THE EUROPEAN COUNCIL

PARIS 12-13 MARCH 1979

Documents in the dossier include:

The European Council in Paris Reproduced from the Bulletin of the European Communities, No. 3/1979

Effective entry into force of the European Monetary System Reproduced from the Bulletin of the European Communities, No 2/1979 1. The European Council in Paris

Paris European Council

sensus regarding monetary compensatory Entry into force of the EMS, amounts reached at the Council meeting on economic and social situation, agriculture on 5 and 6 March. The matters agricultural policy, discussed by the Heads of State or Govern- energy problems ment were set out as usual in the 'Conclu- sions of the Presidency' . Comments on the proceedings were made at press conferences 1.1. The European Council, which met in and in statements immediately after the meet- Paris on 12 and 13 March with Mr Giscard ing and before the European Parliament two Estaing presiding, discussed a series of days later. topics which have come up fairly frequently at previous meetings, notably economic growth and employment, and the common Conclusions of the Presidency agricultural policy, but also the energy issue which has acquired renewed importance and 1.3. The ' Conclusions of the Presidency has become an important factor in the other released at the end of the European Council items discussed by the Council. The other were as follows: outstanding achievement was, of course, the European Council had a broad entry into force of the European Monetary The exchange of views on the situation in the System, which had been held up since December 1978. Community in the light of the latest develop- ments on the world political and economic The Commission had made a substantial con. scene. It noted that these developments tribution towards preparations for the Euro- involved new risks and considerable uncer- pean Council, in which it participated, by tainty. The Community must face them resol- submitting a series of communications on the utely. By further strengthening its cohesion economic and social situation in the Com- and improving its internal equilibrium, it will munity, the utilization of Community instru- be able to make an effective contribution to ments and the increased convergence of international economic development and the economic performance in the Member States consolidation of world peace. employment and the social policy, the Com- munity energy policy, and also the paper on Economic and social situation the future .development of the common agricultural policy, ' which was intended for 1.4. The European Council noted that the December 1978 meeting but could not be several positive factors, discussed until three months later. although there were the economic and social situation in the Community remained unsatisfactory in vari- ous respects. The outcome of the European Council in Paris 1 Bull. EC 11-1978, point 3. Bull. EC 2-1979, preliminary chaptt:r. 1.2. On the first day the Council issued a 3 Tht: numbt:ring at tht: bt:ginning of t:ach main ht:ading communique on the introduction of the Euro- of tht: 'Conclusions of tht: Prt:sidt:ncy' has bt:t:n addt:d by pean Monetary System/ following the con- tht: t:ditorial staff of tht:Bullt:tin.

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Owing, in particular, to the concerted action to substantial progress towards opening up laid down by the European Council in July the Japanese market to imports of manufac. 1978, which should be continued unflinch- tured goods from the Community. The Euro- ingly, a resumption in growth has been pean Council also acknowledged the import- observed in most Member States. It should ance of the implementation of the Japanese continue during the coming months unless Government s expressed intention to increase the world economic situation is disturbed by its official development aid significantly. a continuation of the tensions now being experienced on the oil market. In this respect In spite of the resumption in growth, the the European Council asked the Council employment situation continues to be (Ministers for the Economy and for Finance) major anxiety. The continuation of the to examine the possible consequences of these efforts made to improve economic structures tensions on the Community s economic pros- is an essential factor for increasing employ- pects. ment. These efforts will have to be sup- plemented by specific measures designed to While the rise in prices slowed down in 1978 help to reduce unemployment. and the differences between the rates of infla- tion in the various Member States were reduced, further tensions have becomeappa- Employment and social policy rent in the first months of 1979. The fight against inflation must therefore continue to 5. The European Council devoted a be the first objective of economic policy in large part of its proceedings to the employ- the Member States, and primarily of those ment situation and social policy. It acknow- where prices are still rising fast. Its success is ledged that priority should be given to improving the employment situation an essential condition for establishing the , which basis for stable and lasting growth. The Euro- continues to give rise to concern. pean Council also noted that growth is cur. The European Council emphasized the rently strong in those countries with the low- importance of consultation with both sides of est rates of inflation. industry at the national and Community levels. It welcomed the contribution by the The balance of payments situation has Economic and Social Committee. The Euro- improved in several Member States. How- pean Council noted with satisfaction the ever, there are still excessive differences bet- intention of the Ministers for Social Affairs to ween the various countries , which will have take the necessary measures to improve the to be reduced. It is also likely to be com- work of the Community tripartite meetings promised by the deterioration of the world between workers' representatives' organiza- oil situation. tions, employers' representatives' organiza- In this context, the European Council noted tions and the Community. It invited both sides of industry to take the appropriate steps that trade relations between Japan and the Community continue to be seriously out of to develop their dialogue at Community level where appropriate on a sectoral basis. balance, to the detriment of the latter. It expressed the wish that the consultations The European Council confirmed the import- which the Commission has started with the ance it attached to improving youth employ- Japanese Government should lead this year ment and its wish that the Council keep the

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new aids from the Social Fund in favour of Energy this category under review. It instructed the the following measures Council to study 6. The European Council observes that , to which should help, along with others the current state of the world oil market con. improve the employment situation: firms the urgent need to implement the deci- to make training better adapted to sions taken by the Community to reduce its employment by developing staggered training dependence and contribute to an improved schemes, I.e. by coupling practical training world energy balance. obtained through the exercise of anoccupa- tion at the place of work with theoretical The Community must accordingly continue training in a training establishment, body or and intensify its action in order to reach its department; medium-term objectives and to improve its immediate situation. to limit the systematic use of overtime; to improve the employment of women by The Member States renew the undertaking encouraging diversification of the jobs open given in Bremen in 1978 to reduce the level to them and giving women greater access to of the Community s dependence on energy vocational training. imports to 50% by 1985. By that date the Community will limit its oil imports to the The European Council stressed the import- level reached in 1978. In 1979 the Commu- ance of the social measures taken by the nity and the Member States will pursue a Community in favour of workers in the iron policy designed to reduce oil consumption to and steel industry and other sectors in diffi- 500 million tonnes, i.e. around 25 million culty. tonnes less than estimated. The European Council requested the Com- mission to continue its efforts to improve the The Community and the Member States will European Social Fund' step up their efforts to make the best possible effectiveness of the coal action by directing its assistance moreselec- use of Community hydrocarbon and tively in order to meet the current employ- resources. The programmes for the produc- ment difficulties better. tion of electricity from nuclear sources must be strengthened and speeded up whenever The Council also noted the importance of a conditions so permit; the use of solar and coordinated contribution by the various geothermal energy must likewise be further Community financial instruments to the developed. intensification of the fight against unemploy- ment. With regard to energy saving, the new mea- sures taken at national or Community level The European Council requested the Council must not adversely affect the level of to report back to it at its next meeting on the economic activity in the Member States and practical measures which have been carried will therefore be aimed particularly at the out following the guidelines given above. consumption of energy by Government The European Council asked the Commission departments and public authorities, heating to submit a communication on the social and of business and residential premises and at a economic implications of concerted work- more rational use of energy by motor vehi- sharing. cles. The price policies of the Member States

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must be designed to contribute to the attain- munity, which must slow down the growth in ment of these objectives. their requirements, and by producer countries which are responsible for the balanced man. The Council (Energy) will initiate an exami- agement of their resources, thereby enabling nation of the energy policies of the Member the development of the world economy to States. As regards production, it will ensure continue. that these policies are convergent and will adopt joint objectives to support this con- In addition, the Community emphasizes the vergence. It will adopt the necessary provi- necessity of the dialogue with the producer sions at Community level to pursue the countries. It supports the statement in which development of oil. technologies, promote the the Government of Saudi Arabia calls for use of coal and nuclear energy and make use rapid consultations between consumer and of new sources of energy through an producer countries. It also supports the prop. increased research and development effort osals recently made by the President of Mex- and through demonstration projects. ico, Mr Lopez Portillo, regarding worldwide consultation on world energy problems. As regards energy saving, the Council (Energy) will ensure that the Member States The European Council emphasizes, in this policies are comparable, with particular refer- connection, the need for the Community to ence to the efforts which they make to contri- supplement urgently its approach towards bute to the solution of the current difficulties. supply problems, particularly by as extensive and accurate a knowledge as possible of the It will carry out the desired harmonization quantities of oil and petroleum products and will determine any additional means of imported into the Community, together with intervention which might be applied at Com- their prices, so that a full dialogue may be munity level. undertaken with the producers on the real To enable the Community and the Member state of the market. The European Council States to face crisis situations: invites the Council (Energy) and the Commis- sion to adopt, asa matter of urgency, all the the competent institutions of the Com- necessary measures, particularly with regard munity must finalize the Community crisis to monitoring of the market. mechanism, the principles of which were adopted in 1977; Convergence the Council (Energy) will regularly take stock of national measures. 1.7. The implementation of the EMS The European Council affirms its conviction which will constitute an important contribu- that the present tension on the oil markets tion towards the development of stable and creates a worrying situation; any worsening lasting growth in the Community, must be in this situation would constitute a serious supported by increased convergence of the danger for the world economy. economic policies and performances of the Maintaining the balance of the world energy Member States. market presupposes' major efforts by all The European Council invited the Council countries: by importing countries, in particu- (Economics and Finance) to strengthen the lar the United States, Japan and the Com- means of coordinating economic policies, on

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a proposal from the Commission. It took mental objectives of this policy, which is one note with interest of suggestions which the of the achievements in the construction of Netherlands delegation made in this connec- Europe. tion. It noted that growing imbalances on agricul. Achievement of the convergence of economic tural markets have led to an increase in performances requires measures for which expenditure on agricultural support. the Member States concerned are primarily It considered that a prices policy suited to the responsible, but in respect of which Com- situation and a search for measures adapted munity policies can and must playa support- to each type of production are likely to cor- ing role within the framework of increased rect the imbalances which have become appa- solidarity. rent on certain markets and to avoid the The European Council took note of the com- build-up of surpluses. munication which it had requested the Com- The European Council expressed its interest mission to draw up on this subject. It had an in the improvement of the agricultural struc- exchange of views on the means of arriving at tures policy, particularly in favour of the improved convergence. least-favoured regions of the Community, It emphasized the need for the Community and invited the Commission to submit addi- institutions to ensure more efficient use of the tional proposals in this sector. attain this existing instruments in order to Also, with a view to enlargement, the Council objective. hoped that the efforts to improve structures It invited the Council and the Commission to undertaken in favour of the Mediterranean examine in depth how the Community could regions would be continued so that the inter- make a greater contribution, by means of all ests of all agricultural producers in the Com- its policies taken as a whole, to achieving munity received equal consideration. greater convergence of the economies of the The European Council invited the Council Member States and to reduce the disparities (Ministers for Agriculture) to examine those between them. improvements which are necessary for the To this end, it asked the Council to examine proper functioning of the common agricul- in the light of the above guidelines, what tural policy with due regard to the objectives action should be taken on the proposals con- laid down in the Treaty of Rome.' tained in the above communication from the Commission and to submit a report at the next meeting of the European Council. Comments and statements

Common agricultural policy 9. At the end of the European Council in Paris, President Giscard d'Estaing, who 1.1. 8. The European Council had a detailed had presided over the meeting, and Mr Jen- , held a exchange of views on the common agricul. kins, President of the Commission rural policy, in the light of a communication press conference, while other statements were from the Commission. It confirmed the made, notably by Mr Callaghan, British importance which it attaches to the funda- Prime Minister.

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The initial comments duction of the EMS, there could he no ques- tion of a whole sector of the Community 10. The President of France, Mr Gis- economy being left outside the System. The card d'Estaing, stressed the importance of the EMS was not a simple joint float mechanism decision taken during the European Council for the currencies involved, backed up by an to . start up the European Monetary System. array of credit arrangements, but the ECU He also commented on the 'Conclusions of was to be a numeraire in the full sense of the the Presidency , giving an analysis of the term, which would be exchanged among the results of the meeting. central banks and in which a significant proportion of their monetary reserves would Mr Jenkins, in a brief statement, said that he be denominated. The launching of the EMS considered social policy, energy and agricul- was undoubtedly but a first step on the road ture to be areas in which the European Coun- to the eventual creation of a common Euro- cil had made significant progress. He also pean currency. In .addition, the EMS provided stressed that the entry into force of the EMS for very elaborate rules governing interven- was of fundamental importance. tion and for substantial monetary reserves of Mr Callaghan, the British Prime Minister 25 000 million ECU. emphasized the need for the countries of Mr Fran~ois-Poncet stated that the European Europe to work together to tackle current Council had not discussed the dispute bet- problems, but he restated the United King- ween the Council and Parliament on the dom position, which on various issues differs budget question. However, the Council had from that of the other Member States. In par- begun to study the new budgetary proposals ticular he criticized the common agricultural put forward by the Commission and a special policy on account of its wastefulness. With Council meeting (budget) would be held t() regard to the EMS, Mr Callaghan recognized examine them. The French Foreign Minister the need for a convergence of economic appeared to take a conciliatory line when he policies, but insisted that Member States' net said that there could be no question of inter- payments to the Community budget should fering with Parliament's prerogatives. reflect more faithfully the specific circum- stances of each country. On the question of economic growth and unemployment the European Council noted that growth in 1979 was expected to reach its Statements to the European Parliament highest level since 1976, exceeding the rate of growth expected in the United States. An improvement in the employment situation 1.11. On 15 March Mr Fran~ois-Poncet was dependent on sustained economic the French Minister of Foreign Affairs, speak- restructuring measures and also on the fol- ing in his capacity as President of the Coun- lowing specific measures in particular: youth cil, made a statement to the European Parlia- employment schemes sandwich courses ment on the outcome of the European restrictions on overtime, improved employ- Council. ment opportunities for women. He said that since 13 March the EMS had at The Heads of State or Government stressed last been operating. On the agricultural issue, the importance of social measures by the which was the reason for the delayed intro- Community tp assist industries in difficulty,

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in particular the steel industry. The Com- resources, and the use of nuclear energy and munity financial instruments should be new forms of energy. The Energy Ministers coordinated in order to combat unemploy- would have to ensure the convergence of ment. The Commission has been asked to Member States' production policies and agree forward to the Council a communication on on common objectives. In addition, the Euro- the social and economic implications of reor- pean Council decided that the French Gov- ganizing working hours. ernment should make contact with the oil producers with a view to establishing the pro- The President of the Council stated that the ducer-consumer dialogue desired by Saudi European Council had also discussed the con- Arabia. vergence of the economic policies of the Member States. Community policies should Finally, President Giscard d' Estaing had sub- be a reinforcement for national action rather mitted to the European Council a proposal than a substitute for it; better use must be fora forum of European, African and Arab made of the Community instruments avail- countries which would seek to create the type able and funds must be increased. of mutual solidarity called for in view of their shared economic interests and their desire for Referring to the common agricultural policy independence. The super powers have estab- Mr Fran~ois-Poncet said that the European lished between themselves a close network of Council had reaffirmed its belief in the pol- contacts, which extends to an objective icy, though acknowledging that it had its alliance of interests in different spheres. The faults, particularly that it was inclined to cre- European African and Arab countries ate an imbalance on the markets resulting in according to Mr Fran~ois-Poncet, should increased expenditure in agricultural price endeavour to do the same. The European support. The solution therefore was to have a Council had approved this suggestion and prices policy to match the situation and to preliminary contacts would be made. take appropriate measures for each product. Further structural improvement in the Mediterranean regions was also necessary. 1.12. Mr Roy Jenkins, President of the The Agriculture Ministers should study, in Commission, expressed-as he had done in the light of all this, how the common agricul- Paris-his immense satisfaction at the launch- tural policy might be made to function more ing of the EMS and reiterated the importance smoothly. which the European Council had attached to the convergence of economic policies and The European Council also agreed on the social problems. first guidelines for a common energy policy, based on the harmonization of national mea- Mr Jenkins also expressed the desire to see a sures supplemented where Community common energy policy introduced and, while involvement might be appropriate, by the recognizing the need to improve the opera- adoption of common measures. On a practi- . tion of the common agricultural policy which cal level, it was proposed to reduce oil waS currently experiencing problems due to imports by 1985 to the 1978 level (rate of imbalances on the markets and the financing dependence to fall from 56 to 50%). This of surpluses, expressed satisfaction that the would be achieved in particular through European Council had confirmed the funda. energy savings, the development of domestic mental objectives of the policy.

Bull. EC 3-1979 " ,_ \-".,- """'"

,-,_.i1iW'- Effective entry into force of the European Monetary System'_"'0_.

The European Monetary System (EMS)-which the European Council decided to establish when it met in Brussels on 4 and 5 December 19781 began effectively operating on 13 March. The decision was taken by the European Council in Paris on 12 and 13 March. The following communique was issued: Noting that all the conditions had now been met for the implementation of the exchange mechanism of the European Monetary System, as defined at the previous meeting of the Council on 4 and 5 December 1978, the European Council, meeting in Paris on 12 March 1979, resolved to implement it as from Tuesday 13 March 1979 as soon as the exchange markets opened.' This was made possible by France s decision to withdraw its reservation on the adoption of the regulations for implementing the new system/ following the Council meeting on agriculture on 5 and 6 March, in the course of which a broad consensus emerged on various aspects of a package of agri-monetary measures. The main points of the agreement related to the dismantling of existing monetary compensatory amounts and the procedure to be followed in respect of new MCAs.

Bull.. EC 12-1978, point 1.1.11. Bull. EC 12-1978, points 1.1.4 and 1.1.5. Point 2. 1.55.

Bull. EC 2- 1979