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Brussels, March, 18th 1998
Agenda 2000 : the legislative proposals
In its Agenda 2000 communication of 16 July 1997 the European Commission set out proposals for the reform of existing European Union policies, the process of Enlargement an the financial framework for the period 2000-2006. The legislative proposals adopted by the Commission today provide the legal texts on which decisions can be taken on the policy reforms proposed in Agenda 2000 and on the new pre-Accession aid instruments. The Commission has also adopted a report on the working of the Interinstitutional Agreement (IIA) on Budget Discipline and its proposal for a new Financial Perspective for the period 2000-2006.
The proposals adopted today fall into four main groups as follows:
It should also be noted the the Commission adopted today a proposal for a revised Financial Regulation for Trans European Networks, thus adding a further dimension to this package in a priority area.
Still to come in the autumn of 1998 is the Commission's comprehensive report on the own resources system which will also address the development of relative budgetary positions of the Member States.
Commenting these proposals, Jacques Santer, the President of the European Commission, recalled that : "Agenda 2000 is our vision of Europe for the year 2000 and beyond : the future of the Union's policies, the road towards enlargement, the financial framework". He added : "The process of enlargement has in the meantime been launched on the basis of what we had proposed". Eight months after the presentation of Agenda 2000, the proposals adopted today translate in concrete acts the orientations of last July. Appealing to the European Parliament and the Council of Ministers, Jacques Santer stated : "We will have to work with determination and the will to finalise Agenda 2000 by the beginning of 1999".
The Common Agricultural Policy
The main proposals for new agricultural Regulations cover :
All the agricultural proposals are due to come into effect in the year 2000. They represent a further major step in the direction of the reform of the CAP which was started in 1992. As indicated in Agenda 2000, the further reductions in market support prices proposed and the increase in direct payments to farmers are designed to improve the competitiveness of EU agriculture on domestic and world markets thus reducing the risk of a return to the production of expensive and unsaleable surpluses while avoiding over compensation. Part of the reinforced direct payments will take the form of a financial envelope which Member States can distribute, subject to certain criteria, thereby allowing Member States to address their specific priorities. Lower prices will benefit consumers and leave more room for price differentiation in favour of quality products. Greater market orientation will prepare the way for the integration of new Member States and reinforce the EU's position in the coming WTO Round. Moreover, there will be increased emphasis in the new CAP on food safety and environmental concerns. The EAGGF (European Agricutural Guidance and Guarantee Fund) rural development Regulation will for the first time provide an integrated approach to the development of the countryside. This comprehensive set of proposals are designed to ensure in a comprehensive, simplified and non bureaucratic manner that the European Model for Agriculture can be sustained in the long term, to the benefit not only of the EU agricultural industry but also for consumers, employment and indeed for the EU's society as a whole.
Intervention prices in the dairy sector, as in the arable and beef sectors, will no longer be subject to annual price fixing but will be fixed for the whole period covered by Agenda 2000. It can be expected that internal market prices will stay above the intervention level.
Arable crops :
The intervention price for cereals will be reduced by 20% in one step in the year 2000 while direct payments will be increased from 54 ECU/tonne to 66 ECU/tonne. Direct payments for oilseeds and non-textile linseed will be set at the same level, thereby eliminating the basic condition for production area constraints imposed by the Blair House agreement.
To ensure the profitability of protein Crops compared to other arable crops, an additional direct payment of 6.5 ECU/tonne is proposed, bringing the total available for protein crops to 72,5 ECU/tonne.
The specific scheme for durum wheat which was modified in 1997 will be continued.
While compulsory set-aside will be retained, its compulsory rate will be set at zero. Voluntary set-aside will be maintained with the same level of payment as for cereals and may be guaranteed for 5 years, thus enhancing its positive environmental contribution.
Silage maize will continue to be eligible for direct payments as its abolition would involve expensive control mechanisms given that the final use of maize ie for grain or silage may depend on weather conditions which cannot be foreseen when applying for the arable crop payment. Compared with the proposal from 1997, the retention of this aid will result in important cost savings for many producers notably those in the dairy and beef sectors and is therefore taken into account in the calculation for the increase in direct aids for these two sectors.
Beef :
The effective market support level will be reduced by 30% in three equal steps, starting on 1 July 2000. From 1st July 2002 the present intervention system will be replaced by a private storage regime.
To ensure a fair standard of living for the farmers concerned, direct payments will be increased for male bovine animals and suckler cows. A new direct payment for dairy cows will be introduced. Flexibility and targeting will be increased by entitling Member States to allocate part of the increase in direct payments (national envelope) according to specific priorities.
The amount of direct support follows the Agenda 2000 proposal but will be sub-divided into a Community-wide basic payment and an additional payment according to national provisions. However, the premium for bulls has to take into account the benefits accruing to producers through the retention of the arable crop payment for silage maize.
The basic premiums will be (2002 level) 220 ECU for bulls, 170 ECU for steers, 180 ECU for suckler cows, and 35 ECU for dairy cows. These basic amounts correspond to the pre-reform level of the aid plus 50 % of the increase in the total premium. The remaining 50 % of the increase is distributed to Member States according to their share in production, in order for Member States to distribute these amounts within certain limits and according to common rules. While permitted flexibility, Member States will be responsible for a non-discriminatory implementation.
Payments should be allowed per animal and/or per hectare of permanent pasture. For pastureland, a maximum amount per hectare should be approximately equal to the average area payment for arable crops.
When account is taken of the resources being provided through the basic premia and the additional payments, the level of premia which could be paid to producers would be : 310 ECU/head (+130%) for bulls paid once in their lifetime, 232 ECU (+ 113%) for steers paid twice in their lifetime, 215 ECU/head (+ 48%) for suckler cows per year and 70 ECU/head (new premium) per year for dairy cows to take account of the impact of the reduction in beef support price on the value of dairy cows. The level of premia actually received by any producer will however depend on Member States' decisions regarding the distribution of the financial envelopes allocated in the context of the additional payments.
Regional ceilings for the number of premium rights for male animals will be fixed at 1997/98 levels i.e. 9.095 million. The deseasonalisation premium for steers will continue as at present while the calf processing scheme will be aboslihed.
In addition, it seems appropriate to introduce national ceilings to cover all suckler cow premium rights. The overall number of premium rights would therefore be reduced to the level of actual use in a certain reference period (best out of 1995/1996 plus 3% i.e. a total of 10.285 million).
The total number of animals qualifying for the special premium and the suckler cow premium will be limited to 2 livestock units (LU) per hectare forage area. Producers with a stocking density less than 1.4 LU per hectare and currently practising extensive production methods (animal grazing on pasture land) may qualify for an additional payment of 100 ECU (+ 178%) per premium granted.
Dairy Regime
It is proposed to reduce intervention prices for butter and skimmed milk powder by 15% in four steps to improve competitivness on the internal and external markets.
While this proposed price decrease goes beyond the Agenda 2000 proposal, it is justified not only by the added benefit in terms of competitiveness but also, in comparison to the Agenda 2000 proposal, by the fact that available milk quotas will be increased and also by the fact that dairy farmers will partially benefit from the retention of a crop premium for silage cereals. Moreover, most farmers can be expected to adapt to their new situation through cost saving measures.
The amount of direct support per producer will be based on the number of premium units. This number will be determined by dividing the individual reference quantity by the average milk yield in the Community of 5,800 litres/cow. In order to target support to producers rather than quota holders, temporarily leased quota will be accounted to the producer who has leased it.
The amount of direct payment per premium unit follows the Agenda 2000 proposal but will be sub-divided into a basic payment of 100 ECU per premium unit and an additional payment of 45 ECU per unit according to national provisions. The basic cow premium will be phased in gradually in four equal steps in parallel with the reduction in guaranteed prices.
Milk quota
It is proposed to maintain milk quotas until 31 March 2006. In view of the impact of the 15% price reduction on internal consumption and exports a 2% (2.35 tonnes) increase in the total reference quantity in four steps is proposed. This additional quota should be distributed to particular categories of producers who need particular support, i.e. young farmers and producers in mountain and nordic areas.
It is also proposed that in cases of non permanent transfer of quota (leasing etc) member states place a certain percentage of that quota in a national reserve for redistribution. Furthermore member states will have the possibility of transferring to the national reserve the quota from those to whom quota reverts at the end of a leasing contract but who choose neigther to resume production themselves nor to sell their quota.
Mediterranean products
In relation to products which are primarily produced in Mediterranean regions the Commission has adopted a proposal on olive oil, which follows the recent proposal on tobacco. A proposal on the wine regime will be presented before June.
Rural development
Rural development measures concern in particular support for structural adjustment of the farming sector (investment in agricultural holdings, establishment of young farmers, training, early retirement), support for farming in less favoured areas, remuneration for agri-environmental activities, support for investments in processing and marketing facilities, for forestry and for measures promoting the adaptation of rural areas insofar as these are related to farming activities and to their conversion. The policy brings together for the first time all the measures related to the development of the countryside which were funded by the EAGGF and is to accompany and complement the proposed reforms in market and price policy.
The reformulated policy involves a radical simplification and allows for far greater flexibility and subsidiarity.
Current eligibility criteria for support in Less Favoured Areas (LFA) will be modified in order better to integrate environmental goals into rural development policy; the LFA scheme will gradually be transformed into an instrument to maintain and promote low-input farming systems. In addition, targeted agri-environmental measures will be aimed more specifically at achieving the objectives of protecting the environment and maintaining the countryside.
Coherence between rural development measures and other instruments of the Common Agricultural Policy or other Community policies will be ensured by specific rules, which will ensure that overlapping between instruments is avoided. Maximum amounts for some measures will prevent any abuse of rural development support, such as unjustified additional market support.
Rural development measures will in future be financed by either the Guarantee Section or the Guidance Section of EAGGF according to the regional context. Rural development measures covered by Objective 1 programmes and the rural development Community Initiative will be financed by the Guidance Section of EAGGF. Other rural development measures will fall under the Guarantee Section of EAGGF. These will be the accompanying measures and the LFA scheme in all rural areas as well as measures concerning modernisation and diversification covered by Objective 2 programmes and by rural development programmes outside Objective 1 or 2 regions.
Horizontal measures
Cross compliance: With respect to integrating better the environment into the CAP, Member States should apply appropriate environmental measures concerning the particular market support schemes.
Modulation: The distribution of direct payments among farmers might cause specific problems within certain Member States which call for a subsidiarity approach. However, agricultural income including direct payments has important employment impacts in rural areas. Member States would therefore be authorised to modulate direct payment per farm within certain limits and relative to employment on the farm.
Funds made available from aid reductions - either under cross-compliance and/or under modulation - would remain available for the respective Member State as an additional Community support for agri-environmental measures.
Ceilings on aid payments: To avoid excessive transfers of public funds to individual farmers, the Commission proposes to introduce a degressive overall ceiling to direct payments. The ceiling applies only to payments under the support schemes once cross-compliance and modulation have been applied and involves a 20% reduction in payments between ECU 100,000 and ECU 200,000 and 25% reduction on amounts above ECU 200,000
Structural Funds and Cohesion Fund
The proposals for new Regulations on the Structural and Cohesion Funds will provide the legal framework for support from these funds in the next programming period 2000-2006. The package has been constructed around the three principles enunciated in Agenda 2000, namely concentration, simplification and clarification of reponsibilities. The legal texts proposed are as follows :
The number one priority will be the EU's poorest regions, as the effort continues to improve their infrastructure as well as the education and skills of their workforce. In a new approach, the Strucural Funds will also cater for all areas undergoing structural difficulties, be they industrial, rural, urban or coastal areas with difficulties in the fishery sector. Under the new proposals a clearer division of responsibilities is called for between the Commission and the Member States to improve transparency and accountability, and hence lead to greater cost-effectiveness. Innovative financial instruments are foreseen such as loan guarantees and risk capital funds to increase the leverage of the Structural Funds. And far more than in the current support period, the Structural Funds will promote sustainable development and environmental protection. Following last November's Jobs Summit, which agreed how Europe should act to address its employment problems, a key task of structural policy will be to underpin the reform of labour market policies and practices, in line with the Employment Strategy and the annual employment guidelines for Member States.
Three objectives for the future
For the sake of simplification, the Structural Funds' priority Objectives should be reduced from seven to three. All regions in the EU will be reevaluated to determine which of the new objectives they may qualify for in seeking structural Fund support. The new objectives would be :
Objective 1: The purpose of the first Objective will be to help those regions most in need, that is those whose level of development (measured on the basis of figures for the last three available years in terms of GDP per head) is less than 75% of the Community average.
In the future, these regions will have the same priority they currently enjoy. Although there has been improvement, these regions are still faced with the most serious problems of income, employment, infrastructure, and skills levels in the workforce. Even though these gaps are less now in fields such as telecommunications, eliminating them entirely will be a long-term process given the amount of investment required.
The Canary Islands, due to their ultraperipheral status, and the current Obj. 6 regions will also be covered by Objective 1.
All four Structural Funds (European Regional Development Fund ERDF- , European Social Fund ESF -, European Agricultural Guidance and Guarantee Fund, Guidance Section EAGGF - Financial instrument for fisheries guidance FIFG -) will make a joint effort to assist the development of Objective 1 regions.
The current Objective 1 regions that no longer qualify under the 75 % criterion will have their assistance phased out gradually, over a six year period. It is even prolonged to 7 years for those former Objective 1 regions which fulfil the European criteria for Objective 2. Approximately 2/3 of the Structural Funds will go to Objective 1 regions. Support from Obj. 1 will benefit approximately 20% of the European population , including those enjoying a phasing out treatment.
Objective 2: Under the heading of the new Objective 2, the EU will support the economic and social conversion of areas experiencing structural difficulties, including those in the wealthier Member States. Many types of areas in the EU are in need of restructuring, because their economic base it not sufficiently diversified. These include areas facing industrial decline, rural zones confronted with serious problems such as depopulation, deprived urban areas; regions undergoing structural change in the services' sector and regions heavily dependent on fisheries.
Structural aid will continue to be available for the whole fisheries sector in all areas, with funding from FIFG (Financial Instrument for Fisheries Guidance) and EAGGF-Guarantee. Support will cover measures to help modernize the fleet and eliminate excess fleet capacity, develop aquaculture, port facilities, processing, marketing and promotional operations, and other activities.
Social measures in favour of fishermen directly affected by restructuring, as well as measures encouraging diversification, currently covered by the PESCA initiative, will continue to be included under objectives 1 and 2.
Under the new proposals, densely populated urban will also be eligible for funding under Objective 2, if they have to cope with problems such as a high level of poverty, a high crime rate or a low education level.
Support from Objective 2 will benefit 18 % of the European population. This total population will be broken down by Member State on the basis of a number of European regional criteria as well as a country's share in European unemployment outside Objective 1.
In doing so, an equitable contribution from the Member States to the overall objective of concentration is guaranteed limiting the reduction per Member State (including regions phased out from Objective 1, but eligible for Objective 2) to not more than one third of the coverage of current Objective 2 and 5b regions. Member States will also be more involved than hitherto with the selection of their regions under Objective 2 inside the given population ceiling.
A fair allocation will be sought between the various types of areas. In terms of the total population of the Union, the industrial and service sector areas should represent indicatively about 10%, the rural areas 5%, the urban areas 2% and those dependent on fishing 1%.
The current Objective 2 and 5 b regions that lose eligibility under Objective 2 will see their assistance phased out gradually, over a four year period.
Objective 3: The European Social Fund is being thoroughly reformed in order to bring it up to date as a financial instrument underpinning Member States Employment Action Plans. Under the new proposals, the activities of the ESF are to be re-grouped under the new Objective 3, aimed at supporting the adaptation and modernisation of education, training and employment policies and systems across the EU. The new Objective will also serve as a reference framework for the ESF interventions across Objectives 1, 2 and 3, thereby providing a consistent approach between EU and national human resources development strategies on the one hand, and regional interventions on the other.
It is proposed that there will be five areas for ESF activity: - active labour market policies to fight unemployment, - promoting social inclusion, - lifelong education and training systems to promote employability, - anticipating and facilitating economic and social change, - improving the participation of women in the labour market. The overall aim is to ensure a minimum participation of the Social Fund in all five fields while at the same time permitting each Member State to decide its own priorities for ESF investment. However, the proposal also calls for a particular emphasis on improving systems for anticipating and facilitating economic and social change as well as improving the participation of women in the labour market. In practice, it is proposed as an indicative target to make available at least 15% of the fund appropriations for each of these two policy fields.
Community Initiatives
The Commission proposal foresees a radical simplication and rationalisation of the Community Initiatives, which will be reduced from the current 13 to just three:
The proposal assigns to the new Community initiatives a clearly defined role in implementing measures of common interest in priority fields for the Union as a whole through cooperation between the regions, the Member States and the various economic and social partners. With an eye on simplification, each Initiative will be financed by a single Structural Fund. The share of the total Structural Fund budget will be reduced from 9% to 5%. These changes should further concentrate resources and simplify the management of the initiatives considerably.
Implementation
Clarifying responsibilities and increasing decentralisation
To improve transparency, the Commission calls for a clearer division of responsibilities between itself and the Member States and the various actors involved in the conception and implementation of Structural Fund interventions.
The Commission's role would be focused more on the strategic aspects of programming, such as defining the objectives and intervention priorities and deciding on the budgetary allocations. It would also be responsible for setting Community priorities and ensuring that they are respected in the regional programmes. In the Member States, a single authority would be designated to manage each programme, which would together with the Monitoring Committees take decisions on the detail of the programme, such as the allocation for individual measures, and the selection of projects.
Under the new proposals, the Commission calls on the Member States to ensure that regional, local and other relevant authorities, the social partners and Non-Governmental Organisations (NGOs), including organisations promoting environmental protection and equal opportunities, will be heard when elaborating, monitoring and evaluating the Structural Funds programmes.
More accountability, evaluation and effective control
Under the new proposals, Member States are given more scope to implement programmes according to their particular needs and circumstances. However, a necessary counterpart should be increased accountability and strengthened provisions concerning systematic annual reporting, ex-ante, interim and ex-post evaluations and financial control. The latter should principally be the responsibility of the Member States, but the Commission would reserve the right to conduct its own controls and would be able to impose financial corrections in cases of irregularities or infringements of Community law..
Simplifying financial management
Apart from the simplification in implementation that should result from the reduction in the number of Objectives and Community initiatives and the appointment of a single authority to manage each programme, other proposals aimed at simplifying financial management include:
Improving cost-effectiveness
In the context of reinforcing efficiency, the Commission should keep 10% of the total Structural Funds budget in reserve, which would be allocated after the mid-term evaluations, to the most efficient programmes in terms of budget execution, management and the attainment of target outputs.
The Cohesion Fund
The Cohesion Fund will continue and a limited number of changes will be made for the Cohesion Fund regulation:
Finally, as is the case for the Structural Funds, the Commission proposes a simplified financial managemnt of the Cohesion Fund in parallel with increased responsabilities for Member States, especialy when it comes to controlling projects.
Budget :
The total budget for the EU's structural policies for the period 2000 2006 will amount to ECU 286,000 million in 1999 prices (ECU 275,000 million in 1997 prices which represents a level of 0.46% of GNP), divided as follows :
The instruments for pre-accession aid proposed in Agenda 2000 comprise :
Actions under the three pre-Accession aid instruments will be integrated into the Accession Partnerships with each of the candidate countries to ensure coherence. The overall amount of pre-Accession aid will total some ECU 3,000 million a year for the period 2000-2006 (more than double the amount available in 1999) :
The PHARE programme will focus on accession by setting two priority aims which were endorsed by the European Council at Luxembourg : the reinforcement of administrative and judicial capacity (about 30% of the overall amount) and investments related to the adoption and application of the "acquis" (about 70%);
In the agriculture and rural development sector, pre-accession measures concern in particular support for improving the efficiency of farms (including producer groups), processing and distribution, promotion of quality products, veterinary and phytosanitary control, improving land quality, its reparcelling and registration, water resource management, vocational training, diversification of economic activities in rural areas, agri-environmental and forestry measures, improvement of rural infrastructure and rural villages, including the maintenance of rural heritage as well as technical assistance. The list can be extended if additional priority needs should emerge. The annual resources available to the EAGGF "Guarantee" section are equal to 500 MECU at constant 1997 prices. This money will be allocated to the applicant countries according to objective criteria. Upon accession to the EU, a country will lose its entitlement under this Regulation.
An Instrument for Structural Policies for Pre-Accession (ISPA), will provide some ECU 1,000 million per year for projects in the environment and transport sector. ISPA would be part of a wider, reinforced pre-accession strategy, making close coordination necessary with Phare and pre-accession agricultural assistance to avoid any overlap. In accordance with the Luxembourg conclusions, the countries eligible for assistance will be the 10 countries of Central and Eastern Europe. Given its similar objectives and project based approach, it is proposed that ISPA would broadly follow the lines of the Cohesion Fund in implementation. As a result, ISPA would have a project - based approach. Assistance under ISPA would be limited to projects that are of a sufficient size to have a significant impact. Experience suggests that they should, in principle, be of a minimum size of ECU 5 million.
The three pre-Accession aid instruments will be operated in the context of the Accession Partnerships with each of the candidate countries. These Partnerships will provide a single framework setting out the priorities to be pursued by each country and the various financial resources available from the Community to support the pre-Accession process. Each candidate country has been invited to draw up a national programme for the adoption of the EU "acquis" indicating in detail how it will implement each of the priorities identified in the Accession Partnership. The monitoring of Accession Partnerships and the related national preogrammes will provide an important input into the Commission's regular reviews of the progress of candidate countries.
Financial Perspectives and Interinstitutional Agreement (IIA)
The proposals for the Financial Perspective 2000-2006 closely follow those in Agenda 2000. As requested by the Luxembourg European Council, the Financial Perspective is presented on an EU15 basis, leaving sufficient margin to finance enlargement, but with an accompanying table to estimate the costs associated with enlargement and their financing under the technical assumptions used by the Commission.
The Commission proposes to keep the ceiling of own resources at the level of 1.27% of the GNP between 2000-2006. The overall ceiling for payment appropriations will, in the Commission's proposal, rise to EUR 104.6 billion in 1999 prices (1.13% of GNP) in 2006. In real terms, the average growth rate of payments would be 1.2%, including the pre-accession aid.
The pre-accession aid will be financed from three sources: Phare programming as well as structural and agricultural instruments. After the accession of a first wave of candidate countries, the pre-accession aid remains at the same level and will be concentrated on the countries which were not part in the first wave.
The Commission proposes a contingency margin of 0.03% of the GNP in the Financial Perspective of the fifteen Member States. That would act as a buffer to meet the impact of a possible lower than expected economic growth rate. Under the ceiling of own resources, a reserve growing up to 0.11% of the GNP would be left available for the enlargement.
The Financial Perspective has to be adopted by the Council and the Parliament as part of an Interinstitutional Agreement.
Agriculture - along the guideline
The ceiling of the agriculture heading is determined by the agriculture guideline. This ceiling should grow by 1.9% per year in real terms from EUR 45.2 billion in 1999 to EUR 51.6 billion in 2006 (in 1999 prices).
Main components of the heading 1 are the expenditure on market and direct compensatory aid but it would cover also:
The increase in agriculture expenditure will be most pronounced during the initial phase of the reform in the years 2000-2003 but will then level off. Hence the margin beneath the agriculture guideline will be sufficient to fund expenditure related to enlargement as well as to cover unexpected expenditure.
Structural operations (heading 2) - to concentrate
During the next programming period 2000-2006 the allocations for structural operations will amount to around EUR 247 billion, including the structural pre-accession aid of EUR 7,280 million. Due to the concentration of resources and phasing-out the allocations will fall slightly between 2000 and 2006, by an average of 1.4% a year. Nevertheless, the 15 Member States will receive more during this programming period than over the previous one: a total allocation of near EUR 240 billion in 2000-2006 compared with an amount of EUR 208 billion (1999 prices) in the period 1993-1999.
The Commission proposes a significant concentration of resources in structural funds, reducing the number of objectives from seven to three.
Internal policies (heading 3) - growth area
Internal policies should obtain the highest growth rate in the new Financial Perspective, thus reflecting the emphasis on growth and employment policy. The total allocations for internal policies will progressively increase by an average 2.5% and rise from EUR 6,390 million in 1999 to EUR 7,600 million in 2006. The major policy priorities are Trans-European networks, research and innovation, education and training, introduction of environment friendly technologies and measures to support small businesses.
New emphasis on TransEuropean Transport Networks
The development of TransEuropean Transport Networks not only remains a priority for the European Union as one of the key instruments for encouraging growth, competitiveness and employment but will also serve as a structural policy to enhance the internal cohesion of the Union by tying regions together. TENs also have a particularly important role to play in creating new links with the EU candidate countries of Central and Eastern Europe.
The Commission therefore proposes revising the TENS financial regulation - the legal basis for expenditure on TransEuropean transport, energy and telecommunications projects in the period 2000-2006. The proposal provides an indication of spending needs totalling ECU 5,500 million of which about ECU 5,000 million is earmarked for transport as against ECU 1,800 million for the period 1995-1999.
The proposal also sets out mechanisms to improve the management of the TENs programme, through greater recourse to multiannual planning, and an approach to budgetary commitments similar to the Cohesion Fund. This will facilitate public private partnerships by provided funding availability for the lifetime of the project.
It is also suggested that the ceiling for the contribution from the TENs budget for a single project be raised from 10 per cent to 20 per cent in exceptional cases where there is a particularly strong transEuropean interest.
External actions continued commitment
The overall allocation for external action will gradually rise from EUR 6,870 million to EUR 7,900 million in 2006, that is by 2% a year. This includes the Phare programme for pre-accession. Its amount is EUR 1,560 million a year over the whole period.
Administration - slow growth track
The overall allocation for administrative expenditure continues to stay on the slow growth track: average 1.7% a year over the period 2000-2006, rising to EUR 5,300 million in 2006. Nearly half of the increase will be taken up by a sharp rise in expenditure on pensions leaving for other administrative expenditure no more than a 1% increase a year. This requires a strict management of all administrative resources in all institutions. The Commission states that its intention is to actively pursue the reform of its administration. In implementing all programmes, attention will have to be paid to the minimum size of projects financed to ensure that the management costs are not excessive.
New Member States - expenditure resulting from accession
The communication shows separately accession related expenditure and its financing (table 2), establishing a reference financial framework for the new member states in 2002-2006. As such, table 2 can be seen as a common negotiating position of the Fifteen.
Anticipated expenditure resulting from the accession:
According to the Commission agriculture expenditure should be entirely financed by the margin available under the agriculture guideline. Other expenditure will chiefly be covered by the amount available for accession, which the current 15 Member States are supposed to leave and which is planned to rise from EUR 1.3 billion in 2002 to EUR 10.5 billion in 2006. Additional allocations will be available from the increased GNP of the enlarged Union. A margin of nearby EUR 6 billion (0.06% of the GNP) is envisaged after accession in 2006.
Accompanying reports
When adopting the communication on a new Financial Perspective for the period 2000-2006 the Commission also adopted a report on the operation of the Interinstitutional Agreement, a communication on its renewal and a report on a proposal to modify the functioning of the Guarantee Fund.
Interinstitutional Agreement: Commission proposes a new agreement on budgetary discipline
The European Commission today proposed a new agreement on budgetary discipline between the European Parliament, the Council and the Commission. The Financial Perspective would be part of that agreement.
The new Interinstitutional Agreement would replace the present one, of which the Commission has gained a positive overall experience.
Interinstitutional Agreement clarifies the ways how the Council, the European Parliament and the Commission work together to establish the Union budget along common lines.
Recent budget procedures have led to improved co-operation between the institutions, and the Commission now proposes this positive experience to be consolidated into the agreement between the institutions.
The Commission suggests the new Interinstitutional Agreement to cover among other things the classifications of expenditure into obligatory and non-obligatory, the need for legal basis and the conciliation process in the budgetary procedure. The Commission wishes the new agreement to be agreed in time to be applied to the preparation of the budget for the year 2000.
Guarantee Fund stable loan activities, less resources required
The report highlights the good functioning of the Guarantee Fund, which offers an effective protection of the EU budget. The amount of financial resources at the disposal of the Fund has increased rapidly and in the course of 1997 has reached the level considered adequate.
While maintaining the current capacity to offer guaranteed loans, the resources at the disposal of the Fund now appear to be excessive in relation to the risks to be covered. The Commission therefore proposes to reduce the "target level" from 10 to 8 per cent of the outstanding amount of loans and to reduce the "provisioning rate" to 6 per cent of the amount of the new loans. In the new Financial Perspective 2000-2006 a reserve of EUR 150 million a year (1999 prices) appears sufficient.
The Guarantee Fund was set up in 1994 to protect the EU budget from the impact of possible defaults of loans benefiting from a guarantee. The European Union offers a partial guarantee to loans made by the European Investment Bank in Latin America, Asia and the Mediterranean area, and a full guarantee to financial assistance to EU loans to some third countries. Every time a new loan benefiting from the guarantee of the EU budget is signed, the Fund is credited with an amount, proportional to the size of the loan (the so-called "provisioning rate"), drawn on an ad-hoc Reserve inscribed in the budget by the Regulation which instituted the Fund (the so-called "target level", set at ten percent of the outstanding amount of loans). Contributing to this result have been the limited repayment of defaults and the growth in financial income generated by the resources at the disposal of the Fund.
| EUR million - 1999 prices Appropriations for commitments | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 |
| 1. AGRICULTURE(*) | 45.205 | 46.050 | 46.920 | 47.820 | 48.730 | 49.670 | 50.630 | 51.610 |
| of which: Pre-accession aid | 520 | 520 | 520 | 520 | 520 | 520 | 520 | |
| 2. STRUCTURAL OPERATIONS | 39.025 | 36.640 | 37.470 | 36.640 | 35.600 | 34.450 | 33.410 | 32.470 |
| Structural Funds | 32.731 | 32.600 | 33.430 | 32.600 | 31.560 | 30.410 | 29.370 | 28.430 |
| Cohesion Fund | 3.000 | 3.000 | 3.000 | 3.000 | 3.000 | 3.000 | 3.000 | 3.000 |
| Pre-accession structural instrument | 1.040 | 1.040 | 1.040 | 1.040 | 1.040 | 1.040 | 1.040 | |
| Adjustments (**) | 3.294 | |||||||
| 3. INTERNAL POLICIES | 6.386 | 6.390 | 6.710 | 6.880 | 7.050 | 7.230 | 7.410 | 7.600 |
| 4. EXTERNAL ACTION | 6.870 | 6.870 | 7.070 | 7.250 | 7.430 | 7.610 | 7.790 | 7.900 |
| of which: Pre-accession aid | 1.560 | 1.560 | 1.560 | 1.560 | 1.560 | 1.560 | 1.560 | |
| 5. ADMINISTRATION | 4.723 | 4.730 | 4.820 | 4.910 | 5.010 | 5.100 | 5.200 | 5.300 |
| 6. RESERVES | 1.192 | 850 | 850 | 600 | 350 | 350 | 350 | 350 |
| Monetary reserve | 500 | 500 | 500 | 250 | 0 | 0 | 0 | 0 |
| Emergency aid reserve | 346 | 200 | 200 | 200 | 200 | 200 | 200 | 200 |
| Guarantee reserve | 346 | 150 | 150 | 150 | 150 | 150 | 150 | 150 |
| TOTAL APPROPRIATIONS FOR COMMITMENTS | 103.401 | 101.530 | 103.840 | 104.100 | 104.170 | 104.410 | 104.790 | 105.230 |
| TOTAL APPROPRIATIONS FOR PAYMENTS | 96.380 | 98.800 | 101.650 | 102.930 | 103.520 | 103.810 | 104.170 | 104.560 |
| Appropriations for payments as % of GNP | 1,23% | 1,24% | 1,24% | 1,22% | 1,20% | 1,18% | 1,15% | 1,13% |
| Margin | 0,04% | 0,03% | 0,03% | 0,03% | 0,03% | 0,03% | 0,03% | 0,03% |
| Available for accession | 0,02% | 0,04% | 0,06% | 0,09% | 0,11% | |||
| Own resources ceiling | 1,27% | 1,27% | 1,27% | 1,27% | 1,27% | 1,27% | 1,27% | 1,27% |
(*) The ceiling corresponds to the agricultural guideline.
(**) Including the amount in respect of the EEA financial mechanism and the
adjustment proposed by the Commission to take account of the conditions of implementation
of the 1997 budget.
Table 2
Expenditure resulting from accession; financing
| EUR million - 1999 prices | 2002 | 2003 | 2004 | 2005 | 2006 |
| Expenditure | |||||
| Heading 1 (*) | 1.600 | 2.030 | 2.450 | 2.930 | 3.400 |
| Heading 2 | 3.750 | 5.830 | 7.920 | 10.000 | 12.080 |
| Heading 3 | 730 | 760 | 790 | 820 | 850 |
| Heading 5 | 370 | 410 | 450 | 450 | 450 |
| Total appropriations for commitments | 6.450 | 9.030 | 11.610 | 14.200 | 16.780 |
| (1) Total appropriations for payments | 4.140 | 6.710 | 8.890 | 11.440 | 14.220 |
| Sources of financing available | |||||
| Financing of agricultural expenditure by drawing on the margin available beneath the guideline | 1.600 | 2.030 | 2.450 | 2.930 | 3.400 |
| Amounts available for accession in the financial framework of the fifteen-nation Community (estimate) | 1.280 | 3.300 | 5.680 | 8.060 | 10.470 |
| Increase in own resources resulting from growth in Union GNP following enlargement (estimate) | 3.440 | 3.510 | 3.580 | 3.660 | 3.740 |
| (2) Total financing available | 6.320 | 8.840 | 11.710 | 14.650 | 17.610 |
| Changes in the margins beneath the own resources ceiling | |||||
| Margin (2) - (1) | 2.180 | 2.130 | 2.820 | 3.210 | 3.390 |
| Margin in the financial framework of the fifteen-nation Community (0.03% of GNP) | 2.520 | 2.580 | 2.650 | 2.720 | 2.780 |
| Total margin available in an enlarged Community (estimate) | 4.700 | 4.710 | 5.470 | 5.930 | 6.170 |
| Total margin as a percentage of the GNP of the enlarged Community | 0,05% | 0,05% | 0,06% | 0,06% | 0,06% |
(*) Expenditure estimated at 1999 prices for the purposes of comparison. Only estimates at current prices are relevant.
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