Week in Europe 7 - 13 January 2002

EU news in brief

Statement by Romano Prodi on the Euro and Challenges facing the European Union

"The introduction of euro banknotes and coins has been a success. Many people have worked hard to make this possible, but above all the peoples of the twelve countries concerned deserve our thanks for the enthusiastic welcome which they have given to our new currency.

Once again, those who said it would not work have been proved wrong. The determination and commitment of Europeans are a great resource and should inspire us to move forward now.

What are the next steps for the European Union? In addition to the historic task of enlargement, the challenges of the international situation and the debate on the future of the Union, we face important decisions on reform and management of our economy in order to reach a higher growth path.

European leaders set out a programme of economic reform at the European Council meeting in Lisbon nearly two years ago. We will review progress in Barcelona in March. We know what we have to do to make the European economy truly competitive and move to full employment, while enhancing social justice and securing sustainable growth.

We must continue to liberalise markets and modernise our social welfare systems. The Commission has met its commitments by making the necessary proposals for new rules and policies. We will continue to monitor progress and make sure that Member States keep to their promises. I call upon all European Governments to act and to act quickly. At Barcelona I will set out clearly what still has to be done.

We now have a single currency in twelve countries. The euro has already shown its worth by disciplining our economic policies with low inflation, low deficits and low interest rates. It protects us from external shocks which in the past would have blown us off course, threatening our single market by provoking unwarranted currency volatility. However, the growing interdependence of the euro area economies calls for a regular review and enhancement of economic policy co-ordination. The Commission keeps existing arrangements under close scrutiny and will continue to present proposals in this area."

First Saturday proves a success for the euro

The euro changeover has proved a success during the first week of the new year. The number of cash withdrawals and the volume of transactions have returned to normal, as have queues in shops and stores and, increasingly, in banks. Minor problems of availability of small-denomination banknotes or of certain denominations of coins are expected to be fully resolved at the beginning of this week. All players are now resuming their customary roles after a very "special" week when retailers were heavily involved in the exchange of money.

[Background paper IP/02/16]

Commission publishes second EU Scoreboard on State aid

The European Commission published the second edition of the State aid Scoreboard. Building on the success of the first edition, released earlier this year, this Scoreboard seeks to further increase transparency and raise awareness of the need to control State aid by providing new information and analysis. Available on the home page of the Competition Directorate General's Internet site (http://europa.eu.int/comm/competition), the Scoreboard consists of five parts: an overview of the State aid situation in Member States, an analysis of where aid is directed, information on State aid control procedures, the effects of State aid on the Internal Market, with a focus on R&D, and a forum for Member States to present their own State aid policy.

[Background paper IP/02/12]

Internal Market and the "New Approach" to product regulation: Commission launches on-line consultation

The "New Approach" to product regulation has made a major contribution to 10 years of success of the single market. The on-line stakeholder consultation is part of a broader effort by Commissioner Liikanen and the Enterprise Directorate-General to reinforce the proper functioning of the internal market. The consultation is part of a review intended to overhaul, update and upgrade the European Union's "New Approach" to product regulation. The key goal of this approach is to enhance the safety and performance of industrial products while at the same time ensuring their free circulation within the single market. This is done by laying down only essential requirements concerning safety and/or environmental performance, leaving it up to entrepreneurs to choose the appropriate technical solution to meet these requirements. Those solutions very often lead to the development of European standards, which have the advantage of not only being flexible enough to keep pace with technological progress but also of minimising the administrative burden placed on enterprises.

[Background paper IP/02/11]

Air passengers rights: Commission proposes to reinforce protection against denied boarding, cancellation and long delays

The Commission has adopted a proposal of regulation to protect the rights of air passengers when facing denied boarding, cancellation of their flight or a long delay. "Too many Europeans have a bad surprise when checking-in for their flight. We want to cut the number of passengers who suffer from denied boarding; our proposals will make this practice much less common. We want to protect passengers against cancellations of flights for which operators are responsible, particularly when unexpected and made at a late stage," said Loyola de Palacio, Vice-President of the Commission in charge of Energy and Transport. "Strengthening the rights of passengers will help restore their confidence in air travel," she underlined.

[Background paper IP/02/17]

Environment: New Working Plan for the "Flower"

The Commission adopted a new Working Plan for 2002-2004 for the EU eco-label scheme (the "Flower"). The scheme which was established in 1992 is designed to promote products with a reduced environmental impact in the 15 Member States and the three Member States of the European Economic Area (Iceland, Norway and Liechtenstein). Products that meet strict ecological and performance criteria are entitled to display the Flower as a marketing tool to demonstrate their superior environmental performance to consumers. The Working Plan sets out objectives for increased market penetration and promotion of the Flower, for increasing the number of product groups to be brought within the scope of the scheme and for co-ordination and co-operation between the scheme and other eco-label award schemes in the Member States. The fundamental aim is to make the eco-label a more successful and effective instrument for improving the environmental quality of products and services, contribute to making consumption more sustainable and make the most effective use of the resources allocated to the scheme by the Commission, Member States and the interested parties. The Flower scheme will be reviewed in 2005. For full details of the Working Plan and all information about the Flower and contact points in the Member States, please consult the web site at

http://europa.eu.int/ecolabel.

[Background paper IP/02/26]

Euro changeover practically complete

On average, almost 85% of cash payments are made in euros. Over two thirds of vending machines have been converted to the euro. The changeover is entering the home straight.

It is over 70% in all the participating countries and is significantly above the average in four of them (Ireland, the Netherlands, Finland and Luxembourg). Many large stores are reporting lower figures, as they are receiving the remaining national currency notes which many customers are using up. The euro is being used much more in local shops than in large stores and supermarkets.

Over two thirds of vending machines have been converted to the euro. The proportion is over 75% in six countries (the Netherlands, Ireland, Italy, Greece, Austria and Luxembourg). There are significant differences between Member States in the number and use of vending machines, but operators in the public and private sectors are continuing their efforts to speed up the pace of conversion.

[Background paper IP/02/39]

Commissioner Fischler: The common agricultural policy is better than the press it gets

At a press conference held to mark the start of the 'Green Week' agriculture and food fair in Berlin, the Commissioner for Agriculture, Franz Fischler, has firmly stood up for a sustainable and competitive agriculture and against the idea of scrapping the common agricultural policy (CAP). Dr Fischler labelled demands for a renationalisation of the CAP as "pointless and risky". "What would happen if we suddenly had not one common policy but 15 - in future maybe even 25 - competing policies in the EU? The Member States would try to out-subsidise each other and the single market would be at an end. The common agricultural policy has to stay a Community effort." He said that the Commission would be submitting proposals for further improving the CAP towards the middle of 2002. On the topic of enlargement to eastern Europe, Dr Fischler advocated a gradual introduction of direct payments to farmers in the candidate countries in order not to hamper the necessary structural change. "When I call for the gradual introduction of the CAP, I do so not with a view to making savings. Quite the contrary: we are prepared to give greater financial backing to a comprehensive, sustainable rural development policy in the new Member States." He also suggested a simplified method of making direct payments during this transition period so as to avoid unnecessary red tape and expense.

[Background paper IP/02/32]

Eurostat news

Third quarter 01 compared to third quarter 00; Euro-zone labour costs up by 3.3%; EU15 up by 3.5%

Total hourly labour costs in the whole economy of the euro-zone grew by 3.3% in nominal terms in the third quarter of 2001 compared to the same period the previous year, Eurostat reports. In the second quarter of 2001 the increase was a revised 2.7%. For the EU15 the rise was 3.5% in the third quarter, compared to 3.1% in the previous quarter.

Among countries for which data are available, the smallest annual rise was in Germany (2.4%), and the biggest in the Netherlands (5.0%).

In industry, hourly labour costs also rose by 3.3% in the euro-zone and by 3.5% in the EU15. From the data available, the smallest annual rise in costs was in Germany (1.8%), while the biggest increase was registered in Italy (6.0%).

A breakdown by labour cost components shows how wages and other labour costs affect the change in the quarterly total labour cost figure. For the third quarter 2001, from those figures available, the biggest increases in wages, which cover most of the total labour costs, was in Italy (4.7%) and the Netherlands (4.6%), and the smallest in Germany (2.3%).

[Background paper STAT/02/5]

Third quarter of 2001; Euro-zone GDP up by 0.1%, EU15 up by 0.2%; +1.4% for both zones compared to the 3rd quarter of 2000

Gross Domestic Product (GDP) grew by 0.1% in the euro-zone and by 0.2% in the EU15 during the third quarter of 2001, according to revised estimates out from Eurostat. Economic growth had reached 0.1% for both zones during the previous quarter.

In comparison with the third quarter of 2000, the euro-zone and the EU15 GDP grew both by 1.4%, after an increase of 1.6% and 1.7%, respectively, in the previous quarter.

[Background paper STAT/02/6]

First demographic estimates; 379.4 million inhabitants in the EU and 305.1 million in the euro zone on 1 January 2002

According to the first demographic estimates for 2001, published by Eurostat, the EU had a population of 379.4 million on 1 January 2002. The population of the euro zone2 is estimated at 305.1 million.

The natural increase in the population of the EU (live births minus deaths) is expected to be 410 000 in 2001, slightly up on the 2000 figure (380 000), whilst net migration is likely to be slightly down, from +1 070 000 in 2000 to +1 050 000 in 2001. In total, the EU population is estimated to have increased by 1 460 000 in 2001, or 3.9‰. This is a slightly higher rate than over the past few years, but still modest compared with growth in the 1950s and 1960s.

[Background paper STAT/02/7]

Enlargement news

Enlargement: access to finance still a critical issue for small businesses in candidate countries

EU enlargement candidate countries are making steady progress towards meeting EU enterprise policy goals in areas such as reducing the time it takes to register a company, education and training for entrepreneurship and cultivating business clusters. But access to finance is still a problem, especially for small and medium sized enterprises, in almost all countries, says the European Commission's latest "Candidate Countries (CC) Best Report". Enterprise policy is a relatively recent priority for most candidate countries, which are now completing the transition from the planned economy to open markets. The report looks at about 200 entrepreneurship and competitiveness-promoting measures taken by the candidate countries' authorities, business communities and other bodies such as universities, research and technology centres, and regional development agencies. For further information:

http://europa.eu.int/comm/enterprise/enterprise_policy/enlargement/best.htm

http://europa.eu.int/comm/enterprise/enterprise_policy/enlargement/cc-best_directory/index.htm

[Background paper IP/02/37]

Commission determination on enlargement

The European Commission has welcomed the Spanish attachment to the priority of enlargement. But it also acknowledges that it will be a challenging half-year. The Commission remarks that the enlargement "road-map (the schedule for negotiations) imposes a heavy and tight timetable for agreeing EU common positions and for negotiations". It says the first half of 2002 will be "a crucial period" in meeting the EU objective that candidate countries sufficiently prepared should be able to join in time to take part in the European Parliament elections in 2004.

The Commission says that early this year it will present a common framework for the key chapters with a significant financial component: the agriculture questions still outstanding, regional policy and structural instruments, and financial and budgetary provisions. With the focus during the Presidency on agreeing common positions and opening negotiations on the three chapters, the Commission says it aims to help the development of common positions that respect the already-agreed financial perspectives for 2000-2006. Anticipating the complications that will arise in the light of upcoming French and German elections during the year, the Commission says: "The negotiation of this package of provisions will be all the more difficult since they represent some 80% of the EU budget and since the EU's political situation will be marked by elections in certain member states."

Belgian recipe for a prosperous enlargement

Belgian Prime Minister Guy Verhoefstadt told the European Parliament on December 17 that the European Union has a homegrown "recipe for prosperity" that has successively been applied to Greece, Spain, Ireland and Portugal. "When combined with each other, free trade, international co-operation and reciprocal financial support appear to create powerful impetus towards added prosperity", he said. "The grumbling and fears about the enlargement of the Union become highly relative in such a context. If we soon, say seven years from now, get the Romanians and Bulgarians into this Parliament, with their average income that is something like a seventh of what a German or Dutchman earns, will we not have undertaken the biggest social project of our generation? We will then be busily stabilising countries that might otherwise fall prey to a dictatorship or a society geared solely to generating profits, a situation that we have seen in Serbia and Albania.

"Everything is interlinked. If we can shortly make the accession of 10 new member states just as successful as the previous enlargement to incorporate southern Europe, then we will have established a model and method with which we can also bridge the North-South divide, the biggest conflict of our time."

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