CELEX: 51973PC1170
Language: en
Date: 1973-07-25
Title: PROPOSAL FOR A COUNCIL REGULATION ESTABLISHING A REGIONAL DEVELOPMENT FUND (submitted by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (73) 1170
Vol. 1973/9009
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 ---pagebreak---                        OF THE
                                                          COM(73)1170    final
                                                          Brussels , 25 July 1973
                                    PROPOSAL FOR A
                         COUNCIL REGULATION ESTABLISHING
                             REGIONAL DEVELOPMENT FUND
                   ( submitted "by the Commission to the Council )
O
  COM(73 ) 1170 final
 ---pagebreak---     PROPOSAL FOft A COUKCI'L RBGJLATIOtf ESTABLISHING
                A PJiGIOML DEVEIDFMMT POTTD
                  EXPLANATORY STITEIWT
At tho present stage cf the Community 's development , its
institutions must now , as they were requested "by the Heads
of State or of Government meeting- in Paris in October 1972 ,
devote themselves towards a Community solution to regional
problems and create a European Regional Development Fund.
Per the Conaunity 's assistance to "be effective , it must r.eet
throe requirements * it should ooapleacnt national rogioncl
poliojes , it should be flexibly nanaged ard investments
should conform to development programmes or specific
development objectives.
(a) Complementing national regional policieR
      The Community 's assistance nu^t complement rather than
      substitute the action of Member States because its purpose
      is to implement regional development policies faster than
      Member States could alone , taking account of the discipline
      which Economic ar.d Monetary Union will impose on the use of
    . their own resourc.es.   In spite of the progress which has been
      achieved , action taken so far has turned out to be
      insufficient to offset to the desired extent the tendency
      for companies to locate themselves in already highly developed
      regions , where taey benefit from significant external
      economies , ' The achievement of the common market is in
      itself likely to stronjthen this tendency.    Also in order
 ---pagebreak--- to allow the full development of those regions which have not
kept up in spite cf their considerable development potential ,
it is r.ecessarjf for the Community to add its OwTi effort to that of
Member States .     The Community as a whole will benefit from thin
development , both in its growbh rate and its competitivity.
It is by providing these complementary resources that the
European Regional "Oevelopmert Fund will contribute to accomplishing
the task of "promoting throughout the Community a harmonious
development of economic activities" and the objectives of " the
const ant improvement of living and working conditions11 and
" reducing the differences existing between the various regions
and the backwardness of the less favoured regions" which have been
assigned to the Community in the Treaty.      In order to attain
these objectives , and when the Community 's actions , in particular
those directed to the realisation of Economic and Monetary Union ,
may lead to particular difficulties for certain regions , the
Commission may make proposals or appropriate recommendations , so
that use may be made of Community means of action in order to
contribute to resolving the said diff iculti3S .
Flexib ility
The Community 's assistance must be implemented flexibly.      This
flexibility must be expressed in the choice of investments eligible
for assistance , in the speed of the procedures and in the level of
assistances
( i ) choice _ of investments
      Regional problems vary greatly between different countries
      and different regions .    The Community 's aid should be avail­
      able both in areas where the imbalances are agricultural in
      origin and where they are industrial in origin .     It must be
      adaptable to the priority requirements of each region :
      industrialisation, the creation of service activities , infra­
      structure required for the economic development .     In respect
      of infrastructure , which plays a very important part in
      regional development , the Community 's aid should take strict
      account of the need to guide the development of infrastructure
      in coordination with other common policies , in particular ,
      transport and energy.
 ---pagebreak---           The Fund 's resources must besides "be equitably allocated
          between the various eligible Community regions .       This
          allocation . must take account of the Relative severity of
          imbalances , talcing into consideration .-Jhe Community criteria which
                                                                            ctr©
          described in Article 3 of this Regulation and which will
          serve as a basis for the implantation Regulation which will be
           proposed for the identification of the regions eligible for the
           Fund 's assitance »                     -
   ( ii ) Speed of the procedures
          Before talcing their decisions , companies must kripw what.
          benefits they have a right to expect , depending on where . they
          invest .    Otherwise they would decide independently of any
          serious evaluation of the effect of the assistance .
          That is why the Community 's assistance must not have the
          effect of delaying decisions that Ilember States take under
          their own regional policies .      Subject to the necessary
          examination , the Community 's assista?ice mcy thus be able to
          take the form of reimbursement .
 ( iii ) Levcl of assistance
          For both productive investment and infrastructure the
          Community must not be tied to . a uniform rate of contribution
          to Member States' expenditure , but must be able to take
          account of the interest of each case in its own regional
          context and for the Community generally#
) Conformity with European regional development objectives
    The Community 's assistance must be based on development
    programmes or specific development objectives to which the
    investments conform and which the Committee for I.egioual Policy
    hac examined .     The Community 's activities should sorve the
    purpose of a comprehensive policy whose ""European character is
    fully apparent .     Only the comparison and coordination of national
    policies will allow this result to be attained , and at the same
    time allow the effectiveness of the measures taken to be checked .
    This process should lead to the progressive formulation , at the
    initiative of the . Co(Vimis3ion , of the Community 's general regional
    policy objectives , and enable the Commission to identify the
    most sensitive regional problems , to which most of the Fund should
    be devoted.
 ---pagebreak--- 3. At tho Su/nmit conference hold from 19 "fc° 21 October 1972 in Paris , the
   Heads of '3tate or of Government agreed that a high priority should be
   given to the aim of correcting , in tho Community f the structural and
   regional imbalances which might affect the realisation of "conomic
   and Monetary Union,
   Indeed , regional policy is one of the policies fundamental to the
   building of Suropej    its implementation and development must thus be
   seen in the context of this gradual process , in close coordination in
   the whole of Community action to this end.      In these circumstances ,
   the Commission proposes to inscribe a sum of 500 million units of
   account in the Community budget for 1974*      At the present staje of
   its  appraisal ;   of the matter , it considers also that the magnitude
   of regional imbalances will in the following two years , in the light of
   experience , require the inscription in the Community budget of sums
   of the area of 750 million units of account for 1975 and 1,000 million
   units of account for 197&o
4* There is provision for optional consultation of the Economic .and
   Social Committee .
 ---pagebreak---                        PROPOSAL FOR A COUNCIL REGULATION
                   ESTABLISHING A REGIONAL DEVELOPMENT FUND
THE COUNCIL OF THE EUROPEAN COMMUNITIES s
Having regard to the Treaty establishing the European Economic
Community and in particular Article 235 thereof ;
Having regard to the proposal from the Commission }*
Having regard to the Opinion of the European Parliament }**
Having regard to the Opinion of the Economic and Social Committee }***
Whereas , by virtue of Article 2 of the Treaty, the Community has "been assigned
the task of promoting throughout the Comuunity a harmonious development of
economic activities J
Whereas the Conference of Heads of State or of Government in October 1972 ,
desirous of finding a Community solution to regional problems , invited
the Community Institutions to create before 31 December 1973 a Regional
Development Fund whose intervention , in coordination with national aids ,
should permit , progressively with the realisation of Economic and Monetary
Union, the correction of th© main regional imbalances in the Community and
particularly these resulting from the preponderance of agriculture and from
industrial change and structural underemployment ;
Whereas , since the Treaty has not provided the necessary powers for this
purpose ? it is necessary to give the Community such powers by applying
Article , 235     "the Treaty
Whereas the realisation of these objectives within the . framework of '
coordinated' economic polioies and fixed exchange parities can be achieved
only if resources inscribed in the Budget of the European Communities are
devoted to regional development to supplement the resources which the
Member States can devote *
  * 0J no . . . .
 ** 0J no . . . .
*** OJ no ....
 ---pagebreak--- Whereas regional development requires on the one hand
investment in industrial and service activities , so as to
ensure the creat : on or maintenance of employment , and on the
other band \ nfrastructure required for the deve I or>ment of
these activities ;
V/hereas the principle should be adopted that the Fund 's
assi stance should be allocated on the basis of the relative
severity of regional imbalances , and account should also
be ta'<en of other factors determining the interest of i nvestmei
from the region 's and the Community 's point of view ;
Whereas the management of the Fund should be the respons i b i I i t >
of the Commission assisted by a Fund Committee ;
Whereas the Fund 's assistance will be effective only if invest­
ments benefiting from the Community 's aid are included in
regional develooment programmes , or , failing such programmes ,
meet specific regional deve I op'-ent ob'ectives ;
                                        not
Whereas the Fund' s assi stance should /lead Member States to
reduce their own total regional development efforts but should
be comol ementary ;
Whereas the extent of Community 's activities requires specific
information to be provided to the Counci I and to the European
Parliament in the form of an annual reoort ;
HAS ADOPTED THIS    REGULATION :
 ---pagebreak---                                    Article 1
       A European Regional Development Fund, is hereby established.
                                   Article 2
1,     Financial appropriations shall be provided each year m the budget
       of the Communities for the Fund 's operations in that year .
2,     A financial regulation adopted in pursuance of Article 209 of "the
       Treaty shall determine the means whereby expenditure from the Fund
       shall be authorised.
                                   Article 3*
1,   On a proposal from the Commission and after consulting the European
     Parliament , and without prejudice to the application of Articles 92
     to 94 of the Treaty , the Council shall , acting unanimously, adopt the
     list of the regions and areas which may benefit from the Fund , and
     shall , aotiving by & qualified majority , amend this list as need arises
2,   These regions and areas must be chosen from among those which benefit
     from a system of regional aids and whose gross domestic product per
     head is bolow the Community average .    They shall include particularly
     those with regional imbalances resulting from the preponderance of
     agriculture and from industrial change and structural underemployment ,
     taking in particular the following criteria into considerations
     ( a)   hcavy dependence on agricultural eraploymont j
   * (*)'   heavy dependence on employment in declining industrial activities
     (o)    a persistently high rate of unemployment or a high rate of net
            outward migration.
* see the Appendix
 ---pagebreak---                       Article 4
 The Fund may contribute to financings
 (a ) investments , in industrial or service activites , which .
      benefit from a national system of regional aids , provided
      that the ^^"of the investment exceeds fifty thousand units
      of account and ■.-rtlaair'.:' it involves creating or maintaining
      jobs ;
 (b ) infrastructure investments , required for the development
      of industrial or service activities , and totally or
      partially financed by public atrtho^lii-es .
 The amount of the Fund 's contribution shall bes
 (a) in respect of an investment of the kind referred to in
      paragraph 1(a), at most £iftoen~pot> ecnt ofrtho ooct 'Of tho
      investment.   The amount shall , however , not exceed firffy per
      cent of the aid accorded to the investment by public
      authorities under a national system of regional aids.           The
      national aids to be taken into consideration in this
      connection shall be interest rebates , and grants determined
      either as a percentage of the investment or according to
      the number of jobs created}
 (b) in respect of an investment of the kind referred to in
      paragraph 1(b ), at most thirty pec :. coiat ,of tho :. expenditure
      incurred by public authorities .
The Fund 's assistance may, in respect of infrastructure , take in
whole or in part the form of a rebate of three percentage points
 on loans made by the European Investment Bank pursuant to
 Article 130(a) and (b ) of the Treaty.
Tho above provisions shall not prejudice the application of
Articles 92 to 94 of tho Treaty*
 ---pagebreak---                         Article 5
The Jamil 's assistance shall "be decided "by the Conmission in
accordance with the procedure laid        down in Article 13 , with
reference to the relative severity        of the economic imbalance
of. the region where the investment       is made and its direct and
indirect affect on employment , and       taking account of the
following considerations ;
(a) the consistency of the investment with the development
      prograTimop. and     objectives * referred to in Aticle 6 }
(b) the investment 's contribution to the economic development
      of tLe region ? .          c ..    -sjj; } to rs&uoia ;? its
( c ) the consistency of the investment with the Community 's
              v                  programmes or objectives ,
      particularly those adopted as part of sectoral policies ;
(d) the investment 's effect on the environment , particularly
      as regards living and working conditions ;
( e ) the trans-naticnal character of the investment , that is ,
      the; fact that it . conies from, another Member State ;.
( f) the trans-border character of the investment,' that is ,
      concerning adjacent regions in different Member States.
In tho examination of each request , account phall also be taken
of other assistance provided by the Community institutions or
by tho European Investment Bank pursuant to Article 130(a) aid (b) of
the Treaty.
In respect of infrastructure costing more than twenty million
units cf account , the Commission shall , before obtaining tho
opinion of the Fund Committee referred +0 in ilr hi ele 13 > consult
the Committee for Regional Policy.
 ---pagebreak---                                   Article 6
  Investments may "benefit from the Fund 's assistance only if they form
  part of a regional development prograrume whose implementation may
  contribute to correcting the structural and regional imbalances which
  may affect the realisation of Economic rnd Monetary Union,       In the
  absence of such a programme and until 31 December 1975 ; ir.vertments
  eligible for the Fund 's assistanca must meet specific regional
  objectives .          In the latter case , Member Status
 must provide the Commission annually with all relevant
 information about the resources they are making
 available , and propose to make available , for the development of the
 regions on the list referred to in Article 3 , and also with all
 relevant information about the development of the economic and social
 situation in those regions *
 Regional development programmes or specific regional objectives shall
be communicated to the Commission by the !lember States .      A first sucn
 communication shall be made before 1 October 1374~
The programmes shall indicate the objectives and the means for
developing the region.       To this effect , they must contain sufficiently
detailed indications ofi
( a)    the development of the economic arid social situation of the
        region , particularly in respect of demography , employment ,
       regional product , sectoral structure , infrastructure , ecology
        and land usage ;
(b )   the measures proposed in respect of infrastructure and the
       creation of economic activity , together with an implementation
       schedule j
( c)   the intended financing ;
( d)   the authorities , organisations or institutions responsible for
       these measures .
The Committee for Regional Policy must be consulted about the programmes
or specific objectives for regional development .      The Commission must
confirm their conformity with the Community 's objectives ,.
 ---pagebreak---                                   Article 7
Public expenditure referred to in Article 4 which has "been incurred more
than six months "before the date of the presentation of the request , or
which concerns investments completed more than twelve months before this date
shall not be eligible for assistance from the Fund ,
 ---pagebreak---                               Article 8
1.     Requests for the Fund 's assistance shall be sent to the
       Commission accompanied by the information provided for in
       the Financial Regulation referred to in Article 2 .     In
       respect of industrial and service investments of an amount
       less than ten million units of account and infrastructure
       of an amount less than twenty million units of account ,
       Member States shall group their requests in quarterly-
       statements for each of the regions referred to in Article 3 .
2.     The Fund 's assistance shall be decided :
       ( a)    case b2r case , in respect of industrial and service
               investments of an amount of ten million units of
               account or more , and infrastructure investments
               of an amount of twenty million units of account
               or more ,
       (b)     in the aggregate , in respect of other requests .
                              Article 9
The Commission shall make payments to the Member State , an agency
designated by the Member State for this purpose or the European
Investment Bank , as the case may be , in accordance with the provisions
of the financial regulation referred to in Article 2 .
                              Article 10
1.     The Commission shall , with the cooperation of Member States ,
       make sure that investments benefiting from the Fund 's
       assistance are properly implemented .
2.     If an investment on which a decision about assistance has been
       taken is not carried out as planned , or if the public authorities
       recover from the investor all or part of the aid which they
 ---pagebreak--- havp themselves accorded, that; assistance nay "be suspended ,
reduced or cancelled "by decision of, the Commission after
consulting the Fund- Committee. Any suras to be repaid shall "be
recovered "by the Member State and paid over to the Commission
within the six months following the decision to suspend , reduce ,
or cancel .              ■
                           Article 11
The Comnisrion may use a part of the resources of the Fund ,
provided for this purpose in the budget of the Communities ,
to promote or carry out studies closely related to the operations
of the , Fund or to regional development in the Community.
When a study is undertaken at the request of the Member State
the Fund 's assistance - may not exceed fifty per cent of its cost.
                       ■ Article .12
There shall be established a Fund Committee , composed of
representatives of Member States and presided over by a
representative of the Commission.
Within the Committee the votes of Member States shall be weighted
                                      i  ''        •
in accordance with Article 143 , paragraph 2 of the Treaty. The
Chairman shall not vote .
                        Article 13
Where the procedure laid down in this Article is to be followed ,
the "Chairaan . shall refer the natter to the Committee ©ither oil
his own ; initiative or at the request of the representative of
a Merber State .    I          •
 ---pagebreak---       2.  The representative of the Commission shall submit a draft of fie doc' f
          to be taken.    The Committee shall deliver its Opinion on cuch decisions
          within the time limit to be set by the Chairman according to the urgency
          of the questions under consideration. An Opinion shall be adopted by
          a majority of 41 votes «
      3.  The Commission shall adopt decisions which shall apply immediately.
          However , if these decisions are not in accordance with the Opinion of
          the Committee , they shall forthwith be communicated by th3 Commission
         to the Council .    In that event the Commission may djfer application
         of the decisions which it has adopted for not mare than one month from
         the date of such communication#     The Council may take a different
         decision within one month by qualified majority.
                                        Article 14
     The Committee may consider any other question concerning the Fund 's operations
     referred to it by its Chairman either on his own initiative or at the request
     of the representative of a Member State .
                                        Article 15
    Member States and the Commission shall make public the assistance given
    by the Fund and shall inform the investors concerned that part of the aid
    they receive comes from the Community.,
                                       Article 16
1 . Before 1 July each year the Commission shall present a report to the
    European Parliament and to the Council on the implementation of this
    Regulation during the preceding year .     This report shall , in particular ,
    indicate the extent to which the allocation of the Fund 's resources hes taken
    account of the relative severity of regional imbalances , and mike clear what
    progress has been made towards correcting those imbalances and also the
    regional development measures which seem to be required , by economic and
    social trends in the Community , in one or more of the regions on the.ilist
    referred to in Article 3 ,
2 . This report shall also cover on the one hand the financial administration
    of the Fund and on the other hand the conclusions drawn by the Commission
    from the financial inspections carried out on the Fund 's operations .
 ---pagebreak---                             Article 17
The necessary steps , for the implementation of this Regulation shall
be taken " in accordance with "the procedure laid down in Article 13 «
                            Article 18
The Council shall re-examine this Regulation not later than three -
years after it enters into force «
                            Article 19
This Regulation shall enter into force on 1 January 1974 *
This Regulation shall be binding in its entirety and directly
applicable in all Member States .
Jone at               on                    Por the Council
                                            The President .
 ---pagebreak---                                                               APPSNDIX
                                                                           r
                  PROPOSED INSERTION IN THE COUNCIL 'S MIMJTES .
                  –           –--–-             –––         –              »
Since , with regard to the application of the . regional aida provided
for in the Luxemburg Economic Expansion Bill , the Luxemburg Government
has yet to delimit the peripheral areas of application of the said aids ,
it is agreed that the Fund 's assistance shall at the outset be applicable
to the priority agricultural areas defined in Council Regulation
NO . •• vote * Of