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		52013DC0376

			Recommendation for a COUNCIL RECOMMENDATION on Finland’s 2013 national reform programme and delivering a Council opinion on Finland’s stability programme for 2012-2017 /* COM/2013/0376 final  */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on Finland’s 2013 national reform
programme
and delivering a Council opinion on Finland’s stability programme for 2012-2017

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular Article 5(2)
thereof,
Having regard to Regulation (EU) No
1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances[2], and in particular Article 6(1)
thereof,
Having regard to the recommendation of the
European Commission[3],
Having regard to the resolutions of the
European Parliament[4],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)       On 26 March 2010, the
European Council agreed to the Commission’s proposal to launch a new strategy
for growth and jobs, Europe 2020, based on enhanced coordination of economic
policies, which will focus on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.
(2)       On 13 July 2010, on the
basis of the Commission's proposals, the Council adopted a recommendation on
the broad guidelines for the economic policies of the Member States and the
Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines
for the employment policies of the Member States[5],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)       On 29 June 2012, the Heads
of State or Government decided on a Compact for Growth and Jobs, providing a
coherent framework for action at national, EU and euro area levels using all
possible levers, instruments and policies. They decided on action to be taken
at the level of the Member States, in particular expressing full commitment to
achieving the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.
(4)       On 6 July 2012, the
Council adopted a recommendation on Finland’s national reform programme for 2012
and delivered its opinion on Finland’s updated stability programme for 2011-2015.
(5)       On 28 November 2012, the
Commission adopted the Annual Growth Survey[6],
marking the start of the 2013 European Semester for economic policy
coordination. Also on 28 November 2012, the Commission, on the basis of
Regulation (EU) No 1176/2011, adopted the Alert Mechanism Report[7], in which it identified Finland as one of the Member States for which an in-depth review would be carried out.
(6)       On 14 March 2013, the
European Council endorsed the priorities for ensuring financial stability,
fiscal consolidation and action to foster growth. It underscored the need to
pursue differentiated, growth-friendly fiscal consolidation, to restore normal
lending conditions to the economy, to promote growth and competitiveness, to
tackle unemployment and the social consequences of the crisis, and to modernise
public administration.
(7)       On 10 April 2013, the
Commission published the results of its in-depth review[8] for Finland, under Article 5 of
Regulation (EU) No 1176/2011. The Commission’s analysis leads it to conclude
that Finland is experiencing macroeconomic imbalances, which deserve monitoring
and policy action. In particular, the substantial deterioration in the current
account position and the weak export performance, driven by industrial
restructuring, as well as cost and non-cost competitiveness factors, deserve
continued attention.
(8)       On 18 April 2013, Finland submitted its 2013 stability programme covering the period 2012-2017 and its 2013
national reform programme. In order to take account of their interlinkages, the
two programmes have been assessed at the same time.
(9)       Based on the assessment of
the 2013 stability programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the public finances in Finland have been overall sound and efforts have been made to increase revenues and to
control expenditures in order to move towards the medium-term objective (MTO). The
macroeconomic scenario underpinning the budgetary projections in the programme
is plausible. The growth projection for 2013 is similar to the Commission's
spring forecast, whereas the one for 2014 is 0.6 pp higher than in the
Commission's forecast. The objective of the budgetary strategy outlined in the
programme is to balance the central government finances and to bring the
central government debt to GDP ratio on a declining path by 2015. The programme
incorporates a change in the medium-term objective (MTO) from 0.5% to -0.5%.
The new MTO is in line with the requirements of the Stability and Growth Pact.
The programme foresees reaching the MTO by 2014 and staying at the MTO until
2017. Based on the (recalculated) structural balance on the basis of
information in the programme, Finland did not meet in 2012 the
previously-applicable MTO and would not meet the new MTO in 2013. The programme
projects the (recalculated) structural balance to improve from -1% of GDP in
2012 to -0.9% of GDP in 2013. Between 2014 and 2017, it would remain between
-0.6% and -0.7% of GDP. In 2012, Finland's net expenditure increased by 0.4%,
which remains below the applicable reference rate of the expenditure benchmark.
Due to the negative real GDP growth in 2012, the low structural adjustment is
deemed sufficient. In 2013, Finland's (recalculated) structural balance is
improving and its net expenditure is projected to deviate by only 0.1% of GDP
from the expenditure benchmark. In the light of Finland's large negative output
gap this is deemed to be appropriate. In 2014, Finland's (recalculated)
structural balance is forecast to improve further, reaching -0.6% of GDP, thus
getting sufficiently close to the MTO (moreover, according to the Commission's
spring forecast Finland would fully reach it in 2014). Overall, this would
entail compliance with the preventive arm of the Stability and Growth Pact.
General government gross consolidated debt was 53% of GDP in 2012 and will
remain, according to the programme, below 60% of GDP over the programme
horizon. The programme foresees reductions in the debt level in 2016 and 2017.
Long-term sustainability continues to be the most important challenge for
fiscal policy. The ageing related sustainability gap, concerning pensions,
healthcare and long-term care, has been recognised and needs constant
monitoring.
(10)     The productivity growth in
public services has not matched the productivity growth in the wider economy whilst
the burden linked to an ageing population is increasing. Whereas the principles
for reforming municipalities have been established, mergers will remain
voluntary although financial incentives from central government will be
available. It is expected that the on-going reform of social and health
services will not lead to any significant reduction in the current number of
health-care districts.
(11)     Measures have been
implemented to reduce youth and long-term unemployment such as the youth
guarantee, the temporary skills programme for young adults and the pilot
programme for the long-term unemployed. These were supplemented in 2013 by
additional financial support for apprenticeships as part of the youth guarantee;
these are welcome in the context of an expected increase in the rate of
unemployment. These measures now need to be implemented with a clear focus on
improving the skills level and labour-market position of the target groups.
Raising the employment rate of older workers is important to ensure sustainable
public finances and to meet the demand for labour in the future. The size of
the working age population is declining in Finland. Several measures have been
agreed to address pathways to early retirement such as raising the age for
access to part-time pension, removal of the reduced pension possibility and
raising the age for retirement following unemployment. However, the increase in
life expectancy has been more rapid than envisaged during the 2005 pension
reform, and over time the current statutory retirement age range could turn out
to be too low and pensions insufficient. In its programme, the government
committed itself to increase the effective retirement age to 62.4 years by 2025,
which remains low in the context of life expectancy and the demographic
challenges. Implementing these agreed lines of action remains a priority in the
short term.
(12)     Regulatory barriers in the
services sector in Finland are still restrictive and market concentrations are
high in important sectors such as retail. The envisaged changes to the
Competition Act in respect of the dominant position of grocery trade operators,
the objectives of the programme on healthy competition in terms of greater
supervision of this sector and the removal of unnecessary restrictions on
competition in existing legislation, such as that on spatial planning and
construction, should help tackle current problems. The merger of the
competition authority and the consumer agency, along with an increase in its budget
and wider powers to cover competition neutrality between public and private
actors, should also improve the effectiveness and benefits of competition
policy more generally. Competition-law fines in Finland have traditionally been
low and the survey planned for 2013 should provide a basis for further reforms
to improve their deterrent effect.
(13)     Productivity growth in Finland continues to lag behind the growth in wages while international competitiveness has
weakened, as is shown by a decreasing market share for Finnish exports. Whilst
investment in research, development and innovation continues to be high, a
critical issue remains the efficiency with which this research is translated
into innovations and new high-growth companies, which can penetrate fast-growing
export markets and strengthen international competitiveness. In the short term,
  Finland should implement recently adopted policies and measures to improve
the research and innovation system such as the new action plan, and propose
further reforms, where relevant, based upon existing evaluations and the
foresight report currently under preparation. Prices for energy and labour have
been identified among the input prices increasing the costs for the Finnish
producers. Wage growth in recent years has been modest due to the current
tripartite wage agreement which expires in 2013. It is of concern, therefore,
that no new agreement has yet been concluded by the social partners.
(14)     In the context of the
European Semester, the Commission has carried out a comprehensive analysis of Finland’s economic policy. It has assessed the stability programme and national reform
programme, and presented an in-depth review. It has taken into account not only
their relevance for sustainable fiscal and socio-economic policy in Finland but
also their compliance with EU rules and guidance, given the need to reinforce
the overall economic governance of the European Union by providing EU-level
input into future national decisions. Its recommendations under
the European Semester are reflected in recommendations (1) to (5) below.
(15)     In the light of this
assessment, the Council has examined Finland’s stability programme, and its
opinion[9]
is reflected in particular in recommendation (1) below,
(16)     In the light of the
Commission’s in-depth review and this assessment, the Council has examined Finland’s national reform programme and stability programme. Its recommendations under
Article 6 of Regulation (EU) No 1176/2011 on the prevention and correction of
macroeconomic imbalances are reflected in recommendations (3), (4) and (5).
(17)     In the context of the European Semester the Commission has also
carried out an analysis of the economic policy of the euro area as a whole. On
this basis the Council has issued specific recommendations addressed to the
Member States whose currency is the euro. Finland also should ensure the full
and timely implementation of these recommendations,
HEREBY RECOMMENDS that Finland should take action within the period 2013-2014 to:
1.           Pursue a growth-friendly
fiscal policy and preserve a sound fiscal position as envisaged, ensuring compliance
with the MTO over the programme horizon. Continue to carry out annual
assessments of the size of the ageing-related sustainability gap and adjust
public revenue and expenditure in accordance with long-term objectives and
needs. Ensure the cost-effectiveness and sustainability of long-term care and
put a stronger focus on prevention, rehabilitation and independent living.
2.           Ensure effective
implementation of the on-going administrative reforms concerning the municipal
structure, in order to deliver productivity gains and cost savings in the
provision of public services, including social and healthcare services.
3.           Take further steps to increase
the employment rate of older workers, including by improving their
employability and reducing early exit pathways, and align the minimal statutory
retirement age with increased life expectancy. Implement and monitor closely
the impact of on-going measures to improve the labour-market position of young
people and the long-term unemployed, with a particular focus on the development
of job-relevant skills.
4.           Continue efforts to
enhance competition in product and service markets, especially in the retail
sector, by implementing the new programme on promoting healthy competition.
5.           Boost Finland's capacity to deliver innovative products, services and high-growth companies in a
rapidly changing environment, and continue diversification of the industry
towards less energy intensive sectors. In the current low-growth environment, support
the alignment of real wage and productivity developments whilst fully
respecting the role of social partners and in line with national practices.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ L 306, 23.11.2011, p. 25.
[3]               COM(2013) 376 final.
[4]               P7_TA(2013)0052 and P7_TA(2013)0053.
[5]               Council Decision 2013/208/EU of 22 April 2013.
[6]               COM(2012) 750 final.
[7]               COM(2012) 751 final.
[8]               SWD(2013) 123 final.
[9]               Under Article 5(2) of Council Regulation (EC) No
1466/97.


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52004SC0823

Recommendation for a Council opinion in accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the convergence programme of Lithuania, 2004-2007  /* SEC/2004/0823 final */

Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the convergence programme of Lithuania, 2004-2007(presented by the Commission)EXPLANATORY MEMORANDUMCouncil Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies [1] stipulates that non-participating Member States, that is, those which have not adopted the single currency, have to submit convergence programmes to the Council and the Commission for the purpose of multilateral surveillance at regular intervals under Article 99 of the Treaty.[1]  OJ L209, 2.8.1997. All the documents referred to in this text can be found at the following website: http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htmIn accordance with Article 9 of this Regulation, the Council has to examine each convergence programme based on assessments prepared by the Commission and the Committee set up by Article 114 of the Treaty (the Economic and Financial Committee). On the basis of a recommendation from the Commission and after consulting the Economic and Financial Committee, the Council is required to deliver an opinion, following its examination of the programme. According to the Regulation, Member States need to submit annual updates of their convergence programmes, which may also be examined by the Council in accordance with these same procedures.The ten countries that joined the EU on 1 May 2004 have a derogation and thus do not participate yet in the single currency. They committed themselves to submitting their convergence programmes by 15 May 2004 and a first update thereof towards the end of 2004.Lithuania's convergence programme covering the period 2004-2007 was submitted on 14 May 2004. The Commission services have carried out a technical evaluation of this programme, taking into account the results of the Spring 2004 forecasts and having regard to the Code of Conduct [2] and the principles laid down in the Communication from the Commission to the Council and the European Parliament of 27 November 2002 on strengthening the co-ordination of budgetary policies [3]. This evaluation warrants the following assessment:[2]  Revised Opinion of the Economic and Financial Committee on the content and format of stability and convergence programmes, endorsed by the ECFIN Council on 10.7.2001[3]  COM(2002) 668 final, 27.11.2002The Lithuanian first convergence programme, covering the period 2003-2007, was submitted on 14 May 2004. The programme does not make explicit references to the country's strategy on euro adoption and ERM II membership, although the authorities have indicated on several occasions that they intend to join the euro area soon after accession, which implies early ERM II entry, while keeping all the features of the current exchange rate system.The programme largely complies with the data requirements of the revised "code of conduct on the content and format of stability and convergence programmes" [4].[4]  The code-of-conduct tables annexed to the programme provide all the required data, with minor exceptions, and also some optional information indicated in the code. Table 4 of the programme on the general government budgetary projections gives an incomplete breakdown of expenditure. In addition, inflation is still reported on the basis on the consumer price index (CPI) although table 1 of Annex requires projections for the harmonised index of consumer prices (HICP). The accounting treatment of the compensations for loss of rouble savings and of the real estate restitutions merits further analysis.The medium-term macroeconomic scenario depicted in the programme envisages GDP growth to remain robust over the programme horizon, particularly in 2004 and 2005, when it is projected at some 7%. Looking further ahead, growth is expected to slow down slightly to about 6.5% in 2006 and 2007, but stays above potential as estimated by the national authorities. Domestic demand is foreseen to continue as the main driver of growth, primarily led by high investment and private consumption growth. The programme's macro-economic projections and external assumptions until 2005 are broadly in line with the Commission Spring 2004 forecasts, with the partial exception of 2005, when GDP is foreseen to grow at 7.3%, against 6.6% projected by the Commission services. The risk of lower than expected growth over the programme's horizon cannot be ruled out and appears the main threat for the achievement of the envisaged fiscal consolidation plans.Lithuania's inflation performance has been favourable in recent years. Average annual inflation has remained below 2% since 1999, strongly influenced by exchange rate developments in combination with favourable wage and productivity developments. Higher competition in the telecommunications sector added to these factors, contributing to a negative annual rate of HICP inflation of 1.1% in 2003. The deflationary trend initiated in 2002 is expected to reverse this year, to a large extent due to excise and VAT changes required by accession. Annual average inflation is expected to reach 0.9% in 2004 and progressively pick up to 2.5% in 2007. The litas has experienced a nominal effective appreciation of some 50% since 1999, initially under the peg against the dollar and, since February 2002, under the peg to the euro. Both short-term money market rates and long-term bond yields trended down in the course of 2002 and 2003. Money market rates stabilised last year, broadly in line with developments in the euro area money market, and the short-term interest rate spread to the euro area has remained stable at around 60 basis points since end-2003. The yield spread on long-term government bonds amounted to 55-65 basis points in early 2004.The key objective of the medium-term fiscal strategy defined in the programme is "the approximation to a cyclically balanced general government budget". However, while the targets for the actual general government deficit are set below the 3% of GDP reference value in each year, they are not consistent with a position of close-to-balance during the programme period. In particular, the general government deficit is expected to increase from 1.7% of GDP in 2003 to 2.7% in 2004, decreasing gradually thereafter to 1.5% in 2007. The deficit target for 2004 compares with a target of 2.9% projected in the 2003 pre-accession economic programme (PEP) and the budget for 2004 adopted in December 2003. The targets for 2005 and 2006 remain the same as in the PEP. The programme envisages a rise of the GDP-share of both revenues and expenditure in 2007 relative to 2003. The increase in the revenue ratio, by 2 percentage points, is mostly due to a significant expansion in non-tax revenues. The programme includes no major new policy measures to increase the tax ratio but projects this ratio to rise. The expenditure ratio is foreseen to increase by 1.8 percentage points over the same period, fully due to higher primary expenditure that is expected to be marginally compensated by a decrease in interest payments.The budgetary outcomes could be worse than projected. In particular, the downside macroeconomic risks highlighted above and the experience with expenditure overruns in the past in response to better-than-planned budgetary outturns in the first half of the year, represent a risk to the envisaged budgetary targets in 2004 and 2005. Therefore, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations, at least in the initial years of the programme.The general government debt to GDP ratio has declined steadily from 23.8% in 2000 to 21.5% in 2003, following the fiscal consolidation path initiated in 2000, together with more favourable borrowing conditions. The programme projects an initial increase of the debt ratio in 2004 by nearly 1 percentage point, due to the projected increase of the general government deficit in the same year. The ratio is expected to decrease throughout the remainder of the programme period and stabilise at about 21% in 2007.The programme reviews the government's structural reform programme which focuses on the labour market, pension and health-care. Overall, the presented reforms are ambitious and should improve the quality of the public finances. However, some of them, such as the health-care and pension reforms, may entail significant short-term costs, which are not sufficiently analysed in the programme.Lithuania is placed relatively well to meet the budgetary costs of an ageing population although some risk may emerge in the long-run. A number of measures aimed at improving the age dependency ratio and at modernising the pension and health-care systems are being implemented to improve the long-term sustainability of public finances. Nevertheless, there are risks related to the short-term costs of the pension and health-care reforms and the outstanding contingent liabilities. Securing an adequate primary surplus is essential to ensure that the public finances remain on a sustainable footing.Table: Comparison of key macroeconomic and budgetary projections>TABLE POSITION>Based on this assessment, the Commission has adopted the attached recommendation for a Council Opinion on the convergence programme of Lithuania and is forwarding it to the Council.Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the convergence programme of Lithuania, 2004-2007THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies [5], and in particular Article 9(3) thereof,[5]  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm.Having regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:On [5 July] 2004 the Council examined the convergence programme of Lithuania, which covers the period 2004 to 2007. The programme largely complies with the data requirements of the revised "code of conduct on the content and format of stability and convergence programmes".The budgetary strategy underlying the programme aims at "approximating a cyclically balanced general government budget by ensuring a successful implementation of economic policy goals", although the strategy is not well reflected in the programme's deficit targets. In particular, the programme envisages a deficit reduction of just 0.2 percentage points between 2003 and 2007, when the deficit is expected to be 1.5% of GDP. This results from an increase in the GDP-share of both revenues and expenditure. The rise in the revenue ratio over the programme period is expected to amount to 2 percentage points, primarily due to a significant increase in non-tax revenues related to EU financial assistance. Tax revenues are expected to increase by 0.4 percentage points of GDP, despite the planned elimination of the road tax in 2005, which is estimated to negatively affect revenues by 0.5% of GDP in the same year. Following a significant decrease of the expenditure ratio in the last five years, the ratio is foreseen to increase by 1.8 percentage points over the period under consideration, fully explained by an increase in primary expenditure, which is expected to be only marginally compensated by an anticipated decrease in interest payments. The increase in primary expenditure is foreseen to be mostly led by "other expenditures" which are expected to rise by 0.9% of GDP, mainly related to contributions to the EU budget, and by transfers and subsidies which are expected to increase by 0.7% of GDP, to a large extent related with increasing subsidies to farmers and the compensation for the loss of rouble savings and real estate restitution plans. Government gross fixed capital formation is expected to increase significantly by 1% of GDP in the programme's first two years, but is projected to fall back to 3.1% of GDP in 2007, remaining about 0.2 percentage points above the initial level of 2003.The macro-economic scenario underlying the programme seems to reflect rather favourable growth assumptions. In particular, the projected growth rate in 2005, which has been revised upwards from 6.5% in the 2003 pre-accession economic programme to 7.3% in the convergence programme, appears on the high side. The evolution of growth in the medium term projected in the programme, while more cautious than in the initial years of the programme, still appears relatively optimistic. The projections for inflation appear realistic.The programme's targets for the general government deficit are below the 3% of GDP reference value in each year. However, they are not consistent with a position of close-to-balance during the programme period. Moreover, the budgetary stance in the programme does not provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations, at least in the initial years of the programme period. The budgetary outcome could be worse than projected. In particular, the downside macroeconomic risks highlighted above and past experience with expenditure overruns in response to better-than-planned revenue outturns represent a risk to the envisaged budgetary targets.Lithuania is placed relatively well to meet the budgetary costs of an ageing population although some risk may emerge in the long-run. A number of measures aimed at improving the age dependency ratio and at modernising the pension and health-care systems are being implemented to improve the long-term sustainability of public finances. Nevertheless, there are risks related to the short-term costs of the pension and health-care reforms and the outstanding contingent liabilities. Securing an adequate primary surplus is essential to ensure that the public finances remain on a sustainable footing.****In view of the above, if the growth rates envisaged in the programme materialise, Lithuania is recommended to make faster progress towards a close-to-balance budgetary position, particularly in view of its large current account deficit and domestic demand pressures. Furthermore, Lithuania is urged to implement strictly the budget in order to reduce the risk of breaching the 3% reference value in 2004. Finally, the Lithuanian authorities are encouraged to use better-than-projected revenues for deficit reduction.Key projections from the convergence programme of Lithuania>TABLE POSITION>


title: Recommendation of the European Central Bank of 25 February 2011 to the Council of the European Union on the external auditors of the Nationale Bank van België/Banque Nationale de Belgique (ECB/2011/1)

text:
               2.3.2011

               EN

               Official Journal of the European Union

               C 67/1

         RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
   of 25 February 2011
   to the Council of the European Union on the external auditors of the Nationale Bank van België/Banque Nationale de Belgique
   (ECB/2011/1)
   2011/C 67/01
   THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
   Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
   Whereas:

               (1)

               The accounts of the European Central Bank (ECB) and national central banks are audited by independent external auditors recommended by the ECB’s Governing Council and approved by the Council of the European Union.

               (2)

               The mandate of the external auditors of the Nationale Bank van België/Banque Nationale de Belgique ended after the audit for the financial year 2010. It is therefore necessary to appoint external auditors from the financial year 2011.

               (3)

               The Nationale Bank van België/Banque Nationale de Belgique has selected Ernst & Young Bedrijfsrevisoren/Réviseurs d’entreprises as its external auditors for the financial years 2011 to 2013, with the possibility of one single renewal for the financial years 2014 to 2016,

         HAS ADOPTED THIS RECOMMENDATION:
   It is recommended that Ernst & Young Bedrijfsrevisoren/Réviseurs d’entreprises should be appointed as the external auditors of the Nationale Bank van België/Banque Nationale de Belgique for the financial years 2011 to 2013, with the possibility of one renewal for the financial years 2014 to 2016.

      Done at Frankfurt am Main, 25 February 2011.

            The President of the ECB

         Jean-Claude TRICHET


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31975H0065

75/65/EEC: Commission Recommendation of 20 December 1974 to Member States concerning the protection of the architectural and natural heritage

Official Journal L 021 , 28/01/1975 P. 0022 - 0023 Spanish special edition: Chapter 15 Volume 1 P. 0061  Portuguese special edition Chapter 15 Volume 1 P. 0061

COMMISSION RECOMMENDATION of 20 December 1974  to Members States concerning the protection of the architectural and natural heritage  (75/65/EEC)    1. Chapter 3 entitled "Urban development and improvement of amenities" of the second part of Title II of the Programme of Action of the European Communities on the Environment, approved by the Council on 22 November 1973 (1), provides for a number of studies on environmental problems closely associated with urban and regional development. All of these studies include the examination of the various aspects of preserving the Community's architectural and natural heritage.  Furthermore, in its resolution of 13 May 1974 (2) on the protection of Europe's cultural heritage, the European Parliament recommended a considerable stepping-up of efforts to preserve this heritage.  The work already carried out within the framework of the abovementioned studies shows that the architectural and natural heritage which reflects Europe's cultural identity is now seriously threatened with decay and disappearance and urgent measures are needed. This finding applies equally to the urban and rural environment.       2. In recent years, two important steps have been taken to cope with the problem of the decay and the rapid disappearance of the architectural and natural heritage, namely:      - the convention concerning the protection of the World Cultural and Natural Heritage adopted in November 1972 by UNESCO, and the           - "European Architectural Heritage Year".             Since the architectural and natural heritage is generally felt to be a determining factor in the quality of life, both these initiatives are of major importance for the protection and improvement of the environment in the Community.       3. The UNESCO convention calls upon acceding States to draw up national inventories of immoveable property forming part of the world cultural and natural heritage. It also requires that the acceding States should undertake to ensure appropriate protection for the property thus selected. The convention also provides for the setting up of a fund to assist countries not possessing sufficient resources to provide adequate protection for certain property acknowledged to be of universal value. The fund will also contribute to the training of specialists in this field. Apart from its direct value for the preservation of the fixed architectural and natural heritage, this convention is also of distinct importance as regards the protection of numerous species of wild flora and fauna existing in the protected areas. If the Member States could accede to this convention at an early date, this would also provide a very substantial support for the activities undertaken in connection with "European Architectural Heritage Year".       4. "European Architectural Heritage Year" 1975 is an initiative stemming from the Council of Europe. It is to take the form of a campaign spread over three years and is designed to highlight the architectural heritage as a factor determining the quality of life, as well as improving the preservation of this heritage. The campaign is aimed at the public authorities of all levels, the professional interests concerned and the general public and is to culminate in 1975, which is to be styled "European Architectural Heritage Year". It is intended to mark the beginning of a vast movement for the preservation and restoration of this heritage. This campaign, which the European Parliament has already welcomed in its resolution of 13 May 1974 on the protection of Europe's cultural heritage, is to consist in two main types of action, namely:      - pilot projects for restoration and renovation of numerous decaying buildings and sites in the participating countries;           - creating public awareness and the general desire to preserve and restore the architectural heritage, which is a necessary condition for the implementation of a policy in this field at all levels of public administration.  (1)OJ No C 112, 20.12.1973, p. 1. (2)OJ No C 62, 30.5.1974, p. 5.              Since the start of the campaign, several European countries which are not members of the Council of Europe have joined in its activities and news of similar movements is starting to come in from other continents.       5. In view of the interests at stake and of the urgency of the problems involved, and having regard to the Treaty establishing the European Economic Community, the Commission recommends that Member States:      - sign or ratify, provided they have not already done so, and if possible before the end of 1975, the convention on the protection of the world cultural and natural heritage, adopted by UNESCO in November 1972;           - actively support the actions taken in execution of the initiatives of the Council of Europe in connection with the "European Architectural Heritage Year, 1975".                    Done at Brussels, 20 December 1974.  For the Commission  The President  François-Xavier ORTOLI


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31994H0820

94/820/EC: Commission Recommendation of 19 October 1994 relating to the legal aspects of electronic data interchange (Text with EEA relevance)

Official Journal L 338 , 28/12/1994 P. 0098 - 0117

COMMISSION RECOMMENDATION of 19 October 1994 relating to the legal aspects of electronic data interchange (Text with EEA relevance) (94/820/EC)THE COMMISSION OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Community,  Whereas Council Decision 91/385/EEC (1) established the second phase of the Tedis programme (trade electronic data interchange systems), Article 3 thereof relating to the legal aspects of electronic data interchange (EDI); whereas Annex 1 to that  Decision provides for the finalization of the draft European Model EDI Agreement;  Whereas agreements for the participation of the EFTA countries, namely Austria, Finland, Iceland, Norway, Sweden and Switzerland, were approved by the Council in 1989 (2);  Whereas EDI, by facilitating the exchanges of data between users, can contribute increasingly to the competitiveness of European undertakings in the manufacturing and services sectors;  Whereas the promotion and swift development of EDI in Europe and between Europe and third countries requires a better understanding on the part of economic operators of the legal implications of conducting transactions by the use of EDI;  Whereas the work already initiated in the field of electronic data interchange during the first phase of the Tedis programme (1988 to 1989), established by Council Decision 87/499/EEC (3), resulted in the preparation of a draft of a 'European Model EDI  Agreement';  Whereas a 'European Model EDI Agreement' would contribute to the promotion of EDI by providing a flexible and concrete approach to the legal issues raised by the use of EDI, encouraging cooperation between users for the exchange of EDI messages;  Whereas the use of a 'European Model EDI Agreement' would improve the legal framework by providing a uniform approach to the legal issues; whereas it would increase the legal certainty for trading partners and reduce the uncertainty arising from the use  of EDI; whereas it would avoid the need for every undertaking, especially small and medium-size companies, to draft their own 'Interchange Agreement' and consequently avoid duplication of work;  Whereas the 'European Model EDI Agreement' consists of legal provisions which need to be supplemented by technical specifications provided in a technical Annex according to the user's specific needs;  Whereas the 'European Model EDI Agreement' aims at ensuring an appropriate protection of confidential and personal data, in particular in the light of the proposal for a Council Directive on the protection of individuals with regard to the processing of  personal data and on the free movement of such data (4);  Whereas the 'European Model EDI Agreement' supports international and European standards;  Whereas the need for standardized 'Interchange Agreements' is recognized by other international organizations involved in the promotion of EDI such as the United Nations Economic Commission for Europe (UN/ECE) - Working Party on Facilitation of  International Trade Procedures through its Programme of work on Legal Issues, and the United Nations Commission on International Trade Law (Uncitral);  Whereas the existence of a uniform European approach to issues relating to the use of EDI will improve the position of undertakings within the Member States in their negotiating power when trading via EDI with third countries;  Whereas the Commission will continue to monitor the developments in this area and, should the need occur, take the appropriate measures to up-date, revise and supplement this European Model EDI Agreement,  HEREBY RECOMMENDS:  1. That economic operators and organizations conducting their trading activities by EDI use the European Model EDI Agreement and its commentary, as set out in the Annexes hereto;  2. That Member States facilitate the use of this 'European Model EDI Agreement' and provide the most appropriate measures to that end.  Done at Brussels, 19 October 1994.  For the Commission Martin BANGEMANN Member of the Commission  (1) OJ No L 208, 30. 7. 1991, p. 66.  (2) Council Decisions 89/689/EEC, 89/690/EEC, 89/691/EEC, 89/692/EEC, 89/693/EEC and 89/694/EEC, OJ No L 400, 30. 12. 1989, pp. 1, 6, 11, 16, 21 and 26.  (3) OJ No L 285, 8. 10. 1987, p. 35.  (4) COM (92) 422 final - SYN 287.      ANNEX 1   EUROPEAN MODEL EDI AGREEMENT   LEGAL PROVISIONS Table of contents  Page Article 1 Object and scope   100 Article 2 Definitions   100 Article 3 Validity and formation of contract   101 Article 4 Admissibility in evidence of EDI messages   101 Article 5 Processing and acknowledgement  of receipt of EDI messages   101 Article 6 Security of EDI messages   102 Article 7 Confidentiality and protection of personal data   102 Article 8 Recording and storage of EDI messages   102 Article 9 Operational requirements for EDI   103 Article  10 Technical specifications and requirements   103 Article 11 Liability   103 Article 12 Dispute resolution   104 Article 13 Applicable law   104 Article 14 Effect, modification, term and severability   104    EUROPEAN MODEL EDI AGREEMENT   LEGAL PROVISIONS  This European Model Electronic Data Interchange (EDI) Agreement is concluded by and between:   and  hereinafter referred to as 'the parties',  Article 1 Object and scope 1.1. The 'European Model EDI Agreement', hereinafter referred to as 'the Agreement', specifies the legal terms and conditions under which the parties, conducting transactions by the use of electronic data interchange (EDI), operate.  1.2. The Agreement consists of the legal provisions set out in the following and shall be completed by a Technical Annex 1.3. Unless otherwise agreed by the parties, the provisions of the Agreement are not intended to govern the contractual obligations arising from the underlying transactions effected by the use of EDI.  Article 2 Definitions 2.1. For the purpose of the Agreement, the following terms are defined as follows;  2.2. EDI:   Electronic data interchange is the electronic transfer, from computer to computer, of commercial and administrative data using an agreed standard to structure an EDI message.  2.3. EDI message:   An EDI message consists of a set of segments, structured using an agreed standard, prepared in a computer readable format and capable of being automatically and unambiguously processed.  2.4. UN/Edifact:   As defined by the UN/ECE (1), the United Nations rules for electronic data interchange for administration, commerce and transport, comprise a set of internationally agreed standards, directories and guidelines for the electronic interchange of  structured data, and in particular, interchange related to trade in goods and services, between independent computerized information systems.  2.5. Acknowledgement of receipt:   The acknowledgement of receipt of an EDI message is the procedure by which, on receipt of the EDI message, the syntax and semantics are checked, and a corresponding acknowledgement is sent by the receiver.  Article 3 Validity and formation of contract 3.1. The parties, intending to be legally bound by the Agreement, expressly waive any rights to contest the validity of a contract effected by the use of EDI in accordance with the terms and conditions of the Agreement on the sole ground that it was  effected by EDI.  3.2. Each party shall ensure that the content of an EDI message sent or received is not inconsistent with the law of its own respective country, the application of which could restrict the content of an EDI message, and shall take all necessary measures  to inform without delay the other party of such an inconsistency.  3.3. A contract effected by the use of EDI shall be concluded at the time and place where the EDI message constituting acceptance of an offer reaches the computer system of the offeror.  Article 4 Admissibility in evidence of EDI messages  To the extent permitted by any national law which may apply, the parties hereby agree that in the event of dispute, the records of EDI messages, which they have maintained in accordance with the terms and conditions of this Agreement, shall be  admissible before the Courts and shall constitute evidence of the facts contained therein unless evidence to the contrary is adduced.  Article 5 Processing and acknowledgement of receipt of EDI messages 5.1. EDI messages shall be processed as soon as possible after receipt, but in any event, within the time limits specified in the Technical Annex.  5.2. An acknowledgement of receipt is not required unless requested.   An acknowledgement of receipt can be requested by specific provision included in the Technical Annex or by express request of the sender in an EDI message.  5.3. Where an acknowledgement is required, the receiver of the EDI message to be acknowledged shall ensure that the acknowledgement is sent within one business day of the time of receipt of the EDI message to be acknowledged, unless an alternative time  limit has been specified in the Technical Annex.   A business day means any day except a Saturday, Sunday or any declared public holiday in the intended place of receipt of an EDI message.   The receiver of an EDI message requiring an acknowledgment shall not act upon the content of the EDI message until such adknowledgement is sent.  5.4. If the sender does not receive the acknowledgement of receipt within the time limit, he may, upong giving notification to the receiver to that effect, treat the EDI message as null and void as from the expiration of that time limit or initiate an  alternative recovery procedure as specified in the Technical Annex, to ensure effective receipt of the adknowledgement.   In case of failure of the recovery procedure, within the time limit, the EDI message will definitely be treated as null and void, as from the expiration of that time limit, upon notification to the receiver.  Article 6 Security of EDI messages 6.1. The parties undertake to implement and maintain security procedures and measures in order to ensure the protection of EDI messages against the risks of unauthorized access, alteration, delay, destruction or loss.  6.2. Security procedures and measures include the verification of origin, the verification of integrity, the non-repudiation of origin and receipt and the confidentiality of EDI messages.   Security procedures and measures for the verification of origin and the verification of integrity, in order, to identify the sender of any EDI message and to ascertain that any EDI message received is complete and has not been corrupted, are mandatory  for any EDI message. Where required, additional security procedures and measures may be expressly specified in the Technical Annex.  6.3. If the use of security procedures and measures results in the rejection of, or in the detection of an error in an EDI message, the receiver shall inform the sender thereof, within the specified time limit.   The receiver of an EDI message which has been rejected, or which contains an error shall not act upon the EDI message before receiving instructions from the sender. Where a rejected or erroneous EDI message is retransmitted by the sender, the EDI  message should clearly state that it is a corrected EDI message.  Article 7 Confidentiality and protection of personal data 7.1. The parties shall ensure that EDI messages containing information specified to be confidential by the sender or agreed mutually to be confidential between the parties, are maintained in confidence and are not disclosed or transmitted to any  unauthorized persons nor used for any purposes other that those intended by the parties.   When authorized, further transmission of such confidential information shall be subject to the same degree of confidentiality.  7.2. EDI messages shall no be regarded as containing confidential information to the extent that such information is in the public domain.  7.3. The parties may agree to use a specific form of protection for certain messages such as a method of encryption to the extent permitted by law in either of their respective countries.  7.4. Where EDI messages which include personal data are sent or received in countries where no data protection law is in force, and until a relevant Community legislation is implemented, each party agrees as a minimum standard, to respect the provisions  of the automatic processing of personal data (5).  Article 8 Recording and storage of EDI messages 8.1. A complete and chronological record of all EDI messages exchanged by the parties in the course of a trade transaction shall be stored by each party, unaltered and securely, in accordance with the time limits and specifications prescribed by the  legislative requirements of its own national law, and, in any event, for a minimum of three years following the completion of the transaction.  8.2. Unless otherwise provided by national laws, EDI messages shall be stored by the sender in the transmitted format and by the receiver in the format in which they are received.  8.3. Parties shall ensure that electronic or computer records of the EDI messages shall be readily accessible, are capable of being reproduced in a human readable form and of being printed, if required. Any operational equipment required in this  connection shall be retained.  Article 9 Operational requirements for EDI 9.1. The parties undertake to implement and maintain the operational environment to operate EDI according to the terms and conditions of this Agreement, which includes but is not limited to the following:  9.2. Operational equipment  The parties shall provide and maintain, the equipment, software and services necessary to transmit, receive, translate, record and store EDI messages.  9.3. Means of communication  The parties shall determine the means of communication to be used, including the telecommunication protocols and if required, the choice of third party service providers.  9.4. EDI message standards  All EDI messages shall be transmitted in accordance with the UN/Edifact standards, recommendations and procedures (1) as approved by the United Nations Economic Commission for Europe (UN/ECE-NP 4) and with European standards.  9.5. Codes  Data element code lists referred to in EDI messages shall include UN/Edifact maintained code lists, international code lists issued as ISO international standards and UN/ECE or other officially published code lists.   Where such code lists are not available, preference shall be given to the use of code lists published, maintained and ensuring correspondences with other coding systems.  Article 10 Technical specifications and requirements  The Technical Annex shall include the technical, organizational and procedural specifications and requirements to operate EDI according to the terms of this Agreement, which includes but is not limited to the following:   - operational requirements for EDI, as referred to in Article 9, including, operational equipment, means of communication, EDI message standards and codes,   - processing and acknowledgement of EDI messages,   - security of EDI messages,   - recording and storage of EDI messages,   - time limits,   - procedures for tests and trials to establish and monitor the adequacy of the technical specifications and requirements.  Article 11 Liability 11.1. No party to this Agreement shall be liable for any special, indirect or consequential damages caused by a failure to perform its obligations of this Agreement.  11.2. No party to this Agreement shall be liable for any loss or damage suffered by the other party caused by any delay or failure to perform in accordance with the provisions of this Agreement, where such delay or failure is caused by an impediment  beyond that party's control and which could not reasonably be expected to be taken into account at the time of conclusion of the Agreement or the consequences of which could not be avoided or overcome.  11.3. If a party engages any intermediary to perform such services as the transmission, logging or processing of an EDI message, that party shall be liable for damage arising directly from that intermediary's acts, failures or omissions in the provision  of said services.  11.4. If a party requires another party to use the services of an intermediary to perform the transmission, logging or processing of an EDI message, the party who required such use shall be liable to the other party for damage arising directly from that  intermediary's acts, failures or omissions in the provision of said services.  Article 12 Dispute resolution  Alternative 1 (1)  Arbitration clause  Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by the arbitration of a (or three) person(s) to be agreed by the  parties, or failing agreement, to be nominated by ................................... (5), in accordance with and subject to the rules of procedure of ................................... (6).   Alternative 2 (1)  Jurisdiction clause  Any dispute arising out of or in connection with this contract shall be referred to the courts of ................................... (7), which shall have sole jurisdiction.  Article 13 Applicable law  Without prejudice to any mandatory national law which may apply to the parties regarding recording and storage of EDI messages or confidentiality and protection of personal data, the Agreement is governed by the law of  ................................... (7).  Article 14 Effect, modifications, term and severability 14.1. Effect  The Agreement shall be effective from the date on which it is signed by the parties.  14.2. Modifications  Where required, additional or alternative provisions to the Agreement, agreed in writing by the parties, will be considered as part of the Agreement as from their signature.  14.3. Term  Any party may terminate the Agreement by giving not less than one month's notice either by registered post or by any other means agreed between the parties. Termination of the Agreement shall only affect transactions after that date.   Notwithstanding termination for any reason, the rights and obligations of the parties referred to in Articles 4, 6, 7 and 8 shall survive termination.  14.4. Severability  Should any Article or part of an Article of the Agreement be deemed invalid, all other Articles shall remain in full force and effect.    (1) United Nations Economic Commission for Europe.  (2) Convention No 108 of the Council of Europe of 28 January 1981.  (3) UN/Edifact Syntax Rules ISO 9735 - EN 29735, UN/Edifact TDED ISO 7372 - EN 27372. The Untdid (United Nations trade data interchange directory) includes also the UN/Edifact message design guidelines, Syntax implementation guidelines, Data elements  directory, Code list, Composite data elements directory, Standard segments directory, UNSMs directory and Uncid.  (4) A choice is to be made by the parties between Alternative 1 'Arbitration clause' or Alternative 2 'Jurisdiction clause'.  (5) An 'appointing authority' has to be completed by the parties.  (6) A 'choice of procedure of commercial arbitration' has to be completed by the parties.  (7) A 'country' has to be completed by the parties.      ANNEX 2   EUROPEAN MODEL EDI AGREEMENT   LEGAL PROVISIONS   COMMENTARY   Introduction  The 'European Model EDI Agreement' provides EDI users with a set of provisions which constitute a model for an 'interchange agreement'. To avoid confusion with technical interchange agreements it has been called an 'EDI Agreement', a name  which also reflects its object as described in Article 1.  It is mainly the result of a consensus process reached at European level and intends to cover the needs of European undertakings and organizations. However it has been drafted by taking into account the international developments in this field.  To provide the appropriate legal framework, the European Model EDI Agreement consists of a full agreement to regulate relationships between economic operators or other users of EDI which needs to be formally executed. As a model it offers the  possibility for adaptation where required (1).   I. Objectives of the European Model EDI Agreement  Different legal issues have been identified with the use of EDI for the purposes of commercial transactions or other purposes involving legal consequences. Although these issues do not prevent the use  of EDI they are creating legal uncertainty. One of the most pragmatic ways to address these issues is to resolve them, to the extent possible, in a contractual framework.  The objective of the 'European Model EDI Agreement' is to provide the EDI users with a tool which answers the need for a contractual basis, thus avoiding the necessity to start the drafting of their own agreement and the consequent duplication of work.   The availability of such a model at European level is also an opportunity to improve the consistency of these agreements outside national boundaries, with the consequent increase of security that can be expected from such an approach.   II. Content of the European Model EDI Agreement  The Agreement can be adopted, as it is provided, by the parties. As a bilateral document it allows the parties to fill in their references and adopt it as such. It can also be used as a multilateral  agreement and be adopted by a group of companies, by one or more organizations, by a community of users or by any users group.  Article 1 Object and scope 1.1. EDI  The object of the European Model EDI Agreement, 'the Agreement', as of most interchange agreements, is to govern the EDI relationships between the parties and the terms and conditions under which the parties using EDI for their transactions operate.  1.2. Legal provisions and Technical Annex  The 'European Model EDI Agreement' provides for the legal provisions which need to be addressed when using EDI. Some of the legal provisions include general references to technical matters. These technical matters require further specifications. They  are often found in so-called 'users manuals'.   The legal provisions of the 'European Model EDI Agreement' need to be completed by a Technical Annex which will include the necessary technical specifications as determined by the parties. The Technical Annex is left to the EDI users to develop, draft  and/or agree according to their needs, although the basic requirements referred to in the legal provisions have to be taken into account.   In the current legal environment, the legal provisions should be signed by the parties to show that they intend to enter into an agreement. Subsequent rights and obligations and the legal consequences of the use of EDI between the parties will derive  from this Agreement.   As a model agreement, it can be amended to suit the specific needs of the parties. Article 14 contains the provisions relating to modifications of the legal provisions.  1.3. Underlying transactions  It should be emphasized that the Agreement only governs the EDI relations between the parties and is not, unless otherwise agreed by the parties, intended to govern the substance of transactions which will effectively be carried out using EDI.  Article 2 Definitions 2.1. The definitions which have been inserted in this Article are the general definitions of EDI, EDI message, UN/Edifact and acknowledgement of receipt, as these are basic definitions used throughout the Agreement.   They aim at ensuring an unambiguous understanding of these terms used in the Agreement. Some specific definitions, which have been referred to only once, have been inserted in the corresponding Articles.  2.2. EDI  Many EDI definitions exist and the choice of the definition here is essentially based on a definition which has been widely used and has been referred to, notably by the UN/Edifact rapporteurs (1). It emphasises the essential features of EDI.   The use of the term 'agreed standard' includes, but is not limited to, the use of UN/Edifact standards and may be applied to such other standards as the parties may agree.  2.3. EDI message  EDI is based on the use of structured and coded messages, the main characteristic of which is their ability to be processed by computers and transmitted automatically and without ambiguity. This definition emphasizes these essential characteristics,  which make EDI specific in comparison with other data exchange such as electronic mail.  2.4. UN/Edifact  The definition is the official definition adopted by the United Nations Economic Commission for Europe - Working Party on Facilitation of International Trade Procedures.   In the Agreement it is intended that EDI relates to the exchange of messages structured on the basis of UN/Edifact standards and recommendations. UN/Edifact standards are European and international and are those approved by standardization bodies such  as CEN and ISO. As such, they should be recommended taking account of the support to these standards provided for by the Tedis programme, acting as the Secretariat of the Edifact Board for western Europe, and according to the European Commission  standardization approach.  2.5. Acknowledgement of receipt  As they are different kind of acknowledgement of receipt of an EDI message, it is essential to indicate clearly which level of acknowledgement is referred to, in order to avoid confusion. This definition reflects the level chosen within the Agreement  in particular as it is referred to in Article 5.  Article 3 Validity and formation of contract 3.1 and 3.2. Validity of contract  Paragraph 3.1 attempts to emphasise the intention of the parties to form valid and binding contracts by EDI and to provide proof of this intention to third parties. As such the provision provides that parties will not challenge the validity of  transactions effected by use of EDI, on the sole ground of that means.   The law applicable to the data transferred might be different from one country to the other and the parties may not necessarily be aware of national law's restrictions on the content of an EDI message. It is reasonable to ensure that parties will take  care to respect the national legislation applicable to the content of the EDI message. A provision in relation with this is included in paragraph 3.2.   Whenever the data included in an EDI message received is inconsistent with the national law of the receiver, the obligation on him will be to inform the other party of this inconsistency and he may then be able to take measures to avoid breach of its  own law.   An example of such legal requirement, which might impose limitation on the content of a message. Is the case where messages are sent from a country with no personal data protection legislation to a country where restrictions exist.  3.3. Formation of contract  Paragraph 3.3 is relating to the time and place where a contract is concluded or formed. The determination of the moment and time of formation of a contract is important with regard to the legal consequences it involves. Rules have been defined as  regards contracts concluded by mail or telephone but uncertainty still exists on the kind of rule which might be applicable to contracts concluded by EDI. A clear provision regarding the applicable rule would, as a consequence, ensure more security.   A majority of Member States approve, for contracts concluded where parties are not in the presence of each other, the application of the 'reception rule' which ensures that acceptance takes place at the place and at the time of receipt of such  acceptance by the offeror. The Vienna Convention on the international sale of goods provides for this rule to be applicable to contracts concluded 'at distance'. The conclusion of a study carried out in the first phase of the Tedis programme supports  the view that this rule is the best to apply to EDI contracts (1), in particular as it avoids, to a large extent, the risks of conflicts of laws in connection with the use of EDI. These elements justify the endorsement of that rule in the EDI Agreement.    The reception rule, in the case of the European Model EDI Agreement, is to be understood as the rule whereby an EDI message is received at the time and the place where the message reaches the computer of information system of the offeror.  Article 4 Admissibility in evidence of EDI messages  The area of admissibility and evidential value is one where uncertainty is still predominant. As in most countries legal provisions regarding evidence are not mandatory, specifically in the commercial area, agreement between parties can be reached on  the questions of evidence. By reaching an agreement between parties, this uncertainty can be partly reduced.   Effecting transactions by EDI as an alternative to paper, implies that the EDI messages will replace effectively the documents that were exchanged previously on paper. It implies that the parties can rely on these exchanges of messages to provide the  evidence of the facts which have happened, in the case of a dispute for example.   Within the boundaries of any law which may apply and provided that the parties have respected the provisions of the Agreement, these EDI messages should be admissible before the Courts as evidence and should also be recognized as a means to provide  evidence of the facts that are recorded unless evidence to the contrary is provided.   This Article intends to reflect these views. National legal requirements may however limit the application of such a clause.  Article 5 Processing and acknowledgement of receipt of EDI messages 5.1. Processing of EDI messages  In this Article 'processing' means that the EDI message is dealt with by the receiver. As EDI means increased automatic processing, time limits are of the utmost importance.   The parties should commit themselves to deal with the EDI messages they receive in a fixed time which should be included in the Technical Annex. In the case where no time limit has been decided by the parties they should process messages as soon as  possible after receipt.   A list of the provisions of the Agreement where time limits have been included and which are subject to specification in the Technical Annex or modification is annexed to this document.   This provision is included, not only to ensure commercial efficiency and good business practices, but also in order to define the contractual rights and obligations of the parties in the event where a message is not received, is late or contains errors  and the contract is thereby frustrated.  5.2. Acknowledgement of EDI messages  The acknowledgement of receipt concept has often been misunderstood in particular with regard to the content of the EDI message itself. The definition introduced in this Agreement (Article 2) aims at clarifying the level of acknowledgement which is  envisaged in this Model EDI Agreement.   Different levels of acknowledgement are available. Acknowledgement can be automatically transmitted at the level of the telecommunication network when the message is made available to the receiver, it can be automatically sent upon the receipt of the  EDI message at the information system of the receiver without any verification, it can be sent after some verification has been achieved, it can also at some stage mean acceptance of the content of the message or confirmation that the receiver will act  on the content of the message.   The level chosen in the European Model EDI Agreement does more than simply confirm the receipt. It corresponds to the level where verification of semantics and syntax is achieved and consists of a response to the EDI message sent stating that the  message has been received and that the syntax and semantics of the message are correct.   Parties may require other levels of acknowledgement, which in that case should be determined by them, according to their needs and the appropriate details should be included in the Technical Annex.   The principle stated in Article 5 is that an acknowledgement of receipt of an EDI message is not required unless requested.   Provision may be made, in the Technical Annex, for all EDI messages or for certain categories of messages (i.e. all 'ORDER' messages) to be automatically checked and acknowledged. Alternatively, if no specific provision has been made regarding  acknowledgement, the appropriate segment for a request for acknowledgement may be included within a message sent. Not all messages will require an acknowledgement and the Technical Annex should clearly differentiate between those which do and those  which do not.  5.3. Time limit and acknowledgement of receipt transmission  EDI is characterized notably by an increased reliability due to a reduction in errors, faster and more accurate information flows and by an increased automation of the processing of data. Acknowledgements contribute to the reliability and accuracy of  EDI and time limits are in this context critical.   The importance of the time limit for sending the acknowledgement derives from the fact that the EDI message may not be acted upon, and hence contractual obligations may not be carried out, until the acknowledgement, when required, has been sent.   One business day is deemed to be an appropriate time limit in the EDI environment. However, 'Just-in-Time' management or other priorities may require more strict adjustment of time, or it may seem inappropriate or unpractical and an extension might be  required, in which case the parties should adjust the time limit and complete the EDI Agreement as they will agree.   Although this provision provides definition of a business day, it may prove useful for the parties to specify more precisely the public or other holidays or the time of availability of the system.   An obligation to send an acknowledgement of an EDI message is placed on the receiver, who should not act on a message, which requires an acknowledgement to be sent, if such acknowledgement has not been forwarded.  5.4. Failure of receipt of an acknowledgement  In the case where an acknowledgement is not received by the sender of an EDI message who has requested such an acknowledgement, within the applicable time limit, it is reasonable that he is allowed to assume that there has been a problem with the  message or that the receiver does not want to, or cannot, deal with it and consequently that he should be able to consider such message as null and void provided he so advises the receiver. This latter condition will be particularly useful in the  situation where a problem has occurred with the transmission of the acknowledgement. Time limits again will be critical  Alternatively, the parties may determine a recovery procedure for the cases where technical problems have occurred and the sender of an EDI message for which an acknowledgement is required may initiate such kind of recovery procedure if he does not  receive the acknowledgement within the prescribed time limit. The details of such procedure should be determined in the Technical Annex.  Article 6 Security of EDI messages 6.1. Obligations of parties  A satisfactory level of security for messages must be ensured to avoid any risks that may be associated with the exchange of messages by EDI, and such a level will depend upon the importance of the transactions or messages exchanged.  6.2. Security procedures and measures  Verifications of origin and integrity are stated to be mandatory for any EDI message as they constitute a basic level of security. Parties are, however, strongly recommended to agree, where required, on additional security measures, the degree of which  will no doubt depend on the value and importance of the subject-matter of the messages and the possible liability in the event of an unsuccessful exchange of messages.   Control measures are provided in the UN/Edifact directories and guidelines, such as specific checks, acknowledgement of receipt, control count, reference number, identification etc. More elaborated controls may be necessary, in particular when  transactions are important and could mean the use of some specific messages to increase the security such as those recommended by security experts (1), or any other available security means or method, including, as an example, digital signatures.   The means, methods and specifications of security and the messages to be used between the parties, to ensure the level of security required, should be set out in detail in the Technical Annex.  6.3. Failure of security procedures  Information of the sender about the failure of an EDI message exchange or about an error in a message needs to be ensured in specified time limits in order to allow the sender to initiate any possible action, whenever this is possible. In case of a rejection of an EDI message or of detection of an error, instructions from the sender have to be required before any other action is undertaken about the message itself.  Article 7 Confidentiality and protection of personal data 7.1. Confidentiality  The level of confidentiality to be maintained for EDI messages is intended to reflect the level adhered to in the paper environment. The level of confidentiality of a message should be maintained whenever a message is subject to subsequent  transmission.  7.2. Public domain  Information in the public domain is intended to be understood in the general sense of the words, that is, any information which is commonly known and to which a member of the public might have easy access.   7.3. Specific form of protection  The reference to encryption is included as a reminder that such a method can be used to protect the data but that restrictions on encryption exist under certain national laws. If parties wish to agree to use such a method of encryption, appropriate  authorizations or declarations should be arranged for by them, where required.  7.4. Personal data protection  Personal data shall be subject to the regulation in force for the transmission of such data in the countries to or from where it is transmitted. Most Member States have adopted legislation relating to the protection of personal data, however the kind  of protection often differs. The European Commission has submitted to the Council of Ministers a proposal for a directive in this field. When this proposal is adopted, this agreement should be amended accordingly in order to introduced the respect of  the provisions of the Directive. In the meantime it seems appropriate to refer to the Convention of the Council of Europe for the cases where national laws are not providing any guidance.   It is reasonable to provide that trading partners and EDI users in Europe, operating in a Member State who did not adopt legislation in this field, should apply the principles set out in this Convention. The Council of Europe is preparing a model  contract, which has already been circulated, which aims at ensuring equivalent data protection in the context of transborder data flows. This might constitute a basis for solving issues which might fall outside the scope of the existing national laws  (5).  Article 8 Recording and storage of EDI messages 8.1. Storage procedure and time limits  The requirements for storage of EDI messages have in some countries been set up by legislation, in most cases fiscal legislation. In those countries where no provisions has been made for EDI storage, analogy should be applied by reference to the paper  requirements. The time of storage requirements is different from country to country (6) and may also vary according to the area and circumstances.   For this reason, the parties should ensure that the time they will observe complies with their own national legislation. Some of the Tedis studies have have analysed these issues and may provide guidance; harmonization might prove necessary in this  field (7).   The Uncid code of conduct suggests a period of storage of three years. The same duration of storage has been adopted by the fiscal legislation of some countries. Such a period of time should be considered as a minimum requirement to store information  in an accurate and secure way. This time period of three years is suggested as the time limit to consider by parties in the EDI Agreement, should there be no other legal requirement.   If the national law's requirements are different or longer, compliance with the law should be respected. It must be stressed that most Member States' laws require a longer period of storage, most of the time 7 or 10 years and sometimes more. It must  also be emphasized that such storage may need to be ensured for various purposes, including but not limited to, audit, accountancy, tax, evidence and other administrative or legal requirements.   It is reasonable, as EDI is still in a growing phase and that a relevant business practice is not necessarily well established, to ensure a careful storage of the information.   The EDI messages sent or received should, for the security of the transaction, be stored completely and in a chronological order, in a secure way and without alteration.   More legal requirements in connection with the storage of the data may exist at national level and should be carefully followed (5).  8.2. Format of storage  The data transferred using EDI shall be stored in the format in which it has been sent or in the format in which it has been received (i.e. a UN/Edifact format).   This format has been provided as it is the only format of the data which can be considered as originally received and will constitute, if necessary, evidence of the EDI message as it has been sent or received, before any translation of the message has  happened.   If a digital signature has been applied to an EDI message, it will only be possible to verify it against the format in which the message has been sent.   Ideally the data should also be stored in the format in which it is translated in the information system of the receiver or from the information system of the sender. This will, however, be a matter for decision of the parties.   The readability of, and the possibility to print out the messages are criteria most required by national legislation and should be complied with.   To ensure that readability is maintained, any material, software or any other operational equipment which may be required to access the data and read it, should be retained by the parties, even in the case where updating of systems have occurred. The  parties may wish or need, in such cases, to keep the availability of such equipment without retaining it themselves. Such possibility should only be relied on after verification of national legislation requirements.   Note that, in view of the constant updating of the UN/Edifact standards, it is of particular importance that, for the purposes of proof, the relevant UN/Edifact directories and software used should also be accessible in order to ensure readability and  reproduction of the message if necessary.  Article 9 Operational requirements for EDI 9.1. Operational environment  The objective of this provision is to include in the Agreement the basic operational requirements required to operate EDI. The list of operational and technical elements which are mentioned in Article 9 is not exhaustive. The details regarding these  operational requirements, where required, will be developed in the Technical Annex, in accordance with Article 10.  9.2. Operational equipment  Although EDI is independent from the hardware, the software and the telecommunication means, the ability to exchange EDI messages requires information systems to be able to effectively receive, send and process EDI messages. Basic requirements in that  respect include the efficient working of the equipment used for the transfer of messages, including hardware, appropriate software and software translation.  9.3. Method of communication  Parties need to determine the method of transmission that they will use including, in particular, the telecommunications protocols and, where necessary, the choice of third party service providers, which might be used to provide a range of services.  9.4. EDI message standards  EDI message standards are essential to EDI. UN/Edifact standards are international and European standards (ISO 9735/CEN 29735 - ISO 7372) and strong support for the UN/Edifact standards and recommendations has been expressed within the activities of  the Tedis programme, in particular, within those relating to the Secretariat of the western European Edifact Board which is also an associated body of CEN (6).   The United Nations Economic Commission for Europe issues the recommendations for the approved UN/Edifact standards, guidelines and directories and these recommendations should be followed to ensure the same level of use of EDI message standards  world-wide.   As mentioned above all the appropriate specifications required to exchange EDI messages need to be determined by the parties.   Other standards are available. In the case where parties wish to use any of these other standards they have to reach an agreement on these and have to determine also all appropriate details and specifications.  9.5. Codes  Code lists which are used for EDI are essential. In implementing UN/Edifact messages, the code lists maintained under UN/Edifact procedures are part of the technical specifications. However many other code lists may be referred to and used.   Where possible the use of international standards or officially published code lists is recommended. These may not cover all the needs of the parties. In that case it is recommended, in order to promote efficiency, that preference should be given to  the use of code lists which are published and maintained by known organizations, and which ensure the correspondence with other coding systems (for example statistical code lists).  Article 10 Technical specifications and requirements  The legal provisions are intended to deal mainly with matters relating to substantive legal issues. Basic principles and rules regarding the technical specifications are provided in the Agreement to ensure appropriate agreement and reference to them.   The Technical Annex is the complement to the legal provisions in which the parties will have to determine all the technical requirements and specifications which are required in order to properly exchange EDI messages.   Although is it not easy to provide a list of all the elements which need to be taken into account, as these will vary according to the needs of the parties, it can be emphasized that relevant specifications with regard to the following points need to  be provided:   - the specifications relating to the operational requirements (Article 9), including:   - specifications required in relation to software and translation software for the purpose of EDI exchanges,   - communication protocols and third party services,   - UN/Edificat message standards and recommendations, including the list of messages and their references,   - the conditional elements where needed,   - the messages design guidelines,   - the implementation guidelines,   - the directories  - the code lists,   - the reference to the documentation,   - the versions and updates. The parties should agree, in the Technical Annex, the method that they will use to implement updated versions of messages, rules, guide-lines and directories,   - the specifications required for the processing and acknowledgement of EDI messages,   - the specifications relating to security means for EDI messages,   - the specifications relating to recording and storage,   - the time limits. Time limits may be of critical importance in EDI, in particular when EDI is combined with other techniques such as JIT (Just-in-Time). Some time limits have been inserted in the Model EDI Agreement but may require adjustments  according to the needs. Other time limits have to be determined by the parties,   - the tests and trial procedures. Technical experts have made it clear that it may prove not only useful, but also sometimes necessary, to run tests to ensure the proper working of the systems and telecommunications. Practice shows that such tests are,  in fact, usually conducted by parties commencing use of EDI and this generally happens in two steps. Firstly EDI messages are exchanged in parallel with the paper documents and secondly, when this test is satisfactory, EDI messages are exchanged without  paper support. It may also be necessary to conduct further tests from time to time, for example after changes to the system have been implemented.  Article 11 Liability 11.1. Exclusion of liability  Special, indirect or consequential damages liability in connection with the Agreement have been excluded (5).  11.2. Force majeure  An exception to liability is made in the case of what is commonly known as 'force majeure'. The concept of force majeure included in this Article is in line with the concept developed by the United Nations Convention on Contracts for the International  Sale of Goods or Vienna Convention of 11 April 1980, and, in the absence of uniform national law on this point, provides a definition which the parties may expand, if they wish, by citing various situations in which liability may be exempted.  11.3. Intermediaries' liability  Liability for the actions of a third party is included in many agreements and generally accepted since often the third party will effectively be acting as an agent of the user. Moreover, it is the party who will use the service of a third party  provider and who has the contractual relationship with the service provider who will be in the best position to sue the service provider in the case where its liability could be engaged.  11.4. It should be noted that a difference exists between paragraphs 9.2 and 9.3. Where one party imposes the use of a particular intermediary on the other, it seems fair that the party who imposes such use should be responsible for damages which result  from using that intermediary instead of the one who has to make use of it.   Parties should be careful to ensure that adequate insurance covers any possible risk resulting from a message sent, bearing in mind the value of the transactions to be effected by EDI.  Article 12 Dispute resolution  Two alternative provisions have been provided in the Model EDI Agreement in order to allow parties for their best choice.   The first alternative provides a clause on arbitration, if the parties decide to resolve their dispute by this way. The second alternative proposed provides a jurisdiction clause, where the choice of a jurisdiction is to be agreed in the case where the  parties decide that dispute will be referred to Court.   It should perhaps be emphasized that because of the relationships that EDI creates between users there is a great potential for dispute to be resolved by negotiation.   It is only when such negotiation will fail that the provisions on dispute resolution will become effective and useful.   Alternative 1:   Arbitration clause  Parties may wish to decide to resolve their dispute by way of arbitration. Arbitration may prove a practical procedure to resolve a dispute involving parties of different countries. It offers the advantage of the choice of arbitrator(s) or of the  appointing authority and of a more speedy procedure although this is not always the rule. It can be attractive for the confidentiality of the procedure, which is sometimes favoured by parties. The arbitration award is in principle final although appeal  is possible.   Many countries still require a written and clear statement on arbitration when this is the choice of dispute resolution and parties are therefore advised to include such clause in this Agreement.   The parties need to define how the arbitrator will be nominated. A choice can be made between one or three person(s) nominated by agreement or in case of failure of an agreement on the arbitrator(s), an appointing authority can proceed to the  nomination.   The parties should therefore indicate which will be the appointing authority. They are national authorities, such as chamber of commerce appointed arbitration chamber, and international ones such as the ICC, Uncitral or the London Court of  International Arbitration, as examples.   The rules of procedure relating to the arbitration should be determined as well. In an international context these may be the Uncitral Arbitration Rules, the ICC Court of Arbitration Rules, the London Court of International Arbitration Rules, the  Economic Commission for Europe's Arbitration Rules (5) or it can be a national legal system applicable to the arbitration.   Alternative 2:   Jurisdiction clause  In the case where the parties intend to have their litigation solved by a court, the second alternative provision provides for the parties to choose the competent court and stipulate it in their agreement.   In the case where the parties do not make such a choice, the competent court shall be determined by reference to the Convention on jursidiction and the enforcement of judgments in civil and commercial matters (6).  Article 13 Applicable law  The security of the EDI relationships will be enhanced by an unequivocal specification of the applicable law. As to the law applicable to the Agreement, which is essential, giving consideration to the fact that EDI users may deal with many countries,  they are advised to indicate clearly their choice of law.   In the absence of a stated choice, the Agreement will fall back on the provisions of the Convention on the law applicable to contractual obligations (7), but this may lead to uncertainty regarding the governing law of the contract as the law will be  decided at the time of dispute by determining the law with which the contract is most closely connected.   This will be determined by looking at the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence or in the case of a company its central  administration. If the contract is, however, entered into in the course of that party's trade or profession, that country will generally be the country where the place of business is situated. Certain exceptions exist to this rule and are listed in  Article 4 of the Convention.  Article 14 Effects, term and severability 14.1. Effect  This Article states that the Agreement does not come into effect until it is signed by the parties.  14.2. Modifications  As the Agreement, subject of this recommendation is a model agreement, it is a fundamental characteristic of it, that terms of the Agreement can be amended by consent of the parties involved.   To ensure the necessary stability and coherence of the legal provisions, any modification, addition or alternative provisions to the legal provisions shall only be made in the same manner as the Agreement is adopted by the parties, namely by embodying  them in a written and signed form.  14.3. Term  The period of one month proposed in this Article regarding termination notice may be extended by the parties. It is not advised to reduce it as it is considered as a minimum.   Paragraph 14.3 provides that some rights and obligations relating to the contract are of fundamental importance and shall be respected even following termination of the contract.  14.4. Severability  The final paragraph has been inserted to avoid one party terminating the Agreement simply because one clause has become invalid and it is also intended to prevent parties from terminating an agreement to avoid certain obligations.    (1) Modifications might prove necessary in cases where an inconsistency with a national law occurs, which cannot be completely excluded.  (2) Introduction to UN/Edifact, UN/Edifact Rapporteurs' Team, April 1991.  (3) Formation of EDI contract. Report prepared by the CRID for the European Commission, 1991.  (4) The Security Group working under the auspices of Joint Rapporteurs Team - JRT or western European Edifact Board - WEEB is working on the preparation of recommendations in this area.  (5) Council of Europe, Model contract to ensure equivalent data protection in the context of transborder data flows, 14 September 1992, T-PD (92) 7.  (6) See Wilde Sapte, Report on authentication, storage and use of codes in EDI messages, Report for the European Commission, 1993. This report will be published in 1994.  (7) Wilde Sapte, idem. Ciredit and IT Law Group, Report on the legal constraints and inadequacies relating to the use of EDI in the field of accounting in the Member States, November 1992 (available in English) and in the EFTA countries, December 1993  (available in English in 1994).  (8) Ciredit and IT Law Group, idem.  (9) CEN, Comité européen de normalisation.  (10) For more details see 'The liability of EDI networks operators', Report prepared by CRID for the European Commission, 1991.  (11) For more details see notably Schmitthoff, The Law and Practice of International Trade, Stevens, 1986, pp. 574 to 629.  (12) Convention 72/454/EEC (OJ No L 299, 31. 12. 1972, p. 32).  (13) Rome Convention 80/934/EEC, 19 June 1980 (OJ No L 266, 9. 10. 1980, p. 1).      ANNEX 3   EUROPEAN MODEL EDI AGREEMENT   LEGAL PROVISIONS  1. List of Articles of the legal provisions of the European Model EDI Agreement which provides for completion by the parties The following list includes the items reflected in the legal provisions that allows for completion of modification by the parties within the EDI Agreement, legal provisions.  1. Time limits Time limits are referred to in the following paragraphs 5.3, 6.3, 8 and 14.3.  These time limits can be modified in the legal provisions if needed.  2. Arbitration and jurisdiction clause, applicable law Article 12 contains two alternatives on which a choice has to be made. Both alternatives require completion by the parties.  Article 13 requires the completion of the choice of law.  2. List of Articles of the European Model EDI Agreement which provides for specifications to be developed in the Technical Annex.  The following list includes the items reflected in the legal provisions that require specifications to be developed in the Technical Annex by the parties. This list is not exhaustive and can be completed by other specifications.  1. Time limits Time limits which need to be specified in the Technical Annex are referred to in the following paragraphs: 5.1 and 5.4.  2. Acknowledgement of receipt EDI messages to be acknowledged By reference to paragraph 5.2, the EDI messages which need to be always acknowledged without specific request will be specified.  Specific conditions Any specific conditions regarding acknowledgement of receipt will be specified.  Alternative recovery procedure The alternative recovery procedure referred to in paragraph 5.4 will be specified if it is decided to use any.  3. Security procedures and measures The security procedures and measures to fulfil the requirements set forth in Article 6 will be specified.  These procedures and measures are relating to:  - unauthorized access, alternation, delay, destruction, loss,  - verification of origin,  - verification of integrity,  - non-repudiation of origin/receipt,  - confidentiality.  4. Confidential information EDI messages which will contain confidential information can be listed where possible.  Authorization for disclosure can be specified where required.  Method of encryption, where available or in use, can be specified.  5. Recording and storage Any specifications necessary for the recording and storage of EDI messages will be included.  6. Operational requirements and technical specifications All necessary specifications regarding the following technical requirements will be developed:  - equipment,  - software,  - services,  - communication services,  - communication protocols, - message standards, directories, versions, syntax, type of messages, segments, data elements,  - codes,  - procedure for tests and trials,  - availability,  7. Modifications Any modifications made to the legal provisions need to be specified and agreed in the form provided by Article 14.