Approval of the Minutes
President
The Minutes of yesterday's sitting have been distributed.
Are there any comments?

Janssen van Raay
To clarify the Minutes, Mr President, my group would like you to invite Mr Sorgdrager, as President-in-Office of the Council of Ministers of Justice, to make a statement to Parliament concerning the 368 cancelled provisions. This invitation is a point of order. Was it just the previous Dutch Government that was so negligent, or has the same thing happened in other Member States?

Miller
Mr President, in yesterday's Minutes my name is not recorded as being here. That is not a fault of the parliamentary secretariat; unfortunately it is my mistake. I came down to sign in about 8.30 p.m. only to find that the session was over. Would it be possible to record my presence here yesterday?

President
Subject to approval by the Quaestors, Yes.

McMahon
It is not a point of order Mr President, it is on the Minutes. It is on the first page of the Minutes, the point made by Mr Macartney on Norwegian salmon.
Mr Macartney and I, at the sitting of 29 May, raised the question of whether the Commission would be prepared to make a statement about the agreement which it was negotiating and which this House had not seen. We raised it again yesterday. The President said he would ask the Commission. I want to know whether Sir Leon Brittan, who has been the invisible man in this case as far as Parliament is concerned, if his services or if the Commission have come back to the President and said when they are prepared to make a statement on this Norwegian salmon issue.
It is a very serious issue for Scotland and Ireland and many other states of the European Union. It raises a very serious principle in that a non-member state such as Norway is getting better treatment than the Union itself.

President
To the best of my knowledge, the answer is No, the Commission has not yet come back.

Fabre-Aubrespy
Mr President, I should like to refer to the subject of item 6, paragraph 4, of the Minutes, on the membership of Parliament. It says that the President announced that four of our colleagues had been appointed as members of the French Government and that pursuant to Article 12 of the Act concerning the election of representatives of the European Parliament by universal suffrage, Parliament established these vacancies.
This is incorrect given that the French Constitution lays down a 30-day period for (MPs and) MEPs invited to join the government to decide whether to remain MEPs or accept ministerial responsibility. It is therefore not correct to establish these vacancies but we should wait, in accordance with the French Constitution, for them to decide, i.e. for thirty days.

President
As you know, European law is of a higher order than national law and European law on direct elections says that when you are elected to one of the other institutions, you cease to be a member of the previous institution of which you were a member. So whatever French law says, the European law is clear and their resignations have to be accepted.

Ford
It concerns the Minutes, Mr President. I have no point to make on the Minutes because I cannot get a copy - they have not produced enough. Can you ask them in future to produce enough copies so that we can all look at them, rather than the first few people in the queue?

President
We will do that but one way of stopping points of order on the Minutes is not to distribute them.

Ewing
Mr President, could I follow on the statement yesterday from Mr Macartney and today from Mr McMahon and ask if you, Sir, will personally ask Commissioner Leon Brittan to come here, given that he seems to have got his way against the wishes of the Commissioner for Fisheries, the Committee on Fisheries, and indeed the Commission. And in view of the fact that there is at stake a fragile industry in Scotland and Ireland, a whole industry in the most fragile areas.

President
The agenda is a matter for the Conference of Presidents.

Posselt
Mr President, I wish to make a point concerning Question Time. At the last plenary I put a question that was not reached and had therefore to be answered in writing. My question concerned the then forthcoming Council meeting on 26 May. I received an answer yesterday, dated 4 June, and I must protest about that. I would ask that, in future, answers be sent out immediately.

President
You have protested but, in fact, we are on the Minutes.

Schiedermeier
Mr President, although I took part in yesterday's vote, I omitted to sign in, thus neglecting the second most important duty of a Member. Could I ask you to add my name to the list of Members present?

President
Again, subject to the approval of the Quaestors.

Sturdy
Mr President, I am afraid to say that I did sign the voting list. Really I was making a point of order on page 17 of the Minutes. Yesterday we discussed whether my report should be dealt with at a later date. I asked the President if I could speak on it. I have pressed the button and it appears that it does now work but yesterday it failed to work. We have an electronic system and I think we should use it; we should not need to stand up and flail our arms about like windmills. I would very much have liked to have spoken on that particular position yesterday.

President
I am told that you should also press the button. This is useful because as people no longer sit in allocated seats, we then know their names. It is also useful to raise your hand.

Tomlinson
Mr President, I am reluctant to take the floor but it is in response to something you said...
... in answer to an earlier question. You said: ' the agenda is a matter for the Conference of Presidents.' We should not allow that to become part of the mythology of this House. The agenda is for the Conference of Presidents to recommend but always for this House to decide.

President
You are quite right but the Conference of Presidents makes the initial recommendation and the House approved the agenda on Monday at 5 o'clock. It is now Tuesday in case people have not noticed.
(Parliament approved the Minutes)

Teverson
The week before last three Members of this Parliament - Angela Billingham, Edward McMillan-Scott and myself - wrote to the President's Office to ask for urgent action to be taken on behalf of a number of citizens whose properties in Spain have been wrongly seized by banks - one of those citizens being my own constituent, Mr Frank Clark. We have had no reply as such from your office - no doubt due to an oversight. I would ask that your office help us to urgently respond and to show how this institution can be a defender and fighter for our citizens' rights where wrongs have taken place, particularly in an area which is part of the single market and European citizenship. We ask for your assistance on that case.

Billingham
Mr President, I rise to confirm what has just been said by Mr Teverson. I am sorry that Edward McMillan-Scott is not in the Hemicycle this morning because he has been dealing with this matter for over 15 years. A bad situation is now a desperate situation, with properties actually being sold as we speak. We have asked for intervention. It would appear that the Spanish authorities are running rings around the European laws and this is a quite disgraceful state of affairs. I seek the assistance of the President and of all our colleagues in this Hemicycle.

President
I will ask the President to draw this matter to the attention of the Spanish authorities.

Decision on urgency
Aelvoet
Mr President, ladies and gentlemen, we have received an urgent request to supply macrofinancial aid to Bulgaria and the Former Yugoslav Republic of Macedonia. However, the Committee on External Economic Relations, which is responsible for this dossier, has not yet had the chance to consider it, and this has also meant, of course, that the Committee on Foreign Affairs has not been able to deliver its opinion either. These are politically sensitive situations in which we would normally make macrofinancial aid dependent on a number of conditions, and I would therefore feel it a great pity if it were to be rushed through the Committee on External Economic Relations this week and then voted on without a debate. I think it would be perfectly feasible to deal with it at the July part-session instead, so it should be put on hold until Parliament has the chance to say what it thinks, as indeed it should.

President
I give the floor to the Commission to defend the proposal if it so wishes.

de Silguy
Mr President, the Commission wishes to insist on the request for an emergency procedure. As far as the former Yugoslav Republic of Macedonia is concerned, the International Monetary Fund and the World Ban have now agreed to throw their full support behind that government's economic policy. It is important for the European Union to take part in that movement, and I would add that there are pressing needs for external financing in that country and that if we want to be able to support it in the adaptation of its economic policy, given the instability of the region and the low level of reserves, we should respond alongside the Monetary Fund and the World Bank.
The same is true of Bulgaria: may I remind you that that country's situation is extremely fragile, especially concerning the level of its reserves. It also has a very large foreign debt vis-à-vis the European Union. At the European Parliament's own request in its resolution of 10 April last, on humanitarian aid for Bulgaria, the Commission - along with the Council - was urged to take the measures needed to help the Bulgarian Governments in its fight against the current serious economic crisis.
That is why it is important for the Commission that the European Parliament should be able to vote in favour of the emergency procedure on these two issues.

Christodoulou
Mr President, I have listened to the Commissioner but allow me to say that the situation in Bulgaria, as anyone who has visited that country will have noted, is such that we cannot not permit something that is absolutely vital to enabling that country to return to the path of good economic policy to be held up for bureaucratic and procedural reasons.
Now we find that the Committee on External Relations has not discussed the matter. It must convene a special meeting to discuss it because the problem besetting Bulgaria is actual, not bureaucratic. If we delay for too long all of the work being done in conjunction with the IMF and, to some degree, with the World Bank will be destroyed.
If the committee cannot meet I do not think that we should sit on our hands and let those people wait for things that are crucially important to the survival of the Bulgarian state just because of that.

Castellina
Mr President, I would just like to make it clear that the reason why the Committee on External Economic Relations has not dealt with this problem is the delay in consulting us. As a matter of fact we are not usually consulted at all. This is a very serious matter, which affects everything in these agreements. That is the simple reason why this has not happened. So we do find ourselves in a very embarrassing situation and we would really like a remedy to be found.

President
Lots of Members are asking to speak but the Rules are clear. There should be one speaker for, one speaker against plus the Commission or the committee chair if appropriate.
(Parliament agreed to urgent procedure)

Bourlanges
Mr President, excuse my lateness. I see, however, that my name is not on the list of members present. I was here yesterday and signed in various committees. I hope that this mistake, for which I am to blame, will be corrected.

President
We shall check that out.

European Monetary Institute (EMI annual report
- Monetary policy) - Budgetary and taxation
policy - VAT
President
The next item is the joint debate on the following reports:
A4-0194/97 by Mr Mezzaroma, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the 1996 annual report of the European Monetary Institute (C4-0175/97); -A4-0185/97 by Mr Ettl, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the European Monetary Institute's report on Single Monetary Policy in Stage Three - specification of the operational framework (C4-0043/97); -A4-0192/97 by Mr Fourcans, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the coordination of budgetary and taxation policy in the Monetary Union; -A4-0164/97 by Mrs Randzio-Plath, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the communication from the Commission to the Council and the European Parliament on a common system of VAT - a programme for the single market (COM(96)0328 - C4-0458/96)
Lamfalussy
Mr President, ladies and gentlemen, I come here to present to you the report by the European Monetary Institute, with mixed feelings. I am always happy to be among you and I have some regrets that it will be the last time.
I am going to be relatively brief. You will have more detailed comments and I shall have an opportunity to answer your questions at the edn of the sitting.
Our report is in two parts. The first part describes economic developments, which I shall sum up in a few words. We think that growth has indeed recovered and the latest information to hand on the figures for the first quarter confirm that. It is quite obvious that growth is now accelerating in Germany and is now quite strong in the other countries. What we do not know, of course, is the way in which the various elements of that growth are going to develop in the coming months, especially to what extent domestic consumption, and investment in particular, will develop, since that growth is essentially spurred on by exports. The news in this area is good.
I shall also say - but this is now a banality - that inflation is not a problem. I shall come back to that question in a moment. I have observed a very satisfactory stability of exchange rates, the absence of upheaval on the exchange market, which is really quite something, at present. I also note the continuous - gradual but continuous - convergence of long-term interest rates. That too is good news.
What are the concerns? The main concern is unemployment. There is no shadow of a doubt over that. We have not seen a favourable evolution in the area of unemployment and I think that that is still the main challenge facing governments.
The second source of concern, and there I want to be a little more specific, concerns the evolution of public deficits. We need to be very nuanced here. I think that we have detected a certain convergence downwards. When I think that two or three years ago, the public deficits averaged 6.2 %, and went down to 4.4 % last year, and that this year we are heading for figures of around 3 % - between 3 and 4 % and I hope nearer to 3 than 4 % - then we can see that there is a process taking place there.
My concern is of another nature. Most of these improvements, which are undeniable, have been achieved either by increasing revenue, by means of compulsory levies, or by cutting expenditure almost willy-nilly. But little improvement is due to the beginning of a genuine reform of public finances and a reform of those sectors that are fundamentally responsible for the difficulties we are experiencing - pensions, social security, health care. That is a genuine concern and in my view we have not got rid of it.
The second part of our report concerns the Institute's work and here I can be a little calmer. You know the work programme that we undertook over three years ago. I can tell you that this programme is basically on target and that the mission entrusted to us by the Treaty is to be accomplished. I mean that of preparing a Central Bank to be capable of beginning the single monetary policy in early 1999.
This work is advanced in all major areas within the competence of the central banks. It is obvious that, concerning the operational framework of the monetary policy, the real daily work of the central banks. It is true of the payment and settlement systems. It is true for all the aspects of the life of the central banks, which are barely visible to the outside, but which are essential inside, such as the coordination or harmonization of accounting systems, the adaptation of the statutes of the central banks to treaty requirements, or the harmonization of statistics. I think that all of the main decisions have been taken. It is also true of the lesser known areas, such as that of banknotes.
I should simply like to tell you that all of the main decisions of principle have been taken in each of these fields. That is now the past. We have now reached the stage of implementation. I should not underestimate the difficulties faced by my successor and my colleagues in the future. There will be difficulties but they will be difficulties of implementation. I do not see any area where there might be a hold-up in the practical work. I see plenty of areas where there might be practical difficulties or where there are already. That is life and these difficulties can be dealt with, so I can assure you that if ever there were a hold-up in the application of the Treaty, which I neither foresee nor wish, but if there were, it would not be for want of preparation of the central banks.
I should like to add a couple of words to what I have already described in a text that you can read at your leisure, on the reasons why I am fundamentally confident in the implementation of monetary union. I am confident, of course, because I feel a political will, but it is not for me to judge that. I am confident because, when we take a step back and look at the development that we have seen recently, we can see that there has been a real convergence process. This process is obvious if we take inflation, whose rate has fallen below 2 % for the Community average. There is not a single country giving us worries about the inflation rates. But the others have practically achieved monetary stability. It is a practical achievement. It is not a wish for the future. This achievement is here with us. In this particular area, there is no divide between the well-behaving countries and the badly-behaving ones. We have all become angels, white as snow. There are slightly younger angels, who are a little more fragile, and others who are grown up and very sturdy, but it is only a question of different shades of white from one angel to another.
As far as the budgetary field is concerned, there too, as I have just described, there is a genuine convergence process, but here it is shades of grey. Neither white nor black, but, alas, different shades of grey, with an average near the least grey. There are greyer and less grey countries. But nonetheless a genuine convergence process is under way. I think that two, three, even five years ago nobody would have imagined that we could reach the stage we are at now. Of course, that by no means suggests that all our problems are over.
I have expressed my concerns over the public deficits and those about the real areas such as unemployment, but nevertheless it has to be acknowledged that we have gone a long way down the road and I think that I can fundamentally be confident in the future progress of Europe's monetary construction.

Mezzaroma
Mr President, ladies and gentlemen, first of all, a thank you to those who helped me complete this report. I also want to congratulate Mr Lamfalussy on setting up the EMI and quickly making it operational, carrying out so effectively the tasks conferred on him by the treaty and, throughout his term of office, demonstrating an independent and open-minded approach and a willingness for dialogue as testified to by the highly satisfactory relationship he established with our institution in spite of the limits imposed by the treaty.
The purpose of the annual EMI report is to review all aspects of the tasks conferred on him by the treaty. The analysis looks at the economic, monetary and financial situation in the European Union, including the degree of economic and institutional convergence in the individual Member States, the preparatory work for stage three and the other activities of the EMI, especially as regards cooperation between the central banks, and, finally, the annual accounts in accordance with article 11 of its statutes.
That covers the technical side. But in my view this House also needs to make a political assessment. The single currency presupposes holding individual national public debt in common and also presupposes equilibrium of balances of payments between individual Member States. But how can monetary union be achieved unless there is political union first? I do not think there is a single example of a monetary union that survived without political union. In the sixth century BC the Greek cities set up a monetary union, but it lasted three or four years and then collapsed. More recently, the Latin monetary union between France, Italy, Switzerland and Belgium also failed, as did the Scandinavian one, because there was no political union. The United States made the dollar a single currency, but it preceded that with political union, with the Declaration of Independence. Bismarck created the gold mark after first unifying the German states politically; the monetary laws followed.
A united Europe presupposes a single state, hence a parliament with legislative power and a government with executive power. Then the currency can work! So an effort must be made in Amsterdam to develop the political bases of the European Union, the necessary economic, fiscal, financial and above all social convergence must be achieved, qualitative convergence parameters and not quantitative ones, including equilibrium of balances of payments and convergence of interest rates.
The Commission has lately set out the framework for the convergence parameters, superseding those drawn up by the EMI. These new data have unleashed total uproar in the Member States: some had thought they were top of the class, some had thought they were at the bottom, and others were limping along, desperately trying not to die before the finishing line. Now who can say which will be in and which will be out? Europe is constantly changing: economic, financial and political scenarios of individual nations change, and that changes even the most solid situations.
One thing is certain: Europe today is experiencing a moment of weariness. Citizens are not inclined to believe in a Europe which does not keep them informed, and from which they receive no concrete, visible or rapid benefits. More than anything, if Europe means being afflicted with new burdens, heavy taxation or economic and financial alchemy, they do not want to be part of it. it is true that structural reforms are needed to achieve a single currency, but they must preserve solidarity with the weakest citizen. It is no longer possible to assume that the free market can get everything right, as witness the depression of the Twenties and Thirties. Europe today needs to develop, to work. Our great problem today is unemployment. There is no work. The welfare of the world has to depend on work and on hope for development whereby people can rediscover themselves, and if the technological innovation produced by the information revolution also brings an increasing number of jobs, Europe will be able to compete on culture, education, professionalism, sport, tourism, environment, services, the restructuring of the territory and the development of public and private works geared to transport, energy and telecommunications infrastructure. Let us make our cities more beautiful, let us make rural areas better places to live, let us make room for the cohesion process, so necessary to unite the citizens in a great movement capable of integrating traditions, languages, affections and - why not? - spreading our cultures to the rest of the world. Now is the time to have the courage to spend more, to make economic and social investments, to go out into the world with the accumulated experience of hundreds of years - experience such as no other continent possesses - to aim straight for the heart of development through research.
Money was invented by man and man has become its slave. Europe must make a great effort to use this means of exchange only to guarantee the welfare of the people and not be overwhelmed by it. The EMI should make way for the Central Bank. I hope we are all aware that we need to arrive at 1999 with clear ideas, so that we are not overwhelmed by an institution which should be at the service of the citizens and which, if left alone, would be a state within the state, able to regard the European citizen as a means of developing Europe. This is the scenario spread out before us today, considering the deadlines, analyzing the situation and reading the EMI report. My best wishes to President Lamfalussy and I wish the new president every success even though, unfortunately, the road he must travel is still very uncertain.

Ettl
Mr President, ladies and gentlemen, I wish particularly to make the point that these reports on the introduction of the euro call both for employment policy and for the democratic rights of the European Parliament to participate and exercise supervision to be taken properly into account. I am also grateful for the preparatory work that was done by the European Monetary Institute and its president, Mr Lamfalussy, as this will provide a sound basis on which to build further, However, recent developments illustrate just how critical the situation is. The position of France has shed light on a number of things and is a warning to us to proceed with particular caution. The fact is that every economic and monetary policy measure must be geared to citizens. We need a socially responsible Europe and not a Europe founded on capital alone because capital alone undermines positive integration - and I mean capital alone, please do not misunderstand me. Those then are the purely political considerations.
The European Monetary Institute's report on 'Single Monetary Policy in Stage Three - Specification of the operational framework' , concerning the introduction of the euro, has for the moment to be seen as a proposal: not until the European Central Bank has been set up can final decisions be taken. At any rate - and this is fundamental - we are already staking out the course for the monetary policy strategy which the ECB will need to evolve and pursue.
Over and above that, particular sensitivity and transparency is needed in Stage Three particularly. Not only has there to be a guarantee that it will operate seamlessly and smoothly, the internal barriers to the single currency that actually exist in all the Member States will have to be removed. There has to be wide acceptance of all measures relating to the single currency policy of the ESCB. In the final analysis, it has to seem credible to the public generally.
I wish, in passing, to make a very personal comment on the convergence criteria: the very fact that yet another stability pact has been devised demonstrates a failure to appreciate how integration is achieved in the process of European development. But that has now happened. The concept of a hierarchy with one person in charge, telling everyone else what to do is certainly not what is needed here. Penalties that appear to be a slap on the wrist will not help the financially weak countries and will inevitably impede the integration process.
Introducing the single currency does not simply depend on whether the countries concerned are economically ready for it; it is, far more importantly, a question of our perception of democratic development. If we are to be able to develop the framework conditions in a sensible manner, we need a combination of tried and tested monetary policy strategies able to be applied by all the Member States. When it comes to converting monetary policy, it will be essential to apply different data and early indicators - of the kind we have for inflation targeting. That means that there has to be an operational framework for monetary policy. It makes sense to include inflation targeting as a strategy at the point of transition because we have to take account of uncertainties, particularly the unpredictable portfolio decisions of financial market operators. As we move over to the euro our approach has therefore to be very pragmatic and be an amalgam of both complete transparency of the money supply objective and the variety of information provided by the inflation target.
I also believe that it is crucial to coordinate the exchange rate target, for which the ministers of finance are responsible, as far as possible through permanent consultation arrangements - possibly in the future Economic and Financial Committee or in some other way - with the European Central Bank.
I do not consider it appropriate in that context always to be talking in terms of black and white, of hard and soft currencies, particularly when, in the background, we are considering and fixing exchange rate mechanisms. What is actually needed is to create a stable currency that meets our needs in the global currency context. That is what we are aiming for.
Alongside monetary policy strategies, instruments for conversion and the effectiveness of those same instruments are a vital precondition if we are to convert smoothly to or introduce the system as a whole. Monetary policy instruments have to be applied decentrally, and this means that monetary policy has to be implemented decentralized basis, relying solely on the experience of the issuing banks.
Wishing particularly to emphasize transparency in my report, I have to reiterate that the European Central Bank has to have a special duty of accountability in relation to the European institutions and the European Parliament.
The economic dialogue with the ECB has to be placed on an institutional footing. This is not a matter of political intervention but primarily involves exchanging information at an early stage. That is the only way in which we can guarantee a prompt response in monetary policy.

Fourçans
Mr President, ladies and gentlemen, the subject of the report that I am presenting to you today is very important for the proper functioning of Economic and Monetary Union, as of 1 January 1999. It is a shame that there has been so little thought and decisions about this matter since the success or the failure of the single currency will depend on it. It is from this viewpoint that this report poses a number of questions and proposes a number of answers to ensure that monetary union will work in favour of growth and employment.
The vital questions posed are: firstly, how will the role of budgetary and taxation policy change once the euro is in place? Secondly, in this unknown situation, this first in economic and political history, that of a centralized monetary policy with decentralized budgetary policies, how can we ensure that those policies jigsaw harmoniously and efficiently to ensure growth and employment for the whole of the European Union?
Thirdly, how can we conduct budgetary and taxation policies and, more generally, economic policy, in such a way as to obtain an optimal functioning of the single market? Fourthly, how can we best respect the subsidiarity principle while ensuring the coherence of all budgetary and taxation policies and economic policy in general? Fifthly, should we leave budgetary and taxation policies under the full responsibility of the Member States in the framework of the growth and stability pact - which of course there is no question of calling into question - or should we coordinate those budgetary and taxation policies, even increase the Community budget, if we want to guarantee a harmonious economic and social development? Sixthly, how far should we harmonize taxation policy in order to avoid economic distortions that would be harmful to the allocation of resources, within the European area, and that might create very strong political tensions between the Member States? Seventh - and this is the final question - how can we find this economic and political grail, while guaranteeing democratic control over decisions, in particular giving the European Parliament the role it deserves?
Those, ladies and gentlemen, are some of the fundamental questions that I try to answer in my report. They are ambitious, difficult questions, but they are crucial for the future of the Economic and Monetary Union and I think that everyone here will acknowledge that.
The report therefore proposes various avenues to go down in order best to answer these questions and I will mention four that I think are vital. The first is that in order to deal with an asymmetrical economic clash, i.e. one affecting a single country or region, or even a symmetrical clash, common to the whole euro area, it will be necessary at least to coordinate the budgetary and taxation policies and, probably, in the long term, to increase the Community budget. Even if that is a taboo subject today, I think that in the long term that is the direction in which we shall head. Why? To avoid external factors and situations that which soon prove insufficient in these matters.
The second avenue, in terms of budgetary and taxation policy - again in terms of economic policy in general, in order to head in the direction just indicated - consists in proposing the means for implementing this coordination, via an adaptation of economic decision-taking in a political body to be determined, subjected to a solid democratic control. In other words more or less the proposal made here by Mr Lamfalussy and even by Mr de Silguy.
I should like to emphasize the fact that it is not a question by any means of calling into question the independence of the European Central Bank, nor of calling into question the main aim, that of price stability. It is, on the contrary, a case of ensuring that there is a good policy-mix, as we say, between the two main instruments of economic policy, monetary policy and budgetary-taxation policy.
The third avenue concerns taxation itself, Mr Monti, putting forward the desire for minimum common rules on savings, company taxes and transfrontier taxation.
Finally the fourth main avenue is that of strengthening the ability to analyse the economic situation in the European Parliament, in order for it to participate more satisfactorily in the definition of European economic policy and in order to make our budgetary and taxation choices more credible. We therefore propose creating a committee of economic advisers at the European Parliament to include recognized experts and to report, let us say twice a year, to the European Parliament on the economic situation and on recommendations that it thinks ought to be implemented in terms of economic policy and, more specifically, budgetary and taxation policy.
Ladies and gentlemen, that is what we feel to be essential if we wish to guarantee the optimal functioning of the Economic and Monetary Union, i.e. strong growth and full employment, as that is the final aim, all of it within the framework of harmonious economic and social cohesion.

Randzio-Plath
Mr President, harmonization of taxation - just like monetary union - is part of the whole question of how we get the internal market to work to promote the investment and growth that stimulate employment. The reason I am concentrating on VAT alone in the context of our review of taxation strategy is because this is a tax that has to be paid at the creditor's place of business with regard to economic operators in the European Union, within the European single market, with - currently - 130 permitted derogations, 66 options and special rules and 25 differing rules on the place of taxation. And who is really going to be able to make sense of all of that?
Businesses that operate across frontiers have to have a detailed knowledge of the VAT systems of the other 14 Member States and familiarize themselves with the different procedures. That is the reality of the transitional rules on VAT that have been in force since 1.1.1993. It is high time not only that we improve these transitional rules but that we establish definitive rules based on the country-of-origin principle.
Given the many problems, it certainly cannot be claimed at present that the internal market has made things easier. The transitional arrangements have involved complication, waste, increased costs and bureaucracy, and it is the economic operators above all who have to carry that burden. Small and medium-sized enterprises are therefore unable to derive any benefit from the internal market in this area. What we need then is a reduction in administration, no reduction in the level of the Member States' tax revenue, a reduced risk of tax evasion and to ensure that there is no distortion of competition due to VAT. We have to achieve that by improving the existing system but also by moving towards the definitive system.
The subsidiarity principle has, in any event, to continue to be observed. Harmonization should be required only where it is genuinely necessary. The chief requirement for the definitive VAT system has to be that intraCommunity and domestic transactions are treated the same. That can be achieved only if the taxation of all transactions is based on the country-of-origin principle. That principle is bound to cause shifts in VAT revenue. Member States with high levels of exports would benefit from increased revenue, while Member States with high levels of imports would have to cope with a substantial fall in revenue.
A sensible macroeconomic clearing system is therefore crucial, as it offers the only way of securing the current tax revenue of the individual Member States. However, a clearing procedure of that kind will be generally acceptable only if it is simple, clear and quick and ensures prompt compensatory payments. Previous hearings on this subject in the European Parliament concluded that it was not actually the right moment to introduce the country-of-origin principle.
Uniform and binding rules for all are essential to fair compensation. Macroeconomic criteria have definitely to be applied to the clearing procedure to avoid allowing a distinction between domestic and intra-Community transactions to creep in. I should like once again to point out here that the issue of the erosion of national sovereignty in the field of taxation concerns not merely direct taxation, for which the European Union will have in the long term to be competent also; it also arises in regard to indirect taxation, so that a definitive VAT system really does need to be established - it must cover all transactions and also treat the same transactions in all of the Member States in the same way.
Tax exemptions should be replaced by the application of a zero tax rate. That will be of particular help to nonprofit-making organizations. However, the definitive VAT system has also to be seen as an opportunity to serve employment policy objectives.
A further substantial contribution to the simplification of taxation and transparency will certainly be provided by setting two tax rates only - a standard rate and a reduced rate. Since VAT basically does nothing to distort competition, there is no need for full harmonization of the standard rates. A great deal of work needs to be done on the reduced rates, however.
The definitive VAT system needs to be rounded off by introducing the single-place-of-taxation principle governing local competence in the taxation process. Both businesses, which would have to meet their obligations in one place only, and the tax authorities would benefit from that rule. The tax authorities would be able to monitor individual taxable persons more simply and more effectively. Security of revenue will therefore be improved and it will be easier for companies to meet their obligations.
The call for the establishment of a minimum of control over the Member States' powers to raise tax is very important here, to prevent application of the single-place-of-taxation principle being used to avoid tax. To ensure that all persons liable for tax are treated in the same way, regardless of the Member State responsible, we have to have a rule that provides that VAT is payable throughout the EU on fixed dates. However hard we try, the establishment of the definitive VAT system is bound to take some time yet. We must therefore see to it that the transitional rules are improved and simplified. Every opportunity must be taken to make matters easier and save costs. Europe's economy can only benefit from that and, not least, its employment market.

Donnelly, Alan
Mr President, on behalf of my group I would like to pay tribute to Alexandre Lamfalussy for the excellent work that he has done as the President of the European Monetary Institute and for the relationship that he has had with the European Parliament.
(Applause ) I certainly hope that even though he will be giving up that post he will still visit the European Parliament to give us the benefit of his extensive knowledge.
I would like to ask the President of the European Monetary Institute to respond to the points that I am going to make. I used to work for a former Finance Minister in Britain called Dennis Healey, who you might know. Mr Healey used to have a rule which was called the rule of holes. The rule said that if you were in a hole, you should stop digging. Do you not think it is time, given the state of the debate on economic and monetary union and the very clear shift of public opinion in Europe now, to rebalance economic and monetary union so that we can prove to the citizens of the European Union that we can have, on the one hand, a successful economic and monetary union and on the other hand, that we can tackle the problem of unemployment?
I recall when you came for your confirmation hearing as President of the EMI that you said in response to a question asked by one of the Members that you felt it would be very difficult to complete the EMU project with the levels of unemployment we had at that time. Those levels of unemployment have increased since that confirmation hearing. We have made no impact on the unemployment situation. Surely we must now recognize the political signals from the people in Britain and France and the nervousness of people in countries that have been strong supporters of the monetary union. This must be an economic and monetary union that is not an end in itself but a means to an end, namely a balance that will allow jobs to be created.
In particular I should like to refer to the way in which we deal in future with the question of EMU. We now have nine prime ministers out of the fifteen who come from the family of socialists, or social democrats. This shows that there has been a switch in Europe in favour of a more balanced policy. Is it not time, therefore, for the EMI and the Commission to recognize that they have to rebalance their own policy? Is it not time for us to look at a new model of development within the European Union?
In particular I want to refer to two areas of policy: the stability pact, where the French were right to call for a delay. It is time for us to include something in that pact on growth so that it is not only in name a pact for stability and growth. Is it not time for us to activate Article 103 of the Treaty so that we start getting proper economic coordination?
The most significant thing you could do today, Mr Lamfalussy, in your closing remarks to us as President of the EMI, is to send a very strong signal to the finance ministers and the heads of government in Amsterdam for them to recognize the pressure from the citizens for us to have an EMU, but an EMU in which there is public confidence and that will create jobs. You could do that today for us.

Herman
Mr Lamfalussy, many of us regret the fact that this is your last appearance here among us. You found the right approach with us, sure enough of yourself, your theories and your experience to accept an open dialogue, something that certain high-flying technocrats still do not dare have with parliamentarians. You have been scientifically impartial and thorough, while everyone agrees that you have been courteous. That is why we speak to you today with mixed feelings.
While all the economic indicators slowly but surely evolved towards the convergence required for starting European monetary union, in keeping with the agreed timetable and in accordance with the conditions of the Maastricht Treaty - as you rightly recalled earlier - two purely political events have intervened unexpectedly in a process broadly taken on board and anticipated by financial markets throughout the world.
These two events have occurred in France and Germany, the two countries at the forefront of Europe, and they risk seriously upsetting the already bumpy ride towards the single currency. The first was Jacques Chirac's gamble, in an attempt to give himself the political means to take unpopular measures to put France in a position to respect the Maastricht criteria - and we know what happened there. The other scorched fingers belong to Theo Waigel who, anxious to convince his fellow Germans that the euro would be as robust as the D-mark, repeated with sometimes embarrassing insistence the absolute necessity to stick to 3 %, 3 % and nothing but 3 %, not 3.2 % or 3.3 %. Now he is himself falling into the trap that he thought others would be falling into and got a taste of his own medicine.
That is where we now stand. Should we, like my friend Mr Donnelly, listen to the voice of the people? Should we, in the shelter of the ever so comfortable cocoon of the welfare state, avoid taking measures required for our adaptation to globalization, which is an inevitable fact? Should we apply the policy that consists in not wishing to see the reality, continuing to daydream, sticking our heads in the sand and believing, like some people, that we are going to solve the problem by reducing the working week without cutting wages, increasing the numbers of civil servants, increasing the minimum wage, halting liberalization? That may be the solution for some, but unfortunately I think that they are going to be awfully disappointed.
The world has changed, whether we like it or not. Europe no longer has the monopoly it enjoyed for centuries, the monopoly of science, technology, finances, currency and military strength! That is over! If we are to adapt to the new situation, we shall have to make an effort. It is not by listening to those who say 'Executioner, just one more minute!' , that we shall succeed. That is what the French elections were about: ' not right away, let us continue to benefit from the generosity of the nanny state!' That is the solution some people are recommending.
I think it is time to take a grip. Europe will do it if it hushes up its differences! Everyone in charge, everyone without the excuse of not knowing world realities is aware of that. Mr Donnelly often goes to the United States. He knows what the situation in the world is now. He does not have the excuse of not knowing the limitations of globalization. That is why I hope that everyone in charge of all parties, whatever they are, will take that reality into account and keep heading in the direction that we have chosen, with success, I think, so far!

Garosci
Mr President, our group adds its voice to the chorus of thanks to President Lamfalussy for the commitment he has shown during this period, which has coincided naturally with a temporal and quantitative commitment without precedent in the history of the Community institutions. Our thanks also go to the four rapporteurs who have done excellent work on their reports at a time - I repeat - when Europe, particularly where major responses in the economic field are expected, is expressing simultaneous hopes and fears which we have never had to deal with before.
But we must tell it like it is and not as we would like it to be. In the coming months and years the Member States and the European Union must make definitive choices, choices which prioritize both economic and social needs, and it is very difficult to combine the two. Europe was born of economic issues - the ECSC, coal and steel; it has since developed on the social side and today it is struggling to find the right relationship, the right balance, between the economic and the social. The four reports now before us are responses to this grave dilemma, helping us find a final approach, although a priori this must obviously include work and commitment from all the individual Member States. Regardless of their current position, we know there is very strong political, economic and social movement on our continent at this time and making definitive choices today is very difficult and would erect barriers against countries whose past and future commitment is the guarantee of the continuity and completeness of our continent.
In particular, in presenting his report on the European Monetary Institute, Mr Mezzaroma has hammered home the point that political union and monetary union are mutually indispensable. A few days ago Foreign Affairs Minister, Mr Dini, who has been President-in-Office of the Council and whom I have actually criticized in previous reports, said that a warning had gone out from Italy not to neglect political Europe, not to regard it as completely obscured by the race towards the single currency, which is obviously recognized as immensely significant. These statements were confirmed directly to the President, the Dutch Prime Minister Wim Kok, and to the Committee on Institutional Affairs of the European Parliament. That is important in restoring the confidence this institution needs to carry weight in the coming decisions.
Minister Dini went on to say that the transition to the single currency will not be a change in degree, but a genuine change in kind. Understandably, it is a change which will mean new arrangements. He concluded that we are facing a real revolution. It has been announced in advance, but no-one is ever sufficiently prepared for a revolution. That is why our commitment must be permanent in giving priority to the qualitative over the quantitative, in devoting special attention to those sectors which are of an operational size to make the change positively. I refer in particular to small and medium-sized firms, in which all the reports presented have taken an interest. We are talking about reductions in taxation, contributions and bureaucracy: deregulation to let small and medium-sized companies operate more efficiently.
Finally, on VAT, we favour the approach taken, we are especially grateful to Commissioner Monti for the intensive work of the group that bears his name, and we should unite behind harmonization of the system. In conclusion, we want to work even harder to define the logic of the single market's development into a genuine internal market.

Gasòliba i Böhm
Mr President, ladies and gentlemen, today's joint debate, opened by the chairman of the European Monetary Institute, Mr Lamfalussy, for which I recognize the hard work and good relations that Dr Lamfalussy has maintained with the European Parliament in particular (last year it was my honour to draft the report on the first report by his institution), comes really at a key moment.
We are facing a new element of uncertainty created after the position expressed yesterday by France at the ECOFIN meeting and one week away from the Amsterdam summit, which should lead us to a new Treaty. I think that an important conclusion of this debate would be for the European Parliament to consolidate, strengthen and very clearly insist on the need for EMU to come about and the euro to be introduced in the planned conditions and timescales.
I think that any element of uncertainty could lead to greater difficulties, in an economic situation in which gradual recovery is taking placer, as is shown by the development of the European economy in the last quarter and the Commission's own forecasts, which we debated here for this year and next, and that should offer an appropriate economic framework for fulfilling this project. This project, as you know, also has a very important political dimension for the achievement of European Union.
I should like to insist that this moment in time is not the most appropriate for asking institutions such as the European Monetary Institute or the future European Central Bank to implement policies that do not fit them. The Institute and, later, the Bank, must guarantee conditions of stability and solvency, with low levels of inflation and interest rates, offering a credible framework that is both secure and solvent internationally. Then, if the governments and administrations implement economic policies in a framework of competence, we shall be able to solve the most serious problem facing European society: unemployment. We cannot ask these institutions to solve what has to be done by the other administrations and the governments, when their electoral promises turn out to be more satisfactory, in the short term, from the electoral point of view.

Ribeiro
On behalf of my group I second the congratulations made to Mr Lamfalussy in spite of the differences which we still have. The current joint debate on these four reports evokes ideas which we would rather avoid, following the last Ecofin meeting, since we have already frequently had the uncomfortable feeling of having to think about something which we regarded as already decided and merely needing to be put into practice as quickly as possible.
There might even have been some change through the pressure of the social consequences and we should be glad that it is recognised, albeit timidly, that reflection is called for - even on something which has already been decided. These reports fully follow the general direction taken, which we opposed, but which we think does contain some positive points, which might help in this new situation as regards the reflection which is so urgently needed.
The mention in the Mezzaroma report of the rigidity of the labour market, the cause of all the evils for the European Monetary Institute, hides the fact that there is too little investment and a lack of spending power and demand - which are due principally to the high level of unemployment and to many other determining structural causes; on reading that we have no cause to think and reflect and we can only voice our concern about the attack on the socalled rigidity of the labour market if it is inspired by the example of the United States; downward flexibility would be disastrous in some countries such as Portugal where the wages spread is already vast and social protection is scant and fragile.
When the Ettl report emphasizes the need for follow up measures which are more favourable to the real economy it really means unemployment, much talked about to little avail in practice, but there must be some levelling out of living standards as envisaged in Article 117 on economic and social cohesion.
Should not the mention in the Fourçans report - that it is necessary to anticipate situations in which the Member States might suffer asymmetric or symmetric crises - be reflected in some points in a resolution? I emphasize that it is acknowledged in point 13 that it is inappropriate to abandon the unanimity rule as regards fiscal harmonization, raising the vital question of the notion of fiscal sovereignty and more besides.
When in various points of Mrs Randzio-Plath's report we find concerns expressed about equity in taxation and the strengthening of the instrumental nature of fiscal policy in order to meet national situations which are so diverse, are we not aggravating certain wounds which we would prefer to ignore? But how can we then accept the fact that point 19 of the report calls for the introduction of the principle of majority decision-making on tax issues as a means of overcoming situations which the Member States might find fair in the long term, but which would not suit them in the short term.
It is a pity that these reports are short on points supporting our reflection on the consequences of what is afoot. We do not think any the less of them as we are fully convinced of the need for this debate, which is not of our choosing, but which is forced upon us by social reality.

Wolf
Mr President, Mr Lamfalussy, Commissioner, ladies and gentlemen, as Alan Donnelly has already rightly said, the voters have again given us a one-off opportunity to correct the neoliberal and monetaristic concept of the euro and the relevant strategy, moving not back to the fifties, Mr Herman, but forward to the 21st century.
We must and can now open the way to a Monetary Union within the framework of which it will at least be possible to resolve the major structural problems that were simply concealed by the previous policy of casino-style capitalism that was all show and no substance: the unemployment problem, the environmental crisis - when do we now hear anyone talk about the Rio principles and commitments and the Delors promises? - but also the problem of real and not just monetary convergence between our Member States. We ought really to take the opportunity put behind us the destructive temptation to get 'Back to Brüning' ; we should be moving not back towards classical Keynesianism but beyond Keynes and into selective social and environmental restructuring of our national economies. That will have to be underpinned by a common and coordinated employment policy because it will not be possible to build a stable euro on the back of increasing numbers of jobless.
Since 1994, this House has again and again drafted proposals that were then ignored by the governments. These include the establishment of the Central Bank - French Socialists have again used the phrase 'economic government' but also the link to Community objectives and procedures. They include changing the monster stability pact, making it into a pact that facilitates and drives forward a common approach on the part of the Member States geared to solidarity and employment. It also includes a different interpretation of the convergence criteria, which have to be seen as a starting-point for a policy of genuine convergence and not in fact - and Mr Herman was quite right about this - some kind of mathematical obsession about the figure of 3.0 or indeed 3.00. Last, and by no means least, it includes - and all credit to Commissioner Monti who has consistently pointed this out - an end to tax dumping. We need to get out of this jam, that is to say we have to avoid getting further into debt and imposing taxes wherever possible. The fact is that the taxation of assets and profits is increasingly being undermined by tax dumping, and a community that covers its infrastructure costs from the coffers of employees, channelling it back to the undertakings, may make competitive gains in the short-term but this will not last.
We now have an opportunity to change things. We must take advantage of it, and, in Amsterdam, the Member States can make a real effort here or we shall indeed be moving towards interesting, that is to say critical times when a wealth of decisions will have to be taken.

Ewing
Mr President, I would thank Mrs Randzio-Plath for her radical rethink on the VAT system which is a very cumbersome arrangement and does not seem to have been designed for the Single Market.
The move towards a definitive VAT system based on the principle of origin will be a long process so I would suggest that we should not forget that we can improve matters in the short term. VAT is a standard rate of tax on consumption which is applied across the board regardless of levels of income and, as one speaker already mentioned social justice, I think it is vital that we manage that aspect in a socially just manner.
Mrs Randzio-Plath's explanatory statement says that tax exemptions currently permitted on social grounds should be replaced with a zero tax rate. I see a warning light flashing here because such a move would change the legal tax basis for organizations that are exempt and possibly allow the imposition of the reduced rate or a standard rate in the future.
I would like to suggest that there is a total lack of logic with the VAT rate on newspapers, books and magazines varying from zero to 25 %. We also have a situation where new education and information resources often attract the full rate. Surely, as we move into the technological age, the electronic page should be treated in the same way as the printed page.
I have lodged amendments and would urge support for Amendments Nos 13 and 14 as well as Mr Miller's Amendment No 1, calling for zero rating of certain goods and services such as children's clothes, shoes, food, medical equipment, books, social services, etc. Surely we want to combat illiteracy and promote freedom of information, cultural diversity and an educated citizenry as well as a fair society. I would urge everyone to support the amendments.

Le Gallou
Mr President, the four reports that we are debating now have struck me with their lack of sincerity about the essential matters. The rapporteurs have made an effort to try and paint an objective picture of economic convergence in the European Union, the major differences existing in the Member States' fiscal and budgetary structures or the possible strategic axes of the future European Central Bank.
Mr Fourçans is even trying to do a little 'social' by proposing to ease the constraints of the stability pact, by assessing public deficits not annually but over the whole of an economic cycle, whereas Mr Mezzaroma is aware that the rigidness of the labour market is neither the main nor the only cause of unemployment. The real reasons underpinning the forced march towards EMU are never targeted. Admitting that the single currency is not a vital condition for the proper functioning of the single market, that it serves only one aim, a single cause: the creation of a federal super-State, the structures of which our governments are putting the final touches to at the IGC.
In truth, the single currencies creates more problems than it solves and everyone knows that full well. It calls for a considerable increase in the European budget in order to deal with asymmetrical economic shocks; Mr Fourçans recalled that earlier. It makes fiscal uniformization virtually inevitable, both in terms of rates and structures, in order to avoid fiscal dumping, and thereby considerably limits the different States' freedom for action. It necessarily calls for the creation of a European economic government to counteract the powers handed by the treaties to a handful of civil servants to run the Central Bank. In a nutshell, the single currency can only lead to the total transfer of economic, budgetary and fiscal sovereignty towards Brussels, or else the situation will be totally out of control.
By means of the budgetary policies that it imposes the single currency is already an economic disaster, yet another source of unemployment in Europe. Tomorrow, when it exists, if it exists, it will be even worse as the right conditions will not be there. In order not to put back the date of introduction, we are now contemplating violating the principles originally set in concrete, the sacrosanct Maastricht criteria. Neither France nor Germany will respect them in 1997 or 1998, but neither France nor Germany wants to take responsibility for burying this economic aberration that is EMU. When they want to get elected, government promise to work for the common good, everyone's interests, the country's prosperity. Now, prosperity and interest call for the once and for all abandonment of the single currency.

Randzio-Plath
Mr President, European Monetary Union is constantly being hampered by talk of postponement which, in turn, inevitably leave citizens feeling uncertain. That is definitely not how to support the preparatory work that is being done by the European Monetary Institute, by the Commission, by this House and also by the Council and ECOFIN in particular. I therefore think it very important that the political élite in the European Union should finally speak out clearly, give clear signals and above all, Mr Lamfalussy, highlight what you yourself have again said this morning. We have made huge, previously unimaginable progress towards the convergence criteria - particularly those convergence criteria that are important for the operation of Monetary Union, the low inflation rate, the low long-term interest rates, exchange rate stability and also legal convergence in terms of the independence of the central banks.
We are all aware - and I should very much welcome it, Mr Lamfalussy, if you could say something further about this - that tax criteria are merely a supporting factor in achieving monetary stability and that the future European Central Bank should not be forced to apply a rigid monetary policy because of unsound budgetary policies; that is something we could do without in the Monetary Union if we are achieve growth that is based on investment and creates employment.
It is therefore important to emphasize and give prominence to the fact that those who are in favour of Monetary Union are also for job creation and must look to that. For that reason, the European Parliament has constantly called, since 1993 and by way of preparation for Monetary Union, for investment programmes in infrastructure to modernize and at the same time provide an incentive for private investment in Europe. In that context, I also welcome the fact that it is clear that the need to consolidate the domestic budgets of the Member States should in no event be at the expense of public investment, and that ought constantly to be emphasized, as this reflects the spirit of the Treaty also.
In conclusion, I should like once again to ask you, Mr Lamfalussy, to explain how you think the democratic accountability of monetary bodies can be improved. We are grateful - and I want to say this very clearly on behalf of the Subcommittee on Monetary Affairs - for your trust and constructive cooperation, for the forbearance you have shown in the face of what can only be described as impudent and disrespectful questions from Members of this House but we are also grateful because you have always been willing to listen and respond to us. I believe that you have worked not only to prepare Monetary Union but for the future of Europe. In conclusion, therefore, an indication of the form future cooperation between the European Parliament and European Central Bank should take would be especially important for us.

Carlsson
Mr President, Mr Ettl has written a very good report on the EMI report on Single Monetary Policy in Stage Three. I would like to congratulate the rapporteur on behalf of my party group. The report was accepted without controversy by the Committee on Economic and Monetary Affairs and Industrial Policy and is a good summary of what is, in its turn, a good report by the EMI on the preparations which have been made before the ECB commences its work for the third stage.
Preparations for monetary policy procedures are still underway. The EMI is drawing up various strategies for monetary policy. In order to gain credibility for the new currency and to create an understanding of it, it will be necessary to communicate this strategy. The EMI advocates that the ECB strategy is based on targets for the money supply and for direct inflation, which we warmly support.
To waver on chosen strategies or deviate from them may cause serious damage to a project as wide-ranging as EMU. This is exactly why it is so important for the ECB to be independent and to take the long term view with its main task being to safeguard monetary stability. The risk of wavering has become a reality now that socialist leaders want to delay EMU or even to change it totally or to alter the stability pact. The stability pact is a central feature in gaining the necessary credibility for the new currency.
My party group wants to see Europe being further developed in the name of freedom and peace, with foundations in a Europe for the people, where trade and interaction create a sense of belonging and a dynamism. We are prime advocates of the internal market which will strengthen our joint competitive strength and in so doing increase growth and produce new jobs in Europe. This is why it is so important to remove barriers to cross border trade. In this respect the report by Mrs Randzio-Plath on a common VAT system sets a very good example.
The internal market and the single currency are both institutions needed by the EU to promote competitiveness. Other, different systems which have developed in our individual countries add a diversity which is enriching and which will not benefit from being standardised. Our common institutions are the external framework which set the long term conditions. The content must be created by the people and by entrepreneurs. The easiest way to find the best model is through healthy competition between different national systems and solutions. This is why I am concerned by those who wish to exclude competition and change as we will be the poorer for it. A comprehensive political tax harmonisation will not solve the growth problem in Europe. On the contrary we will set ourselves cost levels which remain permanently high and will continue to have high unemployment.
I am in favour of a diverse Europe which works together for common solutions where these are necessary. I am also in favour of political leaders who keep their promises and are capable of taking a long term view and are not just out for gimmicks and popularity.

Giansily
Mr President, ladies and gentlemen, today's joint debate on the EMU, euro, VAT and coordination of budgetary policies hits at the heart of the matter, i.e. States' currency and public finances, in the perspective of EMU.
All of these reports mostly are agreed to by our group although, in the case of Mrs Randzio-Plath's, we are unable to share the philosophy of paragraph 19, which stigmatizes the principle of unanimity for deciding taxation matters.
As far as VAT is concerned, the switch to a final VAT system, due on 1 January 1997, has been put back sine die. But it must be admitted that the current system opens the door to numerous major frauds and leakages. We are aware of the imperfections of the transitional system and the European Union should set three objectives. On one hand, to improve controls over the real situation of deliveries abroad, and to improve the sharing of information available to customs and tax offices; in other words improve the exchange of information between States. One certitude is that the switch to the final system, which would make it possible to impose the tax in the country of origin, calls for the current system to be greatly improved.
I should now like to make a more political comment. If I am to believe today's press, the new French Minister for European Affairs is asking for six extra months for understanding the set of dossiers on this subject. What did he do when he was a member of this Chamber, until last Friday? I do not like criticizing our colleagues, but even so. A member of this Parliament who sat here for three years, who never spoke in plenary session, whom we never saw, either in the Committee on Economic and Monetary Affairs or in the Sub-Committee on Monetary Affairs, and whose most notable written question dealt with the comparative merits of the Cormorant phallocrocorax carbo sinensis and the Cormorant phallocrocorax carbo carbo , now that he has become Minister, comes and asks, cap in hand, for a six months' delay, probably in order to have the time to examine a dossier he did not give a damn about when he was a member of the European Parliament...
Some of us have been working here for many years and we could give him a few lessons, if he needs some cramming before the Amsterdam Summit. Mr Pierre Moscovici - I am talking about him - and his accomplice, Dominique Strauss-Kahn, are holding the single currency hostage and are taking on the huge responsibility of jeopardizing the patient and careful work done by the Commission, the Council, the European Parliament and the European Monetary Institute. I am sure that history will hold them responsible.

Harrison
Mr President, is it the cormorant or the emu that we are trying to get to fly?
(Laughter )

Berès
It seems to me that our colleague, Mr Giansily, was more interested in making personal attacks than a real political judgment of the commitments made by the French socialists in their electoral campaign which led them to victory.

Cox
Mr President, I should like to begin with the disturbing problem of the lack of consensus which has re-emerged on the question of fiscal policy at the heart of the EMU debate. This needs to be resolved urgently. If it is not, it has the capacity, politically and economically, to destabilize seriously the preparatory work to achieve a good EMU launch.
There is a huge unemployment crisis in Europe today, but we should not kid ourselves about how to respond to it. It requires a realization that in a global economy we need more European labour market flexibility. It requires an understanding that in that context and inside the EMU we need a wage-rate and incomes policy that takes account of growth in labour productivity and of competitive requirements. It requires that we enhance labour mobility where possible within the Union through a variety of measures such as, for example, improving pensions' portability and other practical measures. It requires an emphasis on more European research and development. It requires a constant search for more competitiveness. It requires looking at switching social expenditure from passive to more active models.
All of these and more are needed, but not the illusion that quick, short-term budget fixes are an answer. We tried that. It failed. If we try it again we create an illusion and that illusion will lead to a weak, inflation-prone, high interest rate Euro-zone. We do not need that either. So we have to sort this debate out now, abandon self-delusion and realize that a solid EMU requires a solid fiscal basis. Anyone who does not understand that will pay the price through higher interest rates and an inflation-prone Euro-zone.
On the VAT question, I agree in substance with what the rapporteur has said. The Liberal Group wants two things from the Commission: that it should, in the short- to medium-term, try to improve the problems and shortcomings of the current system; also, it should continue to deepen its work on moving the system to a new regime using the point of origin. We cannot ask Member States to take a leap in the dark. We need to know what are the revenue implications for states. We need the macro-economic distribution key to be resolved sooner and not later. Subject to that, the Liberal Group supports the timetable set out by the Commission.

Hautala
Mr President, in my opinion this debate should have been more intensive and should have taken place a long time ago. I am referring in particular to the debate on the far too independent status of the future European Central Bank, and on the vital need to tighten up economic political cooperation under the conditions created by EMU, particularly in the area of taxation, because under the conditions of EMU fiscal competition between the Member States will become ever stronger. This distorts competition and also makes it harder for the Member States in their efforts to obtain sufficient tax income.
We are relatively satisfied with this report. A number of views are put forward on how to create democratic supervision as a counterweight to the future European Central Bank. One idea which has come up in my own party in Finland is that the European Central Bank should have a 'confidence body' made up of Members of the European Parliament. The Bank of Finland, for example, naturally has a group of bank delegates made up of Members of Parliament. This thought perhaps tends in rather the same direction as the idea which the French floated when they spoke of a Stability Council. However, it would provide a parliamentary dimension to this problem of democratic supervision.
It is also clear that the European Parliament should be consulted when the directors of the Central Bank are chosen. This consultation should involve the whole board, for never before has there been such an independent body of experts which can limit in such a decisive way the powers of democratically elected bodies to pursue economic policy.

Castagnède
Mr President, ladies and gentlemen, these four reports are an opportunity for us to express our support for all those who want Europe not only to be a market and a currency, but it is also an invitation for them to clarify what they really mean by a 'European economic government' , which in our view must be clearly distinguished from the currency question.
As for this currency question, we shall sum up by saying that it is imperative to apply all of the treaty, nothing but the treaty. All the treaty means the independence of the future monetary institution and banning excessive deficits. Nothing but the treaty means that we deplore the slide, noted at Dublin, between the aim of the treaty to ban excessive deficits and the now clear allusion to an aim of systematic balance, even budgetary deficits. We see this as a kind of dogmatic slide on which rests a perfectly erroneous assertion according to which growth and employment cannot only come from monetary and budgetary stability.
The whole of this century's economic history shows the contrary. The single currency does not need that economic justification. While it is a necessary aim for completing European Union, it is a political aim and we know full well that it is because it cannot be built without budgetary stability that that stability is necessary. Those are political aims.
As for the economic government, it must take into hand the question of growth and employment, but regardless of the currency objective. We should not get the negotiation nor the timetable wrong. What we need to achieve that balanced European economic construction is, for example, a strengthening of the means to take Community public action, by means of strengthening the budgetary means and strengthening fiscal means. That would, for example, require the adoption of qualified majority voting, at least for part of the fiscal sector. What is at stake is the IGC, not the stability pact.

Blokland
Mr President, last week the 'Euroboat' was moored at the Westerkade in Rotterdam, showing an exhibition on the monetary history of Europe. This week it has started a tour of various cities in the Netherlands, Belgium, Germany and France, and is scheduled to bring this mobile euro-exhibition here to Strasbourg next month.
Compared with the introduction of the euro itself, this cruise upstream by the 'Euroboat' is a piece of cake. The Waal and the Rhine are not exactly raging torrents, and there are rarely heavy storms in the summer.
In economic and monetary terms, however, quite a violent storm has blown up in Europe. Confidence in EMU is waning by the day. The new French Government wants Spain and Italy to join the euro, but even if they were to meet the criteria - and Italy will certainly not be able to - everyone knows that the market has no confidence in a broad-based EMU, which would inevitably lead to a weak euro. And as Mr Ettl rightly points out, this is hardly what we want.
If we take this view, the logical consequence is to call for EMU to be postponed, a conclusion reinforced by the fact that unemployment in Germany has remained at such high levels. But Chancellor Kohl insists that EMU must and will go ahead. This means that there is no chance of meeting the Treaty criteria by 1998.
The Commission too says that postponement is impossible, which is the result of its highly irresponsible behaviour in promoting EMU and then, as it becomes clear that it cannot be achieved, claiming that there is no choice but to go through with it. With disaster looming whether it goes ahead or not, the public authorities are clearly skating on thin ice.
One thing that surprises me is that the motions for resolutions support the independence of the central banks, while at the same time stressing that the European Central Bank should be answerable to Parliament and calling for a new political organ as an economic counterpart to the ECB.

Lukas
Mr President, given the way it is currently looking and going, the fact is that Monetary Union is going to be an economic area which, though comparable with a nation-state in terms of its currency, has in many others areas structures that are clearly critical if Monetary Union is to be a success but which differ greatly from one Member State to another, and this is in itself a factor that involves a whole range of problems. These are problems that have to be properly resolved before Monetary Union is set under way. If the solutions adopted to tax harmonization and the issue of stability are only half-hearted, then this Monetary Union will rest on very shaky foundations. The single currency should improve the operation of the internal market. However, if, at the same time, it is to promote growth and employment, the Union is going to have to tackle the budgetary and fiscal policies of the individual Member States, as these inevitably have a considerable influence on the Union's general economic position.
Then there is the question of coordinating the national budgets or even significantly increasing the European Union budget. But as the rapporteur, Mr Fourçans, himself puts it, it is extremely difficult, both economically and politically, and I am afraid that it will not actually be possible to resolve those questions in the medium term, because Europe is not yet ready for this. As far as fiscal matters are concerned, the rapporteur points very clearly to the unfair tax competition that could arise in a variety of areas between Member States or regions.
But, politically speaking, these are extremely difficult matters because the structures, traditions and cultures differ very greatly in the individual Member States. What the rapporteur is unable to say is how the distortions likely to result from differing taxes are to be prevented. At present, as far as many Member States are concerned, the principle of unanimity on this issue is something of a sacred cow. We can certainly expect that where wages and wage costs differ only marginally, we shall see both increased worker mobility and businesses exploiting these location-based advantages.
Commissioner de Silguy said he was prepared to talk about everything but not about the point in time at which Monetary Union would commence. I take the view that he needs immediately to tackle the question of a new and realistic time-frame that makes it possible to achieve real convergence if he wants Monetary Union to be a blessing for Europe and not a lasting burden. Those, like me, who want economic union, may also want it at a later point in time, and I think that those who do want it have also to be in favour of closer citizen participation in this issue.

Thyssen
Mr President, employment, competitiveness and growth are issues which deserve to be given priority attention, as has been pointed out more than once here this morning. It is quite clear that they are all affected by the way in which we organize our indirect taxation, so the report by Mrs Randzio-Plath deals with a subject that we cannot afford to treat lightly, not least for the following four reasons.
VAT is naturally important for the national income of each Member State. It is also a consumer tax which affects everyone, and is particularly significant when it comes to the administrative burden on firms. VAT can also cause shifts in intra-Community trade flows and in the attractiveness of certain services that we offer to consumers outside the European Union.
VAT based on the country-of-origin principle has formed part of the single market project since the very beginning, and its purpose is still to make intra-Community trade as easy as trade within one Member State. With the current system this is impossible, and it is therefore unacceptable simply to convert the transitional regime into a definitive system. Some people claim that this transitional system that we have been laboured with for far too long is now well established, and that firms would prefer to follow the principle of 'better the devil you know' . However, this is not the dominant view in business circles. Anyone who takes a rather longer-term approach cannot but follow the Commission's logic and choose the short, sharp shock of conversion, rather than carrying on with the heavy administrative burden which, for a number of reasons, the current system represents.
We should also not forget that the introduction of the euro will make the market more transparent, and that differences in rates and in how the rules on VAT are interpreted and applied are more likely than ever to distort competition. The completion of the single market now demands the introduction of the euro and decisive measures to eliminate the patchwork of VAT rates. This means having a system based on the country-of-origin principle, so that the rates remain roughly in line, and anyone subject to VAT only needs to nominate a single place where he can pay his taxes and claim deductions, with a clearing system based on macroeconomic principles. But this solution will clearly never be achieved as long as this whole issue is still subject to the unanimity rule. I therefore hope, perhaps against hope, that the Amsterdam summit will bring some progress in this area.
Time is now short, and past delays mean that European firms could now face a number of upheavals all at once. Allowing the euro and the new VAT system to coincide could be too much of a good thing, and that is why we, as the authorities, have to show that we are serious about easing the administrative burden. Clearer legislation is what we need, and what we are waiting for.

van Bladel
Mr President, this important debate is taking place at a time of dramatic change in the political landscape of Europe, when the situation seems too unbalanced to guarantee a stable euro. This is a particularly worrying state of affairs and comes despite the considerable progress that has been made, as Mr Lamfalussy has described. Although these reports are of a technical nature, we do of course all know that this is a political issue, much more so than many other aspects of the Intergovernmental Conference, because it is the euro which can create unity in Europe.
Not just Europe's unity, but also its competitiveness is at stake here. Mrs Randzio-Plath called in this morning's 'Financial Times' for the European Central Bank to have the same degree of openness as the federal committees in the United States. I find it remarkable that one of our leading rapporteurs should recommend an American model, when it is more usual for Parliament to feel frustrated by the actions of the USA.
People in general have now become anti-European, and this is why all politicians from all parts of the political spectrum now have just one task before them. We are facing a revolution, as Mr Garosci said, and politicians must now do everything they can to make it clear that European unity requires substantial reforms from all its citizens, because this is the way to create a dynamic financial, economic and social Europe.

Watson
Mr President, I would like to build on what Mr Cox said earlier, on behalf of my Group, about the debate on monetary union and the debate on fiscal union.
It seems to me a little strange that we have brought such diverse reports together into one debate - certainly Mrs Randzio-Plath's report on indirect taxation seems to fit with little ease into such a debate. It is nonetheless important because, inevitably, the discussion on monetary union must be succeeded by an in-depth discussion on fiscal union, which must follow.
I would like to raise the problem of our relative lack of understanding of, and failure to study, some of the principles of indirect taxation. There is a need for clear principles for indirect taxation to be established, and much of the very valuable work that is being carried out by the Commission in this area seems to ignore the wider context of the lack of consensus on the base of VAT; the danger here is that we will find the fiscal base actually being diluted. Certainly, in my own country, the government is extending exemptions from VAT to services which were once in the public sector and are now in the private sector. I am aware of similar problems in France and Italy. The Commission has indeed put some of these questions to the Court of Justice for resolution.
I propose, and my Group proposes through amendments to the Fourçans and Randzio-Plath reports, the establishment of an independent organization which would bring together academics, industry practitioners, Commission officials and national government officials in a wider and informal context to discuss different VAT practices and to build a consensus on this. I hope that the House will feel able to support these amendments so that we may have a wider discussion on the very principles of indirect taxation before we proceed further with the details.

de Rose
Mr President, as opposed to the economic area of free trade initially set up, the rule of increasing Community regulation has prevailed once more, leading to the triumph of supra-national will.
Since the second half of the 1980s, the growing desire for general harmonization called for the setting up of a socalled transitional VAT system that everyone knew was not appropriate. Transitional, but until when? The final system was due to be adopted by the Commission by 31 December 1994. It is now June 1997 and the taxation question is still on the agenda for harmonization. It is a delay but, above all, an admission of failure. This failure is all the more damning because it affects the main Community institutions, the Council and the Commission.
This delay is now symbolized by two simple points. The first is that this transitional system is inappropriate and must be replaced and the second is the difficulty in setting up the final system. For that purpose, a certain number of ideas have been advanced, primarily that of replacing the destination country rule with the so-called country of origin rule. We are in agreement with this rule in principle as it would simplify administrative steps for companies.
When you have fewer declaration obligations, you have fewer risks of error. A single declaration in a single taxation location means less possible fraud and cost savings. Where we disagree is when you recommend the pure and simple abolition of national exonerations and their replacement by zero rating.
This is a further abandonment of our national sovereignty since it would be the Community institutions which would decide. Like all national taxes, direct or indirect, VAT is a priority instrument of budgetary policy. The proof is that since its appearance in France this unique tax has been copied worldwide.
Yes, to the desire to change the current system but not at any price. No, to a further abandonment of sovereignty. We want to preserve our fiscal autonomy, which is not necessarily incompatible with a new VAT system in the European Communities.

Berès
Mr President, like many of the earlier speakers this morning, I should like to thank Mr Alexandre Lamfalussy for his work at the head of the European Monetary Institute and his relations with his institution, in the knowledge that we are not always easy to deal with. We thank him for the relations he has maintained with us, in the hope that we shall develop similar ones with his successor.
He is leaving us at a moment when things are obviously moving. The nearer we get to monetary union and the more we can gauge the main consequence: the urgency of economic union. In this context the Fourçans report, as amended by our Committee on Economic and Monetary Affairs, is a useful one. Yes, we need to strengthen the coordination of the budgetary policies of the Member States, be it by indirect or indirect taxation, capital or company profit taxes, without forgetting the process of relocation. We also need to set up a democratically controlled political body that would be responsible for the coordination of economic policies.
These are the concerns that we share although we have not been the main promoters. But we must go further and be more ambitious. The budgetary aspect of the report calls for several remarks, in my opinion. The stability pact - as the outcome of yesterday's ECOFIN Council meeting showed - is only legitimate if it serves faster growth.
In terms of taxation, we should head towards minimum harmonization of corporation tax, savings taxes and transfrontier taxation. But we should also introduce qualified majority voting for certain direct taxes, or else we shall be unable to fight fiscal dumping or strike a taxation balance between capital and labour, taxing capital speculation.
As for the political body mentioned in the Fourçans report, while not simply call it an 'economic government' and give it, as Article 103 of the Maastricht Treaty clearly calls us to do, clear powers to coordinate budgetary, fiscal and structural economic policies?
The Fourçans report heads in the right direction but seems a little timid when it comes to aims. Recent changes of government in certain Member States should help us, without delay, to promote at European level alternatives to the solutions and mechanisms proposed in recent years.
We must all work for the introduction of the single currency within the set deadline. But the States that want it must be free to pursue their main public investment policies so as not to sacrifice the recovery in growth to the absolute priority of the monetary objective.
To conclude, Mr President, we must avoid setting up a mechanism that would turn employment into the main variable of adjustment, thereby turning our back on our political priority: job creation. To achieve that, we must do all we can to ensure that the switch to the single currency takes place on the planned date but with an economic union that is also committed to, serving growth and employment. For that we must, in the beginning, as of today, complete the stability pact, which only has growth in its name and nothing else, so that thanks to a genuine coordination of economic policies, we can turn it into a genuine growth and employment pact. The vital thing is not whether or not the stability pact is adopted in Amsterdam. It is that the single currency will help to create jobs as of 1 January 1999.

Peijs
Mr President, with regard to the Fourçans report, it is extremely important for us to determine how far we need to focus on economic cooperation during the third stage. We can also no longer avoid the problem of harmonizing the taxation systems within the euro zone.
We have heard much more recently about economic cooperation, such as at yesterday evening's ECOFIN meeting in Luxembourg on giving greater priority to the fight against unemployment in Europe. The socialists clearly see large government deficits as synonymous with social policy, so the proper organization of government finances has been pushed into the background, a move which I deeply regret on behalf of all of Europe's unemployed.
Not long ago, a Stability Council was set up at the request of the French. Now the Fourçans report, once again by a Frenchman, proposes an economic government with far-reaching powers. The intention is clearly to provide a counterbalance to the European Central Bank, particularly with regard to employment, and it seems that there is a wish to have a trade-off between inflation and employment as usual. But I am firmly convinced that the answer to the unemployment problem does not lie in undermining the independence of the European Central Bank. The policy advocated by the future ECB - price stability and low inflation - means low interest rates, which should stimulate investment and, in turn, growth and employment.
Next, tax harmonization. We need to avoid fierce competition between the Member States here. On the other hand, Member States whose government finances are in order and which therefore do not need to impose higher taxes on their citizens must not be punished for their success.
The VAT system too will come under pressure from the euro. For businesses, and in particular for small and medium-sized firms, the current VAT system is the main distorting factor in the single market, and even the man in the street can see why there are still discrepancies. Commissioner Monti bases his definitive VAT system on the country-of-origin principle, which in theory should remove most of the problems we have with the current system. But it is the implementation of the system, particularly the clearing systems, that is causing great concern among the net exporting countries, especially those with a mainport on their territory. Small and medium-sized firms also regard this as a problem. As long as VAT is calculated on the basis of national statistics and the statistics within the European Union are not harmonized, there will still be a risk for the net exporting countries. The SMEs are currently worried that they are going to have to supply the missing figures, which would in one fell swoop cancel out one of the main advantages of having the definitive system, which is to reduce the administrative burden on firms. In principle, the clearing system ought to shift the administrative burden from SMEs to the government, where it belongs. As far as I am concerned, the definitive system is only acceptable if it places the administrative burden where it belongs, with the government, and if a solution is found to the enormous risks presented by the clearing system.

Kaklamanis
Mr President, we have spent thousands of hours discussing economic and monetary union. Unfortunately, however, it still remains the great unknown. We do not know exactly when it will begin and when it will be completed, and we do not know what repercussions it will have for the peoples of Europe and, above all, for the social cohesion of Europe.
None of you, gentlemen of the Commission, has been able to tell us whether all the sacrifices being made, which are driving millions of people in Europe into unemployment and despair, will one day have some positive repercussion on the lives of those people. I believe, gentlemen of the Commission, that EMU will have no effect on international interest rates and energy prices. So why all this endeavour? Everything that is happening, along with the democratic deficit that exists in the European Union today, is leading inexorably to the two-thirds society. It is imperative that you change the timetable, and also the criteria, and, above all, gentlemen of the Commission, that you provide us with more truth and more transparency. We cannot deceive the citizens of Europe for much longer. They will rise up. The social explosion is getting nearer, and you yourselves will pay the price because you have forgotten that behind the figures there are human beings.

Katiforis
Mr President, Commissioners, ladies and gentlemen, Mr President of the European Monetary Institute, today we are debating reports whose common theme is the preparation for the single currency in connection with which you, Mr Lamfalussy, have been a prime mover. You have done it with exceptional skill and finesse and displayed a refinement of conduct which makes all of us regret that today marks your last appearance here as president.
Mr Donnelly has recalled your reference here to unemployment and to the obstacle that you believed it placed in the way of completion of the process. Your full view, if I remember rightly, was that high levels of unemployment would push some governments into relaxing budgetary discipline. Looking at the developments in France one could say that your prophecy is beginning to come true, except that it is coming true, of course, with popular endorsement, and despite the sarcasm that has been expressed in this Chamber about the voice of the people I do not imagine that anyone will say that we should get discard the people of France and appoint another people in their place. I am assuming that in a parliament the voice of the people should carry some weight.
With all due respect to your views, I must point out the one-sidedness of your positions concerning fiscal discipline. Unemployment may give an impetus to fiscal relaxation, and excessive budgetary stringency may, of course, create unnecessary and intolerable levels of unemployment. One has difficulty understanding in what way the persistence with a policy which is expanding unemployment and slowing down economic growth can benefit us as regards global competition, which also comes into play here.
Is it or is it not correct that technological innovation takes off, that costs are reduced, that productivity rises and that, therefore, competitiveness increases when an economy is flourishing rather than when it is stagnating and when unemployment is perpetuated? We are not saying that unemployment should be combated via consumption excesses, but for the stability pact effectively to prohibit public investment when private investment is not forthcoming is, to say the least, rash, and any move by the French Government to change things in the direction which this Parliament has called for would indeed be laudable. Furthermore, the imposition of fiscal stringency is wrong at this particular time. It is not a question of whether we can live with balanced budgets. We can and we must live with balanced budgets. What is at issue is the dynamic via which we achieve them and whether, as far as unemployment is concerned, now is the right time to be imposing a squeeze which is actually increasing unemployment. We need to get on top of the unemployment problem first and to escape from this impasse into which we have been led instead of digging a deeper hole for ourselves. After that we shall be able to tackle the issue of monetary stability, as indeed we must, with much more ease.

Secchi
Mr President, I want to speak mainly on issues linked to the Randzio-Plath and Fourçans reports, and then on fiscal issues.
On behalf of the Group of the European People's Party, Mr Harman and I have presented two amendments to Mrs Randzio-Plath's report, which we strongly support. These amendments are intended primarily to emphasize our clear agreement on the final choice of the principle of country of origin. In the light of many considerations, we are in fact convinced that this is the optimum mechanism for the definitive VAT system, because of its advantages in terms of greater simplicity for businesses, but also for consumers, who will be able to benefit from more transparent news and information about the relative advantages in different countries and on different markets. Finally, it will lead to better functioning of the internal market, which will also be stimulated by a more transparent VAT system. In particular, a system of this kind would strengthen the fight against fraud - and we all know how important that is. We feel sure it is the right system to adopt, despite a certain confusion which emerges every now and then, on condition that it is based on the simplest possible mechanism, both as regards public administrations, hence the compensation mechanisms others have already mentioned, and in particular, obviously, as regards the obligations on firms.
So our two amendments - Nos 9 and 10 - which we hope will receive wide support from Members of Parliament, are intended to reinforce this concept, and are also intended to stimulate the Commission, in the current transitional stage, to do the groundwork, so to speak, for moving to the definitive system. We are certainly facing all kinds of obstacles, in particular the famous unanimity problem. In this connection I am delighted that the Fourçans report, at points 11 and 12, incorporates the concept of a code of conduct in fiscal matters. We debated this at the last Brussels session with a report - I had the honour to be the rapporteur - which received a large majority and wide support from Parliament. I would like to record this fact not only as a point shared with the Fourçans report, but also as a question on which Parliament has already made its position clear very strongly.
I shall restrict myself to these points and just reiterate my deep appreciation for the work of both colleagues, which I have had the pleasure of commenting on briefly here.

Torres Marques
Mr President, I too should like to congratulate Mr Lamfalussy and all our colleagues who draft reports, but due to shortage of time, I shall concentrate in this speech on the Fourçans report.
The coordination of the budgetary and fiscal policies for Monetary Union is based on an initiative report by the European Parliament, which realised at a very early stage that it is essential to study not only the effects which the third stage of EMU might bring, but above all the new role which these policies should come to play in monetary stability, economic growth and the jobs market. It was even fundamental to make an in-depth analysis of the Maastricht Treaty in order to identify the mechanisms which would make it possible to define, follow up and control the policies to be pursued by the Council, the Commission and finally by the European and national Parliaments in this matter.
The principal objectives of the single currency are to bring optimum efficiency to the operation of the internal market and to make it possible to develop a sustainable economy, to have more and better jobs and to improve living standards in the community. So what means should be adopted to keep within these principles?
From the budgetary point of view I think that the main ideas should be as follows: national budgetary policies will continue to be a fundamental instrument, but the deficits should not be assessed on an annual basis, but on the basis of a global cycle. And consequently, the stability and growth pact - if it comes to be implemented - should in some way be applied automatically and independently of political judgment. Budgetary policy should therefore tend towards the re-channelling of expenditure to help to create employment and improve the well-being and safety of the citizens, not to reduce that. At Community level we must in the long term envisage budgetary growth in relation to GNP in order to move ahead of the 1.27 % envisaged for 1999 to higher figures which will make it possible to overcome situations in which we have asymmetrical crises.
As regards fiscal policy within the sphere of the single currency, harmonization measures are needed in order to avoid burdensome economic distortions, measures which must be applied above all in the field of taxation on savings, taxation of companies and the approximation of indirect taxation.
The broad lines are set out in this report by Mr Fourçans, whom I congratulate on accomplishing this difficult task. It is now up to the national and European institutions to define the means and the time-scale for realising our hopes placed in the creation of the internal market and the single currency to reach the objectives of growth, wellbeing and economic and social cohesion which the citizens of Europe aspire to.

Ilaskivi
Mr President, it now seems clear that the third stage of EMU will take place in accordance with the timetable, although according to the assessment of the Commission and the Monetary Fund only two countries, Finland and Luxembourg, will fulfil the convergence criteria It may therefore be necessary to interpret and relax them, partly in order to revive the employment situation and economic growth in some countries in the next few years and to prevent 'asymmetrical crises'.
Mr Fourçans' report has excellently analysed the narrowing of the choice of economic policy instruments under the new current conditions. In adopting my three amendments, the Committee on Economic Affairs accepted a rather softer line which also stresses employment and the prevention of difficult economic crises while at the same time acknowledging the broad lines of the report's analysis. What would this line mean if put into practice? Greater national freedom of action for budgetary policy. Its significance will be enhanced if the possibility of using exchange-rate policy disappears and the European Central Bank prevents the operation of national monetary policy. How should it be implemented? The 3 % ceiling on budget deficit should not be interpreted short-sightedly but in the context of the whole trade cycle. In this way a deficit can be used as a means of stimulating growth, and a surplus as a weapon of deflationary policy. For this reason, punitive interest rates should also be defined on the basis of the average deficit over the whole trade cycle and not the deficit at one particular moment. This last is important because no punitive consequences ensue in the case of divergence from any other of the criteria. A Member State may happily have a debt representing as much as 100 % of its GDP and inflation on an interest rate exceeding the criteria, without these incurring any punitive measures.

Paasilinna
Mr President, ladies and gentlemen, Europe's economic policy has taken a healthy, though to many people dramatic turn. The election victories of the Social Democrats have recently opened the door to the emergence of an economic policy which stresses the importance of employment. We cannot build a common currency on mass unemployment and the voters have now clearly shown that. We must not run headlong into a common VAT system on a wholly mechanical basis without taking account of employment factors. Fortunately, Mrs Randzio-Plath takes account of the social aspects in considering taxation priorities.
However, we must go further. We cannot assume that the Commission has the sole right to analyse and direct the structure of tax policy. Here in the European Parliament we must bear our responsibility and define the new structures and priorities which will encourage employment.
The current VAT directive which had its origins in the 1970s requires reform. Tax revenue has gone uncollected in all Member States since customs formalities were removed and because of the cheap depreciations carried out by big businesses. Large industrial concerns are able to adapt to the jungle-like VAT system, but SMEs are still trying to cope with the differences in practice between the various countries. Now the big firms do not want a new VAT system, but it is of vital importance to SMEs.
The common VAT system will have problems if we assume that public services come within the scope of VAT. Will schools, kindergartens and medical care thus become a saleable good to be taxed and privatized? And how about public service or charitable organizations which collect money for example for developing countries or for those who are excluded in their own society? Will we thus tax humanitarian work while closing our eyes to bigbusiness tax evasion? Setting tax rates at the same level is thus very problematic because it would distort competition.

Cornelissen
Mr President, I should like to comment on the report by Mrs Randzio-Plath. In paragraph 14, she quite rightly calls for particular attention to be given to tourism, which as we all know is an extremely important sector for employment, with some 10 million people in the European Union earning their living from it. In a number of Member States, VAT is a major cost factor for tourists, for example in Denmark, where VAT accounts for 25 % of holiday spending. We should not underestimate the effect of this. Margins in this sector are usually small. In Ireland, the VAT rate for hotels was increased from 10 % to 23 % at the beginning of the 1980s, with the result that over 10 % of Ireland's hotels were forced to close within four years. The Council, the Commission and Parliament all regard the fight against unemployment as our number one priority, and rightly so. Eighteen million people out of work is simply not acceptable. Experts believe that the travel and tourism sector offers the best chances of creating new jobs over the next ten years, particularly for women and young people. At the same time, they also conclude that of the tens of millions of new jobs that are expected to be created in tourism worldwide, less than 5 % will be created in the European Union. This poses two specific questions: firstly, what are the Commission's views on these studies, and is it prepared to try to ensure that the reduced VAT rate is applied across the board to all tourism-related activities? And, secondly, when can we expect the results of the study which the Commission promised six years ago into the impact on employment of the possible abolition of duty- and tax-free sales in intra-European transport in 1999? More and more studies are indicating that tens of thousands of people could lose their jobs, not least in the ferry sector.

Harrison
Mr President, I very much agree with Mr Cornelissen's remarks about tourism. They have application both in the area of VAT and also the single currency. 'Jobs R Us' might be the leitmotif of this debate. For several years many of us have toiled to bring the single currency to fruition in the belief that EMU will help Europe in its search for jobs for its people.
No one has been more single-minded about the single currency than Mr Lamfalussy. For Europe he has been the right man in the right place at the right time and we all wish him well in leaving the European Monetary Institute presidency. I well remember our interviewing him for the job and his declaration that EMU would not succeed if it left millions of Europeans without decent jobs in its wake. Indeed, in his annual EMI report, the President berates the EU and its agents for failing to create the conditions for jobs to be manufactured. Now, as some sceptical voices brand EMU responsible for job losses, it is time to spit out some home truths from abroad about EMU.
Firstly, it should be no surprise to us that right-wing governments in Europe are being thrown out by the people for failing to respond to the jobs crisis. Alain Juppé's myopic deflationary policies were mad in themselves but also a misapplication of the Maastricht Treaty. Jacques Delors has recently reminded us that full implementation of all policies available in the Treaty would have created a people's Europe. Economic criteria, like concern for levels of investment, jobs and productivity have been ignored but they were always as important as the five monetarist criteria.
Those criteria - especially the public debt and budget deficit litmus test - have themselves been subject to wilful misinterpretation. When will some commentators get it into their heads that flexibility of interpretation, pejoratively termed 'fudge' , is already, and wisely, built into the existing criteria. You cannot have your fudge cake and eat it by denying such inherent flexibility in the Treaty. We cannot be responsible for the Theo Waigels of the world who would declare 3 % to be 3.000 % and get hoist by their own petard when their deficit is forecast to overshoot by 0.2 %.
Similarly, the stability pact must be given its full title. It is a growth and stability pact, requiring a proper policy mix of fiscal and monetary instruments to enhance the job-generating powers of EMU. Vigorous and purposeful implementation of the Delors White Paper would have provided the kind of growth and impetus which would have matched the drive towards debt prudence. It is no surprise that the new kids on the EMU block are going along with the Delors vision. The new French Government wants a growth and stability pact and a federal bank which fulfils political aims and objectives of high employment and increasing prosperity for Europe's people. So does Gordon Brown, the new British Chancellor of the Exchequer, who would agree with us that 'Jobs R Us' is the cry for Europe.

Rübig
Mr President, Mr Lamfalussy, in the long run you cannot spend more than you earn. Families that go on spending more than they earn, lose spending power; in businesses jobs are put at risk and lost if, in the long term, they spend more than they make, and the same, of course, applies to States if, in the long term, they spend more than they take in. Anyone can lose credibility in that way, and we have in the past seen crises which have shown that all citizens then lose their assets and enormous numbers of jobs are lost.
That is why the Stability Pact is so important. We have to try to establish sound finances, as they are, when all is said and done, the best foundation for the internal market. The roof is build out of the single currency. Our finances are in the end critical to our ability to compete, including with States outside the European Union.
That is why we need to take a very close look at the harmonized taxes. This House has already made a preliminary assessment of what the subsequent costs will be. It is very important in relation to VAT harmonization also, to consider what the costs will be to the State, to citizens and to businesses.
My second point concerns lean management. I think it absolutely vital that those concerned are involved in the harmonization process. 99.8 % of businesses in the European Union have less than 250 employees. I think that we have to ensure that, for individuals, the taxation system is as simple and easy to understand as possible.
My third and final point concerns bench marks. In the same way as the convergence criteria provide useful bench marks, we need to have that same system for taxation, and indeed to have an improved version that can be applied when decisions are taken in the future also.

Hendrick
Mr President, may I start by thanking the rapporteurs for the excellent work they have undertaken in this very important field. In particular, I am encouraged to see how the role of the European Monetary Institute is shaping up and look forward to seeing the institute become the central bank.
One thing I would like to comment on are the obvious problems that we are finding with the economic and political developments in Germany and France. Both of those electorates clearly are somewhat concerned at the budgetary measures and steps being taken by their respective governments in trying to meet the Maastricht criteria required for European monetary union. In France that has manifested itself in a changing government, where the emphasis now will shift to jobs, prosperity and employment and away from the type of budget-cutting that we have seen in the past.
Similarly, in Germany there are problems with the ability of the German economy to move in a way which will help the country meet the 3 % deficit requirement. Given the changing nature of the view of the electorates in both France and Germany - and indeed the UK since the election - and the emphasis that will be placed on jobs, growth and employment rather than on budget-cutting, the position has altered to the extent that there should be a review in the Maastricht timetable. I say that with regret because I am a keen enthusiast of monetary union and would have liked to see it go ahead on time but the positions of the German and French governments will be such that if a Euro is created on 1 January 1999 it will be a soft Euro and very quickly come under attack from the currency markets. I want to see an emphasis on growth and genuine stability and if we go ahead on 1 January 1999 we will not see stability and growth may be hindered.

McCartin
I want to thank Mr Fourçans for his report and to refer to his report in particular as a good basis for a strategy on the whole question of the harmonization of tax in line, of course, with economic convergence in future years.
We should remember that the internal market has only just been completed. We should recognize that a considerable degree of economic convergence has already been achieved between the richer and poorer parts of the European Union. Yet we still have a wide degree of variation between the economic performance of the Member States, and indeed the traditions of government management of the economies. We should not jump to any rash conclusions about the need for the harmonization of tax in order to create equality of competition.
We should also remember that whatever laws or whatever rules we make will apply to an enlarged Community where economic convergence will be much less than what it is today. The report is therefore a good basis for consideration but we must not do anything rash until we see properly how the Single Market with freedom of movement for people and money interacts with taxation policy and fair competition.
In relation to some countries, I have heard it said that the manufacturing profits tax imposed by the Irish Government on manufacturing industry distorts competition. Yet I would like to point out here that when you consider the high rates of personal taxation, when you consider the social welfare system, when you consider the high rates of taxation on transport, you will find that the government is wiping out with some policies concessions that it gives to others and, in fact, competition is not at all distorted. It will take a number of years before we know what is actually happening.

Willockx
Mr President, ladies and gentlemen, I too should like to congratulate Mr Lamfalussy, the committee and the rapporteurs. The reports before us indicate that we are making considerable progress towards achieving economic and monetary union. A number of major political events have recently intervened in the final phase of preparations, and in a democracy it is logical and advisable to take account of such signals from the public. If we fail to do so, we shall simply undermine Europe's credibility further still. What is currently happening with the stability pact is supported not just by France, but by Parliament and Parliament's largest political group. It is not true, Mrs Peijs, that those who want the stability pact to have a proactive growth component are trying to derail public finances. For us there is no contradiction. We want compliance with the stability pact and the budget criteria, but the name of the pact is actually the pact for stability and growth, and the growth aspect also needs to be given attention. Proactive measures can take various forms. Monetary policy in the stricter sense can be tailored towards employment as well as inflation. The White Paper can be implemented in full, alongside the Member States' own labour market policies and in addition to a different, alternative form of taxation system to produce lower social taxes. So we are in favour of the timing of the euro and we also wish to see compliance with the letter and spirit of the convergence criteria. This does not mean 3.0 for a country such as France with a debt ratio of less than 60 %, and there needs to be room for some discussion on this point. We support an independent European Central Bank, but with democratic supervision by Parliament and a kind of economic government by the Council.
So what we favour is a twin-track approach. First, prove that we are right to be confident about the exact timing for the introduction of EMU and, secondly, introduce a procedure for expanding the stability pact.

Miller
Mr President, I will not bother congratulating Mr Lamfalussy and the Commission because I think they have had enough for one morning.
I should like to speak on the report on VAT. Value added tax is probably the only true European tax. It is also the tax which touches the lives of every European citizen. This tax, though, does not come without its problems. There are problems of differential rates in the various Member States; there are problems of implementation of the tax; there are problems on the collection of the tax. All these problems and differences expose numerous loopholes. It is the exploitation of these loopholes which is responsible for the massive fraud which is occurring within the European Union today. It is therefore imperative that any system of VAT which we adopt must be able to tackle the problem of fraud. That is why the Socialist Group calls for a common system of VAT which is simple, transparent and above all, easily monitored. A VAT system based on taxation in the country of origin would seem to be the best method available to reduce the scope for fraud.
The goal of the single European market is one which this Parliament is striving to achieve, but that also brings forward problems in the harmonization of taxation. In the field of value added tax this, on the face of it, would create innumerable problems. Cultural differences have led to different rates on the same items in different Member States. So, should we harmonize all levels of VAT? I believe that is not necessary. As my colleague, Mrs Randzio-Plath, said, harmonization should only occur where it is necessary and can be effective.
As I said at the beginning of this speech, VAT touches the lives of every European citizen. Therefore the system we adopt has to be simple, fair and effective. If it is not then we run the risk of alienating the citizens of Europe. Without the people's support we are no longer a Union.

Pérez Royo
Mr President, I should like to take this opportunity to speak in this very interesting debate to refer to various questions and in particular the uncertainty that prevails in the European Union and is reflected in public opinion and the front pages of today's newspapers.
First of all, uncertainty over the fulfilment of the convergence criteria in particular by the two central countries: Germany and France.
Secondly, uncertainty over the possible postponement of entry into effect of Monetary Union, due to the previous question.
Thirdly, uncertainty over approval and the functioning and effective application of the stability plan.
Fourthly, uncertainty over compatibility between the logic of Monetary Union and the strategy to boost growth and employment. Uncertainty or argument that can be handled in different ways.
Given all these uncertainties, I think, Commissioner and Mr Lamfalussy, that we must urgently send European public opinion and society a clear political message.
First of all, that message must assert that Monetary Union will be achieved in accordance with the set timetable. In order to meet that aim, we must assess fulfilment of the Maastricht criteria using the flexibility foreseen in the Treaty and that has to be done at once.
Secondly, we must affirm that Monetary Union will be accompanied by a coordination of economic policy between the Member States, with growth and job creation as the main objective. This strategy in favour of employment not only is not in contradiction with the logic of Monetary Union but, on the contrary, is precisely in the framework of the single currency where we shall achieve the vital level of autonomy to develop a European policy to boost growth and create jobs. Active growth policies that are currently coming up against serious limits in each Member State could be developed instead in the Union, by means of a common monetary policy. We must approve the instrument of a stable single currency, with low interest rates and less conditioning in respect of the external sector than that encountered at present by each of the currencies due to join the euro, in order to set in motion a European growth initiative.
I would like finally to refer to the question of the flexibility of the labour market and our economies, a flexibility that often - this morning too - is considered to be the only requisite for growth. Our economies - it must be said - under the imperatives of the single market and fiscal consolidation - have achieved a highly appreciable level of flexibility during this decade. We are still far off the flexibility levels of Singapore, Thailand or the United States, but we enjoy a very high degree of flexibility by European standards, by the standards that are acceptable to our public opinions. These public opinions, bearing the sacrifices imposed by that flexibility, must be sent an urgent and positive message of hope, of confidence that Monetary Union will also make faster economic growth and more jobs possible.

de Silguy
Mr President, ladies and gentlemen, allow me to begin by joining in the tribute you have all paid to Alexandre Lamfalussy and to tell him, on the Commission's behalf, how much we have appreciated the work we have done together. I think that if one day the history of the birth of the euro is written, our cooperation could be mentioned as a model of interinstitutional cooperation - and our work together with the European Parliament has also, it seems to me, been exemplary.
Mr Lamfalussy, I have only one regret: that you will no longer be among us when we set the list of countries that can adopt the single currency, at the end of April or beginning of May 1998. In any case, you will be near to our hearts, of that you can be sure.
I should like to reassure some of the speakers, at once - Mr Lukas, Mr Kaklamanis, Mr Hendrick, Mr Pérez Royo and Mrs Berès: the single currency will be adopted in keeping with the timetable and conditions laid down by the Treaty. Amsterdam must be a success and will be a success, because nobody can or wants to take the responsibility for holding up the progress towards the introduction of the euro nor for halting the progression of the IGC.
Today, Mr Fourçans' motion gives me the opportunity to salute a very useful contribution to what I call the cruisingspeed functioning of EMU. Of course, the Commission goes along with the principle and objectives of your resolution. Only an effective coordination of economic policies will make it possible to enjoy all the benefits of the euro's advent. It is part of the aims of EMU.
To comment on your motion for a resolution in relation with the debate that I have heard this morning, I shall try to answer two questions. Firstly, what are the instruments at our disposal for implementing that coordination of economic policies and secondly how can it be implemented?
First of all, the instruments. Budgetary policy, as you stressed, is and remains a national competence, but the treaty assigns precise aims to the orientation of public finances. I recall that the treaty offers, all the same, a framework that will make it possible to develop, in a context of stability, a policy mix favourable to growth and employment. No, stability is not the enemy of employment, it is even a necessary condition for its creation and that truth must not be hidden from public opinion. I agree with Mr Rübig that only healthy public finances will enable us to create jobs.
On this score I refer you to Article 105(1) of the Treaty, which stipulates that the main objective of monetary policy is price stability, while also specifying that, without prejudice to that objective, monetary policy must contribute to the fulfilment of the Community's aims as defined in paragraph 2, i.e. growth and employment.
The coordination of economic policies will actually make it possible to avoid conflicts between monetary policy, budgetary policy and wage developments. On that score, I should like to emphasize the importance of the wage mass, which accounts for 50 % of GDP in Europe, including social insurance contributions. Its evolution is therefore decisive for the balance of the policy-mix. Furthermore, you know as well as I do the provisions of Article 104, which effectively provide for a certain number of procedures concerning the financing of public deficits, especially in order to avoid the financing of excessive deficits. You know the procedures so I shall not go into detail.
As your rapporteur points out, I can say that any major swelling of the Community budget - although some members of the European Parliament would like it - is unlikely in the coming years. But that does not mean that we have no budgetary weapon. Even if there is no real Community budgetary weapon, all we need is to conduct a genuine coordinated action among the Member States, and the Treaty offers us the means for that. I refer to Articles 2, 3A, 102A and 103. It all follows on, is precise, and thanks to that, Mrs Berès, three instruments have been created in favour of the coordination of economic policy: the main guidelines of economic policy, the excessive deficit procedure and the stability and growth pact. You know them well, so I shall not go into detail.
However, I should like to say that the ECOFIN Council which met yesterday put the final touches to the text on the legal framework, the new European monetary system and the stability and growth pact. It is not the stability and growth pact, Mrs berès, that adds anything to the treaty. It is neither more nor less than the treaty, Mr Wolf. The stability and growth pact is intended, Mr Castagnède, quite simply to assert that public deficits have never created jobs.
I also note that, following your resolution of 30 May, many of the European Parliament's amendments were accepted yesterday by the ECOFIN Council. I should also like to add that the same Council adopted the main guidelines for 1997 economic policy. A lot has been said about the debate on the stability and growth pact, but no mention has been made of the debate on the main guidelines of economic policy, which is precisely an exercise of coordinating economic policies. The document has been transmitted to the heads of State and government. I remind you that, in that document, the Commission has, as you wanted, opened up the way for employment and public investment in particular to be emphasized.
Very briefly, how can we implement that coordination of economic policies without the instruments to do so? I think that we first of all need the political will. For too long, that coordination of economic policies has remained a dead letter in Europe. The situation has fortunately improved in the ECOFIN Council and I think that yesterday's meeting undeniably made significant progress, I would even go as far as to say a major step in the process. The fact that the 1999 deadline is so close is probably inciting, perhaps without doubt, governments to commit themselves to coordination. Application of Article 103 is on the increase and I would say has made it possible to lead to a genuine emulation leading to the improvement of financial management by the Member States.
Europe has now made spectacular progress towards economic convergence and it is the countries that have most reduced their deficits that have created the most jobs and seen the fastest growth. This coordination of economic policies is beginning to have positive effects. Undeniably, cooperation is progressing, the creation of the euro will strengthen that because if today it is useful, tomorrow it will be necessary.
I should say that without awaiting today's debate, yesterday's ECOFIN Council made inroads into the areas of employment and coordination of economic policies since the fifteen Ministers of Finance agreed to set up, on the basis of Article 2, 102A and 103 of the Treaty, a more active surveillance of employment matters and further coordination of economic policies, especially structural ones.
To that end, the Amsterdam European Council could adopt a resolution defining the main thrust of this new approach to coordinating economic policies. The Commission, Mrs Berès, welcomes this development which encourages the efforts that it has been making for several years, as Mrs Randzio-Plath will agree, to put employment at the top of the Union's priorities. Look at what we proposed in the new Treaty on the subject of employment. I also refer to President Santer's proposal for an employment confidence pact. There too, the Commission welcomes the fact that its efforts for improving the coordination of economic policies, making full use of the potential of Article 102A and 103, are now bearing fruit.
That is the political will but political will is not everything. You also need a framework. Your rapporteur proposes a political body. I should say that the natural political body for conducting this coordination is undoubtedly the ECOFIN Council. There is no reason in our view to create a new institutional body, even if I acknowledge that during the transitional period, when not all the Member States will be euro countries, the problem might arise. That is why the Commission is ready to back the idea of creating a Stability and Growth Council, as long as it is an informal body respecting the institutional balance, and does not interfere in the conduct of monetary policy which is the competence of the European Central Bank, and relies on the Commission's work, of course.
What should that coordination of economic policies deal with? I would say all questions of common interest. There is no reason to limit its scope. I am thinking in particular of the deepening of structural policies, those intended to improve the functioning of the labour market, and that is how I interpret the decisions taken yesterday.
My colleague Mario Monti will reply to your questions about the fiscal area. I can tell you that I share your concerns about social and fiscal dumping. That is why initiatives have bene taken in the framework of the main guidelines of economic policies.
I should like to conclude by emphasizing that it is political will that will make economic coordination effective. The necessary legal framework exists, and has been implemented. Now it has to be put into practice. It is for the various institutions to do so. The political will expressed yesterday by the Ministers of Finance to make progress in that direction is a good omen. It is the challenge that the achievement of EMU is now calling on us to take up.

Monti
Mr President, one Member in this debate found bracketing fiscal issues and monetary union together a little forced. On the contrary, I have to say I found that bracketing very interesting. The single currency is the culmination of economic and monetary union, the essential basis of economic union is a properly functioning single market, and a well-functioning single market demands proper coordination of fiscal policies. I will now briefly discuss the fiscal policy aspects, which have been deepened very intelligently in the reports by Mr Fourçans and Mrs Randzio-Plath, and I thank them both for the important work carried out.
I would like to start with a political point. We find ourselves at a stage in which the Member States are very much bound to the concept of fiscal sovereignty but are in fact largely losing that fiscal sovereignty to the benefit of the markets, as a result of mobility. The cover of a recent issue of the Economist was headed 'The disappearing taxpayer' ; it was about the phenomenon of mobility, which whittles away the tax base. As Mr Giansily and Mr De Rose have emphasized, subsidiarity is fundamental and so is national sovereignty. The Commission still considers it desirable to move from unanimity to qualified majority, at least for certain fiscal matters. Even if this does not happen, we must also make efforts to increase coordination of fiscal policies. The political stakes are very high: without coordination of fiscal policies, respecting subsidiarity, there can be no social market economy at European level, and no well-functioning market economy. There can be no social market economy because fiscal competition between the States is increasingly preventing each of them from redistributing income through the fiscal system. And the way fiscal competition takes place - so favourable to capital and adverse to labour, as Mr Wolf underlined - contributes to creating unemployment. Nor can there be a well-functioning market economy in Europe without fiscal coordination, given the obstacles facing firms, and indeed workers, in a single market without a minimum degree of fiscal harmonization.
That is why the Commission has been taking a new approach for about a year, aimed at raising awareness amongst the Member States of the need to make progress and laying the foundations for consensus and concrete proposals.
The Commission has put forward the VAT work programme dealt with in the Randzio-Plath report, the proposal for a directive for the taxation of energy products and a fiscal package being developed in the Fiscal Policy Commission. I agree with Mr Fourçans when he stresses that fiscal competition is not a negative phenomenon in itself, but it becomes one when it involves asymmetry and unfairness, as it does in many cases.
As a result of continuous contact with the European Parliament, in particular with the Committee on Economic and Monetary Affairs and Industrial Policy and with the group of permanent representatives of the finance ministries, the Commission has been finalizing a fiscal package, which coincides in many respects with the lines proposed by Mr Fourçans, consisting of a code of conduct, especially as regards company taxation, measures to eliminate distortions in the taxation of capital, measures to eliminate deduction at source on interest and royalty payments between subsidiary companies and measures to eliminate some of the more significant distortions in indirect taxation.
I now come to VAT. The new VAT system, dealt with in the Randzio-Plath report, is, in the Commission's view, an issue of the greatest importance. As you know, after the result of the vote on the Randzio-Plath report in the Committee on Economic and Monetary Affairs and Industrial Policy on 22 April, nine amendments were presented and if you adopt them they will introduce changes the Commission thinks right. I very much appreciate the constructive attitude of all the political groups in deciding to reconsider certain extreme positions. I thank Mr Donnelly, My Thyssen, Mr Secchi and the others who have shown support for the Commission's project.
The Commission has presented a precise programme of work with a political timetable organized in three stages: the first deals with improving the current VAT system and therefore addresses the perspective Mr Cox has identified; the second provides for the modernization of the VAT system as regards telecommunications services; the third will genuinely simplify the VAT system, moving to a system based on taxation in the country of origin.
As Mrs Randzio-Plath has recognized, work is in progress on the preparation of this definitive system, to make simplicity its salient feature, responding above all - and here I turn to Mr Peijs and other Members of Parliament - to the needs of small and medium-sized firms and contributing to a major reduction in the serious phenomenon of fraud that exists today. I also want to reassure Mr Cox, Mrs Ewing, Mr Cornelissen and others that this will not be a leap in the dark, as every detail of the system will be covered and the issue of reduced rates will be examined in the light of social impact.
I feel certain there is no divergence of views between us on an essential point: before moving to the system of taxation at origin, the current system must be modernized, applied more uniformly and, where possible, simplified. However, I would like it to be really clear that the proposal which we are examining is not limited to the transitional provisions but relates to the entire sixth VAT directive, which specifically includes these provisions.
I conclude, Mr President, by observing that, in its report of a few months ago on convergence and in its annual report, the European Monetary Institute emphasizes the need for progress in fiscal harmonization, in particular as regards the return on capital.
Finally I would like to thank the two rapporteurs and all the Members who have spoken. We shall continue to work on these delicate fiscal issues in close cooperation with the European Parliament. Lastly I would like to associate myself with the homage paid by my colleague Mr Silguy, on behalf of the Commission, to President Lamfalussy.

Cornelissen
Mr President, I do not wish to hold up the sitting, so I would just like to ask the Commissioner if he will answer my two specific questions in writing?

Monti
Yes, I will.

President
Ladies and gentlemen, before I ask Mr President Lamfalussy to speak to conclude this debate, I think I am expressing the feelings of the majority of Members in this House, especially since this is the last time Mr Lamfalussy will be appearing here in this capacity in this Chamber, I should like in paying our sincerest, warmest tribute to him for the way he has collaborated with this Parliament and for giving us the benefit of his knowledge...
for his meticulousness and his personal qualities. Mr President Lamfalussy, please accept the warmest wishes of the European Parliament.

Lamfalussy
Mr President, ladies and gentlemen, I cannot answer all of the questions that I have been asked but I shall try to answer the basic question underlying your debate. How can monetary policy meet ordinary people's expectations? What can it not achieve and what should it not therefore promise?
The first aim that monetary policy has achieved is controlling inflation. That is a laudable direct aim: it must not be forgotten that inflation has always been behind most unfairness and inequalities. We are beginning to forget that now because we are fortunately coming out of a period of inflation. It should not, however, be forgotten that in periods of inflation the powerful and the rich can protect themselves against the ravages of inflation. It is the weak and the have-nots who cannot protect themselves from it. That is, in other words, a social aim that ought to be clearly put on the table.
Once inflation has been brought under control, monetary policy can contribute to economic growth. It can contribute to it by bringing down short term interest rates. It has the means and the possibilities and has already done so. I only need remind you of the figures: in countries where inflation has now been under control for several years, short term interest rates are now around 3 %; in countries where the control of inflation is more recent short term interest rates are still a little higher, but are on the way down. In six months to two years that will undoubtedly have an effect on growth.
On the other hand, monetary policy cannot bring down long term interest rates. That has to be made quite clear. I am particularly concerned with this: whereas long term interest rates, even in countries where short term interest rates are already very low, are relatively low, historically speaking, i.e. around 5.75 % to 6 %, real long term interest rates are still high, around 4 %. That poses a real problem. I do not think that those levels can be influenced by monetary policy. The reasons for this situation lie elsewhere, I think. Some people may fear that the euro will not be properly run: but that is not the fundamental explanation. I think that the fundamental explanation lies in two figures: between 1991 and 1996 public debt went up from 56 % to 73.5 % of GDP. There is no doubt that this huge increase has an effect on real long term interest rates and puts a brake on growth.
In other words, monetary policy can influence growth but not without the help of budgetary policies.
What can it do to help employment? In that unemployment is due to anaemic growth, monetary policy can help within the limits that I have just indicated. In that unemployment is due to structural factors, without a lot to do with growth, it can have no direct influence. I rarely refer to particular countries, but allow me to mention my own: Belgium. Belgium and the Netherlands have been pursuing virtually identical monetary policies for six or seven years and very similar policies for a very long time. Yet the two countries' unemployment figures are quite different: 9.5 % in Belgium and 6 % in the Netherlands. Monetary policy cannot be held responsible for that difference. We have to realise that. I think that the resorption of that part of unemployment - nothing to do with weak growth but the largest part - has to do with the implementation of other policies, namely structural policies, labour market flexibility and policies concerning indirect contributions that affect labour costs.
That policy can be pursued at European level. I think that the coordination of policies, as precisely and correctly described by Commissioner de Silguy, can be pursued at European level - but do not raise expectations that monetary policy cannot meet!
(Loud applause)

President
The debate is closed.
The vote will take place in the block voting time that will commence immediately.

VOTES
Díez de Rivera Icaza
Mr President, I think that Mrs Oomen-Ruijten should speak and then I shall answer her, if you will allow.

Oomen-Ruijten
Mr President, it was agreed in committee that something should be added to my original amendment, but unfortunately this has not been done. It was simply forgotten. The words 'stricter legislation concerning' should be added, otherwise the amendment does not make sense.

Díez de Rivera Icaza
Mr President, yes, I would agree to this oral amendment, if the European Parliament agrees because this Group is always in favour of measures to look after people's health and well-being.
(Parliament adopted the resolution)

Friedrich
Mr President, I should like to ask for clarification. It has now been said at several points in the German interpretation in relation to confirming the vote that you will be holding a roll call vote. I think that either that has to be corrected in the German or that you have on several occasions said that there will be a roll call instead of an electronic vote. Could you please sort this out because we do not have roll call votes in these circumstances. But if there really is to be a roll call vote, you should make that clear. As I said I do not know whether this is just a problem with the German interpretation or whether that is what all of the interpreters have said.

President
Mr Friedrich, I hope that the problem occurred only with the German vote, because when I announce a vote I always make sure that I say exactly which vote it is.

von Wogau
Mr President, we have a further problem with the vote on Paragraph 15. It had been agreed with the rapporteur that it was not strictly necessary to create a new political body here and that this task could be taken over by the existing bodies. That was what was agreed, and it was also the rapporteur's suggestion. We therefore ought - and I apologize for only now realizing this - to have voted separately on the word 'new' in Paragraph 15.
As Mr Friedrich has pointed out, we did not even know that it was a roll call vote. I have to say that I too have some problems with the interpretation from the Greek. My own Greek is not so very fluent, Mr President, but I am doing my best.
This is a very important political issue. I would vote against this report if we cannot reach agreement on it. I would also call on my friends to vote against the Fourçans report, although this distresses me greatly when I think about my friend, Mr Fourçans. I would therefore suggest that the rapporteur be given the floor again.

President
Mr von Wagau, first of all let me say that after all of the discussions there is one corrigendum published to the Fourçans report, namely where the word 'new' occurs. It has therefore been put to the vote with the word 'new' . Secondly, the rapporteur has been at pains to frame all of the points on which discussion led to a conclusion and in each case I pointed out where the addition or other change occurred, for the vote, either roll call or electronic. So I do not think there has been a problem at all, and I think that you know what you are voting on.

Fourçans
Mr President, I should like to reassure Mr von Wogau that the word 'new' is not in the text. If it is there, it is an administrative error, because in committee we voted for a text without the word 'new' . There must have been a transcription error. So the word 'new' is not in the text.

von Wogau
Mr President, to save the honour of the Sittings service, I shall explain matters. As a result of yesterday's negotiations, there was a corrigendum in which the word 'new' was deleted. But the majority voted against it. I have no idea why. A vote was then taken on the original text. If you look at your papers you will see that Paragraph 15 contains the word 'new' . If we could agree that the word 'new' should be deleted and the necessary correction made, then we would be happy with that.

President
Mr von Wogau, as you are aware, the word 'new' does not appear. There is a corrigendum, which is not being voted on, of course, in which the word 'new' is absent. You need not worry.
Before the final vote

Fabre-Aubrespy
Mr President, in the light of Mr von Wogau's remarks, I think that we should clear the matter up before the final vote. Paragraph 15 of the report submitted to the committee, i.e. the one adopted on 22 May and the subject of the written report, contained the word 'new' . In any case, it is included in the written report.
Did the text adopted by the committee include it or not?

President
Mr Fabre-Aubrespy, it has already been made clear that the word 'new' does not appear. That is how the report has been approved thus far and how it will be approved finally if you vote for it.
(Parliament adopted the resolution)

Seillier
Mr President, this new directive on TV broadcasting activities contains some positive aspects, especially since, in the field of subsidiarity, it acknowledges the fundamental responsibility of the Member States and their legal competence. On the other hand, on the question of the protection of minors, there is a clearly defined concern to work in conjunction with parents, through their representatives in associations and educators of all kinds, and to see how they can filter programmes that might be harmful to children, in particular thanks to technical mechanisms. Another positive aspect concerns the condemnation of pornography.
On the other hand, this new directive sins by omission on some basic points. It is not of much use to reaffirm the desire or the intention to encourage European productions unless the necessary measures are taken to ensure European producers the possibility of producing and broadcasting. The fact that a freedom is proclaimed in abstract, without ensuring the means, and in particular the financial and economic means, is virtually tantamount to hypocrisy. Nobody want quotas as an absolute but it is, as they say in mathematical logic, a necessary but insufficient condition. It is not enough to have quotas to have good European productions but it is an absolutely necessary condition.
Unfortunately, this revision of the Television without frontiers Directive does not contain any provisions on quotas, and it is therefore the ideology of a materialistic concept of the market that wins the day. That is not, however, the only concept of the market. We are all in favour of the market as a necessary economic phenomenon for dynamism, without its being an absolute. In this area, as in others, this has unfortunately not been taken into account.

Bernardini
Here we are faced with the joint draft text adopted by the Conciliation Committee on updating the Television without frontiers directive.
At previous votes, the European Parliament was the target of unjustified criticism by certain private operators, accusing it of being protectionist.
I wish to pay tribute to the European Parliament's work and that of its negotiators, who have managed to obtain a compromise acceptable to everyone at the Conciliation Committee.
On the three aspects that we classified as priorities (non-encrypted access to major events, anti-violence chips and independent producers), I think that the first one is of crucial importance.
Where the broadcasting of sporting events or other major events is concerned, what would have been the logic of granting exclusive broadcasting rights to given operators, preventing thousands of people from sharing their enjoyment? Let us take the examples of the Olympics or the World Cup, which have millions of spectators. I think it would have been harmful to grant broadcasting monopolies, for the sake of commercial and financial interest.
Our Parliament took a wise decision. It must now be taken up by the Governments.

Titley
I am delighted to support this conciliation agreement today. As a keen sports fan myself, I am relieved that major national sporting events will still be available to the public on regular television channels. Each of our countries has certain sports events which are more than just competitions between teams or athletes. They are an important part of popular culture and should be enjoyed by the nation as a whole.
Although these negotiations with the Council of Ministers have dragged on for some time, the result is a victory for all sports fans. My own country is making sure that our football cup final, cricket internationals and tennis from Wimbledon are available to the general public. I am tempted to ask if the Council could guarantee my favourite teams and players a place in these finals, but for the moment I am satisfied with the minor miracle which this compromise represents. Millions of sports fans can feel that they have won the cup today.

Ryynänen
The European Parliament has today adopted the 'TV Directive' which has come to us from conciliation. The directive, and particularly the solutions reached in the conciliation procedure are among the few items of EU decision-making which directly affect the everyday life of citizens. The directive seeks to protect for the citizen the TV broadcasting of major events such as sporting competitions on a TV channel accessible to all.
The televising of major events in such a way that all have equal opportunities to see the programmes is the responsibility of the Member States. All Member States should now make use of this power in the interests of their citizens and should define, together with the sporting organizations, those important events which they want to secure for universal viewing.
The recommendation adopted in the conciliation committee for lists drawn up at national level was intended to reassure the market in advance and prevent overheating. It does not prevent competition or preclude sporting organizations from having access to important sources of income. It is also to the sports organizations' and competition organizers' advantage to ensure the widest possible audience for the most important events.
In the European Parliament, and particularly in its Culture Committee, there was concern to develop TV programmes in the interests of children. There was also a strong public opinion demanding action to protect minors.
The proposed technical devices for filtering programmes are not, however, without problems. A particularly careful attitude needs to be taken to any kind of pre-censoring, which would not in any case be effective. There is therefore a continued need for further research in cooperation between the Commission and the Member States' authorities on the various possibilities of regulation.
In particular, the protection of minors must be implemented at national level. Broadcasters of programmes must take responsibility for the protection of minors.

Wolf
In its current form, the report is at best an uneasy compromise.
It is no longer possible to prevent cultural products being completely subject to market forces (quotas); the compromise rules arrived at for the new services, the guarantee funds, the independent producers and the criteria for establishing them as well as for the promotion of European products are reliant on extremely vague Commission promises.
As far as culturally and socially influenced programme content is concerned, we are therefore seeing the information society get under way with general commercial pressure winning out over cultural diversity. That is a bad omen for things to come.
We have, however, to recognize that this is better than nothing. It at least protects minors and guarantees that important sporting events will be broadcast. We have therefore abstained.
Perry report (A4-0190/97)
Blak
. (DA) The Danish Social Democrats welcome the fact that European citizens, through their complaints to the Committee on Petitions, have helped to put important issues on the EU agenda. Amongst other things, we are very happy that animal transport and human rights have been taken up in the committee.
It is also a positive development that EU citizens have begun to make use of the Ombudsman, who has proved to be particularly effective in dealing with cases.
Díez de Rivera Icaza report (A4-0183/97)
Elliott
Mr President, I am delighted that the Díez de Rivera Icaza report has been adopted, and particularly paragraphs 29-31 relating to the very serious problem of aircraft noise.
As the Member who represents one of the largest parts of London, near to Heathrow Airport and affected by the noise created by that airport, I am very pleased indeed. I am, in fact, president of a consortium of local, municipal authorities who are concerned about the noise issue. At the moment there is a public enquiry into the expansion of Heathrow Airport to almost twice its present size. The issue of noise is a very important consideration in that respect.
The European Commission has done much over the years to create quieter aircraft but that is going to be undermined if we allow even more aircraft to fly, particularly outside daylight hours. During the night, when other noises are minimal and people are trying to sleep, even the quietest aircraft produce a disturbing amount of noise. There is new scientific evidence to suggest that public health is much affected by this. So I am delighted that these paragraphs have been adopted.

Caudron
Mr President, ladies and gentlemen, initially the Commission planned to introduce a regulation against noise. Aware of the harm done by noise to the health of millions of Europeans, it seemed to want to take specific, practical and robust measures.
It seems now that we must now be content with a Green Paper, which should make it possible to hold a major debate on noise: a lots of 'ifs' for little effectiveness. That is to be regretted. Public debate is all very well, but it should lead to the introduction of binding Community provisions. It is no longer acceptable that Community policy should neglect anti-noise policy and I am sure the Commission is aware of that.
We live in a noisy society and it is for the authorities to limit noise sources, and the intensity of noise emitted. It is a public health problem. As the rapporteur stressed, the main sources of noise must be ascertained and aims and guidelines must be worked out. We must then apply common assessment methods and determine common indices for noise sources, before contemplating common legislation.
The European Union should no longer accept that 70 % of its population is subjected to unacceptable levels of noise pollution. We are ready to discuss that! But we must above all take efficient, swift measures, aimed solely at protecting public health.
I must congratulate Mrs Díez de Rivera on her serious, high quality piece of work.

Diez de Rivera Icaza
- The overwhelming majority vote just obtained in this House in favour of anti-noise legislation confirms what my report says and what was said at the heated debated last Monday.
It distinctly emerges that the citizens demand a clear legislative policy to this effect which sets objectives and options for priority actions for reducing intolerable noise levels.
Annex III to my report includes two letters from Juan Ramón Jiménez against noise, which I think are a treat, expressing this same concern about noise back in 1919...
For all the above reasons I do not doubt that the Commission, buoyed up by this voting, will be able to provide a global and coordinated response to the request we are all making.
Finally, I should like to express my thanks for the cooperation I have received from everyone, especially from Mrs Graenitz, who stood in for me so well during my illness.

Porto
The concerns expressed about budgetary intervention are quite understandable when, with the single currency, countries will cease to be able to intervene in monetary and exchange procedures.
But such intervention is very limited, since national budgetary deficits are not allowed to exceed 3 % of GDP - we are hoping to keep to the Stability Pact - and since it is neither convenient nor easy to increase taxes.
The rapporteur, Mr Fourçans, rightly points out the need for greather harmonization in this matter, especially as regards the taxation of company savings and profits to avoid fiscal dumping, which above all exacerbates the already widespread tendency to tax work carried out for other persons. But on the other hand curtailing participation in the national budget requires that, contrary to what some people are still maintaining, the Union Budget should exceed 1.2 % of GDP, so that in particular it is able to give greater support to countries which are lagging behind in structural terms. We must always have budgetary stringency, but that is not to say that a shortsighted approach should pose a threat to a project which will be decisive for the success of our collective metarmorphosis.

Schörling
The report contains many good addenda and specific points for the Commission's important Green Paper on combating noise. This is why we are supporting the report in the final vote.
But we cannot support points E, 1, 11, 12, 15, 22, 23, and 30. These points advocate European framework legislation for an area which we most definitely consider should be subject to the principle of subsidiarity.
Mezzaroma report (A4-0194/97)
Berthu
Mr President, the 1996 report by the European Monetary Institute reveals once again the weakness of growth in Europe and the unbearable levels of unemployment, which continue to weigh down on public accounts and aggravate social imbalances. Faced with this situation, unfortunately, most countries are trying to meet the convergence criteria, not by reforming their administrations but by increasing taxes, braking growth even further, something that could expose the growth concerned to serious political problems, as has just been seen in France.
This leads us to a paradox. Whereas preparation for the single currency should in the mind of its promoters, offer an opportunity for stricter public management favouring liberalisation and growth, it has turned out, given the blockages in our societies, to be a depressive mechanism attracting more and more taxes towards the public sphere.
Alas, this situation is the subject of no serious analysis. The governments are going to content themselves tomorrow with interpreting the criteria as trends, which means putting rigour on to the back-burner. Others want to add an 'employment' chapter to the stability pact which, in the framework of today's Europe, would just be a little window-dressing. Switching to the single currency in these conditions would only prepare for a weak euro, with little credibility, quickly turning into a source of tension between the participants and cancelling out most of the advantages expected on paper of monetary unification.
We should also ask why Europe currently seems to be sinking into paralysis. I see two reasons: one is that the European policy of building a super-State is trying to unify everything, including the currency, by imposing new rigid restraints, and on the other hand - it cannot be said enough - the policy of a poorly conducted international opening has led to higher unemployment, thereby compromising the conditions for achieving the single currency. Finally, the destroyers of Europe are hiding in Brussels itself.

Ahlqvist, Theorin and Wibe
As this report is based on the fact that economic and monetary union will come about and also supports this project, we have abstained in the final vote on the report.
Should EMU come into being, of course we would want democratic control of the European Central Bank to be as strong as possible. But the most appropriate course of action is for national parliaments to have democratic control over monetary policy via their elected representatives.

Gallagher
While the economic convergence criteria are a major topic of discussion within the European Union, at the end of the day a political judgement must be made. The gold revaluation dispute and the results of the election in France should not cause the next phase of EMU to be delayed. A delay resulting from the French Government's insistence on renegotiating or reviewing the Stability Pact rules could change the political atmosphere and this would not be good for Europe. I believe that this would result in instability.
This House must call on the heads of state to make a clear and unequivocal statement at the Amsterdam Summit and insist on proceeding as planned to the single currency on 1 January 1999.
Europe has too much to lose by not complying with the conditions and the approach as laid down by Maastricht. The benefits of EMU are obvious.
Ettl report (A4-0185/97)
Ahlqvist, Theorin and Wibe
As this report is also based on the fact that economic and monetary union will come about and it supports this project, we have abstained in the final vote on the report.
Should EMU come into being, we would of course want the European Central Bank to be as open as possible in its activities. But it is important to stress that subsidiarity must prevail by permitting national parliaments to exercise democratic control over their own respective National Banks so that monetary policy can be democratically controlled.

Ojala
The report contains some positive features in its assessment of Economic and Monetary Union (EMU), the European Monetary Institute (EMI) and the activities of the European Central Bank, such as the view that it is necessary to develop democratic supervision for the Central Bank.
A shortcoming of the report is its almost complete failure to touch on the issue of boosting employment. It is not possible to reduce the present high unemployment simply by monetary and economic mechanisms, and there is a need for an active finance policy, i.e. the more effective use of taxation and public forms of subsidy to promote employment. The stability and growth pact described in connection with EMU should also be examined from the point of view of promoting employment.
In the debate on the EU's economic policy, Parliament in particular should prioritize employment and the elimination of social exclusion. The reports under discussion here are notably on the issue of employment.
For these reasons, I voted against adoption of the report.
Fourçans report (A4-0192/97)
Martinez
Mr President, I suppose we will have to pay Commissioners overtime so that they can stay.
As of 2002, the single currency will get rid of the budgetary shock-absorber, i.e. the monetary sluice-gates that enable different economies to rise to different levels. The only adaptation variable will, of course, be the budgetary variable and taxation in particular. Only, a single currency will make the differences of taxation pressures between States more sensitive and will favour relocations.
I offer the example of what has happened to national rights: in Spain, for example, when the Basque Country lowered company tax rates, companies left Madrid for Bilbao. The same thing happened in France, over the Marne department car tax. The only way of avoiding injustice between, for example, ' relocatable' capital income and other revenues would be to plan for a European fiscal constitution adding at least a fifth criterion, providing for a ceiling on compulsory levies for all fifteen counties, a ceiling that might be set at, for example, an average of 40 % of GDP. That would then avoid having too many distortions.

Ahlqvist, Theorin and Wibe
As this report is also based on the fact that economic and monetary union will come about and it supports this project, we have abstained in the final vote on the report.
Above all, we take particular exception to point 15 in the report proposal. It proposes that 'a political body with considerable economic powers' be established with a view to developing a 'real combination of different political and economic instruments and the establishment of a mechanism for achieving standardisation' . We cannot support in any way whatsoever such political centralisation.
Point 16 of the report proposal also proposes that the European Parliament establish a 'committee of economic advisers' . There are plenty of acknowledged experts whom Members of Parliament can consult for advice without establishing new committees and bodies. Unfortunately there are already too many of these within EU institutions.

Andersson, Hulthén, Lööw and Waidelich
We would like to thank the rapporteur for his work in producing a good report. But we could not support points 7 and 15 at the vote. Point 7 would involve the use of totally subjective criteria for the control of budgetary discipline. The implementation of working in such a way would seriously threaten the stability of the single currency and in so doing also threaten opportunities for growth and employment. We think that a single currency is very important for growth and employment but there is a requirement that those countries who participate in the currency union should also contribute to a strong and stable single currency.
As far as point 15 is concerned, we think that the rapporteur's basis for a new political body in relation to EMU is a legal one in view of the need for increased democratic control. But we do not consider that the model proposed in point 15 will satisfy this need.

Berthu
The Fourçans report on the coordination of budgetary and taxation policies in the future single currency system shows very well, albeit involuntarily, the impasse in which Europe finds itself.
Given economic uncertainties, countries will have their national abilities to make responses to given situations greatly reduced, and there will be nothing at European level to take over that responsibility. Imbalances therefore are likely to grow more easily. The European Union would then enter a zone of profound upheaval, if we judge correctly.
Let us explain ourselves. In any economic area, a country can be hit by a particular economic accident, such as the bankruptcy of a major industry, very serious social unrest, etc. What economist call 'asymmetrical shocks' . To remedy those situations, countries have several weapons at their disposal: monetary policy, exchange rate policy, budgetary policy, for example.
But under the future system of the single currency, these national instruments will disappear or see their effectiveness reduced; internal changes will no longer be flexible but fixed by definition; interest rate policy will be unified; budgetary room for manoeuvre will be confined within tight limits by the stability pact; taxes can no longer be raised sharply, as the single market will prevail; more generally, economic policies will be coordinated and subordinated to Community aims, in accordance with Articles 102A and 103 of the Treaty.
In such a hypothesis, theory teaches us that the country facing the imbalance should be able to find help from a central European budget. But that barely exists at present and the Fourçans report acknowledges the fact that we should not dream in the immediate future of setting up budgetary and taxation federalism in Europe. Not only are people opposed to it, but in any case even if nobody opposed it, such an upheaval, which would call for most taxation levers in our countries to be harmonized and very substantial European levies to be raised, would not be possible in the short term.
This impasse is all the more worrying since the 'asymmetrical shocks' are not exceptional phenomena or marginal ones as we have heard some people in this Chamber pretend. In reality, when you have countries and societies with different economies, they never evolve in an exactly parallel fashion. Their relations are marked by asymmetrical 'slides' , constantly moving, that so far have been readjusted gently by equal slides in monetary parities. This brings us back to the fundamental question: the usefulness of several different currencies when there are several different peoples.
Finally, it appears that the countries of Europe, propelled by ideologues, had rushed headlong into the adventure of the single currency, without first of all checking to see whether all the conditions were met and whether they actually had the vital instruments needed to see it through. We are now practically up against the wall.
Is there a way out, enabling us to go further down the same line to accelerated unification? I do not think so. If we wanted to go down it, we would have to propose to our people, in no uncertain terms, radical constitutional changes that nobody wants, really. The Fourçans report tries to evoke the possibility of setting up at European level a political body comprising representatives of all the Member States, subjected to solid democratic controls and that would play the role of coordinating national economic policies.
We can see hints here of the famous 'economic government of Europe' which, in the current disarray of minds, serves as a lifebuoy for right and left alike. Unfortunately, this idea leads nowhere because if that 'government' wants to be anything other than a talking shop, it needs strong and specific powers; yet those powers could only be granted if we carried out radical constitutional reforms, which as we saw earlier are impossible. We are in a Catch-22 situation.
The only solution is to abandon the single currency and take a more progressive approach, a more reasonable approach, tailored to the real situation. For example the single currency could be superimposed on the national currencies, which would enable the people to learn about it gradually.

Cardona
This report deals, inter alia , with the consequences, at the level of fiscal policy, of the adoption of the single currency. From that point of view the clarity and coherence of this document are to be congratulated. As may be clearly seen, if there is to be a single European economy, it needs, in addition to a single monetary policy, single budgetary and fiscal policies.
The question, as this report rightly stresses, is to know who defines the objectives and implements the instruments of fiscal policy within the area of the European Union. According to the author of this document that could only be the economic governor of Europe, whose president is independent of the Member States with a mandate outstripping the Presidency of the Union. Such a governor would then naturally become the political governor of Europe.
Since I still have doubts about real convergence of the economies of each of the States, I cannot subscribe to the premises and proposals contained in this report.
Giving up fiscal sovereignty is tantamount to saying that the smaller, more peripheral States of the Union will no longer have available an important instrument for attracting investment, wealth, companies and job creation. The lack or inadequacy of infrastructures, the inability - due to various factors - to attract investment and lagging technology, as seen in the smaller, poorer economies of some States, can be overcome only by retaining fiscal sovereignty. A single fiscal policy would at the moment and in this context have the effect of preserving the lack of competitiveness both on the internal market and on the external market.
I do not think that is right in these circumstances, which is why I cannot vote for the content of this report.

Kirsten Jensen, Blak, Sindal and Iversen
. (DA) The Danish Social Democrats voted for the Fourçans report today.
The Danish Social Democrats agree with the rapporteur that there is a need for a certain coordination of budgetary and fiscal policy in the EU. We also strongly agree that tax exemptions and social dumping in some Member States represent a very serious problem. We hereby call upon Ireland and other Member States to which this may be relevant to drop tax schemes that are advantageous to firms but unfair to the other Member States.
The Danish Social Democrats favour very wide-ranging exchanges of information and coordination of initiatives between the Member States. First and foremost, to promote employment. However, we do not agree with the rapporteur that the proper functioning of Economic and Monetary Union at the third stage requires a new political body with considerable economic powers. We think that ECOFIN is an excellent and adequate forum for the cooperation that is needed.

Lis Jensen
. (DA) The People's Movement against Membership of the European Union, which I represent, cannot support this report. Since the preconditions for the introduction of EMU are not in place, it is clear that EMU is primarily a political project. Approximation of budgetary and fiscal policy should have taken place in a natural way and prior to the introduction of EMU, if it were in any way to prove necessary or desirable. Instead of this, attempts are being made to introduce harmonizations through the back door, thereby undermining the last vestiges of an independent economic policy in the Member States.
The reference in the report to asymmetrical crises should automatically trigger a reflection on the warnings which American economists have sounded. Since the Member State labour markets are not wage-flexible, it will put disproportionately heavy pressure on general EMU policy if individual Member States run into difficulties. This will undermine the credibility of EMU and may invalidate all the claimed advantages of a common currency and approximated budgetary and fiscal policy.

Lindqvist
The report is contradictory on several points. The introduction states that the single currency as such will not influence taxation policy. Further on in the text it says the opposite, that tax competition and tax dumping will force a 'code of conduct' into being, in other words that countries will undertake not to introduce taxation policies which are in conflict with the 'interests of the Union' , or alternatively will lead to tax harmonisation. There is mention of common taxation on capital, companies and border trade. The Centre group thinks that tax policy should continue to be a national matter. For this reason, I have voted against the report.

Sandbæk and Bonde
. (DA) The June Movement votes against the monetary dictatorship of the Maastricht Treaty and has therefore supported a number of amendments which offer scope for more economic remedies and for action on employment. However, that does not mean we want to be a party to any transfer of economic policy instruments from the Member States to the EU.

Theonas
For the participants in the single currency the commencement of the third stage of economic and monetary union will mean handing over sensitive sectors of economic policy to the European Union and the European System of Central Banks. The stability pact, which will serve as the main policy instrument, will be used by the big financial interests which control the policy choices of Brussels as a vehicle for stepping up their demands. The concept of national government as an institution vested with executive power will effectively vanish, and the national parliaments will, in essence, lose their competence in these matters.
The situation will not be all that different for the countries 'with a derogation' . The strengthening of multilateral supervision and the intensity of the pressures to adjust to the convergence criteria and to avoid public deficits will render any notion of national competence on budgetary policy meaningless.
As the time nears for commencement of the third stage and as the technical preparations are stepped up, so the situation that is being prepared for us looms ever more abhorrent. It is no coincidence that the clamour of indignation against Maastricht is increasing by the day and that in the face of growing working class anger political forces other than the communists are using slogans which distance them from the economic and monetary union provided for in the Maastricht Treaty: that they are trying to tinker with the provisions, talking about introducing a social element into convergence and maintaining that nominal objectives cannot by themselves achieve growth and that measures to support workers are also necessary. Of course, they have not yet gone as far as to propose that the intergovernmental conference that is now completing its work should amend the provisions concerned. Nor do they dissent from the fundamental principles and logic of the Maastricht Treaty.
Our demand for the rejection of Maastricht is being shown to have been right. It is manifestly obvious that chasing after nominal convergence criteria cannot provide solutions for the problems of working people and society. It can only exacerbate them, as the facts of the situation are showing. We do not think that any of the individual solutions proposed by the rapporteur, such as allowing Member States leeway to tackle significant exceptional circumstances or permitting a European derogation from the Maastricht and stability pact indicators, or establishing some form of coordination of taxation policies within those frameworks, can work at a time when the very concept of independent economic policy based on response to particular situations as they arise and on the choices of the peoples and governments of the Member States has to all intents and purposes been rendered meaningless. We disagree totally with the rapporteur's proposals for a form of 'economic government' The institutional edifice of the EU has no need of new political bodies or of any strengthening of the Commission's information-gathering powers. Such measures are aimed only at polishing up the image of the EU and at deflecting the anxieties of the people about the transfer of economic and political authority to certain opaque and remote bureaucratic mechanisms over which they will have no control.
In our opinion a better future can come only through total rejection of the institutional framework of economic and monetary union, of the brutal monetarist policy that it imposes, and adoption of another perception on economic growth that can combine recovery with improvement of the position of working people and widening of their rights. The message from the people encapsulated in the recent French elections, the escalating anger of the citizens and the steadfast struggle of the workers and trades union movement can open the way to destruction of Maastricht and economic and monetary union and to growth based on concern for human beings and their needs.
Randzio Plath report (A4-0164/97)
Martinez
Mr President, we tried to harmonize VAT and, as Mrs Randzio-Plath herself admits, the result is a disaster. It is a disaster in terms of the rules, leading to complexity rather than the aim of simplicity, with over 130 derogations, 66 possible options, without counting the different rules for the localisation of operations.
It is also a budgetary disaster, as a result of fraud, in that, since there are no more border controls, fraud by taxi (i.e. false addresses in two countries doing trade) has obviously increased. The only solution left, it seems, is to compound the mistake by levying VAT in the country of origin, which would call for compensation funds with macro-economic criteria based on GDP.
Excuse me, Mr President, but when you know what the Court of Audit says about GDP calculation in Greece or Portugal, then you can see what disputes there would be between the countries. The only solution again is the same one as for budgetary policy: establishing another convergence criterion, taking advantage of the IGC.
We must bring about a global harmonization by means of a compulsory levy ceiling and perhaps, if I were proEuropean - which I am not - I would try and think about the free choice of the least taxed geographical avenue, as is already the case for the rich and for capital, since the holders of capital revenue can shop around in Europe in terms of rules and regulations and go wherever they are least heavily taxed, which is not the case for workers. Now you understand, Mr President, why the rich are so much in favour of Europe.

Ahlqvist, Theorin and Wibe
We think that there is no real need for harmonisation of value added tax for the internal market to function since value added tax does not affect the comparative competitiveness of domestic or imported goods.
We also take strong exception to the two proposals in point 19 of the report proposal. We think that the principle of unanimity should be applied in the Council of Ministers for all tax matters. Nor can there be any question of majority decision making being applied to matters of indirect taxation which are raised in the Council of Ministers. Value added tax is extremely important to the Swedish National Budget. Sweden is a country which has one of the highest levels of value added tax in the EU. We simply cannot agree to transfer decision making rights over an issue which is so important to us to the Council of Ministers.

Andersson, Hulthén, Lööw and Waidelich
We would like to thank the rapporteur for a well prepared report. We could not support point 19, which concerns majority decision making on tax matters, at the vote. We think that the Council should, in the main, continue to handle tax matters in accordance with the principle of unanimity. But we think that common minimum standards for capital tax, company tax and environmental taxes ought to be drawn up and that decisions in the Council concerning these areas ought to be adopted according to the principle of the qualified majority vote.

Berthu
Mr President, the Randzio-Plath report on the common VAT system invented by the Commission gives hope to all those who think that the madness of certain projects can be halted after all.
The new VAT system being proposed to us is apparently founded on the taxation of goods and services in the country of origin (and not, as at present, in the country of destination), and would treat all European countries as a single domestic market where rates, packages and all other rules would have to be brought into line. This system would take away national decision-taking autonomy (is it not its main aim?) over a resource as vital for the States as this - since VAT receipts accounts, for example, for half of all French tax revenue. That loss of autonomy would lead to rates being harmonized regardless of national needs, other than suffering disastrous relocations, and the allocation of revenue no longer in State control. In fact there would have to be a very rough European share-out mechanism, based not on the real flows of goods and services but on the basis of statistics relating to the countries' GDP.
We are pleased to note that, in a quantum leap of realism, the Committee on Economic and Monetary Affairs and Industrial Policy of the European Parliament considered as 'untimely' the introduction of this new system and urged the Commission to put all its energy into improving the existing system. It is true that this realism has been stimulated by the negative positions taken by several Member States.
It is also true that it contains certain flaws. For example, the resolution ends with an appeal for majority decisions at Council, rather than unanimity, in taxation matters. That rule would have disastrous results as it would put an end to the only serious brake on the Commission's federalist activism.
Another example: the European Parliament's appeal for improving the existing system does not go as far as mentioning why the current system is flawed and riddled with fraud (everyone now recognizes that: it is because, to satisfy the dogma of abolishing internal borders, customs controls have been abolished and replaced by simple voluntary declarations). We would like to think that between maintaining certain outdated formalities and totally abolishing controls it might have been possible, if we had looked hard enough, to find a compromise version, satisfying the need for a safe taxation system while meeting the legitimate demand for simplification coming from the corporate sector.

Kirsten Jensen, Blak, Sindal and Iversen
. (DA) The Danish Social Democrats today voted for the Randzio-Plath report as a whole, but against its proposal that the collection of VAT on commercial transactions should be based on the country-of-origin principle, that VAT-rate differentiation should apply on an EU-wide basis and that majority voting should be introduced in the Council for decision-making on tax issues.
The Danish Social Democrats favour a certain coordination of policy on taxes and duties at EU level but wish to retain powers at national level to decide on VAT questions of key importance. It should still not be possible to force Member States into taking decisions on tax issues against their will. For example, it should be for each individual Member State to decide on the level of VAT and on any differentiation in VAT rates.

Lindqvist
The Commission has proposed the introduction of a fully integrated VAT system by the year 1999, in which all transactions will be taxed in their country of origin and not, as is currently the case, in the country of consumption. There are plans for five different draft laws from the Commission in order to implement this common VAT system. The committee supports the proposal in principle but thinks that we are moving too fast.
The proposal would mean totally harmonised, or in other words common tax rates, which would mean considerable changes and would reduce income from taxation in Sweden. Tax policy should really be a national issue. I have, therefore, voted against the report.

Theonas
In explaining my vote against the report on a common system of VAT I wish to express the following points.
It is true that the present transitional system of VAT has functional shortcomings and that it facilitates fraud and non-payment. It is on those things that efforts to modify the system should be concentrated. No actions have been taken, however, to stamp out corruption, to make the taxation and scrutinizing authorities more efficient, to tackle tax evasion and to ensure that VAT that is due is paid. There is never any mention of applying a zero or reduced rate on various items and services with wide public consumption as a means to strengthening the purchasing power of the working classes and of alleviating the impact of the austerity policy.
We dissent from the proposal that the country-of-destination principle should be replaced by the country-of-origin principle in regard to VAT collection. For many countries such a change would result in revenue loss and have extremely negative repercussions. Moreover, we think it is logical that as a tax on consumption VAT should be imposed and collected in the country where the consumption takes place. Some people will say, certainly, that introduction of the country-of-origin principle would be accompanied by introduction of a system of compensation, of a clearing procedure. We believe, however, that this would complicate the system even further. In addition, there is no guarantee that the principle of the neutrality of the tax would be safeguarded.
One of the main elements of the common system of VAT being examined by the Commission as a possible important simplification is the single-place-of-taxation principle for firms. In our view that would constitute an interference in direct taxation matters and run counter to the agreements on the avoidance of double taxation of income which the Member States of the European Union have signed on the basis of the OECD's model double taxation agreement. Specifically, it would run counter to Article 5 of that model which refers to application of the 'permanent establishment' concept.
We are against any attempt to increase VAT rates as a means either to increasing tax revenues or to offsetting revenue losses resulting from measures designed to reduce the insurance contributions of employers. On the other hand we do believe that reduction of the rates in certain circumstances for the purpose of boosting economic activity and, thus, employment in specific labour intensive undertakings and small and medium-sized businesses is a necessity.
In our opinion a main portion of tax revenue should be provided by progressive direct tax. Any action aimed at burdening consumption would constitute additional theft of the incomes of working people and violate the fundamental principle which should underpin a taxation system, namely that it should contribute to the redistribution of income.

President
That is the end of voting time.
(The sitting was suspended at 1.15 p.m. and resumed at 3 p.m.)

Telecommunications and ONP
President
The next item is the report (A4-0171/97) by Mrs Read, on behalf of the European Parliament delegation to the Conciliation Committee, on the joint text approved by the Conciliation Committee for a European Parliament and Council Directive on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of open network provision (ONP) (C4-0185/97-95/0207(COD))

Read
Madam President, I am delighted to invite this Chamber to approve the joint text. Although it looks very short it was arrived at after many hours of patient discussion and negotiation.
I draw your attention particularly to the items where we reached agreement on the financing of universal service, the study concerning the setting-up of a European regulatory authority, an agreement about the settlement of cross-border disputes, the issue of number portability for subscribers, the question of transparency, the basis of costs of interconnection and assistance for new providers seeking to enter the market. I know that the Commissioner will want to comment on the two statements concerning number portability and the endorsement of the position taken by this Parliament on the voice telephony directive in its first reading and also on the question of to whom the directive applies. I hope the Commissioner will be able to deal with this in his response.
I must draw the attention of this House to the fact that there is no Council representative here; that should be included in the record. However the following statement, which applies to number portability, was drawn up by the Council at the conciliation meeting: ' The Council states that it will consider carefully and take into consideration the Commissioner's opinion' . I know that colleagues who have followed this issue on the Committee on Economic and Monetary Affairs and Industrial Policy will be aware that many issues might be more logically attended to in different directives and we look forward to the Commission's proposals on an overhaul and review of telecommunications legislation in 1999.
Nevertheless, on interconnections, which are a pivotal part of the creation of the single market and the liberalization programme, it is to the credit of Parliament and its staff - and I would like to thank my colleagues who did so much to support me in this work - and thanks to the cooperation of the Council and the Commission that we have a well thought out, coherent and, I hope, effective piece of legislation. I request Parliament to approve the joint text.

Fischler
Madam President, ladies and gentlemen, I should like to begin by thanking all those who have contributed to the successful outcome of the conciliation process, particularly, Mr Imbeni, Vice-President of the European Parliament and co-chair of the Conciliation Committee, Mrs Jorritsma, cochair of the Conciliation Committee, Mr von Wogau, the chairman of the Committee on Economic and Monetary Affairs and Industrial Policy and you, Mrs Read, the rapporteur.
This directive is an important part of the new competition-oriented environment in telecommunications. New market operators will be able to reach existing end-users in a way that will promote increased investment and market growth in the telecommunications sector, within a predictable and stable regulatory framework. Organizations that hold a dominant market position will have to offer new market operators access and connection under transparent, reasonable and non-discriminatory conditions.
The directive will also guarantee the interconnection and interoperability of networks and services so that users throughout the Union continue to be guaranteed universal availability of telecommunications services. The result achieved by the Conciliation Committee is very satisfactory and, at the insistence of the European Parliament, the common position has been substantially improved in key areas: firstly, in regard to consideration of the advantages of a European regulatory authority; secondly, the funding of the universal service; thirdly, a cross-border arbitration process; fourthly, a cost-breakdown and cost-based pricing; fifthly, reasonably priced number portability and, sixthly, recommendations from the Commission for the development of a genuinely European market.
As an integral part of the compromise finally reached by the Conciliation Committee and in the interests of clarity, the Commission is making two additional declarations to be included in the protocol to the interconnection directive as finally adopted. Firstly, we have a declaration on Article 7(1): the Commission confirms that Article 7(1) of the interconnection Directive is to be applied to organizations operating the public telecommunications networks and/or publicly available telecommunications services as set out in Parts 1 and 2 of Annex I, which have been notified by national regulatory authorities as having significant market power, and only to those organisations.
The Commission's second declaration refers to the revised directive on 'ONP voice-telephony' . The Commission has undertaken, when it comes to state its position in the European Parliament's amendments at second reading, to accept the principle of Amendment No 25 to the interconnection directive, but it will carefully consider the implementation of the provisions identified and, in particular, the fact that the new number must be communicated free-of-charge to the user.
In conclusion, the Commission welcomes the achievement of the Conciliation Committee which has enhanced the common position and takes into account the important amendments by the European Parliament at second reading. The final text boosts the Community aspect of the directive and improves consumer protection. The Commission therefore urges the European Parliament to accept the compromise text arrived at by the Conciliation Committee so that this important directive can at last be adopted.

Read
Madam President, can I thank the Commissioner but just query one small point in his presentation?
In the Commission statement on Article 7(1) which he read out, the English translation omitted the final phrase. This is a very important phrase, over which we spent many hours of negotiation, in that it applies to organizations which have been notified by national regulatory authorities as having significant market power. This is the part that did not come over in the English translation: ' and only to those organizations' .
This is a very crucial phrase. Can I have an assurance from the Commissioner that it will be in the Minutes, as it is contained in the report that we agreed at the conciliation? It may just have been the translation tailing off.

Fischler
Madam President, to make things easy, I shall read out the definitive English version of the Commission declaration to avoid problems of translation.
' The Commission confirms that Article 7 paragraph 1 of the Interconnection Directive is to be applied to all organisations operating the public telecommunication networks and/or publicly available telecommunication services as set out in Parts 1 and 2 of Annex I, which have been notified by national regulatory authorities as having significant market power, and only to those organisations.'

President
The debate is closed.
The vote will take place tomorrow at 12 noon.

Production and marketing of honey
President
The next item is the report (A4-0191/97) by Mrs Lulling, on behalf of the Committee on Agriculture and Rural Development, on the proposal for a Council Regulation laying down general rules for the application of measures to improve the production and marketing of honey (COM(96)0596 - C4-0031/97-96/0282(CNS)).

Lulling
Madam President, on 20 January 1995, this House unanimously adopted my report on the difficult situation of European beekeepers and proposed direct support measures to safeguard apiculture in our Member States.
At that time we sharply criticized as inadequate the Commission's half-hearted 1994 discussion paper on the situation of apiculture in Europe and made specific proposals for, among other things, a pollination premium and compensatory payments for loss of income attributable to the absence of Community preference. Almost two years later to the day, we were consulted on a Commission proposal which took no account of our proposals and concerns and again provides merely for half-hearted, selective measures to improve the production and marketing conditions for honey in the EU, on the basis of individual State programmes. Those programmes are intended to be only 50 % EU-funded; ECU 15 m is earmarked for this in the EU budget, with the bulk of that - ECU 11.6 m - being destined for measures to combat bee diseases.
Commissioner Fischler, our feelings range from disappointment to anger at the lack of understanding shown for the difficult position of commercial or part-time beekeepers, and the serious consequences for agriculture and the environment if not enough bees are raised to ensure that the pollination that is so important from both an ecological and an economic point of view takes place.
The Commission neither can, nor should it, ignore the fact that trends in apiculture are disastrous in many regions. I can illustrate that with statistics from my own country, Luxembourg. Within the space of a year - between 1995 and 1996 - the number of bees declined by about 10 %. Almost half of all beekeepers are aged 60 and over. Only 4.75 % are younger than 30, despite the many imaginative efforts made by the Luxembourg Beekeeping Association which, like its counterparts in many other regions, with which I am in contact as rapporteur, is humming with activity.
The short-sightedness of those who refuse to make ECU 65 m available in the Community budget - that is about how much our proposals for direct assistance would cost - is almost criminal, bearing in mind that, through pollination, bees maintain more than 80, 000 different plant varieties, and that the loss of wild flora would also result in the disappearance of insects, birds and small mammals that depend on that flora for their food and habitat.
Since 1985, that is for 12 years now, this House had sadly been a lone voice in the wilderness of European bureaucracy, which can cope with the misappropriation of ECU 60 bn but would have us believe that the EU budget would come apart at the seams if ECU 65 m were made available to preserve beekeeping, even though the economic contribution made by bees to agriculture is probably in excess of ECU 5 bn and possibly even more. That can and must not be allowed to continue, Commissioner!
We have therefore amended and supplemented the Commission's half-hearted proposal. We want the pollination premium; we want compensatory payments for loss of income but we also want apiculture included in the arrangements for compensatory payments in the regulation on improving the efficiency of agricultural structures. We have nothing against national programmes to improve the production and marketing conditions for apicultural products, but we want them to be exclusively Community-funded. To prevent the distortion of competition caused by the very much cheaper imported honey, we are calling for uniform marketing rules for Community and imported honey, as consumers need to know what they are buying.
Unfortunately, our financial masters did not back us in their opinion. The Committee on Agriculture and Rural Development cannot understand this lack of foresight over contributions which would amount to peanuts in terms of the EU budget.
We do not want a market organization on the old model but the direct measures I mentioned earlier, and they have become all the more urgent because the opening-up of the market in honey as a result of the GATT agreement is increasing the pressure on European beekeepers still further.
We are therefore making an urgent appeal to the Commission and the Council of Ministers and asking them to accept our proposals. Like the bees, Commissioner, we are intrinsically peace-loving. But when bees are provoked they sting, and the same applies to us. And that can be very painful! So let me conclude by voicing the hope that the Commission and Council will learn a lesson from the bees' lifestyle. Bees are productive, cooperative, reasonable, reliable, generous and clever. And though, unlike the bees, the Council and Commission are not wisely ruled by a female, they should bear in mind that the might of the queen bee relies not on her sting but on the fact that bees perish unless they work for and with each other. And that too should be a lesson to you and to us.
We in the Committee on Agriculture could not support the perverse proposal of the Committee on Budgets to limit to five years the in any case paltry measures, nor could we endorse the attempt to classify the expenditure as noncompulsory.

Rehder
Commissioner, you will have to put up with this stinging contribution from our European 'queen bee' because she is not wrong. In the first place, it is good news when European taxpayers are prepared to make available ECU 15 m annually for something where the money is being well spent, where much can be achieved at little cost: the fight against varroasis, for instance, continues, and one of the fundamental ills of European apiculture is thus able to be tackled. That money is not being frittered away, nor is it susceptible to fraud. The scale insects are not, after all, European bees and cannot wreak the same kind of havoc here.
But I should like to urge both you and the Commission to take a further, long overdue step. Mrs Lulling made it abundantly clear that this is about finally giving beekeeping credit for the ecological service it provides in Europe. I want therefore to take up what has long existed in a peripheral region of the European Union, the Canary Islands, namely a hive-related premium. I think that what is possible in the Canary Islands must be feasible in the rest of the European Union also, although the existing justification for this special premium in the Canary Islands, namely that the climate is particularly difficult, is not of course so apparent here.
I therefore urge you to take on board these long overdue and modest demands. This is a contribution in the environmental interest and marks further progress for Europe's agriculture.

Filippi
Mr President, Mr Commissioner, ladies and gentlemen, I was a little uncertain whether or not to speak today because Mrs Lulling has been so skilful, so efficient and so effective in defending this report that I did not want to ruin the work she has done. But as Italy is one of the major honey producers, with its 1, 350, 000 hives, I felt I had a duty to support the requests Mrs Lulling has put forward, especially the economic ones, because that is what is needed to make progress along lines that have long been clearly necessary.
On this point I just want to emphasize - in a Parliament where rural development and development compatible with environmental needs are so much discussed - what a contribution this sector can make in this direction, even if it looks like a marginal sector in quantitative terms.
Mrs Lulling has mentioned the structural features of the sector in her country. I have to admit that in Italy the active population in this sector is ageing, but there are also new generations appearing, actually linking the sector to agritourism, that is, an agriculture with income from a range of activities, one of which is beekeeping. These young people need help, especially when they operate in mountain areas. We know where the aid needs to be directed and how to implement it: the fight against varroasis, the problem of pollination, the problem of technological innovation in the sector.
I invite Parliament to support Mrs Lulling's demands and I invite the Commission to respond positively to them.

González Álvarez
Madam President, one minute is not much time, but we are backing Mrs Lulling's amendments.
In 1994, I was the rapporteur for a report on bee-keeping on behalf of the Committee on the Environment, Public Health and Consumer Protection and I think, like her, that this sector is of importance for both the economy and the environment: there are around 500, 000 bee-keepers, 13, 000 of them professionals; Spain, Italy, Greece and Portugal are the countries with the most bee-keepers, and 90 % of all pollination is carried out by bees, working on over 80, 000 species of plants. Without bees, over 20, 000 varieties of plants would disappear. Europe has to make the most of that sector.
We fully agree with Mrs Lulling in respect of the difficulties facing bee-keepers. I live in a region of industrial and farming decline, and bee-keeping complements those declining activities and greatly helps producers. We therefore support this pollination premium, support for training, support for bee-keepers' associations and promotion of honey consumption which, I think we all agree, is extremely healthy.

Macartney
Madam President, if you will forgive the expression, Mrs Lulling's report is definitely 'the bee's knees' and we should be giving it all our support. Members have already explained how important bee-keeping is in various parts of the EU. Perhaps one aspect on which Mrs Lulling is especially helpful is the variations in conditions between different parts of the EU. In northern climes, such as Scotland or Scandinavia, daylight hours and the amount of sunshine are very different from the south and, likewise, the warmth of the sun which means that climatic differences have to be built into the provision of sugar in some cases for the honey.
I have one or two points to make which I think are significant. Firstly, I definitely support the idea of fifty/fifty funding from the EU which Mrs Lulling puts forward. This should be matched by the Member State governments. There is a particular worry about the growth of the varroa disease which can strike and have a catastrophic effect on the bee populations of various parts of Europe.
In Scotland we are immune from this disease at the moment, but we have seen the effects elsewhere. It is very important that every measure be taken to prevent its spread. In particular, I hope that the newly elected British Government will at last set up a bee inspectorate in Scotland which is one of the few parts of Europe which does not have inspectors for this purpose.
By and large, I welcome Mrs Lulling's amendments, although I have a word of advice for the Commissioner. If he intends to reject any of these amendments, I would suggest that he put on his protective clothing. Otherwise, he will be stung by this Parliament!

Martinez
Madam President, it is now two years ago - I think it was January 1995 - that the European Parliament unanimously came out in favour of a pollination premium and the Commissioner came out in favour of a compensatory premium to offset loss of income due to the absence of Community preference. But even when we were unanimous, our demands fell on deaf ears. For mysterious reasons, the Commission does not like bees. The European Commission does not like European honey, it prefers Chinese honey. Perhaps there is a Maoist lobby at the Commission, I do not know. That said, we produce only 123, 000 tonnes of honey. Out of world production of 1-1.2 million tonnes. So it should be possible to protect our bee-keepers.
You are proposing a false solution, a tiny crumb, a paltry amount: 15 million ECU on a fifty-fifty basis, a kind of poisoned gift and you will say: ' you see, we have done something for marketing, we have done something for quality' . For a country like mine, that means sharing 15 million francs or so between 3000 professional beekeepers and some part-time bee-keepers, in other words not very much.
We all know the problems and Astrid Lulling has stressed the sector's importance time and time again. The problems of Varroa, that little insect or mite; the problems of fraud - that has not been mentioned - using rice or corn syrups in feeders so that bees manufacture false honey; the problems of controls on entry into the Community; the problem, in France, of so-called biological honeys, according to a 1996 decree, but by definition honey is biological, and now we go and get biological pseudo-honeys from Mongolia; the problems of imports from China, Mexico, Latin America, goodness knows why, at world prices of 12-13 francs per kilo, compared with French production prices of 14-15 francs. The problem of labelling, too, Commissioner, because it should state on the label whether a honey comes from Mongolia, China or the Canaries, the Alps or my Languedoc-Roussillon.
There is a more general problem of the survival of plant varieties, the survival of life in a nutshell. I shall not repeat Einstein's lesson about humanity's survival being dependant on that of bees. I come from a country where bees were adopted on the imperial mantel, as a sign of authority. That is why, Commissioner, you are a mystery for me. I do not understand why you do not like bees.

Colino Salamanca
Madam President, I wish to congratulate Mrs Lulling on her report, in line with what we said when we held a debate on the reflection document presented by the Commission and also in line with Mr Böge's first report on the honey sector.
When looking at this, I have the feeling - as other speakers have said - that the Commission report is rather remote from the expectations and desires of the European Parliament. It is true that the document and proposals for the Regulation head in the right direction, but I think that they have fallen far short of our expectations. This refers in particular to two subjects already mentioned - given the situation of the Community honey market, given the absolute deficit in the Community and given the lack of regulation - those of pollination premiums and compensatory premiums to offset loss of income. These are such important subjects because of the tremendous cost differentials to be found in the Community and external costs. I therefore support Mrs Lulling's proposal and believe that these aids should be given.
Secondly, I should like to stress the need for the national programmes presented by the Commission, referred to by the Commission proposal, to be implemented with sufficient flexibility so as to take account of the different factors and realities in the different producing countries in the European Union. It seems to me that we should be sufficiently flexible to accept quite different situations in terms of bee feeding, hive maintenances, site maintenance, the different technical marketing management and support for transhumance; i.e. we should be sufficiently flexible in those national programmes so that these aids can be taken on board.
I also think that an effort should be made to market and promote 'honey products' (market studies, new market studies, design, specialized publications, animal nutrition, diet, etc), so as at least to take into account the reality in the different honey producing countries of the European Union.

Keppelhoff-Wiechert
Madam President, Commissioner, it is very unlikely that bees and honey are going to hit the headlines in Europe. Who cares that commercial and part-time beekeepers are having a hard time of it? Who cares that the situation of apiculture is becoming disastrous in many regions? Who cares that there are hardly any young beekeepers to take over? Who is even aware that there have to be enough bees to provide the pollination that is ecologically and economically so important?
Honey is produced at such low costs in third countries that the European producers are coming under increasing pressure. The Commission wants to agree to only ECU 15 m by way of financial support, and the bulk of that, ECU 11.6 million, is earmarked for measures to combat varroasis. Like the rapporteur, I urge the Commission to incorporate that measure into EU veterinary policy. It should also be funded under that policy.
As far as the Committee on Agriculture and Rural Development is concerned, this is a half-hearted Commission proposal. The Committee declared itself in favour of the pollination premium and the compensatory payments for loss of income, but also for apiculture to be included in the compensatory payment arrangements under the regulation on improving the efficiency of agricultural structures.
There are those who wrongly imagine honey to be an industrial product. But honey is a natural food that reaches the consumer's table without being processed. It is an unadulterated agricultural product. We need to have in the EU a comprehensive general scheme to ensure that the profitability of the sector is also guaranteed.
The so-called mature European consumer, Commissioner Fischler, could steer the market by his purchasing policy once the uniform marketing rules for Community and imported honey have been introduced. Consumers must know what they are buying. I am therefore in favour of completely clear labelling.
Let me make one further point: I did not this afternoon dress as appropriately as Mrs Lulling, who looks the bee's knees. But you will be aware that the bee is the emblem of the German association of women in agriculture, and women in agriculture in Germany share all the characteristics of the bee. I do not think that we are very spectacular either. But it may be that 'bees and honey' is the theme for the future.
You can join us, Mr Kindermann!
(Applause)
Funk
Commissioner, Madam President, I should like to begin by paying tribute to the rapporteur, Mrs Lulling, whose determination extends to sporting a new dress that is the bee's knees to mark her birthday. It seems to me that had she not been so persistent we should probably not have been holding this debate on bees today.
And it seems to me that we can only infer from what has already been said that we need to discuss bees, or apiculture will come to nothing. If a matter is not discussed, then there can be no further progress. Bees are valued in terms of the amount of honey and wax they produce but that undervalues them. The contribution bees make to the natural environment, to birds, to crop pollination, to fruit, berry and oilseed production cannot be overestimated. I myself grow rape and welcome every year the arrival of the beekeeper who comes and sets up his hives in my rape fields, because if he did not come or the bees did not fly, then the rape harvest would perhaps be only half of what it is now, as there would be only the wild insects to provide the pollination.
And so we should attach great importance to this incidental effect on the natural environment and, above all, we should attach greater political value to apiculture. For that, clearly, we need not only older, experienced beekeepers, but young people who are enthusiastic about beekeeping. It is terrible thing, but if you have vast experience and there is no-one to follow in your footsteps and take up beekeeping, then there will be no more beekeepers and no more apiculture either. We have therefore to support the whole system - the bees, the honey, the wax and all involved with it - and the positive incidental effects of bees.
Bees provide great benefit and that benefit can be expressed in more than just financial terms.

Fischler
Madam President, ladies and gentlemen, I should like to thank all who have made an appeal on behalf of the bee here, and particularly Mrs Lulling, the rapporteur, for her careful consideration of the Commission proposal and the suggestions she has made concerning a further review.
Back in 1994, the Commission put forward priority proposals for improving honey production and marketing in its discussion paper on the situation of apiculture in Europe. Those measures include combating varroasis, rationalization of transhumance, technical assistance and promoting honey analysis. I am glad to hear that the House supports the Commission in those areas. I can, of course, understand that there are many here who would like to go further and would gladly do more, but the scope for that is, unfortunately, very limited.
We can, however, certainly identify adequate common bases for the introduction of suitable regulations to support this sector. I have therefore read Parliament's position carefully and looked at all the recommendations in a constructive spirit. Unfortunately, I have also to say that the majority of the recommendations cannot be fully implemented for the following and, in my view, compelling reasons. Let me explain them to you briefly.
Amendment No 1, which concerns institutional issues, cannot be accepted as it stands because it does not constitute a legal basis and, consequently, cannot be cited in a reference. Amendment No 1 could, however, be accepted as a recital, to take account of the joint declaration of 1 March 1995. Amendment No 8 on aspects of the committee procedure must be rejected because a recital should be used to give the reason for the corresponding provision in a piece of legislation, and in this case there is no corresponding article in the regulation.
Amendments Nos 5, 11 and 12 call for greater flexibility as regards the individual State programmes and the priority measures. The Commission could accept the reasons for those amendments and inform the Council of this. However, they are not admissible in their current form because they go further than the priority measures proposed. Amendment No 4 is calling for the measures to combat varroasis to be transferred to veterinary legislation. That cannot be accepted because this is not an eradication measure. The measure is actually intended to help beekeepers to cope with the increased production costs that result from dealing with varroasis.
Amendments Nos 6, 13 and 19 propose the introduction of further measures in future on the basis of regularly conducted structural studies on the sector and on price formation. We cannot accept those amendments because the proposed co-financing of the individual State programmes has to be linked to the condition that the studies be carried out before the programmes are approved.
Amendment No 14 provides for the introduction of complicated rules for determining the co-financing ceilings for the individual Member States. Amendment No 15 is designed to change the proposed text, even though it provides for a simple and frequently used budgetary procedure. I am therefore unable to accept those amendments either.
I am, however, able to accept Amendment No 16. In the final analysis, it makes the proposed text clearer. Amendment No 17, which relates to structural policy aspects, cannot be accepted because it would make it more difficult to supervise the application of structural programmes and could result in subsidies being paid twice. I should like to make the following points concerning those amendments which seek to introduce new articles.
Amendments 2, 9 and 10 provide for the introduction of a Community pollination premium and a compensatory payment for loss of income. Those amendments cannot be accepted because it does not seem appropriate, in view of the general situation of the sector in the European Union, to introduce global arrangements for income subsidies or premiums. The Commission will, however, continue to support thorough-going surveys of the economic position of the sector.
Amendments Nos 3 and 7 call for marketing standards for honey. The appropriate framework for that is provided by the existing directive on honey which is currently being considered by the House, together with a range of other foodstuff directives, as part of the proposed simplification process. Amendments Nos 20 and 21, which provide for the rules on compensatory payments for mountain and hill-farming areas to be extended to cover other species, need to be looked at more closely in the context of the Council regulations on structural policy. I am therefore unable to accept those elements in the existing proposal, but we shall consider them further.
Amendment No 18 emphasizes that implementing provisions are needed not only for the supervisory measures but also in respect of Articles 1, 2 and 3 of the Council Regulation. I prefer the text as it stands because implementing measures are particularly important for the supervisory measures, not least because the Council regulation does not contain any special supervisory measures. I can in any event accept Amendment No 22.
The Commission is persuaded that the adoption of the regulation does constitute substantial recognition of the sector and will contribute to positive developments in it.

Lulling
Madam President, after all that the Commissioner has said to us, he accepts two amendments! Those are amendments in which we say that the beekeepers, associations and cooperatives have, of course, also to be taken into account and that the famous report, which the Commission is supposed to submit, should be submitted not only to the Council but to Parliament also. The Commissioner condemned everything else, using arguments which we shall of course look at once again in the Committee on Agriculture, but which are not real arguments, because there is no doubt that it is possible to take our demands on board. We have, after all, made specific proposals.
That applies particularly to the inclusion of apiculture in the structural directive. I could not explain all of that in my allotted five minutes, but the Commissioner should explain to me why Article 19 of the regulation cannot say that a beehive is as valuable as a sheep or a goat and that hives can therefore be included in the structural directive. You have the text there after all. This is not the first time that we in the European Community make changes to items in other regulations when working on a particular regulation; otherwise you should make a proposal if you think that would not be proper in legal or procedural terms. But you cannot say that that cannot be done! It definitely can be done, there is just a lack of willingness to do it! A pollination premium can also be introduced.
You cannot expect me to believe that there is no legal basis for this! Of course there is a cost involved, but it is feasible. I cannot be satisfied to hear you say that you want to look at various amendments and consider the issue once again. You will carry on considering until you are worn out considering and there is no beekeeper left in the Community. We have been studying the issue since 1985, and I think we know enough. It is, of course, possible to engage in even more detailed studies and improve the statistics, but everyone dealing with the problem knows that it is really the eleventh hour, the absolute last moment, if we are to rescue apiculture in the European Union, as all honourable Members here have proposed!
I do not agree with your so-called arguments, and I can also tell you that we do not accept that and that we shall therefore...
(The President cut off the speaker)

President
Mrs Lulling, I cannot allow you to continue. You have our every sympathy here in the European Parliament, and the Chair's too, but I do not decide on the debating time and I would ask you to understand that.
You have been here too long not to know that we are a special parliament and that speaking time is strictly limited.
The debate is closed.
The vote will take place tomorrow at 12 noon.

Summer-time
President
The next item is the recommendation for second reading (A4-0180/97) by Mr Belleré, on behalf of the Committee on Transport and Tourism, on the common position adopted by the Council with a view to the adoption of the eight European Parliament and Council Directive on summer-time arrangements (C4-0169/87-96/0082(COD)).

Belleré
Madam President, ladies and gentlemen, Commissioner Kinnock, when the Committee on Transport gave me the task of drawing up a report on the proposal for an eighth directive on the provisions relating to summer-time, I did not think it was an issue which would arouse such public interest across Europe. Like hitting the headlines as 'Belleré versus Juppé' in a French newspaper!
Earlier, in my report at first reading, I stated that I agreed with the aim of the Commission's proposal: harmonization of the dates for the beginning and end of summer-time to promote better functioning of the internal market and assist important sectors like transport and telecommunications. But we know very well that there are different positions on this issue, depending on the different experiences of each Member State, and on the basis of those considerations I considered that the decision whether or not to apply this time system should be the exclusive responsibility of each Member State. I am quite sure the great majority of citizens are in favour of maintaining summer-time, because it provides an additional hour of daylight for all kinds of activities, from sporting and recreational to services and tourism, especially in southern European countries, where the days are very short.
But we have an obligation to consider cases where the application of summer-time, in particular in the countries of northern Europe, has different or less beneficial effects than in other Member States. I have dwelt on the issue of energy saving, which has minor impact in some Member States, while in others, like Italy, which are not selfsufficient in energy, the application of summer-time last year produced an estimated saving on consumption of 900 million kilowatt-hours, over 0.4 per cent of national requirements.
I also touched on the health issue, the fact that the change in the circadian rhythm as a result of changing from summer-time to winter-time and vice-versa involves small quantifiable disturbances to sleep patterns, but these effects are certainly transitory and definitely negligible. As regards road safety, common sense clearly tells us there is a correlation between more light and greater road safety, but objective data from the Member States are needed to study this properly. I concluded in my first report by applauding the Commission's initiative in presenting its report, because it made an important contribution to evaluating the application of summer-time, but I stressed the responsibility of each Member State to make the decision.
In their common position the Commission and the Council demonstrated, for all response, that their minds were firmly closed to Parliament's position as set out in its three amendments, in particular those relating to the principle of subsidiarity, basing this approach on the fact that acceptance of such amendments would not have made the application of a system of summer-time compulsory as such, and on the fact that they were considered contrary to the aim of harmonization, which is the fundamental purpose of the directive. At this point the Commission and the Council at least have a duty to make clear to Parliament how much store they set by the principle of subsidiarity or whether they are prepared to sacrifice it from time to time if they think fit, creating obligatory conditions with effects which fall, for good or ill, on European citizens.
I am going to dwell on this point, because Europe and the values we seek to propose to the citizens do not take the path of compulsion or imposition, but the path of dialogue, mediation and respect for diversity. We need to bring the citizens closer to Europe, not put them in the position of suffering its effects, and we need to bring Europe - dare I say it - closer to the citizens. So in supporting a favourable opinion on the application of summer-time and harmonization of the date, I once again invite the Commission and the Council to draw up a detailed report on the consequences of the application of summer-time, by consulting representatives of interested sectors and national experts in the Member States, to bear in mind the principle of subsidiarity and the responsibility of each Member State, and to take greater account of the opinion of Parliament as the opinion of a freely elected assembly and the expression of the will of the European people.

Waidelich
Madam President, to begin with, I would like, on behalf of the social democrat group, to express our support for the common position on summer time.
We have heard previously many good arguments in favour of summer time from the rapporteur, but this concerns harmonisation of the dates for the beginning and end of summer time. We think this is a good idea because it will reduce hassle, particularly for the transport sector and will facilitate the free movement of the people of the EU and of goods and services. The majority of people in the EU, more than 80 percent, are also in favour of maintaining summer time. This further emphasises the wisdom of supporting and approving the common position now. So, once again, I would like to express our support for it.

Donnay
Madam President, ladies and gentlemen, during the first reading of the draft eighth directive, I had the opportunity to express to the Committee on Transport and Tourism my feelings on this important subject: summer-time.
Today we can only welcome the common position adopted by the Council with a view to the adoption of this harmonization text and I call on all members to approve the draft recommendation presented by Mr Spalato Belleré.
It was a French initiative, in the early 80s, to ensure that clock changing dates were harmonized at Community level, once summer-time had been adopted by all Member States. As a reminder, that approach was intended to eliminate any risk of impediment to the free movement of persons, goods and services.
Since last year, I am pleased to note that clock changing dates have been completely harmonized. Throughout the European Union summer-time now stretches from the last Sunday in March to the end of October.
As the head of a French local authority located on a border, in the Nord department, I am fully behind the adoption of the eighth directive which is in line with fifteen years of regulations in favour of harmonization. My department shares a 370 kilometre border with Belgium. Think of the importance of a time difference for the daily lives of people living on either side of that border, especially employees and schoolchildren. The same is true of all border regions in France.
This local example shows just how any reorganization of the time system must be carried out on the basis of an agreement and coordination between all the Member States of the European Union. If we adopt this directive, that is what will be done, at least until 2001.

Wijsenbeek
Madam President, allow me, before further ado, to congratulate you on your stunning election, with such a big majority, in your constituency, which has a common border with Spain and which nearly ended up suffering a time difference with people across the border.
I subscribe to the idea of subsidiarity, provided that the time difference between two countries never exceeds one hour. The time difference between Britain and Ireland, on one hand, and Greece and Finland, on the other, is two hours.
Nonetheless we survive and the sun still shines. This time difference between countries is not so serious, as long as the Member States change at the same time. We have reached that goal. We can therefore only welcome Mr Belleré's excellent proposal and report and support him, while regretting somewhat that we had to wait so long for the Commission to set the hour change at the same dates.
Could we not possibly make a concession, in order not to upset the delicate rhythms of Frenchwomen and French children?

Kinnock
Madam President, may I begin by joining Mr Wijsenbeek in warmly congratulating you on your stunning election to the Assemblée Nationale. The only problem is that every silver lining has a cloud, in this case the fact that this is your last day in the chair presiding over this Assembly.
I am certain my colleagues in the Commission will agree with me that the French Parliament's gain is the European Parliament's loss. In neither place, however, would Europe be the loser, because we are certain that you will sustain your vigour and your progressive sense of purpose in all roles. Personally and, on behalf of my colleagues, I wish you the very best of enjoyment and good fortune as your constituency's representative in the Assemblée Nationale.
Madam President, I am grateful to Mr Belleré and his colleagues for their thorough and speedy work. Naturally I welcome their proposed approval of the common position on summer-time arrangements in the European Union. The House will know that transport operators are awaiting the new directive in order to set timetables for transport services and many other sectors whose activities are related to the dates of the summer-time period are eager for conclusive arrangements.
In his recommendation Mr Belleré comments on the implications of summer-time arrangements in the present and future Member States of the Union, in many cases reinforcing points that have already been made by the Commission and by Members of this House. In anticipation of the future enlargement of the Union most European countries, both within and outside the Union, already operate a summer-time régime that is consistent with the Community directive. Our proposal was sent to all the countries concerned and the absence of negative reaction seems to indicate that harmonization of the summer-time period is widely accepted.
The Commission emphasizes the need for the Community to take the necessary action to harmonize the summertime period in order to remove obstacles to the free movement of goods and people. We are, however, prepared to listen, as suggested in Mr Belleré's recommendation, to those who argue that the various aspects and various situations in the Member States need to be examined in depth. Accordingly, the Commission will take into account the advice of national experts and representatives of the economic and social groups concerned and will be submitting a report to this Parliament and to the Council in 1999. I believe that that is the wish of the House and I am very happy to give that undertaking today.

President
The debate is closed.
The vote will be taken tomorrow at 12 noon.

Combined goods transport
President
The next item is the report (A4-0130/97) by Mr Stockmann, on behalf of the Committee on Transport and Tourism, on the proposal for a Council Regulation concerning the granting of Community financial assistance for actions to promote combined goods transport (COM(96)0335 - C4-0028/97-96/0207(SYN))

Stockmann
Mr President, Commissioner, the fact that combined transport is not, as anticipated, being discussed here shortly before midnight, is a good thing; it is, after all, one of things we are pinning our hopes on to make mobility permanently acceptable, and time is getting on.
Those of us involved in transport policy have always made sure that combined transport was writ large our speeches, larger than it was in reality. We sing its praises because we expect it to combine the advantages of the individual means of transport with shifting the rapidly increasing movement of goods to environmentally-friendly transport methods. The old PACT programme sought and the new PACT programme is designed to help bridge that gap between intention and reality, between statistically ascertainable and predictable traffic trends on the one hand and our knowledge of transport policy. At any rate, the ECU 22.7 m under the old programme were well invested between 1992 and 1996 in projects involving 16 international transport axes - incentives which allowed demand to grow. The current proposal for the granting of Community assistance for actions to promote combined goods transport will be based on a regulation and make available ECU 53 m over six years. That, in my view, is still too little, but a step and declaration of intent in the right direction.
The Committee on Transport and Tourism welcomes the fact that the new PACT programme focuses on direct measures. Innovative measures, be they investment in intermodal transport equipment, in transshipment facilities or for access to rail or inland waterway structures, are sensible and important. They are, however, to be promoted degressively. We do not want long-term subsidies. The commercial application of new techniques, which have previously been tested in European research programmes, and the measures to improve logistics and staff development reflect the fact that the programme of support is forward-looking. In its discussion of the proposed legislation, the Committee on Transport and Tourism placed particular importance on four aspects of the conditions attaching to the grant of resources.
First: the projects supported will have also to develop further the European network structure for combined transport. It is clear from the guidelines for the Trans-European Networks that, while the networks of the individual carriers and of combined transport are designed sensibly viewed in isolation, they do not tie in with one another - a wasted opportunity for intermodal transport. The Commission's consideration of the construction of freight freeways does not fully compensate for that omission. Priority should therefore be given to PACT projects which help bridge the existing gaps in the networks.
Secondly, even in the old programme, projects on three axes, which extended to non-EU States, were supported. The new programme too will be open to projects which promote combined transport with Eastern Europe. Given the political will to see the European Union extended to bring in some Eastern European States, we think that it is now necessary to take measures to shift the very rapid growth in the movement of goods from Eastern Europe to combined transport.
We should earmark an additional ECU 4 m annually for the relevant projects or at least discuss the issue again thoroughly two years from now. Taking the right measures at the right time helps save on future spending.
Thirdly: it makes sense to combine PACT projects with the countries of Central and Eastern Europe with transport projects to create the necessary infrastructure. That kind of synergy could be achieved using the cohesion fund. We are therefore expecting the Task Force on Intermodal Transport to engage in structured dialogue within the Commission so that synergy and complementarity can be achieved between all the funds and programmes in question.
It is certainly right to make a distinction between PACT pilot projects and research projects. But we should like to there to be a specific sum to take special account of projects which put the results of research into practice, particularly in the area of telematics and logistics, as this is where we shall see the maximum impact.
Finally, I should like to make one more point: all who believe that combined transport to be one of the existing possibilities for resolving our current transport problems must want to see all political measures brought together to promote it. That is why, in addition to this sound programme of support, we need a political effort to improve the policy framework, be this in relation to the monitoring of driving and rest periods or the implementation of external costs which we have just begun to discuss.
The way we deal with combined transport or, looking further ahead, intermodal transport, will show whether those of us involved in transport policy are and remain capable of political action in the face of current and future challenges.

Sindal
Mr President, Commissioner, ladies and gentlemen, it is hard to follow a rapporteur who has already given a brilliant presentation of the issues involved, but I nevertheless take the opportunity to praise the report. I also praise the Commission for producing a good proposal, and I hope as well that I shall be able to praise the Council for taking the helping hand held out by Parliament and the Commission to make combined transport a standard feature of our transport system. I agree with the rapporteur that the Commission communication is somewhat silent on the political feasibility of combined transport, but I am certain that, with Parliament's help, a way forward will be found.
That said, we do note with satisfaction that the 1992 experiment now looks as though it is developing into a proper programme. The aims of the programme are, as has been said, to manage the EU's transport resources in an optimum manner, taking into account the demands of environmental protection, but transport habits will not be altered through the effect of market forces alone. The aims of the programme are thus a key factor in our progress towards sustainable development. It was so easy to use lorries when there was plenty of time and the roads were not congested. Now that we have the Just In Time concept and a massive increase in transport volumes, we are confronted with a task: how do we ensure rational development? How do we transfer current traffic potential from the roads to more environmentally friendly modes of transport, such as the railways, inland waterways and the sea? My answer is quite simple: the carrot and the stick. We must change patterns of behaviour in transport. We must calculate all the costs of transport into a fair and effective pricing system. We must impose rules for crossfrontier transport, driving and rest periods and, last but not least, we must remember Eastern Europe. Again I agree with the rapporteur. The proposal does not have any special focus on Eastern Europe, although the corridors into the Central and Eastern European countries are expressly eligible for assistance.
It is not the first time I have mentioned the Baltic, but here we have a good opportunity to tell the applicant states that they must not make the same mistakes as we have done. We must tell them that transport today is a multimodal affair and that it is that we are seeking to achieve. I am reminded that, when we mention the Via Baltica, we are not just talking about a motorway, we are talking about railways and sea crossings as well. This concept can also be developed in the Mediterranean and the Adriatic. It is essential not just to look at individual areas in Europe, but to combine the experience we gather in one area and use it elsewhere.
As I have said, I support both the report and the Commission's initiative, and I hope that in the end we shall also get the Council on board.

Schierhuber
Mr President, Commissioner, ladies and gentlemen, I should like to begin by thanking the rapporteur for the work his has done and for this really good report. The European Union is in need of a reliable, Europe-wide transport system that effectively guarantees trade and mobility. As an Austrian, I should like to highlight the importance of combined transport, that is to say the transport of goods using at least two carriers, with the goods being transferred between them.
Because of Austria's geographical position as an immediate neighbour of the States of Central and Eastern Europe, it is particularly important to draw attention to the transport situation. Road traffic has already reached capacity, and, in view of eastward enlargement and the increase in traffic that will result, we face a total collapse of the system. We have, of course, also to take into consideration the increase in road traffic pollution. If we are to take pollution seriously, then it has to be combated and real ways of preventing pollution sought.
This transport system, which embraces a variety of carriers, can play a key role in the way transport in Europe is organized in the future. The social and economic demands of the community as a whole must take proper account of environmental protection and the safety of users. The situation can be relieved only if road traffic is combined with transport by rail and on water, that is to say if the different carriers cooperate and what is called an intermodal transport network is created. That method of transport is, unfortunately, still undervalued, and its capacities and the possibilities it offers far too little used.
The European Union researched and promoted combined transport through its PACT programme, a pilot programme from 1992 to 1996, and made available ECU 22.7 m for that purpose. That programme had positive results, and so the Group of the European People's Party welcomes the fact that the programme has been extended. PACT II runs from 1997 to 2001. Funding of ECU 35 m has been made available but, in my view, that is far too small a sum. I am therefore hoping for more financial support for the PACT programme. I am therefore also arguing for PACT to be interlinked with other EU programmes, such as PHARE for instance, as eastward enlargement takes its course.
The Group of the European People's Party supports all of the amendments in the report. The amendment tabled by the Group of the European People's Party on project selection and the granting of financial assistance was rejected in committee by one vote. In selecting the projects, the Commission should take the regions and Member States into consideration in a balanced way and ensure that decisions do not cause any distortion of competition as between regions and Member States.
I hope this proposal will be approved in plenary for the benefit of Europe's citizens.

Wijsenbeek
We know that we are all in favour of promoting combined transport. We all agreed on this when we dealt with the forerunner to Mr Stockmann's report. However, we have seen that combined transport is not really growing, either in percentage terms or in total volume. Perhaps the Commissioner could tell us whether, in the freight freeways project that he has put forward, combined transport can be promoted in such a way that - since this seems to be one of the main reasons why combined transport has failed to meet expectations - the forwarding agent can remain responsible for the goods during both loading and unloading onto the intermediate form of transport, usually the train. The problem is that whereas getting the goods on the train usually works well, because the train is waiting at a particular place and will not depart until a certain time, unloading can be a major problem, because the train stops only briefly and in any event goods trains never actually arrive on time where they are expected.
In short, two things are needed: the establishment of responsibility at the points of departure and arrival, and at the same time greater cooperation from the railways and greater efforts to keep to the timetables. This is where the problem lies, in the fact that each national railway company has its own responsibility, rather than all of them sharing it jointly.

Linser
Mr President, I should like to begin by warmly congratulating the rapporteur on his excellent report. Given the failure of the negotiations on transit with Switzerland, the report is all the more topical. As a Member for one of the most sensitive transit regions of the EU, the Tiroler Inntal or Brenner region, I particularly welcome the new and committed initiative towards combined transport, as we have already heard too much said but seen too little done.
Further developing the substance of the PACT programme is an important step in the right direction. I am thinking here of the investment in intermodal transport equipment, the enhanced monitoring facilities and the increased promotion of specific projects as opposed to mere feasibility studies. The financial framework that has been established and the increase from ECU 22.7 m to ECU 35 m are best described as token. Moreover, in view of the enormity of the task that professionally combining European goods transport demands, technically and logistically speaking, and the advantages - consumer-oriented and speedier transport of goods as well lasting prevention of pollution - that avoiding unnecessary traffic could bring, it is, sad to say, extremely unsatisfactory!

Kinnock, Neil
I am very grateful to Mr Stockmann, not for the first time, and to this House for their work on this initiative to build on the successful experience of pilot actions for combined transport. Secondly, I am grateful for the continuing commitment to combined transport that has been demonstrated this afternoon. Thirdly, I am grateful for Parliament's broad agreement with the Commission proposal.
I am glad to say that I accept several of the amendments submitted by the Committee on Transport and Tourism but I will, naturally, have to give some detail, especially on those amendments that we cannot accept. I hope you will bear with me, Mr President, and remember that I am coming to your constituency next month. I will not trade on that but I trust that I will get the odd second if I overrun my time.
Firstly, the Commission is sympathetic to the idea expressed in the first part of Amendment No 4 which prioritizes projects located on the trans-European network or trans-European rail freight freeways. A similar idea is already expressed in Article 2(2) of the Commission proposal. It makes sense to mention these two important aspects of our common transport policy more prominently in Article 6. However, I would stress that the notion of priority always presupposes that the project increases the competitiveness of combined transport through innovation. Consequently, a project on a freeway which does not satisfy this criterion should not receive priority over a project of excellent quality which happens not to be on either of the two networks. Where projects are equally excellent, however, priority should be given to trans-European networks or trans-European rail freight freeway-related proposals.
I can also agree to Amendment No 7. In so far as it relates to synergies with the PHARE programme, it is fully in line with the Commission's efforts to have a simple and transparent programme which makes combined transport more competitive. Naturally we should make sure that the PACT and PHARE programmes are managed in a coherent way. There should be no discrimination between modes. It is in that spirit that I accept Amendment No 3, which proposes to make access costs to inland waterway infrastructure eligible for assistance. I am also happy to accept the improved phrasing proposed for Article 4, in the first part of Amendment No 2.
As I mentioned, there are some amendments that the Commission cannot accept. Amendments Nos 1, 6 and 9 propose new selection criteria not related to the innovation and competitiveness that are the basis of this proposal. I can understand the motivation behind the proposal for additional selection criteria relating to regional preferences, preferences and for a certain modal combination and for research and development exploitation. But I have to say that they would introduce rather vague political notions into a stringent selection process based on verifiable economic and technical elements. That would run counter to the Commission's efforts towards transparency in this proposal. In view of PACT's limited resources and the continuing increase in applications for the use of the PACT facility, both applicants and taxpayers need to be sure of the highest degree of fairness and transparency.
The second part of Amendment No 2, which aims to increase the funding percentage for operations and decrease the funding percentage for feasibility studies, would risk distortions of competition in the market. We should not forget that not only does the subsidy for operational measures benefit certain companies and not their competitors, but the higher the assistance level, the bigger the competitive advantage for the selected companies. That is why a 50 % subsidy seems dangerous to the Commission.
While I understand very well the cautious approach to feasibility studies in the report, I still think we should give the chosen studies a subsidy of up to 50 %. First of all, studies do not have a direct impact on the market so the subsidy does not, therefore, lead to distortions of competition. Second, the selection procedure should ensure that the only studies selected are those in which we have a commitment from the applicants to take concrete action if the study results show feasibility. The main concern that Members may have about feasibility studies is that they collect dust in cupboards. I share that concern but on this occasion it is met by the PACT selection procedure.
Amendment No 5 would create legal uncertainty and is difficult to reconcile with the wording and spirit of Directive 95/18 on the licensing of railway undertakings. That directive provides, in any case, that licences shall be awarded within three months after all relevant information has been submitted. This provision ensures that proper account is taken of the interests of licence applicants, especially their interest in a swift handling of their demands. PACT certainly does not need to be more generous in this respect. I therefore cannot accept Amendment No 5.
The amendment concerning comitology, Amendment No 7, where an advisory committee is proposed, cannot be accepted. The two-way committee proposed by the Commission gives the Member States the necessary guarantee of involvement in the process. I therefore want to stick to the Commission's original idea on comitology. I am certain that the guests in Parliament this afternoon will be very relieved to have my assurance on that.
Amendment No 8 conflicts with the financial perspectives of the Community for PACT and the Community obviously has, in PHARE and TACIS, specific instruments to assist East European countries. PACT is primarily centred on the European Community. We should not overburden its scope by making it an instrument to foster accession, much as we support that principle. We should probably return to the issue at some later stage. But meanwhile Amendment No 8 is not acceptable.
Mr Stockmann's report is yet another clear demonstration of his continued and authoritative commitment to improving combined transport. I welcome that, as I welcome this House's continued support for actions to improve combined transport.
The pilot actions have already proved their worth. This new regulation will ensure that combined transport continues to develop its potential which, as Mr Wijsenbeek wisely said, is certainly needed. Combined transport currently takes a mere 4 % of the total share of the European Union's freight market. Many Members have pointed out the huge advantages of more extensive use of developed, modern facilities. We trust that the continued use of PACT will in future encourage the greater use of combined transport.

President
The debate is closed.
The vote will be taken tomorrow at 12 noon.

Tourism
President
The next item is the joint debate on five oral questions to the Commission:
by Mrs Bennasar Tous, Mr Provan and Mr Sarlis, on behalf of the Group of the European People's Party (B40162/97 - O-0042/97) on tourism; -by Mr Wijsenbeek, on behalf of the Group of the European Liberal Democrat and Reform Party (B4-0167/97 - O-0049/97) on tourism; -by Mr Azzolini, Mr Pasty, Mr Parodi, Mr Danesin, Mr Santini, Mr Tajani, Mr G. Collins, Mr Donnay, Mr Kaklamanis and Mr Girão Pereira, on behalf of the Union for Europe Group (B4-0171/97 - O-0077/97) on tourism; -by Mr Novo Belenguer, on behalf of the Group of the European Radical Alliance (B4-0172/97 - O-0078/97) on tourism; -by Mr Novo and Mr Theonas, on behalf of the Confederal Group of the European United Left - Nordic Green Left (B4-0173/97 - O-0079/97) on Community measures in favour of tourism
Sarlis
Mr President, your speed on votes is well known, but at least when there is a change of Commissioner and a change of report we request your indulgence.
Mr President, ladies and gentlemen, we are debating an oral question on tourism, an issue that is of concern to all of the political parties. There are many aspects of tourism which, when we look at them, raise enormous questions. The European Parliament forwarded a proposal to the intergovernmental conference and to the Commission advocating the insertion of a provision in the Treaty stating that tourism is to be considered as a sector of the economy and that it should be governed chiefly by Article 130 so that many of its various aspects, such as the Philoxenia programme and several other programmes that have preceded it, can be approached in a legislative framework.
To our great surprise - and all of the political groups here have been surprised given the importance of the matter - the Commission has not promoted the recommendation of the European Parliament that tourism be included as a separate chapter in the revised Treaty with its own separate legal basis and capital. And the Dutch Presidency, despite being fully aware of Parliament's recommendations on the subject, has itself done nothing to promote the inclusion of tourism, which makes an important contribution to the economies of the 15 Member States and provides employment for 10 million people, and has sat on its hands. There has been silence. Silence from the Commission. Silence not so much from Commissioner Papoutsis, but rather from the Commission as a whole, in that as a college it has made no real attempt to place tourism on the agenda of the intergovernmental conference. Tourism it not the same as foreign policy, defence policy, the common foreign and security policy or other things like that. It is different. It is closer to all of us, and just as there is a chapter for industry so, too, there should be a chapter for tourism.
I would like to know how the Commissioner himself feels about the matter. Other speakers will be making the same request. What is the position of the Commission at least? What plans does it have to raise the issue of tourism again or to put it back on the negotiating table, albeit now, at this late stage?

Wijsenbeek
Mr President, we have called for tourism to be included in the Treaty. I am delighted to have this opportunity to talk to Mr Papoutsis as the Commissioner responsible for tourism rather than as the deputy Commissioner for transport, although the dossiers are closely linked, and this was why we felt that they should be separated a little further by giving tourism its own title in the Treaty. However, the Heads of Government do not appear to be in favour of this, so perhaps Mr Papoutsis could tell us what the situation is at present. It is absolutely vital for tourism to have a separate title, because otherwise it will be impossible in many cases for the Union to exercise its powers in this field, powers which people already wrongly dispute. This is also why, without going into detail, Parliament has given its broad support to the Philoxenia programme, and we are also pleased to see that the Commission has now adopted a new approach to tourism and is setting about giving the Community tourism programme a little more body.
In previous years, we have seen tourism allocated ridiculously low levels of funding, but considerably more has now been set aside for the programme for the next five years. From 1993 to 1995 it received ECU 20.5 million, whereas now it is to get ECU 70.3 m. It is therefore essential for DG XXIII to come up with a decent programme. However, I think the most important thing is for the Commissioner to ensure that tourism in Europe is presented to the outside world as a unified sector where the same rules and standards apply, which is why it needs to be included in the Treaty.

Santini
Mr President, when we talk about tourism - in fact we have done so very rarely in this Chamber - it always seems almost as if we are talking about a marginal, occasional or optional issue. It seems we can talk about it or just as easily forget it. Instead, as others have already stressed, tourism is actually a highly valuable industry which indeed produces well-being and GDP, but above all produces employment. The nine and a half million employees - a 1992 statistic which no doubt needs updating - constitute a formidable platform of employment, especially as it provides jobs for people in areas often less fortunate.
When we talk about tourism there is a serious risk of misunderstanding. We think of Paris, Rome, Amsterdam, hence big city tourism, a type of tourism which needs neither promotion nor attention, far less subsidy. It is an automatic, endemic tourism, which can have no need for extra investment. What does need concrete commitment from the Commission and this Parliament is peripheral tourism in depressed areas. Here there is another misunderstanding to be overcome: that famous subsidiarity. What does it mean? Leaving the peripheral areas the task and the burden of organizing, and of course financing, their own tourism sector? They will never do it! That is where there is a need to intervene with united action, with a serious programme which has good ideas, but also considerable funding, to provide incentives for the areas where tourism needs to be subsidized.
So here lies the logic of taking up virtual, merely oratorical, positions, so far expressed in the tourism actions launched five or six years ago and extended only last year, but always as an experiment, something which still has to happen.
And then at last tourism, too, found a programme with an eloquent name: PHILOXENIA. We were all a little under the illusion that this name would finally make it possible to pass ideas and financing that would give Europe's commitment to the tourism sector body and substance. In November came the cold shower: the 'no' from the Council, a rather icy 'no' , especially as it was backed by reasons that were barely credible and came from only three countries, whereas all the others believed in the need to intervene in this sector.
This programme, with all its potential and its wealth of good intentions, is fortunately coming back in through the window now, and at last there also seems to be a reasonably concrete project beneath the financial aspect. So I ask the Commissioner to take the old proposals up again, for a cultural tourism, a social tourism, a tourism of the weakest, and finally give it body and robustness with new ideas, especially at the financial level.

Novo Belenguer
Mr President, Commissioner, I do not want to be repetitive but we are dealing with an important sector; a sector where, unfortunately, as we all know, we shall only make progress if we really make a considerable effort.
This is a sector representing over nine million direct jobs, an average of 5 % of GDP, and one third of the European Union's service exports. It is a sector which - and I think this is an important feature - helps the more and less favoured regions achieve something the European Parliament and all other European institutions are seeking: social cohesion.
Reference has been made to the PHILOXENIA programme which was on the verge of being approved last year and in the end was not approved. We are convinced of the importance of tourism for employment and on the economy and want to know why and how the Commission is going to try and put pressure on the Council so that the programme can be approved next year. If not, we want to know the economic assistance that will be given to this vitally important sector for the European Union.

Novo
Mr President, ladies and gentlemen, the PHILOXENIA Programme, which involves a series of measures for tourism and which, basically, we supported, has unfortunately not been put into practice in the most appropriate and desirable manner.
We therefore think that the European Parliament should take a political stance reaffirming the need to put into practice the actions which were envisaged for this field, which is a major source of jobs and which therefore plays a most significant role in the development of some less-favoured regions, thus promoting economic and social cohesion in the European Union.
Another reason for taking such a stance is that the promotion of tourism tends at the same time protect the environment and the cultural and architectural heritage and to encourage occupational training and sustainable and stable employment, so that financial resources need to be stepped up within the framework of the current and future policy.
We therefore consider it neither necessary nor appropriate to support the setting up of a common policy for tourism which might entail some centralization which is incompatible with national diversity and which offers little opportunity for transparency or participation. We do not therefore support the motion for a joint resolution due to be adopted at the close of this debate.
It is important - and it seems to have been forgotten in this motion for a resolution - to reach the maximum level of consensus possible to press for the implementation in practice of measures approved long ago which the European Parliament already agreed to but which are still blocked. Then we should not have the impression that proposals were being made which were of doubtful effectiveness based on dubious reasons; what is essential and necessary is simply to make specific measures out of what is already envisaged and so essential for tourism in the European Union.

Papoutsis
Mr President, ladies and gentlemen, the Commission shares the views of the Members of this Parliament concerning the economic and social importance of tourism, particularly as regards its potential for increasing employment in Europe. The Commission's approach on the matter is expressed in the first objective of our proposal for the multiannual programme to assist tourism in Europe, the Philoxenia programme.
As the European Parliament has stated, tourism has substantial job-generating potential, and it does, of course, provide work, in particular, for vulnerable groups in society such as women and young people. It contributes also, in a very significant way, I believe, to the strengthening of economic and social cohesion and to development in remote and island regions. The Philoxenia programme has ambitious objectives, but it is also extremely important with regard to the creation of a legal basis which would facilitate the development at the European level of policies which can strengthen the national policies. We had no wish to duplicate national powers or to infringe the subsidiarity principle in any way. Indeed, when the programme was first presented to Parliament and whenever I spoke to the Council I made a point of emphasizing that the Commission had every intention of respecting the subsidiarity principle.
The main thrust of the programme is that Community measures must improve the quality and competitiveness of European tourism. They must also focus on ensuring that tourists are provided with what they need and on promoting balanced and sustainable development of tourism through rational use of natural and cultural resources and of the tourism infrastructure. The Commission believes that these basic objectives provide a balanced and precisely targeted framework.
As I told the House at the time of the debate and the Committee on Transport and Tourism when we discussed the Sarlis report, the programme had emerged after very difficult and protracted discussions between the Commission's directorates-general and in the college of the Commission. That had been the case because there are differences of view as to how this crucial sector should be approached at the European level.
The problem now is how to get agreement on the existing programme in the Council. The Commission believes that the submission of an amended programme, as some sides are suggesting, would not increase the possibility that the Council would approve the proposal. On the contrary, it would, in our opinion, create additional difficulties and delay the taking of a decision even further. I must inform you that some Member States also wish to cut back on the present objectives of the programme that I have just stated for you.
The real reason for the delay is that in one Member State there is considerable anxiety about the programme and a perception that it violates the subsidiarity principle. The more one talks with the Member States which have expressed reservations, the more one realizes that the discussion process is bedevilled by a host of misunderstandings. It appears that the programme has not been adequately examined and that insufficient time has been allocated for explaining its real orientations and objectives to those who are actually proficient for the taking of the requisite decisions.
Mr President, I would like to use this opportunity to appeal to Members to take the initiative, in their own spheres, in their own countries, in their own fields of responsibility, in explaining the objective and potential of this programme to local and regional authorities and in making clear to them that the programme really does not infringe the subsidiarity principle. When I spoke last week with the President-in-Office of the Council, with the minister of the Dutch Presidency who is responsible for tourism, I had a very lengthy discussion about the details of the programme and possible alternative proposals that could be acceptable to the Council, and I realized that even at this late stage not all of the sides, all of the Member States, all of the COREPER representations, have understood certain substantive observations put forward by Parliament that the Commission has drawn attention to and which could find acceptance with all of the Member States. For that reason I appeal again to Parliament to play a part in this, to step up the political discussion, to approach ministers at the political level and everyone in the Member States with the capacity to promote acceptance of this proposal, so that we can find way out of the problem fairly quickly.
We have tried, so far, to get the presidencies, that is to say each six-monthly presidency, to initiate action on the matter and to request and appoint COREPER to embark on a discussion process in connection with the programme. Over the course of this year we have used every opportunity that has come our way to explain our position to the Member States and to all of the social and political bodies and to convey our message at the major gatherings organized by the industry itself and by regional and local authorities. The Commission has put in a presence wherever that has been possible and has deployed every argument at its disposal, fortunately, with the support of many of you who are here today, and I take this further opportunity of thanking you for your help. Unfortunately, even now, this programme is still with the Council and it has not been possible to get a decision. We hope that during the Luxembourg Presidency there will be some development on the matter, given that the Presidency has already requested the Commission to help set up a large conference on tourism and job creation during the Luxembourg Presidency. I believe that this is a very important development and that we shall have your support in that endeavour. I believe that the next few months will bring some progress.
Turning now to coordination of the Commission's activities, this Parliament, as you know, with many resolutions of its own, and, also, the Court of Auditors have urged the Commission to make Directorate-General XXIII responsible for coordinating its activities with a view to providing transparency and good use of the budget and to ensuring that the tourism sector is provided with a specific policy with priorities and objectives. That is what we have been striving for and achieving over the recent period. The new director-general of Directorate-General XXIII has already started things moving. In recent months six coordination meetings have been organized for directorsgeneral with responsibility for policies in other fields which have some connection with aspects of tourism. We are endeavouring to coordinate the other policies in areas in which they are relevant to tourism, in particular the structural fund initiatives and the more general actions on employment and training and in support of businesses and, also, of course, the single market policies. This inter-service group on tourism now meets regularly, and priorities for 1997 are being discussed with representatives of the industry and of the Member States.
Like you I believe that efficient coordination of Community measures relating to tourism is vital. It was with that necessity in mind that we made cohesion and complementarity between the measures of the Philoxenia programme and the other Community programmes which have a bearing on tourism a principal objective when we drew up that programme.
As regards institutional aspects, the clear support of the European Parliament for the insertion of specific provisions on tourism in the new treaty is very important.
Just as it stated in its report to the Council of 3 April 1996, the Commission wishes it to be understood now, also, that it is not seeking new powers in the tourism sector, or in any other sector for that matter, and that it believes that it is up to the intergovernmental conference to deliver an opinion on the matter. I want to be very precise about this because Mr Sarlis has been kind enough to question me on it. Under the first protocol, under the first annex to the Maastricht Treaty, the Commission had an obligation to present a report at the commencement of the intergovernmental conference on the extent to which, if at all, the three policies - tourism, energy and civil protection - which are excluded from the Maastricht Treaty should be discussed at the conference, and we did present that report. At that time the Commission did not wish, any more than now, to seek new powers - and I think that it is being wise. However, in the report it expressed the view that something had to be done to create a legal basis to cover tourism in view of the sector's status as the largest European industry and its very considerable jobgenerating potential.
In its report the Commission pointed out that the current absence of specific legal bases has not prevented the Community initiating and implementing certain measures to assist tourism, but that the measures that have been adopted have been based either on the provisions relating to other sectoral policies or on Article 235 of the Treaty. At the same time, the Commission stated - in the report to which I have referred - that it was aware that resort to Article 235 may be much more difficult or even impossible in an enlarged Community in which the principle of unanimity in decision-making is retained. How clearer could we have put the case when seeking at that time to progress to the adoption of a specific chapter in the Treaty to cover policy on tourism via that indirect method? We have never sought a common tourism policy on the lines of the common agricultural policy. From the very beginning we stuck to the view and made clear that the principle of subsidiarity had to be respected. Nevertheless, it is a fact that certain joint actions to assist European tourism in general do need to be initiated at the European level.
In that same report the Commission also emphasized the importance of tourism and pointed out that the continuation and cohesion of Community action in the sector would be facilitated by the inclusion of specific provisions in the Treaty. Provisions which, in our opinion, would have to ensure that measures to assist tourism are based on a cohesive and coordinated approach and are more effective and transparent.
What can we do now, at this late stage? We can continue to press for dialogue, on the assumption that the big problems that still remain can be resolved and while there is still some leeway for discussion concerning the new policies. However, judging by the objections that have so far been raised, I fear that this will be very difficult because only one Member State has formally lodged a specific proposal with the Commission and the others have shown no inclination to initiate discussion in connection with the proposals that have been put forward.
Lastly, Mr President, I would like to thank Mr Wijsenbeek for his good words and to assure him that DirectorateGeneral XXIII is now very actively engaged in trying to make up for the time that has been lost and to achieve more rational use of the available Community resources, meagre as they are. We are doing this with the help that Parliament has given via the entering of the specific sum of ECU 4 million in the 1997 budget. Irrespective of whether the Philoxenia programme is approved, Directorate-General XXIII is preparing to use that appropriation for the general benefit of tourism in Europe through the promotion of actions to assist employment and in the fields of information-gathering, access to information, the information society and, contingently, statistics.

Harrison
Mr President, I am very glad that Commissioner Kinnock is going as a tourist to the Lothians. I am even more pleased that Commissioner Papoutsis, as the Tourism Commissioner, is coming to my constituency of Cheshire and Wirral and I can assure the Commissioner that I am taking up the matter of Philoxenia with the new Labour government minister for tourism, Mr Tom Clarke.
Whenever we mention tourism to the Council, or indeed to the Member States, it seems to be that they collectively all go on holiday. Mention tourism and they leave their brains to broil on the beach. Speak about Europe's biggest industry and our decision-makers become indecisive. They sink back deeper in their deck chairs and tan themselves in complacency believing Europe's most successful industry needs neither help nor understanding. Most hopeless amongst these sunseekers has been the Dutch Presidency. They could not even be bothered to summon a tourism council. They have been a grave disappointment.
But let me touch on four areas of concern, most of which are set out in today's resolution. Firstly, the IGC in Amsterdam next week. The failure to translate the unfinished business of the Maastricht Treaty into a title for tourism in the revised Treaty is madness. It is, in particular, a snub to the tourism industry. Many of them are small and medium-sized businesses. Any other industry - shipbuilding, automobiles, the chemical industry - rightly receives the attention of Commission, Council, and Member States. Tourism however has been abandoned. It must be given a title and a proper legal base.
Secondly, Philoxenia. It is quite absurd for certain Member States to stall the modest multiannual programme for tourism. Tourism, of all industries, is one that functions and is dependent on the single market. In other words there is a clear added value in placing tourism in an EU context. This does not contradict the principle of subsidiarity and it is dumb to suppose it does.
Thirdly, tourism and the Euro. If only the Council and Member States woke up - and indeed the Commission has been slow off the mark here - it should be realized that tourism is the best industry and activity to illustrate the benefit of the single currency to the man and women in the street. It is the consumer as tourist who throws away 2 % of their holiday spending money each time to go on holiday inside the EU. Rich Americans too have few bucks to spend in Europe because we retain national currencies. Those working in the tourism industry know only too well the frustrations of moveable exchange rates. Two-thirds of visitors to the United Kingdom come from the EU, but these tourists will be put off by the fact that the pound sterling has appreciated by 19 % against the franc and the mark in the past twelve months.
Finally, Mr President, let me state the obvious which seems all too obscure to the Council. Tourism means jobs. We spend hours in the European corridors of power talking about unemployment but why do we ignore tourism as an obvious job generator? It is time we stopped treating tourism like a holiday; it is time to come home, to jobs.

Provan
Mr President, nobody needs to tell the Commissioner that we in this Parliament listen as closely to him as he listens to us. It is important that we have this synergy, because the blockage is obviously in the Council of Ministers. For a number of years now Parliament's position on tourism has been quite clear and we are becoming increasingly frustrated because, regrettably, many in the Council are not prepared to look at the opportunities which this Parliament has suggested to the Commissioner to mop up some of the unemployment Mr Harrison has just referred to.
We are right to recognize the opportunities and the Council's difficulties. Subsidiarity in tourism is a very important aspect and nobody here would object to that. We must keep trying to find a way through the maze. It seems extraordinary that the Council refuses to endorse the Philoxenia programme, although we have agreed with the Council within the budget the amount necessary to promote the programme. How can the Council take such decisions, either budgetarily or from a policy point of view? The two are not compatible.
The main issue which the Commissioner has correctly identified and which is in the main part of this question is what we should do to get tourism recognized within the Treaty. We must have an independent and welldifferentiated common policy with a proper legal basis, in other words a chapter within the revised Treaty. The Commissioner must push for that. We recognize that perhaps he has difficulties within the Commission. That is part of the problem too and we want to strengthen his arm. Any advice on ways in which we can help him will be gratefully received, because the Commission is obviously very important in helping to push the Member States on the revision of the Treaty and to achieve what we have to achieve.
Coming back to the main issue to which the Commissioner has referred in his remarks, common action within the Commission: we all want greater coordination and we must have it, otherwise tourism will never get anywhere. The Commissioner said that his new Director-General has already had six meetings, but let us see what action results from those meetings, as the saying goes, ' where is the beef, let us get on with it' . We are looking to the Commissioner to deliver.

Aparicio Sánchez
Mr President, I am convinced, along with some of my colleagues, that in terms of tourism the Commission and the European Parliament are heading in the same direction. I think that, as a result, the problems that have bene denounced are the responsibility of the Council. I have no doubt about that especially since Mr Papoutsis, the Commissioner responsible for tourism policy, has highlighted its importance, with energy and firmness, within the Commission.
I would like to know if my impressions are right. The current Presidency of the Council has attached too much to the problems over PHILOXENIA. This hope that is always placed in the next Presidency - does it mean that the problems lie with the country currently presiding over the European Union?
At any event, I think that Mr Papoutsis' demand is a good one in that we should explain to our fellow-citizens, our private companies, our public administrations that we do not want to replace national policies but to complement them. We should explain how good it would be to open up Community support schemes. It would be wrong to claim that a Community policy, with actions and resources, would not increase the overall competitiveness of European tourism compared with others, given the effects of tourism on employment, cohesion, the environment, the generation of resources, etc.
This has already been said but it is worthwhile repeating it here - in terms of employment and the economy, tourism means more for the fifteen Member States than coal and steel did for the six founding members of the European Communities.
Mr Papoutsis' demand is a good one and we shall bear it in mind, but it is also pessimistic about the possibility of reforming the Treaty on European Union. Let us wait until the second half of the year for the PHILOXENIA programme. However, Mr Papoutsis, when it comes to our pessimism over finding a legal basis for the joint motion for a resolution, I wonder whether the Commission might be ready in the current situation, without any reform of the Treaty, to elaborate a legislative proposal on the basis of the current Treaty on European Union, tackling tourism from the consumer's viewpoint. This is not a casual question, since the European Parliament is already making a request on those lines. Against that background, I should like to extend my warm thanks to Mr Papoutsis for his generous assistance.

Bennasar Tous
Mr President, Commissioner, ladies and gentlemen, we are always debating tourism in the European Parliament. There have been a series of good reports over the year and much energy and hard work has been put into the subject by you and my colleagues before me.
We have all insisted on demonstrating the importance of tourism as a social, economic and cultural phenomenon. About 200 million European citizens leave their homes every year and become tourists. It is an industry that generates 9 million jobs and could generate far more.
We must try and convince - you and us - the sector itself and the majority of the Member States that tourism is a horizontal activity and that the PHILOXENIA programme does not get in the way of subsidiarity. We must convince them that if we identify the aspects that can be run at European level, that would add value to the sector and ease the management of the SMEs to coordinate the relationship between tourism and the environment, stimulate the modernization of installations, conservation of the artistic heritage, rural tourism, reassess training, assist the search for new products that keep the industry in momentum and create permanent jobs, setting quality products and services as the main priority.
You, Commissioner, and I know that this is the content of PHILOXENIA, rejected by the Council to everyone's great disappointment, especially mine as rapporteur. I am aware of the considerable effort put in by yourself and your colleagues into properly running DG XXIII, but we should like you to put in more effort and enthusiasm in order to convince the rest of the Commission and the Council of the importance of tourism and make the latter give up its reservations and give the PHILOXENIA programme and all of its content the green light. Transparent and open dialogue should then be continued over important matters such as VAT and the euro, prosaic but urgent matters, that if properly dealt with should help Europe become once again the leading tourist destination.
For this we need a legal base and an instrument for taking action, and that is the PHILOXENIA programme. It is necessary so that you and your team can hold fluid and transparent dialogue with the sector, with enthusiasm, and along with the Council and the European Parliament, in order to establish a European tourism strategy, which we all need. We shall back you, Commissioner.

Torres Marques
Mr President, tourism is nothing more and nothing less than the sector capable of creating most jobs in the future in Europe - that is, the sector which could be the most helpful in solving our greatest problem. On the other hand, tourism is a very diverse activity with a great knock-on effect which makes an important contribution to economic and social cohesion in Europe. It therefore seems to us essential to give tourism a legal basis in the revision of the Treaty on European Union and, whilst the solution of including the tourism industry under Article 130 is not the ideal solution, it does have the advantage of being simple and possible and acceptable to the sector, especially Otreca.
I know, Mr Commissioner, that you agree with us on this objective. I hope that it proves possible, for the sake of the economy and the citizens of Europe, to include tourism in the Treaty. I should like finally to put a proposal to you: why not ask the Commission to carry out a study on the effects on tourism of liberalizing air transport? Perhaps the results of such a study would encourage those hesitant Member States to understand the enormous advantage which would spring from providing tourism with a legal basis in our Treaties.

Pirker
Mr President, there is no doubt that tourism is a major economic factor as well as being critical to employment policy. In Austria, for example, 17 % of GDP is earned from tourism. That means that if we really want to take tourism seriously in those terms, then we have, in my view, to focus on at least three points. Firstly, we should accord tourism the status of an autonomous Community policy, and that has been stressed by those who spoke before me also; secondly, we must do everything we can, that is to say, we must make available the resources to facilitate the PHILOXENIA programme, because that could in the end produce a Community policy that is to some extent a tourism policy for the Union; and, thirdly, we must create opportunities to improve staff quality through mobility and training programmes.

Rübig
Mr President, a few days ago we in the European Parliament held a meeting with those responsible for tourism and established that tourism is set to increase by about 10 % as a result of the introduction of the euro. I therefore believe that the euro can be one of the main incentives for what is qualitatively speaking high-value tourism in Europe, and if we also succeed in making progress towards tax harmonization, for example, in the area of value-added tax in particular, then we shall probably have the best possible start.
Since tourism is very labour intensive, we ought also to consider whether reduced rates of value-added tax ought not to apply here. The most important area has already been mentioned by Mr Pirker, that is, in my view, training and further training, and the LEONARDO programme in particular. I believe that the LEONARDO programme offers many opportunities for our tourist industry and would ask that an even bigger effort be made here.

Tamino
Mr President, I apologize for being late, but I was involved in another meeting and I thought this debate was going to start a little later. On behalf of the Greens, I just want to restate a position we have already expressed on previous occasions: we believe tourism ought to have its own place in the treaty, and that is in line with the intention already expressed by the European Parliament. But we do not think it is enough to include only the commercial and employment aspects of tourism, although these are important. We think it should be valued for its cultural aspects and for relations between different people and cultures, as a means of getting to know them and their societies. So we believe it is very important to highlight not only the economic and commercial side but especially the cultural side and development of relations between the various cultures, to promote the construction of Europe. This is a first important point, frequently debated in the Committee on Culture.
But as Greens we want to highlight the fact that tourism can also have great environmental and social impact, and that is why we have some doubts about the resolutions which have been tabled. It cannot be dealt with in isolation from the serious effects certain forms of tourism have had on the environment in Europe. Account must also be taken of the fact that certain types of mass tourism, with countryside and coastline being covered in concrete, have not only had an environmental impact, but have also reduced the potential for employment in the future and have blocked other activities more compatible with the environment.
So in social terms, we believe the consequences of certain types of tourism need careful evaluation. There have been forms of tourism which have expropriated the inhabitants of certain areas, and tourism multinationals have imposed their logic and their personnel, totally changing the way of life in entire territories. Without careful evaluation of the environmental impact and the social consequences, tourism cannot be regarded as exclusively positive from the commercial point of view. So, yes to incorporation into the treaty, but with the proper precautions, including these environmental, social and cultural aspects.

Papoutsis
Mr President, I will try very quickly to give replies to the questions put to me by some of the honourable Members who have spoken.
Mr Aparicio has asked what the Commission intends to do in the coming months if the Philoxenia programme is not approved. I can tell him that we shall endeavour to strengthen the competitiveness of tourism by focusing on qualitative aspects. We shall be working to help the industry prepare itself properly for the single currency, the euro, and to strengthen its job-creating potential via local initiatives to assist employment, training, cultural promotion, environmental protection and the use of new technologies. We shall try to strengthen cooperation on the external front by widening our contacts and focusing on cooperation in the Euro-Mediterranean context and the general agreement on services and to protect tourism consumers via innovative actions aimed at raising the quality of the products and services that are offered. Finally, as regards your general observation concerning the failure so far to get approval for the Philoxenia programme, and your dissatisfaction about the Council's inability, I agree that there is a problem. Everyone agrees on the need for a budgetary policy that is more cohesive than the one we have at present, on the need for careful husbanding of the Community's finances, on the need for transparency and for proper monitoring of the Community's policy priorities, yet at the same time we are refusing to provide legal bases for specific sectors which have need of them.
I would have been happy if we had had approval for the Philoxenia programme, and I would have been happy if we had had a legal basis - even a legal basis with just one ECU, but all the same a legal basis. If we had had one the Commission would not have got into trouble with the Court of Auditors and had all the criticism from every quarter. Lastly, as far as my own position and efforts are concerned on the question of the Treaty itself, I shall keep on striving to the very end to get provisions on tourism included in the new treaty. And if that cannot be achieved I shall try to get tourism catered for via other articles of the Treaty, because as an industry, as a sector, it does need to be catered for.

Sarlis
Mr President, allow me to emphasize to the House that if provision is made in the Treaty we shall be freed from the sort of trouble that we have had with the Philoxenia programme. Until it gets a proper mention in the Treaty, tourism will continue to be pushed about from pillar to post.

Cornelissen
Mr President, the Commissioner has appealed to us most urgently to bring pressure to bear on the Council. For our part, I would urge the Commissioner to attend the meeting of the tourism group at 3.30 p.m. this Thursday, where the President-in-Office of the Council is to make a policy statement.
Commissioner, if you are serious about this, be there at 3.30 p.m. on Thursday, then we can have a joint discussion with the President-in-Office. If necessary, you can put your urgent request again. Can we count on your attendance?

Papoutsis
Mr President, I will look at that possibility and try to be at the meeting. In the event of my not being able to be there, depending on my programme, a representative of the Commission will certainly attend. Whatever the case, however, I can assure Mr Cornelissen that I am constantly in touch with the Dutch Presidency about the IGC and developments concerning a specific chapter for tourism and the possibility of achieving an agreement on the Philoxenia programme even at this late stage, in the final weeks, through the COREPER framework, without a Council meeting.

President
I have received six motions for resolutions pursuant to Rule 40(5) of the Rules of Procedure.
The joint debate is closed.
The vote will be taken tomorrow.
(The sitting was suspended at 5.25 and resumed at 5.30 p.m.)

Question Time (Commission)
President
The next item on the agenda is questions to the Commission (B4-0170/97).

President
Question No 32 by Mr Juan Izquierdo Collado (H-0347/97)
Subject: Suspension of the LEADER programme
Does the Commission acknowledge responsibility for the suspension of the LEADER programmes following a fax from Mr Legras, Director-General of DG VI, which has no real legal basis?

Fischler
Mr President, ladies and gentlemen, in a communication of 15 July 1996, the Commission informed the Spanish authorities that accumulating structural fund resources in support of one and the same project cannot be approved. What was being asked for at the time was both a Community subsidy under the LEADER programme and, in addition, Community co-financing under a Community support programme.
After detailed discussion of this matter with the Spanish authorities, the Commission is now able to approve the accumulation of aid that is being asked for, provided that effective and reliable project management is guaranteed, so that it is possible to make a clear distinction between the types of aid accorded for the project in question. Only in that way is the Commission able to guarantee that the Community resources are used in an efficient and transparent manner.
As a general point, I should add that accumulating aid is not in itself a condition for the implementation of the LEADER programme. In the majority of the Member States the LEADER programmes progress absolutely normally with no accumulation of resources.

Izquierdo Collado
Commissioner, the fact is that a good many LEADER programmes in my country are being held up for a year.
The execution of those programmes has been paralysed and this has stopped jobs being created and innovations being fulfilled. Why? Because the Council or the Commission have decided that LEADER II must be run in a different way to LEADER I and a Director General's fax has produced such a commotion that we have seen an perfect example of red-tape and its harmful effects on the dearest aims of the Union, i.e. efficiency and job creation.
Commissioner, I hope that your answer will send a clear message to many mayors and councillors who are setting much store by your words that the LEADER programme's continuity is guaranteed in all transparency and, otherwise, that the Spanish Government is asked to take immediate action. I hope that your words will be quite clear.

Fischler
Mr President, Mr Izquierdo Collado, let me first thank you for agreeing with me that LEADER II is in itself a sound Community initiative. But when, in the case of a specific measure, it is not clear whether this is a single measure or two separate measures, as happened here, that is something that has to be cleared up. But it is not a reason for simply shelving that procedure.
If, in future, you should encounter similar problems where, either for reasons similar to those you mentioned or for other reasons, the implementation of a LEADER programme has come to a halt, then I would simply ask you to let me know about it. I should be glad to look into the matter.

Redondo Jiménez
Commissioner, how is it that abusive action by a Director General of the Commission can paralyse the LEADER II programme, just because of problems raised by LEADER I? There were problems of an accumulation of Community subsidies in the case of the LEADER I programme and a lack of controls over the programme by the Commission. But the two things are not linked. Unblock LEADER II and control LEADER I. I think that we are down that road, given that under LEADER II there is now a payment body in each Member State. But I would still ask the Commissioner to make sure that the same things do not occur again. I hope that the Commission will control the excessive powers of some of its employees.

Fischler
Mrs Redondo, let me say it again: we are talking about LEADER II and not a mixture of LEADER I and LEADER II. One thing is absolutely clear: LEADER I has already expired and we now have the LEADER II Community initiative.
I can assure you that it is not my intention nor that of my services to create additional bureaucracy here. What we actually need simply a proper system. And we have to have that system because we could otherwise come up against problems later when it comes balancing the books. I repeat: if there are problems here, for whatever reason, I am prepared to help solve them. Please tell me about them.

President
Question No 33 by Mrs Mary Banotti (H-0409/97)
Subject: Abolition of duty-free sales
Has the Commission considered the implications of the possible loss of 140 000 jobs in the European Union on the abolition of duty-free sales?
Given the high level of unemployment in the EU at the moment, does the Commission not consider that the deadline for abolition of duty-free in June 1999 should be further extended to consider in particular its effect on regional development and employment?

Fischler
Mr President, when the directives on the abolition of tax controls at borders were adopted, the Council decided to cease permitting duty-free sales as of 1 July 1999, although it made provision for a transitional period which has to be used for the taxation of intra-Community trade to allow the adoption of the measures necessary to cushion the social impact in the regions affected and at the same time regional difficulties - particularly in border regions.
The Commission regrets the fact that the sector in question has not used the transitional period provided for by the Council to develop a strategy to cushion the effect of removing the tax advantage of duty-free sales. There was never any question of the Council decision, which actually dates back five years, being rescinded. In fact, the dutyfree sector actually increased its turnover between 1991 and 1995 by some 50 % and in so doing naturally created an unacceptable means of exerting pressure. That increase in turnover also shows the importance of the tax advantage to the sector, accounting for 35 % of turnover on average.
With financial support of that nature, it would be possible for any marketing sector to create at least the number of jobs mentioned in the question. It is telling that the arguments - including the argument about jobs - cited here in support of extending the transitional period, are exactly the same as those which led to the 1991 Council decision. It is not therefore the Commission's intention to propose an extension of the transitional period.

Banotti
I am quite amazed at the Commissioner's answer. Clearly, the Commission has been remiss in assessing the damage both to the shipping and airline business resulting from the abolition of duty-free: its effect on costs and fares and above all, in the regions, its effect on employment. Already it is estimated that at least 1, 800 people could lose their jobs on the ferries in Ireland.
Why is it not possible to do a proper study based on the realities we face today? A huge number of jobs are involved and maintaining duty-free has particular relevance for regional development. You can argue that, simply because they have a tax advantage, they should not be allowed to continue in this line of business and that anybody else would be able to continue with that sort of advantage. I do not think that is good enough given the appalling vista we have before us of job losses in these areas. Would you agree that the Commission has been remiss in the way it did not conduct adequate studies into the effect of the abolition of duty-free?

Fischler
Mrs Banotti, I have to be quite candid with you and say that: firstly, it has long been known that this decision was coming, but instead of preparing for this new and necessary situation, the sector has done exactly the opposite and used the tax advantage to increase turnover. And so it cannot be argued that jobs are now going to be lost because duty-free is no longer possible. You could equally ask how many jobs have already been lost in normal trading which was at a clear competitive disadvantage as a result of this situation.

Truscott
I would like to support what Mrs Banotti said. The UK also has a problem. As in Ireland, we will be facing many job losses in the ferry industries and in regional and local airports.The effect will be disastrous. Although the Commissioner said that this has been known for some time, the studies which have outlined the sort of job losses we are talking about have in fact been relatively recent. In the light of those studies, the Commissioner should give further thought to the number of jobs which will be lost and the effect on transport facilities both in the UK and Ireland and other countries affected.

Fischler
It goes without saying that a restructuring measure of the kind needed here is bound to involve problems and difficulties. We fully acknowledge that. But I do not believe that it is compatible with the principle of the internal market permanently to allow structures which clearly disadvantage normal trade, while special provision is made for some, according them a clear competitive advantage. The Commission is therefore in agreement with the Member States and the Council on this issue and does not intend to submit a proposal for amendment of the kind you are requesting.

Blak
Thank you for your kind treatment of us, Mr President. I am very glad of it.
Mr Fischler, I think your answer was a bad one. I think it was bad because there is unemployment. If there were no unemployment, it would be OK to abolish the system. But regions are affected. In my region we have the highest rate of unemployment in Denmark, and we shall lose 2900 jobs. People will really be devastated by this measure. It cannot be the Commission's intention to create unemployment. Create new jobs, before you start to close jobs down. I think it was a bad answer, and I think you could have been better prepared in the way you are answering us.

President
Mr Blak, I thought you were going to be speaking on a point of order. But it is Mr Cassidy's turn and so I am now giving him the floor. If the Commissioner then decides to answer your question, it is up to him.
Mr Cassidy, you have one minute.

Cassidy
I should like to congratulate the Commissioner on his robust answers to Mrs Banotti and to Mr Truscott. The fact is that the very name duty-free is misleading. A more correct appellation would be tax-free. Secondly, it has been admitted by one of the operators in the United Kingdom that the ending of tax-free sales would mean an extra £15 on the average charter air fare. In other words, nearly ECU 20. The British exchequer loses several hundred million pounds a year on this trade. It has no place in a single market. It has an effect on other sectors of the retail trade as the Commissioner has pointed out. It is also hotly opposed by the Consumers Association. So will the Commission stick to its guns on this issue?

Fischler
Ladies and gentlemen, first and foremost, it is not my personal responsibility to make proposals on this. That is for my colleague, Commissioner Monti. But in so far as I can judge or see from the Commission perspective, we continue to stand by what I already said, including as a Commission.
Secondly, should problems of transport costs arise here or transport difficulties, then I should like to make it absolutely clear that that would have to be met from airport fees which, in Europe, are not exactly the lowest, compared with the international picture.

President
Thank you very much, Mr Fischler. Mr Andersson, on a point of order.

Andersson
I would just like to state that it is a little unfortunate that the discussion on this important issue, which concerns so many regions in Europe, has concentrated on only one region. May I just say that there are many regions which will have the same problems when tax free shopping disappears and we would like to act as the mouthpiece for what will happen in these regions.

President
Mr Andersson, that was not a point of order. You have other channels for that discussion.
Question No 34 by Mr Francisco Sanz Fernández (H-0421/97)
Subject: Attacks by French farmers against Spanish lorries carrying fruit and vegetables
The past week has once again seen groups of French farmers attacking and destroying lorries carrying fruit and vegetables from Spain. In the most recent incident on Monday, 19 May they attacked and set fire to seven Spanish lorries and their contents, and a Spanish lorry driver was seriously injured. As usual, the French police were passive onlookers.
Given that these acts of vandalism have been repeated many times and the French authorities have failed to take the necessary steps to prevent such recurrences, given that such attacks are in breach of the principles of free movement of goods and persons and free competition and therefore hinder the completion of the internal market and given that the allegations made by French farmers to justify their actions are totally unfounded, particularly bearing in mind that Spain is dominated by imports from France in all agro-food products apart from fruit, vegetables and olive oil but has never taken any action against these imports, has the Commission taken any preventive measures designed to avoid these acts of aggression? What action has it taken or will it take to ensure once and for all that the French authorities take the necessary measures to prevent such incidents, thereby guaranteeing the free movement of persons and goods in the EU? Does it consider it necessary, as part of the reform of the Treaties, to contemplate the possibility of its being empowered to impose financial sanctions on Member States which, for whatever reason, prevent or hinder the completion of the internal market? Is any such reform envisaged?

Fischler
Mr President, ladies and gentlemen, the Commission position on the obligations of the Member States, under Articles 5 and 30 of the EC Treaty, to prevent individuals disrupting the smooth functioning of the internal market and the free movement of goods has already on several occasions been explained to the House. In an effort to bring to an end attacks by French farmers on agricultural products from other Member States, the Commission, as the guardian of the Treaties, brought an action for infringement of the Treaty before the European Court of Justice.
The aim of that action is to get the French Government to meet its obligations under Articles 5 and 30 of the EC Treaty. That case is pending before the Court of Justice under Registry number C-265/95. The deadline for the oral procedure has been set at 10 June 1997. Since the Commission has taken the court action available to it under the Treaty to enforce Community law, we must wait for the Court's judgment. Following fresh attacks on 24 April last and then again recently, the Commission urged the French authorities, on 24 April - after the first incident - finally to use their powers and guarantee internal security.
In addition, Commissioner Monti wrote to the minister responsible for the internal market in France, drawing his attention, as a matter of urgency, to the fact that he had to secure the conditions necessary for the operation of the internal market. We have also made it publicly clear that the Commission is not prepared simply to tolerate such attacks, and we shall be considering whether the Commission can take further legal or administrative measures to put a stop to this situation.

Sanz Fernández
Commissioner, as you see this is indeed a very tricky problem and a very serious one, because these violent acts - taking place frequently, as you admit - against Spanish farm produce on French roads, have a terrible effect, destroy the single market and endanger people's personal safety. The most serious aspect of all, Commissioner, is that this aggression is achieving the desired results.
According to news that has come to us over recent days, the overwhelming majority of exports of fruit and vegetables from my country to France has been diverted to other markets, which has obviously led to a sharp price drop. The damage done is therefore far greater than merely a calculation of the quantity and face value of the destroyed goods. My question is: do you think that the current measures and the action taken by the Court of Justice in Luxembourg will be enough to solve this problem or will you need new measures and new powers to take determined action and avoid these uncivilized attacks?

Fischler
Mr Sanz Fernández, I should like to make it clear that the question of whether actions for damages are likely to be successful will depend, in the first instance, on the judgment reached by the Court of Justice. Apart from that, damages are primarily a matter for the national courts. Such claims have therefore to be brought before the national courts.

Camisón Asensio
Commissioner, I must insist on the attacks against Spanish farmers when their fruit and vegetables are being transported through southern France. These are repeated acts of violence. You only have to look at the number of European Parliament resolutions to see that - the number of violations of Article 5 of the Treaty, which obliges all Member States to adopt all the appropriate general or specific measures to ensure compliance with the internal market, i.e. the suppression of any obstacles between the Member States to the free movement of goods. In this case, however, there is an added dimension of unusual violence, of out and out vandalism. It is not enough to condemn these acts. We must compensate for the damage done not only to vehicles but also to the goods, because the loss of those goods in particular must be compensated for.
I refer, Commissioner, in particular to the latest measures taken to deal with these acts, to which you and the previous speaker referred. What does the Commission plan to do in the future to deal with these incidents?

Fischler
Mr Camisón Asensio, when you say that this also constitutes violence and vandalism - and that may very well be the case - it remains clear that such attacks have to be proceeded against under criminal law. But criminal law is in any event national law. Criminal proceedings would have to be conducted in France.
What the Commission has criticized over and over again is that the French police authorities have been anything but active in intervening on-the-spot when such attacks are taking place. We have also been able to document that irregular conduct. We have just today - the oral procedure is today taking place before the Court of Justice - submitted videos and other documentation to prove this.
I hope then that something will finally be done and that the new French Government will take up this matter.

Marset Campos
Commissioner, you know that the European Parliament has repeatedly protested, with the Presidency's blessing, in order to highlight the importance of farming and preserved food in the region of Murcia, against attacks on lorry drivers and products from Murcia in France.
I thought your last answer was evasive. I would like to know whether the Commission is taking action or intends to take action to make sure that the loss of products is compensated for. But I see that this is a question that does not interest the Commission.
My second brief question is this: if these questions demonstrate that the fruit and vegetables COM and the CAP reforms of 1992 are not properly functioning, perhaps these events should actually lead to a proper reform of the fruit and vegetables COMs and the common agricultural policy?

Fischler
Mr Marset Campos, if I may begin with your second question, I should like to make it clear to you that those attacks took place specifically before the new organization of the market in fruit and vegetables entered into force, after the old organization of the market then. I cannot therefore see how the attacks are linked to the new organization of the market in vegetables. Far from it, I am actually expecting the new organization of the market in vegetables to result in new developments, as we further encourage producer groups.
As regards your first question concerning the possibilities of the Commission intervening directly on site, I have, unfortunately, to say that the Commission does not have its own police or similar units, and I assume that the European Council in Amsterdam next week is unlikely to set up a Commission police unit of that kind. So - unfortunately, I have to say - we are always dependent on the forces of law and order of the Member States. Regrettably, all we can do is approach the Member State and ensure it meets its obligations. If it does not, then our ultimate weapon, so to speak, is to bring the matter before the Court of Justice. We have used that ultimate weapon and proceedings are now under way before the Court. Nor are there any further possibilities under the Treaty either.

President
Question No 35 by Mr Roy Perry (H-0436/97)
Subject: Regional policy/islands
Is the Commission giving support to the proposal at the IGC from Greece and Spain to include a clause in the new treaty on islands?

Bjerregaard
Mr President, it was the Commission's understanding that suitable measures would be drawn up to resolve the special territorial issues that arise for certain regions, including the islands. These measures should of course not interfere with the internal market or free trade or, for that matter, the rules of competition. As one of the matters to be discussed at the Intergovernmental Conference, Greece presented a proposal over a year ago, when the negotiations started, to amend Article 92(3) and Articles 130a and 130f of the Treaty in order to take explicit account of the special circumstances arising in the island regions. The Commission had favoured the insertion of a text in the final declaration of the Conference, in which the special concerns of the island regions would be noted.
In the Commission's view this political recognition is sufficient because, with it, the Treaty makes it possible in the future to take account of the situation on the islands. Finally the situation of the islands is different to that of the regions on the periphery of the Union. Here the three countries affected, France, Spain and Portugal, are seeking the inclusion of these areas under Article 227(2) and the addition of a protocol on how this Article should be implemented.

Perry
I appreciate the Commissioner's response. I was somewhat relieved that it was not Commissioner Fischler, who comes from a landlocked country, who answered my question.
I certainly hope that the IGC will be able to recognize the needs of islands. If that is included within the findings of the IGC and in the subsequent Treaty, can the Commissioner give me some idea of what sort of proposals the Commission might think it appropriate to come forward with to help islands and, in particular, the Isle of Wight, which I represent in this Parliament?

Bjerregaard
I think we all realize that we are now at a stage where the very last details of matters under discussion at the Intergovernmental Conference are about to fall into place. These are the last days of meetings between the personal representatives, then comes the summit, which means that I cannot go any further than I did in my first answer, that is to say that the Commission supported the proposals that had been put forward and that we think it would be appropriate if the final declaration contained a text which made it possible to give special consideration to the islands. I myself should guard against making any pronouncements on what should be done in specific cases and in relation to individual islands. That is something I should not venture into, given the many Members who are familiar with islands, which I, as a Commissioner, could of course not know with the same degree of detail as Members of Parliament.

Thors
As we all know, Finland is the country with the highest number of archipelagos and waterways in the whole of Europe. We sing in our national anthem that we are 'the land of the thousand seas' . In fact, we have 76 000 islands which are larger than 1.5 hectares.
But still no attention is being paid, in the proposed Article or the proposal for the opinion from the Intergovernmental Conference currently underway, to the need which exists in Sweden and Finland, and perhaps even Denmark, for an archipelago policy. The opinion mentions 'island regions' . Instead, I would like to see this become 'archipelago regions' , in other words, areas where water divides the land and brings with it the need for a totally different social structure. I also hope that when we specifically follow up on this report it may lead to a different view of transport aid in the regions. I am totally convinced that Commissioner Liikanen could give a very good account of what it is like to live in a country where water really does split the land.

Bjerregaard
It is quite correct that, when we look around the European Union, we see many regions in which islands play a major role, and that is quite clearly the case, as the speaker pointed out, for the Finnish region. What we are talking about, and what today's question hinged on, is, first and foremost, whether we would support the proposal to take special account of the islands' problems in the final declaration of the Intergovernmental Conference, and I gave an affirmative answer to that. Clearly, as a Dane, I know some of the problems there have been in our region, and I think that people in any country where there are islands have a common view on many of these problems which, as the speaker indicates, can have to do with transport, but also education and all manner of things. I therefore consider it important that that possibility should be included in the new Treaty.

Ephremidis
The reply on the particular predicament of islands which are remote from the centre of the Community was positive and very understanding. However, I would like a clarification from the Commissioner on something that I am not sure about.
She has said that the Commission has a grasp of the situation and that there may be an announcement. What the questioner asked, and what we are asking, too, is whether a clause on islands will be included in the Maastricht II text after the IGC. Whether, that is to say, as the final touches are added, as she puts it, there will an interesting announcement on the matter which would still, all the same, be non-binding and a pious aspiration. I would like her to clarify that.

Bjerregaard
As I began by saying in answer to the first supplementary question, we are now at a stage in the Intergovernmental Conference at which it very much depends on what the Member States do and on what degree of priority they assign to particular questions. It is not possible for me, as a Commissioner, to give any guarantees on what the final outcomes of the Intergovernmental Conference will be. The information I can give is that the Commission has supported the concrete proposal put forward amongst others by Greece, Spain and Portugal, and we will continue to do so. I cannot say whether it will be adopted or what form it may take if it is, but I can say that the Commission has supported it in the negotiations so far, and we will also do so in the final stages.

President
The time allowed for the firts part of Question Time has come to an end. Question No 36 will receive a written anwser.

President
Question No 37 by Mr Jonas Sjöstedt (H-0425/97)
Subject: Exemption of EU employees from paying income tax
Staff employed by the EU in the Member States, e.g. in the Commission's and Parliament's offices, are exempt from paying income tax in the country in which they live, yet they and their families benefit from public services, such as health care, transport and education, which are financed by taxes. Does the Commission intend to try to change this state of affairs so that EU employees, too, have to pay income tax in the country in which they work?

Liikanen
Mr President, the Commission's representations in the Member States employ both Commission officials and workers recruited from the Member States in question. For example, on the staff of the Commission's representation in Sweden there are six officials and eleven employees recruited in Sweden. Thus two-thirds of the staff are locally recruited. They pay income tax in accordance with national taxation laws.
As regards the income tax position of the Commission officials, it should be noted that the Community has its own taxation system. EU officials pay a progressive Community income tax. The Union also has its own social security and health insurance system, to which the EU officials pay insurance contributions and by which they and their families are covered.
On the question of indirect taxation it may be noted that both EU officials and locally recruited staff pay indirect taxes. Thus within the EU representations there are staff belonging to two different taxation systems. It might of course be wondered whether in future the proportion of locally recruited officials on the representations' staff should be increased still further.

Sjöstedt
I would like to thank the Commissioner for his response. I would like to say that I think it reasonable that anyone who is working and located permanently in a Member State should pay income tax in that country. They not only receive the benefit of health care in that country but also communications and education etc. EU employees working in Sweden are also protected by the Swedish military and can enjoy the Swedish royal family and much more. I think that it is reasonable to pay tax in the country in which you make use of the public sector, regardless of the capacity in which you are employed by the European Commission.
Furthermore, I think that tax exemption of this kind is provocative, as it also strengthens the view that there are huge benefits attached to employment within the EU system. I do not think that there can be any good reason why some people do not pay tax in the country in which they live and work. I wonder if you are going to take any steps to change this state of affairs so that everyone who is employed by the Commission is treated equally in this respect.

Lindqvist
I am also from Sweden where we have debated EU staff conditions; we have also debated the employment conditions for Members of Parliament, and both are of course equally important. I think that it is extremely important that the relationship between the general public and those of us working here as elected representatives, or at the Commission's office in Sweden or in other Member States should be as good as it can be.
My next question is: does Commissioner Liikanen not think that it would be possible to improve this relationship by actively removing those instruments, or those rules which make it difficult for many people to feel comfortable with what goes on in the EU? I would very much like an answer to this question.

Liikanen
Of course we must improve our relationship with the people in all the Member States. Historically, employment legislation governing EU employees has been designed to treat all permanent staff in every EU country in exactly the same way. This has led to a situation in which anyone working permanently for an EU institution has the same rights in all EEC countries.
I am well aware that this situation has been difficult to explain in Sweden. In general the problem with salary privileges is not so great. We have examined this quite carefully and compared the net salary level for foreign diplomats stationed in Brussels with the net salary level of an EEC member of staff also stationed there. I have to say that in the majority of cases the differences are quite small. This discussion has been more noticeable in those countries where people are working on their home territory.

President
Question No 38 by Mr Bryan Cassidy (H-0439/97)
Subject: Age limits in recruitment to the European Commission and its associate organizations
Is the Commission aware that the European Foundation for the Improvement of Living and Working Conditions does not use any age limits in its job advertisements because it stopped this practice a few years ago?
Will the Commission follow the excellent lead given by the European Foundation and stop using age limits in the Commission's own recruitment advertisements?

President
Mr McMahon, on a point of order.

McMahon
Mr President, I tabled a similar question but for some reason it was put way down on the list. It should have been taken with Mr Cassidy's question as it is on the same issue. This is the second month that this has happened.

President
Mr McMahon, it is not the European Parliament services that decide which Commissioner answers the questions, but the Commission itself. Mr Liikanen wishes to answer you any way. You have the floor, Commissioner.

Liikanen
There is no problem here. Mr McMahon put his question in the context of the Intergovernmental Conference. The Intergovernmental Conference is the responsibility of Commissioner Oreja. I am quite happy to reply to the question of age limits together with the question from Mr Cassidy. It is not the first time these questions have been raised.
The Commission is aware of the fact that the European Foundation in Dublin has not applied age limits in its vacancy notices for several years. The practice of applying age limits has its origins in the very concept of a permanent and independent European civil service, along the lines of practices pursued, still today, in the diplomatic services of most Member States and by a certain number of other administrations. The aim is to recruit young members of staff, offering them long term career prospects, in order to ensure a certain continuity in the services and staff loyalty.
In the institutions, this policy seems to have worked and achieved its aims. The application of age limits has also had certain other advantages. Firstly, it eases the management of competitions with large number of candidates by limiting their number. Secondly, it helps to strike a certain balance, namely geographical or between the sexes.
For example, the A8-A7 competitions, for nationals of new Member States led to very satisfactory results in terms of gender balance 32 and 35 years respectively. The A grade competitions for new Member States setting age limits at 50 and 55 years attracted relatively few women.
The Commission's approach is not a rigid one. Specialized competitions for A5 and A4 grades are open to candidates with confirmed professional experience, with an age limit of 50 years, which helps to introduce a certain diversity into the Commission's policy. The Commission no longer applies age limits for the selection of temporary candidates. The Commission is not opposed to looking into greater openness in this matter. One possibility might be to maintain age limits for certain competitions in basic grades, such as A8 competitions, and not to apply a general rule to other competitions.
The Commission might open a dialogue on this subject with the trade union and professional organisations and, of course, with the other institutions. In a context of zero staff growth at the institution, we must continue to recruit young staff so that the institution's staff does not age excessively.

Cassidy
I am very conscious of the fact that the Commission has made an effort, in particular since Commissioner Liikanen took on responsibility for this dossier and we welcome the fact that for A Grades there is now a limit up to 50. But the fact remains that one of the important institutions, the European Centre for Living and Working Conditions in Dublin, does not exercise limits in age. The parliamentary groups in this Parliament, thanks to the efforts of the Intergroup on Ageing in Parliament, no longer exercise age limits. It is a bit of an old-fashioned survival, I would respectfully suggest. I hope the Commissioner will press on with the negotiations with what he called the organisations syndicales . Am I correct in assuming they are the stumbling block in this affair?

Liikanen
Mr President, the trade union organizations think that independent public administration requires in principle that officials should start at an early age and pursue their career there. We have had some discussions on higher age limits where they have been more hesitant, but that is a discussion we must take.
The second point that I want to make is that even with no growth in Commission staff in the future and despite extensive recruitment over the last ten years, it is plain that - even although I hope we will be more flexible in the future - we cannot stop recruiting young people because, otherwise, the Commission's entire staffing structure will become noticeably top-heavy.
Thirdly, I am ready to try and find with an open mind solutions in those areas where this is possible. The only exception perhaps is that we should have a kind of basic grade for young people coming directly from university although we could try to find more practical solutions for those with professional experience. I understand the intergroup in Parliament on this issue is holding a small seminar on Thursday. My director-general will attend and contribute to the discussion with details of the problems concerned.
The final point I want to make is that our real problem is the huge number of applicants. If we have tens of thousands of applicants and we can only recruit one or two hundred, we will encounter many practical problems in the running of such an operation in the future. I am sure that it will be useful to discuss the details later this week.

McMahon
I heard the Commissioner with some interest. Does he not think there is some hypocrisy here in talking about a flexible labour market while politicians are going around the world saying no-one will have a job for life and that people will have to adapt and have several careers? In their own backyard the Commission are openly practising this job for life approach and, if you do not get on the bottom rung of the ladder then there really is a block on you. Is not hypocrisy being preached within the Commission when they are saying one thing to the general public about unemployment and about the economy, and yet, in actual practice, they are doing the complete opposite. When are they going to match their rhetoric with their actions within the Commission itself?
Similarly, on the IGC, is there not something wrong with the Commissioner proposing a non-discrimination clause on ageism at the IGC while at the same time the Commission and the institutions are practising what they are trying to abolish?

Liikanen
I am sorry that Mr McMahon did not have the chance to listen to my reply because I explained that a large part of the Commission officials are above this age limit. There are no age limits for temporary agents which is a type of recruitment which we are carrying out, for instance, for BSE.
Secondly, as regards the new countries, where we have recruited most officials during the last two years, half of the recruitment has been of young people for the A6, A7 and A8 posts, but another half with staff who are older, up to the age of 60 in fact. I am certain that if we look at the recruitment practices of the public sector in general and how people are being recruited as new officials, the record of the Commission is not so bad.
I am still willing to give thought to whether we can have a more open system for all those jobs where we need professional experience. For those young people who come directly to assistant jobs, whether we have age limits or not it is very clear that these jobs are for people without professional experience as a first step in the administration.

Stewart-Clark
Commissioner, I have read your written reply and I heard what you have said. I read between the lines a degree of personal sympathy for what we are trying to do. I do not know if you know, but Parliament voted in February to delete the reference to age limits from the Annex to the Staff Regulations. I hope you will do the same thing in the Commission.
I find it surprising that anybody should be justifying an age limit by the fact that there are too many people applying. I cannot imagine that any business in this world would apply that criteria. Do you agree?

Liikanen
One thing in Europe today is clear: unemployment is a major problem for people of about 45 to 50 years old. Why? Because they tend not to be recruited in the labour market. That is a fact. That is a real problem of unemployment, because employers prefer to recruit young people. Unfortunately, that is the case. I hope we can change it but that is the case in countries with high unemployment.
As far as the Commission is concerned, we are ready to be more open in the future. We want to have young people also. We will recruit very few now because of budgetary constraints. We cannot forget total generations. We must recruit young people, but be open in areas where we need professional experience and also people who are not young and we will recruit without age limits.

Ewing
I would like to join those who express some amazement that those of us who have to meet the public boast about the non-discrimination and the law on that subject within the Union. And yet we have had really amazingly blatant and naked justification for a system which imposes effectively a ban on people who are very often experienced.
I noted some of the justifications: young people would be happy, loyal and have a good career. Why does that not equally apply to someone over 50? Indeed, they may be happier and more loyal because they would probably appreciate it and bring experience to bear.
We are not asking the Commission to stop recruiting young people, we are asking it not to put a ban on recruiting older people. I do not understand how the Commission can possibly go on with this policy. Is there any timetable it has in mind when it is going to stop it?

Liikanen
Mr President, I am sorry I was not quoted correctly. As much as I would like to talk about happiness in life I did not mention that in my reply.
As far as age limits are concerned, I said that I am presenting here an opening. I still hope that I can go forward with the line I have presented here today.

President
The time allowed for questions to Mr Liikanen has come to an end. Question No 39 will receive a written answer.

President
Question No 40 by Mr Josu Imaz San Miguel (H-0414/97)
Subject: Drift nets
The Presidency of the Fisheries Council suggested to the Commission at the last meeting (held on 14 and 15 April) that a new proposal be drawn up to tackle the problem of drift nets. As the Presidency suggested, the new proposal should include the latest, most up-to-date information on this subject.
Italy's change of position, as publicly expressed by Minister Pinto in Venice on 29 November 1996, in favour of a total ban on drift nets, and the specific provision on using drift nets in the Baltic as opposed to other fishing grounds open the way for a majority within the Council in favour of a total ban on such nets in the Atlantic and the Mediterranean.
Has the Commission drawn up a proposal along these lines? Does the proposal include a total ban on these nets, with the exception of the Baltic Sea?

Bonino
As the Honourable Member knows, the dossier referred to in the question is the one which has caused the Commission, and me personally, as Commissioner responsible for it, the most headaches. One matter remains: after the decisions taken in the Council on the plan to restructure the Italian fleet and especially on the position taken by Germany on a request from the Spanish Minister, there is the decision that the Commission initiate a series of informal bilateral contacts with the Member States to consider the feasibility of a new amending proposal which may be varied in nature: for example, there might be a split between the Baltic Sea and the Atlantic Ocean, or similar actions. So the Commission is making the preparations and starting these bilateral contacts.
But I have to say to the Honourable Member that it is not the Commission's intention to superimpose the 'drift nets' dossier on the 'technical measures' dossier, which the Commission intends to conclude in the Fisheries Council on 30 October. As the Honourable Member can readily understand, this is to avoid cross vetoes or more or less transparent attempts at bartering between the various dossiers. The Commission therefore means to end this round of consultations and settle the position or present a new proposal by the end of the year.

Imaz San Miguel
Thank you, Commissioner, for your answer.
Although this is giving you and the Commission a headache, I am convinced that the Commission is doing serious work on this matter and working in the right direction, according to the timetable you have set.
I should like to ask two further questions. Is the Commission going to make a practical proposal on this matter in the autumn, for October or just after? Then it could plan on banning these nets by summer 1998. Secondly, does the Commission envisage in its proposal any reconversion plan as i think that that would be very positive for the French, Irish and British fleets, funded through the IFOP or any other type of European fund so that these fleets could be paid for the additional net investment required and so that they could be given the necessary training to convert to more selective fishing methods.

Bonino
I believe that the Commission will present a proposal by the end of the year. As you know, everything depends on the procedures in which the Council and the European Parliament take part, and as the Commission is not the only matter of this procedure, it will have to wait and see.
As for your second remark, this is one of the subject of the bilateral consultation that we are holding with the Member States. I should like to point out that, in respect of Ireland, there is only one boat left fishing with drift-nets; that means there is no need for a major reconversion plan there. Once there is an agreement, the Member States using drift-nets in the Atlantic will have to send control vessels: you can imagine what the economic cost of that initiative would be.
As for Britain, last year it had only five or six drift-net boats in use under the British flag. That too would not require a major reconversion plan.
The question does arise in the case of France. It still has a fleet of 40 boats, an old fleet still using drift-nets. This is something that could be considered in the bilateral talks, in similar terms to the procedures applied in the Italian plan. I repeat, there are procedures and also financial aspects.

President
Question No 41 by Mr Robin Teverson (H-0420/97)
Subject: Task force on future of CFP
In the recent round table discussion on the future of the CFP, Commissioner Bonino said that a 'Task Force' is being put together in DG XIV to deal with this. Has this been done, what is the timetable, who is on it and how will it work? In addition, can the Commissioner outline its terms of reference and the European Parliament's role?

Bonino
Mr President, ladies and gentlemen, under the auspices of the Directorate General for Fisheries, a task force has already been set up charged with preparing the revision of the common fisheries policy, as provided for in the base regulation, through a report to be presented to the Commission by the end of 2002.
The first task of this group must be to define the methodology of the work, and in this context a seminar with the European Parliament will be organized by the end of the year, in which all interested Members of Parliament can participate, to establish the content and above all the methodology necessary to make a good discussion possible before the proposal is drawn up in 2001.
Personally, I think the whole process should be based on wide consultation of all the players and interested parties. So on the one hand, very close contact with your Committee on Fisheries throughout this whole process, which is a long term process, and on the other, obviously, consultation with the Member States and the sector.
The idea we are developing inside the Directorate General is a questionnaire to be distributed as widely as possible, in other words trying to have a bottom-up approach, at least in the first stage of the process, so that we can take stock of all the concerns, and indeed suggestions, which emerge from various quarters of the sector, although some subjects, obviously, may be less controversial, while other ideas may be usefully taken into consideration.
From the point of view of methodology, we feel the first important deadline for this task force is the organization of the seminar by the end of the year, with the participation of the European Parliament.

Teverson
Thank you Commissioner, for a very useful reply there. I certainly have been very pleased that such a working party is being set up and that it is going to be reasonably broad-based.
The question I would like to ask going on from that is how broad do you think the questions will be that they will be able to ask? Will it just be a question of how a common fisheries policy should change for the future, or will they actually consider the broad spectrum of alternatives which might go from complete renationalization - not something that I would advocate - but through regionalization and into a completely unified European fleet. Is all that spectrum within the remit of the working party or is it really within a new common fisheries policy as a common fisheries policy?

Bonino
The idea - at least for those putting the questions - is for very broad questions to be asked. That does not mean that in the follow-up of the process we will be able to retain or accept all the suggestions. If we just want to ask what people want to change about the existing common fisheries policy, there is really no point to the use of a methodology such as a questionnaire. You can use other tools. But if we accept this use of a questionnaire, it has to be as broad as possible and address the questions you are asking: such as regionalization. Provided, of course, we understand quite specifically what we mean by regionalization because, as far as I can understand, throughout the fisheries sector the Member States have quite different views on what regionalization is supposed to mean. So on this particular issue, one question is not enough. The problem is to have broader questions with alternatives that can give us at least a broad idea of what everybody thinks.
So we want to start in 1997 to give ourselves enough time for a full revision. Maybe at the end of the process we will remain with the same common fisheries policy or a slightly different one. This I cannot predict. But a revision is not a simple modification. The name itself means that everything can be called into question.

Morris
Since we are trading and cooperating in a variety of ways with Third World countries and our fleets are operating in Third World country waters - will those countries be taken into the Commissioner's confidence when she is drawing up the new common fisheries policy? Will we be permitting the Third World countries to have some kind of meaningful representation so that we hear their voices as clearly as we hear the voices of our own fishing people?

Bonino
My reply is that from a strictly procedural standpoint, this is not possible. But what we are trying to do is to have informal consultations, mostly with countries with which we have development policies or fishery agreements. But I cannot get information from the legal service. We can only have informal consultations mostly related to international agreements.

President
Mr Morris, listen for one moment. If it is a point of order, you have the floor. But your question must be about the same subject. I shall have to stick to the Rules and you know that you cannot open a new debate. But if it really is a point of order, you have the floor.

Morris
I wish to be helpful. As you know, we now have an ongoing ACP fisheries working party. I was wondering whether or not the Commissioner could work through that agency?

President
Thank you for your help - but it was not a point of order. I think Mrs Bonino wants to reply.

Bonino
The Commission is in favour of having input from this working group, not with binding documents but in an informal consultation.

President
The time allowed for questions to Mrs Bonino has come to an end. Questions 42 to 45 will receive written answers.

President
As they deal with the same subject, the following questions will be taken together:
Question No 46 by Mr Felipe Camisón Asensio (H-0394/97)
Subject: Disadvantages of the simulcrypt process in digital TV
The practical implementation of interoperability schemes for digital television services as developed through the Digital Video Broadcasting forum involves the simulcrypt and multicrypt processes. Can the Commission confirm that, by comparison with the latter, the former process has the serious disadvantage of requiring prior agreements between market operators? Question No 47 by Mrs Ludivina García Arias (H-0397/97)
Subject: Use of standards for the transmission of television signals
With regard to the Law on the use of standards for the transmission of television signals which has just completed its passage through parliament in Spain, does the Commission believe that its contents, and specifically its provisions on the simulcrypt and multicrypt systems and the approval and certification of equipment, are in accordance with Directive 95/47 on the use of standards for the transmission of television signals?
When will the Commission deliver its opinion on this matter?
Does it not think that by delaying a decision, it is assisting the strategy deployed by the competing undertaking and its ally, the Spanish Government, namely to hold up the work of the group which already exists in this market and inflict severe economic damage on it?Question No 48 by Mrs Manuela Frutos Gama (H-0430/97)
Subject: The Spanish digital platform
Does the Commission think it is purely coincidental that the Spanish undertakings backing the first Spanish digital platform on the market in Spain are under attack on three fronts, namely at legislative, governmental and judicial level?
Does the Commission not think that a rapid decision on bringing Spanish legislation into line with the Directive would help clarify matters and benefit Spanish society and Spanish consumers by putting a stop to this battle in the communications industry?
Bangemann
Mr President, I can deal only with the factual issue concerning Directive 95/47/EEC and other directives that may be relevant here. I cannot, of course, comment on the political disputes that have begun and are continuing in Spain on this matter.
The directive that regulates television standards, requires standardized transmission systems for digital television, and that is a clear technical requirement that is designed to guarantee that all broadcasters transmit in the same format. This is intended to prevent a number of standards, such as the Pal and Secam variants, existing side-byside in the digital age. The directive then regulates the way in which services are provided so that broadcasters are able to charge customers for programmes broadcast to subscribers. Those are the conditional access services.
Customers are generally able to use those services by using a chip-card which they insert in their decoder. Under the directive, those services must be available to all broadcasters under fair, appropriate and non-discriminatory conditions, that is to say that the directive does not provide for any technical resources, it does not contain any standards, nor does it speak out in favour of any particular system. It is up to the market operator which system he chooses. The directive does not therefore opt for either simulcrypt or multicrypt. Both allow operators common use of conditional access systems. The common or combined use of conditional access systems means that a viewer, who initially subscribes to the services of one broadcaster, is subsequently able to use those of another supplier without having to acquire another decoder. That is the important point.
The directive itself does not deal specifically with agreements and contractual relations between market operators. They have to regulate that among themselves. But it is made clear that such agreements must result in fair, appropriate and non-discriminatory conditions, that means then that where such agreements have to be made, this is not a serious disadvantage but a method that can be applied to specific technical solutions, to which the directive also refers.
We are, of course, aware that this is very much a matter of dispute. We tried, first of all in talks with the Spanish Government, to ensure that its legislation was compatible with the directive, and we also invited both parties to the dispute along with a technical expert who made it sufficiently clear that both the systems that each uses are open systems. Both sides are currently in negotiation, though we remain under an obligation, should the negotiations prove unsuccessful - and we shall know the outcome next week - to consider the legal aspects and then decide whether the Spanish law is compatible with EU law.
What we are looking at here is not only whether the directive is being infringed but also whether Articles 30 and 59 of the Treaty and directives 83/189/EEC and 95/47/EC are being infringed, the implication being that the other provisions may also be pertinent. Commissioner Monti is partly responsible for this, and we are working together. I told Minister Arias Salgado personally about this review and pointed out that if the parties cannot agree, the Commission will take a decision. That will have, of course, also to ensure that no decision is taken in favour of one party or the other. If, contrary to what we decide, that does happen, we shall have to take legal action, and, if necessary, if the Spanish Government has not acted legally, it will have to compensate for the damage its actions have caused.

Camisón Asensio
Commissioner, the Simulcrypt system needs pacts. That is it main defect, because all the owner would have to do is make difficulties over the pact and the whole agreement would collapse in ruins. That would create an owner-dominated market, a de facto monopoly, to the detriment of media pluralism and free competition.
The Member State cannot allow such an abuse as it would not be fulfilling its obligations, as you said, to create non-discriminatory conditions, as we are obliged by the Directive you have mentioned.
Until the pact between the first two operators is unblocked, the problem will continue for the others and other undesirable duopolies or oligopolies will emerge. That would lead to the harmful situation of market collusion. This pernicious situation in Spain has been solved by the recent law banking on the Multicrypt system. That enables immediate compatibility if there is no agreement within two months.

Bangemann
The Commission does not share that view because what is currently provided for under Spanish legislation is in fact a monopoly, with only one system being accepted. An alternative, which already exists on the market in Spain, by the way, is being excluded. How anyone can consider that a prime example of free trade, I fail to see. On the basis of our own directives, only a system that does not permit access to another broadcaster can be excluded. We also brought in a technical expert, whom many describe as the king of decoders, if you do not find that description a little over-the-top, and that technical expert made it absolutely clear in the talks we had with both parties to the dispute that both systems are open, although they use different technologies and that the fact that it is necessary to negotiate in the case of the one system does not mean preclude a fair outcome.
The directive actually provides that the negotiations must be fair and non-discriminatory. Let us just assume that the negotiations that have taken place this week were conducted by one side in an unfair and discriminatory manner. That party would not then be acting in accordance with the directive. But it is not possible to prescribe a single technical solution which, moreover, is not yet on the market. That is not compatible with the directive. The situation is, I venture to say, a little bizarre. There is a system in Spain that already operates; thousands of viewers are working with that system and are completely satisfied. The system is technically open, as the expert confirmed to us, but a different system, that is not even on the market, is to be made compulsory. That is a situation in law or in fact that we do not find credible.

García Arias
I understand that the Commissioner does not want to enter into Spanish domestic affairs, but the situation is such that you should know that the day after a representative of the affected company appeared before the court, it decided that he should not be able to leave Spain. But I understand that you do not want to get involved.
Mr Bangemann, there has been no agreement. Yet the Commission will have to take a decision on Spanish legislation because it is seriously harming this company which has run the risk of innovating, of launching its product on to the market. I go along with your interpretation. I do not go along with the interpretations of the Partido Popular and the interpretation of their Minister who on his return from Brussels said that you - or Brussels - were violating the Treaty of Rome in the case of digital TV. Do you agree, Commissioner, and when will the Commission finally deliver its decision on this matter?

Bangemann
Mrs García Arias, I have made myself very clear here, and all we have done is to try to bring about agreement, including with the Spanish Government, by the way, because it makes no sense for us all to find ourselves before the Court of Justice again. Someone would have to pay compensation, and the viewers would be no better off. In Germany too, we brought the warring factions together, and they reached agreement. That is why we tried to do the same in the case of Spain, but that does not, of course, mean that we want to shirk our duty to take a decision.
I have said that if agreement is not reached - and we shall know next week whether or not it has been - then we shall take a decision based on the directive I have quoted, but also based on Articles 30 and 59 of the Treaty of Rome. I do not know whether it was the Spanish minister or someone else who said that we are not applying the Treaty of Rome. I cannot understand that, since we are applying Articles 30 and 59, and so our decision will, naturally, be based on the directive and the Treaty of Rome.

Frutos Gama
Commissioner, I too understand that you do not want to enter into political differences in my country, but I must insist on this.
We have already spent quite a while on this and, knowing how the Commission works, this matter should be settled and concluded today. My concern, Commissioner, is quite legitimate. Whereas Simulcrypt meets the requirements and the Directive's provisions, if Spanish law prohibits it that would harm not only the company producing it but also large numbers of citizens - potential and actual consumers of that products - and if it is alright for other European countries it should also be for Spain. Therefore, Commissioner, I again ask you to deal with this matter as quickly as possible and prevent legitimate interests from being harmed: those of the media company promoting the system and those of the consumers who have already chosen it. We do not want a situation in my country where public opinion - as is already beginning to be the case - is unsure whether the two decoders are legal and is even beginning to think that Simulcrypt is illegal, fraudulent or something of that ilk. This doubt can only be cleared up and the rights of the company and the consumers will only be restored once the Commission takes a decision. This is an example of the attack I mentioned earlier.

Bangemann
Mr President, I have already said that we shall be taking a decision next week. That is swift work for the Commission!

Redondo Jiménez
I think that we are looking at this askew. What the Spanish law proposes is that an agreement be reached and it sets a timetable for that agreement; if an agreement has not been reached within that time, it proposes that a universal decoder be adopted. But I think that this is neither the time nor the place to discuss this matter.
The place to discuss differences over the arbitrary adjudication of the previous government is not the European Parliament: it is the national parliament where those problems should be dealt with. As he rightly said the Commissioner can only say that Community law must be complied with and we shall know whether or not the agreement has been reached. The Commissioner will tell us next week.

Bangemann
Mr President, you are casting me into despair here, because when I get a question from a Member of the House - three of them - which the President allows, I have to answer. You would not perhaps have put the questions, nor did you, but when members of the other groups put them, the Commission has to deal with them.
Factually you are incorrect because our directive contains specific provisions on what is and is not permitted in relation to decoders. That is the only issue here and that is why I have confined myself to it. The directive does not, for example, say that there should be only one decoder. We deliberately avoided that. We did reserve the right in the directive to set a standard for a single decoder. Were we to do that all of the parties involved would be very dissatisfied and suffer severe economic disadvantage, as the standard would probably not be met by any of the decoders currently in existence.
We have reserved for ourselves this ultimate weapon, if I may so describe it. We did not allow the national governments to have it. And so what we have here is a European problem and not just a Spanish problem. I concede that the Spanish affair is livelier, but our problem is also a difficult one. It can, however, be resolved.

President
Mr Bangemann, we shall remain with the same question but break up this Spanish momentum and open it up to a wider European area. Mr Caudron has the floor for a supplementary.

Caudron
Commissioner, I wanted to speak in this debate as I was the rapporteur for this directive, and I wish to confirm what you said. I have no particular technical question to ask, as I was partly responsible for the choice of solutions made in order to avoid monopolies or oligopolies, to avoid hold-ups and to enable numerical TV to be launched in Europe, as has been done. I therefore fully agree.
The only question I wanted to ask, Commissioner, is a real one: you have set a timetable, i.e. you and the Commission will take a decision within a week. Could you tell us what the rest of the timetable is? Where will it lead us? What is the timescale available for unblocking this situation?

Bangemann
As far as the Commission is concerned, we shall be telling the Spanish Government next week what our legal opinion is and where, in our view, the Spanish law is incompatible with the directive and the articles I have cited. The Spanish Government may accept our view but it may also discard it. In that case, we shall have to go to the Court of Justice and that is bound to take rather longer. The question that we have not fully considered is whether we should ourselves then take a temporary measure or seek an interim order from the Court of Justice, since the Spanish law provides for a deadline, namely 7 July, after which no other decoder is to be permissible. To prevent economic disadvantage, it might be appropriate to apply to the Court of Justice for an interim order, so that the deadline does not mean that an existing decoder has suddenly to be withdrawn from the market.
We shall look into that, but I can make no other promises. If the Court of Justice decides that we and not the Spanish Government are right, then that government will of course have to pay compensation to the company that it has disadvantaged as a result of its decision. That is clear but it is not particularly productive.
That is why we have tried to reach an agreement and we are still trying to ensure that if agreement cannot be reached, then the Spanish Government will at least agree not to apply the law but wait until the Court of Justice has reached a decision. Then both systems will be able to develop alongside one another in Spain. But I cannot, of course, tell you what the Spanish Government will say.
We are doing our best to arrive at a balanced and sensible solution. But I cannot guarantee that all involved have adopted the same approach to the dispute. It is, as I have said, a lively one. In the bullring, there are bulls that will simply not be pacified.

President
Thank you, Mr Bangemann. We return not to bulls but to the Spanish momentum with the last two supplementaries. First of all, Mr Hernández Mollar.

Hernández Mollar
Mr President, a Spanish momentum is a European momentum. What is happening is that certain members from the Socialist Group want to destroy - yes, destroy - the general interests of European citizens and Spanish citizens in particular.
You at the Commission probably know that, in respect of digital TV services, the Governing Board of the DVB decided to postpone application of the Simulcrypt cable system as a European standard. As a result there will probably be no European Simulcrypt standard until the end of 1997 or early 1998.
On the other hand, the common interface for digital receivers was approved in May 1996 by the DVB, after its ratification by the National Standards Organizations that year, and its formal adoption as the European standard in February 1997 by the Cenelec.
Faced with such a problem, i.e. the degree of standardization of the Simulcrypt system, I would like to ask the Commissioner what his opinion is of this disadvantageous situation and what negative effects it could lead to, in terms of the aim of offering all citizens as quickly as possible digital TV services by means of a universal system, while keeping the maximum amount of media pluralism.

Bangemann
When we lay down a universal solution - and the time will come - then both of the systems currently on offer in Spain will have to go. That is a difficult technical issue. I do not know whether you are clear about it.
There are two possibilities: either you have a uniform decoder, through which all services, including conditional access, pay-TV etc, are able to be supplied. That, if you like, is the ideal solution. For that, there has to be a technical standard. We shall get there one day, as the industry is working towards it. But we do not want to dictate it; were we to do so everyone now commissioning or offering decoders would suffer enormous economic disadvantage. They would have in fact to take their decoders off the market. And so we said we would stipulate only a minimum. That minimum is: anyone using a decoder must use one that is accessible to others. That is not a matter of laying down a special technical procedure, it is simply ensuring access. The Spanish legislation is not doing that, it is prescribing a decoder - not even a uniform decoder, by the way, but a decoder with a common interface. That is another technical system.
That is not the ideal solution, namely that there should be only one decoder in existence, but it is a decoder that can, using a technical device, be made open to others. Other decoders that are also open are not allowed. That is precisely what the directive does not permit. Do you follow me? If you read the directive through once again - Mr Caudron confirmed this and what Mr Caudron says is true - you will see that what I have described to you here is the legislation in force. That is the problem with the Spanish law.

President
Thank you, Mr Bangemann, but just one last question, again in the Spanish momentum.
Mrs Izquierdo Rojo has the floor for the last supplementary question.

Izquierdo Rojo
My question is not the same, because I put it in a European key and with an extremely constructive intention.
Commissioner, this afternoon you have been very clear. You know that on many occasions, when faced with a Solomon-like decisions, the introduction of a few keys can open the way to a solution.
You said that if there is no agreement next week, the Commission will adopt a decision and position.
With a constructive intention and in order to avoid such a Solomon-like decisions, could you not propose - if there is no agreement and the Commission had to take that decision - the terms of the Commission position? I am sure that if you could put forward those terms, an agreement might come about. That is my question.

Bangemann
The difference between you and Solomon is that he was far wiser than you, if you will allow me to point that out here. Were I now to tell you how our decision looks, then both the parties currently engaged in negotiation would probably withdraw from those negotiations. One side would be so certain of being acknowledged to be in the right that it would say: ' I do not need to negotiate any further!' Therefore, it is more in the tradition of Solomon, and so somewhat wiser, not to say what we shall be doing next week.

President
That concludes Question Time to the Commission. Questions Nos 49 to 53 will receive written answers.
(The sitting was suspended at 7.20 p.m. and resumed at 9 p.m.)

Agricultural prices 1997-1998 - Arable crops - Improving agricultural
structures - 1998 set-aside
President
The next item is the joint debate on the following reports:
( A4-0173/97) by Mr Sturdy, on behalf of the Committee on Agriculture and Rural Development, on the proposals for 16 Council Regulations on prices for agricultural products and related measures 1997-1998 (COM(97)0089 - C4-0114/97 to C4-0129/97-97/0087(CNS) to 97/0089(CNS), 97/0091(CNS) to 97/0094(CNS) - 97/0096(CNS) to 97/0102(CNS), 97/0905(CNS) and 97/0906(CNS)); -(A4-0176/97) by Mr Funk, on behalf of the Committee on Agriculture and Rural Development, on: I.the proposal and amended proposal for a Council Regulation amending Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops and repealing Regulation (EEC) No 1872/94(COM(96)0422 and COM(97)0022 - C4-0448/96-96/0212(CNS)); II.the proposal for a Regulation amending Regulation (EEC) No 2328/91 on improving the efficiency of agricultural structures (COM(96)0422 - C4-0449/96-96/0213(CNS)); -(A4-0189/97) by Mr Baldarelli, on behalf of the Committee on Agriculture and Rural Development, on the proposal for a Council Regulation amending Regulation (EEC) No 1765/92 establishing a support system for producers of certain arable crops (COM(96)0361 - C4-0496/96-96/0221(CNS)); and on the following oral question:
(B4-0174/97) moved by Mrs Poisson, on behalf of the Committee on Agriculture and Rural Development, on the 1998 set-aside rate.

Sturdy
Mr President, first of all I should like to take this opportunity to welcome Mr Fischler and the President-in-Office of the Council of Ministers, Mr Van Aartsen, to our Chamber. It is a pleasure to see you both here for this report. It shows how important it is.
I have great pleasure in presenting the price package proposals as amended by the Committee on Agriculture and Rural Development. I should like to take this opportunity to go through the amendments in order, put a little bit of meat on them and say why the Agriculture Committee has proposed them and then perhaps look at the costs and talk that through.
First of all, moisture content for cereals. We have proposed that the 15 % moisture content for cereals should be extended; in other words, it should not just last this year but continue. One of the major problems for northern Member States is the moisture content of cereals. It is extremely costly and the misuse of a valuable resource to have to try and bring cereals below 15 % moisture. Therefore I hope the Commission will stay on 15 %. That is budgetary-neutral.
On protein crops, there has been a great decline recently - in fact, in the last two years - in the amount of such crops. I would like to see some sort of improvement in the support system to help protein crops. It is particularly relevant at the moment because we have just had a great debate for almost 18 months over BSE and the problems of animal protein. This is therefore a great opportunity for the European Union actually to produce more of its own protein and a vegetable protein at that. I feel it is important that we seriously consider the opportunities opened up here.
The committee proposes to help the paddy rice industry. This is by way of assisting some of our southern Member States. One of the things that I have learnt since I came into this Parliament is that we are 15 Member States. I therefore have to look at all Members and all their regions and their problems. The rice sector has had a particularly difficult time in recent years. I am proposing a simplification of the present legislation. It provides the opportunity for quick support for the rice industry without great or long-term costs. The cost of these proposals will be somewhere in the region of ECU 60m and that includes all its accompanying measures.
With regard to sugarbeet, we have recommended that the Commission review the fixed element of sugar storage refund. It is more than 10 years since we made these changes. This arrangement should now reflect the present changes in costs and probably should be reviewed, if possible, every three years. I am also proposing help with production costs in Spain and Portugal. This must, quite specifically, come from the national budget and not from the European budget.
With flax and hemp I propose to bring hemp back into line with flax. Hemp is a useful alternative crop, it is environmentally friendly and it would cost only ECU 1m.
On wine, if the ban on distillation were brought in as early as has been proposed by the Commission, it would cause undue hardship for southern vineyards. We are therefore proposing delaying application of the ban for one year. The approximate cost is again ECU 1 million.
I am almost disappointed to say that, unfortunately, these measures and my report actually cost ECU 170m. That money must be found somewhere. We are in a situation of budgetary constraint. We have to understand the fact that in the Committee on Agriculture we cannot continue adding to the budget. There are a number of possibilities. Two have been proposed within the present price proposal package. One is an amendment concerning monthly increments for cereals. This has been re-presented in the amendments.
The deletion of monthly increments would reduce the budget by ECU 160m. Having spent ECU 170m in the budget, this was one way of making the package virtually budget-neutral. For those who do not understand, monthly increments are an increased monthly payment paid to farmers for delaying sending their cereals into intervention. It would be popular in some respects because I see intervention generally being used as little as possible and being an emergency proposal.
I also support another proposal which is to make the budget neutral overall. It comes from Mr Böge who has put down a number of proposals. It is a question of finding the money from the budget.
In my explanatory statement, I call upon the Commission to fix the rate of set-aside, I put a date of July and I suggest the rate be 5 %. At this point, I would add that I believe that set-aside has been a brilliant option under the MacSharry reforms. It has been a good balancing measure. It has stopped over-production. It has stopped intervention and it has been good for the environment. One of the things that was said against it initially was that it would be environmentally unfriendly. This has not proved to be the case.
However, the Commission at the moment has placed an export tax on cereals from the European Union because, in theory, we are short of cereals. This tax is something like ECU 10 per tonne. Therefore I see little point in raising set-aside above 5 % for next year.
Whatever measures are agreed by the Council, agriculture can come to terms with them provided we have sufficient time. That was why I suggested that the Commission and the Council fix the set-aside rate as early as possible and, if possible, by July, as stated in my report. I was given a price proposal with a 0.45 % increase. One of the problems as a rapporteur is that you try to find a little money for everyone but at the same time to stay within sound budget principles. If we want more power for this Parliament and more respect and responsibility, we have to be responsible in our approach to the budget.
I hope that I have made some responsible proposals and I look forward to the Commissioner's reply.

Funk
Mr President, Mr President-in-Office, Commissioner Fischler, ladies and gentlemen, my report deals with the postponement of the advances for oilseeds and the reduction of the per hectare compensatory payments for arable crops.
There are a few points I should like to make. The MacSharry agricultural reform was conceived as a U-turn in agricultural policy, involving a reduction in surpluses and an adjustment to bring us into line with the GATT agreement, with radical price cuts for cereals, oilseeds and protein crops. At the same time, livestock premiums were introduced for dams and male bovines, and the intervention prices were reduced sharply. It was on this basis that the per hectare compensatory payments came into existence. So it was no coincidence that - in France, for example, and in some other parts of the European Union - the highest earning regions also received the highest compensatory payments, though I should make it very clear that, on this occasion, this had nothing to do with a European Parliament resolution. This, however, was the carrot with which farmers and their organizations were persuaded to accept this agricultural reform.
Commissioner Fischler has also, on several occasions, promised to continue compensatory payments until 1999. In your current proposal, you have envisaged linear cuts, justified first on the basis of the BSE crisis and then by the good cereal harvest. Those arguments have now collapsed, as the 1997 agriculture budget is sufficient to meet the financial obligations in full and on schedule. A linear reduction in aid is unimaginative and, in most cases, unfair - that much is apparent. It makes no allowance for the natural conditions existing locally or the farmers' potential yields, and it also completely disregards the unfavourable trend of incomes affecting certain sizes of farm.
A young farmer who has invested in a mixed operation, combining stock and arable farming, has his back to the wall as things stand at present. The only way forward available to young farmers is tenancy, and the tenancy agreements are generally based on this firm promise that the per hectare payments will be available until 1999.
Commissioner, I am sure that you have excellent specialist staff at the Commission. If they had looked more closely at the different kinds of problems facing farmers in the various regions of Europe, I feel sure that this undifferentiated approach would never have occurred to them. It is completely unbalanced and will inevitably result in a serious loss of trust among farmers.
I unhesitatingly reject the Commission's proposed radical reform of the financing of the cereal market. I myself come from a German Land where farms - with an average of 20 cattle - are much smaller than in many other regions of the European Union. In general, they cover between 20 and 50 hectares. This is another point I wish to bring to the attention of the President-in-Office.
I have today obtained figures from my Land government. It seems that 49, 143 of our farms receive compensatory payments averaging DM 8, 595 per year. No Commission official would work for a single month for that kind of money.
Commissioner, these farming families have a hard struggle. It will be a slap in the face for them if you were to regard them as 'over-compensated' . Any reduction in compensation would be particularly damaging to the mixed farms. Cutting back the per hectare payments for arable crops does not do anything at all for the forage growers, who are particularly hard hit. This is the critical weakness in the Commission's proposal. If there really is overcompensation, then it must be judged objectively by reference to the prices the farmer can command in his market and in his local currency. Countries that have benefitted from continuous devaluations can command very high prices for products covered by market organization. So we do need a revised proposal on the form to be taken by the compensatory payments.
The Committee on Budgets also supports our proposal that the payments for oilseeds for 1997 should not be postponed because the budgetary resources are available. Our proposals fall within the agriculture guideline.
Mr President, I hope you will let me finish. We were ordered to speak here this evening - normally I would have been called at 3 p.m. today. The previous speaker was allowed eight minutes. I am a rapporteur too. I believe I am entitled to another three sentences. Please be kind enough to let me finish, because it is necessary. The President-in-Office has come here to listen to what I have to say - or at least, I hope he has!
To prevent any wrong turnings, it is absolutely essential that proposals for the period after 1999 should be submitted very soon, because the credibility of political decisions and confidence in a united Europe are at stake. I ask the Commission, as a matter of urgency, to withdraw its proposal to postpone the advance payments for oilseeds and to guarantee payment in full of the per hectare compensation for the years 1998 and 1999, as envisaged in the agricultural reform.

Baldarelli
Mr President, Mr Commissioner, I think this evening may result in a further contribution to ensuring that Parliament discusses the merits of certain important proposals from the Commission, but I also the debate will give you encouragement, Mr Commissioner, to pursue the policy of reforming the CAP. I have been following your work carefully, including at the recent conference, but I think we need to do more. In a word, we should not wait for the market to be opened up to the new countries - Poland, Hungary - we should start accelerating reform immediately. If these debates can help the process along, that will certainly be positive. To some extent that is also the reason why, as rapporteur, I have dealt with the Commission's proposal in a waya which not only takes account of the legal side, but also looks at an overall restructuring of the system of organizing agriculture at Community level.
Agriculture and related activities, especially Mediterranean ones, are now increasingly suffering a kind of ostracism. This related production is very important because it provides the opportunity to maintain income in difficult and marginal locations, especially in areas where economic and social cohesion is very important: Objective I areas. Durum wheat is one of these forms of production, olive oil is another, tobacco is yet another. Specifically looking at durum wheat, I think the proposals should be rationalized to provide for a maximum area for durum wheat set by the individual countries and then distributed at territorial level. I believe that is an intelligent and serious proposal, which also seeks to counter a series of frauds possibly present in the management of durum wheat farming, but above all it is capable of providing marketing strategies for this product, because some producers very often grow it just for the premium. So this method is important because it anchors the production to the territory.
I also think the proposals approved by the Committee on Agriculture are important. I should add, Mr President, Mr Commissioner, that those proposals were approved unanimously and have two basic aims: one relates primarily to the possibility of widening the 5 per cent limit, so it is substantially about lifting the national, and therefore the regional, quota ceiling for young farmers. Quotas are a rigid instrument. We believe young farmers should have an opportunity to enter the market and, above all, achieve a turnover which no longer exists in the agricultural sector. So making 5 per cent of the quotas available to young farmers is very important. We consider it a choice the Commission and the Council must accept after the united support of Parliament and its Committee on Agriculture.
The other proposal relates to certified seed. We agree with what is happening, but we are also convinced that biodiversity must be maintained as a fundamental factor. Maintaining biodiversity and also some of the special characteristics of seed, especially durum wheat seed, is very important for small farmers. We have added Germany and Austria to the list of traditional producers because we think there is a market need, and at the same time we have updated the quotas of durum wheat allocated to the traditional producer countries. I think it is a pretty well-balanced proposal, which takes account of the united opinion of the committee, and will make a good basis for you, Mr Commissioner, for a discussion in the Council.
That is all I have to say, and I just hope this will be accepted.

Poisson
Mr President, ladies and gentlemen, the oral question to the Commission on my initiative and supported by the Committee on Agriculture, Fisheries and Rural Development, is fully justified because it is vital that the Commission take a decision on set aside in the framework of the 1997-1998 price package. The set aside rate, when it differs from that provided for by the basic regulation, should be made known within a sufficiently short time so that European Union producers can proceed to their land planning and seeding in full knowledge of the facts.
Given the sowing periods, in certain Community regions, the Commission should make a proposal as quickly as possible. Since the CAP reforms of 1 July 1993, the cereals market has recovered its balance as a result of the production cut and, above all, the recovery of the internal market, especially for animal food. This situation has led to a major reduction in European Union cereal stocks. Two of the reform's main aims have therefore been achieved. However, these results need to be kept up by ensuring the maintenance if not an increase in intraCommunity consumption.
Later on, we noted the emergence of Asian demand which seems to be lasting. The European Union must ensure that it regularly meets demand from its traditional non-Community customers.
During the 1995-96 farming year, we noted that the inadequacy of our cereal production hindered the fulfilment of some of our commitments, especially to the Middle East and North Africa. The Commission even had to impose export taxes on cereals in December 1995 to protect internal supplies. We also saw that the record harvest in 1996-97, some 202 million tonnes, was easily absorbed by the internal market and exports. Before the 1996-97 harvest, Community stocks were assessed at 24 million tonnes; now they have risen to barely 28 million tonnes, not enough when you consider that 30-35 million tonnes would be needed to guarantee Europe's food safety over two months.
Today, the drop in world cereal stocks is threatening the planet's food safety. These stocks are currently assessed at 55 consumption days. In 1996, they had dropped to barely 51 days. Experts reckon that, below 70 consumption days, world food safety comes under threat.
To conclude, I should ask the Commission to fix the set-aside rates by 30 June 1997 and take into consideration unexpected weather conditions, increasing market demand and relatively low stocks.

Van Aartsen
Mr President, ladies and gentlemen, Commissioner, I have had the pleasure of following today's debate in the European Parliament on the prices package with great interest and particular attention. It has been an opportunity for me to gauge the seriousness and devotion which you demonstrate as members of the European Parliament when considering the advice given to you by the Commission and the Council on the proposals made.
Before tackling the content of the proposals I should like to say this, with some emphasis. Last week I was invited to attend an excellent symposium on the future of agricultural policy organized and directed by your colleague, Mr Sturdy, and today I have the pleasure of taking part in this debate on current policy issues. Mr President, ladies and gentlemen, I should like to thank you for having agreed, at my special request, to delay your meeting to this late hour in the evening. I was obliged to make this request because I absolutely had to attend the proceedings of the Dutch parliament this afternoon and I am particularly obliged to you for having agreed to hold this debate this evening.
That is my introduction. Now I should like to offer a brief outline of the way in which the prices package for next year is perceived by the Council. Of course, it is possible that this is only a provisional reaction and, as yet, offers no guarantee for the direction to be taken by the decision-making process, given that this will only take place, at the earliest, at the June Council meetings. Nevertheless, in my view, the debates which have been held so far have offered a correct and pertinent overview of the various positions taken.
First of all, we should look at the extent of the prices package. As you know, it is very modest. The Commission is proposing a 'roll over' for high levels of prices and aid. This means that the situation does not change and I think that also on this subject there is a lot to be said because farmers are benefitting from a certain degree of stability and certainty as to the management of their undertakings and, given that the evolution of incomes is also relatively stable, it is therefore probable that the Commission will continue to act 'as and when' , next year. Of course, there are always Member States which would prefer a more rigorous prices package together with more daring reform proposals and, of course, all the Member States have expressed their wishes and made specific requests to the Commission. However, generally speaking, I think that we can say that the delegations have understood this year that the extent of the prices packages was modest. Also because the Commission has announced, for the autumn, reform proposals for cereals, beef and dairy products.
When speaking this year of a prices package we cannot, of course, overlook the budgetary situation because, as you know, agricultural spending for 1998 is provisionally set at an amount 0.5 % higher than the 1997 budget. The reason for this is clear: many countries, as also pointed out in the Sturdy report, must pull out all the stops in order to put their national budgets in order and meet Maastricht criteria and, for that reason, it is perfectly understandable that the Commission should impose a strict budgetary discipline on itself. In the Council, some comments have also been made on this subject and at the European Parliament, if I have understood right, there is agreement on an assessment of agricultural expenditure at around 41 billion ECU.
As far as the size of the total budget is concerned, there cannot be a lot of discussion. On the other hand, the same does not go for the share-out of resources - and that is the case everywhere. In the Commission proposals we start out with a 7 % reduction in agricultural premia. The least that can be said - and I shall use diplomatic language - is that the Agricultural Council was not very enthusiastic about this. Of course, you were well of that. Furthermore, your Parliament does not think that this proposal is an interesting one, at least that is what I have ascertained reading the opinion and what I have just learned from Mr Funk in his speech. The question which arises is how we are going to make sure that expenditure remains within agreed limits, because that is the objective sought not only by the Commission but also by the Presidency. Personally, I have some ideas on this subject but these are personal considerations which are not yet a reflection of the Council's opinion as a whole.
I think that we need to set a budget threshold. I think that we must somewhat reduce all budgetary lines in general so that everything can continue to stick precisely to the budgetary amount as a whole. By means of supple management of the market, the Commission must be invited to do all it can in order to remain within the limits, given the margin for manoeuvre acquired in previous years and I think that that ought to be possible. Furthermore, we still have the possibility of paying advances for oil seeds the following year but, in all probability, we shall have absolutely no need for that instrument in budgetary year 1997 given the evolution of expenditure. That means that we will still have this possibility for 1998 if unexpected expenditure arises. Besides, I think that we now have enough possibilities to maintain 1998 expenditure within the agreed framework. Of course, it is very difficult to predict the decision-making process in the Council but, at present, you now know the personal position of its President-in-Office.
Now please allow me to make another comment on the budgetary situation. As I said, there are possibilities making it possible to remain within the limits thanks to flexible management of the market. But, for that, it is necessary for us to take an extremely reserved look at the series of requests and demands of the various Member States. I think that this is an absolute condition because, otherwise, it would be impossible to find the 1.4 billion ECU which a good many Member States would like to cut from the Commission proposals. Your Parliament also has responsibilities in this respect and I should like to paraphrase Mr Sturdy in saying that your Parliament has also shouldered its responsibilities. In a few days' time you are going to vote on this prices package and I have just received the draft opinion. I think that it would be a good idea to examine it in depth in the coming period. It is important that supplementary costs stemming from your amendment should result in a final amount of around 170 million ECU and given the current budgetary situation I think that this is a very realistic way of tackling the agricultural budget. In this respect, I should also like to refer to the arguments set out this evening by Mr Sturdy and in the beginning of his report, which contains a certain number of comments which are worthy of support.
I think that it is not worthwhile to go on for too long about this subject and that it is not necessary at this stage in the decision-making process, given that many Member States have yet to make their opinions known in the Council. As President, I will do everything in my power and I hope that we are going to be able to cooperate with the Commission so that the decision-making process concerning the prices package is completed at the Council meetings to be held on 23, 24 and 25 June. I think that this is necessary and I believe that farmers are also entitled to be informed in time about what is to await them in the coming years. On this subject, you have carried out important and effective work and I should like to thank Mr Funk, Mr Baldarelli and Mr Sturdy for their excellent contributions. The European Parliament has given its opinion and now it is up to the Council to give its.
I should also like to tell you that it is my intention to submit another issue to the Council in June, the so-called 'sanctions file' . I recall that, in January last, when I was before the Agriculture Committee, we tackled this question and the Parliament's message was: the decision must be taken during your Presidency. I hope that we are going to succeed.
This proposal dates back more than a year now and it contains one aspect which is designed to reduce sanctions in cases of natural disasters, which is important for our southern partners, and it also contains an element of equalization between the regions. For this, sanctions must be applied less quickly. If my memory serves me right, in September of last year, your Parliament issued an opinion on this proposal. I hope that it is now time to be able to take a decision on this complicated system. For that reason, this issue will also be on the agenda at June's meeting.
Something which is not on the agenda, and I would like to talk about this quite frankly, is the proposal on durum wheat. Unfortunately, I am sorry to tell Mr Baldarelli, the decision-making process has not yet reached a stage where a decision can be taken in the Council. All Member States concerned have made claims for an increase in guaranteed areas. An overall estimate comes to - do not be afraid - some 600, 000 extra hectares which comes to hundreds of millions of extra ECU. In the light of the problem facing us, I should like to ask for your understanding - of course this is impossible. Even if you issue an opinion shortly, I do not think that enough progress has been made yet in the Council of Ministers for us to reach a decision. Quite simply, we are coming up against this budgetary problem. Furthermore, I think that, in any case, in June, there will be a 'tour de force' in order to conclude the prices package. That is another reason to put yet more energy into it.
I should like to add one more remark on this subject and turn in particular to Commission Fischler. Certain Member States and representatives of the European Parliament have insisted on a rapid decision-making process concerning the set-aside percentage for the next year. Earlier on this request was again commented on by Mrs Poisson. I think that she used the same argument as the one that I have just made. Apart from the other arguments that she made concerning the developments in the world wheat market, I think that, in the short term, it might be worthwhile explaining the situation clearly to cereal growers. The Sturdy report also referred to this issue and pointed out more or less the way in which such a decision ought to be taken. And I thought that the Goepel resolution that you are going to debate on Thursday insisted on a rapid decision-making process.
That means that you would like to receive, as quickly as possible, a Commission proposal on this subject. I support this position and hope that the Commission will also agree, because it is always in a position to do so, and I hope that, therefore, it is going to be willing to make a proposal in the short term because I think that that might also somewhat simplify the decision-making process in respect of the prices package.

Fischler
Mr President, Mr President-in-Office, ladies and gentlemen, I am very glad to see that the President-in-Office of the Council, Jozias van Aartsen, has been able to join us for this important debate, and I hope this will become regular practice in agricultural matters under the various Council presidencies.
Since I am expected to comment on three reports, one oral question and quite a number of amendments, I hope you will appreciate that it is bound to take up a little time. I should like to start by giving details of a few circumstances that are important as an aid to understanding the Commission's price package for the 1997-98 budgetary period.
A number of market organizations need to be reformed in order to prepare the European Union for the challenges of the next ten years. Specific Commission proposals already exist for some areas of production, and others will follow in the course of the year. The reports on the olive oil sector and the tobacco report are currently the subject of detailed discussions by both the European Parliament and the Council. To enable the additional work of reform to begin, the Commission has produced a number of analyses providing information on the present position, the structure and, especially, the long-term prospects of the markets for cereals, milk and meat. Similar documents for agricultural development are also in preparation.
We should establish clearly that, as regards the price proposals for the coming year, we are going through a kind of transitional period. The price proposals are therefore essentially based on prolonging the period of validity of the existing rules. Where we think it necessary, however, some regulations will be adapted to reflect changes in the economic environment.
The downward trend in interest rates is resulting in an adjustment of the monthly surcharges on the intervention price for cereals and rice and on the storage cost compensation for sugar. As the Council cut the flax subsidy by 7.5 % last year, without at the same time adjusting the subsidy for hemp, which can replace flax in the rotation of crops, we are proposing that the hemp subsidy should be reduced in the same way this year. The subsidies for fish farms, introduced in 1992 to compensate for falling prices, should also be brought more closely into line with the actual price trend.
According to a study by the British Department of Agriculture, the last four years since the introduction of the reform have seen over-compensation totalling ECU 14.3 billion. Not in the United Kingdom, sir, but in the European Union! I had serious doubts about the conclusions of this study and the methods used. I therefore instructed my staff to examine this matter very carefully. The result is this: according to the Commission's services, the extent of the over-compensation is about ECU 8 billion over the last four years.
I should prefer not to pursue this argument further at this stage, but I would point out that the Commission's proposed ECU 1.4 billion annual reduction in the compensation payments seems quite modest in comparison with past over-compensation.
I now come to Mr Sturdy's report. The actual price proposals encompass 16 Regulations, 9 of which were accepted as proposed by the Committee on Agriculture. I should like to thank the Members of the Committee on Agriculture, and especially Mr Sturdy as the rapporteur, for their constructive assistance in drawing up the report on the price package.
Let me now take a closer look at the amendments to the other seven proposals for regulations. First, in some of these amendments you are asking that the monthly subsidies should be retained at their present level. But the agricultural sector, like other sectors, is a beneficiary of falling interest rates, something we cannot ignore in our price resolutions. Therefore, the Commission cannot accept Amendments Nos 3, 7, 11, 15 and 17.
On the other hand, Amendment No 47 calls for the abolition of all monthly subsidies for the cereals sector. From our viewpoint, however, this would be a major change which would not be consistent with the idea of continuity of the price proposal.
Secondly, Amendments Nos 6, 8 and 9 refer to the rice sector and are intended to expedite the reform agreed upon last year. The major problem in this sector at present is the large quantity of tax-exempt imports from the overseas territories of the EU. However, this problem can only be solved in the context of Council discussions. The consequence of any such change would be to reduce protection and budgetary costs by raising the subsidy. As far as Amendment No 5 is concerned, it makes little sense in this situation to support imports by setting the import quotas in advance.
Thirdly, Amendments Nos 12, 13, 14 and 15, relating to the sugar sector, are intended to reintroduce government subsidies in Spain and Portugal. This question was examined in detail in 1995, when the market organization for sugar was extended by six years. The Commission is therefore against re-opening this matter again at present.
Fourthly, Amendments Nos 18, 19 and 20 regarding flax and hemp. We reject these amendments for the reasons already mentioned. Fifthly, Amendments Nos 25 and 26 on the tobacco sector. Although it is true that the issue here is to match production to market demand, this problem can only be solved by a revision of the existing regulation.
Sixthly, Amendment No 2 on protein crops envisages improving the competitiveness of protein crops as compared with other agricultural crop plants. The Commission is sympathetic to the aim of this proposal, but has already proposed an improvement in connection with the resetting of the agricultural premiums. If I may remind you, the compensatory payments for protein crops are being retained, whereas those for cereals and oilseeds are to be reduced.
Seventhly, Amendment No 30 on olive oil. The radical changes proposed should, in our view, be discussed in the context of the reform proposals. Eighthly, Amendments Nos 27 to 29 on the beef and veal sector: the premium regulation for bulls provides only for a payment at the age of 10 months. At that age, however, no distinction can be made between bulls intended for the bullring and other bulls. The second premium for bulls at the age of 22 months has been done away with in the meantime, as you know.
Ninthly, Amendments Nos 1 and 4 on the extension of the exceptional regulation on moisture content - Mr Sturdy has already mentioned this. This decision is within the competence of the Commission, so that the amendment is superfluous. I do recognize, however, that this kind of exceptional arrangement has always been granted in the past and would be compatible with the overall concept of this price package.
Tenthly, Amendment No 10: although I cannot accept the wording of this amendment, I think that the idea of including rice seed in the new common organization of the market is worth consideration, provided that all necessary precautions are taken to prevent serious disruptions of the seed market.
Eleventhly, Amendments Nos 21 to 24 relate to the wine sector and their purpose is to postpone by one year the resolution adopted as part of last year's price package excluding dessert grapes from distillation. These amendments are not acceptable to me. A resolution exists, and it must now be implemented. I do however accept that this change may cause local market problems when it is first implemented, so I shall pursue these reflections further; I believe a reasonable temporary solution might be found within the framework of the common organization of the market for fruit and vegetables. Twelfthly, Amendments Nos 48 to 50 relate to increasing the total surface area for new plantations for the budgetary years 1997-98 and 1998-99.
The new plantations for the first of these years are already laid down in Regulation 15/92, so that any further increase would be unjustified. Amendments Nos 49 to 51 call for the abolition of obligatory distillation, but in my view it would be more sensible to clear up this question in the course of the reform of the wine sector.
Now let me come to Mr Funk's report, and my thanks go to him also. This report deals with the problem of the advance payments for oilseeds and the proposal to reduce compensatory payments for arable crops. With regard to the proposed postponement of the oilseed payments, the latest information on the implementation of the 1997 budget makes it clear that adequate savings would probably be achieved. Those savings will be sufficiently high to create the possibility of affording the next advance payments for oilseeds out of the 1997 budgetary funds on the basis of the existing regulations.
This, however, does not solve the problem for 1998 and 1999. On the assumption that the Commission's draft budget for 1998, rather than that of DG VI, is correct, we need to achieve savings of ECU 1.353 billion from the reduction in compensation for arable crops; otherwise we would have to carry forward the 1998 advance payments for oilseeds to the 1999 budget. The only effect of this, however, would be to postpone the problem until the 1999 budget. Another possibility, which in fact has already been mentioned here today, would be to reduce all the 1998 budget estimates to the same extent, but that would create problems of its own, especially with those estimates where resources are in very short supply, while the over-compensation in the cereals sector would remain.
This shows clearly that the effect of postponing the advance payments would merely be to achieve apparent savings, since the savings achieved in one budgetary year would result in expenditure in another budgetary year. By reducing the compensatory payments for arable crops, however, we achieve genuine savings in all future budgets.
I should like to emphasize that the EAGGF budget, by its very nature, must be subject to fluctuations. For example, who at this early stage could predict the size of the autumn 1998 harvest? The implementation of the budget, as a matter of compliance with the principle of budgetary discipline for which the European Parliament, among others, has so often called, requires that the Commission should avoid unnecessary expenditures where possible.
The European Court of Auditors also regularly emphasizes this aspect. If there is over-compensation in one particular sector, something that the calculations mentioned initially indicate has occurred in the arable crop sector, the Commission must take the necessary action. On that basis, the Commission simply cannot avoid maintaining its proposal that the compensatory payments for arable crops should be reduced.
Regarding those amendments which relate to modulating the compensatory payments for the various producers by reducing the set-aside premium, but without any change in the cereals premium, I would say that this idea is already reflected in the Commission's proposal. A detailed analysis of the breakdown of the compensatory payments in the arable crop sector will be one of the key points of the future sectoral study. The development of set-aside has had an important influence on cereal production in the Community in recent years. Setting the level of compensatory payments for set-aside at the same level as compensatory payments for cereals would bring about an indirect modulation.
I should also like to say a word or two about Mr Baldarelli's report. First, I should like to thank the rapporteur and the members of the Committee on Agriculture for their positive attitude to the Commission's proposal for changing the special arrangements applicable to durum wheat. The proposal corresponds to the efforts to simplify the market organization, which is also supported by the Council. It is very clear, however, that this simplification must not result in an increase in budgetary expenditure. In this context, I would also remind the House that, among arable crops, the durum wheat sector is the best equipped with budgetary resources. In this case, I must endorse what Mr van Aartsen said when he drew attention to the financial consequences of trying to please everybody in this area.
Regarding Amendments Nos 2, 7 and 10 on increasing the maximum guaranteed areas, especially for young farmers, the Commission does share the feelings of the Committee on Agriculture, but the change in the arrangements governing the entitlements of individual farms to maximum guaranteed areas already meets these concerns. The introduction of a special arrangement for young farmers would not only further complicate the administration of the regulation but would also conflict with the principle that the maximum guaranteed areas are available to all farmers in general.
The amendments whereby the obligation to use certified seed would be phased in gradually are entirely in line with the Commission's views as far as their content is concerned. However, the Commission regards this as an administrative matter, to be settled within its own jurisdiction.
In conclusion, I should like to say something about the oral question regarding the set-aside rate for the 1998 harvest. As far as this question is concerned, I am of course well aware that farmers want to have a clear picture before sowing - before the autumn, in other words - of the proportion of their land they are going to have to set aside for the 1998 harvest. I admit that this year has been a particularly good one for exports, resulting in the introduction of export levies for wheat and wheat products at the end of the budgetary year. The intervention stocks at the end of the budgetary year are likely to be no more than about 2 million tonnes, consisting mainly of rye and barley. However, this is no reason to jump to conclusions, because there is no undertaking and no legal obligation to make a proposal or reach a decision before 30 June 1997. I would however remind the House that, in the absence of any Commission proposal or if the Council adopts no resolution on such a proposal, the all-in rate of 17.5 % would apply.
I will, therefore, naturally make a proposal. However, there are two questions which I regret I cannot answer at present: the question of what rate we are actually going to propose, and the question of timing. The reasons is that I should prefer to act in full knowledge of the facts. As soon as we have a reasonably clear picture here, I will submit a proposal as soon as possible.

Cunha
Mr President, I should like to request a clarification. I think the Commissioner was mistaken when he spoke about the proposals for sugar and said that he did not accept amendments No 12 to 15 since they would constitute a reintroduction of national aid. That is mistaken, because for Portugal it is not a case of reintroduction - it is being introduced for the first time and we are only going to apply the quota now.

Fantuzzi
Mr President, this year's agricultural price setting is like a Chinese box. There is a packet inside a package. The packet is minuscule. It is the most absolute status quo ever seen in this Chamber in terms prices and related measures, and is examined in the report by Mr Sturdy. But the package weighs a ton, it is about cutting aid for arable land by ECU 1.4 billion for 1998, and is examined in the Funk report.
I shall begin with the packet. Mr Sturdy has done solid, realistic, rigorous work, eschewing all demagoguery. I have to say that we Socialists are going to go a bit further: we shall vote against any increases in expenditure, even those approved in the Committee on Agriculture. The various outstanding problems in the agricultural sections are going to be dealt with by the reform under discussion, not in the price setting forum. Here we are in agreement with you, Commissioner Fischler. But let me make one exception - wine: because the proposal for reform you say is on the table, is no longer on the table in reality. Since 1994 it has been shamefully left in the box, and Parliament can no longer close its eyes to that fact. We now want to ask for the abolition, with no increase in costs, of obligatory distillation, as a sign that certain inadequate instruments which have been overtaken by circumstances will be cut by half once and for all, giving producers and the market an opportunity.
I now move on to the package. Mr Funk has lost an opportunity by opposing every cut to arable land proposed by the Commission absolutely head on, pretending not to see the real problems and relying on his accountancy skills. Payment in advance or in arrears for oil seeds is part of a vanishing act which lasts a morning. But then, at the heart of the budgeting, he gets there despite himself. Mr Funk, I think it is a little convenient to put your trust in the chronic generosity of the Commission's agricultural spending forecasts, which looks like turning up again in 1997 as well and in the end all the adjustments will be made painlessly in 1998.
As a Parliament, are we or are we not a budgetary authority? Are we or are we not demanding a voice in the chapter on obligatory spending too? That is why, with a report this armour-plated and ultra-conservative, Mr Funk has lost an opportunity to make the European Parliament's voice heard more strongly on the objective problems which exist in our agricultural budget. I envy the Minister-in-office of the Council, he already knows how the vote will go on Thursday. My only regret is that if he had listened to the debate and not just the opinion of the rapporteur, he would have understood that not everyone shares the opinion of the rapporteurs on these delicate reports, especially not the opinion of Mr Funk.
Our group wants to support the farmers, but the best way to do this is not by burying one's head in the sand. We know that the imbalances in the CAP are generating serious problems, including financial ones. The cohesion report informs us about the redistributive problems of the CAP. Nothing new was added in the estimates of overcompensation provided yesterday by the Commission. The need for new rural development policies is there, staring us in the face, and the Commissioner's announcements are no longer satisfactory. And we are not convinced that the fate of the farmers and their future should only be decided by the Fifteen at the ECOFIN Council. Parliament needs to give a signal and the Socialist Group has put forward some proposals: for example, starting to bring certain distortions in aid into the discussion, reducing compensation for voluntary set-aside, which carries an increasing risk of undermining the overall operation on obligatory set-aside, and no further postponement of the issue of reshaping aid, starting immediately by at least bringing the amount of the set-aside premium in line with income support.
I do not agree with the 7 per cent cut in income support, not because cuts are involved, but because they are linear cuts, piling injustice on injustice.
The Socialist Group's amendments should save about ECU 500-600 million on the 1998 budget. That is not everything, but it gives a first signal, takes a first step towards responsibility. We shall see if the other groups follow us, but we shall put difficulties in the way of accepting the rigorous Sturdy report or the lax Funk report. The right thing to do is come down hard on the little packet and send the package back to the sender.
As for the sender, Commissioner Fischler, I do not understand why you told the agriculture ministers there were no further budgetary reasons to cut arable land. In my view that was not very wise. We have here in front of us the preliminary draft of the 1998 budget adopted by your Commission. The cut is there, if I am not mistaken, and it is there to ensure a balanced budget for 1998. And after listening to the Minister-in-Office of the Council, I feel moved to say this: Commissioner Fischler, if this is all a smokescreen, be good enough to say so honestly. If, on the other hand, you want to do battle on serious issues, you know that, even where there are justified differences, the Socialist Group is ready to discuss those issues seriously.

Cunha
Mr President, Mr Commissioner, ladies and gentlemen, I should like to begin by thanking Mr Sturdy for his report which is full of good sense and highly responsible in the view of this Parliament. I should also like to thank Mr Baldarelli for the hard work he put in on durum wheat and, particularly for the understanding he showed for the specific problem affecting Portugal - rather a delicate one which he and the Committee on Agriculture have understood. I hope also that the Commission and the Council will come to understand it.
In the first place I should like to go into greater detail as regards the Funk report. We must agree, for the sake of intellectual honesty, that there is in fact a delicate matter facing us and that the Commission is right in saying that the cereals sector is receiving too much compensation. To deny that would be tantamount to calling day night! And above all we would have to agree that as regards the set-aside payments that there is no reason why they should not be equal to aid.
But other factors which are also important must equally be taken into account. First because this cut in aid would be justified at this time and at this stage only if there were no margin for manoeuvre within the CAP budget; and that is not the case. The budgetary trends do not indicate that. On the other hand, we know that as from 1992 the CAP has been approximately 5 % below the guideline and that money has been returned to the Member States. I should now prefer to see that money remaining with the farmers, albeit badly distributed, rather than see it returned to the Member States for purposes other than farming.
In the second place we must say that the problems of Europe's farmers will not be solved by this simple cut now which is detached from rather than linked to aid for arable crops. The CAP is highly unbalanced and it is essential for the Commission, the Council and all of us to face up to that. We are working on the assumption that the GATT will have the same impact on all European agriculture - and that is not true! There are less-favoured regions which will suffer greatly! Nevertheless, the next reform of the CAP will have to consider very carefully in its aid system the question of equity in incomes support. I agree with the Commissioner. It must be a system of aid which is not linked to production, quantities or productivity. That is the only way we can respond to the real problems of Europe's diverse agriculture, which is heterogenous and not homogenous.

Santini
Mr President, Mr Minister, Mr Commissioner, as we have already seen, the price package adopted by the Commission for the 1997/98 financial year makes no great innovations to the situation as it stood, and in that connection I would like to express appreciation for the effort made in the Sturdy report to try to revitalize a platform that has become so rigid and flat, with such crystallized positions. And crystallized they remain, especially after the Commissioner's announcement. As usual he has been pretty heavy-handed in cutting our amendments.
In fact, apart from certain exceptions, the proposals again take up the provisions on prices and the organization of markets in line with the stability policy applied the day after the 1992 reform. As a partial excuse for this dearth of proposals, there is also the ongoing revision of the common organization of some important markets, such as tobacco, olive oil, meat, and soon - we hope - milk. Alongside this immutable base there are some minor adjustments which it is fair to record. First, the reduction in the monthly increments in intervention prices for cereals and rice and storage refunds for sugar to take account of the fall in interest rates. Secondly, the level of aid planned for flax promotion, which should have been set at zero given that funds exist representing larger sums than the promotional actions warrant; hence the total aid per hectare is reduced by the same amount. Thirdly, aid per hectare for hemp is reduced by 7.5 per cent to prevent hemp becoming more advantageous than flax after the reduction in aid for that product.
The impact of the budget on all these proposals translates into a saving of ECU 82 million for 1998, according to the Commission's estimates. It should also be recalled that this same Commission has already proposed reducing aid for arable crops, which should free up an amount of ECU 1.4 million, as others have mentioned. This will naturally be used to relaunch beef. The economic forecast for the 1997 financial year borrowing requirement, as established in February, amounts to ECU 41, 050 million, which exceeds the budget credits by ECU 245 million and leaves a margin of ECU 755 million as compared with the guidelines.
This is a decrease - announced in the budget - which is very important to the credit needs of the sheep and goat meat sector, essentially due to market prices being higher than the budget forecast. There is also an important reduction in the milk and milk products sector, particularly in the supplementary withdrawal rate which remains to be declared for 1995/1996, and is estimated for the period 1996-1997.
The reduction in the requirements for arable crops is principally due to oilseeds. A reduction in requirements is also planned for other sectors, particularly sugar, dry forage, fruit and vegetables, tobacco, eggs and poultry, and also food aid.
As we have seen, this debate is a concoction of the traditional report on the agricultural price package and two other reports, one by Mr Funk and the other by Mr Baldarelli, which can be said to complete it, revitalize it and project it into the future.
I think the Funk report should be supported, especially on the stabilization of beef, the proposal not to postpone payments for oilseeds but to pay, as from 16 October, only that part of the advance for which there is no possibility of coverage in the 1997 budget.
The Baldarelli report is right to stress the proposal to increase the national areas earmarked for durum wheat cultivation to help young farmers and readjust out of date valuations.
On areas, I have an appeal to make on behalf of Mr Rosado Fernandes who is sorry not to be here today - he is in Portugal receiving a decoration from the President of the Republic - but he has left me this message: ' Today Portugal has a guaranteed area of 35 thousand hectares, the reality is 90 thousand and the potential, as a historical average, is over 100 thousand.' That is an invitation to respect figures, proportions and truth a little, in the interests of all European farmers.

Mulder
 Mr President, since I think it is the first time that Mr Van Aartsen has attended the plenary session in Strasbourg I should like to welcome him here.
Mr President, the prices package that we are looking at this evening is principally part of the strict budgetary policy currently being applied in the different Member States. The Liberal Group supports the Commission's proposal, in its overwhelming majority, to limit the increase in the agricultural budget to 0.45 % and, in this context, it is also supporting, to a great extent, the Commission's proposals in the field of prices. We should like to insist on the fact that the increase in the agricultural budget is still a modest one. The European Union's total budget keeps on increasing by 3 % and this is mainly because the regional funds are increasing by 8 % and it is precisely there that we note a considerable under-use. I think that that will be difficult to explain.
We are opposed to the Commission proposal to reduce agricultural premiums. On this score, we have a certain number of arguments. First of all, the Commission's proposal is not sufficiently well explained. First of all, it was said that this was in order to deal with the BSE crisis. Then we heard the argument which appeared this week in a serious publication by the Commission that this stemmed from an excessive payment of around 6 billion ECU. How was this possible? Has the Commission analyzed the effects of the change in the agro-monetary system which took place on 1 January 1995? Is it not true that the countries which devalued have received an extremely excessive payment and is it not true that we are continuing to grant compensation to those countries because they now have strong currencies again? This is extremely difficult to explain to countries with strong currencies and their farmers. We think that this is in particular a question of credibility. In 1992 this is more or less what we were told: we shall stick to this situation for the next six years. If the Commission now wants to apply this aid to incomes in other sectors, it will lose its credibility because it will be introducing a half-baked system. Furthermore, we share the Commission's argument according to which, if there is an increase in any sector of activity, there will have to be compensation in exchange.
To conclude, I think that premia for oil-seeds should be paid out as quickly as possible and 1998 premia should be transferred to 1999 as the Commission proposes.

Jové Peres
Mr President, the Sturdy, Funk and Baldarelli reports all share one feature - they are all limited by the same financial restraints. It is worth noting that in recent years farming expenditure has fallen below the limits set by the budgetary guidelines.
If the aim is to achieve a financial margin for other political aims, then things should be made clear. In the case of the Funk report, the situation is fairly complicated since, behind the problem, lies a very delicate circumstance, which has been the subject of a committee of inquiry and on whose funding recommendations have been issued. I think that Mr Funk's report has a long history and has the virtue of having concentrated from the beginning on a balanced way of dealing with an extremely difficult problem. My Group therefore supports the Funk report.
As for the report on the prices package, I must say that in its original form, as presented to committee, my Group had many reservations. I think that the final result has not been improved all that much by the committee's debate.
I hope that the final outcome of the votes will enable my Group to consider that it has substantially improved certain aspects of the prices package: but I have considerable reservations right now.
Finally, I should like to congratulate Mr Baldarelli on his report which gains my Group's full support.

Graefe zu Baringdorf
Commissioner, I believe that budgetary problems are not the main issue as far as you are concerned. That was the case six months ago. But the arguments have changed. Even if budgetary problems were your main concern, though, there are other ways of achieving savings. I have already pointed out to the Committee on Agriculture and Rural Development that a linear reduction is somewhat unimaginative. It is also ecologically unsound. And socially unsound. You keep telling the Committee on Agriculture and Rural Development that you want the premiums to be both ecologically and socially beneficial. So why not start with this proposal, if it's cuts and savings you want? Incidentally, you displayed a very curious turn of logic today in saying that because we've cut back on flax we must also cut back on hemp, otherwise hemp will have an advantage and the oilseeds have an advantage because we cut back on cereals. The fact of the matter is that you always regard price cuts as the automatic line to follow.
Mr Funk, I must inform you that we, as a group, naturally support your report. But you don't make it easy for us. After all, we tabled an amendment - it's still on the table, and I can hardly wait to see how your group will view it and vote on it - to try to shoot down this idea, but with the proviso that we arrive at a reform of the compensatory payments in a way that takes account of social and ecological criteria, with a gradual reduction, a staggered reduction, and more of a shift towards ecological methods of farming. You always flatly refused this in the Committee for Agriculture and Rural Development. Similar amendments were tabled by the Group of the Party of European Socialists. So you are making it difficult for us. You as a group - not you personally, but you have to answer for the others - are just as contrary as the Commission: they say 'Cut it!' and you say 'No!' but there must be possibilities somewhere in between, at least for the future.
The same applies to set-aside. There is one amendment, Commissioner, which you failed to discuss: the amendment that the set-aside areas that are under clover should be permitted to be used next year. As you know, the European Parliament adopted that amendment by a majority last year, and although that doesn't necessarily mean that the Commission must act on it, I should be most grateful if you would take a look at this problem. Here again, I can hardly wait to see how your group will vote on our present application. Who knows, we in my group may even make our voting decision conditional on yours. If the socialists vote differently, you need us to secure a majority on this point. That might be one way of coming to an arrangement.
Overall, though, Commissioner, I believe we are on the eve of reform - as you made clear - and the estimates would then have to be clear.
I believe we must make it clear that we want to move away from a world market orientation towards a single market orientation. We must make it clear that we are not going to grant compensatory payments for all farmland. We must make it clear that we want no more export subsidies, and we must make it clear that what were formerly flanking measures are becoming the focal point of agricultural development, where of course we need money. I understand all that, but of course we can't completely axe something somewhere else just so that we can finance it.

Barthet-Mayer
Mr President, Commissioner, ladies and gentlemen, I have a strange feeling that in this debate we are swimming in a sea of incoherence. Budgetary and economic considerations, the so-called operational needs of free trade, the so-called and inevitable globalization, all paralyse any deep thought on the definition of genuine political guidelines.
Since 1992 we have spoken about the reform of the CAP, the integration of requirements to protect the environment, rural development policy, the maintenance of communities and employment in country areas, etc. But what is the use of these fine declarations of principle if they are followed up by no practical initiative to alter the machinery of the CAP? Commissioner, you have repeated to us your attachment to a more harmonious CAP, designed to become the real vehicle of rural development. Yet, in reality, you only leave the choice between lowering prices or set-asides to guarantee the CAP's future. I am sorry but I think you lack a little imagination if you limit yourself to accounting solutions whereas the countries of central and eastern Europe are looking for tangible signs about the next CAP and the forthcoming negotiations on the COMs are looming.
Increasing pressures are being exerted on the European Union to accelerate the liberalization of its farm markets. To deal with that, the CAP needs new founding principles. The prices package seems acceptable in the current context of strict budgetary rigour. We must all take part in those efforts and it is in that spirit that my Group agrees to accept the Commission's proposals. That said, the fact that this package contains no political guideline is unacceptable. It is intended to be neutral, but its accounting neutrality reveals a lack of political thought to the basics of the matter. Without spending more, it should have been possible to spend better, by redirecting Community aids at the political priorities that have so often been announced.
It is again this accounting spirit that leads the Commission to finance BSE related measures out of the producers of certain arable crops. It is indeed urgent to strike a fresh balance between aids for different crops and it is true that the cereals sector has for a long time now been doing excessively well out of EAGGF. But I must oppose the techniques used as they mix up types and risk the setting of a precedent that might be used to deal with budgetary emergencies. Could not the same result be achieved by striking a better overall balance of general savings and in particular by resorting to unused credits?
As for the set-asides, determined accounting is again lord of the day. My Group has always opposed this system. Every year we decide the overall number of hectares to remain unproductive. That is what shocks me. We now only reason in terms of the global regulation of the market, the only priority being to produce less. What about producing better? It is possible to regulate production by turning to quality products or supporting exports, as it is not only a matter of quality. Real fallow land is not unproductive. Fallow has a function of ecological restoration, whereas set-asides are just an unimaginative form of production management. It seems absurd to separate the question of prices from that of set-asides. How can producers plan their activities in such conditions?
To conclude, if we can go along with most of the Commission's proposals on prices and other measures, we must deplore the fact that they are not part of a determined approach to retarget aids so as to meet the aims of a lasting CAP, the only way to ensure the survival and profitability of small farms and maintain a social fabric in the countryside.
Commissioner, if we do not want a productivity-based CAP, one day we will have to stop using its revenues.

Nicholson
Mr President, I should like to take the opportunity, first of all, of congratulating both rapporteurs on the reports they presented here tonight. I agree with everything Mr Funk has said. He put forward his arguments very clearly and succinctly and we could all understand them.
This is a roll-over budget and brings in very little change. In fact this price package has little or no effect as far as the farmer is concerned at all. The rapporteur told us that it is going to cost ECU 170m. After listening to the Commissioner tonight I wonder how much of their reports are actually left because he seemed to be casting aside all the proposals. What has been left?
We can speak all we like in this Parliament but at the end of the day it is what is happening down on the farm that really counts. I come from a region of Northern Ireland. The Commissioner knows this only too well for he is tired of listening to me about it. If you are a farmer there, especially a beef farmer or cereal farmer, you have very little hope or future left.
Beef prices, because of the BSE crisis, are at an all-time low. That has nothing to do with Europe. The European Commission has been very good in the support it has given through intervention. But if you are a cereal farmer or a beef farmer involved in those areas, you have no chance at this moment in time of making a profit or surviving. You have to take this on board and bear it in mind. There is little hope at this stage, this year, of recovery. I can see little hope for the future as far as our farmers in that area are concerned. The farmers are now paying a terrible price for the BSE crisis. It is now hurting, it is biting deep and hurting them in their pockets, where it hurts the most.
One of the other issues that is really affecting them at the moment is the strong pound against the ECU, against the green pound rates. That is certainly the responsibility of the UK Government. I hope my colleagues on the other side of the House will put pressure on the new Minister of Agriculture to make the request to get the support.

Martinez
Mr President, we have the excellent report by Mr Baldarelli on durum wheat; we have the equally excellent report by Mr Funk; we are mostly in agreement with them. As for Mr Sturdy, he poses a problem, because he is an Englishman, a nice Englishmen, which is not common, a warm, human Englishman. Unfortunately, Mr Sturdy's anti-farming positions are those of Anglo-Saxon bleeders of the land.
Technically, of course, he is proposing, as always, the great mass, the sixteen regulations on wine, pork, flax, etc, with price freezes at the centre and a reduction in compensatory amounts for major crops, i.e. 7 % less for cereals, 4 % less for oil seeds, 26 % for set-asides, proposals all made to make cereal farmers bear the costs of mistakes made by British industrialists. Mr Sturdy has tried to make up for the reduction in monthly premiums, but always playing this game of tight-fisted rigour. Then he came up against a better accountant than he is, Mr MacSharry, who rejected the whole package.
In reality, behind this technical arrangement, which is rather tight-fisted, hides the essence of the political choices and I would even say philosophical choices. First of all, we are being subjected to Maastricht austerity, rationing - we cannot go above the maximum limit of 41 million ECU - and prices. Mr Cunha explained to us last year that there were 5 % budgetary reserves. Then we are preparing for enlargement eastward, to central Europe, which is why we must make savings. We are sacrificing the agricultural budget, agricultural policy, to the structural funds. For regional policy, we refer to November's European Conference on Rural Development.
We are also preparing for the Delors III or Santer I package, i..e in the persecutive of the 1999 multiannual budgetary programming we are cutting agricultural spending every year. But, above all, the prices package is preparing for the package-deal for the year 2000, in the trade negotiations with the United States and in the Geneva framework. Older members will remember that, in 1990-91, Mr MacSharry explained to us that stocks were too big, that that was expensive, that cereal farmers were getting rich and that the CAP would have to be overhauled.
Now, we are being told that the stocks are going to be big, that that is expensive, that cereal farmers are getting richer all the time and Mr Sturdy now says that we shall have to reform the reform. That is tantamount to saying that all the measures taken from 1990 to 1992 only prepared the way for Blair House and that all current measures - Sturdy included, as it were - are for preparing the negotiations in the year 2000, when the six year peace will be over. We are beginning to give in to the United States even before they ask us.
Mr Sturdy, who is very intelligent and very subtle, tries to mask this problem. He says: ' Yes, but for farmer security, we need a five-year multiannual programming' . Mr Sturdy forgets that Joseph told the pharaoh that there were climatic variations and that setting prices for five years is really very, very curious.
In reality, Mr Sturdy, and you know I like you a lot, we have a philosophical divergence over this. There is the Anglo-saxon model with its well-known success: 160 000 cattle slaughtered. This Anglo-Saxon model is a model of the invisible hand, but it is really the visible hand of capitalism. Then there is the model of the family farm, the balanced farm, the human enterprise, which is not that of Adam Smith. This is the divergence that separated Keynes from Adam Smith and Cambridge from Oxford. That is the opposition that separates us, Mr Sturdy.

President
I have received seven motions for resolutions pursuant to Rule 40(5).

Colino Salamanca
Mr President, first of all, in this debate I go along with what Mr Fantuzzi said, as his words were fully in line with the Socialist Group's way of thinking.
Secondly, I should like to point out that there is some confusion in this debate, especially over the Funk report, initially because the proposals to cut aids to cereals were linked with the need for funds to solve the meat problem - the reasons behind these Commission proposals. However, at this moment, it seems that the Commissioner is presenting them separately, as if in the framework of a possible reform of the farming policy. I seem to have heard that, given that there is excessive compensation in the cereals sector, aids have to be reduced, completely regardless of the beef question. On this matter - accepting that this is the plan - I think that there should be more clarity as to whether this is a reform or whether we are dealing with the BSE crisis. I say that because if at this moment in time the Commissioner's ideas are separate from the beef problem, I think that we have to be far more realistic, as Mr Fantuzzi was saying. I do not think that we can deal with the reform of the compensatory amounts for cereals by saying 'coffee all round' , because that over-compensation to which you referred, has not occurred throughout the Community at an equal rate. It is possible that some regions have seen an over-compensation. But that is not the general case throughout the European Union. Therefore, I think that we should begin to introduce some elements of discrimination.
On those lines, the proposals made by the Socialist Group head in that direction. We go along with the idea that certain rectifications are needed, but not in the same way for everyone, because that is the defect that we faced when the Council rejected the original proposals made by Commissioner MacSharry. We do agree that some rigour is called for, but the various positions need to be distinguished if this reform is to have a real meaning. Not only that: we should also enhance certain social aspects, as Mr Graefe zu Baringdorf recalled earlier, not forgetting the ecological aspects. It seems to me that it would be a good framework for beginning to discuss some of these ideas.
To sum up, as Mr Fantuzzi said, I think that we should end our discussions and fine words and start taking practical action. We agree with your aims, Commissioner, but start work so that in the coming months we can have some elements that will enable us to know where we are heading with your ideas on the reform of the common agricultural policy.

Tillich
Mr President, Mr President-in-Office, Commissioner, I address the House on these three reports as the rapporteur for the Committee on Budgets for the 1998 budget. First, the Funk report. In view of the large sums in the 1997 budget that were left unused in the agricultural sector, the Committee on Budgets, in its opinion, agreed with the proposal by the rapporteur, Mr Funk, on this, and Mr Funk very largely adopted the proposal contained in the Committee's opinion, but unfortunately not the parts relating to the amendment to the Regulation.
With regard to the deferment of the oilseed payments to 1998-99, or their suspension in 1997, the Commission has expressly stated that it is not prepared to contemplate this, at least at present. I believe we shall have to discuss this further in the course of the ad hoc procedure. I am more inclined to favour the Commission's proposal.
As regards Mr Sturdy's report, I would at least like to congratulate the rapporteur. He has, I think, taken the right line, even if Mr Martinez sees it differently; his proposal really is budgetary-neutral.
With regard to the present motion for a resolution by the Committee on Agriculture, it should be noted that the Committee on Budgets gave its opinion on the Commission's proposal and not on the proposal by the Committee on Agriculture in the present report, envisaging an increase by ECU 170 million. From the procedural standpoint, therefore, it would be appropriate for Mr Sturdy's report in its present form to be referred back to committee, so that the Committee on Budgets can give an opinion on the basis of the new situation.
The amendments proposing that this increase should be covered by savings elsewhere in the agriculture budget, as is proposed by the Committee on Agriculture, is a cosmetic solution, because it is not really budgetary-neutral and ultimately it still amounts to an increase. There are two points I should like to single out from what the Council presidency said. I hope that you will succeed in creating a flexible structure for the budget in the agricultural sector, and I wish you every success in your efforts to do so. But something else you said did reawaken my feelings of pessimism, and that was when you referred indirectly to horizontal cuts. Although such cuts would be effective, and would undoubtedly be the simplest solution, it would run counter to what Honourable Members have said: that we should look at the items and make cuts where over-compensation has already existed for many years.
I believe, though, that we can and must conduct lengthy further negotiations on this. The simplest overall solution, both for us in this House and for the Council, would certainly have been to accept the Commission's proposal. That would have been the most logical course from the standpoint of budgetary policy. Commissioner, you too cannot escape totally unscathed here - I have some criticisms of you as well. It is somewhat comic, of course, that we should receive from your services, two weeks after the proposal for the draft budget, an oral correction saying that you have miscalculated by 329 million. That, of course, will be another matter to be discussed during the ad hoc procedure. That procedure will have begun by late autumn, and then it will be up to all of us to commit ourselves to the kind of budgetary stringency that we resolved upon in paragraphs 9 and 10 of the Guidelines.

Daskalaki
Mr President, first of all I should like to say that this debate shows, as the President of the Commission has said, that the powers of the Parliament on agricultural matters need to be strengthened and that we need co-decision.
As far as the agricultural prices are concerned, it is obvious that the budgetary discipline imposed on the Community expenditure must be upheld. Nevertheless, we should recognize that the freeze at 1997 levels that the Commission is seeking is really pitched at 1992 levels, if account is not taken of average Community inflation and when there are no compensatory mechanisms for making up part of the income. So the biggest income loss will be borne by the markets that have not been reformed since 1992 rather than by those, such as cereals market, that have been reformed.
Strangely enough these reformed markets for which compensatory mechanisms exist encompass only products of the north. So one asks: should we perhaps not be attempting to freeze the prices for the main Mediterranean products? I can think, for example, of about 15 different fruits and vegetables for which the markets have been reformed but for which no compensatory mechanisms have been provided. It is right that we should propose a small increase in the support prices for 1998 for these products, smaller, or at the most, equal to anticipated average Community inflation, because it is likewise not coincidental that agricultural in the south of the Community is coming to believe more and more that it is being persecuted.
Allow me to add, lastly, that when the support prices and the related measures are adopted consideration should given to devising a special policy to serve the Community's interests with regard to the products which are greatly in deficit. Freezing the prices of products which are in surplus makes sense, but it does not make sense to impose a freeze on products which are in deficit and in respect of which the Union has to import more than 50 % of its needs.

Anttila
Mr President, Mr Commissioner, I congratulate the authors of the report. If implemented, the Commission's price package would cut the per hectare aid and set-aside support for cereals and oilseed plants. The relative effects of these cuts, particularly on the viability of agricultural production, will be greater in the Union's remote areas than in the better production areas. For this reason, I cannot approve these cuts. A cut of almost a third in set-aside support would be contrary to the objective of reducing surpluses in the cereals sector. Market deveopment assessments show that over-production in the cereal sector will be a growing problem in future. The cutting of set-aside compensation is a measure which will be poorly received given the current situation on the cereals market. The CAP reform was implemented and it was relatively of most benefit to the farmers in the better production areas. When the Commission proposes making cuts in support to bring about savings, these cuts should be targeted taking account of the relative effect of the cuts on the viability of production.
Within the European Union each country tries to produce as much as possible of its own food itself. Consumers appreciate food produced near home, because over-long transport lowers the quality of food. In the USA's industrial-scale agricultural production system, where specialization has been taken to extremes, food has to be transported thousands of kilometres to the customers' tables. I warn against this type of development, particularly in the context of the forthcoming free trade negotiations. Free trade does not necessarily suit us very well, because its risks are often greater than its benefits.

Querbes
Mr President, Mr President-in-Office, Commissioner, I have to be very frank. With its proposals for 1997-98 prices, the European Commission is not content with freezing price and aid levels, but is also preparing for new adaptations to the CAP with a view to the COM negotiations and enlargement of the European Union to the eastern European countries.
Pursuit of an alignment of Community with world prices is aimed at adapting the CAP to the American model, with further drops in income, an acceleration in the concentration of farms, and the implementation of over-intensive production methods. This prices policy comes after the signature with non-Community countries of agreements doing harm to Community preference.
Farming plays the role of an exchange currency in relations with non-Community countries, as on the internal market, and priority is given to the principle of free competition. Producers are made to compete which only profits major distribution companies and international business. This is the case at present in the fruit and vegetable sector.
Apart from the acts of violence against goods and persons, which I wholeheartedly condemn, farmers' demonstrations are sounding the alarm signal on the deterioration of their situation. Other sectors - milk and beef - have not been spared.
It is not enough, as the Committee on Agriculture proposes - and even if it is fair - to oppose the reduction in premiums for cereals. We must urgently commit ourselves to a process of renovating and improving the CAP. The change of government in France might contribute to that in the framework of the reorientation of European construction proposed by the joint declaration by the socialist and communist parties. That CAP reform should learn the lessons of the mad cow crisis, which revealed how harmful the policy is to the interests of producers and consumers alike.
It is thanks to the joint action of producers, consumers and workers that we count on showing the French Government and the Community institutions that we could impose other guidelines that would respond to the food needs of the population and to the needs of producers themselves.

Souchet
Mr President, farmers need a stable and predictable working framework if we want to put a stop to the loss of jobs in the sector, where a further 230 000 jobs were shed in 1996.
Our Group therefore regrets the fact that we still have no Commission proposal for set-asides for next year, even though farmers already have to prepare their land use plans.
I should point out that last year we had to impose an export tax for the first time in the Community's history. This year, since 14 May, the Commission has again had to impose that tax in order to guarantee internal European Union supplies. It is therefore vital not to go beyond the current compulsory rate of 5 % and to abolish the extraordinary set-aside imposed after any excess.
As for the agricultural budget, we know that the EAGGF-Guarantees budget will only be increased by 0.5 %. In relation to the compromise guidelines agreed on at Edinburgh, that is translated into a total loss from next year's agricultural budget of some 2.4 billion ECU. The real reason is the introduction of the single currency and its corollary, the respect of the Maastricht convergence criteria. We all know that but the farmers do not. Perhaps it is a good thing for a few of us here to speak out and say that.
As for durum wheat, I should like to draw your attention to Amendment No 5, which we tabled and adopted in committee, for durum wheat areas to be set at an inter-regional level. The management of a production needed for supplying a specific agro-foodstuff sector must be flexible.
I should also emphasize the vital nature of the obligation agreed on by the committee to use certified seeds for durum wheat. This is especially important for the seed sector and I had to stress it. We have tabled another amendment that was also adopted in committee, making things as flexible as possible for farmers. I hope that the Council will agree to our proposal on that point as well.

Iversen
Mr President, the EU agricultural policy has in many respects outlived its usefulness. We now have a farming industry that uses unheard-of amounts of poison in order to achieve maximum possible yields. The results are unfortunately major environmental problems and food of which consumers are becoming increasingly critical.
We are now on the brink of an enlargement of the EU to include the Eastern and Central European countries, which also have a large agricultural sector. For many reasons - not least economic reasons - we have to face the fact that the price package proposals must be reformed before these countries become members. In addition, there are the demands from the World Trade Organization for us to fall into line with world market prices. We must therefore view this proposal from the Commission as a challenge that has both economic and environmental advantages. In the same way, it is an advantage that many Member States wish to apply strict budgetary discipline in the future. I think that the Commission proposal shows a realistic attitude to the problems of world market prices. It would be nice if we could now get right away from lines of production that do not belong in the EU. An example is tobacco production. I support the proposal of the Environment Committee to cut the premiums in that sector by 10 %; otherwise we have no consistency between agriculture, health and the environment.
Let us hope that in the future time and money will not be spent on price proposals in the EU. Instead the support would be given a social focus by allocating money for landscape management and for environmentally friendly production. Organic farming also urgently needs help. All things considered, we must ensure sustainable agriculture with quality products in the EU. That is the only way we can be sure of winning back consumer confidence in the common agricultural policy, and that is necessary if it is to survive at all.

Filippi
Mr President, I shall say immediately that I am in agreement with the conclusions reached by the Committee on Agriculture, and I am therefore in favour of upholding the kind of solution we adopted there in this House. But having said that I must immediately add - and I am speaking mostly to Members, but also to the Council and the Commission - that in my opinion we would be mistaken if, at the end of the debate this evening and in the voting tomorrow and the next day, we were to abandon the very important discussion that has been opened here this evening. I refer to the dialogue difficulties existing between Parliament, the Commission and the Council of Ministers, and to the speech by my friend and colleague Mr Fantuzzi, who seemed to be trying to open a dispute inside Parliament itself between reformers and conservatives on the issue of agriculture.
In my view we made an error when we gave the price package a significance and a role it should not have. Here I agree with Mr Mulder when he brings us back to reality. I do not agree with Mr Sturdy's attempts to redistribute expenditure between sectors through the 'price' package, or with Mr Fantuzzi, who starts from a correct analytical assumption but then arrives at the wrong conclusion that, here, now, today, we can find the solution to a general approach to agriculture, although it must certainly come into being and we must try to make a contribution to it.
I do not know if the Commission has an idea in mind about general reform of agriculture, but I feel sure it is pursuing a design of its own through the COM, the price package and so on, and we in the European Parliament need a strategy, which has not been clearly defined yet. I hope the lesson of sorts that we are learning in this debate will help Parliament find the right road in its relations with the Commission and the Council.

Hyland
Mr President, from an agricultural perspective, farm prices are central to the viability of the industry. Farming is about producing food but also about managing the rural environment of which farmers are the main custodians. Unlike other professions, farmers do not have a guaranteed income and the industry has been bedevilled by fluctuations in both prices and production costs.
While it is true that the CAP and accompanying measures have made a significant contribution to market stability and to managing production to market requirements, direct payments have been of immense benefit in ensuring the economic survival of many farming families, in particular those with small and medium-sized farms. Any review of farm prices or the CAP must take into account not only the economic viability of agriculture as a food producer but also the environmental and social significance of retaining the maximum number of farming families.
In his report Mr Sturdy understandably highlights the need for budget management, in particular in the context of EMU. While acknowledging that the agricultural budget represents a significant proportion of the overall EU budget, it seems wrong that proposed restrictions are based more on what remains after we provide for the agreed 8 % annual increase in structural funds rather than the actual needs of European agriculture.
It should also be noted that the roll-over in farm prices represents in fact a reduction in farm prices when inflation is taken into account, not to mention the problems associated with currency revaluation. Guarantee funds are a crucial element in the overall agricultural budget and the proposed restriction of 0.5 % increase will put considerable pressure on a sector already reeling from the impact of BSE. European agriculture faces many challenges in the context of CAP reform and the world trade talks. If the industry is to expand it can only do so in the context of competitiveness in the world market.
Serious decisions will have to be taken on the farming structures of the future. Either we allow the pressures of the marketplace to push us in the direction of New Zealand-style ranches, with disastrous consequences for the human side of farming, or we introduce policies to build and develop Europe's farm family tradition. I understand the rapporteur's view on farm price support at this time, in particular as we enter negotiations on a new world trade agreement, CAP reform and further enlargement to the east. I repeat that the only way forward for European agriculture, and Irish agriculture which with other colleagues I represent in the broader European context, is through greater efficiency and competitiveness leading to an increased share of the world market. In the context of planning for the future we must ensure that goals are achieved within the economic framework of the traditional family farm.

Kofoed
Mr President, first let me congratulate the rapporteurs on these reports. I think they have conveyed the seriousness of the situation and recognized that the reform of the agricultural policy must continue. I also think that the Commission proposal is correct as regards price stability. But I have a few objections to the Commission's arguments for the reduction of support per hectare for cereal crops. I cannot accept the argument that compensation has been excessive in this area. I merely refer to what Mr Funk said about the figures from part of Germany, which presumably apply to all countries with a strong currency. At all events they have not noticed any overcompensation on the cereal market there. That is one of my points.
The other question is whether it is politically right to continue applying cuts in payments per hectare for cereals in the future. If we are to contribute to satisfying cereal demand on the world market, it does not help to pull the rug from under the cereal growers' feet, so that it is no longer profitable to grow cereals. So I do not think the Commission has got its sums right on this point.
Otherwise I think the Commission's policy is correct in moving from price support to hectare support. If we are to have an agricultural policy in the future, it will be necessary to abolish price support completely and apply hectare support exclusively. That is the future for agriculture in Europe.

Ephremidis
Mr President, a deluge of words and a dearth of meaning - that is what one could say about the debating of this whole matter. Council proposals, Commission proposals, long-winded speeches by the President-in-Office and the Commissioner, three reports and an oral question. I interpret them them not as they are, not in terms of their words, but in terms of their meaning. All of them, in their own way, reaffirm the antifarmer, anti-social, anti-economic and inhumane character of the Community's agricultural policy. This is evidenced by the freeze in prices and the price cuts, the freeze or reductions in aid and other support measures and the freezing of production volumes even for the deficit products, in total disregard of inflation and of the fact that production costs are rising sharply every month and every year. So one asks how this agricultural inflation in the Community is to be contained, in the south especially. No one seems to be addressing that. Let the budgetary god and the tight monetary policy take care of it. So instead of the budget providing farmers with a decent human standard of living, the farmers are being asked to suffer and make sacrifices for the budget.
Mr President, the point is that the whole situation needs to be taken apart from top to bottom. If the Community does not do it, the farmers themselves and the workers will, and you can see the beginnings of that now. Do not let things come to that. You still have time to adjust this inhuman policy to some degree if want to.

Van der Waal
 Mr President, according to the preliminary draft 1998 budget agricultural expenditure can only increase by up to 0.5 %. Furthermore the 1.3 billion extra ECU earmarked for the BSE crisis also have to be financed from this tight framework. But is this fair? This means that the bills for the EMU criteria and the BSE crisis have been sent to farmers.
I find it difficult to accept the controversial proposal to reduce income compensation for cereal growers. It is not fair to reduce overall subsidies by targeting cereals because, in certain Member States, growers have been overcompensated. We should not lose sight of the fact that is mainly due to a devaluation of the national currencies concerned. In countries with a strong currency some growers have even been slightly under-compensated. Like Mr Funk, the rapporteur, I think that as an alternative to reducing income subsidies the 1998 budget should be discharged using expenditure which was not used in 1997 for payments targeting oil-seed growers. If that is not enough, then we should abandon the 0.9 % maximum. I recall that promises were made during the 1992 reforms and I should point out that the agricultural directive allows for a supplementary increase of 2 billion ECU.
As far as the Sturdy report is concerned, I agree with the freeze on agricultural prices. Given the inflation rate, that possibly means a decrease in real terms but market prices and farmers' incomes depend more on management of the European market than the rate of intervention prices. I also support the amendments opposing the proposed decrease in the cereals and sugars scales. Current allowances barely suffice to offset storage costs and interest.
To conclude, thanks to the withdrawal of aid to flax fibre, considerable amounts have been saved to promote the sales of that product. But this cannot lead to a reduction in promotional activities. I should like the Commissioner to tell us whether he wants to use the millions of ECU which have been saved to promote sales.

Rehder
Mr President, ladies and gentlemen, there is one point that must be clearly established in this debate: the contributions made to it, today and previously, by members of the Group of the European People's Party on the Committee for Agriculture and Rural Development are notable for what they fail to say and so, basically, for the way they twist what they do say. Because it was not the Commission that, at the start of these discussions, deleted massive savings running into billions; it was the European Finance Ministers and the Council, using any arguments they could find to inflict deep wounds on the operators of small- and medium-sized farms. That is a fact, and we need to acknowledge it. And, Mr Funk, you ownr Finance Minister also supported this policy. So you should have the courage and the resolution to write a letter to your own Finance Minister, even if he is a member of your own party, and tell him that his policy is basically unprincipled, posing an unacceptable burden on small farmers. This has got to change.
Instead of that, you actually voted down any mention of this fact in the Committee on Agriculture and I think that shows that a policy is being put forward here that may well be acceptable in Germany, and perhaps in various other States too, but is basically a bad and un-European policy. Yet again, you are trying to cast the Commission as the villain of the piece, a convenient all-purpose scapegoat to conceal your country's responsibility.
I think that the underlying cause of this whole attitude is partly attributable to the fact that some - and I emphasize, some - sections of the PPE are fundamentally opposed to a radical, sensible reform of the agricultural policy, a reform that is not only overdue but has actually been planned for the near future. Their stubborn attitude is intended to create the impression, not only here but at home - in domestic politics, in other words - with a big lobby, that everything is going to stay the way it was. This policy is basically directed against owners of small- and medium-sized farms, and the social democrats cannot support it.

Mayer
Mr President, Mr President-in-Office, ladies and gentlemen, the issue today is not to do with documents, nor is it to do with disagreements about the structure that is to take us into the next millennium - the issue is the very important one of farm prices and compensation rules, though these things are not as controversial as they were in the past. But this third subject of the 'special arrangement for durum wheat' is an important one for farmers in certain regions. Sufficiently important, I think, to receive timely treatment.
Many thanks to the rapporteurs. A little colour has now been brought into our debate. I can only speak today about the durum wheat arrangement, and in this case the new proposal simplifies the changeover from individual premium entitlements to guaranteed maximum premium areas for each Member State. This change is also welcome.
There was broad agreement on this among the Committee on Agriculture, as there also was on the particular proposals made by the rapporteur, Mr Baldarelli. He has taken a great deal of trouble. The 5 % reserve for young farmers and the increases in which it results receive our approval. We do appreciate, however, that some countries - Austria and Germany, for example - do have justifiable claims for so-called non-traditional farming areas to be taken into consideration.
The cultivation of durum wheat has a long tradition in Germany. Before the current premium rules came into force, Germany already had 25, 000 hectares of land under cultivation, and this would remain necessary.

Boogerd-Quaak
 Mr President, this debate on farm prices has been very much eclipsed by the financial effects of BSE in which the repercussions of a disaster in one sector being imposed on another is only part of the scourge. In my view, Europe is facing a fresh financial debacle, namely that of swine fever, a disease which regularly crops up here and there and has currently hit my country where costs, in the Netherlands alone, have already reached 150 million ECU.
I think that this situation is horrific and I am making an appeal to the Presidency and Commissioner Fischler to look for new methods to combat this disease so that vaccinations provisionally combined with preventive culling can be tested.
It is my opinion that the Council and the Commission, with or without the agreement of the Standing Veterinary Committee, must rapidly work out an action plan aimed at avoiding any further animal suffering, any further harm to trade and any increase in Euro-scepticism.
Of course, I also appreciate the work carried out by Mr Funk and Mr Sturdy, but this evening I felt that I had to talk about this particular problem.

Novo
Mr President, ladies and gentlemen, Mr Commissioner, my colleague Mr Salvador Jové Perez has already expressed the view of our group on the Funk and Balderelli reports. The resolutions on agricultural prices proposed by the Commission for the 1997-1998 marketing year are still incomprehensible to farmers in general, above all to those in less-favoured regions. Although it is true that in some cases such reductions even pose a threat to what was envisaged in the 1992 reform, it certain that for over 80 % of farmers - for instance those in Portugal - and it should be remembered that Portugal is the only one of the four cohesion countries facing a net loss in agricultural terms - such proposals will surely annoy Portuguese farmers whose income has already been reduced so much.
In some cases the European Parliament, through the Sturdy report, made no changes. In other cases it made proposals aimed at keeping prices at the levels for the previous year - which was moreover the method we used for this current marketing year. These changes do not however mean that there will be no real reduction in incomes affecting everyone equally, whether large-scale or small, rich or poor, but it is clearly the poor whose survival will be threatened.
If we support the parliamentary amendments which seek the lesser of the evils that does not mean that we are in any way supporting the overall line of the Commission's pricing policy; it indicates that we might be in agreement with continuing agricultural forecasting which does not pay attention to the differences and specific aspects, or to the less-favoured regions, or to the size of the holdings or to the scantness of incomes.

Lambraki
Mr President, today's debate gives us the opportunity to discuss farm prices for 1997/1998 and, at the same time, matters relating to the level and distribution of the agricultural expenditure appropriations. The parameters of this joint debate extend far beyond the 1997/1998 prices package, the set-aside changes and the support system for certain arable products.
The new priorities of the Union, the stringent financial programmes and the proposed enlargement, for which the timetable remains unclear and the cost undetermined, are, essentially, at the heart of the problem. This does not mean of course that there are no problems with the prices package itself. I could describe the Commission proposal as a management exercise. It has no proper perspective and it will generate uncertainty among producers because they are being placed in an annual planning framework and forced to put up with an inadequate time horizon while waiting for the new arrangements.
The ECU 1.4 billion saving on arable crop support and the linear distribution of the support to all producers will have its worst effect on the small producers. It is, of course, the solution that the Commission habitually opts for when looking for a way out of its problems. Its proposal for generous funding to stabilize the beef sector is something that I, personally, oppose. I am pleased that the President-in-Office is present because we can say, in all sincerity, that we do want to support the efforts to achieve budgetary discipline and, if you like, savings. Mr Fantuzzi expressed that very well. But in order to win our support for this policy the Commission must abandon its prevailing reasoning about good products and bad products, with the bad products being generally those from the south. To endow the cereals regime with generous funding while cutting all of the appropriations and getting the saving from products of the south is wrong. Not all of us can support this policy.

Virgin
Mr President, it seems important that we should also look to the future during the annual debate on agricultural prices. The Sturdy report raises these issues. He also suggests that we should simplify the system of intervention for cereal crops by setting one price and removing the monthly increments. Apart from the fact that this proposal is required to balance the budget, it is also a small step towards adjusting to the conditions of the world market, an adjustment which I welcome. It is a small step which corresponds to 0.5 % of the cereal sector's turnover. This cannot be considered a threat to the Common Agricultural Policy. If we take a more long term view, I am convinced that European agriculture, if it is to play a part on the world market, must adjust itself to that market.
In the forthcoming trade negotiations we should aim, along with other countries, to abolish export subsidies and quota systems which restrict production. It is only by doing this that we can develop a dynamic agricultural sector. I would, in fact, be more concerned about the future of European agriculture if we continue with an unchanged agricultural policy than if we take the bull by the horns and really take the CAP reforms to their logical conclusion. I sometimes think that Commissioner Fischler is also arguing along these lines, but he is doing so extremely cautiously. If he is doing this, he deserves Parliament's strong support.
A drop in prices ought, at least temporarily, to be compensated for through fixed subsidies but it ought to be possible to phase these out when price levels increase, which they will according to OECD estimates. It will be dangerous for European agriculture to continue with an outdated regulation system. European Agriculture deserves a better fate than this.

Wilson
Mr President, the Funk reports are about actions to limit the production of beef and ways to pay for those actions. Last September the Commission asked Parliament to give urgency to consideration of its proposals. We gave urgency to the activities but we still have not agreed how to pay for them and that is what this report is about. The activities include calf slaughter, more intervention etc., but we must agree how we pay for this. Some people are saying the projected underspend this year will pay for it. We have to act here with some sort of morality and say: OK, maybe the underspend will pay for it but we actually have to find a way. Let us hope we can.
Whatever we decide this evening will not change the fact that the activities have not cut beef production, so we have to think for next year and the years beyond of more effective ways of cutting beef production. The drop in consumption Europe-wide has been between 10 % and 15 %, so we have to cut production or we have to promote the eating of beef. An important part of the budget we have to consider later in the year is putting money into the promotion of beef-eating, to take it out of intervention. For every ECU 50m we invest in this way we will make a saving of ECU 100m. I hope we will decide this week and that we will not have the third and fourth Funk reports next year.
We British would like to know the United Kingdom's real contribution to the common agricultural budget when considering the cost of BSE eradication in Britain and the cost of compensation to farmers because of the revaluation of the green pound in the light of the Thatcher-negotiated refund.

Schierhuber
Mr President, Commissioner, ladies and gentlemen, I am very glad to see that the President-in-Office is with us today. In basic terms, Austria is a traditional durum wheat growing area, although that was not accepted or demonstrated in the accession negotiations. So there is a tradition of durum wheat production in Austria, that can be traced back to the early 1960s and proved by planting entitlement certificates. Furthermore, extensive exports confirm that Austrian durum wheat is also in demand on the international market because of its high quality.
I therefore particularly welcome the fact that the Committee on Agriculture has reassessed the situation and voted in favour of granting the durum wheat growing subsidy for 9, 600 hectares of land in Austria. The 1992 plan to reform the agricultural policy has already improved the Community's agricultural situation. The attractiveness of farming and rural areas, with all their varied functions, must be preserved. The care and maintenance of natural resources, greater attention to environmental issues and the adaptation and continuing development of agriculture are important aspects of an integrated policy, in my view.
We must therefore offer farmers the certainty that the next WTO round will not be anticipated and that Europe will pursue a policy of stability. The confidence of the farmers can be gained only by a policy planned on a relatively long-term basis. I should mention in this connection that it is important that farmers are able to earn an income from their own original production, and that compensatory payments are only compensation. The Common Agricultural Policy cannot be dictated by budgetary stringency alone if we want traditional farming to survive throughout Europe!

Wynn
Mr President, I am tempted, having sat here for two-and-a-half hours to do my monetary speech again, that is, money does not grow on trees. But since I have done it once I will not repeat it.
Seven years ago I was in the Parliament in Papua New Guinea having a far better time than I am here. During the debate which was being conducted in pidgin English, one of the speakers who was talking about a great mess that the Government of Papua New Guinea had got themselves in used a beautiful word. He said: ' You have made one big bugger-up' . That word 'bugger-up' encompassed so much. I am reminded of that word when I look at Mr Sturdy's report which was actually going down the budgetary-neutral approach, doing everything OK and then the Committee on Agriculture and Rural Development applied the principle of 'bugger-up' and made a right bugger-up of Mr Sturdy's report.
Commissioner, you, in effect, have said the same thing but in a more eloquent way. What you have said, in fact, is that we really should ignore all the amendments and support the Sturdy report. At least that way we would get a budgetary-neutral position. One of our problems in this Parliament is that not many people will take notice of you, especially on that side of the House. That is where the monetary speech comes in. The one thing they have to learn is that you cannot defy the laws of mathematics. The money has to be found somewhere. We do not conjure it out of mid-air.
I thank the President-in-Office of the Council for being here. I support him in saying that the ECU 170m should be removed and so do a lot of my colleagues, as Mr Fantuzzi said. You also said that Parliament has a responsibility in supporting the reduction of ECU 1.4b. I agree with you. Mr Fantuzzi made that point.
On this side of the House we are as one. We try to live in the real world. That is what we are trying to do with the amendments that have been put forward from our side. If Parliament does not act responsibly, it will not be taken seriously. That is the point that we have to remember time and time again when it comes to agricultural matters.

Goepel
Mr President, the question about set-aside prompts me to mention two or three things. First, the debate regarding the set-aside rate for the end of 1998 is still merely speculative, although farmers are supposed to know where they stand as soon as possible.
For example, France is calling for a zero set-aside rate. The Commissioner talks about a maximum of 17.5 %. From the German standpoint, I am bound to say that we cannot share these views. Why? We must expect the cereal harvest to reach a similar level to that of 1996, but there are already indications that the enormous increase in the use of cereal feeds last year is being reversed, while export projections are, as you know, anything but a reliable guide.
Whatever happens, then - and I particularly emphasize this for the benefit of members of the Socialist Group, though Mr Rehder has unfortunately left - we must adhere to the instrument of cyclical and, especially, voluntary set-aside. Any reduction in voluntary set-aside, especially, would be impossible to explain to our farmers at home. As you know, we can offset 85 % of any voluntary set-aside against overcultivation of the major crop.
That brings me to my second point. In the autumn of 1995, Commissioner, you told the Council of Agriculture Ministers that a national offsetting option for the basic land area would be in existence by as early as the end of 1996. You then deferred your latest proposal on this problem until after the 1996 harvest, and it was the subject of proposed amendments by the Member States concerned, including Germany and France, which the Commission has not yet accepted.
I ask that you finally put into practice the political promises you made in autumn 1995, and that you do so in time for the 1997 balance. And a final word on your over-compensation, which I have mentioned before. Create the same situation as for the oilseed subsidy, and then take all the money left over for improvements in livestock production. Then you'll find we're on your side!

Campos
Mr President, Mr Commissioner, Mr President of the Council, the current CAP is severely out of line with the different political, economic and social realities of the European Community and lacks integrity in its thinking. It gives priority to financing all production which costs jobs, with one scandalous exception - the tiny tobacco-growing area. It allocates 47 % of the whole Community budget to a highly privileged minority of 20 % of European farmers who receive approximately 80 % of all aid. This encourages rampaging production which threatens the environment, the health and welfare of animals and public health. The CAP is today a political aberration which needs to be radically changed.
All production aid should be stopped and transferred to holdings under specifically determined rules. Such aid should be made conditional upon the use of production techniques which are compatible with environmental protection, the health and well-being of animals and public health. It is essential in social terms to tailor production aid in inverse proportion to the size of the holding; for the sake of cohesion allocation should be on a regional basis with amounts increasing as a function of the underdevelopment of the region; there should also be an increase for each stable job existing within each holding and some practical application of the Community priority to combat unemployment.
A top quality rigorous campaign should be mounted and open to consumers to take part and take stock of matters financed by the EAGGF-Guarantee Section. The implementation of this rigorous control should become a commercial emblem which is highly prized by the Community's internal and external markets.
The report by Mr Funk takes the opposite line from what is wanted. Its sole objective is to increase the unfair aspects of the CAP and to channel further financial resources into production which is already swallowing up 45 % of all aid which is losing more jobs and leading to more desertification in the Community.

Gillis
Mr President, I should like to thank the rapporteurs for their work, in spite of the criticism. The collapse of the market and the collapse of consumer confidence due to BSE has caused a huge income drop for farmers. In Ireland this drop is somewhere around 19 % with livestock farmers suffering even greater reductions in income. In spite of what Mr Wynn has just said, this is a very human problem and one which needs to be addressed. I fully acknowledge the work of Commissioner Fischler in softening the market blow and I thank him for the help he has provided. I hope his support will continue until the industry recovers.
Turning briefly to the reports, the proposal from the Commission to allocate an extra ECU 1.4 billion to the beef sector is very welcome but I cannot accept the method of funding proposed, namely to reduce aid to cereal farmers by the same amount. I reject this method of paying for BSE, a crisis which cereal farmers had nothing to do with and for which they should not be asked to pay. I believe the necessary funding can be found elsewhere, perhaps from savings and some delay in payments. I note what the Commissioner told us earlier.
I support the proposal that set-aside be fixed at 5 % for the 1998 harvest but without reducing payments for land taken out of production. As rapporteur on an earlier set-aside report I asked that the rates be set each year in July at the latest to enable farmers to plan properly. There is general agreement on this. I am now asking the Council and the Commission to make an immediate decision at 5 % set-aside with the current level of area aid maintained.
Finally, an important element of this debate should be the future of EU production. We need to start work on the longer term position of agriculture, vis-à-vis the present CAP reform end in 1999 and also the next WTO round. We must explore the possibility of additional farm production to manufacture products separately for the growing world market without export refund or other cost to the EU budget. I think this is worthwhile.

McCartin
Mr President, I thank Mr Sturdy for his report. I disagree with his basic proposal which is that because the Member States have to exercise strenuous restraint in budgetary matters, we in the European Union must do the same. The Maastricht criteria is the business of the Member States. It is not the business of the common agricultural policy. The farmers of Europe and their incomes are our responsibility. Over the years it was the Member States who over-borrowed. It was they who over-spent and ignored their budgetary guidelines. We did not. We lived within our budgetary guidelines all through the years. We not only did that, we stayed within the 75 % of growth that Mrs Thatcher insisted on. We not only did that but we sent back money every year which we saved with good budgetary policy. Mrs Thatcher would be proud of the way we have carried on and she would be particularly proud of Terry Wynn this evening if she recognized the way he is defending what she fought so long for in relation to the European Union budget.
This year, of the money which is available to us, we are sending back ECU 2.27 billion. And this at a time when European farmers' incomes are dropping. Never mind the 20 % spoken about by the previous speaker, we are sending back ECU 2.27 billion which we could apply to the needs of the 80 %, the 5 million European farmers, whose income is only half the average industrial wage. I agree with Mr Kofoed. I accept that we ought not to increase prices indefinitely and we should relate it to area aid or the number of people on the land who protect the environment and maintain the rural fabric. Therefore, I believe we have set out in the wrong direction and I so not support the basic proposal that because there is stringency at national level, it should be applied here.

Van Aartsen
, President-in-Office of the Council. (NL) Mr President, I should like to make a very brief comment because I have not been asked any more questions in this debate, but I should like to tell you that it has been a great pleasure for me to follow it. I also think that, in July, the Council will be able to take advantage of this debate and I would like to tell Mr Fantuzzi that I have not only listened to what has been said by the rapporteurs and paid attention to their reports, but I have also followed tonight's debate in the European Parliament in full.
If possible I should like to ask you, Mr President, and the European Parliament through you, to issue an opinion on the prices package. I think that it is obviously necessary for the decision-making process in the Council for it to receive an opinion from the European Parliament because, without it, the Council cannot do its work and I think that it would be in the interest of farmers and farms throughout Europe for a decision to be taken at the end of June on next year's prices package. As for us, we shall do everything we can to conclude the prices package procedure, but without the opinion of your Parliament that will be impossible and therefore I am waiting for it with bated breath.

Fischler
Mr President, Mr President-in-Office, ladies and gentlemen, I too should like to begin by thanking the House for this debate. I think the price package has been discussed in a very constructive spirit. This is not the time or place to go into details, but there are a few general principles to which I should like to return.
The reason the price package actually exists is in order to define the appropriate production conditions for the next financial year, to the extent that those conditions are within the jurisdiction of the Council and Parliament. So, by definition, it is asking too much of a price package that it should at the same time be a reform package. But I have already promised you, and I stand by what I said, that the Commission will also be presenting appropriate reform packages and proposals to Parliament before the end of this year.
As you all know, the Commission's services published analyses a few weeks ago clearly showing where, and to what extent, reform is needed.
In addition, the question of the budget and the question of reducing the arable crop premiums have played an important part in this discussion. I admit that our proposals, in the form presented, may have overemphasized the budgetary argument on the basis of the budget situation at that time. But we did call attention from the start to the fact that cases of over-compensation exist, and these cases have also been quantified in the interim.
In any case, the Commission has no need to apologize for its economical conduct of the budget, which indeed has been very much in line with Parliament's wishes. There is one thing I must say to you, Mr Funk: if, as you suggested, there is absolutely no willingness for something to happen, it cannot happen. The body representing the farmers, the COPA, is now showing greater flexibility with regard to the future development of the compensatory payments.
Regarding the argument advanced by the hard-currency countries, our calculations have certainly shown that cases of over-compensation have occurred in hard-currency countries, too, not just in countries that have seen devaluations in recent years.
The proposals made in connection with modulation are, in some cases, very interesting and worthy of discussion, but in my opinion they should more properly be discussed in connection with plans for the reform of the sector.
Mr Fantuzzi, I freely acknowledge that your idea whereby the first step should be to equate the set-aside premiums with the standard cereal premiums does imply a degree of modulation. On the other hand, though, I feel I should draw your attention to the fact - as has already been mentioned here - that we should take due account of the fact that any such measure should also be accompanied by precautions to safeguard, in particular, the future production of energy-generated crops.
As for Mr Goepel's proposal regarding the striking of a balance, that is certainly something that can be discussed. The critical point for me, though, is that we should actually get round to what the Regulation intended from the beginning: the adjustment of the compensatory payments to the existing economic conditions.

President
The debate is closed.
The vote will take place at 12 noon on Thursday.

Novel foods
President
The next item is the joint debate on the following oral questions to the Commission:
(B4-0175/97) by Mrs Breyer, Mr Lannoye and Mrs Hautala, on behalf of the Green Group, on the implementation of Regulation (EC) 258/97 on novel foods; -(B4-0176/97) by Mrs Roth-Behrendt, on behalf of the PSE Group, on the application of provisions on the labelling of products covered by Regulation 258/97 on novel foods and novel food ingredients; -(B4-0177/97) by Mrs Schleicher, Mr Pimenta, Mr Liese and Mrs Oomen-Ruijten, on behalf of the PPE Group, on the application of provisions on the labelling of products covered by Regulation 258/97 on novel foods and novel food ingredients; -(B-0178/97) by Mr Eisma, on behalf of the ELDR Group, on the application of provisions on the labelling of products covered by Regulation 258/97 on novel foods and novel food ingredients; -(B-0179/97) by Mr Pasty, on behalf of the UPE Group, on the application of provisions on the labelling of products covered by Regulation 258/97 on novel foods and novel food ingredients; -(B-0180/97) by Mr Weber, on behalf of the ARE Group, on the application of provisions on the labelling of products covered by Regulation 258/97 on novel foods and novel food ingredients.
Hautala
Mr President, we are once again meeting here to discuss the regulation on novel foods. As almost everyone now knows, the novel foods regulation has failed. It has created a confusing situation. There are at least four different labelling practices in use for genetically altered foodstuffs and more are being planned. The authorities in the Member States do not know how to deal with this regulation which has just entered into force. The consumers are worried, they are uninformed. Retailers, too, are calling for clear guidelines to ensure that they will not need to be ashamed of their customers.
Has the Commission ascertained whether the WTO has anything against the EU creating a new stricter packaging labelling practice than had been planned? Has the Commission received any reply from the WTO? I should also like to know whether the Commission's cardinals have met yet to decide who is to be elected Pope. What I mean is that the many Commissioners, as is well known, have made their own proposals as to who should really coordinate labelling practice and who should be elected 'Pope' in the Commission on this matter. How many more days will the Commission still need to appoint this Pope and does it intend to create any uniform labelling practice for these genetically altered foodstuffs?

Roth-Berendt
Mr President, it is of course a pleasure once again to be discussing novel foods with my fellow Members and with Commissioner Bangemann. Mr Bangemann, we have had many opportunities to fence with each other in the past, and indeed we have assured each other, more or less indirectly, of our mutual esteem.
What I do find a little disappointing is that in the supplement on novel food and on novel food legislation I have the impression that you, all of a sudden, as the representative of the Commission, might be a bad loser. One reason I find that disappointing is that I have made a mistake in my own judgement of human nature - I took you for a pragmatist, a stubborn one certainly but still a pragmatist. The things I have heard the Commission say in the past, and my own experiences too, suggest to me just this: you, Mr Bangemann, know as well as I do, as a properly trained lawyer, that a Regulation must be implemented.
In the text of the Regulation adopted by the mediation committee - and nothing could be more democratic than that in the European Union nowadays - it says that it is possible for the Commission to issue implementing provisions. It is also perfectly within its rights if it chooses not to. But if it exercised that option, then its duty would be to ensure that this legislation is applied in the Union. You can't have this both ways. Either the Member States do it for themselves, in which case the Commission issues an instruction, and says what it wants to some extent, or the Commission does it, and that is why I hope to hear you say this evening that the Commission is indeed working on implementing provisions. In that case, though, just to be difficult, I shall ask you why you didn't do that work back in early May, since the regulation came into force on 15 May, and I shall moan and groan a bit more and say you could have known, it's nothing new after all. But I shall be satisfied if I hear you say that you feel certain that, in the light of the conclusions of the mediation committee, consumers now have the right to receive comprehensive information on genetically modified foods when they differ from conventional foods, and not just in the accumulation of all the things they will find in the regulation, when nutritional value, nutritive characteristics and many other things are taken together. That is not cumulative, otherwise it is an alternative, and the text of the law says that quite clearly. I am also perfectly willing to have it checked by the Court of Justice. Even though I, as a politician and a lawyer, certainly do not take the view that the Court of Justice should be making policy.
I should like to hear you say today, Mr Bangemann, that you are working on implementing provisions. If you can't tell me that, then I should like you to tell me how the Member States are supposed to label these foods clearly, and I should also like to hear - and I must admit that I still have a deep and unshaken confidence in your good intentions - that no labelling will be allowed that can mislead the consumer. I am far from being the sort of person who declaims against genetic engineering - quite the reverse. I believe that genetic engineering offers huge possibilities, but I also believe that if food is genetically modified it must not be labelled 'produced by modern biotechnological methods' . I know that there are some Member States that want that. But I hope that you will support the European Parliament in preventing anything of the kind, and I confess that even this late in the day I should be glad to hear something to that effect from you.

Schleicher
Mr President, ladies and gentlemen, on behalf of the PPE Group I would like to give the reasons for the questions we put. The Novel Food Regulation has created legal certainty for consumers, retailers and manufacturers regarding the licensing, in particular, but also the labelling of novel food products, including genetically modified products. That was and is a major achievement by all the European institutions.
But an EU regulation becomes directly applicable law in every Member State on the day on which it enters into force - 15 May, in this case. Every regulation which becomes applicable from a certain date in 15 Member States of the European Union inevitably causes problems of interpretation and implementation in the early stages, especially with such a difficult subject as this. Even if the implementation and application of a regulation, in particular, were to be handled uniformly in every Member State, we do see difficulties with practical application in a matter as complex as this.
I think those problems relate to three points: how, and especially in what wording, products are to be labelled; which products are covered by the regulation; and, finally, what happens to those maize and soya products that were approved even before this regulation came into force. There is evident uncertainty here, caused by differences in interpretation, and so we regard it as urgently necessary for agreement to be reached at Community level on a uniform interpretation. As I see it, these problems are certainly solvable, but the issues must be addressed in an objective discussion with the experts at European level, as a matter of urgency.
I say urgency because foods produced from approved genetically modified soya and maize are already to be found on supermarket shelves, but now, according to the provisions of the regulation on novel foods, they have to be labelled. This of course makes it especially clear that a review of Directive 220 on labelling is more than overdue.
However, these problems cannot be solved in the manner favoured by certain Members of this House, who create the impression that media impact and the prevention of genetic engineering are more important to them than effective consumer protection. A good example of what I mean is the questions put by Mrs Breyer and the Greens, because that group is saying that the whole regulation has got to be amended or even replaced. This view is not only nonsensical but contrary to the wishes of the majority in the European Parliament.
The issue here is not scaremongering but resolving perfectly ordinary difficulties, and we hope our questions will encourage the Commission to do so.

Eisma
 Mr President, I should like to insist that we must be particularly circumspect concerning subjects such as new food products in Europe. After swine fever and BSE, consumers want more than ever to be informed about what they are eating. Although a regulation came into force on 15 May of this year, we absolutely do not know how this regulation is to be interpreted by the Member States in certain areas.
I should like to ask Mr Bangemann why the Commission did not adopt a directive in good time to deal with this problem so that there can be a uniform and clear regulation concerning labelling? How, Mr Bangemann, is the labelling of genetically modified food products currently regulated? Who takes responsibility for this labelling if the Commission has not issued a regulation on it? Is it up to manufacturers?
In short, there is a great deal of uncertainty and we feel that the Commission has been very negligent over this and this has seriously affected consumer confidence and we now would like to know how the Commission intends to deal with this problem because it is becoming a very urgent one.

Leopardi
Mr President, Mr Commissioner, we are naturally delighted at the entry into force, on 15 March last, of Regulation No 258/97 on novel foods and novel food ingredients introducing new provisions covering appropriate labelling. This is an important step forward in a sector which is not yet familiar to the consumer and is a source of great confusion and bewilderment. This is precisely why there is a need for guidelines that are clearer and more transparent than the text of the regulation.
In fact it is unclear whether the regulation has retroactive effect. Indeed, what is its actual field of application? For example, is labelling of genetically modified maize and soya, which were authorized entry to the Community market back in December, obligatory or not? And if it is, must the provisions of the regulation be respected or not? And how should countries which already have national standards in this sector act? How strictly should the rules be applied? Is it too much to ask for clear and precise guidelines on the implementation of this regulation, on its scope and on labelling? Have the different national standards, for example Italy's, been taken into account? And finally, has there been any consideration of the confusion experienced by the majority of consumers who, for the most part, are still too ill-informed to be able to interpret the words on the labels about genetically modified organisms correctly and therefore harbour understandable and fundamental misgivings.
In conclusion, it seems appropriate to stress that, even if we are looking at a regulation which is the fruit of a compromise between the conflicting interests of Member States, organizations and interest groups, and corrects the total lack of control in the sector, this does not mean we should be content with incomplete and unsatisfactory provisions, which lend themselves to various interpretations and may actually be generating bewilderment and confusion.

Bangemann
Mr President, before I deal with the individual comments that have been made I should first like to make a general observation that may clear up a few misapprehensions. We have all accepted the result of the conciliation procedure, except for Mrs Breyer and a few others who pointed out at the time that it was not enough to provide the consumer with appropriate information. So no one here - not Mrs Roth-Berendt nor Mrs Schleicher and especially not Mr Eisma, who as far as I know did not participate in the debate, in which the Liberal Group did not particularly distinguish itself - should now suddenly hold the Commission responsible for something which you brought about yourselves in the course of the conciliation procedure with the Council.
Mr Eisma, I object to the way you are now simply turning the tables and saying that the Commission failed to do such and such. This legislation dates from May this year. It is true that the discussion produced what is somewhat pompously referred to as a paradigm shift, and indeed I called attention to it at the time, a shift away from the traditional principles of labelling, for which I argued at the time. If a change takes place which is significant to the consumer, then labelling is necessary.
If a change takes place which is not significant then labelling is not obligatory , and in my view that change should not be shown on the label, because if we label absolutely everything the consumer is in the position of the emperor with the new clothes, confronted by a whole mass of labels that amount to absolutely nothing. And that, Mrs RothBerendt, is the basis of the achievement you were so proud of. You were proud of it, Mrs Breyer was not. Nor was I. You said at the time - I can still produce the Minutes - this resolution is a slap in the face for Mr Bangemann. And now you're trying to make me responsible for it. I am more inclined to agree with Mrs Breyer - if any breast-beating is called for, you do it!
No, I want to start by getting this clear, so that the dividing lines are not blurred and so that the wrong impression is not created that the Commission is responsible for something which you, at the time, celebrated as a great victory for Parliament. I can still remember your appearance on German television!
(Heckling) My dear madam, if Mr Eisma and Mrs Roth-Berendt and other speakers behave as if the Commission were responsible for everything under the sun, then you are going to have to accept - it's called democracy - the fact that a Commissioner who has been involved in these discussions and suffered these discussions from the start is allowed to say what actually happened at the time. Anyone here who wants to debate honestly and frankly must admit, ' I accepted the result of the debate at the time.' It essentially corresponded to the principles, because it was in fact based on three substantive criteria. I never said, Mrs Roth-Berendt, that they all had to be present at the same time! The Commission never said that. I don't know where you got that idea.
If the composition of a food changes, if the nutritional value changes or if its intended use changes - and if one of those things happens in an individual case, which we have never contested and never viewed differently - then it has to be labelled. That is the first point, and that is crystal clear. But these three criteria mean, Mrs Schleicher, that there is an objective basis: whenever a change is significant to the consumer then the product must be labelled.
Well, Mrs Roth-Berendt - and this is the background to this whole debate - a completely different debate on soya and maize has been launched, not just in Parliament but also within the Commission, on the question, irrespective of the three substantive criteria: Is labelling not generally necessary. No, don't shake your head at me! There are many people in this House - as is apparent from the questions - saying, for example, we want labelling for maize or for soya or for some other food that is not even covered by the Regulation; because, after all, the regulation applies only to foods which are sold to the end consumer, which maize and soya meal generally are not.
But if you now insist that these things have to be labelled, irrespective of whether one of the three criteria has been met, then it is absolutely clear to me that you are abandoning the principles which we all defended at the time by saying that, never mind what the effect is, we must say on the label if a particular technology has been used, even if the effects disappear completely somewhere along the chain.
Everyone knows that genetically produced soya beans or maize, when they are processed, do not have the effects described in the Novel Food Regulation, and need not have those effects, so from that point of view this is a paradigm shift. Now, I am perfectly happy about this - I said so before, I am democratic here - and if Parliament and the Commission adopt that by a majority then of course it will be done. I will be in a minority of one, and bow to the majority. But I am going to take the liberty of saying again, this evening, that I regard it as fateful for the consumer. Because virtually anything and everything is going to labelled, and ultimately that means that labelling will become totally meaningless to the consumer. Again, I think Mrs Breyer is right - we can all pat each other on the back, but the consumer derives no benefit whatever.
So that is the situation. The Commission is working on it. We have set up a group of Commissioners to review this fundamental change. I am against it. I think the three criteria are absolutely essential - or, in more general terms, that the principle of a substantive change affecting the consumer is essential. I am not acting as a spokesman for the industry, because the industry favours the same thing as you. I do not! I believe the consumer will derive more benefit if he is given relevant, clear information about things that are significant to him. But if the majority wants it and if it helps us to ascertain the truth, then we'll do it, which in practical terms would mean that we would have to amend the Novel Food Regulation because it would no longer make any sense.
The idea of having stricter rules for the labelling of animal feeds - granted for the sake of argument that maize and soya beans are feeds - than for novel foods is something that would be beyond me to explain. Because, for heaven's sake, in that case we will change novel food itself, drop the three substantive criteria, and whenever a genetically modified constituent turns up somewhere in the chain we put a label on! That is the real problem.
Mrs Roth-Berendt was kind enough to say that I stand up for my views in issues like these, and that is what I am doing now. If a majority of you want to change it, then, as I said, there is nothing I can do to stop you, nor would I want to. I just want to make sure you understand what the result will be, and that result is not good for the consumer.
Now let me deal with the individual questions, and I shall be very brief. The Regulation has been in force since May. We defined the exceptions from the scope of this directive very clearly in Article 2, so that no guidelines are needed on that. The same applies to Article 1, even though under Article 1(3) there are a good many questions that need to be cleared up in the committee procedure, but after all that was why we set up that procedure - we did not want to introduce guidelines to do something that should be done by the committees.
As far as Article 8 is concerned, we are going to have to review the situation as I said earlier, in other words reconsider the form this fundamental decision is to take. But irrespective of that decision by the Commission, and later by Parliament, the absence of guidelines does not imply carte blanche for the Member States; they can't just interpret the provisions as they see fit. In any decision on approval, the provisions of Article 8 are applied to the specific case and the labelling arrangements and forms are defined. So there is no scope for unilateral action by Member States, or of course for the individual. He does have a certain freedom of choice, but ultimately we shall make the appropriate decision. We also want an ad hoc measure covering soya and maize products. As I said before, this will have consequences of its own, because in principle it has nothing to do with the applicability of the Regulation on food and food additives. So a certain amount of logic would have to be applied in that case.
Those, essentially, were the questions asked in this House. We are quite willing to continue debating with Parliament on what we are doing. But, Mr Eisma, there is one thing I would like to make completely clear: I am not going to take the kind of charges you made this evening lying down!
Like Mrs Roth-Berendt and many others involved in the conciliation, I was of the opinion that the result was an acceptable one. It did not violate our principles. It introduced changes in matters of detail. Mrs Roth-Berendt was very pleased and proud of that. Parliament celebrated it as a major victory over the Commission. And now everything is being turned back to front and you are holding us responsible for that result, and even this late in the evening I must say that I am not particularly pleased about it!

Graenitz
Mr President, Mr Bangemann has explained to us at great length why things that should have happened long ago have still not happened. Today, Mr Bangemann, we are discussing implementing provisions for the Novel Food Regulation and, if I may quote from the Green Paper for Food Law, Regulations are always to be used to increase the transparency of Community law and facilitate the application of its provisions within the single market so that implementing regulations by individual states are unnecessary.
What that means is that there must be implementing regulations at Community level, so that every Member State, when approving products, must do precisely what the other Member States are also required to do. If we want a single market, then we need to construct that single market very carefully for products which are viewed by consumers with some mistrust as something new, something strange, we can't just say, ' We've had the legislation since 15 May and it's only 15 June now so there's still plenty of time.'
Mr Bangemann, you have had plenty of time for your services to prepare this, and I should think that the DG III administration would probably also be capable of it.

Florenz
Mr Bangemann, basically, I cannot fully understand what you are saying. There are things I do understand, but in April 1997 you wrote in the Frankfurter Allgemeine Zeitung that 'labelling contributes absolutely nothing' , and that of course rouses our curiosity. We believe that labelling definitely does contribute something. It contributes something to the consumer and it contributes something to the industry, and that is the opportunity we want to take. After the grim experiences of BSE, we should take the opportunity offered by the Novel Food Regulation and put it to good use.
I think it has become clear here tonight that we are talking not about the content of the directive but about what we have made of that content. You say that it only came into force in May, and in legal terms that is correct. I am no lawyer, as you know, but you knew as long ago as January that this business was coming and what form it took. We would have liked to see you making some effort to make it clear to the 15 Member States of this Union in which direction they were supposed to be heading. All right, there can be no definitive documents for us to examine at that stage, even we understand that, but I think we really should consider it beneath us to grind out the kind of superficial campaign of accusation we have heard on this occasion from the Greens, who can be unimaginative themselves sometimes.
I believe in all seriousness, Mr Bangemann, that the Novel Food Regulation is a good first move in this new direction. So buckle down to it, and then we can tell the Member States where things are heading!

Breyer
Mr President, I believe Mr Bangemann has been honest with us this evening, and we should be honest too. The Novel Food Regulation was indeed a joint creation of Parliament and the Council of Ministers. I pointed out the absence of any implementing provisions, not only in January but also in the conciliation committee. Among those Honourable Members here who are now complaining about it, everything was crystal clear at the time, the Novel Food Regulation was the best of all possible regulations and it covered everything. Well, I want to look not backwards but forwards. I am grateful to Mr Bangemann for the fact that, despite the wording of Article 8, where it does say that the Commission may issue rules for implementation - Parliament didn't want it to say that the Commission must issue rules for implementation - he has nevertheless declared his willingness to arrange implementing provisions on labelling. I believe those are important, because there is criticism here not just from environmental groups and consumer associations but even from the industry itself.
What we need now, therefore, is a form of words to label those products which are covered by the regulation. I would once again strongly urge the choice of the wording 'produced using gene technology' , because 'modern biotechnology optimized by food physiologists' would mislead consumers and offer them little in the way of clear information. Also, we would lay ourselves open to the charge that the Novel Food Regulation is a labelling swindle. If the industry uses the method, then the industry should also have the courage to say so on the label, so that eventually genetic engineering becomes a hallmark of quality in the food industry context.
Which brings me to the subject of the 'quality mark' . The positive aspect of the Novel Food Regulation is that we make provision, in Recital 10, for positive labelling. Mr Bangemann, particularly in view of the fact that the industry is planning to declare everything not covered by the Novel Food Regulation as being free of genetic engineering, I would have liked to hear from you whether you are prepared to do as we did with organic farming, and now with animal products too, and to work out criteria to enable us to have positive labelling. Because one thing has to be clear: we must not shake consumer confidence. What we should be doing, at last, is ensuring clarity.

White
Mr President, I want to put a scenario to Commissioner Bangemann. If a consumer in a Member State suffers as a result of inadequate labelling, in normal circumstances when the law is clear, that consumer may well have a remedy under the Francovitch judgement against the Member State concerned for its failure to implement European law. The Commissioner knows that and I know that.
This new law, as we have all regarded it, has received widespread publicity. Most European Union citizens who take an interest in this matter will have assumed that there is a new law providing protection from 15 May. Surely a Member State Government in circumstances such as now arise can say to any disgruntled consumer in a court case: ' But we do not know what the position is. The Commission has failed to inform us' . So there is a responsibility on the Commission.
The Commissioner dealt well with the argument this evening in terms of Parliament's responsibility and, as a member of the conciliation team, I take part of that burden of responsibility. But I would point out to the Commissioner that there are three readings under co-decision. The Commission is involved in the proposal when it first comes to us. It is involved in the second reading. It is only when we are not able to agree with the Commission that we move on to conciliation. Therefore, there is a responsibility on the Commission now, as there was at the beginning of this legislation, to ensure there is adequate protection for consumers. In my submission, and that of most of the people in this Chamber, that has still to be provided.

Bangemann
Mr White, this regulation came into force on 15 May. Today is 10 June, so less than a month has passed. We have not had a single case so far, and as far as labelling is concerned we laid down detailed labelling requirements in the regulation that apply immediately and mandatorily in the Member States. Because that, Mr Florenz, is the purpose of a regulation. You referred to a directive. But this is a regulation, which applies immediately in the Member States, and if there are any disputes as to whether the labelling is correct the Food Committee can decide - that is stated in the regulation.
Apart from that, as I have already said, we are currently reconsidering matters in general - yourselves and the Commission, jointly. Once we have arrived at a result the Commission will, obviously, present the new ideas to you, and perhaps you will then say: ' We are going to abandon the criteria of the Novel Food Regulation, because we want to say on the label whenever genetic engineering is involved, even if it does subsequently vanish somewhere along the food chain, because that is the existing situation with soya and maize.' But that goes without saying! The requirement is that anyone who uses those two substances in the processing chain should indicate that they have been genetically modified, irrespective of whether or not the three criteria apply.
Mrs Schleicher, the reason I have been so involved in this issue of the Novel Food Regulation is that I believe that we shall be doing the consumer a disservice if we abandon these labelling principles. But if that is what you want, then we must at least be logical. It is out of the question to apply stricter labelling rules for soya and maize than we do for a novel food which is going direct to the end consumer, and that is why we are going to have to reconsider this matter.
You know me. If I make a mistake, I accept it. Anyone can make an occasional mistake, but when you come to me after three weeks have passed without a single case arising and say, as Mr Eisma says, that I have forgotten it all and I have failed to meet my obligations, I am not going to stand for that! Especially not when I have had to listen to Mrs Roth-Berendt saying on a news broadcast, ' Well, Commissioner Bangemann has had his ears boxed.' OK, if that was what happened, maybe you should be wondering whether you might not have boxed your own ears. Because that is the real problem!

President
The joint debate is closed.
I have received six motions for resolutions pursuant to Rule 40(5).
The vote will take place at 12 noon on Thursday.
The sitting closed at 00.20 a.m.

