               EUROPEAN COMMISSION
            Brussels, 20.12.2017
            COM(2017) 807 final
            Recommendation for a
            COUNCIL DECISION
            authorising the opening of negotiations for an agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism

               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE RECOMMENDATION

               In the globalised world where serious crime and terrorism are increasingly transnational and polyvalent, law enforcement authorities should be fully equipped to cooperate with external partners to ensure the security of their citizens. Europol should therefore be able to exchange personal data with law enforcement authorities of third countries to the extent necessary for the accomplishment of its tasks.

               Since the entry into application of Regulation 2016/794 on 1 May 2017
                  1
                and pursuant to the Treaty, the Commission is responsible, on behalf of the Union, for negotiating international agreements with third countries for the exchange of personal data with Europol
                  2
               . In so far as necessary for the performance of its tasks, Europol may establish and maintain cooperative relations with external partners through working and administrative arrangements that cannot by themselves be a legal basis for the exchange of personal data.

               Taking into account the political strategy as outlined in the European Agenda on Security
                  3
               , Council Conclusions
                  4
               , and the Global Strategy
                  5
               , the operational needs of law enforcement authorities across the EU, and the potential benefits of closer cooperation in this area, the Commission considers it necessary to start negotiations in the short-term with eight countries, as identified in the 11th progress report towards a genuine and effective Security Union
                  6
               .

               The Commission has made its assessment of priority countries taking into account Europol's operational needs. The Europol Strategy 2016-2020 identifies the Mediterranean region as priority for enhanced partnerships
                  7
               . The Europol External Strategy 2017-2020 also stresses the need for closer cooperation between Europol and the Middle East/North Africa (MENA) due to the current terrorist threat and migration-related challenges
                  8
               .

               Europol does not have any agreements in place with any of the countries in this region. However, Tunisia's cooperation through Interpol demonstrates the country's willingness to share information with law enforcement partners.

               This Recommendation specifically concerns negotiations with Tunisia, although cooperation with any MENA country needs to be seen in the context of the region as a whole. The current instability in the region, especially the protracted conflicts in Libya, presents a significant long-term security threat to the EU that needs to be addressed urgently. This concerns both the effective fight against terrorism and related organised crime
                  9
               , and migration-related challenges such as the facilitation of irregular migration and trafficking in human beings.  Cooperation with local law enforcement is critical to addressing these challenges.

               On the basis of technical dialogues to define common actions to improve exchange of information and joint law enforcement operational action against firearms trafficking, the EU has already agreed with Tunisia a list of actions to enhance cooperation among relevant law enforcement agencies, ensure capacity-building assistance in relevant regional and/or bilateral programmes and develop operational actions under a commonly agreed framework
                  10
               . This does not, however, cover the transfer of personal data.

               Political context

               EU-Tunisia relations date back to 1976 and gained significant momentum when Tunisia and the EU signed an Association Agreement in 1995, paving the way for two decades of mutually beneficial economic and trade relations.

               EU support to the Tunisian people covers many policy areas, including accompanying the electoral process, promoting human rights, supporting democratic and socioeconomic reforms, improving security and strengthening civil society. In the context of the revision of the European Neighbourhood Policy (ENP) three additional areas for cooperation were identified: 1) economic development for stabilisation; 2) the security dimension and 3) migration and mobility
                  11
               . The EU has also offered Tunisia closer ties across the board, through enhanced economic and trade integration and a Mobility Partnership. In 2012, Tunisia and the EU agreed a 'Privileged Partnership' of strengthened relations and integration
                  12
               .

               The EU has committed to strengthen the implementation of its extensive cooperation with Tunisia in the security sector, in the fight against terrorism and in preventing violent radicalisation and extremism
                  13
               , including by strengthening Tunisia's cooperation with relevant EU agencies and bodies, including Europol
                  14
               . In response, Tunisia has given high priority to the prevention of radicalisation and the fight against terrorism
                  15
               , and is being supported, inter alia, by the European Radicalisation Awareness Network
                  16
               .

               The EU and Tunisia are in the process of agreeing their new strategic priorities, following the EU-Tunisia Association Council on 11 May 2017. At this meeting, both sides emphasized the progress achieved in their bilateral cooperation in the field of security and the fight against terrorism, and noted with satisfaction the marked improvement in the security situation in Tunisia, in particular due to the efforts of the national security forces.

               The 2nd session of the High-Level Dialogue on Security in Brussels on 19 January 2017 reflected the shared will to intensify cooperation in this field while promoting full respect for the rule of law, human rights and fundamental freedoms
                  17
               .

               A Counter-Terrorism and Security Dialogue is already ongoing with Tunisia, with an Action Plan covering law enforcement cooperation and referencing a future cooperation agreement with Europol. The conclusions of the meeting held on 19 January included cooperation between Europol and Tunisian authorities among the priorities for EU-Tunisia cooperation.

               Operational needs

               Based on data in the SOCTA 2017
                  18
                and TE-SAT 2017
                  19
               , the above discussions, as well as, inter alia, Europol's in-house expert knowledge, cooperation with Tunisia is needed in particular to counter the following crime phenomena:

               Terrorism: Terrorist groups operating in the region and across the borders (including in Libya and the Sahel) pose a threat to Tunisia and the EU, which have both been targeted by terrorist attacks.

               In addition to improving the threat picture and the identification of new trends, closer cooperation including the exchange of personal data is needed to address the phenomenon of foreign terrorist fighters (including on suspects holding dual citizenship or legal residence) and effectively detect, prevent and prosecute terrorism travel (including possible infiltration of migratory flows), terrorist misuse of the Internet, terrorism financing as well as the nexus with organised crime.

               Firearms trafficking has drastically increased in the region as a result of protracted conflicts in Libya. Trafficking routes via Tunisia from Libya and the Sahel are a serious problem.

               The EU and Tunisia have established cooperation on firearms and agreed a work programme including training and capacity-building. As cooperation increases, the need for improved information sharing and subsequent investigations becomes even more pressing.

               Drug trafficking: The Middle East and North Africa (MENA) is a major source, transit point, and consumer of illicit drugs. With a steady base of clientele to the north, the Sahelian smuggling route to its south and the heroin route traversing it from east to west, the region both influences and is negatively influenced by illicit substance abuse and production.

               Tunisia appears an important transit country for Latin American cocaine bound for Europe. The country indicates unprecedented seizures of cocaine from South America and seems to be a transit as well as a destination country for cocaine. In 2016, the EU-funded Cocaine Route Programme (component AIRCOP) launched a Joint Airport Interdiction Task Force Legal Authority (JAITFs) in Tunisia.

               Organised migrant smuggling activity has significantly increased in 2017, with Tunisian nationals in particular using organised smuggling networks to facilitate their irregular migration to the EU. The Tunisian government is having some success at tackling this increased threat however providing further specialist support from Europol would enhance their capabilities as well as improve information sharing. Cooperation with Tunisian authorities would also be relevant to address document fraud, a crime area linked to migrant smuggling.

               2.LEGAL ELEMENTS OF THE RECOMMENDATION

               Regulation (EU) 2016/794 on the European Union Agency for Law Enforcement Cooperation (Europol) sets out a legal framework for Europol, in particular its objectives, tasks, scope of competence, data protection safeguards and ways to cooperate with external partners.

               This Recommendation is consistent with the provisions of the Europol Regulation.

               The objective of this recommendation is to obtain from the Council the authorisation for the Commission to negotiate the future agreement on behalf of the EU. The legal basis for the Council to authorise the opening of negotiations is Article 218(3) and (4) TFEU.

               In line with Article 218 of Treaty on the Functioning of the European Union, the Commission shall be nominated as the Union negotiator for the agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism.

               Recommendation for a

               COUNCIL DECISION

               authorising the opening of negotiations for an agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism

               THE COUNCIL OF THE EUROPEAN UNION,

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

               Having regard to the recommendation from the European Commission,

               Whereas:

               (1)Regulation (EU) 2016/794 of the European Parliament and of the Council
                  20
                was adopted on 11 May 2016 and is applicable as of 1 May 2017.

               (2)This Regulation, in particular its Article 25, sets out the rules for the transfer of personal data from the European Union Agency for Law Enforcement Cooperation (Europol) to third countries and international organisations. Europol may transfer personal data to an authority of a third country on the basis of an international agreement concluded between the Union and that third country pursuant to Article 218 TFEU adducing adequate safeguards with respect to the protection of privacy and fundamental rights and freedoms of individuals.

               (3)Negotiations should be opened with a view to concluding such an Agreement between the European Union and Tunisia.

               (4)The Agreement should respect the fundamental rights and observe the principles recognised by the Charter of Fundamental Rights of the European Union, in particular the right to private and family life, recognised in Article 7 of the Charter, the right to the protection of personal data, recognised in Article 8 of the Charter and the right to effective remedy and fair trial recognised by Article 47 of the Charter. The Agreement should be applied in accordance with those rights and principles,

               HAS ADOPTED THIS DECISION:

               Article 1

               The Commission is hereby authorised to negotiate, on behalf of the Union, an agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism.

               Article 2

               The negotiating directives are set out in the Annex.

               Article 3

               The negotiations shall be conducted in consultation with [name of the special committee to be inserted by the Council].

               Article 4

               This Decision is addressed to the Commission.

               Done at Brussels,

                     For the Council

                     The President

                     (1)

                        Regulation (EU) 2016/794 of 11 May 2016, OJ L 135, 24.5.2016, p. 53.

                     (2)

                        In so far as necessary for the performance of its tasks, Europol may establish and maintain cooperative relations with external partners through working and administrative arrangements that cannot by themselves be a legal basis for the exchange of personal data.

                     (3)

                        COM(2015) 185 final.

                     (4)

                        Council Document 10384/17, 19 June 2017.

                     (5)

                        Shared Vision, Common Action: A Stronger Europe - A Global Strategy for the European Union’s Foreign And Security Policy
                  http://europa.eu/globalstrategy/en

                     (6)

                        COM(2017) 608 final.

                     (7)

                        Europol Strategy 2016-2020, Adopted by Europol's Management Board on 1 December 2015,
                  https://www.europol.europa.eu/publications-documents/europol-strategy-2016-2020

                     (8)

                        Europol External Strategy 2017-2020, Adopted by Europol Management Board on 13 December 2016, EDOC#865852v3.

                     (9)

                        According to Europol, relevant organised crime offences in the region include illicit trafficking of firearms, drug trafficking, financial crimes including money laundering, and cybercrime.

                     (10)

                        Several initiatives in this context have been included in the firearms priority as part of the EU Policy Cycle on serious and organised crime, as well as in the Communication from the Commission to the EP and the Council Implementing the European Agenda on Security: EU action plan against illicit trafficking in and use of firearms and explosives, of 2.12.2015 COM(2015) 624 final.

                     (11)

                        These pillars complement those already identified in 2003, when the first ENP was launched (good governance, democracy, rule of law and human rights). https://ec.europa.eu/neighbourhood-enlargement/neighbourhood/overview_en.

                     (12)

                        SEAE 'Relations Tunisie-Union européenne: Un partenariat privilégié. Plan d'Action 2013-2017.
                  https://eeas.europa.eu/delegations/tunisia/documents/press_corner/plan_action_tunisie_ue_2013_2017_fr.pdf
                  .

                     (13)

                        Council Conclusions of 17 October 2016, 13056/16.

                     (14)

                        "Strengthening EU support for Tunisia", JOIN(2016) 47 final.

                     (15)

                        Tunisia created in December 2016 an inter-ministerial "Platform for Alternative Discourse and the Fight against Violent Extremism".

                     (16)

                        The European Radicalisation Awareness Network (RAN) brings together practitioners from around Europe working on the prevention of radicalisation. It held a seminar in Tunisia on radicalisation in December 2016.

                     (17)

                  https://eeas.europa.eu/headquarters/headquarters-homepage/19207/second-high-level-political-dialogue-security-and-counter-terrorism-european-union-and-tunisia_en

                     (18)

                  https://www.europol.europa.eu/socta/2017
                   /

                     (19)

                  https://www.europol.europa.eu/sites/default/files/documents/tesat2017.pdf

                     (20)

                        Regulation (EU) 2016/794 of the European Parliament and of the Council of 11 May 2016 on the European Union Agency for Law Enforcement Cooperation (Europol) and replacing and repealing Council Decisions 2009/371/JHA, 2009/934/JHA, 2009/935/JHA, 2009/936/JHA and 2009/968/JHA (OJ L 135, 24.5.2016, p. 53).

    ---documentbreak---

               EUROPEAN COMMISSION
            Brussels,20.12.2017
            COM(2017) 807 final
            ANNEX
            to the
            Recommendation for a COUNCIL DECISION
            authorising the opening of negotiations for an agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism

               ANNEX

               Directives for the negotiation of an agreement between the European Union and Tunisia on the exchange of personal data between the European Union Agency for Law Enforcement Cooperation (Europol) and the Tunisian competent authorities for fighting serious crime and terrorism

               In the course of the negotiations the Commission should aim to achieve the objectives set out in detail below.

               (1)The objective of the Agreement shall be to provide the legal basis for the transfer of personal data between Europol and the competent authorities of Tunisia respectively, in order to support and strengthen the action by the competent authorities of this country and Member States as well as their mutual cooperation in preventing and combatting serious transnational crime and terrorism, while ensuring appropriate safeguards with respect to the protection of privacy, personal data and fundamental rights and freedoms of individuals.

               (2)To guarantee purpose limitation, cooperation under the Agreement shall only relate to crimes and related criminal offences falling within Europol's competence in accordance with Article 3 of Regulation 2016/794 (together "criminal offences"). In particular, cooperation should be aimed at tackling terrorism and preventing radicalisation, disrupting organised crime notably illicit trafficking of firearms, drug trafficking and migrant smuggling, and fighting cybercrime.

               (3)The Agreement shall spell out clearly and precisely the necessary safeguards and controls with respect to the protection of personal data, fundamental rights and freedoms of individuals, irrespective of nationality and place of residence, in the exchange of personal data between Europol and the Tunisian competent authorities.

               In particular:

               (a)The purposes of the processing of personal data by the Parties in the context of the Agreement shall be spelt out clearly and precisely, and shall be no wider than what is necessary in individual cases for the purpose of preventing and combating terrorism and criminal offences referred to in the Agreement.

               (b)Personal data transferred by Europol in accordance with the Agreement shall be processed fairly, on a legitimate basis and only for the purposes for which they have been transferred. The Agreement shall provide the possibility for Europol to indicate, at the moment of transferring the data, any restriction on access or use, including as regards its transfer, erasure or destruction. Personal data shall be adequate, relevant and limited to what is necessary in relation to that purpose. It shall be accurate and kept up to date. It shall not be retained for longer than is necessary for the purposes for which they have been transferred.

               (c)The transfer of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, genetic data and data concerning a person's health and sex life by Europol shall be prohibited, unless it is strictly necessary and proportionate in individual cases for preventing or combating criminal offences as referred to in the Agreement and subject to appropriate safeguards. The Agreement should also contain specific safeguards relating to the transfer of personal data on victims of criminal offence, witnesses or other persons who can provide information concerning criminal offences, as well as minors.

               (d)The Agreement shall ensure enforceable rights of individuals whose personal data are processed by laying down rules on the right of access, rectification and erasure, including the specific grounds which may allow any necessary and proportionate restrictions. The Agreement shall also ensure enforceable rights of administrative and judicial redress for any person whose data are processed under the agreement and guaranteeing effective remedies.

               (e)The Agreement shall lay down the rules on storage, review, correction and deletion of personal data as well as on keeping records for the purposes of logging and documentation as well as on information to be made available to individuals. It should also provide for safeguards in respect to automated processing of personal data.

               (f)The Agreement shall specify the criteria on the basis of which the reliability of the source and accuracy of the data shall be indicated.

               (g)The Agreement shall include the obligation to ensure security of personal data through appropriate technical and organisational measures, including by allowing only authorised persons to have access to personal data. The Agreement shall also include the obligation of notification in the event of a personal data breach affecting data transferred under the Agreement.

               (h)Onward transfers of information from competent authorities of Tunisia to other authorities in Tunisia shall only be allowed for the purposes of the Agreement and shall be made subject to appropriate conditions and safeguards.

               (i)The same conditions as under (h) shall apply to onward transfers of information from competent authorities of Tunisia to authorities in a third country, with the additional requirement that such onward transfers shall be allowed only with respect to third countries to which Europol is entitled to transfer personal data on the basis of Article 25(1) of Regulation (EU) 2016/794.

               (j)The Agreement shall ensure a system of oversight by one or more independent public authorities responsible for data protection with effective powers of investigation and intervention to exercise oversight over those public authorities of Tunisia that use personal data/exchanged information, and to engage in legal proceedings. In particular, the independent authorities shall have powers to hear complaints from individuals about the use of their personal data. Public authorities that use personal data shall be accountable for complying with the rules on the protection of personal data under the Agreement.

               (4)The Agreement shall provide for an effective dispute settlement mechanism with respect to its interpretation and application to ensure that the parties observe mutually agreed rules.

               (5)The Agreement shall include a provision on the entry into force and validity and a provision whereby a Party may terminate or suspend it.

               (6)The Agreement may include a clause addressing its territorial application, if necessary.

               (7)The Agreement may include provisions on the monitoring and periodic evaluation of the Agreement.

               (8)The Agreement shall be equally authentic in the Bulgarian, Czech, Croatian, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages and shall include a language clause to that effect.


               EUROPEAN COMMISSION
            Brussels, 19.3.2018
            COM(2018) 138 final
            Recommendation for a
            COUNCIL DECISION
            authorising the opening of negotiations on a Global Pact for the Environment

               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE RECOMMENDATION

               The development of a new instrument of international environmental law aiming to complement and improve the coherence of international environmental law and to facilitate the implementation of existing obligations under international environmental law,  has been initiated by an international group of legal experts with the support of the French government. On 24 June 2017, a draft text of a "Global Pact for the Environment" (hereinafter referred to as "the Pact") was presented at Sorbonne University in Paris. The President of the French Republic committed on this occasion to introducing the project of the Pact to the United Nations General Assembly, and the project was presented to the United Nations on 19 September 2017, in the margins of the ministerial week of the General Assembly's 72nd session.

                  The main objectives of the Pact, as set out by its proponents, are:

               ·To include in a legally binding treaty the fundamental principles of environmental law, already included in universal political declarations, so as to make them enforceable before internal courts.

               ·To make universal the main provisions of legally binding conventions that are not universal.

               ·To add new principles, in view of new challenges – the draft text prepared by the lawyers includes, for example, principles of non-regression and resilience, as well as a duty of care for the environment.

                  [To be updated once the Resolution will have been formally submitted and/or adopted] Further to the 19 September 2017 meeting in New York, an ad-hoc group of countries led by France drafted a procedural resolution for adoption by the General Assembly. The draft resolution was made available electronically for co-sponsorship on 20 December 2017 [and officially presented to the General Assembly on [insert date] 2018]. The proponents aim to have the resolution adopted in March 2018, so that formal negotiations on the Pact can start during the spring of 2018. Through that resolution, which is still subject to informal discussion in New York and has not yet been formally submitted, the General Assembly would:

               ·decide to develop an international instrument, called "Global Pact for the Environment", that would aim to complement and improve the coherence of international environmental law and facilitate the implementation of existing obligations under international environmental law;

               ·decide to establish, prior to holding an intergovernmental conference, an open-ended intergovernmental working group to negotiate a Global Pact for the Environment, which would meet in New York, from 2018 until preferably 2020;

               ·request the President of the General Assembly to appoint two co-facilitators to lead the consultations and negotiations of the working group, in regular coordination and consultation with all Member States, regional groups, and all relevant stakeholders;

               ·decide that the first meeting of the working group will examine matters related to the organization of work among members of the group;

               ·request the Secretary General to arrange for support to be provided by the United Nations Environment Programme (UNEP), for the performance of its work, secretariat services and the provision of essential background information and relevant documents;

               ·request UNEP to provide the necessary assistance for multi-stakeholders consultations in order to collect input on the main elements of a Global Pact for the Environment;

               ·recommend that the open-ended intergovernmental working group concludes its work no later than 2020.

                  The proponents of the Pact have made it clear that during the negotiating process, the work carried out by the legal experts would not be considered as a 'zero draft'.

                  The French delegation informed the Council of the European Union and the European Commission about this initiative in the framework of meetings of the Working Party on International Environment Issues (WPIEI-Global), starting in September 2017.

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

                   Given that only the general objectives of the initiative are known and the existing legal experts' draft text of the Pact has no official status, at this point in time, consulting on the initiative would be of limited value. A roadmap was published on 15 February 2018 to explain to stakeholders why this recommendation for a Council decision was being prepared and what it aimed to achieve. Stakeholders have had the opportunity to provide feedback during a period of 4 weeks after the roadmap was published. Citizens and stakeholders will be consulted after the process has been formally launched by the General Assembly. All appropriate means of consultation will be employed once the new international instrument is taking shape in the context of the United Nations working group. Relevant stakeholders include the representatives of the Member States’ administrations, non-governmental organisations, EU citizens and the general public and may include other stakeholders depending on the developments of the negotiation process.

                  Similarly, no impact assessment has been carried out as the exact scope and content of the negotiations remain to be determined. The aim of EU participation in the negotiations is to maximise the international instrument’s alignment with relevant EU and other international law.

               3.LEGAL ELEMENTS OF THE RECOMMENDATION

                  The objective of this recommendation is to obtain from the Council the authorisation for the Commission to negotiate the future Global Pact on behalf of the EU. The legal basis for the Council to authorise the opening of negotiations is Article 218(3) and (4) TFEU.

               The subject matter of the Pact would fall largely within EU policies and competences, in particular in the field of environmental protection (Article 192(1)) and, as a matter of EU law, negotiations could not be conducted without EU participation.

               The rules of international law and of EU law on the protection of the environment need to remain consistent and there is thus a need for action within the meaning of Article 216(1) TFEU so as to protect the integrity of EU law.

               Recommendation for a

               COUNCIL DECISION

               authorising the opening of negotiations on a Global Pact for the Environment

               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 a party to numerous multilateral environmental agreements and contributes to their effective implementation through its internal and external policies and legislation.

               (2)On [scheduled for March 2018 – insert actual date], the United Nations General Assembly adopted the resolution "Development of a Global Pact for the Environment to strengthen the implementation of international environmental law" [check final title, add reference], establishing an open-ended [intergovernmental] working group to negotiate a Global Pact for the Environment ('the Pact'), and deciding that the open-ended [intergovernmental] working group is to meet from 2018.

               (3)Article 191 of the Treaty specifies Union competencies in the area of the environment. In order to protect the integrity of Union law and to ensure that the rules of international law and Union law on the protection of the environment remain consistent, it is necessary that the Union participates in the negotiations on the Pact.

               (4)The Commission should therefore be authorised to open negotiations on behalf of the Union.

               HAS ADOPTED THIS DECISION:

               Article 1

               The Commission is hereby authorised to negotiate, on behalf of the Union, a Global Pact for the Environment.

               Article 2

               The negotiating directives are set out in the Annex.

               Article 3

               The negotiations shall be conducted in consultation with the [name of the special committee to be inserted by the Council].

               Article 4

               This Decision is addressed to the Commission.

               Done at Brussels,

                     For the Council

                     The President

    ---documentbreak---

               EUROPEAN COMMISSION
            Brussels,19.3.2018
            COM(2018) 138 final
            ANNEX
            to the
            Recommendation for a COUNCIL DECISION
            authorising the opening of negotiations on a Global Pact for the Environment

               ANNEX

               In the framework of the negotiations on a Global Pact for the Environment ('the Pact'), the Commission shall seek to ensure that:

               -
                     the Pact adds significant value to, and facilitates the implementation of, the existing body of international environmental law;

               -
                     the provisions of the Pact are consistent with relevant Union law and with relevant multilateral agreements to which the Union is a party;

               -
                     the working methods of the open-ended [intergovernmental] working group enable the Union to participate in its deliberations;

               -
                     the Pact contains appropriate provisions enabling the Union to become a Party to it and to fully participate in any mechanisms to be created for its implementation.

               The Commission shall ensure that the negotiations are conducted in consultation with the [name of the special committee to be inserted by the Council]. The Commission shall report regularly to the Council on the outcome of the negotiations.


               EUROPEAN COMMISSION
            Brussels, 21.3.2018
            COM(2018) 151 final
            Recommendation for a
            COUNCIL DECISION
            to authorise the Commission to open negotiations on behalf of the European Union for the amendment of the Fisheries Partnership Agreement and conclusion of a Protocol  with the Kingdom of Morocco

               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE PROPOSAL

               •Reasons for and objectives of the proposal

               The Commission proposes to negotiate an amendment to the Fisheries Partnership Agreement (FPA) between the European Communities and the Kingdom of Morocco and to conclude a  Protocol implementing this agreement that meet the needs of the Union fleet and are in line with Regulation (EU) No1380/2013 on the Common Fisheries Policy and the 19 March 2012 Council Conclusions on a Communication from the Commission on the External dimension of the Common Fisheries Policy.

               This proposal is presented following the ruling by the Court of Justice of the European Union of 27 February 2018 in Case C-266/16 (Western Sahara Campaign UK) by which the Court holds that the waters adjacent to the territory of Western Sahara are not part of the fishing zone referred to in the Fisheries Agreement.

               •Consistency with existing policy provisions in the policy area

               The current FPA between the European Union and the Kingdom of Morocco entered into force on 28 February 2007
                  1
               . This agreement was implemented by two successive Protocols enabling Union vessels targetting pelagic and demersal species to access the fishing zone of Morocco until 14 December 2011, which marks the termination date of the second implementing Protocol, as a result of the non consent by the Parliament to its conclusion. EP questioned the sustainability, value-for-money and international legality of the proposed instrument. A third Protocol, which took into account EP's concerns, was concluded in 2014
                  2
                and will expire on 14 July 2018.

               Overall, the FPA with Morocco allows vessels from 11 Member States to operate in six different fishing categories covering small pelagic, demersal and highly migratory species. The Moroccan fishing zone represents the northern limit of the distribution area of the  small pelagic stock "C"
                  3
                which stretches over Mauritanian, Senegalese and Bissau-guinean waters, all of them included in the network of bilateral Sustainable Fisheries Partnership Agreements (SFPAs).

               SFPAs contribute to promote the objectives of the CFP internationally, ensuring that Union fishing activities outside Union waters are based on the same principles and standards as those applicable under Union law. In addition, SFPAs strengthen the European Union’s position in international and regional fishing organisations, in particular in the International Commission for the Conservation of Atlantic Tunas (ICCAT). Finally, SFPAs are based on the best available scientific advice and contribute to the improvement of compliance with international measures, including combatting illegal, unreported and unregulated (IUU) fishing.

               Particular attention will be given to the execution and implementation of the financial compensation given to Morocco to support sustainable management of fisheries, in particular in the light of the recommendations of the Special European Court of Auditors Report n.11 of 2015 on SFPAs.

               •Consistency with other Union policies

               Negotiation of a SFPA and Protocol with the Kingdom of Morocco is in line with the EU’s external action towards neighbouring countries and in conformity with Union objectives regarding the respect of democratic principles and human rights.

               Following the above mentioned ruling of the Court of Justice of the European Union, it is necessary  to clarify the geographical scope of the Agreement.

               The EU position is that it is possible to extend the bilateral agreements with Morocco to Western Sahara under certain conditions.  However, it is understood that any arrangement will only be provisional for as long as the resolution of the conflict in the  context of the United Nations and in accordance with relevant UN Security Council resolutions remains pending.

               Negotiations will be conducted throughout the whole process in consultation with all interested Commission Services, the EEAS and with the support of the competent EU Delegation.

               2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

               •Legal basis

               The legal basis for the decision is provided by Article 218 of the Treaty on the Functioning of the European Union (TFEU), in Part Five on the Union’s external action, Title V on international agreements, which sets out the procedure for negotiating and concluding agreements between the EU and third countries.

               •Subsidiarity (for non-exclusive competence)

               Not applicable, exclusive competence.

               •Proportionality

               The decision is proportional to the objective seeked.

               •Choice of the instrument

               The instrument is provided for under Article 218(3) and Article 218(4) of the TFEU.

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

               •Ex-post evaluations/fitness checks of existing legislation

               The Commission carried out in 2017 an ex-post / ex-ante evaluation of the opportunity to renew the fisheries Protocol with the Kingdom of Morocco. The conclusions of the evaluation are set out in a separate Staff Working Document
                  4
               .

               The evaluation report concluded that the EU fleets are firmly interested in continuing fishing in Morocco. Renewal of the Protocol will also help strengthen monitoring, control and surveillance and contribute to improved governance of the fisheries in the region. The evaluation demonstrates that a renewal of the Protocol would also be beneficial for Morocco in view of the importance of the financial contribution paid under the Protocol as a contribution to the Moroccan "Halieutis" strategy of development of the fisheries sector. Morocco has expressed its interest in opening negotiations with the EU on a renewed Protocol.

               •Stakeholder consultations

               Interested stakeholders, including industry representatives and civil society organisations have been consulted as part of the evaluation, in particular in the framework of the Long Distance Advisory Council.

               •Collection and use of expertise

               Not applicable

               •Impact assessment

               Not applicable

               •Regulatory fitness and simplification

               Not applicable

               •Fundamental rights

               The negotiating directives proposed as an annex to the decision recommend to authorise the opening of negotiations including a human rights and democratic principles clause which, if breached, can lead to the suspension of the Agreement and Protocol.

               4.BUDGETARY IMPLICATIONS

               The budgetary implications connected with the new Protocol include the payment of a financial contribution to the Kingdom of Morocco. The related budgetary allocations in terms of commitment and payment appropriations need to be included each year in the budget line for Sustainable Fisheries Partnership Agreements (11 03 01) as well as being compatible  with the financial programming of the Multiannual Financial Framework for 2014-2020. The annual amounts for commitments and payments are established in the yearly budgetary procedure including the reserve line for protocols not entered into force in the beginning of the year.
                  5

               Negotiations are expected to be finalised before expiry of the current Protocol, i.e. by 14 July 2018.

               5.OTHER ELEMENTS

               •Implementation plans and monitoring, evaluation and reporting arrangements

               Negotiations are expected to open in the first quarter 2018.

               •Detailed explanation of the specific provisions of the proposal

               The Commission recommends that:

               - The Council should authorise the Commission to open and conduct negotiations for the amendment to the Fisheries Partnership Agreement with the Kingdom of Morocco and the conclusion of a Protocol;

               - The Commission should be nominated as the EU negotiator on this subject;

               - The Commission should conduct the negotiations in consultation with the special committee, as set out in the Treaty on the Functioning of the European Union;

               - The Council should approve the negotiating directives annexed to this recommendation.

               Recommendation for a

               COUNCIL DECISION

               to authorise the Commission to open negotiations on behalf of the European Union for the amendment of the Fisheries Partnership Agreement and conclusion of a Protocol  with the Kingdom of Morocco

               THE COUNCIL OF THE EUROPEAN UNION,

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

               Having regard to the recommendation from the Commission,

               Whereas negotiations should be opened with the Kingdom of Morocco, with a view to amending the Fisheries Partnership Agreement between the European Communities and the Kingdom of Morocco
                  6
                and concluding a Protocol implementing this Agreement,

               Whereas it is important that the partnership in the fisheries sector that has developed over the years between the European Union and the Kingdom of Morocco is not disrupted, while ensuring that there are appropriate guarantees for the protection of human rights and the sustainable development of the territories concerned,

               Whereas the Union supports the efforts of the United Nations to find a mutually acceptable political solution which would provide for the self-determination of the people of Western Sahara consistent with the principles and purposes of the Charter of the United Nations,

               HAS ADOPTED THIS DECISION:

               Article 1

               1.The Commission is hereby authorised to open negotiations with the Kingdom of Morocco with a view to amending the Fisheries Partnership Agreement between the European Communities and the Kingdom of Morocco and concluding a Protocol implementing this agreement.

               2.The Commission shall be the head of the negotiating team, which shall also comprise the High Representative of the Union for Foreign Affairs and Security Policy.

                Article 2

               These negotiations shall be conducted in consultation with the Council Working Party on External Fisheries Policy on the basis of  the negotiating directives of the Council and set out in the addendum to this Decision.

               Article 3

               This Decision is addressed to the Commission.

               Done at Brussels,

                     For the Council

                     The President

                     (1)

                        OJ L 78 of 17.3.2007, p. 31

                     (2)

                        OJ L 349 of 21.12.2013, p. 1

                     (3)

                        According to scientific classification in use.

                     (4)

                        Evaluation rétrospective et prospective du Protocole à l'accord de partenariat dans le domaine de la pêche durable entre l'Union européenne et le Royaume du Maroc. Final report, september 2017 (F&S, Poseidon and Megapesca).

                     (5)

                        Chapter 40 (reserve line 40 02 41) in line with the MFF interinstitutional agreement ((2013/C 373/01).

                     (6)

                        OJ L 141, 29.05.2006, p. 4.

    ---documentbreak---

               EUROPEAN COMMISSION
            Brussels,21.3.2018
            COM(2018) 151 final
            ANNEX
            to the
            Recommendation
            for a Council decision to authorise the Commission to open negotiations on behalf of the European Union for the amendment of the Fisheries Partnership Agreement and the conclusion of a Protocol with the Kingdom of Morocco

               ANNEX

               Negotiating directives

               The objective of the negotiations is the amendment of the Fisheries Partnership Agreement between the European Communities and the Kingdom of Morocco and the conclusion of a Protocol to this agreement in line with Regulation (EU) N° 1380/2013 on the Common Fisheries Policy and with the Council Conclusions of 19 March 2012 on the Commission Communication of 13 July 2011 on the external dimension of the Common Fisheries Policy.

               To promote sustainable and responsible fishing as well as contributing to the strict observance of international law, while ensuring mutual benefits for the EU and Morocco through this new Protocol, the Commission's negotiations shall seek to:

               ·Provide for the access to the waters covered by the current Agreement and Protocol and to the waters adjacent to the non-self governing Territory of Western Sahara and the necessary authorisations for vessels of the EU fleet targeting small pelagic, demersal and highly migratory species to fish in those waters, thereby inter alia maintaining the network of Sustainable Fisheries Partnership Agreements available to EU operators;

               ·Be supportive of the efforts of the United Nations Secretary-General to find a solution providing for the self-determination of the people of Western Sahara consistent with the principles and purposes of the Charter of the United Nations;

               ·Take into account the best available scientific advice and relevant management plans adopted by the relevant Regional Fisheries Management Organisations (RFMO), in order to ensure the environmental sustainability of fishing activities and to promote ocean governance at the international scale. The fishing activities should be directed exclusively at available resources, taking into account the local fleet's fishing capacity, while paying special attention to the straddling or highly migratory nature of the stocks concerned;

               ·Obtain an appropriate share of the surplus fisheries resources, fully commensurate with the EU fleets' interests, when they also interest other foreign fleets as well as the application of the same technical conditions to all foreign fleets;

               ·Ensure that access to fisheries is based on the activity of the EU fleet in the region, in the light of the most updated and best available scientific assessments;

               ·Establish a dialogue to reinforce the sectoral policy with a view to encouraging the implementation of a responsible fisheries policy, in connection with the country's development objectives, in particular as regards the fisheries governance, the fight against illegal, unreported and unregulated fishing, control, monitoring and surveillance of fishing activities and provision of scientific advice and foster employment generation contributing to inter alia addressing the root causes of emigration;

               ·Include a clause on the consequences of violations of human rights and democratic principles;

               ·Include a clause for the preferential access of the EU fleet to available surpluses and for the application of the same technical conditions to all foreign fleets;

               ·Include appropriate mechanisms to ensure that the Commission is sufficiently informed and involved on the geographic and social distribution of the socio-economic benefits under the Agreement and Protocol, in order to allow the Commission to ensure that both benefit to the people concerned;

               ·Include a review clause enabling to take into account a mutually acceptable political solution which would provide for self-determination of the people of Western Sahara consistent with the principles and purposes of the Charter of the United Nations;

               Furthermore:

               ·The Commission shall assess, at the time of signature, the potential implications of the Sustainable Fisheries Partnership Agreement and its Protocol for sustainable development, in particular as regards the benefits for the people concerned and the exploitation of natural resources of the territories concerned;

               ·The Commission should ensure that, at the time of its proposal for signature and conclusion, the people concerned by the agreement have been adequately involved.

               ·In order to avoid interruption of fishing activities, the new protocol should include a clause of provisional application.

               In particular, the Protocol should define:

               ·the fishing opportunities, by category, to be granted to European Union vessels;

               ·the financial compensation and the conditions for its payment; and

               ·the mechanisms for an effective implementation of sectoral support and its regular monitoring.


               EUROPEAN COMMISSION
            Brussels, 23.5.2018
            COM(2018) 403 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2018 National Reform Programme of the Czech Republicand delivering a Council opinion on the 2018 Convergence Programme of the Czech Republic

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2018 National Reform Programme of the Czech Republic

                  and delivering a Council opinion on the 2018 Convergence Programme of the Czech Republic

               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 9(2) thereof,

               Having regard to the recommendation of the European Commission
                  2
               ,

               Having regard to the resolutions of the European Parliament
                  3
               ,

               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 did not identify the Czech Republic as one of the Member States for which an in-depth review would be carried out.

               (2)The 2018 country report for the Czech Republic
                  4
                was published on 7 March 2018. It assessed the Czech Republic'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 the Czech Republic's progress towards its national Europe 2020 targets.

               (3)On 30 April 2018, the Czech Republic submitted its 2018 National Reform Programme and its 2018 Convergence Programme. 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
                  5
               , 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
                  6
               .

               (5)The Czech Republic is currently in the preventive arm of the Stability and Growth Pact. In its 2018 Convergence Programme, the government plans for a budgetary surplus in headline terms over 2018-2021. The medium-term budgetary objective — a structural deficit of 1.0% of GDP — continues to be met with a margin throughout the programme period. According to the 2018 Convergence Programme, the general government debt-to-GDP ratio is expected to gradually decline to 29.9 % in 2021. The macroeconomic scenario underpinning those budgetary projections is plausible. Risks to the achievement of budgetary targets seem broadly balanced, with an expected rebound of public investment and further growth of public wages. Based on the Commission 2018 spring forecast, the structural balance is forecast to decline to around 0.9 % of GDP in 2018 and 0.2 % of GDP in 2019, remaining above the medium-term budgetary objective. Overall, the Council is of the opinion that Czech Republic is projected to comply with the provisions of the Stability and Growth Pact in 2018 and 2019.

               (6)The Czech Republic continues to display medium fiscal sustainability risks in the long term. While the costs of ageing pose a challenge for healthcare and long-term care, changes in the pension system warrant particular attention. Updated projections of age-related expenditure point to a higher increase than that indicated in the 2015 Ageing Report. Pension expenditure is expected to rise from 8.2 % of GDP in 2016 to 10.9 % of GDP in 2070. This expected higher increase in pension expenditure mainly reflects the capping of the retirement age at 65 years. In fact, the alignment of life expectancy with the statutory retirement age is not automatic; instead, the cap is to be reviewed every five years by the government, starting in 2019. Since it is left to the government's discretion, the current pension expenditure projections do not take into account these retirement age reviews. Moreover, the pension indexation is now more generous, taking into account 50 % of real wage growth rather than the previous 33 %. The impact of these changes on expenditure amounts to 2 percentage points of GDP in 2070. Further changes that are currently being discussed, such as an increase in the basic pension amount and higher pensions for older pensioners, also worsen the sustainability indicators. As regards public expenditure on health care, in the long-term it is projected to increase by 1.1 percentage points of GDP, above the estimated average increase of 0.9 percentage point for the European Union. In this context, there are signs of inefficient use of resources in out-patient and in-patient care.

               (7)The new fiscal responsibility law in place since the beginning of 2017 has significantly strengthened the Czech fiscal framework and established the independent fiscal council. A draft law on independent audits is currently in the interservice commenting procedure and aims to address the outstanding transposition of the Council Directive 2011/85/EU.

               (8)The Czech National Bank can set recommendatory macro-prudential mortgage-lending limits, but has limited sanctioning powers since it lacks the formal authority to enforce them. While the Czech banks comply with certain aggregate level limits, they have not fully adhered to the Czech National Bank's 2016 guidelines. Binding legislative limits would likely increase the level of compliance among banks, ensuring financial stability and reduced risks for borrowers. A legislative proposal, amending the Act on the Czech National Bank, is expected to be discussed by the Parliament in 2018.

               (9)The Czech Republic continues to face challenges in improving the transparency and efficiency of public procurement and preventing corruption. While certain steps have been taken to improve the public procurement framework, the level of competition remains a concern, as nearly half of all public tenders result in a single-bid procedure. At the same time, the enactment of the obligatory use of electronic procedures has the potential to boost transparency and efficiency. The Czech authorities have invested in the National Electronic Tool, which should become increasingly user-friendly and reliable, in addition to private platforms serving the Czech market. There is still considerable scope for removing administrative barriers and tapping the potential of aggregated and strategic public procurement to get better value for public money. Both central and local authorities have started undertaking targeted initiatives to train staff involved in procurement procedures. Nonetheless, setting up joint procurement measures and acquiring specialist expertise in certain areas remain major challenges. In addition, corruption and bribery are ongoing concerns for businesses and the public. While several major reforms of the anti-corruption strategy were adopted, some areas remain unaddressed.

               (10)While the performance of e-government remains below the European Union average, relevant legislative measures have been adopted in order to ensure the increase of accessibility and availability of these services. Certain large-scale initiatives are expected to be introduced in 2018 but their success will depend on the ability of the authorities to raise awareness and provide user-friendly solutions.

               (11)Certain administrative and regulatory burdens are holding back investment. These mainly concern construction permits and tax complexity. It is acknowledged, however, that the authorities adopted an amendment to the Construction Act, which simplifies the building permit procedure by including the environmental impact assessment in the zoning decision or in the joint zoning and building permit. However, it remains unclear whether this could also streamline procedures for large infrastructure projects, since various other authorisations have not been included in this joint permit system. An amendment to the existing law regulating the construction of transport infrastructure is being discussed in the parliament. While changes have been made to the tax system to improve tax collection, tax regulation and rates have moved up the list of concerns as problematic areas for doing business. The new government has indicated possible changes in order to increase transparency and simplify the tax system, including the ongoing work to modernise the income tax legislation. Compliance costs have increased slightly and remain above the European Union average. Although bringing in additional tax revenues, the value added tax control statement has increased the time needed to comply with tax requirements. Despite the significant reduction in hours to comply with the tax code compared to the past, the Czech Republic is still at the higher end of the scale. Moreover, new reduced value added tax rates might add to the complexity of the value added tax system, especially for small and medium sized enterprises.

               (12)While the Czech economy is shifting towards more knowledge-intensive activities, several bottlenecks still hamper the development of a well-performing research and innovation system. The increase of business research and development investment is primarily driven by foreign direct investments. Research and development expenditure by domestic enterprises has declined over the last two years. Despite substantial public research and development investment, the Czech Republic underperforms in terms of the quality of its public science base. Policy measures were adopted to build links between academia and businesses, and improve the performance of the public science base, but the results to date have been limited and the reforms are yet to be fully implemented. Moreover, the governance of the research and innovation system remains fragmented.

               (13)Quality inclusive education and training are of primary importance in view of increasing bottlenecks on the Czech labour market. Education performance continues to be strongly affected by the socioeconomic background of students. Inclusive education measures are still to be fully implemented, in particular for Roma children. Shortages of qualified teachers, combined with demographic projections, indicate that it could become more challenging to recruit and retain teaching staff. The planned new career system for teachers, which would have linked continuing professional development, career and salaries, was not adopted by the Parliament. Teachers' salaries remain low compared with those of other workers with tertiary education, but further salary increases are envisaged in the next years. The teaching profession therefore remains relatively unattractive for talented young people. Finally, the success of the reform to make education more inclusive (introduced in 2016 with the support of the European Social Fund) will depend on the availability of sufficient and sustainable national funding, further teacher and teaching-assistant training, and raising public awareness of the benefits of inclusive education.

               (14)The Czech Republic is experiencing strong labour market performance. Employment has risen steadily over the past six years and unemployment has fallen considerably. The potential of women, the low-skilled and disabled people remains nonetheless underutilised. Against the background of labour shortages, there is clear scope for increasing their labour market participation. Employment and gender pay gaps remain high despite recent measures that have made parental leave more flexible and increased the number of childcare facilities. The employment rate among women remains well below that of men. Motherhood still has a major impact on labour market participation, linked to the low availability of affordable childcare, long parental leave entitlements, low use of flexible working arrangements and the lack of long-term care facilities. In 2016, only 4.7 % of children below the age of three were in formal childcare. Although they make up a small proportion of the population, the employment rate of the low-skilled is well below that of the medium- and high-skilled. Similarly, the employment rate of disabled people is below the European Union average, despite the record-low general unemployment rate and shortages in the labour market. This could motivate tapping into the unused potential of the disabled. Due to limited capacity, public employment services currently fall short in providing jobseekers with personalised, continuous support. Increasing the outreach and activation capacities of public employment services, together with effective and well-targeted active labour market policies and individualised services, would help boost the participation of these groups. Upskilling initiatives (also covering digital skills) could improve labour market access.

               (15)In the context of the 2018 European Semester, the Commission has carried out a comprehensive analysis of the Czech Republic's economic policy and published it in the 2018 country report. It has also assessed the 2018 Convergence Programme and the 2018 National Reform Programme and the follow-up given to the recommendations addressed to the Czech Republic in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the Czech Republic 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.

               (16)In the light of this assessment, the Council has examined the 2018 Convergence Programme and is of the opinion that the Czech Republic is expected to comply with the Stability and Growth Pact.

               HEREBY RECOMMENDS that the Czech Republic take action in 2018 and 2019 to:

               1.Improve the long-term fiscal sustainability, in particular of the pension system. Address weaknesses in public procurement practices, notably by enabling more quality-based competition and by implementing anti-corruption measures.

               2.Reduce the administrative burden on investment, including by speeding up permit procedures for infrastructure work. Remove the bottlenecks hampering research, development and innovation, in particular by increasing the innovation capacity of domestic firms. Strengthen the capacity of the education system to deliver quality inclusive education, including by promoting the teaching profession. Foster the employment of women, the low-skilled and disabled people, including by improving the effectiveness of active labour market policies.

               Done at Brussels,

                     For the Council

                     The President

                     (1)

                        OJ L 209, 2.8.1997, p. 1.

                     (2)

                        COM(2018) 403 final.

                     (3)

                        P8_TA(2018)0077 and P8_TA(2018)0078

                     (4)

                        SWD(2018) 202 final.

                     (5)

                        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).

                     (6)

                        COM(2014) 494 final.


               EUROPEAN COMMISSION
            Brussels, 23.5.2018
            COM(2018) 421 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2018 National Reform Programme of Portugaland delivering a Council opinion on the 2018 Stability Programme of Portugal

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2018 National Reform Programme of Portugal

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

               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 Portugal 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, Portugal 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 Portugal
                  5
                was published on 7 March 2018. It assessed Portugal’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 Portugal’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 Portugal is experiencing macroeconomic imbalances. In particular, the large stocks of net external liabilities, private and public debt, and a high proportion of non-performing loans constitute vulnerabilities in a context of low productivity growth. A prudent current account position and the maintenance of competitiveness gains are required to ensure the adjustment of net external liabilities. Private debt ratios continue to decline from high levels due to resumed nominal growth and slightly negative credit flows, and the government debt-to-GDP ratio is projected to have entered a downward trend, in a context of persistent deleveraging needs. Financial sector interventions helped to reduce stability risks, although banks remain penalised by low profitability and a large (albeit declining) stock of non-performing loans. Higher productivity growth is key for improved prospects as regards competitiveness, deleveraging and potential growth. Unemployment has been falling fast for several years. Policy gaps remain, notably in terms of implementing planned measures to reduce the number of non-performing loans and improve the business environment. The adoption and implementation of several reform plans, including measures to tackle labour market segmentation and fiscal-structural reforms to improve the sustainability of public finances, will need to be monitored.

               (4)On 27 April 2018, Portugal 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. The Stability Programme projects a solid downward path of the public debt-to-GDP ratio. Portugal’s National Reform Programme includes commitments both for the short and medium term and covers the challenges identified in the 2018 country report. In particular, it announces measures in the areas of qualifications and innovation, which can boost productivity and increase the value of Portuguese exports. The strategy presented to reduce non-performing loans together with the action to promote firm capitalisation contribute to reduce the indebtedness of the Portuguese economy and clean-up banks' balance sheets. Overall, the effective implementation of the submitted programmes would underpin the correction of imbalances.

               (5)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
                  7
               , 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
                  8
               .

               (6)Portugal is currently in the preventive arm of the Stability and Growth Pact and subject to the transitional debt rule. In its 2018 Stability Programme, Portugal plans to attain a headline deficit of 0.7 % of GDP and 0.2 % of GDP in 2018 and 2019, respectively, and a further improvement to a surplus of 1.4 % of GDP by 2021. Those plans do not include the potential deficit-increasing impact of bank support measures from 2019 onwards. The medium-term budgetary objective — a structural surplus of 0.25 % of GDP — is planned to be achieved by 2020. The 2018 Stability Programme projects the general government debt-to-GDP ratio to reach 122.2 % in 2018 and 118.4 % in 2019, which would then be at 107.3 % in 2021. The macroeconomic scenario underpinning those budgetary projections is plausible for 2018 but favourable for the following years. At the same time, the measures needed to support the planned deficit targets from 2018 onwards have not been sufficiently specified.

               (7)Portugal's 2018 Stability Programme indicates that the budgetary impact of the large-scale wildfires that occurred in 2017 was significant and provides adequate evidence of the scope and nature of these additional budgetary costs.  In particular, the Stability Programme indicates that the 2018 budget comprises exceptional expenditure amounting to about 0.07 % of GDP in relation to preventive measures to protect the national territory against wildfires. The Stability Programme sets out expenditure related to the emergency management, classified as one-offs, and to prevention. Due to the integrated nature of these expenditures and due to the direct link with the large-scale wildfires of 2017, the specific treatment of wildfire-prevention expenditure could be considered in application of the "unusual event clause". According to the Commission, the eligible additional expenditure in 2018 amounts to 0.07 % of GDP for preventive measures. The provisions set out in Articles 5(1) and 6(3) of Regulation (EC) No 1466/97 cater for this additional expenditure, in that the unprecedented large-scale wildfires are considered unusual events, their impact on Portugal’s public finances is significant and sustainability would not be compromised by allowing for a temporary deviation from the adjustment path towards the medium-term budgetary objective. A final assessment, including on eligible amounts, will be made in spring 2019 on the basis of observed data for 2018 as provided by the Portuguese authorities.

               (8)On 11 July 2017, the Council recommended Portugal to ensure that the nominal growth rate of net primary government expenditure
                  9
                does not exceed 0.1 % in 2018, corresponding to an annual structural adjustment of at least 0.6 % of GDP. At the same time, it was stated that the assessment of the 2018 Draft Budgetary Plan and subsequent assessment of 2018 budget outcomes will need to take due account of the goal of achieving a fiscal stance that contributes to both strengthening the ongoing recovery and ensuring the sustainability of public finances. Following the Commission's assessment of the strength of the recovery in Portugal while giving due consideration to its sustainability challenges, carried out in the context of its opinion on Portugal's Draft Budgetary Plan, no additional elements in that regard need to be taken into account. Based on the Commission 2018 spring forecast, there is a risk of a significant deviation from that recommended adjustment in 2018 and over 2017 and 2018 taken together.

               (9)In 2019, in view of Portugal's general government debt ratio above 60 % of GDP and projected output gap of 1.3 %, the nominal growth rate of net primary government expenditure9 should not exceed 0.7 %, in line with the structural adjustment of 0.6 % of GDP stemming from the matrix of requirements under the Stability and Growth Pact. Under unchanged policies, there is a risk of a significant deviation from that requirement in 2019 and over 2018 and 2019 taken together. At the same time, Portugal is forecast to comply with the transitional debt rule in 2018 and 2019. Overall, the Council is of the opinion that the necessary measures should be taken as of 2018 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.

               (10)Ensuring public debt sustainability hinges on sustainable fiscal consolidation via a structural improvement in public finances, to be achieved through stronger revenue collection and expenditure controls. To enhance expenditure controls, effective enforcement of the commitment control law, strict and timely implementation of the budget framework law and continued spending review and rationalisation efforts are key. Budgetary planning and implementation continue to be a considerable challenge particularly in the health sector, where late payments (arrears) remain very high, which also points to weaknesses in accounting control and managerial practices. For sustainable fiscal consolidation, high and rising ageing costs should be addressed. In the medium term, higher ageing-related fiscal risks are expected to relate largely to the costs of financing pensions, while health-related costs will increase pressure in the long-term. Steps to improve the medium-term sustainability of the pension system, together with a comprehensive strategy to tackle the health-related costs of ageing, would help to address these risks.

               (11)In a similar vein, controlling expenditure, managing debt and improving the overall financial sustainability of state-owned enterprises could contribute significantly to the structural improvement of public finances. Although overall net income continues to be negative, the operational results of state-owned enterprises have generally improved in recent years, except in the health sector, where they have worsened. Total non-consolidated debt of public corporations included in general government also remains high, at around 19.0 % of GDP at the end of 2017. Measures to improve the monitoring of state-owned enterprises are being rolled out, but their impact remains to be seen. An ongoing debt management and recapitalisation plan for state-owned enterprises should reduce indebtedness and lower interest costs, but good incentives could be reinforced by ensuring a predictable and transparent framework for limited budgetary transfers.

               (12)The recovery of the Portuguese labour market continues, in line with strengthened economic performance. The economy added about 150,000 jobs in 2017 and the employment rate (20-64 year olds) increased up to 73.4. % in 2017, back to pre-crisis levels. The unemployment rate dropped considerably and is now below the euro area average. The long-term unemployment rate has also fallen rapidly, although it remains relatively high. Besides ongoing active labour market policies, exemptions on social security and a public employment service model of personalised support for job seekers, Portugal is also planning to implement one-stop shops for employment in 2018. This could play a major role in ensuring wider coverage of activation measures. Poverty and inequality indicators have also improved further. The 'at-risk-of-poverty or social exclusion' rate is coming closer to the EU average and the income share of the poorest 20 % has increased since 2015. However, the level of income inequality is still high. Moreover, the effectiveness of social transfers (excluding pensions) in lifting people out of poverty is low, the adequacy of the minimum income scheme (though improved) remains limited and housing affordability is an increasing challenge for low-income households.

               (13)Despite a significant increase in the number of permanent jobs in 2017, the proportion of temporary employees remained stable at 22 %, still one of the highest levels in the EU. In 2017, around 82 % of temporary employees were in this situation involuntarily. While more people are moving from temporary to permanent jobs, temporary contracts remain the norm for unemployed people finding a job. Moreover, the (already wide) wage gap between temporary and permanent employees grew during the crisis. Measures to promote the creation of permanent jobs (e.g. Contrato-Emprego) and exemptions from social contributions in return for recruiting people belonging to vulnerable groups proved effective but had limited coverage. Some aspects of employment protection legislation and cumbersome court procedures may still discourage recruitment on open-ended contracts. However, no action is currently planned to review the legal framework for dismissals. The government is planning measures to address labour market segmentation through tripartite discussion with social partners.

               (14)The overall skills level of the adult population remains among the lowest in Europe, hampering the country’s innovation potential and competitiveness. This includes digital skills: in 2017, only 50 % of citizens aged 16-74 possessed basic or above basic digital skills (against an EU average of 57 %). Programmes are being rolled out in this regard (notably Qualifica and the national digital competences initiative Incode 2030), but their effectiveness in upgrading workers’ basic (numeracy, literacy and digital) skills and ultimately raising productivity will depend on the coverage and quality of the training offered, going beyond the mere recognition of skills. While evidence suggests that recent minimum wage increases (amounting to a cumulative rise of 18.3 % since 2014) have not harmed the employment rate among low-skilled workers, the substantial rise in the number of employees covered, up to 20.4 % in the third quarter of 2017, resulted in increasing wage compression. This threatens to reduce the skills wage premium, in particular between low- and medium-skilled workers, thus lowering incentives for the low skilled to invest in education and training. The government is closely monitoring minimum wage developments together with social partners.

               (15)Early school leaving remains higher than the EU average, but it is on a long-term downward trend, partly thanks to measures being implemented to encourage educational success and reduce drop-out rates. Educational outcomes continue to improve, but there are equity concerns as proportions of low achievers differ significantly between the bottom and the top socioeconomic quartiles. Attainment in tertiary education (age 30-34) decreased from 34.6 % in 2016 to 33.9 % in 2017, far below the national target of 40 % by 2020. Despite the high employability of science, engineering, technology, and mathematics graduates, there is low student uptake in these fields.

               (16)Despite the positive developments in the Portuguese Research & Innovation system in the last years, notably in terms of quantity and quality of human resources and scientific production, overall significant bottlenecks remain in creating a culture and the enabling conditions for stronger academia-business cooperation. These include barriers to knowledge and technology transfer, commercialisation of research outputs as well as research career tracks that do not sufficiently incentivise researchers to explore the avenues of “entrepreneurial research" and the opportunities for collaboration with industry.  Further raising the awareness and clarity of intellectual property in the relation between academia and business could contribute to reduce the time of execution of contractual objectives, the economic monetization of scientific knowledge as well as their economic potential.

               (17)A comprehensive strategy for a faster reduction of non-performing assets is being implemented. This helped to reduce the ratio of non-performing loans from 17.2 % of gross loans at the end of 2016 to 14.6 % in the third quarter of 2017. Corporate non-performing loans are a particular concern, as they account for about two-thirds of the total stock of non-performing loans; the ratio of corporate non-performing loans remains high, at 26.6 % of gross loans. Resolving bad assets is key to freeing up credit supply for new investments and sustainable growth. However, procedures for insolvent firms and thin secondary markets for bad assets remain significant impediments to reducing the ratio of non-performing loans. Although capital increases, together with the ongoing efforts to reduce costs, are improving financial sector prospects, profitability remains low, exposure to sovereign debt high and capital buffers weak.

               (18)Access to finance and capital remains a major challenge for the Portuguese economy. Obtaining stable access to finance, and in particular to equity capital, is considered to be one of the major challenges for Portuguese enterprises, further exacerbated by the deleveraging pressures. In relative terms, alternative sources of finances remain of little relevance. In recent years, new programmes and credit lines have been launched, along with further simplifications in the business environment, but there is still room for improvement. At the same time, though decreasing, non-performing loans and corporate debt remain high and improvements in the allocation of capital towards more productive firms would be beneficial for the investment environment.

               (19)Despite progress in introducing administrative simplification for cross-cutting matters impacting the daily lives of citizens and businesses, sector-specific regulatory and administrative barriers still impede investment and an efficient allocation of resources. A revamp of procedural workflows by shortening deadlines for decision-making, derogating from the tacit approval principle in very limited cases only and replacing authorisation schemes requiring the submission of multiple documents by 'responsible declarations' are much needed sector-specific reforms in this regard. Administrative charges in the construction sector should be brought into proportion with actual costs. Competition in public procurement remains limited. The revised public procurement code aims to promote transparency, competition and better management of public contracts. The implementation of the new rules should be monitored, including the impact of the stricter rules on the use of direct awards. Even though the Portuguese justice system continues to improve its efficiency, the length of proceedings in administrative courts remains a challenge. Moreover, corruption and lack of transparency are still perceived by businesses as areas of concern. While progress has continued as regards prosecuting corruption, efforts to improve the culture of integrity in public institutions have not so far shown sufficient results.

               (20)Regulatory reforms have been scarce since the financial assistance programme, halting or at times even reversing reforms agreed in that context. Corporate groups are banned from providing several professional services. By-laws regulating certain professional business services, notably legal services, are less ambitious than the framework law in decisive respects, such as legal form, shareholding, management, advertising and multidisciplinary practices. A reform of the authorisation and registration of construction service providers has been scarcely complemented by an easing of controls for installation services and building controls.

               (21)In the context of the 2018 European Semester, the Commission has carried out a comprehensive analysis of Portugal’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 Portugal in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Portugal but also the extent to which they comply with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input for future national decisions.

               (22)In the light of this assessment, the Council has examined the 2018 Stability Programme and its opinion
                  10
                is reflected in particular in recommendation 1 below.

               (23)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 below,

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

               1.Ensure that the nominal growth rate of net primary government expenditure does not exceed 0.7 % in 2019, corresponding to an annual structural adjustment of 0.6 % of GDP. Use windfall gains to accelerate the reduction of the general government debt ratio. Strengthen expenditure control, cost effectiveness and adequate budgeting, in particular in the health sector with a focus on the reduction of arrears in hospitals. Improve the financial sustainability of state-owned enterprises, in particular by increasing their overall net income and by reducing debt.

               2.Promote an environment conducive to hiring on open-ended contracts, including by reviewing the legal framework in consultation with social partners. Increase the skills level of the adult population, including digital literacy, by strengthening and broadening the coverage of the training component in adult qualification programmes. Improve higher education uptake, namely in science and technology fields.

               3.Increase the efficiency of insolvency and recovery proceedings and reduce impediments to the secondary market for non-performing loans. Improve access to finance for businesses. Reduce the administrative burden by shortening procedural deadlines, using more tacit approval and reducing document submission requirements. Remove persistent regulatory restrictions by ensuring a proper implementation of the framework law for highly regulated professions. Increase the efficiency of administrative courts, inter alia by decreasing the length of proceedings.

               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) 421 final.

                     (4)

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

                     (5)

                        SWD(2018) 220 final.

                     (6)

                        COM(2018) 120 final.

                     (7)

                        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).

                     (8)

                        COM(2014) 494 final.

                     (9)

                        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.

                     (10)

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