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		52011SC0820

			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Denmarkand delivering a Council opinionon the updated convergence programme of Denmark, 2011-2015 /* SEC/2011/0820 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of
Denmark
and delivering a Council opinion
on the updated convergence programme of Denmark, 2011-2015
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1]
, and in particular Article 9(3) thereof,
Having regard to the recommendation of the
European Commission[2],
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 European 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[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 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 on time for their inclusion in their Stability or Convergence
Programmes and their National Reform Programmes.
(6)
On 9 May 2011, Denmark submitted its updated
2011 Convergence Programme covering the period 2011-2015 and its 2011 National
Reform Programme. In order to take account of their
interlinkages, the two programmes have been assessed at the same time.
(7)
Based on the assessment of the updated
Convergence Programme pursuant to Council Regulation (EC) No 1466/97, the
Council is of the opinion that the macroeconomic scenario underlying the
Convergence Programme is plausible. While based on slightly more favourable
growth assumptions for 2012 and beyond, it is broadly in line with the spring
2011 Commission services' forecast. The budgetary strategy set out in the
convergence programme aims at bringing the deficit below the 3% reference value
by 2013, in line with the Council recommendations, reaching the revised medium term
objective (MTO) of structural budget balance not below -0.5% of GDP by 2015 and
achieving budget balance by 2020. The adjustment path towards this objective is
appropriate. Measures included in the programme and adopted by Parliament in
spring 2010 are considered adequate to underpin the budgetary targets and would
represent an annual fiscal effort of around 1% of GDP over the period
2011-2013. Denmark will reach its revised medium term objective within the
programme horizon. Risks to the budgetary targets are broadly balanced.
(8)
The Danish economy started slowing down in 2007
amidst a correction in the real estate market contributing to domestic banking
problems, amplified by rising insolvencies and unemployment. The recession was
severe, output contracted by 8% between the autumn of 2007 and the spring of
2009, and the unemployment rate rose to 7.4% in 2010. The employment rate
dropped from 79.8% in 2008 to 76.1% in 2010, affecting young people in
particular. Output started recovering in 2009, and real GDP growth reached 2.1%
in 2010. The recovery has been driven by sustained domestic demand (also on
account of fiscal expansion), a strong inventory rebound and the robust
recovery of Denmark's main trading partners.
(9)
Automatic stabilisers and crisis-related
measures caused the general government balance to turn from a surplus of 3.2%
of GDP in 2008 into a deficit of 2.7% of GDP in 2009. On the basis of Denmark's
notification in Spring 2010 that the budget deficit would widen beyond 5% of
GDP in 2010, an excessive deficit procedure for Denmark was opened in July
2010. Although unexpected and temporary windfall gains linked to pension yield
taxation led to a stabilisation of the budget deficit at 2.7% of GDP last year,
the Commission services' spring 2011 forecast expects the deficit to widen
again to around 4% of GDP in 2011, emphasising the need for continuous and
ambitious consolidation efforts in 2012. This implies a strict implementation
of the measures adopted in the 2010 Consolidation Agreement and expenditure
control as set out in the Convergence Programme to ensure the correction of the
excessive deficit by 2013.
(10)
A tight
control to avoid recurrent spending overruns at local and regional government
levels is important to achieve budgetary targets. For the past 20 years, public
spending has continuously been above budgetary targets. The government has
already taken some measures to address this issue and is planning to introduce
a new spending control scheme, controlled by the Danish Economic Council, as
described in the Convergence Programme.
(11)
As a result of demographic factors, the
working-age population (15-64 years) will shrink by around 1.5% between 2010
and 2025 and by close to 5% by 2040. In the medium term, economic recovery
could lead to a tightening of the labour market as witnessed during the boom
years. Despite an already high labour participation rate, there is scope to
further raise labour supply. Voluntary early retirement is widespread among
people aged 60 to 64 resulting in an employment rate for 60-64 year olds of
only 40%. Moreover, 10 % of the working age population below 40 years of age
are either on disability benefits or in a flex-job (subsidised employment).
(12)
There has been a declining trend in productivity
growth since 1995, one of the potential causes being weak education
performance. Although Denmark continues to spend
generously on its education system, educational outcomes are only average in
several key areas and Denmark has the fourth lowest youth education
attainment level in the EU. In 2009, only 70.1 %
of the 20-24 year old population had completed at least upper secondary
education (as against an EU average of 78.6 %) and the PISA results are
average. The drop-out rates from youth and vocational institutions are
relatively high, with almost 50 % of students in vocational youth
education leaving early. In addition, 10 years after leaving primary school
about 20 percent of young people have not completed their education above lower
secondary level. Improving the quality of the education system would
also help to prevent future skills imbalances in the labour market, currently
pointing to a possible surplus of unskilled workers alongside a shortage of
skilled workers. Productivity growth has been particularly weak in the
construction and services sectors. This is the case in particular within local
services, the retail sector, wholesale trade, and personal services, where low
degrees of competition in certain sectors, for example, high market entry
barriers may lead to a sub-optimal allocation of resources. Zoning laws are
strict, limiting possibilities for productivity enhancing economies of scale in
the retail sector. In order to address the fact that open
public procurement only covers around 25 % of public procurement, the government has launched a strategy aimed at increasing
competition within public services by gradually increasing public procurement
in municipalities and regions, and set a new target for municipalities whereby
31.5% of all procurement should be public by 2015.
(13)
Household debt in terms of GDP is the highest in
the EU. The build-up of debt levels, which has been fuelled by the housing boom
between 2004 and 2007, creates potential risks for the economy and financial
stability. Although these risks are mitigated by the characteristics of
Denmark's sophisticated mortgage-backed bond market and a globally robust
financial situation of the majority of households (with assets far in excess of
liabilities), only limited measures to dampen pro-cyclical fluctuations of
house prices were introduced in the aftermath of the house price correction.
(14)
Denmark has made a number of commitments under
the Euro Plus Pact[4]. To improve fiscal
sustainability, an agreement has been reached to
strengthen sanction legislation with regard to spending control at the local
level. The government has
submitted a proposal on a dowry scheme to facilitate private resolutions to
handle distressed banks and help improve financial stability. Employment measures focus on fostering employment by prolonging
working life. To foster competitiveness a Competition
Package with concrete initiatives is targeted primarily towards the
construction and service sectors. These commitments
refer to the four areas of the pact. Overall, the measures coincide with those
taken to follow up on the Annual Growth Survey and make progress towards the
Europe 2020 targets, most notably in the employment domain. Although a number
of the announced commitments have already been introduced, important measures
to improve budgetary discipline (at local level) and to foster employment
should be implemented in the near future. These commitments have been assessed
and taken into account in the recommendations.
(15)
The Commission has assessed the Convergence
Programme and National Reform Programme, including the Euro Plus Pact
commitments[5]. It has taken into
account not only their relevance for sustainable fiscal and socio-economic
policy in Denmark but also their conformity with EU rules and guidance, given
the need to reinforce the overall economic governance of the European Union by
providing EU level input into future national decisions. In this light, the
Commission considers that continuous and ambitious fiscal consolidation efforts
should be pursued in 2011 and beyond. Further steps should also be taken to
further raise labour supply through reducing early retirement and targeting
particular groups, improve the quality of education, strengthen competition in
key sectors and further stabilise the real-estate market.
(16)
In light of this assessment, also taking into
account the Council Recommendation under Article 126(7) Treaty on the
Functioning of the European Union of 2 June 2010, the Council has examined the
2011 update of the Convergence Programme of Denmark and its opinion[6]
is reflected in particular in its recommendation under (1) set out below. Taking
into account the European Council conclusions of 25 March 2011, the Council has
examined the National Reform Programme of Denmark,
HEREBY RECOMMENDS that Denmark
should take action within the period 2011-2012 to:
(1)
Implement fiscal consolidation measures in 2011
and 2012 as planned and correct the excessive deficit by 2013. Accelerate the
reduction of the general government deficit if economic conditions turn out
better than currently expected. Strengthen expenditure control by adopting
binding multiannual spending ceilings for local, regional and central
government which are consistent with the overall medium-term general budget
targets.
(2)
Phase out as planned the voluntary early
retirement pension (VERP) scheme, reform the disability pension, and better
target subsidised employment schemes (the "flex-job" system) towards
the most vulnerable groups.
(3)
Speed up the implementation of reforms to
improve the quality of the education system. Reduce drop-out rates,
particularly in the vocational education sector, and increase the number of
apprenticeship places available.
(4)
Take steps to remove obstacles to competition,
in particular in local services and the retail sector, by reviewing legislation
on land use and opening up procurement in municipalities and regions.
(5)
While supporting the ongoing stabilisation of
the real-estate market following the recent price correction, take preventive action to strengthen the
medium-term stability of the housing market and the financial system including
reforms to the mortgage and property tax systems.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ C , , p. .
[3]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[4]               More details on the commitments made under the Euro
Plus Pact can be found in SEC(2011) 713.
[5]               SEC(2011) 713.
[6]               Foreseen in Article 9(3) of Council Regulation (EC)
No 1466/97.


Avis juridique important

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52002SC0381(02)

Recommendation from the Commission to the Council in order to authorise the Commission to open and conduct negotiations with the International Maritime Organization (IMO) on the conditions and arrangements for accession by the European Community  /* SEC/2002/0381 final */

RECOMMENDATION FROM THE COMMISSION TO THE COUNCIL in order to authorise the Commission to open and conduct negotiations with the International Maritime Organization (IMO) on the conditions and arrangements for accession by the European CommunityEXPLANATORY MEMORANDUMIntroductionThis communication from the Commission to the Council concerns the accession of the European Community to the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO).It is necessary, as the White Paper on the future of the European transport policy [1] underlines, that the European Union, which is the world's leading commercial power and conducts a large part of its trade outside its own borders, play its role in the adoption of the international rules which govern much of transport.[1]  White Paper on "European transport policy for 2010: time to decide", COM(2001) 370 of 12.09.2001.The Community has built up a considerable body of law over the last ten years on air and sea transport. Therefore the increasing involvement of the Community in matters dealt with in the two organizations and the consequent development of the Community's internal rules make it necessary to strengthen Community participation in the ICAO and IMO, organizations with worldwide membership setting international rules concerning air and maritime transport. This will put the Community in a position to meet its obligations as regards external competences and to guarantee consistency between Community law and international law in these two sectors of particular economic importance.As ruled by the European Court of Justice back in 1971, as the Community develops common internal rules it also acquires authority over external negotiations which might affect these common rules (ERTA doctrine [2]). Later, in Opinion 1/76 the Court of Justice further declared that if the Community has an internal competence to achieve a specific objective, it implicitly holds the exclusive external competence on that subject as far as such an external exercise is necessary to achieve that objective [3].[2]  Case 22/70 of 31.03.1971, Commission v. Council, ECR 1971, page 263.[3]  Opinion 1/76 of 26.04.1977, Draft Agreement establishing a European laying-up fund for inland waterway vessels, ECR 1977, page 741.The Court's Opinion 1/94 [4] confirmed the rationale of these two judgements. It further stated that "Once the Community has included in its internal legislative acts provisions relating to the treatment of nationals of third countries or has expressly conferred upon its institutions a competence to negotiate with third countries, it acquires an exclusive competence on the measure covered by these acts. This is also the case, even in the absence of an explicit provision enabling its institutions to negotiate with third countries, when the Community has achieved a complete harmonisation (...) because the common rules so adopted could be affected in the sense of the ERTA judgement (...) if the Member States retained a freedom to negotiate with the third countries." [5][4]  Opinion 1/94 of 15.11.1994, Competence of the Community to conclude international agreements concerning services and the protection of intellectual property, ECR 1994, page I-5267.[5]  Opinion 1/94, paragraphs 95 and 96.Consequently, the Community has no other choice than to accede to the Chicago and Geneva Conventions, in order to meet its obligations arising both from secondary legislation and from the principles laid down in the case law of the ECJ.In addition to legal considerations, as the Commission stated in its recent White Paper on "European transport policy for 2010: time to decide" [6] "(...) the European Union, which is the world's leading commercial power and conducts a large part of its trade outside its own borders, has (...) little say in the adoption of the international rules which govern much of transport. This is because the Union as such is excluded from most intergovernmental organizations, where it has no more than observer status."[6]  COM(2001) 370 of 12.09.2001.The Commission has therefore taken the position that "...[this situation] needs to be remedied without delay, by having the Community accede to the inter-governmental organizations which govern transport so that the thirty-odd members of the enlarged Union not only speak with a single voice but, above all, can influence those organizations' activities in the common interest and in support of sustainable development."The potential impact of carefully coordinated Community action on the decisions taken in the ICAO and IMO has been already demonstrated under the existing, very limited possibilities for effective Community participation. In the field of maritime safety, the Community has agreed to ban single-hull tankers from its ports by 2015. This determination on the part of the European Union has led the IMO to change its planned timetable for phasing out such ships. The Community efforts to achieve a progressive reduction in aircraft noise have also helped speed up the multilateral discussions on the revision of aircraft noise standards in the ICAO.The problem and the way forwardExisting arrangements, however, for the participation of the Community as observer in the ICAO or the Commission in the IMO are neither satisfactory nor sufficient to guarantee effective representation of the Community position.In this regard, the fact that the Community can be invited to attend meetings of subsidiary bodies of the ICAO Council only as observer on an ad hoc basis and does not receive any information about the day-to-day activities of the ICAO Council and the Air Navigation Commission, the bodies where decisions are prepared and made during the 3-year intervals between meetings of the ICAO Assembly, raises a serious problem for the Community.Similarly, the Commission's observer status in the IMO does not permit it either to express itself in the name of the Community on matters of exclusive Community competence or to refer to decisions made at Community level, since any national position is considered only as such, regardless of the Community membership of the Member State expressing it. Under these circumstances the status of observer makes it difficult to reap the benefits of the coordination of positions, instead favouring the emergence of positions contrary to Community interests.A disparity is therefore obvious between the legitimate right of the European Community to exercise its powers in its own name and the status which the Community or the Commission is accorded in these two organizations.As the Chicago and Geneva Conventions setting up these two international organizations provide for only States to become members, accession of the Community requires amendment of the Conventions to allow regional economic integration organizations to become a member. Thus, before the Community can accede, proposals for amendment of both the Chicago Convention and the Geneva Convention will have to be submitted, approved by a two-thirds majority of the relevant organization's Assembly and ratified in accordance with the provisions of the relevant Convention [7].[7]  In the case of IMO, by two-thirds of contracting States; in the case of ICAO, by the number of contracting States specified by the Assembly, the number so specified having to be not less than two-thirds of the total number of contracting States.To this end the Commission recommends to the Council to authorise it to negotiate the necessary amendments of the Conventions.However, as the Community will not be in a position to accede to either organization until the necessary number of States which are members of the organization have ratified the amendment of the relevant Convention, this process can be expected to take a considerable time.Transitional arrangementsTaking this into account, transitional arrangements are proposed, to be established once the Commission has been given authorisation to negotiate amendment of the Conventions. The objective is to strengthen working relations between the EC and the ICAO/IMO, based on consideration of the need and conditions for fuller participation in the work of these organizations.Because of differences in the rules and functioning of the two international organizations, the present possibilities for EC participation in their work differ considerably.For example, the European Commission has permanent observer status at the IMO and is therefore authorised to receive all documents and to participate as it sees fit, whereas the Community has non-permanent observer status at the ICAO and may participate at meetings only when invited [8], having access only to documents connected with such meetings, the legal restriction being greater in relation to the ICAO than the IMO. One practical result of this is that the Commission coordinates the position of the Member States for IMO meetings, whereas in the case of the ICAO the Community may not attend meetings of ICAO bodies which make binding decisions.[8]  The existing internal ICAO rules do not provide for the status of permanent observer.In view of these differences, the two parts of this communication relating to the ICAO and the IMO respectively place a different emphasis on such intermediate steps and make recommendations in this regard adapted to the needs and possibilities of the respective situation.In the case of the ICAO, due, on the one hand, to the weakness of the present status of the Community in view of the working methods of the organization, and, on the other, to the distance from its headquarters, the Commission will put in place, in parallel with the accession negotiations, more effective methods of representation by designating a permanent representative on the spot (as is the case with the states which are members of the ICAO Council). In addition, appropriate internal Community procedures are required, adapted to the real situation of ICAO work.In the case of the IMO, where coordination takes place but does not allow the Community to speak with a single voice, the Member States should undertake concerted action within the IMO committees, with a view to permitting the Presidency or the Commission, depending on which holds the powers, to express the position of the Community. The process of full participation is likely to take considerable time. Throughout this process it will be important to maintain close relations with other IMO Contracting Parties and representatives of industry. Therefore, a permanent representative of the Commission at the IMO should also be envisaged.ConclusionsThe Commission invites the Council:- to authorise the Commission to negotiate in the name of the Community the necessary amendments to the Chicago and Geneva Conventions to allow it to become a member and appropriate arrangements for the transitional period; and- to adopt appropriate internal Community procedures for effective participation in the work of the organizations.RECOMMENDATION FROM THE COMMISSION TO THE COUNCIL in order to authorise the Commission to open and conduct negotiations with the International Maritime Organization (IMO) on the conditions and arrangements for accession by the European Community1. IntroductionGiven the Community's increasing powers in the field of maritime safety, European Community participation in the International Maritime Organization (IMO) would appear justified. In particular, stronger Community participation has become necessary to prevent infringements by the Member States against their Community obligations and to guarantee the consistency of the Community position.This implies amending the 1948 Geneva Convention setting up the IMO (see Annex II), which must be voted and ratified by two thirds of the 160 countries that make up the Assembly. As IMO procedures are lengthy, the process will take several years [9] and a transitional solution must be found to improve the internal Community procedures for coordination of positions within the IMO and ensure stronger representation of the Commission in the IMO.[9]  On average, the process of ratifying an IMO Convention takes from 8 to 10 years.Consequently, as the Commission notes in its White Paper on "European transport policy for 2010: Time to decide [10] "This situation needs to be remedied without delay, by having the Community accede to the intergovernmental organizations which govern transport so that the 30-odd members of the enlarged Union not only speak with a single voice but, above all, can influence those organizations' activities in the common interest and in support of sustainable development." The Commission states that "the Union needs to increase its ability to assert itself in the international arena and speak with a single voice in defence of its social, industrial and environmental interests."[10]  COM(2001) 370, 12.09.2001, pp. 106-107.Consequently, the Commission recommends to the Council that it:- authorise the Commission to open and conduct negotiations with the IMO on the conditions and arrangements for accession of the European Community to the IMO, in accordance with Article 300 of the Treaty;- adopt the proposed negotiating directives annexed. The Commission further recommends to the Council to invite the Member States to support the action which it takes to attain these objectives, in accordance with Article 10 of the Treaty.2. Community competence and common interest in matters dealt with in the IMOThe situation with regard to powers is complicated in that not all Community acts adopted in the field of maritime safety involve the same level of harmonisation: some set minimum standards, others require maximum harmonisation, while the content of others is more mixed.It is therefore necessary to seek solutions derived from Community practice and the Court of Justice case law on external competences.The Community has responsibility in a large number of areas directly or indirectly linked to maritime safety and the prevention of marine pollution by ships. These powers have been acquired through the entry into force of numerous mandatory instruments (regulations and directives) adopted on the basis of IMO resolutions, recommendations and conventions.The primary purpose of this legislation is to ensure harmonised, consistent implementation throughout the Community of international rules addressed to Member States as flag States for both international and national traffic [11] and for all ships irrespective of their flag.[11]  No distinction is made in the Community between international and domestic maritime transport.By way of example, the Community has powers in the following areas (see Annex I):- establishment and enforcement of criteria and technical standards which Member States are required to adopt, e.g. in the area of marine equipment;- establishment of rules and safety standards for passenger ships;- enforcement by the port State of international standards for ship safety, pollution prevention and shipboard living and working conditions in respect of ships using Community ports and sailing in the waters under the jurisdiction of the Member States;- establishment of harmonised rules addressed to Member States' maritime inspection authorities and classification societies.It is important to ensure that all existing and future rules [12] are consistent with the other policies developed by the European Community, particularly with the objectives of the internal market and of environment policy.[12]  The proposals from the Erika I package that have been adopted: port State control, rules for classification societies; the phasing-out of old single-hull tankers; and those from the Erika II package still under discussion: the Community monitoring, control and information system for maritime traffic, the compensation fund for oil pollution in European waters and above all the creation of a European Maritime Safety Agency.As guardian of the Treaties, the European Community must ensure this consistency and be given its due position on the international scene.3. Community accession3.1. Status of the European CommissionThe Geneva Convention confers membership status only on States. It is in the imperative political interest both of the Member States and third countries to clarify the nature of European participation, particularly as the IMO structures do not recognise the existence of economic integration organizations. The European Commission has had observer status, however, since the signature on 28 June 1974 of a cooperation and collaboration agreement between the Commission and the IMCO (which subsequently became the IMO). It is therefore the Commission, and not the European Community, which has this status (see Annex III).Since 1994 the Commission has been receiving all the documents on the agenda of the IMO bodies [13] and has been taking part in all meetings of the committees and subcommittees which it considers to be of Community interest. These committees have the power to change and amend by the tacit "no objection" procedure the technical annexes to the Conventions of which the IMO is the depository.[13]  The Commission participates in the four main committees: Maritime Safety Committee (MSC), Marine Environment Protection Committee (MEPC), Technical Cooperation Committee (TCC) and Legal Committee (LEG).To this end, the Commission coordinates as appropriate the common or concerted positions of Member States on the fringes of the committee meetings under the auspices of the Member State holding the Council Presidency.The oral presentation of these positions is made during the debates in the IMO bodies, either by a number of Member States expressing their individual views, or by all of them [14].[14]  Until recently, third countries occasionally raised objections when the Commission or the Member State holding the presidency took the floor on behalf of the 15.3.1.1 Current shortcomingsWhile the principle of Community coordination has been established since 1994, its practical application has sometimes been wanting and resulted in dissonance, primarily owing to the lack of communication within national delegations and, as the White Paper points out, to the fact that Member States do not always adopt a consistent position within the Organization in relation to what has been agreed at Community level.The current observer status also has several shortcomings.Observer status does not allow the Commission to:- negotiate directly, even when the issues raised concern matters that are harmonised within the Community;- speak for the 15 Member States. At present, when a vote is taken, only Member States which actually take a stance are counted as for or against. They are always considered individually;- use the Community coordination mechanism effectively in the fields for which the Community is responsible; furthermore, there is always a risk that Member States' oral submissions do not systematically reflect what has been decided in the Community coordination process;- make a concrete, visible contribution to Community maritime safety policy.What is more, this observer status makes it particularly difficult for the Community to participate in negotiating international conventions since it places an obligation on the Community to be vigilant and to follow more cumbersome procedures, both internally and within the IMO structures, even where the Community could stake a claim to participation.3.1.2 Development of powersWithin a relatively short period, the Community legislation has developed fast, and powers are still being added at a rapid rate. For example, the Erika I package entered into force recently and will soon be followed by Erika II.Other proposals on the table or included in the Commission's work programme to confer new powers, for example to tighten up the Community rules on passenger vessels or the environment, and the related international instruments are all legitimate reasons to adopt an international position, particularly within the IMO.3.2. Added value of Community accessionAccession by the Community will make it possible to remedy the shortcomings and problems described in the previous section, with the aid of the arrangements for Community participation and representation within the IMO.3.2.1 Added value on the international sceneWhile the IMO remains the most appropriate forum in which to draw up international standards on ship safety and the prevention of pollution by ships, the mandatory character of Community legislation has proved effective in enforcing these standards.This consistent approach, by 15 Member States at present and around 30 in the long term following enlargement, should logically be reflected on the international scene.In economic terms, Member States' fleets currently represent 12% of world tonnage, a figure which will increase to 22% after enlargement. Furthermore, the Europe of 15 has financial control over 30% of the world fleet, and maritime traffic to and from Community ports represents 30% of world traffic.When the Community incorporates IMO standards in its legislation, this has consequences not only for Member States' fleets, but also in many cases for third country vessels trading with Member States, primarily in the area of inspection.As third countries cannot afford to ignore such a commercially important market, they will be obliged to familiarise themselves with and as far as possible conform to the rules in force in the European market. The safety requirements imposed by the Community in accordance with IMO rules are gradually becoming de facto professional practice for all vessels operating in the European area.This added value should be reflected in a more appropriate status commensurate with the evolution of powers. Certain matters have been fully harmonised in the Member States by regulations and directives, with the result that the Community has exclusive powers in those areas. The European Community should therefore be able to exercise its powers directly in the IMO [15].[15]  See Annex I.3.2.2 Arrangements for future participation by the European CommunityOnce accession comes into effect, it will therefore be necessary to adapt the presentation of views by the Commission and the Member States to the degree of harmonisation of powers and the procedure applicable to them.- Where Community coordination relates to an area in which powers are fully harmonised, the Commission speaks and votes on behalf of the 15 Member States. - Where Community coordination relates to an area of national competence, Member States express their individual views and vote individually.- Where Community coordination relates to an area in which powers are shared and a common position has been established, the latter will be presented by the Council Presidency or by the Commission. If a common position has not been agreed, Member States will express their own views and vote individually, with due regard to Article 10 of the Treaty.3.3. Application for accession by the CommunityUnder the Geneva Convention, the Secretary-General of the IMO alone can propose an amendment to the members of the Organization six months before the Assembly.To give a clear idea of all the steps necessary for accession by the Community to the IMO, the rules of and stages in the procedure for accession by the Community must be borne in mind [16].[16]  See Annex II.3.3.1 Steps towards accessionSince the Geneva Convention allows only States to join, the only means of securing accession by the Community is to amend the Geneva Convention by inserting a clause allowing regional economic integration organizations to become a party to the Convention and by adapting all the relevant articles of the Convention affected by this clause, including the rules of procedure.The following steps will be necessary for accession by the European Community:- The Council authorises the Commission to negotiate the conditions and the arrangements for the accession of the European Community to the IMO, by amendment of Article 66 of the Geneva Convention opening membership to regional economic integration organizations.- The Community submits to the competent IMO bodies a request for amendment of the Geneva Convention to allow a regional economic integration organization to become a party.- "Twelve months after acceptance by two-thirds of the Members of the Organization, other than Associate Members, each amendment shall come into force for all Members."- The Commission adopts a proposal for a Council decision on the accession of the European Community to the IMO and submits it to the Council.- The Council Decision allows the European Community to accede to the IMO; the instruments of signature and acceptance will be deposited with the Secretary-General of the United Nations (Article 71 of the Geneva Convention).- The Community accession takes effect in accordance with the relevant provisions of the Geneva Convention, as amended.3.3.2 Rules of procedureThe amendment must be voted and ratified by two thirds of the members present at the Assembly. It is deemed to be adopted when it has been formally accepted by two thirds of the IMO members, i.e. 106 of 160 countries [17]. It enters into force twelve months after notification of the last ratification [18].[17]  From which theoretically the Member States, EFTA countries and some candidate countries can be subtracted.[18]  Article 66 of the Geneva Convention.The IMO Assembly meets every two years. It last met in November 2001, so any decision to amend the Convention could not be adopted before November 2003.Should the Secretary-General of the IMO refuse to propose an amendment to the Convention to enable the EC to become a party, a decision by the IMO Council is necessary to overturn his position. In particular, the Council may take all appropriate decisions on matters within the scope of the IMO, by virtue of the general delegation of powers by the IMO Assembly (Part IV, Article 15(m) of the Convention). In practice, Article 15(m), in conjunction with Article 52 of the Convention, extends to the possibility of proposing amendments to the Convention. The IMO Council decides by simple majority of the members present.Should the Secretary-General of the IMO refuse to propose such an amendment, concerted action by the Member States within the IMO Council will be necessary.In any event, it is clear that, given the uncertainties of the negotiation and ratification process, it will take several years for accession by the Community to come into effect.4. Transitional measuresThe transitional measures would involve formalising the procedure which already functions correctly for Community coordination in the IMO technical committees and subcommittees. During the accession procedure, an interim arrangement can be sought in the form of coordinated action in the four IMO committees in the areas in which the Community is competent. Account must also be taken of the extent to which powers are harmonised. Harmonisation of powers, by its nature, is constantly evolving, as reflected in the practical application of Community coordination in the IMO committees and subcommittees.It is therefore necessary to adapt the presentation of views by the Commission and the Member States to the degree of harmonisation of powers and the procedure applicable to them.- Where Community coordination relates to an area in which powers are fully harmonised, the Commission speaks on behalf of the Community.- Where Community coordination relates to an area of national competence, Member States express their individual views.- Where Community coordination relates to an area in which powers are shared and a common position has been established, the latter will be presented by the Council Presidency or by the Commission. If a common position has not been agreed, Member States will express their own views individually, with due regard to Article 10 of the Treaty.The question of permanent representation of the Community before the IMO must also be taken into consideration to the extent that the accession negotiations imply a stronger presence before the Member States' permanent delegations to the IMO.The Community's growing participation in the fields in which the IMO is active combined with the natural development of the maritime safety regulations create a need for stronger participation by the Community in development of the rules adopted under the auspices of this organization.This would also enable the European Community to meet its obligations concerning external competences and to guarantee the consistency of the Community position in this field of activity.5. ConclusionsThe European Community has to become a member of the IMO and the Member States, meeting within the Council, must adopt a common approach to amending Part III and all other relevant provisions of the Geneva Convention in order to permit the accession of regional economic integration organizations.The accession process will take several years. It is therefore necessary to adopt a transitional solution to improve the Community's internal procedures for coordinating positions within the IMO and ensure stronger representation of the Commission in the IMO.6. RecommendationsIn view of the foregoing, the Commission recommends to the Council to authorise the Commission to open and conduct negotiations with the IMO on the conditions and arrangements for accession of the European Community to the Geneva Convention, to appoint a special committee to assist the Commission in this task and to adopt the negotiating directives included in the Recommendation below.The negotiating directives included in the Recommendation below have been drafted with a view to allowing the European Community to become a member of the IMO.This status should allow the Community, in matters of its competence and on an equal footing with States which are members of the IMO, to:(a) express its views during negotiations, or at any meeting of the IMO bodies,(b) for matters that have to be decided through a vote, have a voting weight equivalent to that of those of its Member States represented in the relevant IMO body and bound by Community legislation from which external competence arises,(c) express consent in its own name to assume the rights and obligations stemming from the instruments concluded in the framework of the IMO.In accordance with Article 300 of the EC Treaty, the negotiations should be conducted by the Commission in consultation with a special committee appointed by the Council. In their role as current Members of the IMO, the Member States should provide all possible support for the accession of the Community to the IMO.As regards budgetary issues, in view of the fact that the financial contributions from the Member States of the European Union represent a part of the IMO budget, it is not considered appropriate to envisage an additional financial contribution from the Community. As a fallback position, however, the Community could envisage a solution based on that adopted for Community accession to FAO, i.e. contributing a sum to cover administrative and other expenses arising out of its membership of the IMO (provided this sum is in no case fixed unilaterally by the IMO, but in agreement with the Community).During negotiations, the question of the most appropriate place for including the arrangements for Community accession and participation might be raised. The IMO might prefer to include some of them in the Rules of Procedure. For reasons of legal certainty in the participation clauses, the Community should prima facie have an interest in including them in the Convention. Nevertheless, whichever option is chosen, it is also important to leave substantial room for manoeuvre in order to accommodate possible constraints imposed by the IMO.Finally, the IMO will presumably wish to allow Community participation through the inclusion of a general provision referring to the participation of regional economic integration organizations. In that case, it could be useful for the Community to suggest to the IMO use of the definition incorporated into the Statute of the FAO.Once the Chicago Convention has been amended, and in the light of the results obtained, the Commission will present a proposal for a Council decision on the accession of the European Community.During the transition period, the procedures and arrangements for presenting the Community's position to the IMO will be decided as indicated in Section 4.RECOMMENDATIONIn the light of the above, the Commission recommends:- that the letter in Annex 1 to this recommendation be addressed to the Secretary-General of the IMO informing the IMO of the European Community's wish to open negotiations with a view to allowing the accession of the European Community to the Convention on the International Maritime Organization ("Geneva Convention");- that the Council authorise the Commission to negotiate with the IMO the conditions and arrangements for the accession of the European Community to the Geneva Convention;- that, since in accordance with the Treaty, the Commission will conduct these negotiations on behalf of the European Community, the Council appoint a special committee to assist it in this task, and- that the Council adopt the negotiating directives in Annex 2 to this recommendation.ANNEX : NEGOTIATING DIRECTIVESAttachment 1Proposal for a letter to be addressed to the Secretary-General of the IMOSir,We have the honour to inform you that the European Community wishes to become a full member of the IMO. The European Community has competence to adopt measures in the field of maritime safety and marine pollution prevention and control. As a matter of fact, this competence has already been exercised through the adoption of a number of instruments in areas where the IMO has carried or is currently carrying out work.As a result of this, the Community as such is increasingly concerned by the work of the IMO. This has in turn raised the issue of Community accession to the IMO. In this respect, the European Community believes that its accession to the IMO would be advantageous not only for itself, but also for the IMO. Indeed, facilitating the rights and obligations stemming both from IMO membership and accession to instruments in areas where the Community is competent, should also facilitate the progress and results of the works of the IMO.The IMO does not, however, allow for membership of regional economic integration organizations. Therefore, we would like to ask you to open negotiations with a view to making the changes to the IMO Convention and other internal rules that are necessary for allowing the Community to become a member of the IMO, as well as on the conditions and arrangements for our membership.The Commission, assisted by a special committee of Member States, will be in charge of these negotiations from the Community side. The Commission is at the IMO's disposal to meet its representatives at an early date as the IMO deems appropriate.Let us finally assure you that, as we have also expressed, the Community remains committed to ensuring that the IMO remain an attractive forum for all countries in the world.For the CommissionThe PresidentFor the Council of the European UnionThe PresidentAttachment 2Negotiating directives for accession to the IMO- The Community should be granted full member status on equal footing with States.- The status should allow Community participation at negotiations and meetings on equal footing with States.- As to voting rights, the Community should have a number of votes equivalent to those of Member States represented in the relevant IMO body and bound by the Community instruments from which external competence arises.- The Community shall make no financial contribution to the IMO budget. Should this prove impossible to achieve, or were it to compromise acceptance of Community membership by current members of the IMO, the Community could accept as a fallback position making available a sum compensating for the administrative and other expenses arising out of its membership of the IMO. This sum should not be determined unilaterally by the IMO, but in agreement with the Community.- As a full member, the Community should be entitled to accede to all future instruments negotiated in the context of the IMO which fall under its competence. The Commission should also explore the possibility of including in the IMO internal rules a provision allowing Community accession to existing conventions open to Member States, for which a Community competence exists.- The Commission should aim at the arrangements concerning the participation of the Community being included in the most appropriate place in the IMO internal rules in order to guarantee their stability. However, the need for stability of such arrangements will be weighed against possible IMO internal constraints.- During negotiations, and if necessary, the Commission will propose a definition of regional economic integration organization along the lines of that contained in Article II of the Statute of the Food and Agriculture Organization of the United Nations [19].[19]  "(...) a regional economic integration organization must be one constituted by sovereign States, a majority of which are Member Nations of the Organization, and to which its Member States have transferred competence over a range of matters within the purview of the Organization, including the authority to make decisions binding on its Member States in respect of those matters".ANNEX ICommunity legislation relevant to the work of the IMO1) Adopted legislation- Council Regulation (EEC) No 613/91 of 4 March 1991 on the transfer of ships from one register to another within the Community (OJ L 68, 15.3.1991, p. 1), as amended- Council Directive 93/75/EEC of 13 September 1993 concerning minimum requirements for vessels bound for or leaving Community ports and carrying dangerous or polluting goods (OJ L 247, 5.10.1993, p. 19), as amended- Council Regulation (EC) No 2978/94 of 21 November 1994 on the implementation of IMO Resolution A.747(18) on the application of tonnage measurement of ballast spaces in segregated ballast oil tankers (OJ L 319, 12.12.1994, p. 1)- Council Directive 94/57/EC of 22 November 1994 on common rules and standards for ship inspection and survey organizations and for the relevant activities of maritime administrations (OJ L 319, 12.12.1994, p. 20), as amended- Council Directive 95/21/EC of 19 June 1995 concerning the enforcement, in respect of shipping using Community ports and sailing in the waters under the jurisdiction of the Member States, of international standards for ship safety, pollution prevention and shipboard living and working conditions (port State control) (OJ L 157, 7.7.1995, p. 1), as amended- Council Regulation (EC) No 3051/95 of 8 December 1995 on the safety management of roll-on/roll-off passenger ferries (ro-ro ferries) (OJ L 320, 30.12.1995, p. 14), as amended- Council Directive 96/98/EC of 20 December 1996 on marine equipment - Annex A2 (OJ L 46, 17.2.1997, p. 25), as amended- Council Directive 97/70/EC of 11 December 1997 setting up a harmonised safety regime for fishing vessels of 24 metres in length and over (OJ L 34, 9.2.1998, p. 1), as amended- Council Directive 98/18/EC of 17 March 1998 on safety rules and standards for passenger ships (OJ L 144, 15.5.1998, p. 1)- Council Directive 98/41/EC of 18 June 1998 on the registration of persons sailing on board passenger ships (OJ L 188, 2.7.1998, p. 35)- Council Directive 1999/35/EC of 29 April 1999 on a system of mandatory surveys for the safe operation of regular ro-ro ferry and high-speed passenger craft services (OJ L 138, 1.6.1999, p. 1)- Directive 1999/95/EC of the European Parliament and of the Council of 13 December 1999 concerning the enforcement of provisions in respect of seafarers' hours of work on board ships calling at Community ports (OJ L 14, 20.1.2000, p. 29)- Directive 2000/59 of the European Parliament and of the Council on port reception facilities for ship-generated waste and cargo residues (OJ L 332, 28.12.2000, p. 81)- Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (OJ L 12, 16.01.2001 p. 1)- Directive 2001/25/EC of the European Parliament and of the Council of 4 April 2001 on the minimum level of training of seafarers (OJ L 136, 18.5.2001, p. 17)- Directive 2001/96/EC of the European Parliament and the Council of 4 December 2001 establishing harmonized requirements and procedures for the safe loading and unloading of bulk carriers (OJ L 13, 16.1.2002, p. 9)2) Proposed legislation- Proposal for a Regulation of the European Parliament and of the Council concerning the Committee on Safe Seas and amending the Regulations on maritime safety and the prevention of pollution from ships (OJ C 365 E, 19.12.2000, p. 276)- Proposal for a Directive of the European Parliament and of the Council amending the Directives on maritime safety and the prevention of pollution from ships (OJ C 365 E, 19.12.2000, p. 280)- Proposal for a Regulation of the European Parliament and of the Council on the accelerated phasing-in of double hull or equivalent design requirements for single hull oil tankers (OJ C 212 E, 25.7.2000, p. 121)- Proposal for a Directive of the European Parliament and of the Council establishing a Community monitoring, control and information system for maritime traffic (OJ C 120 E, 24.4.2001, p. 67)- Proposal for a Regulation of the European Parliament and of the Council on the establishment of a fund for compensation of oil pollution damage in European waters and related measures (OJ C 120 E, 24.4.2001, p. 79)- Proposal for a Regulation of the European Parliament and of the Council establishing a European Maritime Safety Agency (OJ C 120 E, 24.4.2001, p. 83).ANNEX IIThe International Maritime Organization The IMO is a specialised United Nations agency set up by the 1948 Geneva Convention which has its headquarters in London. The IMO is responsible for matters relating to maritime safety and protection of the environment in the event of accidental pollution by ships.The IMO prepares diplomatic conferences with a view to the adoption of new rules (conventions/protocols) on maritime safety and protection of the marine environment and adopts recommendations in the form of resolutions in these areas. These resolutions (with certain exceptions) are non-binding.The main bodies of the IMO are the Assembly, which meets every two years (22nd session in mid-November 2001), the Maritime Safety Committee (MSC), the Marine Environment Protection Committee (MEPC), the Legal Committee and the Technical Cooperation Committee. A number of subcommittees prepare the Committee decisions. The organization is run by a Council comprising some 40 members elected by the Assembly.The main spokesman of the IMO is its Secretary-General, Mr William O'Neil (Canadian).The IMO has 160 actual members, including all the Member States and all the accession candidate countries, who together account for about 25% of world tonnage.The IMO is also the depository for a large number of existing conventions, in particular the SOLAS, MARPOL and STCW Conventions. Under these Conventions, decision-making powers (possibility to make amendments) have been delegated to the MSC and MEPC. These Committees adopt binding resolutions to this effect. The resolutions amend the Conventions and protocols and the amendments enter into force by tacit acceptance.ANNEX IIIStatus of the Commission at the IMOThe Community is not represented as such at the IMO and is not party to any of the Conventions administered by it. Only States have the right to become members of the organization. The Convention provides only for cooperation mechanisms for international organizations. There is no provision for membership by regional economic integration organizations. This is why, since 1974, only the Commission has observer status.Following an exchange of letters between Mr Ortoli, the then President of the European Commission and Mr Srivastava, Secretary-General of the Intergovernmental Maritime Consultative Organization (IMCO, which subsequently became the IMO), a cooperation agreement was concluded on 28 June 1974.This agreement provides for:- reciprocal consultations on topics of common interest;- exchanges of information on planned projects and work programmes.Owing to the leeway left to States by the Conventions and resolutions, the Community has adopted more than a dozen directives and regulations based directly or indirectly on IMO instruments (conventions or resolutions).The aim of this legislation is to ensure harmonised, consistent application of international rules in the Community for all traffic, both international and domestic.Powers are therefore shared, as a result of which in 1994 the Council instituted a pragmatic coordination approach.ANNEX IVRelevant procedural rules of the IMOPart I. Purpose of the OrganizationArticle 1The purposes of the Organization are:(a) To provide machinery for cooperation among Governments in the field of governmental regulation and practices relating to technical matters of all kinds affecting shipping engaged in international trade; etc.Part III. MembershipArticle 4Membership in the Organization shall be open to all States...Article 7Any State not entitled to become a Member under Article 5 or 6 may apply through the Secretary-General of the Organization to become a Member and shall be admitted as a Member upon its becoming a Party to the convention in accordance with the provision of Article 71, etc.Part V. The AssemblyArticle 15The function of the Assembly shall be:(m) To refer to the Council for consideration or decision any matters within the scope of the organization (...)Part XI. The SecretariatArticle 52The Secretary-General shall assume any other functions which may be assigned to him by the Convention, the Assembly or the Council.Part XV. Relationship with the United Nations and other organizationsArticle 61The Organization may, on matters within its scope, cooperate with other intergovernmental organizations which are not specialised agencies of the United Nations, but whose interests and activities are related to the purposes of the organization.Article 63Subject to approval by a two-third majority vote of the Assembly, the Organization may take over from any other international organizations, governmental or non-governmental, such functions, resources and obligations within the scope of the Organization by international agreements or by mutually acceptable arrangements entered into between competent authorities of the respective organizations. Similarly, the organization may take over any administrative functions which are within its scope and which have been entrusted to a government under the terms of any international instrument.Part XVII. AmendmentsArticle 66Texts of proposed amendments to the convention shall be communicated by the Secretary-General to Members at least six months in advance of their consideration by the Assembly. Twelve months after acceptance by two-third of the Members of the Organization, other than Associate Members, each amendment shall come into force for all Members. If within the first 60 days of this period of twelve months a Member gives notification of withdrawal from the Organization on account of an amendment the withdrawal shall, notwithstanding the provision of Article 73 of the Convention, take effect on the date on which such amendment comes into force.Article 67Any amendment adopted under Article 66 shall be deposited with the Secretary-General of the United Nations, who will immediately forward a copy of the amendment to all Members.Article 68A declaration or acceptance under Article 66 shall be made by the communication of an instrument to the Secretary-General for deposit with the Secretary-General of the United Nations. The Secretary-General will notify Members of the receipt of any such instrument and of the date when the amendment enters into force.FINANCIAL STATEMENTPolicy area(s): Maritime TransportActivity(ies): Membership in the IMO Title of action: Representative of the Commission to IMO1. BUDGET LINE(S) + HEADING(S) 2. OVERALL FIGURES2.1 Total allocation for action (Part B): EUR million for commitment : none2.2 Period of application: Starting in 2003, indefinite duration2.3 Overall multiannual estimate on expenditure:a) Schedule of commitment appropriations/payment appropriations (financial intervention) (see point 6.1.1) None>TABLE POSITION>b) Technical and administrative assistance and support expenditure (see point 6.1.2) None>TABLE POSITION>>TABLE POSITION>c) Overall financial impact of human resources and other administrative expenditure (see points 7.2 and 7.3) >TABLE POSITION>2.4 Compatibility with the financial programming and the financial perspective|X| Proposal compatible with the existing financial programming| | This proposal will entail reprogramming of the relevant heading in the financial perspective| | This may entail application of the provisions of the Interinstitutional Agreement. 2.5 Financial impact on revenue:|X| No financial implicationsOR| | Financial impact - the effect on revenue is as follows:3. BUDGET CHARACTERISTICS: Not applicable>TABLE POSITION>4. LEGAL BASISArticle 302 (ex Article 229)5. DESCRIPTION AND GROUNDS5.1 Need for Community intervention 5.1.1 Objectives pursued The increasing involvement of the Community in matters dealt with in the IMO and the consequent development of Community internal rules, makes it necessary to strengthen Community participation in this organization, which sets international rules concerning maritime transport. This will put the Community in a position to meet its obligations as regards external competence and to guarantee the consistency of the Community position in this sector of particular economic importance.Thus, in its recent White Paper on "European transport policy for 2010: time to decide" the Commission took the position that the present situation needs to be remedied without delay, by having the Community accede to IMO, "so that the thirty-odd members of the enlarged Union not only speak with a single voice but, above all, can influence those organizations' activities in the common interest and in support of sustainable development."No Community contribution to the budget of the IMO is foreseen as a consequence of the membership.However, as the Community will not be in a position to accede to the IMO until the necessary number of States which are members of the organization have ratified the amendment of the relevant Convention, this process can be expected to take a considerable time. The Commission will therefore put in place, in parallel with the negotiations on accession, more effective methods of representation by establishing a permanent representative in London. The representation would consist of one official, permanently based at the Commission's representation in London, and one secretary, also based in London. The costs related to this staff are the only part of this application for accession to the IMO that will have budgetary implications.5.1.2 Measures taken in connection with ex ante evaluation Based on the increasing need for close relations with other IMO Contracting Parties and industry representatives, and based upon past experience of having an official permanently in London to follow IMO matters, the need for such posts has been established. In particular, the negotiations for accession to the IMO, as called for in the White Paper for a European Transport Policy and discussed in this communication, will emphasise the need for such representation, whose annual work programme and achievements will be monitored by DG TREN/G.5.1.3 Measures taken following ex post evaluationThe added value of having a permanent representation to the IMO in London will be regularly reviewed in relation to the relevant task allocations and work programmes.5.2 Actions envisaged and arrangements for budget intervention- the target population(s) (specify number of beneficiaries if possible); The proposed action will be of mutual benefit for the Commission on the one hand and IMO Contracting Parties and industry representatives on the other hand, as it will allow for close relationships between them.- the specific objectives set for the programming period (in measurable terms);Establishing a representative of the Commission to the International Maritime Organization and providing secretarial support.- the concrete measures to be taken to implement the action; Negotiations on the possibilities of accommodating the Commission's IMO representative in the offices of the Commission's delegation in London (office space).- the immediate outputs of each action, and their contribution toThe long-term goal of achieving accession by the Community to the IMO will not be an immediate result. By contrast, the benefits of permanent representation (those referred to in 5.1 above) will be immediate.- the expected outcomes solving needs or problems The outcome will solve the current under-representation of the Commission in the IMO, and would provide substantial added value to the Commission's work in Brussels, by reducing the need for continuous missions to the IMO.Information should also be given on the arrangements for budget intervention (rate and form of the required financial assistance). The establishment of a representative of the Commission to the IMO and a secretary will require budget resources from Part A of the budget.5.3 Methods of implementationThe proposed representative will require the employment of two regular staff (one A and one C official).6. FINANCIAL IMPACT6.1 Total financial impact on Part B - (over the entire programming period) None6.1.1 Financial interventionNone6.1.2 Technical and administrative assistance, support expenditure and IT expenditure (Commitment appropriations) None6.2 Calculation of costs by measure envisaged in Part B (over the entire programming period) NoneCommitments in EUR million (to the 3rd decimal place)>TABLE POSITION>7. IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE 7.1 Impact on human resources>TABLE POSITION>7.2 Overall financial impact of human resources>TABLE POSITION>The amounts are total expenditure for twelve months7.3 Other administrative expenditure deriving from the action>TABLE POSITION>The amounts are total expenditure for twelve months.The needs for human and administrative resources shall be covered within the allocation granted to the managing DG in the framework of the annual allocation procedure.I. Annual total (7.2 + 7.3): EUR197 270II. Duration of action: indefiniteIII. Total cost of action (I x II): n.a.  //  8. FOLLOW-UP AND EVALUATION8.1. Follow-up arrangements: Not applicable8.2. Arrangements and schedule for the planned evaluation: Not applicable9. ANTI-FRAUD MEASURES: Not applicable


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		52013DC0392

			Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive government deficit in the Netherlands /* COM/2013/0392 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
with a view to bringing an end to the
situation of an excessive government deficit in the Netherlands
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the
Treaty on the Functioning of the European Union, and in particular Article
126(7) thereof,
Having regard to the
recommendation from the European Commission,
Whereas:
(1)       According to Article 126
of the Treaty on the Functioning of the European Union (TFEU) Member States
shall avoid excessive government deficits.
(2)       The Stability and Growth
Pact is based on the objective of sound government finances as a means of
strengthening the conditions for price stability and for strong sustainable
growth conducive to employment creation.
(3)       On 2 December 2009, the
Council decided, in accordance with Article 126(6) TFEU, that an excessive
deficit existed in the Netherlands and issued a recommendation to correct the
excessive deficit by 2013 at the latest[1],
in accordance with Article 126(7) TFEU and Article 3 of Council Regulation (EC)
No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of
the excessive deficit procedure[2].
In order to bring the general government deficit below 3% of GDP in a credible
and sustainable manner, the Dutch authorities were recommended to implement the
fiscal measures in 2010 as envisaged in the 2010 budget and, starting
consolidation in 2011, put an end to the excessive deficit situation by 2013.
To this end, they were recommmended to ensure an average annual fiscal effort
of ¾% of GDP over the period 2011-2013, specify the measures that were
necessary to achieve the correction of the excessive deficit by 2013, cyclical
conditions permitting and accelerate the reduction of the deficit if economic
or budgetary conditions were to turn out better than expected at that time. The Council established a deadline of 2 June 2010 for effective
action to be taken.
(4)       On 15 June 2010, the
Commission concluded that based on the Commission services' 2010 Spring
Forecast, the Netherlands had taken effective action in compliance with the
Council recommendation of 2 December 2009 to bring its government deficit below
the 3% of GDP reference value and considered that no additional step in the
excessive deficit procedure was therefore necessary at that point in time.
(5)       According to Article 3(5)
of Regulation (EC) No 1467/97, the Council may decide, on a recommendation from
the Commission, to adopt a revised recommendation under Article 126(7) of the
TFEU, if effective action has been taken and unexpected adverse economic events
with major unfavourable consequences for government finances occur after the
adoption of that recommendation. The occurrence of unexpected adverse economic
events with major unfavourable budgetary effects shall be assessed against the
economic forecast underlying the Council recommendation.
(6)       In accordance with Article
126(7) TFEU and Article 3 of Council Regulation (EC) No 1467/97, the Council is
required to make recommendations to the Member State concerned with a view to
bringing the situation of an excessive deficit to an end within a given period.
The recommendation has to establish a maximum deadline of six months for
effective action to be taken by the Member State concerned to correct the
excessive deficit. Furthermore, in a recommendation to correct an excessive
deficit the Council should request the achievement of annual budgetary targets
which, on the basis of the forecast underpinning the recommendation, are
consistent with a minimum annual improvement in the structural balance, i.e.
the cyclically-adjusted balance excluding one-off and other temporary measures,
of at least 0.5% of GDP as a benchmark.
(7)       The Commission services’
2009 Autumn Forecast, which was underlying the Council recommendation under Article
126(7) TFEU of 2 December 2009, projected that the Dutch economy would contract
by 4.5 % in 2009, followed by a modest recovery in 2010 and 2011, with GDP
growth of ¼% and 1½ % respectively. The years 2012 and 2013 were beyond that
forecast's horizon, but under the hypothesis of a gradual closure of the large
negative output gap by 2015, higher growth than in 2011 was expected for 2012
and 2013. GDP growth in 2009 fell by 3.7%, less than expected in the Commission
services' 2009 Autumn Forecast, and in 2010 the export-led
recovery at 1.6% was stronger, but in 2011 economic
growth slowed to 1% and in 2012 the Dutch economy slipped back into recession. In
2011, the Netherlands already recorded negative quarterly growth rates in all
except the first quarter and in 2012, the Dutch economy contracted by 1%. The
quarter-on-quarter growth was slightly positive in the first half of the year,
but plummeted thereafter. Overall, GDP growth turned out to be markedly lower
than could have been expected under a pattern of normal cyclical recovery and
the sizeable contraction of the economy has affected employment negatively;
unemployment has risen, real wage growth turned negative and domestic demand
declined.
(8)       The
Commission services' 2013 Spring Forecast projects real GDP to continue to drop
by 0.8% in 2013, although growth is expected to return gradually to positive
territory from the second half of the year onwards. Trade developments are
expected to contribute to the recovery, whereas domestic demand is forecast to
remain depressed well into 2013. Uncertainty regarding the general economic
outlook, implementation of reform proposals and possible additional
consolidation measures put an additional drag on domestic demand. In 2014, both
exports and imports are expected to gain momentum and domestic demand should
begin to pick up gradually, supporting a fragile recovery, with real GDP
increasing by 0.9%.
(9)       The Netherlands had chosen to delay fiscal adjustment until 2011. This approach was endorsed in the 2009
Council recommendation which specifically recommended that the 2010 budget be
implemented while consolidation should start only in 2011. In response, the Netherlands designed a multi-annual package of mainly expenditure-based measures over the
period 2011-2015. Implementation of the measures up to 2013 is by and large on
track. After some over-performance of real GDP in 2009 and 2010 compared to the
2009 Commission services' 2009 Autumn forecast underlying the EDP
recommendation, economic performance in the Netherlands deteriorated
significantly from 2011 onwards. This translated into a similar development in
public finances, with some initial over-performance to the budgetary targets
until and including 2011. In 2011, the general government deficit reached 4.5%
of GDP and subsequently, improved to -4.1% of GDP in 2012.Turning to the
driving forces of the deficit, swings in economic growth have mainly affected
government revenues. The initial recovery from the financial crisis, with
stronger-than-expected economic activity in 2010 and the first part of 2011, at
first led to a fairly strong revenue performance. However, subsequently revenue
fell short of what was expected, particularly in the second half of 2011 and in
2012, in the wake of faltering growth. This adverse pattern is expected to
continue, largely driving the weak deficit outlook. Overall trends mirror the
cyclical sensitivity of revenue which the Netherlands typically exhibits.
(10)     According to the Commission
services' 2013 Spring Forecast, the general government deficit is expected to
improve further to 3.6% of GDP in 2013, due to sizeable consolidation measures
mainly on the revenue side, notably the increase in the VAT rate and increases
in excises, while on the expenditure side a wage freeze for civil servants and the
non-indexation of income tax brackets will contribute to consolidation.
Furthermore, in 2013 significant one-off operations will impact on the deficit[3]. The sale of 4G mobile
telephony licenses and the nationalisation of SNS Reaal (both impacting on
2013) broadly cancel out. On balance, however, one-offs have a decreasing
impact on the deficit of around 0.2% of GDP, in particular related to dividend payments
from the De Nederlandsche Bank and the restitution by Havenbedrijf Rotterdam of
state contributions to port enlargement. Specified and agreed measures that are
embedded in the multi-annual fiscal projections entail on-going savings in
2014. In addition, positive one-offs emanating from dividend streams from the
De Nederlandsche Bank and a crisis levy on banks will have a downward effect on
the headline deficit. Nonetheless, since revenue is expected to remain subdued in
view of the sluggish recovery, the general government deficit is projected to
stabilise at 3.6% of GDP in 2014. The Commission services' 2013 Spring Forecast
does not incorporate the additional consolidation package for 2014 proposed by
the government in March 2013 but then withdrawn temporarily in response to the
agreement reached with social partners in April 2013.
(11)     Non-negligible
implementation risks are attached to the fiscal outlook for 2014 and beyond. As
regards measures embedded in the coalition agreement, these risks originate
mainly from the foreseen efficiency gains planned to be achieved by decentralising
tasks to municipalities. In the Netherlands, coalition agreements traditionally
were implemented largely unchanged. Recently, there have been several examples
of substantive changes, responding e.g. to the reappraisal of original plans by
the coalition partners or the agreement with the social partners. In any case,
the headline deficit forecast for 2014 suggests that substantial additional
measures are called for in order to bring the headline deficit below 3% of GDP
in 2014.
(12)     According to the Commission
services' updated 2013 Spring Forecast, the structural balance is expected to
improve by around 0.7 % of GDP per year on average over the adjustment period
2010-2013 but is forecast to deteriorate in 2014 by around 0.3 pp. On the basis
of the SF2013, the average fiscal effort over the period 2011-2013 would thus
be close to the required ¾% of GDP. When adjusted for the significant downward
revision in potential output growth since the time when the 2009 EDP
recommendation was issued and for the impact of revisions on the composition of
economic growth on revenue, the average annual structural effort (1.1% of GDP)
exceeds the recommended average annual fiscal effort (¾% of GDP) over 2011-2013
required in the 2009 Council EDP recommendation by a substantial margin. The Netherlands can therefore be considered to have taken effective action in line with the
Council Recommendation. For the period 2011-2013 the overall fiscal effort
according to a bottom-up approach amounts to 4% of GDP, or around 1.3 % of GDP
annually, broadly equally divided between revenue and expenditure measures. The
bottom-up assessment of the fiscal consolidation measures taken in the years
2010-2013 thus confirms the conclusion that effective action has been taken by
the Netherlands.
(13)     Debt dynamics in the Netherlands have been unfavourable. In 2008, significant government operations to support
Dutch banks had been a major factor pushing up the government debt ratio,
increasing it to to 58.5% coming from 45.3% of GDP in 2007. In the period
2008-2012 it steadily increased to 71.2% in 2012. On the basis of the
Commission services' 2013 Spring forecast the debt ratio is expected to further
increase to 74.6% of GDP in 2013 and 75.8% of GDP in 2014. This is
predominantly the result of the persistent headline deficits in combination
with low nominal GDP growth, whilst EFSF and ESM operations attributed to the
government debt only have a relatively small upward effect. The uptick in the
expected gross debt ratio for 2013 includes debt-increasing operations
equivalent to some 1% of GDP related to the nationalisation of SNS Reaal in
early 2013 (on top of the deficit-enhancing measures amounting to around 0.6%
of GDP).
(14)     Consistent with the rules
of the Stability and Growth Pact, considering all these factors , in particular
the substantial deterioration in the budgetary position resulting from the
weaker overall position of the economy relative to the one underlying the original
Council recommendation under Article 126(7) TFEU, suggests that a new deadline
for the correction of the excessive deficit in the Netherlands by 2014 is
appropriate.
(15)     Against the background of
high uncertainties regarding economic and budgetary developments, the budgetary
target recommended for the final year of the correction period should be set at
a level clearly below the reference value, in order to guarantee an effective
and lasting achievement of the correction within the requested deadline.
(16)     Granting an additional year
for the correction of the excessive deficit would be commensurate with
intermediate headline deficit targets of 3.6% of GDP for 2013 and 2.8% of GDP for 2014.
The underlying improvement in the structural budget balance implied by
these targets is 0.6% of GDP in 2013, and 0.7% of GDP in 2014. In total, to
reach the above-mentioned structural targets, the Dutch authorities would need
to ensure the delivery of the foreseen structural effort in 2013 and adopt additional
consolidation measures of at least 1% of GDP in 2014, on top of the measures
already included in the baseline scenario. These targets take into account the
need to compensate for the negative second-round effects of fiscal
consolidation on public finances, through its impact on GDP growth.
(17)     The European Commission
Fiscal Sustainability Report 2012 shows that the Netherlands does not face a
risk of fiscal stress in the short run. The country is at medium sustainability
risk in the medium to long run. Although the 2013 pension reform is an
important positive step, additional measures, in particular related to curbing
long-term care expenditure, are necessary to fully ensure the long-term
sustainability of public finances.
(18)     The Netherlands fulfils the
conditions for the extension of the deadline for correcting the excessive general
government deficit as laid out in Article 3(5) of Regulation (EC) No 1467/97 on
speeding up and clarifying the implementation of the excessive deficit
procedure,
HAS ADOPTED THIS RECOMMENDATION:
(1)
The Netherlands should put an end to the present
excessive deficit situation by 2014 at the latest.
(2)
The Netherlands should reach a headline deficit
target of 3.6% in 2013 and 2.8% of GDP in 2014, which is consistent with an
improvement of the structural balance of around 0.6% and 0.7% of GDP
respectively, based on the Commission services' updated 2013 Spring Forecast.
(3)
The Netherlands should implement the multiannual
measures already adopted with the 2013 budget, while standing ready to
compensate them if their yield would prove less than currently foreseen, and
implement additional measures sufficient to achieve a correction of the
excessive deficit in 2014. The Council establishes the deadline of [1 October]
for the Netherlands to take effective action and, in accordance with Article
3(4a) of Council Regulation (EC) No 1467/97, to report in detail the
consolidation strategy that is envisaged to achieve the targets.
In addition, to ensure the success of the
fiscal consolidation strategy, it will be important to back the fiscal
consolidation by comprehensive structural reforms, in line with the Council
recommendations addressed to the Netherlands in the context of the European
Semester and in particular those related to the preventive arm of the Macroeconomic
Imbalances Procedure.
This
recommendation is addressed to the Kingdom of the Netherlands.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               All documents related to the excessive deficit
procedure of The Netherlands can be found at:http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/countries/netherlands_en.htm

[2]               OJ L 209, 2.8.1997, p. 6
[3]               This interpretation on the classification of these
operations does not prejudge Eurostat's formal assessment.