The Week in Europe 23-29/09/02

EU news in brief

IST 2002 - Europe's main event on IT and communications research to be held in Copenhagen

This year's most significant "networking" event for research and development in Information Society Technologies (IST) takes place in Copenhagen on 4-6 November 2002 during the Danish Presidency. The main purpose of the event is to assist European researchers and industrialists to build and strengthen their networks for research and technological collaboration, at a time when the IST priority within the EU's sixth Framework Programme for Research and Technological Development is getting underway. Further information and on-line registration facilities are available at:

http://2002.istevent.cec.eu.int/

[Background paper IP/02/1355]

Commission adopts report on government finances in Portugal as a first step of the Excessive Deficit Procedure

The Commission has adopted a report on the government finance situation in Portugal. This report constitutes the first step of the Excessive Deficit Procedure (EDP) provided for by Art. 104.3 of the Treaty. The Commission initiated the EDP for Portugal (IP/02/1168), after receiving official confirmation that the general government deficit in 2001 amounted to 4.1% of GDP, thereby clearly exceeding the reference value of 3% of GDP. This was a serious revision of the deficit data submitted by the Portuguese authorities last February. The extent of the revision reveals serious deficiencies in the production of public finance data in Portugal: it fully justifies the decision of Eurostat last March not to validate the Portuguese deficit and debt data for 2001 (STAT/35/2002). On the basis of available information on budgetary execution this year it is as yet uncertain whether the deficit in 2002 will actually stay below 3% of GDP. In this first step the Commission report is analysing the government finance situation in Portugal without making specific recommendations. As a second step, in October, the Commission will make a recommendation to the Council of economic and finance Ministers for a decision.

[Background paper IP/02/1360]

Air transport insurance after 11 September: European Commission proposes minimum insurance requirements for all carriers operating in Europe

In the aftermath of the 11 September 2001 terrorist attacks in the United States, airlines were suddenly left without insurance and governments have had to step in and assume the role of insurer. To facilitate the rapid return to market conditions and restore confidence both in the aviation and in the insurance sectors, the Commission puts forward a legislative proposal which introduces minimum insurance requirements for all air carriers and aircraft operators flying within, into, out or overflying the European Union.

[Background paper IP/02/1357]

GALILEO: Commission proposes definition of services and guidelines for negotiations with third countries

Six months after the Council of Ministers finally launched the GALILEO European Satellite Radionavigation Project, the European Commission is continuing the development of this first major programme bringing together the EU and the European Space Agency. It adopted a communication on the state of progress with the programme, in which it discusses the various services offered by GALILEO, security questions, relations with the US, and international cooperation with other third countries. Further information is available on the following website:

http://europa.eu.int/comm/energy_transport/en/gal_en.html

[Background paper IP/02/1358]

Euro Area Economy - Recovery continues in uncertain world

According to the Commission's third Quarterly Report on the Euro Area the economic situation has become less rosy over the summer. Recovery of domestic demand has not matched expectations. Current movements in stock markets and oil prices reflect an uncertain world and feed through to consumption and investment. While several factors point towards a continuation of the recovery, acceleration to potential growth is now expected only in 2003. On the positive side, the disinflation trend is expected to proceed smoothly during the rest of the year, the process of inventory adjustment has largely been completed and there are no major economic imbalances in the euro area. For growth to accelerate sustained consumer and investor confidence will be crucial. For full text see

http://europa.eu.int/comm/economy_finance/publications_en.htm.

[Background paper IP/02/1366]

VAT: Commission proposes one-year extension of reduced rates on labour-intensive services

The European Commission has proposed to allow Member States to apply for an additional year (i.e. until 31 December 2003) a reduced rate of Value Added Tax (VAT) to specified labour-intensive services such as renovation of private dwellings, hairdressing, window-cleaning and small repairs. Directive 1999/85/EC allowed those Member States that so chose (9 in total) to apply a reduction of VAT on these services for an experimental period from 1 January 2000 to 31 December 2002, in order to test the impact of such a reduction in terms of job creation and of combating the black economy. The Commission is proposing the extension so as to allow the present arrangements to continue until the Commission makes an overall assessment and proposals regarding all reduced VAT rates, including the treatment of labour-intensive services, in 2003. For a Commission report of October 2001 on the present system of reduced VAT rates (COM (2001) 599) see:

http://europa.eu.int/comm/taxation_customs/publications/official_doc/com/com.htm. The text of the Commission proposal for a Council Directive to extend the facility allowing Member States to apply reduced rates of VAT to certain labour-intensive services is available on the Europa internet site:

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

[Background paper IP/02/1367]

Commission funds 16 environment projects in Third Countries

The European Commission has approved 16 environment projects that will receive funding under the LIFE-Third Countries programme 2002. These new projects, which were selected among 74 proposals, will share a total of €5,773,355. Fifteen projects will be implemented in the Mediterranean region and one in the Baltic region, in the following 10 countries/territories: Bosnia-Herzegovina, Croatia, Cyprus, Gaza Strip and West Bank, Jordan, Lebanon, Morocco, Russia, Tunisia and Turkey. The co-funding by the Commission will contribute to improving the environment through capacity building and the establishment of administrative structures, as well as the development of environmental policies and action programmes in these countries. A summary of the 16 selected projects in Third Countries can be found in the annex to the press release IP/02/1364.

e-Skills: Copenhagen Summit on bridging the e-skills gap

Policy measures to help match e-skills demand and supply across Europe will be debated at the e-Skills Summit at the Bella Center in Copenhagen on 17-18 October 2002. Organised by the European Commission, the EU's Danish Presidency and a consortium of Information and Communication Technology (ICT) industries, this summit is part of the follow-up to the EU Action Plan on skills and mobility, approved by the Commission in February 2002 and endorsed by the March 2002 Barcelona European Council. Improving the availability of e-skilled professionals is widely viewed as vital to Europe's strategic aim of becoming the world's most competitive and dynamic knowledge-based economy by 2010. For further information:

http://www.e-skills-summit.org, to register:

http://www.e-skills-summit.org/registration.htm.

[Background paper IP/02/1365]

EU budget boosts "Cohesion" Countries

In 2001 the EU budget continued to generate major financial transfers to Greece, Portugal, Spain and Ireland, the four countries recipient of cohesion funds. While all member states make contributions to the EU budget that reflect their ability to contribute and their economic activities, the expenditure side of the budget pursues allocative and re-distributive policy objectives. Measured in relative terms, net transfers thus stood at 3.50% of the Greek GNP and 1.5% of the Portuguese GNP. The corresponding figures for Spain and Ireland are 1.2% and 1.1%, respectively. The report is available at:

http://europa.eu.int/comm/budget/agenda2000/reports_en.htm

[Background paper IP/02/1375]

Social Affairs: Commission welcomes new study on antidiscrimination bodies

A new study undertaken for the European Commission of national institutions to promote equality points to the need to establish bodies with clear terms of reference, with adequate and predictable sources of funding and which deal with equality across the board rather than with single issues. The study highlights the strengths and weaknesses of existing institutions and encourages Governments to ensure that their institutions have the resources and the independence they need to fight discrimination effectively. All Member States are required to designate such bodies by July 2003 under recently adopted EU equality law. Further details of the report can be found at

http://europa.eu.int/comm/employment_social/fundamri/news_en.htm.

[Background paper IP/02/1372]

Commission organised data protection conference to look at key privacy issues

How should privacy on the Internet be protected? Are businesses over-burdened by enquiries from people wanting access to the personal details companies hold about them? How well are current rules on international transfers of personal data working? These and other topical questions were addressed by an international conference on data protection in the EU, organised by the European Commission, which took place in Brussels on 30 September and 1 October, attended by business leaders, consumer associations, academics and data protection authorities from both the EU and third countries. For further details, see:

http://europa.eu.int/comm/internal_market/en/dataprot/links.htm

[Background paper IP/02/1373]

Public procurement: Commission welcomes approval of new classification system to help companies seeking public contracts

The European Commission has welcomed the European Parliament's approval of an EU Regulation establishing a single classification system, the Common Procurement Vocabulary (CPV), for public procurement in the EU. The use of a single procurement vocabulary by all public authorities will help to ensure that the subject matter of contracts can be easily identified, allow automatic translation of tender notices into all official EU languages and boost openness and transparency in European public procurement, a market worth over €1,000 billion annually across the EU. Use of the CPV will only become mandatory once the proposed Public Procurement Directives (see MEMO/02/99 and IP/00/461), presently under discussion in the Parliament and Council, enter into force. It will then replace the four different nomenclatures currently in use. Unlike EU Directives, Regulations are directly applicable in the Member States without having to be implemented through national law.

[Background paper IP/02/1368]

Fischler in Greece: "Greek farmers to benefit from new rural development policy"

Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries, presented the Commission's proposals to review the Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP) in Greece. He pointed out that the CAP mid-term review did not mean abandoning the CAP. "The mid-term review does not mean that we want to cut the EU agriculture budget. What it DOES mean is that we want to support Greek farmers differently. And it maintains the clear objective to guarantee farmers in Greece a fair standard of living. For consumers and taxpayers, the review will ensure better value for money. I am really convinced that it is in the long term interest of Greece, a country which receives by far more CAP money from Brussels than it pays, to ensure that public support in agriculture takes place via policy instruments that are justifiable, and do not give rise to environmental degradation or overproduction," Fischler claimed.

[Background paper IP/02/1377]

Eurostat news releases

Second quarter 2002 compared to second quarter 2001: Euro-zone and EU15 labour costs up by 3.7%

Total hourly labour costs in the whole economy of the euro-zone grew by 3.7% in nominal terms in the second quarter of 2002 compared to the second quarter of 2001. In the first quarter of 2002 the increase was a revised 4.0%. For the EU15 the rise was 3.7% in the second quarter of 2002, the same as in the previous quarter. 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 second quarter 2002, among Member States for which data are available, the biggest increase in wages, which cover most of the total labour costs, was in France (4.7%) and the smallest in Spain (1.8%).

[Background paper STAT/02/114]

Competition indicators in the electricity market: Largest company in each Member State produced between 23% and 97% of the electricity generated in 2000

In the framework of the liberalisation process and the completion of a European internal electricity market, Eurostat released a publication Competition indicators in the electricity market EU and Norway with relevant information on the electricity sector during the years 1999 and 2000. By the end of 2000, three groups of countries could be distinguished according to their level of market opening (measured as the percentage of total electricity, consumed by customers free to choose their electricity supplier): five countries were 100% liberalised (Germany, Finland, Sweden, the UK and Norway); ten countries had a degree of market opening between 30% and 45% (Belgium, Denmark, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria and Portugal); and Greece where liberalisation was to begin in February 2001. In 2000, total net electricity generation in the EU was 2.47 million GWh. The main electricity producers were Germany (21.6% of total), France (20.9%) and the UK (14.5%). Regarding electricity exchanges, and taking into account the balance between exports and imports, the main net importer countries were Italy (-44 347 GWh), the Netherlands (-17 850 GWh), the UK (-14 174 GWh) and Finland (-11 880 GWh) while the main net exporters were France (69 479 GWh) and Austria (1 296 GWh). Norway was also a net exporter (19 055 GWh).

Enlargement news

Prodi on statistics and enlargement

"The hour of the great decision on enlargement is drawing near. In December the Copenhagen European Council will, we hope, bring a final 'yes' to accession for ten new Member States in 2004,” said European Commission President Romano Prodi at a European statistics conference in Palermo. Enlargement means that the EU population will rise from 378 to 453 million, an increase of almost 20%, based on 2001 figures, said Prodi. But "the EU's GDP will rise by only 4.6% and agricultural production by 7.9%" - demonstrating that "the economies of the ten prospective new members are still small compared with ours, and agriculture still accounts for a big share of them". If the opportunities - as well as the challenges - that enlargement presents are to be confronted satisfactorily, "Our policies need to be applied sensibly so economic and social life in the candidate countries converges with the current member states," said Prodi. "If it worked for Ireland, Spain and Portugal, why shouldn't it work now?" He suggested that the most recent figures support his own optimism over the prospects: "Growth in GDP in the ten candidate countries was 4.1% in 2000 and 2.4% last year. The figures for the current fifteen member states were 3.4% and 1.5% respectively. The ten candidate countries are already growing faster than we are," he concluded. And "there will be no lack of human capital to support this rate of growth over the medium term. The ten candidates' population may only equal one fifth of the current EU's, but university degrees granted in those countries come to 25.1%".

Ireland sets Nice referendum date

The Irish government has chosen 19 October as the date for its referendum on the Nice Treaty - just a week before the Brussels summit at which EU leaders are likely to name the countries that could accede to the EU in 2004. This second referendum gives Irish voters another chance to back the changes to the EU's rules of operation, and ease the path towards EU enlargement. The new rules, agreed by heads of government at the Nice summit in December 2000, include important new elements for the functioning of an enlarged EU - notably the allocation of member states' voting rights in the Council of Ministers, and the number of Commissioners and Members of the European Parliament for each country. Irish voters failed to endorse the Treaty at a referendum last year, when a low turnout and lack of public awareness gave victory to vigorous opponents of the changes - who focused on aspects of the changes that they claimed could impinge on Irish neutrality. Since then the EU and Ireland have acted to provide reassurance that Nice will have no implications in terms of Ireland's stance on defence. In addition, Ireland has modified the way in which EU legislation is examined by the Irish Parliament.

A special summit for candidate countries

Danish Prime Minister Anders Fogh Rasmussen has invited the heads of state or government of the thirteen candidate countries to a meeting with the Presidency of the European Union in Copenhagen on 28 October, to officially inform them about the results of the European Council meeting in Brussels on 24-25 October. The President of the Commission Romano Prodi, Commissioner for Enlargement Günter Verheugen and the Council Secretary-General Javier Solana are also invited. It will be a short meeting followed by a lunch, but its content will be of the highest significance: the candidates will be formally told which of them are considered eligible for closing negotiations at the end of 2002, and likely to join the EU in 2004 - and which of them are not. Bulgaria, Romania and Turkey already know that their accession processes will be slower.

European Parliament favours 22 observers for the Czech Republic and Hungary

In its own pre-accession arrangements, the European Parliament has given tacit backing to the demand from the Czech Republic and Hungary for increased representation in the enlarged Parliament. The Czech Republic and Hungary are contesting the number of MEPs they will have in the next European Parliament: they want the number to be raised from 20 to 22 each, to match the representation of equivalent-sized current EU member states. MEPs decided in September to allow 147 observers from candidate countries to attend European Parliament sessions from 1 April 2003 onwards, to allow the candidates to prepare for sending their own MEPs to the assembly after their accession in 2004. The figure is calculated on the basis of the number of seats that the candidate countries wish to have in the Parliament, rather than on the allocation agreed as part of the Nice Treaty in 2000.

Enlargement roadmap for justice and home affairs

The informal Justice and Home Affairs Council in Copenhagen on 13 - 14 September agreed on the drafting of a roadmap for the candidate countries to implement the Schengen acquis on border controls. The draft roadmap should be presented to the EU Justice and Home Affairs Council in October. Meanwhile, it has already been accepted that internal border checks will not be lifted when the candidate countries initially accede: only when they can clearly show that they fully comply with Schengen will the Council adopt a Decision enabling such a move.

Czech check on EU water policy

The EU Phare programme is backing with 750,000 euro a Czech project to meet EU standards on water policy. A new Phare Twinning Project was launched last week, in which the Czech Ministry for the Environment will be given assistance by experts from the United Kingdom, Austria, France and Germany in implementing the EU water framework directive between now and December 2003. The project will cover preparation of draft legislation, development of a draft river basin management plan for the Orlice river, designing enforcement procedures and environmental monitoring systems, and making arrangements for stakeholder consultation.

European Parliament Liberal leader backs right to withdraw from EU

Graham Watson MEP, Leader of the European Liberal Democrat Group in the European Parliament, wants countries to be given the right to withdraw from the European Union. He said on 17 September: "I will be urging European Liberal Democrats to back proposals for a clause in the new constitutional Treaty which would allow an existing or future member state to withdraw from the European Union." The creation of such a secession clause would, he argued, challenge sceptics who believe that a country can be half-in the European Union to make a clear choice between full participation in the European Union or withdrawal. "A secession clause could also help us to make the case for enlargement of the European Union in some of the applicant countries, where opinion polls show increasing fears about joining," he added.

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