The Week in Europe 10/03-16/03/01

EU news in brief

Stockholm Council focuses on economic and social concerns

EU leaders gather in Stockholm on 23-24 March, for a European Council that will concentrate on economic and social issues. The summit will review progress towards strategic goals agreed at the Lisbon European Council a year ago. These include the aim of making the EU the most competitive and dynamic knowledge-based economy in the world. The heads of state and government will also discuss the impact of the ageing population on pensions and work, the quality of employment, social protection, and the competitiveness of the business sector in Europe. The ECOFIN Council and the Internal Market/Consumer Affairs Council (both 12 March) prepared a series of reports for Stockholm. These include economic policy guidelines, reviews of structural reforms and product and capital markets, and strategies on employment, growth and simplifying the regulatory environment. Details are available from the Swedish Presidency website at http://www.eu2001.se

Foot-and-mouth restrictions

Tighter restrictions on the movement of animals and animal products have been agreed, after a case of foot-and-mouth disease was confirmed in the North West of France on 12 March. Live animals capable of transmitting the disease, and animal products, may not be moved from the départements of Mayenne and Orne. The ban, adopted by the Commission on 13 March after approval by the Standing Veterinary Committee, runs initially until 27 March. It will be reviewed on 20-21 March. Commissioner David Byrne, responding to import bans imposed by some countries on EU produce, called for such measures to take due account of the tough action taken to contain the outbreak. Some countries had placed excessive and unnecessary restrictions on EU exports, Byrne told MEPs on 14 March. Commission officials would be raising these and explaining that such measures were not needed. The US ban would be reviewed urgently, he understood. In some cases, cereal exports from the EU are being restricted. [Background texts: IP/01/363 & IP/01/367]

Progress on financial services

The Commission welcomed agreement on two key financial service measures at the ECOFIN Council on 12 March. A Directive on the winding-up of credit institutions was adopted, and ministers reached political agreement on a Directive on investment fund management. Both form part of the financial services action plan, which aims to create a single market in this sector by 2005. The first makes banks and others subject to a single bankruptcy proceeding for all the EU. The second enables investment funds to operate EU-wide after authorisation by one Member State, subject to investor safeguards. [Background texts: IP/01/344 & IP/01/345]

EU energy markets by 2005?

Gas and electricity in the EU would be opened fully to competition by 2005, under plans outlined by the Commission on 13 March. The proposals involve bringing forward the schedule for liberalising energy markets, reinforcing conditions that promote real, fair competition, and introducing a genuine single market for energy. All non-domestic customers would be able to choose their supplier of electricity by 2003 and of gas by 2004. All consumers would be in this position by 2005. The management of the transmission and distribution grids would be legally separated from production and sales, with access tariffs approved by national regulators. Consumers would benefit from safeguards on the security of supply and on levels of public service. The latter would protect vulnerable people, such as the elderly or disabled. Finally, the Commission is proposing rules to facilitate intra-Community trade (on cross-border tariff-setting and congestion management for electricity), improved connections between national networks, and agreements with countries bordering the EU. Commissioner Loyola de Palacio said the proposals offered real advantages in terms of price, competition, and business competitiveness. [Background text: IP/01/356]

Biotech strategy taking shape

The strategic potential presented by life sciences and biotechnology is reviewed in an information note drawn up for the Stockholm summit. In preparation for a Communication in the autumn, it highlights the need to address ethical and social issues related to biotechnology, as well the scope for benefits. These could come through the contribution of biotechnology to economic growth, environmental protection and social development. Europe will need to build on its strong points, such as the science base and highly skilled labour force. The Communication is likely to make strategic policy recommendations on the regulatory framework, research, innovation and competitiveness, public perception, governance, and EU policy in a global context. [Background text: MEMO/01/81 ]

Internet use soars as costs fall

Europe now has about as many Internet users as the USA, according to a report prepared for the Stockholm summit. The number of EU households with Internet access rose by 55% between March and October last year, helped by an average cut of 23% in the cost of access. Schools have increased access even faster: 80% are now connected for educational purposes. The Commission's review of the eEurope 2002 initiative notes, however, that Internet usage still tends to be passive - searching for information search and downloading data. The wider potential of interactive services (including e-commerce) is not being fully exploited. The report also proposes some areas for action, including a target of one PC for every five school pupils, and basic 'e-government' services (such as tax returns and car registrations) online by the end of next year. More also needs to be done to improve Internet security; it suggests setting up an early warning system to enable Member States to exchange information about potential threats. Finally, Europe should maintain its lead in mobile communication, and EU countries need to implement rapidly the legal framework for e-commerce. [Background text: IP/01/362]

SMEs urged to do e-business

The Commission is urging small and medium-sized enterprises (SMEs) to make full use of the opportunities offered by e-business. Its GoDigital report recommends action to promote e-business across Europe and promote participation by SMEs. A working group is planned to monitor the demand for relevant information and communication technology skills, and training needs. A 'market watch' tool is also proposed, to measure the take-up of e-business by SMEs and evaluate its impact. [Background text: IP/01/361]

Rights of non-EU nationals

The rights of long-term EU residents who are nationals of other countries would be clarified in proposals unveiled on 13 March. A draft Directive sets out their entitlement to equal treatment in areas such as access to employment, education, vocational training and social protection. Non-EU nationals would be able to gain this status when they have been legally resident for an uninterrupted period of five years in a Member State, possess a minimum level of resources, and do not constitute a threat to public order or internal security. They would qualify for a ten-year residence permit. At present, third-country nationals have the right of free movement within the Schengen area for up to three months. Greater mobility should make it easier to deploy existing labour forces in the EU. The plans do not apply to asylum applicants, or to people in temporary forms of residence or protection. [Background text: IP/01/357]

The EU's Accession Partnership with Turkey was adopted on 8 March. It is a road map for Turkey to comply with criteria for accession to the EU, said Commissioner Günther Verheugen. [Background text: IP/01/332]

P&O Stena Line is seeking renewed clearance for its cross-Channel ferry services under EU competition rules. The Commission is inviting comments. [Background text: IP/01/333]

The steel industry in the EU produced a record 163m tonnes last year and grew by 3%, according the latest review and forecasts by the Commission. [Background text: IP/01/346]

International 'green' crimes could be subject to legal penalties at EU level for the first time. [Background text: IP/01/358]

Enlargement news

Options on free movement of workers

The European Commission has taken the first formal step towards resolving one of the biggest challenges faced by the current EU enlargement exercise: easing fears in the existing EU Member State of a tidal wave of cheap workers from new members in eastern Europe, without creating disappointment and even disillusion among citizens of candidate countries about what many of them regard as full EU membership rights. But the formal discussions are only beginning now. The Commission agreed an "information note" on March 7, which is, it made clear, not a negotiating position, but a working document produced at the request of the Swedish Presidency as a basis for preliminary discussion among Member States. The note, the Commission insists, gives no indication of possible transitional periods or their duration, and does not exclude any options at present. A Commission official said the hope is that Member States will select one or another option, and at that point the European Commission can draft a formal negotiating position.

The Commission note consciously attempts to de-dramatise the debate about enlargement and free movement of workers. Its starting position is that "there will be no dramatic increases in migration, and that the impact on the EU labour market should be limited". It also treats the subject in isolation from free movement of people: "It is important to distinguish access to the labour market from the freedom to travel and reside, which are independent from the right to work", it says. And its information does not deal with Cyprus, Malta or Turkey. On these terms, the long-run migration potential from the candidate countries would be around 1% of the present EU population, it suggests.

But the Commission also recognises that anxiety about negative short-term effects on local labour markets - particularly in some Member States that border the candidate countries - "may well affect overall public support for enlargement". Between 1% and 8% of the labour force could be commuting in border regions, the Commission forecasts. So it suggests focusing attention on the more affected regions and sectors, and on potentially vulnerable sections of the labour market. Possible policy responses could include flexible arrangements to provide assurance, and assistance to border regions and more communication about enlargement.

In essence, the possibilities the Commission examines are the two extremes - a general delay in allowing free movement, or full and immediate application of the acquis - and a range of intermediate positions. These various responses would make use of transition periods, safeguard clauses or other constraints on free movement from the time of accession, all of which could be differentiated by member-state, candidate country, region, sector, or duration. "Inappropriate blanket responses can be avoided", says the Commission.

Formally it refers to these different approaches as:

· Option 1 - full and immediate application of the acquis. This would have the advantages of safeguarding the geographic unity of the single market, giving the fight against illegal labour better chances of success, and requiring no negotiation. But it provides no guarantees against disruption of labour markets, ignores the sensitivity of public opinion, and "does not correspond to the prudent approach" followed by the EU in the past.

· Option 2 - safeguard clauses. This would allow Member States to impose restrictions when and where they suffered disruption of the labour market - based either on an assessment of the labour market situation and an appropriate set of triggers, or on a fixed threshold of migrant workers, defined in advance, at national, regional or sectoral level, and as an absolute figure or a percentage. But safeguard clauses would require detailed negotiation and surveillance.

· Option 3 - a flexible system of transitional arrangements. This option would establish a system of gradual introduction of free movement of workers over a fixed period, with possibilities of speeding the process up at national or EU level as circumstances dictated or individual Member States wished. But negotiation and implementation would be demanding. It could be combined with elements of Option 2.

· Option 4 - establishment of fixed quota systems. This would create predictability and give a sense of security to the populations on both sides of the borders, and would allow for modulation of conditions to allow selectivity (rather than simply "first-come-first-served"). But the inflexibility of quotas can cause difficulties if they are not properly targeted or do not adjust to changing circumstances. And again, negotiation and implementation would be hard.

· Option 5 - general non-application of the acquis for a limited period. Preserving the status quo (under which workers from candidate countries cannot at present move freely into and around the EU) would be easy for Member States to implement, and provide full reassurance to their populations. But it would hinder the functioning of the enlarged single market - and would be extremely difficult to negotiate with candidates, to whom it would have very few attractions.

Poland close to a result, but not there yet, says Prodi

Romano Prodi, President of the European Commission, spoke to a joint session of the committees on European integration, foreign affairs and European law of both houses of the Polish parliament on 8 March. He said how impressed he was with Poland's progress towards joining the European Union, and denounced pessimistic commentators on enlargement. "Only a year ago, the press was full of speculation about delays in the accession process... They were wrong." he said. Nonetheless, the Commission President insisted that the process was not yet complete.

"It is not enough to adopt legislation: laws also have to be implemented", Mr Prodi reminded his audience. "This cannot be done without adequate resources, and one of Parliament's functions is to ensure those resources are available. That means not only money but also people. And not just administrators. Business and civil society, including trade associations and NGOs, must also play an active part. It is often they who have to implement the acquis on the ground, and to do so effectively they need to understand the laws concerned." And he said he wanted to have more information on how the Polish parliament takes account of the views of its citizens.

"Let's be realistic. We have a great deal of hard work to do and there are many tough issues to be resolved", he said, insisting on the need for quality in the work to be done: commitments made by both sides must be realistic and must be delivered on time, he said. And in a message addressed as much to EU Member States as to the candidate countries, he remarked: "A spirit of mutual understanding and good will is decisive if we are to conclude negotiations swiftly... So I invite all those involved to get down to serious discussions".

Dialogue between EU and candidate countries' environment ministers

"The environment ministers of the EU Member States and the countries in line for EU membership have backed the 'priorities' recommended for the EU's Sixth Environmental Action Programme (2001-2010)", according to Swedish Environment Minister, Kjell Larsson. The Minister was speaking at the end of a joint meeting held on 7 March in Brussels, on the eve of the EU's formal Environment Council.

Staged at the initiative of the EU's Swedish Presidency, the meeting provided an opportunity for candidate countries' environment ministers to express their opinions on the main EU environmental policy options for the next 10 years. These countries are due to adopt this policy in due course and many of them will be doing so well ahead of the 10-year deadline. Described as an informal dialogue, the discussions focused on the Sixth Environmental Action Programme. The candidate countries expressed broad support for most of the priorities chosen. They spoke in particular of biodiversity - where many of them are very well endowed, and stressed their determination to preserve this heritage by avoiding the errors the EU has committed - such as by excessive intensive farming, they suggested.

Slovakia's civil service reform, one of the critical developments for progress towards EU membership, is again in danger, after seeming to overcome obstacles last month. The resurgence of a rift between the Slovak Hungarian Coalition and the rest of coalition partners is jeopardising the passage of crucial legislation.

Hungary has been embarrassed by France's admission of two Roma families as refugees when they claimed they had suffered violence in Hungary. Despite Hungary's progress towards meeting the EU accession criteria, the government has admitted it still needs to do more to improve conditions for the Roma.

Transition periods of 3-5 years - but no more than seven years - should be allowed for the introduction of free movement of people, goods, services and capital in the context of the enlargement process, according to the Confederation of European Associations of Small and Medium-Sized Enterprises, which represents SMEs in 19 European countries. Although enlargement will be beneficial overall, SMEs will have difficulties in rapid adaptation, it says, because they will be unable to release the investment needed. The Confederation wants long-term low-interest loans to be made available.

Euro-MP Caroline Jackson, the chair of the European Parliament's committee on environment, public health and consumer policy, said last week she was pessimistic about effective consumer and environmental law in the context of EU enlargement. It could be "a nightmare, for west and east", she said. The enlargement countries will have difficulty in meeting the costs of implementing EU legislation on the environment, consumer protection and health. "The problem is how to extend the acquis communautaire when we are not being honest about our willingness to pay", she said. In her view, the EU financial assistance for implementation is very limited. And monitoring applicants' compliance is weak. She criticised the European Commission for assessing compliance a year in arrears and asked what was supposed to happen if by then the newcomers cannot comply: "Do we wait? We are going through this process with our eyes half closed. We don't know about enforcement and implementation."

European Commission President Romano Prodi said in Poland last week: "Perhaps the most challenging task facing us all is to convince our citizens of the merits of enlargement and to win their full support for it. It is our citizens who ultimately make the Union, day by day, in what they do and think. Our Union cannot just be an economic and political Union: it must, above all, be a union of hearts and minds. A union of solidarity between peoples. We must therefore work very hard to explain to our citizens, clearly and honestly, why enlargement is good for the Union and for Poland. Good for jobs. Good for the environment. Good for our standard of living and for our quality of life."

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