CELEX: 51989PC0440
Language: en
Date: 1989-09-12
Title: AMENDED PROPOSAL FOR A COUNCIL DECISION EMPOWERING THE COMMISSION TO BORROW UNDER THE NEW COMMUNITY INSTRUMENT FOR THE PURPOSE OF PROMOTING INVESTMENT WITHIN THE COMMUNITY

COMMISSION OF THE EUROPEAN COMMUNITIES
                                          C0MC89) 440 final
                                          Brussels, 12 September 1989
                      Amended proposal for a
                         COUNCIL DECISION
          empowering the Commission to borrow under the
      New Community Instrument for the purpose of promoting
                  investment within the Community
            (presented by the Commission pursuant to the
         third paragraph of Article 149 of the EEC Treaty)
 ---pagebreak---                                                      ô^tttef
         àtmmmp HBOPOSAL m » A COOTCIL BBCTSIO»
      empowering the Commission Co borrow under the
  New Community Instrument for the purpose of promoting
             investment within the Community
     (presented by the Commission under article 149,
            third paragraph of the EEC Treaty)
(A list of the modifications is annexed to this new text;
     these are essentially the ones requested by the
European Parliament and the Economic and Social Committee)
 ---pagebreak---                                                                             2.
                                       EXPLANATORY MKttlgAMXJM
The New Community Instrument (NCI) is a financial facility created in
1978 C1) empowering the Commission (2) to borrow in the name of the Euro-
pean Economic Community and to re-lead the funds in order to promote inves-
tment in the Community* The success of the first experiment encouraged the
use of the NCI, which has been renewed five times (including two special
aid operations to help with reconstruction after natural desasters). The
total volume of the NCI reached nearly 6,000 million ECU (3) in 1987.
1. THE BASIS
     The Single European Act, referring to the "other financial instruments'*
     alongside the EIB, made clear that the Community's financial capability
     is one coinponant of the Community's institutional balance. In that
     sense, the existence of the Community alongside the EIB is above all an
     institutional necessity* Indeed,
     a) the Community as such has a vital role row to play, both as guide and
        as promoter, in the unity and the development of Europe* To this end,
        it has the obligation - which it cannot renonce - of, first, setting
        the priorities and degrees of urgency from the point of view of the
        Community's interest, especially in the economic field, and, second-
        ly, of deciding among the Community measures which these priorities
        require;
     b) to carry out this fondamental task, the NCI is the appropriate
        instrument    which is indispensable                   for the  Community's purposes.
        Indeed by contrast with the other financial instruments which exist,
        the NCI can be adapted to whatever objectives are given priority in
        Community policies.
(x) The NCI decision is based on article 235 of the EEC Treaty, which
      authorises the adoption of appropriate measures to achieve Community
      objectives where these have not been provided for elsewhere in the
      Treaty.
( 2 ) Council Decision 78/870/EEC
( 3 ) Com(88)438 f i n a l , 2 8 . 0 7 . 1 9 8 8 , on t h e use made of the NCI.
                                                                                   • ••/ . • •
                                                                                               3
 ---pagebreak---                                                          3.
   No doubt the most important role of the NCI is thus that of signalling
   to the market (and even to the authorities) the priorities and degrees
   of urgency of Community policies, with a vew to bringing about a lever-
   age effect; the very strong demand for NCI credit is a proof in itself
   of its success* Moreover, the NCI IV set up a marker which incited the
   EIB to adopt new guidelines and techniques : it was in fact the Commis-
   sion proposals which opened the way to permitting the EIB to set out, in
   a "parallel action" on it own resources, to finance investment projects
   of small and medium sized enterprises*
   Futhermore, having regard to the excellent guarantees which underlie NCI
   loans, these operations are virtually risk free and     thus involve no
   budgetary cost.
   It is important to indicate, in this context, that the European Parlia-
   ment has unceasingly supported the Commission's proposals concerning the
   NCI, so much so that it is now the Parliament itself which requests
   further NCI action*
2. THE OBJECTIVES OF THE NEW NCI ACTION
                                     • • •
   In the context of the new NCI, the general priority would       again be
   SMEs* For several years one of the priority objectives of the Community
   has been the encouragement of the creation and development of small and
   medium sized enterprises, as well as the improvement of their financial
   environment* The development of such enterprises will help to spread the
   spririt  of  enterprise and  to  foster investment  capable of   creating
   employment•
   Putting at the disposal of SMEs credit conditions comparable to those
   available to the Community will help to overcome their relative dis-
   advantage compared with large firms* It also gives them the possibility
   of  building up their equity capital*   It is in this spirit    that  the
   NCI IV was allocated entirely to SMEs*
                                                                  •/ • • •
                                                                             u-
 ---pagebreak---                                                                     4.
     The first of the more specific objectives which the Commission intend to
     pursue is the safeguarding of rural areas* This priority comes within a
     package   of  Community    actions   : the regulation on the        reform     of the
     structural Funds (*) includes among its objectives the development of
     rural areas*
     As regards rural development (2) we are in a period of important changes
     bringing   about   a   significant   decline    in  the  relative    importance      of
     agriculture in rural areas, in terms of employment, of contributions to
     the regional product or of the protection of the environment. In the
     near future, this situation may well be aggravated by the effects of the
     reform  of   the   CAP,   intended   to   bring  about   certain   adjustments       in
     Community agriculture*
     Community action is therefore necessary in order to :
     - promote the diversification of rural economies and
     - pursue the protection of the environment*
     It  is  important,     in   particular,    to  promote   the  development       of   an
     economic fabric with a view to the creation and/or the stabilization of
     employment in rural areas by bringing financial help to the investments
     of SMEs - including individual entrepreneurs and co-operatives*
     All activities not of a strictly agricultural nature would be eligible
     under    the    NCI   -    including    services     and   all    ag ro- indus t r ial,
     agro-commercial, para-agricultural         or other activity     complementary       to
     agriculture    (^)* On    the other    hand agricultural     production would        be
     excluded   except    in   so  far  as   it   concerned   products    in   which     the
     Community is not self-sufficiant or investments of a truly agricultural
     nature carried out by young farmers*
C 1 ) Council Regulation EEC 2052/88
(2) Com(88)501 final : The future of rural areas.
(3) Including forestry
                                                                              • • •/ ...
                                                                                             5"
 ---pagebreak---                                                         5.
particular importance* This is especially true in certain regions where
the return of the population, the modernization of agriculture and the
diversification of the activity and the style of life, pose serious
environment problems* In this connexion, NCI finance would be available
in parallel with other Community actions for projects of SMEs having a
content favorable to the environment*
From the geographical point of view, the NCI should be applicable in all
the rural areas of the Community*
As regard   high technology    and innovation, the second     of  the more
specific objectives, the contribution of the NIC to SMEs, independently
of the location of the investment, is envisaged at the level of the
incorporation and the application of new technologies and material in
the investment projects of SMEs• These technologies would cover a wide
range of materials    and   products*   In particular,  the  financing     of
specific applications of research results would be eligible*
Educational   and  training   costs   would  be  accepted   as   intangible
investments•
This action, which would be complementary to that undertaken in the
context of the BRITE and EURAM programmes, would fit into the logic of
the Single Act which provides, in Title VI, for the development of
technology, given that this remains a major challenge for Europe*
                                                                 • •/ • • •
                                                                              4
 ---pagebreak---                                                                  6.
   The action envisaged must fit into a suitable time-scale. This is clear
   both from the Commission communication to the Council on the "Future of
   Rural Areas" and from the action already taken by the Community towards
   the  reform   of  the  structural   Funds, which     fits   into   a  package    of
   measures lasting from three to five years. As regards high technology,
   the Community's    action programmes also extend over a long period. In
   consequence,    a  financial   mechanism  which   accompanies      such   measures
   should have a long life, especially        since,   in a rural      context,    the
   leverage effect on markets may prove to be slow.
3. METHOD
   Borrowing
   For the Community's     financial capability    to carry     out   its   basically
   political   task   (by  contrast   with  that   of    the  EIB)    of   signalling
   Community priorities, and in order to maintain a permanent institutional
   balance,   it  must   keep  up  a  continuous   and    stable   presence    in  the
   markets. This means abandoning       the traditional     formula of     successive
   authorizations, in favour of a method under which the Commission would
   be empowered to carry out new borrowing and lending operations within
   the  limit  of repayments    of existing    debt;   this would     represent    new
   borrowing of 500 to 1.000 million ECU per year. The effect would be to
   convert  the NCI    into   a "revolving  fund", with      the   Commission    being
   automatically empowered to borrow and re-lend up to the limit set up by
   the amount of debt outstanding, which will total 5.4 billion ECU at the
   end of 1989.
   The recurrent nature of operations under the new method will help to
   raise the Community's profile in the markets and ensure that its calls,
   coming regularly and     for roughly the same amount each time, are well
   received. This will foster the growth of a regular clientele and hence
   keep down issue costs.
                                                                            ••/•••
 ---pagebreak---                                                                7.
Moreover the proposed revolving method offers the advantage of clarity,
in that the total debt is capped - successive tranches no longer being
cumulable. At the same time it avoids the apparance of gaps, such as
that which has emerged at the present time with the rapid exhaustion of
the   NCI   IV,   leaving    an  unsatisfied    demand   while   awaiting    a  new
authorisation.
At   the end of the first three years, the Commission will review the
working of the system and will submit a report of its review to the
Council, the European Parliament and the Economic and Social Committee;
fresh priorities could also be set on that occasion.
Loans
Given that the investments in question are of modest size, the loans of
the new authorization        could  be   granted by   the well   tried method    of
global    loans.    This   allows,   not   only  to   distribute    the   resources
available to a large number of enterprises, but also to cut out the risk
of   default,    in   view  of   the   excellent   guarantees   provided    by  the
intermediaries.
The techniques of financial engineering           should be   used   as a way    of
supporting projects more efficiently. One could envisage, amongst other
possibilities, to :
a) promote the transformation of global loans into equity in the context
    of high technology and innovation;
b) couple the NCI with a mechanism           to give repayments which increase
    over time;
c) improve the guarantee conditions for these investments; this would
   mean, for example, close collaboration with guarantee organizations;
d) include      the    possibility      of   making    loans,     in    appropriate
    circumstances, at floating rates;
e) encourage the finance of projects through risk-capital operations by
    using an appropriate combination of equity and long term loans.
                                                                           /...
                                                                                    S
 ---pagebreak---                                                       8.
The new NCI would have the additional function of helping to "recycle"
balance of payments surpluses* It is desirable for the currencies of
surplus Member States to be included to an appropriate degree in the
basket of currencies used to finance projects situated in the deficit
countries•
To increase the efficiency of the instrument, the NCI - and particularly
the "rural" NCI - will be closely associated with the other Community
instruments, especially the structural Funds and the EIB.
                                                                         9
 ---pagebreak---                                        COUNCIL DECISION
         empowering the Commission to borrow under the New Community Instrument
               for the purpose of promoting investment within the Community
THE COUNCIL OF THE EUROPEAN COMMUNITIES,         Whereas investment by small and medium-
                                                 sized undertakings involving the appli-
Having regard to the Treaty establishing         cation of new technologies and innova-
the European Economic Community, and in          tion has features which raise special
particular Article 235 thereof,                  financing problems;
Having regard to the proposal      from the      Whereas special financing arrangements
Commission (*),                                  should consequently be provided for to
                                                 deal with such problems, in particular
Having regard to the opinion         of  the     by extending the financing base and by
European Parliament (*),                         encouraging     the   supply    of    equity
                                                 funding;
Having regard to the opinion of          the
Economic and Social Committee (-*),              Whereas the New Community Instrument can
                                                 help    to   recycle   certain   countries'
Whereas    the     Community's    investment     balance of payments surpluses for use by
financing facilities should continue to          deficit countries;
operate, with a view to correcting
structural shortcomings in the produc-           Whereas the Commission should therefore
tion system so as to increase investment         be empowered to borrow and whereas the
and thereby stabilize employment;                amounts borrowed should make it possible
                                                 to stabilize the total stock of debt
Whereas the borrowing authorized by the          outstanding under the New          Community
Council in Decision 87/182/EEC (*) has           Instrument at its present level;
been fully accounted for by the amount
of loans granted under the New Community         Whereas, at the end of a period of three
Instrument;                                      year s following the entry into force of
                                                 this Decision, it will be necessary to
Whereas it is necessary to continue and          examine    the   objectives   of   the   New
to strengthen action under the New               Community Instrument;
Community Instrument, as last defined by
Decision 87/182/EEC, to assist small and         Whereas the European Investment Bank
medium-sized enterprises;                        (hereinafter referred to as the 'Bank')
                                                 has stated that it is willing to contri-
Whereas such action helps to achieve the         bute to the implementation of this
Community's      objectives    in    respect     measure, and to take responsibility for
of employment in rural areas and the             managing the cash holdings for carrying
diversification of the economy in these          out the lending operations, it being
areas through investment projects which          understood that the discharge and audit
are not of a strictly agricultural               procedures shall be those provided for
nature; and whereas such action also             in the Bank's Statute in respect of all
helps to protect the environment;                its operations;
Whereas    it   is vital     in order     to     Whereas the Treaty establishing          the
strengthen the Community's technological         European Economic      Community has not
base and industrial competitiveness to           provided the necessary powers for a
encourage the innovative capacity of             Community action in this field needed to
undertakings;                                    attain, in the course of the operation
                                                 of    the   common market, one of the
                                                 objectives of the Community;
 (*) OJ No C
 (2) OJ No C
 (3) OJ No C
(4) OJ No L71, 14.3.1987, p.34
                                                                                            Jo
 ---pagebreak--- HAS DECIDED AS FOLLOWS :                                  These priorities shall be laid down for
                                                          a period of three years from the entry
                                                          into force of this Decision. For
                              Article 1                   subsequent periods, the Commission will
                                                          propose the priorities to be observed*
The Commission shall be empowered to
borrow, on behalf of the European                         Projects and their implementation shall
Economic Community under the New Commu-                   comply with the provisions of the Treaty
nity Instrument, amounts which make it                    and   of   secondary    legislation, in
possible to maintain the total stock of                   particular    provisions     relating   to
debt outstanding under this instrument                    competition, and with the rules and
at its present level, in principal,                       requirements of the relevant Community
having regard to the repayments of                        policies•
capital on existing borrowings*
                                                                           Article 4
                              Article 2
                                                          Loans shall generally be granted through
The proceeds of the borrowings referred                   the agency of financial intermediaries*
t o i n A r t i c l e 1 s h a l l be o n - l e n t t o    In certain bordereline cases, however,
finance investment p r o j e c t s t h a t c o n t r i -  they may be made directly to the
bute to the i n d u s t r i a l adjustment and            recipients•
the competitiveness of the Community*
                                                          Whatever the procedure for granting
These p r o j e c t s , to be carried out i n             loans, capital and interest payments may
Community t e r r i t o r y , must be such that           be deferred* Loans may also be used to
they serve the Community's                       priority finance   intangible assets       such as
o b j e c t i v e s r e l a t i n g t o the financing of  patents,    licences,     know-how,    and
investment by small and medium-sized                      research and development expenditure
undertakings*                                             directly   linked    to the investment
                                                          concerned*
                              Article 3
                                                          Where they are granted through the
The Commission shall decide whether or                    agency of a financial intermediary, that
not projects are eligible in accordance                   intermediary may, with the agreement of
with the following priorities and guide-                  the Bank, pass the loan on to under-
lines :                                                   takings either in the form of a loan or
                                                          in the form of equity capital* In both
- the investment projects of small and                    cases,   the    intermediary    shall   be
   medium-aized enterprises in industry                   responsible for the service of the loan
   and other productive sectors, in                       and associated risk.
   particular with a view to the applica-
   tion of new technologies and innova-                                    Article 5
   tion (including renewable sources of
   energy)           shall          be    eligible;  the  Lending    terms     as     regards    the
   projects of small enterprises shall                    reimbursements of the principal and the
   have priority;                                         rate and payment of interest shall be
                                                          those applied by the Bank, in accordance
- the investment projects of small and                    with its Statute in respect of loans
   medium-sized enterprises, situated in                  from its own resources, and shall be
   rural areas, shall be eligible; these                  fixed in such a way that, overall, they
   projects must help to protect the                      cover the costs and expenses incurred in
   environment or not be of a strictly                    concluding and performing both the
   agricultural nature and create jobs*                   borrowing and the lending side of the
                                                          transactions*
                                                                                                    A-
 ---pagebreak---                 Article 6                - the Commission and the Bank shall sign
                                           the loan contracts with the primary
The terms of borrowings shall be négo-     borrower, viz the financial interme-
ciât eu by the Commission in the best      diary in the case of a global loan, or
interests of    the   Community,  having   the beneficiary in the case of a
regard to the conditions on capital        direct loan,
markets and in accordance with the
constraints imposed by the duration and  - the Bank shall inform the Commission
other financial aspects of the loans to    of the allocation of the loans*
be granted. The borrowed funds shall be
entrusted to the Bank, which shall                        Article 8
manage them in the manner agreed with
the Commission under the terms of the    The Commission shall annually inform the
existing co-operation agreement*         European Parliament and the Council of
                                         capital receipts and payments resulting
Borrowing and lending operations shall   from borrowing and lending transactions*
be expressed in the same monetary units, To this end the Bank shall forward to
and to ensure adequate coverage the      the Commission any data required for the
Commission   may    carry   out   "swap" European Parliament and the Council to
operations provided that there is no     be fully informed*
resultant exchange or interest rate risk
for the Community*                                       Article 9
                Article 7                Three years after the entry into force
                                         of the present Decision the Council
A mandate shall be given to the Bank to  shall examine, on the basis of a report
grant and administer loans in pursuance  by t'ie Coounission and after consulting
of this Decision* The Bank shall carry   the European Parliament and the Economic
out transactions under this mandate on   and   Social   Committee,   whether  the
behalf    of   the   Community,   whilst objectives and priorities of the New
exercising the same diligence as for the Community Instrument should be changed*
operations carried out with its own
resources.                                               Article 10
The Commission shall decide, in accor-   The financial control and audit of the
dance with Article 3, whether projects   Commission's accounts shall be carried
are eligible. Where the Commission gives out in accordance with the Financial
a favourable decision, the Bank shall    Regulation applicable to the general
decide whether and on what terms to      budget of the European Communities and
grant the loans, in accordance with its  with the Treaty instituting the European
usual criteria and with the procedures   Economic Community*
laid down in its Statute and in the
co-operation agreement*                  The lending transactions and management
                                         of cash holdings shall be covered by the
Loan procedure as provided for in this   discharge and audit procedures provided
Decision shall be as follows :           for in the Bank's Statute in respect of
                                         all its operations*
- loan applications shall be transmit-
  ted simultaneously to the Commission
  and to the Bank by the primary borro-
  wer,                                   Done at Brussels,
                                                                                  M
 ---pagebreak--- CM
                                                                                                                                 ANNEX
                                       A H B i U n t r e TO THE PROPOSAL FOR A COUNCIL DECISION
                 empowering the Commission t o borrow under the New Community Instrument for the purpose of
                     promoting investment within the Community           (COM (88) 661 f i n a l - revised version I )
                 Text to be amended                                             Proposed amendment                               Comments
   Draft decision
   COUNCIL DECISION OF                     empowering          COUNCIL DECISION of                          empowering The Act's title is simplified
   the Commission to borrow under the New Community            the Commission to borrow under the New Community        and brought into line with
   Instrument to srahlHav the level of debt                    Instrument for the purpose of promoting Investment      the title of the communica-
   outstanding    for the purpose of promoting                 within the Community;                                   tion (orig* FR).
   investment in the Community;
   tfiereas loan applications already approved by the                  the borrowing                 by the Council in
   Commission account for over 87% of the borrowing            Decision 87/MB/UC (4)             been fully accounted  The second recital is brought
   authorized by the Council in Decision 87/182/EEC            for by the amount of             granted under the New  up to date*
   (4) and over 97% of the cumulative total of
   all authorizations to date;
   Wnereas the Commission should therefore be                          the Commission tfk**nH therefore be empowered
   empowered to borrow snownts enabling It to                  to borrow and whereas the amounts borrowed should       In order to Improve the
   maintain the level of debt outstanding under the            make it possible to stabilise the total stock of        presentation of the argu-
   Hew Community Instrument at Its present level of            debt outstanding under the New Community Instrument          i9 the third recital
   5,865 million BCD;                                          at its present level;                                            the ninth; the
                                                                                                                       recital is brought up to date
                                                                                                                       with no change being made
                                                                                                                       to the substance*
 ---pagebreak---                                                                   - 2 -
               Text to be amended                                  Proposed amendment                                  Comments
  Vhereas   action    under   the   New Community  Vhereas i t i s necessary to continue and to strengthen    For the same purpose the
  Instrument, as     last defined     by Decision  action under the New Community Instrument, as last         fourth recital is slightly
  87/182/EEC, should for the next three years      defined by Decision 87/182/EEC, to assist small and        amended whithout affecting
  continue to be concentrated in favour of small   medium-sized enterprises;                                  the substance*
  and medium-sized enterprises;
                                                          ,, at the end of a period of three years            For the sake of precision,
                                                   following the entry into force of this Decision, i t       the phrase in the fourth
                                                   will be necessary to eramln* the objectives of the         recital "for the next three
                                                   New Community Instrument;                                  years" is     developed   to
                                                                                                              become the tenth recital*
  Vhereas such action will help to achieve the              such artlffw help* to achieve the Community'a Recital brought into line
  Community's objectives regarding the reversal of objectives in respect of employment in rural areas with the text of the
  the exodus from rural areas and concerning the   and the dfr'WTfff 1**^T****^ of the economy in these areas enacting terms*
  development of these areas;                      through investment projects which are not of a
                                                   strictly agricultural nature; sod uhereas such
                                                   action also helps to protect the environment;
                                                             the sew Community                  can help to   Eighth recital incorporating
                                                   recycle    certain countries' halanr*»       of            the idea introduced in the
                                                   surpi      for use by deficit countries;                   explanatory      memorandum,
                                                                                                              page 5.
  Enacting terms
  Article 1                                        Article 1                                                  Article corrected in terms
  The Commission shall be empowered to borrow, on  The Commission shall be empowered to borrow, on behalf     of language and brought
  behalf of the European Economic Community under  of the European Community under the New Community          up to date*
  the New Community Instrument, amounts enabling   Instrument, amounts which make it possible to maintain
  I t to maintain the level of debt outstanding    the total stock of debt outstanding under this
  under this facility at 5,865 million ECU in      instrument at its present level, in principal, having
  principal, having regard to the flow of          regard to the repayments of capital on existing
  repayments of principal on existing borrowings*  borrowings*
^
 ---pagebreak---                                                                                - 3 -
                              Text to be amended                                               Proposed amendment                               Comments
Article 2                                                        Article 2
The proceeds of the borrowings referred to in                    The proceeds of the borrowings referred to i n                       Amendment requested by the
Article 1 shall be on-lent to finance investment                 Article 1 s h a l l be on-lent to finance investment                 European Parliament*
projects that contribute to the structural adjust-               projects             that      contribute to the          industrial
ment and the competitiveness of the Community; for               adjustment               and the competitiveness            of   the
a period of three years following the entry into                 Community*
force of the present decision, such projects shall
be directed towards the application of new
technologies and innovation or the s t a b i l i z a t i o n
of employment in rural areas; thereafter the
Commission shall determine the p r i o r i t i e s t o be
applied*
These projects,             to be carried out i n Community      These p r o j e c t s , t o be carried out i n Community             Attendaient requested by the
t e r r i t o r y , must,   where appropriate, be such that      t e r r i t o r y , must be such that they serve the                 Economic       and     Social
they serve the               Community's priority objectives     Community's p r i o r i t y objectives relating to the               Committee*
relating to the             financing of investment by small     financing of investment by small and medium-sized
and medium-sized            undertakings*                        undertakings.
Article 3 , second indent:
- the            investment      projects           of small and - the investment projects of small and medium-sized                  tore precise wording*
   medium-sized enterprises i n rural a r e a s , aimed              e n t e r p r i s e s , situated i n rural a r e a s , shall be
   at safeguarding the environment or stabilizing                    e l i g i b l e ; these projects must help to protect the
   employment likely to be lost in agricultural                      environment or not be of s s t r i c t l y agricultural
   a c t i v i t i e s , shall be e l i g i b l e ;                  nature and create Jobs;
                                                                 Article 3 , second paragraph (new)
                                                                 These priorities shall be laid down for a period                     intendment requested by the
                                                                 of three years from the entry into force of t h i s                  European Parliament*
                                                                 Decision. For subsequent periods, the Commission
                                                                 w i l l propose the priorities to be observed*
 ---pagebreak---                                                               - 4 -
                  Text to be amended                                   Proposed amendment                           Comments
  Article 4                                          Article 4
  iiOans shall for the first three years generally   Loans shall generally be granted through the agency   Brought into line with the
  be granted through the agency of financial         of financial intermediaries* In certain borderline    explanatory memorandum*
  intermediaries*     In certain limited cases,      cases, however, they may be made directly to the
  however, they may be made directly to the          recipients•
  recipients•
                                                     Paragraph deleted                                     Amendment requested by the
  Article 6, third paragraph                                                                               Economic       and    Social
  Where borrowings are expressed, payable or                                                               Committee •
  reimbursable in the currency of a Member Sate,
  they may be concluded only with the agreement of
  the competent authorities of that State*
  Article 9                                          Article 9
  Three years after the entry into force of the      Three years after the entry into force of the present Amendment requested by the
  present decision the Council shall examine, on the Decision the Council shallexamine, on the basis of a  Economic       and    Social
  basis of a report by the Commission and after      report by the Commission and after consulting the     Committee*
  consulting the European Parliament, whether the    European Parliament and the Economic and Social
  objectives and priorities of the New Community     Committee, whether the objectives and priorities of
  Instrument should be changed*                      the New Community Instrument should be changed*
A
 ---pagebreak---                                                                       - 5 -
                     Text to be amended                                   Proposed amendment                                Comments
Explanatory memorandum
page 6, f i r s t paragraph:                          As regards high technology, the Coomunity's action           Improvement to the text
Moreover, as regards high technology, the average                     also extend over a long period* In           with no effect on the
l i f e of research projects i s four years* In                     t, s financial mechanism which accompanies     substance*
consequence, an NCI action designed to accompany      such measures should have a long l i f e , especially
such measures should have a long l i f e , especially since, in a rural context, the leverage effect on
as, in rural context, the leverage effect on          markets may prove to be slow*
markets may prove to be slow*
page 6, second paragraph, last sentence:              The effect would be to convert the NCI into a                The text i s brought up to
The effect would be to convert the NCI into a         "revolving fund", with the Commission being                  date*
"revolving fund", with the Commission being           automatically empowered to borrow and re-lend up to
automatically empowered to borrow and re-lend up      the limit set up by the amount of debt outstanding,
to the limit set up by the amount of debt             which w i l l total 5.4 b i l l i o n KO at the end of 1989.
outstanding, currently around 5.8 billion ECU*
page 7, f i r s t paragraph:                          At the end of the f i r s t three years, the Commission      The exaplanatory memorandum
After three years, the Commission will review         will review the working of the system and « H I              i s brought into line with
the working of the system; fresh priorities could     Willir s report of i t s review to the Council, the          the    amendment   to    the
also be set on that occasion*                         Européen Par 11 snaut and the Economic and social            enacting terms requested
                                                      Committee; fresh priorities could also be set on             by the Economic and Social
                                                      that occasion*                                               Committee •
Page 8:                                               The new NCI mould have the additional function of            Non-binding         addition
(new alinéa to insert)*                               helping      to     "recycle"        halanre   of   payments resulting from the talks
                                                      surpluses* It i s desirable for the currencies of            with Member States*
                                                      surplus Member States to be Included to an
                                                      appropriate degree i n the basket of currencies used
                                                      to finance projects situated In the deficit
                                                      countries*
 ---pagebreak---  ---pagebreak---                                 ISSN 0254-1475
                         COM(89) 440 final
                  DOCUMENTS
EN                                        01
   Catalogue number : CB-CO-89-397-EN-C
                       ISBN 92-77-52831-1