Resumption of the session
President
I declare resumed the session of the European Parliament adjourned on 16 April 1999.

Tribute
President
Ladies and gentlemen, I am sorry to have to tell you that our former colleague and Vice-President Hans Peters died last week. Along with many other Members present here today, I remember his sterling work on Parliament's Committee on Social Affairs. This was just one of the ways in which he expressed his strong commitment to social and trade union affairs which led him to become a Member of this House.
Many of us will also recall the special interest he took in matters concerning premises as a member of the specialist group of Parliament's Bureau.
He gave his all to the House for many years. In accordance with our tradition, therefore, I feel it is appropriate to ask you to observe a minute's silence in memory of our colleague.
Parliament observed a minute's silence

Approval of the Minutes
President
The Minutes of the sitting of Friday, 16 April 1999 have been distributed.
Are there any comments?

Maes
) Mr President, as we begin this part-session, I wish to protest at the fact that I was not allowed to organise a seminar on the peace process in the Basque country to which all parties which signed the Lizzara declaration were invited. I and all those invited were banished to the visitors' centre. I think the President of Parliament, who did everything possible to keep this seminar from being held on our premises, has not acted as a president of Parliament here, but as a party-political ally of Mr Aznar, and I deplore that.

President
Mrs Maes, a room was made available for you to meet with the people you decided to invite. It was a visitors' room, and this arrangement was made precisely because you anticipated a large number of visitors and had informed our services accordingly. All that happened was that the usual arrangements for meetings of this nature were made. Nobody prevented you from meeting together, and you did in fact hold a press conference with the visitors who attended. You were treated like any other Member in a similar situation.

Corbett
Mr President, today is the first day on which you will be applying our new Rules of Procedure. I hope that this will facilitate and indeed speed up the work of the House, notably during voting time.
However, one of the new Rules is less important within the House than outside it. I refer to Rule 9(3), which concerns former Members of this House. Up to now we have had two categories of former Member: simple former Members and honorary Members. Some of those so-called honorary Members have used that title in a way that leads the public to believe that they are still Members of this House. That is why this rule was amended: to abolish this distinction between different categories of former Member. In other words, the system of honorary Members will no longer exist.
As this is particularly important before an election campaign, in which some honorary Members are deliberately using the title in order to create the impression that they are still Members of this House, I would urge you to write as soon as possible to all those who still have this title to inform them of the new rule and the new situation.

President
You know, as you are one of the authors of the new Rules, that Rule 9(3) states that questions concerning the rights and privileges of former Members are to be laid down by decision of the Bureau. That is the only option. Neither the Bureau nor the text of the Rules mention whether it is necessary to abolish the status of honorary Members. The Bureau decided some years ago that no more honorary Members would be created. Anyone who has been a Member of this House - honorary or not - has the same rights and privileges as have been laid down by the Bureau. In practice, it would be impossible to write to all honorary Members to inform them that they are no longer honorary Members. That is not in the Rules and the Bureau has not taken that decision. If you want the Bureau to consider the matter again, I will take note and put it on the Bureau's agenda so that it can take a decision.

Evans
Mr President, on Friday of last week a bomb exploded in a crowded part of central London. Three people were killed and many more have horrendous injuries which, in many cases, will leave them scarred and disabled for the rest of their lives. This attack was the third such attack in recent weeks. Vicious nailbombs were deliberately planted in crowded areas frequented and populated by London's minority communities, people who can normally live quite contentedly and happily within the vibrant, mixed, multicultural city that is London.
I am sure all colleagues will join me in condemning this sort of outrageous attack, whether it be perpetrated by racists, the far right, or whoever, and that we will all campaign for an end to such indiscriminate violence, especially in the weeks ahead leading up to the European elections. Furthermore, Mr President, I would be glad if you could send a message of sympathy to the injured and the bereaved on behalf of the European Parliament.
Applause

President
I will do that and I will note that the House has unanimously supported your words. This terrible case demonstrates that racism and xenophobia must be fought continuously. It is not enough to designate one year to fight it. It recurs year after year.

Lienemann
Mr President, we have just found out about the Council of Ministers' decision to allow staff of the Schengen group working in the Council to become European public officials. Such a decision, as you are aware, has repercussions for Parliament since, according to the principles behind the Interinstitutional Agreement, a European official who works for the Council can, at one time or another, become a parliamentary official. I also think that it is outrageous that officials can be recruited without first having sat a competition, as is common practice. You know how sensitive the public is as far as the rules are concerned, and with reason. I would therefore like to know, Mr President, how you intend to make the Council reverse its decision and ensure that these and other officials abide by the correct rules regarding recruitment.

President
What I can do, Mrs Lienemann, is first of all to obtain some information and ask the Council what has actually happened and what are the reasons for this decision. Whatever the case, it will be up to the groups in this Parliament, the new Parliament, to take any steps that are necessary to ensure that the rules are respected. In the meantime, what I shall do is to ask the Council exactly what decisions have been taken, and for what reasons.

Eriksson
Mr President, I should like to add something to what you said before we began to discuss the Minutes, namely that we must fight against racism and discrimination of all kinds every moment of every day, and not just now and again. Here in the House, we nearly always adopt a pro-human rights position precisely against discrimination on the grounds of race, sex, religion or sexual orientation.
Against this background, I should like to request an extremely good explanation - and I really do mean a very good explanation - from the President and the College of Quaestors as to why on Wednesday a decision was taken not to go ahead with the exhibition which I had earlier arranged to be held here, and which had previously been given the green light. This concerns the Swedish exhibition, Ecce homo , which is about sexual orientation and the discrimination to which it can give rise.

President
Mrs Eriksson, you will appreciate that exhibitions held in this House cannot run counter to the feelings of groups within the House. The artistic committee felt that in the circumstances the exhibition should not take place, and the Quaestors took the decision not to authorise it. That therefore is the relevant decision.
Respecting the rights of minorities is one thing. Allowing minorities to impose their feelings or their attitudes on other people who may or may not be in a minority but who do not share their views is quite another. What is at issue is respect for freedom, which has nothing to do with respecting the rights of minorities.

Kokkola
Mr President, as you and the other Members in this House may have heard, among the many accidents that have occurred in the terrible war in the Balkans, a missile destroyed a bus killing sixty people including fifteen children. I think the least we can do is send our condolences to their relatives and condemn these actions.
Forgive my outburst of emotion, but missiles have also fallen on Bulgaria ... there have been many mistakes and we cannot simply say we are sorry. Let us at least behave as we behave towards all victims.
Applause

President
Mrs Kokkola, Kosovo is in fact included on the agenda. The topical and urgent debate is the best context for any remarks a majority of the House believes to be necessary. I think that is the only way to proceed.

Fabre-Aubrespy
Mr President, as we are about to adopt the Minutes, I should like to say that in my view we should reject Part II as it appears on page 6. You in fact declared inadmissible a motion of censure tabled by 66 Members from all the political groups and in so doing you have called into question one of their basic rights. It seems to me that the decision was based on an incorrect legal basis and on the pretext of a political argument - that is, the possible rejection of the motion of censure - whereas the notion of inadmissibility is only of course applied on the basis of legal considerations.
The decision was taken and, as everyone knows, the Commission is continuing about its business as though nothing has happened since 14 January. What is more, it is a particularly risky decision to have taken as regards the future because it means that any Commission threatened with a motion of censure could resign in order to take the initiative and, as a consequence, prevent such a motion from having any effect. It is because of these three factors that I am opposed to this part of the Minutes since it is such an important issue for the future. I should like this particular part to be put to the vote.

President
Mr Fabre-Aubrespy, the process of approving the Minutes is designed to establish whether or not the Minutes are an accurate reflection of what took place. It is not a means of going back over the decisions which were taken, especially a decision which was not put to the vote, even if it was supported by a large majority in the House. However, this decision was not put to the vote because it was not necessary. It is quite clear that if it were possible to go back over decisions by changing the Minutes, we should no longer be respecting the Rules of Procedure. You will appreciate that I am not going to put this decision to the vote.
Exclamation of 'Bravo, Mr President'

Svensson
Mr President, taking up your reply to Mrs Eriksson, in which you explained the reason for not showing the exhibition Ecce homo here in Parliament, I now wonder how it came about that there was room for an exhibition by the Italian lobby group which preaches against abortion and against a woman's right to have an abortion? Was that not a way of offending a very large group of people?

President
Let me make it clear that it was possible for the other exhibition to be held because it complied with the rules of the House. When the Quaestors say that an exhibition cannot be held because it deals with a contentious subject, there are two possible courses of action: the Bureau can be asked to change the rules on exhibitions, or it can be asked not to do so. As long as the rules in question remain in force, they must be observed. The Quaestors have interpreted them correctly. This does not justify reversing their decision.
The Minutes were approved

Membership of political groups
President
I would inform the House that Mr Charles de Gaulle has been dismissed from the Group of Independents for a Europe of Nations and that from 19 April 1999 he has been sitting with the non-attached Members.

Duhamel
I would like to make a point of order, Mr President, regarding order in the House. Can the European Parliament not call for 'de Gaulle' to change names out of respect for the honour of Europe?

President
That is not a point of order, Mr Duhamel, and your comments are not in keeping with the dignity of the House. The political decisions of each Member are a matter for himself, his conscience and his electors.

Janssen van Raay
On a point of order, Mr President, concerning Rules 2, 5 and 119. At the eleventh hour, the Quaestors have taken an appealable decision in response to my letter of August last year. I am now lodging an appeal before the Court of First Instance in Luxembourg on the question of principle, namely who is it who determines the distribution of work of the elected Members of this Parliament: we ourselves or the Bureau, with all manner of financial penalties? If I win, and I shall win, fellow Members of the House will get back the fines they have wrongfully been charged. As for the Kai Islands, I shall come back to those tomorrow.

President
They will no doubt appreciate that, Mr Janssen van Raay.
Mr Bru Púron has asked for the floor.

Bru Purón
Mr President, a group of former members of the militia who fought for the Republic during the Spanish Civil War are present in the gallery today. They have travelled to Strasbourg despite their age and I think they deserve a welcome.
Loud applause

Agenda
President
The final version of the draft agenda as drawn up by the Conference of Presidents pursuant to Rule 95 of the Rules of Procedure has been distributed.
I would inform the House that following the entry into force of the Amsterdam Treaty, certain legislative reports on the agenda for this part-session are affected by changes in procedure. The details concerning these reports will be included in the Minutes of today's sitting.
The President read out the changes to the agenda for Monday and Tuesday
Wednesday:

President
The Group of Independents for a Europe of Nations has asked for the report by Mrs Miranda de Lage on the cooperation agreement between the European Community and the United Mexican States to be withdrawn from the agenda.
Mr van Dam has the floor to present this request.

van Dam
Mr President, The last item on the final draft agenda for Wednesday is Mrs Miranda de Lage's recommendation on the partnership agreement with Mexico. I propose that we remove this item from the agenda, since the agreement in question is still being negotiated.
When it approved the interim agreement with Mexico exactly a year ago, Parliament expressly stipulated that the general agreement could not be approved until the results of the negotiations with Mexico were forthcoming. Well, these negotiations are still under way. Considerable progress is still needed in a number of areas, such as human rights and nature conservation.
So if we approve the partnership agreement now, we shall be giving a blank cheque to the negotiators and abnegating the responsibilities of Parliament.
It is in any case less than clear why we need to deal with the agreement during this parliamentary term. Parliament will be able to reach a far more balanced verdict on it in the next one.
I therefore propose to the House that we do not deal with the agreement with Mexico this week.

Hindley
Mr President, I should like to make three brief points against postponement.
First of all, there is a very strong case against agreeing to the EU/Mexico agreement on human rights grounds. However, there is an even stronger argument in favour of voting in favour. The House should hear and debate that argument and actually take a decision on it. Postponing the argument achieves nothing whatsoever. This has been under negotiation for five years. We gain nothing by delay. It is a responsibility which I would like to see this Parliament discharge. If it is postponed, the matter will be left over to a newly-elected Parliament which will be relatively unfamiliar with the subject.
The second point is: I understand that many Members of this Parliament, including myself, are under pressure from non-governmental organisations to postpone this. Let me say as a friend, admirer and respecter of many NGOs - and I rely greatly on their advice - that were we to postpone, we would in fact be handing to NGOs the right of eventual affirmation or veto of this agreement. Nothing new will come out. That would be an abrogation of our responsibilities. We stood for elections and we won elections. It is for us to decide politically whether this should go ahead or not.
My final point is in answer to Mr van Dam's contention that it is a blank cheque. It is not a blank cheque. If we agree to the Miranda report - and I am arguing in favour of agreeing as well as not postponing - that will set up the very framework in which human rights issues can be mentioned. It will set up the political dialogue which will allow us to judge human rights and that dialogue must - I repeat - be decided at the political level, and so should the vote. Therefore I am not in favour of postponing this vote any further.

President
I put to the vote the request from the Group of Independents for a Europe of Nations.
Parliament rejected the request

Oomen-Ruijten
Mr President, if I understand correctly, it has just been announced that the resolution on the Cologne summit is to be postponed. So I have a problem. We have a problem. We have received the resolutions from all the groups. We have also set a time for discussing them, tomorrow at 11 a.m. I do not know why this proposal has been made all of a sudden. I know the Socialist Group has tabled a very brief text with just a few paragraphs and perhaps the other texts may prompt a few changes to that, but I really do not see why something we should have got done last week is now being put off all of a sudden until Tuesday.

President
Mrs Oomen-Ruijten, the only thing which has been done is to extend the deadline for tabling amendments until tomorrow, Tuesday, at 12 noon. We have not changed the decision or the voting. All that has been done is to extend the deadline for tabling amendments, something on which there is normally a consensus in favour, although that may not always be the case.
The President read out the changes to the agenda for Thursday
(The order of business was adopted thus amended)

Request for waiver of immunity (Mr Féret)
President
The next item is the report (A4-0210/99) by Mr Wijsenbeek, on behalf of the Committee on the Rules of Procedure, the Verification of Credentials and Immunities, on the request for the waiver of Mr Féret's parliamentary immunity.

Wijsenbeek
 Mr President, this is the last report I am presenting at my last part-session after 15 years in the House. It is the ninth report of this parliamentary term, but I shall not bore you with statistics; sadly, it is not a very agreeable task, and I am concerned here not with legislation or promoting European unity, but with a question of parliamentary immunity.
Nevertheless, there are one or two general remarks to be made on this. But let me start with the specific case in question. It concerns one of our colleagues who is accused of failing to meet his obligations under Belgium's far too complicated social security laws, specifically with regard to his assistant. All members of the House must, of course, comply with statutory obligations in respect of their assistants who are employed in Belgium. But the Member concerned rejects the charge and has even proved to us that he wrote letters to the Belgian social security administration confirming his intent to meet those obligations, but without ever receiving a reply. The events took place in 1995, and only in 1999 is the Kingdom of Belgium asking us to waive the Member's parliamentary immunity.
Those are the facts. We should add the remarkable fact that in Belgium, someone who is the subject of litigation cannot take part in elections, and that gave us pause for thought, especially as we had ourselves had sight of the proof supplied by the Member concerned.
We subsequently asked the Kingdom of Belgium for further information and simply got a confirmation of the request for a waiver of immunity that was received in the first instance; more significantly, it later became clear to us that this was merely a request aimed at ensuring that the statute of limitations could not apply. As a result, Mr President, in accordance with our case-law, in accordance with our fixed rule that parliamentary immunity protects not just the individual Member but the whole of this House and Parliament, we believe that the right course of action is to ask you not to waive parliamentary immunity in this case - and all the more so in that we believe, to quote my illustrious predecessors Georges Donnez and Jean Defraigne, that there may be a hint of fumus persecutionis here.
I will end this contribution with a comment of a general nature. Very soon, a uniform statute for all Members of this House will be coming into force. But that uniform statute is missing one thing, and this concerns parliamentary immunity. There are still nationality-based differences as a result of the Protocol on Privileges and Immunities, and that contravenes Article 6 of the Treaty. The fact is that all our Members enjoy immunity in their own countries on the terms enjoyed by members of their national parliaments, whereas we ought to be treated the same and to have a uniform statute. To give you an example: for French Members, the rule is that all political activities are covered by immunity, including those taking place outside Parliament. For the British and Dutch, there is no immunity at all in their own countries, except for what is said at plenary sessions of Parliament. It is high time our successors and the next committee responsible for the Rules of Procedure put forward a proposal to amend the Protocol on Privileges and Immunities so that all of us in this House are exactly the same. That is something I have striven to achieve over the years, and I do so again in this case.

President
Thank you very much, Mr Wijsenbeek. Parliament as a whole can testify to the time and effort you have devoted to the House for so many years. We also admire your total dedication to your work. It falls to me, as President, to thank you on behalf of the House for the dedication, effort and good judgement you have shown throughout your work among us. I am not saying this as a formality, but with genuine appreciation.
Applause

Ford
Mr President, I should like to echo your remarks in saying that we will miss Mr Wijsenbeek. Some of it will be a good miss, but most of it will be a bad miss in that Mr Wijsenbeek was one of the more interesting Members of this House. On behalf of the Socialist Group I should like to say that we will be supporting the Wijsenbeek report on the waiver of immunity of Mr Daniel Féret. In doing that we express our disappointment about the Belgian authorities who, after making serious allegations about one of our colleagues, and the conduct of his office and the payment of his assistant, failed, in my view at least, to supply adequate documentation. Mr Féret and I have sharply different political opinions. Frankly I hope he is defeated in the Belgian elections but I cannot allow him to be banned from standing on the basis of these allegations against him which have not, as yet, been substantiated. On that basis we will be supporting the report to maintain his immunity and in consequence to allow him to stand for election.

President
Thank you, Mr Ford.
The debate is closed.
The vote will take place tomorrow at 12 noon.

Request for waiver of immunity (Mr Moniz)
President
The next item is the report (A4-0262/99) by Mrs Palacio Vallelersundi, on behalf of the Committee on the Rules of Procedure, the Verification of Credentials and Immunities, on the request for the waiver of Mr Moniz's parliamentary immunity.

Palacio Vallelersundi
Mr President, I shall carry on from where Mr Wijsenbeek left off. I would also like to reiterate what previous speakers have already said: Mr Wijsenbeek will be sorely missed in this House.
The issues raised by the waiver of immunity we are concerned with today are actually only part of a more general problem: the fact that this House still does not have a single statute for its Members. This shortcoming is a historical legacy and does not make sense nowadays. The arrangements relating to privileges and immunities date from 1965 and therefore go back to a time when this Parliament was simply a parliamentary assembly. Its role as a representative of citizens of Europe was then only a dream. But that is no longer the case. At this stage, it simply does not make sense that there are so many differences between the various representatives. The fact is that, following the Maastricht Treaty and, in particular, the Treaty of Amsterdam, the people of Europe are beginning to forge a distinctive identity and to ask that their representatives be governed by common arrangements in every aspect of their work. This is particularly true of course where the waiver of parliamentary immunity is concerned.
The second point to be borne in mind concerns immunity. Immunity is not a privilege. It is there to safeguard the House and is therefore a matter of public order. In the particular case of Mr Moniz which I am dealing with today, Mr Moniz specifically requested that his parliamentary immunity be waived. This was taken into consideration in the resolution by the Committee on the Rules of Procedure. The committee voted unanimously for immunity to be waived, not because Mr Moniz wished to appear before the judicial authorities, but because all the necessary conditions had been met. In this instance, the conditions take us back to the 1976 Act, to the provision made for privileges and immunities in primary legislation and from there to the Portuguese constitution and indeed to Portuguese procedural law.
In this case, waiving parliamentary immunity does not present any difficulties as the allegations against Mr Moniz have nothing to do with his parliamentary activities. It should also be pointed out that proceedings now under way prove that there is no doubt whatsoever as to the validity of the allegations. However, the fact that the allegations are well-founded does not of course mean that Mr Moniz is guilty; that is for the courts to decide. Like the rest of us, Mr Moniz must realise that representing the people of Europe means being in the same position as any ordinary citizen as far as responsibilities are concerned. Only when the role of representative is itself at issue is there a need for certain provisions to guard against possible abuse of the legal proceedings which would be to the detriment of the institution, of Parliament and of the people.
Consequently, the Committee on the Rules of Procedure, the Verification of Credentials and Immunities voted unanimously this afternoon to waive Mr Moniz's immunity. He will now be able to appear before the judicial authorities as was his wish.
Turning to other matters, Mr President, it might seem to make little sense for the House to rule on waiving the immunity of a colleague when he has already told us that he did not intend to stand in the elections and when the House is in the last few weeks of its term. But I must speak as the spokesperson for the resolution by the Committee on the Rules of Procedure and say that this is in line with the message the committee has been reiterating down through the years, namely that this Parliament is not dissolving. From the first to the last day of its term, Parliament must continue to rule on any issues that arise and to deal with any problems. That is why we have approved this resolution.

President
Thank you, Mrs Palacio.
The debate is closed.
The vote will take place tomorrow at 12 noon.

Annex V of the Rules of Procedure
President
The next item is the report (A4-0216/99) by Mr Fayot, on behalf of the Committee on the Rules of Procedure, the Verification of Credentials and Immunities, on the modification of Annex V of the Rules of Procedure of the European Parliament.

Fayot
Mr President, as this is the last report to be drawn up by the now defunct Committee on the Rules of Procedure, the Verification of Credentials and Immunities, I should like to say a few words. I should also naturally like to take this opportunity to thank my colleagues, especially all those who have been members of this committee for a long time and in this respect, special mention must of course be made of Mr Wijsenbeek. I should also like to thank the committee's secretariat for the excellent work it has continuously carried out to ensure that the Rules of Procedure meet the needs of Parliament's work.
From the next parliamentary term, the work of this Committee, of this defunct Committee on the Rules of Procedure, the Verification of Credentials and Immunities, will be divided between the two larger committees of the Committee on Legal Affairs and Citizens' Rights and the Committee on Institutional Affairs. In other words, the work it has carried out is clearly of some considerable importance as from now on it will be dealt with by two committees of greater standing.
The present report, Mr President, centres on Annex V of the Rules of Procedure and, in particular, the discharge procedure. You will be aware that it was a letter from Mrs Theato, the chairman of the Committee on Budgetary Control, that prompted the committee to consider Annex V. The letter inquired as to whether Article 5 of Annex V, which states that an absolute majority must refuse discharge, complied with the provisions of the Treaty. Last December we had lengthy discussions on the matter as well as on the issue of whether or not the proposal for a decision could be amended. At that time we adopted an interpretation, which was also adopted in the House, and also stated our intention to reconsider the whole of Annex V.
This is what we have done within the framework of this report and I should like to point out that it is the result of close collaboration with the Committee on Budgetary Control. I should particularly like to thank its chairman, Mrs Theato, who unfortunately cannot be with us today. I should also of course like to thank the draftsman of the opinion of the committee, Mrs Kjer Hansen, and all the members of the committee, who did some excellent work, because this directly involved the way in which their procedures are carried out.
Many amendments were tabled to my draft report, although all of them were along the same lines. There was no fundamental disagreement as to which procedure to adopt. The key point was to do away with Article 5 and the absolute majority, to put the refusal to grant discharge on an equal footing with the granting of discharge, and to set out the procedure to be followed in cases where the decision was postponed. I should therefore like to highlight the fact that the new Article 3, the procedure for refusing or granting discharge, is the subject of three proposals.
First, there is a proposal for a decision concerning the granting or refusal of discharge by, of course, a simple majority. There is a second proposal for a decision that provides for the closure of accounts. This is an important new element which would allow us to separate, on the one hand, the closure of accounts - a type of simple technical procedure, if you like, to check whether the accounts have been kept as they should - and on the other hand, the discussion or opinion of Parliament on the Commission's management of the budget. Lastly, there is a third proposal, a motion for a resolution, in which Parliament sets out its observations regarding the Commission's budgetary management. Only this motion for a resolution can be amended, according to the Rules of Procedure, if it is accepted by the House, as we are proposing.
Finally, we have also set out a very specific procedure to be followed in the event of the decision being postponed, in order to highlight the need to develop the procedure further rather than simply leaving it as it is. A final article provides for its consideration by the House. The two amendments that have been tabled do not therefore significantly change the as set out by the Committee on the Rules of Procedure, the Verification of Credentials and Immunities, and, as a result, they do not alter the general philosophy behind it.
Mr President, I hope that this new annex will facilitate the work of the Committee on Budgetary Control and Parliament. In my view, relations between Parliament and the Commission as regards budgetary management will be developed and enhanced as a consequence and I hope that the new Rules of Procedure will further enhance Parliament's work in monitoring the Commission's budgetary management.

Corbett
Madam President, I wish to begin by congratulating Mr Fayot on not just his report but also his chairmanship of the Committee on the Rules of Procedure, the Verification of Credentials and Immunities over these last few years. It has been a truly excellent chairmanship.
I should like to reassure him that the committee is not being taken over by the Committee on Institutional Affairs: it is merging with that committee to create a new constitutional committee, which will be a very important committee in this House.
The issue we have before us arises because the Treaties themselves are not clear on what should happen if Parliament does not give discharge. We ourselves, as a parliament, interpreted the right to give discharge to mean that we also had a right to refuse discharge. That interpretation is shared by the other institutions and has been the practice for a number of years.
However, the Treaty is silent on what should happen if Parliament refuses discharge. We as a parliament for many years interpreted the situation to be such that if Parliament were to refuse discharge, then the Commission concerned, if it was still in office, should take the necessary consequences and resign - it should have to go. In other words, refusal of discharge was tantamount in itself to a sort of motion of censure on the Commission. The Commission itself, through Commissioner Tugendhat, when he was budget Commissioner, appeared to accept that interpretation. That is why we have put in Annex V of our Rules that we needed not just a simple majority but also a special majority of Members of the House - an absolute majority - to refuse discharge, because otherwise the refusal of discharge could have been a backdoor way to censure the Commission by a smaller majority than that normally required under the Treaty. It was therefore to protect the Treaty that we put this special majority requirement in our Rules.
All this, however, was undermined by the events of last December, when some Members of this House - some Groups indeed - wished to refuse discharge but keep the Commission. That was contradictory, and Parliament was obliged to address the issue through a separate motion of censure on the Commission, thereby destroying the direct link between refusal of discharge and the consequence of the departure of the Commission.
A further problem appeared in that at that time there was probably neither a majority in the House to grant discharge nor an absolute majority to refuse discharge, and Parliament was therefore a prisoner between these two differing majority requirements in its Rules of Procedure. It is for that reason that it was necessary then to review the Rules. The Rules Committee has done that; we have based ourselves largely on the opinion given by the Committee on Budgetary Control. Where we have not done that, my Group has tabled two amendments which will rectify that situation and, indeed, get rid of a contradiction which we believe exists in the report at present. This will therefore revert us to a simple majority both to grant and to refuse discharge. The consequence though is that refusal to grant discharge from now on is simply a reprimand on the Commission, not a way of censuring the Commission. If Parliament were to refuse discharge, it would then have to debate separately what the consequences should be if the Commission itself did not draw any consequences.

Rack
Madam President, the Rules of Procedure are intended to enable decisions on issues of substance to be made and if possible to make this process easier, not to make it more difficult or even obstruct it. Unfortunately, this has not always been the case, and both the chairman of the Rules Committee, Mr Fayot, and Mr Corbett specifically referred just now to the particular circumstances in this instance. We remember that in the 1996 discharge procedure, inconsistencies and provisions which were contrary to the Treaty came to light; this was because Annex V laid down a larger majority for not granting discharge than the Treaty itself prescribes in Article 141 of the EC Treaty. That was the main problem! Mr Corbett has in fact pointed out that there was support in Parliament for making something more of this relatively clear provision in the Treaty than it actually stated and still does state. That also contributed to the problems we experienced during the 1996 discharge which have already been mentioned.
As a result of this situation, the chairman of the Committee on Budgetary Control, acting on the instructions of the committee, made a request in this House on 15 January 1999 for the Rules Committee to clarify precisely what the Treaty itself provides for, that is to say for the direct link between refusal of discharge and a possible censure procedure to be removed. That has now happened. We ought - and here I fully agree with Mr Corbett - to thank very much the chairman of the Committee on the Rules of Procedure, Mr Fayot, for dealing with the matter brought to his committee by the Committee on Budgetary Control very swiftly and for being so willing to cooperate. We should also like to thank Mr Fayot for his work in the committee as a whole, and the fact that this committee will cease to exist in its current form - and this is the final point on which I agree with Mr Corbett - should not be seen as reflecting an unfavourable assessment of the work of the committee and especially not the work of its chairman; this is actually happening because in future we want important matters which relate to each other to be dealt with together. Seen in this light, a considerable amount of the work of the Committee on Budgetary Control will be in good hands in the future Constitutional Affairs Committee.

Kjer Hansen
Madam President, this report does not solve the problem of what consequences there should be for the Commission if Parliament does not give a discharge. That question is one to be dealt with under the Treaty, but we are getting some clear internal guidelines about what procedures we can use in Parliament. I am pleased that we shall no longer spend hours and hours discussing the procedural options, but are now getting some clear rules. I would therefore like to thank my colleagues, and especially Mr Fayot, for their very constructive cooperation in connection with the amendment of the Rules of Procedure, and I would especially like to express my gratitude for the understanding and sympathy shown to the views I have presented.
It is important that we now have agreement between the Rules of Procedure, the Treaty and the Financial Regulation. I think it is crucial that it is clearly stated that we have three options. We can choose to give a discharge, we can choose not to give a discharge, or we can postpone reaching a decision on the matter. The rules will now also include a very important distinction between a technical postponement and a political postponement, where the reason must be clearly stated, as well as a clear distinction between the technical closing of the accounts and a political decision on whether or not we can adopt the accounts.
One thing which is clear is that in December we chose to activate the rules concerning Parliament's role as the discharging authority. And as a follow-up to the extensive discussions which accompanied that, it is crucial that we now have some clear rules on how we should act in a similar situation to the one we saw before. I therefore think the Fayot report is a good proposal for what our rules should be.

Voggenhuber
Madam President, when the most elementary rules of logic are disregarded in politics, it is rarely out of ignorance of these rules but because there is some interest in doing so. That is why the question I am asking myself today is this: why was it in Parliament's interests to block its own supervisory powers? Might it not be the case that in the past - and I hope only in the past - it was more in the interests of the large groups in this House to protect the Commission than to call it to account and strengthen their own Parliament?
According to the Treaties, Parliament takes the decision on discharge by a simple majority. However, Parliament divided this decision into two procedures. Accordingly, the vote to grant discharge was by a simple majority, but the vote to refuse discharge was by an absolute majority. Hence the comical and completely absurd situation of a majority of this Parliament not voting in favour of granting discharge to the Commission, and the same Commission still not being refused discharge. This is an absolutely ridiculous state of affairs, which I can only put down to huge self-interest, and I hope that the large coalitions which put protecting the Commission before Parliament's right of control have learnt from the events of the past months and will be more loyal to Parliament than their Commissioners in the future.

Fabre-Aubrespy
Madam President, as the chairman, Mr Fayot, mentioned earlier, this report was the result of excellent collaboration between the Commission on the Rules of Procedure, the Verification of Credentials and Immunities and the Committee on Budgetary Control.
The final text contains some positive points, but several other points leave us feeling somewhat dissatisfied. With regard to the more positive points, I should like to highlight the fact that we did not make a limited ad hoc amendment within the framework of the 1996 financial year; instead we set out a reform that will be valid for years to come.
I should also like to point out that we have kept to our decision to refuse discharge, contrary to what had been expected. Any other decision would have been paradoxical to say the least in view of everything that has happened since December. We have the option of refusing discharge outright. Such refusal does not necessarily lead to a motion of censure, although it should logically lead Parliament to look at the need for one. What is more, we have done away with the anomaly in the Rules of Procedure whereby a refusal must be voted for by an absolute majority of the Members of Parliament.
We do not entirely agree with some of the points adopted, for example, the fact that the President can inform the Commission of the reasons behind a refusal of discharge simply by letter, as this seems a rather secretive way of going about things. However, it would of course be necessary to eventually set out the reasons why Parliament might refuse to grant discharge.
Our second point of contention relates to the role played by the Committee on Budgetary Control, which is in the process of losing the option it has had until now of giving its opinion on the amendments before they are put to the vote in the House. In my view, this responsibility was a positive element and I regret that it has been amended.
Similarly, instead of saying that the amendments are inadmissible, the report should be referred back to the committee responsible if they are adopted. These are the points in the report on which we disagree.

Liikanen
Madam President, the Commission has no intention whatsoever of interfering in Parliament's internal rules. However, on the basis of the opinion of its Legal Service, the Commission should just like to make a comment of a legal and institutional nature.
The discharge procedure is governed by Article 206 of the Treaty and the decision to grant discharge was designed as a means of support to the initial financial nature based on the report by the Court of Auditors, despite the fact that over the years this has taken on a political dimension.
The decision to grant discharge is a single act that cannot be divided up into a political decision on the discharge and a decision to close the accounts, which is to be taken at the same time. Such a division would change the institutional balance and require the Treaties to be revised.
However, if discharge is refused, the accounts for that financial year need to be closed. This would therefore entail Parliament taking a decision to close the accounts, by default, and would mean that the actual procedures followed for the budget for 1982, 1992 and 1996 would be laid down formally. The Commission, for its part, will consider the legal feasibility of including such an option within the framework of the reform of the financial regulation.

President
Thank you, Mr Liikanen.

Dell'Alba
Madam President, please excuse me. The screens in the offices were in fact showing 'Wijsenbeek report' with me speaking on that report, a mistake I tried to put right. I realise my error and I shall insert a statement in the Minutes. I just wanted to say that I missed the debate on the Fayot report because it was wrongly indicated that another debate was taking place.
I shall submit an explanation of vote. Thank you.

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

General economic policy guidelines - European Employment Pact
President
The next item is the joint debate on the following reports:
A4-0222/99 by Mr Fourçans, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the Commission recommendation for the broad guidelines of the economic policies of the Member States and the Community (drawn up pursuant to Article 103(2) of the Treaty establishing the European Community) (COM(99)0143 - C4-0208/99); -A4-0239/99 by Mr Menrad, on behalf of the Committee on Employment and Social Affairs, on the European Parliament's contribution on the European Employment Pact and on the Commission's communication on Community policies in support of employment.
Fourçans
Mr President, ladies and gentlemen, the report I am presenting this afternoon follows on from the Annual Economic Report we adopted on 11 March. Today's report on the BEPG (broad economic policy guidelines) places greater emphasis on the economic strategy and the structural reforms needed according to the specific situation in each Member State.
Commissioner, our text comprises two main sections, in line with the Commission's proposals: the macro-economic section and the structural section.
First, I would like to look at the macro-economic section. Although a slow-down in growth has been predicted for 1999, we are not talking about a recession, which means that there is no reason to change the overall economic strategy in Europe. In other words, we need to develop our strategy along the lines of a good policy mix where salary increases correspond to productivity gains with a view to promoting growth and employment.
More specifically, budget deficits must continue to decrease and the necessary adjustments must be introduced according to the speed with which this reduction occurs. This means that automatic stabilisers should have a part to play, but I would stress that they must not jeopardise any reduction achieved in public deficits which is absolutely vital for growth and employment today and, above all, in the future.
If this is to be achieved, such a reduction should be mirrored, where possible, by a reduction in taxes and other levies, or at least by their stabilisation. This approach requires greater control over state expenditure and improved effectiveness and quality in terms of public expenditure.
As regards monetary policy, we should of course like to emphasise the importance of the ECB's independence, which is essential for it to best fulfil its role in the area of price stability and guarantee the conditions that encourage growth and employment. Therefore, ladies and gentlemen, it should indeed be independent, but not at the expense of the vital democratic accountability that we in the European Parliament must vigilantly ensure.
The second section of our proposal relates to structural reform. If unemployment is to be significantly and permanently reduced, growth is undoubtedly important, but it will only be achieved by way of thorough, consistent reforms that are adapted to suit the specific characteristics of each of our Member States, as advocated by the Commission. What is more, such reforms need to be carried out over a period of time in a consistent and determined manner.
What do these reforms involve? I shall not go into details here but I would simply like to tell you about the general ideas. Improving the workings of the single market and the European markets in general is one of the key aspects. In order to achieve this, Commissioners, there needs to be greater integration in terms of the financial markets. Moreover, the markets in goods and services also need to be opened up as they provide the greatest number of jobs. The level of participation in the labour markets must also be increased and we must render them more flexible by adapting the social welfare systems and reducing labour costs, particularly for workers with less skills.
Lastly, ladies and gentlemen, we must continue to liberalise the telecommunications, energy and transport sectors and guarantee better financing for SMEs. We also need to reform the social welfare and tax systems as well as the education and professional training systems.
So, ladies and gentlemen, this is the direction in which European economic policy should be moving. No doubt you will say that it is an ambitious programme, and I agree. But the public must be told the truth, especially in this pre-election period. They should be made aware that this type of reform is needed if unemployment is to be genuinely tackled and that the sooner it is implemented, the sooner we can begin to reap the fruits of our labour.

Menrad
Madam President, this report from the Employment Committee was originally supposed to deal mainly with a Commission communication on Article 127 of the Treaty of Amsterdam, that is to say with the mainstreaming of employment policies at Community level. The committee decided also to include the European Employment Pact planned for the Cologne summit. This became the main subject of the committee's report when publication of the communication was delayed by the Commission's resignation. The communication did subsequently appear, however, on the very day after the vote on my draft report had been taken in the Social Affairs Committee. It is now sensible to include it in Parliament's report together with several amendments, such as Amendments Nos 1, 2, 5 and 6.
We were also under pressure of time with our opinion on the Fourçans report on the Commission's recommendation on the broad economic policy guidelines, which it is also my task to deliver. We should like to thank Mr Fourçans for his very fine work and also for the fact that the Committee on Economic and Monetary Affairs has taken on board some important points made in the opinion of the Social Affairs Committee. His report explains how the recommendation is exceptional in two respects. Firstly, these are the first broad economic policy guidelines since the introduction of the euro on 1 January 1999. And secondly, for the first time, job creation is seen as the most important aim of economic policy. We recommend the adoption of the Fourçans report.
Now let us return to the Employment Pact. The comment made by the chairman of the special summit on employment held in Luxembourg in 1997, Jean-Claude Juncker, also applies to the Cologne summit: it must not be a literary convention. He was referring to the many declarations made at previous summits which were not binding. In fact, a whole series of worthwhile, practical initiatives were decided on in Luxembourg and that is why we do not, thankfully, need to start from scratch.
We believe that the European Council in Cologne has to make a tangible improvement on Luxembourg. To sustain a high level of employment, a longer-term strategy for tapping society's potential in terms of creativity, innovation, pioneering spirit and willingness to invest and perform needs to be developed, in accordance with the employment guidelines. Institutional reforms to promote dynamic competition and flexibility have to be coordinated with the need to maintain - but also to modernise - social security systems.
Specifically, the Employment Committee's report calls for the following: an increase in the number of unemployed people to benefit from an active support measure such as vocational training or job-creation measures, compared with the proposals in the guidelines; the autonomy of the European Central Bank and the two sides of industry; and further efforts to consolidate public finances. We specifically declare our support for the stability pact; respecting it makes it possible for interest rates to be lowered and thus to stimulate investment.
From this point of view, we recommend a wage policy geared to productivity. If profits and investment in new jobs are increased as a result of wage restraint, then it is not enough to fob the employees off with a simple thank you for that restraint. The Social Affairs Committee believes that there should be voluntary schemes allowing them to participate in both profits and capital. In return for a moderate wage agreement, employers might also increase their investment in human capital or recruit more workers and trainees.
In addition, we call for intelligent working models and the reduction of overtime, for flexibility instead of a unilateral reduction in working time with full pay, an easing of the tax burden on labour, the convergence of corporate taxes to prevent the relocation of undertakings solely on tax grounds, and finally regular meetings of the political decision-makers with the two sides of industry and the European Central Bank so that common strategies can be agreed.
In the committee, we also discussed the issue of whether special employment programmes for specific groups - such as young people or the long-term unemployed - ought to be implemented and financed at European level, on top of the national action plans and measures carried out by the Member States under the Structural Funds. This would be wrong. Subsidised employment programmes costing billions would be completely wrong - they are neither the right response to structural unemployment nor should they be financed at European level. On the other hand, greater cooperation when formulating national policies - through rigorous application of the employment policy guidelines and action plans and improved monitoring - means European added value, which, together with the stabilising effect of a hard common currency in the European internal market, will in the medium term also contribute to there being more jobs and less jobless, which is an important precondition for the social dimension of the European Union.
With this in mind, I ask you to vote in favour of this report. I will close by telling you that colleagues from all the groups supported me in the committee by making constructive criticism and tabling constructive amendments.

Herman
Madam President, ladies and gentlemen, the Fourçans report is important not only because it fully endorses the Commission's recommendations, but also because it plays a clear part in the political debate that has caused a great stir among European circles, including within this Parliament. The debate focuses on whether or not the introduction of the euro has given rise to the need to relax the budgetary and monetary discipline that led to the historic decision of May 1998, with a view to promoting a more tentative form of economic activity.
The position adopted by the Commission and by the Committee on Economic and Monetary Affairs and Industrial Policy in this connection is qualified: while price stability is guaranteed and maintained, we can be more flexible as regards monetary policy, provided of course that budgetary discipline is maintained and continued. In fact, productive private investment has deliberately had to slow down for years precisely because of the enormous debt accumulated and the substantial sums given to finance both this debt and our deficits.
One of the advantages of this report is that it has prevented us from giving in to the temptation that entraps many a politician on the eve of an election, namely giving into the people's demands. However, the people are calling for fewer sacrifices and more handouts, which is naturally incompatible with the demands of budgetary discipline.
Placing the emphasis on macro-economic resources is much more attractive. Changing interest rates and extending public deficits are far more popular initiatives than the unwelcome measures of restoring the balance of social security, increasing the flexibility of the labour market and reducing labour costs for the least skilled.
We should therefore welcome the fact that on the eve of the elections, Parliament, like the Commission, has been able to tackle the demands of the economy and managed quite honourably to resist the pressures of public opinion, the media and other pressure groups. This is why, Madam President, we welcome this report and will vote for it enthusiastically.

Goedbloed
Madam President, my compliments to Mr Fourçans on his lucid report, which looks like receiving broad support in the House. In recent months, we have on occasions had a robust discussion on which way to go: should we have an expansive policy as advocated by the Social Democrat group, along the lines of what Mr Lafontaine would like, or should we stick to the rules that we agreed? I think it is a good thing - and it is presented in a balanced way in the report - that we have opted for that line, namely to stick to the rules. A measure of support is now developing among the Social Democrats too for implementing these kinds of structural measures, which are so important for ensuring the internal stability of the euro: low inflation, which brings lower costs and which also enables more jobs to be created through the structural measures.
That is important not only for getting people into work, but also for those who are drawing their pensions. We shall have to guarantee this stability in future, and on the other hand we must ensure that there is greater flexibility. If we can stabilise our financial position - which is up to the Member States, and in that regard I am extremely happy with the Commission's response here, which Mr Fourçans emphasises in his report - in such a way that more jobs can also be created in the future, then we shall amongst other things strengthen our competitive position vis-à-vis the United States. In short, then: let us have more people in work in the Union and better provision for those taking part in the work process in these Member States.

Moreau
Madam President, the recent events that led to the Commission's resignation scarcely instilled it with the modesty they should have done, to say the least. In fact, the Commission's arrogance has once again manifested itself in its recommendations on the broad economic policy guidelines. How can we simply stand by and watch the Commission once again lecture the governments of the Member States in as diverse areas as public finance, social welfare and the labour market? Each country has received a good dressing-down. Some are accused of budgetary relaxation, some are being clearly encouraged to reform their pension, health and welfare systems, while others have been told off for the lack of flexibility and adaptability of their labour markets or for being too slow in liberalising their public markets.
Such an authoritative approach is all the more intolerable since these problems are a result of the guidelines that have been in place for years and that have led to the high unemployment rates and poverty experienced by the majority of our countries. These guidelines are based on the reduction of labour costs and they hamper growth. I welcome the fact that certain governments have expressed their support for relaxing budgetary constraints, and the Central Bank itself has had to take account of the risks of a slow-down in growth by cutting interest rates.
However, budgetary relaxation alone will not be enough: the straitjacket of the stability pact must be replaced by a genuine growth and employment pact. This is why, in our view, the Cologne European Council must put an end to the grand and noble declarations on employment and commit itself to actually implementing effective measures. Our group has proposed several initiatives in this respect: boosting public investment through the release of additional resources, including at Community level; continuing to cut interest rates, using a more selective approach, with a view to encouraging projects that create jobs; reducing working hours without reducing salaries or flexibility; and establishing minimum wages.
These employment policies should be integrated into all Community policies and be accompanied by quantified objectives that are binding and that can be monitored. Unemployment will only decrease significantly if such measures are adopted.

Hautala
Madam President, if the euro is a complete success it will improve competitiveness in the European Union, but, on the other hand, I would point out that structural unemployment threatens this competitiveness. This is very much a question of the simplest jobs having disappeared in our society, with differences in pay growing so enormous that some people are paid huge amounts of money for what they do, while others would in fact be more productive, in the traditional sense of the word, if they were not in the labour market at all. But that is in no way an acceptable state of affairs, either for society or from the human dignity point of view. Member States should make low incomes free of tax and lower the rate of taxation across the board since at present, for example, it is deterring people from even accepting temporary employment. Part-time workers and those engaged in atypical work should qualify for welfare and a pension if we wish to take responsibility for people who have to resort to atypical employment more and more.

Blokland
Madam President, I have a few comments on Mr Fourçans' excellent report.
Budgetary discipline remains a good idea in all the Member States. Without good budgetary planning, it is very tempting to resort to a broad monetary policy to ease the pain.
Popular support in the Member States for a tight financial and economic policy is an unpredictable factor. It is worrying that in some Member States, EMU discipline rests on one-off measures and not on structural change. The analysis commissioned from the Netherlands Economic Institute makes it clear that the main problem-cases in terms of EMU, and the ones which need more careful attention, are Portugal, Italy and France. Can the Commission and the Council guarantee that they will receive it?
In future, most countries will face a funding problem due to the fact of an ageing population. By no means all the Member States have yet begun to address this problem. Systems for financing retirement benefits, pensions and health care will need to be radically revised.
Italy, Belgium, Portugal and Spain are Member States which remain sensitive to fluctuations in the rate of interest on their national debt. These countries need to modify the scheduling of their national debt and make sound progress on reducing their budget deficit.

Randzio-Plath
Madam President, Commissioner, it is good that the European Parliament's report on the broad economic policy guidelines in the Community and the Member States strongly emphasises how essential it is to coordinate economic policies, and that it goes even further than the Commission proposal by also demanding practical initiatives. The fact is that structural measures and labour market policy are only part of the answer to the unemployment problem, which we are all concerned about. What is decisive is whether we can achieve growth rates in excess of 3 % in Europe and in the Member States.
For this to be the case, economic policy must fulfil its responsibilities in terms of employment policy and ensure that there is a balanced and appropriate policy mix in the European Union with instruments geared towards supply and demand. We need economic policies to be coordinated so that we can engineer and guarantee higher, sustainable growth. You see, monetary policy is no longer responsible only for price stability, financial policy only for a sound public budget, and wage policy only for pay trends. If the Central Bank, the State and the two sides of industry can work as a team - while fully respecting the independence of the individual parties - they will be able to exert a decisive influence on investment, growth and employment.
All three players must therefore in any case be placed under an obligation to contribute to a balanced and appropriate policy mix in the Community. An essential part of this is a financial policy which will help in particular to increase investment and which will not try to consolidate without considering the economy. We need an incomes policy which will help to increase households' purchasing power without triggering increases in labour costs which exceed increases in productivity - which means that pay trends must be compatible with productivity gains, but should not fall below them either - and we need a monetary policy which will contribute to economic growth by delivering price stability. That is why the ECB's decision to cut interest rates was the right decision and an important step forward. The ECB has finally made its contribution to growth and employment in accordance with the Treaty.
In this way, the Member States will also have more scope for investment in their budgets, even though consolidation is still an important goal. It should be borne in mind, however, that fiscal measures are one way of responding to cyclical or local blips in demand and that their effects vary from country to country. Establishing a strict deficit ceiling can definitely have an adverse effect, and greater account needs to be taken of individual situations. Apart from this, where are the proposals for how the Member States can stimulate public sector investment while still respecting the 3 % ceiling? The guidelines need to give pointers here.
Europe still underestimates the significance of cross-border infrastructure projects, and here - five years after the Delors White Paper was discussed at the European summit - the Council of European Finance Ministers is requested finally to produce European added value in the fields of transport infrastructure and information and communication structures, to push through modernisation schemes and here also to make offensive use of the European Investment Bank, so that in view of the sluggish economy, an upturn will be stimulated more than it has been hitherto by European public sector investment, if possible in partnership with private investors.
Economic and employment policy complement and support each other. The Employment Pact must play a special role. It can only do so if the broad economic policy guidelines and the employment policy guidelines are drawn up at the same time, so that both sets of guidelines apply when both national budgets and the European budget are established. If fighting mass unemployment is the number one challenge for the future of Europe, then it is not only necessary for those involved to agree; the context in which action should be taken, as well as what it should consist of and the timetable, must be laid down.
I think that this is how economic and employment policy can actually be linked together and if, in addition to this, tax policy also makes a contribution, for example through a reduced VAT rate being applied on labour-intensive services, then Europe will be able to make considerable progress.

Blot
Madam President, this report contains a number of interesting admissions, for example, recital F states that there is a constant growth differential with the United States and in recital J, I read that fiscal pressure is generally high in the Member States, which is scarcely favourable to consumption, growth or employment. In paragraph 4, the rapporteur rightly acknowledges the modest performance of the European Union in terms of growth and employment and in paragraph 16 he notes that public investment is not always given the priority it should enjoy compared to operation expenditure. In paragraph 23, the rapporteur states that vigilance is required in view of the prospects of possible deflation.
This is all well and good, but these observations do not lead the rapporteur to question any of the dogmas on which European economic integration is based.
Let us take the example of the euro. The introduction of the euro prevents Member States from implementing monetary policies to regulate their situation. In the event of an asymmetric shock, which the report does not mention, those states that would be most affected, for example, by inflation, would no longer be able to fight it through a differential monetary policy. However, fiscal policy could naturally still be used, while wage policy or the unemployment rate could always be used as adjustment variables.
However, calls for tax coordination, which is unfortunately advocated by the rapporteur in paragraph 34, mean that this second means of adjustment would no longer be open to the Member States. So unemployment is left as a regulatory instrument or pressure on wages, and why not indeed? The problem however is that, quite frankly, no one is prepared to acknowledge this for obvious electoral reasons, as this would make the euro and its creators unpopular.
The rapporteur, speaking on behalf of a committee dominated by the PSE Group and the PPE Group, could not of course express any point of view other than that of those two groups, and so could not denounce the fact that the Socialist policies implemented in 13 of the 15 Member States would put Europe at a competitive disadvantage in the global market.
The combination of the global free trade movement and the increase in social and fiscal burdens, which are a result of these Socialist policies, partly explains Europe's low growth rate, particularly in comparison to the United States. There can be no social progress without economic growth, but there can be no growth where the spirit of enterprise is scorned by egalitarianism and bureaucratisation.
Socialism is thus backfiring on the people because of its poor economic management and its dogmatic cosmopolitanism. The broad guidelines of a European policy should move away from state control and cosmopolitanism as these are the two things that essentially benefit the dominant American economy. Moreover, I regret the fact that the rapporteur did not consider it appropriate to mention the effects of the United States domination of the European economy.
Lastly, it is unfortunate that the self-censorship that has prevailed in this report - which was unavoidable as there was undoubtedly no alternative - forced the rapporteur to limit his work to purely technical aspects, although it was often very thorough, without tackling the fundamental political issues facing our economies, which will one day have to be tackled before our people.

Van Lancker
Madam President, on behalf of the Socialist Group, I have to say that we are especially glad, at this late stage, to be able to give our views and have a discussion on the European Employment Pact. Whilst Amsterdam and Luxembourg placed jobs fair and square on the European agenda, it is obvious that the Luxembourg process alone will not be enough to bring about a drastic reduction in unemployment in Europe. What we really lack is a strategy, a macro-economic European strategy and a structural employment policy which hang together, enabling us to focus our full attention on the right goals.
We therefore welcome the German Presidency's proposal to make headway on a European Employment Pact. Indeed, the European Parliament itself has always insisted that a pact on employment is required, since the stability pact urgently needs something to counterbalance it. But in all honesty, the provisional version of this Employment Pact looks a touch anaemic. It will not be an umpteenth rehash of fine words as a policy mix or a revamp of social security, served up with a dash of Luxembourg sauce, that gives the European Union a decent policy on jobs. And quite frankly, the economic guidelines now before us simply continue to swear by an increasingly tight policy of cutbacks for many Member States, and the belief that flexible wage structures, a deregulated labour market and reductions in social protection will create jobs is definitely not my idea of what a European Employment Pact ought to be. It is more of an American-style cocktail which does nothing new to stimulate growth and merely makes for more social inequality and more uncertainty.
Europe's Socialists and Social Democrats, inspired by Antoni Gutiérres, made proposals of their own for a pact on jobs at a congress in Milan, and I am delighted to see that both Martine Aubry and Dominique Strauss-Kahn have adopted large parts of these. The message is very clear, Commissioner. Certainly the European Pact must not be an empty vessel, but nor must it be a neo-liberal recipe book. It must contain concrete measures and must get all those involved to make clear commitments - the European Central Bank, the social partners, the ECOFIN Council and the Social Affairs Council. The key elements which we believe must feature in a pact of this kind include first and foremost a European strategy for growth. The current growth forecast of 2 % looks set to create even more unemployment. The special action programme agreed in Amsterdam was a good decision, but far too modest. So the European Investment Bank and the Fund must free up new resources and the Member States must also be enabled, through their own budgetary policies, to give their economies a shot in the arm, not by making the stability pact more rigorous but by interpreting it more flexibly.
Secondly, we need a fiscal policy which is an incentive, rather than a disincentive, to employment. The decision on VAT on labour-intensive services is all very well, but in the meantime we still have the Monti proposals, the Primarolo proposals as our staple fare, if I can put it like that. This log-jam urgently needs to be cleared; we have to revive our European fiscal agenda.
Thirdly, the guidelines on employment must be strengthened and given specific shape. One specific commitment might be this: if all the Member States did as well on jobs as the top three scorers, we could get not 150 million but 180 million people into work. And in any event, we urgently need to restore the link between work and social protection.
Lastly, we need more coordination, more coordination between the guidelines on employment and the economic guidelines, not so much as regards timing but as regards substance. We cannot go on having economic guidelines which preach budgetary discipline and at the same time guidelines on employment which are subordinate to them. We shall never get a serious strategy for growth that way. It is this that the Cologne summit needs to understand, and I hope that somebody will listen.

Langen
Madam President, ladies and gentlemen, we have heard Mrs Van Lancker say that she does not want a neo-liberal recipe book; in response, I can only say that nor do we want the employment policy guidelines to become a Socialist book of fairytales. I should like to thank Mr Fourçans and Commissioner de Silguy very much for explaining their economic policy guidelines so clearly both here and in the documents. I know that they have been the subject of much controversy for many years. Today we have the euro, and today no one is disputing the fact that their proposals are right nor that Mr Menrad's report, which covers the employment policy side, is a very good report, which can be debated here alongside the Fourçans report.
Listening to Mrs Randzio-Plath, I do wonder whether she has actually already given up on the stability and growth pact. After all, she has repeatedly stressed these points in the committee as well. I think it is absolutely essential for the three most important aspects to be respected, that is the stability and growth pact, a wage policy geared to productivity, and the need for structural reform. In recent weeks and months, we have discussed what economic and financial strategy is right for the euro zone time and again. Article 105 of the EU Treaty leaves no room for ambiguity here. As far as the European Central Bank's tasks are concerned, economic policy is clearly secondary to price stability. Should we step up coordination of economic policy? Yes, that is also laid down in the Treaty. Should a conventional interventionist economic policy à la Keynes be pursued to control the economy? No!
Chronic unemployment in Europe will not be eliminated by means of a European employment programme or by the Member States in the European economic and monetary union having a uniform economic policy, but by means of structural reform. There can be no doubt that the stability pact was right, is right and will continue to be right. I see that Mr Diller, Parliamentary State Secretary in the Federal Ministry of Finance, is with us. Your former boss, Mr Lafontaine, came up against a brick wall in Europe with his ideas on this subject, did he not? Basically, he failed.
It is true that monetary policy should not be obstructive to economic and financial policy. Of course it is also true that if there are stable interest rates, stable prices and low interest rates, Member States will have considerably more scope to eliminate chronic unemployment than they had before. It is therefore necessary not to ease budgetary discipline; to do so would not be prudent, as Mr Herman has emphasised. On the reform measures, several colleagues have mentioned flexible labour markets. Mrs Van Lancker spoke about the pension system. I think that Germany, which has a pension system funded by contributions, will actually experience serious difficulties in the long term, and that in one generation it will simply not be possible to build up a fund system to run alongside the contributions system. Very wide-ranging structural reforms are therefore required, which must prevent problems also being caused by the State placing too great a burden on GNP, unduly high taxes and social and benefits policies making excessive demands.
If coordinating economic policy triggers a process of learning and competition, with people asking 'How do the other countries actually go about this?' then this will achieve more than illusionary spending programmes. Competition between the countries in the euro zone will call many traditional systems into question. I believe that this is right and proper!

Boogerd-Quaak
Madam President, we have two good reports here, but what counts most for us is a strong economy which really does something for jobs. We have the internal market and we have EMU, but Europe needs more. I should like to focus today on unrestricted fiscal competition. With help from the Commissioner, we have achieved some progress here, but the Council is not doing enough. It is the Council which is dragging its feet on a number of very important issues, for example switching labour costs into environmental and energy taxes, and now it seems that this dossier too is being blocked. It is precisely these areas which offer great opportunities. At my instigation, the Committee on Employment and Social Affairs produced a report on production levies and green taxes, and this shows that the introduction of this kind of taxation at European level could have a major impact on jobs. I would urge the Commission to read this report by Parliament's research departments.
Worker mobility continues to be hampered by the fact that earned income is taxed twice by virtue of the different treatment given to allowances and taxation in the Member States. I therefore think that with regard to social security and pensions, it is very important to pursue convergence between the Member States. I am not advocating the imposition of European legislation 'from the top down', but efforts towards convergence can certainly be made 'from the bottom up', and that will most definitely be needed if we are to secure the financial future of our ageing populations. I would make the point once again that a huge demographic shock awaits us, and that the European Union needs to coordinate its policy for coping with this.

Christodoulou
Mr President, the Commission report on current general trends is a qualitative improvement and places special emphasis on employment by stressing the need for real structural changes. Furthermore, in addition to these general trends, it mentions each specific country in turn - acknowledging that each country has its own peculiarities - addresses the issue of the growth of its economy and puts forward the necessary reforms.
This change was necessary, and I would like to point out that it is in keeping with the flexible interpretation and orientation of the criteria contained in the Treaty and which I have time and again supported. The very existence of economic and monetary union demonstrates that this is not just a formality. On the contrary, it addresses economic and monetary issues in a dynamic way and calls for the coordination not only of the monetary but also the economic and social policies of the Member States of the European Union.
We must bear in mind that this flexibility must also extend to the structural framework. If general economic policies are not coordinated, monetary policy will be ineffective and will not have the desired validity to enable the currency of the European Union to play its true role. In these circumstances, therefore, we must avoid any potential split within the European Union and we must aim to incorporate all Member States into EMU as quickly as possible. Only in this way will it be possible to achieve the more effective, comprehensive, coordinated reforms that the Commission is calling for. And only in this way will we be able to have real economic and monetary union, as envisaged in the Maastricht Treaty.
I therefore welcome the statement made by the Commission on this issue, which seems to open the way for a more rational and more effective economic approach, the main characteristics of which are quite rightly highlighted, discussed and enhanced by our rapporteur, Mr Fourçans in his excellent piece of work.

Ribeiro
Mr President, this joint debate on the broad economic policy guidelines and the European Employment Pact is to be welcomed. You could say that this represents progress towards examining or at least debating the view that unemployment can only be combated with economic policies aimed at job creation. Well, you could say that.
But this afternoon's debate will not only pass by virtually unnoticed, it will be regarded as the unprepared introduction to a week full of events which would engulf any debate, let alone one on economic guidelines and employment.
We expect something to come out of Cologne. There must be a joint debate on economics and unemployment. In particular, the summit participants must be receptive to the marches which will take place against mass unemployment, precarious employment, social exclusion and the other forms referred to in the Menrad report. They must not dodge this issue.

Raschhofer
Mr President, ladies and gentlemen, a sound economic policy, which gives companies breathing space, is the best way to create more jobs. Last year it was possible to bring unemployment down to 10 %. This pleasing, though by no means adequate trend cannot, however, as claimed in many quarters, be attributed to the employment policy measures taken by the Union. The realisation that the efforts made by the Union hitherto, including the NAPs, have been insufficient and have had little success is another reason why this Employment Pact is necessary.
If we wish to take a positive view of these reports, then we can say that we have recognised the problems and have ideas about how to tackle them. But ideas and an awareness of the problem alone will not create a single job. The will and the ideas are there, but there is a big gap when it comes to implementing the measures. There are only limited ways in which the Union itself can create jobs. This is the task of the nation states and companies, in particular the SMEs on which we must focus all our attention.
Creating one new job costs around ATS 1 million in my national currency. Since 1989, therefore, the appropriations in the Structural Funds alone could have created six million jobs! But these jobs are nowhere to be seen, declared the President of the Court of Auditors, Mr Friedmann. The Employment Pact ...
The President cut the speaker off

Weiler
Ladies and gentlemen, it is astonishing - or perhaps it is not - that today's debate is in fact being used as a platform for expounding different views on both economic policy and social and employment policy. It may not be quite so astonishing, because unfortunately the election campaign has of course already started; were this not the case, then perhaps the speeches would have turned out somewhat differently. Mr Menrad has tabled a good and reasonable report which my group can also support, provided our amendments are accepted. He is right that we do not need to start from scratch with everything. We have experience at national level in a few Member States, but at European level, formulating the Employment Pact and implementing it is new territory. The national action plans were also new territory, and unlike the previous speaker, I strongly believe that the Luxembourg guidelines and the national action plans have contributed to the fall in unemployment. Of course more needs to be done; no one is disputing that, and it is mentioned in both reports.
Although I am largely in agreement with you, Mr Menrad, I should like to mention a few further points on which our views differ, and nor do I think that the German Government has such a narrow view on this as you described, Mr Langen. We obviously welcomed the stability pact, but an additional stability policy which strangles public budgets, robbing them of all political room for manoeuvre and making it impossible for them to create the necessary basic conditions in education, research and training, is no good to anyone. That is not the kind of stability pact that we had in mind. Nor is it sufficient - and Mrs Van Lancker is right here - for the ESF to be our only source of funding for employment policy; in any event, that is another matter which will have to be dealt with in the next parliamentary term.
Finally, I should like to give the German Presidency, which will be presenting the Employment Pact in Cologne, something to think about: please bear in mind that as a parliament, we obviously expect to be involved in this.

Carlsson
Mr President, I have said before in this House that inequality and injustice in Europe divide those who have work from those who stand no chance of feeling any sense of participation, earning their own living or developing their potential.
We are now discussing reports by three of my colleagues in the PPE Group. I should like to congratulate them on a constructive outcome. We should allow Mr Fourçans' prescription for a sound economic policy to form the basis of the medicine the European labour market needs. Mrs Thyssen's contribution, which concentrates on labour-intensive services, is unfortunately still required. There is clear proof that high taxes are discouraging an above-board, expanded market in services.
The information, white collar and services sectors are underdeveloped in Europe compared with the USA, for example. In point of fact, this is the area in which tomorrow's jobs lie, which we cannot afford to tax out of existence. Consequently, extensive structural reforms are also needed in the different European markets. The common market should be realised and exploited to its full potential. Monetary union increases pressure on competition but, properly handled, it can also increase European competitiveness and prosperity.
My thanks also go to the Commission, in particular to the present Commissioners, who have tirelessly focused on the lack of dynamism, the need for change and, in particular, on the role of national governments and parliaments in undertaking measures to reduce fiscal pressure, stabilise public finances and improve the labour market and training methods in the different Member States.
Let us use the European Union to create the right conditions for entrepreneurship, growth and new jobs - not to regulate the jobs we need out of existence or to sit here and believe that we can redistribute and 'talk up' the new jobs and tomorrow's opportunities in this Europe of ours.

Svensson
Mr President, both the Commission's recommendation and Mr Fourçans' report are based on an essentially fallacious idea, namely that of a uniform economic policy. We all know that the structure of the economy differs widely in the various Member States. When countries have such different structures, as is the case in the Union, imposing the same economic principles results in disagreement and conflict. If one wishes to achieve harmonisation, however, the policy should instead take account of national differences and be adapted to the national structures.
The Union should finally stop allowing itself to be guided by abstract theories on harmonisation which bear no relation at all to hard and fast reality!

Lienemann
Mr President, Commissioner, ladies and gentlemen, it is somewhat surprising that the European Union, on the one hand, is engaged in a well organised debate on the broad economic policy guidelines, with all the known constraints and a rigorous stability pact, and on the other hand, has an employment policy with only vaguely defined guidelines. And this is in spite of constant assertions that employment is the biggest issue facing Europe and Europeans.
We should firstly like to see the European institutions fall into step and bring the two facets of economic policy and employment policy together. However, it is clear that if we do not get out of the rut we are in, there will not be sufficient growth to reduce unemployment. The European memorandum proposed by the French and Italian Ministers for Employment explicitly urges the European Union to set itself a 3 % growth limit for the next few years. However, this will not be possible without tough decisions. So what type of decisions can we expect?
First, we will need a policy to boost major initiatives as advocated by Jacques Delors. Frequent reference is made to this type of proposal but no specific financial and operational commitments are ever really made.
Second, if growth is to receive a boost, internal demand must be supported. I should like to remind you that growth in the United States is heavily reliant on internal demand. There is certainly no miracle for achieving this: if internal demand is to recover, wages firstly need to be supported. Therefore, the policy of wage moderation, which has all too often prevailed, needs to be reversed. Furthermore, productivity gains and wage increases must go hand in hand. Consumer tax must be reduced, and we believe that VAT should also be lowered, particularly in those sectors that create a high number of jobs.
Lastly, public investment must be given a fresh impetus, for example, in the major initiatives mentioned earlier and also in research. These grand declarations that welcome the reduction in state aid to companies still give cause for concern because there is an unwillingness to accept at the same time that the majority of these large privatised companies no longer invest in vital research or in research and development and as a consequence stunt our technological development.
To conclude, the issue of employment does not boil down to the issue of growth, however essential it might be. Since the dawn of civilisation we have worked less to produce more and I do not see why this secular movement should stop. It is time for a new stage in terms of a reduction in working time, which should provide the opportunity to better distribute the wealth produced. Europe may indeed suffer from high unemployment, but it has never been as wealthy. The problem is that this wealth is poorly distributed. We therefore need to create a fairer tax system, as harmonisation is not enough. There should be greater tax on capital and less tax on labour. We need to invest in the future through public investment in major initiatives and research. Working time must be reduced and alongside this reduction we must train our workforce. The national employment plans are very positive from this point of view.
Our opinion, Commissioner, ladies and gentlemen, is that it we have not achieved the right balance. Today we have 13 Socialist-led governments whose electorates, like the peoples of Europe, expect them to implement a policy that not only helps employment but also creates a social model that is not based on insecurity.

Metten
Mr President, the advent of the euro has also changed the general guidelines for economic policy. Independence is no longer an option, now that eleven countries of the European Union form one monetary zone with a single central bank and a single monetary policy. The economic policy mix urgently needs to be decided now at European level. And it will be. The question is simply whether or not political considerations will play a sufficiently active part in that. Against the background of the need for an active European policy mix, I am perplexed by the Commission's proposal for general economic policy guidelines. Instead of moving us forward, the Commission is pushing us back. Why?
Whilst the European policy mix has hitherto consisted of recommendations for national budgetary policy, the monetary policy of central banks and the wage policy operated by the social partners, the birth of the euro has evidently prompted the Commission to stop giving monetary policy any active role in the overall European policy mix. It is as if governments and the social partners could determine economic policy on their own and as if the ECB did not also have a role in supporting economic policy. There is a history to this debate, and I put it to you that the Commission is setting itself up here as a kind of secretariat for conservative forces within the ECB which argue that the ECB's second duty under Article 105 of the Treaty, namely to support economic policy - without prejudice to the maintenance of price stability - can be discharged simply by maintaining a sufficient degree of price stability. I would refer you to the policy strategy outlined in the ECB's first monthly report. Happily, however, ECB President Duisenberg made it clear at last Monday's latest parliamentary hearing that the interest cut of 8 April was precisely an attempt to help kick-start the Union economy, in other words he acknowledged in so many words that monetary policy too has an economic function. So I think it is a big mistake - fortunately identified as such in the Fourçans report - to reduce the policy mix to nothing more than tasks to be performed by government and the social partners. No, that is not on. You have to return, Commissioner de Silguy, to a policy mix in which monetary policy also plays its part in influencing economic policy.

de Silguy
Mr President, ladies and gentlemen, I should firstly like to point out that I intend to focus on issues relating to the broad economic policy guidelines, or BEPG, and Mr Mario Monti will deal with the other report, that is, the Menrad report on the European Employment Pact.
I should firstly like to congratulate Mr Fourçans on his excellent report and on the excellent work he has accomplished within such a short space of time, something I should also like to congratulate you on. The BEPG constitute both a vital and key instrument for the effective coordination of economic policies in Europe. This, Mrs Lienemann, certainly puts employment at the top of the priorities of the European governments, but it is also high among the priorities of the Commission and, of course, this House. The Ecofin Council will examine the BEPG on 10 May, before they are ratified by the Heads of State and Government in Cologne at the beginning of June.
Mr Metten, I have already given a detailed presentation of the Commission's recommendation to the Committee on Economic and Monetary Affairs and Industrial Policy and, bearing in mind the limited time available this evening, I should like to concentrate my speech on responding to your rapporteur's questions and comments and to the other points that have been raised this evening. To make things easier, my comments shall focus on two areas: the present economic situation and the implementation of the broad economic policy guidelines.
First, the economic situation in Europe is improving, albeit slowly. In spite of the uncertainties recently reflected in public opinion polls, the present outlook is favourable and the economic essentials of the European Union are becoming healthier. Proof of this lies in the positive outlook for consumption and household confidence.
The slow-down in world growth only has a limited and temporary impact on growth in Europe. Growth in Europe is set to speed up during the year to reach an annual rate of between 2.5 % and 3 % by the end of 1999. Recent monetary developments, Mr Metten, are boosting the confidence of economic agents and should have positive repercussions, particularly for private investment. However, as you are well aware, I never comment on the decisions taken by the European Central Bank, so as to avoid being accused of undermining the sacrosanct principle of independence.
The employment situation is improving, although it is certainly not improving fast enough, Mrs Moreau. I listened carefully to what you said, Mrs Van Lancker, and looking at the figures, I see that employment is set to increase by 0.8 % in 1999 and by 0.8 % in the year 2000. It increased by 1.1 % in 1998. The projected increase is very small, but it is proof that Europe's unemployment curve has been reversed and that our growth is generating more jobs. Of course, this is still not enough and that is precisely why the broad economic policy guidelines have been presented: they enable us to put forward an economic strategy that has been pursued for several years and that has been adapted, and as your rapporteur pointed out, there is no reason why we should change the present economic strategy. Instead, we should follow the same course and step up the action taken to support growth and combat unemployment.
The Commission welcomes the support that your rapporteur has given to the strategy advocated in the recommendation on the broad economic policy guidelines for 1999. I shall not go back over this. There is just one point regarding structural reform that I should like to highlight so as to demonstrate the Commission's willingness to assess the liberalisation of the telecommunications, transport and energy sectors. An analysis of these network industries will soon be published and the Commission has no objection to the use of best practices in national legislation where company rules are concerned.
My second set of comments relates to the implementation of the broad economic policy guidelines. Mr Metten, far from being a mere secretariat of the Council, the Commission this year put forward recommendations for each country. In doing so, it aims to ensure that the broad guidelines are a sufficient test to demonstrate Member States' willingness to specifically coordinate economic policies, Mrs Lienemann, by using the instruments they have established for this purpose. I should like to add, for Mr Christodoulou's benefit, that the broad guidelines apply to all 15 Member States, even though some of the provisions of the Treaty are limited specifically to the euro zone.
In my view, this coordination mainly involves two aspects. Although Mrs Boogerd-Quaak brought up another issue, that of the ageing of the population, I should just like to mention two aspects very briefly. The first of these is the budgetary policy. I would like to know whether or not the Member States are prepared to accept the specific country-by-country objectives laid down by the Commission. In other words, I want to know if some of them are prepared to take regulatory measures to face up to the current developments highlighted by the Commission's recent forecasts. These are the real issues the Member States must debate because they lie at the very heart of the process of strengthening budgetary coordination.
The second issue of concern is employment. The Commission's recommendation on the broad guidelines sets out national objectives for structural reform for each Member State. This is something that, as I remember, was mentioned by both Mrs Moreau and Mrs Randzio-Plath, whether in relation to the labour market or a more active employment policy. Are the Member States prepared to accept the objectives recommended by the Commission without toning them down? Here again I ask the question. In Dresden, the finance ministers were responsible for drawing up a European Employment Pact. Mr Mario Monti will answer you on that point and I shall not go into it any further. I just wanted to emphasise the fact that following the example of your rapporteur, the German Presidency suggested in this regard that we should promote macro-economic dialogue among all the elements of the policy mix. This is why the Commission is proposing that the social partners present a common position to the Cologne European Council and is also recommending that in the future an annual meeting be held with the social partners before the spring European Council which adopts the broad economic policy guidelines.
Furthermore, within the framework of improving the integration of employment in the economic policy, your rapporteur suggests that we should do away with the present separation of the broad guidelines and the guidelines for employment. I think you are right and it is worth asking whether it would not be better in fact to guarantee greater complementarity between the two elements, including in terms of the timetables involved. This is something the Commission is considering.
I shall end by saying that, in relation to the implementation of the broad economic policy guidelines, the Commission sincerely hopes that, contrary to what happened last year, Member States are able, in this first year of the euro, to agree on a specific, limited content for these guidelines, which is operational and which is not toned down, particularly as regards the recommendations for each country in the area of employment policy.
To conclude, Mr President, ladies and gentlemen, I should like to stress that the Commission gladly supports your proposal to systematically carry out an annual assessment of the way in which the broad guidelines are implemented by the Member States from spring 2000, on the basis of these country-by-country recommendations. This would undoubtedly help us to strengthen a genuine European economic policy.

Monti
Mr President, on behalf of my colleague Mr Flynn, I would like to start by congratulating Mr Menrad for his report and by thanking the Committee on Employment and Social Affairs for its rapid work on the draft resolution. We fully share the views expressed on the European Employment Pact. In addition, Mr Menrad has stressed the need to mainstream employment in Community policies. This is fully in line with the communication adopted by the Commission on this subject on 21 April. By reiterating Parliament's support for the Luxembourg process and correctly insisting on the support which the European Social Fund must give to the European employment strategy, the report and resolution have given timely messages.
Let us be clear about what we are seeking from the European Employment Pact. As requested by the Vienna European Council such a pact should establish a dialogue involving all the actors with responsibility for designing policies which impact on economic growth and employment creation. This dialogue should fully respect the autonomy of the various actors and take place at different levels as suggested in the draft resolution before Parliament today. As regards macro-economic policy, there should be an exchange of views between the relevant actors on each element in the macro-economic policy mix, fiscal policy, wage trends and monetary policy, so that each can fully support the growth and employment process.
As the Amsterdam Treaty and its Article 127 enter into force, there should be an assessment of the impact of all relevant policies on employment. In our recent communication on this issue, the Commission outlined how a range of policies can promote a high level of employment and how policies are increasingly being directed towards this objective. The Communication deals, for example, with ways of encouraging and supporting investment in capital and human resources in order to strengthen the European Union economy. It examines how structural reforms can make markets work better and thus help achieve sustainable growth and employment. It refers to the modernisation of social protection and of taxation systems in order to improve work incentives and opportunities for entering or returning to the labour market. We are pleased to find that all these points are referred to in the draft resolution.
Further practical steps will be needed to assess how the various Community policies can contribute more to the employment objective and, where necessary, be refocused to ensure that they do just that. It is vital that the Employment Pact should consolidate the key role of the Luxembourg process. What is important now is to strengthen the employment guidelines so that they deliver their full potential as a powerful instrument for labour market reform. We have the right to expect that the national action plans presently being drafted by the Member States will be more ambitious than last year. And as we come to evaluate the impact of the national action plans later this year, two years after Luxembourg, we will be in a better position to assess whether the strategy is working or whether more effort is required in certain areas.
You are right to stress that the European Social Fund must play a key role in support of the European employment strategy. We understand therefore very well why the draft resolution suggests a return to the Commission's proposal for the funding of Objective 3 activities in 2000-2006. However, we cannot forget the broader budgetary context. We are not unhappy with the way in which the European Social Fund and the employment strategy have been treated in the Berlin settlement.
Let me now turn to your discussion on the link between the employment guidelines and the broad economic policy guidelines. In Vienna the European Council called for greater synergy between the two processes and the Commission responded to this request with its latest broad economic policy guidelines and its Article 127 communication. However, do not forget that the Luxembourg process is still very new. The Member States have created new working arrangements to implement their national action plans and to report on them. We are learning together to work a process of peer pressure and open evaluation. It should be allowed to gain momentum: a change in timetable at this early stage could be disruptive.
It is clear that our approach to employment must cover macro-economic, as well as micro-economic, policies and must address problems which arise not just in labour markets but also in the product and capital markets. The creation of such a comprehensive approach and a dialogue between all the actors involved is the core of the proposed employment pact. These are issues of substance not timetabling. We hope the pact will be a step towards a better integration of macro-economic, employment and structural policies.
I should like to conclude with two or three remarks on points which I found particularly interesting in the course of the debate. Several speakers - such as Mr Blokland and Mr Langen - drew attention to the ageing population problem. Under Commissioner Flynn's initiatives, the Commission has looked into the problem of the future of social security and, I am glad to say that, at the further and recent instigation of both the German presidency and the European Parliament, we will come forward very soon with a communication on pension funds, drawing the conclusions from the Green Paper exercise.
A number of speakers - including Mrs Randzio-Plath, Mrs Boogerd-Quaak and Mrs Van Lancker - touched upon the taxation aspects. Let me simply say that in spite of the inevitable difficulties due to the unanimity rule, it is undeniable that now, under the strong urging of the German presidency and with the support of this Parliament, progress is being made in the implementation of the strategy against harmful tax competition and a number of objectives have been set for the Helsinki European Council.
As far as the more specific proposal, dear to many of you, about the reduced VAT rate on labour-intensive services is concerned, I am glad to note that today under the German presidency the first meeting of a Council working group on this subject took place, and later this evening we shall be debating the Thyssen report on this very topic.
Lastly, Mr Blot, I do not share your fear that fiscal coordination, following monetary union, might eliminate one of the two remaining options for implementing a policy against the famous asymmetric shocks. I think you can rest assured since the notion of fiscal harmonisation, as proposed by the Commission and unanimously adopted by the Ecofin Council and as supported, among others, by the rapporteur, Mr Fourçans, is certainly not an advanced notion of harmonisation. I would instead call on you to consider the problem in the following terms: if there were no coordination of fiscal policies, given the present level of market integration, the Member States would increasingly lose their sovereignty to anonymous markets and they would therefore have less and less opportunities to implement an effective fiscal policy.

Metten
Mr President, it is interesting that the Commission is speaking through the mouths of two Commissioners. It is a pity that they contradict each other. Commission de Silguy defended monetary policy not being an element of the policy mix, while Commissioner Monti referred to monetary policy as an important element of the policy mix. Can I have an explanation from the Commission?

de Silguy
In my view, there is no contradiction. The Commission only has one position regarding the broad economic policy guidelines, which it set out in a recommendation that it adopted unanimously. I should like to remind you that this recommendation on the policy mix defends a balance of budgetary policy, wage increases and structural policy. With regard to monetary policy, if this year's presentation seems different compared to last year's, it is due to the fact that, unlike last year, we now have an independent European Central Bank and the Commission does not think it appropriate to interfere in this principle of independence. Having said that, the Commission reserves the right, both this year and next, to carry out all the analyses and make all the comments it deems necessary to guarantee that the policy mix is as balanced and relevant as possible in order to ensure sustainable growth that does not cause inflation and that creates jobs in Europe.

Monti
Mr Metten, I would simply like to confirm exactly what Commissioner de Silguy said. In the text that I read out on behalf of Commissioner Flynn I see no contradiction whatsoever with the position expressed by the Commissioner responsible.

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

Fraud Investigation Office
President
The next item is the report (A4-0240/99) by Mr Bösch, on behalf of the Committee on Budgetary Control, on the amended proposal for a Council Regulation concerning investigations conducted by the Fraud Prevention Office (COM(99)0140 - C4-0180/99-98/0329(COD)).

Bösch
Mr President, ladies and gentlemen, I have always been convinced that in the end the European Union and its institutions would emerge from the crisis of the past weeks and months stronger. By setting up OLAF, the new European Fraud Investigation Office, we shall make a visible contribution to this. I think it is a good sign that the legal base for OLAF will be one of the first texts to be adopted under the new procedures of the Amsterdam Treaty. This would certainly not have been possible had not all those involved - the Council, Parliament and, after initial hesitations, the Commission - collaborated on this project in a very constructive spirit. My thanks therefore go to all those who have been and still are members of the high-level group of representatives of our three institutions at both technical and political level. In my capacity as Parliament's rapporteur, I should like to mention three of the participants by name and express my sincere thanks to them: my committee chairman, Mrs Theato; a courageous friend from my group, Mrs Wemheuer; and my tireless assistant, Mr Schönberger.
I now turn to the proposal itself. We have put together a package consisting of three components. The first component is the Commission decision to establish OLAF, an office which, although located organisationally within the Commission, is guaranteed to be independent of the Commission and to be free to take its own decisions when conducting investigations and enquiries. The Commission adopted this decision last week. The second component is the Council and Parliament regulation laying down how the investigations are to be conducted and what should happen with the results. This regulation is the centrepiece of the package. It covers external investigations in the Member States and internal investigations within all the EU institutions.
Briefly, these are the most important points which we wish to incorporate in it: firstly, the Director of OLAF has a free hand in the investigative work. In this context, he may not accept instructions from any party. He may open investigations at the request of a Member State or an institution, but may also do so on his own initiative, and he has the right to lodge complaints with the European Court of Justice if he finds that his independence is compromised. We included this point on the express recommendation of the Court of Auditors, whose opinion has incidentally been of great assistance to us in eliminating any remaining inconsistencies from the texts.
Secondly, the Director is under a specific obligation to inform and call in the competent national judicial authorities if Office staff working on internal investigations come across facts which might relate to matters open to criminal charges. OLAF is not therefore about replacing or circumventing national public prosecutors and judges. Nor is OLAF a way of setting up an EU police force by the back door. What it is about is carrying out administrative investigations - if you like, preliminary investigations - which should allow the police and public prosecutor to do their job.
Thirdly, OLAF will be subject to monitoring by independent, external experts. The German version of the text rather unfortunately still refers to a scrutiny committee. The English version captures the meaning much better. It uses the term supervisory committee. Here we particularly have in mind experienced experts in criminal law or high-ranking civil servants from the relevant bodies in the Member States such as the Guardia di finanza or the British Serious Fraud Office. It is not intended that this committee should interfere in the Director's everyday work, but that it should ensure, by carrying out ex post controls, that no mistakes are made. All of this and more - on which I cannot enter into detail in the short time available - is therefore part of the regulation.
I now turn to the third component, the institutional agreement between the Council, Parliament and the Commission on internal investigations. This is the subject of another report, which was adopted by the Committee on Budgetary Control today, shortly before the beginning of this debate, and which will be put to the vote along with the report on the regulation this Thursday. All of the other Union bodies, institutions and agencies are specifically invited and requested also to enter into this agreement. This is necessary for OLAF to be able to conduct investigations within them. In addition, it is stipulated that officials and other EU employees are obliged to inform their superiors - and, if they think it necessary, OLAF - directly and without delay of any facts which might allow cases of fraud, corruption or similar crimes to be closed.
It is not only the staff but also the members of the institutions and bodies who will cooperate fully with OLAF. At this stage there can be no exceptions, as this would cause us to lose credibility. However, neither can our independence as Members of Parliament be threatened. It is precisely with our parliamentary immunity in mind that a number of sensitive issues remain to be clarified. This was not part of the negotiations and nor could it be. It is no longer possible for this Parliament to make any over-hasty decisions on this either; it will be a matter for the newly elected Members.
Finally there are several points which, although they are also to be decided by the newly elected Parliament, are matters on which we ought to make progress in the high-level group over the next few weeks, and if possible by the ECOFIN Council on 25 May. We need a proposal for the five members of the supervisory committee to which everyone can agree; we need a job description for the Director of OLAF so that the job advertisement can be published; and, as our colleagues in the Committee on Budgets have already recommended in their opinion, we need an establishment plan for OLAF so that a supplementary budget can be agreed on that basis. This has to happen very quickly, and it is also the decisive test of our credibility. OLAF must actually be up and running by the end of the year.

Blak
Mr President, most of us are growing rather tired of hearing about corruption and fraud involving EU funds. Hopefully, the forthcoming election campaign will also deal with other important political issues, but the battle over the major reforms should be fought now, while the political will is still present. We have succeeded in reaching an agreement on OLAF, and would like to take this opportunity to commend the rapporteur, Mr Bösch, for his outstanding work in the negotiations with the Council and the Commission. We have achieved a really good result. The new proposal is far better than the original. The Office will now be located in the Commission for organisational purposes, but it will be entirely independent as far as carrying out investigations is concerned. Its independence will be guaranteed by the fact that the Commission will not have powers to direct the Office. The Office will also have powers to investigate irregularities and fraud in other EU institutions. The Commission is not the only place where there are problems. The Office will have full access to all relevant information, and it will be able to carry out investigations on its own initiative. With this proposal, we will hopefully get the best of all worlds. We will get an Office which is independent, and at the same time gain an extra benefit by locating the Office within the Commission. If the Office is part of the Commission, we will have access to confidential information which it would otherwise not have been possible to obtain. We will not have an Office which is hoodwinked, as we have been in Parliament for years. If we had instead chosen a solution which involved setting up an entirely new Office outside the Commission, it would have required a change in the Treaty. We cannot wait for that. It is vital that we have the Office now, and not in two years' time or never.
By adopting this proposal, we will set up the legal framework. But that is far from enough. Money must now be made available in the budget for staff. We in Parliament have asked for a staff of 300, which is definitely not too many. The Office must have the resources to operate effectively. Otherwise we would reproduce the problems which result from leaving such an important task to the Commission without allocating the necessary resources. When Parliament meets again in the autumn, we shall ensure that sufficient funds are earmarked in the budget. We have a huge task here. The whole question of what the Office needs cannot be left to the Commission. The tripartite committee should be involved in the discussion, and I would therefore like to propose a meeting of the tripartite committee after 25 May, when the proposal will also have been adopted by the Council. We can then quickly discuss the appointment of the Supervisory Committee, and then we can elect a Director. Then we can get the Office up and running as quick as possible. That is what we need.

Theato
Mr President, it will be remembered that one of the touchstones for being able to grant discharge to the Commission for 1996 was the creation of an operationally independent fraud prevention office. Parliament laid down some important ground rules for an office of this kind when it adopted the report of the Committee on Budgetary Control, the Bösch report, by a large majority in October 1998 and requested a proposal for a regulation along those lines from the Commission. As I see it - and I am not exaggerating - if the Commission had made a reasonable proposal to improve fraud prevention at the beginning of December, then it might have been spared the refusal of discharge shortly before Christmas and thus all that followed.
Unfortunately, it was the middle of March before an amended Commission proposal which met Parliament's demands was tabled. Happily, in this proposal the Commission abandoned the unreasonable idea of entrusting the responsibility for irregularities and fraud to an external agency with, would you believe it, 48 officials, that is one official to protect an average of EUR 2 billion. Since then, progress has been extremely quick. If Parliament, the Council and the Commission continue to cooperate as well as they have done in recent weeks, then we will even be able to adopt all the legislation for an independent fraud prevention office before the European elections.
I should particularly like to highlight the constructive role played by Commissioners Anita Gradin, Karel Van Miert and Mario Monti, but I also wish specifically to commend the Council presidency, our rapporteur Mr Bösch and the secretariats of the three institutions for the huge amount of work which they have done. The Committee on Budgetary Control has done its homework; it has unanimously reached a common position in agreement with the German Presidency, and has just this minute approved the accompanying interinstitutional agreement. If Parliament and the Council keep to this line, then OLAF will be able to enter into force in June. The rapporteur has already described its responsibilities. I should just like to emphasise its operational independence once again - from an institutional point of view, the responsibility still lies with the Commission; we had to do this to find a speedy solution.
It is also important that the Director has access to the judicial authorities in the case of matters which may be open to criminal charges. However, there is another snag here. Our experiences with the national judicial authorities have not been very encouraging up until now. To my knowledge, for example, final verdicts have not so far been reached in any of the 27 internal cases of fraud which UCLAF has investigated since 1994. In conclusion, I think that our aims in creating OLAF are to make a constructive contribution to better protecting the interests of the EU against abuse, to make prevention a priority, and to recover money which has gone missing.

Kjer Hansen
Mr President, the new UCLAF - OLAF - is intended to put an end to irregularities, nepotism, corruption and fraud in the EU. As far as I am concerned, it is therefore vital that the new Office is free to investigate any matter it wishes and that it has complete independence in deciding whether or not the matter should subsequently be handed over to the judicial authorities, the national courts. I think it is crucial for us now to have an investigation office which can investigate circumstances in all the EU institutions. That should certainly give it enough to do. When I say all the EU institutions, that should also include the European Investment Bank, for example. With the accusations which have recently been made, I would expect the Bank itself to have an interest in uncovering everything that is going on there. But the European Parliament should also offer its assistance, and there may be examples of tasks which it would be interesting to have investigated, such as the problems surrounding our premises, where there are still a large number of unanswered questions. I therefore believe, Mr President, that the new office, OLAF, is a significant improvement of the situation in the EU. It gives us a good chance to clear things up and to ensure openness and transparency in all the institutions.

Rosado Fernandes
Mr President, Commissioner, looking at the West's crisis of values, clearly all that was needed for many fraud-related problems to be eliminated was for the Christian commandment of 'thou shalt not steal' to be observed. Fraud and theft are now a way of life and are turning into a scientific study. Organised crime is now a fashionable and studied crime, occurring in the best circles, and its sole goal is theft.
Organisations must therefore be created which are fully prepared and independent. They must have the necessary financial and human resources and be able to act independently. But is acting independently actually the ideal given that the legal systems of many Member States are in crisis? For it is frequently the legal system itself, influenced by the executive - since Montesquieu's separation of powers is fast disappearing - which fails to condemn totally blatant cases of fraud in which billions are at stake. Anyone, like us, who participated in the Action Committee on BSE and the Committee of Inquiry into Community Transit can say that the ideal of a Europe without borders has indeed been created, but without borders and without control. It is clear that this is a temptation and a paradise for organised crime.
I hope that the solutions put forward by Mr Bösch are supported by the political will which is needed to ensure their total success. However, the cooperation of the Member States is fundamental because they are as guilty as the Commission and we should not forget this.

Holm
Mr President, for all of us who have worked to put things in order and find out how taxpayers' money is being spent, it is a step forward to see the emergence of OLAF. Its predecessor, UCLAF, has not been in existence for very long, but the major shortcoming of this has already become apparent, namely that in political terms it is under the control of the Commission. It is of the utmost importance that OLAF really is independent and has the task of investigating all the European institutions, which is quite an extensive mandate but one which I believe we in Parliament will ensure it actually carries out. It is naturally also important for there to be unrestricted access to all material, so that a proper investigation can be conducted. This is necessary in order to combat the fraudulent use of the EU's own resources.
I should like to thank Mr Bösch for working so assiduously on this report, as well as the Commission for withdrawing its first blueprint for OLAF and making a constructive contribution to finding the solution we shall be dealing with this week.

Sarlis
Mr President, I would like to begin by adding my voice in praise of the effort to establish OLAF, and I have to say that today's sitting is something of a celebration, since those of us who worked on the Committee on Budgetary Control are witnessing the accomplishment of an undertaking on which so much time and effort has been spent, and in which so many issues hung in the balance.
I must first of all pay tribute to the rapporteur, Mr Bösch, who managed to stick to his guns, despite the opposition from within his own group, the Group of the Party of European Socialists. In the same vein, I have to say that the Group of the European People's Party, as represented on the Committee on Budgetary Control, was fully behind the rapporteur, put up a good fight, and came away victorious. Furthermore, what took place, such as our refusal to grant discharge, may be the crowning achievement of the efforts of this Parliament, whose term comes to an end this week. We will all be remembered for the effort we made to clean up the economy of the Community, and the establishment of OLAF will have a prominent place at the heart of this endeavour.
Having said that, I in turn hope that this office will prosper, and for this to happen the old confrontations between the Commission, Parliament and the Council are of no import. But we must all tend this plant which is just beginning to take root, so that it can bear fruit for the good of the European Union, its economic and, above all, its fiscal policies.

Bontempi
Mr President, as draftsman of the opinion of the Committee on Civil Liberties and Internal Affairs, I should have spoken earlier but as I was otherwise engaged I would like to thank the Presidency for giving me the opportunity to take the floor now. In my brief comments I am particularly keen to highlight the important role played by Mr Bösch who - even at times when it was not all that easy to make any headway with this idea - has always been very consistent in maintaining the need for an independent body, given the serious nature of the events which have occurred and the difficulties of tackling them.
I would also like to draw your attention to the many years of work done by the committee and by Mr Theato in order to establish a role for Parliament enabling legality and transparency to be improved. The cooperation provided by the Committee on Civil Liberties and the reports we have produced have also played a part here. On this report too, although we only played a minor role, we wanted to draw up an opinion which was consistent and in harmony with all the work done over the years.
We set out a short to medium-term solution, but we also - on the basis of Article 280 - mentioned a possible later development. In fact I believe that the political legacy we have acquired - the independence of the Office - is one which should first be put into practice and then adapted and improved later.
We know that only an Office which is independent in its internal and external investigations can allow us adequately to combat the developments which have threatened to overwhelm our institutions. I would add, however, that it is also highly important to monitor the Office's organisational capacity. Woe betide us if a bureaucratic mentality were to destroy what should be a fresh new development: it is a new departure in institutional terms and this should also be the case when it comes to getting results.
May I conclude, Mr President, by giving my particular congratulations to the colleagues to whom we are most indebted for this work.

Diller
Mr President, ladies and gentlemen, on 15 March 1999, under my chairmanship, the Council of Economic and Finance Ministers adopted a clear position: no leniency, zero tolerance of fraud and corruption in the Community. Abuse of the money which belongs to the people of the Union damages the Community's reputation; headlines about it weaken public support for integration and push the Union's successes into the background.
That is why the creation of the new Fraud Investigation Office is a great opportunity for the Community and an important objective of our presidency. The Council, Parliament and the Commission can hereby demonstrate their will and ability to protect Community resources effectively. If we succeed in setting up the Office by 1 June this year, as planned, then this will be an important sign, and the fact that this is just a few days before the European Parliament elections will lend it a particular significance.
I believe that we have managed - in close cooperation with the European Parliament - to produce a workable blueprint. I should like to single out three aspects of this. Firstly, the proposal you have before you ensures that the Office will take effective action wherever the interests of the Community are at stake. The Office has not only been tasked with external control - and this is undoubtedly important, because it is the Member States which administer around 80 % of Community aid - it will also be an independent guardian of Community interests within the bodies and institutions of the Community. Many speakers have already pointed out the significance of this.
Secondly, even though the Office is being set up within the Commission, its operational independence is guaranteed. The Director of the Office may not seek or accept instructions from anyone. Decisions on opening, conducting and evaluating investigations are his personal responsibility. The Commission can only appoint the Director in agreement with the European Parliament and the Council. A committee of external, independent individuals will supervise and protect the Director's autonomous running of the Office.
Thirdly, although public interest is currently focused on uncovering suspected irregularities, prevention is of not inconsiderable importance. That is another reason why the blueprint for OLAF is a good start, because the Office is called upon to collaborate on the overall strategy for fraud prevention and will also make its experience available for preventive initiatives.
With your permission, I will also say a few words on the timetable. The Office is meant to be created by 1 June. Adoption by ECOFIN is planned for 25 May. Afterwards the regulation will be signed by both the President of the European Parliament and the President-in-Office of the Council. The accompanying agreement will be signed by the Presidents of the three bodies - Parliament, the Council and the Commission. The other bodies and institutions are requested to enter into the agreement.
Finally, I should like to highlight the trusting and constructive cooperation we have enjoyed with the European Parliament delegation, in particular Mrs Theato and the rapporteur, Mr Bösch, and with Commissioner Gradin. For all those who have worked on OLAF this has been an encouraging experience, which also bodes well for future cooperation.

Gradin
Mr President, Mr Bösch's report and the Commission decision to establish a European fraud prevention office marks the end of a long process starting back in 1995. Since then, we have come a long way when it comes to strengthening the tools in the fight against irregularities, fraud and corruption. The European tax-payer has every right to expect us to protect their money and to administer it in an efficient way.
I am fully committed to meet this demand. To me it is also a matter of credibility of our institutions. I believe that the establishment of the OLAF responds to both these objectives. The decision to establish this office is built on a constructive political dialogue between our two institutions and the Council.
Before I comment on Mr Bösch's report, I want to put the fight against fraud into its right perspective. When I took office in 1995 the staff working in the anti-fraud area were still spread around several services of the Commission, with only around sixty staff working in UCLAF. Since then, UCLAF's operational capacity has been considerably strengthened and the staff put under one roof.
Today, UCLAF has 141 staff to deal with around 1000 cases where there is suspicion of irregularities, fraud and corruption. The number of cases under investigation has risen continuously. This is, of course, regrettable but it is also a sign that we are getting better in our work to fight fraud.
During the course of last year much attention focused on the 27 internal investigations in the Commission. It is often forgotten that the great majority of UCLAF investigations relate to external cases in the Member States. I do not mention this to diminish the internal problem in the Commission: just one single internal case is one too many.
UCLAF works in close cooperation with Member States. For instance, in the course of 1998 the total number of cases dealt with by the Member States and UCLAF was almost 5000 cases covering around EUR 1 billion. This cooperation is particularly important since there is a growing number of fraud cases that cut across borders, as well as growing involvement of international organised crime.
The strengthening of UCLAF and its capacity to fight fraud stems from a number of internal Commission decisions. As long ago as 1995 I took the initiative to bring together all the anti-fraud activities under the UCLAF umbrella. This was followed up in 1997 with a decision to strengthen the independence of UCLAF by, among other things, giving the director the same status as the independent financial controller.
A new decision in 1998 transformed the office into a taskforce. At the same time, units were added to UCLAF to deal with fraud in third countries, corruption inside the institutions, and the legal and judicial cooperation with Member States. In July 1998 the Commission decided to further clarify, strengthen and make more transparent the UCLAF mandate. The primary aims were to underline the obligations of staff to cooperate in investigations and at the same time to protect the rights of the individual.
Initiatives have also been taken to improve information about the work of UCLAF. In early 1998 the Chair of the Committee on Budgetary Control, Mrs Theato, and I, agreed on a procedure to inform the committee in camera on ongoing UCLAF investigations as well as internal audit reports from the financial controller. It is in fact UCLAF who brought information as regards suspicion of fraud to the committee's attention and not, as is often believed, journalists having conducted their own investigations. One could therefore say that we, too, have been whistle-blowers.
Despite all these efforts it became increasingly clear during 1998 that one further step was necessary. This is why I responded positively in July last year in the Committee on Budgetary Control to further increase UCLAF's independence. As a consequence the Commission put forward a proposal to externalise UCLAF's investigation functions. One of several important aspects to me was that this would avoid the situation where colleagues would investigate colleagues.
However, the proposal to externalise UCLAF was not acceptable to the Council and the European Parliament. To find a solution a high-level working group was set up at the political level, with participation from Parliament, the Council and the Commission. Commissioners van Miert, Monti and I participated as the Commission representatives. In this context I wish to stress that I found this interinstitutional way to find a compromise very constructive. The Commission moved quickly to approve the first result of the work in the high-level group in March.
I shall not venture into a detailed account of how work progressed. It is sufficient to note that the Commission has a adopted a decision to establish OLAF. I wish to remind you that the establishment of the new office with the Commission will require resources, as Mr Blak also said. The Office will need extra staff and expenditure is bound to increase in light of the broadened scope of operations. A request for these additional resources must therefore be expected in the rectifying letter to the budget to be presented later this year to the new Parliament. I trust that the budget authorities will receive this request positively.
Last Wednesday the Commission also took note of the amendments proposed by Parliament in the Bösch report. I am very pleased to inform you that the Commission can accept all the amendments in this report. The Commission has also approved the draft interinstitutional agreement which will enable the office to conduct internal administrative investigations in Parliament, the Council and the Commission.
I would very much like to thank the rapporteur, Mr Bösch, and other Members of the high-level group: Mrs Theato, Lord Tomlinson, Mr Blak and Mr Grosch. My thanks also include the Council presidency which has participated in the group with the same positive spirit. I believe that this joint process has proven highly effective. It could set an example for the way our institutions could work together in other areas in the future. I hope that Parliament, in its vote on the Bösch report on Thursday will recognise the important efforts made and the added possibility the OLAF will bring to the joint fight against fraud. This would clear the way for the ECOFIN Council on 25 May to take the necessary decisions for OLAF to come into force on 1 June 1999.
I have always had the interests of the tax-payers foremost in mind. With this initiative we are sending a clear signal that all three institutions share this concern. With a new OLAF we will have a tool in place that will strengthen our fight against fraud and corruption considerably. It is a great achievement for the Union and its citizens.

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

Discharge
President
The next item is the joint debate on the following reports:
A4-0196/99 by Mr Elles, on behalf of the Committee on Budgetary Control, on the accounts of the European Communities in respect of the 1996 financial year; -A4-0201/99 by Mr Brinkhorst, on behalf of the Committee on Budgetary Control, on postponement of the discharge to be given to the Commission in respect of the implementation of the general budget of the European Community for the 1997 financial year; -A4-0199/99 by Mr Fabra Vallés, on behalf of the Committee on Budgetary Control, on the discharge procedure relating to the implementation of the general budget for the financial year 1997: Section I - European Parliament/Ombudsman Annex - Section IV - Court of Justice - Section V - Court of Auditors - Section VI - Economic and Social Committee/Committee of the Regions; -A4-0198/99 by Mr Wynn, on behalf of the Committee on Budgetary Control, on granting discharge to the Commission in respect of the financial management of the sixth and seventh European Development Funds for the financial year 1997; -A4-0132/99 by Mr Blak, on behalf of the Committee on Budgetary Control, on giving discharge to the Commission in respect of the management of the ECSC for the 1997 financial year; -A4-0163/99 by Mr Kellett-Bowman, on behalf of the Committee on Budgetary Control, on the special annual reports of the Court of Auditors relating to the financial situation of decentralised Community bodies.
Diller
Mr President, so that the Minutes are correct, I should like to point out that the last letter of my name is an 'r' and not an 'n'.
Mr President, ladies and gentlemen, as you know, I have already had the opportunity of presenting the Council's views on the 1997 discharge procedure to your Budgetary Control Committee on 19 April. The Council recommendation to give discharge to the Commission in respect of the implementation of the 1997 budget is being made in spite of the fact that the Commission has already resigned. As we know, the immediate cause of its resignation was the report of the Committee of Independent Experts on the responsibility of the Commission and individual members of the Commission for cases of fraud, mismanagement and nepotism which had occurred over a number of years.
I should like to state explicitly before Parliament that combating fraud is a matter of great concern to the Council. The comments accompanying our recommendation to give discharge to the Commission in respect of the implementation of the 1997 budget make this crystal clear and leave no room for doubt. In Vienna, the European Council reaffirmed that it attaches great importance to the efficient fight against fraud, corruption and other criminal activity affecting the European Union's financial interests. It expressed the wish that the Council - together with the other institutions - should successfully complete its examination of the proposals on the table before the Cologne European Council in June.
I should like to confirm that our presidency is trying to have the so-called OLAF regulation - which we have in fact just been debating - adopted by the ECOFIN Council on 25 May, and is doing so in extremely close cooperation with you, the Parliament. This cooperation - and this has been highlighted by all the speakers - has further intensified in recent weeks because this is a problem of which the general public is aware and it needs to be resolved swiftly.
There is no doubt that the Council, like Parliament and the Commission, is making every effort to combat fraud, including in particular outside the context of the discharge procedure. If I may, I will now return to the actual reason for my being here, the discharge for 1997. It is true that the Court of Auditors' report contains a whole host of negative comments on the implementation of the budget - some of which I will be addressing shortly - but it would be over-simplistic to lay the entire blame for the shortcomings which have arisen at the door of the Commission. They are partly the result of structural deficiencies to which the Member States have also contributed.
In making our recommendation, however, we also wish to acknowledge the efforts which the Commission has made so successfully in many sectors to tighten up financial management. In the midst of all the criticism, this should not be forgotten. Nevertheless, I should like to address a few points where there are particular grounds for criticism.
Firstly, I should like to stress how important it is to ensure that the internal organisation of the Commission is conducive to the efficient management of programmes. For this to be the case, clear objectives need to be set which allow the efficiency of Community actions to be assessed accurately. The Council is also very concerned about the fact that appropriations for general information measures and measures to provide the public with information about the European Union are still being utilised without a legal base.
In addition, the Council is unhappy that there are still numerous irregularities associated with payments made under the European Agricultural Guidance and Guarantee Fund and for structural measures. Nor is it justifiable that, contrary to the Financial Regulation - and I stress, contrary to the Financial Regulation - it is common practice in the field of research in particular to pay advances before the number of participants or the costs of the activities concerned are known. Finally, it is regrettable that only a small proportion of the payment appropriations for external aid - and in particular for the priority programmes - has been used.
As far as the statement of assurance is concerned, the Council is deeply concerned that the Court of Auditors still has not been able to make a statement of this kind because a large number of mistakes are still being made with the implementation of payments. Hardly any improvements can be noted on the previous financial year. Having made these criticisms, I should also like to make a few more positive remarks. The amendments made to the Financial Regulation in November 1998 have enabled financial control to be modernised, in particular as far as the release of unutilised appropriations is concerned. But like the European Court of Justice - and probably also Parliament - the Council attaches great importance to the Financial Regulation being thoroughly modernised and completely recast. We urgently request the Commission to table proposals to this effect.
I should also like to draw attention to the measures taken under the SEM 2000 initiative, thanks to which it has been possible to tighten up financial management considerably. As the rapporteur for the 1997 discharge procedure, Mr Brinkhorst, emphasises, administrative cooperation both between the Commission and the Member States and among the Member States themselves needs to be stepped up further, given that a large proportion of the budget is implemented by the Member States. Of course, this does not alter the fact that the Commission bears the responsibility for implementing the budget. When it examined the 1997 annual report of the Court of Auditors, the Council also took into consideration all 25 special reports drawn up during 1998. On some of them it jointly adopted specific conclusions, which have been included in the recommendation.
Finally, I should like to emphasise that the budgetary authority and the Member States need to ensure that taxpayers' money is not only accounted for properly but also used as efficiently as possible. The Council is firmly resolved to work towards further improving the financial management of the Community. This is a long-term task for all those who are responsible for managing Community funds.
In conclusion, I should like to mention a few points which played a part in the discussion with your Budgetary Control Committee, Mrs Theato. It was suggested that we should hold a trilogue, or at least a dialogue, with you before the Council adopts its recommendation to grant discharge. I am sorry, but we are rather hesitant about this suggestion. We believe that the Council should first carry out the task which it is assigned in the Treaty of scrutinising the documents, and that only afterwards should we discuss the results with you.
We do agree with you, however, that the questions which have been raised need to be taken into account during the forthcoming reform of the Financial Regulation. Your suggestion to further step up cooperation between national financial experts and between them and the Commission is something which we view favourably.
I am sure that further suggestions will now be made in the debate which I will then be able to pass on to the Council. Thank you for your attention.

Elles
Mr President, I rise to conclude what has been a historic discharge process where nothing has gone according to plan. I hope that we will be able to conclude our deliberations on this report this week. In doing so, I should like to make a few procedural and substantive points and then some concluding remarks.
On procedure, I would like to thank those colleagues in the Committee on Budget Control who have contributed towards this whole discharge process. This discharge is, after all, one of many, and I happen to be the general rapporteur. In December last year the majority of this House refused to grant discharge and it was referred back because there were problems in procedure which have now been sorted out by changing our rules to be in line with those of the Treaty. We should now therefore move to a decision on this item.
We have seen during this process that some people have disapproved of having a discharge which was a political process. I understand that particular problem. I understand less those who have caused problems in this discharge process because it has been dealing with problems of substance. Most of us now realise that it was the right time for this Parliament to refuse to grant discharge because that triggered all the rest of the events which happened in the months afterwards. Yet today we see an amendment by the Socialist Group refusing to follow this definitive decision to grant discharge because it still seems to want to continue this process. Have they learned nothing from this whole procedure? We should close it down today.
Moving to substantive items in the report which I submitted and which should now be an annex to this resolution, there were three major items which we highlighted, all of which have been confirmed by the report of the Committee of the Wise Men. Firstly, lack of democratic accountability and access to information. Secondly, real concern - and it is interesting to read it now after these months have past - about irregularities with Commissioners, and one in particular who, by her inability to resign, caused the resignation of all. Perhaps the central feature was the weakness in management structure which was made very clear in paragraph 19 of this attached document which says: 'Weakness in management organisation led to operational distortions in implementing policies'. Who knows, perhaps acting President Santer could have saved the Commission if earlier he had stopped running programmes for which he did not have staff.
Let me look also at one other substantive item in the original report of the 1996 discharge: the reform programme, which the acting President Santer took on board on 11 January in his reform programme of the Commission. What has happened to these items now: the codes of conduct we asked for, the revision of the Statute, the nomination of A1 and A2 posts so as to make sure we have high quality at the top of the Commission and the screening report? All these things seem to have come into some murky area somewhere because one or two of the resolutions we have passed recently have failed to be specific on the requests we are putting to the Commission.
I would like to see these things at least clarified, perhaps by the Commissioner, so that the new Parliament will be able to dispose of these documents.
Looking ahead, there are two conclusions I would draw from this. Firstly, so far as the Commission is concerned, we have a number of ideas which have been part of this reform process. Fortunately, in the report on the 1997 discharge, which my friend and colleague, Mr Brinkhorst, will be introducing shortly, we shall see a number of those ideas presented. Secondly, I hope that this document will be available to the new Parliament and the acting Commission, and its new President designate, Mr Prodi, so that parliamentarians in a new Parliament have the information they need to ensure the nomination of commissioners is done effectively.
We do not want to leave the feeling in the Commission with this whole 1996 discharge that we do not rate highly the vast majority of the Commission officials. I used to be one myself. I am perfectly well aware of the high quality of people there, but we want to make sure that it is always high quality. We should not condemn the whole system just because of one bad apple.
Lastly, it has actually been Parliament above all who has campaigned on this process. It is not, I am afraid, the Council. It granted discharges. It was Parliament coming of age, and it will have to be proven in the new Parliament that we are capable of meeting our responsibilities.

Brinkhorst
Mr President, it is clear that the conclusions of this report for 1997 are very specific and very clear, namely, a postponement of discharge on institutional grounds.
I should like to thank all colleagues. The Committee on Budgetary Control wanted to go further. It did not want - in terms of the 1996 discharge - to waste time. This is not possible. We should go beyond that. And it is against that background that the Budget Control Committee voted the document which you find as an annex. In a sense it is the history after 1996. It is also the political nature of this report to put the discharge procedure in a broader perspective.
As the President-in-Office of the Council just indicated, there are a number of novel features which should be taken into account in future. We should not just criticise the past, we should look to the future. That is the significance of this particular annex, on the discharge procedure itself, on the information to be given in future. There are comments on what has led to the situation just described by my colleague, Mr Elles, a new staffing policy, questions on the BATs, the Committee of Experts' report and also some guidelines for the Commission reform. That is why the report consists of more than simply the statement that we should refuse a discharge at this particular time.
I am very pleased with the comment of the President-in-Office of the Council because part of this report is also oriented towards the new partnership between the Commission and the Member States as well as the cooperation between the Member States themselves. I welcome the statement by the Council that it will not fall on deaf ears. As the Council executes about 95 % of the budget it is necessary that more action should be taken. I hope the time will come when, like in the Committee on Budgets, we will work much more closely together with the Council on budget control. We find some specific recommendations on that particular point.
The Annex basically has three purposes. Our purpose is to state from the point of view of Parliament where we stand at the present time. It is also an account of what happened after the 1996 procedure.
Secondly, as Mr Elles has already said, it provides an indication - though we should never seek to govern beyond our grave, certainly not a rapporteur who is leaving this Parliament - to the new Parliament about the kind of issues which can be used to judge the new Commission during the hearings. That is an important point in itself. It is not binding but it is an indication. For that reason it is a contribution from the Committee on Budgetary Control and will not be voted by Parliament as such.
Thirdly, we want to be a constructive Parliament. As Parliament acquires more responsibility and power it should also be a partner, not only in criticising, but also in helping the Commission to carry out its tasks independently but with accountability. It is therefore also an element of the work programme for the future Commission which we hope will be taken on board.
Let me clear up one misunderstanding. I had the opportunity of discussing this with Commissioner Liikanen at an earlier stage but I would also like to say it in public. It cannot be the role of the Court of Auditors to replace the Commission, nor Parliament. Some requests to the Court of Auditors to participate in certain studies should not be seen as taking away the responsibility of action by the Commission or by Parliament. But the Court of Auditors has played a very important and useful role in this process between Parliament, the Commission and the Council.
It is against that background that I would like finally to say that it would be useful if the Council itself reviewed its procedures as regards interaction between the Court of Auditors and the national bodies. I hear too often that national courts of auditors have a different role, that they cannot fulfil a function within the Community system. As we move into a new phase, a new situation where it is not the Commission or the Member States, but the Commission and the Member States, I would call on the President of the Council to study this particular issue of activities between the Court of Auditors and the national auditing bodies in future.

Fabra Vallés
Mr President, we shall now move on to the discharge of the so-called 'other sections', starting with the first section: Parliament and the Ombudsman.
In respect of Parliament and the document before us, the large number of cancelled appropriations is striking. I should like to make it clear that the reason for this was the delay affecting the D-3 building in Brussels and IPE 4 in Strasbourg. Since we are reviewing 1997, which is in the past, I should like to emphasise for everyone's peace of mind that there was a steady improvement in the number of appropriations cancelled in subsequent years.
As regards aid to democratically elected parliaments in Central and Eastern Europe, 30 % of initial appropriations were not used. This, too, may seem surprising, but the reasons for this state of affairs and possible improvements are clear.
We would like to take the opportunity provided by the 1997 discharge document to draw attention to the fact that the necessary resources should be made available to the Committee on Budgetary Control to allow it to monitor the appropriations granted to the political groups and the expenses incurred by the secretarial services.
In addition, it is worth emphasising that we are continuing to call for a regulation on the legal status of the political parties in Europe.
Nevertheless, we request that discharge for 1997 be granted where Parliament is concerned.
Moving on to the Ombudsman, the 82.1 % implementation rate is of note. I do not wish to imply that this is due to a shortage of staff. The department in question is constantly requesting additional staff, but it is certainly worth emphasising that this is a new institution; after all, we are still referring to 1997. It is clear that the budget allocated to the Ombudsman is being used more and more effectively as the years go on. Discharge should also be granted in the case of the Ombudsman.
In the case of the Court of Justice, it is important to mention the advantages resulting from the leasing arrangements concerning the annexes to the Palais. As regards the earlier payments of ECU 50 million, I would like to remind you of a concern we had at the time in relation to the commitments made to Parliament by the Luxembourg Government. Back in 1997, we were not certain if these commitments would be fulfilled. We really did not know what problems could arise. However, in the light of events in 1997 and later, we must now thank the Luxembourg Government for the excellent work it carried out. We propose that discharge also be granted to the Court of Justice.
Turning to the Court of Auditors, I would simply like to say that in 1997 the usual problems of budgetary inadequacy were satisfactorily resolved, and almost without effort. This was due to the favourable movement in the conversion rate between the euro - then the ecu - and Luxembourg's currency. Similarly, we are in favour of granting discharge to the Court of Auditors.
As far as the Committee of the Regions is concerned, it should be pointed out that budgetary forecasting needs to be improved. In particular, the haphazard programming of activities should be tackled because it means we are constantly being called on to make significant transfers. Nevertheless, we are in favour of granting discharge to the Committee of the Regions.
Finally, there is the Economic and Social Committee, the only area where we do have a problem. As you are aware, discharge for the Economic and Social Committee is still pending, awaiting a report by UCLAF. Discharge for the Economic and Social Committee is therefore conditional on the findings of the report on its activities which UCLAF - the fraud prevention unit - is due to present. We therefore propose that discharge for the Economic and Social Committee be postponed.
Since this is a joint debate, I do not wish to conclude without stating that my delegation - my delegation and I myself - have already made our position on the 1996 budget discharge quite clear. Further, the resignation of the Commission cannot now be used as an excuse to disregard the commitments made by Mr Santer. These commitments should be honoured by the incoming President, Mr Prodi.

Blak
Mr President, I am going to talk about the ECSC accounts, and I would like to say that this has developed into a success story. When I took over the accounts, we had a mass of problems. We were swamped with the usual stories. Everything was in chaos. Who can forget the interest subsidy which ran for ten years, and which we could not end because of foot-dragging? There was a mass of corruption. There was the case of the purchase of apartments when the Commission moved into fine premises in Paris. In brief, there was a great deal of confusion, and there was disorder and chaos. Then we took matters in hand and we sorted them out. I am glad to say that we in the committee have decided today that we are pleased to give a discharge in this area. When I look back I think of how, for example, we stood on the verge of possibly losing billions in connection with the Channel Tunnel. This appears to have been resolved, and now it is a success story. In Denmark, we had a case concerning the Great Belt bridge, where the loan was rather too large. There were a few billion to play with, but that case too was sorted out. All this is thanks to positive cooperation, and because we were able to obtain information and because we could talk with an excellent Commissioner. I would like to commend Mr Liikanen. It was possible to talk to him. Every time there was a problem, we went to him and we always got the problem solved.
So there has been good cooperation in connection with the accounts of the European Coal and Steel Community. But there have been problems in another area, the granting and uptake of loans in Europe, which I have been concerned with as part of Mr Brinkhorst's report. Here we see some obstinate people who talk down to us - I shall refrain from mentioning the name of the President of the European Investment Bank. Year after year, we have pointed out that we have a right to come and inspect the Bank. 'It is not your concern', he says. 'We have some small private shareholders, and out of consideration for them you cannot enter, and in any case everything is going well with us.' In my capacity as rapporteur, I have received a piece of paper which says that the Bank has in fact lost billions on failed investments and that the money is hidden in the accounts or has been offset. That is unacceptable. It led to me recommending that we should not give a discharge for the 1997 accounts. We are sick and tired of lies from people who sit and hide things from Europe's taxpayers. We will simply not put up with it. Last year, we had problems with the accounts and I refused to give a discharge. The committee supported me. Then we reached an agreement whereby the Commission intervened and made it possible for us to reach a sensible solution, enabling us to monitor the taxpayers' money. More than 80 % of the funds in the various institutions in the European Investment Fund is our money. So what did they do when we gave a discharge? They short-changed us, so to speak, and backed out of the agreement, in spite of the fact that we had goodness knows how many meetings and spent goodness knows how much time setting it up. That cannot be allowed to go on. Let us give a clear signal from this House to Sir Brian Unwin: we are no longer prepared to listen to lies about how everything is perfect. This is going to be cleared up now. We want to know how DKK 4 to 5 billion can disappear in the accounts. It is quite simply an outrageous scandal. It may well be as they say that the money is not lost because it may return, because they have not sold bonds. We do not want to hear such stories. We simply have to say quite bluntly that it is over. They cannot have the accounts approved if there is no audit whereby we can go in and check up on the Community's money. So let us end our cooperation with them. It cannot be right that we have to pay for everything which they sit and play with, and that they can then play with the profits afterwards. We have no wish to see examples of how bond purchases, amongst many other things, are placed with various friends in various places for far less than can be got back. This is a real scandal. If the Commission can be brought down for as little as it was, these people should have been thrown out long ago so that they never have any chance of returning. So here we need to have a powerful Commission which can really go in and check, and we need some people who are willing to cooperate, as Mr Liikanen has cooperated with us, so that we can get this cleared up.
I would also like to say that I was moved to tears when I heard the Council speak about all the things they would like to do. But why do you rubber-stamp the accounts every single year and say that you are making recommendations? You have never applied the brakes. I think the Council should take a look at this area, and the new Commission should get to grips with these things. There really is something to get to grips with here.

Kellett-Bowman
Mr President, this is the fifteenth time I have moved the discharges, first for Dublin and Berlin, and now Thessaloniki. I have to admit that not all the debates have been as exciting and as exhilarating as this one. However, these two first-generation agencies are a good example of how control can be exerted by Parliament. The Committee on Budgetary Control is very much helped by the European Court of Auditors - and I should like to thank them for their two special reports on these two agencies. I should also like to thank the Council which has latterly - and I emphasise latterly because in the early years this did not happen - been putting forward considered recommendations to Parliament to grant discharge.
One also has to admit that these agencies are small and therefore easier to control, but the cooperation on control really does work. Far from resenting control, the agencies welcome the European Parliament's involvement. It would help, though, if the second-generation agencies could be treated in the same way. Again, I appeal to the Council because Parliament, together with the Commission, has put forward considered amendments to the statutes which would make the situation of the new agencies the same as the old.
The reports are not long because there is no point in finding fault where faults do not exist. The European Foundation for the Improvement of Living and Working Conditions had a memorandum of understanding with the Agency for Health and Safety to avoid overlapping, because one of the things Parliament insists upon is that the work of these agencies should not overlap.
I welcome their attempts to reduce mission expenditure. It is rather funny because if you look back a year or two you will find that the Court of Auditors was criticising officials from Dublin who used the weekend as part of their mission - obviously people like to have a trip home at the same time. But now they want the members of the agency to use the special pex tickets which are only available over weekends because a Saturday night has to be involved. It is just a change of opinion within the Court.
I am very happy to recommend discharge for the European Foundation in Dublin.
I now turn to CEDEFOP which has finally got over that tragic move from Berlin to Thessaloniki. I am not attacking Thessaloniki in any way; the fact is that if the Council look up the minutes, they will find it was a mistake to consign CEDEFOP to Thessaloniki in the first place, and the poor Commission and Parliament have been trying to pick up the pieces. However, the new building should be ready for occupation in July. I wish them well in their new building. I can see that the various staffing arrangements are now properly in place and I understand that out of all the staffing of the centre only two A grades remain to be filled. I have no hesitation at all in recommending discharge also for CEDEFOP.
Mr President, I look forward to the day - and I do not think it will be long ahead - when the Court of Auditors is able to give these two agencies a certificate of assurance for 'keeping their noses clean' so to speak and for getting good reports from the Court.

Sarlis
Mr President, this Parliament will go down in history not so much as the Parliament which brought about the collective resignation of the Commission, but as the Parliament which brought about structural changes, which are already underway, to the organisation and operation of the Commission, the foremost institution charged with pushing forward European integration.
Appended to the motion for a resolution which you will be invited to vote on tomorrow, ladies and gentlemen, is a working document which enumerates the points that need to be clarified by the Commission, to enable the Parliament that will be voted in following the June elections to grant the discharge for 1997.
This working document is being held in trust by Parliament to be handed on to the new Parliament. I would like to raise one of the points mentioned in this working document, which concerns the famous Regulation 3245/81. This was a joke regulation in the sense that it was adopted, it entered into force, was published in the Official Journal of the European Communities, but it was never implemented in practice. This regulation provides for the establishment of a European Association for Cooperation to take on the work of a Belgian private law foundation. It was never implemented but, despite this, for a number of years it was referred to in Community budgets as the legal base for capital to be made available from the Community budget to fund the activities of this Belgian private law foundation.
As a result, I hope and I believe - or rather, I am sure - that the structural changes that are currently being made to the organisation and operation of the Commission will make it easy for the next Parliament, which will have the backing of the Commission and will not have to put up with what we have had to put up with over the last three years, to provide explanations and come up with solutions. I wish it all the best.

Günther
Mr President, Mr President-in-Office, Commissioner, although the Committee on Development and Cooperation has to grant discharge for the European Development Fund each year, it does not have any influence on how this fund is used because it has not so far been integrated into the budget. Governments have repeatedly signalled, before taking up the Council presidency, that they might be able to support integrating it into the budget. Later, however, numerous reasons have been found for postponing this decision after all. One of the committee's specific criticisms of the 1997 budget is that large amounts are transferred from one Development Fund to the next. The suggestion is therefore being made to simplify the management of appropriations.
With regard to the appropriations for cofinancing, the committee also criticises the fact that individual projects take too long to complete and that the supply of funds in particular often causes huge problems for the non-governmental organisations. The Court of Auditors and the Development Committee are waiting rather anxiously to see whether the new structures which the Commission is now introducing will prove to be effective here. That is why the Committee on Development and Cooperation requests that a report should be submitted to it next March on experiences with the new structures. The committee also takes the view that the response to the procedural shortcomings criticised by the Court of Auditors should be for a minimum degree of competition to be required, in particular in the tendering and award procedures.
Nevertheless, the committee agrees with granting discharge for the 1997 Development Fund. Development cooperation is not one of the areas which voters immediately see as an essential part of European policy. We are therefore all the more dependent on financial resources being used transparently and in a way which people can understand.

Tappin
Mr President, speaking as the coordinator for the Socialist Group, I want to address my remarks to three of the reports before us today.
I shall begin with discharge 1996. My Group can see no reason not to grant discharge for the 1996 budget. In the course of the discharge proceedings and in the light of the Court of Auditors' report, we asked a series of very searching questions of the Commission. I am sure that colleagues here are aware that the Commission came back with a series of responses to those questions which, to my Group, were satisfactory enough for us to grant discharge. The five questions put down were answered.
It must be said that from our side we believe that the rapporteur is playing petty party politics with the whole question of discharge for 1996. It has taken a great deal of effort to persuade the rapporteur to bring forward a report closing the accounts for 1996 so that we can proceed with the 1997 discharge.
We do not agree with the wording in paragraph 1, and we wish to delete the word 'definitive' from that paragraph because no vote was ever taken in Parliament on the question of the 1996 discharge, which was recommended by the Committee on Budgetary Control to this House. The report was withdrawn and referred back to committee in the light of other events. If no vote was taken, we cannot have a definitive report. If one good thing has come out of the 1996 report, it has been the access which the Committee on Budgetary Control has had to persons and papers. If we are to continue to be an effective Budgetary Control Committee, this must continue in an unfettered way.
On a more pleasing note, let me move on to my second set of remarks on the 1997 budget. My Group will support the report put forward by Mr Brinkhorst, the rapporteur, to postpone discharge. We agree entirely with the reasons for postponement; that is there is no Commission in place to receive that discharge. In the committee, we have had a long series of discussions on the substantive questions we want both the DGs and the new Commission to address. These are reflected in the working document.
I should like to commend Mr Brinkhorst on the detailed work he has put into this. I hope that when the Commission comes back to us in the new Parliament it will take on board and use as a blueprint those questions which are asked in the working document, especially on staffing policies, TAOs, Leonardo and the way in which PHARE and TACIS is operated. This is so critical for us to function as a parliament.
On the comment that Mr Brinkhorst makes on the question of the decentralised agencies - which Mr Kellett-Bowman has picked up - it is essential that the Council address that question, which both Parliament and the Commission have agreement on.
This brings me to the report by Mr Kellett-Bowman. Again, my friend, and I should like to say colleague, has produced two excellent reports on Dublin and Thessalonika. He says he has drawn up 15 reports in his time. This may well be the last report that Mr Kellett-Bowman draws up on the decentralised agencies.
I wish to put on public record the high esteem in which I hold him as co-rapporteur on the Committee on Budgets for the satellite agencies. He has taught me and has been an excellent colleague, very thoughtful, critical and precise. As a lasting memorial to his work, I should like to see the Council now, in recognition of the work he has done, agree to the changes in the statutes for the second generation agencies - changes on the own-resources question, changes on financial control and changes on discharge that will allow Parliament to carry out its responsibilities properly. Let that be a lasting testament to his work.

Theato
Mr President, this evening we have a veritable marathon of a debate to complete on discharge reports. Six reports are on the agenda. I will not comment on all of them, but will turn to the first, Mr Elles's report, which is not actually a discharge report because it proposes closing the accounts for 1996, and I believe that this is right. We need to find a way to bring this process to an end, although I do believe that discharge was not given here, because if we look at the result of December's vote, it is clear that the points made previously in support of the decision, the positive decision put forward by the Committee on Budgetary Control, were rejected by the plenary. That means that no discharge was granted. Our Rules of Procedure were awry. Now they have been amended, and there is no need for these matters to arise again.
We have a precedent for not granting discharge, the 1982 budget, for which the accounts were subsequently closed in 1985. That is how we should proceed here; we should, however, also bear in mind all the consequences which this has had politically. That is why it does not make any sense from a political point of view to grant discharge at this stage, because we do not have a Commission in office any more. It has resigned. Nevertheless, there will be no need for us to condemn everything that the Commission has done and neither do we wish to do so. Nor have we ever implied that Commissioners were guilty of being directly involved in criminal activities. No, but we have established that there is a need for restructuring and that new areas need to undergo a series of reforms which will make us in the European Union fit for the next millennium.
In this respect, this crisis, which began with the discharge or refusal of discharge for 1996 and the continuation for 1997 - for which we are not recommending discharge either this week, but postponement of discharge - was a necessary crisis, if we think of the positive lessons which we have learnt from it, and which we would have liked to pass on to this Commission, Mr Liikanen. But that is not how it has turned out. We all know what has happened.
In both reports, Mr Elles's report, and here I am also bringing in our rapporteur for 1997, Mr Brinkhorst, two points really do need to be emphasised: we have not voted on conditions for giving discharge; we have annexed working documents. This is an unusual procedure, but I believe that it was the right approach to take, and these documents contain the suggestions - and indeed the demands - which we are passing on to the future Commission. I hope that the new Parliament and the new Commission will make use of them.
With your permission, I will just add a word to our rapporteur, Mr Fabra Vallés. He has produced a very accurate report for the other institutions. I do think, however, and here I also have the support of the rapporteur, that we must carry out the same controls here and apply standards in our own House which are just as tough as the ones we have imposed on the Commission. That is why the Council and the Commission, but also Parliament, must abide by the decisions we adopted in the Tsatsos report, for example on party financing, and we must also act properly where filling posts and promotions are concerned. We owe this to everyone.
Thank you, Mr President, for giving me the floor once more, and I should also like to thank all the other rapporteurs, whose reports should go through smoothly.

Virrankoski
Mr President, we are now discussing six reports dealing with the subject of the discharge. I would like to thank the rapporteurs for their excellent work. Four reports propose that the discharge should be granted, one that it should be postponed, and one that it should be refused.
The discharge process for the budget this year has become an immense political task. So it was too last autumn and winter, in connection with the 1996 budget, which led to the Commission's resignation. Although the process has led to many improvements and positive settlements and solutions, there is a danger that the assessment and discharge process will become inappropriately broad in scope, since the EU's instruments state that Parliament must give a discharge in respect of the implementation of the budget. The wording stipulates that giving discharge is the aim, with any obstacles being removed beforehand. Discharge is thus the object of the exercise.
Discharge as a vote of confidence in the Commission is, however, too broad an interpretation, in my opinion, and there are two reasons for avoiding this. Although discharge, as it reflects the rules on accounting, is required be granted, Parliament must always be able to intervene in the work of the Commission if it so wishes. Giving discharge cannot be allowed to act as a barrier to intervention. Furthermore, in the present situation we can see a backlog starting to build up, with the discharge processes relating to several separate years remaining uncompleted. Good administration needs to be clear and systematic, and that applies to Parliament also. The decision on discharge must not be too ponderous or broad in scope, and it should not lead to a situation in which no one dares to give discharge.
With these observations I wish to say that the Group of the European Liberal Democrat and Reform Party supports Mr Brinkhorst's report as it stands and without amendments.

Giansily
Mr President, ladies and gentlemen, in examining the report by our colleague Mr Brinkhorst on the postponement of discharge for the 1997 financial year, we are not aiming to dwell on the serious grievances that have swamped the Commission in recent years and forced it to resign. We are now at the end of a very eventful and stormy period during which the Commission tarnished its image and lost its credibility.
And yet we must continue, and to continue means to look to the future and take stock of the task in hand so that where there has been defeat, failure and negativity, tomorrow there will be success, transparency and confidence. Contrary to what the Council has done lightly and thoughtlessly, we will not grant discharge to the Commission today since, as Laurens Jan Brinkhorst so well explained, discharge will not be granted to a resigning Commission that can no longer advise the European Parliament on future guidelines. Postponement is therefore the most appropriate solution technically speaking and in political terms it constitutes something of a peace gesture towards the new Commission. However, it does not dismiss the need for us to remain as vigilant as possible or the need to act with a certain resolve.
The future message we should like to give to the new Commission involves what we no longer want at any cost and what we do want at all costs. We no longer want a weak Commission that is non-existent politically speaking and that is incapable of controlling and managing its administration. We do not want a Commission where the Commissioners are transformed into shepherds that follow their flocks. We do not want a Commission where some officials, who perhaps head an agency with a particular status, turn out to be true petty tyrants of the organisation, imposing their wishes and desires on their Commissioner, who then admits his ignorance of and lack of interest in the issue even when it concerns an amendment to the Community budget adopted by the European Parliament whose implementation does not present any budgetary difficulties or problems relating to the legal basis.
We had the misfortune to experience such a Commission and it is precisely what we do not want to see repeated. I have reread President Santer's speech and I remember that during his investiture in January 1995 he committed himself, in front of this very House, to a genuine culture of financial management. In the light of recent events, it is all too easy to see the irony in that today.
It is clear that nothing has been done. The Commission's only reaction has been to take several subsequent measures aimed at filling in the gaps and appeasing Parliament, but nothing has been drawn up or thought out and no ideas have been formed. There have been no reforms; the Commission has simply limited itself to promises, preferring rhetoric over action. The truth is that the Commission was able to identify the problem of the financial mismanagement of European Union policies, but it was unable to come up with any solutions that it could turn into specific actions. The example of SEM 2000 and the installation of the new ROLEX system to manage all external contracts are good examples of this.
Another example of inefficiency, this time in the area of Community transport, is the computerisation of transit procedures which has met with many delays. A final example is that of the technical assistance offices which, as everyone knows, have caused many problems in recent years. However, in spite of the European Parliament's insistence, the Commission still appears to be continuing to entrust the TAOs with the preparation of invitations to tender and the lists of projects to be retained. The Commission is not to decide on the projects to be retained, but is to ratify the list drawn up by the private consultants, which, in my view, is unacceptable.
So, in short, this is what we do not wish to see repeated. On the other hand, we do want a Commission that takes full responsibility for its actions and choices, that is transparent in its institutional dialogue and that takes on the role of monitoring the operational policies that the services are responsible for implementing. Since the Court of Auditors has been drawing up the Statement of Assurance concerning activities financed from the general budget of the European Union, the statement has been negative. However, we hope that a new Commission that is politically consistent and responsible will enable the Court of Auditors to finally draw up a positive Statement of Assurance for the first time.
Mr President, ladies and gentlemen, as everyone knows, we must not be too quick to criticise those who are coming to our aid. Let us hope that the new Commission will be able to learn from recent events so that it can successfully complete its mandate and so that today's failure opens the way to tomorrow's success. We are eagerly awaiting Mr Romano Prodi's arrival in the hope that something good will come of something bad.

Miranda
Mr President, I have two brief comments to make. The first one concerns the granting of discharge for 1997 for the Commission and for the Economic and Social Committee. It does seem natural to me that this be carried over to the next parliamentary term. However, as rapporteur on the discharge for the Economic and Social Committee for the 1996 financial year, I must stress that discharge cannot be granted until UCLAF has delivered its conclusions on the irregularities detected. There is no doubt that efforts have been made to correct these irregularities, even to the extent of altering certain working methods, but this does not justify ruling out UCLAF's intervention. Parliament considered at the time that this intervention was essential for granting the discharge and the Council itself has also recently repeated that this is necessary.
The failure to complete the 1996 discharge clearly means that the 1997 discharge is being delayed. I will not go into the discharge procedure for 1996 and the Commission, as I feel that the facts of the matter and the responsibilities assumed speak for themselves. Moreover, parliamentary history will do the rest. However, I do want to underline my dissatisfaction with the final solution which some are insisting on recommending in order to complete the procedure. It seems to me that this is completely at odds with the facts and the incomparable importance this procedure has assumed.

Holm
Mr President, I should like to concentrate on the Elles report concerning the accounts for 1996. From our group's point of view, it is clear that we cannot close the Commission's accounts, since there are still some unresolved cases concerning which the Greens have tabled three amendments. It is of course still the case that a sum of nearly EUR 40 000 was paid to a visiting scholar in breach of the Commission's conditions, and this must naturally be looked into.
Certain unclear points in the Commission's accounts therefore have to be explained before the accounts can be closed. We have thus tabled Amendment No 1, in which we give the alternative wording: 'takes note of the following data established by the Commission in order to close the accounts for the financial year 1996'. However, we cannot close the accounts.
I am surprised to see that the Socialists are tabling an amendment which would do away with paragraph 1 of the Elles report, which is the vital one, stating that we recall our definitive decision not to grant discharge to the Commission in respect of the 1996 financial year. It should be clear to everyone that this paragraph must remain.
As regards the Brinkhorst report, the same thing applies, namely that discharge cannot be given until a great deal of missing information is supplied by the Commission. The Greens have tabled a number of amendments relating to this report as well.

Dell'Alba
Mr President, since the post-war years an insidious practice has grown up in Italy, resulting in even illustrious lawyers justifying the distinction that is made between the constitution as written and the constitution as applied in practice. Following a philosophy which can be traced back in particular to the culture of the Communist Party and to an idea of the sociology-inspired left, it is said that, although written texts exist, they can be amended if so desired by the majority or by a dominant group in politics or public opinion. This is still considered acceptable: written texts can hence be spirited away because at the end of the day theory takes second place to practice.
In countries with an Anglo-Saxon legal system, where there is no constitution, it seems to me that the rule of law is the cardinal principle which governs these countries, and indeed governs them much better and has protected them from the type of vision which at any point allows the majority to decide whatever it likes: there are laws, there are texts but that does not matter, you can say something completely different as long as this is what the majority wants. And this is indeed the principle which in many countries has led to totalitarianism, intolerance and 'people's democracies'. Liberals, who have always taken the rule of law as the cornerstone of their political action, have always based their arguments on the principle that there can be no objection to the texts themselves.
Now, in our regulatory texts, leaving aside the amendment of the regulation we will be voting on tomorrow, the way in which the budget discharge procedure is regulated is set out in black and white for all to see; one may disagree with it but that is the way it is: if a text is tabled in this House and the proposal to which it refers is rejected, the proposal is referred back to the committee responsible. It is extremely serious that this Parliament's final act should be to vote on a text which says something erroneous, or rather states - and in a forum which one might expect to respect the rule of law - that after referring back to committee, in other words rejecting, the proposal by Mr Elles, the rapporteur on the 1996 discharge procedure, that discharge should be granted to the Commission - actually meaning that the European Parliament would not grant discharge - we are today voting on a text which says something entirely wrong. On a political level, there may have been the resignations and there may therefore be a majority as far as the form is concerned but that is an entirely separate argument. I will fight and vote against asserting something which quite simply is not the case.

Fabre-Aubrespy
Mr President, the latest Elles report marks the end of an eventful discharge procedure, a procedure that needs to be transparent so that the order of events is not forgotten.
More than a year ago, on 31 March 1998, the European Parliament decided to postpone the decision to grant the Commission discharge for the financial year 1996. We must not forget that following on from this, at the beginning of December, the Group of the Party of European Socialists and the Committee on Budgetary Control decided nevertheless to recommend to the House that it grant discharge for the Commission.
On 17 December 1998, the majority of the House fortunately allowed common sense to prevail and refused to grant discharge. Given the seriousness of the irregularities and the examples of mismanagement, we immediately sought to take appropriate action and proposed that a motion of censure should be tabled. The motion was then tabled on 11 January by 70 Members from all the political groups, who at that time were heavily criticised with no right of reply, and I am thinking, in particular, of the chairman of the Group of the Party of European Socialists. However, 232 Members decided to match their words with actions by supporting the motion of censure against the Commission.
Then, a committee of 'wise men' was set up as part of a manoeuvre that was designed to overturn their decision. This committee naturally confirmed what the majority of Members had suspected. We welcome today's calls by our colleague James Elles for the situation to be clarified once and for all and for the discharge to be refused outright while the accounts are adopted. We expect Parliament to support him and to do so openly.

Bösch
Mr President, I should like to say a few words on the postponement of the discharge for 1997, not least in view of what we have just been discussing, namely that where OLAF is concerned, we have actually found a basis on which the institutions can work together, which is obviously also a good indication of the political will to cooperate that exists. We have of course also drawn up a number of special documents on this discharge, in other words on Mr Brinkhorst's report, and I have to say that I am rather irritated that we have not received any response at all from the current Commission to documents which will soon be three months old.
I know that this Commission has only been an acting Commission for some time. However, I am assuming that individual Commissioners might perhaps also wish to belong to the next Commission. I think that precisely from the point of view of political understanding, it is very important to realise that Parliament cannot be treated like this! Of course, we do not always expect results of investigations down to the last detail, but we do still have unfinished business to complete. The chairman of the Budgetary Control Committee, Mrs Theato, has already referred today, for example, to the fact that we still have to accept that the cases which were submitted to us of officials being involved in instances of fraud have not yet been presented in a form which we can understand.
As far as the ECHO case is concerned, we have to take it that this affair could assume even greater proportions, but there is not even any information available on the events relating to 1997 - and it is the 1997 financial year that we are dealing with here. The same applies to the points which we have touched on concerning agriculture which various other colleagues are also working on.
We have made a great deal of effort with the new anti-fraud authority. Of course this has involved the application of a little friendly pressure, in particular on the part of the Council presidency and our own House, to make the Commission finally understand that it cannot simply deny facts which are on the table. Otherwise we will have to deal with these matters in another forum, and that would be before the European public. I do not wish to threaten anyone, but we have to state clearly what we as a Parliament expect of the Commission in terms of accountability, in particular if any of its Members also wish to be in the next Commission!

Tillich
Mr President, the 1996 and 1997 discharge procedures changed the way the institutions work together in the field of budgetary control - before, we only had cooperation of this sort with the budget.
I said in the debate on the 1996 discharge back in December that I was actually disappointed by our arrogance - as reflected in the Treaties - in not even allowing for the possibility of discharge being refused. Mrs Theato pointed this out, and the Rules Committee of this House has now rectified the situation at last. Now, of course, I should also like to invite the Council to continue its work, so that it too will finally meet the conditions.
Our group has been consistent in its position; it is also thanks to the stubborn and tough stance deliberately adopted by our rapporteur, Mr Elles, that ultimately the whole House has gone along with this approach, and today we have a success for which we in principle have only one person to thank, the rapporteur, Mr Elles, with his report on the 1996 budget discharge.
Discharge will not be granted for 1996, the accounts will be closed, and discharge can only be given for 1997 if - as you have just quite rightly said, Mr Bösch - the deficiencies are ironed out; the fact that they have not been has of course just been criticised by us both. A working paper and work programme have already been included in the Elles report; no one has yet reacted to them. There was a report from the Committee of Wise Men, and this in fact only confirmed what we had already established ourselves.
Now we are in a state of uncertainty which will drag on until September if the Committee of Wise Men presents a second report, and I do not believe that anyone in this House is happy about being in limbo in this way. But to avoid overburdening the 1998 discharge procedure with these problems as well, the 1997 discharge procedure has to be brought to a conclusion. If it is not, we shall never be finished with this matter and I will probably be affected by this personally in the 1998 budgetary procedure. That is why I wish to invite the Commission - whoever wishes to take the responsibility for this - finally to take the measures which we have demanded.
I am already worried, Mrs Cresson; your work with Leonardo concerned the 1998 financial year. At the time, we were accused of confusing 1996 and 1998. No, the problem is that this came to light in 1998, and I should like to ask you, Mr Liikanen, to tell your colleagues that at that time, in the summer, we sat upstairs on the seventh floor - things were really pleasant and friendly then - and made you an offer: be open, admit your mistakes, show us where the faults lie, and we will be prepared to compromise. That did not happen, and now you will have to find a way of dealing with the severity with which you are now being treated. But this is also significant for the 1997 and 1998 discharges.
I now turn to the House itself. Since the very member of the Socialist Group who has been the most cooperative towards us is sitting here, I will actually avoid criticising the Socialist Group; otherwise I would have said that the dilemma facing us today is in fact the fault of the Socialist Group.

Kjer Hansen
Mr President, it has been a difficult task for the rapporteur, Mr Brinkhorst, and for the Committee on Budgetary Control to work on the 1997 discharge, because there has been no 'proper' Commission with which to discuss the discharge for 1997. Let me say that it is deplorable that the Member States did not appoint a new operational Commission long ago, because the acting Commission is in a state of paralysis and has chosen to be unwilling to take any kind of initiative to rectify errors or omissions. Obviously, in such a situation we cannot give a discharge. But even more important are the real political problems which remain unresolved. There has still been no reform of staff policy and still no improvement has been made in the administration of the various programmes. Especially in connection with the Central and Eastern European countries, with which I have worked a great deal, it is disastrous that people are incapable of turning the budgeted amounts into concrete projects, that the rules on open tendering and on concluding contracts are not being observed, and that no results can be shown in connection with the programme for the safety of nuclear power stations, to mention but a few specific examples.
We need a better structure, a better administration and greater transparency. That is the crucial message to the Commission as a condition for even considering approving the accounts for 1997.

Seppänen
Mr President, I have closely examined the report by the Committee of Wise Men which suggests that both the Members of the Commission and its officials lack a sense of accountability. A sense of accountability, according to the report, is a pre-condition of democracy. The report states how abuse was not investigated in the Commission, or, if it was, it was investigated too late and too long. Furthermore, the penalties were too lenient. The same is true of the conclusions on the matter now in hand, which was the basis for refusing discharge. The Commission resigned, but from the point of view of the Commission this resignation was very obviously an advantageous decision. I read in the 'European Voice' that on their resignation, the Commissioners would receive a three year severance package. If they had been dismissed such an arrangement would not have been made. Commissioner Van Miert had thus suggested that they should resign as one body, thus guaranteeing the implementation of the severance package. In my opinion, it is wrong and unfair that they should be rewarded so well for the work they have done so badly.

Theato
Mr President, I realise that our rapporteur, Mr Wynn, was not here to present the reports on the discharge for 1996 and 1997. The reports were adopted in committee without any amendments. They were finalised in committee and can therefore also be put on the agenda for tomorrow's vote. I should like to mention this here for the sake of the procedure, because an opinion was delivered on the subject by Mrs Günther which likewise dealt with the development budget for 1996 and 1997. According to the procedure, we therefore ought to include this on the voting list for tomorrow. I should like to ask you to see to this, because as I have said, the rapporteur was not present.

President
Thank you, Mrs Theato.

Müller
Mr President, I am sorry I am late, but there are other meetings taking place at the same time and it simply is not possible to be in two places at once!
Mr President, ladies and gentlemen, throughout the debate about reforming the Commission, I have supported clear principles, and today these same principles once again form the basis of the amendments I have tabled to the Elles, Brinkhorst and Fabra Vallés reports.
Firstly, responsibility must be seen to be accepted. That is why the accounts for the 1996 financial year cannot be closed straight away, for example while there has been no reimbursement in areas where nepotism has been established.
Secondly, the greater the transparency, the less need there is for controls. As long as the Commission still does not respect Parliament's right to have access to information, the institutions cannot trust each other, and nor will they win the increased trust of the general public. That also applies to a Commission which has resigned.
Thirdly, Parliament's criticism of the Commission will only be credible in the eyes of the general public if it adopts the same critical attitude towards itself. As long as documents in connection with proceedings against SEL are withheld from me and the Committee on Budgetary Control, discharge should not be granted for Parliament either. I hope I have made it clear that where discharge is concerned, my group is guided by its own principles, which indeed apply to both the Commission and Parliament.

Liikanen
Mr President, firstly I should like to reply to Mr Elles' questions concerning the preparation of the different documents which were based on the programme which Mr Santer presented in January and which was referred to in many of the discharge reports. The preparatory work on the code was very far advanced by mid-March. The code of conduct for officials was ready in the Commission but it went to negotiations with the staff organisations. It is available from the Commission. Also, the first drafts of the code of conduct between the cabinets and services have been drawn up and, as far as the nominations are concerned, that was under way. At the same time, the Commission has taken a decision to freeze all nominations of A1 and A2 level until the new Commission is in place. A decision was taken to freeze all the nominations until the code of conduct was accepted.
Secondly, as far as the Staff Regulations reform is concerned, there was the famous David Williamson report which was presented last autumn. The technical consensus-seeking negotiations with the staff organisation have started and also the first political consensus-seeking sessions have taken place. The position of the Commission was that the Williamson reform serves as a good basis except in one area. The Commission would like to have more open options for disciplinary procedures. There was a clear opinion that more independent disciplinary procedures should be envisaged. At the moment disciplinary procedures are always internal. They are based on joint opinions. There has also been a strong opinion that outside, independent, experienced people with experience in judicial procedures should be involved. That part has been most open.
All this work has been done and now it is for the next Commission to take the political initiatives. It will help the new Commission that this preparatory work has been done and the new Commission can make a political choice on the codes of conduct. If the Committee on Budgetary Control in the meetings in June wants to hear about these preparations I will be available on a personal basis. It has been understood by the Commission that to take clear and strictly political decisions which tie the hands of the new Commission at a time when the Commission has resigned is a question which must be considered on a case-by-case basis.
For the rest, the Commission takes note that the discharge procedure for 1996 is about to reach its conclusion on the institutional legal side which is being discussed here today. I refer to discussions which we had earlier here on the basis of the Fayot report. As to the discharge reports for 1997, the Commission takes note of the fact that the Committee on Budgetary Control has proposed postponement of the discharge on institutional grounds connected with the Commission's resignation. On the guidelines contained in the working document annexed to the motion for resolution, it will therefore be for the next Commission to take the appropriate initiatives. Mr Bösch put a question here but the Commission has replied to those issues. I am sure that Mr Brinkhorst can confirm that we have had a great number of discussions and meetings. We have also sent documents to the Committee on Budgetary Control even though it is difficult for the Commission to make a political commitment for the next Commission. That is excluded. However, if you want to clarify things, I am available as are other Commissioners as along as we are in office. Our responsibility is to work, but undertaking a commitment to changes of a political character is for the next Commission.
I would also stress that the guidelines presented by the rapporteur are part of a major reform movement. The Commission has started reforms of SEM 2000, sound financial management. I disagree to an extent with Mr Giansily. There have been achievements as well as failures. It is very important to analyse what went well and what went badly in order to progress further with reforms. In the area of the structural funds the new regulations are clearer. The eligibilities for different funds have been agreed. The possibility to use financial correction is there. There have been issues where Parliament and Commission have agreed and there has been progress.
But there has been a problem, I can admit that when we have taken decisions at political level which are clear and in the right direction, the ability of the Commission to implement the decisions in all its services in the same way has been weak. They have been implemented in some services but not in all. That is the issue the new Commission must pay a lot of attention to. It is important to take the right decisions but it is equally important to have a system to guarantee that all will be implemented to the very end.
In the MAP 2000 area there have been improvements in decentralisation towards the separate DGs and cutting down the red tape so that all the officials could be directly responsible. Much remains to be done. And the design of the Commission for tomorrow is being prepared for the next Commission. It is very important that the new President has all the elements on the table when he takes his decisions on the portfolios and, in that context, on the structure of the services.
I agree with three major conclusions of the rapporteur. One is that there must be an improved partnership/management of Community actions. It is very important that the Commission and Member States act together and that the rules and responsibilities are clear and are shared and that we know how to correct things if they go badly. We have already made an effort and I am sure we can continue. I was happy to note that the rapporteurs of the Committee on Budgetary Control were at the sessions with the Member States last time. Both sides found it very useful.
Secondly, the issue of decentralisation and devolution of Commission action especially in the field of external programmes is extremely important but we need very strict rules for the delegation of the management of Community policies and that must always be actively pursued. In that context there has been an area where the problems were bigger than expected. For those who came into this House in 1995, I am referring to the area of the external offices which were performing many tasks for the Union. Thanks to cooperation with Parliament we have been able to agree now the budgetary framework so that there must always be budgetary commentary. As you know we have drafted a vademecum on the issues which can be given to external sources and on what rules must be respected. But it is very clear that this work must continue. That has also been discussed in the reports by Mr Elles, Mr Brinkhorst and Mr Bourlanges.
The third area which is very important is the global reform of financial regulations. There also the first communication has been done. Mr Dell'Alba was the rapporteur. Discussion continues. We are waiting for the financial decision of the Court of Auditors. It is extremely important to try to put all these small reforms in one clear global financial regulation where the roles and responsibilities of each player in the implementation of the budget within the Commission, namely the authorising officer, the financial controller and the accounting officer, will be clearly defined. That is extremely important.
Finally, it has been a painful year and obviously this will be the last time we have an open debate on the issue. It is extremely important that all of us who care about the future of the Union, care about the good execution of the Community budget, care about the value of the taxpayers' money try to utilise all this to achieve deeper reform which has clear objectives and a strong capacity of implementation which can lead to results. I say that only because I know that in the House there are also people who are very worried and rather disconcerted because of this public debate. It is not the fault of any of us but we must take that into account. We hope that the painful experience of this Commission can be used by the next Commission so that it will strengthen and not weaken the process for reform.

President
Thank you, Commissioner. Mr Elles has a brief comment.

Elles
Mr President, I would like to clarify one point in the Commissioner's response to this debate. I thank him for the information he gave us on a number of these codes of conduct. However, there is one report which I referred to in my speech which relates to paragraph 7 of the January resolution. In the absence of any Socialist member of the Committee on Budgetary Control, I think I should do it on everyone's behalf. It says: 'Looks forward to the report of the President of the Commission preparing for the Cologne Summit of the internal reform of the Commission. We plan to hold a major debate in this May session'. Could I ask the Commissioner to provide this report when it is available to the new Parliament so that we will have all the information at our disposal.

Liikanen
I know that a lot of work has been done, in these exceptional circumstances, by the services and the Cabinet of the President. I will talk to him about the issue.

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

List of legislative proposals pending
President
The next item is the report (A4-0255/99) by Mrs Palacio Vallelersundi, on behalf of the Committee on Legal Affairs and Citizens' Rights, on the implications of the entry into force of the Treaty of Amsterdam (list of legislative proposals pending as at 1 May 1999, indicating new legal bases and any changes in legislative procedure following the entry into force of the Treaty of Amsterdam) (C4-0134/99 - SEC(99)0581 - C4-0219/99).

Palacio Vallelersundi
Mr President, Commissioner, I was just thinking that this is the last report I shall give as rapporteur in this parliamentary term. I was also thinking that few parliamentarians can have been lucky enough to cut their political teeth on the directive on voting rights for citizens of the Union resident in a Member State other than their own, and to draw their career to a close with this report on the implications of the entry into force of the Treaty of Amsterdam for legislative proposals pending. Indeed, the start of my parliamentary career was also the first time I appeared in an institutionalised political forum.
That said, and with a certain nostalgia for the other reports I have presented and the many times I have spoken in the House over the years, I shall move on to the issue we are concerned with today. Commissioner, I must first say on behalf of the Committee on Legal Affairs that we have taken note of the document you have presented to us. I hope Parliament will confirm this tomorrow but we accept, share and understand its content, despite the pressures of time imposed by the entry into force of the Treaty of Amsterdam. It is an excellent working document and I naturally agree with the philosophy behind it, which is clear and which specifies the essential details.
Nevertheless, Mr President, Commissioner, Parliament can go no further. It will be for the incoming Parliament to consider the validity of the legal bases in each case, pursuant to our Rules of Procedure.
This report goes beyond merely listing the changes the Commission has noted and which it suggests other institutions consider, though these should be borne in mind. Procedural changes affecting more than a hundred acts are noted. Eighty of these involve transfers from the cooperation procedure to the codecision procedure in areas such as transport, the environment and social affairs. Changes in the legal bases are also recorded, notably concerning matters covered under the old Article 43 - agriculture - and which now come under the title covering public health. Finally, there are very significant changes concerning the policy, content, aim, inspiration and underlying political principles behind issues moving from the third to the first pillar in the area of justice and home affairs. The integration of the social protocol into the Treaty itself constitutes another important change.
Faced with what is undoubtedly a complex situation, one thing is clear: there is no transitional law, there are no transitional provisions within the Treaty of Amsterdam. We are therefore called upon to come up with an integrated and constructive interpretation based on the principles underlying the Treaty. As far as Parliament is concerned, this interpretation is based on three points. We must exercise our responsibility towards the people preserving the powers granted to Parliament under the Treaty, and we must guard these powers, just as we should when they are granted to other institutions. The new consultations relating to the Committee of the Regions or the Economic and Social Committee are good examples of this.
In this connection, Parliament will not bow to any other institution's interpretation of procedural matters. Such matters must be considered - as the Commission's report rightly points out - on the basis that the act adopted will be adopted in accordance with the Treaty of Amsterdam, and that this is the procedure that must be followed. Moving on from here, we are bound by another important principle which is also related to the responsibility we have to the people and which I mentioned earlier. I am referring to the principle of preserving the acts, the principle of being as effective as possible and of providing the best and fastest response to the people. Therefore, whenever possible, we shall confirm and ratify procedural arrangements to ensure that each act is adopted and comes into effect at the earliest opportunity.
Consequently, as a general principle, Mr President, we should be unyielding on general principles but as flexible as possible on specific applications.
In conclusion, what we are confronted with is a change that summarises Parliament's philosophy very well indeed. As Commissioner Oreja is on record as saying, this is a change which from 1 May will equip the European Union with a more efficient instrument, one which is more open to dialogue with the people, more democratic and more outward-looking. I believe that this report responds to these ideas.

Oreja
Mr President, ladies and gentlemen, I must congratulate Mrs Ana de Palacio. She herself referred to her first and last speeches, but I would like to emphasise that between them Mrs Palacio has applied herself to her work intelligently, competently and with great energy. All of us as individuals and all the institutions have most certainly benefited from her contribution over the last five years.
Turning to the report before us today, the entry into force of the Treaty of Amsterdam did of course mean that we had to resolve a number of procedural issues concerning legislative proceedings pending. Matters have not been helped by the fact that the entry into force of the Treaty of Amsterdam coincided with the final part-session of this Parliament. Nevertheless, we are convinced that the loyal cooperation between the institutions will enable us to find a solution to any problems which may arise.
As you are all aware, on 1 May the Commission forwarded to Parliament and the Council a communication detailing the consequences of the entry into force of the Treaty for all proposals already submitted and not yet adopted. Eighty proposals previously subject to the cooperation procedure will now have to be considered and adopted under the codecision procedure. For some 20 proposals, Parliament's involvement changes from a simple ruling to codecision. Further, the legal bases of 27 proposals have been modified.
Parliament has already made its views on a number of these proposals clear, and the Commission has incorporated some or all of these into its amended proposals. We believe it is very important to ensure that the people of Europe do not feel that the Community's decision-making powers have been constrained as a result of the entry into force of the Treaty or because of the parliamentary elections. It is therefore essential to carry on with the legislative work as usual.
Mrs Palacio's report suggests a procedure confirming the one that was chosen by the European Parliament after Maastricht. It involves Parliament's confirmation of the legislative procedures already under way whose legal bases or procedures have been amended pursuant to the Treaty of Amsterdam. It is worth mentioning that some cases call for swift action, particularly the three concerning approval of the conclusions of the negotiations on Agenda 2000.
I certainly appreciate the goodwill Parliament has shown in dealing with all urgent pending matters - especially those relating to Agenda 2000 - at this part-session despite the pressures of time.
Finally, I should like to refer to the proposals pending concerning justice and home affairs and affected by the fact that under the Treaty of Amsterdam such matters have now become a responsibility of the Community. In these cases, the Commission will formally table new proposals. The content of these will naturally be retained, but the most appropriate legal instrument will be used, be it a regulation or a directive. As for the two agreements on the forwarding of acts and the recognition of decisions in marital matters and parental responsibility, these will be forwarded to the Council and to Parliament immediately. They are due to be adopted by the Commission tomorrow in accordance with the Treaty.
In conclusion, I should like to emphasise that in view of the institutional calendar and the political circumstances which have resulted in the entry into force of the Treaty of Amsterdam coinciding with the advent of a new Parliament and a new Commission, it will be for the incoming members of both these institutions to pursue dialogue on this issue with the Council. Thank you very much and congratulations once again, Mrs Palacio.

President
Thank you, Commissioner.
The debate is closed.
The vote will take place tomorrow at 12 noon.

Dispute between the EU and the USA
President
The next item is the statement by the Commission on the WTO dispute settlement procedure for the dispute between the European Union and the United States.
I should like to welcome the Commissioner, Sir Leon Brittan.

Brittan
Mr President, I addressed the REX Committee on this subject on 13 July and the issue was subsequently debated at the General Affairs Council of 26 April.
With regard to hormones, as you know the definitive risk assessment which the Commission initiated last year after the appellant body ruled against us, will not be completed before the expiry of the reasonable delaying period which was allotted on 13 May. But, the Commission received an interim report from the scientists last weekend and we shall be having a first discussion of it at our meeting tomorrow. It is premature, therefore, for me to comment on the scientific data which has only just become available on this question or on the conclusions that we should attach to that data in the context of the WTO case in Geneva. As I have said, we will have a first discussion on the scientific reports tomorrow but we do not envisage drawing conclusions until a later meeting. But I can say one or two things which I think are of some importance now.
I should stress that there is no reason whatsoever for a new urgent decision to be taken on public health grounds or for there to be any kind of panic. The reason for that is very simple: it is that there is a complete ban on the use of hormones in the European Community and the import of meat that has been treated with hormones, so that public health cannot be affected just because the scientific reports that have just come out have been published, however they are interpreted. So the question now that we all have to consider is not what shall we do to protect public health, which is adequately protected, but, rather, what implications do these latest reports have for the handling of the WTO issue? That is obviously something which needs very careful consideration. It is primarily a legal and economic issue now, and not a public health one.
Meanwhile, in the light of the various positions expressed in Parliament, I would like to stress the following. First of all the Commission of course shares the commitment of Parliament to the highest possible level of food security for European consumers. Secondly, we are of course committed to fulfilling our international obligations under the WTO. There is no reason why these two objectives should be contradictory. If the scientific evidence warrants it, the existing ban, which fully protects the European consumer, can remain. But it is important from the point of view of handling the issue in the WTO that there should be the maximum transparency with regard to our new scientific information. If it is to be persuasive internationally we will have to be clear as to the extent to which it is a new analysis of existing material and the extent to which it is based on new studies. It is likely and it would be reasonable for us to be asked to disclose any such new studies whether now or when they are finally completed. I therefore intend to ensure that all our scientific data - which will be accessible to everyone on the Internet - is discussed with our scientific counterparts in the US and Canada, with the objective of seeking greater consensus on this issue.
The data now available since the weekend may represent an important addition to the debate on this issue. I hope that scientists and regulatory agencies on both sides of the Atlantic will start a fruitful dialogue on the basis among other things of that data which I trust will be fully available. We will then be in a position to judge how to handle the matter from the point of view of the WTO findings and the American intentions on that.
Let me now turn to bananas. The Commission decided last week - with the consent of the Council of Ministers - not to appeal on either the substance of the issue or the so-called systemic question, but we do intend to pursue the latter issue, the systemic issue, in the panel which the EU brought against Section 301 of the US Trade Act. We also intend to pursue it in the dispute settlement understanding review and if necessary in the next trade round.
On the substance of the issue, our intention now is to change our regime in order to comply with the WTO panel ruling. I believe that everybody has agreed that our objective has to be conformity with the WTO. But this will not be easy. We intend to consult extensively with all the main players with the objective of achieving a system which will not be threatened by further WTO challenges. I discussed this issue in Washington two weeks ago with the US agriculture secretary among others. My meetings were followed by discussions at official level. Subsequently, the Council asked the Commission to put forward proposals for amending the banana regime by the end of May in the light of further contacts with the US and other parties principally concerned.
It has been clear from these talks that there is no simple way to secure the quick removal of American sanctions. The United States insists that our system should be amended both with regard to licensing and in such a way as to provide what they regard as adequate market access for Latin American bananas. They are willing to support the prolongation of the Lomé waiver when it comes up for renewal next February, but are reluctant about the idea of extending its scope.
On licences, the Commission sees the possibility of an auctioning tender system as an efficient, transparent and non-discriminatory method of distributing import licences. While accepting that auctioning was mentioned by the panel as a method consistent with the WTO rules, the Americans have indicated that they continue to have doubts on the legality of such a system.
We have also had a first discussion with Ecuador, which has indicated its main areas of interest and that it considers that the Community should now compensate it if we do not bring our regime into conformity with the WTO immediately. This week we are also seeing the ACP countries and plan to see the other substantial suppliers too, as soon as possible. When these discussions are concluded we will be better able to judge the parameters for an acceptable solution. We are pursuing a mutually acceptable solution with the US and other interested parties. We are looking at the various suggestions made by the panel established at the request of Ecuador to ensure that we amend our system in a WTO-compatible way. We are working to reach agreement on a reformed regime with all parties. But if we are unable to do so we will clearly have to propose those changes which we ourselves believe will make our regime compatible with the WTO rules as interpreted in the latest rulings.
Finally, I turn to hush-kits. The issue of aircraft noise has achieved prominence in recent months following US concern about our proposed regulation. European airports are situated very often close to densely populated areas which means that there is great local concern about noise pollution when it comes to expanding airport capacity. So we proposed last year a regulation designed to reduce aircraft noise, fuel consumption and pollution. From 2002 there will be a cap on the number of old technology aircraft permitted to be used in the European Union, including aircraft equipped with so-called hush-kits or noise mufflers.
The Americans have argued that this is de facto discriminatory against aircraft originating from the US and that it will cost US industry more than $1 billion since it will no longer be able to sell its aircraft with hush-kits to countries neighbouring the EU for operation to and from Community airports. They have not been able to explain in detail the basis for their calculation.
During numerous high-level meetings with the US, the Commission and Member States representatives have explained that the measure is non-discriminatory, that its economic impact is limited and that it merely involves a freeze on the number of noisy aircraft within the Community. We have also argued that the current ICAO noise certification standard has not been updated since 1977, largely due to American reluctance.
Following intensive discussions over the past few weeks we now seem to have found a way of defusing this issue. Last week the Council adopted the proposed regulation regarding aircraft noise but also decided, taking due account of the views of Parliament, to delay its application for one year. This delay will help us to conclude the discussions we started with the Americans in March. These discussions will focus on promoting work within ICAO to reach the next generation of noise restraint standard.
Finally the Americans have given priority to working speedily and in close cooperation with the European Union within this framework. These discussions will also address the more immediate or short-term noise problems. We will consider proposing amendments to our legislation to meet any legitimate US concerns. The Commission is invited to report to the Council on the progress of these discussions by September this year. We will also keep Parliament closely informed, particularly through the relevant committees. We will naturally continue to defend European interests vigorously, but we want to avoid unnecessary and potentially damaging trade disputes with the US. We look to the United States to show similar restraint on other issues where we are seeking to resolve our differences.

Mann, Erika
Commissioner Brittan, once again you have made the position very clear, and indeed you have also dealt with the various trade disputes in which we have been engaged with the United States for quite a number of months, if not for years in some cases. Several points give me cause for some concern. Without further ado, I should like to turn to the first of these. All these cases, these trade disputes, in which we are at present engaged with the United States or with Canada, are in principle test cases, in which the boundaries set by the World Trade Organisation are being scrutinised to see how much independence and autonomy countries actually have to determine their own policies in particular fields, whether it is consumer protection, whether it is health care, whether it is a question of how policies with respect to developing countries can be implemented - as in the banana case - or whether it is about standards. These are all key questions, and we have a World Trade Organisation which has marked out a framework within which we have to act as a trading partner. In principle and by and large we are happy, but we know that there are definite borderline situations and cases which are being tested out by means of complaints or rulings. This is the situation in which we find ourselves.
My second concern is that there are two conflicting models here, and the hormones case illustrates this perfectly: the famous American model, if I may call it that, with a different system of health care, and the European model, in which welfare is given greater prominence.
What bothers me is how we are going to be able to work together in the future and how in the new trade round we are going to be able on the one hand to agree on more common standards, while on the other hand guaranteeing a greater degree of independence and autonomy in the self-determination of regions and countries. That will not be very easy; indeed we have already discussed in the committee several times how this is to be achieved. This hormone case will be the test case for the European Union. This will far surpass everything we experienced in the banana dispute, because here consumers will of course be very sensitive, and they want policies which guarantee the highest possible standards of health care and health protection.
At the moment, I am very unsure of how we can react in the light of the answer which you have given. On no account should we rule out any option, and on no account - this is my group's opinion and other colleagues will also be mentioning this - should we make any concessions at this stage. On no account should we make a political statement committing ourselves to anything before we have the final results of the scientific investigations. Only then should we reopen discussions - involving Parliament, the Council and the Commission - on what our next move ought to be. At the present time, I would consider a statement of any kind to be premature.

Kittelmann
Mr President, Commissioner, ladies and gentlemen, at a time of great agitation, whether the source of this is the Kosovo conflict or a different conflict altogether, we are again obliged to debate a subject in the European Parliament which has already occupied all of us for too long, the trade dispute with the USA. The United States is insisting on one point of view, firstly with bananas - an issue which has most likely been resolved in its favour - and now with hormones, where it is extremely difficult to draw the picture in such a way that it will attract the sympathy of those outside the European Union, because the trade disputes we are talking about here only involve 2 % of our joint trade.
But it is precisely because of this that I should like, on this occasion, to make a clear appeal to the United States. Although we know about the need for innovation, what really matters to us Europeans is not neglecting our traditional roots. I am thinking here, for example, of banana growing in some Member States and protecting our consumers, to whom we are accountable as elected Members, and we need to further consolidate that level of protection.
In doing so, we also take the liberty of setting different priorities from those of our American colleagues in Congress. However, I do think it is essential also to appeal to the Commission and the Council. Sir Leon, our experience of working with you over the last few years has been extremely positive, because during the transatlantic trade disputes you have worked very closely with the European Parliament. I should like to thank you very much for that, but you alone are not the Commission and the Council. I should therefore, on behalf of my group, also like to ask that any efforts to resolve the trade disputes by extending the procedure before the WTO, so as to delay the result, should be vigorously opposed. I must remind all of us of what we have done frequently in the past. The European Union and the United States, Canada, New Zealand and Australia each have one vote in the WTO, but hundreds of developing countries, who are waiting in the WTO and hoping that their interests will also be taken into consideration, must not be sidelined by ongoing disputes between the European Union and the USA, because there are other fundamental problems too.
I also ask that we Europeans do not only think about playing for time in order to delay the process of rectifying the underlying injustices. As the general rapporteur of the European Parliament, I should also like to warn that behaviour of this kind - playing with WTO rules mainly for political motives - might weaken the standing of the WTO both in the eyes of the USA and in the eyes of our own voters.
I should also like to call on the Socialist Group to support the PPE Group's line on this issue. We are all experiencing all kinds of political difficulties as a result of the banana ruling and the hormone case. Nevertheless, in spite of these difficulties, we should not lose sight of the essential features of the legal solution, which is actually a workable one. The WTO banana ruling requires us to produce a clear regime for our own producers and ACP producers, as far as providing adequate market access for all third countries is concerned. I would also plead for a solution to be found as quickly as possible, because the legitimate imposition of punitive tariffs by the USA has put other sectors of the economy under considerable pressure and jobs are at risk in Europe as a result. As regards assessing and authorising hormone-treated beef from the USA, I would ask you to bear in mind that the reason we set up a multilateral legal framework was precisely to protect weaker states. Thanks to the WTO and because we are not giving in to market power, we have a legal procedure for raising legitimate concerns. But if no hard scientific evidence can be produced, then obviously no import ban can be imposed. The first in a series of reports assessing the health risks of hormone-treated meat has, however, come out today. The first point to emerge from this is that it is not completely safe to consume this meat. But we should avoid having a transatlantic - or indeed a European - philosophical war about individual reports and should wait calmly for the final verdict of the scientific community. It is noticeable that comments made in the interim are based more on emotion than on the facts.
Today we have tried to combine the various opinions held in the European Parliament in one joint motion, to allow Europe to speak with one voice on this important matter. I would therefore ask you to vote in favour of this motion for a resolution.

Mulder
Mr President, the main point for my group is that we have concluded an agreement under the terms of the WTO and must abide by the legal rulings which have been given. I agree with what the Commissioner said about the consequences to be drawn.
Far more problematic is the question of animal hormones. In the first place, I think it has to be absolutely certain that there is no threat to human health. The second point I would raise is that of consideration for animals. Can these hormones be fed to animals without doing them harm? I think European views on this are very different from those in the United States, and this too is something we must raise in the forthcoming talks.
The second question I would ask of the Commissioner is this: what happens if we permit US meat containing hormones, provided it is labelled? Can we then legitimately forbid European producers to use animal hormones? What will the upshot of that be?
Lastly, Parliament has made numerous pronouncements already on the whole question of policy regarding the quality of farm products. Parliament unanimously adopted a resolution last October which broadly sets out what a policy of quality for European farm products might comprise. I suggest that this be taken into consideration in future discussions.

Herzog
Mr President, Commissioner, ladies and gentlemen, the recent disputes with the United States lead me to two conclusions. The first is the need to foster dialogue with the Americans, as well as with other regions of the world, because we need now, and will need in the future, to form new alliances. The second is the need for greater vigilance on the part of the European Union in the WTO negotiations, bearing in mind their growing importance. This is of course a collective problem that also involves the European Parliament.
In my view, in the banana affair, which you dealt with so well, the European Union must pursue its action against unilateral legislation before the WTO. With regard to hormone-treated beef, there are fundamental issues at stake, such as food safety and the choice of agricultural model. The interim report and the concerns voiced in the Transatlantic Consumer Dialogue considerably consolidate our position on the matter and, as Erika Mann mentioned, it is important not to make any concessions at this stage. If there is any compensation, it must be of a temporary nature. And as regards labelling, any change in approach would, at present, seriously weaken our position.
Above all, Commissioner, bearing in mind the problems posed by the old WTO agreements on these types of products, I should like to know if you would consider reopening the WTO file on two counts. First, we need a better definition of the precautionary principle with, in particular, a reversal of the need to furnish proof where doubts arise. Second, we need a better definition of expertise, because the Codex Alimentarius cannot be considered to be an unequivocal legitimate reference.

Graefe zu Baringdorf
Thank you Mr President. With all due respect, Sir Leon, we have to discuss this now, and when you say that there is no reason for consumers to panic because we have the ban, then I have to say that we are on the brink of lifting the ban and, as Mrs Mann said, this is undoubtedly about the different ways of life in America and Europe. However, it is also about the huge interests of hormone producers and users here in Europe, Mr Kittelmann, as is apparent from your speech and the softly-softly manner in which it was made. In fact, we now have exactly what you wanted: no emotion, but the scientific proof - and, as requested, this is qualitative not quantitative - that the use of hormones is harmful, that they pose a risk to health, that they are carcinogenic and that they cause puberty to begin prematurely in girls; I am just translating what it says here. This is what we have repeatedly stated and pointed out in the past: the use of sex hormones disturbs the hormonal balance in children at this particularly sensitive time.
Sir Leon, consumer protection must take priority here, and this is not a legal issue; the legal issue should take second place to consumer protection and preventing the public from harm. Neither, Mr Mulder, is it about not complying with WTO rules and negotiated agreements. We want very much to comply with them, but we need to have some input into them and we need to develop them further where dispute settlement is concerned, as well as in the social and environmental fields and in the fields of health and culture.
Sir Leon, we have seen that when dubious substances of this kind are used, the floodgates are opened, including for illegal use. In fact we can see it now with the samples which the Commission has taken that banned hormones are being used in the USA, and that it is not true that the meat which comes here is hormone-free. That means that if we were to lift this hormone ban, we would have to authorise the use of hormones here, with all their adverse consequences. Side-effects might be acceptable where medicines are concerned, Sir Leon, but with food there should be no such side-effects, and here the burden of proof needs to be reversed so that those who wish to produce and use these substances have to prove that they are harmless. That is what we should say in the WTO negotiations, and we should raise the issue of our European way of life and ensure that we are able to keep it.

Dell'Alba
Mr President, Mr Vice-President of the Commission, in this trade war concerning bananas and hormones there is a sting in the tail which, as we all know, affects European businesses and economic sectors which have nothing to do with the sectors involved in the dispute. This is part of the American philosophy of taking the offensive, to which it would be a good idea to respond, using the same instruments of course, but we cannot continue to ignore the price being paid as a result by some economic sectors and I would also point out, Sir Leon, by some countries more than others. I have never been an ardent nationalist but there is no doubt that if we look at the statistics - and you must know them better than we do - we can see that Italy and some of Italy's economic sectors have been hardest hit by the punitive duties imposed as part of the American retaliation. For example, the battery and accumulator industry is incurring extremely heavy losses, amounting to millions and millions of dollars, as a result of the 100 % duty rates imposed under the terms of this war.
The proposal we would therefore make, and I know that this is being studied by DG I, is to set up a compensation fund, to propose to the budget authority that in order to give you and our common trade policy some weapons with which to fight, it should put into the budget a fund, a reserve which could provide compensation for European businesses that are the innocent victims of this fair and necessary common trade policy. This is the suggestion which I should like the House to approve, but at the same time I would like to support the studies you are carrying out with a view to making a practical proposal, so that the new financial perspective and the new budget also contain a pm entry, a specific reference to this extra weapon for our common trade policy.

Roth-Behrendt
Madam President, Commissioner - for the moment - I listened carefully to what you had to say. Your speech surprised me; no, actually it did not surprise me. But in fact it did surprise me, because there are only two explanations for it. Either you cannot read, or you had a preconceived opinion and wanted this opinion to be confirmed, and that is why you do not like the scientific reports.
Let us consider where we stand today. You said that it was a legal and economic issue. Is it a legal issue? The WTO Appellate Body has told us to prove that there is a health risk. Has it not been proven? The danger is proven, so where does that leave us today? Mrs Mann said that we were not actually sure how we should react, and Mr Kittelmann said that any action we took had to be legal and actually workable. Mr Kittelmann, I look forward with great interest to seeing how you explain to your voters at the elections to the parliament in Berlin what is legal and actually workable. It was 20 years ago, Sir Leon, when colleagues of yours did this in your country, the United Kingdom, and look where that got us with BSE. You are well on the way to continuing that process with the government of the United Kingdom, should you believe that you have their support.
Let us just consider where we are. We have six hormones. The scientific reports say that all of them pose a risk to health and that one of them both causes cancer and aggravates it, and you dare to say in all seriousness, Sir Leon, that now there should be greater transparency. Is that what you have in your Directorate-General and in your private office? I would love to know. There should be greater transparency, we need new analyses: which ones then? Ones which support and match what you actually want? And you say that we need new scientific data. Which data would that be, Sir Leon? I know that really you were in favour of the labelling option. Anyone who can read, see and hear knows that. But you also know what the labelling option means. A piece of meat can perhaps be labelled, but nothing which derives from it can be, not minced meat and nothing, nothing, nothing more! You, the Commission, repeatedly told us this, did you not, when we were in favour of comprehensive labelling and wanted that in Parliament. Anyone who is in favour of labelling now is saying loud and clear: we actually accept health risks, we do not take any notice of them, and we accept that people will be at risk, including children who have not reached puberty - Mr Graefe zu Baringdorf made that point. Mr Kittelmann, go out onto the streets in Berlin and say: 'but it does say on the label that it is highly dangerous for children during puberty and for everyone else as well; and if people already have cancer it encourages more tumours to form, and in addition it can be carcinogenic'. Go on, why not? I could not hope for more in the election campaign!
Now just tell me one thing, Sir Leon. You will not be in office for much longer, and that is why I do not actually need to hold too intensive a discussion with you. Whom are you actually representing here? Are you representing the USA, or are you representing the European Union? If so, whom in the European Union? Certainly not consumers, because if so you would be aware that one of the basic principles of European Union legislation is that only safe, completely harmless products are allowed onto the market, and even then they are labelled. You see, a label is not a warning notice, Sir Leon; a label provides consumers with information, but the assumption is that the products are safe. That is not the case here, and what you are doing at the moment is what I would normally describe as reckless, but it is irresponsible, and I will make it clear in public what the Christian Democrats here in this House stand for!

Ferrer
Madam President, I shall concentrate on the crisis triggered by the banana sector, particularly because it seems logical for this sector to be the one most affected by the crisis. What does not seem as logical is that yet again the textile sector - among many others - is suffering the consequences of a crisis that has nothing to do with it. Indeed, following the decision by the WTO arbitration body, export tariffs for this sector will be increased by 100 %. Cotton bed linen and cashmere goods are particularly badly hit, as are other sectors, specifically those on the list that accompanies the World Trade Organisations's ruling. For the companies involved, the consequences will be very serious indeed. As you are aware, Commissioner, the textile sector is going through a particularly difficult time as it is being forced to compete with massive imports of cheap goods from Turkey and Asia. As a result, its plight is causing great concern.
Furthermore, not all the Member States of the European Union are affected by the measures mentioned. This constitutes a serious distortion of the rules of competition within the single market and it will lead to even further negative consequences for those companies affected by the high tariffs the United States is imposing in its sanctions.
Consequently, for these sectors which are now the victims of the banana war, it is essential to settle the dispute as soon as possible. I have therefore been very encouraged by what you said, and by the details of the initiatives and actions you mentioned that are aimed at finding a solution at the earliest opportunity. In addition, I am in favour of setting up a compensation fund to assist companies affected by the sanctions. Without assistance, many of these companies will soon be in a critical situation and could even fold. The resulting job losses would be particularly unfortunate at a time when the Union is trying to promote policies designed to increase employment opportunities.

Iversen
Madam President, there is a high level of awareness among consumers. This means that we cannot simply decide anything we like. It also means that consumers expect food to be of decent quality, but above all, consumers expect and demand that food should not be damaging to health. The situation may not be all that good here, but it is still better than in many other places. What we are seeing today is a dispute between two continents. As has already been said, this dispute concerns, amongst other things, meat treated with hormones, and in this case it is quite clear, as has been emphasised here, that we should put consumer interests first. Labelling is not an option at all, because it is not the job of consumers to act as guinea pigs for industry's new ideas. You must not gamble with people's health. I therefore also regret the fact that labelling is one of the options the Commission has mentioned in its statement.
The problem is that it is very difficult to turn the WTO into the champion of consumer interests. But it is also true that faith in free trade has proved to be misguided. There is no reason to expect free trade to solve every problem. Free trade cannot be the driving force for the environment and consumer interests, quite simply because the two areas require a political consideration which the market cannot give. We therefore need to get some more politics into the WTO. And the EU will be among those insisting on the right to defend public health against the free market.
In the long term we will also have to require the Commission, when negotiating these WTO agreements, to put consumer interests and environmental considerations before concern for the sacred free market. You need to understand that in the Commission. It is not good enough to consider only the free market, because then consumers lose out, as we have seen in this case. Things cannot be left to the market alone.

President
Before I give the floor to Sir Leon, Mr Kittelmann has asked to speak on a point of order or to make a personal statement.

Kittelmann
Madam President, on a point of order, I should like it to be noted that what I actually said, word for word, which provoked Mrs Roth-Behrendt's attack was: 'we should avoid having a transatlantic - or indeed a European - philosophical war about individual reports and should wait calmly for the final verdict of the scientific community before we act.' Your speech was emotional, Mrs Roth-Behrendt, above all the personal attacks on Sir Leon Brittan, which were melodramatic and unjustified; they were beneath you, and more in keeping with an election campaign which you wished to fight in Berlin.

President
That was indeed not a point of order, but a personal statement.

Graefe zu Baringdorf
Madam President, if Mr Kittelmann is finding it difficult to understand his own statements and remarks, perhaps I should make my speech again. Otherwise, I fear he will not know my point of view.

President
Ladies and gentlemen, at this late hour, there are bound to be some problems of comprehension.
I am sure Sir Leon will now put us in the picture in his usual masterly way.

Brittan
Madam President, I will do my best. Let me begin with the banana issue, which is of great importance to a number of people. I listened with great interest to what was said, for example by Mr Dell'Alba and Mrs Ferrer. We are trying to resolve the question by coming up, after consultation with all the people who have a legitimate interest in it, with proposals, which we hope will be acceptable to all, to deal with the problem by amending our regime. If that happens, by definition the sanctions will end and that is the quickest way of getting them to end. But people cannot be forced to reach agreement and, therefore, we have to envisage the possibility of not reaching a comprehensive agreement. We then have to do our best, after having heard what everybody has to say, to make changes which meet the rules and satisfy as many people as possible, if not everybody. That of course we can do. But in those circumstances we will be able to say to the United States that the sanctions are not justified. The only way of compelling the United States to remove the sanctions is through the WTO and, therefore, I can assure Mr Herzog that we will continue with the 301 case in the WTO as well.
As for the question of compensation, there are considerable difficulties as to whether it is possible to give it and there are certain disadvantages which, if mentioned, would only give aid and succour to our opponents on this issue. I would not wish to do that publicly but I can well understand the deep concern. This morning in Brussels, before coming here, I held a meeting with representatives of the European textile industry and I understand exactly how serious the situation is for them and for other people who are at the receiving end. Therefore, we will continue very hard and are committed to putting four proposals to the Council by the end of the month, with agreement or in the absence of agreement from our trading partners.
Let me now turn to hormones. I must admit that I thought Mrs Roth-Behrendt got the wrong end of the stick in her comments as far as I was concerned, as well as what she said about Mr Kittelmann, which was without justification. As far as I am concerned, there is no question at all, as her tone if not her words suggested, of ignoring the interests of the consumer or wishing to put people's health at risk. I fear that her interpretation to the contrary bore a whiff of the electoral campaign rather than the exercise of pure reason, because the point I made was a very simple one: as long as the ban exists, there can be no risk to health because meat with hormones is not allowed into the European Union. As nobody at the moment has a proposal to lift the ban - you certainly did not hear any such proposal from me. There is absolutely nothing more which anybody can do to protect European health than to stop something coming in. You cannot do more than that; you cannot have a double ban. So what are now faced with is how best to handle the situation we have as a result of these reports.
At this point I should like to comment on some of the broader questions which Mrs Mann and Mr Kittelmann raised. We have to ask ourselves: is there a fundamental conflict, as Mr Iversen seemed to suggest, between trade and consumer protection? The answer is no! It is absolutely clear that the WTO rules permit you to ban dangerous products. They do not permit you to ban products because you say they are dangerous, you must have a reason. It goes further than that: you do not have to be able to prove that the products are dangerous, you must have respectable evidence, even if it does not necessarily represent the majority or dominant view of the scientific community.
When the WTO looked at our hormone ban - which of course existed long before the WTO came into existence - it came to the conclusion that the process by which we had arrived at that ban was not a risk assessment which met the standards that could reasonably be asked for before a ban was put in place. It is exactly for that reason that we have begun a new risk assessment, and we have the interim results of it, which, as I understand it, are partly derived from the re-examination of published literature on the basis of the criteria set out by the appellate body and partly derived from the interim conclusions of some of the seventeen new studies we have commissioned. It is an interim report: the final report comes at the end of the year.
The question we have to ask ourselves is: how do we handle this situation as far as the WTO is concerned? It is no use saying that we have our report and that proves it, because it does not remove the threat of sanctions. You have heard the people from the countries affected by the banana sanctions. I can tell you that the possibility of sanctions from the United States on this is much more serious, and therefore it is acting very much in the interests of European consumers, European individuals and European employment to say that it is sensible that these findings should be put into the public domain as fully as possible. It has not happened yet. I hope it will happen more fully very soon. There should be serious discussion amongst scientists on both sides of the Atlantic, because I do not believe that the United States is careless about the health of its citizens: it is as yet unpersuaded that there is a risk and, if we have evidence, it is right to put it to the United States as well as to everybody else.
The question then is: at what point do we do this and how do we handle it? That is something which bears further consideration. There is no fundamental conflict between consumer protection and trade. The WTO as it stands allows for that balance in a proper way. I am not saying that it is perfect - I would not say that to Mrs Mann and Mr Kittelmann at all. We have to consider exactly in the coming trade round how to improve the rules and make them clearer. I agree with Mr Herzog that one of the things we have to do is to produce a better definition of what the precautionary principle really means. I hope that it is possible for Parliament then to consider these issues on the basis of what has happened, knowing that there is no question of any precipitate action which could conceivably endanger the health of the European citizen.

President
The debate is closed.
I have received eight motions for resolutions to wind up this debate.
The vote on these will take place on Wednesday at 12 noon.

Reduction of VAT on labour-intensive services
President
The next item is the report (A4-0207/99) by Mrs Thyssen, on behalf of the Committee on Economic and Monetary Affairs and Industrial Policy, on the proposal for a Council Directive amending Directive 77/388/EEC as regards the possibility of applying on an experimental basis a reduced VAT rate on labour-intensive services (COM(99)0062 - C4-0169/99-99/0056(CNS)).

Thyssen
Madam President, Commissioner, the report which it is my privilege to present this evening concerns the Commission proposal to amend the sixth VAT directive in order to allow Member States, by way of an experiment, to apply a reduced rate of VAT to labour-intensive services.
The proposal has a long history. As long ago as 1991, we and Parliament first asked for labour-intensive services, or at least some of them, to be included in Annex H to this directive. Regrettably, the Commission never shared our enthusiasm. It took us quite a few hours of negotiations to persuade the Commission to have a study conducted on the impact on jobs which a measure of this kind might produce. In the end, we had to wait for an edict from the European Council in Vienna before the Commission came up with a concrete proposal.
The question now is what Parliament thinks of the proposal currently before us. Well, Commissioner, we endorse your proposal. Some professional bodies admittedly regret the fact that this is just an experiment of limited duration and not a definitive measure. We understand their disappointment, but we say that half a loaf is better than no bread, and if we cannot convince people with arguments then we will do it with figures, which this experiment will undoubtedly supply.
Precisely because this was an experiment, the majority of the Economic Affairs Committee was happy to accept the general criteria and the fact that the scope of the experiment would not be limited to closely defined sectors. Naturally, we are all happy to say where our priorities lie, especially in the run-up to the elections. We can focus on the environment, services to families, parts of sectors we include within the social economy, and so on. All these things are laudable initiatives, but it is better not to make any choices here for the moment. That way, the Member States can tailor their experiments to those sectors where they expect to reap the most benefit. The broader the scope of the experiment, the more results it will yield and the greater the chances of sound final measures which will create more jobs on a sustainable basis. That, ultimately, was what we were after.
We have adopted seven amendments in the Economic Affairs Committee, Commissioner. We are sure that they clarify and improve the proposal. There are no great questions of principle, except in one respect, that of the authorisation procedure. Neither the Social Affairs Committee nor the Economic Affairs Committee can see why the Commission should not authorise Member States to launch an experiment. The Commission is after all the executive. Perhaps the Council wants to keep hold of the reins itself, and it still has the final say on fiscal matters. So we conceded that, but it is too much for us to accept that the Council can only grant authorisation on the basis of unanimity. That makes the procedure unnecessarily cumbersome. It will inhibit the ease with which the measure can be implemented. It may lead to use of the veto and obstructionist tactics. We find that unacceptable, hence our Amendment No 4. If the Council wishes to act itself, then very well, but let it be by a qualified majority. There are no legal arguments why this should not be acceptable.
I should be glad to hear what you think about this, Commissioner, and what the timescale for it might be in the Council. Lastly, I should like to take the opportunity of this, my last report of the current parliamentary term, to thank you for the willing cooperation we have always received from you.

van Velzen, Wim
Madam President, I do not think I have ever spoken in Parliament as late as this. I am happy to say it is the very last time!
It takes the shine off things a little to have to deal with a proposal which I have always strongly advocated in these kinds of circumstances, and in a 'like it or lump it' situation. We are so glad to have it at last that one is wary of being overcritical of it. But some criticisms do need to be voiced, not least about the length of time it took to get this proposal. In fact, one might best describe the speed of the process as that of a snail hitting the brakes just before a bend in the road. The approach of both the Commission and the Council was one of extreme caution. I think this was mainly so in the Council, where there seemed to be an exaggerated fear of competition but also that the measure might succeed. It happened to me several times in discussions, especially with German representatives, that they said: 'Imagine, if this works in the Netherlands, we shall of course be forced by social pressure at home to implement it there as well. Just think what may happen. If it is successful in creating jobs, it may cause a problem in Germany.' I never understood that, and I do not feel at all guilty about it. What irritates me most is that it was precisely those Member States which are always harping on about subsidiarity which placed most difficulties in the way of other Member States which said 'look here, it is not the only way, but it is one we want to try in order to create more jobs'.
When I put forward the proposal for a 'social' rate of VAT, as part of preparations for the Luxembourg summit - and I was not the first to do so, because an option had already been put to Members of the House previously - I believed that I was acting in the spirit of the Delors White Paper, which had already pointed out that we in Europe had saddled ourselves with a system which made labour extremely expensive, very expensive in connection with our profligate use of energy, raw materials and the totally free movement of capital. To my mind, that is still the central theme and problem in the Union. And I would say, as we address this subject, that Member States have still not done anywhere near enough here. 'Social' VAT is certainly not the complete answer. It is just a small part of the answer. But it may offer a solution in the area of services at local and regional level.
The Commission once produced an interesting 'employment rate report' in which it compared the rate of employment in the Union with that of the USA. One of the surprising conclusions was that we did not really lag behind the USA in any area except one, and that was services, services from the lowest to the highest level. I believe that a reduction in VAT precisely in the service sector at local and regional level could be beneficial, and at any rate increase the employment rate. Supply and demand can be matched here. Care of the elderly, jobs for the handicapped, environmental projects and so on - I do not want to impose my choices here any more than Mrs Thyssen, and I leave it to Member States to choose the opportunities offered by the proposal to see what suits their needs and capabilities best.
Like Mrs Thyssen, I too have a few comments on the amendments we have tabled. Like her, I find it totally unacceptable that the Council should have to decide by unanimity on specific authorisation to a Member State to apply this reduced rate of VAT. It means that those Member States which have been obstructive right from the start will be given the ultimate means of being obstructive all over again. I think the Commission has to be consistent here and say that a qualified majority is the only logical legal principle to be applied in approving the system. I am keen to hear the Commissioner's response.
Lastly, I was surprised and disappointed to see that the Commission has not kept the machinery for evaluation under its own control, but is in fact transferring this to the Member States and with it the initiative for new proposals. I think - and I appreciate the difficult position it is in at the moment - that the Commission is not really functioning properly here vis-à-vis recalcitrant Member States, but it will have to be very careful for the future. If the Commission surrenders the initiative for making new proposals, as it is doing in this proposal, it really is destroying its whole raison d'être , destroying a guiding principle in the Union, namely the right of initiative. That right rests not with the Council but with the Commission, and that is how it should remain.

Peijs
Madam President, things on the employment front in the European Union are looking a little better. The rate of unemployment recently dipped below 10 %, but naturally we are not dancing in the streets because it is still far too high.
Parliament had to put pressure on the Council and the Commission for a long time to get where we are today. But I am glad that we are now able to debate a specific proposal here in the House. We have not yet, however, got as far as approving the proposal. As Mr van Velzen and Mrs Thyssen said, there is a major obstacle. That is the rule that Member State proposals to apply a reduced rate of VAT are required to have the unanimous assent of the Council, even though VAT is no longer the basis for Member States' contributions to the European Union, so the argument always put forward previously that that basis would be weakened is no longer valid.
That makes no sense these days. I can imagine that one might ask a neighbouring country: 'Is it a problem for you if my shoe repairer is subject to a reduced rate of VAT?' But why should Finland be able to stop shoe repairers in the Netherlands from being granted a reduced rate of VAT? I really cannot see any sense in that. I cannot imagine anyone taking his shoes from the Netherlands to Finland to be mended. So I really think this is a reversal of everything which Parliament has worked to secure. I think we shall soon see all the Member States opposing every specific proposal, and I find that very disappointing.
Some Member States have already put forward little lists of demands, the Netherlands amongst them. Can the Commissioner say to what extent there is agreement on some of the specific proposals in these lists? For example, the renovation of buildings and shops and certain urban areas is being mentioned. I think a reduced rate of VAT might prevent whole urban areas from falling into decay. Renovation is not mentioned on the Dutch list. Is there any consistency in all these proposals, or is it just up to each Member State to say what it wants?
I wholeheartedly endorse the rapporteur's approach. Take for example her ideas on evaluating the experiments. The rapporteur wants the specific results of the scheme to be evaluated, including prices, for instance. What we do not want, of course, is to see a reduced rate of VAT bringing not greater demand and more jobs, but simply higher profit margins.
I should like to thank the Commissioner for the excellent cooperation we have enjoyed in recent years. I hope he will show a little flexibility over the amendments this evening. Some of them are very important. He will have another chance to make his point in the Commission on the subject of the Member States. That would be a fine way of rounding off the last five years.

Kestelijn-Sierens
Madam President, Commissioner, ladies and gentlemen, on behalf of the Liberal Group, I welcome this Commission proposal. Various speakers have already pointed this evening to the number of times we have pressed here in the House for VAT on labour-intensive services to be reduced. We realise it is not the instrument of choice for creating jobs. But reducing the rate of VAT will make these services less expensive and enable them to be taken out of the black economy. Whilst the Commission is not convinced that the measure will or may create jobs, research carried out by the Netherlands Economic and Social Institute for SMEs found that it could possibly create 66 000 jobs. That is no mean number! I hope the experiment being launched here will prove helpful in creating jobs. We must not be afraid of negative repercussions on the budget, because look at what a lowering of VAT did for the ornamental plant growers: in my country, sales rose, earning an extra 340 million for the Treasury. But if we are to create jobs, the Member States must above all take structural measures; we have to reduce labour costs, make employment more flexible and encourage part-time working, and in these respects we see that there is still a long way to go.

Blokland
Madam President, it is good to see the Council, after what has been a protracted debate, now allowing the experimental application of a reduced rate of VAT to labour-intensive locally based services.
In the Netherlands, for example, the number of shoe repairers was decimated between 1992 and 1998 as a result of the high rate of VAT on their work. Because it was so expensive to mend shoes, consumers tended to throw them away and buy new ones. The extra burden associated with this on the environment may perhaps be reduced if the VAT directive is amended. The number of jobs in this sector may also increase again.
I am grateful to the rapporteur for spelling out these effects in Amendments Nos 1 and 2. It is also a good thing to reduce incentives to the 'black economy'. In evaluating this experiment, due consideration must be given to these aspects. I support the amendments which have been tabled, and I hope that the Council and the Commission will do so too.

Monti
Madam President, first and foremost I would like to congratulate the rapporteur, Mrs Thyssen, and express my own words of appreciation for the cooperation we have enjoyed over the years.
In making this proposal, the Commission is responding to a request made by the European Council in Vienna in December 1998. It is certainly true that Parliament had for a long time been asking the Commission to move in this direction. But the Commission did not just get down to work in February 1999: we should recall that back in September 1997 it drew up a communication for the European Employment Council in Luxembourg in which this idea was put forward. It is nonetheless true that Parliament, much earlier on, had been asking us to do this. Why didn't we do it before? For a political reason of substance: we wanted to avoid short-cuts in tax policy subsidising employment.
Mr van Velzen is right in saying that this idea of a reduced VAT rate may be one instrument but is not the main instrument. Various Members have pointed out that the best ways of using taxation to boost employment are the energy tax and tax coordination enabling capital taxation to be increased slightly and labour taxes to be reduced slightly.
Why did the Commission take until September 1997 to come up with this idea of a reduced VAT rate, which Parliament had been requesting for so long? Because only in September 1997 did we become convinced that quite good progress was being made in key areas. The package of measures against harmful fiscal competition was very close to completion, and was signed by the Member States in December 1997; discussions on the proposal on the taxation of energy products were well under way. At this point we were sure that this proposal for a reduced rate of VAT would be a useful extra factor and not a short-cut enabling Member States to dodge their prime obligation.
That was just to explain to you why we acted rather later than you had hoped but nonetheless in line, I believe, with the overall requirement.
I will not spend a long time describing the proposal; I am glad that as a whole it has been appreciated and supported. I can assure you that the Commission, following these reports and on the basis of available data, will make an overall assessment and if necessary submit appropriate follow-up proposals after the trial period.
I note with satisfaction that the Thyssen report broadly supports the approach proposed by the Commission. In substance, the main amendments tabled aim to do the following: stress the directive's favourable effect on the employment of unskilled or semi-skilled workers, the environment and also the reduction of undeclared work; stipulate that the Council, acting by a qualified majority, may decide whether to authorise the application of a reduced rate; and require the Commission to draw up an overall evaluation report, accompanied if necessary by appropriate proposals.
I can assure you that the Commission would for the most part endorse these objectives. However, it is my duty to draw your attention to the fact that authorisation to apply a reduced rate is a measure concerning harmonisation of legislation on value added tax, which is covered by Article 93 of the Amsterdam Treaty, the former Article 99. Under these circumstances I feel it is impossible to depart from the rule that the decision should be taken by the Council acting unanimously. Apart from that, it is obvious that the Commission hopes that the measure will have the positive effects mentioned.
Finally, I should emphasise that if, as I assume, we all want this proposal to be adopted soon by the Council so as to keep to the timetable called for by Mrs Thyssen, involving entry into force on 1 January 2000, I am unable to accept the amendments proposed.
Mrs Peijs encouraged me to be flexible. In this case in point, I take flexibility to mean achieving results as quickly as possible and therefore, paradoxically, I shall take her request to mean that I should not accept the amendments, which would just slow the procedure down.
I should also like to inform you that, thanks to the German Presidency, today in the Council the working party examining this proposal met for the first time and I think there are grounds for reasonable optimism.
Finally, Madam President, this proposal, which I hope will prove very good for jobs, will also help to dispel certain doubts about the tax coordination work done by the Commission and the European Union.
Here we have a situation in which Brussels does not want to claim more powers but to restore powers to the Member States, letting them make the decisions; here we have a case in which coordination of taxation does not mean higher taxes but lower ones, and in which the primary aim is employment. I hope that the Member States will want to use this subsidiarity we are granting them, without hiding, as Mr van Velzen fears, behind an obstacle conveniently put in their way by the European Union in order not to be exposed to the full weight of decisions made under their own responsibility.
Thank you for the support you have given us this evening. Madam President, I too would like to thank Parliament and the Members who have taken the floor this evening for the staunch support they are giving to our endeavours to coordinate taxation.

President
Thank you, Mr Monti.
The rapporteur wishes to speak, and I now give her the floor.

Thyssen
Madam President, I am grateful to the Commissioner for answering our questions. I gather from your reply that you do not share our view and do not accept the amendment in which we are seeking to have the authorisation procedure dealt with by a majority in the Council, rather than by unanimity. But unfortunately I have to say that your legal arguments have not convinced me. I assume that there are political reasons involved here, but there are no legal reasons. This is an implementing measure, and not a general measure. Legislation must of course be approved unanimously by the Council, under the terms of the Treaty. But I am afraid that is not so when it comes to implementing specific measures. There is a great difference between the two things. If that is the opinion of your legal service, and that is what the Commission officials told our Committee on Economic and Monetary Affairs and Industrial Policy, then we are not at all convinced, and it might be no bad thing to look at this again from the legal standpoint.

President
Thank you, Mrs Thyssen.
Before Commissioner Monti replies, I should like to give the floor to Mr van Velzen, so that Mr Monti can answer both speakers together.

van Velzen, Wim
To begin with, I entirely share Mrs Thyssen's opinion that the legal basis for that argument is completely flawed. And then I have a specific question for the Commissioner. Can he be sure that those countries which have been difficult from the outset will not use their ability to block matters within the Council if unanimity is required in order to give permission to a particular Member State?

Monti
Madam President, I do indeed appreciate the point raised by Mrs Thyssen and Mr van Velzen. In our view, had we not provided for unanimity we would have had difficulties of principle much greater than those we will have anyway in getting this proposal through the Council. I would point out that, for example, even the derogations under Article 27, which are basically implementing measures rather than new legislation, require unanimity; I would point out the major difficulties we are encountering with the VAT Committee, whose whole purpose is to deal with implementing provisions and yet the Member States are holding out against a rule being passed by a qualified majority. To some extent therefore I can of course share your hope, which is my hope as well, of political realism being applied to an issue which affects employment, a matter of considerable urgency. I had to make a sacrifice when deciding to follow the path we have taken.

President
Thank you, Mr Monti.
The debate is closed.
The vote will take place tomorrow at 12 noon.
The next sitting will take place tomorrow at 9 a.m.
The sitting was closed at 11.20 p.m.

