               EUROPEAN COMMISSION
            Brussels, 1.6.2018
            COM(2018) 376 final
            Recommendation for a
            COUNCIL DECISION
            to authorise the Commission to open negotiations on behalf of the European Union to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean

               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE PROPOSAL

               •Reasons for and objectives of the proposal

                  Following a request from the EU Member States and a number of EU fishing operators, the Commission proposes that the EU accedes to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean (ʻthe Conventionʼ) as a member of the North Pacific Fisheries Commission (NPFC), the body set up by the Convention to manage the area’s fisheries.

                  EU accession to the Convention would accord with the wish to seek access to its resources, as expressed by EU Member States and the relevant Union fleet. This would also provide a firm basis for the sustainable management and conservation of marine biological resources and the marine environment managed by the NPFC. This is in line with Article 28 of Regulation (EU) No 1380/2013 on the Common Fisheries Policy of the European Parliament and of the Council
                     1
                   and with the Council Conclusions of 19 March 2012 on the Communication from the Commission ‘External dimension of the Common Fisheries Policy’
                     2
                  .

                  The Convention does not provide for any negotiable rights or duties between the acceding contracting party and the NPFC. Accession to the Convention and membership or cooperating non-contracting Party (CNCP) status in the NPFC require full acceptance of the provisions in force at the time of accession.

               •Consistency with existing policy provisions in the policy area

                  Regional Fisheries Management Organisations (RFMOs) are international organisations of countries, some of which are coastal states; regional integration organisations, such as the EU; and fishing entities with fishing interests in a given area. Some RFMOs manage all the fish stocks within a specific area, while others focus on particular highly migratory species, notably tuna, throughout vast geographical areas. While some are purely advisory, most have management powers to set catch and fishing effort limits, technical measures, and control obligations.

                  In line with the Commission communication ‘Participation in regional fisheries organisations (RFOs)’
                     3
                   the European Union, represented by the Commission, plays an active role in 6 tuna organisations and 11 non-tuna organisations.

                  In accordance the Joint Communication by the High Representative of the EU for Foreign Affairs and Security Policy and the European Commission ‘International ocean governance: an agenda for the future of oceans’
                     4
                   and the Council conclusions on that joint communication
                     5
                  , promoting measures to support and enhance the effectiveness of RFMOs and, where relevant, improve their governance is a central feature of the EU’s action in these fora.

               •Consistency with other Union policies

                  Not applicable

               2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

               •Legal basis

               The current Recommendation for a Council Decision is based on the Treaty on the Functioning of the European Union, and in particular Article 218(3) and (4) thereof.

               •Subsidiarity (for non-exclusive competence)

                  Not applicable.

               •Proportionality

                  Not applicable.

               •Choice of instrument

               Under Article 218(3) and (4) of the Treaty on the Functioning of the European Union, the Commission submits recommendations to the Council, which adopts a decision authorising the opening of negotiations. The Council may adress directives to the negotiator and designate a special committee to oversee the negotiations in accordance with the negotiating directives.

               3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

               •Ex-post evaluations/fitness checks of existing legislation

                  Not applicable.

               •Stakeholder consultations

                  The Member States and a number of EU individual fishing operators asked the Commission to start accession negotiations at the end of 2017. The relevant organisations and interest groups were consulted in early 2018 to ensure that future negotiations the EU’s possible accession to the North Pacific Fisheries Commission take their views into account. They included the representatives of the Member States’ administrations, the EU fisheries industry and NGOs, as well as EU citizens and consumers. In the course of the consultations, the EU fisheries industry urged for effective steps taken by the EU institutions to secure the possibility for the EU fleet to commence fishing activities in the region of NPFC as of 1 July 2018. In their view, possibly the fastest way to achieve this is a two-step approach by which the EU becomes in first instance a cooperating non-contracting Party with the expressed ambition of becoming a full member of the NPFC soon afterwards. No other comments were received during the consultations.

               •Collection and use of expertise

                  Not applicable.

               •Impact assessment

                  Not applicable.

               •Regulatory fitness and simplification

                  Not applicable.

               •Fundamental rights

                  Not applicable.

               4.BUDGETARY IMPLICATIONS

                  EU accession to the Convention will require the payment of a yearly financial contribution to the NPFC from budget line 11.03.02 (Compulsory contributions to RFMOs), estimated at EUR 90.000 annually. The EU contribution could increase, depending on the EU’s future fishing records in the NPFC. The exact amount will be established in the relevant budget lines in the annual budget procedure.

                  Voluntary contributions to the organisation’s budget under budget line 11.06.62.03, to promote scientific research, are also likely. These are estimated at about EUR 200.000/year. Budget line 11.01.04.01 also provides for technical assistance to support the provision of scientific advice at the NPFC meeting. The cost of this is estimated at EUR 10.000/year.

               5.OTHER ELEMENTS

               •Implementation plans and monitoring, evaluation and reporting arrangements

                  Not applicable.

               •Explanatory documents (for directives)

                  Not applicable.

               •Detailed explanation of the specific provisions of the proposal

                  Not applicable.

               Recommendation for a

               COUNCIL DECISION

               to authorise the Commission to open negotiations on behalf of the European Union to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean

               THE COUNCIL OF THE EUROPEAN UNION,

               Having regard to the Treaty on the Functioning of the European Union, and in particular Article 218(3) and (4) thereof,

               Having regard to the recommendation from the European Commission,

               Whereas:

               (1)The Union is competent to adopt measures for the conservation of marine biological resources under the common fisheries policy and to enter into agreements with third countries and international organisations.

               (2)Pursuant to Council Decision 98/392/EC
                  6
               , the Union is a Contracting Party to the United Nations Convention on the Law of the Sea of 10 December 1982. That convention requires all members of the international community to cooperate in conserving and managing the biological resources of the sea.

               (3)Pursuant to Council Decision 98/414/EC
                  7
               , the Union is a Contracting Party to the Agreement on the implementation of the provisions of the United Nations Convention on the Law of the Sea of 10 December 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks.

               (4)The EU Member States and fishing operators have expressed their interest to fish in the area of the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean (ʻthe Conventionʼ).

               (5)The Convention allows for the accession of Regional Economic Integration Organisations to the Convention. The North Pacific Fisheries Commission (ʻNPFCʼ) is the body established to perform the functions foreseen by the Convention. Parties to the Convention participate in the decision-making process. As a general rule, the NPFC adopts its decisions by consensus.

               (6)Subject to the terms and conditions established by the North Pacific Fisheries Commission, a cooperating non-contracting Party (ʻCNCPʼ) may participate in the fisheries subject to its commitment to comply with, and its record of compliance with, the NPFC conservation and management measures. CNCPs do not participate in the decision-making process but are obliged to cooperate fully with the NPFC and apply the conservation and management measures adopted by the Commission. CNCPs are encouraged to make a contribution to the budget of the NPFC.

               (7)It is appropriate to ensure the Union’s conservation approach across the world’s oceans and reinforce its commitment to the long-term conservation and sustainable use of fisheries resources globally. In accordance the Joint Communication by the High Representative of the EU for Foreign Affairs and Security Policy and the European Commission ‘International ocean governance: an agenda for the future of oceans’ and the Council conclusions on that joint communication, promoting measures to support and enhance the effectiveness of RFMOs and, where relevant, improve their governance is a central feature of the EU’s action in these fora.

               (8)Negotiations should be opened with a view to the accession of the European Union to the Convention. Should it become apparent that it is impossible for the EU to accede to the Convention, or to do so within a reasonable timeframe, it is appropriate to negotiate the terms of participation of the EU as a CNCP.

               HAS ADOPTED THIS DECISION:

               Article 1

               The Commission is hereby authorised to negotiate, on behalf of the European Union, with a view to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean (ʻthe Conventionʼ).

               Article 2

               If it appears during the negotiation for the accession to the Convention, that it is impossible for the EU to accede to the Convention or to do so within a reasonable timeframe, the Commission is hereby authrorised to negotiate, on behalf of the European Union, the terms of participation of the EU as a CNCP to the North Pacific Fisheries Commission.

               Article 3

               These negotiations shall be conducted in consultation with the special committee designated by the Council and in accordance with the negotiating directives set out in the Annexes.

               Article 4

               This Decision is addressed to the Commission.

               Done at Brussels,

                     For the Council

                     The President

               LEGISLATIVE FINANCIAL STATEMENT

               1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

               1.1.Title of the proposal/initiative

               1.2.Policy area(s) concerned in the ABM/ABB structure

               1.3.Nature of the proposal/initiative

               1.4.Objective(s)

               1.5.Grounds for the proposal/initiative

               1.6.Duration and financial impact

               1.7.Management mode(s) planned

               2.MANAGEMENT MEASURES

               2.1.Monitoring and reporting rules

               2.2.Management and control system

               2.3.Measures to prevent fraud and irregularities

               3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

               3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

               3.2.Estimated impact on expenditure

               3.2.1.Summary of estimated impact on expenditure

               3.2.2.Estimated impact on operational appropriations

               3.2.3.Estimated impact on appropriations of an administrative nature

               3.2.4.Compatibility with the current multiannual financial framework

               3.2.5.Third-party contributions

               3.3.Estimated impact on revenue

               LEGISLATIVE FINANCIAL STATEMENT

               1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

               1.1.Title of the proposal/initiative

                  Recommendation for a Council Decision to authorise the Commission to open negotiations on behalf of the European Union to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean

               1.2.Policy area(s) concerned in the ABM/ABB structure
                  8

                  To promote ocean governance at international level

               1.3.Nature of the proposal/initiative

               X The proposal/initiative relates to a new action

               ◻ The proposal/initiative relates to a new action following a pilot project/preparatory action
                  9

               ◻ The proposal/initiative relates to the extension of an existing action

               ◻ The proposal/initiative relates to an action redirected towards a new action

               1.4.Objective(s)

               1.4.1.The Commission’s multiannual strategic objective(s) targeted by the proposal/initiative

                  A stronger global actor

               1.4.2.Specific objective(s) and ABM/ABB activity(ies) concerned

                  Specific objective

                  To promote ocean governance at international level

                  Specific objective No 3

                  Sustainable fisheries worldwide and improved international governance by 2020

               1.4.3.Expected result(s) and impact

               Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

                  The EU Member States and economic operators should have access to Convention Area managed by the North Pacific Fisheries Commission (NPFC).

                  It shold further promote the Union’s conservation approach across oceans and reinforce its commitment to the long-term conservation and sustainable use of fisheries resources globally.

               1.4.4.Indicators of results and impact

               Specify the indicators for monitoring implementation of the proposal/initiative.

                  Number of EU fishing vessels engaged in the fishery

                  Number of EU catches

                  Improved long-term sustainability of the stocks

                  Number of NPFC meetings attended by the EU

               1.5.Grounds for the proposal/initiative

               1.5.1.Requirement(s) to be met in the short or long term

                  EU operators in the Netherlands, Lithuania, Latvia, Poland and Germany are seeking to enlarge their fishing operations to the North Pacific in order to further consolidate themselves as global actors. Economies of scale will be promoted too as the EU fleet is already engaged in fishing operations further south in the neighbouring RFMO: the South Pacific Regional Fisheries Management Organisation (SPRFMO).

                  The participation of the EU in the works of the NPFC will also contribute to the long-term sustainability of the stocks and support the scientific research in line with the Common Fisheries Policy (CFP) external objectives.

               1.5.2.Added value of EU involvement Added value of Union involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this point 'added value of Union involvement' is the value resulting from Union intervention which is additional to the value that would have been otherwise created by Member States alone.

                  Reasons for action at European level (ex-ante)

                  The conservation of marine biological resources falls under the exclusive competence of the EU according to Article 3 (1d) of the Treaty on the Functioning of the European Union (TFEU).

                  Expected generated EU added value (ex-post)

                  In line with Article 28 of the CFP’s ʻbasic regulationʼ, the EU accession to the NFPC will have as it mains purpose to:

                  (a) access the resources of the NPFC;

                  (b) actively support and contribute to the development of scientific knowledge and advice;

                  (c) improve policy coherence with the Union initiatives, with particular regard to environmental, trade and development activities and strengthen consistency of actions taken in the context of development cooperation and scientific, technical and economic cooperation;

                  (d) contribute to sustainable fishing activities that are economically viable and promote employment within the Union;

                  (e) ensure that Union fishing activities outside Union waters are based on the same principles and standards as those applicable under Union law in the area of the CFP, while promoting a level–playing field for Union operators vis-à-vis third-country operators;

                  (f) promote and support, in all international spheres, action necessary to eradicate IUU-fishing;

                  (g) promote the establishment and the strengthening of a country-by-country compliance mechanism.

               1.5.3.Lessons learned from similar experiences in the past

                  The Commission’s actions at international and bilateral level are an important element of its priority to strengthen the role of the EU as a global actor. The EU positions in the RFMOs, to which the EU is a Party are all based on the best available scientific advice, on the standards and principles of the CFP and our international approach to ocean governance. However, positions of other contracting Parties do not always allow to gather full support. The Commission represents the EU at RFMOs meetings, so DG MARE has taken the lead in all those negotiations, consistently ensuring appropriate consultations with Member States and relevant stakeholders, to promote the objectives of the CFP globally.

               1.5.4.Compatibility and possible synergy with other appropriate instruments

                  The proposal drives forward the global and multilateral agenda promoting sustainable fisheries worldwide to address crucial issues such as eradication of illegal, unreported and unregulated (IUU) fishing or reduction of overcapacity.

                  It better integrates the fisheries, development, environment, trade and other policies to further advance the objectives of sustainable and responsible governance.

               1.6.Duration and financial impact

               ◻ Proposal/initiative of limited duration

               –◻
                     Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY

               –◻
                     Financial impact from YYYY to YYYY

               X Proposal/initiative of unlimited duration

               –Implementation with a start-up period from 2018,

               –followed by full-scale operation.

               1.7.Management mode(s) planned
                  10

               X Direct management by the Commission

               –X by its departments, including by its staff in the Union delegations;

               –◻
                     by the executive agencies

               ◻ Shared management with the Member States

               ◻ Indirect management by entrusting budget implementation tasks to:

               –◻ third countries or the bodies they have designated;

               –◻ international organisations and their agencies (to be specified);

               –◻the EIB and the European Investment Fund;

               –◻ bodies referred to in Articles 208 and 209 of the Financial Regulation;

               –◻ public law bodies;

               –◻ bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees;

               –◻ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees;

               –◻ persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act.

               –If more than one management mode is indicated, please provide details in the ‘Comments’ section.

               Comments

                  None

               2.MANAGEMENT MEASURES

               2.1.Monitoring and reporting rules

               Specify frequency and conditions.

                  Each year, the NPFC’s budget is adopted. In accordance with the NPFC procedures, the Commission will examine, verify and comment on the draft budget submitted by the NPFC Secretariat. The execution of the budget is also scrutinised every year by the contracting Parties. The budget is to be adopted by consensus.

                  Reporting on the implementation of the NPFC budget is also undertaken on annual basis by the NPFC Secretariat.

               2.2.Management and control system

               2.2.1.Risk(s) identified

                  NPFC contracting Parties pay their contributions to the budget of the Organisation regularly and currently there are no arrears.

               2.2.2.Information concerning the internal control system set up

                  The NPFC’s financial situation is reviewed annually by the Finance and Administration Committee. There is an annual audit of the accounts against the approved commitments and expediture.

               2.2.3.Estimate of the costs and benefits of the controls and assessment of the expected level of risk of error

                  Limited costs. Peer review. Subsequent reviews.

               2.3.Measures to prevent fraud and irregularities

               Specify existing or envisaged prevention and protection measures.

                  The annual NPFC budget and expenditure forecast are prepared by the NPFC Secretariat on annual basis and then reviewed and endorsed by the Finance and Administration Committee who issues a recommendation to the NPFC on its endorsement. There is an annual audit of the accounts against the approved commitments and expediture.

               3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

               3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

               ·Existing budget lines

               In order of multiannual financial framework headings and budget lines.

                        Heading of multiannual financial framework

                        Budget line

                        Type of
                        expenditure

                        Contribution

                        Number

                        Diff./Non-diff.
                           11

                        from EFTA countries
                           12

                        from candidate countries
                           13

                        from third countries

                        within the meaning of Article 21(2)(b) of the Financial Regulation

                        11 03 02: Compulsory Contributions to International Bodies (2)

                        Diff.

                        NO

                        NO

                        NO

                        NO

                        11 01 04 01 : Non-operational administrative and technical assistance (2)

                        Non-diff.

                        NO

                        NO

                        NO

                        NO

                        11 01 02 11: Other management expenditure (5)

                        Non-diff.

                        NO

                        NO

                        NO

                        NO

                        11.06.62.03: Voluntary Contributions to International Organisations (2)

                        Diff.

                        NO

                        NO

                        NO

                        NO

               ·New budget lines requested

               In order of multiannual financial framework headings and budget lines.

                        Heading of multiannual financial framework

                        Budget line

                        Type of
                        expenditure

                        Contribution

                        Number
                        [Heading………………………………………]

                        Diff./Non-diff.

                        from EFTA countries

                        from candidate countries

                        from third countries

                        within the meaning of Article 21(2)(b) of the Financial Regulation

                        [XX.YY.YY.YY]

                        YES/NO

                        YES/NO

                        YES/NO

                        YES/NO

               3.2.Estimated impact on expenditure

               [This section should be filled in using the

                  spreadsheet on budget data of an administrative nature

                (second document in annex to this financial statement) and uploaded to CISNET for interservice consultation purposes.]

               The annual expenditure will depend on the contribution the EU must make to the Organisation’s budget decided at the Annual Meeting of the NPFC. It is currently estimated at maximum EUR 90.000 but it might increase depending on the annual fishing activity of the EU fleet.

               3.2.1.Summary of estimated impact on expenditure

               EUR million (to three decimal places)

                        Heading of multiannual financial
                        framework

                        2

                        Preservation and management of natural resources

                        DG MARE

                        Year
                        2018

                        Year
                        2019

                        Year
                        2020

                        Year
                        2021

                        Year 2022

                        Year 2023

                        TOTAL

                        • Operational appropriations

                        11.03.02

                        Commitments

                        (1)

                        0.090

                        0.090

                        0.090

                        0.090

                        0.090

                        0.090

                        0.540

                        Payments

                        (2)

                        0.090

                        0.090

                        0.090

                        0.090

                        0.090

                        0.090

                        0.540

                        11.06.62.03

                        Commitments

                        (1a)

                        0.200

                        0.200

                        0.200

                        0.200

                        0.200

                        0.200

                        1.200

                        Payments

                        (2a)

                        0.200

                        0.200

                        0.200

                        0.200

                        0.200

                        0.200

                        1.200

                        Appropriations of an administrative nature financed from the envelope of specific programmes
                           14

                        Number of budget line 11.01.04.01

                        (3)

                        0.010

                        0.010

                        0.010

                        0.010

                        0.010

                        0.010

                        0.060

                        TOTAL appropriations
                        for DG MARE

                        Commitments

                        =1+1a +3

                        0.300

                        0.300

                        0.300

                        0.300

                        0.300

                        0.300

                        1.800

                        Payments

                        =2+2a

                        +3

                        0.300

                        0.300

                        0.300

                        0.300

                        0.300

                        0.300

                        1.800

                        • TOTAL operational appropriations

                        Commitments

                        (4)

                        Payments

                        (5)

                        • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes

                        (6)

                        TOTAL appropriations
                        under HEADING <….>
                           of the multiannual financial framework

                        Commitments

                        =4+ 6

                        Payments

                        =5+ 6

               If more than one heading is affected by the proposal / initiative:

                        • TOTAL operational appropriations

                        Commitments

                        (4)

                        Payments

                        (5)

                        • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes

                        (6)

                        TOTAL appropriations
                        under HEADINGS 1 to 4
                           of the multiannual financial framework
                        (Reference amount)

                        Commitments

                        =4+ 6

                        Payments

                        =5+ 6

                        Heading of multiannual financial
                        framework

                        5

                        ‘Administrative expenditure’

               EUR million (to three decimal places)

                        Year 2018

                        Year
                        2019

                        Year
                        2020

                        Year
                        2021

                        Year 2022

                        Year 2023

                        TOTAL

                        DG MARE

                        • Human resources

                        • Other administrative expenditure

                        TOTAL DG MARE

                        Appropriations

                        TOTAL appropriations
                        under HEADING 5
                           of the multiannual financial framework

                        (Total commitments = Total payments)

               EUR million (to three decimal places)

                        Year
                        2018

                        Year
                        2019

                        Year
                        2020

                        Year
                        2021

                        Year 2022

                        Year 2023

                        TOTAL

                        TOTAL appropriations
                        under HEADINGS 1 to 5
                           of the multiannual financial framework

                        Commitments

                        Payments

               3.2.2.Estimated impact on operational appropriations

               –◻
                     The proposal/initiative does not require the use of operational appropriations

               –X
                     The proposal/initiative requires the use of operational appropriations, as explained below:

               Commitment appropriations in EUR million (to three decimal places)

                        Indicate objectives and outputs

                        ⇩

                        Year
                        2018

                        Year
                        2019

                        Year
                        2020

                        Year
                        2021

                        Year       2022

                        Year      2023

                        TOTAL

                        Type
                           15

                        Average cost

                        No

                        Cost

                        No

                        Cost

                        No

                        Cost

                        No

                        Cost

                        No

                        Cost

                        No

                        Cost

                        Total No

                        Total cost

                        SPECIFIC OBJECTIVE No 3: Sustainable fisheries worldwide and improved international governance by 2020

                        - Output

                        - Output

                        - Output

                        Subtotal for specific objective No 1

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        1.8

                        SPECIFIC OBJECTIVE No 2 ...

                        - Output

                        Subtotal for specific objective No 2

                        TOTAL COST

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        0.3

                        1

                        1.8

               3.2.3.Estimated impact on appropriations of an administrative nature

               3.2.3.1.Summary

               –◻
                     The proposal/initiative does not require the use of appropriations of an administrative nature

               –X
                     The proposal/initiative requires the use of appropriations of an administrative nature, as explained below:

               EUR million (to three decimal places)

                        Year
                        2018

                        Year
                        2019

                        Year
                        2020

                        Year
                        2021

                        Year        2022

                        Year       2023

                        TOTAL

                        HEADING 5
                        of the multiannual financial framework

                        Human resources

                        0.143

                        0.143

                        0.143

                        0.143

                        0.143

                        0.143

                        0.858

                        Other administrative expenditure

                        Subtotal HEADING 5
                        of the multiannual financial framework

                        Outside HEADING 5
                           16

                        of the multiannual financial framework

                        Human resources

                        Other expenditure
                        of an administrative nature

                        Subtotal
                        outside HEADING 5
                        of the multiannual financial framework

                        TOTAL

               The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

               3.2.3.2.Estimated requirements of human resources

               –◻
                     The proposal/initiative does not require the use of human resources.

               –X
                     The proposal/initiative requires the use of human resources, as explained below:

               Estimate to be expressed in full time equivalent units

                        ·

                        Year
                        2018

                        Year
                        2019

                        Year 2020

                        Year 2021

                        Year 2022

                        Year 2023

                        • Establishment plan posts (officials and temporary staff)

                        ·XX 01 01 01 (Headquarters and Commission’s Representation Offices)

                        · 01 01 02 (Delegations)

                        ·01 05 01 (Indirect research)

                        ·10 01 05 01 (Direct research)

                        ·01 02 02 (AC, AL, END, INT and JED in the delegations)

                        ·01 04 yy
                           17

                        ·

                        ·- at Headquarters

                        ·

                        ·

                        ·

                        ·- in Delegations

                        ·

                        ·01 05 02 (AC, END, INT - Indirect research)

                        ·10 01 05 02 (AC, END, INT - Direct research)

                        ·Other budget lines (specify)

                        ·1.50 TOTAL

               XX is the policy area or budget title concerned.

               The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

               Description of tasks to be carried out:

                        Officials and temporary staff

                        To contribute towards the sustainable management and conservation of marine biological resources in international waters and enhanced performance of the NPFC in line with the objectives of the CFP and its external dimension and DG MARE’s priorities.

                        To promote the principles and standards of the CFP for the conservation, control and enforcement measures in the NPFC and in that context develop the negotiating strategies for achieving the EU’s objectives.

                        To carry out analysis and develop conservation and management measures on fisheries in RFMOs while ensuring policy coordination in the implementation of the CFP.

                        To engage in a regular dialogue with stakeholders and maintain constructive relations with the other Institutions and international bodies.

                        External staff

               3.2.4.Compatibility with the current multiannual financial framework

               –X
                     The proposal/initiative is compatible the current multiannual financial framework.

               –◻
                     The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.

                  Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts.

               –◻
                     The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework.

                  Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.

               3.2.5.Third-party contributions

               –X The proposal/initiative does not provide for co-financing by third parties.

               –The proposal/initiative provides for the co-financing estimated below:

               Appropriations in EUR million (to three decimal places)

                        Year
                        N

                        Year
                        N+1

                        Year
                        N+2

                        Year
                        N+3

                        Enter as many years as necessary to show the duration of the impact (see point 1.6)

                        Total

                        Specify the co-financing body

                        TOTAL appropriations co-financed

               3.3.Estimated impact on revenue

               –X
                     The proposal/initiative has no financial impact on revenue.

               –◻
                     The proposal/initiative has the following financial impact:

               –◻
                     on own resources

               –◻
                     on miscellaneous revenue

               EUR million (to three decimal places)

                        Budget revenue line:

                        Appropriations available for the current financial year

                        Impact of the proposal/initiative
                           18

                        Year
                        N

                        Year
                        N+1

                        Year
                        N+2

                        Year
                        N+3

                        Enter as many years as necessary to show the duration of the impact (see point 1.6)

                        Article ………….

               For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.

                  None

               Specify the method for calculating the impact on revenue.

                  None

                     (1)

                        Regulation (EU) No 1380/2013 of the European Parliament and of the Council on the Common Fisheries Policy, amending Council Regulations (EC) No 1954/2003 and (EC) No 1224/2009 and repealing Council Regulations (EC) No 2371/2002 and (EC) No 639/2004 and Council decision 2004/585/EC (OJ L 354 of 28.12.2013, p.22).

                     (2)

                        COM(2011) 424 of 13.7.2011.

                     (3)

                        COM/99/0613 final.

                     (4)

                        JOIN(2016) 49 final.

                     (5)

                        7348/1/17 REV 1.

                     (6)

                        Council Decision 98/392/EC of 23 March 1998 concerning the conclusion by the European Community of the United Nations Convention of 10 December 1982 on the Law of the Sea and the Agreement of 28 July 1994 relating to the implementation of Part XI thereof (OJ L 179, 23.6.1998, p. 1.).

                     (7)

                        Council Decision 98/414/EC of 8 June 1998 on the ratification by the European Community of the Agreement for the implementing of the provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the conservation and management of straddling stocks and highly migratory fish stocks (OJ L 189, 3.7.1998, p. 14.).

                     (8)

                        ABM: activity-based management; ABB: activity-based budgeting.

                     (9)

                        As referred to in Article 54(2)(a) or (b) of the Financial Regulation.

                     (10)

                        Details of management modes and references to the Financial Regulation may be found on the BudgWeb site:
                  http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html

                     (11)

                        Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.

                     (12)

                        EFTA: European Free Trade Association.

                     (13)

                        Candidate countries and, where applicable, potential candidates from the Western Balkans.

                     (14)

                        Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

                     (15)

                        Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).

                     (16)

                        Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

                     (17)

                        Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).

                     (18)

                        As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 25 % for collection costs.

    ---documentbreak---

               EUROPEAN COMMISSION
            Brussels,1.6.2018
            COM(2018) 376 final
            ANNEXES
            to the
            Recommendation for a Council Decision
            to authorise the Commission to open negotiations on behalf of the European Union to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean

               ANNEX 1

               Directives for negotiations to be conducted by the Commission on behalf of the European Union to accede to the Convention for the Conservation and Management of High Seas Fisheries Resources in the North Pacific Ocean

               A
                     Negotiating Directives

               1.
                     The purpose of the negotiations is to enable the European Union to accede to the Convention as a Member.

               2.
                     While negotiating with the North Pacific Fisheries Commission (NPFC), the Commission should:

               –seek access for the EU fleet to the area covered by the Convention;

               –pursue the EU’s participation, as a contracting party to the NPFC, in the decision-making process established by the Convention;

               –seek an appropriate share of the fisheries resources managed by the NPFC, taking into account the interests of the EU fleets;

               –promote the Union’s conservation approach across the world's oceans and strengthen its commitment to the long-term conservation and sustainable use of global fisheries resources;

               –comply with the Convention and the Conservation and Management Measures adopted by the NPFC;

               –comply with international law, and in particular with the United Nations Convention on the Law of the Sea, the 1995 Agreement relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas;

               –comply with the objectives and principles which the Union pursues through  the common fisheries policy, as laid down in Regulation (EU) 1380/2013.

               ANNEX 2

               Directives for negotiations to be conducted by the Commission on behalf of the European Union to participate as a Cooperating Non-Contracting Party (CNCP) in the North Pacific Fisheries Commission

               A
                     Negotiating Directives

               1.
                     The purpose of the negotiations is to enable the European Union to participate as a Cooperating Non-Contracting Party (CNCP) in the North Pacific Fisheries Commission.

               2.
                     While negotiating with the North Pacific Fisheries Commission (NPFC), the Commission should:

               –seek access for the EU fleet to the area covered by the Convention;

               –pursue the EU’s participation, as a Cooperating Non-Contracting Party in the NPFC;

               –seek an appropriate share of the fisheries resources managed by the NPFC, taking into account the interests of the EU fleets;

               –promote the Union’s conservation approach across the world's oceans and strengthen its commitment to the long-term conservation and sustainable use of global fisheries resources;

               –comply with the Convention and the Conservation and Management Measures adopted by the NPFC;

               –comply with international law, and in particular with the United Nations Convention on the Law of the Sea, the 1995 Agreement relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas;

               –comply with the objectives and principles which the Union pursues through  the common fisheries policy, as laid down in Regulation (EU) 1380/2013.


               EUROPEAN COMMISSION
            Brussels,15.11.2017
            COM(2017) 664 final
            Recommendation for a
            COUNCIL DECISION
            authorising the Commission to open negotiations with the Swiss Confederation to amend the Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road with a view to enabling the participation of the Swiss Confederation in the European Union Agency for Railways

               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE PROPOSAL

               •Reasons for and objectives of the proposal

                  In line with Article 75(1) of Regulation (EU) 2016/796 of the European Parliament and of the Council of 11 May 2016 on the European Union Agency for Railways and repealing Regulation (EC) No 881/2004
                     1
                  , the European Union Agency for Railways (hereafter "the Agency") is open to participation by third countries, in particular by countries which have concluded agreements with the Union under which the countries concerned have adopted and are applying Union law, or equivalent national measures, in accordance with the procedure laid down in Article 218 TFEU, in the field covered by Regulation (EU) 2016/796, which is above all railway safety and railway interoperability.

                  The Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road of 21 June 1999 (hereinafter "the Land Transport Agreement") provides for a coordinated transport policy in the areas of road, rail and combined transport.

                  The cooperation with the Swiss Confederation has intensified and evolved positively over the years. The geographic position of the Swiss Confederation and its role as a major transit country make it an important partner in achieving a safe and interoperable railway area in Europe.

                  Through Decision No 1/2013 of the Joint Committee
                     2
                  , the Swiss Confederation committed to apply legal provisions equivalent to the relevant acquis in the area of rail interoperability and safety. Such legal provisions have been adopted and are effectively applied by the Swiss Confederation. The Swiss Confederation joins the meetings of the Interoperability and Safety Committee set up under Directive (EU) 2016/797 of the European Parliament and of the Council of 11 May 2016 on the interoperability of the rail system within the European Union (recast)
                     3
                   as observer. Swiss experts have attended technical meetings at the European Union Agency for Railways (the Agency) as observers.

                  Further intensifying the existing constructive cooperation between the Union and the Swiss Confederation is deemed to be mutually beneficial in terms of achieving a safe and interoperable railway area as well as ensuring that the Swiss Confederation continues to provide its expertise in interoperability and safety matters.

                  As such, it is appropriate to allow in principle the Swiss Confederation to participate in the Agency. The Swiss Confederation requested such a participation in 2013.

                  The detailed rules for the participation of the Swiss Confederation in the work of the Agency are to be laid out in arrangements, which should be made between the Agency and Swiss Confederation. These arrangements shall be signed by the Agency after having received the agreement of the Commission and of the Management Board, as stipulated in Article 75(2) of Regulation (EU) 2016/796.

                  When making these arrangements, the Agency shall act in accordance with the relevant provisions of the agreement between the country concerned and the Union that is mentioned in Article 75(1) of Regulation (EU) 2016/796. In the case of the Swiss Confederation, this agreement is the Land Transport Agreement.

                  However, the Land Transport Agreement does currently not contain any provision in this regard. It is therefore proposed to insert a new Article in Title III of the Land Transport Agreement - which contains provisions related to international rail transport - that provides for the possible participation of the Swiss Confederation in the Agency.

               •Consistency with existing policy provisions in the policy area

                  This Recommendation is fully consistent with the common transport policy in general and the common railway policy in particular. It enables the participation of the Swiss Confederation in the Agency, in line with the provisions of Regulation (EU) 2016/796. Switzerland is located along important railway corridors, has a highly developed and competitive rail sector that is closely integrated in the European rail area.

               •Consistency with other Union policies

                  This Recommendation is in line with the external policy of the Union. The relations between the Swiss Confederation and the Union are based on a set of agreements concluded in 1999, among which the Land Transport Agreement. The aim of the Land Transport Agreement is on the one hand to liberalize the access of the Contracting Parties to each other’s transport market for the carriage of passengers and goods by road and rail and, on the other hand, at laying the basis for a coordinated transport policy.

               2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

               •Legal basis

                  The legal base is Article 218 of the Treaty on the Functioning of the European Union. It provides the framework for the procedures applying to the negotiation and conclusion of agreements between the Union and third countries.

               •Proportionality

                  The present Recommendation proposes to the Council to authorise the Commission to open negotiations with the Swiss Confederation on an agreement amending the Land Transport Agreement of 21 June 1999. As the basic provisions of this agreement can only be amended by another bilateral agreement between the two Contracting Parties, the proposed measure is proportionate.

               •Choice of the instrument

                  Article 218(3) of the Treaty on the Functioning of the European Union provides that the Commission shall submit recommendations to the Council, which shall adopt a decision authorising the opening of negotiations.

               3.BUDGETARY IMPLICATIONS

                  The present recommendation which authorises the Commission to open negotiations with Switzerland is not expected to have immediate budgetary implications. Future arrangements between the Agency and the Swiss Confederation will be established on the basis of Article 75 of Regulation (EU) 2016/796 setting out detailed rules for participation of the Swiss Confederation in the work of the Agency, in particular the nature and extent of such participation. This arrangement shall include provisions on financial contributions and staff.

               4.OTHER ELEMENTS

               •Detailed explanation of the specific provisions of the proposal

                  Article 1 authorises the Commission to negotiate with the Swiss Confederation an amendment of the Land Transport Agreement for it to provide the basis for a future participation of the Swiss Confederation in the Agency.

                  Article 2 refers to the negotiation Directives in the Annex to this Recommendation.

               Recommendation for a

               COUNCIL DECISION

               authorising the Commission to open negotiations with the Swiss Confederation to amend the Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road with a view to enabling the participation of the Swiss Confederation in the European Union Agency for Railways

               THE COUNCIL OF THE EUROPEAN UNION,

               Having regard to the Treaty on the Functioning of the European Union, and in particular Article 218(3) and (4) thereof,

               Having regard to the recommendation from the European Commission,

               Whereas

               (1)The Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road of 21 June 1999 (hereinafter "the Land Transport Agreement") provides for a coordinated transport policy in the areas of road, rail and combined transport,

               (2)The cooperation with the Swiss Confederation has intensified and evolved positively over the years. The Swiss Confederation has adopted and effectively applied legal provisions equivalent to the relevant acquis in the area of rail interoperability and safety. The Swiss Confederation joins the meetings of the Interoperability and Safety Committee set up under Directive (EU) 2016/797 of the European Parliament and of the Council of 11 May 2016 on the interoperability of the rail system within the European Union (recast) as observer. Swiss experts have attended technical meetings at the European Union Agency for Railways (the Agency) as observers. Further intensifying the cooperation between the Union and the Swiss Confederation is deemed to be mutually beneficial in terms of achieving a safe and interoperable railway area as well as ensuring that the Swiss Confederation continues to provide its expertise in interoperability and safety matters.

               (3)Therefore negotiations should be opened with a view to concluding an agreement with the Swiss Confederation, amending the Land Transport Agreement with a view to enabling the participation of the Swiss Confederation in the Agency,

               HAS ADOPTED THIS DECISION:

               Article 1

               The Commission is hereby authorised to negotiate, on behalf of the Union, an agreement with the Swiss Confederation amending the Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road of 21 June 1999 with a view to enabling the participation of the Swiss Confederation in the European Union Agency for Railways.

               Article 2

               The negotiating Directives are set out in the Annex.

               Article 3

               This Decision is addressed to the Commission.

               Done at Brussels,

                     For the Council

                     The President

                     (1)
                  OJ L 138, 26.5.2016, p. 1.

                     (2)
                  OJ L 352 of 24.12.2013, p. 79.

                     (3)
                  OJ L 138 of 26.5.2016, p. 44.

    ---documentbreak---

               EUROPEAN COMMISSION
            Brussels,15.11.2017
            COM(2017) 664 final
            ANNEX
            Recommendation for a COUNCIL DECISIONauthorising the Commission to open negotiations with the Swiss Confederation to amend the Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road with a view to enabling the participation of the Swiss Confederation in the European Union Agency for Railways

               ANNEX

               to the

               Directives for the negotiation of an agreement with the Swiss Confederation
                  amending the Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road
               with a view to enabling the participation of the Swiss Confederation
                  in the European Union Agency for Railways

               The Agreement between the European Community and the Swiss Confederation on the Carriage of Goods and Passengers by Rail and Road of 21 June 1999 should be amended to allow the Swiss Confederation to participate in the European Union Agency for Railways (hereinafter "the Agency") without the right to vote and subject to the arrangements to be made with the Agency in accordance with Article 75(2) of Regulation (EU) 2016/796
                  1
               .

                     (1)
                  OJ L 138, 26.5.2016, p. 1.


               EUROPEAN COMMISSION
            Brussels, 23.5.2018
            COM(2018) 408 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2018 National Reform Programme of Spainand delivering a Council opinion on the 2018 Stability Programme of Spain

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2018 National Reform Programme of Spain

                  and delivering a Council opinion on the 2018 Stability Programme of Spain

               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,

               Having regard to the opinion of the Economic and Financial Committee,

               Having regard to the opinion of the Social Protection Committee,

               Having regard to the opinion of the Economic Policy Committee,

               Whereas:

               (1)On 22 November 2017, the Commission adopted the Annual Growth Survey, marking the start of the 2018 European Semester of economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. The priorities of the Annual Growth Survey were endorsed by the European Council on 22 March 2018. On 22 November 2017, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the Alert Mechanism Report, in which it identified Spain as one of the Member States for which an in-depth review would be carried out. On the same day, the Commission also adopted a recommendation for a Council recommendation on the economic policy of the euro area, which was endorsed by the European Council on 22 March 2018. On 14 May 2018, the Council adopted the recommendation on the economic policy of the euro area (‘recommendation for the euro area’).

               (2)As a Member State whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, Spain should ensure the full and timely implementation of the recommendation on the economic policy for the euro area, as reflected in recommendations (1) to (3) below.

               (3)The 2018 country report for Spain
                  5
                was published on 7 March 2018. It assessed Spain’s progress in addressing the country-specific recommendations adopted by the Council on 11 July 2017, the follow-up given to the recommendations adopted in previous years and Spain's progress towards its national Europe 2020 targets. It also included an in-depth review under Article 5 of Regulation (EU) No 1176/2011, the results of which were also published on 7 March 2018
                  6
               . The Commission’s analysis leads it to conclude that Spain is experiencing macroeconomic imbalances. In particular, large stocks of external and internal debt, both public and private, in a context of high unemployment, continue to constitute vulnerabilities with cross-border relevance. The external rebalancing is advancing, thanks to the current account surpluses recorded since 2013, which are underpinned by structural improvements in trade performance. However, net external liabilities remain high. Private sector debt reduction is also progressing, supported by favourable growth conditions, but deleveraging needs persist. A healthier financial sector supports economic activity. Despite the strong nominal GDP growth, government debt as a share of GDP is only slowly decreasing. The unemployment rate has continued its rapid decline, but remains very high and the high degree of labour market segmentation impedes faster labour productivity growth. Following the strong reform momentum between 2012 and 2015, progress on the implementation of recommendations has become more limited. The present economic situation provides a window of opportunity to address pending reform needs with a view to making the Spanish economy more resilient and raising productivity growth.

               (4)Spain is currently in the corrective arm of the Stability and Growth Pact. In its 2018 Stability Programme, Spain plans to correct the excessive deficit by 2018, in line with the Council Decision of 8 August 2016 giving notice to Spain to take measures for the deficit reduction judged necessary in order to remedy the situation of excessive deficit.
                  7
                 The general government balance is planned to continue improving and to reach a 0.1 % of GDP surplus in 2021. The 2018 Stability Programme incorporates all the measures included in the draft budget law submitted to parliament on 3 April as well as additional measures announced by late April. The medium-term budgetary objective of a balanced budgetary position in structural terms is not planned to be reached within the time horizon of the 2018 Stability Programme. The 2018 Stability Programme projects the government debt-to-GDP ratio to decline to 97.0 % in 2018, 95.2 % in 2019, and 89.1 % in 2021. The Programme’s macroeconomic assumptions are plausible. Overall, the planned achievement of the headline deficit targets continues to rely on the strong economic outlook and on government expenditure growing by less than nominal GDP. Risks to the achievement of the fiscal targets relate to both stronger revenue growth and more contained expenditure increases than in the Commission forecast, and to the possible materialisation of further contingent liabilities.

               (5)On 8 August 2016, the Council requested Spain to put an end to the excessive deficit situation by 2018 and, in particular, to reduce the general government deficit to 4.6 % of GDP in 2016, 3.1 % of GDP in 2017 and 2.2 % of GDP in 2018. This improvement in the general government balance was deemed consistent with a deterioration of the structural balance by 0.4 % of GDP in 2016, and a 0.5 % of GDP improvement in both 2017 and 2018, based on the updated Commission 2016 spring forecast. Spain reached a headline deficit of 3.1 % of GDP in 2017, as required in the Council Decision of 8 August 2016. The Commission 2018 spring forecast projects the headline deficit to decline to 2.6 % of GDP in 2018, 0.4 % of GDP above the headline deficit target in the 2018 Stability Programme and that set by the Council. Compared to the 2018 Stability Programme, the Commission forecast projects lower growth in government revenues and somewhat higher expenditure. In the Commission 2018 spring forecast, the structural balance is forecast to deteriorate by 0.3 % of GDP in 2018, against the backdrop of deficit-increasing measures included in the draft budget law for 2018 that reached parliament on 3 April, and to improve only slightly in 2019. Hence, the fiscal effort in 2018 as well as cumulated over 2016-2018 is not expected to be ensured. While the economic expansion is supporting the deficit reduction, it is not being used to structurally strengthen the public finances. Accordingly, in its Opinion on the updated Draft Budgetary Plan of Spain, the Commission concludes that the plan is broadly compliant with the provisions of the Stability and Growth pact, as the Commission 2018 forecast projects that the excessive deficit will be corrected in a timely manner, but is expansionary.

               (6)For 2019, should a timely and durable correction of the excessive deficit be achieved, Spain would be subject to the preventive arm of the Stability and Growth Pact and to the transitional debt rule. In view of Spain's general government debt ratio above 60 % of GDP and projected positive output gap of 2.3 % of GDP, nominal net primary government expenditure
                  8
                should fall by at least 0.3 % in 2019, in line with the structural adjustment of 1.0 % of GDP stemming from the matrix of requirements under the Stability and Growth Pact. At the same time, there are signs that idle capacity in the economy is underestimated. In 2019, Spain is still expected to record one of the highest unemployment rates in the EU, which is set to contain wage pressures, especially in the private sector, and in turn inflation is expected to remain well below 2 %. This points to remaining slack in the labour market. In addition, even if the Commission's assessment of the plausibility of the output gap does not flag the output gap estimates based on the commonly agreed methodology as implausible it indicates a rather wide range of plausible output gap estimates for Spain. On this basis, an annual structural adjustment of 0.65 % of GDP, corresponding to a maximum growth rate of net primary government expenditure of 0.6 %, appears appropriate. According to the Commission spring forecast, under unchanged policies, there is a risk of a significant deviation from the required fiscal adjustment in 2019. In addition, Spain is not projected to comply with the requirements of the transitional debt rule in 2019. Overall, the Council is of the opinion that Spain needs to stand ready to take further measures to ensure compliance in 2018 and that the necessary measures should be taken as of 2019 to comply with the provisions of the Stability and Growth Pact. The use of any windfall gains to further reduce the general government debt ratio would be prudent.

               (7)In addition, in August 2016, the Council also requested Spain to take measures to improve its fiscal framework, with a view to increasing the automaticity of mechanisms to prevent and correct deviations from the fiscal targets and to strengthening the contribution of the Stability Law's spending rule to fiscal consolidation. However, the 2018 Stability Programme does not report plans to reinforce the domestic spending rule. Neither does it report measures to increase in the law the automaticity of the corrective and preventive mechanisms. The Council also requested Spain to take measures to improve its public procurement policy framework. Spain has made progress with the adoption of a new law on public sector contracts in November 2017. However, the new legislation can only improve the efficiency and transparency of public procurement if it is swiftly and ambitiously implemented by setting up the new governance structure and enhancing control mechanisms of procurement procedures at all levels of government. In particular, the forthcoming National Public Procurement Strategy should specify the ex-ante and ex-post controls to be carried out by the new structures. In June 2017, the government commissioned the independent fiscal authority to carry out a spending review on selected public sector subsidies. The Commission monitors the implementation of the review, which is expected to be completed by early 2019.

               (8)On 27 April 2018, Spain submitted its 2018 National Reform Programme and its 2018 Stability Programme. To take account of their interlinkages, the two programmes have been assessed at the same time.

               (9)Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds for the 2014-2020 period. As foreseen in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council
                  9
               , where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of that provision in guidelines on the application of the measures linking the effectiveness of the European Structural and Investment Funds to sound economic governance
                  10
               .

               (10)Employment has continued to grow at a robust pace in Spain, supported by the effects of past labour market reforms and wage moderation. The unemployment rate continues to fall, but it remains well above the country’s pre-crisis levels and ranks among the highest in the EU. This entails considerable untapped skills potential, notably for young unemployed people. The proportion of unemployed people who have been without a job for more than a year is decreasing, but still accounts for nearly half of all unemployed people. Spain adopted a set of policy initiatives to extend the individual support to the long-term unemployed and to help young people enter the labour market and improve their employability, notably by increasing the number of Youth Guarantee beneficiaries. The effectiveness of these measures also depends on the capacity of regional public employment and social services to deliver personalised support to jobseekers, which is only slowly improving. There is also scope for greater cooperation with employers, notably by increasing the percentage of vacancies handled by the employment services and by better profiling and matching of jobseekers with employers’ needs. At the same time, efforts to improve the coordination between employment and social services, which has seen some progress in 2017, should be maintained.

               (11)The proportion of employees on temporary contracts is among the highest in the EU, and mostly comprises young and low-skilled workers. Temporary contracts are often short-term and rarely serve as a stepping stone to a permanent contract. Their widespread use, including in sectors less prone to seasonal or cyclical activity, may impede faster productivity growth and is often associated with lower entitlements to social benefits and higher risks of poverty. While open-ended contracts have increased as a percentage of net employment growth in the last two years, further action is needed to incentivise transitions from temporary contracts into open-ended ones. The system of recruitment incentives remains fragmented and does not effectively aim to promote open-ended employment. Spain adopted a plan to reduce the reliance on fixed-term employment in the public sector, but its implementation is just beginning and needs to speed up to meet the 8 % target set for 2019. Labour inspectorates’ greater capacity and effectiveness in fighting the abuse of temporary contracts has resulted in an increased number of them being converted into permanent contracts, but does not seem to discourage employers from continuing to use them extensively. The tripartite round table set up at the beginning of 2017 to discuss quality of employment has not yet made specific proposals. The involvement of social partners in policy design has increased recently but there is still room for further improvement.

               (12)Economic growth and job creation are helping to reduce the share of people at risk of poverty and social exclusion, which nevertheless remains above the EU average, as well as income inequality. In-work poverty is a concern especially amongst households with members employed on temporary or part-time contracts. The child poverty rate, although declining, remains very high. The impact of social transfers other than pensions on reducing poverty is below the EU average and decreasing. Income guarantee schemes are marked by large disparities in access conditions across regions, and by the fragmentation of multiple national schemes that target different groups of jobseekers and are managed by different administrations. As a result, a number of people in need do not receive support. There is still no action plan further to the recent study assessing the effectiveness of the national and regional income guarantee schemes. The launch of a Social Card system should make the social benefits granted more transparent and facilitate participation in associated activation measures, although it will not directly address the weaknesses of the existing schemes. The effectiveness of family benefits is also low and coverage is uneven. The Spanish pension system plays an important role in maintaining the quality of life of older people, who as a result face a significantly lower risk of poverty than younger generations. Relative to wages, current pensions are among the highest in the EU. Projections in the forthcoming 2018 Ageing Report and Pension Adequacy Report
                  11
                indicate that the 2011 and 2013 reforms helped ensuring sustainability and relative adequacy of pensions in the long term. However, the increases in pensions and the postponement of the sustainability factor proposed during the adoption process of the draft 2018 budget call into question the commitment to these reforms. At the same time, they do not address the main challenge to income adequacy of future retirees, which is rather related to high unemployment and segmentation in the labour market.

               (13)Addressing weaknesses in Spanish firms’ innovation capacity could improve their productivity. Innovation performance and productivity growth is hampered by persistently subdued levels of investment in research and development, which make reaching the national Europe 2020 research and development intensity target of 2 % very unlikely. This trend is reinforced by the low and falling execution rate of the public budget for research and development. While governance of national research and innovation policy is being streamlined, partly through the new State Agency for Research, national-regional coordination in the design, implementation and evaluation of policy remains weak. Developing an evaluation culture to systematically assess the effectiveness of support programmes and policies would allow policy learning and create synergies across levels of government.

               (14)The limited innovation capacity of Spanish firms is also explained by skills mismatches, which negatively affect the long-term potential for productivity growth. Under-qualification and over-qualification at work are widespread in Spain. Despite having improved markedly over the last decade, early school leaving rates are well above the EU average. Together with educational outcomes, they vary greatly across regions and may affect equality of opportunities. Targeted programmes to address these disparities have so far only had limited effects. The National Social and Political Pact on Education, aimed at an in-depth reform of the education system, is still in the negotiation phase. In the meantime, the professional development of teachers is to be supported by reducing temporary employment contracts and increased resources for their training. At the same time, tertiary graduates in particular face difficulties in finding adequate, stable jobs in the labour market. Greater cooperation between education and business could boost labour market access of young graduates, while providing firms with the skills required to enhance their innovation capacity. In this context, the proposal for a new national digital strategy acknowledges the need to improve digital skills. Challenges relate to the low number of specialists in information and communication technologies, as well as to promoting the role of the education system in advancing digital skills. Retraining workers in digital skills would also allow Spanish companies to remain competitive in an increasingly digitised economy.

               (15)Regulatory disparities in the business environment also play a role in keeping productivity growth restrained. In the current context, regulatory disparities and restrictions in the business environment contribute to keeping mark-ups high, reducing the geographical mobility of companies and workers, and restraining productivity growth. The Law on Market Unity, which aimed to meet this challenge, has been implemented only in part. The monitoring of the implementation of the Law at regional and local level must be improved and the role of the inter-sectoral conferences strengthened. The Law introduced the principle that compliance with certain requirements in one part of the territory would allow businesses to operate in the whole territory. In several judgments published in 2017, the Constitutional Court held that this principle is void in the absence of common or equivalent minimum standards for access to or exercise of an economic activity. In light of these judgments, establishing consistent common or equivalent standards throughout the territory could help fulfil the objectives of the Law. In addition, cooperation between the different levels of government should be improved at all stages of the implementation to more effectively tackle the adverse effects of fragmentation on businesses. The work of the Committee for Better Regulation, which was set up to ensure the legislation was aligned with the EU acquis on services, should be stepped up and completed. Restrictions affecting certain regulated professions such as civil engineers and architects were also highlighted in the Services Package adopted in January 2017, and no specific measures to address them have been taken so far
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               .

               (16)More generally, improvements in the quality of institutions could boost trust in the Spanish economy and amplify the gains from measures adopted to increase productivity growth. Progress has been made in the transparency of party financing, and disclosure of assets and conflicts of interest. The business environment has also benefited from progress in the fight against corruption, although concerns still remain in this area. Perceptions of the independence of the justice system have also improved amongst citizens and businesses. Efforts to further improve the effectiveness of the justice system are under way and should be continued. Though some progress has been made in this broad area, the challenge of fostering trust in institutions across all levels of government remains.

               (17)Further enhancing the transport, energy and water infrastructure would foster territorial cohesion, better integration in the common market and productivity growth. Cross-border transport and energy connections, as well as water infrastructure, face investment gaps. Better use could be made of passenger and freight rail infrastructures. The different gauges coexisting in Spain, Portugal and France are a critical barrier to better rail connectivity, although new sections using the internationally prevalent standard gauge have been completed recently. Shortcomings are also found in freight railway connections between the main harbours on the Atlantic and Mediterranean coasts and in-land industrial areas. Insufficient connectivity also impedes closer integration in the EU electricity and gas markets. Further infrastructure investment is needed to improve water management, e.g. to treat wastewater, reduce of leaks in the networks and improve water supply. This would bring environmental, economic and social benefits to Spain.

               (18)In the context of the 2018 European Semester, the Commission has carried out a comprehensive analysis of Spain’s economic policy and published it in the 2018 country report. It has also assessed the 2018 Stability Programme and the 2018 National Reform Programme and the follow-up given to the recommendations addressed to Spain in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Spain but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

               (19)In the light of this assessment, the Council has examined the 2018 Stability Programme and its opinion
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                is reflected in particular in recommendation 1 below.

               (20)In the light of the Commission’s in-depth review and this assessment, the Council has examined the National Reform Programme and the Stability Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations 1 to 3 to Spain below.

               HEREBY RECOMMENDS that Spain take action in 2018 and 2019 to:

               1.Ensure compliance with the Council Decision of 8 August 2016 giving notice under the excessive deficit procedure, including through measures to enforce the fiscal and public procurement frameworks at all levels of government. Thereafter, ensure that the nominal growth rate of net primary government expenditure does not exceed 0.6% in 2019, corresponding to an annual structural adjustment of 0.65 % of GDP. Use windfall gains to accelerate the reduction of the general government debt ratio.

               2.Ensure that employment and social services have the capacity to provide effective support for jobseekers, including through better cooperation with employers. Foster transitions towards open-ended contracts. Improve family support and address coverage gaps in income guarantee schemes, by simplifying the system of national schemes and reducing disparities in access conditions to regional ones. Reduce early school leaving and regional disparities in educational outcomes, in particular by better supporting students and teachers.

               3.Increase public investment in research and innovation and systematically carry out evaluations of support policies in this area to ensure their effectiveness. Increase cooperation between education and businesses with a view to mitigating existing skills mismatches. Further the implementation of the Law on Market Unity by ensuring that, at all levels of government, rules governing access to and exercise of economic activities, notably for services, are in line with principles of that law and by improving cooperation between administrations.

               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(2018) 408 final.

                     (4)

                        P8_TA(2018)0077 and P8_TA(2018)0078.

                     (5)

                        SWD(2018) 207 final.

                     (6)

                        COM(2018) 120 final.

                     (7)

                        OJ L 148, 10.6.2017, p. 38–41.

                     (8)

                        Net primary government expenditure comprises total government expenditure excluding interest expenditure, expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a 4-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off measures on both the revenue and expenditure sides are netted out.

                     (9)

                        Regulation (EU)  No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the  Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p.  320).

                     (10)

                        COM(2014) 494 final.

                     (11)

                        European Commission (2018), The 2018 Pension Adequacy Report: current and future income adequacy in old age in the EU, Volume I and Volume II Joint Report prepared by the Social Protection Committee (SPC) and the European Commission (DG EMPL), Publications Office of the European Union, Luxembourg, 2018.

                     (12)

                        COM(2016) 820 final.

                     (13)

                        Under Article 5(2) of Council Regulation (EC) No 1466/97.