Thus, SPRINT

supports a group of major banks and selected European financial institutions which act as

intermediaries in promoting technology. SPRINT underwrites part of the finance at risk

which these financial institutions provide for technologies under FTP projects - the value of

each project ranges from ECU 50,000 to 200,000 - and takes charge of the commercial and

technical arrangements.

Table 7 gives a breakdown, by type of measure set up by the Commission, of the number

of enterprises which have benefited directly from the SPRINT programme, by acquiring,

testing or being informed of new technologies. **7,200 SMEs acquired new technologies,**

**24,000 SMEs tested or evaluated new technologies and 64,000 were made aware** of

**new technologies,** particularly via transnational networks. Altogether, **95,200 SMEs**

**benefited from the SPRINT programme.**

C. Effectiveness and coherence of public policies

With regard to improving the effectiveness and coherence of public policies promoting

innovation and technology transfer two types of activities have been financed.

The first one, which partly already started during the pilot phase, concerns the exchange of

knowledge and experience between the Member States and the Commission concerning

innovation policies and innovation support measures.

Topics which have received particular attention are:

Patents and other Intellectual Property Rights;

Science Parks;

Regional Technology Advisory Centres;

Innovation Management Techniques, particularly Design, Value Analysis and Quality.

**^o** **^**

**Table 7**

**Number of SMEs which have directly benefited from SPRINT**

Number of

SMEs that

have been

made aware

of new

technology

18,000

45,000

1,000

Number of

SMEs that

tested/

evaluated

new

technology

6,000

18,000

L Adoption of new technology

A. Transnational technological cooperation between SMEs through
transnational networks for inter-SME coopération, and technology
transfer days

  - 600 agreements established each involving two SMEs. Examples
of such agreements are production or distribution licences, joint
R&D and production agreements;

  - for each agreement to come through, an average 10 SMEs have
evaluated or tested the technology;

  - for each agreement to come through an average 30 SMEs have
been made aware of the new technology

B. _Diffusion_ _of_ _new technologies_

_f through networks_ _of Research and_ _Technology (since_ _1986) :_

300 Research and Technology Organisations - with an average 750
SME clients each, have participated in this action

   - 2 % of client SMEs have acquired new technology as a direct
result of activities of these networks

   - 8 % of client SMEs have evaluated or tested new technology as
a direct result of the activities of these networks

   - 20 % of client SMEs have been made aware of new technology

_4_ _Specific projects for intra Community innovation transfer (20_
_such projects each involving 5_ _SMEs)_ _:_

    - SMEs involved in the specific projects

   - SMEs that will be made aware of new technology when
diffusing the results of the specific projects

II. Other benefits

C. Facilitating the uptake of new technology through the MINT
(Managing the Integration of New Technology) scheme

  - 1000 SMEs will receive consultancy to facilitate their adoption of
new technology

D. Investment Fora

  - 10 fora each one involving an average 40 innovative SMEs, from
different countries looking for funds

Number of

SMEs that

acquired new
technology or

other

resources

(e.g. finance)

1,200

4,500

100

Number of

firms directly

involved

1,000

400

Total A - D

7,200 24,000 64,000

**4** **off**

7,200

24,000

In order to organise a review of public measures and policies supporting innovation and

technology transfer at regional, national or Community level, a series of Innovation Policy

Fora has been launched in 1993. The themes for the first series are as follows:

Support of High Technology Based New Firms (NTBNF)

The Acquisition and Diffusion of Tacit Technological Knowledge

The Clustering of Innovative SMEs

Research and Technology Organisation, strategies for the future

Quality promotion towards innovative SMEs.

The second type of activity concerns the establishment of the European Innovation

Monitoring System (E.I.M.S.), which aims to build up a European knowledge base and

research capabilities on innovation and technology transfer.

A call for tenders resulted in the selection of 53 organisations with expertise in research on

innovation and technology transfer. They will help the Commission services in developing

this system and by carrying out the survey projects. A second call is currently being

evaluated.

Several projects have been launched that can effectively support the decisions and actions

of the following target groups:

policy makers and public administrators from the Commission, Member States and

regional bodies

suppliers of innovation supporting services.

Two main areas are currently concerned with SMEs:

1. Innovation studies using existing data

There is at present a number of data sources which can be used to explore comparative

performance in science, technology and innovation. These include databases integrating

R&D and industrial performance data; data sets drawn from decentralised innovation

surveys; literature-based innovation surveys, and other sources. EIMS seeks to use these

sources to provide a "state of the art" empirical overview of innovation and research

activity, looking at the following issues.:

_**s,o$**_

- R&D performance and industrial structures

- Inter-industry flows of new technology

- Inter-European comparisons of innovation activity

- Industrial distribution of innovation outputs

- Sources of innovative ideas

- Obstacles to innovation

- Inter-firm technological cooperation

2. Surveys and new data sources

EIMS cannot be implemented just by integrating and comparing existing data sets. It must

sponsor the development and use of new and innovative sources of information on

innovation in Europe. Innovation surveys will therefore play a central role in developing

the EIMS.

They will form a basis for monitoring the variety of innovation patterns, environments and

practice across Europe.

A series of national innovation surveys have been launched in cooperation with

EUROSTAT and based on methodological work and tests, to cover:

- the innovative capabilities and strategies of European firms; and

- the application and diffusion of technologies and innovation management techniques.

**About 55000** SMEs **will be concerned.**

At the end of 1992, SPRINT financial commitments totalled ECU 87 million, or almost the

whole of the programme budget. The breakdown of the budget according to the 3 types of

action described above conforms to the 1989 Council decision (EC/89/286), namely:

infrastructure and services: ECU 50 million

dissemination: ECU 30 million

improving knowledge: ECU 10 million.

An inter-departmental group meets regularly on an informal basis to exchange information
on the financing of innovation in order to coordinate initiatives and action taken in this

area.

_AAo_

The Commission submitted to the Council a proposal for a Decision to extend the SPRINT
programme by one year in 1994 and to allocate it a budget of ECU 23 million [25] .

**II.5** **OTHER** **COMMUNITY PROGRAMMES RELATING TO TECHNOLOGY**

**AND RESEARCH**

**THERMIE PROGRAMME**

In the sphere of energy, apart from the SAVE and ALTENER programmes, the THERMIE

programme provides support for SMEs.

The THERMIE programme, which aims to support the establishment and dissemination of

efficient technologies, is particularly concerned with reductions in harmful emissions,
industrial competitiveness, especially for SMEs, [v] and co-operation with non-member

countries.

Apart from supporting innovative projects, THERMIE implements accompanying measures

through a network of 40 European bodies for the promotion of energy technologies: the

OPET network.

Through this network, SMEs are helped to set up their energy projects by receiving

targeted, accurate information, participating in "marketing" discussion groups attended by

professionals, industrialists and OPETs, and developing transnational partnerships for the

presentation of innovative projects on a Community scale. A data base on energy

technologies has also been set up for SMEs.

Since SMEs make a significant contribution to technological innovation, the THERMIE

programme's selection criteria for innovation projects in SMEs include co-operation and

partnership, encouraging the Community character of projects.

Statistical analysis of the THERMIE programme for the period from 1973 to 1991,

including previous programmes demonstrating and supporting technologies relating to

hydrocarbons, shows that, on average, 50% of bidders are SMEs. In addition, the share

of SMEs in projects presented and adopted is 57% for users and 48% for energy

technology manufacturers.

25 COM (93) 306 final of 05.07.93.

_**A**_ _**s)A**_

SME participation in THERMIE from 1990 to 1993 is described in table 8. **From 1990 to**

**1993,** **about** **60%** **of the projects involve at least one** SME **and account for** over **40%** of

**the budget.**

The THERMIE programme and the OPET network have taken account of the special needs

of SMEs by providing them with financial support, assistance with the administrative and

financial arrangements for projects, complete and accurate information, a means of finding

European partners and involvement in the future direction of energy technologies. Thus, in

facilitating access for SMEs, the THERMIE programme helps to improve the

competitiveness of SMEs and reinforce their administrative and financial comprehension of

Community programmes.

There is no doubt at **all** that the introduction of efficient energy technologies in SMEs will

improve their production costs and help to maintain or create jobs. The analysis showed

that some **17,000 jobs were either maintained or created** as a result of the THERMIE

programme over the period 1973-1991.

**ECSC RESEARCH ACTIVITIES**

Research programmes in the field of health and safety have also helped to promote inter
firm co-operation and partnership between SMEs from different regions of the EEC. The

following programmes are concerned:

First joint research programme on safety in the ECSC industries, 1989-1994 [26] ;

5th and 6th research programme on "Industrial hygiene in mines" 1983-1991 [27] and

1991-1994;

5th research programme on "Technical control of nuisances and pollution at the place
of work and in the environment of iron and steel works" 1985-1993 [28] .

26 OJC 325 of 29.12.89.
27 OJ C 332 of 08.12.83 and OJ C 14 of 22.01.91,
28 OJC 338 of 31.12.85.

_**A*\L**_

NUMBER OF THERMIE PROJECTS INVOLVING SMEs

AND SUPPORT GRANTED

table 8

1990-1993

SME TOTAL in %

116 198 58.6%

66.1 128.5 51.5%

136 197 69%

68 112.7 60.4%

3 23 13%

9.3 97.9 9.5%

56 112 50%

32.2 87 37%

311 530 58.7%

175.7 426.1 41.2%

1992

SME TOTAL in %

29 52 55.8%

13.9 31.6 43.9%

43 67 64.2%

18.6 35.1 53%

0 4 0%

0 33.2 0%

16 31 51.6%

8.3 27.7 29.9%

88 154 57.1%

40.8 127.6 32.0%

1993

SME TOTAL in %

30 42 71.4%

30.1 43.3 69.4%

40 52 76.9%

24.1 35.2 68.3%

1 10 10%

0.5 33 1.4%

21 35 60%

14 26.4 52.9%

92 139 66.2%

68.6 138 49.7%

1990

SME TOTAL in %

23 39 59.0%

9.1 18.7 48.7%

21 27 77.8%

4.8 6.6 73.1%

1 3 33.3%

8.7 9.6 90.9%

8 16 50.0%

5.2 10 51.8%

53 85 62.4%

27.8 44.9 . 62%

1991

SME TOTAL in %

34 65 52.3%

13.1 34.8 37.5%

32 51 62.7%

20.5 35.7 57.4%

1 6 16.7%

0.1 22.1 0.6%

11 30 36.7%

4.7 22.9 20.7%

78 152 51.3%

38.5 115.5 33.3%

Number of
projects

Support (MECU)

Number of
projects

Support (MECU)

Number of
projects

Support (MECU)

Number of

projects

Support (MECU)

Number of

projects

Support (MECU)

**^**
**3**

**^**

RATIONAL

USE

OF ENERGY

RENEWABLE

ENERGY

SOURCES

SOLID

FUELS

O I L &

GAS

1990 -1993

SME = projects involving at least one SME
TOTAL = total number of projects supported

Source: evaluation sheets and Commission's decisions on support granted

Table 9 shows the breakdown by Member State of the amounts allocated to SMEs as a

percentage of the total volume allocated to the programmes. From this it is evident that

credits allocated to SMEs average 48%, with a maximum of 77% for the largest of the

three ECSC research programmes.

SMEs played an essential part in devising research projects aimed at improving health,

safety, industrial hygiene and the environment at work and in their home area for workers

in European coal and steel industries.

Many of the results of these research projects carried out by SMEs have led to the

preparation of directives aimed at improving health and safety at work. They have therefore

been more closely connected with Community decisions. The Commission's financial

participation was generally 60% of the total cost of the research. The consequences in

terms of employment and the economic spin-offs are very obvious (industrial patents have

very often been filed). However, owing to the future of the ECSC Treaty and the gradual

reduction in ECSC levies, the amounts allocated to ECSC research are going to be reduced

considerably or even abolished. SMEs will therefore have to opt for diversification of their

industrial activity and adopt new lines of business.

RESEARCH ACTIVITIES IN THE FIELD OF TRANSPORT

The EURET programme (European Research in Transport), a research programme in the
field of transport, was launched by the Council Decision of 21 December 1990 [29] . It has

three objectives: to optimize the management of transport networks, to optimize logistics

and to reduce external effects. Allocated a budget of ECU 26.8 million, the programme has

enabled SMEs to participate by the creation of business consortia. Although large

undertakings have received over half the available funds (51%), SMEs come second in

receiving 19% of the budget (ECU 3.6 million), followed by research institutions (13%),

universities (12%) and consultants (5%).

**29** **Decision** **90/11/EEC** **of** **21.12.90,** **OJ** **L** **8** **of** **11.01.91,** **p. 16.**

_**WH**_

**Table 9**

**ECSC RESEARCH ACTIVITIES** **AND** **SMES**

Amounts allocated to SMEs as % of the total budget for the programmes

and by country

**Total Budget for**
**the Programme**
**in MECU**

**21**

**23**

**11**

**55**

Absolute

figures in

MECU

4.578

17.8

4.2

26.578

**G**

**4.6 %**

**3.2**

**15.9**

**-**

SP

5.6 %

2.6

6.5

GB

1.8 %

12.5

IT

4.2 %

23.9

2.2

PT

2.2%

2

B

19.9

1.5

Total

21.8

77.3

38.6

4 8 %

**^**

**^**

ECSC

Research

Programmes

Safety Programme
(1989-94)

Programme on
"Technical control of

nuisances and pollution
at the place of work and
in the environment of

iron and steel works"

(1983-1991)(1991-1994)

Programme on
"Industrial hygiene in
mines"

(1985-1993)

Total

**FR**

**3.4 %**

**25.7**

n.6 COORDINATION BETWEEN COMMISSION DEPARTMENTS

In conclusion, coordination between Commission departments has been particularly fruitful

in connection with specific action aimed at SMEs both under R & TD programmes like

CRAFT and via the feasibility premiums of the BRITE EURAM programme. Moreover,

the Commission departments are invited to send representatives to the IRDAC - Industrial

Research and Development Advisory Committee - whose opinions on SMEs as regards R &

TD form the basis of the CRAFT programme. This also applied in the case of programmes

to exploit research results, such as VALUE, and in the conduct of the

EUROMANAGEMENT - R & TD pilot action.

The VALUE programme also develops synergies with Community initiatives which help to

finance technological SME projects such as EUROTECH CAPITAL, SPRINT

INVESTMENT FORA, SPRINT TECHNOLOGY PERFORMANCE FINANCING,

VENTURE CONSORT and the Launch Capital pilot plan.

To improve the integration of the different approaches of the concerned Commission

departments to venture capital for SMEs, a common brochure has been produced on

"venture capital for the exploitation of Community research activities carried out by

SMEs".

An inter-departmental working party on R & TD and SMEs has just been set up to foster a

global approach and consolidate these first attempts at coordination, intended to improve

the response to the special needs of SMEs.

The working party's objective is to give concrete form to the SME dimension of the 4th

framework programme of R & TD by increasing the complementarity of measures

implemented under different policies. Thus, in particular, it will aim to improve the

transparency of Community R & TD actions among SMEs by joint promotion and the

coordination of existing networks.

_**y)/)&**_

m . SMEs AND VOCATIONAL TRAINING

In the field of vocational training (apart from important amounts (about 20 MMECU for

the period 1989-1993) which were granted by the European Social Fund for the vocational

integration of people encountering difficulties on the labour market) the Commission has

implemented a number of programmes intended to improve the level of qualifications

throughout the Community in order to face up to the process of economic, technological,

social and cultural change (ERASMUS, COMETT, LINGUA, EUROTECNET, FORCE

andPETRA).

These programmes meet the following objectives:

encourage transnationality, which permits an improvement in quality while respecting

national systems;

multiply transnational exchanges and increase the mobility of students and instructors;

create suitable networks for facilitating exchanges, co-operation and the setting up of

joint projects.

Of these programmes, EUROTECNET (innovation in the field of vocational training

resulting from technological change), COMETT (education and training in technology) and

FORCE (continuing vocational training) are the ones of more direct concern to SMEs.

Thus, after a brief account of their objectives, this report will deal with their impact on

SMEs.

Table 10 gives figures showing the participation of SMEs in these three programmes.

HI.l THE EUROTECNET PROGRAMME

The EUROTECNET programme [30] aims to promote innovation in the field of vocational

training resulting from technological change. It is designed to help Member States adapt

vocational training to the change in technologies. In order to promote the exchange of

information and the transfer of experience and expertise, a Community network of

demonstration and co-operation projects was set up.

30 Council decision 89/657/EEC, OJEC No. L 393 of 30.12.89, p. 30.

**> 7 1 ^**

**^B^B^^H**

**SUMMARY TABLE OF ACTIONS IN FAVOUR OF S M E S**

**UNDER EUROTECNET, COMETT AND FORCE PROGRAMMES**

**PROGRAMMES** **1991-1992**

**EUROTECNET (1990-1994)**

. Budget (MECU)

Total number of projects in the network

Total number of projects targeted at SMEs

% **of projects targeted at SMEs**

**COMETT (1990-1994)**

. Budget (excl. EFTA) (MECU) (90-92:121)

(93-94:79)

Number of beneficiary SMEs*

(directly or indirectly)

Number of SMEs directly involved**

Number of SMEs with < 50 employees

Number of SMEs with 50 to 200 employees

**Estimated SME participation rate**

**FORCE (1991-1994)**

. Budget 91-93

Total number of projects
(invitation to submit proposals 91 et 92)

Number of SME contractors or

project coordinators
including groups of SMEs

SME beneficiaries

   - directly

   - through groups of enterprises

  - through professional or sectoral
federations, etc.

Number of enterprises involved,
including groups of SMEs
(contractors, coordinators, partners)

Number of SMEs directly involved
including groups of SMEs (contractors,
coordinators, partners)

7.5 MECU

277

46

**18%**

200 MECU

30,000

7,000

3,300

2,300

       - 75%

32.8 MECU

427

140

Several thousand, as SME groups may have
many members, sometimes several hundred.

2.000

1,250

**Rate of direct participation by SMEs -** 62 %
**groups of SMEs /** **all** **enterprises.** **1**

- Estimate.

- * SME involvement includes the completion of training courses.

_siO?_

It has allowed research to focus on in-service training, particularly in the field of

apprenticeships. The aim is to improve the skills and capability of employees in SMEs, in

particular, and to manage technological change and create the necessary conditions for an

enterprise to become a place of learning. The EUROTECNET programme, launched in

1990 for 5 years, considerably expands the opportunities for vocational training systems to

profit from innovation throughout the Community. It gives preference to qualifications

which take account of the profound changes and which have a strong technological

element. Both training methods and the instruments necessary to enable SMEs to provide

continuing training for their staff are constantly being adapted to take account of

technological changes.

The Council decision stipulates that SMEs must participate in the implementation of the

programme and in the dissemination of the results achieved. Thus, EUROTECNET has

placed the emphasis on projects which have a direct or indirect impact on the introduction

of innovative solutions concerning human resources in SMEs. Following the selection

procedures in the 12 Member States, 277 demonstration projects were selected to form the

network of EUROTECNET projects, of which **46 (or about 18%) concern basic or**

**continuing vocational training in or for** SMEs.

These projects may be divided into four groups:

**s**

1. projects which aim mainly to develop new approaches and methods in order to analyse

SMEs' skill and training requirements;

2. projects which aim to improve the level of qualifications of SME employees. These

projects are more particularly concerned with identifying "key skills" which enable

workers to meet their needs as regards both technical qualifications and personal

development;

3. projects which aim to reorganise/transform training centres into business services

centres in order to meet the specific needs of SMEs;

4. projects which aim to promote technology transfer within SMEs (e.g.: CIM 
Computer Integrated Manufacturing, CAD - Computer Aided Design, LAN - Local

Area Networks) and develop new learning strategies and methods in enterprises.

_**S)q<j**_

_As an example from each_ _category_ _of_ _projects_ _one might_ _mention:_

_- the Italian project of_ _AFM-Edilizia_ _in the building and civil_ _engineering_ _sector, which_

_aims to develop and establish SMEs by a system of advanced services (new_

_technologies), to stimulate demand by introducing new professional profiles and to_

_promote new_ _organisational strategies_ _in building_ _such_ _as integrating large/medium-_

_sized_ _undertakings_ _with_ _SMEs;_

_- the Belgian_ _"ARIA"_ _project, which aims to train business managers in the need to_

_maintain and develop the_ _intellectual_ _assets of SME_ _employees_ _and to inform them of_

_technological_ _developments._ _Thus,_ _continuing_ _training is regarded as an investment in_

_the_ _human capital_ _of the_ _business;_

_- the_ _British_ _project by_ _Newcastle_ _College,_ _which aims to develop innovation in training_

_for new_ _qualifications_ _in_ _electronics_ _in_ _order_ _to meet the skill_ _requirements_ _of_ _emerprises_

_(CAM/CAD, micro-computers, robots), the objective being to provide industry with_

_engineers_ _and_ _technicians capable_ _of_ _adapting_ _to particular needs;_

_- another_ _British project_ _being_ _carried_ _out by the_ _University_ _of Aberdeen in the field of_

_aquaculture_ _aims to give_ _training_ _in bio-technologies for the staff of_ _recently established_

_European_ _aquaculture_ _farms, by using multimedia training techniques and remote_

_training in situ._ _This_ _project_ _concerns continuing in-service_ _training in peripheral areas_

_using_ _rural telecommunications_ _networks._

The subject of SMEs and vocational training has been covered by various EUROTECNET

seminars, such as those on SMEs and CIM, the development of human resources or new

training concepts, and were attended by many SMEs. The conclusions of these seminars

have been published and circulated.

Mention should also be made of the EUROTECNET publications designed to help SMEs in

their effort to adjust and reorganize in the face of new approaches to the development of

human resources and new training strategies such as: the practical manual for SMEs: "12

steps towards the qualification of employees: mastering new technologies through

continuing training", "The Learning Organization", which includes guidelines for the

reorganisation of SMEs, "EPOQUAL", which contains a sample of case studies on new

professional profiles, and "The importance of robotics (CIM) for continuing training in

small and medium-sized enterprises".

_**n**_ _**do**_

III.2 THE COMETT PROGRAMME

The COMETT programme (1990-1994) [31] is a programme for intra-Community cooperation

between universities and industry regarding initial and continuing training in the field of, in

particular, advanced technology. One of its general objectives is to respond to the specific

skill requirements of SMEs.

The measures implemented are arranged in the following 4 sections:

Section A: development and reinforcement of the European network of UETPs:

university-enterprise associations for training to promote greater transnational

cooperation;

Section B: transnational exchanges by the granting of bursaries to students or persons

who have completed their initial training or to the staff of universities and

enterprises;

Section C: joint projects for continuing training in technologies, particularly advanced

technologies, and remote multi-media training;

Section D: complementary promotion and accompanying measures.

A detailed analysis of SME participation in the COMETT programme was made in 1992

from a sample of 200 SMEs which had participated in 129 projects selected via the

invitation to submit proposals launched in 1990. This study and information obtained from
the COMETT data base show that approximately 75% of undertakings involved in
COMETT are SMEs (fewer than 500 employees), namely around 7,000 SMEs. Of
these 7,000 SMEs which participated directly, 3,300 (or almost half) employ fewer than 50
people and 2,300 (or a third) have between 50 and 200 employees.

80% of COMETT projects include at least one SME, and this figure has been increasing

steadily since COMETT I. Each UETP network (University Enterprise Association for

Training, section A) includes an average of 10 SMEs. Every joint project on continuing

training in advanced technology and multi-media (section C) includes an average of 4

SMEs.

31 Council decision 89/27/EEC, OJ No. L 13 of 17.01.89, p. 28.

_**A**_ _**Zs\**_

Of the SMEs which participate in COMETT, 40% take part in the UETPs (section A),

33% in transnational exchfinges (section B) and about 25% in joint continuing training

projects (section C). A growing number of SMEs are active in two sections, A and B or A

andC.

It is estimated that 30,000 SMEs will benefit directly or indirectly from COMETT II,

particularly through the training courses.

From the analysis it was also possible to discern a typology for SMEs in COMETT. The

SME participation rate by country shows no significant differences. On the other hand,

60% of SMEs which are partners in the same project operate in the same country and 20%

in neighbouring countries. Thus, COMETT is an important entry point for SMEs wishing

to become European.

As regards activity sectors, one third of the SMEs involved are service undertakings,

particularly consultancy, software design and training undertakings. Thus, it is the services

sector where the smallest undertakings are found, whereas those in the industrial sector

tend to be of medium size (between 50 and 500 employees). Also, consultants form the

most active SME sector in COMETT and, conversely, the traditional industrial sector has

the lowest participation rate.

HI.3 THE FORCE PROGRAMME

The FORCE programme [32], for continuing vocational training in Europe, aims to persuade

undertakings, particularly SMEs, of the need to invest in continuing vocational training and

to encourage them to provide such training for workers. For this purpose, the transnational

measures under the FORCE programme support the coordination of innovation, the

conducting of European sectoral surveys on continuing vocational training plans, the

exchange of comparable data on continuing vocational training, analysis of contractual

policy on continuing vocational training and forecasts of trends in skills and occupations.

During 1991 and 1992, 427 projects were selected (164 in 1991 and 263 in 1992). 1,250

SMEs or groups of SMEs are taking part as partners in over two thirds of the

projects, either directly or indirectly via associations, chambers of trade or inter-firm

training bodies.

32 Council decision 90/267/EEC, OJ No. L 156 of 21.06.90, p. 1

###### _All._

**(8**

The projects are sectoral or inter-sectoral in character and are aimed at different categories

of workers. They support SMEs in their continuing in-service vocational training activities

by means of studies and training materials.

Generally speaking, SME projects fall into five groups:

1. continuing training projects involving a high degree of direct participation by SMEs (at

least three SMEs as contractor, coordinator or partner);

2. continuing training projects with the participation of chambers of trade and associations

(indirect participation by SMEs);

3. continuing training projects for large undertakings/SMEs;

4. SME continuing training projects involving majority participation by training bodies

and both sides of industry;

5. continuing training projects for undertakings in general, including SMEs.

1. Continuing training projects involving a high degree of direct participation by

SMEs

These projects involve at least 3 SMEs and sometimes as many as 10 SMEs. Large

undertakings and/or chambers of trade and associations are not represented, except on a

minority basis. In most cases they are located in frontier regions, particularly between

Germany and the Netherlands, and are coordinated by economic bodies. These projects

involve several countries. An SME may be both the contractor and the coordinator of a

project. The majority of projects in this group involve 3 or 5 SMEs. Inter-firm training

bodies are also represented in practically all the partnerships.

Irrespective of their specific objectives, these projects share a precise classification of SME

skill requirements, which is clearly reflected in the results aimed at. The continuing

training programmes and teaching concepts intended for different target groups (pilot

projects) need to be supplemented by devising guidance structures and support for planning

the skills required by industry (skill projects). The results will have to be circulated by

means of modern training and learning methods.

_**A^2>**_

_**For example, the project coordinated by BBS**_ _**(Berufsbildungsstûtte),**_ _**geared to SME**_

_**training needs, aims to**_ _**harmonise**_ _**the skills required by employees of the Dutch and**_

_**German partners**_ _**in the field of**_ _**synthetics.**_ _**The cross-border partnership**_ _**should**_ _**reduce**_ _**the**_

_**differences**_ _**in the level of**_ _**development between developed regions such**_ _**as**_ _**Munster**_ _**and less**_

_**developed regions such**_ _**as**_ _**the**_ _**five**_ _**new**_ _**Lander.**_

_**The training modules**_ _**are intended for**_ _**training**_ _**in the**_ _**training centres**_ _**and**_ _**subsequently**_ _**in**_

_**undertakings.**_ _**They**_ _**will**_ _**comprise multimedia**_ _**tools for**_ _**learning**_ _**in**_ _**training**_ _**centres, guides**_

_**for**_ _**in-service**_ _**training,**_ _**information**_ _**seminars for**_ _**SMEs**_ _**and an advice**_ _**structure intended**_ _**to**_

_**help implement training strategies. This project involves continuing training centres,**_

_**professional associations, a business association, a university, SMEs and large**_

_**undertakings**_ _**in**_ _**Germany and the**_ _**Netherlands.**_

_**Other projects concern, for example, strategic**_ _**information**_ _**management in the SME**_

_**clothing sector (F, UK, GR) or in the**_ _**sail-making**_ _**sector, consisting mainly of**_ _**micro-**_

_**businesses**_ _**which wish to develop**_ _**certified training**_ _**and create an accredited network of**_

_**suppliers and maintenance services in European industry**_ _**(UK,**_ _**GR, P, I,**_ _**IRL).**_

**2.** **Continuing training projects with the participation of** chambers **of trade and**

associations

In this group of projects it is not the direct participation of SMEs that is decisive but the

grouping of undertakings, and particularly SMEs, in chambers of trade, be they private or

public, at national level, and professional associations. Britain's "Training and Enterprise

Councils" (TECs) play a particularly active part.

This category comprises two types of project. First, partnerships between at least five

national professional associations which, by a resolutely European approach, aim to

respond to future skill requirements of participating undertakings, for example in the

clothing and footwear industry, and the food and goods transport sectors. Then, there are

the projects in which a decisive part is played by chambers of commerce and industry and

chambers of trade, which mainly represent SMEs. Although these projects generally adopt

a specific, sectoral approach, e.g. in order to prepare continuing training concepts and

training materials for technico-industrial workers in different sectors, they often have an

inter-sectoral aspect to assist SME managers in their own continuing training activities or in

planning and applying measures to improve skills at work.

_**/izy**_

_To illustrate, the project coordinated by the_ _Confederation_ _of_ _National_ _Associations of_

_Tanners and Tawers of the European_ _Community (COTANCE)_ _which has_ _Greek,_ _Italian,_

_French, Dutch and Danish partners, aims to devise a new teaching_ _instrument_ _suited to_

_remote instruction, in order to provide continuing vocational training for Community_

_tanneries._

_Other projects concern continuing_ _training for craft_ _entrepreneurs_ _in_ _Europe_ _or_ _training_ _in_

_total_ _quality management_ _and_ _statistical control methods_ _in the_ _aluminium_ _industry._

3. Continuing training projects for large undertakings/SMEs

In this category, it is the large undertakings which are directly involved in projects in

transferring their know-how and knowledge to SMEs. Thus, the experience of large

undertakings is made available to SMEs. It is not a question of transferring the continuing

training and organisational structures of large undertakings to SMEs, since the latter do not

generally have a continuing training department, still fewer a human resources development

department, but have adapted proven continuing training materials to the specific conditions

of SMEs making use of modern teaching methods. Thus, the target groups for these

projects are generally SME teachers and instructors. Training bodies also play a key role in

partnerships as coordinators, in particular in harmonising training materials with the needs

of SMEs and providing the basic initiation.

_For_ _example, the coordinated project_ _"Values_ _and Performance", an ASFO training_

_network_ _in_ _France_ _in_ _partnership_ _with_ _training_ _associations,_ _undertakings,_ _universities_ _and_

_major banks in_ _France,_ _Belgium, Spain, Italy and the_ _UK,_ _plans to set up a_ _transnational_

_consortium to devise_ _assistance_ _for SMEs. This consortium will compare analyses and_

_evaluation methods_ _in large_ _undertakings and_ _select the_ _elements_ _most_ _applicable_ _to SMEs;_

_it will_ _then produce_ _an_ _"SME training advice assistance package "._

4. SME continuing training projects involving majority participation by training

bodies and both sides of industry

Undertakings are not directly involved in this category, and the projects always concern

continuing training programmes and concepts as well as guidance structures and planning

aid for SMEs.

_**z r**_
_**/)**_

Apart from inter-firm training bodies, universities and University-Enterprise Associations

from the COMETT programme are increasingly taking part in these projects*. Undertakings

then become involved at the level of trying out the results of the projects. Partnerships are

concluded between training bodies and employers' associations or unions.

_For example, the project being carried out by the Portuguese Industrial Association_

_(A.I.P.)_ _in_ _collaboration_ _with France,_ _comprising_ _associations of_ _undertakings,_ _sectoral_

_training centres and UETPs, aims to develop transferable methods for training SME_

_managers_ _in_ _strategic management_ _and_ _the management_ _of human_ _resources._

_Another project being_ _carried_ _out by the_ _Bedrijfsschool Machinefabriek_ _in Breda in the_

_Netherlands consists in developing a_ _"flexible_ _production system - just in_ _time *_ _training_

_module in_ _order_ _to avoid the huge loss of production when a flexible_ _production machining_

_lathe is run in._ _This module_ _is_ _applicable_ _to_ _SMEs_ _and_ _allows women_ _to be integrated into_

_the production_ _process._ _

5. Continuing training projects for undertakings in general, including SMEs

Continuing training products in this category do not apply specifically to SMEs but to all

undertakings. The projects aim to develop guidance structures or planning aids (skill

projects), continuing training programmes or the content of training courses (pilot projects)

in a particular industrial sector such as metallurgy or pharmaceuticals. However, some

projects take an intersectoral approach and deal with more general topics such as the

organisation of in-service continuing training, e.g. for female workers in the service sector.

m.4 CEDEFOP

In the vocational training field, mention should be made of the work of the European

Centre for the Development of Vocational Training (CEDEFOP), which complements that

of the Commission. CEDEFOP has given priority to the need to begin research and

programmes aimed at:

1. developing and improving the training of SME executives and managers, especially in
small enterprises, for which the target groups are "SME training officers and training
organisers";

_**/)**_ _**£Q>**_

2. identifying the most effective training measures for promoting the creation and

development of small enterprises, for which the target group is "creators of

enterprises";

3. promoting exchanges of experience and cooperation;

4. identifying good examples of programmes and strategies used to improve the

competitiveness of SMEs, for which the target group comprises "SME support

institutions".

In order to meet the specific needs of the above-mentioned target groups, the following

work has been done:

1. SME training officers and training organisers.

Five skill guides have been produced for the introduction of training measures in SMEs.

These guides aim to improve the skills of the training officer and the training organiser in

order to support the creation and development of SMEs. These guides relate to four crucial

aspects of corporate life: development of entrepreneurial spirit, support for creation,

support for the survival and development of small enterprises and preparing SMEs for the

single market.

These guides have been used successfully in 7 countries. However, evaluation has shown

that model training courses suitable for SMEs should have been developed from these

guides. Thus, CEDEFOP has supported the preparation of teaching materials in the form of

"Manuals for training in SMEs", which will be available at the end of 1993.

2. Enterprise creators

On the basis of national studies carried out in the twelve Member States on the training of

managers of small businesses, CEDEFOP has published a synopsis which summarizes these

national studies in the form of information sheets by country. These information sheets

relate to the demography of enterprises, the profile of creators, policies supporting the

creation of enterprises and training for creation. In addition, this publication offers a series

of recommendations on improving the conditions for creating and developing new

enterprises in the Community.

_**-nz**_ _**q.**_

3. Exchanges of experience and cooperation

In 1991 a transnational management training project for craft enterprises was launched in

the Saar-Lor-Lux transboundary region. This project aimed to identify common

denominators between national models in the wider region. This enabled the chambers of

commerce of the Saar-Lor-Lux Inter-regional Council of Chambers of Commerce to

prepare a joint training programme model for craftsmen wishing to create an enterprise.

This project also led the Economic and Social Committee to propose to the Commission, in
its opinion on SMEs and craft enterprises [33], that CEDEFOP, in collaboration with the

Commission, should concentrate more on training heads of enterprises and that the

cooperation project should be extended to European craft industries.

4. Institutions supporting SMEs

In order to identify examples of good practice in training in SMEs, CEDEFOP has carried

out a study which has two objectives:

to list the external and internal problems preventing small businessmen from receiving

training;

to identify good support strategies and programmes developed in the 12 Member States

in order to overcome these obstacles.

The conclusions of the study show that there are no major differences in the problems

encountered by enterprises. As regards demand, there is a lack of infrastructures offering

effective training, and at the same time entrepreneurs reject traditional training. As regards

the training available, in most cases the methods are unsuited to the needs of entrepreneurs,

there is no made-to-measure training and instructors lack competence as regards the

problems of small businessmen. On the other hand, the strategies developed show the

greatest diversity both in the development of infrastructures and services and in marketing

strategies for training, strategies to imprpve the quality of training offered, in particular by

"made-to-measure" training, the introduction of new technologies or more flexible methods

more appropriate to the businessman, and finally strategies for the creation and support of

networks for cooperation between enterprises and training bodies.

33 OJC 332 of 16.12.92, p. 35.

**7**
**^ J**

The actions developed by CEDEFOP have had a lever effect on the launch of initiatives

aimed at supporting training in SMEs. For example, the new German Lander have set up a

support network for the creation of enterprises and an enterprise creation observation post

has been set up in Portugal. Seminars have also been organised to disseminate the results of

the work.

The work of CEDEFOP described above has been carried out under the working

instruction entitled "development of vocational training in SMEs and cooperatives".

Although the budget is limited, namely ECU 175,000 in 1991 and ECU 127,000 in 1992,

the action carried out has had an obvious impact on SMEs.

**III.5 LOCAL DEVELOPMENT AND EMPLOYMENT**

In connection with Community action to develop local employment, mention should be

made of the LEI, LEDA and SPEC programmes and the EGLEI and TURN networks,

which very often concern SMEs to a great extent, particularly by their demonstration

effect.

LEI and SPEC provide financial support, while LEDA consists more in supporting a

network of experiments and research projects.

The Local Employment Initiative programme (LEI) [34] for women, set up in 1984, aims to

provide direct support for women starting a business, co-operative or other local

employment initiatives. In 1987, under the second Community action programme on Equal

Opportunities, a European network of experts was set up to support women wishing to start

a business. **From 1986 to 1990,** almost 700 women's businesses received Community

support. LEI is also a key action under the 3rd Community action programme on Equal

Opportunities (1991-1995) for men and women. Its budget is very limited (ECU 1.5

million per annum) and although the premiums are small (ECU 1500 per full-time job) they

act as a lever in encouraging other financial partners to contribute to the projects. The LEI

network offers technical assistance and sets up partnerships for the formation of networks,

inter-firm co-operation and synergy with other Community programmes.

34 Council recommendation of 13.12.84 on the promotion of positive action for women, OJ L 331
of 19.12.81, p. 34. Council resolution of 21.05.91 on the third medium-term Community action
programme on equal opportunities for men and women (91-95). OJ C 142 of 31.15.91, p. 1.

## **^5**

Publications include the "Guide to better Business", which helps women lo launch and run

their business, or the export guide.

The special job creation aid programme (SPEC), set up in 1990 for 3 years in response to a

European Parliament initiative, provides financial and technical aid for action intended to

promote employment by means of diagnosis and forecasts concerning the repercussions of

the completion of the internal market. Thus, among other things it backs up programmes

supporting SMEs and the transfer of know-how to other Community countries.

The Local Employment Development Action programme (LEDA) launched in 1986 aims to

improve know-how in the field of local development and to help local bodies to combat

unemployment, create new jobs and exploit local potential. Having identified positive

experiments, the programme prepared methods and techniques, with the help of local

experts and researchers, for designing effective local development strategies which were

then circulated throughout the Community. For this purpose, the programme set up a

network of 33 pilot zones in the 12 Member States plus "associate zones" (particularly in

central and eastern European countries), which serve as a basis for the exchange of

experiences organised in the form of seminars and study visits. In 1991 a management

training programme was also set up and a local development manual was published. With a

budget of ECU 2 million per annum, the LEDA programme does not finance initiatives

directly, but gives support to actions such as the development of local projects for

employment creation, training programmes, and seminars with experts.

In July 1993 the LEDA Programme entered its third phase which is expected to last three

years. The priorities for LEDA 3 are:

1. to strengthen the network through the inclusion of a number of new areas;
2. to further enable practitioners to identify, distil and develop good practice through the
mechanism of "LEDA circuits" (mini-networks), with practitioners from the LEDA
areas taking the lead;
3. to extend its dissemination activities throughout the community and beyond, in EFTA
countries and Central and Eastern European regions where LEDA is establishing
networks of associated areas;
4. to facilitate the practical application of LEDA know-how:

adapting its local development instruments, such as the Management Development

Programme and Practical Manual to the special needs of different types of areas
and;
encouraging and supporting the adoption of good practice in Community, national
and local programmes.

_**y\**_ **jo**

**(9)**

In 1986 the Commission also set up the programme of exchange visits for local

development officers, directed by the European Group on Local Employment Initiatives

(EGLEI), in order to train officers by exchanges and the comparison of practical ideas and

to develop transnational cooperation, and also the trades unions' regional network of

employment initiatives (TURN) at the level of regional and local trades unions.

All these initiatives in the field of local development permit experimentation and the

pooling of innovative practices which can then be transferred and thus act as a catalyst,

especially in SMEs.

**IV.** **OTHER COMMUNITY PROGRAMMES**

**IV.l.** **INTERNATIONAL COOPERATION**

Cooperation between enterprises is one of the priority lines of action of the enterprise

policy. This chapter presents the cooperation programmes which have been set up to

stimulate and sustain cooperation between Community enterprises and enterprises in non

Community countries, namely: the countries of the European Free Trade Association,

central and eastern European countries, the countries of the CIS and Georgia, and the

countries of Asia, Latin America and the Mediterranean.

**1.** **COOPERATION WITH EFTA COUNTRIES**

Although the involvement of the EFTA countries has no impact on the European

Community budget, these countries take part at their own expense in the BC-NET networks

and Euro-Info-Centre (as a correspondence centre) and in the EUROPARTENARIAT

programme. For example, the Austrian Chamber of Commerce has stated that, through the

BC-NET network, 29 contracts hâve been signed between Austrian and Community firms

covering sectors such as textiles, furniture or services and consisting in the establishment of

subsidiaries, the development of commercial activities, representation or subcontracting.

_131_

2. COOPERATION WITH CENTRAL AND EASTERN EUROPEAN COUNTRIES:

CEECs

Under the PHARE programme the Commission has set up SME development programmes

by providing assistance for the following countries: Poland, Hungary, Czech Republic,

Slovakia, Bulgaria, Albania, Slovenia, Romania, Lithuania, Latvia and Estonia. In this

connection, **the amounts** allocated **to** SMEs are ECU **31 million** for **Poland,** ECU 20

**million for the former Czechoslovakia,** ECU **25 million for** Hungary, ECU 2.5 **million**

**for Bulgaria,** ECU **2.1 million** for **Albania,** ECU **700,000** for **Slovenia,** ECU **10 million**

**for Romania,** ECU **2 million** for **Lithuania,** ECU **1 million** for Latvia and another

ECU **1 million for Estonia.** The support is concentrated on 3 types of measure: SME

assistance services (advice, information and training), financial instruments (banking

services) and guidance on the formulation of an enterprise policy. These programmes are

run in a decentralised manner by a management unit in each country comprising local and

external experts.

The departments responsible for the enterprise policy are closely associated with the

implementation of measures for SMEs under the PHARE programme. This coordination

takes place at several levels, in particular by technical assistance for the development of

SMEs in these countries, help with defining, monitoring and evaluating calls for tenders

and the joint organisation of seminars. They also contribute towards the gradual integration

of new partners from the CEECs into the SME information and cooperation networks,

namely the EICs and BC-NET, the organisation of a EUROPARTENARIAT in Poland in

1994 and, finally, the development of inter-firm cooperation and partnership under the

JOPP programme.

The JOPP programme (Joint Venture PHARE Programme) [35] is a specific programme under

the PHARE programme which aims to develop support measures for the creation of joint

ventures in the CEECs by Community SMEs and partners from those countries.

This programme comprises 4 types of measure:

finance for feasibility studies carried out by Community SMEs before the creation of a

joint venture in the CEECs;

**35** Commission decision of 30 January 1991 No. Z91/01

### **i s e**

participation in the capital of the joint venture in parallel with financial intermediaries;

finance for the cost of training the staff of the joint venture;

general measures to reduce the cost of access to information needed for the creation of

a joint venture.

JOPP had a first budget of ECU 20 million for the period 1991-1993, of which ECU 17

million directly benefits SMEs. At the end of 1991, ECU 1 million had been committed

for the benefited of SMEs and on 31 December 1992 a further ECU 10.4 million was

added, total budget was committed in September 1993. An additional budget of 27.5

MECU was immediately allocated to the JOPP Programme to face the increasing demand

coming from the SMEs

The measures implemented essentially enabled Community SMEs to carry out feasibility

studies for their joint venture projects, thus reducing the administrative, financial and legal

constraints impeding the development of joint ventures. Following feasibility studies, a

number of SMEs have already actually set up the joint ventures envisaged with the aid of

JOPP programme credits.

Although the JOPP finance benefits all CEECs, Poland and Hungary are the main

beneficiaries. This finance covers all productive sectors of the economy, and it is the

industrial production and services sectors which are the primary beneficiaries, followed by

consumer goods and agri-foods. Community SMEs in fact benefited the most from this

programme (93.3% of the dossiers accepted). It is now planned that the participation to the

Joint Venture Capital, besides that of financial intermediaries, will be exclusively given to

requests from Community SMEs. By encouraging the creation or expansion of Joint

Ventures in the CEECs, this programme is meant to foster investments of Community

SMEs abroad. Estimated investment totalled ECU 400 million for a Community budget

commitment of ECU 17 million, or a lever effect from 1 up to 24.

**^** **53**

**3.** **COOPERATION WITH THE CIS AND GEORGIA**

**j**

The Commission has set up a programme to support the process of economic reform and

development in the Commonwealth of Independent States (CIS) and Georgia, aimed at

establishing a market economy: the TACIS programme (Technical Assistance to the

Commonwealth of Independent States (CIS) and Georgia) [36] . With a budget of ECU 20

million for 1992, this programme provides for a technical assistance programme targeted

on SMEs which consists in developing the necessary competence and local know-how by

the creation of partnerships between enterprises and networks both within and outside the

countries receiving Community support. Thus, 7 development agencies and 9 "Business

Communication Centres - BCCs" will be set up and then connected to the BRE and BC

NET networks.

**4.** **COOPERATION** **WITH DEVELOPING** **COUNTRIES** **IN** **ASIA,** **LATIN**

**AMERICA AND THE MEDITERRANEAN**

Specific programmes to foster the development of SMEs have been set up in a number of

developing countries. They include the MED-INVEST programme for Mediterranean Third

Countries, the LA-INVEST programme for Latin American countries and the ECIP

programme.

MED-INVEST is a programme which supports cooperation for the development of SMEs

in Mediterranean Third Countries in association with European SMEs and professional

bodies. It aims to promote in Mediterranean Third Countries an environment which favours

the development of SMEs and an increase in their ability to compete. With a budget of

ECU 12.2 million for 2 years (1993-1995), Med-Invest grants non-repayable aid to groups

of enterprises, institutions, bodies or development associations with genuine capability in

the field of information, inter-firm cooperation and support Tor economic development.

The Business Cooperation Network (BC-NET) is associated with this programme to

reinforce and extend the network in the 11 Mediterranean countries and to provide training

for members and the necessary accompanying measures for economic operators. The

Commission departments responsible for the enterprise policy provide technical assistance

for the creation of partnerships.

36 Council Regulation No. 2127/91/EEC of 15.07.91, OJ L 201 of 24.07.91, p. 2.

LA-INVEST, an industrial cooperation and investment promotion programme in Latin
American countries [37], with a budget of ECU 18.5 million for 2 years (1993-1995), aims to

facilitate trade, transfers of technology and know-how, and finance for the mutual benefit

of both Latin American and European businesses. The ERB is also associated with this

programme.

European Communities-Investment Partners (ECIP) is a financial instrument for developing

countries in Latin America, Asia and the Mediterranean, set up in 1988; its legal basis
dates from 1992 [38] when it was extended for a further 3-year trial period and allocated more

funds on account of its success (ECU 39.15 million for 1993).

ECIP's main objective is to facilitate the creation of joint ventures in eligible countries in

order to contribute towards their economic development. Thus, it intervenes in the different

phases of setting up an enterprise: from identification of potential partners and projects

through intermediaries to training and technical assistance, and including a feasibility study

for the project and a contribution to the capital of the joint venture. The maximum which

may be granted is ECU 1 million for a joint venture. ECIP excludes multinationals and

requires the joint venture to include at least one Community partner and one partner from

the country concerned. SMEs have been given priority. ECIP support is provided via a

network of 73 financial intermediaries.

In 1992, 186 projects were approved, worth ECU 20.27 million, against 171 projects

during the period from 1988 to January 1991. The promising results show that this

instrument plays a role in Asia, Latin America and the Mediterranean in encouraging local

economic operators to consider the European Union as a partner for developing their

businesses.

Other specific joint actions are also planned, such as the organisation of a seminar on inter
firm partnership with China.

37 Council Regulation No. 443/92 of 25.02.92.
38 Council Regulation No. 319/92 of 03.02.92.

_**^2S**_

5. PROMOTION OF COMMUNITY EXPORTS TO NON-MEMBER COUNTRIES

The promotion of Community exports to non-member countries can be supported, as under

the EXPROM programme for Japan, by executive training measures, market research and

logistical and financial support for participation in fairs. In addition, joint action by the

departments has resulted in export guides for the United States, Canada, Australia or Japan,

in order to facilitate and promote Community exports to these buoyant markets.

In conclusion, most of the cooperation programmes with third countries, such as TACIS,

PHARE, Export Promotion, EXPROM-Japan, Med-Invest, ECIP, Med-Campus and Med
Urbs, encourage the development of SMEs and particularly joint ventures. Although SMEs

are the main beneficiaries, directly or indirectly (through larger undertakings), Community

support is not specifically aimed at Community SMEs, and the PHARE and TACIS

programmes, for example, also support SMEs in **countries** receiving Community aid. On

the other hand, in the case of joint ventures both parties are guided by a common interest

which allows permanent economic ties to be formed between Community partners and

those in non-member countries.

All the work of cooperation with non-member countries is carefully coordinated by the

various competent Commission departments. It enables those countries to benefit by the

expertise acquired as regards enterprise policy and the existing networks of intermediaries

of European SMEs, and it gives European SMEs a better insight into the opportunities

available to them in non-member countries through Community programmes.

IV.2 HYGIENE, HEALTH AND SAFETY AT **WORK**

1. European Year of Safety, Hygiene and Health at Work (1992)

In connection with the European Year of Safety, Hygiene and Health at Work, organised in

1992, special attention was paid to information and improved safety and health in SMEs.

_**A**_ _**3G**_

The project selection criteria laid down in the Council decision of 25.7.91 [39] establishing

the European Year of Safety, Hygiene and Health at Work stipulate that projects in favour

of SMEs should be preferred. **Out of a budget of ECU** **12** **million, 56% of the actions**

**directly financed by the Commission and 50% of the projects part-financed on the**
**proposal of the National Liaison Committees** **[40]** **were intended for** SMEs.

The majority of these actions aimed:

to inform SMEs about European and national legislation on health and safety at work;

to increase awareness of these problems among those responsible in SMEs and to train

them to take these problems into account;

to provide practical instruments for evaluation and improvement in this matter.

Moreover, in actions directly organised by the Commission, special attention was paid to

SMEs:

by consulting European SME organisations;

by informing the Euro Info Centres;

by circulating information and miscellaneous documents and brochures direct to SMEs

or through networks likely to reach SMEs (such **as** sectoral professional organisations,

SME federations, Euro Info Centres);

by producing documents targeted on SMEs;

by promoting information and training media likely to be used in SMEs (e.g. film

video).

The enterprise policy services were associated with the European Year of Safety, Hygiene

and Health at Work, in particular by producing a "handbook of self-auditing on safety at

work" for SMEs and co-financing a special edition of the EURO-CE review, with a

circulation of 200,000 copies. During this Year, the Commission staff gave talks on the

various aspects of workers' health protection in SMEs; these were collected in the form of

conference reports.

Since this was essentially an information campaign, these actions did not aim to modify the

administrative, financial or legal environment of SMEs, but to circulate information on

rules and good practice in this matter.

39 OJL 214 of 02.08.91
40 Provisional figure.

**1 3 ^ -**

In view of the importance of this field of activity, the Commission, in collaboration with

the Advisory Committee for Safety, Hygiene and Health Protection at Work, set up by the

Council Decision of 27.6.74 [41], undertook a longer term discussion of information for

SMEs on safety and health at work. This discussion will take place in collaboration with

both sides of industry and the enterprise policy services.

In conclusion, departmental coordination in the field of Safety, Hygiene and Health at work

has been very fruitful.

2. Activities in the field of health protection at work

In coordination with the World Health Organisation and the International Labour Office,

the Commission departments are developing safety cards on chemical substances. These

cards, intended mainly for SMEs, are meant to provide information on the characteristics,

toxic potential and typical reactions of certain chemicals used at work. So far, the first

series of cards and a handbook have been prepared and translated into the Community

languages. It is planned to add to the card series by stages in order to cover the maximum

number of chemical substances.

A draft recommendation is being prepared on the establishment of a system for collecting

and disseminating information on technical solutions which could improve conditions at

work.

The aims of this draft are:

to encourage cooperation in the exchange of suitable solutions for problems at work;

to define clearly the objectives and constraints of a system of this type;

to consider whether a data base of typical solutions would be appropriate;

to propose measures to be taken in.this field.

Under Article 118a of the Treaty, when preparing a draft act of legislation aimed at

improving the health and safety of workers, the Community must prove that the act does

not impose administrative, financial or legal constraints on the creation and development of

small and medium-sized enterprises. The competent Commission departments are

responsible for analysing the potential impact of the proposed acts on the creation and

development of SMEs.

41 OJ L 185 of 09.07.74, p. 74.

**130***

3- Training and advice for creators _ot_ SMEs

In 1987 and 1988, training and advice for creators of SMEs as regards health and safety at

work were supported by the European Social Fund. Two pilot actions were successfully

completed, one in Luxembourg with the Chambers of Trade and the other in the Nord-Pas
de-Calais region in partnership with the Region and the Caisse Régionale d'Assurance

Maladie, and were continued in 92 and 93. By these actions, SMEs were made aware of

and trained in safety and health at work, so that these problems were integrated into the

management of the business. A deterioration in safety in a business is frequently a first sign

of deteriorating management. These actions help prevent a number of young businesses

from going bankrupt. They have resulted in the creation of two teaching tools for safety

training: two computer programs which simulate SME management, one in the carpentry

sector and the other in the prepared meat products trade.

In view of the success of these two pilot actions, similar actions will be carried out in Spain

and Portugal. They form the subject of inter-departmental coordination.

IV.3. NEW FINANCIAL TECHNIQUES AND SMEs

In connection with new financial techniques, the Commission has continued to develop two

actions, in addition to the JOPP programme described in the chapter on cooperation with

the CEECs. These are EUROTECH CAPITAL [42] and VENTURE CONSORT whose aims

include the elimination of unjustified financial constraints which impede the creation and

development of SMEs. These programmes are administered in collaboration between the

Commission departments and form part of a set of financial (SEED CAPITAL) or

technological (VALUE, SPRINT, IMPACT) programmes.

EUROTECH CAPITAL participates directly in financing SMEs developing transnational,

advanced technology projects.

VENTURE CONSORT part-financed SMEs to the level of ECU 0.8 million in 1991,

ECU 0.9 million in 1992 and ECU 0.7 million in 1993. EUROTECH CAPITAL

participated in financing SMEs to the level of ECU 1.9 million in 1991, ECU 1.4

million in 1992 and ECU 1.1 million in 1993.

42 Commission decision No. EEC/1781/91 of 17.12.91

_**A**_ **S 3**

These financial measures help to reduce the cost of financing SMEs while encouraging their

integration into international markets. **Due** to a **lever** **effect** of 1 to 25 EUROTECH

CAPITAL part financing made it possible to provide SMEs with a global amount of 195

MECU of venture capital since the beginning of the programme.

Since the EUROTECH CAPITAL action concerns investments, its impact in terms of

economic development cannot be measured until the end of the investment cycle, which is

from 5 to 10 years.

Due to the fact that the European Investment Fund will include equity capital activities for

SMEs, it is envisaged to carry out an internal evaluation of the Venture Consort action

prior to its integration in the SME activity of the Fund.

**IV.4.** **TRANSPORT AND** SMEs

Although there is no legislation specifically aimed at SMEs in the transport sector, almost

all the measures taken have a direct or indirect effect on SMEs. In 1992 and 1993 the

Council adopted several regulations which substantially liberalized the transport of goods

and passengers by road, sectors in which SMEs are most numerous.

**Road haulage**

Regulation EEC No. 881/92 of 26 March 1992 [43] on access to the market in the

international carriage of goods by road within the Community provides for the elimination

of all quotas on 1.1.93. International transport now takes place under cover of a

Community licence which replaces all the documents or authorizations previously required.

According to people in the sector, this measure, which is reflected in administrative

simplification, permits a saving of 3 to 4% on the price of traditional transport and even

more on the price of "Express" type transport.

4 3 OJ L95 of 09.04.92, p. 1.

Concerning road cabotage, the EC Regulation n° 3118/93 of 25 October 1993 [44] laying

down the conditions under which non resident carriers may operate national road haulage

services within a Member state provides for the progressive liberalization of cabotage

(through annual quota allocated amongst the Member States) to be effective on July 1st

1998 when limitations will disappear.

Carriage of passengers by road

Regulation EEC No. 684/92 of 16 March 1992 [45] on common rules for the international

carriage of passengers by coach and bus, another sector in which SMEs are numerous, has

the effect of liberalizing all occasional passenger services and shuttle services with

accommodation. The elimination of authorizations removes substantial administrative

formalities, very important to SMEs which operate more particularly in this sector. The

regulation also reduces the time taken to obtain the necessary authorizations for regular

transport services and shuttle services without accommodation.

As regards "passengers cabotage", EC Regulation n° 2454/92 of 23 July 1992 [46] laying

down the conditions under which non-resident carriers may operate national road passenger

transport services within a Member State, provides for the immediate liberalization of

certain cross-border special regular services, other regular services being excluded for the

time being, as well as of non regular services, the immediate liberalization of "closed-door

tours" and the liberalization of all non regular services from 01.01.1996.

IV.5 THE ENVIRONMENT AND SMEs

The Fifth Environmental Action Programme states in chapter 4 on manufacturing industry

that there should be no discrimination between SMEs and larger enterprises. It further

states that "a special effort will be made to avoid disproportionately burdensome

administrative, financial or legal constraints which might impede the creation or

development of SMEs.... It may be possible to provide direct practical assistance,

including provision of expert services, training programmes".

44 OJ L 279 of 12.11.93, p. 1.
45 OJ L 74 of 20.03.92, p. 1.
46 OJ L 251 of 29.08.92, p. 1.

**-W-1**

Consequently, besides the possibilities of obtaining subsidies under the framework on State

aids for environmental purposes, financial instruments for environmental protection such

as, for example, the LIFE instrument provide the possibility of supporting SMEs as well as

larger enterprises.

Until the end of 1991, SMEs could obtain support under the framework of the Community

Actions for the Environment programme (ACE) [47] . This regulation specifically stated that

the development of clean technologies and of improved techniques for the recycling of

waste is likely to be of particular importance for SMEs. The annual budget of ACE was

about ECU 4.5 to 5.5 million but only a small part of the budget was spent on SMEs.

From 1992 onwards SMEs can be supported under the framework of the LIFE Financial

Instrument for the Environment [48] . The total annual budget is approximately ECU 66

million (ECU 400 million up to the end of 1995) of which ECU 20 million are foreseen for

nature protection and 5% for projects outside the Community.

Since the LIFE instrument has a larger budget than the ACE programme, it may be

assumed that the size of projects funded will be larger. This may prove a deterrent to SMEs

with only a limited capital available, for example, for the financing of clean technology

projects which are a "follow-on" from research and development. However, if SMEs in

different Member States collaborate on projects, raising the appropriate degree of funding

should not be a problem.

This possibility is emphasized in the annex to the LIFE regulation, where it is stated under

"3. administrative structures and environment services" that the actions are "to foster

greater cooperation between the authorities of Member States particularly with regard to the
control of trarjsboundary and global environment problems." The "clean technology" [49 ]

tender offer stated that for project selection purposes, the Commission will give preference

to projects involving an association between at least two partners from outside the

Community and to projects calling for the use of an international network. Some projects

have been submitted by association of SMEs. It is obviously too early to evaluate the

participation of SMEs in these programmes. Results will be examined in the next report.

47 Council Regulation EEC No. 2242/87 of 23.07.87. OJ L 207 of 29.07.87, p. 9.
48 EEC Regulation No. 1973/92 of 21.05.92, OJ L 206 of 22.07.92.
49 Published in OJC 336 of 19.12.92, p. 13.

_**A^Z**_

One of the aims of these programmes is to turn the environment protection concern into an

advantage in terms of competitiveness and employment. Nevertheless, financial resources

remain limited and it is up to businesses to exploit the potential benefit of the integration of

new technologies to prevent pollution.

**IV.6 COMMON FISHERIES POLICY AND** SMEs

Besides measures carried out within objective 5a for the improvement of the processing and

marketing of fishery and aquacultural products, the Commission gives substantial support

within the structural aspects of the Common Fisheries Policy to restructuring the fisheries

sector, in particular the Community fleet, as well as to developing aquaculture.

Mainly formed of SMEs, the Community fisheries fleet, which is in overcapacity in most

Member States is subject to numerous capacity reductions and has to face huge investments

to modernize and meet the sanitary and safety standard requirements.

About ECU 20 million were spent in 1993 to modernise this sector, including building new

boats, and ECU 164 million were spent on adjusting the capacities.

Aquacultural businesses are also, for most of them, small and their expansion is largely

conditioned to their fulfilment of Community sanitary and environmental requirements. In

1993, 269 projects received ECU 52.7 million, priority being given, besides sanitary

standard to the development of new productions.

V. CONCLUSION

In this report the Commission has endeavoured to give an account and measure the impact

of programmes and initiatives carried out at Community level in favour of SMEs. The

SME dimension is in fact present in a great many policies, and is tending to be reinforced

so that SMEs become more involved in the process of European integration.

Wishing to develop synergies between the various Community programmes which they

administer, the Commission departments have coordinated their efforts to achieve greater

efficiency, particularly in favour of SMEs.

**^M3**

Thus, coordination has been particularly fruitful as a result of the joint actions or close

collaboration between the departments in fields such as: inter-firm cooperation

(Europartenariat, Interprise, Med-Invest, La-Invest, TACIS, PHARE), research and

technological development (VALUE SME), finance (Eurotech Capital, Venture Consort)

and finally, vocational training. This coordination has often permitted a greater impact on

SMEs than if the initiatives had been carried out in isolation.

However, improvements are probably necessary in the field of regional policies, where

coordination is more difficult because of the multiplicity of partners involved: Member

States, regional and local authorities, and numerous Commission departments.

Furthermore, most of the instruments set up (particularly Community Support Frameworks

and Community Initiatives) do not aim only at support for SMEs: that is integrated into

broader support policies.

Aware of the potential role of SMEs in achieving economic and social cohesion, the

Commission wishes to increase the visibility of action in favour of SMEs under regional

policies in order to facilitate access to these funds for SMEs and to improve their

effectiveness, particularly by supporting SME intermediaries. In accordance with the

principle of partnership, it is therefore necessary to convince Member States and the

regional and local authorities responsible for implementation to pay special attention to

SMEs when preparing the regional development plans now submitted to the Commission.

The creation of the Committee of the Regions, an advisory committee of representatives of

local and regional authorities, set up by the European Union Treaty, should also have a

positive impact on SMEs.

Moreover, improving the European representativeness of the professional organisations of

SMEs is a key element in strengthening coordination. Steps have already been taken in this

direction by means of the social dialogue.

The Commission will therefore continue its efforts with all its partners, Member States,

professional organisations, economic and social partners, to ensure that SMEs can play a

greater part in Community programmes and that the policies developed actually take

account of their specific needs.

###### **^Vy**

**SUMMARY OF MAIN DEFINITIONS OF** **SMEs** **CURRENTLY IN USE AT COMMUNITY LEVEL**

Independancy

Max. 25% capital
held by a large
entreprise
(apart from exceptions)

         

_

_

Max. 1/3 capital
held by a large
entreprise
Max. 25% capital
held by a large
entreprise
(apart from exceptions)

        

Max. 1/3 capital held by a
large enterprise

Other criteria

        

       

net fixed assets < 75

MECU

       

       

       

max. number

of employees

50

250

50

250

250

500

250

0,1-9
10-19,20-49,50-99
100-199,200-249,250-499

+ 500

500

max. balance-sheet

total

(in million ECU)

2

10

2,5
10

6,2

**„**

      

10

      

**c,**

subject concerned

SME State. AidU)
(OJCEC213of

19.08.92)

  - small businesses

  - medium-sized businesses

simplified annual
accounts for SMEs(2)

  - small firms

  - medium-sized firms

non life insurance^)
(Directive 88/357)
VAT - exemption
(6th Directive)

EIB- global loans

EIB - interest rate subsidies

(under discussion)

SME statistics:

  - micro

  - small

  - medium

  - large
Research and Development

- CRAFT

- faisability premiums

max. turnover

(in million ECU)

5

20

5

20

12,8

0.005

     

20

/

38

1 It is sufficient to have 1 of the 2 criteria - turnover or balance sheet - in addition to the number of employees.
2 U sufficient to have 2 of the 3 criteria - max. number of employees, turnover or balance sheet.
1 It is sufficient to have 2 of the 3 criteria.

ISSN 0254-1475

**COM(94)** **221 final**

##### **DOCUMENTS**

**EN** **08**

**Catalogue number** **: CB-CO-94-233-EN-C**

**ISBN 92-77-69486-6**

Office for Official Publications of the European Communities

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