title: Commission Recommendation for the Broad Guidelines of the Economic Policies of the Member States and of the Community "Restoring growth and employment - strengthening convergence"

text:
  M j
                            COVMISSION OF THE EUROPEAN COMMUNITIES
                                                                         C0M(93) 629 final
                                                                         Brussels, 24 November 1993
                                    Commission Recommendation
                                                                 for the
                              Broad Guidelines of the Economic Policies
                                    of the Member States and of the Community
                                             drawn up in conformity with
         *«f^«?*as«^
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                                   Article 103(2) of the Treaty on European Union
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                                   "Restoring growth and employment
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 ---pagebreak---          Commission Recommendation
 Article 103 of the Treaty on European Union provides theframeworkfor economic
 policy coordination from the start of Stage II of the process towards Economic and
Monetary Union. The economic policy guidelines adopted under this article will
 constitute the reference for the conduct of the economic policies in the Community
and in the Member States.
Main Objectives
The Community should aim to substantially increase employment creation so as to cut
 significantly the present high unemployment levels. A decrease in unemployment is
imperative to reduce the negative economic and social consequences arisingfromthis
wastage of human resources. Higher employment creation is also necessary to achieve
a more active society where all those wishing to join in the production process are
given a chance to do so and where the weight of the factors leading to social exclusion
is substantially reduced. Reducing unemployment, for instance cutting it by half by
the year 2000, would imply the creation of at least 15 million new jobs.
This employment objective should be obtained by a non-inflationary, strong and
employment-creating growth, lasting over many years and respecting the environment.
Higher growth is essential not only in relation to employment creation but also to
enable the Community to reap the benefits of the internal market, to improve its
economic and social cohesion and to meet its growing commitments in relation to the
rest of the world. But growth cannot be artificially generated, it must be brought
about mainly by market forces and by the dynamism of the European internal market,
open to the outside world.
Achieving higher sustainable growth also requires a strengthening of economic
convergence among Member States. Convergence will set in place the conditions for
stronger job creation and will allow the Community to reap the full benefits of the
internal market. It will also make possible a successful transition to EMU.
In this respect the task of policy-makers is to allow market forces to display their full
potential by:
i) providing a stable and coherent macroeconomic framework;
ii) removing the macro and microeconomic obstacles to growth.
In the present situation the challenge is a dual one. Firstly, to act decisively to
support growth in the short-term without putting at risk the commitment to high
                                                                                24-11-83
 ---pagebreak---                                               -2-
  employment creation in the medium-term. Secondly, to create the conditions which
 will permit a stronger, durable and more employment intensive growth in the medium
 to longer term.
 Igniting the recovery process will require a restoration of confidence through a
 rebalancing of the current macroeconomic policy mix combined with credible
 structural measures. Lower interest rates, achieved on a sound basis, represent the
 most potent instrument presently available to boost short-term prospects in the
 Community. The sooner current and expected pay and budgetary trends incorporate
 the stability objective, the sooner interest rates can be further reduced substantially on
 a sound basis. Given the severity of the present situation, however, and the size of the
 budgetary adjustment to be undertaken in many countries, the recovery process may
 well be modest and hesitant. In these circumstances it may be necessary to envisage
 an intensification of the Community initiatives agreed at the European Council
 meetings in Edinburgh and Copenhagen,
 In the medium-term policies and behaviour must remain consistent with stability.
 They must help to overcome rigidities and to put an end to the damaging reduction of
 national saving inflicted by high budget deficits, thereby strengthening the investment
 conditions and the growth potential of the Community so that many years of stronger,
 and more employment-creating, growth becomes possible.
 Policy Guidelines
In order to create the conditions to realise the Community's employment /
unemployment objectives, the Commission recommends to the Council to adopt the
following broad economic policy guidelines.
Price and Exchange Rate Stability
The Community will aim to keep a stable macro-economic framework. A rate of
inflation of no more than two to three per cent should be reached for the Community
average by 1996.
Achieving this target implies that all policies and behaviours should be consistent with
this stability objective. Those Member States who have already reached this target
range should ensure that policy measures are consistent with the maintenance of this
performance. For the other Member States, more courageous initiatives are needed
involving determined action in relation to budgetary consolidation and to the wage
evolution in order to allow a loosening of monetary policy on a sound basis.
                                                                                24-11-83
 ---pagebreak---  If these measures are implemented with sufficient speed, short term interest rates could
 come down rapidly and long term rates would follow as inflationary expectations are
 stabilised.
 The high degree of integration and the reaping of the benefits of the single market
 demand that the Community continues to aim for exchange rate stability built on sound
 economic fundamentals embracing both nominal and real variables.
 The Community reaffirms its commitment to the EMU process and timetable as agreed
 in the Treaty on European Union. To this end it will intensify its efforts at achieving
 economic convergence.
Sound public finances
 The restoration of confidence requires that in 1994 Member States prevent any further
 deterioration in their budgetary situations and aim to start the process of deficit
 reduction. In those Member States facing more worrying fiscal positions, confidence
will benefit from an immediate strong pursuit of the consolidation process. This holds
 especially for Member States with very high and rising public debt ratios.           The
consolidation process should also start in those Member States expected to face a
relatively favourable economic situation in 1994. In other Member States tight
control of budgets will be necessary in 1994 but the emphasis should mainly be on
credible medium-term consolidation strategies with measures to be already announced
now which will take effect in future years as the recovery strengthens.
From 1995, the Community will aim at making its public debt position sustainable
again. Under the expected growth path for the years ahead, this means reducing
budget deficits to the reference value indicated in the Treaty on European Union (three
percent of GDP). The Community could achieve this goal by 1996/97. Most
Member States have the potential to reach this goal by 1996, with the others needing
more time.
The measures used to consolidate public budgets will give priority to reductions in
current expenditure and to improving the efficiency of the tax system. All Member
States need to re-orient public expenditure to more productive uses and to increased
investment in particular. In addition, it is necessary to adapt the tax system in a way
which will contribute more to employment creation. Reductions in employers' social
security contributions in a number of Member States, especially for the lowest paid
and for younger workers, are particularly important in this regard although any action
taken will clearly need to be revenue neutral given the scale of the budgetary
adjustment to be achieved in many countries.
                                                                                24-11-83
 ---pagebreak---                                             -4
 In the long term, Member States budgetary policies will be directed towards
 contributing to higher national savings and investment. This will entail much lower
 budget deficits (perhaps close to balance by the year 2000).
 Creating more employment
 Member States and the Community will take determined action to improve the
 functioning of their economies, aiming specifically at improving competitiveness and
 the Community's underlying capacity to create jobs. Such structural measures will be
 highlighted in the forthcoming White Paper on "Growth, Competitiveness and
 Employment"
 In addition to the micro-economic measures to be presented in the White Paper the
 overall evolution of wages and salaries will play a crucial role in creating jobs. To this
 end, governments and the two sides of industry will use all the instruments that
 national arrangements put at their disposal to ensure that wage developments in the
 Community adapt rapidly to the agreed inflation objective.
 In the short term, the need to create new jobs will not allow for real wage increases in
 most countries. Once the recovery sets in and real wages will be able to increase
 again, wage developments will allow an increase in investment profitability by keeping
real wage increases below productivity growth. For example, between 1982 and
 1989 real wages per head increased by about one percentage point less per year than
productivity growth. Furthermore, the wage evolution will provide for an appropriate
differentiation according to member countries, regions, vocational qualifications and
work experience.
                                          *     *
The policy guidelines laid out above will form the central core of all future multilateral
surveillance exercises. The broad framework for, and assessment of, Member States
convergence programmes will be established by the guidelines. By laying out a
credible and coherent implementation programme for the broad policy orientations,
individual convergence programmes will act as symbols of the degree of political
commitment which individual Member States attach to the Community's overall policy
objectives for the year 2000.
                                                                                24-11-93
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(93) 629 final
                                                      DOCUMENTS
EN                                                                         04 IO
                                 Catalogue number : CB-CO-93-664-EN-C
                                                             ISBN 92-77-62148-6
Office for Official Publications of the European Communities
L-2985 Luxembourg


title: Commission Recommendation No 843/78/ECSC of 26 April 1978 extending the provisional anti-dumping measures established in relation to imports of steel products originating in Spain

text:
27. 4. 78                               Official Journal of the European Communities                          No L 115/37
                             COMMISSION RECOMMENDATION No 843/78 / ECSC
                                                       of 26 April 1978
             extending the provisional anti-dumping measures established in relation to
                                     imports of steel products originating in Spain
THE COMMISSION OF THE EUROPEAN                                     HAS ADOPTED THIS RECOMMENDATION :
COMMUNITIES,
                                                                                Article 1
Having regard to the Treaty establishing the European
Coal and Steel Community, and in particular Article                The provisional anti-dumping measures established by
74 thereof,                                                        the recommendations No 159/78 / ECSC and No 160/
                                                                   78/ ECSC in relation to imports of steel products origi
Having regard to Commission                  recommendation        nating in Spain are hereby extended for a period not
77/329/ECSC of 15 April 1977 on protection against                 exceeding three months.
dumping or the granting of bounties or subsidies by
countries which are not members of the European                                            Article 2
Coal and Steel Community ( l ), as amended by recom
mendation No 3004/77/ECSC (2), and in particular                   Without prejudice to the provisions of Article 1 above,
Articles 16 and 19 thereof,                                        the amount secured by way of provisional anti
                                                                   dumping duties shall be released to the extent that the
Having heard the opinions expressed within the Advi               importer establishes to the satisfaction of the compe
sory Committee provided for by recommendation                      tent national authorities that it is due to a diminution
77/329/ ECSC,                                                      in value resulting from the quality of the goods being
                                                                   inferior to the lowest quality described in the last
Whereas the Commission has established by recom
                                                                   publication of basic prices by the Commission .
mendations No 159/78/ECSC (3) and No 160/78/
ECSC (4) provisional anti-dumping duties in relation                                       Article 3
to imports of steel products originating in Spain ;
                                                                   This recommendation is addressed to the Member
Whereas the examination of this matter has not yet                 States. It shall enter into force in respect of each
been completed and exporters and importers known                   Member State from the date of its publication in the
to be concerned have requested that the duty be                     Official Journal of the European Communities.
extended for a period not exceeding three months ;
Whereas therefore it is appropriate to extend the provi           Done at Brussels, 26 April 1978 .
sional measures ;
                                                                                For the Commission
Whereas, however, due consideration should be given
to any diminution of value of the products imported,                                         Wilhelm HAFERKAMP
claimed by the importers and established to the satis
faction of the competent national authorities,                                                   Vice-President
(<) OJ No  L 114, 5 . 5. 1977, p.   6.
(2) OJ No  L 352, 31 . 12. 1977,    p. 13 .
(3) OJ No  L 23, 28 . 1 . 1978 , p. 31 .
(4) OJ No  L 23, 28 . 1 . 1978 , p. 33 .


Avis juridique important

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31985K2575

Commission Recommendation No 2575/85/ECSC of 12 September 1985 on Community surveillance of imports of certain iron and steel products covered by the ECSC Treaty and originating in Brazil and amending Recommendation No 41/85/ECSC

Official Journal L 246 , 13/09/1985 P. 0015 - 0018 Spanish special edition: Chapter 11 Volume 22 P. 0154  Portuguese special edition Chapter 11 Volume 22 P. 0154

*****COMMISSION  RECOMMENDATION No 2575/85/ECSC  of 12 September 1985  on Community surveillance of imports of certain iron and steel products covered by the ECSC Treaty and originating in Brazil and amending recommendation No 41/85/ECSC  THE COMMISSION OF THE EUROPEAN  COMMUNITIES,  Having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 74 thereof,  Whereas imports of certain iron and steel products covered by the Treaty establishing the European Coal and Steel Community and originating in non-member countries other than Spain were subjected to Community surveillance under Commission recommendation No 41/85/ECSC (1);  Whereas, however, for imports of iron and steel products originating in Brazil it is necessary to amend the list of products subject to surveillance and for certain of these products to make the issue of an import document subject to the presentation of an export licence issued by the Brazilian authorities; whereas this special surveillance scheme should therefore be introduced for imports originating in Brazil and recommendation No 41/85/ECSC should consequently be amended;  Whereas, in consequence, recommendation No 41/85/ECSC shall no longer apply to Brazil,  MAKES THE FOLLOWING RECOMMENDATION:  Article 1  1. The importation into the Community of iron and steel products covered by the ECSC Treaty, listed in Annexes I, II and III and originating in Brazil shall be subject to the issue of an import document.  2. The products referred to in paragraph 1 shall be considered to be prime-quality products until proof to the contrary is supplied by the importer.  3. The import document shall be issued or endorsed by the Member States, free of charge and for any quantities requested, upon receipt of the application and in any case within not more than 10 working days of the submission of the completed application and presentation of two duplicates of the relevant purchase contract or contracts and the vendor's order confirmation or confirmations. The originals of these documents must be produced if required by the issuing authority. If the products in question are declared to be non-prime products, the import document shall indicate the precise characteristics which justify the said classification of the products.  4. For the products referred to in Annex I, the issue of the import document shall be subject to the presentation of the export licence issued by the Brazilian authorities. The specifications given on the import application relating to the characteristics of the product and destination must tally with those on the export document. The country of destination shall be deemed to be that in which the goods are put into free circulation or made subject to inward processing arrangements.  5. The period of validity of the import document shall be two months, without prejudice to possible changes in the import arrangements in force.  6. Completely used import documents shall be returned immediately to the issuing office. Documents not, or incompletely, used two months after their date of issue shall be returned to the issuing office within five working days of their date of expiry.  Article 2  1. The importer's application must state:  (a) the country of origin and the country of consignment;  (b) a description of the goods and an indication of the Common Customs Tariff subheading and the NIMEXE code;  (c) the characteristics establishing any claim that the goods are non-prime products;  (d) the quantity of the goods in tonnes, by individual lots;  (e) the name, address, telephone number and telex number of the vendor;  (f) the name, address, telephone number and telex number of the importer;  (g) the name, address, telephone number and telex number of any final purchaser, where known;  (h) the proposed date and place (customs office) of importation;  (i) the point of delivery used for the calculation of the invoiced price;  (j) the date of the contract for the purchase of the goods and the contract number or any other reference given by the vendor by which the delivery in question may be identified;  (k) where applicable, that the goods in question are intended for processing under contract and subsequent re-export outside the Community (country of re-export to be specified).  2. The following additional information shall also be supplied for goods listed in Annex I or II:  A. For goods originating in and consigned directly from Brazil (direct importation):  (a) a commercial description of the goods, including exact specifications, sufficient to permit calculation of the delivered price according to the price lists selected;  (b) the delivered price per tonne, including customs duties, transport costs and all extras, rebates and any other factors relevant to calculation of the delivered price;  (c) details of:  (i) the Community producer's price lists chosen for calculating the delivered price, stating the date of the chosen lists, or  (ii) where appropriate, the non-member country offer on which the terms of the delivery have been aligned, giving details sufficient to identify the offer, including its date, or  (iii) where appropriate, other prices (to be justified);  (d) the date of issuance of the bill of lading, if available.  B. For goods originating in Brazil but consigned from any non-member country (indirect importation):  (a) a complete description corresponding to that appearing in the list of products subject to the basic prices in force;  (b) the cif price at the Community frontier, per tonne, in the currency of the contract, plus customs duties applicable and unloading costs.  3. The importer shall declare that neither he nor the purchaser will be granted any reduction, rebate or other form of refund not mentioned in the contract for the transaction, either at the time of the transaction or subsequently.  4. The importer shall certify that his application for an import document is accurate.  5. The importer shall state whether his application is a repeat of a previous application concerning the same delivery.  Article 3  1. The Member States shall communicate to the Commission, as soon as such information is established by the competent authorities, any difference between:  - the delivered price calculated according to the provisions on prices applicable to Brazil on the date scheduled for importation, and  - the price used on the basis of the chosen Community producer's price list pursuant to Article 2 (2) (A) (c) or justified otherwise.  They shall also furnish all necessary documents, notably the duplicates of import documents applications, purchase contracts and vendor's order confirmations, wherever the price difference noted is considerable or relates to a large quantity.  2. For goods originating in Brazil but consigned from another non-member country, the Member States shall communicate to the Commission, as soon as such information is established by the competent authorities, any difference, in ECU per tonne, between:  - the basic price as published in the Official Journal of the European Communities, plus any extras, and  - the cif price at the Community frontier, including customs duties applicable and unloading costs.  3. Within the first 10 days of each month, Member States shall notify the Commission of the tonnage and amounts (calculated on the basis of the cif prices) for which import documents were issued during the preceding month.  4. The information supplied by Member States shall include:  (a) a breakdown by product (Common Customs Tariff subheading and NIMEXE code) with separate declaration of the quantities declared as being non-prime products; (b) a breakdown by country of origin;  (c) within the total of any one product, the quantities not imported directly from Brazil and, in this case, breakdown by country or countries of consignment;  (d) the quantities of each product re-exported outside the Community after inward processing.  5. Within the first 10 days of each month, Member States shall communicate to the Commission the tonnage and the amounts (calculated on the basis of the cif price) for which import documents have expired during the preceding month without having been used by importers.  Article 4  For the purposes of this recommendation, the country of consignment shall be deemed to be the last intermediate non-member country in which the product in question was the subject of entrepôt operations or legal transactions not connected with its transportation.  Article 5  Recommendation No 41/85/ECSC is hereby amended as follows:  1. Article 1 (1) is replaced by the following:  '1. The importation into the Community of iron and steel products covered by the Treaty establishing the European Coal and Steel Community listed in Annex III A or III B and originating in non-member countries other than Spain and Brazil, shall be subject to the issue of an import document.'  2. Article 2 (2) C, first paragraph is replaced by the following:  'C. The countries listed in Annex I or II but consigned from any non-member country other than the country of origin (indirect importation) and for foods originating in a non-member country other than Spain and Brazil not listed in Annexes I and II.'.  3. Article 3 (2) (ii) is replaced by the following:  '(ii) goods originating in non-member countries other than Spain and Brazil or those listed in Annexes I and II;'.  4. Article 3 (2) (iii) is deleted.  5. Brazil is deleted from the list of third countries mentioned in Annex II.  Article 6  This recommendation shall enter into force on the day of its publication in the Official Journal of the European Communities.  It shall apply until 31 December 1985.  Done at Brussels, 12 September 1985.  For the Commission  Willy DE CLERCQ  Member of the Commission  (1) OJ No L 7, 9. 1. 1985, p. 5.  ANNEX  I  List of products subject to price and quantitative surveillance requiring an import document issued on presentation of a Brazilian export certificate  NIMEXE codes: 73.02-01, 73.02-09, 73.06-10, 73.06-20, 73.06-30, 73.07-12, 73.07-21, 73.07-24, 73.08-01, 73.08-03, 73.08-05, 73.08-07, 73.08-21, 73.08-25, 73.08-29, 73.08-41, 73.08-45, 73.08-49, 73.09-00, 73.10-11, 73.10-12, 73.10-14, 73.10-15, 73.10-17, 73.10-18, 73.10-42, 73.11-11, 73.11-12, 73.11-14, 73.11-16, 73.11-19, 73.11-41, 73.11-50, 73.12-11, 73.12-19, 73.12-21, 73.12-51, 73.12-71, 73.13-11, 73.13-16, 73.13-17, 73.13-19, 73.13-21, 73.13-23, 73.13-26, 73.13-32, 73.13-34, 73.13-36, 73.13-41, 73.13-43, 73.13-45, 73.13-47, 73.13-49, 73.13-50, 73.13-64, 73.13-65, 73.13-67, 73.13-68, 73.13-72, 73.13-74, 73.13-76, 73.13-78, 73.13-79, 73.13-82, 73.13-84, 73.13-86, 73.13-87, 73.13-88, 73.13-89, 73.13-92, 73.61-20, 73.62-10, 73.62-30, 73.63-29, 73.63-72, 73.64-20, 73.64-72, 73.65-21, 73.65-23, 73.65-25, 73.65-53, 73.65-55, 73.65-70, 73.65-81, 73.71-21, 73.71-23, 73.71-24, 73.71-29, 73.71-53, 73.72-11, 73.72-13, 73.72-19, 73.72-33, 73.72-39, 73.73-23, 73.73-25, 73.73-26, 73.73-29, 73.73-33, 73.73-35, 73.73-36, 73.73-39, 73.73-72, 73.74-21, 73.74-23, 73.74-29, 73.74-72, 73.75-11, 73.75-19, 73.75-23, 73.75-33, 73.75-43, 73.75-53, 73.75-54, 73.75-59, 73.75-63, 73.75-73, 73.75-79, 73.75-83, 73.75-84, 73.75-89, 73.16-14, 73.16-16, 73.16-17, 73.16-20, 73.16-40, 73.16-51.  ANNEX II  List of products subject to price and quantitative surveillance and requiring an import document the issue of which is not subject to the presentation of an export certificate from the Brazilian authorities  NIMEXE codes: 73.01-10, 73.01-21, 73.01-23, 73.01-25, 73.01-27, 73.01-31, 73.01-35, 73.01-41, 73.01-49, 73.63-21, 73.75-29.  ANNEX III  List of products subject to quantitative surveillance and requiring an import document the issue of which is not subject to the presentation of an export certificate from the Brazilian authorities  NIMEXE codes: 73.61-50, 73.71-55, 73.71-56, 73.71-59, 73.73-24, 73.73-34, 73.75-39, 73.75-49, 73.75-69.


title: Council Recommendation of 12 July 2016 on the 2016 National Reform Programme of the Netherlands and delivering a Council opinion on the 2016 Stability Programme of the Netherlands

text:
               18.8.2016

               EN

               Official Journal of the European Union

               C 299/41

         COUNCIL RECOMMENDATION
   of 12 July 2016
   on the 2016 National Reform Programme of the Netherlands and delivering a Council opinion on the 2016 Stability Programme of the Netherlands
   (2016/C 299/10)
   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,
   Having regard to the resolutions of the European Parliament,
   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 26 November 2015, the Commission adopted the Annual Growth Survey, marking the start of the 2016 European Semester for economic policy coordination. The priorities of the Annual Growth Survey were endorsed by the European Council on 17-18 March 2016. On 26 November 2015, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report, in which it identified the Netherlands 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. This Recommendation was endorsed by the European Council on 18-19 February 2016 and adopted by the Council on 8 March 2016 (3). As a country whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, the Netherlands should ensure the full and timely implementation of the Recommendation.

               (2)

               The 2016 country report for the Netherlands was published on 26 February 2016. It assessed the Netherlands' progress in addressing the country-specific recommendations adopted by the Council on 14 July 2015 and the Netherlands' progress towards its national Europe 2020 targets. It also included the in-depth review under Article 5 of Regulation (EU) No 1176/2011. On 8 March 2016, the Commission presented the results of the in-depth review. The Commission's analysis leads it to conclude that the Netherlands is experiencing macroeconomic imbalances. It is crucial to address the very large stock of household debt. The large and persistent current account surplus, which reflects structural features of the economy and policy setting as regards non-financial corporations, remains a challenge, also in view of spillovers to other euro-area Member States.

               (3)

               On 28 April 2016, the Netherlands submitted its 2016 National Reform Programme and its 2016 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (4)

               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 (4), 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 this provision in guidelines on the application of the measures linking effectiveness of the European Structural and Investment Funds to sound economic governance.

               (5)

               The Netherlands is currently in the preventive arm of the Stability and Growth Pact and subject to the transitional debt rule. In its 2016 Stability Programme, the Government plans a gradual improvement in its headline balance to 0,1 % of GDP in 2019. At the same time, the Government plans a deterioration of the recalculated structural balance (5) in 2016 to -1,4 % of GDP and an improvement thereafter. The medium-term budgetary objective — a structural deficit of 0,5 % of GDP — is planned to be reached in 2019. However, based on the recalculated structural balance, the medium-term budgetary objective would already be met as from 2018. According to the Stability Programme, the government debt-to-GDP ratio is expected to reach 65,4 % in 2016 and then to gradually decrease to 58,9 % in 2019. The macroeconomic scenario underpinning these budgetary projections is plausible. Based on the Commission 2016 spring forecast, the Netherlands is at risk of some deviation from the requirements of the preventive arm in 2016 and over 2016 and 2017 taken together under unchanged policies. The Netherlands is forecast to comply with the transitional debt rule in 2016 and, following the end of the transition period, with the debt reduction benchmark in 2017. Based on its assessment of the Stability Programme and taking into account the Commission 2016 spring forecast, the Council is of the opinion that the Netherlands is expected to broadly comply with the provisions of the Stability and Growth Pact. Nevertheless, further measures will be needed to ensure compliance in both 2016 and 2017.

               (6)

               The recent growth in employment can be fully attributed to an increase in the number of people employed on temporary contracts and the number of self-employed. Although the Netherlands has taken measures to address the issue, a more comprehensive approach is needed. Low transition rates from temporary to permanent contracts still pose a risk of labour market segmentation. The high and increasing percentage of temporary contracts is observed in the context of great differences in employment protection provisions on temporary contracts, on the one hand, and permanent contracts, on the other. Self-employed people without employees are more often under-insured against disability, unemployment and old age, which could affect the sustainability of the social security system in the long run. Several measures were introduced that reduced the differences between permanent and temporary contracts. Favourable tax arrangements and the absence of obligations to pay certain social security contributions still provide financial incentives for self-employment.

               (7)

               A key challenge in addressing high household indebtedness lies in the housing market, where rigidities and distortive incentives that have built up over decades shape housing financing and sectoral savings patterns. Households' tendency to leverage up gross mortgage debt against housing wealth largely reflects long standing fiscal incentives, in particular the tax deductibility of mortgage interest. Since 2012, a series of measures has been implemented to address this partly, but these have not been stepped up in line with the 2015 Council Recommendation. The development of a well-functioning private rental market is constrained by subsidies in the other housing subsectors. The social housing sector is one of the largest in the Union but housing is not always allocated efficiently to those really in need. More income-based rent differentiation has been introduced in the social housing sector. Housing corporations will have to separate activities of general economic interest (i.e. social housing) from other activities. Given that some distortive incentives relating rents to income in the social housing market have been addressed, it is appropriate to shift this part of the 2015 Council Recommendation to monitoring of the situation. At the same time, the housing market remains significantly distorted and continues to create a debt bias for households. Further progress is needed on these issues.

               (8)

               In addition to housing market distortions, compulsory non-tax contributions to the second pillar of the pension system weigh on households' disposable income. The second-pillar pension system performs well in terms of quality and adequacy, but has drawbacks in terms of inter-generational fairness, transparency and resilience to economic shocks. In recent years, the sustainability of the pension system has been improved by raising the pensionable age to 67 by 2021 and linking it to life expectancy thereafter. On average, pension contributions have been lowered since the maximum tax exempted accrual rate was reduced. An appropriate intra- and inter-generational distribution of costs and risks beyond the rules adopted on indexation and financial buffers (the financial assessment framework) would help households to allocate their financial means in more growth-friendly ways. The Government announced its intention to reform the second pension pillar substantially with the involvement of social partners in order to create a more transparent and actuarially fairer system.

               (9)

               Investment fell markedly during the economic crisis and has recovered only partially since. The weakness in economy-wide investment appears to have a strong cyclical character. It was driven by a downturn in the housing market and fiscal consolidation choices. While barriers to investment seem to be minor, low investment in the construction sector and in renewable energy appears to be linked to market uncertainty and regulatory factors. In spite of improving credit conditions, risks to new lending are heightened in the current financial environment. Government expenditure on R & D has been falling since 2014, while private R & D spending remains low. In 2015, the Council therefore recommended that the Netherlands shift public expenditure towards supporting investment in R & D and work on improving private R & D expenditure. Public and private expenditure on R & D is low in relation to the level of educational attainment, academic achievement and economic development.

               (10)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of the Netherlands' economic policy and published it in the 2016 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to the Netherlands in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the Netherlands but also their compliance with EU rules and guidance, given the need to strengthen the EU's overall economic governance by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations (1) to (3) below.

               (11)

               In the light of this assessment, the Council has examined the Stability Programme, and its opinion (6) is reflected in particular in recommendation (1) below.

               (12)

               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 recommendation (3) below,

         HEREBY RECOMMENDS that the Netherlands take action in 2016 and 2017 to:

               1.

               Limit the deviation from the medium-term budgetary objective in 2016 and achieve an annual fiscal adjustment of 0,6 % of GDP in 2017. Prioritise public expenditure towards supporting more investment in research and development.

               2.

               Tackle remaining barriers to hiring staff on permanent contracts and facilitate the transition from temporary to permanent contracts. Address the high increase in self-employed without employees, including by reducing tax distortions favouring self-employment, without compromising entrepreneurship, and by promoting access of the self-employed to affordable social protection.

               3.

               Take measures to make the second pillar of the pension system more transparent, inter-generationally fairer and more resilient to shocks. Take measures to reduce the remaining distortions in the housing market and the debt bias for households, in particular by decreasing mortgage interest tax deductibility.

      Done at Brussels, 12 July 2016.

            For the Council

            The President

         P. KAŽIMÍR

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  OJ L 306, 23.11.2011, p. 25.

      (3)  OJ C 96, 11.3.2016, p. 1.

      (4)  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).

      (5)  The structural balance as recalculated by the Commission based on the information in the Stability Programme, following the commonly agreed methodology.

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


title: EFTA Surveillance Authority Recommendation of 13 April 2011 on the regulatory treatment of fixed and mobile termination rates in the EFTA States

text:
               8.11.2012

               EN

               Official Journal of the European Union

               C 340/5

         EFTA SURVEILLANCE AUTHORITY RECOMMENDATION
   of 13 April 2011
   on the regulatory treatment of fixed and mobile termination rates in the EFTA States (1)

   2012/C 340/04
   THE EFTA SURVEILLANCE AUTHORITY (2),
   Having regard to the Agreement on the European Economic Area (3),
   Having regard to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice, and in particular Article 5(2)(b) thereof,
   Having regard to the Act referred to at point 5cl of Annex XI to the EEA Agreement, Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (‘Framework Directive’) (4), and in particular Article 19(1) thereof, as adapted to the EEA Agreement by Protocol 1 thereto,
   After consulting the EFTA Communications Committee,
   Whereas:

               (1)

               According to Article 8(3) of the Framework Directive, National Regulatory Authorities (NRAs) shall contribute to the development of the internal market, inter alia, by cooperating with each other and with the European Commission and/or the Authority, where appropriate, in a transparent manner to ensure the development of consistent regulatory practice. However, during the assessment of more than 850 draft measures notified under Article 7 of the Framework Directive it appeared that inconsistencies in the regulation of voice call termination rates still exist.

               (2)

               Although some form of cost orientation is generally provided for in most EEA States, a divergence between price control measures prevails across the EEA. In addition to a significant variety in the chosen costing tools, there are also different practices in implementing those tools. This widens the spread between wholesale termination rates applied across the EEA, which can only be partly explained by national specificities. The European Regulators Group (ERG) established by the Act referred to at point 5ci of Annex XI to the EEA Agreement (Commission Decision 2002/627/EC (5)), as adapted to the EEA Agreement by Protocol 1 thereto (6), recognised this in its Common Position on symmetry of fixed call termination rates and symmetry of mobile call termination rates. NRAs have also, in a number of cases, authorised higher termination rates for smaller fixed or mobile operators on the grounds that these operators are new entrants into the market and have not benefited from economies of scale and/or are subject to differing cost conditions. These asymmetries exist both within and across national boundaries, although they are slowly decreasing. The ERG recognised in its Common Position that termination rates should normally be symmetric and asymmetry requires an adequate justification.

               (3)

               Significant divergences in the regulatory treatment of fixed and mobile termination rates create fundamental competitive distortions. Termination markets represent a situation of two-way access where both interconnecting operators are presumed to benefit from the arrangement but, as these operators are also in competition with each other for subscribers, termination rates can have important strategic and competitive implications. Where termination rates are set above efficient costs, this creates substantial transfers between fixed and mobile markets and consumers. In addition, in markets where operators have asymmetric market shares, this can result in significant payments from smaller to larger competitors. Furthermore, the absolute level of mobile termination rates remains high in a number of EEA States compared to those applied in a number of countries outside of the EEA, and also compared to fixed termination rates generally, thus continuing to translate into high, albeit decreasing, prices for end-consumers. High termination rates tend to lead to high retail prices for originating calls and correspondingly lower usage rates, thus decreasing consumer welfare.

               (4)

               The lack of harmonisation in the application of cost-accounting principles to termination markets to-date demonstrates a need for a common approach which will provide greater legal certainty and the right incentives for potential investors, and reduce the regulatory burden on existing operators that are currently active in several EEA States. The objective of coherent regulation in termination markets is clear and recognised by the NRAs and has been repeatedly expressed by the European Commission and the Authority in the context of their assessment of draft measures under Article 7 of the Framework Directive.

               (5)

               Certain provisions of the regulatory framework for electronic communications networks and services require necessary and appropriate cost-accounting mechanisms and price control obligations to be implemented, namely Articles 9, 11 and 13 in conjunction with recital 20 of the Act referred to at point 5cj of Annex XI to the EEA Agreement (Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (‘Access Directive’) (7)), as adapted to the EEA Agreement by Protocol 1 thereto (8).

               (6)

               The Act referred to at point 26j of Annex XI to the EEA Agreement (Commission Recommendation 2005/698/EC of 19 September 2005 on accounting separation and cost-accounting systems under the regulatory framework for electronic communications (9)), as adapted to the EEA Agreement by Protocol 1 thereto (10) has provided a framework for the consistent application of the specific provisions concerning cost-accounting and accounting separation, with a view to improving the transparency of regulatory accounting systems, methodologies, auditing and reporting processes to the benefit of all parties involved.

               (7)

               Wholesale voice call termination is the service required in order to terminate calls to called locations (in fixed networks) or subscribers (in mobile networks). The charging system in the EEA is based on Calling Party Network Pays, which means that the termination charge is set by the called network and paid by the calling network. The called party is not billed for this service and generally has no incentive to respond to the termination price set by its network provider. In this context, excessive pricing is the main competition concern of regulatory authorities. High termination prices are ultimately recovered through higher call charges for end-users. Taking into account the two-way access nature of termination markets, further potential competition problems include cross-subsidisation between operators. These potential competition problems are common to both fixed and mobile termination markets. Therefore, in the light of the ability and incentives of terminating operators to raise prices substantially above cost, cost orientation is considered the most appropriate intervention to address this concern over the medium term. Recital 20 of the Access Directive notes that the method of cost recovery should be appropriate to the particular circumstances. In view of the specific characteristics of call termination markets and the associated competitive and distributional concerns, the European Commission and the Authority have for a long time recognised that setting a common approach based on an efficient cost standard and the application of symmetrical termination rates would promote efficiency, sustainable competition and maximise consumer benefits in terms of price and service offerings.

               (8)

               According to Article 8(1) of the Framework Directive, EEA States shall ensure that when carrying out the regulatory tasks specified in that Directive and the specific directives, in particular those designed to ensure effective competition, NRAs take the utmost account of the desirability of making regulations technologically neutral. Article 8(2) of the Framework Directive further requires NRAs to promote competition by, amongst other things, ensuring that all users derive maximum benefit in terms of choice, price and quality of service and that there is no distortion or restriction of competition. In order to achieve these objectives and a consistent application in all EEA States, the regulated termination rates should be brought down to the costs of an efficient operator as soon as possible.

               (9)

               In a competitive environment, operators would compete on the basis of current costs and would not be compensated for costs which have been incurred through inefficiencies. Historic cost figures therefore need to be adjusted into current cost figures to reflect the costs of an efficient operator employing modern technology.

               (10)

               Operators which are compensated for actual costs incurred for termination have few incentives to increase efficiency. The implementation of a bottom-up model is consistent with the concept of developing a network for an efficient operator whereby an economic/engineering model of an efficient network is constructed using current costs. It reflects the equipment quantity needed rather than that actually provided and it ignores legacy costs.

               (11)

               Given the fact that a bottom-up model is based largely on derived data, e.g. network costs are computed using information from equipment vendors, regulators may wish to reconcile the results of a bottom-up model with the results of a top-down model in order to produce as robust results as possible and to avoid large discrepancies in operating cost, capital cost and cost allocation between a hypothetical and a real operator. In order to identify and improve possible shortcomings of the bottom-up model, such as information asymmetry, the NRA may compare the results of the bottom-up modelling approach with those resulting from a corresponding top-down model which uses audited data.

               (12)

               The cost model should be based on the efficient technological choices available in the time frame considered by the model, to the extent that they can be identified. Hence, a bottom-up model built today could in principle assume that the core network for fixed networks is next-generation-network (NGN)-based. The bottom-up model for mobile networks should be based on a combination of 2G and 3G employed in the access part of the network, reflecting the anticipated situation, while the core part could be assumed to be NGN-based.

               (13)

               Taking account of the particular characteristics of call termination markets, the costs of termination services should be calculated on the basis of forward-looking long-run incremental costs (LRIC). In an LRIC model, all costs become variable, and since it is assumed that all assets are replaced in the long run, setting charges based on LRIC allows efficient recovery of costs. LRIC models include only those costs which are caused by the provision of a defined increment. An incremental cost approach which allocates only efficiently incurred costs that would not be sustained if the service included in the increment was no longer produced (i.e. avoidable costs) promotes efficient production and consumption and minimises potential competitive distortions. The further termination rates move away from incremental cost, the greater the competitive distortions between fixed and mobile markets and/or between operators with asymmetric market shares and traffic flows. Therefore, it is justified to apply a pure LRIC approach whereby the relevant increment is the wholesale call termination service and which includes only avoidable costs. An LRIC approach would also allow the recovery of all fixed and variable costs (as the fixed costs are assumed to become variable over the long run) which are incremental to the provision of the wholesale call termination service and would thereby facilitate efficient cost recovery.

               (14)

               Avoidable costs are the difference between the identified total long-run costs of an operator providing its full range of services and the identified total long-run costs of that operator providing its full range of services except for the wholesale call termination service supplied to third parties (i.e. stand-alone cost of an operator not offering termination to third parties). To ensure an appropriate attribution of the costs, a distinction needs to be made between those costs that are traffic-related, i.e. all those fixed and variable costs which rise with increased levels of traffic, and those costs that are non-traffic-related, i.e. all those costs which do not rise with increased levels of traffic. To identify the avoidable costs relevant for wholesale call termination, non-traffic-related costs should be disregarded. Then, it may be appropriate to attribute traffic-related costs firstly to other services (e.g. call origination, SMS, MMS, broadband, leased lines, etc.) with wholesale voice call termination being the final service to be taken into account. The cost allocated to the wholesale call termination service should thus be equal only to the additional cost incurred to provide the service. As a consequence, cost accounting based on an LRIC approach for wholesale call termination services in fixed and mobile markets should allow only the recovery of costs which would be avoided if a wholesale call termination service was no longer provided to third parties.

               (15)

               It can be seen that call termination is a service which generates benefits for both calling and called parties (if the receiver did not receive a benefit it would not accept the call), which in turn suggests that both parties have a part in the creation of costs. The use of cost causation principles to set cost-orientated prices would suggest that the creator of the costs should bear those costs. Recognising the two-sided nature of call termination markets with costs being driven by two sides, not all related costs need to be recovered via the regulated wholesale termination charge. However, for the purposes of this Recommendation, all of the avoidable costs of providing the wholesale call termination service can be recovered via the wholesale charge, i.e. all of those costs which increase in response to an increase in wholesale termination traffic.

               (16)

               In setting termination rates, any deviation from a single efficient cost level should be based on objective cost differences outside the control of operators. In fixed networks, no such objective cost differences outside the control of the operator have been identified. In mobile networks, uneven spectrum assignment may be considered an exogenous factor which results in per-unit-cost differences between mobile operators. Exogenous cost differences may arise where spectrum assignments have not taken place using market-based mechanisms but on the basis of a sequential licensing process. Where the spectrum assignment takes place through a market-based mechanism such as an auction or where there is a secondary market in place, frequency-induced cost differences become more endogenously determined and are likely to be significantly reduced or eliminated.

               (17)

               New entrants in mobile markets may also be subject to higher unit costs for a transitional period before having reached the minimum efficient scale. In such situations, NRAs may allow them, after having determined that there are impediments on the retail market to market entry and expansion, to recoup their higher incremental costs compared to those of a modelled operator for a transitional period of up to four years after market entry. Drawing upon the ERG Common Position, it is reasonable to envisage a time frame of four years for phasing out asymmetries based on the estimation that in the mobile market it can be expected to take three to four years after entry to reach a market share of between 15 and 20 %, thereby approaching the level of the minimum efficient scale. This is distinct to the situation for new entrants in fixed markets which have the opportunity to achieve low unit costs by focusing their networks on high-density routes in particular geographic areas and/or by renting relevant network inputs from the incumbents.

               (18)

               A depreciation method that reflects the economic value of an asset is the preferred approach. If, however, the development of a robust economic depreciation model is not feasible, other approaches are possible, including straight-line depreciation, annuities and tilted annuities. The criterion for choosing among the alternative approaches is how closely they are likely to approximate an economic measure of depreciation. Thus, if the development of a robust economic depreciation model is not feasible, the depreciation profile of each major asset in the bottom-up model should be examined separately, and the approach which generates a depreciation profile similar to that of economic depreciation should be chosen.

               (19)

               With regard to efficient scale, different considerations apply in fixed and in mobile markets. The minimum efficient scale may be reached at different levels in the fixed and mobile sectors as this depends on the different regulatory and commercial environments applicable to each.

               (20)

               When regulating wholesale termination charges, NRAs should neither preclude nor inhibit operators from moving to alternative arrangements for the exchange of terminating traffic in the future to the extent that these arrangements are consistent with a competitive market.

               (21)

               A period of transition until 31 December 2012 should be considered long enough to allow NRAs to put the cost model in place and for operators to adapt their business plans accordingly while, on the other hand, recognising the pressing need to ensure that consumers derive maximum benefits in terms of efficient cost-based termination rates.

               (22)

               For NRAs with limited resources, an additional transitional period may exceptionally be needed in order to prepare the recommended cost model. In such circumstances, if an NRA is able to demonstrate that a methodology (e.g. benchmarking) other than a bottom-up LRIC model based on current costs results in outcomes consistent with this Recommendation and generates efficient outcomes consistent with those in a competitive market, it could consider setting interim prices based on an alternative approach until 1 July 2014. Where it would be objectively disproportionate for those NRAs with limited resources to apply the recommended cost methodology after this date, such NRAs may continue to apply an alternative methodology up to the date for review of this Recommendation, unless the body established for cooperation among NRAs and the European Commission and the Authority, including its related working groups, provides sufficient practical support and guidance to overcome this limitation of resources and, in particular, the cost of implementing the recommended methodology. Any such outcome resulting from alternative methodologies should not exceed the average of the termination rates set by NRAs implementing the recommended cost methodology.

               (23)

               This Recommendation has been subject to consultation with the EFTA Communications Committee, which has given its opinion on it,

         HEREBY RECOMMENDS:

               1.

               When imposing price control and cost-accounting obligations in accordance with Article 13 of the Access Directive on the operators designated by National Regulatory Authorities (NRAs) as having significant market power on the markets for wholesale voice call termination on individual public telephone networks (‘fixed and mobile termination markets’) as a result of a market analysis carried out in accordance with Article 16 of the Framework Directive, NRAs should set termination rates based on the costs incurred by an efficient operator. This implies that they would also be symmetric. In doing so, NRAs should proceed in the way set out below.

               2.

               It is recommended that the evaluation of efficient costs is based on current cost and the use of a bottom-up modelling approach using long-run incremental costs (LRIC) as the relevant cost methodology.

               3.

               NRAs may compare the results of the bottom-up modelling approach with those of a top-down model which uses audited data with a view to verifying and improving the robustness of the results and may make adjustments accordingly.

               4.

               The cost model should be based on efficient technologies available in the time frame considered by the model. Therefore, the core part of both fixed and mobile networks could in principle be next-generation-network (NGN)-based. The access part of mobile networks should also be based on a combination of 2G and 3G telephony.

               5.

               The different cost categories referred to herein should be defined as follows:

                           (a)

                           ‘incremental costs’ are those costs that can be avoided if a specific increment is no longer provided (also known as avoidable costs);

                           (b)

                           ‘traffic-related costs’ are all those fixed and variable costs which rise with increased levels of traffic.

               6.

               Within the LRIC model, the relevant increment should be defined as the wholesale voice call termination service provided to third parties. This implies that in evaluating the incremental costs NRAs should establish the difference between the total long-run cost of an operator providing its full range of services and the total long-run costs of this operator in the absence of the wholesale call termination service being provided to third parties. A distinction needs to be made between traffic-related costs and non-traffic-related costs, whereby the latter costs should be disregarded for the purpose of calculating wholesale termination rates. The recommended approach to identifying the relevant incremental cost would be to attribute traffic-related costs firstly to services other than wholesale voice call termination, with only the residual traffic-related costs being allocated to the wholesale voice call termination service. This implies that only those costs which would be avoided if a wholesale voice call termination service were no longer provided to third parties should be allocated to the regulated voice call termination services. Principles for calculating the wholesale voice call termination service increment in fixed and mobile termination networks respectively are further elaborated in the Annex.

               7.

               The recommended approach for asset depreciation is economic depreciation wherever feasible.

               8.

               When deciding on the appropriate efficient scale of the modelled operator, NRAs should take into account the principles for defining the appropriate efficient scale in fixed and mobile termination networks as set out in the Annex.

               9.

               Any determination of efficient cost levels which deviates from the principles set out above should be justified by objective cost differences which are outside the control of the operators concerned. Such objective cost differences may emerge in mobile termination markets due to uneven spectrum assignments. To the extent that additional spectrum acquired to provide wholesale call termination is included in the cost model, NRAs should review any objective cost differences regularly, taking into account, inter alia, whether on a forward-looking basis additional spectrum is likely to be made available through market-based assignment processes which might erode any cost differences arising from existing assignments or whether this relative cost disadvantage decreases over time as the volumes of the later entrants increase.

               10.

               In cases where it can be demonstrated that a new mobile entrant operating below the minimum efficient scale incurs higher per-unit incremental costs than the modelled operator, after having determined that there are impediments on the retail market to market entry and expansion, the NRAs may allow these higher costs to be recouped during a transitional period via regulated termination rates. Any such period should not exceed four years after market entry.

               11.

               This Recommendation is without prejudice to previous regulatory decisions taken by NRAs in respect of the matters raised herein. Notwithstanding this, NRAs should ensure that termination rates are implemented at a cost-efficient, symmetric level by 31 December 2012, subject to any objective cost differences identified in accordance with points 9 and 10.

               12.

               In exceptional circumstances where an NRA is not in a position, in particular due to limited resources, to finalise the recommended cost model in a timely manner and where it is able to demonstrate that a methodology other than a bottom-up LRIC model based on current costs results in outcomes consistent with this Recommendation and generates efficient outcomes consistent with those in a competitive market, it could consider setting interim prices based on an alternative approach until 1 July 2014. Where it would be objectively disproportionate for those NRAs with limited resources to apply the recommended cost methodology after this date, such NRAs may continue to apply an alternative methodology up to the date for review of this Recommendation, unless the body established for cooperation among NRAs and the European Commission and the Authority, including its related working groups, provides sufficient practical support and guidance to overcome this limitation of resources and, in particular, the cost of implementing the recommended methodology. Any such outcome resulting from alternative methodologies should not exceed the average of the termination rates set by NRAs implementing the recommended cost methodology.

               13.

               This Recommendation will be reviewed in line with any future changes to the European Commission’s Recommendation 2009/396/EC on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU.

               14.

               This Recommendation is addressed to the EFTA States.

      Done at Brussels, 13 April 2011.

            For the EFTA Surveillance Authority

         Sabine MONAUNI-TÖMÖRDY

            Acting President

         Sverrir Haukur GUNNLAUGSSON

            College Member

      (1)  Corresponds to the European Commission’s Recommendation 2009/396/EC of 7 May 2009 on the regulatory treatment of fixed and mobile termination rates in the EU (OJ L 124, 20.5.2009, p. 67), as adapted to the EEA Agreement.

      (2)  Hereinafter referred to as ‘the Authority’.

      (3)  Hereinafter referred to as ‘the EEA Agreement’.

      (4)  OJ L 108, 24.4.2002, p. 33.

      (5)  OJ L 200, 30.7.2002, p. 38.

      (6)  Decision of the EEA Joint Committee No 10/2004 (OJ L 116, 22.4.2004, p. 58 and EEA Supplement No 20, 22.4.2004, p. 13), e.i.f. 7 February 2004.

      (7)  OJ L 108, 24.4.2002, p. 7.

      (8)  Decision of the EEA Joint Committee No 11/2004 (OJ L 116, 22.4.2004, p. 60 and EEA Supplement No 20, 22.4.2004, p. 14), e.i.f. 1 November 2004.

      (9)  OJ L 266, 11.10.2005, p. 64.

      (10)  Decision of the EEA Joint Committee No 84/2008 (OJ L 280, 23.10.2008, p. 18 and EEA Supplement No 64, 23.10.2008, p. 11), e.i.f. 5 July 2008.

      ANNEX

         Principles for the calculation of wholesale termination rates in fixed networks

      The relevant incremental costs (i.e. avoidable costs) of the wholesale call termination service are the difference between the total long-run costs of an operator providing its full range of services and the total long-run costs of that operator not providing a wholesale call termination service to third parties.
      A distinction needs to be made between traffic-related costs and non-traffic-related costs to ensure the appropriate attribution of those costs. The non-traffic-related costs should be disregarded for the purpose of calculating wholesale termination rates. From the traffic-related costs only those costs which would be avoided in the absence of a wholesale call termination service being provided should be allocated to the relevant termination increment. These avoidable costs may be calculated by allocating traffic-related costs first to services other than wholesale call termination (e.g. call origination, data services, IPTV, etc.) with only the residual traffic-related costs being allocated to the wholesale voice call termination service.
      The default demarcation point between traffic- and non-traffic-related costs is typically where the first point of traffic concentration occurs. In a PSTN network this is normally deemed to be the upstream side of the line card in the (remote) concentrator. The broadband NGN equivalent is the line card in the DSLAM/MSAN (1). Where the DSLAM/MSAN is located in a street cabinet, then it needs to be considered whether the former loop between the cabinet and the exchange/MDF is a shared medium and should be treated as part of the traffic-sensitive cost category, in which case the traffic-/non-traffic-related demarcation point will be located in the street cabinet. If dedicated capacity is allocated to the voice call termination service irrespective of the technology deployed, then the demarcation point remains at the level of the (remote) concentrator.
      Following the approach outlined above, examples of costs which would be included in the termination service increment would include additional network capacity needed to transport additional wholesale termination traffic (e.g. additional network infrastructure to the extent that it is driven by the need to increase capacity for the purposes of carrying the additional wholesale termination traffic) as well as additional wholesale commercial costs directly related to the provision of the wholesale termination service to third parties.
      To determine the efficient scale of an operator for the purposes of the cost model, NRAs should take into account that in fixed networks operators have the opportunity to build their networks in particular geographic areas and to focus on high-density routes and/or to rent relevant network inputs from the incumbents. When defining the single efficient scale for the modelled operator, NRAs should therefore take into account the need to promote efficient entry while also recognising that under certain conditions smaller operators can produce at low unit costs in smaller geographic areas. Furthermore, smaller operators that cannot match the largest operators’ scale advantages over broader geographic areas can be assumed to purchase wholesale inputs rather than self-provide termination services.

         Principles for the calculation of wholesale termination rates in mobile networks

      The relevant incremental costs (i.e. avoidable costs) of the wholesale call termination service are the difference between the total long-run costs of an operator providing its full range of services and the total long-run costs of an operator not providing a wholesale call termination service to third parties.
      A distinction needs to be made between traffic-related costs and non-traffic-related costs to ensure the appropriate attribution of those costs. The non-traffic-related costs should be disregarded for the purpose of calculating wholesale termination rates. From the traffic-related costs only those costs which would be avoided in the absence of a wholesale call termination service being provided should be allocated to the relevant termination increment. These avoidable costs may be calculated by allocating traffic-related costs first to services other than wholesale call termination (e.g. call origination, SMS, MMS, etc.) with only the residual traffic-related costs being allocated to the wholesale voice call termination service.
      The costs of the handset and the SIM card are not traffic-related and should be excluded from any costing model for wholesale voice call termination services.
      Coverage can be best described as the capability or option to make a single call from any point in the network at a point in time, and capacity represents the additional network costs which are necessary to carry increasing levels of traffic. The need to provide such coverage to subscribers will cause non-traffic-related costs to be incurred which should not be attributed to the wholesale call termination increment. Investments in mature mobile markets are more driven by capacity increases and by the development of new services and this should be reflected in the cost model. The incremental cost of wholesale voice call termination services should therefore exclude coverage costs but should include additional capacity costs to the extent that they are caused by the provision of wholesale voice call termination services.
      The costs of spectrum usage (the authorisation to retain and use spectrum frequencies) incurred in providing retail services to network subscribers are initially driven by the number of subscribers and thus are not traffic-driven and should not be calculated as part of the wholesale call termination service increment. The costs of acquiring additional spectrum to increase capacity (above the minimum necessary to provide retail services to subscribers) for the purposes of carrying additional traffic resulting from the provision of a wholesale voice call termination service should be included on the basis of forward-looking opportunity costs, where possible.
      Following the approach outlined above, examples of costs which would be included in the termination service increment would include additional network capacity needed to transport additional wholesale traffic (e.g. additional network infrastructure to the extent that it is driven by the need to increase capacity for the purposes of carrying the additional wholesale traffic). Such network-related costs could include additional mobile switching centres (MSCs) or backbone infrastructure directly required to carry the terminating traffic for third parties. Furthermore, where certain network elements are shared for the purposes of supplying origination and termination services, such as cell sites or base transceiver stations (BTS), these network elements will be included in the termination cost model to the extent that they are needed because of the additional capacity necessary to carry terminating traffic by third parties. In addition, the additional spectrum costs and wholesale commercial costs directly related to the provision of the wholesale termination service to third parties would also be taken into account. This implies that coverage costs, unavoidable business overhead costs and retail commercial costs are not included.
      To determine the minimum efficient scale for the purposes of the cost model, and taking account of market share developments in a number of EEA States, the recommended approach is to set that scale at 20 % market share. It may be expected that mobile operators, having entered the market, would strive to maximise efficiency and revenues and thus be in a position to achieve a minimum market share of 20 %. In cases where an NRA can prove that the market conditions in the territory of that EFTA State would imply a different minimum efficient scale, it could deviate from the recommended approach.

         (1)  Digital subscriber line access multiplexer/multi-service access node.