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

Posselt
Madam President, page 6 of the Minutes clearly contains an error. What has been recorded is that Mr Rübig asked the President a question about crime in Brussels and about whether this subject has been referred to the Committee on the Rules of Procedure, the Verification of Credentials and Immunities. He received the answer that this problem was being taken seriously and that the authorities in Brussels had been informed of it. But the Brussels' authorities are not the Committee on the Rules of Procedure. I merely wanted to ask whether the Committee on the Rules of Procedure, the Verification of Credentials and Immunities was dealing with the matter as a question of urgency.

President
We have taken note of this matter and I shall see that it is looked into.

Hager
Madam President, I am sure that Mr Gallagher always tables excellent amendments, however yesterday Mr Berthu mentioned my amendments to the Herman report and consequently on page 9 of the Minutes the name Gallagher should be replaced by that of Hager.

President
Thank you very much. We shall amend the text accordingly.

Teverson
Madam President, I just wanted to say that I was present at the session yesterday.
(The Minutes were approved)

President
Mr Poggiolini, you asked to speak on a point of order.

Poggiolini
Madam President, going back to what I was trying to say a little while ago, the arrival of spring has given the Italian Members a nasty surprise: flights have been done away with from Rome and Milan, places where the Italian Members used to meet to come to the European Parliament. Air France has said that the Parliament, the Quaestors and the Presidency are to be blamed for this, as they failed to renew some agreement. I almost have the impression that, following the judgment of the Court of Luxembourg, there is a desire to punish Members, not just the Italians but the Members in general, as the problem does not just concern Italy. It is no longer possible to get to Parliament without making incredible journeys from one part of Europe to another. I would like the Presidency to give us an explanation for this.

President
Mr Poggiolini, that was not a point of order. The same opinion was expressed yesterday by Members from other countries. I believe that we have taken note of this and that the matter will be pursued.

Implementation of the budget and discharge
President
The next item is the joint debate on the following reports:
A4-0097/98 by Mr Elles, on behalf of the Committee on Budgetary Control, on postponement of the discharge to be given to the Commission in respect of the implementation of the General Budget of the European Communities for the Financial Year 1996; -A4-0091/98 by Mr Wynn, on behalf of the Committee on Budgetary Control, on giving discharge to the Commission in respect of the Financial Management of the sixth and seventh European Development Funds for the 1996 financial year; -(A4-0094/98) by Mr Wynn, on behalf of the Committee on Budgetary Control, on the Commission report on the measures taken in response to the comments made in Parliament's resolution accompanying the decision giving discharge in respect of the General Budget for the Financial Year 1995(COM(97)0571 - C4-0126/98); -A4-0093/98 by Mr Blak, on behalf of the Committee on Budgetary Control, on giving discharge to the Commission in respect of the Financial Management of the European Coal and Steel Community for the 1996 Financial Year; -A4-0092/98 by Mr Kellett-Bowman, on behalf of the Committee on Budgetary Control, on the specific annual reports of the Court of Auditors on the financial statements of the decentralised Community Agencies (OJ C 393, 29 December 1997) - 1996 Discharge Procedure (including the decisions giving discharge to the Administrative Board of the European Foundation for the Improvement of Living and Working Conditions (Dublin) and to the Management Board of the European Centre for the Development of Vocational Training (Thessaloniki) in respect of the implementation of their budgets for the 1996 financial year).
Elles
Madam President, I would like to start by making a few remarks on procedural aspects concerning the postponement of discharge which we have in front of the House this morning. First I would like to welcome the presidency here amongst us. It is very nice to see that the presidency has shown full concern at all these issues in front of the House. In particular, coming to our Budget Control Committee the other day was a 'first' in presentation of the Council's views.
Secondly, I would also like to thank the Council for the way in which it has presented its recommendation. Inevitably it is not for the Council itself to give discharge on the budget; but it is relevant that it should offer comments which we as a Parliament can not only receive but also read in time and understand.
Last but not least we should remember as we have this debate this morning that it is not concerned with the discharge process itself, but with the postponement of discharge. Therefore in the issues that I cover this morning I will not for example be referring to the loss of customs duties in terms of the own-resources system or the system of the statement of assurance. These are issues which hopefully we will come to later in the year, when we come to give discharge on the 1996 budget itself.
Moving to the substantial aspects, we are focusing today on six specific points which lead me as rapporteur to conclude that we should be postponing discharge and therefore be unable under Article 89 to give our discharge to the 1996 budget by 30 April 1998.
The first of these refers to the implementation of recommendations of the Committee of Inquiry into the transit system. Although these implementations are under way, we feel that more should be done in terms particularly of the computerization system. Secondly - and this is a serious point for us in Parliament - there is, we feel, a lack of democratic accountability in the fight against mismanagement and fraud. There is a good deal of procrastination to use a good British term, because we have been looking for information in this sector since 1989 and are still trying to obtain, as paragraph 5 of the resolution says in specific terms, ' the regular submission of lists of all current internal investigations involving allegations of fraud and corruption on the part of officials of the European institutions and lists of all special audits carried out by the Directorate-General for Financial Control of the Commission.' Secondly, in this context of tourism, which also I think refers to the MED programme, ' measures have to be taken to ensure that the competent national judicial authorities will in future be swiftly and without exception informed of any case of alleged fraud, corruption or any other offence when there is a suspicion that EU officials might be involved.'
Thirdly, there is the question of the external policy areas. Many colleagues across this House, whether looking at the question of Bosnia or at the question of PHARE, have been asking for measures to be taken to promote a more decentralized approach, most recently in a mission by this House to Bosnia-Herzegovina. We are still awaiting effective action in this particular area.
Fourthly, in terms of agricultural expenditure, we have the integrated control system. The Council has referred to this in its recommendations, but when we look into the substance we find that this system is still not working effectively in all Member States, and one wonders why this is the case. We would hope that the Commission will come up with satisfactory explanations on this particular point. After all, as we all know, large sums of money are involved in the operation of the agricultural policy and when after a year or a year and a half this integrated control system is still not actually being applied in all Member States, one is entitled to ask why, and why the Commission has powers to withhold money for payments of advances to Member States, which it is apparently not yet applying. Second-to-last, in terms of the measures applied in the Structural Funds for small and mediumsized businesses, we had a problem in the Budget Control Committee because a major political group did not wish to vote for this particular point. But it seems to me that we have a programme laid down under which we are going to do something for small and medium-sized businesses, yet, once in the Budget Control Committee or in the Budgets Committee, it has been impossible to get any information from the Commission as to how it is going to be applied or what is happening. We are waiting for a report and we fully endorse the Council's view that the Commission needs to come forward with some facts on that point.
The last point is the question of audit and control of the European Investment Fund. We would like there to be greater transparency, and the Court of Auditors has I think noted that. We would of course like that point to be clarified.
So let me conclude that in terms of all these points added together - whereas perhaps not one of the points taken singly would justify the postponement of discharge, and whereas we recognize that although the Commission has taken several steps and will no doubt be taking steps with us during the summer to clarify each of these points which are in front of us - we in the Budget Control Committee, as has been shown in this report which was voted by a large majority, believe that it is Parliament's prerogative and indeed Parliament's duty to clarify these points before we give discharge to the 1996 budget. I therefore urge postponement of discharge in this particular debate.

Wynn
Mr President, I should like to concentrate for my first five minutes on the follow-up to the 1995 discharge and then move on to the discharge for the EDF for 1996. The 1995 discharge asks the Commission, the Court and Parliament to carry out certain actions. I am glad to say that a lot of those actions have been adhered to and that we have made a lot of progress in the way that discharge will be carried out in the future.
If one looks at the report we can see that there have been and will be improvements to the system from the way the Commission reports to Parliament on its findings. We gave additional comments through an amendment by Piet Dankert at the committee stage, asking if we can get a better response, hopefully before the summer recess, so that we can take that into consideration before we look at the next year's budget.
Also, for the first time we have the responses from the Member States, albeit twelve months after they were due. However, at least we received them. And this time we have already received them from the UK, which is a major achievement. One would hope that the other fourteen Member States will give us their responses just as quickly. Of course we do not give discharge to the Member States, we give it to the Commission. But when we have that information in front of us it helps us to question the Court and the Commission.
As far as the DAS goes, the Court has once again complied with our request about submitting its findings on the activities within the report. However, referring to Mr Elles' report, he makes the point: ' If the Treaty of Amsterdam were already in force, the rapporteur would probably no longer in the present situation be able to recommend postponement of the discharge but would be obliged to propose its refusal' . We have had this proposal since 1994 when the DAS first came into being. We found a solution for it then with the correct form of words for the 1994 and the 1995 discharges.
If the Treaty of Amsterdam is going to make things more difficult, I would suggest that the institutions involved - Parliament, Commission, Court of Auditors and Council - get together within a very short space of time to hammer out exactly what we expect from the DAS. This has been an ongoing debate since 1994 and we need a resolution to it. I am pretty sure that what Mr Elles says is what I have been saying for the last two years. If we carry on like this we will never get a positive DAS for the Union's budget, and that does not look well in the eyes of the taxpayer. We need to get a solution to this and it will only be done if we get all the institutions together talking about this.
The report also calls upon the Court to bring its annual report forward to the first October session. I know this causes problems for the Court, but the procedure we have gone through recently does not do justice to the report or to the work of the Court or the work of Parliament. It is not acceptable that our workload is such that Members of the Court are allocated only two minutes' speaking time in committee. If we can bring the process forward it will give us all a lot more time to get into the detail of what we should be discussing. It will give Members a lot more time to analyse each aspect of the annual report, even though that it may be shorter. But we need to take that extra time. If it came forward in the first October part-session, it would also fit in nicely with Parliament's first reading in the second session in October.
Within the report, I accept that there are situations where we asked the Commission for certain actions and it says that it cannot do better than it is already doing. That applies to paragraph 8 on action necessary to improve collections and recovery of sums due to the Community. The Commission lays great stress on SEM 2000. Let us hope that it works. We expect reports on that.
I also need to mention olive oil and cotton. This has been ongoing since 1994 when I have been doing reports. I am glad to see that action will be taken in these two sectors and that sooner or later we may get some monies repaid to the Community.
On Amendments Nos 11, 12 and 13, on classical swine fever, I will leave that to Mr Mulder, who is a far greater expert on pigs than I am! But it is a serious issue when it comes to taxpayers' expenditure. I have two final points on this report. Firstly, the Commission's reply to paragraph 79 of the 1995 discharge resolution does not give the explanation necessary concerning the Berlaymont Building. I ask the Commission once again to undertake an inquiry to find out where the blame lies for this. Finally, on this report to the Court of Auditors, we reiterate our request which we voiced in resolutions in 1992, 1993 and 1995 about information concerning the financial controller's lack of approval on refusals of visas. I am sure Mr Friedmann will take that on board.
Concerning the EDFs, things could be worse. If Mr Elles is actually saying we should refuse discharge for the general budget, it would have been quite easy to get Parliament to accept that we should refuse the EDF budget also because of the arguments put forward over the last two years and the fact that only recently we voted in this Parliament not to give an opinion on the new financial regulation for the eighth EDF funds. The reason is because of the arguments we have about our role within the European Development Fund. The situation is that we have responsibility without authority. We are supposed to monitor the spending of those appropriations without having any authority to do anything about them.
We have no way of influencing that spending; all we can do is give a discharge at the end of the day. The easiest thing, following the Court of Justice ruling, is to say: we are having nothing to do with this; if the Commission and the Council want a discharge, then they can go ahead and give it; we are not going to give it.
However, on reflection, that would be rather childish. We have to accept that Parliament has a role in this and we have to say that we want to see the EDF budgetized. That is our aim, that is what we wished had come out of Amsterdam, knowing full well that it probably would not. Until the EDF is budgetized, Parliament will have a great problem in its role, especially in giving discharge. Therefore, as I have said, we would expect the EDF to be budgetized some time in the future - we have the support of the Commission on this - and the Council should reconsider and realize that it would be far better administered through the general budget. The choice has not been easy but, at the end of the day, the committee's recommendation to Parliament that discharge should be given is probably the right one.
However, there are three points to raise in this connection. First of all, the advance payments to the eighth EDF. According to the report, the Court states quite clearly that payments are being made from the sixth and seventh EDFs to the eighth without a legal base. The Commission does not contest this. We get rather annoyed when the Council tells us that lines cannot be implemented because there is no legal base. Yet here we have a blatant contradiction of that argument, where money is being spent without anything resembling a legal base. On those grounds alone, we could have said that we are not giving discharge to this report, but we are not doing that because we accept the practicalities of trying to get money to ACP countries.
So I ask the Council and the Commission to take on board that we are not best pleased about this, to say the least, but we would expect the situation to be ratified in the near future. I have to say to the President-in-Office that it is rather surprising that there is no mention of this in the Council opinion. The Council's report on the general budget was wonderful but this issue was not mentioned.
On the tendering procedures, there are several things stated within the report and in my opinion, especially on quality control of tendering procedures and the hard currency payments. We ask the Court to keep an eye on this, and we ask the Commission to make sure the tenders are correct in the future.
Finally, on the DAS, it is good to see a positive DAS but there is one part where 4.5 % of payment transactions could not be assessed because of material obstacles. That needs to be looked at, even if it is only a small amount. I am sure we can get over those obstacles in future.

Blak
Madam President, this is my briefest statement on the Coal and Steel Community accounts in the five or six years that I have been working on this topic. I recommend discharge. In past years, there has been talk of sensible administration. This does not mean, however, that there are no problems. I have requested information from the Commission, and I have been promised written information. But I still have not received this information, which concerns the Channel Tunnel, the matter of Storebælt in Denmark, where there were certain problems, and the matter of subsidies on loans to UK coal mines. I do hope the answers are on their way. In all other respects, I can affirm that we enjoyed excellent cooperation with the Commission and the Court of Auditors in this matter.
Having been given the opportunity to speak, I will now turn to the issue of lending and borrowing. I have prepared a report for Mr Elles on this subject. I must say that there are some problems here. I find it quite incredible that we still have unfinished business from 1981 concerning the earthquake in Italy. We are still receiving information, including allegations of corruption, bad planning, poor administration, and details that all the money we gave actually went on something else altogether. This is the kind of thing that tries the patience of European taxpayers as regards the EU, so I think we should endeavour to get both of these matters wrapped up once and for all.
Another matter that I would like to bring up concerns the guarantee fund. We can see there have been significant losses here. Losses are, of course, to be expected, but considering that over the last couple of years these losses have cost the taxpayer ECU 289 million, I am curious to know who is footing the bill - presumably the Commission, exceeding its normal budget. So there are a few questions we would very much like answered. I would also like to comment on global loans. In connection with global loans, that is, the Copenhagen facility, money is given to banks which then issue the loans. Thus, the banks get all the credit. I think it ought to be made known that the EU is footing the bill. In my opinion, therefore, some communication problems persist. Perhaps we are also overlooking the public relations value of making it known that we are behind these loans.
There is one area for which I have not recommended discharge to Mr Elles, although postponed discharge may be appropriate. This concerns the European Investment Fund. I have been dealing with this issue over the last three or four years, and in debating with the Investment Bank and the Commission, among others, I have advocated allowing the Court of Audit to undertake the necessary monitoring and auditing. But all I get is pathetic excuses to the effect that of course, private banks are involved. 70 % of the money is public funds, and a handful of banks account for 30 %. It appears to me that we have a real problem on our hands. According to our rules and regulations, we are responsible for the budget, but we are not even permitted to carry out any monitoring. The Court of Auditors has been fobbed off with a handful of documents that are accessible to all. That is not enough, and it leads me to recommend to Mr Elles that we should postpone granting discharge. It appears that something is now happening. It is evidently becoming apparent that this is a serious matter. I have spoken to the Court of Auditors, which says there is light at the end of the tunnel, but we want a guarantee that everything for which we make public funds available will also be subject to our control. I sincerely hope we can find a solution. It is obviously positive to see the light at the end of the tunnel over the last couple of months, but we will not under any circumstances accept a refusal to allow monitoring by the Court of Auditors, or being denied access to the information we want. If this is the situation, I sincerely hope we will take a firm line and say that this is the end, that we simply cannot countenance any further discussion on the subject.
Every time I have taken up these issues, I have been confronted with a very arrogant attitude on the part of the Investment Fund. I will not stand for this. I cannot accept being told, ' We're not telling you anything about these matters.' I hope, therefore, that the new winds that are blowing will bring about the auditing we desire. That being the case, I would be delighted to join the ranks of those recommending that we grant discharge in this area, but if not, we wash our hands of the matter. We cannot face prolonging this cat-and-mouse game with bumptious officials.

Kellett-Bowman
Mr President, we move from discharges concerning large funds of money to two decentralized agencies which are very transparent in that they are dealing with much smaller sums of money. May I thank the services for finally getting the details of this agenda item correct. We are dealing with the discharge for the administrative board of the European Foundation for the Improvement of Living and Working Conditions which is in Dublin and the management board of the European Centre for the Development of Vocational Training, known as CEDEFOP, in Thessaloniki.
In preparing this report the Committee on Budgetary Control has had the advantage of reports from the Court of Auditors, for which I thank the President, and two very fulsome reports from the Council recommending us to give discharge. May I say in the presence of the Council thank you because in past years they have arrived very late and have been rather superficial; this year is much more helpful. We are also helped by an opinion from the Committee on Employment and Social Affairs.
May I first deal with Dublin because I am getting a bit fed up with one aspect of Dublin. The financial regulations, both a general one for the Community and the one concerning this agency, require correct division of powers between authorizing officers, financial controllers and accounting officers and still the Court is reporting to us that Dublin has not got it right. If the Court reports next time that it is not right, I fancy that we shall not be recommending discharge for the 1997 year. When the new agencies, the second generation, were set, up the Committee on Budgets and the Committee on Budgetary Control were very wary of the potential overlap between what the various agencies were to do. We have to specify here that there is an overlap between the Foundation in Dublin and the European Agency for Health and Safety and we must keep them separate. We cannot have a duplication of work. The Dublin Foundation has had a good 1996 and if it gets these details right there is no problem as far as discharge is concerned and we are very happy to recommend discharge for the 1996 year.
CEDEFOP in Thessaloniki have had a rough time. They were transferred from Berlin to Thessaloniki and into temporary premises. There were difficulties with staff not prepared to move away from Berlin for family and other reasons and they were understaffed. There was a time when we thought there was a possibility that CEDEFOP might go under, but thanks to the director who resolutely got on with the task they are now carrying out fully their responsibilities.
The Court has drawn attention to the fact that they are not following the financial regulations strictly in obtaining tenders for projects in the research field. The Court also points out that we still have problems with the contract for the new building which is a unique type of contract in my experience and has got to be watched closely. Of course, in vacating the temporary premises we must make sure that financial details are covered properly. Now that CEDEFOP is fully operational I hope that their budget provisions, their forecasts and everything to do with the running of the agency will be more smoothly presented, because the Court has some difficulty with the irregular transfers of money to CEDEFOP. This is a point which is raised from time to time by the Court because of the difficulty of operating an agency so far from Brussels. Again, the committee recommends to Parliament that we grant discharge. In this report there are therefore two discharge recommendations: one for Dublin and one for Thessaloniki.
I now turn to Mr Elles' report where Mr Tomlinson and I have put in a working document in connection with fraud in the transit system. This subject has occupied a lot of European Parliament time. The Committee of Inquiry reported in March last year, after a year's intensive work. Mrs Wemheuer's report recently secured a very satisfactory response from the Commission. Mr De Luca's report also covered the special report from the Court of Auditors on the subject.
It would be churlish of us not to recognize that the Commission has made a great deal of progress. There is new legislation being put in place and there are new rules for dealing with transit matters. I have had reports from users of the system of an improved devotion to duty on the part of customs officials - morale has gone up. I believe that when reports are submitted to us we shall find that far less money than that which we said was being lost in the transit system is being lost now.
There remain the outstanding debts. That is a very difficult situation for the customs services and for the Commission, because the rules do not permit the Commission to remit any of these outstanding debts. They are a matter for separate negotiation by the individual customs authorities with the carriers and freight forwarders themselves. I hope that those debt burdens will not continue for much longer because they must be putting some of those companies very much at risk.
However, the proposed computerization of the transit system is now three years away when it should be only about 18 months away. This we do not like. It is all the more disappointing since the computerization was proposed and planned long before the inquiry first sat. Nevertheless, we are falling seriously behind. I do not blame the Commission entirely because five states volunteered to enter the first phase and they are falling behind as well. It is important that Mr Elles should use this delay as one of the reasons for recommending deferral of the discharge for 1996.

Mayer
Madam President, Mr President, Commissioner, ladies and gentlemen, I shall probably not need my full three minutes, Madam President, for I am somewhat pressed for time since I currently have an important group meeting in the House.
In its annual report on the 1996 financial year in respect of the agriculture sector, the Court of Auditors touches on several areas in which irregularities have been discovered. These include the cultivated-plant compensation scheme, livestock premiums and the organization of the tobacco and wine markets. I do not wish to go into the abuses mentioned in the report in any detail, but would merely point out that a lot needs to be done in order to eliminate, or at least check, the misuse of those funds which have been allocated to the agriculture sector. The citizens of the European Union naturally expect these resources to be used efficiently for the purpose for which they were intended and moreover they expect that the process can be audited at any time.
I support the proposal to postpone the discharge. EU agricultural expenditure tends to be more in the forefront of people's minds when funds are running low. We have in recent months had repeated debates on individual areas of expenditure. There are still production sectors which suffer from severe public criticism, even when EU funds are used in a proper manner. When these sectors are also the subject of irregularities, it is no wonder that serious questions are asked about agricultural spending. In future it will not only be market-organization expenditure which will have to pass scrutiny, but also and increasingly the integrated administration and audit system. Here I would just like to recall to Members' attention the cattle registration and beef labelling schemes, which are designed in the long run to win back consumer confidence. Any irregularities here would have devastating consequences, in my opinion, and would without doubt throw into question the sense and purpose of the whole system. For this reason the Commission is also called upon to draw the necessary conclusions from the abuses highlighted by the Court of Auditors.
The impending reform of the CAP gives us all the opportunity to draw up regulations which are more transparent and less susceptible to irregularities. This is a real chance for Agenda 2000, which should not be missed. This also applies to the whole BSE issue, which has still to be fully resolved, and to the various problem areas indicated by the Committee of Inquiry. I therefore refer in particular to the conclusions, where action is also called for.

Napoletano
Madam President, in the opinion approved by the Committee on Regional Policy, it has been brought to light that, for all the sections relating to the Structural Funds, the year 1996 has been a turning-point in the commitment of allocations. From this point of view, we must be pleased as all the allocations initially provided for have been committed, not just those for 1996, but also those for 1994 reincorporated into the budget.
However, in our committee's opinion, the same optimism cannot exist for the closure of the programmes. Many programmes in the period prior to 1994 remain open, with the main problem being the large number of programmes, rather than the amount of the resources. The Committee on Regional Policy points to a total lack of assessment of the impact of the measures and funds on small and medium-sized businesses, a question which has already been brought to light and which I believe is very important as the Luxembourg Council attaches great importance to this sector.
Finally, it is the third time that the Court of Auditors is using the statement of assurance for this part of the budget. It might be useful if the Court were to add a clarification on the concepts of formal and substantial errors, irregularities, illegalities and fraud. I think this explanation will be very useful, not just for our committee and for the sector we are dealing with, but for the entire budget.

Liddell
Madam President, I wish to begin by thanking you for the chance to present the recommendation of the Council regarding discharge to the Commission in respect of its implementation of the budget for the financial year 1996.
I am also very pleased to have been able to attend earlier this month a session of the Committee on Budgetary Control, and I thank Mr Elles for his kind words. The discussion we had there on the Court of Auditors' report and the discharge recommendation was of considerable importance to all the parties involved. I appreciate the important work done by all the rapporteurs, who are prepared to devote their time to ensuring that taxpayers' money is safe.
The reason I attended that meeting, and the reason I am here today, is because the Council makes a recommendation on discharge which it regards as very important. But it is Parliament, and Parliament alone, which, acting on that recommendation, has the responsibility for granting discharge.
As you know, on 9 March the Council decided to recommend that Parliament grant discharge to the Commission for the management of the Community budget for 1996. That recommendation is the result of lengthy and serious discussion by the Council, during which a number of areas of concern were highlighted. The action that the Council would like to see taken on these areas is set out in the comments accompanying the discharge recommendation. The view of the Council is that to gain significant improvements is to focus on the future and apply the lessons learnt from the report. To achieve this there is a need for cooperation between the Commission and the bodies, including the Member States. It is the Commission which is responsible for executing the budget but real progress can only be made if everyone who handles Community funds takes their share of responsibility for achieving the highest standards of financial management. It is for this reason that the President of the Council has written to the President of the Economic and Social Committee to stress the Council's concern over the audit of the travel claims of the committee.
Both the Council and the European Parliament are determined that financial management of the Community budget must be improved. The annual report of the European Court of Auditors is a very valuable tool to help us achieve this, and we must use it to the full.
We may have very different approaches as to how we wish to use these opportunities to the best advantage but I know that we share a common goal of achieving improvement - significant improvement at that - in the management of the Community budget.
From the comments accompanying the Council's recommendation on discharge, you will see that we consider that it is particularly important to focus on the lessons for the future at a time, such as now, when the Union is considering policy reforms in key areas, in particular the common agricultural policy and the Structural Funds. The enlargement process will make this even more important.
Another key lesson from the report is the need to make sure that Community expenditure is actually achieving results. We must ensure that taxpayers' money is properly spent and accounted for but we also need to ensure that it is being used in the most effective way possible to achieve our policy aims. For this to happen, the Community needs to assess its needs and priorities rigorously, it needs to legislate clearly, to monitor progress and to evaluate results. We need a system that tells us not just that money has been spent and all the proper procedures have been gone through but also what the impact of the expenditure is and what has really been achieved with the taxpayers' money. The Council's comments have highlighted areas where there is a need to focus more on objectives and on the evaluation of results.
The Council is extremely concerned by the excessively high incidence of errors which the Court found when it did work on the statement of assurance. The Court estimate of substantive errors is barely changed from what it was last year. The Council considers this unacceptable. The comments contain a clear statement about the need for reform. It is happening that there is some indication that the level of errors for the EAGGF Guarantee Section is lower than the average for the budget as a whole, but for the Structural Funds it is higher and this high rate of errors is a cause for grave concern.
You may then ask why, having said that, the Council is recommending that Parliament grants discharge. The reason is, as I have already indicated, that the Council believes progress will only be made if there is cooperation between the different parties who have involvement in handling Community funds and if they all accept their responsibility for achieving the highest standards of financial management.
The Council is facing up to its responsibilities for ensuring that reform is carried through by working in cooperation with the Commission to achieve this. As already mentioned, the Commission has made great efforts through the SEM 2000 initiative to improve both its internal financial management and its cooperation with Member States.
These measures are beginning to show results and we will continue to monitor progress closely. The Commission has also generally responded to the observations of the Court constructively. In a number of cases, measures have already been taken on recovery of misspent money, on reducing the level of advances and on eliminating dormant commitments. The Commission's undertaking to submit a proposal on reform of the financial regulation to make this clearer and more appropriate to current circumstances is also a useful move forward towards better financial management.
The Commission is taking measures, but more needs to be done. I know from the discussions in the Committee on Budgetary Control that Parliament is particularly concerned by lack of progress in certain areas. These are real concerns which, as you will see from the comments on the recommendation, the Council shares in many cases. Taking one of the committee's main concerns - strengthening the fight against fraud inside the European institutions - you will see that the Council has called for all institutions to authorize UCLAF to carry out inquiries in appropriate cases. The presidency is looking forward to the Court's forthcoming special report on the functioning of UCLAF.
The Council also shares Parliament's concern that measures to support SMEs should be more accessible and the results more visible. Procedures for getting aid to SMEs, the intended beneficiaries, need to be rationalized and simplified. The Council welcomes the fact that, in December 1997, the Commission launched an assessment of the impact of the Structural Funds on the SMEs and has requested that the outcome be communicated both to the Council and Parliament. The Council has also commented on weaknesses in the Commission's management of external aid. The Council has stressed the importance of improving budgetary implementation of both PHARE and TACIS. The PHARE programme is particularly important in the context of preparation of the beneficiary countries for accession. The Council has called on the Commission to take account of experience acquired in the evaluations aiming to improve these programmes.
The Committee on Budgetary Control has criticized the Commission for the slowness of progress with measures to update the Community transit system, particularly the computerization project which we have heard about this morning from Mr KellettBowman. The Council agrees with Parliament that modernization of the transit system is essential. There should be cooperation, not confrontation, on this difficult project. No-one realistically expected the wholesale reform of transit to be completed within twelve months, but significant progress has been made in improving customs control measures. I wish to take this opportunity to pay particular tribute to Mr Tomlinson and Mr Kellett-Bowman for their excellent work on this subject.
There has also been steady progress in agreeing the legislative changes that are needed. Reflecting the priority given to this matter under the UK presidency, the Council has broadly agreed the legal changes needed to pave the way for more detailed reform of the system. Further discussion in the Council has been deferred pending receipt of Parliament's opinion on the Commission proposals. As Mr Kellett-Bowman has said, it is disappointing that the transit computerization project has suffered delays, in part because of the complexity of the project and the way it was underestimated by the Commission. However, the Commission has given its assurance that the project is now under proper management control, and I am confident that Member States will support the project through to its implementation.
Similarly, setting up the integrated administration and control system was a major technical and administrative task involving considerable investment and administrative reorganization. Member States and the Commission have cooperated to implement the system as quickly as possible and good progress has been made in many areas. The Council would like the system to be fully implemented in 1998 and has asked Member States to ensure that checks conducted by IACS are fully operational and comply with the principles of sound financial management.
The Council has made it clear in its comments that it expects the Commission to improve its performance in all of these areas where serious weaknesses have been identified, but progress requires increased efforts and greater vigilance on the part of all the Community's institutions. The Council has recommended that discharge be granted and has invited Member States to work with the Commission to ensure that the lessons drawn from the report are acted on and, where changes need to be made now, they are made. Where there are lessons for the future, they need to be fed into the policy-making process. From the Council's perspective, this is the most constructive way forward and it is on this basis that the Council recommends to Parliament that discharge should be granted to the Commission for the 1996 financial year.

Liikanen
Madam President, your rapporteur, Mr Elles, proposes deferring the decision for discharge to September, and has asked the Commission to take a series of measures between now and then relating to the Commission's various fields of activity.
The Commission has taken note of the report in question. It will do all in its power to comply with the wishes of Parliament. A certain number of indications on the major points raised by Mr Elles may, however, already be given.
With regard to the fight against fraud, my colleague, Mrs Gradin, last week sent a letter to Mrs Theato specifying the procedures under which information on internal investigations for the Commission could be made available to you. Furthermore, as stated in the document that the Commission sent you on 18 November 1997, on improving the fight against fraud and corruption, UCLAF will make the necessary contact with the national legal authorities in case of suspicion of fraud or corruption.
As regards UCLAF authorization by all the European institutions in the pursuit of its enquiries, the Commission is looking at measures relating to the consolidation of the powers and of the mandate of UCLAF within the Commission to ensure its independence. UCLAF procedures giving the best possible assistance to other institutions confronted with fraud enquiries will therefore be more closely specified.
As regards the basis of the enquiry on the transit system, the Commission has had to change its approach on the new computerized transit system, the NCTS, because of its complexity, which made it too difficult to manage. The report scheduled for September will outline the state of progress. We hope that the project will be able to work with five Member States before the end of 1999, but there have been many difficulties, as you know.
In the agricultural sector, in accordance with the resolution of this House of 18 April 1996, the Commission has now strengthened the audit unit (unité apurement des comptes ) by 15 members. It will also be submitting a composite report on the introduction of the integrated financial control system, and will draw the requisite financial conclusions of any inappropriate operations.
As regards the SMEs, the Commission has launched an overall assessment, the final result of which should be available towards the end of the year.
In the external policy field, the Commission has proposed a review of the regulations on reconstruction aid in the former Yugoslavia, and will strengthen its delegation in Sarajevo. These are measures which take into account the severe criticism expressed by this Parliament and the Parliamentary delegation which went to Bosnia recently. Furthermore, the Commission will submit a proposal for a new regulation aimed at creating a unified framework for budgets and procedures.
As regards the decentralization of PHARE activities, the Commission is actively pursuing its consideration of the possibilities, but believes that the complete transfer of the national programme as a whole requires a little bit more time, and will probably not be possible until 1999. It should be emphasized, furthermore, that on 15 October 1997 the Commission decided to set up a common management service for Community assistance to third countries. This is an important step toward harmonization, rationalization and transparency in tender procedures, contract award and in the general manner of operating. This new service will continue the process of decentralization which is already under way.
As regard the audits by the Court of Auditors on the activities of the European Investment Fund, the Commission has always undertaken to respect the Court's right to audit, while respecting the competencies of each of the institutions and bodies concerned. It will propose a new meeting with the Court for the purpose of reaching an agreement on this issue.
In the field of administrative and budget management, the Commission has undertaken a vast programme of internal reform. Four major sites have been opened up to this effect. Launched in 1995, the SEM 2000 initiative has provided the foundations and instruments to build up healthy financial management. The MAP 2000 project complements this in the personnel and administrative field. Adopted in 1997, it sets out a framework for modernizing the running of the Commission, based on the principles of decentralization, simplification and rationalization.
In parallel, the Commission has undertaken an in-depth study of its activities and resources. The results will serve as the basis for a reorganization of the portfolios and the structure of services for the next Commission. Finally, the Commission is now dealing with the difficult question of the linguistic implications of the forthcoming enlargements.
Mr Elles, in his resolution, has included the European Parliament resolutions relating to tourism, ECHO, PHARE and the MED programmes, following to the various special reports of the Court. These reports have already been discussed at length, and it would serve no purpose for me to return to them. The Commission will, of course, respect the content of these resolutions.
Madam President, I believe we are on the right track, and I have no doubt that in September the Commission will be able to present the elements that will allow you to definitely give discharge for the 1996 financial year.

Wemheuer
Madam President, ladies and gentlemen, some time ago the media presented a report which worried a lot of people, gave rise to a number of jokes and became a real talking point. The story was not about the European Commission nor about Parliament. A major German-based car manufacturer had carried out trials on a new model, which had reportedly overturned during testing. What did the manufacturer do? It re-designed the car and restored customer confidence.
If the Commission had been this same manufacturer, it would have said: "let us first carry out an internal investigation to establish whether the car actually existed and whether or not there were any moose in the area at the time' . Years later - and by this time the company's shares would have fallen through the floor - we would probably have received a report stating that, while there were moose around, it could not be said with any certainty that a moose had personally been involved in the car overturning. In the meantime, the Commission would probably have improved the car anyway, but would have said nothing to anyone about this.
On a more serious note, much of what we are debating today has been discussed before on numerous occasions. Almost everything which the rapporteur, Mr Elles, writes in his report, and which I can support on behalf of my group - in other words, all parts of the report -, are points which we have often expressed. The question of why we are now postponing the discharge is an obvious one, since much of what is addressed there could well have been said at any time during the past 12 months. Many of the new issues involved may well have been present a year ago in a different form. We could just as easily have got together and said "discharge with critical comments or postponement of discharge' . The difference is a matter of degree.
What does this reveal? It reveals a loss in confidence. Not only a loss in confidence between a few Members of the Committee on Budgetary Control and the Commission. We possibly still have much more confidence in you than others do. But it reveals a loss in confidence in European institutions - and not only in this House but with the public at large. This is a major problem. I do not think that we can solve it by postponing the discharge, but perhaps we can use this to illustrate what is wrong.
Reports will be appearing this week in the media, or may already have appeared, on the subject of Europe - and not on the discharge or on the granting or postponement of the discharge. These European themes include enlargement, monetary union and everything connected with the concept of Agenda 2000. If we want to achieve all these things - and we really want to - then the face of Europe will be dramatically changed in the years to come. We want this change - and here I am speaking both to the Council and to the Commission. We want this change and we want to be involved in bringing it about. But it can only function if the citizens of Europe put their trust in the Union and its institutions: if they feel they are based on clarity and transparency, that there is democratic accountability and that Parliament is not just there to make comments now and again, but is in real dialogue with the Commission - which by this means and this means alone is subject to democratic accountability.
This is the fundamental problem and I believe that it is the reason for postponing the discharge, in order to make it clear that improvements have to be made - and not only in our personal relations, for I do not think that the situation here is as bad as all that, but rather in terms of the external impact involved. I would like to illustrate this by means of an example, since this has already been touched on by almost every other speaker in one form or another.
Madam President-in-Office of the Council, I address my remarks specifically to you. The criticism which has been made of the computerization of the transit system is not to do with the fact that it is a very difficult subject, or that it is a complex process which has lasted longer than was foreseen. We all know that this sort of thing can happen at any time. No, Madam President-inOffice, ladies and gentlemen of the Commission, we are talking about something quite different. The call for computerization was the central demand of the first Committee of Inquiry set up by this Parliament. The Commission's undertaking to do this and to make this the central issue has contributed significantly to the fact that in our final report our dealings with the Commission were actually quite harmonious and resulted in a well-balanced report with well-balanced demands, rather than simply succumbing to directing criticism at the Commission. You met us half-way and you proposed a plan as to how to proceed further.
We know that the unexpected can always happen. But why did you fail to inform us? You drew up a timetable and you then confirmed it at a time when you already knew that it could not be met. That is where the mistrust lies. You informed us that there was to be a delay, but you told us too little, too late and only after repeated inquiry, and I would like to know why. Hence the misgivings on our part. It was not that nothing could have happened to delay such a complex project. We can well appreciate that. In spite of everything, we still live in the real world and know that things can go wrong, that problems can arise and that sometimes it is not possible to keep to schedule. But the point I am making is the fact that you again failed to keep us informed; that is where the confidence building comes in. This is the key point. And for that reason this issue perhaps affected us much more than any of the others.
Then there is the integrated control system. How often have we discussed this subject? Deadlines were set and then extended and all the time we were told "we are on the way, we will have an impact on the Member States, we will get results' . We are quite ready to believe this, but I want to know why are we still standing here making the same demands as before - only this time things are worse. The situation itself is not worse - what is worse is the fact that we are not going to believe what you tell us. This is indeed a dramatic turn of events.
A final point, which Mr Elles did not mention, is one which was introduced through amendments tabled by Mr Bourlanges. This concerns staff policy. Here too it can be said that much of what has been criticized in other points, such as the implementation of the programmes and so on, is still connected with the fact that the Commission tells us that we do not have enough staff, that we have bottlenecks and so on. We accept that. But at some point there has to be a plan on the table, there must be transparency. When we are told that there are still efficiency reserves, that restructuring could be introduced, then we have to know how big these reserves are, when they are to be mobilized and how. If the Commission really believes that we cannot enter the new millennium with many more Member States and an increasing number of duties to perform, since the reserves must run out sooner or later, then it must tell us this and demonstrate it in a plausible manner. It simply will not do for the Commission to say, when it comes to each and every little programme, that we have five people missing here, three people missing there and maybe even twenty people missing somewhere else. This is why we engaged some company or other to sort out the problem. Later, years later - as was always the case when we put our minds to it - this company tells us "that really was the reason, but we are on the right road' . Yes, I really do think that we are on the right road, but we should be doing more than just showing that we are on the right road, we should be doing it in such a way that people can believe us.
I shall say one more thing and this will be my final word on the subject. The European Union has an institution which is responsible for, and which can influence, the people's trust in the Commission - and that institution is the European Parliament. If you fail to convince us, or if you do not win or regain our trust, then no-one in this European Union will trust you in the future, for you yourselves cannot be voted in or out of office. We are the middle-men, we are the democratically elected body. We need a strong Commission for the future and we need a strong Parliament too. But this Parliament needs a Commission which it can work with and to which it can say "Yes, we can confirm that and give it our full and unreserved support' .

Theato
Madam President, in preparing the discharge to be given to the Commission in respect of the 1996 financial year, we had a pleasing new experience. For the first time the Council complied with a request which Parliament had been making for many years by submitting in good time its position on the discharge, with the result that a detailed debate could be held in the company of the President-in-Office of the Council prior to the vote being taken in the Committee on Budgetary Control. For this we should like to express our thanks to Council Minister Liddell.
As far as the actual discharge for 1996 itself is concerned, things seem less than promising. In the excellent report which was adopted unanimously in the Committee on Budgetary Control, and for which I would like to offer my sincere congratulations to the rapporteur, Mr Elles, a proposal is made to postpone the discharge and, I believe, justly so. On the basis of the report submitted by the Court of Auditors, for which we again express our thanks to the President, Professor Friedman, who is present here today, and to all members of the Court, and on the basis of in-depth information and discussions with the Court and with the Commission, the rapporteur lists five important reasons which justify postponing the discharge. Then we also have the negative findings of the statement of assurance, which the Court of Auditors delivered particularly in respect of the Structural Funds, while its assessment of the agricultural sector was somewhat more encouraging.
There is still a period of grace for assessing the DAS, but once the Amsterdam Treaty has been ratified, Parliament is obliged to incorporate its results fully into the discharge. I fully agree with the comments made here by Mr Wynn, that our various institutions should first discuss how we should handle the DAS in future, how this is to be set up and how this is to be used. As far as I know we have never before had such a large number of grounds for postponement. Does this prove that the deficiencies in implementing the budget are on the increase? What it does prove, however, is that Parliament in its supervisory role condemns these deficiencies and insists that they be eradicated. If the Commission fails to comply with our demands before the September 1998 deadline, then the refusal to give discharge could ultimately remain in place, and this would be followed by a vote of noconfidence and the subsequent dismissal of the Commission.
But we should not make threats. The rapporteur is quite specific about this and I agree with him. Our approach is, on the contrary, a constructive one. By highlighting the weaknesses and by urging that these be effectively overcome, we are in fact contributing to the efficient and rational use of budgetary funds and are helping to build public confidence in Europe and in its institutions.
If we examine the individual points of criticism contained in the present resolution, then it becomes clear that the present Commission can no longer plead that these deficiencies were the fault of its predecessors. It has been in office long enough to have brought in the necessary improvements. This applies equally to the transit procedure, where little progress has been made towards the introduction of computerization - though the Commission itself considered this a priority matter - and to the elimination of mismanagement and fraud, as attested by the deficient administration of the PHARE, TACIS and MED programmes. I will say nothing here about events in the tourism sector. The grievance often expressed concerning the failure to carry through the integrated control system for agricultural spending is in this respect just as significant as the inefficiency in promoting SMEs.
As far as UCLAF is concerned, I am pleased to see that what is being said is very much in keeping with what Parliament has been aiming at for many years. I freely admit that the Commission has been making efforts to move towards our demands, especially in recent months, and I agree with Mrs Gradin, with you Mr Liikanen and with Mr van den Broek, that we should gradually reduce our catalogue of complaints. But this must be done by September, and so I would ask that you give us clear-cut answers to clearcut questions. This is also something which applies to your officials. Long-winded explanations in unintelligible language obscure more than they clarify.
In conclusion, let me offer the Commission some advice: do not confuse Mr Elles' statement that "the auditor is a watchdog not a bloodhound' with the saying "his bark is worse than his bite' . In closing, allow me to express my thanks and recognition to the rapporteurs, Mr Wynn, Mr Blak and Mr Kellett-Bowman. They have done an excellent job and their reports have been unanimously adopted by the Committee on Budgetary Control. I recommend this to the House.

Giansily
Madam President, ladies and gentlemen, in this very special context of the serious problems raised by the discharge procedure for the 1996 budget, we are faced with a problem which is far from the routine exercise that we have so often encountered in the past, and now have before us a very substantial political examination of the situation of the European Union. Indeed, this is a time when the single currency is to be introduced, a time when negotiations which will lead to an unprecedented enlargement of Europe are beginning and a time when the Union, if it is to obtain the commitment of the citizens it needs, more than ever requires transparency. Despite all this, we see, when looking at the allocations of the 1996 budget, evermore widespread fraud and corruption, along with the shortcomings of the Commission, which to date has given the very unfortunate impression of being quite unable to track down and control fraud. The Commission is responsible to the European citizens for the proper use of funds. This responsibility, as it appears, has not been shouldered. This is the third consecutive time that the Court of Auditors has refused to give overall positive assurances with regard to the legality and regularity of the underlying payment operations. However, at the time of its 1995 investiture, the European Commission announced rigorous action to improve financial management, particularly within its own services.
I do not here intend to stand as an accuser of the Commission, nor take it to trial, but to remind all institutions of the demand for transparency and coherence, which we must commit to in front of the European citizens. This involves the credibility of Europe and the future of its institutions, as well as the success of the major projects now underway. It also involves the hope which will either fortify or desert the younger generation.
The extent of the irregularities and the fraud in the tourism sector, and the laissez-faire attitude of the Commission, which has piled up dilatory manoeuverings to delay the communication of the information demanded by Parliament, is an example neither of transparency, nor of healthy management. When faced with the enormous failures of the Community transit regime, which have been brought to light by the Parliamentary committee of inquiry and its stubborn hard work, when we see tens of billions of ECUs vanish while the Community transit regime has made the fortune of fraudsters of all kinds, was it not a legitimate expectation of the Commission that it should show a renewed energy and determination to act with greater speed in immediately considering the recommendation of that committee of inquiry? Unfortunately, to date, no in-depth reform of the Community transit regime has been implemented by the Commission.
When faced with ever increasing corruption, which has now reached out into the very services of some institutions, why has the Commission, as indeed it has been asked to do by the Council, not drafted the statutes for a UCLAF interinstitutional mission, so ensuring an extension of the key competency to intervene. Under these conditions, what could our rapporteur Mr Elles do, except to defer discharge to give the Commission time to act? It is now down to the Commission to take full measure of what is really at stake, and to fully shoulder the burden of its responsibilities.

Mulder
Madam President, the question of how seriously the European Commission is taking this Parliament is central to this debate to our group. This is particularly relevant when we are talking about the Wynn report on the follow-up to the 1995 discharge, and the Elles report on the 1996 discharge. It has already been said by previous speakers, and I agree that the Commission should take this Parliament very seriously. This is good for public opinion, and it might also be good for the Commission itself.
I will just say a brief word about the Wynn report. He was right; I will discuss swine fever. What is the current system? If there is an outbreak of swine fever somewhere in Europe, the European Union will pay 50 % to 70 %. The remainder has to be found from the national Treasury. Different countries have different systems. In some countries the farmers are wholly responsible, in others the government pays. My question to the Commission is: is this not a clear case of unfair competition? Should something not be done about it? Is it not an indirect state subsidy when the government pays for everything?
My second question is: should the system not be judged on risk? The interested parties should make a bigger contribution when they might pose a high risk by the system they use. My group can largely endorse the Elles report. It is necessary, particularly in view of Agenda 2000, that the integrated monitoring system for income support is perfected. If we are to extend this system, it has to work well. My group will therefore vote in favour of the Elles report. We hope that, before 15 September this year, the Commission will have presented sufficient arguments to convince Parliament that it should grant discharge after all.

Miranda
Madam President, I would like to begin by stating that I fully agree with Mr Elles' suggestion that the discharge should be postponed on account of the errors and omissions reported by the Commission in the administration of Community funds. This is more particularly evident in the light of the unacceptable attitude adopted by the Commission in failing to furnish in due time the information required by Parliament to analyse these matters and issue an opinion, as appropriate under such circumstances; in particular, in situations where such accusations of corruption and irregularities exist, as has occurred in the tourism sector. I mention tourism here because one of the Commissioners responsible for this sector was Portuguese, which prompts me to be even more stringent in this regard. This is a political signal, an extremely important signal, which the Commission should perceive as such, so that the situation may be improved in the future.
As rapporteur for other institutions, I would like to end by saying that I consider that the same rigour should be observed here. I consider that the discharge to be given to the other institutions cannot be viewed in isolation from the general discharge that we are now discussing. Moreover, I also consider it appropriate that due account should here be given to the opinion issued by the Council with regard to the matter of the Economic and Social Committee; it is appropriate that that opinion should be taken into account in the general discharge to be given to the Commission.

Müller
Madam President, Mr Liikanen, ladies and gentlemen, at the end of December 1995 the budgetary procedure made substantial funds available for reconstruction in the former Yugoslavia. Since then I and some of my colleagues, and in particular Mr Giansily, have been looking into why the Commission is finding it so difficult to implement these funds effectively and quickly - after all they are supposed to constitute an immediate aid to reconstruction - and to get them to where they are needed.
My advice, based on what we are doing in the discharge procedure, is as follows: continue to appeal to the Commission to do better, to create a better legal basis, to listen less to the Council and not to be blackmailed by it - for the Council too has played its part in events here. For a long time this approach failed to have any effect until we brought some real pressure to bear - and this was in the form of the reserve which we provided under the last budget procedure. This year some ECU 30 million will not be allocated for Bosnia unless the situation noticeably improves through the summer. We need a proper legal basis for implementing all budget lines thoroughly, quickly and effectively, that is to say we require thorough, effective and well-trained personnel to be present on the spot and, most importantly, we need a decentralized decision-making process - and this is something which is still clearly giving the Commission considerable cause for concern.
We have been reliably informed by the delegation out there that the decision-making processes operated from Brussels, where no-one knows the real situation on the ground and where files are just moved from one desk to another, cannot cope with the task in hand, and that people there cannot reconstruct their parliament or their schools because of some blockage or other at the Brussels end. This situation simply cannot be allowed to continue. The pressure brought to bear by the reserve has meant that new proposals are again being submitted, and that is why the postponement of the discharge is so important. I have learned a lesson from all this, namely that the Commission ultimately responds to pressure
The Commission has often said "yes, we too have read the report from the Court of Auditors and now everything is better' . This time we really want to be convinced that the Commission has learned something, that it is now prepared to improve its own management structures and that it is ready to make amends for the political damage inflicted on us by the Bosnian affair. The question which arises is not just whether taxpayers' money is being used to good effect, but as far as Bosnia is concerned, centres on the public image being presented by the European Union. Why are the Americans better at these things? They are not better people, after all. Nor are their officials any better or worse than our own. But they do have a clear strategic notion of what is important and they have effective machinery. When it comes to Bosnia, we could do worse than learn from the Americans.
I would ask the Commission, and in this case Mr Liikanen, urgently to take note of the fact that Bosnia is not the only problem. My belief is that the Commission also has a problem with DG IA. We naturally discharge the Commission as a collective body, but as this collective body is able to take part in today's debate, it must be capable of amending its internal structures in such a way that when something nasty occurs in a certain area, then there is a mechanism for putting this right internally. I am sure that Mr Liikanen and Mr Santer will make good use of the time between now and 15 September to focus on this matter. Parliament will then be in a position to deal with you in quite a different way.

Dell'Alba
Madam President, Commissioner, ladies and gentlemen, I too support and agree with what has been said so far. It is a somewhat difficult exercise for Parliament to have to say how the taxpayers' money, the public money, the money we are called upon to use properly - with the European Parliament being first in line to do so - is the subject of this type of application, which is certainly not inspired by any criteria of healthy financial management, which the Treaty lays down as an obligation. I am referring to one section in particular, that of foreign measures, in the context of which the image of the Union should be irreproachable and something of a "buttonhole' with regard to third countries.
However, apart from the emergency humanitarian aid distributed by ECHO, it seems to me that, for all the other items of expenditure, what is intolerable is not just the accumulated delays but also, unfortunately, the discrepancies in every budget heading. Every one of us has direct experience of fair, objective and irreproachable complaints made by operators, by NGOs or by other bodies who work in the field and who have to wait 18-24 months for payment, after an undertaking has been assumed and signed by the Commission. These things are beyond any logic and understanding of our Members. Many of us on the Committee on Budgets fail to understand, for example, the reason why certain budget lines are so late: one which comes to mind is that ECU 150 million of late payments have accumulated over six years. These figures cannot fail to lead Parliament to take appropriate measures.
I become concerned when I hear people talking about initiatives in the personnel policy aimed at scorning in any way the European civil service with proposals such as that of limiting senior jobs to five years, plus five non-renewable years.
The basic problem, Commissioner Liikanen, should be treated with an overall approach, which should, first and foremost, make the point on what we want as a personnel policy and as a European civil service and what this should be. This European public function should be assessed, reforming it where it is lacking, but also praising what was always, at least until a few years ago, a task that was taken on with a spirit of sacrifice and service. However, although the aim is to renationalize everything, it is clear that the results in the field can only depend on what is expected of the European public function.

Fabre-Aubrespy
Mr President, for the third time, the Court of Auditors has refused to give an overall positive assurance on the legality and regularity of payments made by the Commission. Hence our rapporteur's statement that, if faced with a similar verdict from an auditor, the members of the board of a multinational company would probably have to immediately resign.
This time, unlike in 1994/1995, the Committee on Budgetary Control proposes that we consider that the trust laid upon the Commission by the Parliament no longer be granted. The Commission has now been at work for three years; as soon as it came into office, it announced its determination to establish rigorous action to improve financial management. It now no longer deserves indulgence.
Speaking for my group, I am glad to see increasing concern on the part of the members of the Committee on Budgetary Control with regard to the situation of the Community finances, which is more than worrying. I approve the reasons set out in this report, arguing for the postponement of discharge. How can we do otherwise, if we remember the two resolutions adopted by this House, the first relating to the MED programme - which had emphasized the serious irregularities committed by the Commission - and the second, much more recently, relating to allegations of fraud and irregularities in the tourism sector?
I therefore hope - like many speakers - that the firmness of the rapporteur will not go unnoticed, and that if the Commission fails to give a concrete response to the demands set out in the resolution, a vote of no confidence will effectively be passed, so that our good intentions are not short-lived. This should prove that sweet words from the Commission are not enough to cajole the majority of our Parliament into giving it a discharge. The watchdogs mentioned by Mr Elles in his report - and I note he has already left - need to be more like bloodhounds than like poodles. If not, the taxpayers in the Member States would simply continue to be taken for a ride.
I conclude, Mr President - your predecessor was only too happy to give extra time to other speakers - by saying that with regard to the Wynn report, let us, please, spare the EDF, as this is the only body which has received a positive statement on the part of the Commission. It is not in the budget. It is under the control of the Member States. Let it remain there.

Tappin
Mr President, I would like to address my remarks primarily to Mr Kellett-Bowman's report on the satellite agencies.
This is a momentous report because it is the end of the first tranche of reports on the two older agencies, Dublin and Thessaloniki. But it also sets out in the appendix the principles which we will move to in the new discharge procedure following the KellettBowman report which Parliament has adopted - and I hope the Council will accept - for discharge for the newer agencies which have been created. This will give Parliament not only power over the budget, but power over control of expenditure once it has been allocated to the separate agencies.
As Mr Kellett-Bowman points out in that report, a single report is a wonderful idea; themes can be developed across the agencies and horizontal issues can be compared between the agencies themselves. We can develop themes and get a good control over the agencies in future. Also, we can look at each agency individually. That is something to be welcomed.
I also welcome the third point made in Mr Kellett-Bowman's report, that there will be an input from the substantive committees themselves, because they are best placed to evaluate the work of the agencies as it pertains to their committee.
Turning briefly to the agencies in the report, taking Dublin first of all, I fully support what Mr Kellett-Bowman has said on this report. I am pleased at the efforts that have been made by Dublin and Bilbao to limit duplication and minimize conflict between the agency in Dublin and the one in Bilbao. That has not been easy. The two directors are to be complimented on that. Mr KellettBowman makes reference to a memorandum of understanding to be signed by the two directors. I hope, too, that the Committee on Budgets and the Committee on Budgetary Control can have a copy of that memorandum of understanding, as well as the Committee on Employment and Social Affairs. It is important that we have a working document to work on in future when it comes to budgetary matters.
One issue I wish to take up on the Dublin question is one which is not shown on the Dublin budget accounts: the amount of money that has not been accrued due to exchange rate losses. I raise this point in working Document No 4 for the Budget Committee and again draw this to your attention, particularly because Dublin has lost some ECU 1 million in exchange rate losses in the year 1996. Until there is a single currency, with all Member States which host agencies participating, the problem of exchange rate fluctuations will be a real one. Over the next couple of years it may well be even more acute for agencies in those countries which remain outside the first wave of the single currency. I would argue strongly for a mechanism to correct both positive and negative effects of exchange rate fluctuations. After all, if we vote a budget for an agency, we should try to ensure that the agency gets the budget we voted and does not incur losses for reasons outside its control.
On Thessaloniki, I am delighted at the progress that has been made on staffing problems. Commissioner Liikanen is to be praised for the work he has done to achieve this.
Another point I want to take up is the proposal regarding the building. This is now seven months behind schedule. As you know, Parliament forced this issue by putting a payment into reserve. This procedure shows how we can have an effect and get a building started when we withhold the money. If that point needed stressing, the signing of an agreement by Alicante - the trademarks agency - with the Spanish Government for a ECU 24 million building without proper control or consultation with Parliament's Budget Committee underlines this question. This is something to be followed.
I would therefore like to add my voice to the recommendation and add a request for the Commission to report back to us on proposals for safeguards to be applied when any building question arises.

Bourlanges
Mr President, I have three minutes and three comments: transit, personnel, EDF.
There is nothing more to be said about transit. You have acted, the information systems are behind schedule, and you know it.
I would like to draw your attention to a specific fact, which is that once we have improved the situation in the transit field, we shall be seeing classic forms of contraband developing. Here, we will be confronted with the inadequacies of our overall customs systems, which are lack of information, lack of integration, lack of homogeneity, and also sometimes, lack of motivation.
Here, I am not saying that Community institutions and Member States are lagging behind, but that we should really substantially improve our control of transit procedures, at a time when criminals are returning to more traditional forms of crime, which we may be less efficient at combating.
The second comment concerns personnel. Let me go into a little more detail - and Mrs Wenheuer mentioned this - on an idea which goes against the flow, namely that while of course the personnel resources made available to the institutions and in particular to the Commission are insufficient, at the same time the number of missions is increasing, the competencies of the European Union are extending and the number of Member States is increasing.
We are managing a European Union which will very soon contain some five hundred million inhabitants, with horizontal operating personnel in the Directorates-General of around ten thousand people. It's pretty laughable really. And how do you react? With timidity. You are considering decentralization, but that will have its own limits, due to what I would discreetly call the growing heterogeneousness of national administrative systems. You are considering privatization, delegating to third parties. In principle, we are not against this, but we have the impression, like the Court, that it is carried out on an excessive basis and without many precautions. It is not acceptable that some of the decisions in the field of the orientation and distribution of funds should be entrusted to third parties. And finally, you are envisaging Eurodeployment. We are waiting for you to show us some evidence in this field, but we can see that there are limits.
My third comment involves the EDF. The rapporteur, Mr Wynn, is right to propose the discharge, even though we are extremely dissatisfied with the conclusions of Amsterdam. The purpose of the discharge is not to be the Court of Appeal of the treaty, even if the European Council and the heads of states who signed the Amsterdam Treaty have been remarkably unambitious.
But we are very concerned by the problem of the legal bases. On this point, we are being extremely indulgent towards you, but we will not let that happen again. If you do not quickly find the appropriate legal solutions to correct the break in continuity from one EDF to the next, we can hardly go on being forgiving. An evil which has not been condemned, an evil which is tolerated cannot be accepted by this Parliament!
I would like to thank you overall. I am evidently in agreement with Mr Elles' report and with the other reports.

Virrankoski
Mr President, I would like to thank the rapporteurs of all the reports, and in particular Mr Elles for his outspoken and unbiassed report. The postponement of discharge is a serious measure. There must be sufficient grounds for it, as, otherwise, Parliament will be guilty of unwarranted action.
I believe Mr Elles has highlighted some serious issues. The weaknesses in the customs transit system are a big problem, as they cause losses that obviously run into millions. It is worth noting that customs that have remained unsupervised are doing harm to Member States because they have to be economically supported out of the nation's gross domestic revenue. That is why developing a computerized system would be of great advantage to Member States, but the Commission has to take responsibility for it.
The administration of EU programmes is difficult because the geographical references are enormous. For that reason it makes very large mental and moral demands on EU officials. That is why the least we can ask is that EU internal administration should be in good shape; then we have to turn our attention to the administration of programmes.

Seppänen
Mr President, the European Parliament, in my opinion, all too often criticizes the Commission for its lack of supervision and all too rarely criticizes Member States for its sheer negligence. Fraud is very possible when the most important task for member countries seems to be to minimize its net costs, while maximizing its income. If the EU is paying out, it is as if there were endless funds.
The European Parliament rapporteurs, in my opinion, give too much weight to negligence on the part of the Commission and understate their own countries' responsibility for surveillance. Furthermore, relations between Parliament and the Court of Auditors seem very bureaucratic. They appear to be living in a different age. Neither seems to be living in reality.
Parliament has systematically argued for the European Development Fund to be included in the general budget, but to no avail. This being the case, discharge from the use of resources is now only a formality, rather than Parliament scrutinizing the appropriate use of funds in connection with acceptance of the general budget.
As there is no real alternative to discharge we can only give the Commission our blessing. And we could endorse that with a rubber stamp, hopefully without arousing Parliament's whole bureaucratic machine.

Holm
Mr President, my party colleague has already discussed the group's argument in favour of postponing the discharge for 1996. I shall not therefore repeat those arguments, but simply stress that the Commission should get a yellow card for the way it deals with some of the issues which are of concern to us in Parliament. For me personally this applies above all to the question of the lack of democratic control for measures against fraud involving EU funds, which is an important problem to get to grips with. I know that the Commission is working towards this, and that we in Parliament have given a number of opinions on it.
As regards Mr Wynn's report on the granting of a discharge in relation to the European Development Fund for the 1996 financial year, the Green group entirely agrees with Mr Wynn that the existing procedure is strange, namely that the European Parliament should grant a discharge without being able to have any influence over the budget. This report points out, among other things, how remarkable it is that funds from the seventh European Development Fund have been used without any legal base to finance measures which come under the Fourth Lomé Convention. It goes without saying that these funds should be repaid as soon as possible.
In the Kellet-Bowman report on some of the decentralized bodies there are, in spite of everything, small problems both in Dublin and Thessaloniki which we must tackle, including financial control in Dublin and the buildings in Thessaloniki.

Tomlinson
Mr President, I congratulate the Council for the serious attention they have shown this year towards discharge. We have had evidence of a political discussion at Ecofin, of a ministerial presentation in the Committee on Budgetary Control and a ministerial presentation here in plenary. The Council is deserving of our thanks and our congratulations for those three things. It has made the discharge debate more serious.
I would like to accompany my congratulations to the Council with a warning to future presidencies about the dangers and the consequences of recidivism. If they go back to their former ways Parliament will be as irate at a future presidency as it is warm towards the present one. So, my congratulations!
My second point is in relation to transit. Here I would take issue slightly with my good friend Commissioner Liikanen. In his intervention he spoke about the Council changing its approach and dealing with five Member States as if somehow that was an act of planning. It is not. It is a manifestation of failure. It was not a conscious decision to change approach. It was a failure of the contract we had for computerization. While I am prepared to congratulate the Director-General and staff of DG XXI, I do not think we can have it as a matter of record that somehow everything was going along quite smoothly and we decided to change our approach. The approach has changed because it has failed and the transit reservations we have are extremely serious, as shown in paragraph 4 of Mr Elles' excellent report and paragraph 15 of the explanatory memorandum.
There has, indeed, been progress. But the scale of the progress, the loss of revenue and the impending enlargement of the Community mean that progress is insufficient and not backed by sufficient urgency.
Thirdly I turn to the statement of assurance. In the debate a number of references have been made to the statement of assurance. There is a feeling that some Members are beginning to doubt its utility because it always produces the same result. I hope that we will continue to value the statement of assurance. It is an extremely useful tool that should not in any way be denigrated because it leads to a bad result. Obviously we have to be able to look forward to an improvement in the results. But if there is an agreement about the statistical base on which the statement of assurance is undertaken, we have to live with the results.
My fourth point is in relation to our procedures. I would like to say yet again that we have a fundamental need to examine discharge procedures. It is my opinion that we spend far too long in the contradictoire procedure between the Court of Auditors and the Commission. It means that there is too much time wasted, too much long-winded dialogue, too much wasteful use of audit resources so that by the time we come to a discharge procedure, we are dealing with out-of-date information.
I hope that all the institutions will make efforts to obtain a discharge closer to the events to which it relates. That means reviewing the length of time we spend on the contradictoire procedure. With those few comments, I support the Elles report and once again congratulate the Presidency for the work it has done in politicizing this important process.

President
The President-in-Office of the Council, Mrs Liddell, has to leave us at this point, owing to a meeting, a trilateral discussion on marketable securities. Thank you, Mrs Liddell, for attending this sitting.

Fabra Vallés
Mr President, one of the main reasons Mr Elles is today presenting us with a motion for a resolution about postponing the 1996 discharge has to do with the MED programmes, and from what we are hearing, not just the MED programmes, either. And it is in that context - of the MED programmes - where the misunderstandings arise.
The first misunderstanding is that the European Parliament, or more specifically the Committee on Budgetary Control, is opposed to decentralized cooperation. The second misunderstanding is that the European Parliament has blocked the relaunching of such cooperation. But I want to stress that neither of those things is true. In fact, the European Parliament gave the green light for the relaunching of decentralized cooperation over eight months ago, with its resolution of 17 July 1997. Furthermore, that green light will be confirmed when Parliament votes on the resolution which will conclude the present debate.
How, for example, could Parliament be opposed to cooperation between universities in the Member States and the associated countries of the Mediterranean? On the contrary, the European Parliament is not opposed to it, but there was a serious management problem which was mainly located in Brussels, and was discovered by the Court of Auditors. And it was the European Commission which stopped the programmes.
Once the management problem has been resolved the programmes can of course be relaunched. But - and it is a big but - we need to draw conclusions from the lessons of the past: the European Commission needs to learn from this affair.
The first lesson is that the European Commission needs to take a more significant role in the management of these decentralized programmes. The second lesson is that those operators who committed themselves to cofunding but failed to deliver should not be allowed to participate in the new programmes. Thirdly, the sums identified as recoverable must be repaid. Fourthly, the financial losses, and also the serious loss of confidence, resulting from this affair mean that disciplinary steps need to be taken, because there is no doubt that there has been serious negligence. And the fifth lesson is that the European Commission should send all the details of this affair to the judicial authorities in Belgium, France and Italy so that they can examine any possible legal implications.
Before I finish, I want to make it clear that I have no doubts about the European Commission's good intentions for the relaunch of the MED programmes but, just as good intentions are not enough to pass an exam, come back in September and show us that you have learned the lessons I have just explained to you - and do not look at me like that! The Council said exactly the same thing, although it then went on to draw different conclusions.

Dankert
Mr President, in the resolution on postponement of discharge hardly any mention is made of the Structural Funds, except in relation to small and medium enterprises. I think there was no justification for this, as the problems in 1995 were exactly the same as those in 1996, and we have had SEM 2000 in the meantime, which means there will be some improvements. To my mind the new Commission proposals regarding Agenda 2000 comprise far-reaching improvements, even though the problems of combating fraud, the question of who the interest should be paid to, and how this should be calculated has not yet been sufficiently worked out in these proposals.
I would like to focus on another point, Mr President. People in this House speak regularly about the damaging situation related to the implementation of the recommendations on transit made by the Committee of Inquiry, and the damaging delay in computerization. I wanted to emphasize that. But on 25 March I came across a new point in a Dutch newspaper which is on the one hand very interesting, but on the other extremely alarming. Mr President, in the recommendation, we in the Committee of Inquiry worked on the assumption that transit is only able to function when customs function as one in Europe. That is not to say that it is one service, but that it functions as one. This newspaper report in fact concerned Spain; Mr President, I read that the Spanish authorities are going to hold the cigarette manufacturers responsible for the sale of illegal cigarettes. This is good news, but I think it will throw the entire system into confusion, because the Spanish authorities seem to be saying that the manufacturers are selling their cigarettes knowingly and despite warnings to known smugglers. Spanish customs are alleged to have registered these smugglers.
Mr President, this raises questions such as what is the legal situation? Because if the customs duties are not transferred, then there is the obligation to seek the guilty party, but the risk liability remains with the carrier. Mr President, will he be discharged of his liability, or are the fines for the manufacturers an addition to his liability? I think that in both cases we are dealing with a precedent within the European Union. In that context it would interesting to see whether, now we know that the Spanish customs have a blacklist, whether this blacklist has been brought to the notice of the Commission and of other customs services. That would make the operation a lot easier.
A third question which arises is why the manufacturers in America and England did not respond to the requests made by the Spanish authorities to suspend their deliveries to known smugglers. This kind of unilateral declaration might lead to a significant shift in trade traffic. That is why I see every reason to question the Commission about this. My final conclusion is that it is high time the Member States acknowledged that these kind of issues should be tackled jointly and in conjunction with the Commission. As soon as it comes to individual operations, the matter only gets worse than has already been established by the Committee of Inquiry.

Bardong
Mr President, ladies and gentlemen, the budget control mills grind slowly and still produce the same old bitter grain. We are now dealing with the draft budget for 1996. The Court of Auditors presented us with its report in 1997. We have spent the whole time debating this matter with some intensity. But instead of coming to our conclusions, we see ourselves compelled to request a postponement. Anyone watching our efforts from the outside would hardly be impressed by all this. Nevertheless, we hope that this postponement - and our committee decision was a unanimous one - will produce greater efficiency and bring more pressure to bear on the Commission. I am sure that something will be set in motion before September. However, this method can surely only be used once. I believe that the decisive pressure only materializes according to whether or not there are sufficient votes to refuse a discharge, whether this be today or at some unspecified time in the future. There are certainly plenty of grounds for this - one only has to think of the lack of trust, which many speakers have mentioned, and the negative findings of the statement of assurance.
On the other hand, the Commission is certainly not refusing to provide us with the necessary information. The Commission has reacted in a very constructive way to many of the comments which have been made, but this is not enough as far as we are concerned.
In recent years the debates have focused increasingly on the responsibility of the Member States, which account for some 80 % of EU spending and which are then responsible for controlling this expenditure. The Commission is only responsible for monitoring this control process. While this explains many a delay, it cannot serve as an excuse for everything. The Commission remains responsible for failing to reveal the negligence of others and for not proposing adequate changes.
The budgetary control procedure of the European Parliament is still more powerful than that operated by the national parliaments. We can only improve the effectiveness of our budgetary control system by making it absolutely clear who is actually responsible and perhaps by taking a brave decision once in a while.

Kjer Hansen
It saddens me that we have to have this debate on postponement of discharge at all. It saddens me because we would be better off expending our efforts on promoting the development of common policies rather than on cursing the Commission. But the reasons for postponing the discharge are numerous, as Mr Elles' excellent report so ably demonstrates. These are familiar difficulties and Parliament is simply forced to prevail upon the Commission to take action. On previous occasions I have made it clear that I find it embarrassing that joint funds are being managed as badly as they are. And it is scandalous that the Commission has not as yet succeeded in implementing the PHARE area programme more effectively to produce tangible and visible results in the destination countries.
But I would like to express my appreciation that we have now got a positive dialogue underway, and that the Commission is determined to take a number of measures designed to correct the failures and inadequacies found in the programme today. I would like to note in particular the Commission's announcement today to the effect that the proposals set out in the special report on PHARE will be implemented in 1999, concerning delegating the administration to the destination country itself. I look forward to hearing that on 1 January the administration of the PHARE programme will indeed have been transferred to a specific country. I would also like to know the name of the country concerned, and I strongly urge the Commission to ensure that, if any legal changes are necessary, the relevant motions will be tabled, so that we can ensure that all obstacles are cleared out of the way to allow us to implement true decentralization on 1 January 1999.

Bösch
Mr President, ladies and gentlemen, I wish to thank the rapporteur, Mr Elles, who has painstakingly come to the conclusion that we should not at present give discharge to the Commission in respect of the 1996 budget. It is also commendable that he should point out that if the Amsterdam Treaty were already in force, then we should have no other option but to refuse to give discharge to the Commission owing to the fact that the Court of Auditors was unable to provide a statement of assurance for the third time in succession.
The rapporteur is totally correct when he states that the approach which we have decided on is not at all abnormal, but rather constitutes a return to normality. Perhaps we have not handled things this way before at European level, but with this move we are also attempting to normalize the degree of cooperation and the responsibilities which exist within the Union and to make these more transparent.
It is perhaps indicative of the Commission's attitude to this postponement of the discharge that we hear that Commissioners' press officers are linking the intentions of this House with the forthcoming European elections. Ladies and gentlemen of the Commission, I believe that this opinion demonstrates a remoteness and an arrogance which the citizens of Europe call Brussels bureaucracy.
What Mr Elles concludes as justification for the postponement of the discharge is in itself nothing new. Given the treatment which the special reports from the Court of Auditors have received in this House, the Commission should have had enough time to sort out the deficiencies in the external affairs programmes, in the SME sector and in all the other areas which the rapporteur has mentioned today.
Something which I would also like to touch on here - and I regret that the highly creditable Mrs Liddell has just had to leave to attend a meeting - is the completely incomprehensible position of the Member States vis--vis the recommendation to give discharge to the Commission. This concerns Agenda 2000, where one hears that Member States are crossing off their net payment assessments with increasingly ridiculous calculations, saying they are still paying more than the others. Obviously these same Member States can find nothing wrong when money is paid out by the Commission and by a Commissioner in the agricultural sector, despite the fact that there is no basis for this, despite the fact that agreements between the 15 Member States are quite clearly not being kept by certain countries and despite the fact that all that is needed is for the Commission to put the brakes on and say: "that is quite enough, everybody. You will get no more money until you finally do what we originally agreed' .
The matter is so simple, yet we have been behaving as if we had to make changes to ten thousand regulations. We need people in the Commission who are prepared to show a little courage and to pursue policies which are in accordance with the wishes of EU taxpayers. We in the European Parliament have been scraping together money for SMEs - ECU 150 million this year, 150 million next year and so on - so that these small and medium-sized businesses can create job opportunities.
The Court of Auditors says that 80 % of the enterprises lucky enough to have been awarded funding are completely unaware of the fact. I consider this to be a policy which is quite simply out of touch with the interests not only of this House but also of the citizens of Europe. It is high time that this House revealed what is really going on.

Rack
Mr President, the course of this debate on giving discharge for the 1996 financial year has in my view demonstrated two different things. The first is the fact that the EU and its staff are better than their reputation suggests. In many respects the content of the various reports under discussion today has shown that a great deal of what Europe and the staff of the EU are doing is progressing smoothly. However, the reports have also shown that there are many weaknesses and deficiencies which we cannot ignore. I should now like briefly to say something about three of these issues.
Firstly, it is a scandal that the results of the Committee of Inquiry into the transit system are being implemented at such a snail's pace. There is some kind of paradox here. Computers are getting faster every day. Every six months a new generation comes on to the market and all the while the computerization of the whole system is proceeding ever more slowly.
Now to my second point. In recent days and weeks we in this House have been engaged in an intensive debate on the completely inadequate use of resources in central and eastern Europe, particularly in respect of the PHARE, TACIS and MED programmes. With negotiations on new membership barely started, this completely inadequate deployment of funds hardly augurs well for the future.
Finally to my third point. We have established on numerous occasions, particularly in connection with the BSE Committee of Inquiry, that we in the European Union - and particularly at Commission level - need a disciplinary code for our officials which will put an end to the Commission claiming with fascinating regularity that its hands are tied by the existing disciplinary code and that therefore there is no point in its even trying. We have received an undertaking from the President of the Commission, no less, that this Commission will be presenting a new disciplinary code. We look forward to it. The postponement of the discharge must be taken seriously. We do not want the situation in the autumn to be the same as it is now.

Sarlis
Mr President, first of all I must commend the rapporteur on his report. I agree with his recommendation to postpone the discharge, and I also agree with the reasons he gives in his report about why that should be done.
In this debate I will dwell on two points. The first is what the report refers to as lack of democratic responsibility on the Commission's part. What does that mean? Or if you will, what is Parliament worried about? Commissioner, ladies and gentlemen, the Committee on Budgetary Control cannot reach an opinion, whether positive or negative, about discharges because the Commission will not give us the figures we deem necessary and have formally requested from it, to enable us to form any opinion at all. The current regulation on the service conditions of Commission employees bans them from providing the European Parliament with figures without prior permission from the hierarchy. That largely explains the dearth of figures we get, because as you can understand, we cannot form opinions based on the paroles d'honneur of various Commissioners to the Committee on Budgetary Control, for example 'there has been no deception' or 'the matter was investigated but no figures are available' , etcetera. In my view, the issue ought to be tackled by adding something to the interinstitutional agreement between the three institutional bodies, which as we all know, happened in the case of the investigative committees. This Gordian knot must be cut, in other words a way must be found to provide the European Parliament with the figures it must have if it is to exempt or not discharge the Commission for its implementation of the budget.
A second point, one which I am repeating for the umpteenth time and which concerns the European Parliament, is that we ourselves ought as soon as possible to modify the way the Committee on Budgetary Control works. It is something I always stress, and we must hurry so that we can respond to present-day needs. All this, of course, is related to the issue of the UCLAF's autonomy, a body which has been successful so far. And the UCLAF cannot be autonomous if its employees continue to be bound by the employment conditions of the Commission's staff. If UCLAF is to monitor the Commission, then those who are to monitor the Commission cannot be Commission employees.

Liikanen
Mr President, thank you very much for this debate. I will comment on only two major areas of the expenditure which have been dealt with here. First, external programmes and then Structural Funds and DAS.
On the external programmes, I will very briefly mention that the Commission took a major decision in the autumn to create a common structure for all external programmes. This is now being implemented and we hope that it will be completed soon. It means that management of the PHARE, TACIS, MEDA and other programmes will come under one common structure where we hope to standardize all the procedures and public tenders and simplify the way we run the external programmes. There are too many different procedures and too many different types of contract. It is extremely difficult for our clients and also very difficult for us. If we have simple, transparent and standardized procedures it is much easier to control.
This common structure will be put in place this year and we will be able to keep the Committee on Budgetary Control informed of the process. Mrs Kjer Hansen referred to decentralization and deconcentration and I can say that the Commission agrees in principle. It is, of course, true that it is better to run the programmes close to the people who are concerned. This is something we must do to improve efficiency, but of course the balance between efficiency and control is a very delicate one. We must, therefore, decentralize and deconcentrate as quickly as possible and the recipient country and authority must be able to re-organize their working methods accordingly. I have discussed this a lot with my colleagues and in the case of PHARE it is clear that we can move forward fairly rapidly in some sectors, perhaps more rapidly than with whole countries.
As far as DAS and the Structural Funds are concerned it has been suggested that not much has happened. Perhaps I can briefly mention what has happened with the Structural Funds because we have been working very hard on this issue over the last few months. We got the first DAS in autumn 1995. It showed that there had been a high level of irregularities, especially in the field of Structural Funds. Irregularities, not fraud. It also said that most of these irregularities, perhaps 90 %, take place at the level of the final beneficiary. That was in autumn 1995.
In 1996 we established the group of personal representatives of the finance ministers of the Member States to clarify the situation. We cooperated with the Court of Auditors and asked their advice and there were two key areas. Firstly, the rules of eligibility were not clear in the existing regulation. There was no agreement on what was eligible and what was not. Secondly, financial regulations were not accepted as a principle. We therefore concentrated on these two issues and were able to conclude our extremely lengthy and arduous work in the space of one year, following which we accepted the eligibility sheets for all the Structural Funds and they entered into force on 1 January 1998. The whole process took about eighteen months.
The Commission has also said that the financial corrections will be applied from 1 January 1998 in order to clarify the uncertainties and ambiguities of the present regulation which dates from 1993. At the same time, of course, we have tried to see how we could improve the whole legal framework to avoid this kind of ambiguity in the future. We fed our experience of DAS into the preparatory work on reform of the Structural Funds. This reform, which was presented to you in various committees on 18 March, has taken into account a large number of the remarks by the Court of Auditors and our own findings. We must concentrate more on several objectives. We must cut down the number of initiatives: there will be only three. We must simplify procedures concerning commitments. That will be done. When a programme is accepted the tranches for the programming period will be accepted at the same time. We must also agree on how financial corrections are made. The new regulations are very clear. If a Member State identifies an irregularity, it can transfer the funds to another project; if it is the Court of Auditors or the Commission which identifies an irregularity, we will withdraw the funds.
The question of financing the regulation is extremely important and we hope that this presidency and future presidencies will work hard to get it accepted in time for it to enter into force on 1 January 2000. We have made a start on the extremely difficult task of financing spending on the Structural Funds in the long term, and I am very pleased to note the words of the presidency that it is a joint effort. There are tens of thousands of participants in the Community projects. Whatever we do in the Commission we cannot solve every single problem in the final beneficiary countries. We have our responsibilities but we must be able to carry them out together. I shall be pleased to come back to the Committee on Budgetary Control in the autumn. We have discussed with the President and the rapporteur the possibility of grouping these issues so that we could have perhaps a couple of meetings before the summer and finalize matters in the autumn. We are keeping an open and constructive mind.

President
The debate is closed.
The vote will take place tomorrow at 12.00 noon.

Criminal proceedings to protect the Union's financial interests
President
The next item is the report (A4-0082/98) by Mrs Theato, on behalf of the Committee on Budgetary Control, on criminal proceedings relating to the protection of the Union's financial interests.

Theato
Mr President, at the last part-session we first discussed the protection of the Union's financial interests in the report submitted by Mr Bontempi, and now today we are debating the very same subject by way of my report. This indicates how seriously Parliament is taking this particular theme. The matter at hand is the completely inadequate level of cooperation between the national judicial authorities and the criminal prosecution services in the fight against international crime, which is damaging the EU budget by way of fraud, corruption and money laundering.
As Europe continues to open up, both in terms of the internal market as well as in its relationship with non-EU countries, barriers are being dismantled for the benefit of the business sector. As Commissioner Gradin clearly indicated in her annual report on fraud prevention, well-organized lawbreakers often know how to use this situation for their own ends. Yet national legal limits to the right of search, and more particularly to the right of prosecution for such practices, continue to exist. Taxpayers cannot understand this. Consequently, this report by the Committee on Budgetary Control will attempt to demonstrate how we can gradually solve the dilemma posed by national limits to jurisdiction and by the different criminal law systems, using existing treaties in the first phase and then moving on possibly to amended treaties as part of a subsequent phase, without having to propose the technical details of such measures at present.
The first question which arises is this: which Member State has jurisdiction to deal with multinational offences against the EU budget? Is it the one which discovers the offence, is it the one in whose jurisdiction the arrest takes place, or is it the one whose nationality is held by the perpetrators of the crime? In addition to these conflicts of jurisdiction, cooperation in respect of international requests for judicial assistance faces a number of further obstacles, such as extradition by appeals with suspensive effect or by outmoded procedures, which are handled through diplomatic channels, the principle of double incrimination, difficulties arising from different criteria for the admissibility of evidence and also the criminal procedures involved and the ignorance of each other's systems. Practical proof that such difficulties exist has been provided by events in the tourism and transit sectors and in last April's hearing held by the Committee on Budgetary Control and the Committee on Civil Liberties and Internal Affairs.
What can be done? Intergovernmental agreements are not a solution and it is highly debatable whether the Convention on the protection of financial interests, or PFI for short, which dates back to 1995, will be ratified by July 1998 as required. The negotiations on judicial assistance agreements, which we are still debating this week, are proving extremely difficult. Should the EU not be playing a subsidiary role here? It already has a body, namely the Unit for the Coordination of Fraud Prevention, or UCLAF, which could act as a link between the national investigating authorities. It could collect relevant information in a central database - it already has a number of such databases - and then relay this data to national authorities as legal evidence. It could coordinate and support the work of the national investigating authorities and contribute to providing better training for lawyers in this sector.
To improve this kind of interface, we should be striving to make UCLAF independent of the Commission. Mr Bösch's report, which is to be presented shortly, will discuss this matter in greater detail. Let me just say at this point that we really require a new statutory regulation together with a clear interpretation of the legal immunity granted to EU officials. In the long term, however, these measures would not be sufficient to control the problem of fraud in the EU. The new Article 280 of the Treaty of Amsterdam is intended to promote cooperation between Member States and the Commission in the area of criminal prosecution. The right of codecision with the Council is transferred to Parliament here. The application of national criminal law remains unaffected by this, that is to say, it remains with the Member States.
If in a second phase we were to set up some sort of European judicial authority, as proposed by the Commission's "Corpus Juris' study, which refers to the establishment of a European public prosecutor, then this would constitute the final brick in the building of a European criminal justice system, which would be protected by treaty. To this effect it would be necessary to lay down uniform criminal laws for all Member States in respect of crimes affecting the Community. This European judicial authority would use information supplied by UCLAF and as the delegated European authority would give power of attorney to the appropriate national judicial authorities without the jurisdiction of the latter being in any way restricted or affected.
In order to tackle these problems, we call upon the Commission - and your participation would be most welcome, Mrs Gradin - to submit two things to this Parliament before July. The first is a response to the question of what measures the Commission is proposing in order to harmonize criminal law in respect of the misuse of Community funds, in the event that the PIF is not unanimously ratified, as requested, by July of this year; and the second is a study on the compatibility of the proposals contained in the "Corpus Juris' with the particularities of the national legal systems, together with proposals for its implementation. This should also include a clear definition of the term "European public prosecutor' , as used in the Corpus Juris study, so that this is compatible with the individual legal systems of the Member States in respect of their powers of investigation and prosecution, and here I am thinking particularly of English law.

Tomlinson
Mr President, I am rather concerned, and I am sorry I did not have a chance to raise it before Mrs Theato spoke, that a corrigendum has been published to the report of the Committee on Budgetary Control. The corrigendum affects the very issue which was the substance of the only significant argument in committee. It seeks to replace in paragraphs 7, 9 and 10 the words 'European public prosecutor' with "European judicial authority' . I have to say as somebody who has consistently opposed the use of the words that do appear in "Corpus Juris' , in English, "European public prosecutor' - and that was the whole substance of my intervention in committee - that I find it amazing that by corrigendum we have now got a major and fundamental amendment to the report. That is certainly what it is in English and I seek your guidance because I think that this is far too substantial an amendment to be done by way of corrigendum.

Theato
Yes, I would just like to explain that. I have the German text and in this version the term "public prosecutor' carries a certain meaning. There is nothing comparable at European level. This term is represented differently in each language. I have had approaches made from so many sides that I have resorted to the German text as it was submitted in committee. I am not responsible for the translation. Clearly, something has been created here which does not yet exist, which takes account of national circumstances, usage and traditions and indeed powers of authority. What we should really call it ultimately becomes the second question. I would therefore ask you not to attribute a particular meaning to this word as such, but rather to identify the underlying concept. I hope that Mrs Gradin will have the opportunity today to comment on this matter, for we are not seeking to interfere in national arrangements but rather are contemplating the setting-up of a new European institution.
Mr President, I should also like to draw your attention to another matter. I am speaking on a point of order. I do not know what the list of speakers looks like, but if for a third time we find that Mrs Gradin has to voice her opinion and that of the Commission while Members of this House are pouring into the Chamber, with all the noise that this entails, and with the vote soon to take place, then I say that this is simply unacceptable. I would therefore ask that you organize the sitting in such a way that Mrs Gradin has the full attention of this House and is not disturbed by noise of any kind. I hope that you will give this matter your attention.

President
Mrs Theato, if all speakers observed speaking time, we would not run this risk, but they have to observe it strictly. With regard to Mr Tomlinson, I have to say that the problem has to be examined. It is a report on an initiative, on which we are not pressed, for we are not in the legislative field, but I understand that the problem is a very, very delicate one.

Bösch
Mr President, We shall try to help you in this respect so that Mrs Gradin also has enough time at the end of the sitting. I believe that this conversation has now illustrated right from the start just where the problems lie in this respect. This report has also helped to focus our minds on a problem which has again been highlighted both by the conclusions of our Committee of Inquiry into the transit system and indeed by the whole episode of fraud at EU budget level. The problem is this: at the end of the day we cannot complete the internal market as long as we are working to 15 sets of national rules.
I believe that from a purely technical point of view we would be taking an important step if we were to distribute translations of the Corpus Juris study to the 15 Member States and national parliaments, so that opinions can be expressed in the various parliaments as to what can be practically achieved in this area. One hopes that the various comments expressed by the Members of this House would then also move the process forward. This is a programme on which we shall probably be working for some considerable time in partnership with the Commission and the Member States. With this in mind our group gives the report its general approval.

Rack
Mr President, words are obviously very important things and words can be used either to emphasize something or to conceal it. I would like to say something about the word "subsidiarity' . This is a word which gives many of us problems. In some respects it is difficult to pronounce, but it is clearly even more difficult to understand. If you look it up in the dictionary, the definitions given suggest that what is involved is the principle of self-responsibility, whereby those above should only be called in, or intervene, as a secondary consideration in the event that those below are incapable of handling the situation for themselves.
The dictionary will often also refer to various papal encyclicals for possible uses of the word. This is all very well, but it hardly suffices for our purpose. In a European context the word "subsidiarity' has a third meaning, and possibly an even more important one, in that it is constantly misused by those looking for a reason not to have to do something, or to postpone something indefinitely. This is exactly what is happening now in connection with the proposed European public prosecutor or judicial authority. I believe that we reached agreement on this matter in the discussions held by the Committee on Budgetary Control. We should therefore demonstrate here today in this House that we require better coordination between the national prosecution authorities in those areas involving the control, prevention and sanctioning of fraud affecting the financial interests of the Union.
In far too many areas we see, time and time again, that many Member States regard the improper use of EU funds, and EU funds alone, as a pardonable offence, and that even national prosecution authorities take a very long time to deal with these fraudulent offences by way of appropriate sanctions.
The report calls for a stronger UCLAF to be set up as a matter of urgency to tackle this problem and also demands the establishment of a new institution - call it what you will - and the name European public prosecutor perhaps gives the wrong impression here. In substance we need something which will ensure that the national prosecution authorities change their nonchalant attitude towards the abuse of the Union's financial interests, which they have displayed all too often. We need to achieve greater coordination so that this type of offence can be properly prosecuted and, if at all possible, removed from our midst.

Rosado Fernandes
Mr President, Commissioner, our course is clear; we all know how we should proceed in providing the Commission with the legal instruments and penal provisions to combat organized crime.
But the discussions I have held here on this subject over the years have always been inconclusive. Fraud is on the increase, and a friend has compared me to the Sophists who used a race between Achilles and a tortoise to prove that the goal is ever more distant. Fraud is becoming increasingly prevalent, to the extent that I am beginning to think that fraud has ceased to be a crime and has become instead an economic instrument for boosting competitiveness, used by Member States to protect their economies from each other. Why is it that monetary convergence - which requires sacrifices by so many states - can be implemented, while crime cannot be effectively combatted? There is no lack of proposals! We all know how to combat crime: by furnishing the legal instruments and by laying down criminal penalties to ensure that those who engage in organized crime do not go unpunished. Unless these measures are taken and while Parliament, through its Committee on Budgets, continues to vote against the proposal to spend money on scanners to physically ascertain what is going on at our former borders, then crime will certainly continue to increase and, like Mrs Theato, I will feel like a sort of "Don Quixote' and "Sancho Panza' tilting at the computerized windmills of crime which in fact spread crime and fraud throughout Europe.

Kjer Hansen
Mr President, I think Mrs Theato's report on criminal proceedings relating to the protection of the EU's financial interests constitutes a very worthy and significant contribution to the discussion of how to proceed in this area. In the debate on tourism, we expended a great deal of effort and a lot of time on the subject of transit, and these examples amply illustrate the crying need for results in this area. But this also demonstrates how difficult it is to make progress unless all the Member States show the political will to make some concrete decisions in this area with a view to putting in place the systems required for effective collaboration.
Mrs Theato is proposing some very necessary initiatives, but at the same time, I must say that the report is rather ambitious. It is ambitious considering how difficult it is to come to any decisions in this area, and here, of course, I am thinking of our good old problem of the convention to protect the financial interests of the EU not having been ratified. The fact that this has still not been ratified in some Member States does present a problem.
This is a serious area and an important one, and I would also like to illustrate this with a simple example - perhaps even a banal example in the wider context - but right now in Denmark we are debating the problem of the loss of many millions of kroner that Denmark incurs because fathers are avoiding their obligation to pay child support. They move to other countries, and it is painfully apparent that the Danish authorities do not stand the slightest chance of recovering the outstanding sums. Thus, this topic also affects everyday life; there are many such examples.
I believe the stage is set for some exciting ideas on promoting proper cooperation, to bring about improved exchange of information, to strengthen UCLAF, and then as regards this present public prosecutor - or whatever the term is going to be. I think it is important for us to have more information on the table, and I am looking forward to June, when it is hoped that the Commission will respond with more detailed material so that we can make some progress in this discussion. It is an important area. Thank you for the report.

Le Gallou
Mrs Theato's report on the criminal proceedings for the protection of the Union's financial interests raises a fundamental problem which is inherent in the Maastricht Treaty, as amended by the Treaty of Amsterdam, which is the transfer of sovereignty between Member States in the European Union in the field of justice, notably though Article 280 of the Treaty. It is true that in this case good arguments have been used, as the Elles report has emphasized, regarding the refusal to discharge the budget for 1996, but these arguments are also used for purposes which we believe are questionable.
Indeed, if there is no satisfactory outcome to the fight against fraud, corruption and organized crime, we will naturally wonder, as we do for the euro, whether there should not be more integration in the legal and criminal field. The liaison body between the national and Community judicial authorities would naturally be UCLAF, the Commission's anti-fraud unit, which should, in a manner of speaking, become the European public ministry. But we forget that the inadequacies, the negligence and the culpable mishandling by the Commission of its lawsuits in the case of mad-cow disease or that of tourism, should be the competence of national courts only.
In truth, in the longer term, there is a degree of risk that, in order to combat the mafioso inclinations which arise from clientelism and organized fraud, we might get to the stage, as Mrs Theato wished, where we wanted to set up a European public ministry or a European judicial authority, to return to the terminological debate between the British and the Germans. However, this terminological debate is not neutral; it shows that there is a real, fundamental problem with regard to the culture of the various Member States, in terms of the freedom of the states, the freedom of the nations. And from this point of view, the terminological debate shows just how dangerous the road is down which people are trying to send us.
For our part, we refuse to go down that road, because we do not wish there to be a further, supranational judicial authority to substitute the sovereignty of the Member States.

Tomlinson
Mr President, I wish to begin by congratulating Mrs Theato. We have a useful report, which clearly underlines the wish of Parliament to enhance the fight against fraud, maladministration and the abuse of European taxpayers. In that regard everybody is equally committed to the fight against fraud. I certainly pay tribute to Mrs Theato for the valuable work she has done over the years, both in the Committee on Budgetary Control and as its chairman.
However - and I say the first part absolutely clearly - I have to express some reservations, not about Mrs Theato's analysis of the problem but about the remedy prescribed for the problem. As I indicated in my point of order my reservations are about paragraphs 7, 9 and 10 and the use in the English text of the words 'European public prosecutor' , and what I believe to be the misinterpretation and the misuse of Article 280 as it is referred to in indents (h) and (I).
Article 280 enables the Union to intervene to take subsidiary action under the first pillar. But it is not my concept of subsidiary action to have, for example in paragraph 7, the European public prosecutor having the ability to delegate powers to national public prosecutors. That is the antithesis of subsidiarity and is the basis on which we have wrongly quoted Article 280.
In conclusion, the intervention of the corrigendum, far from making matters easier, makes it worse. It is one thing to talk about a 'European public prosecutor' , a single official and his/her role, together with the staff, but to turn it into a 'European judicial authority' manages to compound the problems that I have in relation to Article 280.
There are good sentiments in the report; there are merits in the analysis of the report. The prescription is one that we are a long way away from being in a position to realize, and it is for that reason I will not be supporting those parts of the report that refer either to 'European public prosecutor' or 'European judicial authority' .

Bourlanges
Mr President, as you can see, Mrs Theato does not wear glasses, as she is neither short-sighted, nor long-sighted. The same applies to her report, which is really very broad in the viewpoint it takes, and defines the horizon towards which we should tend, in this case harmonization of criminal law in the European Union, and the setting up of an independent judicial authority, an expression which is I believe literally translated from the German, although it is not the translation of the corpus juris. After all of that, we shall be voting on the report, and not on the corpus juris.
Furthermore, Madam, not content with being so clear-sighted, you also specify the obligations which must be met in the short and even the very short term. What are these? In your view, Article 280, although very poorly drafted, can be intelligently interpreted. We know that some instances of fraud and crime with regard to the Community budget are multinational in nature, as they involve a number of players, and their effects are felt in a number of Member States. We also know that it is impossible to react appropriately at national level. A solution would be not to do anything, and this is what Mr Le Gallou is inviting us to do. He is, it would appear, a devoted defender of the national or Community taxpayers, but in this specific context he has decided that he will not do battle. Others claim that we should do nothing at Community level, if it is impossible to act at national level. But you, Madam, propose a direct way forward to the establishment of an independent judicial authority, the granting of a legal status, and of operational resources and of powers of enquiry to UCLAF. It is a first step in the right direction. Your report, Madam, is a moderate report, but it is, as the saying goes, ruthlessly moderate.

De Luca
Mr President, it seems to me that we are making Europe into a kind of giant with huge legs, driving the economy it runs with arms just as long involved in the fraud and organized crime that are becoming more rapacious today, but with a brain that is sometimes very small and heads in a very modest political direction and that, finally and unfortunately, has no kidneys or liver, organs which it should use to get rid of the negative aspects.
I apologize for this image, but it seems to me that Mrs Theato very specifically wanted to show this, and I thank her for her persistence in continuing to deal with this problem.
How can we imagine that we can make progress in a situation in which the national states are competing with each other, in a situation of disparity due to the fact that some states regard Community fraud as a specific crime while others do not? To conclude, going back to Mr Bourlanges' image, I think that Mrs Theato has been far-sighted and specific and that the corrigendum is right. Mr President, how can we imagine a European public prosecution service without a specific European judicial authority?

Hager
Mr President, this report leads me to think that the status quo in the fight against multinational fraud is unsatisfactory. As I have repeated on a number of occasions, I support any improvement in cooperation between the national prosecution authorities and, naturally, I also support the optimal use of existing databases. There is no doubt that developing UCLAF into an independent coordination and information body would be a real contribution to the fight against international crime.
But of course we need a clear definition of the role and responsibilities of this special body, and we also need to know what provisions are to be made to protect its independence. In other respects, of course, neither the principle of an alternate international criminal justice system nor the principle of ne bis in idem stand in the way of an efficient prosecution of transnational fraud; the real problem here is the absence of an effective intergovernmental legal procedure, and this has to be put right.
We reject the idea of a public prosecutor with European-wide jurisdiction in the same way as we reject the Europeanization of criminal law. For this reason we cannot accept any report which would lead us in this direction.

Sarlis
Mr President, the report is a good one because it is moderate, if I can say that; it considers the issues in light of a real situation that exists in the area of the EU's economic interests that are being affected, as we have seen recently. I must come down in favour of medium-term or, if you will, short-term planning in contrast to the long-term planning relating to the cases of paragraphs 7, 9 and 10 which Mr Tomlinson raised.
I must point out that with the corrective action proposed - it matters not how we go about it - a great lack of clarification is removed. And I must remind us all why such an authority is essential. The authority must exist, ladies and gentlemen, because - and I speak as a practising lawyer - the Commission cannot arraign any Member State. A citizen can go to a Member State and lay a charge and the authority can intervene, but the Commission itself is not empowered to approach a national authority so that it can protect Community interests and call for the initiation of criminal proceedings when there are accusations about specific criminal injustices. So these amendments ought to be supported and I will ask Mr Tomlinson, who helped so much to complete this report, to view the matter in a different light.
Finally, I should like to say that the UCLAF's role seems to have succeeded so far. However, the UCLAF itself must put its house in order and, mainly, adopt practical measures that will enable it to deal with the problems. One of those measures is that its staff must not be bound by the employment conditions applicable to Commission employees.

Gradin
This is the third time that this has happened. I am very sorry that I always have to speak under these circumstances.
The rapporteur, Mrs Theato, and I share the conviction that a well-functioning European judicial area is essential if we want to guarantee freedom, security and justice for all our citizens in the years to come. This has become even more clear in view of the forthcoming enlargement. The opening of the negotiation conference takes place today - as you know - in Brussels. The new citizens joining the European Union will expect the European Union to provide them with guarantees in this respect and so will the citizens of the 15 present Member States.
Mrs Theato's report is part of this much broader endeavour, even if it relates directly to the financial interests of the Community. In order to move towards an area of freedom, security and justice I favour a gradual and pragmatic approach. This is necessary because our point of departure is 15 different judicial and penal systems in our Member States. There are many different definitions of fraud. The varying level of administrative and penal sanctions, and the insufficiencies of judicial cooperation among the 15 provide a breeding ground for crime and corruption in general, and also against the EU budget.
So far we have used the Maastricht Treaty as best we can. It has produced some successful results, such as the regulation on the protection of the financial interests and the regulation on spot checks, but clearly we need to broaden the understanding among practitioners of the utility of our work by addressing issues close to the hearts of citizens. The multi-annual programmes do precisely that.
We now have a number of programmes in operation: GROTIUS for judicial cooperation, STOP to combat sexual exploitation of children and trafficking in women, DAPHNE to fight violence against women and children, SHERLOCK on forged documents and OISIN on police and customs cooperation. Another two programmes have just been approved by the Council of Ministers: ODYSSEUS on border controls, migration and asylum and FALCONE on the fight against organized crime.
Taken together, these programmes are an impressive start to practical cooperation between the relevant specialists in all our Member States. They allow practitioners from various areas of the judicial world to come together to compare best practices and to learn to appreciate and respect each other's way of doing things. The academic work done to prepare the Corpus Juris is yet another example of how to prepare the ground for further initiatives. Such preparatory work is essential if we want to succeed in improving the legal framework which has to protect citizens.
The protection of the Union budget is of special concern to me, as I am responsible for the fight against fraud. It is also of great interest to citizens for tax revenue to be well spent and fraud-proof. The budget of the European Union affects all taxpayers. They demand protection against fraud and corruption. The only efficient way of doing this is through common action.
This was fully recognized in Amsterdam. It was decided that the taxpayers' money must be protected in an equivalent way in the Union as well as in all the Member States. We were also given a legal instrument: the new Article 280, with a qualified majority which provides for a much more efficient decision-making process.
I agree with the rapporteur that in order to ensure that the Union finances are equally protected under criminal law in all Member States, we need efficient cooperation between investigation authorities and the judiciary in all Member States.
One important contribution will be the ad hoc legal interface in UCLAF staffed with legal experts from all the Member States. This will help to coordinate and assist national investigators and, where necessary, judicial authorities. We have put such a proposal to the Commission but, as I have stressed on a number of occasions, such an activity needs human resources so I expect the European Parliament to take its political responsibility in this respect.
I am also establishing an anti-fraud unit on external assistance and another dealing with the fight against corruption. I will also establish a dedicated intelligence cell focusing on customs fraud in particular. A number of other improvements in the UCLAF organization will also be made, notably in its computer unit, but these are questions I will come back to next month when we discuss Mr Bösch's report.
With regard to the concept of a register or database managed by UCLAF, I wish to report that the Commission has already proposed such a register in the additional protocol to the Convention on the protection of the financial interests submitted to the Council in 1996. It was, however, not integrated in the final result, so I am still reflecting on the best way in which to bring the idea back to the table.
The role of UCLAF in assisting prosecuting authorities in the Member States is laid down in the second protocol to the convention. Unfortunately, as was said earlier, not a single Member State has yet ratified the various conventions dealing with the protection of the financial interests of the Community. This is very disappointing, as many Members have said in the debate. I hope the issue will be addressed at the European Council in Cardiff. In the event that Member States do not ratify these conventions, the Commission must seriously consider how to make progress and here we have the new Amsterdam Treaty that gives us some better instruments.
I am thinking in particular of the new framework decisions in Article K6 which will be moved to Article 34. Or the more operational Article 209A which now will become Article 280. Moreover, conventions will enter into force when they are ratified in half of the Member States. Mrs Theato also calls for certain changes in the Staff Regulations. The Commission has already expressed its positive attitude to certain adjustments in its communication of 18 November 1997. My colleague Mr Liikanen commented on this at the time.
I also wish to inform you that I am preparing, together with Commissioner de Silguy, a proposal to protect the new currency, the euro, from forgery and counterfeiting. You will receive a communication on this subject very soon. This brings me again to the ambitious ideas of the 'Corpus Juris' . These ideas have, as you know, been the subject of debate in academic circles for some years. The Commission is committed to looking at all its aspects. A number of experts are now comparing the legal system of fifteen Member States in areas such as taking of evidence, mutual assistance and admissibility of proof. So a great deal of preparatory work has already been done and an interim report is being worked on.
I have no doubt that the ideas contained in this document will form part of the future discussion on a European single judicial area - an important discussion that also has to link in with implementation of the Amsterdam Treaty.

President
Madam Commissioner, thank you for your speech and for speaking in a difficult situation. In this respect, I think that the Conference of Presidents will have to examine the problem, which has already been raised several times, on the conditions in which the last speech is made before voting.
The debate is closed.
The vote will take place today at 12.00 noon.
We shall now proceed to the vote.

Votes
President
I would like, before the votes, to make an announcement. The Bureau decided yesterday to send a message of congratulations to Mrs Nicole Péry, our former Vice-President, who has just been appointed a member of the French government.
I am particularly happy to make this announcement because I am, as you know, Mrs Péry's successor, although I am in no way trying to replace her.

Oomen-Ruijten
Mr President, now that all the amendments have been adopted, I would like to ask the Commission, and via the Commission, the Council, to have another look at whether it might be possible for Parliament's wishes to be met. Yesterday we agreed that Regulation No 1408/71, which deals with frontier workers, who should be getting decent rights, is still being blocked as far the jurisprudence in the Court of Justice is concerned. We discussed this very thoroughly yesterday, and it turns out that the amendments tabled by Parliament were not adopted by the Commissioner. I also asked the Commission yesterday to ensure that we would receive written information on all the proposals which are being blocked, and to tell us who is blocking what, and why.
I was given a response by the Commissioner, also after the debate last night, which was negative. He agrees in substance, but he is not prepared to adopt the proposals. Mr President, this is why I am requesting that we should not have the final vote on this proposal, and that we should instead refer the report back to committee. We should have an opportunity to have a proper debate with the Commission and the Council.
I now understand from the President of the Commission that the Council, the British Presidency, wants to discuss this proposal on 6 April, and that this Parliament is being put under heavy pressure to proceed to the final vote.
On behalf of all those who are waiting for improvements, the frontier workers who are for ever left out in the cold, I call on the Council, which always takes the benefits, but never wants to provide any more rules, to give its support to the proposal not to implement in the final vote the modifications to Regulation 1408 as they are before us.

Hughes
Mr President, I rarely disagree with Mrs Oomen-Ruijten but I have to do so today. I would oppose referral back to committee. I have looked at the exchange that took place in the Chamber last night. I have also seen a copy of Commissioner Flynn's letter to the rapporteur. I agree that it is a shame that the amendments cannot be accepted at this stage but I note the Commission's intention to accept the two main amendments, Nos 3 and 4, in the context of the general revision of Regulation 1408/71 which will come forward later this year.
I hope the rapporteur will support those amendments at that time. Also, in the context of Anne Van Lancker's own-initiative report on the issue of frontier workers, the separate question of the position of various delegations in Council is one which would have to be answered by Council. The rapporteur is fully aware of that.
My final point is that the Council looks to adopt this on 7 April. That is not the most important issue by any means but it has driven the entire timetable for our dealing with this proposal. No purpose would be served by referring this matter back to committee. I therefore oppose it.

Crowley
Mr President, I also rise to oppose referral back to committee. What we are voting on this morning is something that the Commission has already taken on board and accepted. It has shown a willingness to look at other areas also. As my esteemed colleague Mr Hughes has said, this is a matter for Council and we should not use it as a delaying or blocking tactic. Let us vote on the issue before us and not mix up other issues with it. I oppose referral back to committee.

Wolf
Mr President, Mr Commissioner, ladies and gentlemen, I think that it is a scandal of the highest order, and one which has been running for years, that the problems caused by an incomplete system of regulations and a lack of harmonization, which frontier workers have to endure on a personal basis, have still not ben solved. We in this Parliament are responsible for doing everything we can to bring maximum pressure to bear on the Council and the Commission, whose efforts in this area I fully acknowledge. We can do this by agreeing to the proposal put forward by Mrs Oomen-Ruijten, even though the UK Presidency may be somewhat annoyed about it. What we are trying to do here is to represent the interests of a large number of people, and not those of a Presidency which is hoping for less discord in the ranks.

Flynn
Mr President, on behalf of the Commission I wish to reaffirm to the rapporteur that the Commission is very supportive of everything she has said. The first two amendments you have voted for this morning are already on the table of the Council and are being discussed at this time. I am quite prepared to give my support to the other two, and will make a proposal before the end of the year. However, this morning the House is asked to vote on purely technical amendments to the annual adjustment of Regulation 1408/71. On the other point, which is, of course, related, unanimity is required, and I very much ask for the support of the House in pressing the Council. These other four items are blocked, although we are making some progress on them. But this morning you are asked to vote on technical adjustments to Regulation 1408/71, which happens on an annual basis. This is going to the Social Affairs Council on 6 April, and it would be a great pity if the House could not see the usefulness of doing this at this time.
I say to Mrs Oomen-Ruijten that her point is taken on board, the Commission is supportive of her point of view and we will be pressing this matter with whatever support we can get and wherever we can get it. But unanimity in the Council is involved. As I say, some progress is being made, and I hope we will be able to address the outstanding two amendments - Nos 3 and 4 - before the end of the year when the case law judgments we are expecting by the end of June are clear so that the interpretation of all of this directive is clearly understood.
I appeal to Mrs Oomen-Ruijten, recognizing that the Commission is supportive of her view, to relent and allow this to go to Council to have these technical amendments cleared at this time.

Oomen-Ruijten
Mr President, I will speak very briefly. To me the issue is that the Commissioner now wants the Council to have all the benefits, whereas the frontier workers continue to have all the disadvantages. Who in this House will therefore dare to vote against my proposals for it to be referred back to committee, on account of the British Presidency on 6 April? I would like to discuss this with you and the Council in the Committee on Employment and Social Affairs.
(The matter was referred back to the committee responsible)

Müller
Mr President, in our amendment my group has called for the setting up of a Mr or Mrs Reconstruction for Bosnia and Herzegovina. In discussions with the other groups and with the Commission we have reached general consensus that if we withdraw the word Mr or Mrs Reconstruction, then the amendment will be approved, the reason being that it will be moving towards replacing this function with a Mr or Mrs Director-General appointed by the Commission. We should not burden this initiative with terms which leave us in the dark as to who is involved. I would therefore ask the House to vote on this amendment without including a 'Mr or Mrs Reconstruction' .

Giansily
Mr President, our group supports Mrs Müller's proposal.
(The President noted that there was no objection to the oral amendment)
(Parliament adopted the resolution)

Tomlinson
Mr President, I look to you as a lawyer to give guidance to the House, and also to protect our interests. In a very important report there was a substantial debate in committee and the most substantial part of the debate, as far as I was concerned, was about the use of the words 'European public prosecutor' . That has been the subject of debate in our political groups. It is, therefore, fundamentally unsatisfactory when we come to plenary to find that we have a corrigendum deleting in paragraphs 7, 9 and 10 the words 'European public prosecutor' and replacing them with 'European judicial authority' , which actually means something totally different. To change 'European public prosecutor' , which I regarded as bad, to 'European judicial authority' , which I regard as even worse, and to do it by way of a corrigendum is an abuse of the House, and I look for your ruling on it.

Dankert
Mr President, on the same subject, I certainly think that the replacement, debated in committee, of the words public prosecutor with independent judicial authority is not just a linguistic corrigendum, but is more like a coup d'État . I believe that the clerk's department should have refused such a change.

Theato
Ladies and gentlemen, we have just discussed this problem a short while ago. I started out from the German version, which was the one also voted on in committee. The fact that there is no European judicial, prosecuting or investigating authority, nor is there a public prosecutor, makes it very difficult indeed to find a common term which does justice to all the different national systems. The term 'public prosecutor' was proposed in a study, but it is not an established term as such. As I encountered a great deal of resistance to the German term for public prosecutor, which is 'Staatsanwaltschaft' , I have tried to find a more neutral expression for my report and then to have this put to the vote. It was of course not the different translated versions which were voted on. Since approaches were later made to me that the translation was inexact, and even misleading, I requested that the term be changed to comply with German translation, which is what I started off with.
However, I should like to point out again that what we have to define here is something which does not yet exist. Some time ago I even asked the Commission for a definition. The term must be so filled with meaning that the jurisdiction of the Member States is fully taken into account and left intact. For me, the problem therefore centred around the translated version. I was slightly amazed that approaches were made to me on this subject late last night. Yet I would earnestly request that you examine the general content rather than focusing on a word for which we have still to find a definition, which is what I have requested.

President
Thank you, Mrs Theato. I must say that, for my part, it is more a question of the concept than the translation. I shall ask Mr De Luca and Mr Bourlanges, as well as Mrs Wemheuer, for their opinion. Then we shall make a decision.

De Luca
Mr President, as you rightly said, the question does exist, and it is not just a question of terminology. In fact, the term "European public prosecutor' has a meaning. Perhaps, in the attempt made by Mrs Theato, "judicial authority' is a more comprehensive term that could incorporate both concepts. Perhaps it is a solution I will suggest to the Chamber: not to use either the term "public prosecutor' or "judicial authority' , but "European judicial body' . I do not know how this term can be translated into the other languages, or whether it is compatible, but a body is something that is indefinite, that is half-way; that could therefore solve the linguistic problem we are otherwise faced with.

Bourlanges
Mr President, there is a fundamental debate, certainly, but here we are simply involved in a procedural debate, and we have to raise the question as to whether the draft which is submitted conforms with what was voted on within the Committee on Budgetary Control.
While open to correction, I think there is little doubt, firstly that the text on which we have voted and which is authoritative is the German text; secondly, this German text included the expression "independent authority' in German and it did not contain the expression "European public prosecutor' , which for its part comes from another source, namely the corpus juris proposed by the Commission.
Therefore, I think that in procedural terms, there is no ambiguity. We have indeed voted on a draft which spoke of an independent judicial authority. In the event of disagreement with this draft, it would, it appears to me, have been necessary to table an amendment according to the prescribed procedure, and this being the case, there would have indeed been a translation error between the German text and the other linguistic versions.
I therefore think that we should stay with the vote on the basis of the German text, which is the faithful version.

Wemheuer
Mr President, the various groups, including of course my own, have been discussing the report as it was then, namely without the corrigendum, and have formed an opinion on it. I therefore believe that we can only vote on the text as we knew it at the time. I would like to ask Mrs Theato to withdraw the corrigendum, since instead of clarifying the situation it has clearly only served to confuse matters further. If she does not withdraw it, I will propose on behalf of my group that the report be referred back to committee.

Green
Mr President, I agree entirely with the comments made by Mrs Wemheuer. Like you, we believe that this is not just linguistic; it is a different concept, so if we cannot have the withdrawal of the corrigendum we would like to have it referred back to committee for clarification.

President
Ladies and gentlemen, we therefore have a proposal relating to the corrigendum and a proposal for referral to committee. I am thus going to put to the vote the proposal relating to the corrigendum, to see whether or not the corrigendum is accepted or refused. Mrs Theato, do you agree with this procedure?

Theato
Mr President, I should first like to know precisely whether, in the event that the corrigendum is not adopted, you will again allow a vote on the referral back to committee.
I need to know exactly what the course of the procedure is. Is this in fact correct? Do we first have to vote on the corrigendum? If the corrigendum is adopted, will you still be having a vote?

President
Madam, we shall first vote on the corrigendum. If the corrigendum is adopted we shall then possibly vote on a referral to committee, if so requested. However, at present, I have before me a proposal from Mrs Green, for a referral back to committee if the corrigendum is not adopted. Is that right?
(Interruption from Mrs Green) Excuse me, Mrs Green, it is the other way round. I did not make myself clear. We shall first vote on corrigendum No 1, to see whether or not it is accepted. I must remind you that this corrigendum in French replaces the expression "European public prosecutor' with the expression "European judicial authority' . We therefore need, as the amendment applies to the whole, to vote first on the corrigendum. Then we shall possibly vote on a request for a referral back to committee.

Green
Mr President, I appreciate very much what you are trying to do and I agree with you but this is a procedure which we have not adopted before. As far as a corrigendum is concerned, if Mrs Theato is prepared to withdraw it then I think that is the appropriate thing and we then vote on the original text. If she is not prepared to withdraw it then I think we should refer it back to committee.

Theato
I should like to thank Mrs Green most sincerely for her contribution which has clearly helped clarify the situation. I am prepared to withdraw the corrigendum. I should just like to point out that this in no way concerns me directly. But I would say that all those Members, wherever they may be, will now be leaving me out on a limb if they vote against the resolution on the basis of the withdrawal of the corrigendum. I would like to make that absolutely clear. Let me state quite categorically that the name of this new body, which we are going to set up some day or other, is not the main issue for me. The most important thing in my view is that we get started, so that the protection of the Union's financial interests is assured.

Tillich
Mr President, the vote which you now wish to conduct is inadmissible. The rapporteur said that the original text was in German. If we are now to proceed to a vote, then we shall be voting on the work of the translators and not on the issue in question. I therefore consider the vote you are proposing to be inadmissible. We should be voting on the basis of the German text.

President
Ladies and gentlemen, I note the fact that Madame rapporteur withdrew corrigendum No 1. We shall now vote on the text without corrigendum No 1. We are in agreement on that. Each person must take on their own responsibilities. I cannot make any other suggestions.
(Parliament adopted the resolution)

Caudron
I would like to congratulate our colleague Tom Megahy for his hard work and the pertinence of the recommendations made in his report, which seem to me to go in the right direction. Like many of our colleagues, I wish to support the amendments tabled by the rapporteur. Hence I totally agree with the idea of differentiating between the "beneficiary' of the card and the vehicle.
We are indeed well aware of the difficulty of implementing measures aimed at integrating disabled people into a society which increasingly excludes those individuals who have most problems adjusting to ever more demanding circumstances. I therefore hope that these recommendations will be very quickly taken over by the Member States of the Union.
In this report, the question of a citizen's Europe is once again raised. I note that reality is always becoming more and more removed from the official rhetoric, and from the stream of stock market indicators, where individuals have no role to play.
Once again, I wish to denounce these blows against the values of solidarity and justice. The European Union is a model of development and of civilization, and I want to remind you of that at a time when we are witnessing the dismantling of the Welfare State.
I grant that these words are somewhat removed from the original subject, but I fear that the measures aimed at social deregulation particularly affect people with disabilities. I believe that in this field we have much more to do, particularly in terms of access to employment and the fight against all kinds of latent discrimination, which affects disabled people all too often.

Titley
Although my colleague Mr Megahy is right to point out that the Council is only opting for a nonbinding recommendation for governments to follow on this issue, I share his welcome for the idea of an EU-wide parking card for the disabled.
I am also happy to see Parliament's specific suggestions being taken on board - for example the importance of issuing the card to a disabled driver for use with whatever vehicles they will drive, removing the need for bureaucratic renewal of the card each time a different vehicle is used.
I am also glad to find that the definition of disabled drivers will be left to the Member States, allowing this to be as broad as each country sees fit. As always, EU guidelines should be a minimum standard on which we can build where countries wish to go further. I hope that governments will do as much as they can to make travel easier for our many disabled fellow citizens, so that freedom of movement applies to all Europeans in future.
Recommendation for second reading (A4-0116/98) Wijsenbeek
Langenhagen
We have to bear in mind the following, and Mr Kinnock, the Commissioner responsible, confirmed this yesterday after the debate on modern tachographs:
1.In its decision the Council has only expressed an opinion on the future black box (system mentioned in 1B). The UK Member and coordinator of the Socialist group had to ask the Commission twice about this matter in the last sitting of the Committee on Transport and Tourism. The Commission representative confirmed that only proposal 1B had been submitted to the Council.2.The new black box has not yet been decided on. Do we really know what we are voting on?3.The Council Decision is flawed, because the matter of retrofitting has not been settled. The Council rushed into this in order to force through a compromise. Do you really believe that, in the absence of a retrofitting scheme, firms will not try anything and everything to preserve the old style of tachograph? A botched-up tachograph will certainly do nothing to increase measurement accuracy.4.Competition is being made very easy for the countries of central and eastern Europe. Agreement was only reached with these countries in 1995 to put forward any kind of tachograph at all. If the transport firms and inspection authorities in the European states do not even have the overall infrastructure required for the new device, then, as Adam Riese says, we can hardly assume that our competitors will be very eager to adopt it.5.There is no system in place for checking and recalling the data recorded by the firms in question. Surely no-one seriously wanted this.After working for four years on this regulation in my capacity as rapporteur for the Group of the European People's Party in the Committee on Transport and Tourism, I reached the conclusion that Member States want for the time being to retain the existing tachograph system, which is easy to manipulate. The reasons are regrettable but all too obvious.
The Commission has done a complete U-turn and played right into the Council's hands. The majority of Parliament has done the same. This does little for the credibility of the European Parliament.
On the plus side, today's decision by Parliament constitutes a technical step forward. On the negative side, however, it is a matter for regret that this will not be happening today but rather far into the future. In the meantime, there will be a period of 10 years in which we will be driving through a grey area. This will not be without its consequences.

Lindqvist
It can hardly be reasonable for the EU to regulate road transport in such detail as is now happening with regulations on the design, installation, use and testing of tachographs. The system also has to be approved by the Commission. The Council is going even further and prescribing the obligatory installation of fully digital tachographs in all new vehicles from 1 July 2000.
The proposal affects small hauliers in particular and those companies which do not always have the possibility of introducing new equipment without high costs. Questions of this type should be dealt with at national level. Detailed regulation at EU level must end.

Rovsing
All the nations of Europe are currently making a special effort to provide freedom of movement to disabled citizens. An important element of this policy is access for the disabled to strategically positioned reserved parking spaces. Permission to park in such places is granted by means of a special identity card issued by the authorities. Fortunately, in most cases, these national disabled badges are still recognised when the badge holder travels to the other EU countries. But it would still be much more practical and much safer for disabled citizens if a common EU badge were issued. Thus, the proposal for a regulation is a positive initiative.
Parliament adopted a number of amendments at first reading, aimed at further improving conditions for disabled citizens, and it is gratifying to see that the Council has allowed these proposals to be incorporated into its common position. Against the backdrop of these positive results, I give the adjustment my full support.

Schlechter
To begin with, there was Council Regulation No 548/69 on the harmonization of a number of provisions on social matters in the field of road transportation. This regulation was followed by another regulation, No 1463/70, which provided for recording equipment in road transport. As in many other cases, this innovation had, to begin with, positive effects on conditions of work and competition, but unfortunately they did not last long.
There was then a need for a new regulation. In 1985, Council Directive 3820/85 established driving times and rest times for professional drivers, and guaranteed better control over Community provisions relating to the monitoring devices.
After years of practical experience, it became apparent that Regulation No 3821/85 did not provide sufficient protection against manipulations of the disk, and that the control system was extremely difficult to implement.
Consequently, the Commission in 1994 proposed system 1, which kept the current tachograph, supplemented by an electronic "black box' , and which allowed the transfer of the information required to the driver's memory card. This solution was accepted with reservations by the European Parliament. In 1995, Parliament wished for a better performing, more reliable system, which would be less open to fraud.
It is now astonishing to see our rapporteur backtracking, for the 1A system which he proposes is a regressive one. It does not go as far as the European Parliament's decision in 1995, and neither the Commission nor the Council have any time for it.
Of course, the common position goes further than that recommended by our rapporteur. It has applied to the letter the request by the European Parliament to introduce a new generation of recording equipment, which would be entirely digital and feature integrated memory.
For more than two years now, technical progress and new thinking by manufacturers have clearly indicated that this way forward - that proposed by Parliament - was the right one, and that consequently there was no justification for maintaining the option of an intermediary stage of the evolution between the tachograph 1A and the entirely digital recording equipment (see text of the conclusions of the common position).
I therefore believe that the decision we have taken is the right one.
Now we have to find solutions to the problems which will certainly arise. We will need to ensure that our new regulation conforms to the AETR, which was signed between the Member States and the other European countries. Its aim is to harmonize driving periods and the recording equipment with a view to avoiding distortions in competition between hauliers from the European Union Member States and those from third countries. Such a modification should be made within the same period as that laid down by the new regulation. The conformity of vehicles must also be looked at within sensible time periods which satisfy the parties involved.
If the vehicles driving two years after the entry into force of the regulation require an 1B electrotachograph, the same should apply for vehicles in circulation from 1 January 1996, when the recording equipment which they are equipped with is replaced. Seven years after the regulation's entry into force, all vehicles concerned will need to be equipped with the 1B equipment.
In my opinion, there is no problem in establishing detailed technical requirements on the basis of a later decision of a technical committee. However, it would appear to me to be appropriate to have reached a definitive and comprehensive agreement within that committee before the entry into force of the new regulation. However, these technical improvements are of no value if the road transport controls are not carried out within the rules, and uniformly so in all Member States.
In conclusion, I would say that we need an indispensable instrument to record violations and to increase the respect of the rules now in force. I believe that the 1B system meets these conditions. As regards the Member States, they will need in the future to make efforts to avoid different behaviour arising from divergent interpretations of the rules in force.
The investments in the 1B system will be accepted, and the controls will produce the desired effect, provided the Commission also looks at these problems as soon as possible.
Väyrynen report (A4-0008/98)
Väyrynen
Mr President, I should like to give an oral explanation as to why the Liberal group abstained in the final vote. This was because the outcome of the vote on Article 4, on the subject of national airport networks, would be, from our standpoint, unworkable.
Here there was a vote on the committee's proposal number 10, which had two recitals. Parliament voted to accept the proposal by 251 votes to 243. As a result, compensatory payments made in respect of national airport networks will be restricted to domestic flights. As Neil Kinnock said here yesterday, this goes completely against a key principle of the directive, namely nondiscrimination. Charges must be the same for both domestic and inter-EU flights. As this essential point in the report has now become distorted, the Liberal group felt they had to abstain from voting.
I would like to add that we opposed the Green group's Amendment No 25 on the basis that our own Amendment No 26 as well as Amendment No 20 tabled by the Socialist group, had already focused sufficiently on environmental issues.

Ahlqvist, Andersson, Hulthén, Lööw, Theorin and Waidelich
We are in favour of the underlying idea behind the proposal for a directive, namely that transparency and consultation should lead to the differences in tax systems being as small as possible. European airlines could benefit from a clarification of airport taxes. However, because we do not think the proposed formulations can be interpreted in such a way that the consequences can be fully assessed, we are abstaining from the vote.

Cushnahan
Mr President, as we continue to move forward with the Single Market, the European Union is required to look at each sector of industry and ensure that there are no non-tariff barriers to trade within that sector. That is exactly what the Council Directive on airport charges intends to do.
Within the context of a single market, it is unconscionable that airport charges should be levied in obscure ways. Just as consumers want to know what they are purchasing before they hand over payments, airlines (who are indeed consumers of airport services) should receive the same level of transparency. Airports should be required to disclose what the fees are used for. They should also reflect the level of use. The airlines should not have to pay the same amount to land a small commuter plane as a jumbo jet at any given airport.
I agree with the rapporteur that there is no need to harmonise airport charges across the EU, in that different airports have different needs, and airlines that use a specific airport should bear the cost of that airport's services.
It is for these reasons that I support this report.

Eriksson
I think Community legislation on airport taxes is unnecessary. There are big differences between the situations in the Member States which make it simpler and fairer for these issues to be governed by national legislation. In addition, it seems as if liberalization and EU harmonization are more important goals than providing for the public good.
For these reasons I am abstaining from the final vote on the Väyrynen report.

Fayot
This report has considerable significance for small airports and their income could be dramatically reduced as a result.
Luxembourg, which has only one commercial airport, is keen to maintain a reasonable compromise between the airport authorities and the interests of the airline companies. The country is, however, dependent on these charges.
The Luxembourg Socialists therefore support the amendment proposed by Mr Simpson (PSE), which seeks to apply Articles 4, 5, 6 and 7 of the directive only to those airports which have annual traffic of at least 2 million passengers or 50 000 tonnes of freight. The Commission's proposal was for only 250 000 passenger movements and 25 000 tonnes of freight.
While Luxembourg's freight traffic is well above the limit provided for in the directive, its figure for passenger movements is about 1.2 million - and would therefore not come under the directive with the corresponding amendment. This will allow us to ensure that our airport remains a cost-effective business.
It is therefore a matter of extreme regret for us that the motion was not adopted. I have thus abstained from the final vote.

Kestelijn-Sierens
I would like to express my support for the Väyrynen report.
I am particularly interested in the fact that it is possible to include the specifically identifiable external costs resulting from environmental damage caused by air traffic. I believe that collecting higher airport taxes is justified in the case of noisy aircraft, night flights, or aeroplanes which emit exceptionally strong kerosene fumes.
This extra tax is not only a sanction or a measure to discourage those causing the disruption. The Commission rightly points to the fact that the differentiation should be aimed at bringing in extra revenue for the airport. It should be intended as a compensation for environmental damage. These extra receipts should be put into a fund for environmental improvements at the airport itself, or for cofinancing investments which people living nearby have to make as a result of disruption or damage. Schiphol Airport is to my knowledge applying this principle carefully.
There is the risk that, in the event of extra environmental compensation not being used to cover genuine environmental damage and disruption, certain airports may attract disruptive flights in order to boost their income.
Taking into account these considerations, I supported Article 5 and Amendments Nos 11, 25 and 26 in particular.

Theonas
The proposal for a directive we are debating is the last of the measures envisaged in the third liberalization package for air transport. The Commission proposes to establish one set of rules for the payment of dues at airports which it tells us will be based on the principles of non-discrimination, cost relation and transparency. The proposal is based on strict, rational, financial criteria, which regard airports as simple commercial enterprises and ignore their vital role as a means to support economic development and cohesion, to exercise social policy, and to implement objectives related to environmental protection and the safety of flights, passengers and those working in the area.
The aim, of course, is not to improve the present services and infrastructure at airports and enhance safety, but to reduce costs for the airlines using the airports and once again to give them a boost in the race to share out the liberalized markets. Needless to say, the last people to gain will be those who work for the airport management agency or the companies that use airports, since all they can look forward to is abolition of their collective agreements under the blackmailing threat of closure - as in the case of Olympic Airways -, aiming once more to cut costs for the companies. Nor will the passengers benefit, who might have theoretically, since experience shows that under conditions of oligopolistic competition and market sharing, all cost cuts lead as a rule only to increased profits.
On the contrary, this directive will create problems for airport management agencies, granted that their reduced income will undermine their ability to develop and modernize infrastructures, to the detriment of flight and passenger safety. The income reduction and parallel ban on state aid, combined with the suffocating framework imposed by financial discipline and cuts in the resources for regional policy, will directly affect the smaller airports and consequently the more distant and less accessible regions, which are precisely the ones that need help.
From that starting point, we stress our disagreement with the Commission's proposal, which aims to relate the level of dues to the cost of the services and infrastructure provided. Those dues cover the costs not only of central and busy airports, but regional ones as well, small and isolated as they are, and which, because traffic through them is limited, cannot meet operating expenses which are to a large extent inelastic, and cannot spend what they need to on modernization investments.

Wibe
It is extremely important to point out in connection with the discussion of this report that we must see the network of national airports as one system. Airports which make profits must be allowed to subsidize airports in the system which operate at a loss, since profitable airports would not be profitable if loss-making airports were closed.
Aparicio Sánchez report (A4-0071/98)
Cushnahan
With the pending economic and monetary union, as well as the completion of the single market, several barriers to tourism within the Union will be lifted. The question remains: will we truly have a single market in tourism as well?
Currently, the EU's lack of coherent thinking as regards tourism seems to indicate the answer to that question will be a resounding 'no' . It is for that reason that I fully support the report by Mr Aparicio Sánchez.
It is time for the Commission to begin considering the effects on the Union's tourists separately when drafting legislation. Just as we have started to look into consumers' rights in their home country, we should also place an emphasis on the rights of those consumers on holiday. It is these consumers who are most vulnerable, often in a culture with which they are not familiar, possibly on a whirlwind tour of several cities and not aware of local laws.
I welcome the rapporteur's call on the Commission to increase transparency in the airline industry. As we move toward liberalization of the Union's skies we should consider how this liberalization (and the airline industry's habit of selective price discrimination) affects the Union tourist. The practice of code sharing should also be made more transparent so that the traveller knows which company is actually taking him on his journey, not just which company is selling him the ticket.
I also find particular significance in Mr Aparicio Sánchez's call for harmonization of rules in the hotel and group tour sectors. To truly have a single market, tourists must be protected by similar laws in each Member State.
The Commission, as this report points out, must organize its thinking vis-à-vis the tourist sector, as the areas that affect tourists are spread across DGs within the Commission. By encouraging the different policy-making areas to work together, the EU can be sure to protect the tourist and provide for the industry to grow.

Eriksson
Improvements in the rights and safety of consumers are always an important goal, even though I think that the current impact of the tourism sector on the environment is the most pressing problem to solve.
The protection of the rights and safety of consumers and improvements in trading standards in the tourism sector are best taken care of at national level, both from the point of view of efficiency and of democracy. I have therefore abstained from voting in the final vote on the Aparicio Sánchez report.

Titley
Mr President, I am happy to lend my support to this report today because I share its commitment to securing proper compensation for travellers who suffer when airlines or hotels overbook. Too many people's hard earned holidays have been ruined by this practice, whether it is due to mistakes by the companies concerned, or a deliberate act of policy.
The report is also right to point out that air safety needs more attention as the number of flights and passengers criss-crossing our airspace grows each year.
I hope that the Commission and Council will act on the rapporteur's ideas and ensure that consumer confidence in the vital tourism sector of our economy is strengthened as a result.

Wibe
I think this matter should be outside the scope of this Parliament. Paragraph 11 of the report proposes that the Commission should present to Parliament and the Council the results of a study of overbooking of hotels and other accommodation etcetera. Similarly, paragraph 30 proposes that, along with Parliament and sector associations, the Commission should organize annual conferences on the quality of the supply of tourism services.
The tourism industry is certainly of great importance for employment in many parts of the EU, but it is getting a little absurd when the above proposals are presented to this Parliament. I consider these issues to be outside our area of competence.
Elles report (A4-0097/98)
Berthu
Mr James Elles' report on the implementation of the general budget of the Union for 1996 shows that the Commission's attitude ends up irritating even those who were originally best disposed towards it. Frauds which have been denounced from year to year are continuing unabated and the institutions tend to protect the officials responsible or at least give that impression, maintaining the lack of transparency which characterizes internal investigations. Energetic reform is non-existent. For the third consecutive time, the Court of Auditors has refused to give its "statement of assurance' for the Community budget, and the European Parliament, for its part, has just refused to give it discharge.
The reports of the Court of Auditors make appalling reading. They show an accumulation of fraud and inertia, without really explaining where this paralysis comes from. For its part, the Group of Independents for a Europe of Nations goes further in its analysis and lays the blame on the structure itself of a number of European institutions and policies.
For example, the Elles report is concerned about the fact that more than one year after the conclusions of the European Parliament's Committee of Inquiry on the procedures for Community transit, the computerization of this procedure, which was presented as an appropriate means of making it reliable and operational, has still not begun. Worse still, as of March 1998, the Commission has not even been able to establish a detailed specification of the system which would need to be installed to allow for a better detection of fraud. Is this by chance? Should we, like the Elles report, blame only the Commission's inertia? In reality, we have reason to believe that the problem goes far deeper: now that administrative documents concerning goods as well as internal border controls have been suppressed, has Community transit not simply become quite unmanageable?
Could the same question not be raised with regard to procedures relating to Community initiatives in favour of SMEs? They have led to such a fragmentation of appropriations that the Commission seems unable to say whether or not their objectives have been met.
There could be many more examples like these. Overall, repetitive fraud not only highlights lax management, but the impractical nature of policies which were originally defined with an ideological aim of developing the European super-state, rather than out of any goal of efficiency. Furthermore, by placing the Commission on a pedestal for so long, as the unchallenged guardian of the European interest, its control has hardly been facilitated, and we see the consequences today.
To truly fight against fraud, the Commission must be removed from its pedestal, and it must itself be subject to control. It is clear that the refusal to give it discharge for the 1996 budget will have consequences. If the European Parliament was logical with regard to its own actions, it would vote a motion of censure.
Kellett-Bowman report (A4-0092/98)
Papakyriazis
I am voting for the Kellett-Bowman (CEDEFOP) report, but with one serious reservation.
I am voting for the draft decision with reservations concerning paragraph 4, which I consider to be outside the scope of the report.
Besides, the specific issue - ' purchase of the new building for CEDEFOP in Thessaloniki' -, is also very strangely referred to analytically in the rapporteur's explanatory statement which, as we know, is not put to the vote but is an expression of the rapporteur's personal views. That reference is superficial, fragmented, unclear, unfounded and therefore misleading, in a way that could create entirely erroneous impressions.
Today, after the objective - and not just objective - difficulties it faced during its transfer from Berlin, CEDEFOP in Thessaloniki is going from strength to strength and its creative work is making substantial contributions to the EU's needs.
The construction of the new building is proceeding normally, and it is likely to be handed over ahead of the official schedule, May 1999.
The Committee on Employment and Social Affairs, as the de facto committee responsible for CEDEFOP's 'policy' , is conscientiously monitoring the whole matter - as is stated in our committee's opinion which is attached to the Kellett-Bowman report.
This explanation of vote is given on behalf of all Members belonging to PASOK ESP/GR - the Greek socialist parties.
Theato report (A4-0082/98)
Kirsten Jensen and Blak
The Danish Social Democrats are abstaining from the vote on Mrs Theato's report. We believe that the report constitutes an attempt to prejudge development, since to a large extent it relates to a situation that will only arise if the Member States do not unanimously ratify the convention on the protection of the Union's financial interests.
If such a situation should arise, it is not a foregone conclusion that harmonization of criminal law would be necessary in order to protect the financial interests of the Union. Moreover, Denmark will remain outside any such initiative on the basis of our reservations about participation in EU legal cooperation.

Wibe
I do not support the report's proposal on the establishment of a European public prosecutor. On the other hand, I think it is of course appropriate that those who commit fraud with EU subsidies are carefully investigated and caught at national level.
(The sitting was suspended at 1.10 p.m. and resumed at 3.00 p.m.)

Financial assistance for SMEs
President
The next item is the report (A4-0114/98) by Mr Pronk, on behalf of the Committee on Employment and Social Affairs, on the proposal for a Council Decision on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) - The Growth and Employment Initiative (COM(98)0026 - C4-0138/98-98/0024(CNS)).

Pronk
Mr President, we are dealing with an important proposal, which has appeared thanks to this Parliament, namely as a result of the van Velzen report and the proposal made by the draftsman of the opinion of the Committee on Budgets, Mr Tillich. The Luxembourg Summit adopted these proposals. SMEs generate new jobs. In the European Union 6.5 % of all investments are made in start-up enterprises. In the United States 37 % of all investments find their way to start-up enterprises. Maybe that is why more jobs are is created in the United States. The proposal comprises three complementary initiatives. This plan constitutes the implementation of part of the Tillich package, ECU 420 million out of a total of ECU 450 million. The first part, namely 40 % of the ECU 420 million, is allocated to the ETF start-up scheme which provides risk capital for SMEs. I would like to stress that the name should be changed, and I suggest it is called the Euro Start-up scheme.
The new name is needed first and foremost to avoid confusion with other European schemes. Secondly, the ETF scheme is implemented by the European Investment Bank, whilst the Euro Start-up scheme will be managed by the European Investment Fund. Thirdly, it is not a very easy name for the European Commission to market. The Commission will have to do something about marketing this initiative. Unless the EIB is constantly involved, marketing it will be difficult. It is also a rather meaningless name. The Euro Start-up initiative aims to improve access to capital for high-end technological SMEs which are starting up or are in their initial stages. These enterprises have a big growth potential, but have difficulty gaining access to capital due to the high risk involved. There are only four Member States where such initiatives exist in practice, and in those countries they are working well. In other Member States there is a great deal of interest in creating an instrument which provides investment in highend technological SMEs, and which can offer guidance. With such a scheme the potential which already exists in a number of Member States can be extended throughout the entire European Union.
The second scheme is that of the joint European venture . 20 % of the ECU 420 million is set aside for this. The aim is to promote the establishment of transnational joint ventures by SMEs within the European Union. There have been some examples of cooperation between transnational SMEs in central and eastern Europe and in the Third World. These examples offer hope and confidence that the joint European ventures will work. It should be realized that these are not revolving funds which will pay themselves back after a number of years, in contrast to the other two initiatives.
The third scheme is the SME guarantee facility. 40 % of the ECU 420 million has been allocated to this. This guarantee facility enables SMEs which are starting or have just started out to gain access to capital. One thing I would like to emphasize in this report is the evaluation of these three initiatives. The European Parliament does not want to add any conditions in advance, other than those proposed by the Commission itself. Otherwise, it could take years for the programme to come into force properly. What is needed is effective evaluation afterwards, rather like interim evaluation when a political decision needs to be made once a programme comes to an end. What is also important is the length of the programme. It was agreed that the programme would run for three years. This was also promised by the Luxembourg Summit. But three years is not less than three years, so if the programme starts on 1 May 1998, than it should run until 1 May 2001, rather than 1 January 2001. Evaluating it will become extremely difficult otherwise. I call on the Council to change its view on this point, and to let the programme run for the full three years, particularly since the euro start-up scheme and the SME guarantee facility are revolving funds which have to run for 16 years. All being well, these two programmes will cost the EU absolutely nothing after 16 years, and this is a wonderful way to promote job creation, whilst at the same time pursuing a frugal budgetary policy. A big advantage of the guarantee scheme initiative is that the Member States which do not yet have it, will have to set it up, whilst other Member States will be better able to process the applications which precede the guarantees. These programmes are frequently over-subscribed, after all. What is also remarkable is that it covers both national, regional and local systems. In some countries, like mine for instance, the national system has developed further. In others it is the regional systems which have come to further fruition. It is good to learn from each other on this point. I would like to add that, after the talks with the Commission, I have tabled some new amendments, namely numbers 18, 19, 20 and 21. Amendments Nos 18 and 20 are formal changes. There is a mistake in Amendment No 19; it should read assessment in the English, not evaluation. This should be similarly modified in the other languages. Amendment No 21 has incorporated part of the amendment from the Committee on Economic and Monetary Affairs and Industrial Policy which had fallen between two stools.
To conclude, Mr President, I would very much like to thank the Members and the Secretariat of the Committee on Employment and Social Affairs for their excellent cooperation in this difficult case. I would also like to thank the other Members of the European Parliament, and especially the two committees with which we cooperated, the Committee on Budgets and the Committee on Economic and Monetary Affairs and Industrial Policy. We have also cooperated well with the Council and the Commission. I have rarely experienced such intense cooperation between the institutions as in this case, but it deals, after all, with a solemn promise made by the European Council, which we have to implement here.

Tillich
Mr President, the report we are dealing with today, with its legislative proposal, was indeed one of the key issues of the 1998 budget debates, for which I was the rapporteur. This legislative proposal is intended as an initiative for creating more jobs in Europe.
During the budget debate we reached an agreement with the Luxembourg Presidency which the EP and the Council finally complied with at second reading. Now the Commission has tabled a legislative proposal. I must compliment the Commission for having basically adhered to the conclusions of those debates. These have indeed been taken into account in the Commission's proposal.
The aim of the proposal was, and is, to adopt a programme which will quickly and easily help create additional jobs in innovative enterprises, and not in the administrative offices of the Commission and Member States. The amendments to the Commission's legislative proposal, which have been put forward by the Committee on Budgets, were drawn up with this in mind.
Let me now turn to the content of the report and to the amendments being proposed therein. I should first like to congratulate the rapporteur, Mr Pronk, for his efforts in accelerating the procedure normally used for such proposals, which was something also requested by the Commission, for this has meant that we are able to debate the issue here today. On the subject of the first amendment proposed by the Committee on Employment and Social Affairs, I really have to say that this stratagem is not appropriate. In the course of the 1998 budgetary procedure and in the decision, we did not set out that this programme should comprise ECU 450 million for three years. We could not do this because we were deciding on a budget for one year. The correct interpretation is that we reached a decision on ECU 150 million for the year 1998. During the deliberations between the Council and the European Parliament it was established that it was our intention to apply this programme for a period of three years with a total allocation of ECU 450 million. However, this does not mean - and indeed this is the position of the Commission and the Council - that we require a legal basis for the remaining ECU 420 million.
With regard to Amendment No 3, I have to say that it is indeed correct that we should also be taking account of those other small and medium-sized enterprises which are engaged in the social sector and in other areas of public health. However, the same amendment seeks to stimulate the creation of employment, and as this refers to all enterprises it must therefore automatically include all those operating in the social sector.
I have serious doubts about Amendment No 7, as proposed by the Committee on Economic and Monetary Affairs and Industrial Policy and drafted by Mr Harrison. Perhaps this is why the wording 'if necessary' has been used. I know, and this has already been said by the rapporteur, that Europe has had a very poor success rate with venture-capital funds and with this programme we wanted to provide some stimulation here. For this reason we should be working with ventures which already exist and, instead of complicating the process by introducing a tendering system, let us therefore first take on those which have been successful. This would also be in keeping with the content of the document.
I am therefore of the opinion that we should try to ensure that what we call risk capital is also made available to enterprises which are prepared to take the risk, and we should not impede this by erecting administrative barriers.

Harrison
Mr President, the committee strongly supports the Commission's proposals to help small businesses by making more accessible finance for innovative and job-creating SMEs. We welcome the involvement of Europe's biggest bank - our bank, the European Investment Bank - and the use of the European Investment Fund.
I know that the lead committee, the Committee on Employment and Social Affairs, retains certain concerns over the level of the funds to be provided for these three programmes and the timing of their application. I share these concerns and hope that the full ECU 450 million can be used earlier rather than later. These fast-moving SMEs are, after all, the speedboats of enterprise on the Lake Geneva of Europe's economy.
Back in calmer waters, however, the committee raised several concerns. Firstly, the grant should be made to firms offering the hope of providing sustainable jobs, and new jobs to boot. The European fund should not be used as a substitute for normal business investment. Secondly, the funds should be aimed at micro-enterprises. They are the little acorns from which some of the biggest oaks in the forest of jobs have grown. Next, the intermediary institutions should be selected in an open and transparent manner, using competitive tender where feasible. The committee's final point focuses on the visibility of the European Investment Bank. Despite its triple-A rating, it has triple-zero recognition amongst the SME community in the EU. Firms still write to me and ask where they can get hold of EIB funds. 'I have looked up and down my local high street and I am blowed if I can find the EIB' , say my correspondents. It is time the EIB came in from the cold and told Europe how it is here to help.
Finally, I wish to congratulate Mr Pronk on the drawing up of his report.

van Velzen, Wim
Mr President, in his introductory speech Mr Pronk reminded us of the intense cooperation between the three bodies. This was largely the result of the European Parliament having financed this project out of its own budget. That is why it was necessary for the others to cooperate with us. The European Parliament did this to create the opportunity to submit at least one concrete project before the summit on employment in Luxembourg. I am still extremely satisfied that we ended up doing this, albeit with a great deal of trouble.
The objective of the entire project is obviously to create employment. I accept the idea that SMEs can play a vital role in this. I would like to point out, however, that there seems to be a certain amount of hype going around. Everyone thinks that as soon as a new small firm has been set up, everything will be fine. Yet if you look again a year later, you will notice that quite a number of these new SMEs have disappeared. That is why I would like to emphasize the request we are making in our amendments to include education and mentorship. The people concerned deserve top-quality support, whether in the context of entrepreneurship, as was formulated during the employment summit, or else as part of this project, to ensure that the jobs created will last.
Another element I would like to point out is the one expressed in Amendment No 11. The final assessment should devote considerable attention to the quality of job creation, to social protection and trade union rights for example, as well as to the type of job creation. Is it atypical, full-time, and so on? If this forms part of the assessment, then it obviously means that this should also play a role in the objectives, at the time when the projects are given approval. I hope the Commission will pay attention to this right from the start. Simply leaving it to the Member States is an extremely dangerous strategy, because in some of the Member States hamburger jobs are proving more popular at the moment than a balance between flexibility and security.
In conclusion, I would like to point out that the link with what we refer to as the third system, the so-called social economy, which may be found in public health or culture, is very important to us in the project. It is my view that there is enormous scope for job creation in this area. I still believe that this sector has been hugely underestimated, by the Commission as well as others. I would like to argue for these projects to be linked to the proposal we are discussing today, and which I hope we will approve tomorrow, once the Commission has adopted enough of our amendments.

Schiedermeier
Mr President, in his report Mr Pronk has clearly presented the problems and concerns in respect of the proposal for a Council Decision on measures of financial assistance for innovative and job-creating small and medium-sized enterprises. I should like to thank him most sincerely for his valuable contribution and I hope that his proposals will be given due consideration by the Commission and the Council. For years the institutions of the European Union have been stressing the importance of SMEs in the area of job creation.
All available figures show that SMEs form the backbone of employment growth in the EU and that this situation will continue. The smaller the business, the more successful it generally is in creating jobs. Various financial schemes have been devised and introduced continually since 1992, some of which undoubtedly proved successful. In spite of this, Commissioner, I am constantly aware of criticism that the programmes lack cost-effectiveness because the application procedure for SMEs, no less, is too complicated, too bureaucratic and too protracted. Many SMEs have to hire expensive consultants just to process their applications. These defects should all be put right in the new proposals.
The criticism which has been expressed, namely that there is no comparative assessment of the performance of previous measures in terms of cost per job created, is sadly justified. This lack of transparency makes it considerably more difficult to prepare the new measures which are being planned.
Nevertheless, I hope that what the rapporteur calls the 'ETF start-up scheme' , the joint European venture and the SME guarantee facility, particularly for businesses employing fewer than 100 people, will all prove successful. It is precisely these enterprises which experience problems when it comes to the provision of risk capital. Parliament wants to promote this through the SME guarantee facility and in so doing to create more jobs. I therefore expect that the final amount allocated will be something which approaches what has been proposed by Parliament. The success of the new measures is vital for the unemployed of Europe and is now a matter of real urgency. The sooner these are implemented, the better it will be. Our motto must be 'more jobs, less bureaucracy' . I hope that we can quickly achieve this goal, though not, as Mr van Velzen says, by giving employers even more regulations to cope with. That would be regrettable.

Crowley
Mr President, I welcome the Commissioner to the House. At the outset I want to congratulate my colleague, Mr Pronk, for a wonderful report which comes at a very opportune time for us. Last week in Brussels we discussed the proposed changes to structural funding and to the support mechanisms under the European social fund, in particular those for employment creation, and we saw with some disquiet that the real amounts of money allocated for employment creation and training processes were being reduced overall.
As my colleagues have already said, the SME sector accounts for over 66 % of all employment within the EU. Ireland is unique in the sense that our criterion for SME status in the European Union is an average of 250 employees or under. The majority of companies in Ireland in that sector would employ 80 people or less. This presents us with a great opportunity to send out a very strong message to those people who are putting their own capital at risk that we are willing to act with them as joint partners in creating new enterprises, new jobs and, in particular, new economic wealth.
There are a couple of things we should focus on more than we have done. Mr van Velzen touched on the fact that a lot of SMEs shut down within a year of being set up. The main reason for that is that they do not have access to more long-term finance than just a one-year term loan.
Secondly, they do not have the same access to training which would allow them to keep up with the new technologies, with new economic forecasting to enable them to be competitive within the main markets.
I congratulate Mr Pronk on his proposals with regard to the very technical aspect of providing venture capital to these small enterprises, so that Europe once again can be in the lead in creating new employment.
Finally, I do not think it is appropriate that the third sector should be included. Following on what Mr Schiedermeier has said, it is important to recognize that we can protect workers' rights and social entitlement, but that does not mean we have to add on more bureaucracy and red tape.

Boogerd-Quaak
Mr President, the previous speakers have already pointed out that it was partly thanks to Parliament that these resources have become available. It is my view that they were released for a good cause, namely to support those enterprises which are starting out or are in their initial stages and which need capital. The fact that we are doing this is unique. On the other hand, we should ensure that no money is wasted, either at the research centres or in the hands of those who are responsible for channelling the money. For that reason and because we are worried that these resources might be misused, we tabled an amendment to paragraph 3 of the proposal. We tabled Amendment No 17 for the same reason, because we believe that if you want to evaluate, you should know what you are evaluating. At the moment there is still some uncertainty over the implementation measures. I would like to know from the Commission what its position is on these amendments.
Mr Pronk mentioned that we worked together very closely on this point and that we acted unanimously. Those who have known me for some time know that I normally try to use reason when looking at things, and this includes the debate between the Commission and the Council. But I think we should both use reason, and, together, take a serious look at each others amendments.
Mr President, Mr van Velzen also pointed out the importance of mentorship for young entrepreneurs and people starting out. I believe Mr van Velzen is too dismissive in saying that many of those who start out do not continue. I share his view on mentorship, but I believe there will always be risks and that we should look at the people who have progressed further than the start-up stage. Because, as it turns out in America, many more new jobs are created than lost through risk. That is why I hope that we will be able to look at this programme in a positive way.

Ojala
Mr President, firstly I would like to congratulate Mr Pronk on his report, and on the fact that he has succeeded, in quite a short space of time, in coming to grips with the essentials in this matter and making important and worthwhile changes to the Commission's proposal. Hopefully the Commission will be willing to accept them.
I am particularly satisfied with the report's mention that part of the SME structural funding programme should be aimed at funds for third sector SME's, especially for public health, education and the Arts. This represents that broad interpretation of the notion of innovation that is needed. Innovation does not just mean technological invention, but also possible new ways of producing services or care. Naturally, the main responsibility for the nation's health and other such things rests with the public sector, which small firms in the third sector can only complement, never replace.
The small companies I allude to are often firms in which women mainly work. I am happy too that the report mentions the need for a report on female entrepreneurs, as a separate exercise. These companies I am talking about are often very small. Women are inexperienced as entrepreneurs and they lack information on funding opportunities. However, women often work in labourintensive service industries, so investment in such companies will lead directly to job creation.
It would be advantageous to all, men and women alike, if information on funding opportunities via the EU were easily accessible at one source and there were no need to search for it among the various authorities. This is very important.

Ewing
Mr President, like the others, I thank Mr Pronk for his work. I am struck by the degree of consensus there usually is on this important subject right across the parliamentary groups. We in this Parliament all seem to know that this is the hope for dealing with the horrendous joblessness. This is the bright star shining in that darkness.
I come from an area with a tremendously sparse population and I have to ask: what is small? In many parts of my area small would not be 50 employees; that would be big. I join with the honourable Member who appealed for a special set of rules for the micro SMEs. Some of the most innovative schemes in my constituency have started off with five to ten employees, sometimes in quite remote places. If the idea is good enough remoteness can often be overcome. There is one in Skye where scientifically skilled people, working in tiny areas, create instruments to measure various parts of the body for various purposes. The thing produced is so small that it is not costly to despatch it to all parts of the world. That business started off with two men and now it employs about 30 top scientists who are happy to live on Skye. It can often be that something starting in a tiny way can become very important to the whole community. We could all give examples like that.
Mostly these small businesses have the problem of a narrow investment base and that is what we are trying to address. I welcome the three schemes which Mr Pronk has so ably described. However, one has to say that once the small business has got over the start-up problem and shown some success in job creation, what happens then? That is when the test comes. Very often in my country - and in others - they go into bankruptcy because of late payment and the lack of a code for that.
There was a programme recently on the BBC which suggests that the Commission is about to introduce a directive on this subject. I hope so. In the Committee on Economic and Monetary Affairs and Industrial Policy, on which I served for some time, we all unanimously wanted a code for late payment. It is late payment that undoes all the work we are trying to do here, and often the culprits are big companies, local authorities and, I have to say, institutions of the European Union. They are all at fault in driving many of these companies - who have managed to get over the hurdle of getting started and creating jobs - out of business.
The old schemes worked rather well, once we managed to get quite a lot of banks to support the European Investment Bank guarantee system. We have not really had a proper evaluation, as one speaker said, of performance in terms of cost per job. I put a lot of information around my constituency in Scotland about that scheme and many people wrote to me. It should not really be me who provides the publicity. A lot of companies simply do not receive information about the EIB, not even about the important work being done by European Information Centres. For example, there is one excellent centre in Inverness, but it does not receive enough funds to disseminate the fact that it is there and what it can offer.
I welcome this report with all its merits and hope it will be passed unanimously.

Nicholson
Mr President, first of all I would like to congratulate the rapporteur on an excellent report. It is certainly widely recognized throughout the European Union that SMEs are fundamental to the future of our economy. With that in mind, I certainly welcome this report which seeks to build on Parliament's commitment to creating conditions in which SMEs can develop. We all know that small and medium-sized enterprises account for more than 65 % of our employment, and it is right therefore that in finding ways of strengthening our economy most effort is put into helping them over the initial difficulties.
I would certainly support the calls for help because I am a little bit like Mrs Ewing in my constituency. Many of the proposals concern businesses with under fifty employees, indeed under twenty employees, and a lot of these industries are the micro-ones who start from very small beginnings but can flounder very speedily if they do not get that initial help.
Late payment is certainly one of the major problems, and I think we must ensure that we give the flexibility that is needed and that we do not hang more red tape and bureaucracy around their necks.
This is one of the problems I find with national governments, especially when support comes from the EU - that there seem to be more bureaucratic conditions tied in to all new proposals. Unless we can lighten this up, unless we can find flexibility here, then I think we are not achieving what we are hoping to achieve and that is to get people in the EU back to work.
In my own constituency, we have the particular problem of the difference between the pound sterling and the punt. The UK government has to date been unable to tackle the high rate which is the most overrated cost of any currency in the world. The pound sterling is certainly putting many of my small businesses, especially in border regions, out of work and they are experiencing considerable difficulty.
Those are the challenges I think that we have got to face and if we do not face up to those challenges, then I think we will not be doing the job that we are certainly here to do, and we will not achieve in the long term what we hope to achieve in getting the people of Europe back to work.

Angelilli
Mr President, I too would like to congratulate Mr Pronk on his report. As all the other speakers before me have said, no doubt all the studies and statistics maintain that the future of European employment depends on small businesses, which in the last ten years have been the only ones able to create most new jobs.
In Italy, for example, there are around four million small businesses, which represent 90 % of our enterprises. The SMEs have had the highest growth potential and, therefore, the highest potential to create jobs, precisely because they are the best at adapting to market requirements.
However, the SMEs are too often forced to assume all the business risks, without any type of facility, either in terms of tax concessions or in terms of access to credit, as the State normally only favours and helps large businesses. Among other things, it is precisely the difficulties in obtaining money, other than at often totally unreasonable bank rates, that determine the conditions for an increasingly more worrying spread of the phenomenon of high interest.
Consequently, I share the spirit of the initiative favouring the new financial measures for SMEs. In particular, I agree with the opinion expressed by the Committee on Employment and Social Affairs on the need to give specific priority to business with less than 100 employees, establishing accurately and transparently the real potential for growth of the businesses themselves, that have to create new jobs; however, these new jobs also have to be permanent.
To help the more dynamic SMEs, particularly with regard to the small undertakings of young people and women - possibly the most disadvantaged sectors - by making more funding and finance instruments available, will mean not only an increase in employment but also technological innovations, competitiveness on the market and, above all, greater ability for economic operators to face the challenges and opportunities of the imminent European Monetary Union.

Ghilardotti
Mr President, as recalled by Mr Pronk and by those before me, for years we have been trying to identify effective means, methods and solutions to contribute towards facing the employment problem in a positive way. The reality confirms that in all Member States the SMEs are the backbone of the business sector in Europe, the only ones, as previously pointed out, that have managed to create new jobs in recent years.
The SMEs are therefore the most able to adapt to fast changes, they are more flexible, but they also have greater difficulties in finding capital on the markets and in gaining access to credit at lower rates.
We therefore need, as we are already doing and as proposed in the communication, to increase the growth potential and the vitality of SMEs at Community level, by facilitating and enhancing access to capital.
For this reason, last year, while preparing for the Luxembourg Extraordinary Summit, the European Parliament called on the Council to adopt strengthening and expansion measures in favour of SMEs and proposed the creation of a new budget heading B-55, job market and technological innovation, to be financed with ECU 450 million over three years, dividing the measures into two sections: initiatives in favour of the job market and technological innovation, in addition to the amount already provided by the EIB and by the European Investment Fund.
In particular, the initiatives favouring the job market are also based on the implementation of the Commission communication indicating the need for local employment initiatives, identifying too 17 different sectors in which pilot projects would be financed as would the spread of the good practices that have produced satisfactory results in terms of employment in recent years. I am thinking, among other things, of the development and promotion of pilot projects within the third system - not the tertiary system, as it is often incorrectly called or translated - which, in addition to creating jobs, is an efficient local means of participating in and providing positive answers to social, environmental and cultural requirements. At this point, I have to say that, not meeting expectations, with the proposal we are discussing today, the Commission is allocating a reference sum of ECU 420 million, excluding the initiative of the first section. Frankly, it seems a little strange to me, as it does to Parliament, and inconsistent with the indications and choices of the European Parliament accepted by the Luxembourg Council.
In addition to approving the Commission proposal, it is therefore also necessary to correct what has been mentioned above and include it in the proposal legal basis, as proposed by the rapporteur, whom I congratulate.

Chanterie
Mr President, Commissioner, ladies and gentlemen, I would also like to start by thanking Mr Pronk for the work he has done on his report, which could be seen as ground-breaking as far as this Parliament's work is concerned. I would also like to make clear from the start that I am in favour of the growth and employment initiative. The European Parliament has made ECU 150 million available, and all this is primarily for the benefit of small and medium-sized businesses, businesses with up to 250 employees, as set out by the European Commission. We are unanimous in this Parliament in our support for this scheme. Yet I would like to put a few objections to Parliament and the Commission, Mr President, in the hope that we will also remain critical when seeing through this entire initiative.
My first objection concerns the fact that 90 % is allocated to the so-called technology facility for SMEs. It concerns sub-sectors which chiefly employ highly-qualified people. This kind of support should go hand in hand with investments in education and professional training; if it does not, we might see an increase in the shortage of technologically-skilled people. Today the papers are reporting that the Belgian government is looking for 5 000 computer specialists, and that in Great Britain Tony Blair is looking for 20 000 to tackle the millennium bug. These people are simply not on the market at the moment. We need further training.
Secondly, I am pleased with Amendment No 3 which aims to extend this initiative to the third sector, especially to sectors such as public health, education and culture. These social angles have great value in themselves, and could lead to numerous jobs, which will not so much affect highly-skilled, as semi- and unskilled workers. The fight against structural unemployment should be introduced in this environment above all.
My last comment, Mr President, is that we must take care that we are not dealing with the phenomenon of the cuckoo in the nest, as when important subsidies are passed on to SMEs with jobs being not the main, but the secondary concern. That explains why it is so important that this initiative is implemented, and more specifically that jobs are created.

Gallagher
Mr President, I would like to pay tribute to Mr Pronk on the preparation and presentation of a very fine report. I am particularly pleased that small and medium-sized enterprises have now been placed at the top of the European agenda, recognizing their important job-creating role within the Union.
SMEs are the backbone of industry, commerce and the service sectors throughout the Union, with one third of all jobs in the private sector within the Union in enterprises employing fewer than ten employees. Coming from an almost ultra-peripheral region in the north-west of Ireland and representing the constituency of Connacht and Ulster, which has a high rate of unemployment and a per capita income less than 75 % the European average, I can very much identify with enterprises with less than ten employees and fully appreciate their importance. We must create an economic climate which is conducive to investment in such small enterprises.
The creation of an enterprise culture within the Union is absolutely essential. It is not the responsibility of the Commission or indeed Member State governments to create employment. However, it is their responsibility to create conditions conducive to investment and job creation. Favourable economic conditions, terms of competitiveness and labour market flexibility are an essential prerequisite to job creation. Therefore, in conclusion, I welcome Parliament's decision to provide additional financial resources of ECU 450 million and also welcome the proposal for a Council decision to assist SMEs.

Raschhofer
Mr President, advertising is dominated by the big companies and multilateral corporations. Their presence in this sector establishes them firmly in the minds of the people. Just think of Coca-Cola, for example. Every child, no matter where, knows the name. However, the real mainstay of our economy is not the handful of big businesses but rather the many small ones, the SMEs. These account for 66 % of total employment in the EU and are marked by a strong gross employment growth. I therefore welcome any initiative which enables us to provide financial assistance to these highly efficient businesses, for one of the biggest problems facing small entrepreneurs is the generally poor availability of own capital.
Only by subsequent assessment will it be possible to establish whether or not the aim of the programme, namely to create more jobs, has actually been achieved. The earlier we carry out this assessment, and the greater the detail of our reporting, then the greater will be the success of the programmes and the effectiveness of the financial resources used. I therefore fully support the adoption of Amendment No 10.

Waddington
Mr President, this report on financial assistance for innovation and job-creating SMEs carries the promise that resources will be made available to encourage the sort of entrepreneurship which will provide for sustainable growth in employment. Regrettably, however, the Commission's proposal for a Council decision fails to mention the role that women entrepreneurs might have in this process. This is a serious omission because women probably represent the greatest potential in this field. Currently only 30 % of SMEs are run by women but those businesses, according to the relevant statistics, are the ones most likely to be successful.
The excellent Mr Pronk has kindly agreed to my suggestions in this regard. Amendment No 8 draws attention to the need to secure the wide dissemination of information concerning financial assistance, especially to women entrepreneurs, and Amendment No 11 calls for an assessment of the schemes which takes into account equal opportunities. I hope that the Commission will listen to us on this point and will truly mainstream opportunities for women within this financial assistance.

Formentini
Mr President, the report we are examining is certainly positive, as well as a reversal of the trend in speeches by the European Community. But I have the impression that it is like a drop of water in the desert, totally inadequate, all the more so as now, with the entry into force of monetary union, the difficulties of SMEs will increase.
We are faced with a situation where a certain amount of flexibility will no longer be permitted and where the lack of democratic control by an elected Parliament over measures taken by the governments and by the European Commission makes this problem even more difficult. It is made difficult by the serious discontentment felt in the world of real production. Take Italy, for example, where I have been elected, a country which has got its accounts more or less into order, intensifying the tax pressure on SMEs and planning to do so even more in the future; the European Commission should pay a great deal of attention to that need.
There are instabilities. There is an area in the north of Italy, where SMEs are concentrated, that will certainly become unstable, precisely because of these policies.
The Italian state has not yet entered Europe. It is already thinking of diverting resources to the south, taking inspiration from the usual practice, that should certainly favour the great capital, that has deindustrialized the north and which creates virtual businesses in the south where there is no independent growth, because the slightest real business activity is suffocated by the Mafia world.
It is therefore right for the Commission to allow the idyllic visions to be dispelled and realize that great instability will be caused by the Italian state, particularly owing to the revolt of the SMEs in the north of the country.

de Silguy
Mr President, ladies and gentlemen, Members of the House, Mr Pronk's report follows on from the "growth and employment' initiative which you mentioned, and which Parliament approved by making the necessary resources available during the 1998 budget procedure. This very clear political signal from the European Parliament made a very substantial contribution to the success of the European Employment Summit last November in Luxembourg. On this basis, the Commission was able on 21 January to present its legislative proposal, and is both delighted and thanks you for the speed with which your committee has handled the matter.
There is no miracle response, no simple solution to the challenge of employment. The strategy recommended by the Commission is the continuation of a healthy macroeconomic policy at Community level and the strengthening of the coordination of national economic policies and employment policies. Within this framework, the growth and employment initiative intends to develop specific actions in favour of small and medium-sized companies which create employment, as Mr Chanterie and Mrs Ghilardotti have just pointed out. No sector is excluded; all sectors are admitted. The SMEs are the reservoirs of employment in Europe. I would remind you that in the United States, it is estimated that 3 % of companies - those working basically in biotechnology, telecommunications and in the cutting edge sectors, have created 80 % of jobs in that country.
Hence the Commission has adopted the mechanisms which are the most efficient in terms of the creation of sustainable employment, and they aim in particular at lightening the financial burdens placed upon SMEs.
In response to your questions, I will look briefly again at these three programmes, which are parallel but complementary.
Firstly, we have the European Technology Force "start-up initiative' which is a venture capital mechanism run by the European Investment Fund. The EIF will invest in specialist risk capital funds, and the proposed arrangement will strengthen the European Technology Force - the ETF - which has already been implemented by the European Investment Bank (EIB), but this will take place exactly where the EIB cannot intervene. This new mechanism will set great store on the market segment for venture capital which finances the establishment and start-up of small and medium-sized companies, and where the need for finance is higher and the risk greater.
The ETF start-up is purely an initiative for job creation, irrespective of the field or type of small or medium-sized enterprise - Mrs Ewing, I reply to you on this point - and of course, for the smallest companies, companies which are set up or run by women, there are no constraints or limits in this field.
We nevertheless note that, in spite of recent efforts, risk capital is underdeveloped in European countries, in particular as regards start-up risk capital. That is why we drew up this proposal.
Why is it not possible to change the name? This is because it is a complementary initiative to the EIB, hence the marketing, by which I mean the advertising and communication which focus on this initiative. A moment ago, Mr Harrison, you pointed out that it was particularly difficult for SMEs to know when these schemes existed. Accordingly, we have paid special attention to efficiency in our marketing. That is why this initiative, associated with the EIB, will be implemented in accordance with the EIB. Moreover, in our opinion it was unnecessary to add the term "Euro' and call it 'Euro Start-up' , as this did not add a great deal.
That is my response to your comments on the first initiative.
With regard to the second initiative, the joint European venture, which was less frequently mentioned by Members of the House, I would say that it will help in setting up transborder SMEs within the Union, enabling them to make better use of the opportunities offered, in particular, by the single market. This programme provides for contributions to a maximum amount of ECU 100 000 per project, for expenditure on market studies, development of corporate plans, and for subsidies which may cover up to 10 % of fixed capital formation. This mechanism is based on a pilot initiative which was adopted by the Commission in 1997. I would add that a similar programme - namely the JOP - is intended for the Eastern European countries, and has already shown its capacity to create new business and jobs.
The third and last mechanism is the SME guarantee facility, managed by the European Investment Fund. This facility is intended to increase the volume of loans available to small or recently formed companies, on the basis of shared risk with existing guarantee systems. The Commission is relying on the leverage effect of such an instrument, which will add to the capacity to raise real credit for the relevant small and medium-sized companies.
Overall, these three mechanisms could add up to some ECU 9 to 10 billion of extra investment in Europe, and will be rapidly made available. In this respect, the Commission has taken up your request for a rapid and in-depth evaluation of the efficiency of these measures. Mr Pronk, there are no supplementary conditions. We accept, like you, that the agreement should last three full years, of course, and I would say to Mr Schiedermeier that we are in fact trying to ensure more transparency and accessibility for this proposal.
The Commission has already made a certain number of things available for venture capital. This programme is limited, but it will significantly improve the availability of own or quasi-own capital to small and medium-sized enterprises. Having said that, it is not enough simply to provide them today with what they need most. We have to exploit all the advantages offered by the single market. In this respect, institutional and regulatory barriers, market fragmentation, taxation and obstacles to as the development of a vast single European capital market will persist, and we will need to tackle these questions too.
I do not think that the growth and employment initiative is, on its own, enough. That is why the Commission will, this very afternoon, set up a special committee on risk capital, with a view to the 1998 Cardiff European Council, which will, therefore, play a fully complementary role.
In conclusion, allow me to add my congratulations to Mr Pronk on this report, and to say that this is an excellent example of successful institutional cooperation. In this respect, I can tell you that the Commission can take over most of the rapporteur's amendments, sometimes with certain changes in the wording. However, it cannot support the amendments relating - as I said a moment ago - to a change in the name of the action itself, nor those which discriminate between the beneficiary enterprises. Mrs Ojala and Mr Wim van Velzen, any enterprise is acceptable, as any job is worth creating. In other words, the second part of Amendment No 3, Amendments Nos 4, 5, 6, the second part of Amendment No 11 and Amendment No 15 cannot be accepted. On the other hand, to Mrs Boogerd-Quaak, I would reply that we can accept Amendments Nos 16 and 17 and Amendments Nos 8 and 10, which were tabled, I believe, by Mrs Raschhofer.
I have a final word about the budgetary aspect, in response to Mr Ghilardotti. The formal position of the Commission is that shown in the financial statement of the proposal, in other words, ECU 420 million for measures of financial assistance for SMEs. This amount in entered in the lines B 5-510 and B 5-511; these two lines which correspond respectively to the SME technology initiative and to the joint European venture.

Chanterie
Mr President, I would simply like to ask Mr Commissioner - whom I thank for his replies - whether I have properly understood that Amendments Nos 3, 4, 5, 6 and 11 have not been taken over.

de Silguy
Amendments Nos 3, the second part of Amendment No 5, Amendment No 6 and the second part of Amendment No 11 have not been taken over.

van Velzen, Wim
Could you please explain to me what you mean by "not the second part of Amendment No 3' , because that is our own amendment. May I point out that the collective nature of this project meant that, in addition to the SMEs we also wanted to incorporate innovative actions in the labour market and in the third system? We added Amendment No 3 so that the original character of the deal would be restored. I would like to point out that this is not just some marginal discussion. If Amendment No 3 is a problem to you, then the interpretation we gave to the original accord must have been a problem to you. If this is the case, then you are making it very difficult for Parliament to approve this proposal. I therefore urge you to be extremely careful before you cast Amendment No 3 aside.

de Silguy
Very briefly, Mr President, with regard to Amendment No 3, it is proposed to add a sentence to the first paragraph. I shall say it in English:
'to stimulate job-creation by facilitating and strengthening'
(FR) We can accept it. In the second paragraph:
(EN) 'A part of the Programme should be devoted to the financing of SMEs in the third system, in particular in sectors such as public health, education and culture.'
(FR) We cannot accept the amendment because, as I said earlier, the programme, as a whole, is not exclusive. Therefore, there can be no specific mention of one sector or another. All sectors of activity are covered. There is no reason to identify one or two of them.In the third paragraph:
(EN) 'In the implementation of the programme, priority shall be given to small enterprises with up to 100 employees.'
(FR) We can accept the amendment, although the idea is already included in Amendment No 2. It is a little redundant, but we can accept it.
Pronk
I understood the Commissioner to say that the Commission is of the opinion that as it stands at present the proposal by the Commission makes it possible to provide finance for the things mentioned in that paragraph which he does not want to be part of the legal base. Is that not correct?

de Silguy
Yes, it is covered.

President
The debate is closed.
The vote will take place tomorrow at 12.00 noon.

Follow-up to the world summit on social development
President
The next item is the report (A4-0105/98) by Mrs Schörling, on behalf of the Committee on Employment and Social Affairs, on the Commission's communication on the European Union's follow-up to the world summit for social development (COM(96)0724 - C4-0142/97).

Schörling
Mr President, as you just said, this report is about the Commission's communication on the world summit on social development in Copenhagen in 1995 when heads of state and government from 117 states and from the EU signed the Copenhagen Declaration. They thus agreed that the overriding objectives on which people should cooperate were the eradication of poverty, an increase in employment and the fostering of safe and just societies.
In just over a month, in May, the UN's Economic and Social Council is to hold a meeting in New York at which the question of the implementation and follow-up of the Copenhagen summit will be discussed. It is therefore particularly important that we in the European Parliament have the opportunity through this report to give opinions before this meeting. As we know, a new General Assembly is going to be meet concerning these issues in the year 2000. It will then be time for people to show what they have done to live up to what they have agreed. I therefore welcome this communication from the Commission and think it is good that we have had the opportunity to discuss it in committee, including with the Commission's presence. I would like to take this opportunity to thank my colleagues on the Committee on Employment and Social Affairs for good cooperation and for their valuable points of view. At the same time I regret that, unfortunately, the opinion from the Committee on Development and Cooperation came a little too late for me to include anything from it. However, I believe that most of the points of view of that committee are still covered in the report.
In addition, I would like to say that the main responsibility for the implementation of measures falls primarily to the Member States. However, EU policy and the EU as an international player have of course a special responsibility. This may concern the negative environmental and social effects of the single market. It may, for example, concern the effect of EMU on employment and cutbacks in the public sector, economic convergence but no social criteria, and it may also concern the EU's role as an aid donor.
When I read the commitment which the Copenhagen Declaration entails, I am, to say the least, surprised that in the summary on the first page the Commission writes that at both national and Community level we have implemented a policy which corresponds to the commitment in the Copenhagen Declaration. I must ask how we are going to get to grips with social and environmental problems if we close at least one of our eyes to reality? Considering how many unemployed and how many poor people we have in the EU today, I think it is a bit of a joke for us to say we have done so well. In addition, there is not a word about the poverty action programme which has yet to be adopted by the Council.
I am also looking for a strategy from the Commission to encourage and exhort the signatories of the Copenhagen Declaration to really adopt concrete targets for social development and to involve the citizens in decisions and priorities about measures. It is good that there is such a heading, but unfortunately there are only eight lines of text concerning this important extension of the debate and the involvement of civil society. An involvement of civil society is in some way fundamental to the success of the policy. That applies not only at EU level, but, of course, also at international level. In developing countries we must establish a partnership, a cooperation with the local population in a totally different way. We must replace the old donor/recipient mentality with the idea that we have to solve the world's future problems together.
One disappointment with the outcome of the Copenhagen Summit was that we did not put sufficient emphasis on the necessity of debt relief for the poor countries, and that we did not succeed in arriving at a code of conduct for financial markets and world market trading. At some stage the rich countries will have to take the initiative to break the trend whereby the gulf between rich and poor just keeps on growing. In recent years the world's total aid has fallen to its lowest level in modern times. That is why I am so anxious that we really vote in favour of paragraph 14 which concerns a global tax on international currency speculation, which has been proposed by Nobel Prize winner James Tobin. The income would go into a fund to be administered by the UN's Social and Economic Council. I think it is time that we accepted such a fund, and time that we in this Parliament repeated yet again that it is now time for the rich world to really take a big step.

Schmidbauer
Mr President, Mrs Schörling has presented an excellent report. On behalf of the Group of the Party of European Socialists I wish to recommend it to the House, for there are clear loopholes in the Commission's communication on the European Union's follow-up to the world summit for social development. The Commission maintains, and indeed Mrs Schörling also confirms this, that the policies of the EU and of the EU Member States have always been compatible with the commitments of the Copenhagen Declaration and action programme. Proposals for initiatives within the EU have therefore been of correspondingly meagre proportions.
It is certainly right for the EU to advocate the philosophy of unemployment reduction, social integration in the positive sense and the eradication of poverty. But as far as real action is concerned, we have had nothing but vague declarations. We demand that the fight against poverty and social exclusion be given top priority within the EU. Measures must therefore be taken within the framework of the European Social Fund. For many years the programme to eradicate poverty has been put on hold because the German government was opposed to any EU initiative.
This German blockade must be broken. We call upon the Commission to interpret the new article in the Treaty of Amsterdam as a means to combat social exclusion, that is to say, we require a definition of the legal instruments so that after ratification of the Treaty, measures can be taken for the benefit of the long-term unemployed, the poor, the disabled and the elderly.
The Commission's proposal deals in much greater detail with the priorities which have been laid down at international level. EU policy in the area of development cooperation is actually directed at the eradication of poverty. We have repeatedly endorsed our call for programmes aimed at debt reduction, after we have fulfilled the commitment to provide 0.7 % of GDP for official development assistance, and after compliance with ILO standards for basic working conditions and with the UN declaration of human rights and the UN child convention.
But we have also called emphatically for a global tax on international currency speculation, the so-called Tobin Tax, in the form of a Parliamentary resolution to the Copenhagen Summit. Using taxes obtained from this source to create a fund for debt reduction for the poorest countries is without doubt a very practical move. My group cannot therefore support Amendment No 10 as proposed by the Group of the European People's Party, for we believe that this tax should be imposed.

Pronk
Mr President, I am standing in for Mrs Glase who has dealt with this issue on behalf of our group and has prepared it in the Committee on Employment and Social Affairs, but is sadly unable to be present here today due to illness.
Mr President, what we have here is a good statement from the European Commission. I would like to thank Commissioner Flynn most sincerely for this. I believe that what the statement says is very good in itself, and that it tries to resolve a number of issues which have landed on the European Union's plate. The suggestions by the rapporteur, Mrs Schörling, whom I would also like to thank for what she has written, contain a number of useful and important additions.
But Mr President, that is about it. I would have preferred it if we had stayed closer to what the Commission had given us as a statement, and had not gone too far. Because now we are dealing with a strange situation. Mrs Schörling, a representative from Sweden, takes a rather anti-European Union view. She is fully entitled to that, but this view implies that her country should remain as independent as possible. That is also her right. But now we have the strange situation in which we are going to include a text from Ms Tongue in this report, dealing with very centralized, harmonized measures which encroach on the Member States' autonomy to raise taxes. Mr President, if you understand this, than I must congratulate you. At the moment it is hardly comprehensible. It is not possible to do two things at once. You cannot resist European union, whilst at the same time proposing all sorts of measures which lead to the type of harmonization that really goes one step too far. And that is a very major problem with this report. I understand that the Socialist group let this pass rather more easily than we do, but we are not able to accept this under any circumstance, Mr President. Should we for some reason come off the worst, then we will not be able to support this opinion, primarily on account of this point. There are a few other points on which we have submitted amendments that attempt to make some improvements to the opinion. But as to the point in the text by Ms Tongue, there is no room for discussion. We would have to make a complete volte-face. In fact, Mrs Schörling has made a complete volte-face herself by suggesting this.

Lindqvist
Mr President, one of the most important tasks we have at national, European and international level is to prevent poverty and exclusion and to create social, economic and sustainable environmental development. We shall do that at EU level together with Member States which also gave their support to the Copenhagen Declaration and its ten detailed commitments.
Parliament also supports this and welcomes the Commission's communication on a more detailed and concrete follow-up of the commitments of the world summit. However, things are going too slowly and the commitments are too weak. I think that in her report the rapporteur sums up in a very worthwhile way a proposal which goes further. Poverty must be tackled through a combination of measures. There is not one measure alone which prevents poverty, but several, including trade, aid, partnerships, positive economic development, employment programmes, more companies, skilled work and family life on equal terms. We have now prioritized three measures at both national and EU level. Firstly, as regards trade and reduced tolls and taxes, the EU has a special responsibility. Secondly, there must be joint arrangements, such as the 20: 20 initiative combining development aid with social programmes in the recipient countries. Thirdly, we need social and ethical rules or regulations in international trade, including WTO rules.
The Group of the European Liberal Democrat and Reform Party largely supports this report. However, a majority of the group is opposed to a Tobin Tax and wants to reduce the number of references to ethical regulations in paragraph 17. In other words, we support Amendments Nos 9 and 10. Personally, I have no difficulty accepting a Tobin Tax, and I believe both the demands the rapporteur is proposing are worth trying in order to get a bit further with the commitment to partnership and the eradication of poverty in the world.

González Álvarez
Mr President, the latest United Nations report on human development defines poverty as a denial of the choices and opportunities to lead a tolerable life. It also says there are 1 300 million people in that situation, surviving on less than one dollar a day. One thousand million people are illiterate, and even more have no drinking water. It seems to us that in recent years, not only has the situation not improved, but it has not even stabilized; in fact, it has deteriorated.
That same United Nations report says that, whereas in 1960 the poorest 20 % of the population had a 2.4 % share of world income, today that share is 1.1 %. Furthermore, whereas in 1960 the difference between the richest 20 % and the poorest 20 % was 30 to 1, today it is 78 to 1. So the situation is not improving or even stabilizing: it is getting worse.
This is why we completely agree with the Schörling report, including the controversial Tobin Tax. We especially agree that all countries should comply with the United Nations resolution calling for 0.7 % of GNP to be allocated to development cooperation. Only four European countries comply with that resolution.
In recent years, not only are donations from these countries not increasing, but they are going down. This year's average is 0.27 %. We think that for there to be a proper follow-up to the Copenhagen Summit, it is essential for all those countries which do not yet comply with this demand to come to a decision in that respect.
The United Nations study contains a very interesting sentence: "Economic globalization is advancing very rapidly with no compass or map, and all it does is favour a very powerful minority of the world' . Decisions need to be made. For example, we need to approve the fourth programme to combat poverty, although we do not know where it has got to, and it is being held up by problems. Decisions have to be taken about making the 0.7 % compulsory, and about cancelling the debts of the poorest countries. Of course, we also have to think about a tax like the Tobin Tax, which would affect currency speculation. Just a 0.5 % tax on this currency speculation would be enough to cancel the debts of all poor countries.
We appreciate that the Right has problems accepting this suggestion, but if we do not make all these decisions today we will be talking here for ever, and never make any progress towards eradicating poverty. And in ten years time, we will be debating poverty here again and still talking about the thousands of millions of people still in the same situation.

Wolf
Mr President, ladies and gentlemen, if my memory serves me well, social justice is the central concept of the Christian doctrine. I believe that Plato was absolutely right when he said that one cannot build a community without justice. We are now living in a state of globalization and the world is now a global community, even though we may not always be as mindful of this as we should be.
To stand up and say that the world market will take care of this, that the technological development and deregulation actually taking place will somehow solve the problems, is simply unchristian, and what is more it is foolish. I am therefore simply astonished that those on the Right of this House are saying: no, we cannot do that under any circumstances, particularly since I would like to remind you that even in the run-up to Copenhagen this Parliament agreed by majority vote to do and to call for this very thing. What matters is whether we succeed in actually using the process of the UN Summit to reverse the trend of blind globalization and ideological globalism, and whether we succeed in steering towards social justice, ecological sustainability and democratic co-determination, even for those living in the poorer countries.
The Copenhagen commitments must be realized. The Commission has played a very positive role here, though Mrs Schörling has indicated, and quite rightly in my opinion, that there is still work to be done here. In this respect, we would like to support the Commission, in full recognition of the work which it is doing, but also with the intention of promoting and accelerating this work, for the decision which is at stake will affect the future of the planet.

Papakyriazis
Mr President, ladies and gentlemen, I feel as if, with the opportunity of this debate, the European Union as a whole is undergoing a kind of test, a trial. I believe we talk about globalization every day, we talk about the world society, about the global village, and we must finally grasp the fact, declare and demonstrate what we mean by it all. Could it be that globalization of solidarity lies beyond and outside this view? Perhaps that is what we, the EU, ought to stress. Among globalization's many aspects and dimensions, there is also and predominantly the aspect of globalizing solidarity. I think the great debate that began in the world - and I am being literal, not exaggerating - with this Conference must represent an opportunity for the EU to adopt a responsible stance, to claim the role it rightly has in world society and demonstrate, by its own example, what it is capable of and what it is doing. As an example by which we will be particularly judged, let me mention too the fourth programme on poverty. I have no hopes that the programme will eliminate poverty. It is, however, a sample, an indication, through which we can demonstrate to ourselves first of all and then to the world community what the EU says and does, and I believe that with other similar examples, such as those mentioned in the excellent report by Mrs Schörling concerning what we, Europe can do, that emphasis will indeed be given. Commissioner Flynn, I consider that the EU now has a real opportunity, with Parliament's support, and I should like to hope that Parliament will express that support unanimously, without small-mindedness and without counting the pennies. Let us hope that tomorrow the European Parliament will give the European Union the support it needs at this historic time.

Amadeo
Mr President, we believe that economic and social development is not an abstract concept but is combined with the fundamental concepts of peace, safety, respect for the environment and, not least, respect for human rights. The Luxembourg Summit on employment, in addition to trying to respond to the consequences of the globalization of the economy, emphasized the need to draw up suitable policies to combat the resulting social exclusion and poverty.
We support the Commission's proposal when it hopes for the ratification by the Member States of the UN Convention on the situation of migrant workers and their families, recalling, however, that within the Union itself, workers who have emigrated from the Community countries still do not fully enjoy fundamental rights - which are the "buttonhole' of the Union - and experience real situations of exclusion that need to be rectified. I am referring to the more than five million Italian workers in the world who still cannot exercise their fundamental right to vote.

Burenstam Linder
Mr President, poverty can above all be tackled through economic growth, with rising real wages and growing tax bases. Economic growth is based on technical development, not least by saving on resources, and so also provides new opportunities for growth with environmental improvements.
For the members of the Green group who see economic growth as something objectionable and technical development as a threat, the only thing left is to cling to the idea that you can eradicate poverty through declarations, conferences, resolutions and conventions. Mrs Schörling's report is characterized by this idea. The report does not contain a single word about economic growth as a condition for economic improvement. The rapporteur's efforts are praiseworthy, but this way of approaching the problem is risky, especially since it awakens the general public's hopes which are frustrated by disappointment over false commitments and declarations which lead to nothing.
In paragraph 14 Mrs Schörling urges the Commission to take the initiative for a global tax on international currency trading. For a person who represents a party which believes that its own country should leave the European Union, it is surprising to put forward a proposal which means that the EU should introduce such a gigantic and bureaucratic project as a tax on all currency transactions. The fact that a well-known economist has previously talked about such a system is not a guarantee for the idea's political wisdom any more than that of the person who has an exaggerated respect for the games an advanced theorist plays with reality.
The proposal is also an example of a common finance policy which the rapporteur opposes in other respects. If you dislike currency trading, you should also be a keen supporter of EMU, since when this currency union is created on 1 January 1999, the scope for currency trading between the eleven Member States will disappear. However, because Mrs Schörling is an opponent of EMU, this idea is not mentioned in the report.

Pailler
Mr President, I would have liked the honourable Member to provide the proof that monetary union would effectively give us what all the other commitments have given us.
The social summit of Copenhagen ended in March 1995 with the adoption of ten commitments which fixed as priority objectives the fight against poverty, support for full employment and social integration. The ink of the signature at the foot of the joint declaration was barely dry when the OECD countries began negotiations on the MAI, which totally contradicts the Copenhagen commitments. The secrecy of the negotiations made the MAI negotiators blind and deaf to any other concerns than those of the multinational firms, and they have only taken into account the legal, political and moral commitments made in bodies such as the United Nations and the ILO. They have just received a big slap in the face from the European Parliament.
Following on from the Copenhagen Summit, we have to call into question the heavy trends of current economic and social system of organization and tackle the domination of the financial markets over all human activity, a domination which has not really its progress. This is what was said in the report on the resolution on the respect of human rights voted through here on 17 February, which considered that poverty and unemployment were indeed violations of human rights.
We also support the principle of the Tobin Tax, and we are happy that Mrs Schörling shows determination, unlike our colleagues from the PPE. We have time and again called for this within the group. The governments of the Member States have got better things to do today than to undertake secret negotiations aimed at satisfying the interests of a few investors. They must implement, as they have promised, the decisions of the social summit of Copenhagen, and take effective measures to fight unemployment and poverty. And that is a matter of figures, sir!

Lannoye
Mr President, like many of my colleagues, I would firstly like to express my full admiration for Mrs Schörling's report, which our group will support unanimously, provided the Tobin Tax is passed, of course. I hear protests from the PPE, and I would like to know whether the PPE shows as mush restraint with respect to international institutions which act in the monetary field in particular, such as the International Monetary Fund. It appears that the conservatives are much less reticent with regard to them.
Allow me some thoughts on what I believe is essential. The Copenhagen Summit was an important summit which led to ten commitments which were very positive, and to which the Member States of the European Union itself have subscribed. But once again, these are non-compulsory commitments. However, although in the economic and commercial field, we are subject to compulsory commitments - here, I am thinking of the World Trade Organization which is the only global institution with supranational power, with the possibility of arbitrating decisions over the states, over the European Union, the same does not apply in the social or environmental fields. These commitments have produced a stock of regular reports and promises, but the achievements do not at all measure up to the commitments given. It is important to fight this imbalance and I believe that it is absolutely the role of the European Commission and the European Union to tackle this problem and to act so that in parallel with the institutions which operate in the commercial field, other supranational institutions can also have a role to play in the field of environmental and social affairs. But what do the European Commission and European Union do? They negotiate a multinational agreement on investments which is exactly the contrary of this approach, and which goes in the direction of the World Trade Organization, which further strengthens the policy aimed at depriving the Member States of their means of action in the social field. This behaviour is schizophrenic. Hardly had we voted on a critical resolution in this respect, than Mr Brittan and his colleagues triumphantly announced that they were ready to negotiate a new agreement with the United States, an agreement which goes, yet again, in the same direction. I think that is quite enough, and as a Parliament, we should have the pride to show that we are far more demanding towards a Commission which does not respect in any way what we say to it.

Flynn
Mr President, first of all my thanks to the rapporteur, Mrs Schörling, and to all of her colleagues who have contributed. We welcome the Parliamentary resolution, which identifies a number of concrete priorities both at European Union level and at the international level to follow up the Copenhagen Declaration and Programme of Action. The Commission shares these concerns to a very large extent. The Copenhagen summit has given a strong impetus to governments, to the Community, to NGOs, United Nations bodies and a lot of others to develop and strengthen their actions in the field of social and human development. A lot certainly remains to be done but since the Copenhagen summit a great number of actions have been launched and they should be referred to here.
Allow me just for a moment to make the following specific observations, particularly referring to points 2 and 4, dealing with the people-centred approach and the environment. I should remind the House that the Commission did not wait for the Copenhagen recommendations to adopt the human-centred and environment-conscious approach to development cooperation. The 1992 Council regulation on cooperation with the countries of Asia and Latin America already stated that 'the aim of the Community development and cooperation policies shall be human development. The human dimension of development shall be present in all areas of action.' The same regulation regarding environment issues also stated that 'protection of the environment and natural resources and sustainable development shall be long-term priorities.' So these efforts, strengthened by the declaration, are being maintained.
All this is absolutely consistent with Article 130u of the Maastricht Treaty which emphasizes sustainable economic and social development, the campaign against poverty in developing countries, and respect for human rights and fundamental freedoms. Moreover the Community has committed itself to the implementation of the new Development Cooperation Strategy for the Twenty-First Century presented and adopted by the Development Assistance Committee of the OECD in 1996, which particularly emphasizes people-centred development. I would like to refer to point 5, the fight against poverty, because the matter has been raised by virtually all of the contributors today. Yes, we agree that the fight against poverty and social exclusion should be a top priority for the European Union because it remains a serious problem for so many of our European citizens.
The European Union's single main tool for fighting against exclusion from the labour market is the Integra Community employment initiative within the Structural Funds. The aim of Integra is to promote measures to improve access to the labour market and employability for those who find themselves excluded from it. After two project selection phases, one in 1995 and the other in 1997, 1 600 Integra projects have been selected. One of the principal objectives of the tabled proposals for the new Structural Funds is to combat and to prevent unemployment and exclusion. Point 6, dealing with the legal instruments for combating poverty and exclusion, should be referred to.
The Amsterdam Treaty, once ratified, will create new legal bases for action at Community level to combat exclusion, which can complement the present actions which have a labour market focus. The Commission will discuss how to make best use of this with all the relevant actors and specifically with the Non-Governmental Organizations. Mrs Schmidbauer gave this as a top priority and I agree wholeheartedly with her comments there. The Commission is also actively involved in the work of the DAC to strengthen coordination and coherence amongst donors as well as the work in the Commission for Social Development of the United Nations ECOSOC and other multilateral organizations and bodies.
Some reference was made to debt reduction. This is point 12 in the document and the Commission has strongly supported the World Bank and IMF Highly Indebted Poor Countries Initiative which was launched in 1996, and has proposed new measures at the EC level to reduce the debt of these countries.
Given in particular the Asian financial crisis the Commission is concerned by possible effects of instability in world financial markets and the damage which can be caused through it and believes that proposals such as the Tobin tax are worth examining. I noted the difference of opinion on that particular matter between Mrs Schörling, Mr Pronk, Mr Lindqvist and others. The difference of opinion is there. However, the point is that it is worth examining what is involved. As far as labour standards are concerned, the Commission attaches very great importance to core labour standards and their application worldwide.
We firmly believe that public support for increased trade liberalization will be threatened if we fail to address the public concerns on this important issue. Our new GSP scheme provides for special incentive arrangements starting on 1 January 1998 in the form of additional preferences which may granted to countries implementing core labour standards.
On 29 October 1997, the Commission adopted a proposal for the introduction in the GSP of a social clause on compliance with ILO conventions on child labour and freedom of association, of the right to organize and collective bargaining and of an environmental clause on sustainable management of tropical forests as defined by the International Tropical Timber Organization to ensure that these special incentive arrangements operate effectively. The proposal for a regulation lays down the methods of monitoring application.
Finally, the Commission fully supports the current ILO proposal for a declaration on workers' fundamental rights and, especially, the need for a mechanism to be put in place to guarantee these rights. With regard to cooperation with NGOs, I have one final comment. The Commission greatly values the contribution of non-governmental organizations and citizen-based organizations to the development process and has an ongoing programme of support and cooperation.
Mr Wolf and Mr Amadeo made the very important point about social justice, i.e. that it was needed not just in the EU but also in the global economy. I share that view and have been saying for many years, as Mr Wolf knows, that it is not just an economic development. It has to be matched and parallelled by the social dimension. That is important for the Union and it is also just as important in the global economy of the future.

President
The debate is closed.
The vote will take place tomorrow at 12.00 noon.

Horizontal state aid
President
The next item is the report (A4-0100/98) by Mr Berès, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the proposal for a Council Regulation (EC) on the application of Articles 92 and 93 of the EC Treaty to certain categories of horizontal state aid (COM(97)0396 - C4-0512/97-97/0203(CNS)).

Berès
Mr President, ladies and gentlemen, the Commission's proposal on which we have been consulted at one reading relates to regulations enabling the Commission to adopt individual rules for the exemption from the obligation to give prior notification of certain classes of horizontal state aid, which amounts to 83 % of total state aid in Europe.
This is the first truly significant use of Article 94 of the Treaty. This tool enables the Commission, enriched with the experience it has acquired in this field, to exempt certain aid from the notification procedure. The Commission's idea is to achieve in this area a procedure similar to that applicable to the control of concentration, which relies on revisable intervention thresholds, and the participation of third parties in the consideration and establishment of a consultative committee.
We fully approve of the Commission's approach, which focuses its attention on the cases of state aid which truly do require consideration, and to accelerate the granting of aid where there is no dispute as to the validity of the cases. Such an approach is all the more necessary as 11 Member States are going to go into the euro, which will increase competition between territories where unfair practices were an incentive to out-sourcing.
The aid covered by the regulation concerns the aid for SMEs, where it is as effective as it is diligently allocated to research and development, environmental protection and employment and training. In terms of education and training, the exemptions mechanism should give priority, in our opinion, to the best possible implementation of the conclusions of the Luxembourg Summit.
It appears that we should add to this list local public services, which have only a minor effect on competition policy, and a strong impact in terms of social and economic cohesion within the Union.
The Commission's proposal also stipulates that the Commission will be able to adopt a regulation which allows aid under a certain threshold limit to be exempt from notification. This would provide a legal basis for a practice which is already longstanding. We must be pleased about this, although we recognize that the impact of this regulation will vary according to the practice of the Member States.
As rapporteur, I nevertheless wish to make four general observations. The first relates to the general line followed by the Commission in the field this text comes under, the aim being an undifferentiated reduction in state aid in the European Union. Such a position might a priori be an obstacle to achieving two fundamental objectives, namely the strengthening of industrial policy, and the search for greater efficiency in public expenditure. In other words, would it not be better in this field to give priority to a qualitative, rather than a purely quantitative approach, the latter being, it would seem, that which the Commission is seemingly proposing?
The Union should be thinking about a positive approach to aid, be it from the state or from the Union itself. Aid is becoming an effective and appropriate tool for an innovative industrial policy. A final assessment of aid as used and applied as part of the ECSC Treaty should be drawn up. The Union's approach with regard to state aid as an economic policy instrument should be drawn up and explained. The assessment of how far aid is compatible with the rules of the internal market should take into account general objectives of Community policy, relating to industrial competitiveness and economic and social cohesion within the Union, but also paying attention to the practice of our major competitors on the global market.
As a second comment, we need to be careful not to pick the wrong target in terms of the inspection and control procedures that we introduce for this aid. The Commission's proposal can give rise to two sorts of reaction. The Commission is calling for more powers, or the Commission is accepting the consolidation of the power that it already has in its hands. It is absolutely clear that the second approach is the one we should follow. We are not giving the Commission free rein, but providing it a posteriori with a measure of control. Having said that, in the procedures for implementing this control, we should be aware not to excessively weigh down the conditions set on advertising, as this would run the risk of making for unwieldy control procedures and encouraging a plethora of litigation which would be detrimental to the safety of enterprises before the law. It would be paradoxical if we were to end up with an obligation to give more information concerning this aid, which a priori does not pose any problems, than is required for far larger amounts of aid.
My third observation relates to the importance of the Commission's proposals with regard to the application procedures of Article 93 of the Treaty. We will have the chance to return to this when we consider, in this House, the aid procedure.
My last point, Mr President, relates to the place of our Parliament in the implementation of enabling regulations to be proposed by the Commission. In our amendments, we ask to be involved in this procedure. I believe this is important, and I hope that the Commission will support our proposals. We are also calling for the enabling regulations to be more adaptable, and we hope that this regulation is reviewed after three, and not five, years.

Wibe
Mr President, I would first and foremost like to thank the rapporteur for an excellent report. I agree with all her proposals and conclusions. In particular I would like to point out one amendment which did not achieve a majority on the Committee on Economic and Monetary Affairs and Industrial Policy, Amendment No 11, which proposes that block exemptions should also be granted to local public companies. I believe it is necessary to make such a point. I can say that in Sweden we have a large number of companies all over the country which employ disabled people. I believe there are between 30 000 and 40 000 such companies in Sweden which sell their products on the open market and so compete with normal companies, but they are subsidized by almost the whole wage cost. It is obvious that these companies receive a lot of public aid, but it is also obvious that they make an enormous social contribution. It would be very important, I believe, to include the fact that this type of company belongs to the group which is granted exemptions.
In the same amendment, No 11, the rapporteur also removes two categories proposed by the Commission, namely export credits and export credit guarantees. I think that what the rapporteur is proposing is good because there is doubt that export credits and export credit guarantees really are aid which falls under Article 92 and that they belong in this context.
After this I would still like to say a few words about the fact that the rapporteur and I differ on one point, that is, our attitude towards state aid in general. I think it often seems in this House as if state aid just means that one country goes and steals work in some way, but that is only one side of the coin. If the USA, for example, were to subsidize its car exports to Europe, it would mean above all that Europe received cheaper cars from the USA, in other words that Europe's consumers benefited from it. In this respect there is no difference between state aid and, for example, the USA cutting the wages of the car workers. It is the same in other areas. For example, if Spain wanted to subsidize wine exports to Sweden, Swedish consumers would just get cheaper wine. I do not actually see any great harm in that.
The rapporteur points out that state aid amounts to 1.7 % of the Community's GDP. That may sound like a lot of money, but we should be aware that the socio-economic costs associated with this aid are perhaps a tenth or a hundredth of that amount and so amount to a few tenths or hundredths of one per cent. I would therefore like us to have a somewhat less rigid view of this state aid. However, my main point is that this is an excellent report which I hope will be approved by a large majority tomorrow.

Areitio Toledo
Mr President, I want to thank the rapporteur, Mrs Berès, for her report. Certainly, the control of state aid is a big responsibility for the Commission. We have on the table today a Commission proposal for a regulation seeking a more practical formula for controlling such aid, by exempting one category of aid and transferring responsibility for it to the Member States, because of a shortage of Commission resources.
The Committee on Economic and Monetary Affairs and Industrial Policy has taken a very clear stance on this. We agree with the Commission's approach, but great care must be taken. We must not forget that it is the Member States who provide this aid, and to transfer control to them is - excuse the expression - like setting the fox to guard the henhouse!
So, we agree with a practical approach, we agree with the list of categories and aid proposed by the Commission - and our group is not in favour of either lengthening it or shortening it, as the rapporteur suggests - but we have made two comments which have been taken up by the Committee on Economic and Monetary Affairs and Industrial Policy.
The first point is that production can be integrated, which means that by giving small amounts of aid to integrated businesses, the added value of the final product might be over-subsidized. For example, aid might be given to the research sector, then to another company collaborating in the manufacture of the same product, and so on all down the line. Integrated production has to be monitored, otherwise we are going to run into serious problems of very large subsidies in terms of a product's final added value. For that reason, the Committee on Economic and Monetary Affairs and Industrial Policy has included an amendment that I myself presented to them, and I think the European Commission should study it.
The second comment is that this procedure - this new focus - requires the Member States to be monitored at a global level. As we lose specific control of each type of aid, there has to be more global budgetary control over the total aid given by each country. This theory has already been approved by this House with regard to the general report on competition policy, and it becomes increasingly important the further we progress with monetary union. We cannot cease to exercise control over the possibility that a certain budget might in total devote more than a certain percentage of GDP to state aid. That can and will happen. Even today there are large differences between the Member States, and once monetary union comes into effect, if the Commission fails to take account of the risk that each Member State might devote a large or very significant part of its budget to helping its businesses, we will have competition problems within monetary union.

Garosci
Mr President, today we have to decide which type of direction to give to state aid in the future, how to involve the territory and categories as well as the controls and exemptions to be applied. As we know, the distortion of competition is the most obvious disadvantage of state aid, but it is not the only one. Just think of the cost for public finances or the cost resulting from the loss of competitiveness for businesses used to state aid, at a time in which it is being reduced or is disappearing.
The globalization of the market and the arrival of the euro will result in totally new scenarios. In the immediate future, the EU will support the entry of new states, including financially. Agenda 2000 will then oblige us to give preference to choices of quality over quantity. So aid will no longer be provided if it is not targeted and the result of projects and programmes based on actual requirements and resulting opportunities.
We obviously do not want to say that all state aid is counterproductive, as clearly maintained by the rapporteur, whom we thank for her work. Aid can, in fact, favour an industrial policy where it is exists and is correctly applied. However, it should not just be aimed at large businesses and the industrial sector any more. We should be looking in particular at small and medium-sized businesses and at new sectors: tourism, trade, services, crafts, the environment and research and development are sectors that are integrated and connected to each other, as recalled by the Spanish Member.
We believe that the Commission, as the body which supervises competition, will adopt decisions and measures in the medium term that will facilitate balanced growth. For this purpose, we call on it to reassess the sectors and business sizes we have just mentioned. The future of the Union's economic and social growth inevitably lies with the SMEs. State aid cannot fail to take them into account.

Riis-Joergensen
Mr President, state aid is of course an exception to free and equal competition. Therefore, it is important to adhere to regulations on state aid, and transparency is especially important in order to enable third parties, namely competitors, to see what is being given by way of state aid. The Liberal group is delighted that the Committee on Economic and Monetary Affairs and Industrial Policy has supported us in requiring these subsidies to be made public. Therefore, I hope that the Commission, too, will be in a position to support the committee's Amendments Nos 4 and 5, in which we emphasize the requirement for making public the various subsidies, and in particular Amendment No 5, where we urge the Commission to publish details of subsidies given to the individual countries in the Official Journal of the European Communities to ensure that the average business has access to this information.
Finally, on behalf of the Liberal group, I have to say that we cannot support Amendment No 11, which the rapporteur touched on, and nor can we support the amendment tabled by Mr Wibe of the Socialist group. Nonetheless, I look forward to hearing the Commission's response on the question of transparency.

Hautala
Mr President, I agree with the Commission's view that, on the one hand, state aid must be made more public and controlled more effectively, but, on the other, the Commission must be given the opportunity to focus on more important and larger-scale cases, where group exemptions can be considered properly. But this should not mean that complete transparency must not prevail, as state aid can seriously distort competition. State aid should also be examined in connection with normal EU Structural Funds because it is awfully difficult at the moment to know what individual projects are being subsidized either through state aid or through EU structural funding.
It is a very serious matter that meagre public resources are causing grave problems, and we should ensure, as best we can, that the EU's basic purpose in public subsidies is being realized. I can thus give a great deal of support to the rapporteur in her desire to make the state aid process more open. In fact, I believe there should be a centre in every Member State where every citizen could have access to information on aid for each individual project, and not just state aid but Structural Funds.
This would have a far-reaching influence on the relocation of companies. As we know, many firms have learnt to get Member States and regions to compete, and this has an exceedingly unfavourable effect on the public economy.

McCarthy
Mr President, I hope my voice is going to hold out. Let me say that I understand the general thrust of this report is to ensure that we prevent distortion of competition while achieving a fair and level playing field. I very much commend the work that Mrs Berès has done on this report, but we are talking about transparency.
Let me raise an issue with you in the Commission. We in the Committee on Regional Affairs are very concerned at the lack of transparency in the document that you have adopted, the draft communication about the coherence of structural policies and competition. I understand that Commissioner Van Miert has already signed an agreement with Commissioner Wulf-Mathies on making sure that these two maps are indeed coherent, and I wonder when you will refer that document to Parliament. I believe it is our right to look at issues involving the Structural Funds and I understand you have also written to Member States. I would like to know which legal base you are using to consult Member States on these issues. Is it not the case that you will predetermine the national priorities of the Member States on where they wish to spend their structural fund money and state aid under Article 92(3)(c)? Why, therefore, is it the case that we in Parliament are not looking at that? I want to know what flexibility exists for a Member State to defend its own national priorities on state aid and whether you can legally enforce these issues. Or is it simply a case of a voluntary agreement that you hope to have with Member States?
Finally, I would like to say to the Commission that I do not honestly see the logic behind this. I believe the Structural Funds have a very different objective to state aid and I would simply refer to the case of rural areas. In my own constituency in the Peak district, I do not think that we want to attract Siemens actually to come and re-establish itself in an area which is environmentally sensitive, where we are looking to establish small businesses. The issue is not about actually attracting state aids in those kinds of regions. I would therefore ask you to decouple and de-link these two areas and let Member States decide on their own priorities on structural fund eligibility maps.

Carlsson
Mr President, Commissioner, ladies and gentlemen, state aid is one of the main causes of distortion in the single market. Not only is it costly and an inefficient way to use public funds in the Member States, but it is also delaying an essential structural change which affects not only the individual region, but also the EU as a whole.
It is quite clear that several Member States are currently breaking or behaving in a very suspect way with regard to the rules we have on state aid. The Commission is now trying, on the basis of existing conditions, that is, in spite of a lack of resources, to improve and monitor compliance.
I would like to congratulate Mrs Berès on her report which increases the chances of better compliance and control of state aid because it makes transparency and greater openness possible. This is a credibility issue, not least in relation to third parties, that is, companies and their employees who are affected by unhealthy competitive disadvantages.
I would like to warn against Mr Wibe's enticing tones when he thinks that local public businesses in Amendment No 11 should be approved. Today, local authorities and regions have a lot of different opportunities to exploit the system which means that we get more monopoly and less competition. I think it was very good that we removed the amendment in the Committee on Economic and Monetary Affairs and Industrial Policy.
The Commission's credibility now depends on sharpening the supervision of state aid which is talked about a lot in industry. Since no-one else can monitor our compliance with competition on equal terms, I think the Commission must ensure that it approves the amendments which have now been added to this report. Otherwise it will be difficult to ensure that we are complying with the demands which are rightfully made on the EU system.

Alavanos
Mr President, I think that in principle we are considering a very interesting and major issue.
Despite what some speakers have said, I believe there is agreement that, on the one hand, aid from the private sector certainly distorts competition and reduces efficacy, but on the other hand too, nobody can pick up a blue pencil and strike it out entirely, and the Treaty itself, by virtue of Articles 92 and 93, imposes certain limits within which such assistance must operate.
Against that background I think the Commission's proposal is moving towards acceptance of certain exceptions and the creation of new mechanisms which, I think, must lay stress on four very basic points: firstly, we must avoid creating a new bureaucratic and complicated system, which might be worse than its predecessor. Secondly, these problems will not be solved by virtue of a regulation from the Commission alone, without participation by the state and the productive agencies. Thirdly, the criteria should be qualitative and not just quantitative. And fourthly, SMEs are hugely important in all this.

van Miert
I would like, before anything else, to give my apologies, in particular to Mrs Berès. The Commission had to deal with a relatively complicated and sensitive issue and its consideration lasted longer than expected. Mrs Berès knows how interested I am in this problem, and I am always ready to meet her and any other Members of the European Parliament in order to continue the discussion on the proposal and the elements relating to them. I apologise to Mrs Berès and I take this opportunity to congratulate her, because I know that she has put a great deal of work into this report, along with other Members, in order to come to an opinion based on reality and on actual experience.
At a certain point in time, it became apparent that of the some six hundred aid cases a year that currently have to be dealt with, one third or possibly more, being subject to prior notification, were in reality routine cases. Was it possible to implement another system which would set aside the routine cases which demand much work from our services, although 95 % or 98 % of them are in practice problem-free? Nobody is unaware of the fact that "state aid' , in the case of competition policy, suffers from a very severe shortage in human resources when it comes to the management of individual cases, which are increasingly numerous as well as increasingly complex.
Consequently, we had to focus our efforts on the more important cases, and to try and set aside the routine, and we would then be able to get rid a part of the bureaucracy; hence the idea, on the basis of Article 94, of proposing a solution which would create draft regulations for group exemption, applying to aid cases where there was already considerable experience, for example in certain sectors such as the SMEs, where the rules are relatively well known and which, in general, do not cause any problems. This could also be the case for the environment and for research and development. In other words, it could apply in a number of sectors where there are sufficiently precise rules and a sufficiently broad discipline where individual cases would no longer need to be notified. Of course, the rules of the game have to be respected. Furthermore, to ensure no misunderstanding, the Commission will naturally continue to see to it that these rules are respected, particularly in the event of complaint. It will study any complaint made by a company or other authority, even if this complaint goes beyond the framework of the regulations which are our concern now. Creating a number of instruments does not mean that there will be no more discipline, or that there will be no more control. On the contrary, it is quite wrong to claim that they will lead to a more lax policy in this field. The aim to be able to pay more attention to the most important cases.
This, it appears to me, is the raison d'être of this enabling regulation. I am delighted that our proposal has found favour within the Council and that the adoption process is on the right track.
Furthermore, ladies and gentlemen, I believe I am right in understanding that a number of Members of this House - and they are not alone - have raised certain doubts and wondered whether or not this system might not adversely affect the required transparency, once systematic notification had been abolished. I have already said that the Commission will react as soon as the slightest doubt is raised.
I, for my part, believe that the system once implemented, and in particular the annual reports that the national authorities must send us, will as much as is the case today, and possibly even more so, guarantee the necessary transparency.
I now come to the other concerns that have been raised. Some of you have dealt with subjects somewhat outside the framework of the proposal under consideration. I would like to rapidly reply to the Member who spoke about the consistency between the state aid policy, notably provisions governing regional aid at national level and the structural policy, that is, the proposal put forward by Mrs Wulf-Mathies. Insofar as possible, we have made every effort to create a situation of consistency, which is no easy matter. Indeed, as you know, a whole series of regions, for example the 5B regions, which are eligible for Structural Funds, are not eligible for regional aid funds or national aid. So necessarily there is no consistency between the two cases.
The map of regional aid covers about 47 % of the population of the European Union, whereas the Structural Funds reach 51 %. There is no consistency in reality. Regions eligible for Community funds wonder why they cannot receive regional aid, at Member State level. The problem is a real one.
Mrs Wulf-Mathies and myself have tried to act in such a way that the future regime is very much more consistent in the period from 2000 to 2006. Perhaps we will still not be able to achieve consistency at the individual, per capita level, as we will need a slight margin to try to take into consideration specific situations. I regret this, but perhaps we will be unable to do otherwise. Nevertheless, our aim is to try and ensure that the two maps of aid provision match up as broadly as possible.
I do not know if I have given an answer to what has been said. In any event, I am available for direct discussion with you. I hope I have covered most of the comments. Yet again, many thanks to Mrs Berès and to all those who have contributed to this report, and of course to those who have spoken today.

McCarthy
Mr President, on a point of order. I did not ask about the policy. I asked about when you intend to consult Parliament. I understand that the Commission has exclusive competence for competition policy, but in my opinion you are wandering into an area where Parliament has a view on whether it is necessary, in all cases, to have complete coherence of maps. We would like some flexibility. Therefore, I would like to know when you intend to consult Parliament and, if you intend to force this, what is the legal base for the Commission to enforce the coherence of state aids and structural fund eligibility maps?

van Miert
I now understand the precise point of your question. First of all, I am always available to Parliament to discuss this although it is an exclusive competence of the Commission. As you know, the Commission has this responsibility for state aids on the basis of Articles 92 and 93, unless we make a proposal, as we are doing today, on the basis of Article 94, when the Council has to take a decision. As I have already said, the Commission has already taken a decision as far as regional aid is concerned because it is the Commission's responsibility. But I am readily available to Parliament or the relevant committees to discuss this matter and explain to you why we think this coherence between the Structural Funds map and the regional aid map is important. It is up to you. If you would like to invite me to a committee meeting, I would be happy to attend.

President
The debate is closed.
The vote will take place tomorrow at 12: 00 noon.

Shipbuilding
President
The next item is the report (A4-0101/98) by Mr Sindal, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the proposal for a Council Regulation on establishing new rules on aid to shipbuilding (COM(97)0469 - C4-0527/97-97/02499(CNS)) and on the Commission communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions entitled: "Towards a new shipbuilding policy' (COM(97)0470 - C4-0548/97).

Sindal
Mr President, may I begin by congratulating the previous rapporteur on the general discussion on competition policy. Now that we are embarking on a more detailed debate on shipbuilding, the waters are parting, for it is very easy to agree on a general plan. For this we owe Mr Van Miert our grateful thanks. The report is excellent, but as soon as we go into detail, the waters begin to part. The subject under debate today is fraught with emotion and history.
All of us present here today are aware of why this regulation has gone to consultation. We are missing one single signature on an OECD agreement - that of the USA. Now we are venturing a new regulation, perhaps the eighth in the series. The discussion and the problems are partly internal to the EU and partly external, in that they concern how the EU relates to the world-wide competitive situation. To my mind, the key elements in this debate are that our future internal policy must not distort competition for shipyards within the EU, and our aid policy must not cause social listing in some Member States and regions, as we have just heard.
There has to be a fundamental belief that the EU would be best served if the OECD agreement were to come into effect. The OECD agreement is the best way forward for the Community's shipyards to be able to compete on a level playing field. Since this is not happening, we are best served with an aid policy that is as restricted as at all possible. We must strive for equality of opportunity for all and avoid creating a situation with competitors losing simply because they do not qualify for aid. The new aid policy must avert creative book-keeping and speculation in aid systems. That is not what it is intended for. But the new aid policy is supposed to create jobs in the EU. Unemployment is the biggest problem today, and in my opinion regional aid to shipyards is not part of the EU's social policy - nor should it be. It would be naive to believe that would create more jobs. That would be throwing good money after bad.
In shuffling jobs from one area to another, we would antagonize citizens who perceive this to be unfair - worse still if jobs are moved out of the EU altogether. Therefore, at a time when the citizens of Europe are discussing confidence and belief in the European project, it is vital that our aid policy should avoid prejudicing citizens' understanding of justice by giving better opportunities to some than to others. What is needed is a policy to ensure equality of opportunity.
What we need today is a long-term, visionary employment policy. The new aid policy, which I support, Mr Van Miert, must not amount to featherbedding. We must avoid giving support to such an extent that the shipbuilding industry forgets to think for itself. Strong support may well be beneficial in the short term, but long-term it could turn European shipbuilding into a loser in the global marketplace.
Let me emphasize four things in the Commission's proposal. Firstly, I support development, innovation, etcetera. This is extremely positive. It is the way forward. Secondly, I find regional aid dissatisfactory. I find it impermeable and prejudicial to competition. But if we can agree on regional aid, we should decide whether to change the extent of such aid. The third point is that we are concerned about how monitoring should be carried out. That is embarrassing. But history shows that we must be committed to one another. The fourth point is the situation in the Far East and the massive aid given there. This must not be allowed to lead to Korean shipyards becoming more dominant players in the market than they are already, for example.
Finally, Mr President, Commissioner, I would like to say that the three statements from the committees concerned and the statement from the Economic and Social Committee all point towards the need to think twice before implementing this plan unamended.

Matilainen-Kallström
Mr President, the object of Mr Sindal's report is to reform the complex network of aid schemes in place for the European shipbuilding industry, so that the EU will become more competitive with regard to third country dockyards.
The largest area of current aid is dedicated to shipbuilding itself, which has in fact distorted competition in the common market. The idea of getting rid of aid, which Mr Sindal mentions in his report, is thus correct. The ultimate goal of EU policy must be that the shipyards recover naturally through market demand.
The European Community has to guarantee Member States equal conditions for competition, promote research and development in shipbuilding, and motivate industrial cooperation. The conditions for competition among shipyards in EU countries cannot be distorted by aid action which is different for every country. I hope the Commission understands this.
The shipbuilding industry employs about 130 000 people in the EU. Securing these jobs is important. At the moment the EU share of the world market for shipbuilding is around 20 %. In recent years, despite improvements, as far as competitiveness and productivity go, many shipyards have fallen behind greater competitors, such as Japan and South Korea. Furthermore, new shipbuilding nations have begun to come into the world market. The market share these countries have, with their cheap labour, is also in the region of 20 %.
The EU countries have much scope for research. The European shipyards should follow the Japanese model and concentrate resources on research and development in order to improve the design and production process and produce safe and efficient vessels. The development of the shipbuilding industry is closely linked to developments in other sectors of technology. The use of computerization and telecommunications, in particular, should be regarded as an essential part of developing a modern shipbuilding industry.

Ilaskivi
Mr President, as we are now debating Mr Sindal's report on the shipyards, I would also like to turn our attention to debating customs and Europarliamentarianism in general. And why? Well, when the Committee on Economic and Monetary Affairs was discussing its report, it had, in accordance with good practice, asked for the opinions of others, such as the REX committee. But what happened? The committee voted in the morning and only received the opinion it had asked for in the afternoon, at least as far as the REX committee was concerned. I do not know if the committee was in too much of a hurry to adhere to its timetable or if it was a case of the REX committee coming late with the two opinions it had formulated. My own was actually ready the week before.
My question is: what is the point of asking for opinions unless they can be relied upon to materialize and taken notice of? We should consider this here to ensure that the work of Parliament is actually appropriate at all times.
But that is not all. When we vote on the report in tomorrow's sitting, COREPER will have already started its debate on the issue; it did so last Thursday, to be precise. It is still going on, and COREPER's view will be discussed by the Council, but the question remains: should a Parliamentary report not be ready when COREPER starts its own debate? Otherwise, it seems as if each and every body makes its own resolutions without hearing the opinion of others.
The situation is an irritating aspect of Parliamentarianism, especially as it has happened again and again and will happen, I suppose, in the future also. I wish the Bureau would look into this seriously. It is a matter of the European Parliament's prestige and credibility.
As to the issue we are debating here, I will briefly state that shipyard aid has come to the end of the road. This view is in agreement with the Commission's proposal and Mr Sindal's report. Now that the main shipbuilding nations of Asia are in the grip of an economic crisis, and devaluation of their currency has increased their competitiveness in exports, it is a most opportune moment to embark on global measures to end aid. The USA, for its part, must accept the OECD agreement. All interested bodies must set about ending shipyard aid as a condition of Asian financial aid. The countries of Europe have to get their act together in their affirmation of the fact that we cannot go on supporting a lame duck forever.

Kaklamanis
Mr President, the opinion I have prepared on behalf of the Committee on Transport and Tourism related only to the Commission's communication to the Council and the European Parliament. The Committee on Transport never discussed giving an opinion on the proposal for a Council Regulation, with which, however, Mr Sindal's report is mainly concerned.
Consequently, I am here to echo what the last speaker said: why were we asked for an opinion? Because I have found that almost nothing has been taken into account by Mr Sindal's report. This of course, does not mean that my group disagrees with very many points in Mr Sindal's report. At the same time, however, we are very worried about why this process has taken place, which is quite unusual, at least during the three years or so that I have been a Member.
At the same time, I heard all the speakers and the rapporteur talking about support and competition, saying that state aid for shipyards must stop, and talking about the globalization of the economy. Ladies and gentlemen, that is all very well, but we ought not to remember it only when America, Japan or Korea are asking us to bear in mind the globalization of the economy.
The European Union has an obligation, and this is very rightly addressed by the Commission and Mr Sindal's report, to put its own house in order: to care first and foremost for the existence, preservation and if possible the strengthening of Europe's shipbuilding industry, to retain jobs and above all, from now on, to secure a better future than before.
In conclusion, Mr President, I would like to ask the Commissioner and Mr Sindal what impact the euro is likely to have from 1 January 1999 on Europe's shipbuilding industry. Will there be consequences or not? And if so, what? Will they be good or bad?

Sainjon
Mr President, on 18 March this year, a majority of the Committee on External Economic Relations approved my report proposing certain amendments to the regulations of the Commission relating to aid to shipbuilding. The REX committee simply wishes account to be taken of the situation, of the financial crisis in South-East Asia and of its consequences on European shipyards.
I must say very frankly that I do not understand the present attitude of the Commission, which is not unaware of the monetary situation in the South-East Asian countries, and particularly in South Korea. The Commission is determined as of now to announce that operational aid will be ended on 31 December 2000. It appears to me that wisdom and common sense should cause it to stand back a little and, as I propose, to firstly carry out a study to ensure that the South-East Asian crisis will have no consequences on the European shipbuilding industry.
The Commission is acting as if, in a battle, an army is announcing that whichever way the battle goes, it will lose, and that it will surrender at a specified date and time. This is totally illogical. That is why the REX committee supports the idea that such a study should be undertaken for the end of 1999 and that, if it appears that there is no risk of monetary dumping from the South Korean conglomerates, the decision should be taken then to eliminate operating aid. But political honesty should oblige us to await the outcome of this study before taking any decision. That is why, on behalf of my group, I request a separate vote on paragraph 10.
I remind you that the REX committee has travelled and visited a number of shipyards, such as in Saint-Nazaire, or more recently in Genoa. Everywhere, we hear the same concerns from company directors and trade unions. While they say they are ready in the future to accept the phasing-out of operating aid, they demand that the European Union arm itself with a defensive commercial policy. However that is at present not the case.
Mr President, we are dealing here with an extremely sensitive subject, and more than ever we need to be cautious. Must I point out here once again that since the 1970s, 200 000 jobs have been lost in this sector. Of course, to my mind, there is no question of artificially supporting lame ducks, as I am convinced that if competition is fair, the European industry can be very competitive in many sectors. However, we have to note that every time a European shipyard is pulled out of difficulties through extraordinary aid, the Commission immediately imposes new reductions on production capacity, which result in new job losses.
At the present time, everyone knows that the South Korean shipbuilding industry, whose production capacity has reached the same levels as the European Union, is benefiting from sustained aid from the International Monetary Fund. But what are the European Union and Member States doing to impose reductions in capacity on South Korea in exchange?
Sir Leon Brittan has given a commitment that the aid granted to South Korea is not used to save bankrupt shipyards, but I would like the Commission to tell me what resources it has available to monitor this. Has this problem been included in the framework of the cooperation agreement with Korea? I am waiting with curiousity for the Commission's reply. I know that the Commission and the European Union, as such, are not represented within the International Monetary Fund, and that it is the national governments which have a say in the matter. That is why I condemn the logic of the various Member States and their Finance Ministers who agree to grant loans amounting to several billion ECU in support of the South Korean financial system. However, I condemn in particular the European banks who have been involved in South Korea, and the lack of control over the way in which this money is distributed.
Once again, industrial policy is sacrificed to financial policy.
And there is a final problem: regional aid. It is perfectly normal that some less favoured regions in the Union should be entitled to different forms of aid. But when the general philosophy of the Commission's regulation is to limit operating aid, this logic must be taken to its conclusion, or alternatively a strategy defined which excludes anything affecting the industrial sector. That is because it is a distortion of competition if we say that some shipyards could continue to benefit at will from aid under the auspices of regional aid, while others will have to do without.
I therefore wholly support Amendment No 29 from Mr Sindal.
We are now standing at a crossroads. Either the leading trading power in the world remains a shipping power, or it will become dependent on other countries to ship its goods, and it will very quickly become an idol with feet of clay.

President
Thank you very much, Mr Sainjon.
Ladies and gentlemen, having heard Mr Sainjon's speech, we must now suspend the debate on Mr Sindal's report. It will resume at 9.00 p.m.

Question Time (Commission)
President
The next item is questions to the Commission (B4-0272/98).
First however, ladies and gentlemen, please allow me to read you a series of recommendations from the Bureau to Members of this House. I am sorry that Mr Wijsenbeek is not going to hear this too, because these recommendations aim to ensure that our work proceeds smoothly. At its meeting of 9 March 1998 the Bureau adopted the following decisions, to make our current Question Time procedure as up-to-date and politically relevant as possible.
The first recommendation concerns the deadline for tabling questions. Questions for each Question Time are only to be tabled during that part-session's period for tabling questions. The relevant services are requested to no longer accept questions tabled before that date. The honourable Members are reminded that the period for tabling questions for each Question Time begins as soon as the deadline for the previous part-session's Question Time has expired, and ends at 1.00 p.m. on the Thursday of the penultimate week prior to each part-session.
The second recommendation concerns supplementary questions. The Bureau asks the President of the sitting only to accept requests to put supplementary questions once the main question has been dealt with. Members are reminded that it is up to the President of the sitting to rule on the admissibility of supplementary questions, which must relate directly to the subject of the main question.
The third point is admissibility. The Bureau recommends that the relevant services should be stricter in applying the admissibility criteria for questions, as set out in Annex II of the Rules of Procedure. The Bureau particularly requests Members to respect the stipulations about the maximum length of questions, and to limit themselves to a single question within each text.
Ladies and gentlemen, you will all receive your own copy of these recommendations. Today, however, with your help, we will begin to adjust to these recommendations from the Bureau.
Mr McMahon wishes to speak on a point of order.

McMahon
Mr President, on a point of order. It is on the same issue. I have a copy of the document you are referring to and I am absolutely astounded by it. I find it an affront to democracy in this House. I have been a Member here for 14 years and have taken a great interest in Question Time. I know we have had problems, and we have had changes. I remember when we tried to change it before: Mrs Dury put forward a long report from the Committee on the Rules of Procedure, the Verification of Credentials and Immunities and there was a great deal of debate and discussion by Members.
What the Bureau seems to be resorting to here is diktat from on high, and it is very anti-democratic. One of the benefits of publishing the names of the Commissioners who were going to answer questions was that if Members had, for example, an environment question, they could table it well in advance, knowing that they would receive a straightforward and knowledgeable answer from the Commissioner for the environment. They would be unlikely to get someone else who had simply been handed a dossier, who was unacquainted with its contents and would just give a completely unsatisfactory off-the-cuff answer. If you knew in advance that the individual Commissioner for that portfolio was going to reply, that would be advantageous. So I feel this is a very retrograde step. There has been no discussion on this in the political groups nor with the Members, and I take great offence at the dictatorial and high-handed attitude the Bureau has adopted. I will raise this in my own political group and would urge other Members to do the same.

President
Mr McMahon, please listen to me. I know you can understand Spanish but I would prefer you to listen to me in your own language, through the interpreters. I must inform you that what I have just read in no way suggests that Question Time is going to be altered as far as the Commissioners are concerned. All these recommendations are trying to do is introduce a degree of order. In other words, questions are not to be tabled way in advance, but within the period established by our Rules of Procedure.
The second aim is to avoid the situation where the President of the sitting already has lots of supplementary questions even before the start, and Members who request to put a question but cannot be allowed to do so because somebody else has already asked. What is being said is that from now on people will only be able to request the floor once the main question has started. So these are small rules, Mr McMahon, intended to improve our work. If in practice we find it is no improvement, I can assure you we will revise them. I will convey that to the Bureau straight away, but at the moment I would ask that we do not start a debate on the matter, because these rules are designed to help us work better. If they do not have that effect, we will change them again. But let us start by respecting them. It is not a question of being dictatorial, Mr McMahon, but it is the Bureau's responsibility to try to organize the work of this House in the best way possible. Several people wish to make points of order, but I must point out that all these points of order will detract from the time available for questions to the Commission.
Mr Crowley wishes to speak on a point of order.

Crowley
Mr President, I should like your guidance. I have also received the same notice as Mr McMahon and I agree with him fully. In the second part of paragraph 2, it says: ' It is up to the President of a sitting to rule on the admissibility of supplementary questions which must relate directly to the subject of the main question.' Surely we as political representatives of the European people, must be able to decide whether a matter is related to a question or to an individual Commissioner, or to upbraid a Commissioner or the President-in-Office of the Council when they refuse to answer the question directly and we have to try another tactic to get around this. I ask you to use your discretion in interpreting that aspect and to give us clear guidance on what latitude you will allow us.

President
Mr Crowley, you will be able to test out the amount of latitude I am prepared to allow during the course of our work. But I should warn you that Annex II of our Rules of Procedure states: "The President shall rule on the admissibility of supplementary questions and shall limit their number so that each Member who has put down a question may receive an answer to it' . In other words, the President is not being given any new power. This is simply a reminder that the President has that power. You will have noticed, Mr Crowley, that given the existence of that rule, the President has been exercising the natural flexibility which the liveliness of our Question Time demands. So nothing new is being suggested - it is all there.
Mr Wijsenbeek wishes to speak on a point of order.

Wijsenbeek
Mr President, you mentioned me as the person who initiated the changes to Question Time. I would like to point out to you, Mr President, that I wrote a report for the Committee on the Rules of Procedure, Verification of Credentials and Immunities. It was approved by that committee four months ago, and the Bureau is refusing to put it to the partsession. The objections by Mr Crowley and Mr McMahon could at least have been discussed in the groups and in the part-session. Now the Bureau is misusing my report to propose new rules on its own authority, instead of through the usual democratic procedures. But you and I agree on one thing: if we look around we see that we have managed to kill Question Time, which in most parliaments is a lively affair and the climax of the parliamentary week. We are sitting here surrounded by a handful of people, whilst the Commissioners and Presidents-in-Office dish out prescribed answers and are not able to enter into a debate with us. The long and short of my proposal, Mr President, is that we call the questions in random order, so that those who tabled a question six months ago do not have the first turn, but that everyone gets an equal chance to speak. Secondly, we should have a true debate, in which questions are responded to succinctly. If you would be so kind as to submit my proposal to the part-session, than we would at least be able to join in the discussion as Members and as backbenchers, rather than be told what to do by a group of vice-presidents who think they always know better.

President
Mr Wijsenbeek, I mentioned your name in a friendly manner because I know you are a great authority on the Rules of Procedure. For that reason, my immediate thought was that you would realize that none of the recommendations I have read represent any change to the Rules of Procedure. In fact, the Bureau does have some proposals which do alter the Rules of Procedure, but those will be referred to the Committee on the Rules of Procedure, the Verification of Credentials and Immunities, where Mr Wijsenbeek will be able to expound, explain and defend his position at length.
However, ladies and gentlemen, the Bureau is not overstepping its authority by making the simple proposals we have heard here. The Bureau is keeping well within the scope of its competence, which is the application of the Rules of Procedure, and there is nothing in these proposals which does not appear in the Rules of Procedure. There are some proposals for amendment: for example, Mr von Habsburg's suggestion that people should be able to ask two supplementary questions during questions to the Council. But that means amending the Rules of Procedure, which is why we have referred it to the Committee on the Rules of Procedure, the Verification of Credentials and Immunities.
So, ladies and gentlemen, I repeat that when you have all read this notice carefully, you will realize that it involves no change to the Rules of Procedure or any alteration to our relations with the Commission and the Commissioners. All we are trying to do is see if we can make better use of time. What I have noticed is that any little change made in this House ends up wasting time, because it meets with such an extraordinary amount of reluctance. Please, ladies and gentlemen, read the notice carefully. Watch how we apply what the notice says, and at our next Question Time I will be very happy to listen to your opinion again, once we have tried it out today and you and I have all thought about it.
Having said that, ladies and gentlemen, I suggest we move on to the first question, which Mrs Concepció Ferrer has been awaiting for some time now. Her question concerns small and medium-sized enterprises, and I invite Mr de Silguy to reply. I would like to welcome him and thank him for having listened to our debate during the past few minutes.
Mr de Silguy, you have the floor.

President
Question No 41 by Concepció Ferrer (H-0301/98)
Subject: Policy in favour of small and medium-sized enterprises
The results of a survey carried out by the Court of Auditors show that of 33 enterprises considered small and medium-sized, 11 actually corresponded to that category while the remaining two-thirds of the enterprises investigated belonged to consortia, and in one case a business classified as a small enterprise had 2000 employees.
Does the Commission not believe that, in view of these results, the concept of small and medium-sized enterprises should be revised in order to bring it into line with the actual situation?

de Silguy
I have learnt a great deal, I am much more knowledgeable now, and I thank you for allowing me to participate in your debate.
When describing SMEs, the Commission applies the definition set out in the recommendation of 3 April 1996 to the Member States, to the European Investment Bank and the European Investment Fund. Under this definition, the purpose of which is to put a little order into the situation you have described, a company must have less than 250 employees, a turnover not exceeding ECU 40 million, and total balance sheet value not in excess of ECU 27 million to comply with the definition of an SME. To meet the definition of "small, ' a company must have fewer than 50 employees, a turnover of less than ECU 7 million, and a balance sheet of less than ECU 5 million.
Also, small and medium enterprises must be truly independent, which means that they must not be more than 25 % owned by another company. The thresholds for turnover and balance sheet will be regularly adjusted, normally every four years, to take account of the economic changes in Europe.
Having said that, in certain specific research and technology development programmes, and in the 1994-1998 fourth framework programme, different and other definitions of small and medium-sized enterprises have been used. But for the implementation of the fifth framework programme, that is, for 1998-2000, the Commission is proposing that the new definition that I have just given to you should be applied with an exception to allow the inclusion of companies with up to 500 employees.
Among the various criteria for this new definition is that of independence, and the Commission is aware of the fact that this criterion has, unfortunately, not always been respected. As you note, Madam, with regard to the database on the participants in the technological research and development programme, the Court of Auditors' annual report states that of the 33 companies selected for the audit it carried out, 11 did not meet the independence criteria and one even employed more than 2 000.
Nevertheless, the Commission is intent on reassuring you and your House: the quality and the reliability of the databases is constantly being improved and updated. This improvement will continue, in particular with the introduction in stages of financial and legal viability checks, which will also cover parent companies. We will also continue our improvement by verifying the criteria applicable to SMEs on the basis of documentary evidence. The Commission will certainly continue to insist that, in the future, the SME definition criteria are scrupulously respected.

Ferrer
I just want to thank the Commissioner for his explanation, which I think was needed. It has been very useful because just this morning, in approving the Elles report, we stressed how many gaps there were in relation to the aid available to small and medium-sized enterprises which has not been used. This is a waste, maybe not of resources, but of the chance to improve not just the situation of SMEs, but above all their job-creating abilities.
I would call on the Commissioner to ensure that, in accordance with what he has just said, the Commission is very aware of this, and turn his words into reality.

de Silguy
I completely agree. I have taken note of Mrs Ferrer's wish, and I am all the more in agreement with her because it is important that the Commission be able to target these measures at ad hoc companies, for if not, we will see aid being scattered, and allocated less efficiently. I can, therefore, assure you that the Commission agrees with your analysis and will act along these lines.

Ewing
With regard to the actual situation, could I ask the Commissioner to look at certain areas where companies of fifty are really large companies and where the concept of a small company is nearer ten. In areas like my constituency of the Highlands and Islands, it is often these companies that one looks to for job creation. Would it not be possible for the Commission to consider an additional approach to give even more favourable treatment to the micro-small business?

de Silguy
This question is always a delicate one. On the one hand, we must take into account the need for a more or less harmonized approach at European Union level, for the sake of efficiency, and on the other hand, we must take into account specific situations. My response to Mrs Ewing is that the Member States have introduced more flexibility than we have. However, we are introducing flexibility, as we have fixed thresholds for micro-companies, employing less than 10 people, which must be precisely adapted to the situation in the islands you mentioned. I would even say that in some Member States, flexibility is even greater, as the thresholds given are for maximum limits, and the criterion concerning the number of employees may be applied alone, without reference to turnover or balance sheet figures. That therefore goes in the direction which you appear to wish.

Crowley
I want to thank the Commissioner for his response. I have just two very brief questions to ask him on this point. Firstly, can he give a guarantee here to us that this Court of Auditors' survey will not be used to try and reduce the amount of money which is being appropriated for the SME sector, and in particular for the employment-creation aspect of it? Secondly, I may have misinterpreted what he said in his original answer, but am I right to understand that the criteria for the definition of SMEs and micro-enterprises will be updated and evaluated every year?

de Silguy
Very rapidly, my answer to Mr Crowley is yes for both questions. With regard more precisely to the second question, I would point out that we plan to have an update of the criteria at least every four years, and sooner, if necessary, according to the change in economic data.

President
Question No 42 by Nikitas Kaklamanis (H-0314/98)
Subject: Increase in subsidized quantity of olive oil
Commissioner Fischler is reported as saying on a recent visit to Spain that the ceiling on the production of olive oil subsidized by the EU will be raised by 300 000 tonnes for Spain and Greece.
Will there in fact be such an increase in the ceiling on olive oil production, and how will this quantity be divided between Greece and Spain?

de Silguy
In parallel to the Agenda 2000 exercise, the Commission, on 19 March last, examined the file on the reform of the common organization of the olive oil market. In this respect, the Commission has very largely taken on board the comments made by the European Parliament. The reform of the common market organization should come into force for the 2001-2002 campaign. Until then, and in order to do something to offset the management difficulties of the current CMO, the Commission has proposed urgent modifications to the current regime. These modifications, as well as the elements that must be taken into account when proposing to reform this sector, will soon be part of a specific debate within your Parliament, and my colleague, Franz Fischler, will answer precisely all your questions on this subject.
I can say to you today that the proposed increases include, among other things, a rise in the maximum guaranteed quantity of 212 400 tonnes, and among the modifications, it is proposed to distribute the increase among the national guaranteed quantities of the producer Member States. This distribution, among these Member States, of the new maximum guaranteed quantity of 1 562 400 tonnes is as follows: Spain, 625 210 tonnes; France, 3 065 tonnes; Greece, 389 038 tonnes; Italy, 501 172 tonnes; and Portugal, 43 915 tonnes. The increase in the maximum guaranteed quantity is due to the change in the Community market take-up capacity. It takes into account the potential for new plantings made recently in Spain and Portugal, and also corresponds to the savings made in the Community budget by the eliminating the regime for small producers and eliminating aid for consumption.

Kaklamanis
Thank you very much, Commissioner. I think perhaps I ought to be pleased by what you told me in your answer, but because we do not have to hand here all those figures you mentioned, at the end of the day I understood quite clearly that, indeed, what I asked about in my question is true, is it not? In other words, I am not so interested in the figures - I am sure that those you have quoted will be correct and I believe them - but is it really true that what has applied to Spain and Greece until now might be increased by 300 000? Yes or no? Because I have heard the figures but I do not know what the situation was before. So are they the same, or more?

de Silguy
Although I am not a specialist in olive oil, going on what I know, the current maximum quantity for the whole of the European Union is 1 350 000 tonnes. This will be raised to 1 562 000 tonnes. Consequently, this tonnage will be raised and distributed among the various Member States, on the basis of the factors normally used as part of the common agricultural policy. One of these allocation criteria relates in particular to the average national production over three years, out of the last five years, setting aside the best and worst year for each of the Member States. Consequently, the usual criteria, which are classic distribution criteria, will be applied. You will be sent the technical details if you have not already received them; they show that the maximum guaranteed quantity will be proportionately distributed among the various Member States in accordance with the usual criteria.

Colino Salamanca
I just want to remind the Commissioner of two things.
Firstly, he mentioned that the change to the maximum guaranteed quantity is based on five seasons, with the worst and the best being ignored. However, in the specific case of Spain, the 1992-93, 1993-94 and 1994-95 seasons were all catastrophic because of drought. That means that if those data are used to fix the amount for Spain, we are being penalized.
The second, very important thing is that the maximum guaranteed quantity for the whole of Europe will also be affected by these unrealistic Spanish data. It is important for the Commission to realize that, so they can correct the data at some point, even during the Council phase. If that is not done, the whole of Europe will be penalized, especially the Spanish production.

de Silguy
I have taken note of your remark. It reminds me of the debate in the Commission when the proposal was drafted. We had to attempt both to achieve a number of objectives, which can appear contradictory, and to consider the problem caused by the drought in Spain at the time.
The file is now in the hands of the Council. The comment that you have raised is very much in Mr Fischler's mind, and he will be heading negotiations. However, it is the Commission's job to submit a proposal on the basis of objective and traditional criteria. Now the negotiations are in the hands of the Council and I have no doubt but that all points of view will be heard and defended.

Camisón Asensio
Commissioner, having heard your replies, I would like to know whether the Commission actually realizes the damage this will do to employment levels in Spain. If the Commission continues to refuse to increase substantially the maximum guaranteed quantity - as I see it does - employment will suffer. The fact is, apart from the drought problem which has been mentioned, the latest figure for Spanish production was 947 000 tonnes, which is very different from the maximum being set for that country. If that difference is not subsidized, there is bound to be more unemployment in Spain, which is the very country with the highest unemployment rate in the whole of the EU.
There is not much point preaching about employment at the Luxembourg Summit if work is being thrown away, and if this threat hanging over Spain's olive groves actually materializes.

de Silguy
I shall make the same reply as before: this matter is still being discussed. I have explained the basis of the Commission's proposal. I had explained also that the Commission was proposing to raise the maximum guaranteed quantity, as compared to the current quantity. I know that, for a certain number of countries, this raises economic problems, and also problems, which we cannot overlook, in terms of market disposal of the olive oil.
However, I believe that all these elements are in the minds of the negotiators. You have done well to emphasize them. They will now become part of the negotiation which is to take place within the Council.

President
Thank you very much, Mr de Silguy.
Mrs Izquierdo Rojo wishes to speak on a point of order. Excuse me, but which Rule does your point of order come under?

Izquierdo Rojo
Mr President, I should like to point out that in the public gallery, all the way from Granada...
(The President cut off the speaker)

President
Mrs Izquierdo Rojo, that is not a point of order. I would ask you to please sit down and allow me to proceed with my work properly, with the following question.

President
Question No 43 by Phillip Whitehead (H-0321/98/rev. 1)
Subject: Consumers and the euro
Will the Commission state whether it maintains the view that all bank charges that are compulsory should be free? If so, how will this principle be implemented?
Can the Commission confirm when it will decide whether or not to propose legislation on the question of dual pricing? What does the Commission believe is the final date for such a decision, given the time taken by the codecision procedure?
Can the Commission indicate the timetable for the development of codes of good practice between professionals and consumers?
What will be the role of the Euro observatories, and where will they be located?

de Silguy
The Commission believes that on the basis of the regulations relating to the euro which are currently in force, the banks are not legally authorized to make charges on the compulsory currency conversions arising from the introduction of the euro. It is therefore not necessary to adopt further legal provisions in this field. However, the Commission also believes that in order to facilitate the smooth introduction of the euro, the banks should go beyond their minimum legal obligations. To fully clarify its position on bank charges for euro conversion, the Commission will in 15 days - thus, in the very near future - submit recommendations on the principles of good conduct which will cover both the legally binding provisions and the additional provisions that the Commission believes are desirable. These recommendations will be sent to the governments, to the various bodies, organizations and consumers' and professional associations and, of course, your House will be kept informed.
I would add that the use of a recommendation is a mid-way course between the adoption of a regulation and the free play of market forces, and that this path will be the most effective way of meeting the target that has been set. To implement this recommendation, the adoption of codes of good practice accepted by the parties concerned is the best method and the most appropriate way forward. I believe that progress down this road has already been made, but in the event that voluntary procedures proved inefficient, the adoption of legislation provisions might nevertheless be envisaged with a view to clarifying the situation.
Secondly, as regards dual pricing, which was mentioned in Mr Whitehead's question, I would say that the Commission here too considers that the mandatory imposition of dual pricing through a European regulation is not an appropriate means of ensuring dual pricing which both meets the requirements of the consumers and keeps the cost of the transition to the euro to a minimum. In this case also, the Commission will present a recommendation in two weeks time and will thus propose codes of good practice in order to provide the necessary clarity and certitude to all the parties concerned with dual pricing. If, in practice, we see that this voluntary approach is unsatisfactory and ineffective, the adoption of a regulation on the codes of good practice might be a possibility, and Emma Bonino will not contradict me on this.
I have a third comment to make. The round table on 26 February last showed that progress in the practical preparations for the introduction of the euro was to a large extent the result of the mobilization of consumer organizations and professional organizations, and the beginning of continuing dialogue between the players concerned. This dialogue basically takes place at national level, which is the level where the negotiations should end with the definition and introduction of these codes of good practice on the basis of our recommendations; these negotiations are already well advanced. Negotiations between consumers and between professionals can also begin at European level. This has already happened and one of the objectives is to create a "euro' label for retailers displaying their prices in euros and who accept payments in euros. It is hoped that negotiations be concluded as fast and as satisfactorily as possible. That will enhance the trust of users and consumers in the process of moving over to the euro.
Finally, I will reply to the last point raised by Mr Whitehead, the problem of national, regional or local observatories. Indeed, the introduction of such observatories is, I believe, a good thing, as it is a means by which the Member States can promote the circulation of information on the euro and a means by which they can also oversee the voluntary agreements in terms of the codes of good practice I mentioned. At European level, these observatories might conceivably become a place of informal exchange of information on developments among the Member States. The form, function and precise operational procedures for setting up such observatories are to be defined, I believe, by the Member States on the basis of their national practices and the existing legal provisions.

Whitehead
Thank you for allowing me in with this question. I am also glad Commissioner Bonino is here now to hear her colleague's answer. Can I ask two brief questions? Firstly, how long will the Commission pursue the recommendations for good conduct, which Commissioner de Silguy has just described, before deciding whether they are effective or not and whether it needs to make mandatory provisions given the time for codecision and the 2002 deadline which means that we have to make some judgement on this well before 2002?
Secondly, on the question of banking charges, what has been the response of the banking community thus far? How does the Commission itself propose to ensure continuity of contracts during the switch over from national currencies to the euro?

de Silguy
I shall be very precise on this point. The Commission will make its recommendations in around two weeks, around 15 April, I hope. These recommendations will be sent to the governments, with the hope of being able to include them in the conclusions of the European Council of 2 May, in order to give them a major political impact. These recommendations will be sent to the various professional organizations, and to the consumers' organisations, with the instruction to work together, and draw up codes of good practice.
In the light of the various problems, we shall then consider what to do. It is more urgent to look at bank charges, as from 1 January 1999 a certain number of questions will be raised in this respect, which means that we will have to move faster. For questions of dual pricing, we have a little more time. We should therefore not determine precise dates. However, we have fixed the date for a meeting with the banking community in Autumn 1998. This will enable us to make take stock of this banking aspect.
I can tell you that the negotiations and reactions are rather positive since the banking community, prior to the round table of 26 February, had sent a letter to Emma Bonino, which I had a copy of, showing that they were willing to work in this direction. We are now involved in a process which is fairly encouraging, and which operates on the basis of consultation. We shall then make an assessment of the results. As regards the continuity of contracts, all the information at our disposal leads us to believe that the current status of regulations is adequate and satisfactorily meets this legal obligation.

President
Thank you very much, Mr de Silguy.
Ladies and gentlemen, we have now used up the time allocated to Part I of questions to the Commission. Question No 44 will therefore be dealt with in writing.

President
Question No 45 by Marialiese Flemming (H-0227/98)
Subject: Transport of animals
In June 1995 the Council adopted Directive 95/29/EC on the protection of animals during transport. At the same time the Council requested the Commission to employ more Veterinary Inspectors to monitor the implementation of these new rules.
In view of the increased resources available to the Food and Veterinary Office would the Commission say how many inspectors are presently monitoring the transport of animals and what plans are in place to increase the number to the twelve inspectors thought by the Council to be the minimum necessary?

Bonino
As Mr Flemming knows, today the Food and Veterinary Office has a vast range of responsibilities in monitoring the implementation of Community legislation on veterinary, food and plant health matters. At present, the Food and Veterinary Office has 46 inspectors. Some of the resources available for veterinary inspections are already specifically intended for controls relating to monitoring animal welfare, to which the Member is referring. However, in relative terms, these activities still represent a small proportion of all inspection activities.
The Commission is currently increasing its personnel seconded to the Office to enable all its duties to be conducted. However, the assignment and training of personnel will inevitably take time.
The Commission is certainly aware of the importance of animal welfare and this aspect will be taken into due consideration when implementing future decisions on the allocation of the resources required by the Office to perform its duties.
We also wish to point out to the Member that the Office is currently introducing a system of establishing the priorities of tasks, and this will ensure that the programmes of tasks can reflect a balanced assessment of the various control and inspection requests made to the Office.
The Commission must say that, at least once, all the Member States have been inspected with regard to animal welfare and these inspections are far from satisfactory. Unfortunately, the current situation of employees and human resources is such that only two of the 46 inspectors deal with this sector. The Commission therefore considers that a list of priorities should be drawn up, as is compulsory.

President
Thank you very much, Mrs Bonino.
Sorry, Mrs Flemming, I will let you speak, but Mrs Jensen wants to make a point of order and the Rules of Procedure say that I must give her the floor. You have one minute, Mrs Jensen.

Jensen, Lis
I was wondering whether the President could see me over here. I asked to speak because naturally enough I find it extremely dissatisfactory not to have my question answered. But, on a point of order, what I really want to be sure of is that I will be the recipient of the response. My name is not Kirsten Jensen. My name is Lis Jensen. I would like to appeal to the administration to make this change when sending me the written response. I cannot blame the administration for this mistake, because half of Denmark is actually called Jensen, but I find it unsatisfactory not to be able to receive a response today, because the actual question of the regulation on restraint of trade is of great interest to us in Denmark, not least in the run-up to the referendum coming up on 28 May. I find this extremely dissatisfactory and I feel the President is being inflexible here.

President
Mrs Lis Jensen, I am sorry your question could not be answered but I have no control over the clock. I am its slave, just like you and the rest of the honourable Members. As regards your name, I have noted your comment, but I should point out that Parliament's services have already made the correction. So you can rest assured that if I had allowed anyone to speak it would have been Mrs Lis Jensen.
Mr McMahon, you have the floor on a point of order.

McMahon
On the same issue, it is not just in getting the honourable Member's name wrong that the administration have boobed, in actual fact the question of restraint of trade is a question for Mr Monti because he is the one who has put the paper before the Commission and he is down for questions, so I do not see why it was tabled in the wrong section. Secondly, why could you not give permission for it to be answered at the time when Mr Monti answered questions later on?

President
Mr McMahon, ladies and gentlemen, I would warn you all that spending time on points of order means there is less time left for questions to the Commission. You have your rights, but it is my duty to remind you of that. I should also point out to you all that Question Time is governed by rules, and when the clock shows that time is up, the President is obliged to go on to the next section of questions. It is not possible to change what has already been established.
I apologize to Mrs Bonino for our having interrupted her interesting remarks. I also apologize to Mrs Flemming, but please understand that I am governed by the Rules of Procedure. You now have the floor for a supplementary question.

Flemming
Mr President, Madam Commissioner, I am sure that the two previous speakers have just as much interest in the welfare of animals as I and that their points of order do not portray indifference to the well-being of animals. Directive 95/29 on the transport of animals lays down rules for the provision of food, water and rest-breaks when transporting different categories of livestock, and these regulations came into force on 1 January 1998. In addition, all Member States are committed to the setting-up of officially approved stopping places which comply with the requirements of the directive. The question which I would now like to ask you, Madam Commissioner, is this: can the Commission tell us here and now how many of these stopping places actually exist at this moment in time and whether veterinary inspectors - and I learn to my astonishment that you have 46 of them - are also actually checking that these establishments are being properly run, which is part of their function?

Bonino
As I said to the honourable Member, every Member State has been inspected at least once and the results are available. We have discovered that some of the rules in the directive, which was implemented on 1 January 1998, are far from satisfactory. Problems have been found at the following sites: livestock markets of national importance, border inspection posts, ports where animals are transferred from lorries to vessels, slaughterhouses and so on. I can provide more details in writing.
I would like to tell the honourable Member that I have two inspectors out of forty-six. There are emergencies such as BSE and classical swine fever and hygiene deficiencies in meat plants. There are also legal obligations arising from other directives such as third countries requesting approval for exporting fisheries or for exporting fresh meat to the European Union. I can make available to Members in writing all the obligations, emergencies, what we have done on animal welfare, what we have found and why the Commission itself is not satisfied with the situation.

Elliott
I am pleased to note that the Commissioner is not satisfied with the existing situation and I am grateful to her for being so honest and open with Parliament about the unsatisfactory nature of the current situation. I would like to put one further point to her. Another role of the veterinary inspectors is to monitor the export of trade of live cattle to third countries under the export refund scheme. Could the Commissioner say what instructions have been given to the team of inspectors regarding monitoring duties when cattle arrive in third countries? Will any liaison be established with those animal welfare organizations which so far, apparently, are the only ones to have exposed the cruelty of this trade? It is a serious point and some of the Commission's problems could be helped a little by closer collaboration with animal welfare organizations working in this area who, I am sure, would be only too grateful to assist.

Bonino
This is an exercise we are trying to conduct in an informal way. As you can imagine, the Commission can only have official relations with Member States authorities. On top of that, many third countries - even the groups you are referring to - are not very strong. So, we are faced with these two problems: firstly, the animal welfare groups are not very strong and, secondly, our formal counterparts are the Member States alone.
Nevertheless, I hope that the organizations dealing with animal welfare in the European Union will forge closer links with their counterparts in third countries so that we can establish another form of contact between the people who have to implement the law.

von Habsburg
Mr President, Mrs Bonino, I should like to ask you a question, though admittedly you have answered most of it already: what is the situation in the countries of central and eastern Europe, particularly in Poland, where conditions are still pretty dreadful? Is the Commission engaged in direct negotiations with these countries with a view to achieving a commitment that what they are exporting is treated as we would like to see it treated? If this process does not work there from the start, then it may well not work for us either.

Bonino
I have already partly answered the question. In the larger process of negotiation and enlargement due to the acquis communautaire , evidently this rule will be taken care of. Of course, it is a long way ahead, so we need to find a quicker way of ensuring that the directive is implemented.

President
Question No 46 by Robin Teverson (H-0281/98)
Subject: MAGP IV: Beam trawler length
The Commission has allowed the Dutch MAGP IV implementation plan some credit for complying with a change to the Dutch national regulations. A 1986 rule required that the maximum aggregate length of beams should be reduced. Priority under MAGP IV is for those Member States, like the Dutch, who failed to meet MAGP III targets, to remove the overhang from the previous programme by the end of 1998 and allowance for this change to the rules would make a significant contribution to the Dutch MAGP position.
Does this mean that the Commission believes that technical conservation measures should be allowed to contribute to MAGP IV compliance, and have other Member States' fleets been similarly credited for national conservation measures?

Bonino
This is a very technical question but I think it has a political more than a technical meaning. I think Mr Teverson wanted to know if technical measures have to be counted in the MAGP. I must be very clear. A reduction in beam lengths reduces efficiency rather than increasing selectivity, and, as such, would not be considered as a technical measure. I can confirm that technical measures cannot be taken into account for the achievement of the MAGP IV objectives, as their effects on fishing efforts are considered to be additional to those of the MAGP. No credit was given in terms of capacity for the reduction in beam length in the Dutch fleet. It was accepted that the reduction in beam length resulted in a decrease in the efficiency of the vessel. But it was noted that there was an increase in activity during the previous MAGPs, which compensated for any reduction in efficiency. I hope that is clear.
Since this compensatory effect was recognized and calculated, account was taken of the reduction in beam length by reassessing the appropriate base-line level of activity for the MAGP for this part of the Dutch fishing fleet. There was then no net increase in the fishing efforts base line for MAGP IV. No Member State has therefore benefited from national compensation measures in the context of MAGPs.
We understand that it decreased efficiency but they increased their activities, so the result was equal. For this reason, there was no compensation, and the technical measures cannot be taken into account for the calculation of MAGPs.

Teverson
I thank the Commissioner for that reply and although, as she says, it is a technical subject, it is more a question of the interpretation of how we fulfil MAGP requirements. I take it from that - although not necessarily agree with the point - that when technical measures mean selectivity they cannot be used towards MAGP targets. That is understood.
However, from her reply it seems that somehow, even if it is a counter-compensation, measures that might be technical in nature, though not technical measures that reduce efficiency, could and therefore do have an effect on effort, and would actually then be seen as contributing towards MAGP targets. That seems to me what actually happened. The Commissioner mentioned that there was a trade-off in the Dutch fleet on beam length which was used as a compensation against increase in effort, which is within the MAGP target. That seems to suggest to me that we can use decrease in efficiency methods or physical methods to actually achieve MAGP targets. Is that true?

Bonino
Maybe I was not clear. I must confirm that there are only three elements to calculate MAGP which have to reduce overcapacity as a first target. The three elements that are taken into account are activity, tonnage and power.
The special case that you are referring to, because it was compensated was not in fact taken into account. They have to reduce the activity, in any case. This is the result of what I am saying. They reduced the length of the beam but they increased their activity. For us it was a non-starter. Our request is that they reduce their activities. Is that clear now? Technical measures are additional but cannot be included in the calculation of MAGP IV.

President
Question No 47 by Carmen Fraga Estévez (H-0286/98)
Subject: New Argentinean fisheries law
On 12 January 1998, Argentina adopted a new fisheries law which will come into effect three months after that date. Pursuant to various articles of that law (Article 4 et seq.), Argentina has assumed the right to regulate fishing outside its EEZ, which is clearly a breach of general international law and the UN Convention on the Law of the Sea. It also represents a further serious precedent in the wake of the 1994 Canadian fisheries law and that country's new draft law on the same subject, which is currently going through Parliament.
What legal or other action is the Commission preparing in response to the threat which that law poses to international law and to the legitimate activities of sovereign states in international waters?

Bonino
At the meetings held recently between the Commission and the Argentinean authorities, both before and after the adoption of the new fisheries law in that country, the Commission raised the points mentioned in the Member's query as points of great concern.
The Commission also expressed its concern that several provisions of the new law, particularly those relating to the measures the Argentinean authorities can take with regard to transzonal stocks in the sector adjoining the economic area, are contrary to international law, and the Commission pointed out that, in particular, they are contrary to the UN Convention on the Law of the Sea.
According to the Commission, conservation measures applicable to international waters, such as those provided for by the new law, can only be taken within the scope of regional or international organizations. The new Argentinean law on fisheries, as the Member knows, is now being considered by the Council, but at the same time the Commission has received the mandate to negotiate the creation of a regional conference or a regional area for the South Atlantic, if necessary, because the type of conservation measure proposed cannot be applied unilaterally.
This is the Commission's formal interpretation of the UN Convention.

Fraga Estévez
I am grateful to the Commissioner for her answer but I would like to ask a couple of specific questions.
This question of the fisheries law is related to the notorious law on baselines for maritime zones, which gave rise to protest in its day. As you know, that law contravenes the UN Convention on the Law of the Sea. A few months ago Argentina made an amendment, and I would like to know whether or not that amendment is in accordance with the UN Convention.
My second question refers to something you mentioned: the famous South Atlantic Fisheries Organization. Mr Provan is here, and he produced a report on this subject some time ago. I would like to know what stage that project is at, and what Argentina's position is. I understand that since the fisheries law that country has displayed opposition to this international organization, the so-called SAFO.

Bonino
With regard to defining the borders of the area, the Commission is studying the first documents forwarded by Argentina on the establishment of those borders. It remains understood, however, that any amendment, accepted by the Commission or otherwise, should be communicated to the United Nations, which, in the cases, or at least in one case we are aware of, was not applied.
So in answer to the first question, I can say that the Commission is studying the new definition of borders and may in the short term say whether the definition is consistent or not.
With regard to the second question, the Council has just given us the mandate to negotiate and we are exploring Argentina's true intentions to determine how the new fisheries law could fall under the terms of this new mandate. Finally, I have to say that we have worked towards this negotiating mandate for a whole year, because the idea goes back to August 1995. I think the time has come to confirm the actual availability and the actual willingness of the Argentinean authorities.

President
Thank you very much, Mrs Bonino.
Ladies and gentlemen, Mrs Fraga Estévez' question marks the end of the time allotted to this block of questions, so Questions Nos 48 to 52 will be dealt with in writing.
Ladies and gentlemen, you often cannot help expressing your feelings but, as I said earlier, the clock is in charge here, not me.

President
Question No 53 by Jens-Peter Bonde, which has been taken over by Mrs Lis Jensen (H-0276/98)
Subject: National compliance with social directives
Will the Commission guarantee that the Member States may comply with directives in the social field by transposing them as collective agreements, even where trade union representation is below 50 %?

Flynn
Article 2(4) of the agreement on social policy provides that a Member State may entrust management and labour, at their joint request, with the implementation of directives adopted under the agreement. In such a case the Member State must ensure that no later than the date on which the directive must be transposed in accordance with Article 189 of the Treaty, management and labour have introduced the necessary measures by agreement. This is done in accordance with national law and practice, with the Member State concerned being required to take any necessary measures enabling it at any time to be in a position to guarantee the results imposed by the directive.
This provision is similar to those already incorporated into several directives in the social field and, furthermore, this principle was already acknowledged in the case law of the European Court of Justice prior to the adoption of the social protocol to the Treaty.
As a positive example of how the social partners have been associated with the implementation of directives, I would like to refer the honourable Member of Parliament to the agreement on the implementation measures concluded between the social partners' organizations in Denmark.

Jensen, Lis
I would like to ask Commissioner Flynn a slightly more specific question, if he would kindly expand on the response he has already given. A survey carried out by the School of Economics and Business Administration in Denmark shows that 50-60 % of employees in the private sector labour market have collective agreements. The question applies equally to conditions for those in a situation where no collective agreement has been drawn up between the parties to the labour market. How can implementation be assured for this remaining segment?

Flynn
Unfortunately, the answer is not quite straightforward. According to the notification we have received in a specific instance in so far as the Danish authorities are concerned, the working time directive has been implemented by a combination of both statutory provisions and collective agreements. The services of the Commission are currently undertaking an examination of the implementation measures in the light of the detailed implementation of the directive under both headings. So we are talking about a global implementation report. We cannot do that just yet because six Member States have yet to notify us of the implementation measures. As soon as they do so the Commission will be able to proceed. The matter is delayed for that reason.

Krarup
Thank you for the information. The working time directive is precisely what the question is aimed at since, as the Commissioner points out, the situation is such that the Danish government has announced that a relatively large segment of private sector employees are not covered by any agreement and, thus, the working time directive is not in effect for approximately 40 % of private sector employees in the Danish labour market. The Commission has been informed of this, and although what the Commissioner states is obviously correct about no notification yet having been received from a number of other countries, it should nonetheless be possible for the Commission to take a stance on the issue and confirm that this level of implementation is not acceptable. These questions are of enormous fundamental importance in Denmark, where many of us believe conditions in the labour market should be regulated by means of collective agreements, but on the other hand we do not believe that the current level of implementation can be considered adequate when the Danish government has announced that approximately 40 % of private sector employees are not included in any agreement whatsoever and are therefore simply not covered. I would like the Commissioner to confirm that this level of implementation is inadequate.

Flynn
I think it must be underlined that different directives sometimes have different aims. That being said, some of them fall within the sole competence of the social partners, while others are regulating issues and would be the exclusive competence of public authorities. In other words you have to be quite careful how you analyse the context of the particular directive that is involved. We cannot take a decision until we have all the information available as to implementation. Unfortunately we do not have it yet, but I would like to think that if the Member States comply with what we seek from them and we get the information, we will have the implementing report early next year, at which time we will be able to give you a complete answer to the basic point you have raised.

President
Thank you very much, Mr Flynn.
As the author is not present, Question No 54 lapses.
Question No 55 by Brian Simpson (H-0296/98)
Subject: "Star' Alliance
Does the current "Star' Alliance within the aviation sector fall within the scope of the European Works Council Directives?
If so, what action does the Commission intend to take? If not, why not?

Flynn
The 'Star' Alliance is essentially a marketing arrangement whereby the members of the alliance have agreed to promote the services of their alliance partners through code-sharing deals. Code-sharing enables an airline to market seats on a flight operated by the partner airline. The alliance does not involve any exchange of ownership or control between the members of the alliance. They continue to act as independent companies. The alliance therefore falls outside of the scope of the Works Council Directive.
Some or all of the companies which are members of this alliance may themselves fall under the scope of the European Works Council Directive if they meet the relevant requirements. If this is the case, it is up to the individual company and its employees to develop the information and consultation mechanisms provided for them therein.
The Commission has neither the power nor the wish to interfere in the way that the concerned parties define these mechanisms or apply them to particular situations within the context of the Works Council Directive.

Simpson
As a supplementary, I should like to ask the Commissioner if he is saying that, basically, if this 'Star' Alliance starts to diminish the working conditions and contracts within that particular alliance the Commission will not act? I am particularly concerned about those members of the 'Star' Alliance from the Far East who seem to have lower conditions of pay and service compared to their partners in the EU.

Flynn
At this stage, the 'Star' Alliance comprises only the pooling of the frequent-flyer programmes - you probably know that - i.e. common use of some lounges, check-in facilities and a better scheduling coordination. The agreement is not binding and, in any case, it does not fall under Regulation 397/87 which applies to international transport outside the EU. If the matter changes, perhaps you might wish to come back to the question at a later date.

President
Thank you very much, Mr Flynn.
As the author is not present, Question No 56 lapses.
Question No 57 by Bernd Posselt (H-0319/98)
Subject: Strengthening the family
In the light of the EU's latest demographic report and the alarming facts it contains, how does the Commission propose to strengthen the family as the basis of all effective social policy, and does it feel adequately supported in these endeavours by the Council and the Member States?

Flynn
The Commission is aware of current demographic trends and what they indicate about changes in family structures. However, the European Commission has a limited competence in the area of policies on the family. Our actions are based on the conclusions of the Council of Ministers responsible for family matters that took place in September 1989. Since then the Commission has been active in promoting exchanges of information on family matters, monitoring measures taken for families in the Member States and financially supporting the promotion of family-friendly initiatives.
The exchange of information between the Member States is done through a group of national senior officials responsible for family matters, meeting several times a year at the Commission's invitation. The next meeting will take place on 16 and 17 April. The monitoring of measures for families in the Member States is conducted by the European Observatory on National Family Policies that the Commission set up in 1989. A European network on family at work established by the Commission in 1994 has also been engaged in promoting family-friendly employment policies. Innovative projects, studies and networks in relation to family-friendly policies have received support from the Structural Funds, mainly under the NOW initiative and from the action programmes on equal opportunities.
In the field of employment policy, all Member States have recognized the need for a substantially increased participation by women in the labour market and the 1998 employment guidelines state that Member States should translate their decision to promote equality of opportunity into increased employment rates for women. At the same time it is explicitly recognized that this must be accompanied by family-friendly policies for reconciling work and family life and policies facilitating the return to paid work after an absence.
I would like to refer to the 1992 directive on pregnant workers, the 1996 directive on parental leave and the 1997 directive on part-time work in particular. They are the main elements of the legal framework at European level which reconciles family and working life. Parliament has been particularly supportive in its upholding of budget line B3-4108, that is measures in favour of family and children. Although it is quite modest, the budget line enables the Commission to cofinance the promotion of familyfriendly practices and measures as well as comparative studies between the Member States. Within the budget line's remit, the Commission performs demographic research analysis such as the demographic report which allows us to link demographic evolution and changing family patterns.
Finally, the Commission's intention is to continue the analysis of demographic trends and deepen the debate on their implications. We are going to have a major European symposium on demographic change under the Austrian presidency. We will do that in the latter part of the year.

Posselt
Mr Commissioner, thank you for your detailed answer. I should just like to put two short questions to you. You spoke primarily of working women. I just wanted to ask if there were any studies or programmes - though particularly studies - which relate to the financial support of women or men, though it will mainly be the women who decide to devote themselves to raising children? My second question is this: are there any studies or programmes which deal with the provision of old-age pensions for this particular group?

Flynn
Briefly, some work has been done on that matter. Mostly it is done by national authorities but there is a certain element of coordination between what they do and what we are doing at Commission level. Perhaps there is a need to go a little further in establishing the points you have made.

President
Thank you very much, Mr Flynn.
Mr Posselt's question rounds off the time allocated to this series of questions. Questions Nos 58 to 62 will therefore be dealt with in writing.

President
Question No 63 by Mark Watts (H-0033/98)
Subject: Proposed abolition of duty-free concessions in 1999
Is the Commission aware that the proposed abolition of duty-free sales in 1999 is estimated to result in the loss of 9 000 jobs in Kent in the United Kingdom, and a total loss of 140 000 jobs across the EU?
In the light of these independent forecasts, will it at least agree to a full study being carried out urgently to examine the social and economic impact that ending duty-free would cause? Could it also elaborate on its proposals to cushion the impact of abolition?

Monti
In recent months, I have set out the Commission's position on duty-free sales within the Community on numerous occasions. In particular, I was able to explain this position at the public hearing held on 27 October 1997 and at the sitting in November 1997. Today, I am taking the opportunity given to me by Mr Watts to confirm that the position has not changed.
The deadline agreed back in 1991 by the Council for all those involved in the duty-free sales sector to adapt to the requirements of the single market was an exceptional measure. This unanimous decision took financial concerns into account, which certain Members had expressed at the time.
As things stand, the Commission has also stated very clearly that it has no intention of undertaking a study into the social and economic consequences the expiry of the transitional regulations agreed by the Council could entail, thereby establishing the definitive nature of its decision.

Watts
I thank the Commissioner for his answer, but unfortunately he did not address the particular point regarding the proposals to ameliorate the impact of abolition which he put to the public hearing that he earlier referred to earlier. Perhaps he could answer that particular point.
Secondly, as regards preparing for abolition, perhaps he could come to my constituency, speak to the company P&O Stena and suggest which particular members of staff they lay off and which ships they suspend from service. That would be particularly helpful.
Thirdly, on the study, would Mr Monti confirm that, if ECOFIN vote for a study in May, as is possible and I think likely, he will enthusiastically implement that decision.

Monti
If I can start with the last point, I have every reason to expect that the ECOFIN Council will not ask for the Commission to conduct a study. As a matter of fact, the issue did come up at the ECOFIN Council on two occasions, in November 1996 and again in March 1998, and as the President-in-Office of the ECOFIN Council, Mr Gordon Brown, said publicly on a recent occasion, there is no evidence of an emerging consensus within ECOFIN for any reconsideration of the decision taken unanimously in 1991.
In relation to the other two points, I can say that if we compare the solution and the problems sometimes aired by the categories concerned to the solutions provided for other professions affected by internal market legislation, customs freight forwarders, for example, did receive funds for reconversion of about ECU 30 million. A seven year period allowing for an annual turnover of about ECU 6.5 billion does not appear, if I may say so, to be disadvantageous treatment.
Finally, I have repeatedly stated that, while the Commission is certainly not prepared to propose to the Council that the 1991 decision should be reconsidered, if there were to be proven and specific problems in certain regions or on certain transportation routes connected with the abolition of duty-free, then it will be possible for Member States, in a transparent way, to consider forms of state aid, which would of course have to be proposed by the Member States and in line with Community norms.

President
Thank you very much, Mr Monti.
Ladies and gentlemen, it is now 7.00 p.m., the time at which Question Time was supposed to finish. However, in view of the fact that we lost several minutes on points of order, I have asked Parliament's services if they would be kind enough to allow us to extend Question Time by ten minutes. So we will finish at 7.10 p.m.. Mr Monti, I have two supplementary questions on the question we have just heard. The first is from Mr Corbett, who may speak for one minute.

Corbett
Does the Commissioner agree that a study might be useful for a purpose other than that for which many have been asking it for, namely, to reassure the public that some of the wilder claims of job losses that will result from the loss of dutyfree are in fact perhaps an exaggeration? A study would certainly help to clarify that. A study might also identity the areas of specific problems that the Commissioner mentioned in his answer to the previous question.
Whereas I agree with him entirely that it is very unlikely that the Council, even if the Commission put forward such a proposal, would wish to reverse a decision taken many years ago and introduce a further tax break for the alcohol and tobacco industries - a tax break that is conditional on it being sold to international travellers, which seems preposterous - nonetheless a study would be a useful weapon in furthering this debate.

Monti
A study would be counterproductive. I believe this very sincerely because it might well give false expectations and delay further the adjustments that might well be needed. In fact, a very long period was given for adjustments, and it would be rather paradoxical and counterproductive if, when less than 15 months are left to the date of expiry of duty-free on intra-Eu travel, we were to engage in a study. It is for Member States to indicate to the Commission whether they consider, on the basis of studies or any other elements that they might have available, that there is a need for a specific intervention.
Finally, it does not take a study to understand what is increasingly being perceived by public opinion, namely that duty-free is, in fact, a hidden, regressive subsidy, favouring the consumption of alcohol and tobacco to a large extent. It is hidden because it is passed on to the general taxpayer, who is hardly aware that he is subsidizing duty-free consumption by others. It is regressive because the ordinary taxpayer is normally less well-off than those benefiting from duty-free purchases; and, to a large extent, it sustains artificially and in a non-transparent manner the consumption of alcohol and tobacco.

McMahon
In view of his last answer, would the Commissioner close down the duty-free shop in the Commission for Commission staff such as himself? Seriously though, my question is: what confidence will European citizens have in the Commission, given that Commissioner Scrivener promised away back in 1991 to carry out a study? As the Commission has reneged on its promise, what confidence is this going to give the European Union in the Commission's honesty, integrity and determination to listen to elected representatives of the European population?

Monti
I understand Mr McMahon's question but I would submit to you that the Commission and the Council, following the Commission proposal in 1991, gave much more than a study. It gave a more than seven-year adjustment period, something particularly long in terms of any adjustment. I hardly dare touch on the subject of the confidence of European citizens in the Commission but I am sure that European citizens would hardly increase their confidence in a Commission that was to propose the continuation of a sort of hidden regressive subsidy at the expense of the general taxpayers in Europe going to a large extent into subsidizing forms of consumption that Community policies, if anything, tend to discourage.

President
Question No 64 by Bernie Malone (H-0228/98)
Subject: Abolition of duty-free sales in 1999
Mr Michel Vanden Abeele, the Director-General of DG XXI recently commented, in a letter to one of my constituents, that the Commission's policy of liberalization within the single market had promoted the increased competition that low cost carriers bring to the market.
An independent study by Symonds Travers Morgan has revealed that the abolition of tax- and duty-free sales will damage an otherwise healthy single market in air transport, causing a 20 % reduction in the number of routes that could otherwise expect the entry of low cost airlines by 2003, a reduction of 5 million in expected passenger levels, as well as massive job losses.
How can the Commission reconcile its professed concern for the competitive participation of low cost carriers within the single market at the same time as it presses forward with legislation which will obviously cripple these carriers, costing approximately 3000 jobs?

Monti
The expansion of the air transport sector has certainly favoured the development of cut-price flights and, like all others, these flights will feel the effects of the abolition of the duty-free concessions as from 1 July 1999.
In any case, the tax benefit deriving from these sales is relatively small if it is compared with other data. One aspect that should be pointed out, in fact, is that air passenger transport has seen an increase of around 7 % and this increase certainly cannot be attributed to duty-free sales, but to other causes such as the liberalization of air transport as from 1 April 1997. It is therefore presumed that this increase in passenger transport will continue and may give rise to broad compensation after the abolition of duty-free sales. In other words, we want to have and we have got the benefits of the creation of a single market and, in this case, that of air transport, and it is difficult to try and gain the benefits of the single market and maintain archaic structures, which are totally incompatible with the single market, as are duty-free sales. We also need to bear in mind that, at the moment, air transport benefits from an extremely favourable tax system, in terms of which the duty-free benefits are marginal.
In fact, total VAT exemption applies to all aircraft and the relevant equipment and intra-Community passenger transport is not yet taxed; moreover, supplies on board are currently tax-free and, unlike other means of transport, aircraft fuel and kerosene are not subject to either VAT or excise. To conclude on this point, the Commission is aware of the fact that air transport is the means of transport which is growing fastest, and in which duty-free sales play a very marginal role. Any restructuring of the sector should therefore be considered within the framework of the strategies for achieving ever greater efficiency and profits and not just as a result of duty-free sales.

Malone
I accused the Commissioner of being obstinate and arrogant at the public hearing which Parliament held. Today, I have to tell you, Commissioner, that I find you are totally out of touch with people. In your answer to me you say that the fiscal advantage to the air traveller will be very small. A study that was carried out in Ireland just recently and published yesterday by SIPTU, a trade union organization, and by IBEC, representing business interests, shows quite clearly that between £15 and £17 will be added on to the cost of an airline ticket for the average traveller. To an ordinary person that is a lot of money.
In the same letter I received from my constituent, your office said that there are a range of measures that the Commission has at its disposal to deal with any threat to employment. Could you please define these measures, provide an estimate of the total cost of them, specify how they could be applied and outline the criteria for the allocation of these yet undefined measures? After what Mary O'Rourke our Transport Minister has achieved in the Transport Council, you should be more optimistic about the outcome of the Ecofin meeting. With the pressure on the various Member States from ordinary citizens, the Commission will just have to concede that a study will have to be done in this case.

Monti
I wish to thank Mrs Malone for her supplementary question. I am not sure that the Commission is out of touch with the population. Of course it holds a view that is different from that maintained by the duty-free lobbies but there are, of course, numerous positions taken recently by - may I say - broader representative institutions and the last one I have here is that of
COFACE, the Confederation of Family Organizations in the European Communities, notes that the current system is of virtually no interest for consumers. Only a small percentage of consumers have the possibility of regularly buying from duty-free stores. Furthermore, with the exception possibly of tobacco products, the advantages in price terms are often only apparent, as the competitive advantages of exemption are not always passed on to the final consumer.
(EN) And to the extent that the present duty-free system contains an element of subsidy that enables transport fares to be lower than they would be otherwise, that is the best proof that the present duty-free system implies a subsidy which is hidden and regressive, as I hinted. In the case of transportation, as my colleague, Commissioner Kinnock, recently stated in response to one of the many letters on this point, no Member State subsidy in the form of continued tax-free sales would be possible. He went on to say that Community rules provide Member States with the means to pursue legitimate public service goals in cases where no commercial operator will be able to meet these goals without public assistance. This was the case in the Community guidelines on state aid to maritime transport. I believe this would also be valid for other forms of transportation.
Finally, I stress that the Commission is certainly not insensitive to problems that might materialize from the abolition of duty-free on intra-EU travel, but it will insist that the appropriate instruments be used to tackle any such problems without re-opening an issue which, as I have stressed several times, simply implies having ordinary citizens bear the burden.

Banotti
Commissioner, it appears that you have set your face against the retention of duty-free sales. It is interesting that in Brussels airport, at the moment, they are constructing a totally new duty-free shop in the middle of the airport. I wonder why?
Respecting your request, I understand that the Commission is undertaking a report on commercial and retail activities in US airports. I find it very difficult to understand when the Commission has consistently refused to undertake a similar assessment of EU airports. Will you therefore make available to us the study done about the US airports?
I am picking up Mr Cushnahan's question here because, unfortunately, he had to leave. I would be grateful if I could have an answer to this supplementary.

Monti
There is no such study. The Commission is looking at the situation in Europe and elsewhere. We are interested in the shopping malls at US airports although there is of course no duty-free on domestic flights in the US. We can look at those without any particular studies because they do open up encouraging possibilities for the former duty-free industry in Europe. Although there will no longer be a duty- and tax-free system there will be captive customers around the airports and on other means of transportation and therefore a substantial demand. Research by consumer organisations has confirmed that the duty-free prices for many goods are no more advantageous than in other shops. There is a large captive market, even apart from the duty-free element and it is there to stay. I have no particular axe to grind. I have nothing against duty-free but I have a duty to implement the single market. When we are working hard, with the support of this Parliament, to try and eliminate tax havens around Europe and promote employment, it would be illogical for me to crusade against tax havens and at the same time propose -or even consider - the continuation of localised tax havens connected with particular forms of transportation within the single market.

President
Thank you very much, Mr Monti.
Since the time allocated to questions to the Commission has now expired, Questions Nos 65 to 106 will be dealt with in writing.
That concludes Question Time.
Mrs Hardstaff wishes to speak on a point of order.

Hardstaff
I would ask you if you could look into the procedure by which the questions are put into the order they are on the order paper. For example, every question in the first part of this session was tabled after my own question, which is being dealt with much later. This is even allowing for the fact that it was actually tabled at the beginning of February and got lost. The same is true of Council questions: at least nine questions which were tabled after my question are ahead of it. I think there is quite a lot of resentment among Members on this issue and I would ask that this be sorted out, so that questions appear in the order in which they are submitted and there is some fairness.
Thank you very much indeed.

President
Mrs Hardstaff, I will make sure your comment is taken into consideration. However, I can tell you now that the first five questions are chosen by the President of Parliament, with priority being given to those considered to be most important. In other words, the choice is of a discretional nature. The remaining questions should follow in order, as long as they relate to the specific Commissioners due to attend Question Time. In any case, Mrs Hardstaff, I will give your comment some thought and let you know in due course.
(The sitting was suspended at 7.22 p.m. and resumed at 9.00 p.m.)

Shipbuilding (continuation)
President
The next item is the continuation of the report (A4-0101/98) by Mr Sindal, on aid to shipbuilding and a new policy on shipbuilding.

Glante
Mr President, Commissioner, ladies and gentlemen, after 9.00 p.m. in the evening, I am almost inclined to greet everybody individually. I am speaking on behalf of the Group of the Party of European Socialists and have no wish to conceal the fact that I am, of course, also a Member who comes from East Germany. I still remember with gratitude the vote in this Parliament and the proposals by the Commission aimed at rectifying the problems neglected by the East German shipyards and in this respect I shall express myself in very moderate terms about the proposal. I think the Commission's proposal is very good. We live in an age when we must consider whether industrial policy can be ruled by means of subsidies alone. Nevertheless, I have also made it known to my group that I - and subsequent speakers will no doubt go into this - have my difficulties with some of the amendments tabled by Parliament and the committee.
Basically it has to be said that productivity in the European shipyards has increased in recent years. Of course it must also be pointed out that this was often due to numerous closures, lay-offs and reductions in capacity. Unfortunately the OECD agreement was neither signed nor ratified, and I have the impression that some Member States are not angry about it at all.
In view of the crisis in Asia and the devaluation of the currencies there, the shipbuilding industry will come under increased pressure. This has to be withstood and the Commission has submitted proposals which reduce the extent and amount of subsidies, albeit a moderate reduction. To that extent, this is a reaction to the progress sought in productivity.
I have difficulties with some of the amendments tabled. I am specifically concerned that in so-called Objective 1 regions, the local shipyards should not be disadvantaged in comparison with other industrial sectors in the Objective 1 regions. We are strenuously pursuing this matter. It is not an honour for any Objective 1 region to be labelled as underdeveloped, but more help and some regulations are still needed in order to extricate ourselves from this situation. In this respect, I consider the proposal which has been submitted to be a good one. All Members should examine critically the amendments tabled by the committees and other Members. I nevertheless request that some consideration be given to the fact that our East German shipbuilding industry still has difficulties, and my colleague, García Arias, will certainly also bring up the subject of Spanish industry.

Jarzembowski
Mr President, Commissioner, ladies and gentlemen, we still share your hope, Commissioner, that the OECD agreement of 1994 will still come into force. We also appeal to the Commission and to the Member States to try again to exert pressure on the USA, so that this agreement is ratified. Even if we succeed in this we have a further difficulty. We really must insist that the new shipbuilding nations, such as the People's Republic of China and Poland, endorse the OECD agreement, as it is no use having only some of the countries sign up to the OECD agreement, whilst the People's Republic of China and Poland continue with their own shipbuilding policies.
We must probably now say, however, that the prospects for the OECD agreement coming into force are very slim and it is somewhat questionable whether the new shipbuilding nations will sign up to comparable regulations. We therefore need, as the Commission proposes, a new shipbuilding policy. But it is very important to have a shipbuilding policy which is both inward and outward looking. I myself come from a shipbuilding city. It is the very last time, as the Commission says, that there will be a special five-year arrangement for shipbuilding. After that, the shipbuilding industry can no longer say "another five years and another five years' ; that cannot go on indefinitely.
It is right to propose one more special arrangement now. We also share the view that order-related subsidies should be abolished by 31 December 2000, even if some amendments tabled in this House still seek to shake our conviction through more and more new studies. We know what the situation is, Commissioner; we do not need any more studies.
If we look at the shipbuilding programme, there are still subsidies for lay-offs and restructuring, for innovation and environmental protection; that is enough subsidies to apply over five years. And, I should like to say to the previous speaker, you in Mecklenburg really have no need to complain at all that your subsidies are too low. I say to you and also to my Spanish colleagues, and I mean it very seriously: it is time for change. Therefore, we also support the original proposal from Mr Sindal - and I hope Niels can listen and will not be diverted by the women again. So, Niels, listen! Commissioner, we in the Christian-Democratic Group support his proposal to delete paragraph 7.
There must no longer be a loophole for additional subsidies, because it is so difficult in the regions. It is a sector-orientated policy which we are deciding upon and there can be no new distortion of competition within the European Community. We regard that as very important, and I hope that tomorrow there will be a majority in this House for it.
Commissioner, I believe we need a clear external shipbuilding policy, because unfortunately there is no guarantee that the other countries will end their subsidies. At present we are in agreement, and I hope the Commissioner will say something to us on this matter. The whole House is of the opinion that, if the European Member States now help the Asian countries in overcoming their financial crisis, those countries must not be allowed to abuse this in order to create advantages for their shipyards over ours, by ridding themselves of their shipyard debts and through other protectionist measures, especially when it is our taxpayers' contributions which are helping them to overcome their financial crisis. We cannot allow that. We must, however, also consider - and Commissioner, I should be very interested to hear your view on this subject - whether we might use the WTO or the instruments of the Union's trade policy to bolster our own position slightly, and add to our ammunition. We cannot indefinitely allow the unfair competition practices of other states to put our shipyards out of business. I believe - in fact I insist, Mr President - that in this area of the Union's foreign policy we need a new concept, and I hope that the Commissioner will say something to us on this matter.

Parodi
Mr President, Commissioners, ladies and gentlemen, I would like to reflect on a few points. After the difficult situation and painful reorganization of the 1970s, today I have the impression that we believe that the European shipbuilding industry, which today accounts for 21 % of world employment, is, at first sight, well positioned in the world. In reality, in my opinion, the situation is not as bright as we might think, which is clear to those living in shipbuilding cities.
The European shipbuilding industry is experiencing a revival with a great increase in demand and has at least a couple of years' work ahead. However, if we in fact analyse the actual information on the sector and the medium-term projections, we realize that the sector is characterized by surplus supply and by surplus production capacity, owing in particular to the irresponsible doubling of plant engineering capacity in the last four or five years by the Koreans. This has happened to such an extent that today Korea alone is able to produce more ships than all the European shipyards put together.
The fact that supply exceeds demand is shown indisputably by the fact that the prices of the new constructions have fallen or, when things are going well, stagnated in all sectors. In current dollars, a new ship today fetches the same price as it did seven or eight years ago.
Along with this worrying situation of structural imbalance, there is the currency storm that has affected many Asian countries, particularly South Korea. The 50 % devaluation of the Korean won has led to a situation that risks having particularly serious consequences for the Community shipyards and for employment in Europe. In fact, it has been calculated that the Koreans could reduce the prices of their ships to 30 %, with their current internal margins remaining unchanged.
In this context, I believe it essential for the EU to apply a policy that enables the European shipbuilding industry, which is appreciated throughout the world for its high technological content, to be able to compete with the same weapons with the industries of the other countries in a system of transparent and balanced competition with the same rules for everyone and without any distorting intervention by the states.
Consequently, before the OECD agreement comes into force, before deciding to end the aid, the Commission should check the state and prospects of the sector in 1999, taking appropriate measures, if necessary, to protect the sector so that the European shipbuilding industry can face up to the threats that could undermine its survival.
To conclude, the loan granted to Korea by the IMF should be negotiated with the condition that Korea undertakes to limit its ship production and operate within a system of fair and transparent competition.

Riis-Jørgensen
Mr President, Commissioner, ladies and gentlemen, we are debating shipbuilding policy. This is a real hot potato, because everyone has an opinion on it. It is almost as bad as agricultural policy. If you get five farmers in a room, there will be seven different opinions. I think it is important to realize that we must strive towards the adoption of an OECD agreement. I am also aware that we in Europe are working hard to achieve this. Until such times as it has been adopted, I welcome the Commission's proposal to establish some ground-rules for a transition period in the run-up to the OECD agreement. We must remember that state aid to shipbuilding is an exception, and we must ensure that we allow the minimum acceptable level of aid, just enough to put our shipyards on an even playing field with shipyards outside Europe. That is the balance we must strive to achieve.
Thus, we have to examine the Commission's proposal to see whether it fulfils this, and it does. I am in agreement with the Commission on many points. What really matters to the Liberal group is point 1, namely the need for monitoring to ensure that the rules are adhered to. That is of the utmost importance. Point 2 basically outlines the need for transparency with regard to where aid is being given, and reference could once again be made to the report we debated this afternoon - the Berès report - when we also touched on the question of transparency. That is an extremely important aspect of state aid.
A third aspect is also crucial to the Liberal group and that is the question of combining the various types of aid, which actually results in a very high ceiling for support. I am concerned about the need to prevent shipyards from gaining aid through regional areas. Thus, I would very much like us to support Amendment No 29 in order to avoid unfair competition within Europe so that shipyards will not in future be located only in areas that are eligible for regional aid.

Theonas
Mr President, the Commission's new policy on shipyards is not in fact all that new. It operates within a framework we are already familiar with, and which has had dramatic impacts on Europe's ship repairing industry.
The Commission proposes to place yet more restrictions on the production capacity of European shipyards, with the consequent loss of still more jobs, the complete abolition of operating aid in 2000, but allowing aid to be given for closures and to facilitate the further concentration of production in the few, powerful shipyards that are left. All this is proposed while ignoring the fact that demand in coming years is forecast to be high and that the European Union's international competitors are continually increasing their production capacity and adopting support measures.
For countries like Greece, such a policy means abandoning and selling off a strategically important branch which has already sustained irreparable damage with incalculable consequences for the fabric of society and for the country's economy.
The European Union has learned nothing, either from the dramatic consequences of its policy or from the stance of the United States, which reserve for themselves the right to use only ships built in the USA for internal schedules. Unfortunately, the rapporteur too is proposing that aid should be restricted still further, competition should be intensified to extreme levels, and essentially, that shipyards should continue to wither away.
Ultimately, what do competition and the existence of a shipyard industry and jobs mean for us? We cannot accept these proposals, whose implementation would complete the destruction that began long ago. On the contrary, we call on the Commission to adopt measures to support the European industry, if necessary even ignoring the OECD agreement, so that shipyards can survive the annihilating and unfair competition from third countries. We ask it to undertake specific initiatives at international level for the adoption of measures which will compel renewal of the ageing fleet - an essential prerequisite for improving shipping safety and bringing recovery to the shipyards - and to have ships checked by the state in which the port is located. It should also ban the entry of low-specification vessels into its ports as a way to bring about their withdrawal, and tackle the problems of taxation and social dumping in the field.

Schroedter
Mr President, we realize that these subsidies are necessary to create a level playing field on the world market. They can, however, only be accepted if such aid is also transparent. For this purpose the Commission must, in our view, procure its own right of verification. It can be seen that there is worldwide over-capacity in the shipbuilding industry and it would therefore be absurd to further subsidise these existing capacities. It would be much more sensible to subsidise innovative projects in this field, to give more intensive support to research and development and in this way to create an opportunity for genuine future markets in shipbuilding.
I should like to give an example from a very poor region in Sachsen-Anhalt, where a small shipyard, Roszlau on Elbe, had no chance of further contracts. It initiated a crucial innovation, namely the building of flat-bottomed boats, which do not require rivers to be widened for their use. The environment creates jobs - that is all I can say - and in this case it succeeded! We are talking about a new market which is urgently needed throughout Europe, which needs to be provided for, which will also be of global interest and which, at the same time, can secure jobs which had already been written off.

Buffetaut
Mr President, ladies and gentlemen, what is the context in which we are considering the Sindal Report?
As has been emphasized by our colleague André Sainjon in his opinion, the OECD agreement whose aim was to eliminate direct aid to shipbuilding was stillborn. In effect, it had to be so, as the United States Congress did not ratify it. This was only to be expected, as the American authorities have no reluctance whatsoever in subsidising their own shipyards.
At the same time, South Korea, which is going through the economic turbulence that we all know about, is preparing for a future as an even more formidable competitor. The 'Challenges' newspaper this month emphasizes however that the financial crisis is temporary. The country should soon return to normal, thanks to IMF funds. The shipyards will work hard to catch up on lost time, and their sales people will once again be going around the globe to put spokes in the wheels of the Japanese and Europeans.
This is the context in which the Commission is apparently persisting stubbornly in doing away with direct aid in Europe, and strangely enough is sticking to the line which was defended at the time of negotiations on the OECD agreement, although these negotiations foundered. The position is all the more astonishing since the aid from the IMF, in the final analysis, does in fact boil down to a subsidy paid by Japan, the United States and Europe to begin a high risk economic policy. We therefore completely agree with the general comments made by André Sainjon and the amendments proposed by the Commission on External Economic Relations. We believe indeed that it is extremely dangerous to commit to a date to end aid to orders, without prior analysis of the market situation and of whether or not there are non-competitive practices afoot. Similarly, we are in favour of eliminating any regional aid which would risk introducing unacceptable distortions in competition.
In conclusion, once more, the Commission appears show either an strangely naive commitment to free trade, or an overwhelming ideological blindness. Industrial policy and commercial policy, on the contrary, require realism and pragmatism.

Paasilinna
Mr President, ladies and gentlemen, I would like to thank Mr Sindal for his splendid report. I agree with its main message that the shipbuilding industry should be left to recover in the longer term without state aid.
Mr Sindal's report, however, is turning into something that is unfortunately dividing the southern and northern European states. Many of our friends in Spain, for example, have been very concerned about possible cuts to aid, and that is quite understandable. We in the Nordic countries have already cut shipyard aid though, and we have noticed that the shipyards have actually been coping better since the cuts were introduced. We have lost some, but the sturdier ones have remained, and they are competitive. The policy of support had actually been distorting the picture in this sector.
I agree with Mr Sindal that the prompt implementation of the OECD agreement is especially important for the normalization of world ship markets. The Commission, in its estimation, however, is rather gratuitously optimistic. The USA, as you know, does not seem very willing to ratify the agreement. The Commission should put more pressure on the USA as, if the agreement is not ratified, we will have to produce yet another directive on shipbuilding when the old 7th Directive comes to an end at the end of the year.
The present jungle of aid to shipbuilding has led to unfair competitive advantages between one European shipyard and another. The EU must therefore aim to guarantee similar benefits to the industry both in Europe and overseas. In this we must obviously be prepared for competition from countries where production costs are low.
Aid that differs from country to country and region to region, like regional aid and aid for structural change, is now making the status of the different European shipyards a variable factor. I myself proposed an amendment to this report, in which I suggested the checking of the overlapping of aid and variable aid systems for the years 1999-2000. The Commission has not itemized its aid programme meticulously enough for the years to come and this might lead to overlap instead of cuts. My proposal for an amendment did not, however, get any response, even from my own group, and thus I did not consider it wise to present it to you here.
I assume that modern vessels are very intelligent. They thus call for much technological development. They are high-tech products, and that is what we Europeans have to face up to.
Shipbuilding contracts have to be made in the knowledge that the industry in the Community is being assured of reasonable and uniform conditions for competition. The ultimate aim of the EU should be that the shipbuilding industry in the longer term recovers without aid. That would be consistent with the OECD agreement.

Pomés Ruiz
Mr President, for a long time shipbuilding has been subject to strong commercial pressure from third countries - such as South Korea, China and others - which are causing serious complications to the market due to, among other things, the competitive devaluations of their currencies, with the passive consent of the International Monetary Fund.
Furthermore, there already is a suitable framework designed to realign the market, born of consensus and backed by the OECD. Of course, it would be better if the United States and China were to sign it, but as a framework it is good.
In that context, we Spanish Members of the People's Party believe we should oppose any regulation which directly or indirectly might allow a reduction in the current system of aid to shipyards. In the current market situation, we think it would be irresponsible to commit to withdrawing contract-related aid from shipyards from the year 2000.
We also disagree with the Sindal report's criticisms of any regional aid which the shipyards might currently be receiving. Everybody knows that if a shipyard closes in a depressed area with a high unemployment level, the consequences for the workers are far worse than when a shipyard closes in the prosperous countries of the north, where there are jobs. In addition, the Maastricht Treaty states that all the Union's policies should take their inspiration from the principle of economic cohesion.
Those arguments, and others, lead us to oppose the Sindal report. We cannot support the proposed reduction in aid to shipbuilding, especially in the international context we have just been describing. The OECD agreement should form the framework for regulating our aid in the future. Moreover, every time a shipbuilding job is destroyed in Europe, another one is created in South Korea. This is not the time to commit to any reduction in aid, unless in the context of the OECD agreement, which is good for Europe and good for all shipyards. So it makes no sense for us to want to be more demanding than the established framework. We will vote against a possible toughening up of the 7th Directive, and we think it would be a very good thing if it were prolonged.

Girão Pereira
Mr President, ladies and gentlemen, Commissioner, on several occasions the Parliament has drawn attention to the vital importance of adopting common standards for the shipbuilding market which is, after all, the ultimate objective of the OECD agreement.
We share this view and agree that the European Union should not submit proposals that might jeopardize the agreement's ratification. On the contrary, every effort should be made to ensure that it enters into force. Meanwhile, since it is impossible to achieve that objective, principally on account of the United States' protectionist measures, we welcome the Commission's proposal to extend the 7th Directive and to draw up a new shipbuilding policy.
We would, however, like to make two comments in this respect. We consider the 31 December 2000 deadline for operating aid to be inappropriate and premature, particularly if competition is further distorted, for instance, by dumping or by the Far East crisis. Before a decision is taken to eliminate aid, the most thorough possible analysis should be made of the situation of Community shipyards.
Our second point, briefly, relates to the rigorous compliance, application and monitoring of the new legislative framework. The regulation should contribute to ensuring that the existing inequalities in competition between European shipyards do not increase. Professionals in this sector frequently state that the playing field is not level, on account of local subsidies and aid which infringe the rules of competition. We feel that the Commission has an important role to play in this respect.

Moreau
Mr President, over the last twenty years, the number of employees in European Union shipyards has fallen from 280 000 to less than 80 000.
In France, the number of employees has fallen from 32 000 to less than 5 000, and many yards have closed. This situation, which is already catastrophic, would have been aggravated still further if the OECD agreement of July 1994 had been applied, as its aim was to eliminate aid while maintaining the American protectionist legislation arising from the Jones Act and reserving a monopoly to the American merchant fleet shipbuilders.
The proposal for a regulation from the Commission aimed at banning operating aid from 31 December 2000 anticipates the OECD agreement, which has still not been ratified by the United States.
Our group favours neither the early application of the OECD agreement, nor the fixing of a date to get rid of aid. Rather, it would be necessary to renegotiate the OECD agreement by taking into account changes in the world market, and more particularly the Asian crisis, which very much looks like leading to more dumping by Far Eastern shipbuilders.
Quite the contrary of what has been planned, we ask that measures be taken to promote the shipbuilding and maritime business in the Member States. We should give them a boost, by putting right the unfair competitive practices at global level, by maintaining the system of State aid, and introducing Community preference for shipbuilding, in order to promote the purchase of ships built in European yards.

Blokland
Mr President, shipbuilding is a global industry and should be approached as such. It should not be viewed from a regional or national perspective. The relevant market is the global market. The Commission's proposal unfortunately does not take this sufficiently into account. Moreover, it goes against agreements which have been made on cutting back subsidies for shipyards whilst reducing capacity.
The sector has been going through a process of reorganization for years. This proposal increases the risk that capacity might creep up with the aid of government support. This would wipe out in one fell swoop the organizational achievements which have already been made.
The Commission document does not mesh with European competition policy. It even flagrantly contravenes the principles of the internal market; one yard may get 3 to 9 % in aid, whereas another may get 60 to 70 %. Paragraph 7 regarding regional aid should therefore be deleted. The restructuring aid is also completely superfluous. With these proposals the European Commission is killing off the best European shipyards, whilst lesser yards are maintained artificially. A recent study by Ernst and Young highlights this conclusion.
The strategic importance of the European shipbuilding industry is evident. We want to continue to be able to build our own ships, even if we are forced to help the sector. But let us not create a mess with all kinds of obscure regulations within the European Union, and squander tax revenue. It will not be of any help to the sector itself. The ultimate goal must still be the abolition of all types of government support, so that every yard gets the price it deserves.

Pérez Royo
Mr President, the report on aid to shipbuilding which we are debating tonight refers to matters of great importance for the European Union and particularly for certain regions. One such region is Andalusia, especially the provinces of Cadiz and Seville, where shipbuilding is virtually the only heavy industry still in existence, although it is experiencing enormous difficulties.
The shipbuilding sector is in crisis, as the honourable Members are well aware. Furthermore, it is a sector which is greatly exposed to competition, especially from Asia, as has been underlined several times this evening. The production capacity and actual production of South Korea alone are greater than for the whole of the Community. Furthermore, as has also been stressed tonight, that ability to compete is reinforced by the strong devaluation of the Korean won, caused by monetary instability in Asia.
For that reason it is important to call on the Commission to exert pressure on the US Congress, to get them finally to ratify the OECD agreement on competition conditions in the shipbuilding sector. And not just in the context of the OECD agreement, either: there is also the World Trade Organization, where the Commission should make its voice heard in order to achieve fair competition conditions for the world market.
In its regulation, the Commission proposes that contract-related aid should cease on 31 December 2000, but the recitals of the same regulation introduce a safeguard clause to cover that eventuality. It specifically says: "Whereas, one year before that date the Commission will monitor the market situation and appraise whether European yards are affected by anti-competitive practices. If it is established at that or a later stage that industry is being caused injury by anti-competitive practices including injurious pricing, the Community will consider introducing appropriate measures...' .
Well, Commissioner, we are very worried that if this study were carried out, the conclusion would be that in fact anti-competitive practices are still being used in the world market. If that were the case, we hope the Commission would be up to the situation, and come up with suitable measures to solve this extremely serious problem. So we are surprised that the safeguard clause I quoted from the recitals nevertheless fails to be reflected in the actual text of the regulation, and we are strongly in favour of it being formally incorporated into it.
We are also in favour of retaining Article 7 in the regulation. Several speakers this evening have said that this article distorts competition, but it does nothing of the sort. It is founded on the principles of regional policy so it could be said that, even without being specifically mentioned in the body of the regulation, aid arising out of regional policy would still be applicable.
Lastly, Mr President, I listened carefully to the words of my compatriot Mr Pomés Ruiz of the Group of the European People's Party, who expressed clear views on this regulation. It just remains for me to say one thing: the Spanish People's Party, to which Mr Pomés Ruiz belongs, currently has a seat in the Council of Ministers. Let us Spaniards hope that the stance taken within the Council by the Spanish Ministry of Industry is as firm as the one we have heard tonight.

Alavanos
Mr President, I wish to say that in debating this issue today, we are again doing so in the shadow of the United States and the situation created by the USA's refusal to ratify the agreement on shipbuilding industry policy.
In that sense, I think there has been some lack of initiative by the European Union, and this erosion taking place at the level of state aid is not related to any overall and long-term policy but to the international situation that exists.
I would like to stress two points here. Firstly, the European Union ought, at international level, to renegotiate the agreement and tackle the problem of the dumping that is taking place as a result of the developments we are seeing in Eastern Asia and the protectionism of the United States.
Secondly, it must enhance the regional nature of its criteria and interventions. It is sad to see shipyards in Greece closing down and becoming concentrated only in the north of the European Union, while there are opportunities, with Russia, Ukraine and other countries, for not just Greece or Italy but the European Union to gain a foothold in the eastern Mediterranean.

Torres Couto
Mr President, ladies and gentlemen, the House is today discussing the creation of a new Community legislative framework for the granting of aid to the European shipbuilding industry.
The objective here is to fulfill the principles enshrined in the Treaty by providing the shipbuilding sector with fair and uniform conditions of competition within the Community so that, subsequently, the sector may survive without state aid, in compliance with market rules and conditions.
In this connection, the agreement signed in 1994 between the European Union, Japan, South Korea, Norway and the United States, under the auspices of the OECD, which should have entered into force on 1 January 1996, may today be said to be a dead letter in that, under constant pressure from US shipyards, the US Congress has failed to ratify the agreement.
This position may be understood in the light of the fact that, over and above the many millions of dollars allocated in aid to the opening of a shipyard in Philadelphia, the US authorities wish to add a new payment with which the US Navy may openly finance the construction of non-military vessels.
Mr President, ladies and gentlemen, shipbuilding today is undeniably a global industry and the European shipbuilding industry should enjoy the same conditions as its international competitors. Therefore, steps should be taken to extend the standards in force within the European Union to a global level, preventing any distortion of competition. It is essential to incorporate the existing instruments of economic policy, together with those to be created in the future, within a policy which seeks to achieve a uniform international shipbuilding market without distortions of competition and without dumping of any kind.
The United States' protectionist measures, China's total freedom to ignore commitments of this type, together with the crossed subsidy mechanisms made possible by the vertical and horizontal composition of the Japanese and South Korean shipbuilders undermine the objectives of achieving uniformity.
South Korea's position, which combines its 25 % market share, which it clearly aims to increase, with a devaluation of the won in excess of 50 %, has had and continues to have disastrous effects on the world market. For instance, the increase in the number of jobs in Korean shipyards in the last decade is equal to the number of jobs lost in my country's shipbuilding and repair yards.
It is therefore urgent to force countries like South Korea to correct the imprudent industrial policy they have pursued and force them to eliminate their excess capacity. Thus, the 7th Directive should be extended. The Commission should maintain the 31 December 2000 deadline for eliminating subsidies if it ascertains that anti-competition practises do not exist. If that is not the case, then it should be extended, until at least 31 December 2003, the date on which this regulation expires.

García Arias
Mr President, I am glad to see we are joined tonight by the two Commissioners dealing with this matter, in the contexts of industrial policy and competition policy. It would have been nice if Sir Leon Brittan had also been here, because of the international importance of the subject.
I am not going to repeat here what everybody has been saying about the international situation. What I want to do is put the following question to the Commissioners: what aspect of the world situation has changed, for there to be this change in attitude in the Community strategy towards defending the shipbuilding sector? So far we have been prolonging the directive while waiting to see what happened with the international agreement. Also, there has been the crisis in Asia, and all the current phenomena we have just been talking about here. The Commission now realizes, as we all know from the newspapers, that European companies have lost international contracts or tenders because obviously those devaluations, that excess capacity, and perhaps that indirect aid being diverted from the IMF aid, are having an effect.
So, what has happened to make us change our strategy? Is it because the Nordic countries have joined? That is what can be deduced from what we are hearing here in Parliament. Is that the international change which has taken place? In the debate on this question, Parliament's position is that we should not set a date for the prolongation of the directives, because as soon as we set a date we are adopting and announcing unilateral policies. And now it turns out that we have here the regulation which announces that unilateral disarmament on the part of the European Union.
Mr President, in view of what we have been hearing I would like to say two things. I go a little further than what has been said by my colleague Mr Pérez Royo and the Spanish People's Party. I would like to hear the Minister declare publicly that he is defending that position at the Industry Council. I think it would be very interesting and very important for the shipyards and the Spanish regions to know that that position is being defended because, as we are hearing, that does not seem to be the case. However, at this time of night I do not wish to go any deeper into the question. I would prefer it if the two Commissioners here - and I wish Sir Leon were here too - would tell us what change has occurred for us now to find ourselves with a proposal for our unilateral disarmament.

Caudron
Mr President, Commissioners, ladies and gentlemen, after having as is customary, thanked and congratulated Mr Sindal and the draftsmen of the opinions, and our two Commissioners for their presence here, I wish to begin my speech on the future of aid to shipbuilding by making three observations.
Firstly, in the course of the past five years, every time a job has been lost in the European shipbuilding industry, another job has been created in the Korean shipbuilding industry, and our sacrifices have therefore been perfectly useless. Secondly, in Korea, it is neither low wages nor industrial organization which has made Korea dominant, but the cross guarantees of the conglomerates, supported by the Korean government, making actual financial backing unnecessary. Thirdly, in Europe, every time aid is given to a shipyard in difficulty, the European Commission demands a reduction in capacity, whereas of course in Korea, Japan and the United States nothing of the sort happens.
The result of all this can be summarised in four points. Firstly, Europe has imposed on itself measures which its competitors did not. Secondly, tens of thousands of jobs have been destroyed with all that ensues in terms of social difficulties and misery. Thirdly, Europe has lost a substantial market share. Fourthly, contrary to what occurred in other industrial sector, in particular the steel industry, there is no guarantee that what is left of our production capacity will actually last.
Ladies and gentlemen, a few months ago, we nearly hit rock bottom in this area, as aid under the 7th Directive was about to disappear on behalf of an OECD agreement that our competitors had not even ratified. For once, we all together were able to say no. Today it is being proposed to us that the European Union should unilaterally apply, to itself, the principles set out in the OECD agreement, although it is not ratified. And here I say once again that we must be more pragmatic. If in the year 2000, we see the market is sufficiently healthy for us to be able to do without aid, I will doubtless agree to it being done away with. But today, who could say as much? The Commission itself acknowledges the need for appropriate measures although it cannot say what these are. So now, I beg of you, do not shut the doors. But if we are to shut the doors, let us at least keep the keys, and between now and then we shall be able to study exactly the changes in the market before fixing final dates and taking definitive measures. Shipbuilding is not an industry like any other. That is why I call on our Parliament to be cautious, and I call on the Commission to accept the amendments which I hope will be voted through and which will allow us between now and the end of the year 2000 enough margin for manoeuvre. Once and for all, in this sector, as in many other sectors, we should, Mr President, stop being masochistic.

van Miert
. Mr President, as I listened to all these speeches, and this time there were many of them, you will have surely been aware, if you listened to one another, of the difficulties with which we are confronted, because the arguments go from A to Z. Some of you wish to stop aid immediately, and in particular operating aid, and a number of governments defend this point of view even today. Others would like aid to be continued, using the same arguments as have been raised for the last fifteen years.
Everyone seems to forget that the only industrial sector, and I repeat the only industrial sector which has for a very long time benefited from operating aid is shipbuilding. This is no longer the case for the steel industry, nor for other sectors; shipbuilding is the only one left. Taking the figures from 1990 to 1995, did you know that in the European Union, more than ECU 5 billion of state aid was allocated to operating aid, and more than ECU 3 billion for restructuring? That is a total of ECU 8 billion. So those who claim that this sector has been let down are completely wrong.
In spite of this aid, which is at times massive, I knew of cases where the public authorities were paying one third and even more for ships - when I say the public authority, of course I mean the tax payer - often in order to be able to compete with shipyards within the Union itself. Sometimes even more than one third of the aid was provided. That was the situation. So in effect, the question has now been with us for many years: can we continue like this? Increasingly, more governments are saying no.
We have tried to find a solution through the OECD agreement, at a global level, and we have not disarmed on a unilateral basis. We have tried to find an agreement which everyone would respect, and provided this agreement was ratified, we were ready to immediately put an end to the 7th Directive. Unfortunately, the Americans did not ratify the agreement. The problem is not that the Americans are major competitors, because I am not aware that American ships are causing great difficulties to our own shipyards. The Americans are protectionist, that is true, but in terms of global competition, the problem is not really there. Our problem is that, as ships are becoming increasingly sophisticated, we need to act to ensure that we are at the cutting edge of technological development and of the development of modern ships.
I shall return to Korea in a minute, but I believe it is useful to go over the global context again. Once again, more and more governments cannot or do not wish to continue giving operating aid. Sometimes, from some of the speeches, my understanding was that it is no longer a question of giving aid. That is wrong, as even in the framework of the OECD agreement, aid for research and development, for the environment and for social support measures and export finance arrangements continue to be provided for. The OECD agreement allows all this to continue.
Our proposal allows more: it offers aid for the restructuring of companies and aid for innovation. That is new, certainly, but that is precisely the reason why we have to try and innovate more to remain competitive. That being the case, I do not understand why we are being criticised for including that in our proposal. That is where the future lies. We did this for the automobile industry; why not do the same for shipbuilding?
Let us now come to a highly controversial point, particularly among yourselves, which is aid to investment in eligible regions. This is the logic of our regime. Let us take the automobile industry, Mr Jarzembowski. We can give aid to eligible regions, to compensate for the disadvantage that these regions have compared to non-eligible regions. That is why a great deal of aid can be allocated to Saxony, as you know. Not as much as Mr Biedenkopf would wish, but, even so, it is a substantial amount, whereas in other places, nothing can be given, not even a penny to Vilworde. That is the logic of our regional policy. Do you wish to keep this policy or not? The Commission believes that we should.
Where your argument does bite, is knowing whether the degree of aid that can be allowed for the eligible regions, be it region A or region C, would also be acceptable in the logic of shipbuilding. I have just mentioned the automobile industry where aid can only be given for investment in order to make up for disadvantages. But here I am ready, and I emphasize this, to consider along with the Council of Ministers how to limit regional aid, possibly even by combining it with certain other measures. However, I believe we should in principle maintain the overall approach in terms of regional policy.
Of course, this investment must not be used to increase capacity. It may be used to modernize, to increase productivity, but not to enlarge capacity. From this point of view, this rule can be maintained and rightly so, I believe. We shall see what the Council of Ministers decides. I am not sure that it will follow this logic, but I maintain that it is right. It is consistent with what the Commission does within the European Union in terms of regional policy.
Now I will look at Korea. Of course many other comments have been made, but my time is limited, and clearly I have to speak on the question of Korea. Furthermore, Martin Bangemann is here, and he may talk more about the report which was drawn up under his responsibility, in an attempt to contribute to the modernization of our shipbuilding industry. Who can believe for a moment that the Commission is not in fact concerned about this? It only wants the sector to be able to support itself, as far as possible, through its own resources, receiving aid of course for research and development and for the environment. All these instruments remain available, but we must, after a certain period, eliminate operating aid, that is, by the end of the year 2000, as we have proposed. Here too, we shall see what the Council decides.
However, before even the crisis in Korea, Martin and myself included in our proposal a clause stating that if something were to happen at a global level, somewhere in an industrialized country which was developing an aggressive dumping policy with regard to our shipyards, the Commission would reserve the right to come back on this. We undertook, one year before the end of operating aid, to review this matter in order to make an assessment and present it to you and to the Council of Ministers, with a view to determining whether we should take new measures or develop other elements of our policy. This door was not only halfopen in the aftermath of the Asian crisis, but was open before it, because that is what had been agreed. In this light, I have no difficulty in accepting some of the suggestions which were made, with a view to studying extremely closely, as Martin does, as the Commission will do and as the Council will do, the consequences of the events in South Korea, where there is in fact a considerable degree of competition.
Contrary to what many of you have said, the crisis does make it possible for us to intervene. Before, in practice, we could not. Before the crisis, the Koreans would not accept a reduction in capacity. Now, with the crisis, with the operation of IMF aid, we will also have our bit to say. Although precautions have been taken, we will naturally need to ensure that they are complied with. It so happens that in the wake of the Industry Council which is due to take place on 7 May, there will be a high-level meeting between Korea and the European Union, and believe you me, we will take stock of the situation there. In fact, over and above the problem of the shipbuilding sector, South Korea and a number of other countries are facing a far more serious crisis, which also affects their industrial structures and massive aid systems. Hence, at a time when those countries are in the throes of crisis, nobody is going to try and sell us a policy based on the South Korean model.
Let us take advantage of the situation to try and make some adjustments, since we were not able to do so with the OECD agreement, which provided no commitments from Korea to reduce its capacity. On the contrary, South Korea continued to increase its capacity. Now we have at least a possibility of saying to the Koreans that we want to enter into serious discussions about this matter.
Furthermore, the European Union is not the only one to act; the Member States are also able to act through the IMF. In my view, if anything it is a matter of good fortune that we can now get into a serious discussion with the Koreans and reassess the matter, instead of being in the situation as it was before. I therefore yet again, make a commitment on behalf of the Commission to come back to this aspect, as well as to others, one year before the end of the regime, in other words, one year before the end of operating aid.
Specifically, this means that we shall continue to discuss among ourselves, but we must find a solution for the future, as the 7th directive comes to an end at the end of the year. Last time, we were able to extend it for a limited period only, and barely gained a qualified majority to do this. But now this will no longer be possible. A blocking minority will certainly oppose the continuation of this regime. We therefore need to find another way forward, another policy, and I believe that the if it is possible to discuss one element or another and the Commission itself is prepared to consider certain amendments here or there, that in this way an agreement will be possible within the Council of Ministers.
With that, ladies and gentlemen, I will conclude. I have spoken at length, but I know how interested you are in this sector, which is still very sensitive, and as I look at some of you, I can immediately see behind you the region and shipyards in question. I know this because I understand that because very often the regions are already facing difficulties. When we speak about the difficulties in the shipyards, thousands of people are affected, and the situation is showing itself to be dramatic. I therefore fully understand what you have said. But on the other hand, I think that our proposal is fairly balanced, and also aims to ensure that, in the next century, we will have a competitive shipbuilding industry, which will not only be a major industry at European level, but also at global level.

Sindal
If I could have your attention, Mr van Miert - thank you for your reply and for contributing positively this evening. This is a consultation procedure, and I think this process is in fact intended to help expose the problems facing not only the Commission, but also the citizens of Europe, and I believe we can all sympathise with one another. However, I do also look forward to the Commission and the Council coming up with a workable solution. That was one point I wanted to make.
I am actually speaking in response to criticism from some Members before the break to the effect that the procedure prevents the various opinions from those committees asked to give an opinion from reaching the corresponding committees in time, thus preventing them from being heard. As rapporteur of this proposal, I would like to say that I have endeavoured to get this put back a little, but the fact is that British Presidency wants the matter settled in May, and the Commission did not want it to be postponed. I am saying this with regard to the protocol. At some point, we must learn to deal with matters in their correct order. This is my response to criticism from my two colleagues this afternoon.

van Miert
Mr President, I wish simply to make good an unpardonable omission. I did not even congratulate Mr Sindal on his excellent report. I deeply regret this, as I know how hard he has worked, and I hope that my omission now has been made good.
I was so keen to give a quick response to the comments of substance, that I forgot to congratulate you, but I do so, believe me, with all my heart and with conviction.

President
Our congratulations echo yours, Commissioner.
The debate is closed.
The vote will take place tomorrow at 12.00 noon.

Passenger vehicles
President
The next item is the report (A4-0113/98) by Mr Murphy, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on special provisions for vehicles used for the carriage of passengers comprising more than eight seats in addition to the driver's seat, and amending Council Directive 70/156/CEE (COM(97)0276 - C4-0545/97-97/0176(COD)).
I welcome Mr Bangemann, who joined us during the previous debate.

Murphy
Mr President, I should like to begin by putting on record my thanks to Parliament services for assisting with this very complicated dossier, the Commission for its assistance and, in particular, the bus builders of Europe, the bus operators of Europe and those people who use the buses of Europe, for their great assistance in drawing up this report.
Yet again Parliament is making one of its traditional errors. We spent the whole of this morning contemplating our own budgetary navel. That is important to us but here we are this evening, as a Parliament, talking about ship-building and buses and coaches which are very relevant to the citizens of Europe. I know which reports my constituents in towns like Wolverhampton and Dudley would like to see us talking about in front of the media and not here in front of a few interpreters and a few hardy souls such as ourselves.
I welcome the Commission's proposals. They are an important step forward towards the completion of the single market. They protect national and regional preferences in vehicles and in this respect, from the United Kingdom's point of view, I am pleased that our traditional double-decker buses - and in London the Routemaster buses - are under no threat whatsoever from Europe. I am pleased to be able to say that.
Also, very importantly, I welcome the mandatory provision for disabled accessibility to class I vehicles. This is very important. As the rapporteur I have spoken widely to various interest groups, as I said at the beginning of my speech. Not all are going to be happy with my proposals but I can assure you that I did my best to meet all their main aspirations in a realistic, technical and cost-effective way.
There are a few key points from my report that I would like to bring to the Commission's attention and to invite their support. Firstly, we are widening the single market here. But I would ask that instead of adopting a derogation approach to vehicles which are not typical throughout the European Union, such as double-decker buses and midi-buses - which are used in certain parts of the European Union, I think we ought to allow type approval for them all, provided they are safe and not a hazard to citizens. We should grant them type approval. Nobody has to actually use them but why separate them out? Why not have a complete market in buses and coaches? I would urge the Commission to look at my Amendments Nos 4, 5, 28, 29 and 41 in that respect.
Secondly, we ought to widen the accessibility provisions to include class II vehicles. The Commission is currently involved in a study looking at the technical feasibility of accessibility for class II vehicles. It is my prediction that Commission study will report in favour of mandatory accessibility provisions for those vehicles before the Council has even adopted its first common position. We, as a Parliament, ought to be looking at class I and class II vehicles because this is technically feasible. I have seen the vehicles, I have been on them. Included in that we ought to start a study into class III vehicles, coaches and class A vehicles and minibuses.
The key challenge to this House is to accept that we have a duty here to widen accessibility as far as is technically and affordably possible. I say to my colleagues in the EPP group on this: please accept this challenge; what I am saying is reasonable and achievable. I am not coming forward with some super-fantastic idea here. I would say to the EPP and the UPE groups: please, let us put this in at first reading; let us test the waters. I believe that by the time we get to our second reading, the Commission will be backing us on class II vehicles.
I would not want to waste what is a golden opportunity. I myself know how difficult it is to get on and off buses if you have a slight disability. I had a broken ankle a couple of years ago. It is impossible to get on and off vehicles with high steps. A friend of mine told me about a woman at a bus depot in Wolverhampton who had a child in a push-chair. She had to wait for different vehicles to pass until the right one came along, with a low floor, so that she could actually get on that vehicle.
I am saying here, this evening: let us take this opportunity to widen the single market, to increase the accessibility provisions from class I to class II, with the various bits and pieces of technical amendments we require.
There has been a lot of fuss made about my report in the Committee on Economic and Monetary Affairs and Industrial Policy. That has been based largely on a series of misunderstandings. As far as I am concerned, this is an important piece of single market legislation; it is an important report for the citizens of Europe. But what is more, I can assure you it is technically feasible, undoubtedly affordable, and eminently achievable. I think it is a good response to a good Commission proposal. I ask the House to support it.

Schmidbauer
Mr President, Commissioner, the directive on the regulation of vehicles with more than eight seats in addition to the driver's seat - generally known as buses - is aimed at standardizing the type approval system in the context of the Single Market and at the same time improving safety. The whole report is very technical; nevertheless, these technical details have considerable repercussions for the people. The Commission has fortunately taken into account accessibility for people with restricted mobility, but it is the fine details which are causing the problems. I have therefore mainly addressed this problem area in my opinion. I thank the rapporteur for having incorporated to a large extent the opinion of the Committee on Transport and Tourism in his report.
In its proposals on accessibility, the Commission concerns itself solely with wheelchair-bound persons with strong arm muscles. We intend to extend the concept of "persons with reduced mobility' to include not only all disabled persons, but also elderly people and those who, for various reasons, have difficulty in boarding; for example, passengers with heavy luggage, passengers with pushchairs or bicycles and even pregnant women. This new definition of the term will entail a whole series of technical changes which will, however, make it possible and/or easier for people to use public transport.
The second fundamental change which I propose is to stipulate accessibility for persons with reduced mobility for all types of vehicle. We want to have this accessibility not only for local but also for long-distance buses. Boarding aids should be available for at least one door. We are not satisfied with a promise from the Commission that it will submit a proposal on this subject in the near future, because it does not want to make a decision at present as to the best technical solution.
We have waited years for this directive and have repeatedly demanded mandatory obstacle-free design. We do not want to be put off any longer.
In non-binding declarations, demands for the integration of people with disabilities are made repeatedly. With the acceptance of the amendments tabled, we have an opportunity to make a start on integration, at least in the field of transport. About 10 % of the population lives with some form of disability. A large proportion of these people have difficulty in using the roads. They are reliant on public transport. Because of their reduced mobility it is important for them to be able to get out and about, to be able to lead an independent life. Public transport must be designed in such a way that it does not constitute an obstacle for this group of people, so that they can reach their place of work, but also so that they can participate in leisure activities, reach holiday destinations or keep up family or social contacts.
Alongside people with disabilities, there are approximately 100 million elderly people in the EU, and this figure - as we know from demographic statistics - is set to climb even higher. Elderly people are particularly reliant upon public transport. It is estimated that about 50 % of these people do not have a private car at their disposal. It must be made possible for all of them to gain easy access to public transport, thereby saving them from the threat of isolation. However, it also makes sense, from the economic point of view, to invest in the additional costs of removing the various obstacles. The assertion that this is too expensive is simply wrong. According to the most recent calculations, it does not even amount to 10 % of the total investment. Offset against this is a large number of potential new users, if obstacle-free design enables them to use the service.
I appeal to all Members to vote for the amendments to the report, in order to make integration something which is there for all to see and experience.

Billingham
Mr President, I add my congratulations and approval of this report and I praise Simon Murphy for the assiduous and sensible way in which he has crafted this proposal. At the same time I acknowledge the work the Commissioner has played in it too. The details contained in the report, as has already been said, are the result of extensive consultation with all the key interest bodies. The report has gained approval from very diverse organizations: from manufacturers and industry, trade union representatives as well as consumer and disability groups.
During the passage of this report through EMAC the depth of the research into detail that Simon Murphy had carried out was evident to all of us. It is a proposal for a Council directive which takes a positive step towards the completion of the single market and at the same time provides a framework for the harmonization of construction standards between all Member States which in itself will engender and encourage trade between them.
Important though these aspects are, the prime reason why the citizens of Europe will recommend the Murphy report is the emphasis it rightly places on safety and accessibility for everyone. Getting on and off buses is the point at which most accidents happen, especially to those who are vulnerable. Alongside the recommendations of low-floor buses, buses which in effect kneel at the kerbside to give easier access, many other safety features are contained in this report. All of these will make all of our travel, on coach or bus safer and more risk free.
Let me underline once again that this directive will only apply to new buses and will not threaten double-decker buses or Routemaster buses. Tomorrow we vote in this House and I hope we will keep the integrity of the Murphy report with its focus on helping passengers with reduced mobility, disabled people, the elderly, small people, parents with children and pushchairs and - dare I say, Commissioner - nimble grannies-to-be who, in the very near future, could be the beneficiaries of this report and be grateful to it.
Finally, and unsurprisingly, need I remind the Commissioner that very similar transport modes already exist in my constituency of Northamptonshire and Blaby where buses have been pioneered with great success which do just what the Murphy report recommends: low-floor buses which kneel to let people on and off are already a feature of our local travel and much welcomed by the users. The Murphy report is splendid and prepares the way for better and safer public transport in the future. Parliament would be well-advised to give it splendid and resounding support tomorrow and I am confident it will.

Wibe
Mr President, I would like to begin by saying that I am very impressed by Mr Murphy's work. He is dealing with an extremely complicated directive, but he has clearly mastered it down to the smallest detail. I also appreciate the rapporteur's clear main thrust for amendments, which is to make it easier for disabled people to have access to public transport.
However, I would still question whether this type of directive should really be dealt with in such a detailed way in this Parliament. It is still an extremely complicated directive with a lot of diagrams and formulas which are extremely difficult to understand for people other than experts. I wonder whether the best solution for any similar reports in future would not be to make a statement of principle and then leave it to the experts to work out the details. I may be wrong, but allow me just as an amateur in this area to point out some things which surprise me a little. These include, for example, Amendment No 54 from Mr Murphy. It discusses the fact that the text on buses showing the destination should be white or yellow on a black background and at least 12 cm high. It is possible that this is the most readable at the moment, but it is quite conceivable that a technology may be developed tomorrow which makes it best for the visually impaired to have a black text on a white background. I wonder if it would not be better just to say that people should use the best available technology.
The same amendment also says that the destination should be announced by recorded voice, inside and outside the bus, when the bus stops at bus stations etcetera. In the bus I can understand, but should the destination also be announced by a loudspeaker outside the bus too? I think that would lead to a terrible racket in many towns where there are a lot of buses. In addition, it says that the voice should be recorded. In Sweden we have buses which travel perhaps 300-400 kilometres and may stop only two or three times on the route because we have such large distances between towns and villages. In that case it might be simpler for the driver to do as he does today, which is to say that we have now arrived at Burträsk or wherever it may be.
Another matter which does not relate to any amendment, but which is part of the directive itself and is mentioned in Amendment No 87, concerns the fact that when buses have a wheelchair lift they should have three flashing lights and an audible signal when the lift is in operation. With current technology such wheelchair lifts cannot be controlled remotely from the driver's seat because it is too dangerous. That means that the driver must go out and stand by the wheelchair when it is raised. I therefore wonder again whether it is necessary to introduce a requirement for an audible signal when this happens. Lights may be appropriate, but audible signals are perhaps a bit doubtful.
As I said before, I am an amateur on the question of such technical matters. They were just a few comments. I would like to return to my initial point which is that I think that, given the difficult material, Mr Murphy has done an excellent job.

Howitt
Mr President, it is now two years since we in this Parliament passed the lift directive which was setting a precedent that legislation for Europe's single market could and must be used to enable access for disabled people. That precedent was then enshrined by agreements within the Treaty of Amsterdam, the draft Treaty of European Union. Tonight we face our next test in addressing the buses and coaches directive and addressing too an issue which is most campaigned about amongst Europe's 35 million disabled people - the right to accessible public transport.
I congratulate Simon Murphy on this report and the amendments which he has tabled. These are important amendments which everyone in this Parliament should support. The amendments ensure that the definition of disability is not just one for wheelchair users but for all disabled people, including blind people and deaf people, and, as my colleague Mrs Schmidbauer has said, for pregnant women, people with children, people with heavy shopping, older people and others. There are many people who will benefit from that amendment.
I call for support for the amendments which recognize specifically the needs of blind and partially-sighted people, including internal lighting and colour contrasts within buses and, for deaf people, to ensure visual displays for their information needs. I support Simon Murphy's amendment to extend the provision from Class 1 to Class 2 buses so that double-decker buses and tourist coaches also enable disability access. Even if the Commission tonight opposes the extension of this directive to inter-urban services, it should give us a clear commitment in advance to implement the study which it has launched. I hope the Commissioner will respond directly to this point tonight.
I call on Parliament to support our amendments to reduce the initial step height to 24 cm or to ensure a boarding aid. These are the only standards which genuinely ensure access for disabled people. After all, this is only consistent with the findings of the research on low-floor buses which was published by the Commission itself as long ago as 1995. I would appeal to the right of the Parliament, the Group of the European People's Party, to join us in supporting the amendment but I look in vain for its presence here tonight and for its contribution to this debate.
Instead, I send a simple message to disabled people in Europe. This proposal has been delayed in Brussels because of the long fight which has been engaged to ensure that all new buses in our towns and cities from the year 2001 will offer full rights of access for disabled people. It is a very significant victory and one that I commend to the House tonight.

Rübig
Mr President, many years ago the European Community introduced pan-European standards for tractor seats. We are still waiting for a solution for the electric plug. We have gathered a great deal of experience in the field of standardization, and we have also been punished very severely for a great deal of our standardization, for example the angle of curvature of bananas.
Today we are talking about standardization in the case of vehicles for the carriage of passengers. This is a very important area. At this point, I thank the rapporteur, Mr Murphy, for his impressive commitment and his understanding of the detailed solutions mentioned. The Group of the European People's Party largely supports these results, particularly as regards persons with reduced mobility.
I myself have proposed in committee that the definition of disabled should be made more specific and that it should be extended. We are in favour of the use of boarding aids even for Class II vehicles, appropriate forms of handrails, entrances, luggage racks and special destination displays, in order to make the use of buses both possible and practical for disabled persons.
Our concerns lie in a different direction, however. From today we are no longer regulating just tractor seats. The European Parliament is about to design the perfect bus. More than 100 amendments on technical details have been tabled. There is mention of a radius of between 2.5 mm and 5 mm for corners, of retractable steps, of obvious markings on edges and even of hot drink vending machines and cooking equipment.
In our view, we must, however, distinguish between political initiatives and questions of technical standardization. The latter should be dealt with by appropriate committees of experts, such as standards institutions - for example, the CEN - in other words, by specialists who build and/or use the buses. We are therefore also convinced that some important political points must be addressed. In this area, a SLIM initiative should also be implemented, which concentrates on the essential political aspects.
We believe that, above all, the proposals concerning the safety of vehicles and/or the accessibility of vehicles for the disabled, in Appendix 7, which go beyond those of the Commission, are sensible. However, we should have a debate where it makes sense to do so; namely, in a technical committee. That is also the reason why the Group of the European People's Party will tomorrow propose that it should be referred back to the relevant committee. We believe that the extent of the debate should be clearly reduced, but should be all the more specific, so that it can contribute further to a proper standardization of this area.

Koch
Mr President, ladies and gentlemen, when we speak today about a new bus directive which contains special regulations for the carriage of passengers with reduced mobility, we should bear in mind, particularly in view of the recent debate about increasing road safety - after all, 1.6 million people suffer often permanent injuries in accidents - that we could in fact ourselves be one of them tomorrow. We too would then have to cope with living as a disabled person.
At present there are about 37 million disabled people living in the European Union. But it is not only they who often have problems with the use of public transport. We must think of everybody: of elderly people with mobility problems, of small children, or of those in particular situations, such as, for example, pregnant women or passengers carrying luggage or pushchairs. I therefore feel that the broad interpretation of the concept "persons with reduced mobility' is legitimate and should be welcomed.
To that extent, I support the social aim of the directive. It deals with the right aspect, namely that of safety, but in respect of certain detailed solutions goes much too far in its regulation. We must not absolve companies from their own responsibilities to seek the best solutions. Such solutions could be of a technical, but also of a logistical nature. Bus manufacturers already demonstrate in fact their great capability in respect of safety.
I am at all times very happy to support demands for equality of opportunity for people with reduced mobility. However, I reject nonsensical and exaggerated regulations on detail. The responsibilities which lie with the European Committee for Standardization, business and, in terms of subsidiarity, even with local authorities, should not be brought together by us under the umbrella of the EU Commission. I therefore consider demands for 4 metre ramps at the entrance and exit of buses to be completely ill-considered.
Political demands and objectives which call upon both manufacturers and operators of buses alike to seek, in equal measure, innovative solutions, seem to me to be more suitable for doing something for the disadvantaged than rigid European standards which apply from Finland to Sicily. Although the problems of disabled people across the European Union are comparable, the Member States must take into account climatic, territorial, traditional and other specific conditions in their efforts to procure a real place in their midst for disabled people.

Bangemann
Mr President, I do not wish to make the same mistake as my friend Karel van Miert and I should therefore like to thank Mr Murphy very sincerely for his work, right at the start. It has already been said during the discussion that this is a difficult report because it deals with a whole series of technical questions and an attempt had to be made to find a compromise in many respects. I should, therefore, like to concern myself particularly with the questions which were directed at the Commission and from which it can be seen that a number of demands are being made.
First, I should like to refer to the fact that there are two different starting points for this directive. One proposal is to create the Single Market by means of a type approval system. For this we need precise regulations, because only such precise regulations can lead to the approval of a type. Nothing can be allowed to remain unclear in such type approvals. We need standardization of the technical regulations at Community level. With undertakings like this a certain complexity sometimes cannot be avoided. I am quite sure that our proposal is already being seized upon in the press as another example of over-zealous bureaucracy. If we were to adopt all the amendments tabled - and I believe there are 120 - we would be at even greater risk. In this I must agree with some of the speakers. We can, of course, overdo this sort of specialization and attention to detail and then still not achieve what we actually set out to do. A certain willingness to compromise is necessary here.
However, we also want to solve the safety problems. Not only do we want to aim for the highest possible level of safety for vehicles in general, but we also want to guarantee that disabled people - however one wants to define this term, that is, persons whose mobility is reduced - can use these vehicles safely. These are our aims.
If we now look at the amendments tabled, they can be roughly divided into three groups: firstly, there are the amendments which correct mistakes made by the Commission or propose better technical regulations. That is, as ever, very desirable and we are pleased that we can adopt all 22 amendments here, without reservation. I do not wish to read out the numbers of the amendments now. We have them here; if it interests you, you can look at them afterwards. Then we have a group, which make alterations or additions to the proposed technical requirements and finally a third group, which proposes fundamental alterations in respect of sensitive points. Here we may quote as an example the derogation provided for by the Commission for the special situation in the United Kingdom and Ireland. I should like to thank those British colleagues who praised us for taking this exceptional situation into account. And what is more, against all expectations, according to those well-known serious British newspapers where alarm reports were published, after an attempt to ban fish and chips, we also wanted to ban double-deck buses. We did not do so. I hope that we shall be appropriately praised by this press.
However, I draw attention to the fact that this is also a compromise between a national tradition and safety requirements, regardless of how much I can appreciate the pleasure of our British colleagues. Anyone would probably concede that a doubledeck bus is not exactly the safest kind of bus, and it is clear that this type of bus can only be accessed with great difficulty by disabled persons.
It is evident from this that with all these problems, we are always moving in a direction which represents a compromise. We have in fact done so. We did not go as far as Mr Murphy's request, that we should, to a certain extent, recognise it as a type. We therefore also provided for the possibility that other Member States might not permit this type of bus, which is approved in another Member State, in their sovereign territory, because they do not have this tradition. We would like to continue to regard this as a derogation.
We then have two further amendments which we can adopt in part, and two amendments where we can adopt the substance. What we cannot accept - and I want to say this here very clearly - are other technical proposals or an extension to other categories, as it is our opinion that what we have created here can hopefully go through in the Council. We are not quite sure about that; in other words, we are still talking amongst ourselves here. I fully understand if Parliament says that at the moment, it should like to assess another position but does not wish to adopt this one. Whether or not it is very wise to reject this proposal, I leave to the wisdom of this House, in which I have boundless trust, of course. I should like however to note that we have already come a long way and what is more, after a very long time. That has also been said. If maybe the Commission's proposal, apart from the amendments which we can accept, is approved without too many more additions, we shall make even more progress.
On the aspect of safety we have also reached a compromise, as a difference must be made between buses which are used predominantly on short routes, where rapid boarding and alighting is necessary for the bus to make reasonable headway, and other buses. These buses stop very frequently, because of which accessibility is very much more to the forefront than with a bus which, for example, travels long distances, is mainly fitted with seats and does not stop very often. Boarding this kind of bus may well require more time.
We want, however, to examine this class too. I can confirm that we have already put this investigation in hand, so that we can perhaps deal with these further demands. I would ask you to understand that in our case a role was played by our efforts to avoid imposing financial burdens, arising from excessive demands on the operating companies, particularly those in the public sector. We must remember that we are not usually dealing with private companies here, but with towns or regions which have to use public means of finance and cannot therefore avoid cost pressures. We are convinced that with this multi-level concept, we have proposed a solution which is acceptable.
We assume that it is realistic to prescribe access for persons with reduced mobility for all vehicles of Class I from the time the directive comes into force. Without standardized regulations, there is an acute danger for the Single Market, as some Member States have already begun to put together their own regulations.
As far as the other classes of vehicle are concerned, we shall, as already mentioned, submit a proposal on the basis of the ongoing investigation as soon as possible to the European Parliament and the Council. The proposal based on this study also amends the directive, with technical requirements for Class II vehicles, which are used for both urban and scheduled long-distance transport. That is our position. I know that it does not meet all the requirements which have been expressed here.
I do not know what Parliament will decide tomorrow, but we are in the first phase here and we should really do what we always do. If you believe, with a majority, that you have to adopt a different position, you can do so, but do not shoot the pianists, in other words, us. We have to play this tune to the Council and hope for its applause. I do hope, however, that we can then arrive at improvements during subsequent proceedings, which perhaps go more along your lines. In any case, it should not founder in the Commission.

Murphy
Mr President, I thank the Commissioner for his comments and I note in particular his comments on double-decker buses being less safe or less accessible. If he has a couple of hours to spare he could come with me to Birmingham, which has the busiest route for buses and coaches anywhere in Europe, and join me on the only two low floor double-decker buses actually in operation in Europe which would meet these standards and more. So if you have a couple of hours I will take you on a journey to the West Midlands.

Bangemann
Of course I accept your invitation. My only point was that, if the situation is as you say, why are you asking for an exception to be made for these buses? Why can they not fall under the general rules?

Murphy
Mr President, I must just correct in that case. Under my proposals the derogation would actually be removed and those vehicles would be treated just the same as any other because I happen to believe they are as safe and secure for passengers as other types of vehicle.

President
The debate is closed.
The vote will take place tomorrow at 12.00 noon.

Trading of goods
President
The next item is the report (A4-0102/98) by Mrs Lulling, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the proposal for a European Parliament and Council Regulation (EC) amending I. Council Regulation (EEC) No 3330/91 on the statistics relating to the trading of goods between Member States (COM(97)0252 - C4-0248/97-97/0155(COD)) andII. Council Regulation (EEC) No 3330/91 on the statistics relating to the trading of goods between Member States, with specific reference to the nomenclature of products, SLIM and Intrastat (COM(97)0275 - C4-0257/97-97/0162(COD)).

Lulling
Mr President, we all know here that statistics are somewhat unpopular, particularly in the eyes of those who have to supply the data.
In 1993, when the Single Market came into force and border controls were abolished, the consequence was the elimination of the corresponding VAT declarations and of the statistics whose reliability was assured by the customs departments.
Intrastat was created. Its main objective, for all those involved, namely the national and Community administration companies, is to supply, at least cost, reliable and up-to-date statistics on the transfer of intra-Community goods. Companies, particularly small and medium-sized companies, were not enamoured with this. The introduction of Intrastat gave rise to a consideration of the way in which the suppliers' task could be simplified, of how to reduce costs for those on whom the burden of statistical information falls, as the smaller the company, the higher the relative cost of the administrative burden.
As regards reliability, it must unfortunately be said, five years on, that the operation of Intrastat is not satisfactory, in spite of the fact that the total annual cost for the 450 000 companies making declarations is estimated at ECU 500 million to which is added ECU 100 million for operations by national collectors. This lack of reliability is illustrated by what in technical jargon is known as "mirror statistics' , which comes from the high inconsistency of the results.
Thus, this simulation exercise, which involves replacing the incoming goods for each Member State with the amounts of outgoing shipments to the fourteen others, proved, that for 1996 for example, imports for Germany must be increased by ECU 19 billion, and for France by ECU 11 billion. For Germany, this means that the balance of trade surplus is reduced to zero, and for France, its deficit increases from ECU 7 billion to ECU 18 billion.
We have before us, Mr President, two proposals which arise from the SLIM initiative. Unfortunately, they do not represent all the proposals of the SLIM team, which is why it is all the more astonishing that these proposals were favourably welcomed by the Commission and the Council. Furthermore, the Member States do not even seem to be ready to follow these proposals, which are less extensive in comparison to the SLIM results. Throughout the drafting of my report I was approached by the lobbies of the major industrial federations who are concerned that the small step towards simplification proposed in the field of nomenclature might result in the loss of information which they believe to be indispensable for their commercial policy, and which they could only procure through a great many costly surveys.
I wanted to highlight these divergent, and even antagonistic interests of the various players. In other words, there is, on the one hand, the small and medium-sized companies who want significant relief in terms of the burden of making declarations, and on the other, the users of the statistics who want detailed and high quality information on intra-Community trade to be made available.
However, things being as they are, and after organizing in committee a hearing on these antagonists, I have proposed amendments aimed at reconciling their interests, amendments which the Committee on Economic and Monetary Affairs accepted, Commissioner, as a block and on a unanimous basis.
We wish to avoid completely the situation whereby these regulations end up having less of an impact in terms of simplification as compared to the Commission's initial proposal. On the other hand, we do have a great deal of sympathy for the federations and industries whose concern is that the simplification of the nomenclature might end up with a depletion of statistics which will no longer allow an analysis of the markets.
You know that I am very interested in viticulture, Mr Martin. A reduction in the suppositions from 8 to 6 would no longer effectively give the necessary detailed information, namely the type of wine, red or white, or the region of origin. What is important for this product, is not the same for others. For example, for the centrifugal pumps, it is not absolutely necessary to know whether they are intended for aircraft, or whether they are submersible, single-stage or multi-stage pumps, and so on.
Our proposal therefore is to limit the burden of declaration by eliminating unnecessary data, such as the means of transport, and optional data, to limit the number of small and medium-sized companies required to supply detailed statistical data, and to simplify the use of the combined nomenclature, while preserving a single nomenclature for intra-Community trade and trade with third countries. We also propose establishing a partnership with national administrations and the representatives at European level of the suppliers and users of statistical information, as well as preserving, within the framework of this partnership, a sufficient time limit for the provision of information, in order to meet the special requirements of certain sectors, such as the wine sector which I illustrated.
We also clearly accept the need to preserve the level of information on intra-Community trade, and our action is satisfactory in the eyes of the Committee on Regional Policy. We know that all this is not a true reform of the system. It is a first step, Mr President, a first package of measures to be implemented pending more radical simplification.

Martin Philippe-Armand
Mr President, ladies and gentlemen, for all of the companies and administrations in the Member States of the European Union, the entry into force of the single market has meant an upheaval for the administrative practices involving the trade in goods between Member States. VAT declarations and statistics, which were previously dealt with by customs services have been changed. However, of course, the need for such information has not thereby disappeared.
In this report, Mrs Lulling points out that it is essential for the data to be reliable. Hence the export figures of one Member State should normally equal the sum of exports from the other Member States to the Member State in question. However, the total discrepancy is in the order of 4.6 %. Depending on which figure you use, the French trade deficit of ECU 6.4 billion would be more than doubled. However, given the need to simplify the administrative burden on companies, the Commission is presenting us with two proposals, which enable us to simplify these declarations.
With this goal in mind, we must certainly welcome the Commission's initiative. The amendments proposed by the rapporteur all go in this direction, and I support them. However, along with several of my colleagues, I wanted to table a further amendment. In fact, modifying the nomenclature must not reduce the information which is required, both for companies and professional organizations. Changing the number of figures in the nomenclature from eight to six could lead to the elimination of an essential element. In the case of wine, as Mrs Lulling reminded us a moment ago, it would no longer be possible to dissociate intraCommunity trade from one Member State to another Member State, be it Bordeaux, Burgundy, vins de pays, Champagne, etcetera. The purport of my amendment is therefore to call on the Commission to ensure that these amendments do not lead to any such loss of information.

Gasòliba i Böhm
Mr President, ladies and gentlemen, on behalf of the Group of the European Liberal Democrat and Reform Party, I first want to congratulate Mrs Lulling on her constant work in the area of statistics which, as we know, is a fairly thankless task. But those of us who follow her efforts are bound to appreciate them, because they provide something which will obviously be needed with the new economic and monetary dimension being adopted by the European Union.
As we have discussed in other reports on statistical matters, we obviously need to have reliable information in order to orientate activities and economic and monetary policies.
Mrs Lulling has the unanimous support of the Committee on Economic and Monetary Affairs and Industrial Policy for the amendments she makes to the Commission's proposals. Her report deals with a situation which she knows how to balance perfectly: eliminating excessive burdens on small and medium-sized enterprises; maintaining the reliability of the necessary figures, so as not to lose the proper information; and maintaining the other information we have at present - also referred to in her report -, namely the regional aspect of statistics. In other words, as when we were talking about the wine sector, for example, we have to take account of the various grape and wine-growing regions of the European Union - and I could, for example, add Penedés to the list we heard earlier. In those regions, knowledge of the exchanges within the EU markets is obviously extremely valuable, not just in order to establish the appropriate EU trade policies, but also so that companies can decide on their commercial strategies.
So I repeat our support for the amendments tabled by Mrs Lulling, and congratulate her once again on her work.

de Silguy
Mr President, ladies and gentlemen, first of all I welcome the presence of Members at this late hour.
I congratulate Mrs Lulling on her excellent report, which follows on from the SLIM initiative aimed at simplifying the legislation of the internal market. Within the framework of this initiative, the Commission submitted, in June 1997, two proposals for regulations to the European Parliament and to the Council with a view to simplifying the basic regulation for the intra-Community system for collecting statistics on trade, known as Intrastat. I agree with Mrs Lulling, when she advocates improvement. I also agree with Mr Martin. Unfortunately, it is often the case that statistics do not correspond when they are compared. However, the aim of this proposal is not to correct the deficiency that has been observed. At present, we are attempting to improve our systems, but in order to correct the inadequacy that you have pointed out, we need to have answers. However, not all the Member States provide answers. Furthermore, the answers must be reliable and not simply partial. So let us not muddle up the exercises. The exercise we are dealing with here is simplification. The other exercise, that of improvement which needs to be undertaken, and which we are trying to bring about, is not covered by the present draft regulation. This regulation is in fact divided into two parts, into a first proposal aimed at reducing the amount of data collected, and a second which introduces a simplified application of nomenclature for goods used to classify the products traded. I would remind you that this nomenclature at present comprises more than ten thousand codes.
The introduction of the Intrastat system in 1993 had already made it possible to exempt more than 60 % of all intra-Community commercial operators thanks to the use of statistical thresholds. I would remind you that before 1993, that is to say, before the single market, any intra-Community movement of goods was subject to administrative formalities, and in particular a declaration of VAT. The statistical system was based on the VAT declarations, and that was extremely onerous, particularly for small and medium-sized companies, and even for micro-companies.
The purpose of the two proposals that you are considering today is to introduce further simplifications of these administrative constraints, so that there is a further reduction in the burden of declaration for companies. These simplifications are part of a short term-process, and here two other regulations of the Commission also apply. These regulations have already been adopted and their aim is to introduce a less burdensome form of declaration of the net mass of goods and their statistical value.
These proposals follow on - and here I am answering some of your concerns - from the Commission's commitment within the framework of the SLIM project, and they represent the first concrete legislative measures taken aimed at simplifying the legislation concerning the internal market. They are also a response to the many complaints made by companies about the excessive burden of their statistical declarations, and in particular the difficulties of product classification in terms of the nomenclature of goods.
I can tell you that only this evening, before I arrived at this sitting, and although it had nothing to do with the subject we are now debating, I received a phone call from a manufacturer who bitterly complained about the statistical system, on the grounds that it would generate expenses that he believed to be excessive. So, with these proposals the Commission found itself in the situation of seeking to establish an appropriate balance between the interests of those supplying the commercial statistics on the one hand, and the users of the statistics on the other. As Mrs Lulling says, these are often antagonistic interests, and they became apparent at the time of the consultations that we held, particularly with representatives of the European federations and national administrations.
The Commission attaches great importance to obtaining concrete legislative results as part of the SLIM exercise. It is therefore delighted with the support given by your House to these two proposals.
The Commission can generally accept the amendments tabled by your rapporteur. It cannot accept Amendment No 9 from Mr Martin, not out of any basic disagreement, but because it goes beyond the problem of nomenclature aimed at in the proposal for a regulation. Furthermore, the spirit of the amendment is to be found in other previous amendments which the Commission can accept. Even so, there is one amendment tabled by your rapporteur that the Commission cannot accept. This is Amendment No 2 to paragraph 4b of Article 1. The Commission, like you, is in favour of the elimination of the "terms of delivery' information, but this cannot occur immediately. This information is currently used by national institutes for statistics to calculate the statistical value of traded goods, to which Mrs Lulling made reference earlier. Before eliminating it, a new method of calculation must be introduced, in order to forestall any problem with the figures, particularly in terms of balance of payments.
We therefore need to introduce a transitional period to allow both us and the Member States to adapt the statistical systems.
In any case, and in conclusion, Mr President, Madam rapporteur, ladies and gentlemen, the Commission shares your point of view. We need to focus increasingly on simplifications, for the small and medium-sized enterprises, by introducing thresholds for the collection of certain data.
I thank you for your attention.

President
Thank you, Commissioner.
The debate is closed.
The vote will take place tomorrow at 12.00 noon.
(The sitting was closed at 11.00 p.m)

