title: Council Recommendation of 9 July 2013 on the National Reform Programme 2013 of Belgium and delivering a Council opinion on the Stability Programme of Belgium, 2012-2016

text:
               30.7.2013

               EN

               Official Journal of the European Union

               C 217/5

      COUNCIL RECOMMENDATION

   of 9 July 2013
   on the National Reform Programme 2013 of Belgium and delivering a Council opinion on the Stability Programme of Belgium, 2012-2016
   2013/C 217/02
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
   Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
   Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission’s proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which focuses on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.

               (2)

               On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, it adopted a decision on guidelines for the employment policies of the Member States (3), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

               (3)

               On 29 June 2012, the Member States’ Heads of State or Government decided on a Compact for Growth and Jobs, providing a coherent framework for action at national, EU and euro area levels using all possible levers, instruments and policies. They decided on action to be taken at the level of the Member States, in particular expressing full commitment to achieving the objectives of the Europe 2020 strategy and to implementing the country-specific recommendations.

               (4)

               On 10 July 2012, the Council adopted a recommendation (4) on Belgium’s National Reform Programme for 2012 and delivered its opinion on Belgium’s Stability Programme for 2012-2015.

               (5)

               On 28 November 2012, the Commission adopted the Annual Growth Survey, marking the start of the 2013 European Semester for economic policy coordination. Also on 28 November 2012, the Commission, on the basis of Regulation (EU) No 1176/2011, adopted the Alert Mechanism Report, in which it identified Belgium as one of the Member States for which an in-depth review would be carried out.

               (6)

               The European Parliament has been duly involved in the European Semester, in accordance with Regulation (EC) No 1466/97, and, on 7 February 2013, adopted a resolution on employment and social aspects in the Annual Growth Survey 2013 and a resolution on the contribution to the Annual Growth Survey 2013.

               (7)

               On 14 March 2013, the European Council endorsed the priorities for ensuring financial stability, fiscal consolidation and action to foster growth. It underscored the need to pursue differentiated, growth-friendly fiscal consolidation, to restore normal lending conditions to the economy, to promote growth and competitiveness, to tackle unemployment and the social consequences of the crisis, and to modernise public administration.

               (8)

               On 10 April 2013, the Commission published the results of its in-depth review for Belgium, under Article 5 of Regulation (EU) No 1176/2011. The Commission’s analysis leads it to conclude that Belgium is experiencing macroeconomic imbalances, which deserve monitoring and require policy action. In particular, macroeconomic developments in the areas of external competitiveness of goods, and indebtedness, especially concerning the implications of the high level of public debt for the real economy, continue to deserve attention.

               (9)

               On 29 April 2013, Belgium submitted its 2013 National Reform Programme and its Stability Programme for the period 2012-2016. In order to take account of their interlinkages, the two Programmes have been assessed at the same time.

               (10)

               Based on the assessment of the Stability Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underpinning the budgetary projections in the Programme is plausible. In comparison to the Commission services 2013 spring forecast, which projects GDP growth to be flat in 2013 and to increase to 1,2 % in 2014, it is slightly more optimistic (projecting 0,2 % and 1,5 %, respectively). Since 2010, and particularly in 2012, Belgium has implemented consolidation measures and, also in 2012, it introduced structural reforms in the pension system, the unemployment benefit system and product markets. However, the fiscal effort was not sufficient to be in line with the Council Recommendation of 2 December 2009 to end the excessive deficit situation. Also in light of the recapitalisation of the banking group Dexia, which had a negative impact of 0,8 % of GDP on the deficit outcome, and the worse than expected economic developments in the second half of 2012, the 2012 deadline for correction of the excessive deficit has been missed. Due to this, it is now foreseen that the deficit will be brought below the 3 % of GDP Treaty reference value as of 2013. The objective of the budgetary strategy outlined in the Stability Programme is to reach a balanced budget in structural terms by 2015 and to achieve the medium-term objective (MTO) in 2016. The Stability Programme has changed the MTO from a surplus of 0,5 % to 0,75 % of GDP. The new MTO is in line with the requirements of the Stability and Growth Pact. The Stability Programme is compatible with the new excessive deficit procedure deadline of 2013, but according to the Commission services 2013 spring forecast the safety margin against breaching the 3 % of GDP Treaty reference value is narrow, with a deficit projected at 2,9 % of GDP in 2013.
               The planned annual progress towards the MTO, which is projected to be reached by 2016, is higher than 0,5 % of GDP (in structural terms). No consolidation measures have been specified beyond 2013. According to the information provided in the Stability Programme, the growth rate of government expenditure, net of discretionary revenue measures, over 2014-2016 is expected to contribute to an annual structural adjustment towards the MTO by 0,5 % of GDP. According to the Stability Programme, the debt ratio will peak at 100 % of GDP in 2013 and will decline gradually to 93 % of GDP by 2016. From 2014 to 2016, Belgium can be expected to be in a transitional period regarding compliance with the debt criterion. According to the plans, the debt benchmark will be met at the end of the transitional period. Based on the Commission services 2013 spring forecast, which projects the debt ratio to reach 101,4 % in 2013 and to rise further to 102,1 % of GDP in 2014 under a no-policy-change assumption, the transition towards the debt reduction rule will not be respected in 2014, which indicates that progress towards the MTO is not sufficient. The Stability Programme does not explain how the planned adjustment will be shared between the different layers of government, an issue also addressed in last year’s Country Specific Recommendation. In addition to a rules-based multi-annual framework for general government, it is necessary to design and agree on explicit coordination arrangements to secure and enforce more robust, automatic commitments from the regions, communities and local authorities, in order to meet budgetary targets.

               (11)

               Belgium faces a very significant projected increase in age-related expenditure (+2,0 percentage points of GDP) already in the 2010-2020 period, in particular in the areas of pensions and long-term care. The initiated reform of old age social security is set to have a positive impact on the employment of older people. Nevertheless, forecasts show that Belgium will fall short of the 2020 target it set for itself in this area. Given the magnitude of the challenge, additional efforts will be required to close the gap between the effective and the statutory retirement age. Measures to link the statutory retirement age to developments in life expectancy would make it possible to safeguard the sustainability of the pension system in the long term. The need to achieve financial sustainability will have to be balanced against the need to maintain the adequacy of the old-age social security schemes. In long-term care, improved cost-efficiency of public spending on long-term care services, cost-saving measures such as health prevention and rehabilitation, and the creation of better conditions for independent living should be explored in the light of the relatively high cost of institutional care in Belgium.

               (12)

               Belgium’s long term loss of competitiveness is caused by several factors, including the wage-setting system, malfunctions in the markets for inputs, and non-cost factors related to the innovation capacity of the economy. The wage norm of 1996, intended to preserve competitiveness vis-à-vis the main trading partners, has not always fulfilled its role. The immediate measures taken so far to bring wage evolutions more in line with productivity levels are steps in the right direction, but are not sufficient to ensure long-term compatibility between wage and productivity developments. Structural improvements to the wage-bargaining framework are still needed. These include automatic corrections in case the wage norm is not respected or where the health index increase exceeds wage increases in the main trading partners. The wage-bargaining system should ensure that wage developments follow subregional and local level productivity dynamics. Belgium specialises in intermediate products for which international competition is severe, making it difficult to include variations in input prices in the end price. While the strengths of the Belgian research and innovation (R&D) system have played a mitigating role as regards cost-competitiveness, business R&D remains very concentrated and broader uptake by businesses lags behind. The framework conditions for speeding up the transition towards a more knowledge-intensive economy should be reinforced, focusing on entrepreneurship, facilitating firm dynamics and the formation of human capital.

               (13)

               Prices for electricity and many other goods and services are higher in Belgium than in other Member States, reflecting weak competition and structural barriers. Prices in the retail sector remain above the euro area average, while restrictions on professional services impede the development of innovative business models and restrain investment. Belgium has made only limited progress in improving competition in the network industries and the establishment of strong and independent regulators remains incomplete. Belgium has the second-lowest rate of mobile broadband penetration in the Union, largely due to regulatory and coordination problems with regard to spectrum availability. While higher consumer switching has diminished the dominance in generation of the traditional energy operator, competition at retail level for electricity and gas and at wholesale level for electricity remains a challenge with high distribution costs disproportionately contributing to net price levels for industrial users when compared with neighbouring countries. Belgium’s decision to control end user retail prices for electricity and gas may hamper capacity investments and new market entry. Licensing conditions in the postal sector still raise concerns. Domestic rail passenger transport is not open to competition and port labour legislation has not been modernised. Given the importance of all of the above-mentioned sectors for competitiveness, these measures are urgently needed.

               (14)

               The Belgian taxation system relies disproportionately on direct taxes and contains loopholes that diminish its fairness. While Belgium has made some efforts to reduce the overall tax burden on labour, the implicit tax rate is still among the highest in the Union for most types of workers. Belgium continues to be one of the countries with the lowest share of environmental taxation in total tax revenues. There is scope for simplifying the tax system and improving its efficiency, including by reducing and streamlining tax expenditures, as well as removing unjustified or ineffective reduced VAT rates.

               (15)

               Belgium suffers from below-average and stagnating labour-market participation and high employment and unemployment disparities across regions and population subgroups. The population groups with the lowest participation in the labour market include those with a migrant background, the elderly and low-skilled youth in all regions. These groups are also exposed to higher risks of poverty and social exclusion. The reform of the unemployment benefits system is a move in the right direction but does not in itself guarantee more effective matching of labour supply and demand unless it is associated with effective job-search assistance and training opportunities. The interaction between the targeted reductions at the federal level and the employment support schemes implemented by the regions generates considerable complexity. Although the measures aimed at low-skilled youth are likely to also benefit migrants, an encompassing strategy specifically aimed at this target group is called for. In addition, it would seem difficult to solve certain labour mismatches without significantly increasing interregional labour mobility. A more fundamental assessment is needed of how to make the provision of education and training more transparent and efficient and how to reinforce the synergy between the different training providers.

               (16)

               Projections for greenhouse gas emissions until 2020 indicate that Belgium will fail to meet its 15 % reduction target. It remains unclear how the isolated initiatives taken by the different authorities will ensure that the target is met, or how the burden will be shared between the regions. The impact of the combined measures on reducing emissions, in particular from the transport sector and buildings, remains unclear. Congestion is placing a heavy burden on the Belgian economy, estimated to be as high as 2 % of GDP and one of the highest in Europe, but the implementation of the new traffic tax system in the three regions has been delayed until 2016.

               (17)

               The coordination issues inherent in a highly regionalised structure put emphasis on an efficient organisation of public governance, as the presence of multiple networks, layers and actors may lead to duplication of structures with weakened governance and higher administrative costs. These issues come to the fore with regard to taxation and the burden sharing of budgetary efforts including for education and social security, which, in general, requires more cooperation and coordination.

               (18)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of Belgium’s economic policy. It has assessed the National Reform Programme and the Stability Programme, and presented an in-depth review. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Belgium but also their compliance with EU rules and guidance, given the need to reinforce the overall economic governance of the Union by providing EU-level input into future national decisions. Its recommendations under the European Semester are reflected in recommendations (1) to (7) below.

               (19)

               In the light of this assessment, the Council has examined the Stability Programme, and its opinion (5) is reflected in particular in recommendation (1) below.

               (20)

               In the light of the Commission’s in-depth review and this assessment, the Council has examined the National Reform Programme and the Stability Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations (1) to (5) below.

               (21)

               In the context of the European Semester the Commission has also carried out an analysis of the economic policy of the euro area as a whole. On this basis the Council has issued specific recommendations addressed to the Member States whose currency is the euro (6). As a country whose currency is the euro, Belgium should also ensure the full and timely implementation of those recommendations,

         HEREBY RECOMMENDS that Belgium take action within the period 2013-2014 to:

               1.

               Adopt additional measures to achieve the structural adjustment effort specified in the Council Decision to give notice to correct the excessive deficit by 2013 and to enhance the sustainability and credibility of the consolidation. A durable correction of the fiscal imbalances requires the credible implementation of ambitious structural reforms which would increase the adjustment capacity and boost potential growth. After the correction of the excessive deficit, pursue the structural adjustment at an appropriate pace so as to reach the MTO by 2016 and ensure that the high debt ratio is put on a firm downward path. To this end, present, by 15 October 2013, growth-friendly structural measures for 2014 which ensure a sustainable correction of the excessive deficit and sufficient progress towards the MTO. Ensure that the adjustment path is balanced over time or even front-loaded. Adopt explicit coordination arrangements to ensure that budgetary targets are binding at federal and sub-federal levels within a medium-term planning perspective, including through the prompt adoption of a rule on the general government budget balance/surplus that complies with the requirements of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union and to increase the transparency of burden sharing and accountability across government layers.

               2.

               Step up efforts to close the gap between the effective and statutory retirement age, including by pursuing the ongoing reforms to reduce the early-exit possibilities. Underpin reforms of the old-age social security systems with employment-support measures and labour-market reforms conducive to active ageing. Increase the effective retirement age by aligning retirement age or pension benefits to changes in life expectancy. Continue to improve the cost-efficiency of public spending on long term institutional care.

               3.

               To restore competitiveness, pursue the ongoing efforts to reform the wage-setting system, including wage indexation, in particular by taking structural measures, in consultation with the social partners and in accordance with national practice, to ensure that wage setting is responsive to productivity developments, reflects subregional and local differences in productivity and labour-market conditions, and provides automatic corrections when wage evolution undermines cost-competitiveness.

               4.

               Present concrete and time-specific structural measures to improve competition in the services sector, by removing barriers in retail and excessive restrictions in professional services, and improve the provision of mobile broadband. Continue to improve the functioning of the energy sector by reducing distribution costs and monitoring retail prices, and strengthen the independence of the regulators in the energy, telecoms and the transport sectors (railway, airport). Remove remaining regulatory barriers in the postal sector.

               5.

               Establish concrete and time-specific proposals for shifting taxes from labour to less growth-distortive tax bases, notably by exploring the potential of environmental taxes, for example on diesel, heating fuels and the taxation of the private use of company cars. Simplify the tax system by reducing tax expenditures in income taxation, increasing VAT efficiency and improving tax compliance by closing existing loopholes.

               6.

               Further reduce disincentives to work by ensuring effective enforcement of job-search requirements and personalised job search assistance for all unemployed. Take measures to increase interregional labour mobility. Simplify and reinforce coherence between employment incentives, activation policies, labour matching, education, lifelong learning and vocational training policies for older people and youth. Develop comprehensive social-inclusion and labour market strategies for people with a migrant background.

               7.

               Take concrete measures and agree a clear division of efforts between the federal and regional authorities to ensure progress towards reaching the targets for reducing greenhouse gas emissions from non-Emissions Trading Scheme activities, in particular from transport and buildings.

      Done at Brussels, 9 July 2013.

            For the Council

            The President

         R. ŠADŽIUS

      (1)  OJ L 209, 2.8.1997, p. 1.

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

      (3)  Maintained for 2013 by Council Decision 2013/208/EU of 22 April 2013 on guidelines for the employment policies of the Member States (OJ L 118, 30.4.2013, p. 21).

      (4)  OJ C 219, 24.7.2012, p. 5.

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

      (6)  See page 97 of the current Official Journal.


title: 2011/24/EU: Commission Recommendation of 11 January 2011 on the certification of defence undertakings under Article 9 of Directive 2009/43/EC of the European Parliament and of the Council simplifying terms and conditions of transfers of defence-related products within the Community  Text with EEA relevance

text:
               15.1.2011

               EN

               Official Journal of the European Union

               L 11/62

         COMMISSION RECOMMENDATION
   of 11 January 2011
   on the certification of defence undertakings under Article 9 of Directive 2009/43/EC of the European Parliament and of the Council simplifying terms and conditions of transfers of defence-related products within the Community
   (Text with EEA relevance)
   (2011/24/EU)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
   Whereas:

               (1)

               Article 9 of Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community (1) lays down the criteria for the certification by Member States of defence undertakings established on their territory as recipients of defence-related products transferred under general transfer licences.

               (2)

               The certification of undertakings is a key element of the simplified licensing system introduced by Directive 2009/43/EC.

               (3)

               Different interpretations of the certification criteria by Members States could hamper the implementation of Directive 2009/43/EC and the achievement of its simplification objective.

               (4)

               A convergent interpretation and application of the certification criteria by Member States are important to the mutual recognition of certificates referred to in article 9(6) of Directive 2009/43/EC and to a wide use of general licenses.

               (5)

               Representatives of Member States in the Committee established by Article 14 of Directive 2009/43/EC have suggested that convergent interpretation and application of the certification criteria could be achieved by the adoption of a Commission recommendation.

               (6)

               Representatives of Member States in the Committee established by Article 14 of Directive 2009/43/EC therefore established a working group to prepare guidelines on the certification of defence undertakings under Article 9 of Directive 2009/43/EC.

               (7)

               The guidelines set out in this Recommendation are based on the best practices of certain Member States, which have proven to be efficient and practicable,

         HAS ADOPTED THIS RECOMMENDATION:
   1.   THE CERTIFICATION CRITERIA

   1.1.   Assessment of criteria set out in points (a) and (b) of Article 9(2)

   Only recipient undertakings which actually manufacture defence-related products or partly completed defence-related products covered by Directive 2009/43/EC, consisting of components and/or systems and sub-systems purchased from third parties, with a view to being placed on the market under his own name or trademark should be eligible for certification.
   Certified recipient undertakings should use the defence-related products received under the general transfer licences referred to in Article 5(2)(b) of Directive 2009/43/EC for their own production (which includes incorporation of components into other products, or as spares or replacement parts) and should not retransfer or export them as such, (except for the purposes of maintenance or repair) where the prior authorisation of an originating Member State is required.
   Competent authorities should be able, where appropriate and before issuing a certificate, to require a statement from recipient undertaking whereby they commit themselves to the following:

               (a)

               to use the defence-related products, received under the general licences referred to in Article 5(2)(b) of Directive 2009/43/EC, for their own production;

               (b)

               to refrain from retransferring or exporting the relevant products as such, except for the purposes of maintenance or repair.

         1.2.   Supplies to recipient undertakings purchasing for the exclusive use by the armed forces of a Member State under general transfer licences referred to in Article 5(2)(a) of Directive 2009/43/EC

   Recipient undertakings qualifying as contracting authorities within the meaning of Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council (2), purchasing for the exclusive use by the armed forces of a Member State, should be entitled to receive defence-related products under the general licences referred to in Article 5(2)(a) of Directive 2009/43/EC without being certified.
   1.3.   Assessment of criteria set out in points (c) and (f) of Article 9(2)

   The senior executive referred to in Article 9(2)(c) of Directive 2009/43/EC should be personally responsible for the internal compliance programme or transfer and export management system implemented in the undertaking and the staff in charge of export and transfer control. That senior executive should be a member of the managerial body of the undertaking.
   Where the certificate is requested for one or several production units, the description of the chain of responsibility within the recipient undertaking required under Article 9(2)(f) of Directive 2009/43/EC should clearly establish the control of the senior executive over the staff of those units in charge of export and transfer control.
   Questions and guidelines on the description of internal compliance programmes and for subsequent assessment are set out in Annex I. Member States may add further questions. Where Member States add any further questions, they should be directly relevant to the certification assessment process.
   1.4.   Organisational Structure to be certified and assessment of criteria set out in points (d) and (e) of Article 9(2)

   How certification is approached will depend on a recipient undertaking’s organisational structure and how it delegates responsibility for transfer and export controls. The undertaking could be certified as a whole or by business unit. Undertakings with production units and associated activities at several addresses, that have been delegated the responsibility for transfer and export controls, should specify which of those units are to be covered by the certificate.
   2.   THE CERTIFICATION

   2.1.   A standard certificate template

   The use of a standard certificate template set out in Annex II is recommended.
   The certificate should be drafted in one of the official languages of the Member State issuing the certificate and preferably in one of the official languages of another Member State, as indicated by the certified recipient undertaking. The date of entry into force of the certificate should be marked on the certificate.
   For the purposes of Article 9(4)(a), the certificate should require the certified recipient undertaking to notify the competent authority of all factors and events arising after the certificate is granted which may influence validity or content of the certificate. The certified recipient undertaking should notify in particular the following:

               (a)

               any major change in its industrial activity in defence-related products;

               (b)

               any change in the address where records concerning received defence-related products are accessible to the competent authority.

         For the purposes of point (a), the relevance of the change justifying notification should, where appropriate, be assessed in the light of the information already provided for the registration as a defence undertaking or for the granting of any defence activity licence or manufacturing licence.
   2.2.   Exchange of information on recipient undertakings seeking certification

   For the purposes of Article 12 of the Directive 2009/43/EC, national competent authorities are encouraged to exchange all relevant information regarding the issuance of certificates. If for the assessment of a recipient undertaking in view of issuing a certificate it is necessary to collect information from other competent authorities, the issuing national competent authority should liaise with the other relevant national competent authorities before issuing the certificate.
   3.   MONITORING OF COMPLIANCE

   3.1.   Powers of competent authorities to carry out compliance visits

   For the purpose of visits to verify compliance with the conditions attached to the certificate and with the criteria set out in Article 9(2), inspectors assigned by the competent authority should be at least empowered:

               (a)

               to enter relevant premises;

               (b)

               to examine and take copies of the records, data, rules of procedure and any other material relevant to products exported, transferred or received under a transfer licence from another Member State.

         Such inspections should be carried out in compliance with the legislation of the Member State in which they are to be undertaken.
   3.2.   Cases justifying a re-assessment

   A re-assessment of compliance with the conditions attached to the certificate and with the criteria set out in Article 9(2) should be carried out by the competent authority in the following cases:

               (a)

               major changes to the certified recipient undertaking, including changes to the internal organisation of the undertaking or to its activities;

               (b)

               indication that the relevant conditions and criteria are no longer met by the certified recipient undertaking;

               (c)

               where the certified recipient undertaking has been prescribed to take corrective action;

               (d)

               where suspension of the certificate is to be lifted.

         3.3.   Closer monitoring of newly certified recipient undertakings

   The competent authority should pay particular attention to the monitoring of newly certified recipient undertakings. The competent authority should carry out a compliance monitoring preferably during the first year after the first time a certificate is issued.
   4.   CORRECTIVE MEASURES, SUSPENSION AND REVOCATION OF CERTIFICATES

   4.1.   Decisions to prescribe corrective action

   Where a certified recipient undertaking no longer complies with one or more of the criteria set out in Article 9(2) of Directive 2009/43/EC or with the conditions attached to the certificate and where the competent authority deems the non-compliance to be of minor importance, the competent authority should, within a time period not exceeding 1 month from the date the competent authority first became aware of the non-compliance, take a decision requiring the recipient undertaking to take corrective action.
   That decision should immediately be notified in writing by the competent authority to the certified recipient undertaking. Such decision should require the certified recipient undertaking to carry out the prescribed corrective action within a time period set out in the written notification.
   On expiry of that time period, the competent authority should verify that the corrective action has been implemented. The verification could include a site visit, a meeting with the senior executive referred to in Article 9(2)(c) of Directive 2009/43/EC or a senior officer nominated by that senior executive, and/or the assessment of written documentation supplied by that senior executive.
   Within a time period not exceeding 3 months after completion of the verification, the certified recipient undertaking should be notified in writing of the assessment by the competent authority of the appropriateness of the corrective action undertaken.
   4.2.   Suspension and revocation of certificates

   The competent authority should suspend or revoke the certificate in any of the following cases:

               (a)

               the certified recipient undertaking concerned has failed to take the corrective action within the time period set out in the written notification from the competent authority requiring the certified recipient undertaking to take corrective action;

               (b)

               the certified recipient undertaking no longer complies with one or more of the criteria set out in Article 9(2) of Directive 2009/43/EC or with the conditions attached to the certificate and the competent authority deems the non-compliance to be of serious importance.

         The decision suspending or revoking the certificate should immediately be notified in writing by the competent authority to the certified recipient undertaking and to the Commission.
   The competent authority should maintain the suspension until the certified recipient undertaking can demonstrate compliance with the criteria set out in Article 9(2) of Directive 2009/43/EC and with the conditions attached to the certificate. The competent authority should, at the time of written notification of the suspension of the certificate or in subsequent written correspondence, impose a time limit within which such compliance should be demonstrated by the certified recipient undertaking.
   4.3.   Lifting suspension of the certificate

   Following expiry of the time limit imposed in the decision on suspension, the competent authority should verify whether the certified recipient undertaking is in compliance with the criteria set out in Article 9(2) of Directive 2009/43/EC and with the conditions attached to the certificate.
   The verification could include a site visit, a meeting with the senior executive referred to in Article 9(2)(c) of Directive 2009/43/EC or a senior officer nominated by that senior executive, and/or the assessment of written documentation supplied by that senior executive.
   Within a time period not exceeding 1 month after completion of the verification, a new decision from the competent authority should be notified in writing to the certified recipient undertaking stating any of the following:

               (a)

               that the suspension of certificate is lifted and the date on which it takes effect;

               (b)

               the suspension is maintained until a certain date, following which another verification will be carried out;

               (c)

               the certificate is revoked.

         5.   EXCHANGE OF INFORMATION RELATING TO CERTIFICATION

   Where a certificate has been granted, suspended, revoked or suspension of a certificate has been lifted, the competent authority should immediately notify in writing the certified recipient undertaking and the Commission.
   6.   FOLLOW-UP

   The Member States are invited to give effect to this Recommendation by 30 June 2012 at the latest.
   Member States are encouraged to inform the Commission of any measures taken to give effect to this Recommendation.
   7.   ADDRESSEES

   This Recommendation is addressed to the Member States.

      Done at Brussels, 11 January 2011.

            For the Commission

         Antonio TAJANI

            Vice-President

      (1)  OJ L 146, 10.6.2009, p. 1.

      (2)  OJ L 134, 30.4.2004, p. 114.

      ANNEX I

         Questions and guidelines on the description of internal compliance programmes and for subsequent assessment

                  Core areas

                  Key questions

                  Best practice recommendations

                  Relevant certification criterion

                              1.

                              Organisational, human and technical resources allocated to the management of transfers and exports

                  What percentage of the undertaking’s business (annual turnover) depends on exports and transfers of licensable items?
                  How many exports and transfers of such items take place within a year?
                  What functions within the company (e.g. purchasing, engineering, project management, shipping) are involved in the export and transfer process and how are those responsibilities organised?
                  Has the undertaking an electronic system to manage exports and transfers? What are its main features?

                  The purpose of these questions is to obtain additional information on the undertaking’s internal organisation, which is relevant for assessing the impact of export/transfer activities on the undertaking and on the related operational procedures

                  How many people are either employed solely to deal with the management of exports and transfers or have responsibility for it with other tasks?

                  There should always be at least 2 people in case of holiday, illness etc.

                  Does the undertaking internally circulate its written commitment of compliance with export/transfer control regulations and of adherence to any relevant end-use and export restrictions?
                  Does the undertaking internally circulate its written commitment to provide on request end-use/end-user information?

                  Both written commitments should be included in the compliance manuals available to export/transfer control staff and should also be known to all employees concerned by export/transfer controls (e.g.: sales department …).

                  9(2)(d) and 9(2)(e)

                  Has the undertaking so far complied with export/transfer control regulations?

                  The undertaking should have a sound track record of compliance with export/transfer control regulations.

                  9(2)(a)

                  Are compliance manuals being provided and kept up-to-date for export/transfer control staff?

                  Compliance manuals for the use and guidance of export/transfer control staff should be available, at least in electronic version (for instance, on the undertaking’s intranet).
                  Those manuals should contain the operating and organisational procedures to be followed by export/transfer control staff.
                  Export/transfer control staff should be expeditiously informed of the amendments to the manual applying to their tasks as well as of their entry into force.

                  9(2)(f)

                              2.

                              Chain of responsibility

                  Please describe the chain of responsibility for exports and transfers within your undertaking.

                  The responsibility for export/transfer control compliance should be set down in writing. The written support describing the chain of responsibility (such as records or organisation charts) should be kept up-to-date.
                  The description should provide detail on delegations of responsibility and the adopted routines in situations when the senior executive referred to in Article 9(2)(c) of Directive 2009/43/EC is absent.

                  9(2)(f)

                  Is such a description always accessible to the competent authority?

                  Knowledge of the chain of responsibility should always be easily accessible to the competent authority not only at the application phase but also for subsequent compliance monitoring and compliance visits.

                  9(2)(f)

                  In which part of your undertaking is the export/transfer management situated?

                  Whether export/transfer control management is organised in each shipping unit, in the head office or as a separate export control department should depend on the size and the structure of the undertaking.

                  9(2)(f)

                  How do export/transfer control staff interact with other functions inside the undertaking?

                  Export/transfer control staff should be protected as much as possible from conflicts of interest. They should be empowered to stop a transaction.

                  9(2)(f)

                  How is the relationship between the export/transfer control staff and the senior executive organised, for example, the possibility of information exchange?

                  Export control staff should be allowed to report directly to the senior executive if they require authority to stop a transaction.

                  9(2)(f)

                  Please indicate the other responsibilities of the senior executive who has been appointed personally responsible for transfers and exports

                  The senior executive should be part of the top management. His/her position should not present a conflict of interest (e.g.: he/she should not also be head of sales …)

                  9(2)(c) and (f)

            3.   Internal audits

                              (a)

                              Random inspection

                  How frequently are random inspections carried out?

                  The ICP and the daily operating procedures should be subject to (unexpected) random checks.

                  9(2)(f)

                              (b)

                              internal audits

                  How frequent are internal audits?

                  Ideally, once a year and, at least, every 3 years.

                  9(2)(f)

                  What percentage of exports/transfers is subject to checks?

                  Depending on the number of exports/transfers, at least 1 % and an expected maximum of 20 %. The ratio can vary each time an audit is undertaken.

                  Who carries out these checks?

                  Possible answers should be one of the following:

                              —

                              someone senior in the chain of responsibility for export/transfer controls,

                              —

                              the quality manager,

                              —

                              the finance manager or accountant,

                              —

                              anyone else of a middle management or higher position who is one step or more away from the day to day work of the export/transfer team.

                  What questions do these audits cover?

                  Audits should provide answers to the following questions:

                              —

                              Are the export limitations put in place abided by?

                              —

                              Are procedures in place and updated to ensure that all export and transfer regulations are complied with?

                              —

                              Is regular awareness training undertaken?

                              —

                              Are records readily available?

                              —

                              Are the records comprehensive?

                              —

                              Do the records cover all the relevant aspects of import, export and transfer, and products remaining within the Member State?

                              —

                              Is information available on the life of relevant products from source to destination?

                              (c)

                              planning, effectiveness and follow-up of the audits

                  How do you ensure you audit a representative range of shipments?

                  At least one shipment per customer or destination should be audited or at least one shipment for each project.

                  9(2)(f)

                  Does the undertaking establish a programme of internal audit?

                  A programme of internal audit should be established ensuring that a representative range of shipments are to be audited.

                  Is the non-compliance disclosed by internal audits systematically corrected? Is a trail of such actions kept?

                  The undertaking should clearly record any suspected occurrence of non-compliance identified by the internal audit, the measures recommended to correct such an occurrence and an assessment of the effectiveness of those corrective measures on compliance.

            4.   General awareness-raising

                              4.1.

                              Operating and organisational procedures

                  How are the undertaking’s internal processes designed to raise general awareness and minimise risks related to export/transfer controls?

                  Operating and organisational procedures should be set down in writing and provide instructions and guidelines on the following:

                              —

                              the overall export/transfer process from reception of an order, assessment of applicability of export/transfer regulations, compliance with relevant export/transfer regulations and shipment or transmission (a final compliance check must be carried out before shipment or transmission),

                              —

                              the monitoring of compliance with the terms and conditions of the licence,

                              —

                              the interaction with external parties, and in certain cases, with other interested departments within the undertaking, such as the legal and sales department,

                              —

                              the coordination of all employees involved in or somehow concerned by export/transfer controls (e.g.: sales staff should be instructed to inform export/transfer control staff of any doubts, and should be informed that the processing of an order can only take place once it has been cleared by the export/transfer control staff),

                              —

                              the coordination and possible exchange of information with the competent authorities (e.g.: possible reporting of suspect transaction orders, possible existence of a voluntary disclosure policy …).

                  9(2)(f)

            4.1.1.   Operating and organisational procedures: pre-licensing phase (1)

                              (a)

                              Embargoes

                  How does the undertaking take into account embargoes?

                  In cases where a shipment is planned to be sent to an embargoed destination, rules should be in place to verify the relevant embargo regulations. Such verification should at least encompass:

                              —

                              the supply bans enacted by the embargo regulation,

                              —

                              the classification of products to be shipped against the embargo’s list of products,

                              —

                              the additional licensing requirements for certain services, such as technical assistance.

                  9(2)(f)

                              (b)

                              Sanctions lists

                  How does the undertaking take into account sanctions lists?

                  The names and identities of the legal and natural persons to be supplied should be checked against the relevant sanctions lists.

                  9(2)(f)

                  When searching for an identity on the sanctions list, what level (or percentage) of certainty that a match has been found is required to consider it a match (‘hit’)? What procedures are followed when a match for a name has been found?

                  Procedural instructions should have been set down in writing which detail how likely matches and ‘hits’ are to be addressed (for example, when a match has been found, it must be reported to the competent authority).

                              (c)

                              Control of listed products (products subject to licensing because of their inclusion in an export/transfer control list)

                  Questions on internal processes ensuring that a listed product is not exported or transferred without a license:

                  9(2)(f)

                              (1)

                              Is there an electronic data processing system in place to record the classification of products received or manufactured by the undertaking?

                  The classification of products should be recorded in an electronic data processing system (only if in existence already). Changes in the control lists should be immediately reported in the system.

                              (2)

                              How are all products subject to licensing requirements classified and recorded, and who is responsible for this? What processes are in place to ensure that the classification of products is kept up to date, and how is it documented?

                  The export/transfer control staff should be responsible for recording and classifying products, if necessary, in consultation with technical experts.

                              (3)

                              How is the end-use by and the reliability of the recipient assessed?

                  The export/transfer control staff should be responsible for verifying the reliability of the recipients, with special attention given to the end-use and risk of diversion.
                  If export/transfer control staff are informed that the recipient has breached export/transfer control regulations, they should inform the competent authority. A verification of the recipient’s good faith is especially important in cases where the customer is new or where the customer’s identity is unclear or when there are doubts about the declared end-use (e.g.: order in unusual quantities, special and unusual transit routes requested by the recipient …).

                              (d)

                              Intangible transfer of technology

                  How does the undertaking ensure compliance with intangible transfer of technology (ITT) requirements (e.g., e-mail and access to the intranet from abroad)?

                  The undertaking should have issued clear and written instructions in relation to ITT over e-mail, fax, intranet or Internet.
                  The provision or transfer of technology should not occur until, an assessment has been made of its licensability, and if licensable, a licence is in place to permit the transfer.

                  9(2)(f)

                              (e)

                              Technical assistance

                  How does the undertaking ensure compliance with technical assistance requirements?

                  A compliance procedure regarding technical assistance should be in place:

                              —

                              for foreign visitors/employees,

                              —

                              for employees (e.g. technicians) abroad,

                              —

                              for conferences, seminars with foreign participants or when organised abroad.

                  9(2)(f)

                              4.1.2.

                              Operating and organisational procedures: licensing phase

                  How does the undertaking ensure that it makes full and complete licence applications?

                  The undertaking should be equipped to fully comply with the licence application process and procedures in force in the Member State where it is established.

                  9(2)(f)

                              4.1.3.

                              Operating and organisational procedures: post licensing phase

                  What internal procedures ensure compliance with the conditions of the license?

                  A final verification of the export/transfer control requirements should take place before final shipment to ensure that the terms and conditions of the licence have been complied with.

                  9(2)(f)

                              4.2.

                              Awareness raising and training of export control staff

                  What information is available to all employees concerned by export/transfer controls and to export control/transfer staff?

                  All should have access to the above-mentioned organisational and operating procedures relating to export/transfer controls.
                  Those operating and organisational procedures should be recorded and updated in compliance manuals available to export/transfer control staff.
                  The operating and organisational procedures should include a clear description of the export/transfer compliance process, from the reception of an order, the verification of compliance with relevant export/transfer regulations to the final shipment or transmission.

                  9(2)(f)

                  How often is the export control staff’s knowledge updated?

                  This should occur when changes are made to national and Union export control legislation and procedures but at a minimum at least once every year. In addition to annual general training updates, it is recommended that commentaries on export/transfer control legislation as well professional journals and magazines, where they exist should also be made available.

                  How is the export/transfer control staff’s knowledge updated?

                  Training through various tools including:

                              —

                              external seminars,

                              —

                              subscription to information sessions offered by competent authorities,

                              —

                              training events, external or online.

                              5.

                              Physical and technical security

                  Is your company security accredited by an appropriate Government body? Please give details.

                  Each national Ministry of Defence or similar organisation is likely to require some measure of security where the undertaking is working on their behalf. The mere fact that the undertaking is security accredited in some way may be enough.

                  9(2)(f)

                  If there is no such official security accreditation, which security measures are in place to secure export/transfer records and procedures?

                  The premises should be entirely enclosed by fencing. The entrance should be secured and controlled. The premises should be under constant surveillance, even during non-working hours. There could be a separate entrance for deliveries and collections, away from the main production area.

                  9(2)(f)

                  What are the security measures regarding software and technology?

                  The system should be password protected and secured by a firewall. The undertaking’s network is secured against unauthorised access.
                  There should be a control on electronic devices (laptops, personal digital assistants, etc.) being taken offsite or overseas and over e-mails sent as part of a project and in other circumstances.

                  9(2)(f)

                              6.

                              Record-keeping and traceability of exports and transfers

                  How do you maintain records of the exportation limitations passed to you from the supplier of the products?

                  Undertakings should include one or more of the following:

                              —

                              electronic file or e-mail folder,

                              —

                              folders based on projects,

                              —

                              folders based on suppliers,

                              —

                              in separate folders for limitations,

                              —

                              on an order system.

                  9(2)(f)

                  How do you relate export limitations to subsequent transfers or exports?

                  Possible answers should include one or more of the following:

                              —

                              electronic file or email folder containing import and subsequent movement information,

                              —

                              as part of a business management system,

                              —

                              folders based on projects or suppliers where all information is kept together,

                              —

                              a filing system similar to the folder system.

                  9(2)(f)

                  How are these records made available to the competent authorities?

                              —

                              It should be possible to make records available electronically — some may require a visit to the sites if access to secure intranets is necessary but some may be able to be transferred for remote checks.

                              —

                              Records can also be available in hard copy and some of these could be scanned, for example for remote checks.

                  9(2)(f)

         (1)  The purpose of the pre-licensing phase is to determine whether the undertaking is impacted by export/transfer controls, that is, whether export/transfer control regulations are relevant in respect to the activities and transactions of the undertaking and accordingly whether there is a licensing requirement for those transactions. The goal is to identify and analyse as early as possible any export/transfer control risks, and to implement any necessary relevant measure, for example, to apply for a license or to appropriately use a general licence.

      ANNEX II

         STANDARD CERTIFICATE TEMPLATE


title: Recommendation of the European Central Bank of 22 December 2016 to the Council of the European Union on the external auditors of the Bank of Greece (ECB/2016/46)

text:
               6.1.2017

               EN

               Official Journal of the European Union

               C 3/1

         RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
   of 22 December 2016
   to the Council of the European Union on the external auditors of the Bank of Greece
   (ECB/2016/46)
   (2017/C 3/01)
   THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
   Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
   Whereas:

               (1)

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

               (2)

               The mandate of the Bank of Greece’s current external auditors, KPMG Certified Auditors AE, will end following the audit for the financial year 2016. It is therefore necessary to appoint external auditors from the financial year 2017.

               (3)

               The Bank of Greece has selected Deloitte Certified Public Accountants S.A. as its external auditors for the financial years 2017 to 2021,

         HAS ADOPTED THIS RECOMMENDATION:
   It is recommended that Deloitte Certified Public Accountants S.A. should be appointed as the external auditors of the Bank of Greece for the financial years 2017 to 2021.

      Done at Frankfurt am Main, 22 December 2016.

            The President of the ECB

         Mario DRAGHI


title: Council Recommendation of 12 July 2011 on the National Reform Programme 2011 of Germany and delivering a Council opinion on the updated Stability Programme of Germany, 2011-2014

text:
               19.7.2011

               EN

               Official Journal of the European Union

               C 212/9

         COUNCIL RECOMMENDATION
   of 12 July 2011
   on the National Reform Programme 2011 of Germany and delivering a Council opinion on the updated Stability Programme of Germany, 2011-2014
   2011/C 212/03
   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(3) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   After consulting the Economic and Financial Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

               (2)

               On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines for the employment policies of the Member States (2), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

               (3)

               On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

               (4)

               On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. It requested Member States to translate these priorities into concrete measures to be included in their Stability or Convergence Programmes and National Reform Programmes.

               (5)

               On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments in time to be included in their Stability or Convergence Programmes and their National Reform Programmes.

               (6)

               On 27 April 2011, Germany submitted its updated Stability Programme covering the period 2011-2015 and on 7 April 2011 its 2011 National Reform Programme. In order to take account of the interlinkages, the two programmes have been assessed at the same time.

               (7)

               The German economy entered the crisis in a relatively solid position. However, the slump in world trade resulted in a collapse of exports and investment in 2009, such that real GDP contracted by an unprecedented 4,7 %. Nevertheless, after a small rise, unemployment has been falling again since late 2009. The resilience of the labour market reflects the beneficial effects of past reforms facilitating a reduction in hours worked and of subsidies for short-time work. The economy has rebounded strongly from the recession, with real GDP rising by 3,6 % in 2010. Exports have largely reversed the massive decline recorded in 2009 and paved the way for a more broad-based recovery also leading to a diminishing current account surplus. The economy has further improved its competitiveness vis-à-vis most of the other euro area Member States. The general government budget went from being in balance to a deficit of 3 % of GDP in 2009, driven by fully operating automatic stabilisers and discretionary measures to counter the economic downturn. The economic recovery helped to contain the deficit in 2010 (3,3 % of GDP) despite ongoing sizeable fiscal stimulus and financial market support measures.

               (8)

               Based on the assessment of the updated Stability Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underlying the Stability Programme is cautious for 2011 and plausible thereafter, also as assessed against the Commission services spring 2011 forecast. The Stability Programme projects real GDP to grow by 2,3 % in 2011, before slowing to 1,8 % in 2012 and to an average of 1,5 % in 2013-2015. The Stability Programme plans to bring the deficit below the 3 % GDP reference value already in 2011, two years ahead of the deadline established by the Council, and to make further progress towards achieving the medium-term objective (MTO) — a deficit of 0,5 % of GDP in structural terms — in 2014. Following the expected correction of the excessive deficit, the pace of adjustment towards the MTO under the Stability Programme falls below the 0,5 % of GDP benchmark in 2013 and 2014. While the debt-to-GDP ratio rose by almost 10 percentage points in 2010 (3), it is projected to start falling as of 2011 and should reach 75,5 % of GDP by 2015, thus remaining above the Treaty reference value. The risks to the budgetary projection appear broadly balanced for 2011, but the outcomes thereafter could be weaker than expected, since some savings might not materialise as envisaged. Certain measures are still subject to debate (e.g. energy and financial transaction tax) and others remain to be specified (e.g. efficiency improvements in public administration). Moreover, further financial market support measures cannot be excluded. According to the Commission's latest assessment, the risks with regards to long-term sustainability of public finances appear to be medium.

               (9)

               Since the recent reform of the health-care system introduced measures to curb spending increases mainly in 2011 and 2012, further steps to enhance the efficiency of public spending on health-care and long-term care, would support the envisaged consolidation path. At the same time, maintaining a largely growth-oriented consolidation course, including by ensuring adequate expenditure on education, would help to strengthen the long-term growth potential.

               (10)

               While the German fiscal framework has been considerably strengthened through the introduction of a constitutional budgetary rule, the creation of the Stability Council and the early warning system to prevent budgetary distress, the budgetary rule still needs to be fully implemented at Länder level. Further strengthening of the associated monitoring and sanctioning mechanism would also enhance the overall credibility of the public finances.

               (11)

               The crisis revealed serious vulnerabilities in the banking sector. Heavy losses and write-downs from international investments in subprime loans and structured assets weakened the capital base of some banks and led to the need for substantial state interventions. The crisis also exposed the weaknesses of some Landesbanken, which had already been suffering from a lack of effective risk management structures and the absence of a viable business model before the crisis. Further reform of the banking sector, including restructuring of the Landesbanken in need of a viable and adequately funded business model and strengthening of the regulatory and supervisory framework, would help preserve the stability of the financial sector and also ensure a more efficient allocation of domestic savings as a means of underpinning demand and investment.

               (12)

               The growth potential and structural competitiveness of the German economy depend to a large extent on a well-trained, skilled workforce, but labour supply shortages may become pressing given demographic developments. This underlines the importance of fully utilising the labour force potential by removing obstacles to labour market participation for particular groups (older workers, women, the low-skilled, non-EU nationals) and the further development of human capital. Addressing the tax wedge, which remains high especially for low and middle incomes, would improve incentives to work while allowing wage increases to be translated to a greater extent into higher disposable incomes and domestic demand. The high marginal income tax rate for second earners due to the joint taxation of couples creates disincentives for labour supply. The ‘Faktorverfahren’ introduced in 2009 allows for the individual monthly tax burden to reflect the personal income of each individual, while the tax burden for the year as a whole remains unchanged. The effects of this reform on labour market participation should be monitored. In this context, further measures to reduce possibly remaining disincentives to work might be necessary. Further increasing the availability of childcare facilities would in particular also help to improve the still low full-time labour force participation of women. Moreover, increasing the number of persons with vocational training qualifications could enhance the labour market prospects of low-skilled workers.

               (13)

               Germany has recently taken far-reaching decisions on its future energy mix. The implementation of the Energy Concept will imply a fundamental transformation in energy supply and have implications for energy prices and the competitiveness of the economy in the medium- to long-term. Cost-effectiveness should therefore be the key guiding principle for the implementation of the Energy Concept, based on efficient energy consumption, cost-effective support schemes and adequate electricity grids for renewable energy and competitive energy markets.

               (14)

               Boosting competition in the service sector would foster productivity growth and support domestic demand. More dynamic growth of the service sector could also contribute to broadening the base for supply and demand growth in Germany. Despite considerable progress in recent years through the implementation of the Services Directive, there appears to be scope to further reduce barriers to the entry and exit of firms, notably by further simplifying the license and permit system and to simplify the regulation for the exercise of certain professional services. The justification and adequacy of the regulation of certain crafts could be examined. With regard to network industry services, competition in the railway sector in particular can be improved. Strengthening the supervisory role of the Federal Network Agency and the opening of sales and ticket infrastructure to competitors would foster competition in the short-run.

               (15)

               Further reforms to improve the accessibility and quality of the education and training system will be key to ensuring an adequately skilled labour supply, also in view of demographic developments. Shortages of medium- and high-skilled labour in particular are forecast, especially as regards mathematics, science and technology subjects. The educational attainment rates of young people in Germany, at both upper secondary and tertiary level, are below the EU average. Increasing the availability of pre-school education and all-day schools and easing the transition between different strands of the school system may improve educational outcomes.

               (16)

               Germany has made a number of commitments under the Euro Plus Pact. On the fiscal side, the commitments call for the excessive deficit to be corrected already in 2011 and for the targets under the national budgetary rule to be achieved by a wide margin in 2011-2012. To reinforce financial stability, measures include efficient regulation and supervision of the capital market. Employment measures focus on labour market participation (reform of active labour market instruments, improved integration of professionals with foreign qualifications and integration of migrants) and education (Basic Education Pact). The competitiveness measures focus on network industries, energy and the service sector (i.e. market transparency agency for the electricity and gas sector, a programme on electromobility, and increased funding of transport infrastructure) as well as on education (i.e. Initiative for Excellence to promote graduate schools and funding of the University Pact). These commitments refer to the four areas of the Pact. They largely reflect the broader reform agenda outlined in the Stability Programme and the National Reform Programme. However, several policy areas remain unaddressed in the Pact commitments (e.g. restructuring of Landesbanken or the tax wedge on labour) or are only touched upon (opening the services sector and network industries to greater competition). The Euro Plus Pact commitments have been assessed and taken into account in the recommendations.

               (17)

               The Commission has assessed Germany's Stability Programme and National Reform Programme, including its Euro Plus Pact commitments. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Germany but also their conformity with EU rules and guidance, given the need to reinforce the overall economic governance of the EU by providing EU-level input for future national decisions. In this light, the Commission considers that the German budgetary strategy should be implemented as envisaged. An adequate structural adjustment effort towards the MTO should also be ensured thereafter, while maintaining a growth-friendly consolidation course. Further steps in 2011-2012 should focus on ensuring the stability of the financial system (e.g. through restructuring of the Landesbanken), the strengthening of domestic sources for growth, by increasing labour market participation through a reduction of the tax wedge on labour, improving the accessibility and quality of education, and opening up the services sector, trades and professions and the network industries to greater competition.

               (18)

               In light of this assessment, also taking into account the Council Recommendation under Article 126(7) of the Treaty on the Functioning of the European Union of 2 December 2009, the Council has examined the 2011 update of the Stability Programme of Germany and its opinion (4) is reflected in particular in its recommendation (1) below. Taking into account the European Council conclusions of 25 March 2011, the Council has examined the National Reform Programme of Germany,

         HEREBY RECOMMENDS that Germany take action within the period 2011-2012 to:

               1.

               Implement the budgetary strategy for the year 2012 and beyond as envisaged, thus bringing the high public debt ratio on a downward path, in line with the Council recommendations under the EDP. Ensure an adequate structural adjustment effort towards the medium-term objective thereafter. Complete the implementation of the budgetary rule at the Länder level and further strengthen the corresponding monitoring and sanctioning mechanism. Maintain a growth-friendly consolidation course, in particular by safeguarding adequate expenditure on education and by further enhancing the efficiency of public spending on health-care and long-term care.

               2.

               Address the structural weaknesses in the financial sector, in particular by restructuring Landesbanken which are in need of an adequately funded viable business model.

               3.

               Enhance participation in the labour market by improving equitable access to education and training systems and by taking further steps to reduce the high tax wedge in a budgetary neutral way and improve work incentives for persons with low income perspectives. Increase the number of fulltime childcare facilities and all-day schools. Closely monitor the effects of recent reform measures to reduce tax disincentives for second earners and take further measures in case disincentives remain.

               4.

               Remove unjustified restrictions on certain professional services and on certain crafts. To improve competition in network industries, strengthen the supervisory role of the Federal Network Agency in the rail sector; and, in the context of the announced national Energy Concept, focus on improving the long-term cost-effectiveness of the Renewable Energy Act, ensuring the effective independence of energy production and transmission, and improving cross-border interconnections.

      Done at Brussels, 12 July 2011.

            For the Council

            The President

         J. VINCENT-ROSTOWSKI

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  Maintained for 2011 by Council Decision 2011/308/EU of 19 May 2011 on guidelines for the employment policies of the Member States (OJ L 138, 26.5.2011, p. 56).

      (3)  The jump in 2010 was largely related to the fact that two troubled banks transferred impaired assets to their respective ‘bad-banks’, which are classified under the government sector. In line with the Eurostat guidance on accounting rules for financial defeasance structures, the corresponding liabilities of ‘bad-banks’ had a direct impact on the debt level.

      (4)  Foreseen in Article 5(3) of Regulation (EC) No 1466/97.


title: Council Recommendation of 14 July 2015 on the 2015 National Reform Programme of the Netherlands and delivering a Council opinion on the 2015 Stability Programme of the Netherlands

text:
               18.8.2015

               EN

               Official Journal of the European Union

               C 272/83

         COUNCIL RECOMMENDATION
   of 14 July 2015
   on the 2015 National Reform Programme of the Netherlands and delivering a Council opinion on the 2015 Stability Programme of the Netherlands
   (2015/C 272/22)
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
   Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
   Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the resolutions of the European Parliament,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for growth and jobs, Europe 2020, based on enhanced coordination of economic policies. The strategy focuses on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

               (2)

               On 14 July 2015, the Council, on the basis of the Commission’s proposals, adopted a Recommendation on the broad guidelines for the economic policies of the Member States and the Union and, on 21 October 2010, it adopted a decision on guidelines for the employment policies of the Member States (3). Together these form the ‘integrated guidelines’ which Member States were invited to take into account in their national economic and employment policies.

               (3)

               On 8 July 2014, the Council adopted a Recommendation (4) on the Netherlands' National Reform Programme for 2014 and delivered its opinion on the Netherlands' updated Stability Programme for 2014. On 28 November 2014, in line with Regulation (EU) No 473/2013 of the European Parliament and of the Council (5), the Commission presented its opinion on the Netherlands' draft budgetary plan for 2015.

               (4)

               On 28 November 2014, the Commission adopted the Annual Growth Survey, marking the start of the 2015 European Semester for economic policy coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report, in which it identified the Netherlands as one of the Member States for which an in-depth review would be carried out.

               (5)

               On 18 December 2014, the European Council endorsed the priorities for fostering investment, intensifying structural reforms and pursuing responsible growth-friendly fiscal consolidation.

               (6)

               On 26 February 2015, the Commission published its 2015 country report for the Netherlands. This assessed the Netherlands' progress in addressing the country-specific recommendations adopted on 8 July 2014. The country report also includes the results of the in-depth review under Article 5 of Regulation (EU) No 1176/2011. The Commission's analysis leads it to conclude that the Netherlands is experiencing macroeconomic imbalances, which require policy action and monitoring. Risks stemming from the high level of private debt persist and merit attention, even if recent measures support a recovery in the housing market and will help to curb mortgage growth. While the high current account surplus partly reflects structural features of the economy, the structure of the pension and tax systems may potentially be a source of inefficient allocation of capital.

               (7)

               On 30 April 2015, the Netherlands submitted its 2015 National Reform Programme and its 2015 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (8)

               The Netherlands is currently in the preventive arm of the Stability and Growth Pact and subject to the transitional debt rule. In its 2015 Stability Programme, the Government plans a gradual improvement of the headline deficit to 1,8 % of GDP in 2015 and further to 0,7 % of GDP in 2018. The Government plans to meet the medium-term objective — a structural deficit of 0,5 % of GDP — throughout the programme period. According to the Stability Programme, the government debt-to-GDP ratio is expected to peak at 68,8 % in 2015 and to gradually decline to 66,1 % in 2018. The macroeconomic scenario underpinning these budgetary projections is plausible. The Commission's 2015 spring forecast expects the structural balance to meet the medium-term objective and to reach -0,3 % of GDP in 2015 and -0,4 % of GDP in 2016. Based on its assessment of the Stability Programme and taking into account the Commission's 2015 spring forecast, the Council is of the opinion that the Netherlands is expected to comply with the provisions of the Stability and Growth Pact. At 0,84 % of GDP in 2013, public expenditure on research and development is low in view of the educational attainment, academic achievement and the level of economic development. Government expenditure in this area is on a declining trend since 2014, while private R & D spending remains low. Shifting public expenditure towards innovation and research, in particular fundamental research, and implementing framework policies to unlock private investment in R & D would help enhance the long-term growth potential of the Dutch economy.

               (9)

               A key challenge lies in the housing market, where rigidities and distortive incentives that have built up over decades shape house financing and sectoral savings patterns. Households' tendency to leverage up gross mortgage debt against housing wealth largely reflects long-standing fiscal incentives, in particular the full tax deductibility of mortgage interest. Since 2012, a series of measures have been implemented to partly address these incentives. Some of these involve adjustments to the fiscal treatment of housing finance. The gradual move to limit mortgage interest tax deductibility and increase the incentive to amortise is warranted. However, this measure could be phased in at a higher pace to influence amortising behaviour more. A sizeable tax incentive to invest in unproductive assets will persist. The loan-to-value ratio of 100 %, to be reached in 2018, is still high. The rental market is constrained by regulation and the existence of a very large social housing sector that also has to cope with long waiting lists. The introduction of more income-based rent differentiation in the social housing sector is a step in the right direction, but its impact is limited. Under a new law, housing corporations will have to separate activities of general economic interest (i.e. social housing) from other activities. It remains to be seen whether this leads to the intended redirection of social housing towards people in need and ensures that social housing is available to disadvantaged people unable to obtain housing at market conditions.

               (10)

               The long-term sustainability of the pension system has been improved. In addition to gradually increasing the first-pillar statutory retirement age from 65 years in 2012 to 67 years in 2021 and linking it to life expectancy thereafter, the Netherlands has adopted comprehensive reforms of the privately funded pillar of the pension system and in the long-term care system. The financial supervision of pension funds has been improved and the system made more resilient to financial shocks. This has been complemented by successful reforms encouraging older workers to work longer. Long-term care reforms have shifted responsibilities to municipalities, bringing a reduction in overall expenditure and a focus on efficiency gains. The quality and accessibility of long-term care needs to be monitored.

               (11)

               Remaining challenges include an appropriate intra- and inter-generational distribution of costs and risks beyond the adopted rules on indexation and financial buffers (financial assessment framework), in particular by lowering contributions by those in the early years of working life. Improving the actuarial fairness of the contributions to the second pension pillar would help households to allocate their financial means in more growth-friendly ways.

               (12)

               The comprehensive reform of employment protection legislation enacted in 2014 aims to increase labour market participation and mobility. Fiscal disincentives to work have been reduced. Legislation adopted by the Parliament has introduced the possibility to activate a quota, in case employers fail to deliver the extra jobs for people with disabilities that they committed themselves to. The impact of these measures can only be fully assessed once implemented. Further measures are needed to improve the integration of people on the margins of the labour market, including those with a migrant background.

               (13)

               Taking into account compulsory non-tax payments, the tax wedge in the Netherlands is significantly higher than the EU average and there is scope to shift taxation to factors less detrimental to growth. The envisaged tax reform would contribute to increasing labour market participation. Once adopted, its impact needs to be closely monitored.

               (14)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of the Netherlands' economic policy and published it in the 2015 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to the Netherlands in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the Netherlands but also their compliance with EU rules and guidance, given the need to strengthen the overall economic governance of the Union by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations 1 to 3 below.

               (15)

               In the light of this assessment, the Council has examined the Stability Programme, and is of the opinion (6) that the Netherlands complies with the Stability and Growth Pact.

               (16)

               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.

               (17)

               In the context of the European Semester the Commission has also carried out an analysis of the economic policy of the euro area as a whole. On the basis of this analysis, the Council has issued specific recommendations addressed to the Member States whose currency is the euro (7). As a country whose currency is the euro, the Netherlands should also ensure the full and timely implementation of those recommendations,

         HEREBY RECOMMENDS that the Netherlands take action in 2015 and 2016 to:

               1.

               Shift public expenditure towards supporting investment in R & D and work on framework conditions for improving private R & D expenditure in order to counter the declining trend in public R & D expenditure and increase the potential for economic growth.

               2.

               With the strengthening of the recovery, accelerate the decrease in mortgage interest tax deductibility so that tax incentives to invest in unproductive assets are reduced. Provide for a more market-oriented pricing mechanism in the rental market and further relate rents to household income in the social housing sector.

               3.

               Reduce the level of contributions to the second pillar of the pension system for those in the early years of working life.

      Done at Brussels, 14 July 2015.

            For the Council

            The President

         P. GRAMEGNA

      (1)  OJ L 209, 2.8.1997, p. 1.

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

      (3)  Maintained by Council Decision 2014/322/EU of 6 May 2014 on guidelines for the employment policies of the Member States for 2014 (OJ L 165, 4.6.2014, p. 49).

      (4)  Council Recommendation of 8 July 2014 on the National Reform Programme 2014 of the Netherlands and delivering a Council opinion on the Stability Programme of the Netherlands, 2014 (OJ C 247, 29.7.2014, p. 88).

      (5)  Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area (OJ L 140, 27.5.2013, p. 11).

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

      (7)  OJ C 272, 18.8.2015, p. 98.


65/379/EEC: Commission Recommendation of 7 July 1965 to the Member States on the housing of workers and their families moving within the Community