The Week in Europe 15-21/01/03

The Week in Europe 15-21/01/03

EU news in brief

Commission assesses implementation of 2002 Broad Economic Policy Guidelines

The Commission gives its assessment of the implementation of the 2002 Broad Economic Policy Guidelines (BEPGs). Macroeconomic policy was broadly adequate but there were differences across Member States. Automatic stabilisers acted to cushion weak economic activity but in several member states we had discretionary budgetary loosening or failure to consolidate structural deficits. This and sticky inflation have limited the room for manoeuvre. The pace of structural reform, which lost its momentum in 2001, was not stepped up in 2002. This is disappointing in view of signs that past reforms, especially in labour markets, are starting to pay off. The Commission' s report and the working document is available on:

http://europa.eu.int/comm/economy_finance/publications/european_economy/implement2001_en.htm

[Background paper IP/03/38]

Commission outlines new, more operational European Employment Strategy

The European Commission has adopted the outline of a new, more operational European Employment Strategy to confront new challenges such as faster economic change, ageing populations and enlargement. The Commission proposes three basic objectives for the future strategy, in line with the Lisbon reform agenda: full employment, the promotion of quality and productivity at work (better jobs) and fostering cohesion and an inclusive labour market. Specific priorities, to be supported wherever possible by quantified targets, will inter alia include: getting women (back) into work, helping older workers to stay in work and making work pay. The Commission also proposes better governance of the strategy, especially through more involvement of social partners and civil society and streamlining of the strategy with other EU policy coordination processes such as the broad economic policy guidelines. This policy paper is intended to provoke a broad discussion about the future shape of the European Employment Strategy in the run-up to the EU's Spring Summit to be held on 21st March this year. The Commission will then make formal proposals for the new employment guidelines and recommendations in early April. The communication is available at:

http://europa.eu.int/comm/employment_social/news/2003/jan/ees2003_en.html

[Background paper IP/03/41]

Farm reform: "Commission proposals would have positive effect on farm incomes," studies say

The European Commission has published two internal and four external impact studies, which support the overall orientation of its proposals from July 2002 to review the Common Agricultural Policy (CAP). The studies indicate that "decoupling" aid from production would result in production adjustments where needed, but would clearly not lead to production abandonment. The studies also highlight that the reforms envisaged by the Commission would significantly improve market balances. This means that in the future our taxpayers' money would not be spent on financing unsaleable food mountains. The Commission's concept to reduce direct payments and shift more money to rural development, the so-called modulation, would impact little on markets. And the most important result of the simulations is that there would be a positive effect on overall farm income. The main impact of decoupling would be seen in the beef sector. The impact in the arable crops would be minor. This is the result of the fact that our current system is already decoupled to a large extent, meaning that adjustments in production will be limited. The studies are available on the website of DG Agriculture at

http://europa.eu.int/comm/agriculture/publi/reports/mtrimpact/index_en.htm

[Background paper IP/03/41]

Financial reporting: Commission welcomes Parliament's support for modernised accounting rules

The European Commission has welcomed the European Parliament's vote on 14 January to approve the proposal for a Directive amending the European Union's Accounting Directives. The amendments will bring existing EU rules into line with current best practice and complement the International Accounting Standards (IAS) Regulation, adopted in June 2002 (see IP/02/827), that requires all EU companies listed on a regulated market to use IAS from 2005 onwards and allows Member States to extend this requirement to all companies. The amendments allow Member States which do not apply IAS to all companies to move towards similar, high quality financial reporting. They allow appropriate accounting for special purpose vehicles, improve the disclosure of risks and uncertainties and increase the consistency of audit reports across the EU. The Commission supported the Parliament's amendments and hopes the EU's Council of Ministers can adopt the Regulation in a single reading in March. The proposal is an important element in the Financial Services Action Plan (see IP/00/1269), endorsed by the Lisbon European Council as a key element of the creation of an integrated financial services market. It is also in line with the strategy outlined in the Commission's June 2000 Communication on the future of financial reporting in Europe (see IP/00/606).

[Background paper IP/03/47]

European Commission launches new staff appraisal system

The European Commission has launched its new staff appraisal system called the 'Career Development Review' (CDR). CDR will be a crucial element in further improving the efficiency and management of the Commission, by linking individual achievement with organisational objectives and results. Around 20,500 staff and temporary agents below senior management grade will be assessed on key competencies, conduct, and the achievement of individual objectives. Starting this year, the results will have direct relevance to career advancement through a system of promotion points. Essential competencies for all staff include the delivery of results and customer service and, for managers, they include team leadership and the management of resources.

[Background paper IP/03/48]

Jacob Söderman congratulates Nikiforos Diamandouros on his election victory

The European Ombudsman, Jacob Söderman, has congratulated Nikiforos Diamandouros on his election as the new European Ombudsman. Welcoming vote in the European Parliament, Mr. Söderman said " I am convinced that Mr. Diamandouros will work on behalf of European citizens with dedication. His track record in defending citizens' rights will greatly benefit him as European Ombudsman. His experience in successfully setting up an ombudsman office in Greece will surely be valuable."Nikiforos Diamandouros will take up the post of European Ombudsman on 1 April of this year when Mr. Söderman retires. By then, Mr. Söderman will have been European Ombudsman for over seven and a half years, having been elected the Union's first Ombudsman in 1995.Mr. Diamandouros is currently the National Ombudsman of Greece, having been appointed Greece's first National Ombudsman in 1998. For further information on the Ombudsman election, please visit:

http://www.europarl.eu.int/comparl/peti/election/default_en.htm

Price and cost competitiveness report (Q4/2002)

Pursuing its appreciating trend over the fourth quarter, the nominal effective exchange rate of the euro appreciated by about 2˝% during the fourth quarter of 2002. However, in December, it still stood about 4% below its inception-level. The appreciation of the euro exchange rate led to a deterioration of the cost competitiveness of euro area producers (against 12 industrialised countries) of about 1%. Consequently, cost competitiveness of the euro area producers deteriorated by 7% compared to one year ago but is still (9˝%) above its long-term average. Therefore cost competitiveness is still in a good position from a historical perspective. Full document available on

http://europa.eu.int/comm/economy_finance/publications/priceandcostcompetiteveness_en.htm

ECHO adopts 2003 strategy EUR 442 million for disaster victims

The European Union's Humanitarian Aid Office (ECHO) has adopted its 2003 strategy. With a budget of €442 million for the year, ECHO will project Europe´s solidarity to the victims of humanitarian disasters in more than 50 countries and territories worldwide. The Strategy can be found at http://europa.eu.int/comm/echo/pdf_files/strategy2003_en.pdf

Industrial property: Commission proposes improvements to Community Trade Mark system

The European Commission has presented a proposal for a Regulation modifying existing procedures for the granting of Community Trade Marks (CTMs) by the Office for Harmonisation in the Internal Market (OHIM) in Alicante. Community Trade Marks are valid EU-wide on the basis of a single application to the OHIM. The new proposal would abolish the system of searches. That system was intended to help applicants for CTMs to monitor effectively the possible existence of prior conflicting rights, but in practice has not proved satisfactory. Moreover, the Regulation would amend the regime for professional representation before the OHIM to bring it fully into line with the principles of freedom of establishment and freedom to provide services. Furthermore, the proposed Regulation would expand the system to include instruments allowing the Boards of Appeal to improve further the way they function. The Regulation would also make other procedural changes aimed at making the system simpler and more efficient, without affecting its substance or the rights of the parties involved. For the full text of the proposed Regulation and of reports on the functioning of the existing Regulation see:

http://www.europa.eu.int/comm/internal_market/en/indprop/tm/index.htm

Green Week 2003: Commission invites schools to participate in creative painting and sculpture competition

The European Commission invites all children in the EU and candidate countries, aged between 5 and 16 years, to take part in its Green Week schools competition 2003. The competition is part of the annual Green Week conference and exhibition, which this year will take place from 2-5 June 2003 in Brussels. Younger children are invited to make water themed drawings and paintings, while older pupils can take part by making sculptures using recycled material. Environment Commissioner Margot Wallström said: "For me it is very important to know what young people think and feel about the environment." For more details see:

http://europa.eu.int/comm/environment/greenweek/index.htm

Eurostat news releases

November 2002 Industrial production up by 1.0% in euro-zone; Up by 0.9% in EU15

Seasonally adjusted industrial production increased by 1.0% in the euro-zone in November 2002 compared to October 2002, Eurostat estimates. Production rose by 0.2% in October after remaining stable in September. Output in the EU15 rose by 0.9% in November 2002, after remaining stable in October and increasing 0.1% in September.

[Background paper STAT/03/7]

Enlargement news

Referendum challenges for candidates

The ten EU candidate countries that completed negotiations at the Copenhagen summit at the end of 2002 now face their next challenge: winning popular support for joining the EU, on the basis of the terms negotiated.

Slovenia may the first to hold its referendum - it has fixed March 23 (and will hold two votes simultaneously, one on EU membership, the other on NATO membership: EU support is high, but support for NATO membership, is lower). Hungary will vote on April 12, just days before the scheduled Accession Treaty signing ceremony in Athens on April 16. The Hungarian poll is not legally binding, but the government has indicated it wants to have a strong popular mandate before it signs up to the Accession Treaty. Public support in Hungary is, however, still running high.

So too is public support in Slovakia, which will follow, probably on May 16-17, with a legally binding referendum and a minimum participation threshold of half the country's voters. Elsewhere, Lithuania has slated May 11 for its poll, but is still defining the nature of the referendum and finalising the precise date. Poland is toying with a referendum on June 8, and is currently amending its referendum rules. The Czech Republic has fixed June 15-16, for a legally binding vote. The autumn will see Estonia vote on September 14 - with a non-binding vote. Latvia will follow on September 20, with a binding vote.

In Malta, where the vote will be non-binding, the Maltese prime minister Eddie Fenech Adami announced the referendum question on January 6 ("Do you agree Malta should join the European Union at the next enlargement on May 1, 2004?"), but did not yet set a firm date - although March 8 is being strongly tipped. Cyprus is not planning a referendum - although one might be held on March 30, covering EU membership and the reunification of the island under the UN plan, if a deal emerges before then.

Greece sets out plans to European Parliament

"We live through a historic era of transformation of Europe", said Greek prime minister Costas Simitis, in presenting the priorities of the Greek Presidency to the European Parliament last week. "We all, the Council, the Commission, the Parliament as well as our peoples, are called to contribute; to give our support to the course towards European integration, in a larger Europe, of 25 or more member states, that is being built and develops on our common values, the values that have guided our steps during the last fifty years. A Europe that fosters growth and prosperity for all, that strengthens its societies as well as their cohesion and solidarity; a strong Europe in a multi-polar global system that strives for peace, co-operation and justice".

And in more concrete terms, he said that on enlargement, the Presidency aims at "the completion, on the level of the Union, of the process leading to the accession of the ten new countries into the Union". This means "the substantive and procedural arrangements for the Accession Treaty to be signed on April 16, in Athens" - in, which the role of the European Parliament and its assent "are decisive" for the accession of the new states. It also means pursuing "even more actively" negotiations with Bulgaria and Romania so as to implement the new pre-accession strategy with them; at the same time the monitoring procedure for their implementation of the acquis "will continue as foreseen".

For Cyprus, the Presidency plan includes "keeping up our efforts in a consistent way and in order to achieve a solution by February 28" to the continuing division of the island. "We want Cyprus to join the European Union as a re-united country. We want the two communities to participate in a common future and enjoy the advantages and the benefits of the accession. From the outset, we saw in the "Annan Plan" a basis and a starting point for a solution to be found for the political problem".

And the Presidency programme means dealing "actively" with the pre-accession course of Turkey: "Greece believes that Turkey must find its place among the European family, on the basis of existing European Council decisions. We have to offer Turkey the unique opportunity to implement the reforms that will bring her closer to us. Such reforms will create perspectives and possibilities for its people, similar to what we have been offering our peoples. The reforms will bring about more democracy, freedom, prosperity, peaceful co-existence and co-operation. Turkey will thus become integral part of the European area of the rule of law. The European Council of Copenhagen decided in favour of a strategy leading to the start of accession negotiations with Turkey. The next two years will be crucial for this country. Greece, both as Presidency and as a member-country wishes to assist the process that will allow Turkey to fulfil the criteria for the launching of negotiations. Against this background, the shaping of a new accession partnership is among the goals of the Presidency."

The new theme of "beyond the current enlargement" was also a part of the Greek presentation. "The transformation of the Union must not stop at today's candidate countries. We have acknowledged that the Western Balkan countries are eligible to become members. If and when these countries fulfil the relevant preconditions, they must find their place in the European edifice", Simitis insisted. "We should see that the enlargement and the new borders do not become new dividing lines and do not impinge on the legitimate interests of our new neighbours. It is from this angle that we should envisage the further strengthening of the relations of the Union with neighbouring countries".

The major political parties in the Parliament welcomed the support of the Greek Presidency for concluding the present enlargement process and for signing the Accession Treaty in Athens.

EP says Northern Dimension Action Plan should have a social dimension

The European Parliament adopted a resolution last week calling on the Commission to focus on social disparities when preparing the 2004-2006 Action Plan for the Northern Dimension Policy of the EU. Since the principal objective of the Northern Dimension is to address the opportunities and challenges posed by enlargement - particularly with the new EU borders with Russia, Belarus and Ukraine - it is logical to aim to counter the disparities that can otherwise be expected to grow between the enlarged EU and the bordering countries, the resolution argues.

In particular, Parliament said it wanted a start to a partnership programme in the social and health sector, directed especially at the fight against communicable diseases like TB and HIV-AIDS. But Parliament also emphasised the need to put sustainable development and environment at the heart of the plan, too: the resolution speaks of the "unique fragile marine environment of the Baltic Sea", nuclear safety, and achieving effective waste water management and clean drinking water distribution. In Russia, the Sosnovy Bor nuclear power plant near St Petersburg and the Kola plant near Kandalaks should be replaced by more modern nuclear or gas plants, Parliament says.

EBRD wins Parliament approval

The European Parliament voted through a broad endorsement of the work of the European Bank for Reconstruction and Development during its plenary session in Strasbourg last week. It congratulated the EBRD on its successful involvement in central and eastern Europe and the CIS, and expressed satisfaction at its approach: "unlike many other public investment banks, EBRD is involved in more than 800 medium-sized projects and is not pursuing a strategy of promoting large-scale, politically motivated prestige projects", the resolution said. But the Bank's funding potential continued to be under-exploited, according to the Parliament: "There are many entrepreneurs in eastern and central Europe who are prepared to invest, but who cannot obtain the requisite resources to do so from their national banking system. The EBRD must give priority to supporting them".

The draft resolution recommends a gradual shift towards more equity investment, and a more integrated approach designed to help to establish entire value-added chains - from the processing of raw materials to the sale of the product at local level. It also urges increased investment in municipal projects, particularly where better utility services for the public, at reasonable prices, can be achieved by improving the management of public utility companies. And while the Parliament accepts the EBRD logic of gradually shifting its focus towards Russia and the former USSR, it also says "The process of transition in central and eastern Europe is far from complete even in the most highly advanced countries", and it calls for active policies to be continued after their accession to the European Union.

The EBRD made a record € 3.89 billion of new commitments in 2002, according to preliminary data. The Bank committed € 1.3 billion to Russia, € 1.4 billion to early and intermediate transition countries, and € 1.2 billion to advanced transition countries. The results reflect the Bank's continuing efforts to extend its operations south and east, said EBRD President Jean Lemierre, with the commitments to Russia and early/intermediate countries representing nearly 70 % of the year's business volume.

New member states' role in management of external borders

"As a result of enlargement, the new member states will gradually take over the task of ensuring security at the external borders, with a considerable proportion of responsibility being transferred to those countries", remarks the resolution adopted last week by the European Parliament on the EU's management of its external borders. So "although security at external borders continues to constitute an essentially national matter and must be managed at national level, increased efficacy of border protection may be achieved principally by means of measures taken at European level". The Parliament resolution gave its backing to the European Commission's plans to upgrade management, but insisted that it will be "necessary to define the tasks at the external borders afresh and as a common standard in accordance with experience acquired". It also renewed the call for a jointly financed European Corps of Border Guards, consisting of specialist units which could be temporarily seconded to assist national authorities at vulnerable sections of the EU's external borders.

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