The Week in Europe 16-22/07/03

EU news in brief

Commission adopts measures to reduce air pollution by heavy metals

The European Commission adopted a proposal for a Directive aimed at minimising the harmful effects of heavy metals in the air we breathe. The heavy metals in question are arsenic, cadmium, mercury, nickel and polycyclic aromatic hydrocarbons (PAHs). Prolonged inhalation of these pollutants can cause lung cancer and other adverse effects on human health. The proposed legislation will require air quality monitoring by Member States, which will provide the necessary information to take appropriate abatement measures and monitor their implementation. The full text of the Commission's proposal can be found at:

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

[Background paper IP/03/1020]

High-speed Internet: the Commission imposes a fine on Wanadoo for abuse of a dominant position

The Commission has adopted a decision against Wanadoo Interactive, a subsidiary of France Télécom, for abuse of a dominant position in the form of predatory pricing in ADSL-based Internet access services for the general public. The Commission found that, up to October 2002, the retail prices charged by Wanadoo were below cost. This practice restricted market entry and development potential for competitors, to the detriment of consumers, on a market which is key to the development of the information society. In view of the gravity of the abuse and the length of the period over which it was committed, the Commission is imposing a fine of €10,35 million.

[Background paper IP/03/1025]

VAT: the Commission proposes rationalisation and simplification of reduced rates

The European Commission has just presented a proposal for simplifying the rules on reduced rates of VAT in order to ensure its more uniform application. The purpose of the proposal is to afford Member States equal opportunity to apply reduced rates in certain fields (e.g. restaurants, housing and the supply of gas and electricity) and to rationalise the numerous derogations currently applying in some Member States. The

aim is to improve the functioning of the internal market and avoid potential distortions of competition, which have given rise to numerous complaints from traders. Following the experimental application of a reduced VAT rate to certain labour-intensive services, the Commission is convinced that the reduced rate had very little, if any, impact on prices or job creation. A reduction in VAT rates would therefore seem to be a waste of budget resources which could be deployed more usefully. The proposal for a Council directive amending Directive 77/388/CEE as regards the scope of reduced VAT rates is available on the following Europa site:

http://europa.eu.int/comm/taxation_customs/whatsnew.htm

[Background paper IP/03/1024]

Taking action to stop EU brain drain: Commission proposes measures to improve researchers' careers

A range of measures to help prevent Europe's best scientists abandoning their careers in Europe in favour of more lucrative opportunities in the US and elsewhere were proposed today by the European Commission. Based on a thorough analysis of career prospects in the EU, the Communication “Researchers in the European Research Area: one profession, multiple careers” identifies factors that impact on the development of careers in R&D, namely training, recruitment methods, employment conditions, evaluation mechanisms and career advancement. The Communication proposes concrete steps to encourage and structure improved dialogue and information exchange with researchers and to establish a genuinely competitive research labour market at a European level. Recommended actions include a “European Researcher's Charter”, a “Code of conduct for the recruitment of researchers”, a common way of evaluating and recording researchers' skills, qualifications and achievements, advanced training tools, access to adequate funding and minimum social security benefits for PhD students. For further information please visit:

http://europa.eu.int/eracareers/index_en.cfm

[Background paper IP/03/1051]

Commission report shows Europe's public research centres mean business

A European Commission study of 769 public research centres across Europe, released today, dispels commonly held views that they are in decline, by demonstrating that the sector is much larger and more dynamic than generally appreciated and is radically re-inventing itself by building stronger links with industry. The research centres surveyed employ over 100,000 scientists, and in recent years have shifted from pure research to strong science-industry relationships, with much more activity in applied research than in basic research. They are therefore key to meeting the Lisbon European Council's goal of turning Europe into the most competitive knowledge-based economy in the world. The study can be found at:

http://www.cordis.lu/indicators/publications.htm.

[Background paper IP/03/1050]

Commission concerned at Member States' failure to implement new racial equality rules

The European Commission is deeply concerned that Member States have so far failed to write new EU rules on racial discrimination into national law. Many Member States are set to miss the deadline of 19 July 2003 for transposing the legislation. In her opening address to a conference on fighting discrimination on Monday 21 July, Anna Diamantopoulou, Employment and Social Affairs Commissioner, will give a clear message to EU governments on the need to incorporate these rules into national law immediately. For more information on the new legislation, and the information campaigns: www.stop-discrimination.info

[Background paper IP/03/1047]

No hiding place for rogue traders: Commission proposes EU-wide network of national watchdogs

Unscrupulous traders will no longer be able to evade consumer protection authorities by targeting consumers living in other EU countries. The Commission has adopted a proposal for a regulation which will link up national enforcement authorities and enable them to take co-ordinated action against rogue traders who abuse the freedom of the EU's Internal Market in order to deceive consumers. The regulation will remove existing barriers to information exchange and cooperation and empowers enforcement authorities to seek and obtain action from their counterparts in other Member States. Following the recently adopted proposal for a Directive on Unfair Commercial Practices (see IP/03/857), today's proposal forms part of the Commission's drive to improve enforcement in the Internal Market (see IP/03/645), as set out in the Internal Market Strategy 2003-2006. The proposal will now be forwarded to the European Parliament and the Council as well as to the European Economic and Social Committee and the Committee of the Regions. It will be adopted through co-decision and could enter into force in 2005.

[Background paper IP/03/1067]

Enlargement news

New member states at risk of losing out on structural funding

Some of the €22 billion allocated to acceding states for Structural and Cohesion Funds in 2004-2006 may go unused unless adequate administrative structures are set up quickly, the European Commission warned last week.

The Commission confirmed at its regular meeting on July 16 that new member states may not be able to take advantage of money reserved for them, because there are still deficiencies in national preparations.

European Enlargement Commissioner Günter Verheugen said: "The time is short and there is no room for further delay". He pointed out that this report is part of the Commission's overall monitoring efforts of the acceding states. "It will provide a good basis for the November monitoring report where I hope we will be able to register further progress in the implementation", he said.

The report adopted by the Commission assesses the progress made in managing EU funds by the

ten countries joining the EU in May 2004: Poland, the Czech Republic, Hungary, Slovakia, Estonia, Latvia, Lithuania, Slovenia, Cyprus and Malta. Cyprus, Malta, Estonia and the Czech Republic were singled out as having made very good progress with preparations. However, the Commission also made plain that Slovakia and Latvia are in more need of urgent developments than the others.

The matter is all the more urgent because projects are eligible for aid from the beginning of 2004 - four months before formal accession. Michel Barnier, Commissioner responsible for regional policy, acknowledged "the considerable progress made by the acceding countries in their preparations". But he emphasised that they "will only benefit from project and expenditure eligibility from the 1 January 2004 if all appropriate legislation has been aligned and fully transposed by 31 December 2003. Otherwise, the Commission will not be able to approve Community funding upon accession."

Paying for EU information campaigns through 2003

The European Commission has just allocated nearly €10 million for information campaigns about EU accession this year in the ten central and eastern Europe candidate countries. In most cases, the allocations continue the increasing trend of EU funding under the Communication Strategy. The money is provided to the European Commission Delegation in each country, for local programmes.

* 12 months equivalent

** in fact an increase when different contracting periods are taken into account.

The allocations take into account the different levels of activity after the referenda that have taken place in some countries, and the need to continue the information effort in the immediate period after accession.

The Communication Strategy in these countries is financed by the Phare programme - and it will continue to pay for it until the end of 2004 in the eight central European countries that are set to join on 1st May 2004, as well as the continuing Communication Strategy in Bulgaria and Romania. Information campaigns are also being funded separately for Cyprus and Malta, and in each of the 15 member states too.

For information about the implementation of the communication strategy, see the regular monthly reports at

http://europa.eu.int/comm/enlargement/communication.

Cyprus and Malta first acceding states to ratify Accession Treaty

Two of the acceding states have now ratified the EU Accession Treaty. Cyprus - the most easterly - and Malta - the most southerly - both completed their formal ratification processes last week, advancing past one of the last milestones on the road to full membership next May.The 56-member Cyprus House of Representatives ratified the Treaty unanimously at an extraordinary sitting on July 14, attended by - among others - President Tassos Papadopoulos, Paphos Bishop Chrysostomos, the Armenians' Archbishop, the Attorney General Solon Nikitas, the Republic's EU harmonisation co-ordinator, Takis Hadjidemetriou, and Nicosia mayor Michalakis Zambellas.

Malta - which was the first of the acceding states to hold a referendum on EU accession, too - also ratified the Treaty at a third reading on July 14 by Malta's Parliament of the bill endorsing accession. But the vote was less ceremonial than in Cyprus. Since the Maltese Parliament began discussing the bill in late June, there had been votes against it from the Labour opposition, and it required three votes on the bill on July 14: in the end the bill was finally approved by 34 government votes in favour and 25 opposition votes against, just satisfying the 33-vote minimum required by the constitution. Five members of parliament were missing from the opposition benches for the final vote, including the Leader of the Opposition himself.

Meanwhile, the German Parliament has approved the Accession Treaty - the second member state to do so, after Denmark. The German upper house endorsed on July 11 the support registered by the lower house the previous week.

VAT rule changes "driven by enlargement"

European Commission proposals last week to remove some of the anomalies in member states' VAT rules are due in part to the need for clarification before enlargement. The Commission wants to iron out excessive variations between national provisions on reduced VAT rates for some goods and services, so it is urging an equalisation process among the derogations some current member states enjoy, and a standardisation of the goods and services that member states are allowed to levy reduced rates on. "This proposal must be seen in the context of the upcoming enlargement of the EU", said the Commission. "In the recent negotiations, the Commission and the Council agreed on a rigorous approach to VAT-rate derogations granted to the new countries: all the derogations granted were strictly limited in time, with the last one expiring on 1 January 2010. This should be taken into account in the review of the temporary derogations currently enjoyed by certain member states. The EU must ensure more equitable treatment of all member states, both old and new. This proposal, which advocates applying all derogations from the standard rate only to goods and services that are eligible for reduced rates, is an important step in this direction", it urged.

EU ministers review acceding countries' structural reforms

The EU's Ecofin Council of economic and finance ministers last week reviewed structural reform in the acceding countries, and welcomed "the impressive progress with structural reforms in acceding countries in recent years and the ensuing higher real economic growth rates". But the future member states need to take on some serious challenges to achieve real economic convergence with current member states more quickly. Their tasks "may in some cases be more demanding" than in current member states, EU ministers admitted - particularly on employment and incentives to work. Competition and efficiency in goods and services markets, completing reforms in financial markets, continuing pension and health reform, and accelerating the transition to the knowledge-based economy are other major challenges identified. In some acceding countries the structure of public finances needs to be re-balanced too, so as to foster growth and sustainability more effectively. And ministers decided that acceding countries should be integrated as soon as possible into the EU processes for coordinating structural policy: so they will be included in the update of the EU's broad economic policy guidelines from 2004, and in the associated implementation report from 2005. Acceding countries are also to be invited to provide - on a voluntary basis - reports this October on structural reforms in goods, services and capital markets.

Twinning is winning on Czech environment

Czech compliance with the EU's environmental rules has benefited from help under the EU's twinning programme - part of Phare's pre-accession aid, under which experts from EU member states work alongside local officials in the acceding states. An 18-month Phare project at the Czech Ministry of the Environment has helped develop institutions for monitoring air quality, and integrated regional offices into the process of implementing EU clean air rules. It has also provided investment of €1 million in equipment for air quality monitoring. Another 18-month project also coming to an end has focused on EU rules on Integrated Pollution Prevention and Control: it has prepared the state administration for the new system of issuing integrated permits, and provided with training programmes, the preparation of expert documents, issuing of pilot permits for three IPPC installations, and investment in information systems for an integrated pollution register. There was German expert input into both these projects. A third 18-month project, with Austrian input, has been focusing on waste management rules. This is due for completion in August, and is establishing an EU-compliant centre for waste management in the Czech Ministry of the Environment. The project has also provided training and set up a waste information system, as well as purchasing sampling and analytical equipment. Altogether, the EU contributed €4.3 million to these three projects, bringing Phare assistance to the Czech Republic since 1990 to close to €1 billion - alongside some €350 million under the ISPA programme and some €70 million under the SAPARD programme since 2000.

New border crossing for Hungary on the EU's new borders

EU-financed construction of a new border crossing at Horgoš, between Hungary and Serbia, has started, with a view to speeding commerce and travel between the enlarged EU and the Balkan region. The crossing is on the E75 highway that runs from Germany to Greece, one of the key trade routes through south-eastern Europe. It will be equipped with modern customs facilities and a special terminal for inspecting trucks and goods - particularly livestock and plants. The €10 million project is funded by the EU and managed locally by the European Agency for Reconstruction. Work is expected to be completed by July 2004.

"Cut red tape" for new member states' employment aids

The European Commission is to make it easier for candidate countries to use funds from EU support programmes in order to boost employment, particularly "by eliminating red tape". That is what the European Parliament's committee on social policy and employment was urging just before the Parliament's summer break started. A draft report on candidate countries' progress in implementing the joint assessment papers on employment also says that EU member states should show more empathy with candidate countries as they face the demands being made on them to introduce stable employment policies. The committee - whose report will go the Parliament's plenary after the summer break - is urging special employment programmes for particular crisis regions, so as to avert further emigration and impoverishment. Where youth unemployment stands at 20% or more, special efforts are needed "to prevent neglect and radicalisation". Business location policy in the candidate countries should be "selective", the committee report also says, to cut the risk of heavy localised job losses, and an additional EU aid instrument should be introduced to prevent regions from becoming impoverished as a result of industrial restructuring. Private investors from the EU should earmark part of their investment for training, to support workers in difficulties in new deregulated labour markets, and there should be a "balanced business strategy" to ensure greater respect for workers' rights and to make businesses more aware of their social responsibility. Farming should be assessed "not only from the point of view of business economics", but also taking account of environmental protection, landscape conservation, and interim relief until new jobs are created outside farming.