Resumption of the session
President
I declare resumed the session of the European Parliament adjourned on 19 September 1997.

Approval of the Minutes
President
The Minutes of Friday 19 September 1997 have been distributed.
Are there any comments?

Posselt
Mr President, it will be seen from the Minutes that the Friday session finished at 10.10 a.m., and that we only had a single item on the agenda. However, our agenda today is totally overcrowded, so that an important agreement like the cooperation agreement with Macedonia will only be dealt with towards midnight. I would therefore urge that we should organize these meetings better in future. If we had made good use of the last Friday, we could today have dealt with this important subject during the day, in the presence of our guests!

President
You are right, Mr Posselt. It is a pity more topics were not prepared for the last Strasbourg session, but the committees which were supposed to have completed the relevant reports were not able to approve them in time.

Kreissl-Dörfler
Mr President, I would like to point out that today we have two guests from the Brazilian Federal State of Bahia present. I myself have just taken part in a seminar on Mercosur, and I believe I speak on behalf of us all in calling for a strengthening of our relations with Brazil. I would like to give a warm welcome to Minister Barbosa de Deus and the Vice-Governor of Brazil, Mr Borges. Muchas gracias, muito obrigado!

President
Thank you very much. I welcome the guests you mention. However, as you know, the Rules of this House are that the Chair only welcomes visitors who have been officially invited. Many distinguished visitors attend at the invitation of honourable Members, in which case there is not normally a public welcome. However, the Chair is glad to join in your welcome.

Fabre-Aubrespy
Mr President, my point relates to page 13 of the Minutes of Friday's meeting in Strasbourg. Paragraph 11 it states that the President reminded everyone that the next sittings would take place on 1 and 2 October 1997.
Given today's decision of the Court of Justice, I do not think it is possible to approve the Minutes as they stand. Nor is it possible, as other Members will confirm, to hold this sitting. Point 29, second paragraph, of the decision states that additional part-sessions cannot be held anywhere apart from Strasbourg, unless the Parliament holds twelve ordinary part-sessions in Strasbourg, the seat of the institution.
I believe it is necessary, if we are to approve the Minutes, to express an opinion on this very important point by removing paragraph 11 from the Minutes of the sitting of Friday 19 September.

 President
Mr Fabre-Aubrespy, you must not mix up different issues. The Minutes record what was decided, and it was decided that we would have a sitting today, which is now taking place.
Secondly, with regard to the ruling of the Court of Justice, the Bureau has today asked the legal adviser to give an opinion regarding the consequences of this matter. Once that opinion has been prepared, it will be submitted to the appropriate parliamentary bodies which will draw all the necessary conclusions.

Berès
Mr President, the Court of Justice has, in effect, just passed a ruling which concerns us directly, stating that the Edinburgh decision should be interpreted as defining the seat of Parliament as the place where twelve ordinary part-sessions must be held regularly. Furthermore, article 176 of the Treaty of Rome, which governs our work, stipulates that the institution or institutions from which the act appealed against emanates, or whose failure to act has been declared contrary to the current Treaty, are required to take the measures involved in the implementation of the ruling of the Court of Justice.
Mr President, you have just announced the expected initiative, and we are very pleased about that. It will enable our institution to conform to the ruling of the Court. All things considered, Mr President, I invite you to act to enable Parliament to comply fully with the law and prevent us from having to give an opinion, year after year, on a timetable which should be permanently fixed.

President
Mrs Berès, I am not going to continue this discussion. The Bureau, which is the appropriate authority, has requested an opinion on the consequences of this matter. This will be submitted to the Conference of Presidents and to the Bureau and, if necessary, to the whole House so that all the consequences may be drawn. I shall not prejudice that and, of course, it in no way encroaches on Parliament's right to set its own timetable. But this will all be in accordance with the treaties, in accordance with the ruling of the Court and in accordance with our Rules of Procedure. That is all we can say on the subject today. It is a serious matter and allows of no improvisation. There is no question of opening a debate on the matter now and I hope everyone will show understanding.

Striby
I, too, would like to speak about Parliament's session and the part-sessions for 1998. You have all heard, and I regret it, the Court of Justice's decision ruling given at the request of France. We have...
(The President cut off the speaker)

President
Mr Striby, please listen. I said this debate would not continue. We will draw the consequences of the situation according to our Rules of Procedure when the time comes, but we are not going to discuss it now.
(The Minutes were approved)

Andrews
Mr President, I have been trying to get the floor since I came in. I indicated to your services that I wanted to issue a statement on behalf of my group, the Union for Europe. This is the third largest group in Parliament. It sought to visit Angola on a peace mission...
(The President cut off the speaker)

Crowley
Mr President, I wish to bring a very important matter to your attention. On 19 September a Member of this Parliament, while returning from the session in Strasbourg, was invited to an official function in Florence. At that function, Antonio di Pietro, the magistrate of Milan, one of the candidates for the Third Senatorial College in Tuscany was approached by this Member, Mrs Baldi. As she approached him she was attacked by one of Antonio di Pietro's bodyguards and knocked to the floor. She was given no assistance in spite of the fact that both Mr di Pietro and the bodyguard knew that Mrs Baldi was there as a guest of honour from this institution.
Mr President, I would like you to take up this matter with the Italian authorities to secure an apology for Mrs Baldi from the appropriate authorities and Mr di Pietro. I will give you a full file on the case including photographic and medical evidence. I would ask you to take steps to restore the dignity of a Member of this Parliament. This comes at a very apt time. Commissioner Bonino was arrested and detained in Afghanistan recently. We should condemn these sort of acts outside the European Union as well as inside.

President
Thank you very much, Mr Crowley. If you would be kind enough to send me the relevant documents I will take the appropriate measures and contact the Italian authorities. As for Mrs Bonino, she has not asked us for any assistance and I am sure that the President of the Commission gave her whatever help she needed. She does not need our help, but if she did, we would give it.

Request for procedure without debate
President
The Committee on Foreign Affairs, Security and Defence Policy has just asked for procedure without debate, pursuant to Rule 99, to be applied to Mr Kittelmann's report on the procedure for adopting the Community's position at the Customs Union Joint Committee set up by Decision No 1/95 of the EC-Turkey Association Council on implementation of the final phase of the customs union. Therefore, this report will simply be put to the vote during tomorrow's voting time at 11 a.m.

Kreissl-Dörfler
Mr President, this is a request for procedure without debate under Rule 99(2) of the Rules of Procedure. I would like to request the President not to adopt Mr Kittelman's very important report without debate - I do not know if he is in the Chamber. The report is about strengthening the customs union. We cannot adopt a report of this kind during a period when - and this is my reason - we are effectively taking part in negotiations on the accession of Turkey to the European Union, and while there are problems with Cyprus. I would like to ask the President to proceed accordingly, as there are comments to be made, including those of Mr Kittelman.

President
You have invoked the relevant Rule and, as you know, the report must be submitted to a vote without debate unless at least 29 Members ask for it to be debated. Are there 29 Members in support of Mr Kreissl-Dörfler's request?
(The President noted that more than 29 Members supported Mr Kreissl-Dörfler's petition. The report would therefore be placed on the draft agenda for a future part-session, to be taken with debate)

Urgent political matters
President
The next item is a Commission communication on Member States' employment policy guidelines for 1998 (in preparation for the European Council summit on employment to be held on 20 and 21 November 1997 in Luxembourg).
The President of the Commission, Mr Santer, now has the floor.

Santer
Mr President, ladies and gentlemen, this morning the Commission adopted these reports on employment, along with proposals on guidelines for Member States' employment policies. These are our contributions to the special European Council of 21 November which will be entirely dedicated to employment. Considering the importance of this deadline, and of the absolute priority given to the fight against unemployment, a priority which has been highlighted on many occasions by your Parliament, I am delighted to have this opportunity to give you the latest information on our proposals.
The proposals for guidelines are a start, an important start, which constitutes a qualitative move forward in the way in which we approach the question of employment at European Union level. In some ways I see in it the culmination of the step I took on 31 January last year when I presented to you, in this very Chamber, the confidence pact for employment. Integrated action at the level of macro-economic policy, the domestic market, policies on the labour market, structural funds and mobilization of all the players in a search for convergence in the fight against unemployment and for jobs. These are the factors I advocated in the confidence pact, because the post-industrial revolution and economic globalization demand a new and integrated approach, and because it would simply not be credible if employment were not regarded as a subject of common interest. It would be unacceptable if the Union were not to put its full armoury into the fight against unemployment.
We have come a long way in this direction. The social partners have accepted the challenge. They are negotiating at European level, and with success. At national level, the efforts to conclude pacts are increasing. The European Council has aligned itself with the concept of a confidence pact in several of its conclusions and, what is more, employment figured in the Treaty of Amsterdam. From now on employment is a subject of common interest. Not just as a pious wish, but with monitoring and convergence procedures that will stimulate the coordination of policies within a common framework.
In effect, from now on it is no longer just a matter of presenting reports on employment. The Treaty of Amsterdam calls for the establishment of guidelines for the employment policies of Member States and even, if need be, recommendations to Member States on the employment policies to follow. Let us not underestimate the importance of this progress. I know there are sceptics who dismiss it as more procedures. But you do not need a very long memory to recall the general rejection that used to be the rule as regards common policy in the area of employment policy.
At this very moment we are seeing the effectiveness of the monitoring and convergence procedures within the context of economic and monetary union. They have given a veritable boost to each one of our Member States in the achievement of established common objectives. This example should serve as an inspiration in our fight against unemployment. We are all agreed that we are talking about the number one priority.
Heads of State and of Government have highlighted that by stating that we must not wait for ratification of the new treaty to implement the measures set out in the chapter on employment. This was underlined by their decision to make employment the focus of the special European Council in November. I greet such signs of determination with pleasure. But we must be careful not to raise false hopes. No text of a treaty, no conclusion from the European Council, no declaration of intent will create jobs. That requires effective, efficient and tenacious action on a wide front. This will take time because there is no magic wand in this area. But that is no reason for resignation.
On the contrary, it is another incentive to wait no longer, to move from now on into concrete action. The 18 million unemployed in the European Union demand it, and we owe it to them. What is more, economic conditions and perspectives for growth are improving. Let us profit from that. But let us avoid the error of complacency. Things do not sort themselves out under favourable circumstances. We know that the necessary changes are structural in nature and we know what we have to do. There are plenty of converging analyses. The priorities have been agreed by successive European Councils. In fact, everything has been said. Now it is time to act.
It is in this spirit that we make our proposals for guidelines today. We are proposing concrete objectives, ambitious but realistic, since they are based on best practice in Member States, and quantifiable wherever possible. We are proposing that these objectives be followed in as concrete a way as possible, through detailed action plans in each Member State, drawn up within the common framework of objectives and guidelines, updated and followed up on an annual basis.
The long term objective of the European Union must be progressively to reach an employment level of over 70 %, similar to that of our principal trading partners. This demands a great deal of serious determination on the part of Member States in the application of the policy mix that we are proposing. Given that, and thanks to better circumstances as well, we should be able to see an improvement in the employment level from 60 to 65 % in five years time and a decrease in unemployment levels from nearly 11 % to 7 %. We will thus have created 12 million new jobs.
This objective is ambitious, certainly, but realistic. Realistic if all our Member States seriously follow the rules of the game. Based on a collective dynamic, on peer review and peer pressure - group discipline if you like - and if we act at Member State and Union level on four major issues. We must create a new enterprise culture, create a culture of professional integration and employability, promote and encourage a capacity to adapt and, finally, strengthen equal opportunities policy.
Mr President, the first line of action is the enterprise culture. Jobs are created by enterprises. A stimulating climate for the enterpreneurial spirit is therefore necessary, notably for small and medium-sized businesses which are veritable pools of new jobs. Concretely, we propose to reduce administrative and general costs, for they are discouraging to the recruitment of new workers. The burden is enormous. We estimate that the annual cost of administrative constraints on our businesses is ECU 200 billion. Let us reduce these pressures for those who want to move from salaried employment into their own businesses. Too often people give up for fear of losing acquired social security entitlement. Let us facilitate access to capital for small and medium-sized businesses, notably by creating, by the year 2000, a secondary, pan-European, capital market. Let us take inspiration from the impressive example of the American NASDAQ. This Stock Exchange covers 5, 500 businesses, with some 10 million employees. It has contributed to the creation of hundreds of thousands of new jobs and has a higher turnover than the New York Stock Exchange.
Let us at last translate into action the general guideline agreed long ago by the European Council: reduction of the tax burden on labour. Up to now, the trend has been completely in the opposite direction. The tax burden on labour is increasing, while that on capital is decreasing. The actual level of 42 % destroys employment. We are asking each Member State to set themselves the objective of reducing this substantially by the year 2000.
As an example, a reduction of one percentage point in gross domestic product would be equivalent to around ECU 70 billion. Some would say this is a high price to pay. I would remind them that our Member States spend nearly ECU 100 billion each year in state aid, largely on sectors with poor future prospects and little promise in terms of job creation.
At the same time we must restore the balance of tax on capital. In this way budgetary neutrality can be respected, and harmful tax competition and the resulting distortions on the domestic market limited. The Commission today identified a package of measures to be discussed at the Ecofin Council on 13 October. May I also remind you, in the same context, of our tax proposals with regard to energy which are still on the Council table.
Finally, much has been said on the challenge of new technologies, which are opportunities for our businesses. This evolution cannot be ignored, so let us develop strategies to enable them to benefit from its potential, notably by facilitating access to the world of information. Much has been said on the importance of our efforts in research and development. But what is the reality? We are losing ground in relation to our competitors. Let us therefore reverse this trend by spending levels comparable to those of the United States and Japan in these areas, that is, 2.5 % of gross national product.
Mr President, the second proposed line of action aims for better professional integration, or better employability, as it is called today. We have 18 million unemployed. At the same time, business complains that it is impossible to fill hundreds of thousands of vacancies. Surprising, certainly, but less so in the light of the fact that half of all unemployed people have no training, and less than 10 % of the unemployed receive training.
This phenomenon affects the under 25s in particular. Should we be unduly surprised when we see that 10 % of our young people leave school early, that of those who start secondary education, 45 % do not finish. Nearly 50 % of the unemployed are long term unemployed, and lack of training has a lot to do with this. What of the employment policies of our Member States, which absorb ECU 200 billion every year? Two thirds of these policies are purely passive in character, providing no incentive to reintegrate into the employment market. Unemployment is a harmful phenomenon for those individuals it affects and for the integrity of our societies, and a dreadful waste of our potential for growth and prosperity.
The very brief analysis that I have just given shows that lack of qualifications is a major cause of this scourge. We propose that Member States attack it by fixing clear objectives, by offering a fresh start in the form of jobs, training and all other measures to every adult unemployed person within twelve months of being unemployed and a fresh start to all young people within six months of unemployment.
Similarly, they must set themselves the objective of reducing by half the number of young people leaving the education system prematurely within the next five years, and of ensuring that many more young people finish their secondary education and benefit from an apprenticeship in business. Furthermore, let us favour active employment policies. The Member States must set themselves targets for the number of people passing through the new system, thus encouraging their reinsertion into the employment market, and must bring the number of unemployed being offered training to at least 25 % within five years.
Mr President, the social partners, too, have every interest in the success of the necessary changes. Their negotiations at European level with regard to paternity leave, part-time work, and so on, highlight the essential role they can play. The same applies to their exemplary contribution with regard to wage increases over the last few years. We are asking them to intensify their efforts, because the challenges are great. More specifically, they should rapidly come to a framework agreement with a view to opening up jobs throughout Europe with the aim of increasing professional integration. Let us not forget the contribution that the structural funds already play in raising qualification levels and making labour policies more active. As far as possible, Member States should strengthen these aspects.
Mr President, the objective of the third line of action is a better adaptability. New technologies, new market conditions, developments to which our businesses must adapt, are becoming more and more frequent. The ability to adapt is becoming increasingly determinant in the viability of businesses. It is a reality which cannot be ignored and which must be integrated into the organization of the work place. Unions and management have an important role here too, notably in negotiating agreements on work place organization and flexible ways of working. But Member States are also called on to contribute, notably by creating a framework for more flexible types of contract and by improving the status of atypical work at the level of social security and career development.
The Member States will also have to support businesses' capacity to adapt more strongly. They should, for example in the area of tax, promote investment in human resources and the development of in-house training. They should introduce measures to encourage workers to improve their qualifications. Rather than spending enormous sums of money in state aid on sectors with an uncertain future, Member States should favour actions such as professional improvement, creation of lasting jobs, efficient functioning of employment markets.
Mr President, I now arrive at the fourth line of action we are proposing in our guidelines, that is, equal opportunities. I have spoken about unemployment in general and youth unemployment. But it has to be noted that women are greater victims of unemployment than men and their participation in working life is lower. Obviously, what I have said regarding the potential for growth and prosperity represented by our human resources also applies fully to female workers. This is even more important if you look at the demographic perspectives. Eventually, with a declining working population, the maintenance of our living standards and the European social model will crucially depend on the contribution of women.
We propose a three-pronged approach. First, Member States must translate their fondness for equal opportunities into action. They must make a substantial effort to reduce the gap between the unemployment rates of men and women by actively supporting an increase in the employment of women. Secondly, they must do more to reconcile professional and family life by ensuring follow up and by accelerating, if need be, achievements in the areas of career breaks, paternity leave and part-time work. Let us improve access to nursery services and care for dependants. Thirdly, the reintegration of women into working life must be facilitated, for example, in the area of training.
Mr President, I am coming to my conclusion. I have tried to give you as complete as possible an insight into the proposals that we have today adopted as our contribution to the special European Council on employment. Later in October we intend to submit a second contribution with two components. First, we will present our comments on the follow-up to other actions adopted by the European Council of Amsterdam in favour of employment, for example, those regarding the jurisdiction of the European Investment Bank, those within the framework of the programme of action for the domestic market, those favouring small and medium-sized businesses and the strengthening of our competitiveness. Then we will develop our ideas on the way all our common policies can be better put to use in the service of employment.
Mr President, I believe that with today's proposals we are taking the Member States at their word. We are not asking them to achieve miracles at the special European Council. Let us avoid at all costs creating false hope which, by definition, would translate into true disappointment. But we are asking the European Council to ratify concrete directions in accordance with the convergent analyses and principles it has already accepted itself. We are asking it to demonstrate in this way that defining employment as the number one priority is not a hollow phrase. This is what the citizens of Europe expect, it is what, above all, the 18 million unemployed expect.
Mr President, Commissioner Padraig Flynn and I are of course at the disposal of honourable Members to reply to any questions they would like to ask.

van Velzen, Wim
Mr President, broadly speaking, the report follows the same direction as the report that we are soon to discuss in the Committee on Social Affairs and Employment, although of course there are differences. I have two questions. Firstly, I cannot find in the whole story on tax credits the proposal to reduce VAT on labour-intensive services. I should like to know from the President of the Commission whether I am mistaken. And if I am not mistaken, what are the arguments for not making that important proposal, where the Commission itself has authority?
Secondly, I would like to know whether you have based this proposal on a survey of Member States or, to put it another way, how broad do you think support for your proposals will be at the Luxembourg Council?

Santer
Mr President, regarding tax proposals we have this very morning identified a global package of tax measures including a code of conduct for tax regulations and a certain number of other proposals which are aimed both at direct and indirect taxation. This package will, moreover, be submitted to the Ecofin Council on 13 October.
We expect the Ecofin Council of 13 October to produce certain orientations for the European Council of 21 November because we consider that the fiscal package also has an influence on employment, that a relationship between employment and taxation exists, as in other areas, for example the environment, and we are also counting on the European Council of 21 November to give some guidance in this respect.
Regarding your second question about whether the Council will follow our lead, my answer is that we hope so. In the area of taxation, unanimity is still the rule and with this in mind we consider that, at least by the end of the six months of this Presidency, that is, by the end of December, we will have reached a political agreement concerning the fiscal package and also, I hope, the fiscal package in relation to employment.

Burenstam Linder
Mr President, one way to reduce unemployment, as it appears in the statistics - and I emphasize the words "as it appears in the statistics' - is to reduce the supply of labour through various adjustments and subsidies, that is, removing people from the labour force, reducing labour force participation. Do you think, Mr President, that this method, which is used in a number of countries, is a good way to solve Europe's problems, as they appear in the statistics, by actually working less? Or would you rather do what Mr Blair is proposing in the United Kingdom, that is, increasing employment by introducing greater flexibility into all the rules which immobilize the labour markets of Europe?

Flynn
We have taken this particular question on board in one of the employment guidelines where we talk about making the taxation systems more employment-friendly. In order to encourage enterprises to create more new jobs, Member States must exploit the current favourable macro-economic climate to reverse finally the adverse long-term trend towards higher taxes and, indeed, charges on labour, which have increased from 35 % in 1980 to over 42 % in 1995.
So we are saying that each Member State should set a target for reducing the tax burden on labour while maintaining budget neutrality with a view to achieving substantial progress by the year 2000.

Hughes
My question is about the politics of this special Employment Summit. I would like to hear from President Santer his assessment of how we stand in terms of momentum as we near the special summit. We came out of Amsterdam with a considerable head of steam behind the employment debate. Does he think that the guidelines he has adopted today can be a rallying point for the Heads of State? What is his assessment of the current state of momentum among the Member States and what would be his test of the success of the special summit?

Santer
All the players must of course must be mobilized so that the European Council is a success. I have mentioned the difficulties with regard to this summit. The exercise we carried out this morning, that is, the proposals for guidelines which are a first in the area of employment, because they anticipate the employment chapter in the Amsterdam Treaty, is definitely a new type of exercise. In fact, it launches a process by which Member States can review their employment position year on year and adopt guidelines for a national employment policy. Using a similar approach to that for economic and monetary union, we are seeking to establish methods of convergence and surveillance, with these guidelines, as the starting point, to provide Member States with a monitoring system for checking whether or not their targets have been achieved each year.
Secondly, you asked how we can move the package of measures forward so that the European Council of 21 November is a success. I think we need to mobilize the other players. I mentioned the social partners. They have a paramount role to play. That is why we have organized a summit for unions and management on 13 November next. I think all the other Community bodies must be included, such as the Economic and Social Committee, the Committee on Regional Policy, and so on. A genuine process needs to be undertaken.
We are very much aware that the European Council itself is not going to create employment, but a process must be initiated and I believe that if the political will is there in the fifteen Member States, and they have a document based on that political will through the acceptance of the employment chapter in the Amsterdam Treaty - and we will be present when it is signed tomorrow morning in Amsterdam - then I believe the follow-up from this European Council has a chance of success.

Boogerd-Quaak
Mr President, this employment summit must be a success and for that reason I should again like to go into the two questions that were raised by Mr van Velzen, because I do not think any reply was given to Mr van Velzen's two questions. The first question was: what are you actually proposing on taxation? Do you, for example, actually propose shifting taxes on work to other areas such as energy? And are you going to make proposals in the context of VAT where we have an authority for reducing charges on intensive services?
My second question is related to that one, and you have now replied to it three times: what exactly are the possibilities open to the European Commission if the Member States are not prepared to agree on convergence in their aims? What sanctions can the European Union then impose? Or are we going to carry on in the same old way, begun in Essen, where it was stated that we were going to do certain things, but in the end nothing was fixed and no basis laid down whereby the Member States can implement these plans.
Finally, Mr President, what proposals are you going to put forward for reforms in the longer term? Because what you now propose deals with the short term, but what are you going to do about the long term?

Santer
We consider that tax regulations must be more favourable to employment. I have not gone into detail regarding the proposals, which you must of course study within the global package and which cover several dozen pages, but in order to encourage businesses to create new jobs we consider that the Member States must exploit the favourable macro-economic climate in order to reverse the long term trend towards increasing tax and social security contributions.
We have established the objective of reducing fiscal pressure on labour, whilst maintaining budgetary neutrality, so that substantial progress can be made by the year 2000. We have also made a proposal, which is on the table, concerning the taxation of energy. We consider that this is perhaps one of the ways in which taxation on labour can be reduced. It is not a new proposal, for we have repeated it endlessly since the White Paper in 1993. Both the previous Commission and the current Commission have made proposals on this. There therefore exists a group of proposals which aim to reduce taxation on labour, to reinforce the general trend. If you study the dossier on taxation you will find extremely precise points with regard to this.
Secondly, you ask me what provision has been made for sanctions by the Commission. It is difficult to say because it is a process that we are only just initiating. We did not make provision for sanctions in our approach when we began the process of economic and monetary union. We are counting on peer review, that is, the group discipline which is evident in the Council when the national reports submitted by the various Member States, which must fall within the framework of the guidelines, are examined, year after year.
Finally, the Commission has the right, as stated in the employment chapter, to make recommendations to the Member States. We have not yet reached that point. We are, of course, waiting for the European Council of 21 November to see how we should draw up those recommendations. So the process has not yet started. No sanctions are in place because, like economic policy, social policy and employment policy are largely national responsibilities, and that must be borne in mind.

Ojala
Mr President, my question to President Santer is also on taxation. If the Council is not ready to make a unanimous decision on taxation, what conclusions can the Commission draw? In fact, does he agree that all these jobs will be undermined unless the very essence of taxation changes, substituting forms of energy tax and VAT so that income tax can be cut. If we could only cut income tax we would then be in a position to cut social security. Is it the philosophy of the Commission that the income tax position can be eased by reducing the social security burden?
I would also like to ask Commissioner Flynn what is meant by this 'flexibility' which we need to have more of in the name of adaptability. Does it mean the USA-style development, where new jobs actually mean jobs which pay salaries that no one can live on, or does it mean dialogue in the labour markets?

Flynn
The first thing that should be said here is that this process will require each of the Member States to draw up an action plan. This plan will be interactive and deal specifically with all the matters raised in the guidelines, always remembering that it will be done within a common European framework of the objectives and guidelines set down. But each Member State will set it out to satisfy its own particular circumstances.
Regarding the sanction, after the summit in December adopts these guidelines, it will then be for the Member States to draw up the action plans. Then we will be in a position to evaluate and monitor what the Member States do. As a consequence of that evaluation, it is possible that the Commission, on its own initiative, will be able to make recommendations to the individual Member States as to how they have met the challenges of the guidelines.
We are not talking here about cuts in social security; that is not the point. A huge resource of finance - over ECU 200 billion per year - is spent on the social security systems. Two-thirds of it is used on passive income maintenance measures. We want to see a greater proportion of the taxation and the social security systems reserves transferred into active labour market policies.
We should always remember that we are responding to the strategy that was agreed in Amsterdam. This is what the Amsterdam Summit asked us to do; to regard unemployment and job creation as a matter of common concern.
We will not be working against the Member States so far as sanctions are concerned; we will be working with governments. We are building cooperation so that we can finally make a quantum leap. This process goes back to 1993 and has now reached a point where we can set down guidelines which will help the Member States to draw up their action plans.

Reding
Mr President, the Commission wants to turn the ship around in five years. It is a challenge, it is optimistic, but I feel that without vision there can never be success.
To achieve an enterprise culture, a new mentality must naturally be in place. This is a long term vision. In the short term, we must think about finance for businesses. My question is thus the following: where will this finance come from? From the Community budget, from the private sector, or from national budgets? What does the Commission think?

Flynn
There is no question of suggesting that a new volume of money is required. What we are talking about here is taking the existing financial structures, whether at Community or national level, and converting them into more active labour market policies. We must remember that we are talking about increasing the employment rate to 65 % over five years. This is not an impossible target. We were at that figure before in the 1970s when our employment rate was on a par with the United States. But they have moved ahead.
We have carried out a simulation which shows that if we can maintain macro-economic growth pattern of at least 3 % per annum over the next few years, together with the structural reforms and the policy employment guidelines we are suggesting here, we will achieve at least a 65 % employment rate which corresponds to somewhere between 7 % and 8 % of an unemployment rate after five years of operation.

Wolf
Mr President, ladies and gentlemen, we are holding this debate while nearly 30 million people in the Union are unemployed and at least 50 million are living in poverty. We should not delude ourselves into thinking that the active labour market policy needed can be financed from petty cash. I would like to ask the Commission if, in December, in connection with the Monti initiative, it will at least discuss reclaiming tax-raising powers, namely on financial operations, company profits and property, as in view of the stability pact this can only be done through gains on the receipts side.
Secondly, what about industry's responsibility? What does the Commission intend to do to get industry to create jobs and training places, instead of rationalizing and dispersing jobs?
Thirdly, I welcome the fact that it will not be a deregulation summit. But I am not satisfied with just that. It must not be a workfare and flexible working summit either, because this USA model cannot be applied to the European Communities and even over there it has led to the destruction of social cohesion and to lasting social unrest.

Flynn
We are seeking to promote and encourage adaptability. We are talking here about modernizing work organization and working patterns in the Union. We will be asking the social partners - who will play a key role in all this - to negotiate, in particular in economic sectors undergoing major structural change, agreements on work organization and flexible working arrangements. The Member States will also be asked to put in place a framework for more adaptable forms of contract, taking into account increasingly diverse forms of employment.
Those in non-standard work should be given greater security, for instance an occupational status. Those who opt to work reduced hours should not be penalized in terms of career advancement. All in all, we are supporting adaptability in enterprise and we want to see greater employability and to reduce the skills gap which is the main structural deficit in the Union at the present time.

Santini
Mr President, I should like to begin with a specific point in your report where you say that 45 % of students in higher education fail to complete their course of studies. To these must be added about 65 % of university students who fail to graduate. This has given me an idea which I am preparing as a proposal for the committee: besides the incentives for employers, besides the incentives for occupational training for these young people who otherwise would automatically become unemployed, why not provide a programme of assistance for students who are in difficulties as very often they are in this position not because they do not want to study but because they need to work? Why not provide them with a programme that will help them to complete their studies? There would be a number of parallel results: first of all the number of potential unemployed would decrease and secondly we would be increasing the educational level of those young people who would subsequently have a better chance of being employed at a higher level as a result. Why not turn this proposal into a future programme?

Flynn
This is quite a good idea. We would like to suggest that it involves employability, that is, enhancing people's capacity to be employed. And that is the core of the guidelines we are presenting to you today.
We are talking here about tackling the problem of the long-term unemployed; and we are talking about tackling the problem of youth unemployment. In particular, we are talking about those who have never had the opportunity for training. We should not forget that 10 % of all the unemployed in Europe have had no training whatsoever. These are the people who end up as the long term unemployed.
We want to see a guideline: and it is stated here quite specifically that every unemployed person will either be in a job, a skill experience or a training situation within twelve months of being unemployed. And every young person under 25 will be in a similar situation of training, education, or work experience within six months.
So the work ethic will be there from the very start and we will be able finally to reduce the level of dependency in the Union. That is what has to be tackled if we are going to plug the skills gap that is bedevilling the whole labour market of Europe.

Hernández Mollar
Mr President, we are currently in a transitional period until monetary union comes into effect, allowing us to become more competitive, and our economies to converge. But the fact of the matter is that the Member States are currently making major efforts to improve their financial situations, and to converge.
I should like the President of the Commission to give an assessment of Member States' efforts towards the convergence of their economies, and the effects these efforts are having on the labour market and job creation. I should also like to hear the President of the Commission's judgement of how well the multiannual employment programmes have been adhered to since 1995, and what value the Commission places on these programmes.

Flynn
In fact, quite a lot of things have been done in the recent past. While today President Santer and I have been focusing on the employment guidelines, we also approved two other documents. One of those is the employment report for 1997 where we bring together all the data, analyse it and discuss questions of policy.
The second document, the joint report, is of considerable importance for it is from this document that the economic guidelines were derived. The joint report is a collection of all the best practices submitted to us in the multiannual programmes and the submissions made to the Luxembourgish President-in-Office. We have drawn from specific best effort and best experience and they are in the joint report. From that it will be clearly seen that most of the Member States have been doing positive things as far as developing their labour markets and their educational systems and reforms of all their other systems are concerned.
Unfortunately, it has not always been done in a coordinated way. With these guidelines and with the Amsterdam mandate, we are seeking a coordinated action which is set out in the action plans, so that we can address the evaluation process on an ongoing basis. A lot has been done; it is not suggested that Member States are not giving this top priority. But now finally, because of Amsterdam, we have this process which allows the strategy to have real teeth. And I believe we have grasped that nettle today.

Myller
Mr President, we have here a great many issues connected with taxation. It is also a very important part of the Commission's employment package or at least it ought to be an important part of the Commission's proposal because the President has said we should not set our sights too high in terms of what can be done about employment at EU level. But we can actually achieve something in taxation. I would also like to ask to what extent capital tax and the harmonization of capital tax feature in this proposal. We should be wary of tax dumping or tax competition, with different Member States chasing jobs and investment, unless progress is made in this area. I would also like to ask a question which has already been asked several times here: what does the Commission mean by wage flexibility being a good way of remedying the employment problem?

Santer
Mr President, the fiscal package is not a part of this Commission communication. This communication relates, in particular - I have said this from the start and we must make no mistake about it - to proposals for guidelines for Member States' employment policies for 1998 pursuant to, and in anticipation of, the employment chapter of the Treaty of Amsterdam. This is the communication that I have put to you this morning.
However, in addition to this communication, another fiscal package was this morning identified by the Commission within a different context. It relates to an agreement in principle which was reached by the informal Council of Finance Ministers held some time ago in Luxembourg-Mondorf-les-Bains, and which incorporated harmonization of taxation on capital. It is a separate package which will be submitted to the Ecofin Council on 13 October.
Of course, you are entirely correct in saying that competition in the area of taxation, which currently occurs between Member States, reduces the tax base, creates problems of tax receipts for Member States and leads to fiscal dumping. This is why I believe we need to act in the face of this unhealthy competition between Member States in the sphere of taxation and, as I said, we will put in place more precise guidelines at the European Council in order to tie up, at least in a political agreement, the global package on taxation, which is far-reaching, I can assure you. Thus we are at least assured of having succeeded, after two years of hard work, in unblocking the taxation package which, as you know, has been bogged down for quite a while. So I think the Ecofin Council on 13 October will be able to give the green light to a policy agreement which we will then ratify at the European Council.

Sainjon
Mr President, Mr Santer, I have listened to what you have to say with great interest, and I think you are right. Employment policy has become a major political issue for the European Union. It is indeed the number one priority.
You have spoken of an ambitious plan, but I have to tell you that we can never have enough ambition when we are talking about the future of the citizens of Europe, in particular the youth. So I really support the various objectives you have presented to us, notably in the area of SMEs, innovation, training, youth employment and so on.
But Mr President, you know as well as I do that a great deal of conviction is needed for the Member States as a whole to pool their efforts in this sphere effectively. That cannot be taken for granted. Do you not believe, therefore, that it is now time to talk about moral duty, indeed civic duty, in the face of such a situation in Europe? You yourself have quoted some disturbing figures for unemployment, in particular concerning people living in situations of insecurity. It is truly scandalous.
That is why I ask you this question. How can we make sure, authoritatively, that the states take effective measures to combat unemployment? Lastly, Mr President, we talk of the EIB. But what finance is there?

Santer
Mr President, I am perfectly happy to agree with the honourable Member, because I have always felt that it is a moral duty for each Member State to combat unemployment, which is the curse of modern times. I myself took the initiative, on 31 January last year, to set before you a confidence pact for employment which, it has to be said, did not find the same success with the Member States as it did with you.
I have constantly repeated that something must be done about unemployment in Europe if Europe wishes to remain credible to its citizens. We have to consider the perception of the man in the street, the worker in Europe, if we do not succeed in curbing this scourge. I am very happy that at Amsterdam - it was not easy, the President knows that very well, having participated in a number of intergovernmental conferences - the employment chapter was accepted, since now, at least mutatis mutandis , a connection is established with the process of monetary union.
Now, in the eyes of the citizens, the European Union is not only a market, not only a single currency, but it also has a social dimension. And I hope, indeed I am sure that, thanks to the process to be undertaken, the Member States will also shoulder their individual responsibilities. The process which will be undertaken will enable the employment situation to be reviewed each year, because it is necessary to ensure concrete annual follow-up. I believe that is where success will lie.

Seillier
Mr Flynn, since you talked about a quantum leap and a new culture, do you not think the Commission could suggest, in the area of intellectual creativity, the following new approach: since SMEs, as we know, are the main source of job creation, I propose that you regard the mother of a large family as the head of a genuine SME. This would revolutionize our economic thinking. It pains me to see these women still considered inactive when they are accomplishing work of great social value through the important training they give during childhood, which is the basis for further training. Would this not be a great innovation to propose to our Member States?

Flynn
That is quite right. You will be particularly interested in the fourth line of action which we have styled: ' To strengthen the policies for equal opportunities' . Therein we state quite clearly that following on the demographic reports as outlined, the working-age population is now growing much slower than it has done for the last twenty years. Over the next decade it is going to decline. In the longer term you are quite right that the growth of employment necessary to sustain our living standards and the European social model is critically dependent on an increase in the participation of women in the labour market.
I believe we will succeed in what we have put our hands to today. When the White Paper on Growth, Competitiveness and Employment was introduced, you will remember that was regarded as a breakthrough in developing European policy. It rejected wholesale deregulation and growth alone as being a solution to our unemployment problems. It advocated growth and structural reform. But neither have been achieved to the extent we hoped for. Governments have been too slow and sometimes too timid in adopting the reforms we proposed at that time. But things have changed and moved on. There is a much stronger commitment now coming through and that is evident since Amsterdam. And we here today have grasped what is necessary to move that on and to make the commitment really substantial, to get action plans that will deliver the goods over the next five years.

President
I thank the President of the Commission and Commissioner Flynn for their replies and their readiness to answer Members' questions.
The debate is closed.

Implementation of 1997 budget
President
The next item is a motion for a resolution (B4-0818/97) by Mr Brinkhorst, on behalf of the Committee on Budgetary Control, and Mr Tillich, on behalf of the Committee on Budgets, on the implementation of the Community budget for 1997.

Brinkhorst
Mr President, I would first like to thank Commissioner Liikanen and Commissioner Gradin for the way in which the implementation of the European budget has improved recently. It is clear that in the last year we have improved the way in which the budget proposed by the budgetary authority is voted on. There are of course a number of criticisms, but I just wanted to say that first of all.
It is clear that we still have problems with regard to the milk quota. This year no less than six countries have exceeded the quota and the question to the Commission is whether it is now time to consider proposals for restructuring in this sector.
With regard to the structural funds, there is also a global improvement, but to the disappointment of the Committee on Budgetary Control the situation is such that there are certain shortcomings in the implementation of certain Community initiatives. I would like to stress the need for Commissioner Liikanen take account of this fact.
Thirdly, last year we rightly focussed our attention on the transeuropean networks in the field of transport, energy and telecommunications. The Commission promised that by the end of this year there would be full implementation and the credits would be taken up. Is it correct that in August this year no more than 4 % of the transeuropean network funds were being used and if so, what does the Commission intend to do to improve this situation during this year.
We are pleased about the fact that there is far greater use made of the durability of the structural funds. Last year, Commissioner Liikanen's colleague, Mrs Wulf-Mathies, together with the Committee on the Environment, gave clear priority to the better use of the structural funds and particularly to encouraging this durability. We welcome that. We also hope that it will be possible to make further progress in that regard because in that way durability in the European Union will be enhanced.
With regard to external policy there is fundamental change to the Phare programmes. The Commission has announced that the Phare programmes will be revised, also with a view to making pre-accession easier. That has led to a certain amount of underspend this year. The question I have for the Commissioner, on behalf of the Committee on Budgetary Control, is how quickly can the reform of the Phare programme be implemented, especially as, in the near future, we need to prioritize giving the countries of eastern Europe a sign that the situation is improving.
As far as former Yugoslavia is concerned, there are still considerable problems. Yesterday we had a discussion with representatives of the High Commissioner for former Yugoslavia and it seems that, regarding the spending of the money, there are serious problems, particularly with regard to the development of land for housing.
Finally, the Meda programme. We are pleased that after the initial difficulties, we can now see an improvement in Meda. We also hope that it will be possible with regard to the establishment obligations to achieve a clear change of emphasis regarding the payment obligations.

Welcome
President
It is my great pleasure, on behalf of the House, to welcome a delegation from the Parliament of the former Yugoslav Republic of Macedonia, led by the chairman of its delegation for relations with the European Union, Mrs Ilinka Mitreva, who have taken their seats in the official gallery.
This visit is the second meeting between delegations of the European Parliament and the Parliament of the former Yugoslav Republic of Macedonia, and the first official visit by a delegation from the Macedonian Parliament to the European Parliament.
The European Parliament, which represents the citizens of the European Union, attaches great importance to its relations with the Parliament of the former Yugoslav Republic of Macedonia and, through its members, to the country and people of Macedonia.
I am kept informed of the frequency of your meetings and current matters under discussion and I trust that these meetings will bear fruit. So I welcome you on behalf of the European Parliament and I hope you have a good visit.

Implementation of 1997 budget (continuation)
Theato
Mr President, Mr Commissioner, ladies and gentlemen, it is not our job as a Parliament to spend more money at all costs. Our job is rather to recognize obstacles and clear them out of the way, to make the Community capable of action.
Those words were used by Heinrich Aigner, the first chairman of the Committee on Budgetary Control of the European Parliament, on 11 October 1977, nearly 20 years ago, to describe our purpose here today. The authoritative procedure that he initiated at that time for monitoring the implementation of the budget has lost none of its importance since then. As a Parliament we have a duty to check whether the money that we have provided in the budget is also properly spent in practice.
We have to recognize in good time if something is amiss with the budget's implementation. In good enough time to change course or take counter-measures. Later on in this process we need to find out what needs to be changed in the budget for the coming year and what needs to be improved. I would like to give just a few examples of where things must definitely get better.
Firstly, reconstruction in former Yugoslavia. The European Union was and is at the forefront in terms of commitments for financial support in aid of reconstruction there, in order to make people's return home easier. But we also know that various projects have had to be discontinued or could not even start at all, because political conditions were not met and because money was only to be given to those who fully respected the peace agreement. Nevertheless, the actual outflow of funds and the management and efficiency of aid from the European Union also leave a lot to be desired in many areas, so that drastic improvements are urgently needed. The credibility of the Commission is now at stake here.
Now for a second example, where I also consider the situation critical. The money that we have made available for nuclear safety in central and eastern Europe is only being used in dribs and drabs, or not at all. Of course the Commission is not solely responsible for the coordination of international aid for Chernobyl, but coordination problems should not be constantly used as an excuse. All I can do is to urgently ask the Commission again to treat these problems with the priority that they deserve.
I know splendid arguments can be advanced about the correct priorities in politics. But there can be no doubt that enhancing the safety of nuclear installations in central and eastern Europe is one of these priorities. However, if problems arise in implementing the budget, the blame cannot always simply be laid at the Commission's door. One example of this is the money provided in the budget for anti-fraud measures, particularly in agriculture. ECU 15 million are available for improved control programmes in that area, for example. Apparently, the problem is just that until now no proposals have been submitted by Member States for suitable projects. This does not exactly cast the Member States' efforts in this field in a good light. We can only hope and appeal for some proposals in the coming months.
For years we have been greatly concerned about exceeding milk quotas, and in 1992 we even had to postpone the final discharge. But I would also like to say something positive. In the case of the structural funds, the new trend already discernible in 1996 seems to have been confirmed. In the first half-year, at the final count more payments were effected than new funds committed. Nevertheless, the backlog of commitments still to be processed is enormous. We now have unused commitments of over ECU 24 billion and need to be very careful they do not turn into an unmanageable inherited financial burden. I would particularly ask you to look after that, Mr Liikanen! I would also like to draw particular attention to the Community initiatives that our rapporteur, Mr Brinkhorst, has already mentioned.
To conclude, I would like to go back to Mr Aigner again. The top priority mentioned in his speech twenty years ago was to initiate actions in favour of young people. Thanks to pressure from the European Parliament, some projects have indeed been initiated since then. I have in mind in particular the Socrates programme, which has been totally exhausted, and which needs to have enough funds in the next budget so that we can also make a contribution to the issue that we have just been discussing with the President of the Commission and with the Commission.
Lastly, I would like to thank the two rapporteurs, who have put in a great deal of work and have brought everything together in questions and in evaluating answers, and I would like to thank the Commission, Commissioner Liikanen and Mrs Gradin for their willing cooperation.

Bösch
Mr President, ladies and gentlemen, allow me to adopt an approach to today's debate which is perhaps different from that of the previous speaker. Maybe we could look at things somewhat more keenly from the viewpoint of a totally ordinary elected representative of the taxpayers. It will then be seen that to some extent we are giving the starting signal today for the debate on the Commission's final discharge. I see that the submission by the two rapporteurs, who have done a good job, is pretty much in line with expectations.
We criticize the fact that milk quotas have been exceeded, regret the low take-up of Phare, and are even concerned about the use of our funds for Yugoslavia, but in contrast we welcome the high Meda utilization rate. That just about sums up our position. At the end of this process, in the interest of Europe's taxpayers, that is to say - we hope - our electorate, we will wag a warning finger and then give good discharge to the Commission for its implementation of the budget. We will once more have seen - and it will be touched upon in various speeches - that 80 % of the EU budget will regrettably have been spent by Member States, and only 20 % - peanuts, as we now say in Germany - will have been spent directly by the Commission.
Perhaps it would be interesting if just once we did what we promise our fellow citizens before the elections, and quite simply and dispassionately exercised political control over the Brussels bureaucracy. I would suggest that to start with we concentrate on the 20 % where it is not the Member States who are the naughty boys, but the European Commission itself. For once, let us not concentrate exclusively on the implementation percentage rates, according to the motto 'High rate good, low rate bad!' . We would soon strike rich then. We have already mentioned the Phare programme.
After seven years, the Commission is still unable to spend more than half of the budget provided. In the same position, any national minister responsible for a department would have to resign and admit that he is not capable of properly carrying out the work entrusted to him, and the Court of Auditors says just that in its reports. And all this in an area where the Commission has set its own sights very high with its Agenda 2000, and says that this is practically the most important thing that we have to do in the next few years, that is, enlargement to the east.
Given the European Commission's total inability to spend ECU 1 billion a year meaningfully in our neighbouring countries in central and eastern Europe, can we really expect that the same Commission, with the same people, will be capable of managing the far more expensive and complex process of these countries' accession to the European Union? I certainly could not explain that to my voters in Austria, in view of the figures before us today.
This assumption is supported by the "utilization' rate - which I can only say in quotation marks - for the ECU 10 million under the Phare democracy budget heading, of which by 31 August this year, precisely 0 % had been used or committed! This is at a time when the Commission is ostentatiously issuing testimonials to our eastern neighbours and explaining to them the great scope for improvement in society, and how much they can rely on the support of the European Commission.
I do not want to labour the point about the Phare programme, and I think we could say the same about the Meda programme, where there are also reports by the Court of Auditors. Their verdict? Irregularities! So far we have not had an opportunity, because of the somewhat limited staff resources at our disposal, to go into the details here. Mrs Theato, the chairman of our Committee on Budgetary Control, has already touched on nuclear power stations and the utilization of Tacis funds. The situation there looks disastrous as well. I have to say that it may be a good thing that we have not committed more than 20 % in the Ukraine.
I do not want to quote any more examples, but I do believe that during these debates we should perhaps really investigate the quality of budget implementation. Surely we owe that to our electorate and to ourselves as the European Parliament.

Elles
Mr President, I should like to begin with a general remark before making a few specific comments. It seems to me that the debate we are having this afternoon is sometimes relegated in importance in our budgetary debates. It seems to be thought of as just a means by which we look at the way in which the budget has gone. Then we make a switch in our minds and look to the budget debate next week in the Committee on Budgets and later this month with the vote in Strasbourg.
But the monitoring of expenditure should be treated with equal importance by the Committee on Budgets and the Committee on Budgetary Control and by Parliament's spending committees. I was pleased to see that there has been some progress in ensuring that the monitoring of expenditure is an important item. It should be the jumping off position for us. After this debate we should be able to say: we know where the weaknesses are in the budgetary process. And we should not be voting new credits until matters such as those Mr Bösch has raised are cleared up. We can use the reserve to caution the Commission in the expenditure process that something is not right. So this debate forms part of a developing process and is important.
A whole range of ideas have been put forward by Mr Brinkhorst and Mr Tillich in their resolution about the underutilization of credits. Low utilization should be a sign for treating amendments in these areas with some considerable caution. There are particular areas such as ex-Yugoslavia where we have to take into account special circumstances. I am interested in what our rapporteur Mr Brinkhorst has said to us about the difficulties in implementation of programmes. It would be helpful to have the Commission's comments on what has been set out in paragraph 16.
Secondly, as Mr Bösch said - and my group agrees with him - rapid utilization does not necessarily lead to effective utilization of the credits. You could have some eager bureaucrat who says: As long as I spend my money, Parliament will vote me more, because it sees that utilization has actually been carried out. We notice that where there has been good utilization in Category 1, the forecasts have been perhaps over-optimistic and therefore I welcome the fact that we will have an updated picture of the 1998 budget before we come to our final vote.
In the programmes in Category 4 where we see high utilization in Meda and low utilization in Tacis, the Group of the European People's Party does not feel that we should necessarily be voting all the credits for Meda next year but put Tacis in the reserve. Precisely as Mr Bösch says, we have to look at the quality of the expenditure.
Lastly the European People's Party would hope that where we have had an unexpected event like in the Jet programme in Culham this year, where there have been unexpected exchange rate movements -the pound gained vis-à-vis the ecu - there should be some consideration to make sure that cuts are not made in the effective operational budgets of an important programme like that of the fusion programme at Culham.

Giansily
Mr President, ladies and gentlemen, the joint report by Mr Brinkhorst and Mr Tillich seems to me an excellent occasion to remind everyone of an obvious principle that can be stated thus: funds approved by Parliament are intended to be spent. If this report notes, rightly, some progress in the tendency to spend funds activated two years ago more fully, then it underlines, and I want to insist on this, a certain number of malfunctions with regard to which certain drastic conclusions need to be drawn for the next budget.
Firstly, concerning funds for the Phare programme, the availability of ECU 150 million which is forecast for the end of the financial year must lead us to question ourselves sincerely as to whether the tool is sufficiently adapted for the intended objective. The delegation which visited Romania last week within the framework of the joint committee was able to observe the difficulties which this country is having, like many others, in integrating into the accession negotiations due to lack of funds, whilst at the same time we have ECU 150 million unspent.
When we are beginning, through the Agenda 2000 discussions, to build what must be our new border, it seems to me distressing that we cannot find a response appropriate to this type of problem, which leads to the cancellation of credits when there is a crying need voiced by the candidates for enlargement.
Concerning former Yugoslavia, and in my position as special rapporteur for this budget, I would also like to underline here my utter dismay in the face of the virtual lack of take up of some of these credits. Thus, for example, the rate of use of payment appropriations allocated for reconstruction of the republics was 6.14 % by the end of August 1997, for Sarajevo the rate was 4.15 % and none of the funds allocated whatsoever had been used for rehabilitation of the republics born of the former Yugoslavia.
I must say that, notably with regard to refugees, it seems to me incredible that funds provided by Europeans are used for objectives whose concrete effects cannot be seen, since the refugees are still here in the countries which have given them a home. I believe that, for the vote on the 1998 budget, a certain number of conclusions should be drawn so that the budget is not disrupted by open credits which we now know perfectly well will not be spent.
Concerning Tacis, I must say that the problem is a little different, since we know of certain specific difficulties, in particular nuclear energy in the countries of the former Soviet Union, and in this respect it would be extremely useful if effective decisions were taken. On the other hand, last year we were lamenting the lack of use of funds for the Meda programme. I think we must from now on take pleasure in the substantial acceleration in the use of these credits.
However on a more general note, and by way of conclusion, I would like to warn the Council against an initiative which would once again mean a reduction of payment appropriations in the 1998 budget for the financial year to come. Now that the stability pact has been ratified in Amsterdam, it is up to each Member State to reduce its domestic expenditure and to stop regarding the Community budget as something for a rainy day which, at the end of the financial year, enables them - thanks to the return of unused funds - to carry out last minute adjustments in which European credits are a positive variable for finance ministers in difficulties.
I believe we must make sure that the policy of commitment appropriations and payment appropriations is used so that there is no difference, or as small a difference as possible, between the amounts committed and the amounts paid. It is because some governments do not wish to implement the interinstitutional agreement fully that it often seems as if the European Parliament is not doing its job. Here I would here like to say that exactly the opposite is the case. I believe the Committee on Budgets of this Parliament works meticulously on the use of credits. It just wishes its work was followed up in the same way by the Council and the Commission.

Virrankoski
Mr President, Mr Brinkhorst's and Mr Tillich's presentation of the resolution provides an excellent interim picture of the implementation of this year's budget. I would like to thank them both, accordingly.
There are several interesting points to note in the document on the implementation of the budget for 1997. Of these, I would like to draw your attention to point 5 which states that the objective 6 commitment appropriation may not have been spent at all. This is both worrying and surprising. The objective 6 regions are sparsely-populated areas in northern Europe which have experienced immense structural change, and where the employment situation is bad. So it is worrying if monies set aside for the development of these regions goes unspent.
Although the presentation of the resolution is very recent, it may be slightly out of date. According to my information, Finland has committed half the appropriation it got for this year's objective 6 programme. In itself, this is positive, but the situation is hardly satisfactory. The implementation of structural funding is hampered by bureaucracy and complicated systems. Getting funds means complicated administrative procedures, and good projects remain unimplemented because applicants are fed up with grappling with formalities to do with application procedure. These procedures should, therefore, be simplified.
The main topic of debate at the Luxembourg Summit is employment. The employment situation in Europe is alarmingly fragile. In improving the situation one of the EU's most important tools is the structural funds, so more effective use of them should be high on the agenda.

Müller
Mr President, Mr van den Broek. We included ECU 105 million in the budget for reconstruction in Yugoslavia. Of that, just ECU 3, 376 million had been implemented by August. We made ECU 15 million available for 'Europe for Sarajevo' in 1997, of which ECU 623, 000 had been implemented by August. How can you demonstrate to us, the Parliament, which at a future date will be required to give you final discharge, that the Commission is committed to making every effort actively to support reconstruction in former Yugoslavia?
Less than four weeks ago I sat in your office and we analysed together the considerable political and legal problems, and those of your own making, involved in using these funds. We came to the common conclusion that things could not carry on as they were. Some political imagination was needed and we had to come up with some proposals for getting out of this mess. You agreed with this, and suggested that Mr Giansily, some other colleagues and I should undertake to get together with the Commission and consider a way forward.
We have waited in vain for this invitation, which should actually have come at the last part-session. So how can the Commission convince us that you are really prepared to do something? This much I can tell you: during the budget process next week, we will include a reservation, and it will not be the Parliament that has to explain to the public why this money is not flowing out, it will be the Commission that will have to explain why this money had not been made available by August and why - I think I dare say this - it will not be have been made available by the end of the year!
(Applause from the left)

Willockx
Mr President, ladies and gentlemen, in my previous life I was involved with the Belgian budget, and now I am dealing with the European budget. In the Belgian budget for years our problem was to prevent expenditure going off the rails and to remedy it. In Europe the situation is somewhat different. Here, our main problem is to ensure that what we plan to spend is also effectively spent.
On closer inspection both tasks are important democratic imperatives. A budget must be the reflection of a political will and so our task is the optimum implementation of the budget within the margins, and not outside the margins.
It is important to seize the opportunity of this debate in order to stand still. I can limit myself quickly to two observations. Firstly, a favourable observation. I can endorse what Mr Brinkhorst said, that with regard to the structural funds, spending is gradually improving. That is a good thing.
I can confirm much more emphatically what Mr Giansily and Mrs Müller have said with regard to assistance to former Yugoslavia. Here we have an immense moral obligation to fulfil in connection with the reconstruction after our failure to dam up the conflict, and we are fulfilling it in an extremely poor and non-transparent way. This must be remedied in the short term and for me that is the most important message that I have learned from the implementation of the 1997 Community budget.
My group has asked me, with reference to the implementation of the 1997 budget, just to take a look at the future. In the future the budget will be politically dominated by two subjects: 1. employment, 2. enlargement. As far as employment is concerned, it must be clear from the outset. The European Parliament as budgetary authority must dare to stick its neck out in order to contribute to the offensive that Europe must make against the scourge of unemployment. But it must also be clear that we only form part of a global approach. It will not be possible without greater effort, not only in our budget, but also from the Member States and in other areas which largely cannot be included in our budget at European level today. I continue to go on about the non-implementation, the scandalous non-implementation, of the Delors White Paper from 1993, particularly with regard to the transeuropean networks. These are the things we must assess in a global framework and within that global framework we must assume our responsibility with regard to the European budget.
The hypocrisy must stop where the budgetary authority votes on certain items that later cannot be implemented owing to a lack of legal basis. That is humbug. We cannot accept that any longer.
The difficulty we face in the discussions about the first reading of the 1998 budget in the next few weeks is that the Luxembourg summit takes place between the first reading of the budget and the second reading of the budget. I think we will have to be creative in order to maximize the negotiating position of the European Parliament and pressure by the European Parliament on decision-making during the Luxembourg summit at the end of November.
The second aspect is the implementation and preparation of the enlargement of the Union. Let it be clear: enlargement stands or falls for us on further institutional adjustments. Whatever is provided for in the budget, if institutionally we cannot go further than Amsterdam, then Europe is destined to become paralysed on enlargement. So in the first place for me enlargement is an institutional debate, but in addition it is a fact that we must prepare ourselves for the financing of the European Union after enlargement. In this connection a central feature is of course a more rational structural policy that cannot harm the underestimated, in my view, redistribution function that Europe now already has and which is a good thing. We must dare to say loudly that the enlargement of the Union means not less solidarity but more solidarity. We must also dare to say out loud that we do not accept people attacking the enlargement of the Union in order to restart a debate about the just return and once again endanger a number of commitments connected with the financing of the Union. An enlarged Union, whether we like it now or not, will cost the Member States more money. That is, however, our basic political duty.
And lastly, we shall have to assume our responsibilities. Within a certain budgetary strait-jacket, we shall selectively have to cut back on certain items. May I now on the eve of our budget debate call on both the Council and my colleagues in Parliament to make these cuts selectively in order to avoid linear cuts at all costs. Linear cuts for me amount to a lack of courage and lack of political choice. Therefore I argue in favour of selectiveness.

Holm
Mr President, as many speakers have already said, as far as the European Parliament is concerned, we should be pleased that developments have gone in the right direction. The implementation of the budget is gradually getting better and better, but we should not content ourselves with that. As the resolution states, there is still a great deal left to do.
Just like my Finnish colleague from the Liberal Group, I was surprised by paragraph 5 concerning objective 6 areas, and that no money has gone to this. I have now checked this and found out that what is said is not entirely true. Money has, in fact, been earmarked, but the systems in Sweden and elsewhere mean that the money is not paid out. It is, nonetheless, very important to find out why full use has not been made of these accounts. The Commission must find out about this as soon as possible in cooperation with the Member States. Objective 6 is important for northern parts of Sweden and Finland in view of, amongst other things, their geographic situation. May I mention, in parentheses, that the first snows already fell in northern Sweden last week bringing 20 centimetres of snow. Compare that with Brussels, where it is 20 degrees above freezing, and you can see that it could cause certain problems in northern Sweden. We must therefore make sure that the objective 6 funds are used. The reason why they have not been used is two-fold. It may be due in part to bureaucracy, and in part to the fact that the funds might not match up with projects on which decisions have already been taken in Sweden.
And, finally, to the eternal headache: the agricultural sector. I want the Commission to produce a real restructuring plan for milk quotas, so that we do at some time bring some order into this problem in future. I want the Commission to reply to this too.

Liikanen
Mr President, the resolution discussed today concludes the procedure to inform the budgetary authority about the implementation of the current Community budget. This procedure which was initiated by the European Parliament has turned out to be very helpful for the control and also for us as the executor. It has been quite effective in permitting the Commission and Parliament a detailed discussion of the state of execution as we have been able to note today.
Furthermore, it provides the basis for the global transfer which the Commission will propose next week. As far as the overall execution of the 1997 budget is concerned, the outlines, of which the Commission informed the budgetary authority in July, are confirmed by the most recent data. The execution of the budget as a whole at the end of September exceeds the level of previous years, in particular with regard to payment appropriations. Although one-third of the budget still needs to be implemented, the Commission's expectations are that execution at the end of this year will be higher than in 1996 and therefore continue the recent trend.
There are two main factors to explain this development. Firstly, there were no major new spending programmes in the 1997 budget. In particular with regard to the structural funds, implementation now progresses smoothly. Secondly, the 1997 budget was intentionally conceived more tightly than previous budgets. Both in agriculture and with regard to payment appropriations for structural actions, the budgetary authority to some extent decided to anticipate the underspend. While this does not seem to create particular problems in category 1, the payment appropriations for the structural funds will very likely be fully used.
I have a few remarks and replies regarding the individual categories. In category 1 the Commission has already proposed a transfer to re-balance the budget lines before the end of the budgetary year. Lower than expected needs in the beef and cereals sector will enable us to pay the advance on the oil seed premiums and to cover the costs of swine fever. The agreement of the budgetary authority to examine a late rectifying letter will permit the drawing of the appropriate conclusions also for the 1998 budget.
As far as the matter of the milk quota is concerned, that discussion will be a part of Agenda 2000, the CAP reform, so we may come back to it in discussions in that context. In Category 2 the only exceptions to the high rate of implementation are a few Community initiatives. In these areas some re-programming towards the end of the programming period has been inevitable. As far as the questions from Mr Virrankoski and Mr Holm on the execution of objective 6 are concerned, it looks very likely that the funds will be fully used by the end of the year. Our information points in that direction. The particular problems of objective 6 have been widely discussed in the context of Agenda 2000.
Concerning the internal policies, the Commission expects an overall execution close to 100 % in commitments, taking into account very limited redeployments in the framework of the global transfer. Mr Brinkhorst asked about the transeuropean networks. The emphasis put on the TENs by the European Parliament has been met by an already very high rate of execution. I have here the figures from yesterday which say that execution as far as commitments are concerned is at the level of 82 %. As far as payments are concerned the level is 40 %.
In category 4 the picture is more mixed as has been noted by a few speakers. The Commission will propose some more significant redeployment in the global transfer. Most important, the reorientation of Phare towards a preaccession instrument will reduce the amount which can still be executed this year by ECU 150 million. These funds could be made available this year for Meda and recuperated in 1999 thus fully respecting the pluriannual envelopes for both programmes.
Concerning Mr Bösch's remarks, I have two comments. As far as Phare is concerned, as long as the projects were very small on average, execution was extremely complicated and control was also difficult. That was one reason for reorientating Phare towards the two major areas of infrastructure and institutions and also increasing the critical size of the programmes. As far as Meda is concerned, his criticism was directed at programmes which are programmes of the past. For the present Meda programme, the size of the programmes is higher and execution is already this year at the level of 63 %.
Finally, as far as the administrative budget of the Commission is concerned, the exchange rate developments have been favourable. The Commission will shortly transmit a proposal to the budgetary authority to use these funds to reduce future budgetary needs and I hope this proposal will receive support.

President
Mr Commissioner, you must excuse me but by mistake we have not given the floor to Mr Lukas. I therefore immediately give him the floor for one minute.

Lukas
Mr President, I have the unexpected honour of speaking after the Commissioner. My intervention will not be so earth-shattering, but order must prevail and I am happy to accept that.
The motion for a resolution gives a very objective overview of a serious situation. The rapporteurs deserve thanks for their work. If in many important areas funds have been scarcely used or even not at all, that begs the question whether the contributions from the Member States, or from some individual states, are not too high. As regards plans for enlargement to the east, the low utilization rate of Phare programme funds and of those for cross-border cooperation in the structural area are particularly to be regretted. The extremely low implementation rate for the heading covering measures to counter violence against children is not totally devoid of a certain cynicism. The consistently low implementation rate of funds for agricultural controls is worrying. Bearing in mind the growing incidence of fraud and the consequent anger felt by citizens of the Union, all control mechanisms need to be fully and efficiently applied.
It is particularly hard to explain to the citizens of those countries which are net contributors why large parts of the budget which they help to finance are barely implemented. A reform of income and expenditure policy really is needed. With the social situation deteriorating in many Member States common decency alone demands a stricter and more efficient budget policy!

President
The debate is closed.
The vote will take place at 11 a.m. tomorrow.

EU-Canada relations
President
The next item is the report (A4-0140/97) by Mr Graziani, on behalf of the Committee on Foreign Affairs, Security and Defence Policy, on the communication from the Commission on relations between the European Union and Canada (SEC(96)0331 - C4-0620/96).

Graziani
Mr President, at the beginning of the sitting I asked to speak to make one of those digressions from the Rules of Procedure which are a fairly frequent occurrence in this Parliament. Allow me, Mr President, to draw the attention of the House and the Commission to the tragic event that has struck Italy in two regions, Umbria and the Marche: the toll of victims is high as is the toll of lost works of art. I believe it would be useful, positive and necessary for Italy, as the country directly affected, but also the European Union, to take charge of the work of restoring a heritage which - and it is not going too far to say this - belongs not just to Italy or Europe but to humanity as a whole.
Let us now come to the report on the agenda. Bilateral relations between Europe and Canada have a history going back to the signing of the Treaties of Rome. The first agreement concerned nuclear cooperation, then, in 1976, there was the framework agreement on commercial and economic cooperation, and in successive stages we arrived at the political declaration and the relative joint action plan of December last. This cooperation and these links have been renewed over time and are now becoming closer in terms of strengthening transatlantic relations which, although first established with the United States, certainly cannot ignore Canada today. In fact, within the sphere of new international relations, an agreement between Europe and Canada may be useful in bringing the necessary equilibrium to this complex of transatlantic relationships. What we have to do is in fact find out what are, after the end of the cold war, the new areas of agreement between Europe, the United States and Canada, now that the cement of security which has held these relationships together for 50 years has been substantially altered.
A period in which joint security was the prime consideration can only be succeeded by a period of the closest collaboration in all fields, where no one party can exercise excessive hegemony. But hegemony cannot be exorcised, it has to be contained by appropriate policies. Here the understanding between the European Union and Canada constitutes a balancing factor of primary importance, useful, I think, to the United States which, with its Helms-Burton and D'Amico laws, obviously thought - incorrectly - that it could make its allies accept unilateral measures.
Maintaining the right balance is what binds together the democracies, together with the rule of law and more firmly based international relations. Failure to achieve the right balance also has an impact on relations and cooperation and so if we now treat our transatlantic relationship with Canada in the same way as we treat our relationship with the United States, it will follow the same logic and they will reinforce each other.
It is therefore in the interests of the European Union to ensure that North America does not abandon its relationship with Europe in favour of its, admittedly necessary, relationship with the Pacific area. Certainly there are advantages in seeing this scenario as the possible, but currently objectively uncertain way forward for Europe, if it does not become an institutional and political entity with a foreign policy, the creation and development of which will be the expression of a genuine ability to govern. Today this is not the case, and this deficiency is the reason for the imbalance. What Amsterdam offers us is only a substitute, like using chicory to make coffee.
However, with Canada, a young country which has the advantages but also the disadvantages of a young, multilingual nation, collaboration opens things up even more, which makes it impossible to hide current disputes such as the issue of fishing. The biggest problem from this point of view - I would remind you - is that the shoals off Newfoundland are no longer what they were and it is in everyone's interest, not just Canada's but Europe's as well, to take account of the fact that the fish have disappeared. The same goes for hunting. The culture and the needs of the indigenous population must be respected above all, but that does not rule out the need to use traps which cause as little suffering as possible. Canada is - I would remind you - an essential partner for ensuring Europe's stability and security. It is a modern country with a culture of democracy and respect for minorities. In this regard, Mr President, I have the honour of presenting this report to Parliament in the hope that it may be approved.

Schmid
Mr President, the Commission's proposal on EU-Canada relations includes a chapter on cooperation in the field of internal affairs and justice. That is a good thing. It takes account of the fact that long before the globalization of the economy there was globalization of international organized crime. Modern criminal organizations are now organizing their activities on a global scale. Thus we can see the Russian mafia committing organized social security fraud in Los Angeles, not just in Moscow. The Japanese Yakuza are not just active in Tokyo, but also in Düsseldorf and Toronto. Chinese Triads are not just active in Hong Kong, but also in Amsterdam, London and San Francisco. There are lessons to be learnt from this. The lesson is that crime has long since been organized across borders, whereas the police are still cooped up in the pen of nation states.
We in the European Union have drawn the obvious conclusions by developing the third pillar. But that is not enough. What is taking place in the third pillar needs to be complemented by agreements with third countries. Internal security needs its flanks protected from the outside. The conditions for doing this with Canada are favourable. First, the Canadian government and both chambers of the Canadian Parliament are also in favour of this. Secondly, the authorities in Canada concerned with internal affairs and justice are deeply interested in the problems that I have just mentioned. And thirdly, the partner for police cooperation is highly qualified, you cannot fail to learn from the Canadian Mounted Police when you see what they actually do.
No, the obstacle lies in Europe's disunity. We are not yet as able as we might wish to speak with one voice. That must change.

Schnellhardt
Mr President, ladies and gentlemen, first of all I would like to congratulate the rapporteur, Mr Graziani, on his report, which evaluates the various aspects of EU-Canadian relations in a balanced way and is forward-looking. However, at the same time I would also like to emphasize how important it is that the European Parliament should state its position on the joint action plan. It is precisely because cooperation between Canada and the European Union is very good in many areas, but has nevertheless been difficult on the environment, for example, that strong contacts between elected representatives are needed.
We need many contacts and conversations in order to understand one another, and then we must be in a position to influence the action plan. That is why I find it almost incomprehensible that the action plan was adopted before Parliament had expressed its views on it.
I would now like to turn to some environmental issues. As I see it, environmental protection is a field where the EU and Canada cooperate within international bodies in order to find common solutions to global environmental problems. In addition, there are also bilateral issues, such as efforts to introduce humane animal trapping standards. Intensive discussions and negotiations have now led to acceptance by the EU's foreign ministers of the agreement negotiated between the EU, Canada and Russia. In future, when it comes to implementing the agreement - which I in fact support - a key issue will be to find specific humane alternatives to the trapping methods used up to now. The abolition of steel jaw traps alone will not necessarily solve the problem.
This is not just a matter for government and Commission officials. The contribution of people who have enormous practical experience and expert knowledge will be critical. I have in mind both animal protection organizations and indigenous trappers in Canada, and also in the USA or Russia. They have practical experience. You will see that I would like to extend EU-Canadian relations, especially on the environment and animal protection, to other levels as well.
In Autumn last year, I had an opportunity to learn about the experiences and practices of Indians in Quebec at first hand. This experience, and also the experiences of other groups and peoples should be passed on and discussed, for example, with international animal protection organizations and with Members of this House interested in this.
It is certainly not a question of interference. After all, animal protection is a matter of common worldwide interest, as are the efforts made to give indigenous peoples an appropriate role in achieving environmentally sound and sustainable development, and to allow them to participate in decision-making about the utilization of resources and development in their territories. As for general cooperation on the environment, the action plan shows that the environmental consultations that have taken place in the past should be continued. However, we realize that negotiation is not anticipated, but simply the production of a report.
We also warmly welcome the processes or the agreements concerning health policy. Now we need to get on with the programme and negotiate!

Plooij-Van Gorsel
Mr President, ladies and gentlemen, on behalf of the Committee on Research, Technological Development and Energy I wish to compliment Mr Graziani on his excellent report. The bilateral relations between the Union and Canada have a long history. In 1995 important agreements were signed on cooperation in the field of science and technology. Since 1959, there has also been cooperation in the field of energy and particularly nuclear cooperation. And Canada of course has a strong tradition in science and research. This also offers sound prospects for Canada as the site of the future thermonuclear experimental reactor, known as ETER, but only in fact if the Union decides to continue the fusion research in full.
The strengthening of the ties with Canada is also important in the light of the recent reinforcement of transatlantic relations with the United States. In the new action plan, cooperation is extended to information and communications technology and biotechnology. Two sectors in which there will be the most job opportunities in the future. The Committee on Research, Technological Development and Energy hopes that the planned scientific cooperation in the field of biotechnology, including regulations in the field of genetic manipulation, can quickly be put into action.
With regard to cooperation in the field of information technology, attention should above all be paid to the formation of networks between companies in order to encourage the transfer of technology. Top priority must be given to joint research projects in the ICT sector. In view of the considerable amount of development in this sector in Canada, the European ICT sector can benefit from it.

Gallagher
Mr President, like my colleagues I also wish to congratulate Mr Graziani on the presentation of an excellent report.
Generally speaking, there has always been cooperation and mutual good will between Canada and the Union so it is difficult for most people to fully understand the often fraught relations between the EU and Canada in the fishery sector. The question is often asked how fisheries became the subject of such disagreement. It is important therefore to look at the background.
Both the EU and Canada have very similar fishery structures. The EU and Canada's dependence on the fishing industry in peripheral regions is high and any threat to the resource understandably gives rise to emotion and tension. In 1975 Canada, Iceland and Norway declared a two hundred mile exclusive economic zone to protect their dwindling stocks and Europe followed suit in 1977.
This led to a loss of fishing opportunities for European vessels and after the accession of Spain and Portugal in 1986, the problems which they faced then became Community problems. In 1992 Canada declared a moratorium on the fishing of northern cod and they estimate that this resulted in the loss of some 40, 000 jobs in Newfoundland.
The effects of the reduced fishing opportunities for the EU fleet are well known; we had years of stalemate and deteriorating relations. The Union and Canada in 1992 initialled a memorandum of understanding and this was to constitute a new fisheries agreement to supersede the 1981 framework accord. In 1994 Canada amended its coastal fishery protection act to allow measures to be taken for the conservation of straddling stocks within the exclusive two hundred mile zone and in adjacent waters. This gave the authorities power to arrest vessels of designated states and in March 1995 Spain and Portugal were added to that list. The arrest of the Spanish vessel and the bitter battle which ensued are now history. Fortunately, the dispute was settled some weeks afterwards and in September of that year Spain and Portugal were removed from the list of designated states.
Having said all that I share the optimism that it seems possible for the Union and Canada to cooperate more fully and that both sides better understand and respect each other's point of view. My committee hopes that increasing cooperation in the fishery sector will help develop the strong ties which exist. This can be achieved through confidence-building measures, both at bilateral level and multilaterally through NAFO.
My committee calls on the Union and Canada to ensure compliance with their bilateral commitment. We support the NAFO initiative to maintain the current objection mechanism. We reject the extra-territorial provisions of current Canadian fishery legislation and in conclusion can I say....
(The President cut off the speaker )

Barón Crespo
Mr President, ladies and gentlemen, first of all I should like to congratulate Mr Graziani on his report and say that I am glad he is better and can be with us. I should like to raise two important points. This report on our relations with Canada is particularly important now, with all the talk of modernizing transatlantic relations. Right from the outset, and even during the most difficult moments, Canada has always supported the causes of Europe and freedom. This must be recognized and brought up to date. It is not just a question of discussions with the United States.
There are two aspects I want to mention. Firstly, transatlantic relations are entering a new dimension now that Canada is also becoming involved in the creation of a free trade area with the United States - the NAFTA Treaty - which has also been extended to Mexico. At the moment there are even suggestions for a continental free trade area for the whole of America. This means that in the near future we too will have to reconsider not only our economic but also our political relations. We have to recognize this because it will have repercussions for us.
Similarly, I think it is important to consider how our relations with Canada are affected by international law and relations within the framework of the WTO. In particular, I am thinking about extra-territorial laws, such as the Helms-Burton Act, which are as damaging to Canada as they are to the European Union. I think it is a good idea to combine our efforts in this respect.
Finally, Mr President, I should like to mention fishing, which I think is an important aspect of the report. Mr Graziani has incorporated amendments in this area, some of them at my suggestion. As the previous speaker said, it is best if long-standing relations, such as concern fishing, can respect international law. We are well aware that fishing is a contentious matter, as shown by the current "salmon war' between the United States and Canada. As a former Community leader said, Jesus chose fishermen for his disciples because fishing can easily become contentious. In any case, I believe it is important to look to the future positively, by developing our relations in a climate of solidarity, cooperation and respect for international law.

Varela Suanzes-Carpegna
Mr President, ladies and gentlemen, I should also like to congratulate Mr Graziani warmly on his magnificent report. Canada is a great country with which we have strong historical, political and economic ties. We share common principles and values, and our relations should be governed by cooperation. However, as a Spaniard and a Galician in particular, I must mention a matter which has cast a shadow over our relations - namely, fishing. The Galician people whom I represent here still cannot understand why Canada behaved so aggressively in the fishing conflict which it started, in violation of international law.
I do not want to reopen old wounds, but rather to help to heal them once and for all. Therefore, I would like to draw attention to sections 20 and 21 of the Graziani report, and the eight conclusions which the Committee on Fisheries has added to it. These reject Canadian extraterritorial legislation, calling for it to be repealed, and for guarantees to be given to Community vessels. They also call for true cooperation within NAFO, maintaining the existing objection mechanism and avoiding discrimination with other fleets, and also call for the 1992 Fisheries Agreement to come into force, albeit in a modified form, but including the main European requests as already granted, such as access for the Community fleet to Canada's surplus fisheries resources.
As the Graziani report says, for the joint action plan to be useful it must not just be a declaration of good intentions, but an effective commitment to improve cooperation.
As a member of this Parliament's delegation to Canada and of the Committee on Fisheries, I sincerely hope that this cooperation may be strengthened. Fishing, Mr President, can be the test of these new relations between Canada and the European Union.

Novo
Mr Chairman, Mr Commissioner, ladies and gentlemen, our common interest in maintaining and developing relations between the European Union and Canada is not derived - or at least should not be exclusively derived - from the extensive major commercial interests represented here. On the contrary, cooperation and agreement on matters such as those relating to our opposition to the extraterritorial effect of certain national legislation, such as the American Helms-Burton Act and laws of some NATO countries, or, similarly, cooperation and agreement in the case of certain humanitarian actions, or indeed that of resolving the question of how to finance the United Nations, are political fields of joint cooperation which certainly ought to be maintained and strengthened.
In the strictly commercial sector, it is important that a small number of extremely powerful economic interests, such as those connected with steel, wheat, beef and the audio-visual industry, should not predominate, nor cause us to overlook - or even cause us to consider as less important or marginal - the need to achieve by consensus mutually acceptable solutions to problems which are socially and economically relevant for certain regions and countries of the European Union which, by coincidence, belong to less developed areas, and where, furthermore, solidarity is far from being a reality.
I refer, of course, to the problems associated with the controversy over fishing in the NAFO zone, which is still going on and, we believe, cannot be resolved at the expense of unilateral measures with extraterritorial effect. Such measures have been rightly repudiated by both Canadians and Europeans in another context.
It is thus important that Canada should not adopt different weights and measures as regards fishing but that, on the contrary, negotiations to safeguard the interests of all the countries represented here should be pursued, including our common interest in preserving fishing resources.

Leperre-Verrier
Mr President, relations between the European Union and Canada have existed for just fifty years and we must congratulate ourselves on seeing them take on a new dimension. In fact, as we know, transatlantic solidarity has been an indispensable element in maintaining peace, liberty and stability. It is therefore pleasing that this communication, whilst maintaining the scope of the previous framework agreement, emphasizes its political, social and cultural dimension by opening up cooperation in new sectors such as scientific research, technological development and education.
What is more, after the period of the Cold War, the international situation which placed the United States in a dominant position required a revision of transatlantic relations. In this context, relations between the European Union and Canada are the guarantee of readjustment. We both find ourselves standing up to unilateralism, and the Helms-Burton and D'Amato laws are an interesting and significant example of this convergence of interests.
This is why I fully share the point of view of Mr Graziani, author of this excellent report. Let us not allow sectoral controversies to cast doubts over bilateral relations which have always existed. The reciprocal interest which is represented by the strengthening of political and commercial links is too important.
There are however two problems: fishing is the first stumbling block and the problem of catch quotas has literally poisoned relations between the European Union and Canada over the last few years. Another bone of contention is the question of leghold traps and imports of furs. In both cases solutions need to be found so that our relations remain tranquil. In fact, Canada is a partner indispensable to the stability and security of Europe. And the breadth of the areas of cooperation reflects the challenges with which the western world is confronted.
It is therefore desirable that Canada and the European Union join efforts in the search for new stability for the international community.

Berthu
Mr President, ladies and gentlemen, Canada is particularly close to us, in spite of its geography, since it shares a part of its history with two members of the Union, Great Britain and France. Our heritage of common values must be maintained and must serve as a basis for active cooperation between government and business and above all between people who, today, have ever more solid links across the Atlantic.
Canada also offers the example, a very interesting one for all those concerned with the European institutions, of a federal country which, in spite of its age, has not found its equilibrium. Its troubled institutional history is marked by an absence of approval from the province of Quebec of the current constitutional law of Canada and by the impossibility of finding, at least up until now, an original formula to unite the sovereignty of francophone Quebec with its association with the rest of the country. Consequently, in its first referendum on sovereignty held in 1980, the 'yes' vote was 40 %. In the second, held in 1995, the 'yes' vote was 49.5 % and a third referendum has been announced.
This evolution should also set Europeans thinking. For whilst federalism works well in relation to one people, as in Germany, it becomes blocked, or goes through endless convulsions when it relates to several peoples desirous of conserving their identity and the mastery of their destiny. In fact, since the coordination required subordinates member nations, it lays itself endlessly open to suspicions that it may not be respected by one of the partners. This remark is all the more true, of course, when the basic constitutional charter has not even been approved by one of the member nations.
This is why I am happy to see that most responsible Europeans do not now have federalism as an explicit target. And in the same perspective, I would also like to say to our friends overseas, that we follow with sympathy the efforts of Quebec and Canada to find an institutional formula that will clarify their relationship.

Antony
Mr President, ladies and gentlemen, in his report on relations between Canada and Europe, Mr Graziani has tackled many extremely diverse subjects, from leghold traps to reflections on the interest in a trilateral dimension between the Union, the United States and Canada, via the problem of coastal fishing.
There is therefore a lot that could be said, some criticisms expressed too, in particular with regard to the position taken in favour of the World Trade Organisation, that is, a world without frontiers abandoned to the appetites of the multinationals. But two minutes would not be enough, all the more so as the text which has been submitted to us does not tackle the key points.
What Canada has become represents what Europe could become, a federal group which is a satellite of the United States. Ottawa is a model for Brussels, the capital of an artificial entity binding together in a federal straitjacket two nations, the French Canadians and the Anglo-Saxons. Both are victims of the system. The French Canadians of course, but also the Anglo-Saxons who, as Ottawa cuts the links with London, lose all uniqueness.
Today, the two peoples are dissolving in the American melting pot. The natives of Quebec are putting up a good fight in defence of French, but the collapse of their birthrate, since the onset of what is known as the silent revolution, makes this battle in vain. Within a few decades the six million French Canadians risk disappearing, wiped off the map just like the Acadians, the French of Louisiana.
There is however one way out for these two peoples: getting rid of the federal strait-jacket, just as the peoples of central Europe did, and as our countries - progressively being suffocated by Brussels - want to do. This is the reason why we French patriots support the cause of an independent Quebec. In 1995, the Ottawa federalists won by a narrow margin, benefitting from the same advantages as the Maastricht Euro-federalists in France in 1992 - ethnic minority vote, financial and media related pressures. And, just as in 1763, Paris was uninterested in the fate of the new France.
Our intellectuals are truly the inheritors of Voltaire, who said he wished Canada was at the bottom of the Arctic Ocean. Next time they will win. The natives of Quebec should know they are not alone. Once we French have freed ourselves from Brussels' authority, we will be able to tie once again the links broken with our Quebec brothers two centuries ago.

Mann, Erika
Mr President, Mr Graziani's report is excellent, and I am grateful to him for conveying such a positive spirit in it, as I believe that we depend on having good transatlantic relations not only with Canada, but also with the United States. It provides an important foundation for western values, for which I am very grateful to him. By the way, I am also delighted that he is in good health and back with us again.
The joint action plan of 17 December 1996 consolidates the 1976 framework agreement and thus opens up a new form of cooperation between the European Union and Canada. I am pleased that this agreement is before us, and I am glad that we have also found new types of cooperation as a basis for this. I will return to that point in a moment.
The main focus of the agreement is the area of bilateral trade and investment relations, but also closer cooperation in multilateral trade matters, and closer and more stable political cooperation. This is a wide-ranging package, and the Commission has put in very solid work.
So what is this new type and new style of cooperation? I would like to mention just a few areas. The first point is that there is a direct form of cooperation, which involves the Commission working with its Canadian administrative counterparts. There is a much more direct form of political cooperation, that is, in future there will simply be direct means of cooperation for each case and for each topic to be dealt with.
The second point is that it will be possible to resolve trade disputes directly, avoiding the complicated conventions which used to apply. We should not underestimate the value of this. We know that trade disputes make life difficult for us, and so this is important. We have totally new types of agreement before us, and I am glad the Commission has done this.
Nevertheless, you are quite right, Mr President, in saying that the Parliament needs to be involved in this more closely. I would ask the Commission to keep us informed of what they are doing at all times.

Van den Broek
Mr President, may I also begin by warmly congratulating the rapporteur, Mr Graziani, on this comprehensive report and perhaps firstly just add to the introductory remarks that he made on the disaster that has befallen his country. I should just like to tell him that the matter was discussed this morning in the Commission and I should like to take this opportunity, on behalf of the Commission, once again to express our feelings of sympathy for the victims of the earthquake in Italy. It was also said very spontaneously this morning that it is really a pity that owing to a lack of funds and exhausted budget headings we are not able to translate a firm sign of sympathy into one of some support, even if it were just a symbolic amount, because we do not have any resources for natural disasters. We have nevertheless looked into this possibility and I know that Commissioner Oreja is investigating to what extent a contribution could perhaps be provided for the restoration of damaged art treasures - we all know that the great cathedral in Assisi has also been damaged. I cannot provide a solution at the moment, but it did seem appropriate to me at least to mention this matter here.
As far as the report is concerned, I am pleased to report to Parliament on the recent positive developments in relations between the European Union and Canada. Further to the communication from the Commission to the Council on 28 February last year, on 17 December last a joint political declaration and a joint action plan were adopted. The action plan has already had a positive effect on bilateral relations which are now more balanced than a year ago. This was confirmed on 20 June last by both parties during the summit between the EU and Canada in Denver. At a meeting a few weeks later within the context of the political dialogue, Foreign Minister Axworthy said that the progress made so far with the action plan had exceeded Canadian expectations. In my view, we can be reassured that our own expectations have also been exceeded. There are nevertheless still some problems in the bilateral sphere, particularly with regard to the various opinions - this has also been on the agenda this afternoon - on the extraterritorial application of legislation in the field of fisheries and I could also mention certain trade and investment matters.
In general, Canada is, however, an important transatlantic partner for us with whom we share common values and aims. I am completely behind Mr Graziani's comments on the importance of our relations with Canada.
With regard to the action plan, I would also draw your attention to four agreements with Canada that have almost been completed. Firstly, there is the mutual recognition of standards and certification. The negotiations have been completed and the agreement was initialled on 30 May. Further information on the institutions for conformity assessment must be exchanged.
Secondly, an agreement on cooperation and mutual assistance in customs matters. The agreement is ready to be signed.
Thirdly, the veterinary and phytosanitary standards. The negotiations have been completed. But certain matters relating to the BSE situation still remain to be sorted out.
Fourthly, in the field of competition, the negotiations have also been completed and the agreement will be sent to the Council in the next few weeks.
We feel we can say that these four agreements together will certainly encourage trade with Canada. A start has also been made on the preparatory work for a joint trade study on the promotion of trade in goods and services and the reduction or removal of tariff and non-tariff obstructions. On 30 September, lists of the trade restrictions were exchanged within the context of this study.
Also worthy of mention is the fact that Canada is an important ally in our resistance to the Helms-Burton and d'Amato Acts. This is a matter we have discussed with our Canadian friends.
In the field of foreign and security policy, the Union and Canada have for years worked closely together in multilateral forums such as the UN and the OSCE. As a direct result of the action plan, during the Luxembourg presidency, the EU at expert level will conduct discussions on the following areas: reform of the UN, disarmament, non-proliferation, human rights, Eastern Europe and Central Asia.
As Mr Graziani rightly remarks in his report, Canada is an important player in the Pacific Ocean region. As such, it currently holds the chair of the APEC and next November is organizing the APEC summit in Vancouver.
As far as the last chapter of the action programme is concerned, the title of which is "fostering links' , I am of the opinion that the agreements with Canada in the field of higher education and vocational training and also in the field of science and technology have already led to some very good results.
With regard to the links, that is to say from one people to another, I would like to say how pleased I am about the Canadian decision in April that for Portuguese nationals there is no longer a visa requirement. This was a matter the Commission had discussed within the action plan with Canada.
Not least I should point out that the European Parliament delegation for relations with Canada will visit the capital later this year and in my view that visit comes at an extremely convenient time in EU-Canadian relations and I hope and expect that it will be a success.

President
The debate is closed.
The vote will take place tomorrow at 11 am.

Economic and monetary union
President
The next item is the report (A4-0255/97) by Mr Willockx, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the convergence criteria for economic and monetary union and the funding of the social security systems in the Member States of the European Union.

Willockx
Mr President, Mr Commissioner, ladies and gentlemen, I should like to begin by making it clear that my report on social security is really part of a single whole. A single whole with three components: work, social security and income. These three components are inextricably linked to each other. In this sense the targets the Commission wishes to propose to the Member States also contain important elements of social security and income guarantees. It is important that during the Luxembourg Summit on employment the coherence of these three components is not lost from view.
I would just say as an aside that, on the one hand, it is a mistake to say, regarding compliance with the convergence criteria in the budgetary field that non-compliance could solve the employment problem. On the other hand, it is also a mistake to use compliance with the convergence criteria as an excuse to cut back social security and in that way also indirectly mortgage the employment policy.
I think we should guard against artificial comparisons with the United States of America. We have our own Rhineland model. We must also remain true to our own Rhineland model here in Europe. For me these criteria do not constitute a risk to the financing of social security. On the contrary, in a country such as Belgium, compliance with and pursuance of the convergence criteria has certainly become the best way to guarantee the financing of social protection in the long term. So I refuse, and I would stress this, to recognize a contradiction between the two objectives.
In this debate we have repeatedly discussed pensions. Here again, we must guard against using slogans. Capitalization is not a panacea to secure the future of pensions. Support of the distribution systems by additional capitalization on the other hand, certainly as far as I am concerned, is not a mortal sin. But one thing is clear, caution is required, and here I would echo the position the European Commission expressed in its latest communication on the modernization of social security, in the transition from one system to the other.
The key question that we face in the future is: how can we keep social security affordable without weakening the social safety net. I shall give you three factors. The first is a repetition: healthy government finances. The best guarantee for the future of social security because it will in future allow more funds to be made available for social security. Secondly: employment. A system of social security cannot function without a high degree of employment. Thirdly, the necessary modernization of the systems to face the new challenges. What can Europe do? Our task here is not so great. We can only try to create the framework to bring this task that I have just described to a satisfactory conclusion.
There are three important instruments. First of all, fiscal coordination between the Member States in the field of mobile bases of taxation. I am pleased with what President Santer said this afternoon on this point. Secondly, the search for coordinated fiscal responses to the need for alternative financing of the social security system, for example, energy tax to finance the reduction in the paternal contribution. Thirdly, the establishment of social convergence criteria in order to direct social protection and wage policy and to prevent social dumping in the future.
Mr President, ladies and gentlemen, I am firmly convinced that the more democratic Europe becomes, the greater the strength will be of an adapted, modernized social security system. Some theorists also say that the population who elect us do not wish for and will never accept the dismantling of such a social security system. The more democracy there is in Europe, the more efficient our social security system will be. That is my firm conviction.

Chanterie
Mr President, first of all I should like to say as the draftsman of the opinion of the Committee on Social Affairs and Employment that I am pleased that both the rapporteur and the Committee on Economic and Monetary Affairs and Industrial Policy have largely taken up the conclusions of our advisory committee. There is no doubt that economic and monetary union has an important influence on social security in the Member States.
However, this does not provide well-founded reasons to reject EMU. On the contrary, the objectives, criteria and timetable should be retained in full. Not because they form part of some economic dogma, but because they contribute to the success of EMU and thus to monetary stability, economic growth, more competitiveness and consequently to promoting employment.
The temporary drawbacks do spur us on to prepare social security for EMU. This should nevertheless happen without running the risk of jeopardizing social security. On the one hand, there is the insurance aspect, that is to say, being collectively covered against the main social risks and on the other hand the assistance aspect that expresses solidarity. Social security is, after all, one of the cornerstones of the European social model. We all agree that the financing of social security nevertheless forms the major problem facing every Member State. The budgetary stranglehold inevitably leads to the question of whether all parts of social security can be maintained and whether judicious intervention should not be chosen rather than finally giving up rights and entitlements out of necessity.
It is too often forgotten that social security is not of course only influenced by EMU, but also by demographic developments and technological factors. Just think of ageing and the fact that there are not enough younger people in work to provide funds for social security. Think of the changes in the composition of families, the entry of women on to the labour market and the constantly high unemployment. Think, on the other hand, too of the progress in medical science and medicines, the developments in information technology, robotics, telematics and multimedia. Such demographic and technological upheavals lead in the main to a shrinking of earnings and expansion of social security expenditure. The resulting imbalance cannot be sustained.
The Committee on Social Affairs and Employment sets out four spheres where we could intervene. Firstly, the completion of the internal market in order to counteract distortions in competition and social dumping. Secondly, the support of economic growth, among other things, through additional investments and the improvement of competitiveness. Thirdly, the promotion of employment, for example, by using unemployment benefit as a wage allowance. Fourthly the reform of tax law in order to reduce both the charges on work and to help to bring the national budget more into balance.
In the draft Treaty of Amsterdam it states that the European Union is aiming for a high level of employment and a high level of social protection. This is explicitly mentioned. Although at the moment there is no European social contract, the employment chapter is in the Treaty of Amsterdam and in the employment summit to be held in November. Hopefully they are both a start on intervention that in itself will not be sufficient to secure the financing of social security, but in combination with the various national policy measures could ensure that the way is opened to an economic, monetary and at the same time social union and that is ultimately what we have to do.

Donnelly
Mr President, I would like to thank Mr Willockx for his report and Mr Chanterie for his opinion. This is a very timely debate because we heard President Santer earlier this afternoon discussing the issue of the jobs summit meeting to be held in Luxembourg and there is an intimate link between our social security systems, the levels of unemployment and the whole future of growth and employment within the European Union.
While this report asks the question, what will happen to social security systems as a result of economic and monetary union, we on all sides of this House have to face up to one simple truth: our social security system, regardless of economic and monetary union, needs serious reforming. Mr Willockx's report points that out very clearly indeed.
The Socialist Group wants to see a review of social security but as Mr Willockx's report points out, we want to do it on the basis of ensuring that we keep a social safety net. We must reform the system but maintain the safety net we have within the European Union.
The system set up at the end of the second World War is no longer appropriate for the types of employment and unemployment we have today. Therefore, we would like three things to be addressed in the review that will take place. I would like the Commission, perhaps, in their further studies and the Council to consider these in the future.
The first is to establish a new system of social security systems which offer flexible help, tailored to the needs of the individual citizen and focused on assisting people through periods of unemployment rather than excluding them permanently from work. It is a fact that in some of our countries the social security systems permanently exclude our people from work. That is why 50 % of the people out of work in Europe today are long-term unemployed.
We need to recognize that the social security bill for the taxpayer is increasing. That is why we need job creation in the European Union. If we create jobs then we can reduce the debt and the borrowing to pay for social security. That is why, Commissioner, this summit meeting in Luxembourg is crucial not only for the social cohesion of the European Union but also to bring down the budget deficit and ensure that the pact for stability and growth can actually operate.
Particularly for our young people we have to break down the barriers which make the move from benefit to work almost impossible for hundreds of thousands of young people. In the European Union today it is virtually impossible for some of our young people to make that move from benefit to work. I say to you as a social democrat, let us for heaven's sake have an honest debate on this issue and let us design a social security system that will be sensitive to the individual and will help to maximise the opportunities for employment in the European Union.

Herman
Mr President, ladies and gentlemen, if I so obviously applauded Mr Willockx and Mr Donnelly, it is because what they said was exactly what I wanted to hear. But it was not exactly what was written in their text. This is why we have some small differences of opinion, although on the whole I am happy with the combination of ideas and consensus between us.
In fact, as Mr Donnelly has clearly said, we need to keep our social security systems, and we are very happy to do so, if they are adapted. This is not exactly the same as saying we must maintain social security systems and strengthen them, if necessary. If you had said we must reform them in order to adapt them, I would immediately have been in agreement. Similarly when you say that neither the observation of convergence criteria nor the date of implementation of the third phase can undermine the indispensable efforts made by the Union to create jobs, I am sorry but that sentence is ambiguous. If it could be read as you said it in your speech I would vote for it, but that is not what you wrote.
Similarly, in paragraph 14 you speak again about social security and you introduce a notion of rigidity which was not in what either you or Mr Donnelly have said. With you, there are nuances. But I find that Mr Donnelly has become extraordinarily realistic and I can only applaud him. It is probably the experience of power that makes things more comprehensible and makes people more responsible.
Having said that, Mr President, the report is otherwise excellent. We all have an interest in maintaining a system of social security and solidarity, for this is essential for the smooth running of the economic system. We do not believe in the law of the jungle. We do not think that the market can rule everything. We believe that the State has a role to play and that the social partners have an important role to play. They must therefore be in agreement, and the government too, but that implies an awareness of reality on their part.
In fact, as Mr Donnelly has clearly said, and I repeat, the current system as it works in most of our States, is no longer fundable, it is no longer sustainable in the face of globalization. There must be efforts to adapt it therefore, and I am happy that, in these discussions, unhappily less so in the texts, we may arrive at an agreement on this point.
Mr President, our group has not difficulty voting for this report and we would like to thank and congratulate Mr Willockx again.

Kestelijn-Sierens
Mr President, ladies and gentlemen, the Group of the European Liberal, Democratic and Reformist Party has mixed feelings about the report by Mr Willockx. We applaud the fact that the rapporteur has had the courage over a period of several months to seek something of a consensus. But nevertheless it is a fact that nobody can really recognize their views in the report. It is difficult to ignore the fact that the resolution is disjointed and ambiguous. Disjointed, for example, because it is difficult to maintain that Maastricht affects the criteria for budgetary leeway on social measures and at the same time that it does not really do so because a small shortfall leads to lower interest costs, more investment, growth, jobs and therefore a broader tax basis. I must admit, Mr Willockx, that you have expressed a clearer position today, which I cannot find so easily in the report.
On behalf of the Liberal Group, I should like to make a few things clear. I should first like to stress that it is the countries that persevere and systematically make their government finances healthy that score highest in terms of jobs and therefore lay the bases for affordable social security.
Secondly, as far as pensions are concerned, we are of the opinion that the system of capitalization can exist next to the system of distribution. It is not a matter of replacing one system by the other, both can function side by side.
My group does support paragraph 6 of the resolution in which the Commission is called upon to undertake a study into the effect of the ageing of the population on the pension system.
Finally, ladies and gentlemen, we shall soon obtain the report on the modernization and improvement of social security in the European Union to debate in the House. The same material will come up again in Parliament. It would enhance the credibility of this House if we devoted one report to the subject instead of a whole series. It would not only reduce the paper mountain but ensure greater consistency in our positions.

Theonas
Mr President, it is an indisputable fact that the entire social security system in Europe is in danger of total collapse. Social security systems are on the edge of bankruptcy.
The question to which there should be a very clear answer, at least from the European Parliament, which is the only elected body of the Community and is considered, for that reason, to be closer to the people of the European Union, is: who is responsible for this unacceptable situation? The answer is clear to all: mass unemployment and the policies that cause it. But then another question automatically arises: who is responsible for unemployment? In this respect the answers that are given not only defy the intelligence of the citizens of Europe, but, by attempting to turn reality upside down, call for the continuation and intensification of just those policies that are responsible for the dramatic increase in unemployment and poverty.
Unfortunately the present report does exactly the same, as it insists on leaving it up to economic and monetary union to address unemployment. Whereas it should be discussing the consequences of EMU on the social security system, it calls for enforcing to the letter the criteria and the starting date of the third phase for the creation - it says - of a more effective framework for higher levels of employment. Delusion or conscious distortion? Let those involved choose which of the two they prefer. The result is the same. Totally ignorant of the consequences that the EMU criteria and the programmes of convergence are having on the ability of the social security system to fulfill its obligations to its citizens and to the unemployed, they are proposing transfer of the sources of social security financing and transfer of resources are available for unemployment benefits and professional training, to employment initiatives, that is to say, to the advantage of commercial profit.
Mr President, at a time when statistics show that the contribution of employers to social security is on the decrease, making it easier for businesses to plunder the financial resources of social policy and to profit at the expense of working people and their social rights, is nothing short of provocation.
If the new integrated employment strategy, as the leaders of the European Union call it, and the appeal to the social services for adaptability, flexibility and the shouldering of their responsibilities means stripping working people and European Union citizens of the rights they have fought so hard for, if the success of the policy that is being mapped out means the complete dismantling of the European social model, then you can be sure that their response will be further conflict which, sooner or later, will sweep away not only this unpopular policy but also the implementors of this policy.

Hautala
Mr President, EMU compels us to debate the subject of social security structures, because there has been great pressure on us to reduce state expenditure. And it is with equal zeal that we should consider where states will get their funding from in the future to deal, for example, with the organization of social security. In this respect, I do not believe that EU policy is uniform. We have been properly concerned when there have been so many shortages, but the European Union has not, by any stretch of the imagination, been able to do everything to guarantee social security funding, or, in other words, state income. In this regard, I believe the most essential single reform would be to end the process of tax erosion, that is to say, guarantee that producers cease to wander from one country to another in search of lower taxation systems. There is really a lot that needs doing in the harmonization of indirect taxation especially.
Obviously, as EMU draws near, we are starting to speak more and more of the European model. We do not want to tread on people sleeping in the street. We even want to pay taxes, to some extent, so that people can have a minimum of state support. The dialogue already begun on the different social security models prevailing in the various countries must be pressed on with. Each European country has something to offer the European model. I certainly believe there is no cause for concern, in this respect, with the Nordic countries, and, indeed, that social security thinking in Europe generally runs along the same track as the Scandinavian philosophy. Just one example is the German health insurance system, which is clearly a step in this direction.

de Lassus
Mr President, Mr Willockx' report is of an extremely high quality and I in turn would like to congratulate the author and underline that it concerns probably one of the most difficult subjects that we will have to face up to in the coming years. Mr Herman's speech a few moments ago gave us a glimpse of this.
If the implementation of economic and monetary union and the Euro is accompanied by an overly rapid deregulation this could in fact provoke an overall increase in unemployment and a worsening of the standards of living for a growing, and already too large, number of people in Europe. This is all the more true because extremely divergent policies are pursued by the Member States in the area of social security and this causes considerable and additional distortions of competition. It is, therefore, now necessary to tackle the establishment of true convergence in our social security systems. On this point I want to underline the interest that the Commission will find in the wider and more vigorous exploitation of the conclusions in the White Paper on growth and employment.
Concerning the fight for jobs, we must emphasize the budgets which are destined, on a regional level, to facilitate insertion and return to work, notably by supporting the fabric of the community which is now trying to respond to this, but with insufficient resources. It is also necessary to make a start on the convergence of health insurance policies of Member States, taking good care not to reduce the area currently covered by national health services, so that the health of Europeans is not abandoned solely to the private insurance business. This implies many new decisions, of which one of the most urgent is certainly the establishment of a directive on the mutual insurance system.
Finally, I would like to give the backing of the Group of the European Radical Alliance to the decisions to be taken to move towards a progressive transfer of the resources necessary for the social security system so that they come from the taxation of capital and non-renewable energy sources, in order to lighten the costs which now weigh too heavily on those in work, to the detriment of employment.

Blokland
Mr President, the report by Mr Willockx is a problematic one. Perhaps this is the only conclusion we can agree on today. Naturally we admire the courage of the rapporteur, who is as it were sticking his hand into a hornets' nest. But the preceding question asks whether all this is necessary. Anyone who reads the opinion of the Committee on Social Affairs, knows the answer: no. Because the report in no way deals with the consequences of EMU for the financing of social security systems in the European Union.
This report is also a contradictory report. Take the first part of the preamble, which states that the current social model must continue to exist. If you are looking for the solution to a problem you must not switch off the light, but let your light shine on all creative possibilities. The challenge of increasing international competition requires an appropriate response. According to the World Economic Outlook published this month by the IMF, drastic reforms are necessary in the European Union in the fields of social security and labour market policy in order to be able to push down unemployment. EMU demands greater mobility of labour. Anyone who considers that to be socially unacceptable must be consistent and remove the EMU from their list of priorities. But the rapporteur does not do that.
Finally, this report is out of date. It is turning its back on the future. Using subsidies to create jobs and to neutralize inter-regional differences are actions that are dead and gone. They kill off any innovative initiative. Nobody is actively encouraged to support himself. Of course governments must put into action measures to discourage fiscal, social and environmental dumping. And they should also encourage education and training. But this can go hand in hand with the dismantling of the social welfare state. Is it really so honest to saddle our children with enormous repayment obligations because we refuse to assume this responsibility?

Lukas
Mr President, this report demonstrates very clearly the extent of the measures that still need to be taken precisely in the field of social and employment policy in the context of preparing for monetary union. Every one of the suggestions and demands made by the rapporteur is valid, and I personally would support them. However, I believe that all these points contradict paragraph 1. The very fact that there are still no coordinated tax systems and that it has not yet been possible to reform national budgets in a socially acceptable way; the fact that in trying to meet the convergence criteria Member States are damaging the basis of social security systems - these are an indication that the deadline for introducing the Euro needs to be reconsidered.
In this context a petition for referendum is to take place in Austria at the beginning of December on the holding of a plebiscite on this subject. This step, which is important in democratic terms, is intended to give citizens an opportunity to become involved in a critical way in an issue that affects them personally. We believe that it is wrong to use controlled advertising and propaganda campaigns to persuade our citizens that all the social and employment policy problems that need to be solved in connection with the introduction of monetary union simply do not exist.
European monetary union should be treated as a final and important aspect of the internal market at a point in time when at least the most serious problems, including social policy problems, have already been solved and the most important conditions have been achieved.

Katiforis
Mr President, the report which we are debating today has had a long passage and extensive debate in the Committee on Economic and Monetary Affairs and Industrial Policy. It is now over twenty-two months since we had our first exchange of views on the subject. Given the importance and sensitivity of the subject, our rapporteur has guided the committee skilfully throughout this period until we were able to reach a conclusion which we were able to adopt with no votes against. This is of great credit to the rapporteur and he deserves our congratulations.
Nevertheless, fundamental questions still remain, I am afraid. We have not all been able to agree on the effects of the convergence criteria and the stability pact, in particular, on the European economy. I am among those who believe that they have and will continue to have deflationary effects. Moreover the single currency exposes Member States to the danger of asymmetric shocks on the demand side which it will no longer be able to possible to offset by a readjustment of the exchange rate. Of course, I am not arguing for abandoning the single currency with the great benefits and the historic change that it is bringing to European affairs, but we need antidotes. The important antidote in this particular case is a pan-European coordinated employment and social policy. By some new taxes, if necessary, like the windfall tax which was so successfully applied in Britain recently and which financed an important campaign against unemployment.
There is a fundamental last question. After all the skilful surgery that Mr Donnelly has so justifiably spoken about has been applied, will the standard of living of the European worker remain the same or will it go down, and will it even plunge towards the level of the third world worker to which reference has been made in the reference to globalization?

Frischenschlager
Mr President, this report makes an honest attempt to tackle the issues, but in very traditional areas, and it raises a few questions of principle that I would like to deal with. Firstly, the report says that there should be no adverse social consequences. Of course, no-one wants that! But we have to be honest and admit that a reorganization of our social structures and of our social security systems is unavoidable, and there is a danger that this will involve some cuts.
My second point is that in the context of pension provision, the report says that there is little chance of a change from the adjustable contribution system to the formation of capital coverage system. If it happened at all, it would take a very long time, I know that much. However, it has to be said quite unambiguously that private provision will play a very central role in pension provision in the future.
My third point is about the employment summit in Luxembourg. The President of the Council, Mr Juncker, always stresses that this will not be a deregulation summit. Fine, it would really be too little to have just that. But I do hope at least that one subject dealt with by this employment summit will be the need to change our economic and labour law structures and make them more flexible.
In two areas the report includes hints about the future, one case being where it touches upon environmental tax reform, implying a shift of taxation away from employment and towards energy, consumption, etcetera. However, it only suggests investigating this. That is absolutely not enough as far as I am concerned! We know that this is one of the forward-looking instruments. We need to summon up the political will actually to get on with it.
The report quotes the Commission's 1995 report on the future of social welfare, which questions the direct link between the payments made by social security contributors and the covering of risk. I think that is important. I believe that we should seriously contemplate a basic level of provision, as there is ever less work, and the gap between those who have work and those who do not is getting greater. However, social solidarity should also extend to people who have not made sufficient contributions to the social security system through paid work.

Ribeiro
Mr President, ladies and gentlemen, this is yet another debate which clearly illustrates that we are trying to square the circle or round off the square. In the short time I have at my disposal to deal with such a demanding topic, I congratulate the rapporteur on his effort, which puts forward a number of extremely relevant points, but which reaches opposite conclusions to those which would seem to follow logically from those premises. But we must not forget that this is a report by the Committee on Economic and Monetary Affairs and Industrial Policy, which is more concerned with EMU and the effects social security financing will have on it than with social security and the effects EMU will have on the social situation and security of citizens.
At this point I would like to make what seems to me to be an urgent observation of central relevance on a view which is gaining general acceptance, namely that social security protects citizens against risks of a social nature. The expression of this view is found both in Community documents and in those of member States, such as the Portuguese Green Paper on the subject. I consider that this view has the capacity to be extremely damaging if it were to replace another according to which social security enshrines the rights of anyone born or living, who works or has worked, as social rights corresponding to society's obligations to individuals. This is not a question of individual insurance and actuarial calculations, but of human rights appropriate to the times in which we live.
Furthermore, there is nothing innocent about the way in which, when considering the serious problem of social security financing, the responsibility of those who do not comply with their social obligation to contribute to that financing is being removed from them - an obligation which still exists, so long as the systems are not altered, and is not being complied with - and no attempt is made to emphasize it, nor is any responsibility being placed on those who are failing in their duty.

Cellai
Mr President, please forgive me if, having asked to speak since the beginning of this sitting and having been regularly passed over, I follow the example of my colleague, Mr Graziani, and begin my speech on the Willockx report with a slight digression. In fact, I should like to stress the gravity of the situation which has been created in Italy, particularly in Umbria and the Marche, following the recent catastrophic earthquake, and I should like to impress on the President, the Committee on Budgets and all my colleagues the urgent need to reallocate funds for natural disasters, also in advance of the next vote on the European Union's budget for 1998. Because of the current state of affairs the Italian government has not yet submitted an official request for aid, but Europe cannot stand idly by when confronted with such extremely serious events which have resulted in deaths, damage costing hundreds of billions of lire and thousands of people losing their homes and jobs, and damaged a substantial number of works of art which are not the heritage of Italy or Europe but the world.
Returning to Mr Willockx's report, the convergence criteria are the torment and delight of the Member States. On the one hand, it is true that convergence limits room for manoeuvre in the budgets of individual Member States and necessitates a restructuring of welfare institutions but, on the other hand, complying with the convergence criteria increases the overall efficiency of the European economy and reinforces its position in the world economy, promoting growth and employment. Perhaps the problem is slightly different and has to do with the fact that to date no body of Community laws and regulations, even of a minimal nature, has been introduced to govern fiscal and financial policy. Tax dumping reduces government revenue and shifts the tax burden from capital to labour, thereby impeding the welfare policies of Member States. In this connection, however, the meeting of the Ecofin Council held on 13 September last finally seemed to produce encouraging results. The Fifteen seem to be prepared to go down the road of a coordinated tax policy and indeed the first decisions are expected to be taken by the end of the year during the meeting of the European Council which are likely to include the approval of a code of conduct relating to fiscal matters.
We must fight against competitive defiscalization - President Santer was talking about this earlier this afternoon in relation to employment - and unfair competition without increasing the tax burden. The level of taxation has to be adjusted downwards, particularly in relation to direct and indirect taxes on workers in employment, the growing burden of which is having a disastrous effect on employment.
As the report rightly pointed out, it would be desirable to create a fund from which aid would be granted to help needier Member States to combat unemployment. It should be borne in mind that the absence of a European agreement on worker protection will enable industries to relocate to regions where the workforce is less expensive and has less protection, running the risk that national systems will be harmonized at the lowest level of social security because national governments will be able to cut their expenditure on social protection in order to be competitive. If we wish to avoid this dangerous scenario we shall have to endeavour to ensure that the Union has sufficient room to manoeuvre in the field of social protection. Policies must be harmonized at European level: if we are to be an efficient economic union I believe that this is all the more reason why Europe-wide social standards are an important prerequisite if we really want to maintain the economic and social cohesion of the European Union.

President
Thank you very much, Mr Cellai, and thank you for your sympathetic words about those who have been affected by the earthquake. I am very pleased that you were able to say those words during your speech. Thank you.

Ettl
Mr President, ladies and gentlemen, I am very grateful to Mr Willockx for having clearly shown in his report the extent to which social and economic policy are interdependent rather than being mutually exclusive or opposites, whereas for that very reason it has already virtually become commonplace within the 15 Member States of the European Union to attribute the growing pressure for reform which exists at many levels in politics solely to the EU.
There is already a discernible tendency for the convergence criteria to be taken as an excuse for not reforming social security systems, but deregulating them. It must be obvious to all of us that this is scarcely a suitable basis for maintaining wealth and well-being, and that a more comprehensive examination of the problems is needed. Our objective is a genuine European Union, underpinned by social harmony, and not just a superior free trade zone that ignores social policy. Of course we should not underestimate demographic change. Over the last decade alone, life expectancy has increased by two to three years. That alone should be sufficient incentive to treat the question of living standards more fully. It is certainly necessary to shift the tax burden from employment not only to capital, energy consumption and environmental impact, but also to value added. But it is certain that the greatest distortions in competition that we see are due to differences between taxation systems. That is where have to start. It is more likely to lead us to our objective than indiscriminate pressure on social systems or on social support mechanisms. Thus the key conditions for putting the financing of social security systems on a stable footing again are a European taxation policy in accordance with the Commission's Monti memorandum, combined with a European social pact to solve the problem of unemployment, and continuity in economic growth. A debate on the future of social security in the EU is long overdue, and we - the European Parliament - could make a positive contribution to it with all our initiatives. The reports contain very strong proposals to this effect.

Elmalan
Mr President, the report by the Committee on Economic and Monetary Affairs and Industrial Policy recognizes that the convergence criteria limit the budgetary margin for manoeuvre of the Member States in the fulfilment of their social mission. This pressure on the budgets of Member States could lead to difficulties in the financing of social security.
Instead of expanding on this point, the report shrugs off all contradictions and contents itself with reaffirming that the measures relating to economic and monetary union must be implemented without exception. Of course, the report takes into account the problems but it is fully a part of the current logic which leads inevitably to the single currency.
One could usefully have drawn on the study undertaken by the European Social Observatory concerning the social stakes involved in economic and monetary union. This study said that economic and monetary union intrinsically brings with it social deregulation. To be competitive and to be able to respond to external shocks, the Member States will no longer be able to adjust price levels and salaries through taxation and social security systems. This study also noted that economic and monetary union will enable pressure to be exerted on the unions so that they accept lower salary levels and allowances, in the name of maintaining competitivity.
The report by the Committee on Economic and Monetary Affairs and Industrial Policy goes in this direction by coming down in favour of a lowering of labour costs through a reduction in employers' social security contributions. Its analysis and proposals are a long way from reality for European citizens. The submission to financial markets, which the single currency and its criteria require, brings an acceleration of deregulation in all sectors, challenges public services and causes the dismantling of social security systems. The workers and their unions are becoming more and more aware of this reality - you can see it in Italy at the moment - and are taking action.
The revival of purchasing power, the development of public services, the reduction of the working day without reducing salaries, the taxation of speculative movements of capital to dissuade speculation, these are the many trails that are deliberately ignored by the report. Trails which could, however, open up of a path towards the building of a different Europe, the engine of which would be employment and social progress.

de Silguy
Mr President, ladies and gentlemen, the comments made today by the rapporteur, Mr Willockx, make the specific point of reminding us of the finality of economic and monetary union, and I would like to congratulate the rapporteur, and all those who have spoken in this House this morning.
The Euro is not an end in itself. The Euro must be an instrument of growth and employment. It must also be a guarantee of our social security system. As your rapporteur noted, article 2 of the Treaty on the European Union gives the Community the objective of promoting a high level of social security and a high level of employment. Your Parliament also legitimately raises the question of the financing of social security systems in Member States, within the context of economic and monetary union. This is a subject which also concerns the Commission, who last March adopted a communication entitled: ' Modernizing and improving social security in the European Union' , which largely answers the questions put by Mrs Kestelijn-Sierens just now.
Following your discussions, I would like to make two brief comments. The first concerns demographic evolution in Europe and its potential consequences for the financing of social security systems of Member States in the future. The second is related to the management of public finances in order to guarantee the smooth running of social security systems.
Firstly, the difficulties in financing social security systems that may be encountered in the future - I am here replying to Mr de Lassus - will be demographic ones. The ageing of the population will mean growing costs for an ever shrinking active population. In fact, the employment rate in Europe, that is, the ratio between the total number of employed and the number of people of working age has dropped from 67 % in 1960 to 59 % currently. As a reference point may I remind you that in the United States, as in Japan, it is over 73 %.
If policies are not changed, the drain on public finances will be ever growing with the following consequences. First consequence: the weight of retirement and health costs linked to the ageing population will increase. The ratio of retirement costs in relation to GDP will increase 3 or 4 points from 1995 to 2030; that is a great deal. Second consequence: the changing age structure of the population will lead to an increase in the demand for services and welfare transfers will probably weigh heavily on public expenditure.
What will be the effects of this demographic evolution? There will be budgetary effects, but there will also be implications for the labour market. In fact, firstly, national savings will decrease significantly due to the worsening of the financial accounts. Similarly, according to a recent study by the OECD, the development of private savings will be negatively affected by the aging of the population. Secondly, labour market mobility will be less. The 20-30 age group will decrease by 9.4 million people, whilst the 50-60 age group will increase by 5.5 million. The decrease in professional and geographic mobility which will follow could, what is more, negatively affect growth and productivity.
These perspectives could be worrying for future generations. They must therefore encourage us, in order to preserve social and economic cohesion and ensure the proper funding of social security systems in Europe, to take and safeguard for good the European social model, beyond a simple safety net, Mr Donnelly. In this respect, the establishment of economic and monetary union - on 1 January 1999, Mr Lukas - may bring some elements of a solution.
As your rapporteur notes, the improvement in public finances, linked to the achievement of economic and monetary union, is not dangerous. It is even the best guarantee for the preservation of social security systems in Europe, and I would say it is the same for employment. But this budgetary readjustment must also be accompanied by true structural reform, and Mr Chanterie underlined that just now.
To face up to this demographic challenge and to be in a position to take the necessary political decisions - the arbitration will have to be political - the Member States must first of all once more find sufficient budgetary margin for manoeuvre. The budgetary framework introduced by economic and monetary union provides a way. We must aim, first of all, to respect the rule regarding virtual balancing of the budgets, which moreover figures in the pact for stability and growth. If the actual rate of improvement of public finances continues, and that should be possible with the return to growth, this objective of a virtual balancing should be reached by 2002, that is, several years before the effects of the demographic change are felt.
In fact, the demographic deficit will be the strongest in the European Union in the year 2010. Until that date the impact of population ageing will be less. Member States therefore have a sufficient time lapse in which to prepare for the necessary changes. This preparation must, however, begin immediately and these efforts must include true structural reform. From your speeches, ladies and gentlemen, I have understood that everyone is agreed on this point, even if the recommended solutions differ according to the speaker.
The structural reforms to be undertaken - many of you noted this - concern both fiscal systems and social security systems or, properly speaking, pension schemes. The reform of the welfare state is at the heart of the necessary adjustments. It is essential in order to ensure the lasting character of budgetary consolidation, for the objectives of solidarity and social security must be made compatible with those of mastering public expenditure. As your rapporteur rightly noted, suitable fiscal reforms will be essential, which does not mean, Mr Katiforis, that taxes will necessarily have to be increased, but without such reforms, social harmonization would be much more difficult.
That is why the Commission has revived the idea of fiscal harmony, and work is progressing within the framework of the Monti group. Moreover this has been highlighted by many of you and notably by the rapporteur for the Committee on Social Affairs. This is why the Commission insists that social harmonization be achieved through social dialogue.
I am not going to talk about the employment aspect as, earlier, President Santer and Padraig Flynn had the opportunity of presenting to you the guidelines to be adopted by the Commission in view of the jobs summit, but it seems to me that they signal an extremely innovative element in the context of this desire to recreate jobs in Europe, which of course will be a step towards improving our social accounts.
Finally, reform of pension schemes is also a priority. A pension scheme based on accumulation is being developed in most of the countries. This is a positive evolution, in so far as a balanced system must be based both on assessment and accumulation. Therefore, such an evolution can only be a progressive one as, again rightly, your rapporteur reminded us. And the creation of a pension fund must not brutally challenge existing systems of assessment. It must complement these systems. I believe, moreover, that Mr Frischenschlager noted this just now.
In conclusion, Mr President, ladies and gentlemen, allow me to underline that the Commission congratulates the European Parliament on its contribution to this particularly sensitive and delicate subject. Your report very usefully contributes to the public awareness which is currently coming to light in Europe. Many states are applying themselves with courage and determination to the establishment of the necessary fiscal and social reforms. The culture of stability which accompanies the introduction of the Euro strengthens the conditions of success for this necessary adjustment, and it is thus that economic and monetary union appears the best safeguard of the European social model for the future.

President
Thank you very much, Commissioner Silguy.
The debate is closed.
The vote will take place tomorrow at 11.00 a.m.

Convention on the Law of the Sea
President
The next item is the recommendation (A4-0283/97) for second reading by Mr Cot, on behalf of the Committee on Legal Affairs and Citizens' Rights, on the proposal for a Council Decision concerning the conclusion by the European Community of the United Nations Convention of 10 December 1982 on the Law of the Sea and the Agreement of 28 July 1994 on the application of part XI thereof (COM(97)0037 - COM(97)0037/2-9032/97 - C4-0477/97-97/0038(AVC)).

Cot
Mr President, I must report back, on behalf of the Committee on Legal Affairs and Citizens' Rights, on the proposal for a Council decision concerning the conclusion by the European Community of the United Nations Convention of 10 December 1982 on the Law of the Sea and the agreement of 28 July 1994 on part XI thereof.
This Convention, the so-called Montego Bay or Jamaica Convention on the Law of the Sea, is a basic text, which was signed by the European Community on 7 December 1984, as is the supplementary agreement which was signed by the Commission on 16 November 1994. A first question clearly comes to mind: why are these texts coming to us now, almost fifteen years after the Montego Bay Conference? The answer: it is because as an international organization we cannot deposit our instrument of ratification regarding a convention until a majority of Member States, that is Member States of the Community, have first gone through this procedure.
Being a party to the Convention on the Law of the Sea seems to us essential, firstly because of the Community's own jurisdiction in the area of the Law of the Sea, jurisdiction in the area of commercial policy, fisheries, and the environment. The delay with which we are proceeding to this ratification, I hasten to note immediately for my colleagues, will cause no harm to the European Community, since our Community is already a member, albeit provisionally, of the International Seabed Authority, the instrument which implements the measures in this chapter of the convention. We will lose this privilege if we do not authorize our adherence before the 16 November 1998, that is, in one year's time.
The main problem that arises in my eyes is that of the settlement of disputes. Article 287 of the convention offers the choice between four procedures: the International Tribunal for the Law of the Sea, which is in Hamburg, the International Court of Justice at the Hague, an arbitral tribunal constituted in accordance with Annex 7 of the convention, and a special arbitral tribunal constituted in accordance with Annex 8.
In this matter, our Community chose not to choose. The decision under consideration by us specifies only that the Council undertakes to re-examine, on the basis of a proposal from the Commission and within a reasonable period, once the dispute-settlement procedures provided for have been in operation long enough, whether it is in the Community's interest to opt for a dispute-settlement procedure other than arbitration.
This tortuous formula raises three problems. Firstly, a basic problem. The decision seems to me unfortunate. I would have preferred, personally, that the Community support the setting up of a new tribunal in Hamburg, or at least show its confidence in the International Court of Justice. The second problem, I would say, is one of "ping pong' . At the time of the ratification of the agreement on the United Nations convention relating to the conservation and management of fishery resources found both within and outside exclusive economic zones - look at the species that are thus targeted - the Commission stated that it would use, for the settlement of disputes, the model to be chosen at such time as the Community ratified the Convention on the Law of the Sea.
Thus, in this instance, the cost of playing "ping pong' is such that we score neither of the two points that were foreseen, which means that the two conventions are hanging in mid-air with regard to dispute-settlements.
Finally, the last problem is one of procedure. By giving our compliance to the whole of the convention, we will no longer be able to participate at a later date in the decision on this particular and important point. I am also asking Mr Van den Broek, on behalf of the Commission, to agree to consult Parliament on the content and modalities of the solution to be adopted regarding this point of the procedure for settling disputes, when the time comes.
With the benefit of these observations, the Committee on Legal Affairs and Citizens' Rights, having considered the opinions of Mrs van Bladel, Mrs Langenhagen and Mr Collins, unanimously proposes that you approve the decision.

Añoveros Trias de Bes
Mr President, I should like to start by congratulating Mr Cot, a Vice-President of our Parliament and also a university professor, on his magnificent report. I agree with all the details he has set out in the report. Furthermore, as somebody who is familiar with this area, I want to say how important this convention is. I have followed its ups and downs from the Conference on the Sea to its conclusion in Montego Bay (Jamaica) in 1982.
Some very significant things happened at that conference. For example, the contribution of the small countries was extremely important, and for that reason representatives at the conference wanted the convention to be wideranging. They demanded at least 60 ratifications before it came into force, and that is why it has taken 12 years. The agreement on the application of part 11 of the convention encountered fewer difficulties.
This extremely important convention satisfactorily defines the Law of the Sea, with respect to its economic aspects. It is so important that even before it came into force following the sixtieth ratification, international guidelines which had been created by it were already in use. Therefore, it would still have been very important even if it had never come into force, because it had already given rise to international usages (for example concerning the exclusive economic area), and therefore to extremely important competencies which are currently the responsibility of the Community, as Mr Cot has said.
By means of this report, Parliament must give its opinion on the Council decision which examines whether it is advisable for the Community to be part of the convention and the agreement on its application. I agree with Professor Cot when he says that the proposal for a Council decision hinges on two major questions. Firstly, on the allocation of competences, because many of the aspects assigned by the convention and the agreement are the responsibility of the Community, because of the Treaties, and therefore powers must be granted to the countries which make up the European Union, and by establishing a ratification instrument the Community's participation will finally be strengthened and the problem resolved.
Secondly, another important problem is the settlement of the disputes which the convention will bring. Unfortunately we cannot avoid this. That is why Mr Cot is turning to the Commissioner, quite rightly in my opinion, to ask him whether it is possible to resolve that lack of clarity in this respect. Article 287 establishes several methods, but neither the Council nor the Commission has been willing to be specific on this point. The only choice remaining to this House is to trust in the other institutions' good intentions and to ask the Commission (which will propose the method) and the Council (which will decide on the proposal) that when they come to examine it, they should consult Parliament again and bear our views in mind. Like Mr Cot, I beg the Commissioner to make sure that this is done.

Vaz da Silva
Mr President, the formal adhesion of the European Community to the UN Convention on the Law of the Sea concludes a long and difficult process in which Europeans have not always been able to identify their real interests. That process began in 1982 when the Convention was signed and went on to its coming into force in 1994, with the initial ratification by 60 member States.
For Portugal, a country which has historic links with the sea, and which in recent years has been in the vanguard, together with a few other small States, of the fight to establish specific international rules protecting the irreplaceable heritage of the oceans, this act of adhesion by the European Community is of great symbolic importance. It is indeed through a Portuguese initiative that 1998 has been declared World Year of the Ocean, and this has been due to intense efforts on the part of Cavaco Silva's government, which, at the same time, has won the 1998 International Exhibition for Lisbon with the title 'The Ocean: a heritage for the future' .
The Independent World Commission for the Ocean, created by UNESCO in 1995 under the presidency of Portuguese former president Mário Soares, will present its final report in Lisbon in 1998. I am certain that the Committee's reflections on the enormous potential of the oceans will point to solutions which will contribute to the genuine implementation of this Convention on the Law of the Sea, also taking into account the Rio conclusions, in chapter 17, on seas and coastal areas.
For that reason, however, we must now go beyond the apparent conflicts which are dragging on interminably between the defenders of traditional concepts based on acquired practices and those who uphold inter-sectorial and integrated interests. The interests of both parties must be - and are - compatible. There is no doubt that the oceans are a three-dimensional area which requires the integrated management of resources. Europe can only gain by taking the lead, following its formal adhesion to the convention, in introducing a new concept making specific proposals to transpose it into Community law, thus opening the doors to the 21st Century. This would be achieved by means of the creation of a European Oceans Agency and by a resources management concept which balances not only the rights of maritime states and those states which traditionally fish in the high seas, but also the collective right to those resources.
But in concluding, Mr President, I must express my regrets concerning the blatant contradiction which is currently in evidence in Portugal. After our leading role over the last few years, with the results I have described, it appears that my country is not among the 120 which - to date - have signed the convention. Is this forgetfulness, lack of vision or what?

Van den Broek
Mr President, the Commission also wishes to thank Mr Cot for his excellent report and wholeheartedly supports the position taken by the Committee on Legal Affairs and Industrial Policy, the Committee on Fisheries, the Committee on External Economic Relations and the Committee on the Environment, Public Health and Consumer Protection. The Commission is very pleased that this important last step has been taken so that the Community can quickly become a party to this Convention, following the example of the majority of its Member States. It represents an essential development in the gradual establishment of international law in this field and is an example of international cooperation in the conclusion of conventions.
Together with the Member States, the Community has actively participated in the different phases of the lengthy negotiations whose objective was the achievement of a comprehensive and universally accepted law of the sea. This convention concerns areas in which the EC has extensive powers, particularly in the field of fisheries, the environment, commercial policy and safety at sea. The report rightly refers to the importance of the convention for the fishing interests of the Community. As a coastal region, the Community, which has very important fishing interests on the high seas and at the same time manages the fish stocks in waters that fall within the jurisdiction of the Member States, endeavours to obtain a balance between the interests of the coastal states and the countries that fish on the high seas. This balance between the interests is very clearly reflected in the provisions of the convention on fishing activity. Furthermore, the Community has always referred to the convention in implementing its external fisheries policy and in concluding bilateral fisheries agreements and other multilateral fishing accords.
As far as the EC authority in the field of commercial policy is concerned, the convention provides that the Community shall be a permanent member of the International Seabed Commission. This organization, which deals with the exploitation of the substratum of the seabed, should become operational in 2015 when the trade in polymetallic granules should be able to become effective.
Mr Cot and others have referred to the dispute procedure and with regard to the reference to this subject in the report, I should like to stress that there have been no ulterior motives in the decision that was taken in this phase. In particular, it is in no way the Commission's intention to bypass the consultation procedure with Parliament. For the time being, we felt, however, that it was more sensible to gain experience before coming to a definitive decision that is based on the necessary information. That therefore really means leaving open a definitive choice with regard to the method of settling disputes, which is referred to in article 15 of the convention.
The Commission is completely behind the European Parliament's request to be fully involved in the definitive choice of procedure. In good time, that is before the end of 1998, a new and separate communication will be submitted to the Council, either in order to confirm the current choice for arbitration which by default of another choice is automatically the procedure used at the moment, or in order to put forward a new possibility, such as, for example, the Court of Justice in Hamburg. But whatever the choice is, the European Parliament will be fully consulted in view of the fact that the new decision must be considered as the follow-up to the procedure for concluding an international agreement, in which the European Parliament must fulfil its institutional role.

President
Thank you very much, Commissioner Van den Broek.
The debate is closed.
The vote will take place at 11 a.m. tomorrow.

International law, Community law, national constitutional law
President
The next item is the report (A4-278/97) by Mr Alber, on behalf of the Committee on Legal Affairs and Citizens' Rights, on relationships between international law, Community law and the constitutional law of the Member States.

Alber
Mr President, ladies and gentlemen, when I was appointed rapporteur for this report on the relationship between international law, Community law, and national constitutional law, I had no idea that this would be my last report after more than twenty years in this House. I could have even less idea that the subject, the content of this report would fit so seamlessly with my move to the European Court of Justice. If anyone thinks that I have only cast the role of the European Court of Justice in such a positive light in my report because I shall be at the Court of Justice as Advocate-General as from next week, then they are mistaken!
Because of the situation on European law, it is impossible to reach any other verdict than to affirm the primacy of Community law and of course to stress the role of the ECJ in this context. The primacy of Community law is not in fact laid down either in the Treaty or anywhere else. It is based on general acceptance, which is of course very much supported by the jurisdiction of the Court of Justice, which rightly indicates that if its primacy is questioned, then the basis of the whole Community is put in doubt. But this mere notion of effectiveness is certainly not an adequate and definitive basis for this primacy.
There were also concerns in the very early days of the Community. I would like to remind you of the German ruling, which in the case of the Solange 1 judgement held that as long as the Community did not necessarily take account of constitutional and human rights, its compatibility with national constitutional law might well have to be reconsidered. The Solange 2 judgement then followed, which said exactly the opposite, namely that as long as the Community observed constitutional and human rights, there was no need for a national review.
Only now, because of the Maastricht judgement by Germany's Federal Constitutional Court, are there doubts about national jurisdiction, and other countries are now following this trend and reserving the right to review primacy should the occasion arise. I am very grateful to my colleague Mr Rothley for inducing the Committee on Legal Affairs and Citizens' Rights to hold a hearing on this matter, and the outcome of this hearing is naturally also incorporated into this report.
It is certainly true to say that because of the extent of European Community law, it is now difficult to make decisions using an approach based solely on international law. A new approach based on European law is required. I also believe that we should not limit ourselves to considering the question of transfers of powers by national parliaments. We must also legally recognize that the Treaty is drawn up in such a way that it is directed towards an ever closer union of the nations of Europe. This process of the nations of Europe growing ever closer together is of course also bound to have legal consequences.
The German court has not yet been able to describe the present Community as a federal state and does not intend to, but rather described it as a union of states, without defining precisely what legal characteristics flow from this. However, it is not of course possible to describe something in purely semantic terms, the legal consequences also have to be accepted. I personally would go so far as to say that this growing together of nations has reached a point where European law has primacy eo ipso , without any amendment of or insertion into the Treaty being necessary.
Nevertheless, it is of course a good thing - and we are demanding it - that primacy should be written into the Treaty. I welcome the fact that the Council, in the Treaty of Amsterdam protocol, also says, in affirming the jurisdiction of the European Court of Justice, that this primacy should be practically undisputed today. So if the Amsterdam Treaty is ratified, it could be said that through this ratification and, as I have already said, by the inclusion of this protocol, it will have been established by treaty that primacy exists. It must, however, be admitted that not all ratification laws have constitutional status. To that extent this issue will not be settled in this way alone.
I agree with the German Federal Constitutional Court when it addresses the issue of the democratic deficit. We see it in exactly the same way. Only that we would of course reject the conclusions of that Court when it says that national parliaments should absorb this deficit, and not the European Parliament, suggesting that the EP cannot not have any true rights because there is as yet no European nation or people. I find that sentence very amusing! It would be an amusing subject for an ethnological congress. We do not want a European people, it is the very concept of retaining the nations of Europe that is the attractive thing about this structure! Let us be honest, where is there a Belgian people? There was never a Soviet people when the Soviet Union existed, and when Yugoslavia existed there was also no Yugoslavian people, and despite that no-one questioned the status as a state or the legal personality of these organizations and these states!
It is also not the case, as is sometimes taught, that the people create the state by contract. We may cite Rousseau and the contrat social , but no-one has ever yet seen even a certified copy of this contract. It is pure fiction. The only document that ever led to the founding of a state was that of the church state, the Donation of Constantine, and it is well known that it was a forgery and so at least constitutionally honest. So we should not hold on to this concept of 'nation state' , as most states have grown, starting with Switzerland and including others, so that this was just a case of legitimization after the event.
To sum up then: in this report we approve of the judgement of the European Court of Justice in the Foto-Frost case, in accordance with which national jurisdiction does not have the competence to declare the actions of Community institutions invalid. From which it follows, of course, that we also hold and support the opinion that jurisdiction over the binding force of Community law lies exclusively with the European Court of Justice. As a consequence of this, in case of dispute the highest national courts must also apply the duty of referral contained in article 177.
We demand, however, that the primacy of Community law - despite my observations - should in future be written into the treaty. We also want a clear solution to the relationship between international law and Community law to be incorporated into the treaty, and in this connection require that the Community should be put on a par with the nation states, which means that international law does not apply eo ipso , but rather that it has to be transformed within the EC by means of a legal instrument. We also demand that in the long term the relationship with international law should also amount to the second and third supporting pillars of the Union. In the same context, we also demand, of course, that the whole European Union should eventually be given legal personality by treaty.
I believe that this report takes account of real developments in the European Community. If we say yes to this Europe and welcome the growing together of nations into a union, the only solution - regardless of whether one prefers a federal state or a union of states - is to accept the primacy of European law and the jurisdiction of the European Court of Justice which flows from that, and accept it in this context.

Rothley
Mr President, that was the last report by my colleague, Mr Alber. I would like to thank him for his helpful and considerate cooperation and to wish him all the best for his new post. My group will vote for the motion for a resolution and reject all the amendments.
I would like to say a word, Mr Alber, about the specific function of the term 'union of states'. In the terminology used by Germany's Federal Constitutional Court it is evidently an attempt to reduce the law of the European Union, of the European Communities, to international law. We are not talking about a theoretical problem. We talking about a full-blooded political conflict, which could develop into a crisis for the European Union. It is not a general question about whether there are limits to European integration in national constitutions. No, the question is whether constitutional courts can review the validity of the actions of the Community. That is what is at stake.
This is not just about Germany's Federal Constitutional Court, there are also comparable trends in other Member States, such as Austria or Sweden, to name just two. Ten years ago, as you pointed out, Mr Alber, the European Court of Justice said that the need for uniformity, that is, the uniform application of Community law through the national courts, was particularly important when the legal force of some Community action - such as the adoption of a directive - was in doubt. Differences of opinion between the courts of the Member States about the validity of Community actions could jeopardize the unity of the Community's legal system itself and threaten the fundamental need for legal certainty.
That is the reason for the primacy of Community law. It is not presumptuousness, it is not arrogance, it is an absolute necessity! That is why it is no wonder that the President of the European Court of Justice, Mr Rodriguez Iglesias, is talking about an attack on the basic elements of the Community's constitution in this context. I very much hope that the national constitutional courts will recognise that in accordance with article 164 it is the task of the European Court of Justice to ensure the law in interpreting and applying this treaty. To ensure, that is the wording, to ensure! No national constitutional court can set itself up as ruling over Community law. No constitutional court can be the tutor.
Incidentally, there is an element of control by national parliaments in all this, because they decide which additional powers can be transferred. I very much hope that we will be spared one situation, namely treaty infringement proceedings against a Member State because of a judgement by a constitutional court. We can do without that!

Anastassopoulos
Mr President, the report by our dear colleague, Siegbert Alber, which we are debating this evening, is worthy of our special attention for two principle reasons.
Firstly, because it examines an issue which is not only very delicate, but is also extremely important for the European Union. This is the position held by community law in the legal system which governs our society, either within each Member State of the European Union, through its relationship with the constitutional or fundamental law of that Member State, or in its international relationships with pubic international law.
Secondly, because it is the final contribution of a colleague who is greatly valued by all of us and who has contributed much to the European Union, before he devotes himself the day after tomorrow to defending Community law from another, very different and even more distinguished bastion.
I had the pleasure and the honour of working closely with Siegbert Alber, initially in the presidency of the European Parliament, when we sat side by side as Vice-Presidents, then, in more recent years, on the Committee on Legal Affairs and Citizens' Rights, which he set up, and I consider it my duty to express with deep emotion the more general appreciation of the people in this room of his entire contribution over so many years as elected representative of one of the great European nations.
Two years have not gone by, Mr President, since I felt the need to point out, in the report of the Committee on Legal Affairs and Citizens' Rights on the twelfth annual report of the European Commission on the Monitoring of the Implementation of Community Law, after the special hearing organized by the Committee on Legal Affairs and Citizens' Rights, the following details which I regarded as revealing: one, that the Community Treaties had established a new law and order in support of which the Member States had curtailed their sovereign rights in everexpanding areas; two, that the control that the constitutional courts were beginning to exercise in recent years as to the validity of Community regulatory actions in relation to the respective constitutions of the Member States was pregnant with dangers for the uniform implementation and harmony of Community law.
It took three whole years for the principle of the supremacy of Community law over domestic law to be accepted by the French State Council, which was the last, chronologically, to put it in place. Nor did we manage to breathe a sigh of relief before the German Supreme Federal Constitutional Court made the decision, concerning the Treaty of Maastricht, to call this principle once again into even greater question throughout the nineties, this time from a different standpoint. A principle which was shaped basically by jurisprudence and which was indirectly strengthened by the Treaty of Amsterdam, which is being signed tomorrow, as Siegbert Alber also observes in his report.
Nevertheless, we would naturally prefer this recognition to be more direct and more explicit. The ideas that I put forward in my report of 1995 are strengthened and systematized in our German colleague's text, which supports the supremacy of Community law in the innovatory and unique character of the European Union, and also in its inclination towards further development. A development which creates new conditions and facts in the field of law, which establish opportunely the observation of the Ancient Greek philosopher, Theophrastos: not the things for the laws, but the laws for the things. In other words, reality should not adapt to the law, but the law should adapt to reality.
This new reality is represented today by the European Union, which embodies all the hopes and aspirations that its inspirers and founders invested in it. Mr Alber's report has appeared at a very timely moment, because the building of a united Europe, albeit with many hurdles in its way, is making progress, but there is no lack of shock waves and indeed shock waves which assume the dangerous form of decisions of venerable supreme legislative bodies of the Member States.
The value of the report that we are now debating lies in exactly this point, that in its content, with the very valid argumentation that we have heard this evening by the rapporteur, it rejects any tendency for the substitution of supreme national legislative bodies in a task that belongs exclusively to the Court of the European Communities. Because only the latter guarantees the independence and unity of Community law and order. And from tomorrow, today's rapporteur, Mr Alber, will be called upon to defend this independence and unity, in his new capacity as Advocate-General to the Court. We are delighted and proud of his new position.

Florio
Mr President, ladies and gentlemen, defining the relationships between Community law, constitutional law and international law is an issue of great importance which affects every citizen, even though they are often unaware of it. The application of an apparently abstract principle, such as the principle of the direct applicability of Community legislation places obligations on judges dealing with national law which dictates their jurisdictional activities. The most fervent supporters of the supremacy of Community law consider that it has precedence over any other legislation, whether national or international. This theory maintains that the relationship between Community law and national law is substantially a federal type of relationship. A different interpretation is maintained by those whose aim is to safeguard the fundamental principles of national constitutional law against the encroachment of Community law. According to these people, national constitutional arrangements are the ultimate expression of popular sovereignty, whereas Community law, encumbered as it is by a democratic deficit, cannot be considered as a higher source on principle.
The rapporteur, Mr Alber, who was recently appointed Advocate-General at the Court of Justice - and we congratulate him on this appointment - maintains the federalist position. He was critical of the judgement of the German Federal Constitutional Court of October 1993 concerning the draft Maastricht Treaty: the author did not share the basis of his assertion that the passing of power to the European Community would potentially constitute a deprivation of the democratic principle.
Our group appreciates the views expressed by Mr Alber and lays particular emphasis on how important it is that the preeminence of community law, as requested by the rapporteur, was sanctioned by the Treaty of Rome and that this treaty clearly defined the relationship between international law and European law.
However, in this respect we believe we have to point out the urgency of overcoming the present democratic deficit which, if it continues, will end up by perpetuating anomalies in European decision-making processes which can only be tolerated in the short term.

Wijsenbeek
Mr President, I have never seen a report in which so many judgments have been quoted as the report by Mr Alber that we are now discussing. It must have been a preliminary exercise for his appointment as Advocate-General and I must say that now that he is going to join the ranks of the Court of Justice together with our former colleague Mr La Pergola, we do not need to waste too many more words on the right of appointment of the European Parliament of members and prosecutors at the Court of Justice, because soon the government judges will also become this Parliament's judges. Does this mean, and I cannot refrain from mentioning it, that a decision such as today's where the Court has already dropped us like a hot potato will perhaps be more difficult in the future.
However, let us learn a sound lesson from this, because for years in the reports on the application of Community law in the Committee on Legal Affairs and Citizens' Rights we have warned that we should not involve the Court of Justice too much in our political battle with the other institutions. Now that has been done in this case by France, but it is a fact that from time to time the Court must distance itself from the Parliament. I believe that the primordiality of Community law stands very clearly in the hierarchy of standards that are mentioned in Mr Alber's report and also very clearly in the political battle and the political role of the Court of Justice, as Mr Rothley has so rightly said. Nevertheless, it is a fact that the Member States must not only adapt to this but there must also be a unity of jurisdiction and this is caused above all by the preliminary rulings under article 177.
I hope that Mr Alber in his role of Advocate-General will have to deal with a preliminary ruling that will be sought tomorrow morning by myself and my counsel Mr Janssen van Raay before the Court of Rotterdam where I must appear in a criminal case that I have provoked because I believe that Community law must be applied equally in all the Member States and that the treaty must be applied above national law.

Ullmann
Mr President, ladies and gentlemen, the European Union is still a long way from being a political union. On the other hand, as a European Community it is most certainly a legal community, and one which has developed an astonishing dynamic over the decades it has existed. The Alber report is a kind of summary of this dynamic. Mr Alber, it is a matter of some personal satisfaction for me that this outcome has been possible because of an initiative by the European Parliament, or rather of its Committee on Legal Affairs and Citizens' Rights, which in June 1995 held a symposium on the relationship of Community law to international law and to the constitutional law of the Member States respectively. This initiative and the discussions which followed it resulted in the clarification presented in this report, although this clarification is far from being common knowledge or a commonly accepted feature of jurisdiction in the Member States.
The first point of clarification, which defines all the others, is the primacy of Community law as opposed to national law. This primacy is not some theory propounded by extravagant Eurocrats, but is a guaranteed matter of legal fact, for the simple reason that in an area without internal borders, the area of the four freedoms, there is no competing law nor can there be as long as observance of the principle of subsidiarity guarantees national powers, which are at a totally different level. Connected with this is the fact that the freedom of movement of persons has for a long time not just been seen as a commercial activity, but rather, as in the Bosman Judgement, as a personal right and as an expression of the liberty of the citizens of the Union. This should be sufficient cause for this Parliament to support the rapporteur in his demands for high-level and extensive protection of fundamental rights and accordingly for a legal personality for the European Union, which is in a position to support this protection of fundamental rights at international level and to defend it.
Whilst expressing my thanks for this handsome and encouraging report, I would like to offer my very best wishes for the responsible position which its draftsman will in future hold as Advocate-General of the European Court of Justice.

Fabre-Aubrespy
Mr President, I too have a great deal of respect for the rapporteur and I wish him the best of luck in his future post, but I must admit, on behalf of my group, that I am in total disagreement with his report.
We were in fact expecting a legal study, a reflection on the problems posed by the hierarchy of laws, relationships, for example, between the European Council and the European Parliament, or the Council of Ministers. We were expecting a better way of reconciling Community law with national law to be defined.
Instead of that, we find a political, I would say almost ideological, report in front of us. His starting point is the observation that the Supreme Courts show a tendency to resistance, claiming the right to examine Community law for its compatibility with national constitutional law. It is clearly the German Federal Constitutional Court, with its decision of 12 October 1995, and the Danish Supreme Court, which my colleague will talk about in a moment, and its ruling of 12 October 1996, which are being targeted, I was going to say reviled. But you could also add the French Constitutional Court or the Italian Court, or plenty of others.
You cannot state, as does the report, that the European Union's purpose is to create primary international law to be imposed on all the States and their national law. Nor can you say, as the resolution proposes, that every national judge, including the supreme national authorities, have the duty to apply the primacy of Community law. One cannot claim, moreover, that the European Community takes the place of national states in the enforcement of public international law.
National law has to be respected, in particular national constitutional law for, by asserting that national constitutional law must be subordinated to Community law when national constitutional law is often the result of referenda, it is people's right to self-determination that you are challenging and that is a curious thing for a supposedly democratic institution to do.

Welcome
President
Ladies and gentlemen, I should like to welcome Mr Zurab Zhvania, President of the Parliament of the Republic of Georgia, and Mr Georgy Kobakhidze, Vice-President and President of the Permanent Parliamentary Delegation for Relations with the European Union, whom we had the pleasure of welcoming to the European Parliament in May 1997.
Our two distinguished Parliamentary colleagues from Georgia...
... and their accompanying delegation will take part in the European Conference entitled 'Initiative for Democracy' tomorrow and on Friday. These Members of Parliament will also have conversations in the European Parliament, particularly with the Delegation for Relations with the Transcaucasian Republics and the President of the European Parliament. I hope our meetings and debates over the next few days will be profitable and will contribute to the achievement of closer relations between your country and the European Parliament.

International law, Community law, national constitutional law (continuation)
Hager
Mr President, allow me to say first of all that it is my custom to refrain from complimenting the rapporteur not out of a lack of politeness or because of the content of his report, but rather because of the need to be concise. I would like to comment on another point in addition to what we have already heard. As Mrs Spaak, in the Committee on Institutional Affairs, originally put it with truly commendable frankness in her capacity as rapporteur, our citizens feel overwhelmed by the accelerated pace of institutional integration in Europe and cannot identify with it.
We are of the opinion that it would be logical to look for another approach, an approach that would give the Member States more room for manoeuvre. In fact, the opposite is happening. People are looking for a new way to render an approach that our citizens do not want to accept more palatable them. You are probably asking what all this has to do with the report before us. We believe, as Mr Fabre-Aubrespy has already emphasized, that this report follows exactly the same political line, in that an attempt is being made to put the highest courts, such as Germany's Federal Constitutional Court and Denmark's Supreme Court, in their place, because they have drawn attention to the limits to integration. It is for this reason alone that we cannot support the approach adopted in this report, despite the high regard in which we of course hold the rapporteur.

Rack
Mr President, I have three good reasons for whole-heartedly supporting Mr Alber's report. As a university lecturer in both constitutional law and European law, I am delighted that a serious text is now available for my students, in which the nuances of the not so simple and not so easy to understand Solange judgement of the German Federal Constitutional Court is set out very precisely and above all in the correct perspective. The Alber Report will therefore provide material for numerous, nay countless, seminar papers and dissertations, which cannot be sand of many other academic texts of this type.
As one who has long been committed to the idea of Europe, I welcome the fact that this report represents a clear rejection of the many "yes, but' Europeans. A rejection of those who always speak out for a greater role for Europe on every appropriate or inappropriate occasion, but who then, when things get serious, fall back on their country's special interests and legal situation; a rejection of those, for example, who not only in Germany but also in my own country say that they want the Euro, but not just yet, and not quite like this, and not quite as laid down in the treaty. It is also a rejection of those who, in many Member States, want one kind of subsidiarity one day and another the next, depending on what they are after or on how it suits their interests at that particular time.
The Alber report very clearly tells these people that there can only be a common Europe when Member States share sovereignty and partly transfer it to the Community, and then continue to respect this surrender of sovereignty. Yet the Alber report also says - and I consider this to be very important - that there can only be a common Europe, now and in the future, if this Europe uses all the means at its disposal to protect fundamental rights, exactly as this report formally requests.
As a university lecturer and as one who is committed to the European ideal, I have good grounds for saying 'yes' to this Alber report a third time. This report, and this has already been said several times, provides an excellent starting point for Siegbert Alber in his important new post as Advocate-General to the European Court of Justice. In that post Siegbert Alber will, I am quite sure, contribute to ensuring that Europe not only becomes a reality through the decisions of the European Court of Justice, but also that it is brought closer to its citizens. He will make this contribution in his usual friendly and knowledgeable manner, and because during the short time that I have worked alongside him I have got to know him a little and have come to appreciate his fine sense of humour, I hope that in future the European Court of Justice will make judgements that one cannot just acknowledge with a nod, not only respect and accept, but I also hope that a quiet smile to oneself will sometimes be in order.

Janssen van Raay
Mr President, Mr Alber, dear Siegbert, that sounds rather more normal in the German translation than in the Dutch, but I must honestly say that after Mrs Ewing you are the most long-standing member of this Parliament. You beat me by two years. We have worked together for years. Your swan song is stylish and as the accused Mr Wijsenbeek has already said, tomorrow we hope, I as his counsel and he as the accused, to ensure that the important matter of the refusal by Mr Wijsenbeek to show his passport at Rotterdam Airport is submitted to you under principles 8A and 7A of the treaty for a preliminary ruling. It is only at that moment that we will no longer say dear Siegbert, but will be able to use the correct Dutch terminology: "Your Honour' . We thank you, your honour, for everything that you have done in the Committee on Legal Affairs and Citizens' Rights for your colleagues and Europe as a constitutional state. We wish you the best of luck in your new position. It will be a Freudian slip of mine if we appear with our lawsuit before you at the Court of Justice in Luxembourg.

Krarup
I have no doubts that Mr Alber is an excellent lawyer, and I would also like to join in congratulating him both on this report and on his future job. It is a clear and unambiguous rendition of one of the fundamental principles of EU integration, the principle of supremacy, which even Mr Rack's students will be able to enjoy reading. There are certainly others who would also enjoy reading it, including the judges in the Danish Supreme Court, before whom I shall be presenting a case next month. This principle, which is expressed very accurately and in detail, has the support both of the rapporteur and of the great majority of Members, and more than that: it will be extended and strengthened, as a number of the paragraphs in the report indicate, and tendencies in the opposite direction, and here I am thinking in particular of some statements and rulings by the German Constitutional Court, which were followed, although on a somewhat different level, by the Danish Supreme Court in a ruling in August last year in a case which I myself conducted. But, and here come the problems, as integration and the principle of supremacy are extended, the national decision-making processes are weakened. If I may say so, the colossus, if one can be so irreverent as to describe the system in that way, is growing bigger, but its feet of clay are growing weaker and weaker. The national democracies are being undermined, and hopefully, in the course of the next six months, the Danish Supreme Court will deliver a ruling which will send shockwaves through this selfsatisfied system.

Añoveros Trias de Bes
Mr President, I must confess that I have been very much looking forward to taking part in this debate, knowing that it concerns my colleague Siegbert Alber's last report. I sincerely believe that this House is losing one of its best Members and, speaking from a personal point of view, I am losing a close colleague. We have always sat next to each other, because of our surnames, and I feel very sorry to be losing the advice and help which he has given me on so many occasions. At the same time, however, I am also very pleased for him because I believe the post he is going to take up - that of Advocate-General in the European Union Court of Justice - is one of law's most prestigious positions.
The European Community is a Community of law, which honours the rule of law. This in its turn is closely related to the principle of the separation of powers. In legitimately yielding certain aspects of their national sovereignty to the Union, the Member States should not weaken the democratic control which is able to bring about this transfer. This potential deficit should be offset by a greater political control on the part of the legislative power. Thus we can say that fundamental rights will only enjoy true legal protection when there is a parallel process between the transfer of national powers to Community competence on the one hand, and on the other hand, when the European Parliament and the national parliaments together gradually acquire greater control over the executive's activities.
We must not forget that although the European Union is based on the rule of law, it has not yet completely assimilated the principle of the separation of powers, since the treaties only grant powers and do not completely design a system of political control.
Another of the important consequences, to which Mr Rothley and Mr Florio have referred, is the principle of a legal hierarchy. This axiom has been repeatedly defined by the Court of Justice and could be summed up in the idea that any national decision which is contrary to Community law is inapplicable. Among the measures to guarantee this, there is for example article 177, concerning the question of prejudice.
As Mr Alber, the rapporteur, has specifically mentioned, during discussions of this report in the Committee on Legal Affairs and Industrial Policy reference was made to the Foto-Frost judgement of the Court of Justice, which emphatically and exclusively stated that the national courts are not competent to declare invalid the acts of the Community institutions, and that the Court of Justice is the only body competent to evaluate the binding nature of Community law.
It must not be forgotten that Community law is a unitary legal order in which various types of rulings can be found, including derived law, which is that which results from the acts of the Community institutions and is an integral part of Community law. If I may say so, I think it is more than that - it is the most visible part of Community law. This derived law is only controlled by the Court of Justice and not by national jurisdiction. A national judge should not and cannot pass judgement on the validity of derived law.
This point brings us, Mr President, to the tricky and dangerous question of the principle of subsidiarity, which has also been alluded to during this debate. Although I do not propose to do so, I could quote the protocol on the application of the principles of proportionality and subsidiarity which is included in the Treaty of Amsterdam, and which is to be annexed to the treaty.
I conclude by saying that I agree with what Mr Rack has said about the firm, constant and decisive defence of Community law, and the request, also made by Mr Alber, that the primacy of Community law be respected in the treaty.

Van den Broek
Mr President, this is a debate for legal connoisseurs and my lawyers heart is rejoicing. I should like to begin by warmly congratulating the rapporteur on this thorough report that certainly invites further reflection to which he will contribute, although from a certain distance. But once again, our heartiest congratulations on the quality of this report. In the Commission's view he comes out with a great many interesting ideas and particularly about the precedence of Community law and the ratification of international treaties in the Community system of law.
The Commission endorses the rapporteur's view that the doctrine of the precedence of Community law is of crucial importance in order to ensure that Community law is applied in the same way in all the Member States. This aspect of the Community system of law has contributed in particular to the implementation of the objectives of article 2 of the treaty.
A number of means that the rapporteur refers to in order to strengthen the precedence of Community law, and I am thinking firstly of the strengthening of the role of the European Parliament, are to a greater or lesser extent generally accepted in the Community. The Commission considers the other means that the rapporteur proposes to be valuable ideas that certainly merit further consideration.
The contribution from the rapporteur on the relationship between Community law and international law is very interesting now that the Community increasingly participates in international negotiations and concludes ever more treaties.
The issue of the integration of the international treaties into the Community system of law certainly demands further reflection, but the suggestions made by the rapporteur for certain solutions in this field definitely provide a good start.
We can therefore conclude right away that the rapporteur has covered a number of subjects that concern the very heart of the Community system of law. The Commission will undoubtedly undertake further study of all these subjects and the many suggestions made by the rapporteur.
Finally, may I take this opportunity, on behalf of the Commission to wish Mr Alber every success in his new position of Advocate-General to the Court of Justice. This institution will now be strengthened with someone who is a powerful defender of the values of the Community and whose important contribution to the development of Community law is undeniable.

President
Thank you very much, Commissioner Van den Broek.
May I also address my personal congratulations to Mr Alber.
The debate is closed.
The vote will take place at 11 a.m. tomorrow.
(The sitting was suspended at 7.55 p.m. and resumed at 9.00 p.m.)

EU-Asean Relations
President
The next item is the joint debate on the following reports:
A4-0221/97 by Mr Pettinari, on behalf of the Committee on Development and Cooperation, on the proposal for a Council Decision concerning the conclusion of the Cooperation Agreement between the European Community and the Kingdom of Cambodia (COM(97)78-6828/97 - C4-0250/97-97/0060(CNS)), -A4-0216/97 by Mr Castagnède, on behalf of the Committee on Development and Cooperation, on the proposal for a Council Decision concerning the conclusion of the Cooperation Agreement between the European Community and the Lao People's Democratic Republic (COM(97)79-6829/97 - C4-0251/97-97/0062(CNS)), -A4-0195/97 by Mr Hindley, on behalf of the Committee on External Economic Relations, on the proposal for a Council Decision concerning the conclusion of the protocol on the extension of the Cooperation Agreement between the European Community and Brunei-Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, member countries of the Association of South-East Asian Nations, to Vietnam (COM(97)0002 - C4-0152/97-97/0017(CNS)), -A4-0262/97 by Mr Hindley, on behalf of the Committee on External Economic Relations, on the Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee "creating a new dynamic in EU-ASEAN relations' (COM(96)0314 - C4-0467/96).
Pettinari
Mr President, the political situation in Cambodia has altered radically since the Committee on Development and Cooperation approved the cooperation agreement last July. This is a situation which will prompt me to recommend to the Chamber tomorrow, when the vote is taken on my report, that this report be referred back to committee to allow me to update it as necessary and to give us time to contribute towards a peaceful resolution of the crisis in Cambodia.
Two months ago we witnessed a political upheaval in Phnom Penh where military action enabled the leader, Hun Sen, to take virtual control of all of Cambodia and force Prince Ranariddh to flee abroad. The spectre of the Khmer Rouge was and continues to be behind this fighting, particularly since Pol Pot's movement broke away and has been trying to get back into civilian life in Cambodia. The prospect of the Khmer Rouge being able to change the political framework in Cambodia, mostly thanks to alliances with the main national parties, has produced an unstable situation and brought forth the least democratic elements in Cambodian politics.
I believe it is necessary to renew our appeal to the parties to accept an immediate cease-fire in the provinces still affected by the fighting and I would ask the Cambodian government to respect the people's basic rights as a precondition for finding a solution to the crisis.
The European Union can and should play a peacemaker's role in Cambodia, as should the European Parliament by using the instrument of the framework cooperation agreement which, I repeat, it is premature to ratify at this stage. I believe that the approval of the agreement, which will be necessary at a later date, should be subject to three basic conditions, already discussed in the Committee on Development and Cooperation: first and foremost, full adherence to the Paris agreements of 1991 and the national institutional apparatus determined by these agreements; secondly, adherence to the timetable for elections, or a guarantee that legislative elections will be held in March 1998. The elections I am talking about must be free, multi-party, democratic elections which guarantee full right of expression to all parties in Cambodia. Moreover, these elections should be monitored by international observers, obviously including envoys from the European Parliament. The third condition is the strict observance of human rights, a point on which we cannot give way. I therefore believe that a committee of inquiry should be set up as soon as possible to investigate accusations of massacres perpetrated during the recent fighting shortly before summer.
In the meantime, the European Union should also make a contribution to stabilizing the situation now that former Foreign Minister Um Guot has succeeded Prince Ranariddh as Head of Government. In this connection it is necessary to support the mediation work done by King Sihanouk who has preferred to remain impartial with regard to the main players in the crisis and try to resolve the conflict on behalf of the Cambodian people who have already been severely tested by decades of dramatic history.
I also note the decision by ASEAN foreign ministers to delay further the admission of Cambodia to their organisation. This is a real novelty as for the first time in its history ASEAN has decided that a country's internal political situation could have an adverse effect on that country's relations with the organisation. At any rate, it is a positive approach which I hope can also be used in future with Burma, a military dictatorship which was nevertheless recently admitted to ASEAN.
Mr President, the European Parliament has an opportunity to make an active contribution to the search for a negotiated political settlement of the crisis in Cambodia and it can do so if we can by a large majority in this House use the ratification process for the framework economic and commercial cooperation agreement. At this point we know we can count on the collaboration and cooperation of the Commission.
For these reasons I would therefore ask Parliament to grant my motion tomorrow for the report on Cambodia to be referred back to committee. In this way I shall be attempting to convey to the Cambodian authorities the extent of Europe's concern about a political crisis which must be resolved as soon as possible.

Castagnède
Mr President, ladies and gentlemen, Laos is one of the most modest of countries - I am talking in terms of its population, which is only 5 million - in South East Asia. It is also one of the poorest, since 46 % of the population live below the poverty line. It is perhaps also one of the most charming due to its ethnic and cultural diversity - more than sixty different ethnic groups living together - due to its authenticity, largely preserved, its nature, its cultural heritage and its traditional ways of life.
It is also a country which has had to suffer long and painful ordeals since independence, gained in 1953. First of all internal ordeals between the right wing, the 'neutralists' and the communist Pathet Lao. Then, above all, the ordeal of the Vietnam War in which Laos, in spite of itself, found itself drawn in and above all the victim. Since the supply lines of North Vietnam passed along its frontier, Laos became the object of bombing, by the American air force, on a staggering scale. It is claimed that almost the equivalent of half a tonne of bombs per person were dropped on Laos.
We know, however, that after the fall of Saigon and the departure of the Americans from the region in 1975, Laos fell under the control of the Pathet Lao communist movement. They imposed a Soviet-style economic model for around ten years, with no truly convincing success. Finally, from 1986 onwards, Laos launched a programme of economic reforms which moved towards a market economy, a direction that was clearly confirmed in its 1991 constitution. An agreement was concluded with the World Bank and the International Monetary Fund. The first elements of co-operation were put in place with the European Union. These concerns to open up to the outside world are being more widely concretised with Laos' adhesion to ASEAN, although they are at the same time involved in negotiations with a view to reaching commercial agreements with the United States and the European Community.
The agreement reached between the Community and Laos is a trade and cooperation agreement. With regard to trade, the two parties agree to most favoured nation status for the exchange of goods. With regard to cooperation, the Community has showed its willingness to contribute to a lasting development in Laos and an improvement in the living conditions of the people of Laos. In this sense, certain priorities have already been defined in the fight against poverty, the favouring of rural development, the role of women in development, and also the development of human resources.
We would like to briefly draw Parliament's attention to the four particular features of this cooperation agreement. It mentions first of all the serious problem of unexploded devices, the anti-personnel mines that were widespread during the Vietnam War. Their proliferation is today a major handicap for agricultural development. The Community will have to continue its efforts to contribute to the eradication of this blight. The particular importance of environmental considerations in this co-operation agreement should also be highlighted. I will not go into details, but this is an extremely interesting feature of the agreement.
The agreement contains measures with a view to combatting the production of opium, which remains a major problem in Laos. The solution here is obviously the establishment of substitution crops. Encouraging experiences have already been undertaken. The agreement will enable these to be extended.
It is necessary to mention, finally, the particular importance of concerns in the areas of human rights and democratic principles in the agreement which is submitted for our study. Now established as a free market economy, it is true that Laos is still ruled by a regime which, if not one-party, is certainly one-party dominant. It is a regime which has favourably evolved as the after effects of civil and international war have faded, but respect for human rights and democratic principles needs more in-depth treatment, which both parties to the cooperation agreement were clearly concerned about.
In fact the agreement sets out, in its first article, that respect for democratic principles and fundamental human rights is an essential element of the agreement, and violation of this article would constitute a case of special urgency under which measures may be taken for the non-execution of the agreement. Because it enables the development of human rights and freedoms in this part of South East Asia by making it a determining factor in our support to development and economic liberalization in Laos, this agreement on trade and cooperation between Laos and the Community is worthy of approval.
This is in any case the unanimous position of your Committee on Development and Cooperation, an opinion also held, of course, by your rapporteur.

Hindley
Mr President, before turning to my report on Vietnam and the report on ASEAN, may I first make a procedural point. The Committee on Foreign Affairs, Security and Defence Policy submitted an opinion to my report on ASEAN. Due to an unfortunate lack of coordination between committees, this resolution was not included into today's resolution. It will be presented as an oral amendment tomorrow and I should be grateful if whoever is in the Chair tomorrow gives me a few moments of time before the vote to explain that.
If I may turn to the substance, I would like to spend a few moments discussing the agreement with Vietnam, or that part relating to Vietnam, and then move on to the wider issue of ASEAN.
The question of Vietnam is simply a technicality to take into account that Vietnam is now a member of ASEAN and to amend our existing cooperation agreement with ASEAN to include Vietnam. Vietnam is a poor country; it is a country which is recovering; it is a country which has tremendous potential; and is a country which really in essence has never been part of the wider world because since gaining independence at the end of the Second World War it has been submerged in its internal and external wars. So it cannot be simply said that joining ASEAN and our agreements with ASEAN and our bilateral agreements with Vietnam are rehabilitating Vietnam. In a very real sense Vietnam has never been allowed the privilege of joining the wider world and these agreements give that country that right at long last.
The question has been raised of human rights in Vietnam and I am sure other Members will wish to make reference to that in the succeeding debate. For my own part could I remind the House that our bilateral agreement with Vietnam includes a human rights conditionality and this will be carried with Vietnam, as it were, into ASEAN. That question of extending our already existing agreements with ASEAN to a new entry into ASEAN and the question of human rights, gives me the opportunity of reaching to the wider question of ASEAN itself.
ASEAN, this summer, admitted Burma at last and there is, as has just been indicated, still the possibility of Cambodia joining. This raises the question of how we handle human rights because Members will clearly have grave reservations when it comes to the admission to our treaty with ASEAN of Burma and, to a lesser extent or perhaps equally now, Cambodia.
Let me make it clear that I myself and my Committee categorically consider membership of ASEAN to be an ASEAN issue. Who ASEAN admits is ASEAN's business. No one can recall ASEAN having an opinion on the enlargement of the European Union. However, when ASEAN has been enlarged, clearly our relations with the old ASEAN will have to significantly change to take into account that new composition. In that respect, let me say that the committee thought the most prudent and wise course is to insist that when the Treaty needs to be amended for Cambodia, Laos and Burma - we will certainly soon be presented with that in the case of Laos and Burma - we should follow the procedure adopted for Vietnam and have a separate mandate. I would not like the issue of enlargement of ASEAN, including Burma and Laos, to be finessed by putting them together. We would like a separate mandate so that each can be considered on its merits.
We understand that the composition and constitution of ASEAN has a concept of concentric and overlapping circles, so that membership of ASEAN does not necessarily imply that a new entrant has the right to participate fully in all the dialogues which ASEAN has with third parties. From that we could conclude that with some skill and some wit and good judgment, we can continue our wider relations between the EU and ASEAN, taking into account the moral disapproval we may have with some of the new entrants and yet manage to continue a dialogue. I do not think that is far beyond the wit of the Commission, the Council and other people involved to arrange.
However, the Committee is not happy with the anomalous situation that we will now have countries inside ASEAN who have bilateral human rights conditionality in their agreements with us when the overall EU ASEAN agreement does not contain such conditionality. We would like to insist as much as we can on drawing up a new agreement between the EU and ASEAN which contains specifically human rights conditionality, not simply in the form of freedom of conscience and freedom of expression but also human rights at work. We all accept the idea of social conditionality being important within the European Union; we accept a social chapter. It is perfectly reasonable therefore to demand a social chapter and a social dimension to our relations with any other block, and that would include ASEAN.
If I can move on to more a positive aspect, I would stress that our relations economically and in trade terms with ASEAN seem to be a great success story. However, it has been remarked by no less a person than the Prime Minister of Singapore himself that in the triangular world which is emerging of Europe, America and Asia, it is certain that the US-Europe link is strong. It is also clear that the US-Asia link is emerging strong but as yet the Asia-Europe link remains weak and that would eventually have, we feel, disproportionate and disorientating effects on the general world economic welfare.
In that respect, when we talk about strengthening dialogue, the Parliament welcomes the ASEM dialogue process. That seems to have been a successful way of moving items onto the agenda and making sure there is progress which obviates the difficulties caused by the blockage in EU ASEAN relations themselves. We congratulate sincerely those who participate in that dialogue. When we read the presentations to that dialogue, we welcome the mention of ministers meeting each other, we welcome the mention of academics meeting each other, we welcome youth exchanges, we welcome business exchanges, we welcome the Commission exchanging visits. What we are looking for, however, and what is certainly not in any of the documents that we have seen is mention of parliamentarians having an exchange. Clearly if we are to develop a genuine dialogue between Europe and ASEAN, we must involve directly elected members who have a mandate and we must facilitate contacts as part of the ASEM process and wider EU-ASEAN relations.
Finally, I should like to say a word of genuine welcome and appreciation of the document which talks of creating a new dynamic in EU ASEAN relations. We recognise the need for more dialogue and strengthening our agreements and our cooperation. However, that must not be at the expense of Parliament's rights to issue opinions and eventually vote on such matters. We can accept, as a temporary expedient, the production of a document to bring on the dialogue but there really is, I must say to the Commission, no substitute for an actual agreement. If an actual agreement is to be avoided because we fear that the ASEAN side will not accept human rights conditionality, then I am afraid Parliament will not accept that. That must be pointed out; we can accept as a temporary measure you using a communication for a new dynamic but that is no substitute for a permanent relationship. We do not wish to see the responsibilities of Parliament undermined in this way, so we would urge the conclusion, difficult as it may be, sticky as some issues are, of a genuine new agreement.
In that regard, President, I commend to the House approval of both the Vietnam report and the wider ASEAN report as well. Thank you.

Caccavale
Mr President, ladies and gentlemen, obviously the Committee on Foreign Affairs, Security and Defence Policy considers the relationship between the European Union and ASEAN to be an extremely important and delicate matter, for a variety of reasons. I need not repeat how strategically important the South-East Asian region has become; I would also remind you that Europe is now the second-largest investor in this region and a need is clearly felt for an ongoing political dialogue between the European Union and ASEAN. However, with regard to the technical question of how to go forward in this political dialogue, we believe that the best solution would be to negotiate a new, third-generation, agreement. For this reason we believe it necessary to ask Portugal to withdraw its refusal to give the Committee a mandate to negotiate this third-generation agreement.
The various pieces of sleight of hand looked at by the Committee to get round the problem - for example, the addition of protocols to the 1980 agreement or a package of economic and social cooperation measures - cannot in our opinion be regarded as an alternative to a new, third-generation agreement with ASEAN, for one simple reason: this would weaken the agreement between Europe and ASEAN at a political level, particularly with regard to the issue of human rights, which is a key issue. We cannot hide behind a fig leaf or behind economic interests which, although important, obviously cannot have priority over certain basic principles which are currently burning issues. Burma, which recently joined ASEAN, flagrantly and brutally violates human and democratic rights while other ASEAN countries routinely exercise the death penalty, in breach of all internationally agreed conventions. East Timor is in a situation which up to now has been in a state of suspended animation. The arms trade is in breach of all internationally agreed conventions.
We therefore consider it necessary not to negotiate on principles, principles of self-determination, liberty and human rights. We believe it is vital for the ASEAN countries to sign the two international conventions on human rights and against torture.
I conclude, Mr President, merely by saying that for technical and bureaucratic reasons the opinion of the Committee on Foreign Affairs and Security was not included in the general report of the Committee on External Economic Relations. I hope that this intervention can be included tomorrow by means of oral amendments.

Moniz
Mr President, before we go any further, I should like to congratulate my colleague Mr Hindley on his work. The conclusions he has presented are clearly the result of a detailed study of the complex problems involved in the European Union's relations with ASEAN.
It notes the growing importance of the ASEAN countries in the international economy, their strategic relevance in safeguarding peace, stability and security in a region which is having a very significant influence on world events. It correctly evaluates the positioning of the European Union, which, from the economic point of view, is the second largest investor in the region, and will have to opt for a positive approach of strengthening its participation in actions which further the economic and social development of those countries. Thus it is absolutely necessary to enter into closer dialogue and raise levels of cooperation, a desideratum not clearly secured by Agenda 2000, be it said, in the fields of either commerce, investment policy or market access.
It is, nevertheless, essential to make a permanent evaluation of levels of cooperation, bearing in mind the requirements of reciprocity and the limits imposed by ASEAN internal legislation. Just as it is also imperative to ensure that conditionality on human rights applies to all European Union-ASEAN agreements, and that this is not only agreed on paper but effectively secures the social rights of workers and the individual freedom of citizens.
We all consider the restrictions the European Union has been placing on Burma as a result of her disregard of human rights to be perfectly proper. But all of us are also aware of the intransigent position of Indonesia, especially as regards East Timor, representing a clearly offensive attitude to which the European Union must give an effective and determined response. It would therefore be more appropriate and politically justifiable to require that country to comply with the international rules recognised by the UNO than to ask Portugal for leave to negotiate thirdgeneration agreements, although it is recognized that these have intrinsic importance and value as the best option for a new dynamic in European Union-ASEAN relations. All this must be achieved within a democratic framework of justice and respect for human dignity.

Stasi
Mr President, if there is any country in the world which the European Union should help then it is Cambodia, for at least two reasons. Firstly, because Cambodia is one of the poorest countries on the planet and since its trading relations are largely in deficit, only vigorous support on the part of the international community can curb and reverse the process of pauperization which this country is going through.
But this effort is required also for moral reasons. The passivity, the cowardice which the international community, in particular the countries of Europe, showed at a time when the Cambodian people were truly the objects of genocide at the hands of the Khmer Rouge, makes it our duty to today help these people to develop their economy, improve their living conditions and move down the path to democracy.
We welcomed with satisfaction the cooperation agreement between the European Union and Cambodia, signed last 29 April, in Luxembourg. This is a good agreement and the priorities that it establishes respond very well to the situation in the country and to the needs of its inhabitants. The fight against poverty, the search for lasting development, defence of the environment, notably the fight against deforestation, mine clearance, education, encouragement of private investment, and also the promotion of democracy and respect for human rights are amongst the main objectives of this agreement.
Last June, for various reasons and in spite of reservations on the situation in the country regarding political stability and respect for human rights, the Group of the European People's Party approved the implementation of this agreement. Today, unfortunately, the situation is completely different. The coup d'etat on 5 July, by which the second Prime Minister, Mr Hun Sen, deposed the first Prime Minister, Mr Norodom Ranariddh, has plunged Cambodia once more into chaos. Fighting has recommenced, violence is appearing in different forms - looting, assassinations - those in power challenge political pluralism and human rights are scorned. To ratify this agreement now under these tragic circumstances would be to give our approval to the coup and all the acts of violence that it has given rise to, which are still multiplying throughout the Cambodian territory.
The PPE Group supports Luciano Pettinari's recommendation at the beginning of the sitting, to refer the report aimed at ratifying the agreement with Cambodia back to committee. It is certainly not a question, for Europe, for the European Union, for the European Parliament, of ignoring for a second time the fate of the unhappy Cambodian people. On the contrary, by resorting to what the rapporteur called 'active referral', it is a way of putting pressure on those who keep hold of power in order that their reign of illegality and violence may cease, so that the Paris agreements, notably those concerning the holding of elections in March 1998, may be applied, elections which we must demand take place under international supervision.
The Cambodian people have suffered far too much in their recent history and our responsibility in this is too large for our Parliament, at the time of this vote, to fail to show its clear and vigorous desire to help Cambodia to finally find the path to development and democracy.

Plooij-Van Gorsel
Mr President, Mr Commissioner, ladies and gentlemen, first of all I should like to compliment the rapporteur, Mr Hindley, on both his detailed reports. The Group of the Liberal, Democratic and Reformist Party is pleased about the extension of our cooperation with ASEAN to Vietnam. This will stimulate economic growth in that land and benefit social stability in that poor country. Commercial ties within ASEAN stabilize regional relationships so that the region becomes more attractive to European investors.
Electronic trade in particular offers very interesting prospects for large and small European entrepreneurs provided that the ASEAN countries do not put up any thresholds in that area. I am thinking particularly here of the strict rules in Singapore regarding censorship on the Internet. International consultation is very important in order to guarantee electronic free trade.
The Liberal Group is also glad that cooperation with Vietnam is placed under the condition of respect for human rights. This clause is one of the few instruments that the Union possesses to enforce the protection of human rights. My group hopes that there will also be a quick result in the discussions about human rights with the other ASEAN countries.
With regard to cooperation with these other ASEAN member countries, the forest fires in Indonesia again clearly show the importance of cooperation with regard to the environment and development. We hope that cooperation in these areas will also help to prevent such ecological disasters in the future.
Finally, my group wishes to stress that it is very important to give the euro, our common currency, a good reputation among the business world in Asia. This can bring about an improvement in our position as the third trading partner in this region.

Telkämper
Mr President, there is no doubt that South-East Asia is a booming region, as Mr Hindley has just said. From which it follows that the 1980 agreement between the European Union and the ASEAN states should continue. But just what is booming at present? Crashes and anxiety - so that it is starting to look like Mexico a couple of years ago. In Thailand the baht is plunging, and in Kalimantan, Sumatra and Celebes the forests have been burning for weeks. In Burma, Cambodia, East Timor and many other regions there are human rights violations going back years in some cases. What can we conclude from this? Our relations cannot just carry on as they are. We cannot simply liberalize trade or pursue the liberalization of investment according in line with the WTO model. I believe that instead we need to consider whether it would not be sensible, as a means of stabilizing financial markets, to introduce something like the Tobin Tax. Malaysia's premier was right when he told the IMF-World Bank Conference in Hong Kong a few days ago that currency speculation is immoral and demanded that it should be prohibited.
My second point is that if we conclude a treaty, it must of course cover human rights. The EU cannot just fiddle around with protocols on a matter like this. A basic requirement for new treaties, given our own democratic standpoint, has to be the participation of the European Parliament. So we do not need any protocols, but a new third generation agreement. That is why we - and many other colleagues - are asking Portugal to give up their veto on East Timor. This does not mean that we condone the human rights violations there, no, it signals the fact that this is a European Union problem and not just one for Portugal. The other European countries are just as involved, and it is a legacy from the colonial era. Maybe we will even decide to apply something like a European Union protection order to the East Timor region, out of a sense of historical responsibility; maybe it can even be taken out of the treaties.
My third point is that the sustainable economy must have the utmost priority. The economy must not be further liberalised, it needs to be restructured. It is not a question of removing constraints, but about banning products manufactured in conditions that involve squandering resources or infringing human rights. To do this we need commitments to protection, and I believe that if we had had these, the forest fires would not have happened. I have a question for the Commissioner: the European Union or its Commission has supported early warning systems in Sumatra. Why did they not work? What happened to the natives in these fires? Were they burnt to death? Are these fires possibly a form of liberalisation, to allow rice to be planted there in the near future, to complete the Transmigrasi project and perhaps to replace virgin jungle with plantations soon? What are we doing to preserve the environment? What are we doing to conserve resources and to preserve the knowledge, the richness of the peoples in this region and in the forests?
Lastly, a word about the treaties. If we conclude new treaties and Burma is included, at present we can only, as many others have said before, support the position of Great Britain, who are pursuing a policy of not granting Burma a visa in relation to ASEAN 1998. I believe that we should not include a state like this in the expansion process. Of course, expansion is a matter for ASEAN, but we need to have our own ideas about it. Are we to accept what ASEAN presents to us or not? If we cannot accept this on human rights or economic grounds, then we should not do that either, but instead make our position clear.

Dell'Alba
Mr President, Vice-President Marín, ladies and gentlemen, today in a certain number of European newspapers a group of MPs have said, notably, that Europe is not doing well, not doing well because, under the terms of the Treaty of Amsterdam, it has not made democracy a sufficiently high priority within its institutions, its procedures, or its rules of operation.
If Europe is doing badly, then ASEAN is doing very badly. It is not by chance that fires ravage the region, that their currency is in free fall. It is not liberalism at any cost which reigns there, Mr Telkämper, it is just liberalism, an economic system which is causing deadlock in human rights, in democracy, and which claims, in the name of the market and growth, to forget that human rights are a universal value, to forget about political democracy, and to think that the model of the state can function without these values.
We members of the Union, we have other values and I believe that in this case it is important to emphasize, as all our colleagues have rightly done, that we cannot accept, in the name of the laws of trade and profit, to close our eyes to the fact that, in spite of its generals - a little dictatorial it is true - ASEAN has accepted Burma as a member, and whilst Aung San Sun Kyi, winner of the Nobel prize and the Sakharov prize is under house arrest.
No, I believe that our Parliament and our Union have the right and the duty to say no and thus do everything possible in order that human rights clauses, and the rules which we set out in our relations with the countries with which we co-operate should be accepted. If this is not the case, we can quite simply say to our friends in ASEAN that they can look elsewhere because we are not interested.
I know that it is a difficult position and that, very often, with China, with other countries, we fob ourselves off with fine words and then go and do the opposite. I believe that a firm attitude towards the ASEAN countries would be a way of testing whether our values really exist or not, or of seeing if we can review them when it suits us.
Malaysia and other countries are heading a movement which will try to oppose the fiftieth anniversary of the Universal Declaration of Human Rights. Well, if our values are real, it is through them that we will put in place the co-operation that we want. From this point of view, the comments of the rapporteur of the Committee on Foreign Affairs, Security and Defence Policy are very important. The challenging of the death penalty which is practised there, and all the other violations denounced in the report must serve as test cases, for the Commission, for us all, to demonstrate our priorities in the way in which we treat these countries. The English Foreign Secretary, Robin Cook, has just turned down a very interesting arms deal with Indonesia. I think he did the right thing. Such signs are important to enable us to break this agreement, if ASEAN want to accept Burma as a member. Why not conclude bilateral agreements on the basis of our values?
Such is the challenge that in my opinion we have to take up, the challenge for which, for example, at the level of the European Union budget, our group proposed to put to one side a certain number of credits allocated to the ASEAN countries, just to show that we are not happy that they have accepted Burma as one of their members.

Antony
Mr President, regarding the report that Mr Hindley has provided on the relations between the European Union and Vietnam, and their extension through the agreements signed with the Association of South East Asian Nations. The text presents indicative figures for economic progress achieved by Vietnam and also reminds us of the possibility of suspending our agreement in the case of human rights violations. This 'in the case of' is truly astounding, for simple good sense should prompt the observation that no accord should have been signed from the moment when it was subjected to respect for human rights. But perhaps the opponents of the communist regime, the believers, Christians, Buddhists, and others, persecuted, would not here be considered as humans. Vietnam has not been liberated from the communist strait-jacket, no more than has Laos, or Cambodia.
There is also a lot than can be said regarding what the figures of improved economic well-being really reflect, the country having been reduced to generalised misery by the most ferocious form of collectivism. The slightest relaxation evidently brings improvement, but how relative that is. What is unfortunately certain is the phenomenal corruption that is running through the country like gangrene, in accordance with the process current in all socialist regimes where, after the eradication of men and the natural structures of the market economy, they are left swarming with mafia, like bad undergrowth in a field long ago laid to waste. But as in 'lao gai' China, as in Cambodia, as in Laos, Vietnam remains a country of oppression, where the great martyrdom of a people subjugated by communism continues.
Let us repeat it as many times as it needs, communism was killing before Nazism killed. It was killing while Nazism killed. In 1997, it is still killing. The news which comes from Vietnam - I have three little Vietnamese godchildren - is frequent and always concerns the violent repression of all freedoms and the bloody repression of all demonstrations, but then two-thirds of this Assembly fought for so-called peace in Vietnam.
In its two wars of conquest, Vietnamese communism has killed millions of people in mass executions, death camps, and also through the flight of the boat people. Unfortunately, firstly the Vietminh then the Vietcong were not lacking in support from the countries of the West, from the communist party of course, that of Boudarel the traitor, not yet come to trial, the sinister torturer of camp 113, author of crimes against humanity, who was this morning taking a coffee on the Boulevard Saint-Germain.
But it also gained massive support from the Catholic hierarchy and clergy, by admission of Cardinal de Courtray himself, on 5 January 1990. We French are now waiting for the French bishops to ask forgiveness for their inexcusable compromise of principle, over tens of years, with the butchers of 200 million victims of these subjugated peoples.

Junker
Mr President, ladies and gentlemen. Today's debate is concerned with ASEAN in general, with its relatively new member Vietnam, and with Laos which has recently been included in the membership process, as well as with Cambodia, whose ASEAN membership had to be deferred for the time being because of the violent change of government last July. Another new ASEAN member, Burma, is not the subject of discussion today, but cannot be totally ignored.
ASEAN is an inter-Asian association which, as Mr Hindley accurately writes in his report, was designed as a bulwark against communism. However, with Laos and Vietnam, the 'tiger club' now includes two countries which despite all their economic liberalization, politically speaking still have communist governments. The political situation has changed since the dissolution of the old blocs. This alliance now has a geographically strategic significance in the face of the Chinese giant to the north. Until recently, most of ASEAN's members - especially Malaysia, Singapore, Thailand and to some extent Indonesia - were regarded as a never ending success story.
With two-figure growth rates, high-rise buildings were shooting up like mushrooms, output and exports were booming like never before, and Europe was starting to feel the aggressive competition in trade and had to - and is still having to - contend with job relocation. At the same time, the ASEAN countries were recognised as an important market that had to be strategically addressed, so that the European Union became the second largest investor in this region.
The cooperation agreement with ASEAN is based on relations as they were in 1980. So it can rightly be said that modernization is long overdue. But that is easier said than done. Extending the existing agreement to the new members is really just a matter of getting in training for that. There was no problem with Brunei, a wealthy oil sultanate. With Vietnam as well it is almost a formality, even if it is a bit tricky. We have already mentioned the human rights issue.
Anyone who has ever set eyes on an ASEAN country knows that child labour, the sexual exploitation of women and children, the absence of workers' rights, and the oppression of ethnic and religious minorities are the order of the day in many places. Working conditions in Malaysia and Indonesia and elsewhere constantly give rise to calls for the observance of the standards set by international labour organisations and for agreement on a social clause in the context of the WTO, but this scarcely bothers the ASEAN countries. They refer to Asian values, which they say should be respected. Malaysia has even called for an amendment of the definition of human rights in the 1950 UN convention.
However, more recently the tigers have suffered some severe setbacks. Turbulence on the currency markets, economic collapse, and environmental disasters, especially in recent weeks, have made it clear that there is a penalty to pay for over-exploitation of people and of the environment, and economic development 'on tick' without a solid foundation. This gives the call for a new dynamic in relations with ASEAN a new dimension. For the European Union, this means a balancing act between political and economic systems, and between cooperation, toleration and rejection, if tolerance levels are exceeded.
So at present there can be no question of an agreement with the new ruler of Cambodia, Hun Sen, who literally walked over dead bodies to achieve power, nor can there be any question of supporting the military regime in Burma, which shows contempt for humanity, finances itself from the drug trade and from smuggling, and which accordingly has an unhealthy influence on its neighbouring countries, which out of poverty are driven to grow opium.
However, I believe that it is important, particularly in the case of Vietnam and Laos, to stress the development policy side, and to emphasise the need for sustainable development. It is the job of the European Union to take care of this.

Günther
Mr President, ladies and gentlemen, I would like to restrict my intervention to Laos, and would first like to thank Mr Castagnède for his report and for his contribution to the debate just now. As far as development goes, we are primarily concerned with the ACP States. But here we are dealing with Laos, one of the poorest countries in the world, which, however, has no access to the resources of the European development fund. In that respect this agreement brings expectations of partnership and cooperation.
Poverty in a country like Laos does not just mean a shortage of food, but also inadequate health care, education and general prospects in life. The per capita income of this country is 290 dollars a year, and when you allow for the development aid which we have given so far, in the final count 15 % of this income is actually in the form of financial support or contributions from the European Union.
If we are to work towards cooperation in the framework of this agreement, then we certainly need to be clear that we are looking at trade and cooperation spanning half the globe. On the other hand, the entry of this country into ASEAN means that there is a market on its doorstep covering 400 million consumers. I also have a few more questions for the Commission, much as I am pleased with this treaty.
The first question is this: what are the real prospects now for the democratisation of a single party government, given that some 75 % of the leading figures in this country are high-ranking and other military officers? The second question is this: will the market prospects for this country improve significantly inside the community of Asian countries, resulting in what we always particularly strive towards in development, that is, a regional market involving deliveries over relatively short distances?
The third question is about anti-personnel mines. The treaty says that the Commission will examine this problem. I would like to know what 'examining this problem' means. The fact is that up to now we have not managed to clear more mines each year than are laid. There is an enormous discrepancy here, and would be very pleased if this issue could be treated as a priority, rather than just taking small steps here and there.
The last question that I would like to ask is this: what about the strength of the currency? Are efforts being made and plans drawn up to gradually give the country a stable and less vulnerable currency, a convertible currency? With an inflation rate of 20 %, even growth rates of 7 % look somewhat modest.

Harrison
Mr President, ASEAN is growing up fast and fraternal Europe has just started to notice this precocious, younger brother whose family ties to Europe, whether political, economic or cultural, are strengthening daily. Like good brothers, we need a sensible and constructive way of talking to each other and so I warmly welcome the Commission's communications and Parliament's rapporteurs for the fine reports that they have written.
Take Europe's biggest project, EMU; a recent conference in Singapore highlighted the enormous trade, commercial and financial opportunities which will deepen between the two economic blocks once the Euro partners the dollar and the yen as a world reserve currency.
Commissioner De Silguy's recent ASEAN visit highlights these exciting developments. Unfortunately, ASEAN's own recent financial wobbles may have obscured Mr De Silguy's message. As one Thai official put it, 'I am more worried about today's mark than tomorrow's Euro.' Doctor Mahathir's spat with George Soros about the threat to the Malaysian ringgit only serves to emphasize the interdependence of the world's financial markets, as if Baring Brothers of Singapore had not already thrown up warning signals enough.
Political ties are also strengthening inside and outside ASEAN. The ASEAN ten must now deal with internal tensions, especially when such tensions spill over to contaminate relations with the EU. We have to find a voice, neither rasping nor sotto voce to raise concerns about the abuse of human and political rights throughout the region and especially in Burma.
The British Government has made it clear that Burma would not be deemed a full participating Member of next year's ASEM meeting in London under the British Presidency.
At the same time, we must acknowledge ASEAN's decision to incorporate Burma, as well as Laos, and eventually Cambodia into the full block. Cambodia's decline into political instability must surely prompt us into supporting any impetus towards democracy that rises in that troubled country. Let us hope that free and fair elections can be held with EU encouragement next May or November.
For Vietnam, the EU cooperation agreement offers potent opportunities for lively but constructive dialogue. Just how will the first ever human rights call for an ASEAN country be interpreted in the case of Vietnam. It must surely be remiss of us to pass over the importance of countries like Malaysia and Indonesia in today's world. The world's fourth largest nation, Indonesia, still has to resolve its difficulties with Europe, including Portugal, over the question of East Timor. I hope that they can be sympathetic to Parliament's request to visit East Timor in an official EP delegation. We in turn, if visas are granted, should be prepared to report fairly and honestly all that we see and hear several years on now from the dreadful deaths of Deli.
Finally, smog. El Niño and the slash-and-burn forestry clearance policies of Indonesia are a devastating cocktail. ASEAN countries cannot insulate themselves from the outside world, just as we in Europe and Britain cannot. When our friends and colleagues come next year to London, now miraculously free from its all-enveloping 19th century smog, let us hope that only the mist and mizzle of the 21st century stand between us and ASEAN in the development of our fraternal futures together. Thank you President.

Marín
Mr President, I will deal in turn with Mr Pettinari's, Mr Castagnède's and Mr Hindley's reports, and with the views expressed by the Committee on Budgets and the Committee on Foreign Affairs.
As regards Cambodia, which seemed to be enjoying relative stability, it is true that since the forced expulsion of Prince Norodom Ranariddh the country has gradually been moving towards a precarious domestic situation, as has been clearly demonstrated by recent events. This situation is affecting not just aspects of democracy or of development towards democracy, but also regional concerns, as shown by Cambodia having been excluded from the ASEAN framework for the first time at the last meeting in Kuala Lumpur. We had the chance to discuss this on July 17, when Parliament presented its resolution.
As you know, the elections are planned for 23 May 1998 and it is obvious that the international community is going to see these elections as a test of the intentions of the current Prime Minister, Mr Hun Sen. At the moment, the Cambodian National Assembly is debating electoral legislation. The approval of this legislation, when it happens, and above all its content, will enable us to judge the Cambodian Government's strategy for the next few months. Obviously, and here we share the view of Mr Pettinari the rapporteur, the international community, and especially the European Union, must do everything in our power to force the current leaders to respect human rights and fundamental liberties, and to use the internal process planned to culminate in next year's elections to make sure that Cambodia progresses towards a situation of normality, as was gradually being achieved with great difficulty until the occurrence of the incidents which I have just mentioned.
As you know, the European Commission is prepared to make significant resources available for this purpose: ECU 9.5 million (which is a significant sum) for the precise purpose of organizing the 1998 elections. Of course, we think close coordination should be employed when making this decision. We have the budget. Now we have to make the political decision whether to use it. For the participation or lack of participation of the international community, and particularly of the European Union, in implementing, assisting, monitoring and observing the elections will depend on the credibility of the electoral legislation currently being debated in the Cambodian National Assembly, and on the objective conditions in which these general elections are carried out.
So it is clear that at the appropriate moment we will have to decide whether to participate or not. Then, assuming that we do participate, we will have to decide what we should do to enable this project to be carried out cleanly and transparently, so that the country can return to normality.
What are we doing, in view of the country's situation? At the Kuala Lumpur meeting we spent a lot of time discussing how to proceed, and in the end we decided to use modulation. This is because at that time, during the ASEAN Conference (we will talk about Mr Hindley's report in a minute) I was not much in favour of agreeing to a complete and permanent break in our cooperation with Cambodia, and I do not mind admitting it. Basically, this is because most of the financial aid programmes being carried out in Cambodia affect important rural and peasant areas. Therefore, had we taken a radical decision, I do not know if we would have caused many problems for Mr Hun Sen, but we would certainly have created many problems for the peasant farmers, who are the people who actually benefit from these cooperation programmes.
Therefore, we opted for a modulation route, to retain those projects which have most impact in the areas where the population is most vulnerable, and exercising much more control over those projects which could have a political connection with power, so to speak. That is our reasoning.
As you know, there is going to be an international debate on Cambodia in the United Nations General Assembly on November 22 and 23, and we are hoping to obtain more precise information about the steps taken by the ASEAN countries. Also, within the next couple of weeks, the Thai Minister of Foreign Affairs will be visiting the European Commission to provide us with information on this point, among other things, since he is currently the President of the ASEAN group, and we want to know exactly how the matter stands.
As for ratification by Cambodia, it is more than likely that, owing to the present circumstances, the Cambodian National Assembly will not be able to do this before the end of the current year. This gives us room for manoeuvre, because we will be able to see what happens in the elections in March. When it comes to making the political decision in the Council and the financial decision in the Commission (and indirectly in the European Parliament, since you are the budgetary authority) we will have to judge whether it is worth spending ECU 9 million or not, depending on the conditions of the electoral legislation and on whether there was at least a certain amount of transparency in the elections.
Turning now to Laos, I should like to thank Mr Castagnède for stressing the enormous challenges faced by that country at the moment. Because of its poor social and economic development, its transition to a market economy and its efforts to open up, there can be little doubt that the European Union also had to respond to these efforts. As the report says, an essential element of what we are giving to the Lao People's Democratic Republic is the political message, and the act of signing this cooperation agreement is a political message saying that we believe they are on the right track.
Are we going to be able to make a difference to Laos? Well, of course, that is the aim of all our cooperation agreements. And I believe that as the country gradually becomes integrated politically, economically and regionally, it will be extremely valuable for it to try to work within the general framework offered by ASEAN. Once the European Parliament has approved this cooperation agreement, our plan is that the first joint committee meeting envisaged in the agreement will be held in Vientian at the beginning of 1998.
As for extending the ASEAN/European Union agreement to include Vietnam, I must say that for the Commission, achieving a cooperation agreement with Vietnam was a political challenge, and is a source of great satisfaction when you think that negotiations for this agreement first started about two years ago, if my memory is correct. These negotiations have been very long, and started at a time when the chances of success were very slim. Vietnam was not a member of ASEAN, it was still in a state of war with the United States, and the European Union acted as a pioneer in initiating the negotiations. Subsequently, Vietnam normalized its relations with ASEAN and the United States. In other words, we have seen once again that with negotiations of this type, even though the negotiating partner may not have a perfect democracy and may raise doubts about the European approach, some operations still turn out well in the end and we can be justifiably pleased with the outcome. One such is the agreement with this Republic which we initiated by crossing the desert into no-man's land two years ago. The situation was normalized and Vietnam joined ASEAN. We think this is positive because Vietnam will have an incentive to open up its economy, which will result in a major new era in Vietnam and new decisions within the Vietnamese Communist Party. Vietnam will not be transformed in 24 hours, nor in a week, nor in a year. The process will still take a long time, but it is becoming more certain all the time, which is the important thing.
To me it seems clear that ASEAN is increasing the political stability of the region. As some speakers have mentioned, the situation in that part of the world has changed. In geopolitical terms, the end of the cold war has had more important effects in South-East Asia than in any other part of the world, and relations have changed fundamentally. Therefore, we think it is extremely valuable to support this initiative for extending the ASEAN framework to include Vietnam.
As for human rights, it must be said that in the case of Vietnam just as in the cases of Cambodia and Laos, this matter constitutes a clause of possibilities. Of course, we must maintain this clause in all the cooperation agreements, as the European Parliament says. However, it would be naive to imagine that just because a negotiating partner has been persuaded to accept the democracy clause in the cooperation agreements, the country in question will automatically become a democracy. That is not the way things work. Including the democracy clause in the cooperation agreements makes political dialogue possible, allowing us all to progress towards respect for freedom and human rights. However, nobody should assume that because we have the democracy clause with Vietnam, Laos and Cambodia, these three countries will automatically and miraculously become democracies, because that will not happen. It is a question of time, perseverance and tenacity. It is a question of maintaining the trends, and of course reacting, as has happened in the case of Cambodia. If there is a relapse then we automatically modulate - which is a fancy way of saying "intervene' - by adjusting the nature of our cooperation. I believe this is the key to understanding how we are going to work with the human rights clause.
Mr Hindley, what can I tell you about the ASEAN situation in general? I have nothing to tell you besides what you have already written in the report, apart from the news you have been able to read, see and hear for yourselves in the last few months, about a difficult situation. I think it is up to the ASEAN countries to explain that difficult situation, far more than the European Union. The reason is that the ASEAN countries are making a brave and interesting decision in excluding Cambodia specifically because that country's democratic normalization process has suffered a setback, whereas in contrast they nevertheless admit a country such as Myanmar, where there is a military junta. There is a fundamental geopolitical explanation for this, which is perfectly understandable in the zone we are talking about. But of course the ASEAN countries themselves are aware that they are in a very awkward situation when it comes to giving an international explanation, over and above certain geopolitical explanations which you can think up for yourselves.
What I do want to tell you however, is that irrespective of the complicated situation at Kuala Lumpur ASEAN made it clear (on its own behalf as much as on ours) that firstly, it wants to remain in existence, regardless of the ASEAN phenomenon. In other words, ASEAN cannot result in ASEAN being replaced or diluted. That is a good thing.
Secondly, I can confirm that the Commission has been obliged to implement institutional engineering, in order to get round the problem of not being able to renew the 1980 agreement. We have had to carry out an institutional engineering operation which will allow us to progress protocol by protocol, and sector by sector in an independent fashion. That was the only way to save the momentum politically, because the political dangers of which you are well aware mean that the political conditions are not appropriate at the moment to be able to have a new regional agreement to take the place of the old agreement from 17 years ago.
Therefore, for lack of an agreement, we have divided up the various sections of the agreement. We will do this by means of protocols, and thereby avoid institutional problems. I do not know whether this idea is brilliant, good or bad, but after two years of racking its brains, the Commission has found an institutional gimmick (I admit that is what it is) which is at least allowing us to respond to the challenges of trade, industrial property, the information society - in short, the challenge of globalization.
In any case, Mr Hindley, if the European Parliament can come up with a better method, we will be quite prepared to accept it.

Günther
Mr President, I asked the Commissioner four questions, of which he answered two in his speech. I would also very much like to know if there are any definite plans regarding antipersonnel mines. What is the meaning of 'we will examine the problem' ? My second question was whether measures are envisaged to stabilize the currency in Laos.

Telkämper
I also asked the Commissioner a couple of questions; I mentioned that the European Union had supported or set up an early warning system in Sumatra. This early warning system did not alert us quickly enough to the forest fires. Why did it not work? I would be grateful for an answer to this question. I just think that this is important in the light of the current debate.

Dell'Alba
Mr President, I also asked a question, albeit not at all explicit, which I should now like to repeat. If, as I have heard, a meeting of the ASEAN countries is to be held next year during the British Presidency and we could ask about Burma, if it would be acceptable to ASEAN to proceed by means of bilateral agreements where we had something to say about Burma. What did the Committee think of the other idea, namely not to accept ASEAN as a block but to negotiate separate cooperation agreements with the different countries? What is your position in this specific case, which could of course happen?

Marín
Mr President, my reply to the first question from Mrs Günther about anti-personnel mines, is that this is an urgent and fundamental matter in Cambodia, but not one of the aims of the cooperation agreement as such. It is a problem which exists in the area, but it is not part of the agreement. What are we doing about this problem? Well, for some time now the European Union has had some very intensive programmes to rid Cambodia of mines, and we have been working very hard to try to resolve the problem. My opinion on anti-personnel mines is that their manufacture should be halted world-wide. In other words, there is no problem in this respect. Furthermore, I believe that the whole of the European Union thinks the same way.
As for monetary stabilization, as you well know the Commission does not have financial powers, and unfortunately the euro still does not exist. Will the European Union be able to intervene the day the euro comes into existence? You are asking me a question which I cannot answer. You know better than I that as yet the European Union has no external responsibility in financial matters. Perhaps from January 1, 1999, when the euro has responsibilities internally and externally, the European Union may perhaps be able to intervene by means of normal participation in the international financial institutions, for example the Asian Development Bank which is a World Bank regional bank. However, as things stand we do not have the means or the ability, not even internally. This is a debate for the future.
If you want my opinion, I am in reasonable agreement with the views expressed by the Director General of the Fund, Mr Camdessus, in Hong Kong. Globalization is fine and so is free movement of capital, but there are of course certain objective limits which must be adjusted to make sure that the positive aspects of globalization do not turn into a powerful element of destabilization, particularly in those countries with the weakest economies.
As for the fires in Sumatra, it was said that the early warning system did not work. I do not understand your question, Mr Telkämper.

Telkämper
Mr President, another quick point of clarification. I had mentioned that it was worthwhile to support environmentally sustainable projects and, regarding human rights, to protect the peoples living in these forests. As far as I know, funding from the European Union was used to set up and support an early warning system for the Sumatra Kalimantan region, to prevent such fires, such disasters. In this case the Commission was very progressive and did something with a lasting effect. My question is why this European Union project did not work. If the question is too specific, Mr Commissioner, you can also let me have a written reply if necessary.

Marín
Mr Telkämper, why do you say that it did not work?

Telkämper
Because there are now major forest fires, and in my intervention I asked if this was perhaps the result of liberalisation, with forests simply being burnt to clear land for the migration project, for rice cultivation, for new plantations. That was the question at the root of it. But, as I said, if that is too specific to answer now, you can also let me have a written reply.

Marín
That is simple, Mr President. You say the system did not work, and I am asking you to explain why you think it did not work. If I want to prove to you that there is no light in this semicircle, I have to show you that we are sitting in the dark.

Telkämper
Perhaps we are misunderstanding each other, but if the European Union supports a project, I assume that it is put into effect well technically and administratively speaking, and that it is intended to have a preventive function...
(The President cut off the speaker)

Marín
I cannot remember Mr Dell'Alba's question. My friend Mr Telkämper always unsettles me politically, Mr President. Now I do not remember where I had got to.

President
Mr Commissioner, you may answer in writing.
The debate is closed.
The vote will take place tomorrow at 11 a.m.

EU-former Yugoslav Republic of Macedonia cooperation agreement
President
The next item is the report (A4-0273/97) by Mr Pons Grau, on behalf of the Committee on External Economic Relations, on the proposal for a Council Decision concluding a Cooperation Agreement between the European Community and the former Yugoslav Republic of Macedonia (COM(96)533-8204/97 - C4-0305/97-96/305-96/0259 (AVC)).

Pons Grau
Mr President, I am speaking in support of this agreement on behalf of the Committee on External Economic Relations, whose members supported it unanimously.
The Former Yugoslav Republic of Macedonia is the only republic to emerge from the former Yugoslavia without bloodshed. This small country of two million inhabitants in the heart of the Balkans between Albania, SerbiaMontenegro, Bulgaria and Greece has had to face inter-ethnic tensions and difficult relations with its closest neighbours, the direct repercussions of which on its economy and its insertion into the international economy and international community have been negative in the extreme. However, more than six years on from the declaration of sovereignty, it is gradually beginning to emerge from the economic and international isolation in which it found itself thanks to a double embargo: the direct embargo imposed by Greece, and the indirect repercussions of the international community's embargo on the Federal Republic of Yugoslavia.
Mr President, I am not going to spend much time on the problems which this Republic and the Greek people have both suffered - you know these much better than I do. But at the present time, the only major problem remaining is that of the Republic's name. Everything appears to indicate that this point will also be resolved shortly in the United Nations Security Council.
Considering the country's economic and political circumstances, one success achieved by its government's current policies is inflation control, which has been carried out very decisively. At the same time however, on the minus side, it must be said that unemployment has reached a record level of 37 % in a short time, which shows that the economic measures have been very harsh.
The key problem of the country's economy is how to raise levels of investment to modernize production structures, transport infrastructure and social infrastructure in an economic context characterized by very low levels of domestic saving, high interest rates and a heavy burden of public spending.
Despite the positive changes seen in the Republic's economic situation, its economic future would appear to be completely conditional on the political uncertainties which characterize both the country's own domestic politics and those of its neighbours. The complexity of the situation is clearly revealed by the country's ethnic makeup: 65 % of the two million inhabitants are Macedonians, 22 % are Albanians, 4 % Turks, 2 % Serbs, and 4 % belong to other minorities. In fact, the principle threat to the country's stability lies in the treatment of the problem of the Albanian minority.
As regards the content of the cooperation agreement, it is similar to the one signed with Slovenia in 1993. It is a framework trade and cooperation agreement, preferential and susceptible of further development. The democratic basis of cooperation constitutes an essential part of the agreement. There is also a joint declaration which will permit: the establishment of a regular political dialogue; the reinforcement of democratic principles and institutions as well as respect for human rights, including the rights of persons belonging to minorities; and the Republic's full integration into the community of democratic nations. Meetings and contacts are provided for at ministerial, technical and parliamentary level, and the joint declaration also envisages the possibility of organizing political dialogue as regional dialogue.
The trade arrangements are the usual ones in such cases: provisions concerning rules of origin; intellectual, industrial and commercial property; anti-dumping procedures and subsidies; safeguard measures required for infant industries and for difficulties with regard to trade and balance of payment; and provisions for consultation within the Cooperation Council.
We think this cooperation agreement is of enormous value, for reasons of politics more than of economics. Therefore, the Committee on External Economic Relations thinks that in this region troubled by continuous political, economic and even military problems, which have gone so far as to affect the development of the European Union, it is politically important that we should support this cooperation agreement.

La Malfa
Mr President, the Committee on Foreign Affairs, Security and Defence Policy has voted in favour of signing the cooperation agreement between the European Union and the former Yugoslav Republic of Macedonia. To the economic reasons stated by Mr Pons Grau, I should like to add the considerations of a more strictly political nature advanced by the Committee on Foreign Affairs, Security and Defence Policy. Over the past few years Macedonia has managed to achieve independence without the terrible tragedies that accompanied the independence of the other regions of former Yugoslavia and the European Union will have to do everything in its power to sustain the continuing economic transformation of Macedonia and consolidate its democratic life.
In our judgement it would be very useful for the European Union to have its own delegation in Skopje to monitor carefully and from close at hand the development of this democratic experience. In commending to the House approval of this agreement, which we consider to be of great political importance, we consider it incumbent upon us to call on the Macedonian government to monitor carefully the situation with regard to its minorities and the situation with regard to civil rights in general. Macedonia has a population which is complex in its ethnic origins and this government must show a high degree of respect for the complexity of the situation over which it governs.
With this opinion of the Committee on Foreign Affairs, Security and Defence Policy, we move that this House should vote in favour.

Dell'Alba
Mr President, first of all please allow me to take a few moments to say that having seen Mr Telkämper and Vice-President Marín confer I hope to have, at least in writing, the reply I was expecting to my previous question.
As the draftsman of the opinion of the Committee on Budgets I should like to say that our committee also voted in favour of enabling us to go ahead with this agreement. This effort is very important. This issue has three essential elements: Parliament has already accepted macroeconomic aid to ease the country's balance of payments situation. Now, with this agreement, and therefore with all the elements of technical, financial and commercial cooperation, we are doing something important and significant for the Republic of Macedonia.
From this point of view, the aspect of the financial protocol is significant: 150 million ECU from the BEI, guaranteed by the community budget. We have asked, and duly received from the Commission, estimates as to the financial implications. The Committee on Budgets now confirms the favourable assessment given to this agreement.
I take the liberty of making a small point with regard to financial cooperation: the rapporteur believes that recycling is in conflict with other methods, with a different policy in relation to drugs.

Karamanou
Mr President, ladies and gentlemen, the concluding of a cooperation agreement between the European Union and the former Yugoslav Republic of Macedonia, together with the finance protocol and the agreement on transport, is indeed of great political value since it will make a vital contribution to the economic development of this small Balkan state, to the restructuring of its industry, the rekindling of its commercial dealings, and the promotion of more stable and balanced relations with neighbouring countries.
It must be emphasized, however, that the agreement comprises a special provision and gives particular importance to social development and social rights, which is an innovative aspect of this agreement. It is a fact that the former Yugoslav Republic of Macedonia, as demonstrated in the debates that took place in the Interparliamentary Assembly yesterday and the day before yesterday, has made great efforts to modernize and to strengthen the competitiveness of its economy, and also to gradually adapt its infrastructures to the European models and indeed, as is well known, under particularly difficult conditions and at a difficult historical juncture.
Following its interim agreement with Greece, the economic activities across its southern borders take on even greater significance. Greece is the Community state with the greatest amount of exports to the former Yugoslav Republic of Macedonia and the third as regards the totality of its commercial dealings. The development of road networks that is provided for by the agreement is expected to further facilitate the development of economic relations and an increase in the volume of reciprocal trade.
The cooperation agreement is expected, among other things, to facilitate political dialogue on the consolidation of democratic institutions, respect for human rights, including the rights of minorities, and the promotion of security, peace and stability throughout the whole of Europe, and, more especially, in this sensitive region of the Balkans. Closer ties between the former Yugoslav Republic of Macedonia and the European Union must be given support. The country has a pro-European parliament and a government which recognises the importance of good regional cooperation. Nevertheless, ladies and gentlemen, if you would allow me, as someone from a country which is of course a signatory to this agreement, Greece, to express my desire and my wish to break down the final barrier to relations between the two countries by finding a viable and dignified solution, which is acceptable to both sides, to the problem of the international name of the former Yugoslav Republic of Macedonia, a solution that will respect the sensitivities of both countries.
In addition, I also would like to support the request of this country for the creation of a European Union office in Skopje.

Posselt
Mr President, as a Czech Bishop from Northern Bohemia used to say, to love one's neighbour would be a wonderful thing, if only the neighbour did not live so terribly close! That is exactly the problem with Macedonia. Macedonia is a small country with various neighbours and a very complicated history, and it has repeatedly been in danger of being overwhelmed by this history. So we will be all the happier both now and in the future if our Parliament says yes to this agreement, which will represent a breakthrough in accepting this country into the community of Europeans, a country which has contributed a great deal to our history and culture, and will also make a great contribution to the future of Europe.
Nevertheless, the problems remain acute. We only have to think, as my colleague Mr Pons Grau has mentioned, about the problems of the ethnic Albanians in Macedonia, but who mentions the fact that this is directly connected with the Kosovo problem, the fact that the oppression of Kosovo led to the extremely difficult situation at the Albanian University in Tetovo in Macedonia? This is just one example that demonstrates how various different issues are closely interwoven in this region.
Therefore we owe it to this country to offer it unambiguous support on the path to Europe, and above all we must make sure that the freedom and independence of this country are safeguarded. We have talked about Asia today, and quite rightly so, but it would be a pity if we talked about Asia without being able to solve elementary European problems. The country of Macedonia would not even exist today if the United States of America had not begun to defend that country's independence in the face of possible Serbian aggression. When one considers the forces currently involved in taking over power in Serbia, it is a question of out of the frying pan, into the fire, and there is a risk of renewed massive conflict.
It is therefore high time that we concluded this trade and cooperation agreement after years of blockade. We must support the forces of democracy in this country. We should not reproach this country for failings in the reform process, because logic dictates that when there is external pressure it is incredibly difficult to carry out internal reforms at the same time. For that reason it is impressive that reform has taken place to such an amazing extent at all, but we need to intensify the process. Above all, we need to agree that the next stage, that is an association agreement and Europe agreement, should follow as quickly as possible. Slovenia needed three years to take this step, and I believe that Macedonia should not have to wait any longer.

Habsburg-Lothringen
Mr President, Mr Commissioner, my colleague Mr Posselt has already suggested that this agreement will be just one step into the future for Macedonia. I would like to add how pleased I am that this cooperation agreement with Macedonia has fallen on such fertile soil in this Parliament. First of all, I would of course like to thank Mr Pons Grau very warmly for his report. Macedonia is a country that has gone through a lot in recent years, a country that has managed to free itself from a very difficult hold, which many other countries in a similar situation did not succeed in doing - we only have to think of the fate of Bosnia-Herzegovina, for example. I believe that this country therefore deserves our support.
So I would also like to stress how delighted I am that a few weeks ago, when we were discussing macro-economic aid for Macedonia, this Parliament changed its spots and agreed to this aid, although there had not been a corresponding debate either in committee or in this House, and displayed enormous confidence, quite rightly in my opinion.
I believe that we in the European Union occupy a significant position, when one considers who Macedonia's traditional trading partners are today. These are first Bulgaria, followed by the remains of Yugoslavia and then by Russia. But if we take a look at the map now, and I often have the feeling we do not do that often enough, we can see that Macedonia really is a key country in the Balkans. For that reason, we must promote overall transport links. Macedonia is situated almost in the European Union, if you can envisage the route from Greece to Austria or Germany. This infrastructure needs to be built up both for the sake of this country and also to provide adequate links for the European Union.
I honestly believe that we have a great obligation towards this country. It is almost a moral obligation, if you consider the geography, if you consider what this country has been through. Once again, I am pleased that this report has been received so positively by this Parliament, and I hope that it will continue on the path determined for it.

Marín
Mr President, first of all I should like to thank the rapporteur, Mr Pons Grau for his excellent report and tell him that the Commission shares his opinion that the cooperation agreement is of supreme importance for the former Yugoslav Republic of Macedonia and the development of its relations with the Community. This is because it includes a system of trade preferences, a financial protocol and political dialogue (based on a separate declaration) which sets in motion relations which are unquestionably important for the future of this country, not just within its own region but also of course in its relations with the European Union. Furthermore, together with the separate transport agreement, the cooperation agreement will greatly promote stability and cooperation in the region.
The Commission also goes along with the general opinion expressed by the speakers, that this cooperation agreement is a first step of great political significance which, in the final analysis, is far more important than its economic value. Because of this importance, the Commission hopes that the Council will approve without delay the decision to bring in the cooperation agreement and the transport agreement, so that it can come into force on 1 December 1997 at the latest.
The Macedonian Government is still applying its policy of economic and political reforms, but we all know that it is faced with difficult economic and social problems such as low economic growth and, of course, high unemployment as a result.
As well as the normal financial aid under the Phare programme - ECU 15 million directly from the Phare programme and ECU 10 million for transfrontier cooperation with Greece - a further ECU 8 million has recently been made available to the country. There will be no difficulty in absorbing these funds, which will be used to promote projects which have priority under the existing multiannual indicative programme for 1996-1999 - namely, those involving SMEs, public investment aid, and the Tempus education programme.
Similarly, the Commission is studying how the Phare programme can help to improve inter-ethnic relations, which constitute one of the most complex aspects of the domestic political situation.
Finally, the Commission would like to express its appreciation of the European Parliament's initiatives to develop contacts with the Macedonian Parliament. Such contacts are an important focus for increasingly close relations also between the European Union and the former Yugoslav Republic of Macedonia. Therefore, the Commission would be very pleased if this political dialogue between the European Parliament and the Macedonian Parliament could be developed and strengthened even further.

President
The debate is closed.
The vote will take place tomorrow at 11 a.m.
(The sitting was closed at 11.55 p.m.)

