The Week in Europe 11-17/03/02

EU news in brief

The Barcelona Council has made the process of economic and social reform "irreversible"

The President of the European Commission, Romano Prodi, described the foundations laid in Barcelona as ”excellent” and announced that that the Commission is to draw up a Report on the coordination of the economies of the 15 Member States for the Spring Council of 2003.

Among the undertakings adopted at Barcelona is an agreement on taxation on energy which will be introduced in tandem with the liberalisation of energy markets by 2004. Moreover, in what was described as a ”crucial step” by Aznar, the EU 15 agreed to open electricity and gas markets for non-household consumers by 2004. As a result, at least 60% of these two markets will be liberalised by then.

The 15 EU Member States, meeting for the first time with the Candidate Countries at a summit which focused on economic and social reforms, also expressed their commitment to the Stability Pact for budgetary equilibrium by 2004. They expressed their willingness to ratify the Kyoto Protocol before the Johannesburg Summit and agreed to increase average Overseas Development Aid across the EU to 0.39% by 2006. This agreement will be the EUs common position at next weeks Monterrey Conference.

On employment, the 15 set a target of 20 million new jobs for this decade (5 million have already been created since the Lisbon European Council) and adopted a programme for access to crčche facilities. They also agreed to raise the current average retirement age in Europe by 5 years.

Still on social issues, the Barcelona European Council adopted the European Health Insurance Card , together with a declaration condemning violence against women.

With regard to the interconnection of European markets, agreement was reached on the implementation of the Lamfalussy proposals. Integration of capital markets will be achieved by 2003, while financial services markets will be fully integrated by 2005, thanks largely to the adoption of 7 separate Directives by the end of this year.

In addition to the liberalisation of gas and energy markets, the European Council agreed to review trans-European energy networks by the end of the year and to work to ensure a level of electricity interconnection equivalent to at least 10% of their installed production capacity by 2005.

In the field of transport, a number of projects were put forward for consideration, among them several for the Alps and the Pyrenees. The 15 also agreed to take the appropriate decisions to ensure that the Single Sky proposals become a reality in 2004. The difficulties hindering the adoption of the Galileo Programme were also overcome in Barcelona.

With regard to telecommunications, a new e-Europe 2005 Plan for the development of broadband networks will be submitted to the Seville European Council. In Barcelona it was agreed also that the ratio of Internet-connected PCs to pupils should be increased across the European Union to one for every fifteen pupils.

Consideration was also given to a report by the High Representative on the reform of the European Council. The Council also discussed and adopted a declaration on the current situation in the Middle East.

Among other issues, the Barcelona Council discussed the agreement reached by Serbia and Montenegro and adopted a declaration on Zimbabwe.

Consumer Day 2002: Most consumers not yet confident enough to shop cross-border but consumer groups top of the pops, finds new survey

In preparation for Consumer Day on 15 March, a new survey of consumer attitudes published by the Commission shows that a lack of confidence in their protection across Europe means that consumers are still losing out on the full benefits of the internal market. The survey also confirms the vital role of consumer associations, who are a popular source of information and who consumers see as the best means of protecting their rights. These results underline the importance of consumer representation the theme of events marking this year's Consumer Day organised by the Spanish Presidency and the consumer movement.

[Background paper IP/02/381]

Commission publishes its draft of a new regulation for the motor vehicle sector, invites comments from all concerned

The European Commission published its plans for a new regime for motor vehicle distribution, servicing and repair, and invited comments from all interested parties, including the general public. The draft regulation heralds a much more pro-competitive and pro-Single Market future for the sector, and an all round better deal for the European consumer. The draft regulation, which the Commission adopted on 5 February this year, is intended to come into force on 1 October, when the current "Block Exemption" regulation 1475/95 expires. The text of the draft new regulation is available on the Commission's website, at

http://europa.eu.int/comm/competition/car_sector/, together with an explanatory note.

[Background paper IP/02/380]

Recognition of professional qualifications: Commission proposes to simplify EU rules

The European Commission has put forward a proposal for a Directive to clarify and simplify the rules in order to facilitate the free movement of qualified people between the Member States, particularly in view of an enlarged European Union. The proposed Directive would replace fifteen existing Directives in the field of the recognition of professional qualifications. The proposal constitutes the first comprehensive modernisation of the Community system since it was conceived forty years ago. A number of changes are proposed compared with the existing rules, including greater liberalisation of the provision of services, more automatic recognition of qualifications and increased flexibility in the procedures for updating the Directive. The Commission also proposes to develop its cooperation with the Member States in order to keep citizens better informed about their rights and give them more help in getting their qualifications recognised. The proposal will be forwarded to the EU's Council of Ministers and the European Parliament for adoption under the co-decision procedure.

For further information concerning the proposal, see MEMO/02/52.

The full text of the proposal is available on the Europa site:

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

[Background paper IP/02/393]

Indicator-based forecast for euro-area GDP for 1st and 2nd quarter of 2002

The indicator-based model for quarterly GDP growth for the euro area, developed by the Directorate General for Economic and Financial Affairs of the European Commission, forecasts for the first quarter of 2002 a range of 0.1% to 0.4% for the percentage change of GDP vis-ŕ-vis the previous quarter. This follows a -0.2% contraction of the euro area GDP in the fourth quarter 2001 according to Eurostat's first estimate published on 12 March. For the second quarter of 2002, quarter on quarter growth is forecast to be in the range of 0.4% to 0.7%. These forecasts confirm that the slowdown is over, but suggest that the recovery is moderate. In the first quarter of this year weak consumer spending (as captured by retail sales) has held back further acceleration, while in the second quarter acceleration is helped by recovery in the US (as captured by the Purchasing Managers' Index for the manufacturing sector). Full document available on:

http://europa.eu.int/comm/economy_finance/indicators/euroareagdp_en.htm

The European Commission outlines how environmental technology can contribute to sustainable development

On the eve of the European Council in Barcelona, the Commission presented a report setting out how environmental technologies can contribute to sustainable development. Clean technologies can both boost our economies and protect our environment. They enable a "de-coupling" of environmental impacts from economic growth. Use of such technologies can create "win-win" situations, where economic benefits can be reaped without making the environment suffer as a result. However, market barriers and a number of other obstacles are preventing realisation of the full potential of environmental technologies. The Commission therefore intends to work with stakeholders to develop an action plan to promote environmental technology.

The Commission Report can be found at http://europa.eu.int/comm/environment/

A conference will be held on the subject of Environmental technology as part of the Green Week, on the 16th April, in Brussels. Details about this conference can be found at http://europa.eu.int/comm/environment/greenweek/index.htm

[Background paper IP/02/416]

Postal services: Commission welcomes European Parliament's endorsement for more competition

The European Commission has welcomed the European Parliament's endorsement at second reading of the proposal for a Directive aimed at improving postal services and reducing prices by opening up postal markets to increased competition. The Parliament voted in favour of the proposal at its plenary session in Strasbourg. The proposal seeks to push forward the gradual and controlled implementation of the Internal Market for postal services, combining more competition with maintaining a universal service. It would require Member States to open up a substantial additional section of the market to competition from 2003 and a further part from 2006. The Commission supports the Parliament's amendments, which fine-tune the market-opening process. The text will now go to the Council for its second reading and final adoption. The March 2001 Stockholm European Council, called for a new postal Directive to be agreed before the end of 2002.

[Background paper IP/02/406]

Safety of food supplements: Commissioner Byrne welcomes agreement between European Parliament and Council

Commissioner David Byrne welcomed the European Parliament's position on the proposed Directive on Food Supplements. The European Parliament voted in favour of the legislative text adopted by the Council of Ministers as its Common Position, thus clearing the way for the final adoption of the new EU-wide rules. They will harmonise the substantially diverging national rules on the sale of food supplements in the form of pills and capsules, introducing common safety rules for food supplements that contain vitamins and minerals. Labels will have to give consumers detailed information on vitamin and mineral content and on daily use, including a warning about exceeding the intake as set out in the manufacturer's instructions.

[Background paper IP/02/404]

Commission calls for stepping up of industrial cooperation to prepare for Euro-Mediterranean Free Trade Area

2010 is the target date set by the partners for the establishment of the Euro-Mediterranean Free Trade Area. This deadline is fast approaching. The forthcoming 4th Conference of Euro-Mediterranean Industry Ministers, to be held in Malaga (Spain) on 9-10 April 2002, offers a chance to make much-needed progress. That is why the European Commission has adopted a Working Document, setting out specific suggestions for practical co-operation to achieve this ambitious goal. These include standards, technical regulations, conformity assessment procedures, and industrial innovation. The creation of a virtual network between public administrations could also be taken into consideration in the medium term. This initiative is part of the Barcelona process, launched during the Conference of Euro-Mediterranean Foreign Affairs Ministers (Barcelona, 27-28 November 1995), aimed at encouraging the establishment of an area of peace, stability and shared prosperity across the European Union and its 12 Southern Mediterranean partners.

Further information:

http://europa.eu.int/comm/enterprise/enterprise_policy/ind_coop_programmes/med/index.htm

[Background paper IP/02/410]

Statatement by President Prodi and Commissioner Nielson on the eve of the UN Conference on Financing for Development

The Commission welcomes the agreement by Member States on a common EU position for the Monterrey International Conference on Financing for Development. In particular, we welcome the EU commitment to reach an average of 0.39% of Official Development Aid (ODA) of Gross National Income (GNI) by 2006 as a concrete first step forward to achieving the internationally recognised goal of 0.7%. This achievement, which builds on the conclusions of the Gothenburg and Laeken European Councils, shows that Europe is not complacent about being the world's number one aid donor. With the valuable assistance of the Spanish Presidency, Member States have rallied around a position giving the EU a strong platform for providing leadership based on global equity and solidarity in Monterrey. The conference provides an historic opportunity to make progress towards the achievement of the Millenium Development Goals for poverty reduction.

Conference on company taxation in the EU, Brussels, 29-30 April 2002

The European Commission will host a high-level conference on how to remove tax obstacles to business activity in the Internal Market in Brussels on 29-30 April. The conference is due to focus in particular on possible ways of achieving a single tax base for EU companies to use when calculating their EU-wide taxable profits. This would aim to avoid the current costly inefficiencies resulting from the operation of fifteen different sets of tax rules. The conference is a follow-up to the Commission's company taxation Communication of 23 October 2001 (see IP/01/1468). To prepare for the conference, the Commission has launched a web-site on company taxation in the EU which includes an online discussion forum to allow the public to contribute their views on this subject. The web-site also includes the agenda, list of speakers and application material for the conference, as well as information on recent EU developments in the area of company taxation. Members of the public may attend the conference free of charge subject to space restrictions and advance registration. Journalists are also welcome to participate.

The "European Union Corporate Tax" Web-site is located at :

http://europa.eu.int/comm/taxation_customs/taxation/company_tax/index_en.htm

[Background paper IP/02/419]

Eurostat news releases

January 2002 - Euro-zone unemployment stable at 8.4% ; EU15 steady at 7.7%

Euro-zone seasonally-adjusted unemployment stood at 8.4% in January 2002, the same as December 2001, Eurostat reports. It was also 8.4% in January 2001. The EU15 unemployment rate was 7.7% in January, the same as December 2001. It was also 7.7% in January 2001. In January 2002, lowest rates were registered in the Netherlands (2.4% in December), Luxembourg (2.6%), Austria (3.9%), Denmark (4.2% in December), Ireland (4.2%), and Portugal (4.3%). Spain's 12.8% remained the EU's highest rate.

[Background paper STAT/02/27]

A statistical panorama on distributive trades in Europe - significant structural differences between Member States

According to a comprehensive study on the European distribution sector, published by Eurostat, with around 5 million enterprises in the EU and more than 22 million people employed in 1999, the distributive trades sector plays an important role in the economy. In the EU, the distributive trades accounted for about 13% of total value added in 1997 and employed nearly 16% of total employment. In 1999, retail trade accounted for almost 60% of all businesses in the distributive trades, half of all jobs, and around 30% of total turnover. Wholesale trade represented 27% of all businesses, one third of total employment but was the most important activity with regard to turnover (around 55% of the total). The third sub-sector, motor trade, occupied a smaller share: 13% for the number of businesses, 15% for employment and 16% for turnover.

[Background paper STAT/02/28]

Enlargement news

Commission encourages candidate countries in macroeconomic stabilisation and financial sector reform effort

Candidate countries are succeeding in achieving macroeconomic stabilisation and are making great strides in advancing structural reforms, including in the financial sector. Their capacity to cope with potential future macroeconomic and financial sector challenges has considerably improved. Yet, this capacity must be continuously reinforced and adapted as economic development creates new challenges for macro-economic policies and as financial sectors, at an early stage of development, mature. The Commission report responds to the Ecofin Council request of 26 November 2000. Without prejudice to the pre-accession process and the evaluation of the Copenhagen criteria that are effected in the context of the accession negotiations, the Council considered that a regular in-depth dialogue with accession countries on a large spectrum of macroeconomic policy and financial stability issues would assist the accession process.

The Commissions services will use the report on Macroeconomic and Financial Sector Stability Developments in candidate countries to nourish the dialogue in the 26 March high-level meeting between members of the Economic and Financial Committee and their counterparts in candidate countries. The report and conclusions of the dialogue will be presented to the November Ecofin Council.

[Background paper IP/02/389]

Poland ready to close the gap on land sales

One of the most conspicuous and contentious issues on the road to Poland's accession to the EU - the sale of Polish land to non-Poles - looks as if it can be resolved. The Polish government agreed on March 1 a compromise on its earlier hard-line insistence that only Poles could buy domestic land for nearly two decades after EU entry. The new position still argues for long transitional period (of twelve years, which is more than the seven years other candidates have settled for), but it is accompanied by a series of provisions that will enable EU farmers to buy Polish farmland before the end of the transitional period, provided they have been leasing it previously. This gives clearer shape to a deal which EU member states had already indicated they would be prepared to accept, but which remained elusive as long as tensions over the detail persisted between the coalition partners in the Polish government.

Polish Government spokesman Michal Tober said after the hard-won compromise - which includes a range of conditions relating to where the land is and how long it is to be leased for - that the new position would be forwarded immediately to Brussels, and that it was hoped that Poland would now be able to close the freedom of movement of capital chapter in negotiations with the EU in March.

European Enlargement Commissioner Günter Verheugen, on a visit to Warsaw, indicated that the new position should make it possible to close negotiations on this point at the next meeting between the EU and Poland, in Brussels on March 22. Verheugen indicated he supported the Polish position and was ready to recommend it to EU member states.

Eu enlargement and Kaliningrad at the heart of Baltic Sea states agenda

European External Relations Commissioner Chris Patten highlighted the challenges and benefits of EU enlargement for Kaliningrad when he addressed the tenth anniversary meeting of the Council of the Baltic Sea States (CBSS) on March 6. The special meeting of foreign ministers took place in Svetlogorsk, Russia, and was chaired by Russian foreign minister Igor Ivanov, and opened by Russian Prime Minister Mikhail Kasyanov. The Russian region of Kaliningrad, on the Baltic coast between Poland and Lithuania, will become an enclave within the EU after enlargement. There are some tough issues still to be resolved - such as the transit of people between Kaliningrad and the rest of Russia after EU enlargement, which involves finding a balance between Russia's wish to ensure easy transit and the need of an enlarged EU to ensure security. Kaliningrad poses other problems: illegal activities, environmental pollution and the spread of AIDS and tuberculosis pose a threat to the security of the whole Baltic region, said Patten. The EU has already provided technical assistance of some € 40 million, and the Commissioner underlined the EU's determination to work with Russia on the challenge. He stressed that despite fears of isolation in Kaliningrad, or of a further burden on the region by those living nearby, "Enlargement offers first and foremost new opportunities for more co-operation, for better mutual understanding and more prosperity". The Commissioner proposed that a special meeting of senior EU and Russian officials on Kaliningrad be held in the region in May, to prepare the next EU-Russia Summit on 28 May 2002.

Slovakia's view of the future of Europe

Eduard Kukan, Slovak minister of foreign affairs, offered his view of the future of Europe when he spoke in Brussels on 7 March. Speaking only days after the EU Convention on the future of Europe started work to prepare for the next Inter-Governmental Conference to rewrite the EU Treaty - probably in 2004 - Kukan predicted the upcoming rewrite "will not be the last", and "certainly cannot represent the 'final reform' of the EU".

Looking ahead, he predicted a long process towards completing EU integration: "Admittedly, the process of political integration will necessarily stretch across a long period of time. This process has certainly not been hindered by the accession of any new member and I am confident that it will not be obstructed by the present-day candidates either. It would therefore be wrong to delay the enlargement process on suspicion of the risk of Union's 'dilution' or of putting the continuation of political integration the EU enlargement in jeopardy. The Slovak Republic and other candidate States are no less prepared for political integration than some of the existing member states", he concluded.

Parliament to look at enlargement funding

At its plenary session in Strasbourg on March 12-15, the European Parliament will be looking at the EU funding plans for 2003 - and at the impact of enlargement. The draft report from Swedish socialist Euro-MP Göran Färm on the guidelines for the 2003 budget procedure note that preparations for enlargement will put pressure on the EU's budget as the top priority. There will also be implications for the administrative expenditure of all the EU institutions, which will not only have to take account of the impact of new staff from the candidate countries, but also future pension needs, and a statute for Euro-MPS. Färm's report, for the Parliament's budget committee, therefore stresses the need for the Commission's administrative reforms to be put in place as soon as possible.

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