Week in Europe 17-23/09/03

EU news in brief

"Welcome home, Latvia!"

With a clear majority in favour of joining the European Union in 2004, the citizens of Latvia successfully sealed the cycle of referenda on accession which took place in the future new Member States. "The citizens of nine countries have spoken and voiced a strong YES for the European integration, which should encourage all of us to work even harder in uniting the continent", underlined the President of the European Commission, Romano Prodi. With a reference to the positive outcome of the referendum in Latvia on 20 September, he added : "We are happy and proud that Latvian citizens decided to join the European Union as well. They will bring their own experiences, talents and good will into our European family."

Statement of President Prodi following the Cancun ministerial meeting

The failure of the WTO Cancun Ministerial meeting is a serious disappointment for all and a severe blow for the World Trade Organisation.

It would be useless to try and blame anyone for the outcome for we are all equally responsible - and we all loose if we allow the Doha Development Round to fail.

The European Union has made its best to contribute to a compromise, notably to meet the demands of developing countries. We continue to be committed to our proposals, which will benefit developing countries and to the overall development goal. We must not lose heart.

Even though the WTO should not be criticised for the lack of its Member States willingness to accept compromise, we should, however. consider ways to make the WTO function more effectively. What is evident is that the organisation couldn't support the weight of the task it was given. The EU will continue working towards the end in the spirit of a strong rules-based multilateral trading system.

Commission urges social partners to protect pension rights of job changers

The European Commission is calling on social partners to play their role in tackling problems faced by workers who lose out on occupational pension rights when moving job, particularly to another Member State. In its consultation paper, the Commission asks unions and employers to adapt occupational pension schemes under their responsibility in such a way that workers who change jobs or interrupt their careers do not suffer undue losses of occupational pension rights. The Commission invites the social partners to negotiate an EU-wide collective agreement allowing for more mobility-friendly occupational pension arrangements. The full text is available on :

http://europa.eu.int/comm/employment_social/soc-prot/social/index_en.htm

[Background paper IP/03/1243]

Commission launches consultation on legal problems for enterprises doing e-business

The European Commission has launched an eight-week Internet consultation on legal barriers that enterprises still encounter when using electronic commerce and other electronic business applications. Such problems could arise, for example, from divergent national legal provisions for electronic invoicing or from a different legal treatment of online and offline business. The Commission would be interested to learn more about remaining practical reasons for not doing business electronically. This consultation is open to all enterprises until 7 November 2003. The results of this consultation will be presented and further discussed at a conference in March/April 2004 in Brussels. Stakeholders are invited to consult the questionnaire at the following web page:

http://europa.eu.int/yourvoice/consultations/index_en.htm.

[Background paper IP/03/1254]

Commission adopts opinion on the European Constitution

The European Commission adopted its position paper on the draft European Constitution. In its view the Intergovernmental Conference (IGC) starting on 4th October should not reopen the compromise reached at the Convention. The IGC needs to improve and clarify a limited number of areas and complete unfinished work. It should avoid setting in stone the policy provisions of the Constitution. Also, an effective, credible European Commission must include a full member from each country. A large Commission will need to streamline its internal organisation accordingly.

The Commission welcomes the draft Constitutional text as an excellent basis for the work of the IGC. President Romano Prodi said: “The Convention has taken us a long way along the road to a Constitution. Now, the Intergovernmental Conference has the political responsibility to make some improvements to the Convention's text so that Europe can work effectively and democratically”, especially to define a more flexible way to revise the policy part of the Constitution; bring creative solutions for more majority voting; and establish an effective and legitimate Commission.

[Background paper IP/03/1261]

EU budget : All Member States benefit the poorer more than the others

In 2002 total expenditures from the EU budget was € 85 bio, 73 bio of which went to final beneficiaries in the Member States. This is analysed in the report on “Allocation of 2002 EU Operating Expenditure by Member State”. The EU budget is a good investment and provides important funding to all Member States. It benefits especially the economically weaker ones, without posing an undue burden on net contributors declared Budget Commissioner Michaele Schreyer when presenting the report. In 2002 Spain, France, Germany and Italy were the four biggest recipients from the EU budget in absolute terms. In relative terms the major financial transfers went to Greece, Portugal, Ireland and Spain, the four recipients of cohesion funds. On the financing side of the budget Germany, France, Italy and the UK contributed the biggest absolute amounts, whereas in relation to the national income the ranking of the net contributors is that the Netherlands, Sweden, Luxembourg and Germany are the strongest net-contributors. Generally Member States make contributions to the EU budget that reflect their ability to contribute and their economic wealth, while expenditure aim at increasing the efficiency of the single market and foster economic and social cohesion. The report is available at: http://europa.eu.int/comm/budget/agenda2000/reports_en.htm

[Background paper IP/03/1269]

Commission launches new web portal to help EU citizens find jobs

The European Commission is launching an innovative new website and information campaign to help EU citizens find work in another Member State. The launch will be held in the margins of a conference on 19 September highlighting the importance to the European economy of increased investment in skills, education and training.

“Job mobility is key to a flexible, responsive labour market and a competitive and dynamic European economy” said Anna Diamantopoulou, EU Employment and Social Affairs Commissioner. “The European Job Mobility Portal, which is accessible to anyone, will enable people to make choices based on full information on the opportunities available to them. It is an invaluable addition to our range of tools to encourage greater job mobility within the EU. ”

The portal URL is :

http://europa.eu.int/eures/index.jsp

[Background paper IP/03/1264]

Transmission of asylum applications between member states - DubliNet now operational

A secure electronic network of transmission channels between the national authorities dealing with asylum applications, called DubliNET, became operational on 1 September in the EU Member States, plus Norway and Iceland. Its creation was called for by the "Dublin II" Regulation establishing criteria and mechanisms for determining the member state responsible for examining an asylum application lodged by a third country national, which replaces the Dublin convention.

[Background paper IP/03/1271]

Eurostat news releases

Second notification of deficit and debt data for 2002 : Euro-zone government deficit at 2.2% of GDP and public debt at 69.0% of GDP

For the second time in 2003, the EU Member States have notified to the European Commission their data on government deficit and debt for 2002. They have been verified by Eurostat and are consistent with Eurostat decisions, notably on capital injections into public corporations, treatment of non-returned banknotes and coins, securitisation operations undertaken by general government units and allocation of mobile phone licences (UMTS). The revised data confirm the trends observed in the notification of March 2003. The government balance of the euro-zone and EU15 moved into a higher deficit in 2002, compared to 2001. Meanwhile government debt continued to fall slightly in both zones in 2002.

[Background paper STAT/03/106]

August 2003 - Euro-zone annual inflation up to 2.1%; EU15 up to 2.0%

Euro-zone annual inflation rose from 1.9% in July to 2.1% in August 2003, Eurostat reports. A year earlier the rate was 2.1%. EU15 annual inflation was 2.0% in August 20032. A year earlier the rate was 1.9%. In August, the highest annual rates were recorded in Ireland (3.9%), Greece (3.3%) and Spain (3.1%) ; the lowest rates were observed in Austria (0.9%), Germany (1.1%) and Finland (1.2%).

[Background paper STAT/03/108]

Enlargement news

Swedish call for radical overhaul of EU's structural policy

The study "Reinventing Cohesion - The Future of European Structural Policy" was published by the Swedish Institute for European Policy Studies. It was launched by its author Daniel Tarschys, former Secretary General of the Council of Europe, at the Swedish Permanent Representation to the EU in Brussels on 16 September 2003.

The study claims that the structural policy in its present form is a legacy of the Delors era. Originally intended to compensate for the losses incurred by the internal marked, it has become obsolete. The losses never materialised while the compensations remain, according to Mr Tarschys. The same applies to the EU's cohesion fund that was set up to help some Member States meet the Maastricht convergence criteria. With all of those countries having qualified for the membership of the eurozone, there is no more reason for the cohesion fund to exist, according to the author of the study.

The study calls for a thorough policy review in preparation of the next budgetary period starting in 2007. It proposes three options for replacing the current structural and cohesion funds with new policies:

Renationalisation, letting Member States take care of their own regional problems. In fact they already do, so the added burden would be marginal; Reallocation within the EU budget in favour of currently underfunded policy areas; Radical reform of structural policy, discarding the intermediate objective of convergence but giving greater emphasis to the ultimate goal of cohesion.

Romania adopts new Constitution, but no guarantees on 2004 end to negotiations

The final text of the Constitution received 100 votes in favour and 37 against in the Senate, while the respective figures were 265 and 62 in the House of Commons. The new Constitution will have to be promulgated by President Ion Iliescu before being subjected to a referendum, most likely on 19 October. Among other things, the new Constitution extends the mandate of the country's president to five years against four years today, and thus separates the legislative and presidential elections. The new Constitution would also allow Romania to take part in international military alliances and peace missions, and would eliminate obligatory military service.

European Commission President Romano Prodi stopped short of publicly guaranteeing that Romania would complete its accession negotiations next year when he met Romanian Prime Minister Adrian Nastase in Brussels last week. Instead, Prodi limited himself to expressing "a personal wish" to see the task completed by the end of 2004.

Romania has repeatedly insisted that it has to finish negotiations next year if it is to accede by its target date of 2007. Otherwise, its application will get bogged down by EU discussions of major internal reforms and medium-term financial planning.

But Prodi did applaud Romania's recent attempts to reduce corruption with new systemic legislation. And he offered compliments on reforms going in the "right direction", and expressions of confidence that matters were "on track".

The Commission presented a formidable list of areas where Romania still has to do more work urgently. They include faster progress on privatisation, economic and administrative reforms, transparency, improvements in company law, and cutting public sector arrears.

Bulgaria "could take 100 years to catch up with the EU"

If Bulgaria is to catch up fast with the EU economically, rapid reforms will be needed in the Bulgarian government's economic policy; but if the current policy is maintained, development will be slower, according to the Bulgarian Institute for Market Economics. The most optimistic scenario is that rapid economic reforms will be accompanied by pension and health care reform, the preservation of macroeconomic stability, a reformed judicial system, early completion of privatisation, deregulation and liberalisation, an easing of the tax burden, a more business-friendly climate, and the abolition of subsidies and protectionist measures. This could lead to average growth of the economy in the next two to three decades of 7 % per year, and could see Bulgaria reaching EU average levels of prosperity in 20-25 years.

But if reform is slow, the pay-as-you-go pension system will create deficits; the health care system will need bailing out, and increased budgetary spending will generate a growing budget deficit, pushing up taxes and leading to scrapping of the currency board arrangement, while preferential treatment of some sectors will distort the efficient allocation of resources. This could keep economic growth down to between 0 and 3 % and per capita GDP in Bulgaria will not reach the EU average even in the next 100 years.

A mixed scenario, with macroeconomic stability preserved and investment levels staying the same, but with only slow privatisation, continued regulatory and fiscal burdens, and protectionism in agriculture, would constrain growth to 4 % on average, meaning Bulgaria will reach the EU average in 45-65 years. And, concludes the study, "judging from the budget programme for 2004-2006, there is no strong will for reform."

Denmark to limit worker access from new member states?

Danish trade unions seem to have persuaded the Danish government to impose tough controls on workers from the new member states in the years following enlargement. Under the government's plan, residence and work permits will be granted only when workers are appointed to jobs where the working conditions are in line with agreements between trade unions and employers. In response to concerns about the labour market being undercut by cheaper labour from outside the country, Danish liberal minister of employment Claus Hjort Frederiksen is taking seriously demands from trade unions that permits must include declarations that the worker has been appointed in line with the general terms of work and payment agreed by the company and the trade unions. And as soon as the appointment ends, the worker will be obliged to leave the country. Local labour market councils will automatically be informed of all permits given to employ foreign labour - and only employers registered with Danish tax and customs authorities will be able to obtain permits. Member states are entitled to impose limits on employed workers from the acceding states in central and eastern Europe for up to seven years after their accession - although several member states have already indicated they will not exercise this right. For more details see Practical guide.

Food standards still a sticky issue in the Visegrad Four

David Byrne, European Commissioner for Health and Consumer Protection, has insisted again on the need for acceding states to match EU food safety standards before they join in May next year. The Czech Republic, Hungary, Poland and Slovakia were all reminded by the Commission last May that agri-food establishments needed urgent upgrading to meet EU standards on animal, public and plant health. And on October 10 Byrne will complete his tour of all four countries with a visit to Slovakia. Meanwhile, on his recent visit to Prague, discussion focused on precisely how the rules for food plants would be implemented after enlargement. Some plants in the acceding states have been granted transitional periods so they can continue selling on their domestic markets while they are modernising but most have not, and these face the threat of closure if they fall short of EU standards on 1 May 2004. One option emerging is some adjustment to the lists of plants benefiting from transitional periods.

EBRD eyes the Czech Republic

Directors of the European Bank for Reconstruction and Development have been touring the Czech Republic to learn more about the state of reforms and economic transition in the Czech Republic as it prepares to join the EU in May 2004. They have met the Czech Republic's EBRD governor, minister of finance Bohuslav Sobotka, the governor of the Czech National Bank, Zdenek Tuma, and the business community, as well as visiting EBRD projects. The EBRD says the Czech Republic has turned itself into an attractive country for foreign investment in recent years, and is ready to help the country overcome the remaining challenges of the transition process - including finalisation of the privatisation process, and boosting infrastructure investment. The EBRD has put €873 million into 42 local and 32 regional projects in the Czech Republic - an investment that has attracted a further €3 billion from business partners.