The Week in Europe 15-21/12/00

EU news in brief

2.7bn euro development scheme cleared for Northern Ireland

A 2.75bn euro scheme for Northern Ireland was approved by the Commission on 18 December. Covering 2000-2006, the programme will support economic and social development, with EU funding of 1.315bn euro from the Structural Funds. The public sector will contribute 0.59bn euro and the private sector 0.84bn euro. This Community Support Framework has the following five priorities:

¨ peace and reconciliation,

¨ tackling the legacy of 30 years of conflict;

¨ economic growth and renewal;

¨ employment and social inclusion;

¨ regional development in both urban and rural areas;

¨ and cooperation north-south and more widely.

Two detailed programmes are being finalised to put these broad priorities into specific measures. The second EU programme for peace and reconciliation will operate jointly with the border areas of the Republic. The other is an Objective 1 transition scheme, which applies to Northern Ireland as income per head has risen above the qualifying level of 75% of the EU average. The strategy was developed with the devolved government in Northern Ireland. Commissioner Michel Barnier said it would enable the Union to continue supporting all sections of the community in Northern Ireland in their efforts to build an inclusive, peaceful society. [Background text: IP/00/1483]

Sweden takes over EU chair

Sweden takes over the Presidency of the EU on 1 January, steering the work of the Council for the first six months of 2001. EU enlargement is the top priority for the Swedish Presidency, following the reforms agreed in Nice to enable more countries to join from the end of 2002.

Alongside enlargement, the Swedish government has highlighted employment and the environment as other key areas in which it will seek to make progress. European Council summit meetings are due to take place on 23-34 March in Stockholm and on 15-16 June in Gothenburg. The Presidency website is at http://www.eu2001.se

'European Company' agreed

Companies will be able to operate throughout the EU using one set of rules rather than a series of national systems, under a Regulation agreed by the Council on 20 December. A European Company could expand and restructure cross-border operations without the costly and time-consuming red tape of having to set up subsidiaries in every country, said Commissioner Frits Bolkestein. It was an important step forward in making the internal market a reality for business and in boosting competitiveness, he said. An accompanying Directive on employee involvement seeks to ensure workers are consulted and informed about key developments in the company. Following the political agreement reached by the Council, the texts now go to the European Parliament. They could be formally adopted early next year, coming into force in 2004. Council agreement on the European Company statute or Societas Europaea, first proposed in 1970, followed a compromise at the Nice summit, on the details of the employee participation rules.

[Background text: IP/00/1495]

Banana import regime adopted

The Agriculture Council on 20 December adopted an EU import system for bananas, which is aimed at ending a trade dispute with the USA. The system will allocate tariff quotas on a first-come, first-served basis, as importing ships arrive at EU ports. In 2006 it will move to flat-rate tariffs, which will be negotiated with banana producers. The transitional regime will apply from 1 April 2001, with scope to delay the start by two months if Member States' customs authorities need longer to complete technical preparations. The system is transparent and simple, compatible with World Trade Organisation rules, and provides a viable alternative to one based on historical links, explained Commissioner Franz Fischler. The USA imposed trade sanctions because it claimed EU rules favoured growers in Africa, the Caribbean and the Pacific over Latin American producers.

[Background text: IP/00/1502]

Air control review on runway

Proposals to tackle the growth in air transport, cut delays and maintain a high level of safety will be put forward as soon as possible, Commissioner Loyola de Palacio said on 18 December. An action plan will draw on a report prepared by a group of experts chaired by Palacio, which sets out measures to improve the management and use of airspace in Europe. The report advocates six main steps towards 'a single European sky'. Airspace should be managed as one common resource, with a strong Community regulator. Gradual progress is needed to bring joint civil and military management of air traffic closer. The institutions of the EU and Eurocontrol should be brought together. Finally, new technology and a better human resources policy should be promoted.

Such moves could set up the necessary structures by 2005. Delays in air traffic have become widespread; one in five flights is more than 20 minutes late. Air traffic control is finding it hard to deal with the increase in flights, too partly as a result of compartmentalised systems and structures within Europe. [Background text: IP/00/1481]

Rules on auditor independence

Principles to ensure the independence of auditors checking the accounts of companies have been set out in draft for consultation. The proposals would require auditors to consider the expectations of those directly affected by their work, the public interest, threats to independence and appropriate safeguards. This general framework would be complemented by guidance on how such principles should apply in specific situations, including prohibitions in some cases. As well as ensuring that auditors operate to high levels of integrity and objectivity, the principles would help to make financial information in the EU more readily comparable and reliable. This in turn would promote an efficient EU capital market by encouraging cross-border investment and investor confidence. Audit rules currently differ significantly between Member States. The consultation paper can be found at

http://europa.eu.int/comm/internal_market and comments are invited by 2 March 2001. [Background text: IP/00/1478]

· The Commission is also seeking comments on the regulation of financial conglomerates, companies that offer a range of services (such as banking, insurance and investments). It seeks comments by 10 February 2001, ahead of a draft Directive in the spring. [Background text: IP/00/1488]

Plan to cut farm aid paperwork

Around 500,000 farmers in the EU should benefit from a scheme to cut red tape, proposed by the Commission on 18 December. It would enable farmers who receive small amounts of direct aid (up to 1,000 euro) to apply once when they enter the scheme, rather than making a separate claim for each type of premium each year. Commissioner Franz Fischler said the scheme would make form-filling a one-off event for small farmers and would operate initially as a pilot scheme during 2002-2005. The change would also minimise administration for the national authorities that oversee the payments, but without watering down the stringent controls applied to the use of taxpayers' money. It would operate for direct aid (not linked to production).[Background text: IP/00/1482]

· Agricultural income per worker rose by an average of 1.3% in real terms in the EU this year, according to Eurostat. [Background text: ES 142/2000]

4.6m euro for anti-violence projects

Grants totalling 4.6m euro for 47 projects to tackle violence against women and children have been approved by the Commission. Supported by the Daphne programme, they deal with problems such as human trafficking, sexual exploitation, forms of domestic violence and abuse, and violence in schools and against migrants and minority groups. The EU's role was to help create networks that promote best practice and exchange information, said Commissioner Antonio Vitorino. Violence could also be reduced by raising public awareness of its causes and consequences, he added. The grant-winners were selected from more than 400 applications. Since it began in 1997, the Daphne programme has supported 150 projects with 11.5m euro in funding. [Background text: IP/00/1440]

Annual inflation rates rose by 0.2% in November, to 2.6% in the EU, 2.9% in the euro zone. [Background text: ES 143/2000]

The EU 2001 budget was adopted on 14 December. It includes 92.6bn euro for payments, equivalent to just 1.06% of the Union's GDP. [Background text: IP/00/1466]

Human rights and democracy projects will receive over 100m euro in EU support. This will back 140 projects throughout the world, channelled mostly (83%) through non-governmental organisations.

[Background text: IP/00/1475]

500m euro for film-makers and others in the European audio-visual industry should be available in loans and grants backed by a strategy of the European Investment Bank and the Commission.

[Background text: IP/00/1489]

EU summits with the USA and Canada on 18 and 19 December respectively produced statements that are available from http://ue.eu.int/en/summ.htm

BSE-related illnesses are the focus of an expert group that met for the first time on 15 December. Set up by the Commission, it will co-ordinate research on transmissible spongiform encephalopathies.

[Background text: IP/00/1476]

Animal transport rules are not being implemented properly, according to a Commission report.

[Background text: IP/00/1492]

Enlargement news in brief

The Nice Treaty and the Protocol on enlargement

Over and above the changes agreed to the EU's internal procedures in Nice, agreement was also reached on a specific protocol annexed to the Treaty of Nice, dealing with the institutional operations of an enlarged EU. Subject to the reservation that the final version of the text has at this stage still to be refined by the Presidency, the key provisions relating to enlargement itself include:

¨ The new voting system for the Council of Ministers will come into effect on 1 January 2005, with new member states getting the voting rights now agreed for them (see the table below) as and when they join.

¨ The European Parliament for the 2004-2009 term shall include representatives of the new member states "resulting from the accession treaties signed by 1 January 2004 at the latest" - and in line with the allocations in the table below; similar rules will apply to the Economic and Social Committee and the Committee of the Regions.

¨ The Commission will include one national of each of the member states from 1 January 2005. New member states will get a Commissioner of their own for one term as soon as they join, even though they will subsequently have to take part in the new rotation system agreed. That will come into effect when the EU consists of 27 member states, at which point "the number of members of the Commission shall be less than the number of member states". Commissioners will be chosen by rotation "based on the principle of equality", with the implementing arrangements and the precise number of members being set by the Council, acting unanimously. This amendment will come into effect as the first Commission following the date of accession of the twenty seventh member state of the Union takes up its duties.

And a declaration on the future of the union states that now the EU has "opened the way to enlargement", there should be "a deeper and wider debate about the future development of the European Union" starting in 2001, and "the candidate States will be associated with this process in ways to be defined." After these preparatory steps, a new intergovernmental conference will be convened in 2004 with a view to further Treaty changes. But this new IGC "shall not constitute any form of obstacle or pre-condition to the enlargement process. Moreover, those candidate states which have concluded accession negotiations with the Union shall be invited to participate", and "those candidate states which have not concluded their accession negotiations shall be invited as observers."

What the Nice Summit means for the enlargement process

The Nice summit endorsed the more extensive December 4 General Affairs Council conclusions, and thereby in effect:

¨ reaffirmed the EU's "political commitment and its total determination" for "a successful conclusion" of enlargement;

¨ urged candidates to keep up their efforts in transposing the acquis into national law and actually implementing it - including in macroeconomic and financial stability;

¨ indicated that the "road map" timetable for negotiations with leading candidates over the next 18 months "needs to be fine-tuned to the progress made by each applicant and should incorporate scope for the best-prepared applicants to make swifter progress in the negotiations";

¨ recognised the legitimacy of some claims for transitional provisions by candidates (but the General Affairs Council noted that the Commission has to date counted more than 170 requests for transitional measures from the applicant countries, over and above the 340 for agriculture alone. "With full adoption of the Community acquis being the basic principle underlying the negotiations, the requests for transitional measures, coupled with effective implementation of that acquis represent one of the most difficult points in the talks", it observed);

¨ accepted the possibility of putting off some issues "in certain exceptional cases" to enable the chapters to which they belong to be closed provisionally, but only after "every effort has been made in the negotiations on the chapters concerned".

¨ confirmed that "the Union itself will be able to invoke the need, in its own interests, for certain transitional arrangements";

¨ repeated the "importance not only of transposing the acquis into national law but, above all, of implementing it effectively";

¨ called on the Commission "to update each country's scoreboard at regular intervals";

¨ looked forward to being ready "to take in any applicants that are ready as from 1 January 2003".

How far does the Nice Treaty permit enlargement?

There is plenty of work to be done to move the business of enlargement ahead after Nice. Meanwhile, there are also mixed views as to how far the Treaty of Nice provides for enlargement.

"It's an agreement that opens the way to enlargement", said French Prime Minister Lionel Jospin at the French Presidency's closing press conference for the IGC. But the draft treaty of Nice falls far short of what the European Parliament considers to be necessary to strengthen the EU's capability for enlargement, according to the resolution massively adopted in the European Parliament after this week's debate in Strasbourg. The Parliament has instructed its Constitutional Affairs Committee to undertake a detailed evaluation of the draft treaty and to assess whether an enlarged Union can function effectively on the basis of this treaty.

European Commission President Prodi told the European Parliament on 12 December "the final aim of the Nice Summit was and remains the reunification of Europe", but his remarks made clear that he felt more needed to be done to ensure success for enlargement. "As a step, it was shorter one than we had hoped to make, or indeed could have made. But we are moving in the right direction, and I would therefore ask you to lend us your support", he told Euro-MPs.

The incoming Swedish Presidency has made clear its view that: "The successful conclusion of the Intergovernmental Conference on institutional issues at the summit meeting in Nice means that the Union has now made the necessary internal preparations to be able to welcome new members as from the end of 2002 in accordance with the conclusions of the Helsinki summit."

Concrete steps towards enlargement after Nice

The upcoming Swedish Presidency sounded a determined note about the next six months when foreign minister Anna Lindh presented her country's programme in Brussels on December 15. Asked what Sweden planned to bring that was new in order to move ahead with the ambitious road-map for negotiations over the next 18 months that the Nice Council endorsed, Ms Lindh said the formula consisted merely of making sure that "everyone does their homework", in the Commission, and in the Member States, in preparing common positions. "We will do all we can to get substantive talks opened and closed, and opened for the front runners on all the difficult chapters, including agriculture and regional affairs, during our Presidency". But this depended, she added, on Member States having the time to discuss the positions, so she said she would be urging the Commission to present the draft positions in time. "We must stick to differentiation", she said, but "There are no easy solutions". And "I am not advocating a big bang", said the incoming President of the Council of Ministers.

Sweden's formal programme notes that "During the Swedish Presidency, the enlargement process will enter a new phase of concrete negotiations, involving a number of difficult areas. Sweden's objective is to attempt to pave the way for a political breakthrough. This means, among other things, endeavouring to provisionally close as many chapters as possible in the negotiations with all the candidate countries. For the countries that have made the most progress in the negotiations, this also involves some of the most difficult chapters.

Review of the enlargement strategy

Negotiators from the leading candidates agreed at a meeting in Budapest this week that they were still aiming at EU entry in 2003, and therefore at completing negotiations by the end of 2001. Progress on the "road map" would depend on the will of the upcoming Presidencies, they agreed. Poland is now waiting to see a clear exposition from the Commission of how its requests for transitional provision requests will be categorised - as acceptable, negotiable, or impossible. Polish negotiator Jan Kulakowski said in Brussels on December 15 that he expected a Commission proposal in the first quarter of 2001. "If we find that many of our requests have been ruled out in advance we will have to revise our negotiating strategy", he said. Kulakowski also warned against member state "abuse" of the new "set-aside" facility, under which outstanding negotiating issues will be left to the end. This risks putting a lot of work onto the shoulders of the Belgian Presidency in the second half of 2001, he said

At one of the first formal encounters between the EU and a candidate country since the Nice summit, the EU-Czech Republic Joint Parliamentary Committee in Strasbourg on 13-14 December expressed "its conviction that the reforms agreed have created an adequate base for the effective functioning of the European institutions in conditions of an enlarged Union". The meeting repeated the European Parliament's call for the European Union to ensure that a clear accession scenario for each candidate country should be established after the conclusion of the Intergovernmental conference.

Unsurprisingly, given the disappointment in Prague at the loss of a negotiating session in November, it also expressed its concern the EU was unable to prepare the common position on the energy chapter for the Czech Republic, thus slowing down the negotiating process in this area.

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