GGG G G G G 1999 G G 2004 GGG

Session document

FINAL A5-0354/2002

14 October 2002

REPORT

on the first progress report from the Commission on economic and social cohesion (COM(2002) 46 – C5-0198/2002 – 2002/2094(COS))

Committee on Regional Policy, Transport and Tourism

Rapporteur:

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EN EN PE 314.720 2/25 RR\479717EN.doc

EN CONTENTS

Page

PROCEDURAL PAGE...... 4

MOTION FOR A RESOLUTION ...... 5

EXPLANATORY STATEMENT...... 8

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS, HUMAN RIGHTS, COMMON SECURITY AND DEFENCE POLICY ...... 16

OPINION OF THE COMMITTEE ON AGRICULTURE AND RURAL DEVELOPMENT...... 19

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EN PROCEDURAL PAGE

By letter of 1 February 2002, the Commission forwarded to Parliament its first progress report on economic and social cohesion (COM(2002) 46 – 2002/2094(COS)).

At the sitting of 13 May 2002 the President of Parliament announced that he had referred this report to the Committee on Regional Policy, Transport and Tourism as the committee responsible and the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy, the Committee on Employment and Social Affairs and the Committee on Agriculture and Rural Development for their opinions (C5-0198/2002).

The Committee on Regional Policy, Transport and Tourism had appointed Elisabeth Schroedter rapporteur at its meeting of 21 February 2002.

It considered the Commission report and the draft report at its meetings of 10 September and 8 October 2002.

At the last meeting it adopted the motion for a resolution by 46 votes to 1, with 5 abstentions.

The following were present for the vote: Luciano Caveri, chairman; Rijk van Dam, Gilles Savary and , vice-chairmen; Elisabeth Schroedter, rapporteur; Emmanouil Bakopoulos, Carlos Bautista Ojeda (for Camilo Nogueira Román), Rolf Berend, Felipe Camisón Asensio, Luigi Cocilovo, Jan Dhaene, Den Dover (for Jacqueline Foster), Garrelt Duin, Alain Esclopé, Giovanni Claudio Fava, Mathieu J.H. Grosch, Konstantinos Hatzidakis, Ewa Hedkvist Petersen, Juan de Dios Izquierdo Collado, , (for Sérgio Marques), Karsten Knolle (for Philip Charles Bradbourn), Dieter-Lebrecht Koch, Giorgio Lisi, Emmanouil Mastorakis, Erik Meijer, Rosa Miguélez Ramos, Jan Mulder (for Isidoro Sánchez García pursuant to Rule 153(2)), Francesco Musotto, James Nicholson, Josu Ortuondo Larrea, Wilhelm Ernst Piecyk, Giovanni Pittella (for Danielle Darras), Samuli Pohjamo, Bernard Poignant, José Javier Pomés Ruiz, Alonso José Puerta, Reinhard Rack, Encarnación Redondo Jiménez (for Dana Rosemary Scallon pursuant to Rule 153(2)), Ingo Schmitt, Brian Simpson, Dirk Sterckx, Ulrich Stockmann, Margie Sudre, Hannes Swoboda (for John Hume), Joaquim Vairinhos, Jaime Valdivielso de Cué (for Karla M.H. Peijs pursuant to Rule 153(2)), Ari Vatanen, Herman Vermeer, Dominique Vlasto (for Christine de Veyrac), Christian Ulrik von Boetticher (for Carlos Ripoll i Martínez Bedoya) and Mark Francis Watts.

The opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy and the Committee on Agriculture and Rural Development are attached; the Committee on Employment and Social Affairs decided on 19 March 2002 not to deliver an opinion.

The report was tabled on 14 October 2002.

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EN MOTION FOR A RESOLUTION

European Parliament resolution on the first progress report from the Commission on economic and social cohesion (COM(2002) 46 – C5-0198/2002 – 2002/2094(COS))

The European Parliament,

– having regard to the first progress report from the Commission (COM(2002) 46 – C5-0198/20021),

– having regard to its resolution of 7 February 20022 on the second report from the Commission on Economic and Social Cohesion (COM(2001) 24),

– having regard to the study commissioned by the Commission and drawn up by Jörg Beutel entitled ‘the economic impact of Objective 1 interventions for the period 2000-2006’ of May 2002,

– having regard to the conclusions of the Göteborg European Council of 15 and 16 June 2001 on a sustainable development strategy,

– having regard to its resolution of 31 May 20013 on environmental policy and sustainable development: preparing for the Göteborg European Council,

– having regard to its resolution of 29 November 20014 on the Commission White Paper ‘European Governance’ (COM(2001) 428),

– having regard to its resolution of 9 March 19945 on the Commission White Paper on ‘Growth, Competitiveness, Employment – the challenges and ways forward into the 21st Century’ (COM(93) 700),

– having regard to Articles 158 to 162 and Article 299(2) of the EC Treaty,

– having regard to Rule 47(1) of its Rules of Procedure,

– having regard to the report of the Committee on Regional Policy, Transport and Tourism and the opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy and the Committee on Agriculture and Rural Development (A5-0354/2002),

A. whereas all public contributions so far have noted that European cohesion policy must remain the cornerstone of European integration, because otherwise the cohesion of the

1 OJ C not yet published. 2 OJ C Texts adopted by Parliament, P5-TA(2002)0060. 3 OJ C 47 E, 21.2.2002, p. 223. 4 OJ C 153 E, 27.6.2002, p. 314. 5 OJ C 91, 28.3.1994, p. 124.

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EN Union will be in jeopardy, which would have disadvantages for all EU Member States,

B. whereas it is impossible to drop below the current share of 0.45% of the Union’s GDP set aside for cohesion policy without seriously jeopardising the achievement of the cohesion objectives with a view to enlargement and sacrificing the credibility of cohesion policy,

C. whereas any attempt to renationalise European structural policy must be rejected, since otherwise serious damage could be done to the European model based on solidarity between the richest and poorest regions,

D. having regard to the outcome of the study on the economic impact of aid in Objective 1 regions which notes that 24.2% of EU aid for Objective 1 regions benefits other EU regions,

E. having regard to the debate on the issue of the equitable division of existing financial resources in an EU of 27 Member States and in view of the fact that the regions in the new Member States have a substantially lower level of development than the EU average and current Objective 1 regions and that most regions in the new Member States will receive Objective 1 status,

F. having regard to the fact that structural policy interventions have not so far had all the desired results despite a very substantial financial input by the EU and that in particular deep-seated imbalances remain between the various regional areas of the EU and unemployment in the poorest regions is further increasing, whereas the still high level of unemployment can be combated by a regional development policy, designed to create new prospects for investment, employment and the use of available regional resources in the areas that have made least progress and industrial reconversion areas,

G. whereas the most remote regions have a distinct geographical, economic and social identity within the European Union,

H. having regard to the permanent geographical handicaps which affect the socio-economic and structural development of certain regions of the Union, particularly the most remote regions, and the need to find a specific treatment for them,

I. whereas employment policy, the CAP, transport policy and finance policy must be brought into accord with the cohesion objectives of a sustainable regional development,

J. whereas there is a need for greater simplification of the procedures and greater efficiency in the partnership between the Commission, the Member States and the regions concerned,

K. whereas regional policy must promote the polycentric development of the European Union,

Future of European cohesion policy

1. Notes that European cohesion policy and the solidarity it involves between the wealthy and the less wealthy Member States of the Union must remain an integral part of an

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EN enlarged Union;

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EN 2. Calls for a sustained reform of the EU’s structural policy which allows the regions to pursue their development plans independently of EU interventions but with the backing of EU interventions within the framework of straightforward administrative procedures;

3. Considers that in the run-up to enlargement, cohesion policy needs to be reviewed, improved and adapted to cater for the new conditions that will prevail in an enlarged Union;

4. Insists on the necessity of carefully adapting Community assistance within the cohesion policy framework to the specific needs and socio-economic realities (which have resulted from their unique history and economic and political transition) of future Member States so that it has a maximum impact on economic competitiveness, the living standards of the population and sustainable economic development;

5. Reminds the candidate countries of the imperative need to further improve their administrative capacity and coordination mechanisms in their preparations for the management of the Structural Funds; calls on the Commission to make the planning and implementation of the cohesion policy more effective and more flexible; considers it would be appropriate to gradually decentralise the management of funds provided that this is combined with an effective and rigorous monitoring of their use;

6. Is in favour of the Commission receiving the human and material resources to prepare the enlargement countries for the technical implementation of the regional policy funds from which they will benefit;

Objectives

7. Considers that, to avoid the ‘statistical effect’ in the future cohesion policy, we need to take account of not only the pro capita GDP criterion but also other indicators reflecting regional sensitivities and the development difficulties;

8. Expresses its astonishment that, unlike the second cohesion report, the first progress report does not mention Objective 2 regions; stresses that continued Community support to these regions is justified both on account of the persistence of problems of conversion and economic development and because the Structural Funds are an indispensable tool of regional development policy, because the added value which they represent should not be lost; considers it essential that this Community support should first and foremost promote regional competitiveness;

9. Considers that regions in reconversion must be entitled to benefit from a reformed Objective 2;

10. Reaffirms the importance of a cohesion policy which is not limited to support for regions whose development is lagging behind but which also devotes attention to regions which suffer from serious geographical or natural handicaps (island regions, mountain regions and sparsely populated regions);

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EN 11. Stresses that regions with permanent geographical handicaps must be a priority of the new regional and cohesion policy, particularly the most remote regions thanks to more complete implementation of Article 299(2) of the EC Treaty;

12. Stresses the need to strengthen cross-border , transnational and interregional cooperation, as it is an important factor for integration between peoples and regions;

13. Calls on the Commission, before the publication of the third report on economic and social cohesion, to make proposals concerning the future of the Objective 2 regions;

14. Calls on the Commission, before the publication of the third report on economic and social cohesion, to make proposals concerning the future of the Community initiatives;

Principles and procedures

15. Proposes that scheduling for the 2007-2013 intervention period should begin at an early date, to ensure that EU funds are available to the regions on 1 January 2007 for the start of the project, and calls on the Commission to propose a time-frame to Parliament and Council with this aim in mind;

16. Endorses the Commission’s proposal in the White Paper on ‘European Governance’ in future to carry out structural policy interventions in the form of tripartite contracts with the regions and the Member States, to introduce the principle of ‘one programme – one fund’ and to transfer more responsibility for implementation to the regions; urges in this connection the adoption of a simple, but effective, control procedure;

17. Stresses the importance of 'good governance', both in administrative and decision- making processes to ensure the strict application of the principle of subsidiarity in order to make the best possible use, in accordance with the rules, of the available budgetary resources; considers it important to enhance the partnership between the Union's institutions and regional authorities in future Member States in accordance with the proposal made by the Commission in its white paper on ‘European governance’ to implement structural-policy measures by means of tripartite contracts with the regions and Member States in future, in order to bring decisions which have a specific local impact, closer to their citizens;

18. Confirms the central statements of the White Paper on ‘Growth, Competitiveness, Employment’ presented by the Commission President, Jacques Delors, in 1993 on the link between the excessive use of natural resources and the neglect of human resources and their development; stresses, nevertheless, the need to promote territorial cohesion in Europe so as to prevent the population, economic activities, employment and investments from being concentrated in the wealthier central zones of the European Union;

19. Reiterates that future cohesion policy must be based on the principles of solidarity, partnership and additionality;

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EN 20. Calls on the Commission, before the publication of the third report on economic and social cohesion, to make proposals for rendering EU policies considerably more consistent, to the benefit of economic and social cohesion;

21. Urges the EIB to increase its commitment to economic and social cohesion policy, by contributing more resources to structural and regional policy actions;

Spatial aspects

22. Confirms that the European Spatial Development Perspective could make a positive contribution to the development of a polycentric, harmonious and balanced model of the European area;

23. Draws attention to the need for regional and cohesion policy to promote polycentric and balanced development of Community territory in accordance with the guidelines set out in the European Spatial Development Perspective (ESDP) and thus to contribute to the objective of economic, social and regional cohesion of the European Union;

24. Instructs its President to forward this resolution to the Council and Commission.

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EN EXPLANATORY STATEMENT

Cohesion remains a core policy, but must be revamped The Commission has set itself the task of addressing the challenge of enlargement in good time on issues involving economic and social cohesion within the European Union, in accordance with Article 158 of the EC Treaty. With its second report on economic and social cohesion (COM(2001) 24) of January 2001 the Commission launched the discussion on a reform of European structural policy. Of the 12 candidate countries, 10 are Central and Eastern European countries undergoing transformation. In the next few years the European Union will be confronted with an unprecedented internal disparity of income. This will require a substantial commitment to integration and solidarity by all EU Member States. Despite the strain this process is expected to cause, the need for a future European cohesion policy has not been questioned in discussion forums so far.

There is general agreement that 0.45% of the GDP of the EU should continue to be set aside for this purpose. However, some recipient countries consider that this share of the EU budget will be insufficient. Your rapporteur cannot accept this view and would argue that the focus should instead be more on the quality of aid and its lasting impact for the development of regions in need. This position is justified by a study commissioned on the economic impact of aid in Objective 1 regions which comes to the conclusion that cohesion policy interventions have not had the desired effect. 24.2% of aid for the six least-developed regions does not benefit these regions, but is diverted to substantially more wealthy regions. In Greece, 42.6% of aid – that is just under half of aid – is not used for the purpose for which it is intended. In the light of these figures, cohesion policy aid must be reviewed as a matter of urgency.

1. Cohesion policy is a European policy for regions and not for states The reforms in the regional structures in the candidate countries – which are often recent – and the substantial shortcomings which continue to beset the construction of regional administrations in these countries have led some Member States to question the regions as the appropriate territorial unit for cohesion policy interventions. Your rapporteur considers that this approach is misguided. National criteria overlook the sharp disparities that actually exist between individual regions within a Member State. They deprive the regions of responsibility for their own development, exclude the regions as a partner of the EU and accentuate the trend towards a renationalisation of European structural policy.

However, your rapporteur supports the Commission which in the White Paper on ‘European Governance’ (COM(2001) 428) proposes that target-based administrative contracts should be introduced in European structural policy between the Member States, the regions or localities and the Commission in order to implement planned interventions.

2. The progress report as the first evaluation of the discussion on the future of European cohesion policy The first progress report is based on the Commission’s formal declaration on the occasion of a meeting of the Council of Ministers on 11 June 2001 to continue the work (on the second cohesion report of January 2001) and to report to the Council on a regular basis. As far as its contents are concerned, the report summarises or assesses the forum on cohesion organised by

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EN the Commission on 20 and 21 May 2001 on the basis of the second cohesion report.

Under Article 159(2) of the EC Treaty, the Commission is obliged to submit a report on cohesion to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions every three years. The second report on cohesion in particular contained options and the familiar ten questions for public debate on the future of cohesion policy. The third report on cohesion which is due in January 2004 is intended, as provided for under Article 159 of the EC Treaty, to include appropriate legislative proposals. Overall, therefore the cohesion reports may be seen as a kind of white or green paper preparing legislative initiatives in the field of regional policy.

The intended purpose of this draft report drawn up by the rapporteur within the framework of a non-legislative consultation procedure is to enable the European Parliament to intervene in the debate with a contribution of its own, i.e. to agree to its own guidelines on reshaping European cohesion policy and to present these guidelines before the Commission draws up its third report on cohesion. In the present phase, the essential thing is to establish the basis for future cohesion policy rather than to flesh out the details.

Against this backcloth, your rapporteur considers that the European Parliament should develop a clear position on the following issues: 1. What should be the substance and objective of a future cohesion policy? 2. What basic preconditions are necessary in order to ensure the future of cohesion policy in an enlarged Union? 3. What type of partnership is necessary, taking into account the subsidiarity principle, in order to ensure an effective cohesion policy in future? 4. Which regions with which deficits should a future cohesion policy concentrate on? 5. What role does cohesion policy play in connection with the reforms of other EU policies?

3. Partnership as a means of achieving a simplification and greater efficiency in regional policy In the discussion on the report on cohesion criticism about the content of the present cohesion policy has been almost non-existent. On the other hand, repeated complaints have been made that excessive administrative costs impaired the effectiveness of aid. Although the Commission had made this a key area for reform as early as Agenda 2000, the situation has not improved in the new regulation.

Your rapporteur proposes three basic pillars for a reform which will contain a tangible simplification of administrative procedures.

1) The drawing-up of a well-thought-out planning document in good time by the regions concerned with the involvement of all the regional and local players. This document should not be geared solely to the objectives of European intervention nor be drawn up for this purpose, but rather serve as a basic action plan for the development of the regions concerned in general. If a region has a clear idea of its own development objectives and has identified its deficits, the determination to achieve development is based not only on intervention by the EU, but on the potential and particular characteristics of the region concerned. EU intervention is a factor in development aid and not an end in itself. It can be incorporated in a

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EN targeted manner and without undue expense in the existing strategy of the region. However, if this is to work, the Commission for its part must develop a flexible system of aid.

2) A tripartite agreement between the Commission, the Member States and the regions concerned must be the centrepiece in a process of implementation in which the region assumes responsibility for internal development processes. The Commission and the Member States will carry out external controls, at the same time ensuring that their policy does not jeopardise the region’s own development plans. The Commission will simplify the procedure for recognising payment agencies for projects and at the same time ensure a transparent procedure.

3) Structural policy intervention should take place according to the principle ‘one fund – one programme’ and permit many different measures and forms of intervention: the region concerned can choose the most appropriate of these for its existing plan. The advantage of this approach is that it can be used both for disadvantaged regions and for regions that are more prosperous but face specific problems.

4. Sustainable development must be the goal of cohesion policy interventions The second report on cohesion chooses to highlight the successes achieved; nevertheless, it is clear that despite substantive amounts of aid, unemployment is continuing to increase in the EU and the growth in GDP rates has not had sufficient impact on job creation. It is time therefore to rethink the underlying rationale of aid. As early as 1993 Commission President Jacques Delors noted in the White Paper on ‘Growth, Competition, Employment’ (COM(93) 700) that the economy should be restricted to be made more environmentally conscious and socially just and should be geared to sustainable development. European cohesion policy continues to suffer from a failure to respect this principle and the Commission’s inability to draw up practical criteria for sustainability.

The Commission is urged to develop methods (for example, the performance reserve or the promotion of ‘best practice’) and thereby exercise more stringent substantive controls which would not entail any great administrative costs by means of quality competition.

5. Focusing aid on disadvantaged regions while ensuring a soft landing for the others Your rapporteur proposes that the European Parliament adopt the following basic positions in the discussion on the practical conduct of structural policy, without naming specific figures:

- the most needy regions in the enlarged Union to receive the bulk - at least two thirds - of Structural Fund resources; these are without restriction those regions with a GDP below 75% of the average Community GDP; - all regions which owing to the fall in the Community GDP have become only statistically 'wealthy' and may further strengthen their positive development approaches in a long-term process of phasing-out to receive approximately one fifth; - approximately one tenth to be set aside for special interventions; it shall be used in special areas and underpin the best proposals for addressing specific problems; it shall also bring regions with comparable problems in contact with each other.

Even in countries with severely disadvantaged regions, EU intervention shall not exceed 4%

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EN of national GDP, in order not to overstretch the ability to absorb this aid.

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EN 6. The EU of 27 Member States will become an EU of 25 plus 2 between 2007 and 2013 Your rapporteur assumes that Romania and Bulgaria will accede to the European Union during the funding period 2007-2013. She also supports the Commission proposal that planning documents should be drawn up before the beginning of the planning period. In the case of Romania and Bulgaria a special fund should therefore be set up to address the specific problems facing these countries in a targeted manner before accession. This fund would have to be organised separately from a budgetary point of view from heading 2 for structural measures (comparable to heading 8 in the financial plan 2000-2006).

The special fund would also make it possible to calculate the average GDP of the EU of 25 Member States, which would mean that the statistically adverse effects on current EU regions with Objective 1 status would not be so marked as would be the case if GDP were calculated on the basis of an EU with 27 Member States, including Bulgaria and Romania.

7. Other EU policies must be subordinated to the objective of cohesion The relatively poor record of progress made by disadvantaged regions compared to the EU average set out in the second report on cohesion is due primarily to the fact that the other EU policies, such as employment policy, agricultural policy, transport policy and the non-existent equalisation policy are not subordinated to the cohesion objectives of a sustainable regional development. Fledgling development initiatives in disadvantaged regions are often stymied by the shortcomings of other EU policies. The requirement that such policies should be completely subordinated to the main objectives of cohesion would allow the regions successfully to implement their specific development plan with the aid of EU structural policy and to free themselves of the drip-feed of aid.

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EN 2 October 2002

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS, HUMAN RIGHTS, COMMON SECURITY AND DEFENCE POLICY

for the Committee on Regional Policy, Transport and Tourism

on the first progress report from the Commission on economic and social cohesion (COM(2002) 46 – C5-0198/2002 – 2002/2094 (COS))

Draftsman: Paavo Väyrynen

PROCEDURE

The Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy appointed Paavo Väyrynen draftsman at its meeting of 22 April 2002.

The committee considered the draft opinion at its meetings of 11 September 2002 and 30 September 2002.

At the last meeting it adopted the following conclusions by 49 votes to 1 against, with 1 abstention.

The following were present for the vote: , chairman, Baroness Nicholson of Winterbourne and Christos Zacharakis, vice-chairmen, Paavo Väyrynen, draftsman, Ole Andreasen, Alexandros Baltas, Bastiaan Belder, André Brie, Rosa M. Díez González, Giovanni Claudio Fava (for Glyn Ford), Concepció Ferrer (for John Walls Cushnahan pursuant to Rule 153(2)), Hélène Flautre (for Per Gahrton), Pernille Frahm (for Luigi Vinci), , Gerardo Galeote Quecedo, Vasco Graça Moura (for Gunilla Carlsson), Ulpu Iivari (for Jannis Sakellariou), María Izquierdo Rojo (for Klaus Hänsch pursuant to Rule 153(2)), Georg Jarzembowski (for ), Giorgos Katiforis (for Mário Soares), Efstratios Korakas, Joost Lagendijk, Catherine Lalumière, , Hanja Maij- Weggen (for Jacques Santer), Minerva Melpomeni Malliori (for Véronique De Keyser pursuant to Rule 153(2)), Cecilia Malmström, Pedro Marset Campos, Emilio Menéndez del Valle, Philippe Morillon, Sami Naïr, Pasqualina Napoletano, Arie M. Oostlander, Reino Paasilinna (for Magdalene Hoff), (for Franco Marini), Jacques F. Poos, Luís Queiró, José Ignacio Salafranca Sánchez-Neyra, Ulla Margrethe Sandbæk (for Paul Coûteaux), Amalia Sartori, Jürgen Schröder, Elisabeth Schroedter, Ursula Stenzel, The Earl of Stockton (for David Sumberg), Hannes Swoboda, Charles Tannock, Maj Britt Theorin (for Raimon Obiols i Germà), Demetrio Volcic, , Jan Marinus Wiersma and Matti Wuori.

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EN CONCLUSIONS

The Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy calls on the Committee on Regional Policy, Transport and Tourism, as the committee responsible, to incorporate the following points in its motion for a resolution:

1. calls on the Commission and the Council to create the necessary conditions for the successful integration to the EU of new Member States, giving priority to policies which aim at diminishing economic disparities and consolidating the common foundation of values within the enlarged Union and at promoting the catching-up process, thus allowing for a speedy economic convergence;

2. reminds of the long term perspective and the evolutive and inclusive nature of the enlargement process; stresses the need to promote economic and social cohesion also beyond the external borders of the enlarged Union; reminds of the right of every European country fulfilling the membership criteria to join the Union and stresses the need to assist them in preparing for membership;

3. considers it necessary to maintain at an adequate level the cohesion efforts targeting the least developed regions which are currently benefiting from structural funds, so that their further development is not hampered by enlargement; this would prove the continuing solidarity which should be preserved in the enlarged Union as one of foundations of the EU's political integration project;

4. observes that Bulgaria and Romania have stated that their own objective is to accede to the EU only in 2007, i.e. after the programme which is being prepared for the 2007-2013 period has been finalised; proposes, in view of the considerable backlog in their development, that a special ‘phasing-in’ structural programme (similar to that which currently exists for budget heading 8) be instituted for these two countries which concentrates on the specific development difficulties and is linked to the pre-accession measures;

5. considers it crucial to promote the cross-border dimension of cohesion policy giving more emphasis to the INTERREG programme in the internal cohesion policy ; at the external borders of the enlarged Union, PHARE, TACIS and INTERREG programmes should be used effectively in order to improve economic and political stability, to protect the environment and to reduce immigration pressures;

6. considers it important to find a way to combine efficient border control on external borders of the enlarged Union with unimpeded legitimate cross-border travel and trade to preserve the historic and cultural links which bind in particular the Ukraine but also Russia, Moldova and the Belarus, to their Western neighbours;

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EN 7. insists on the necessity of carefully adapting Community assistance within the cohesion policy framework to the specific needs and socio-economic realities (which have resulted from their unique history and economic and political transition) of future Member States so that it has a maximum impact on economic competitiveness, the living standards of the population and sustainable economic development;

8. reminds the candidate countries of the imperative need to further improve their administrative capacity and co-ordination mechanisms in their preparations for the management of the structural funds; calls on the Commission to make the planning and implementation of the cohesion policy more effective and more flexible ; considers it would be appropriate to gradually decentralise the management of funds provided that this is combined with an effective and rigorous monitoring of their use;

9. stresses the importance of "good governance", both in administrative and decision- making processes to ensure the strict application of the principle of subsidiarity in order to make the best possible use, in accordance with the rules, of the available budgetary resources; considers it important to enhance the partnership between the Union's institutions and regional authorities in future Member States in accordance with the proposal made by the Commission in its white paper on ‘European governance’ to implement structural-policy measures by means of tripartite contracts with the regions and Member States in future, in order to bring decisions which have a specific local impact, closer to their citizens.

10.considers it crucial to explore the need for a Community legal instrument for cross-border and extra-territorial cooperation, including its financial implications; calls on the Commission to increase the overall amount dedicated to border regions with applicant countries (within the framework of the programme ‘Community Action for Border Regions’), the majority of which are facing a dramatic economic and social situation.

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EN 2 October 2002

OPINION OF THE COMMITTEE ON AGRICULTURE AND RURAL DEVELOPMENT for the Committee on Regional Policy, Transport and Tourism on the first interim report from the Commission on economic and social cohesion (COM(2002) 46 – C5-0198/2002 – 2002/2094(COS))

Draftsman: Carlos Bautista Ojeda

PROCEDURE

The Committee on Agriculture and Rural Development appointed Carlos Bautista Ojeda draftsman at its meeting of 1 February 2002.

It considered the draft opinion at its meeting(s) of 11 July 2002, 11 September 2002 and 2 October 2002.

At the last meeting it adopted the following conclusions unanimously.

The following were present for the vote: Joseph Daul (chairman), Albert Jan Maat and María Rodríguez Ramos (vice-chairmen), Carlos Bautista Ojeda (draftsman), Gordon J. Adam, Danielle Auroi, María del Pilar Ayuso González (for Michl Ebner), Sergio Berlato, Giorgio Celli, Arlindo Cunha, Francesco Fiori, Christos Folias, Georges Garot, , Liam Hyland, Salvador Jové Peres, Hedwig Keppelhoff-Wiechert, Wolfgang Kreissl-Dörfler (for Jean-Claude Fruteau), Xaver Mayer, Emilia Franziska Müller (for Agnes Schierhuber), Karl Erik Olsson, Ioannis Patakis (for Christel Fiebiger), Isidoro Sánchez García (for Giovanni Procacci), Giacomo Santini (for Neil Parish), Dominique F.C. Souchet, Robert William Sturdy and Eurig Wyn (for Friedrich-Wilhelm Graefe zu Baringdorf).

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EN SHORT JUSTIFICATION

Cohesion and the CAP

Article 159 of the Treaty states that the Community shall take into account the objective of the economic and social cohesion in the formulation and implementation of all of its policies. Furthermore, Article 16 of the Treaty includes the notion of territorial cohesion.

The Second Cohesion Report stressed that as things stand CAP aids tend to benefit the big producers and the more developed agricultural areas. This may be explained by the sectoral character of the CAP's first pillar and by the fact that the CAP plays the role of regulating and stabilising the markets, over and above that of supporting the social, territorial and environmental functions of agriculture. It would therefore be unrealistic to try to base the CAP strictly on criteria of social and territorial cohesion. It would, however, be equally erroneous to keep the CAP exactly as it is, in circumstances in which the productive function has priority under the first pillar and the cohesion principle applies only to the second (rural development) pillar.

Multifunctional agriculture, the key to a more balanced and sustainable CAP

The EU's successive declarations in favour of multifunctional agriculture are based on the option of formulating a new CAP which will effectively promote the interests of farmers in their dual role as producers and as stewards of goods and services of public interest deriving from agricultural activity. It has to be pointed out, nonetheless, that the EU has not yet succeeded in drawing up a support model that would be compatible with the multifunctional approach. The CAP continues to give priority to supporting farmers on the basis of production levels, and this accounts for the increasing volume of criticism it is receiving from the European public.

In this context, the introduction of a support model aimed at encouraging the multifunctional approach would have four objectives: a) to reduce the CAP's deficit as regards sustainability and social and territorial cohesion; b) to achieve a closer fit with the agricultural and rural structures of the applicant countries; c) to confer fresh legitimacy on the CAP; and d) to facilitate the multilateral negotiations now under way for the signature of a new agricultural agreement.

The present circumstances are also affecting all developed countries. The OECD has confirmed the general failure of farm support to meet the needs of small multifunctional producers: in the OECD, 25% of farms receive 40-75% of all support, 43-79% of price support and 26-65% of direct aids. It is therefore vital that the forthcoming WTO round should recognise agricultural multifunctionality within the category of non-commercial considerations and enable specific aid for small farmers to be included in the 'Green Box'. The EU will not be able to achieve this goal unless it shows proof of its willingness to reform the existing CAP. The revision of Agenda 2000 and the reform scheduled for 2006 must make further progress in the definition of specific aid for multifunctional agriculture. This will require the introduction of new forms of aid for small producers, the further development of modulation, and the general extension of rural conditionality throughout its market aid

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EN arrangements.

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EN Cohesion of rural areas after enlargement

With a view to the coming enlargement and the debate on the future of cohesion policy after 2006, the interim report draws attention to a number of circumstances which have absolutely to be dealt with:

- enlargement will be a major challenge for cohesion, as it will increase regional inequalities. Meeting this challenge will necessitate raising structural credits over 0.45% of GDP and operating a flexible interpretation of the limit of 4% of GDP as regards absorption capacity;

- in a Union of 27 there will be 53 new regions with GDP levels of less than 75% of the Community average; agriculture accounts for more than 5% of employment in 47 of these and for more than 10% in 29;

- in the enlarged Union of 27, average Community GDP will be 18.5% lower than it is now. This will mean that 17 of the existing Objective 1 regions - all with agriculture accounting for over 5% of employment and with severe depopulation problems - will cease to qualify under that heading.

In view of these factors, your rapporteur believes that the Commission will have to devise a new classification of rural areas to take account of geographical, natural and regional disadvantages, levels of rural activity and depopulation levels. He also considers that a transition period will be essential for the future 'ex-Objective 1' regions. Accordingly, he proposes the creation of a rural cohesion fund, as well as closer coordination between rural development policies and structural actions.

Finally, your rapporteur considers that, in addition to the challenge which enlargement will represent for the Objective 1 rural areas, account will have to be taken of the adverse consequences for those areas of the association agreements signed with the Mediterranean basin countries.

CONCLUSIONS

The Committee on Agriculture and Rural Development calls on the Committee on Regional Policy, Transport and Tourism, as the committee responsible, to include the following conclusions in its motion for a resolution:

1. Considers that enlargement will increase regional inequalities, and stresses that agricultural restructuring in the applicant countries will lead to higher levels of unemployment and social dislocation, which will necessitate measures to support subsistence agriculture and rural and regional development, with a view to achieving economic and social convergence;

2. Notes that cohesion policy played an important part in earlier enlargements of the EU, and is still yielding significant results; calls therefore for cohesion policy to be prioritised in the case of the future enlargements also, in particular to redress the social and economic

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EN imbalance that exists in the candidate countries;

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EN 3. Points out that in an enlarged Union of 27 Member States there will be 53 new regions with GDP levels of less than 75% of the Community average, and that agriculture will account for over 5% of employment in 47 of these regions and for more than 10% in 29;

4. Notes that the 'statistical effect' of enlargement will lead to the exclusion from Objective 1 of some of the currently eligible regions, and fears that this could have a highly damaging impact on the economic and social balance in the countryside in the regions affected;

5. Recalls that in the existing Union of 15 Member States there are 46 Objective 1 regions, most of which are rural, and is concerned that 17 of these regions will be excluded from Objective 1 following enlargement; notes that these are regions in which agriculture accounts for over 5% of employment, and that their real convergence levels will be affected and their problems of depopulation and isolation intensified; calls on the Commission, therefore, to propose, before 2006, compensatory measures to offset this situation;

6. Calls for the establishment of a classification of rural areas, with differentiated cofinancing levels and broken down into categories in such a way as to pinpoint the diversity and structural particularities of the EU's rural areas, taking account of their levels of rural activity and depopulation and their geographical and natural disadvantages;

7. Advocates closer coordination between the EAGGF rural development programmes and the actions financed from the Structural Funds; calls for the creation of a rural cohesion fund, with a view to bringing new ideas to the 2006 reform and involving regional and local authorities and industry representatives;

8. Believes that the revision of Agenda 2000 and the 2006 reform of the CAP must introduce, under the first pillar, specific aid for family-type, multifunctional forms of farming, with a view to remedying the deficit in terms of sustainability and social and territorial cohesion currently affecting the CAP and conferring enhanced legitimacy on agricultural aid;

9. Calls for the implementation of the rural development programmes to take place on the basis of more contractual modes, so as to ensure the mobilisation of the highest possible level of human resources locally while giving special priority to the establishment of young people;

10. Regrets the lack of Community aid for intergenerational transfers, and calls, in this connection, for a specific aid for young farmers under the second pillar of the CAP, since they hold the key to prosperity in the countryside;

11. Calls for specific measures in support of small farmers, in view of their key role in ensuring multifunctionality and sustainability in the countryside; believes that this specific support must be directed primarily towards the development of market-oriented activities appropriate to the character of rural areas; calls for the compulsory modulation of sectoral aid in the interests of rural development and food quality, and for the general extension of rural conditionality under the first pillar of the CAP;

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EN 12. Believes that the current WTO round must recognise agricultural multifunctionality within the category of non-trade-distorting considerations;

13. Stresses that enlargement will pose a challenge not only to the Objective 1 rural areas but also to certain association agreements with third countries, which, while they are desirable from the viewpoint of promoting trade, in some cases fail to respect the principle of Community preference; insists, therefore, that this principle must be redefined in the general context of cohesion;

14. Takes the view that structural aid for rural areas must, in particular, stimulate entrepreneurial activity of a kind that results in greater added value for rural areas; believes that this could include added value from local and regional products, efforts to meet stricter quality requirements, and the establishment of enterprise-based and market- oriented (new-generation) agricultural cooperatives.

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