Brussels, 16/06/2005 (Agence Europe) - On Thursday afternoon, the Luxembourg Presidency presented a compromise document to the European Council (dated 15 June) on the next financial perspectives 2007-2013. It was presented to the EU Heads of State and Government on Thursday afternoon for a first round-the-table examination. After dinner with the Heads of Stat and Government, the Presidency organised meetings that evening with the Member States that are experiencing difficulties agreeing on the text, in order to present a new version of the “negotiating box” on Friday morning taking into account the results of these bilateral discussions.
Despite the unfavourable reactions in the heat of the moment on Thursday morning, which is only natural before the beginning of what promises to be a very tough negotiation, the Presidency document contains the main ingredients for a successful agreement between member States on the financial perspectives: - a freeze of EUR 4.6 billion on the British rebate at least until 2013 as well as a direct link with the rebate and agricultural spending (any modification in the level of budgetary correction for the United Kingdom after 2013 will depend on the way market spending and direct payments in the field of agriculture evolve, the document states); - respect of the October 2002 agreement on agricultural spending (with adjustments for accession by Romania and Bulgaria); - the confirmed objective of a budget that does not exceed 1% of the EU's Gross National Income (GNI) in payment appropriations; - new changes regarding the decision on own resources in favour of Germany, the Netherlands and Sweden (countries that consider they pay far too much to the budget compared to what they get back in return); - additional structural aid in favour of certain Polish regions, Cyprus, and very outlying regions; - and confirmation that the Spanish Cohesion Fund will be maintained for two years. Furthermore, the compromise provides, in consideration of special efforts deployed in Northern Ireland for the peace process, a total of EUR 200 million under the Peace programme for the period 2007-2013.
First reactions to the document issued on 15 June were somewhat negative. France considered amounts suggested were too high (1.06% of GNI in commitment appropriations and 1% of GNI in payment appropriations) and described as unacceptable the proposals on the British rebate (“too high”) and agricultural spending (France demands an additional allocation evaluated at nearly EUR 8 billion to finance aid in favour of Bulgaria and Romania, something that is not guaranteed in the Presidency's text). According to a British source, it is out of the question to freeze the amount of the budgetary rebate granted to the United Kingdom which, in such a scenario, would lose between EUR 25 and 30 billion. Some sources say, however, that the United Kingdom is ready to accept a freeze (without reduction) at a higher level (between EUR 5 and 6 billion). Given EU enlargement, the amount of the rebate would, without modification to the system, go from nearly EUR 5 billion today to 7.5 billion in 2013, which would make the British the only Europeans not to finance enlargement, the French authorities protest. The Netherlands is still not pleased which what has been suggested for reducing its contribution to the EU budget. The secretary of State for European Affairs, Atzo Nicolaï, asserted on Thursday that the latest Presidency proposal was “absolutely unacceptable” for the Netherlands. The Presidency suggests that - for the Netherlands, Germany and Sweden - the share of their VAT receipts paid to the EU budget should be half as much as that of the other countries. It also suggests that the Netherlands and Sweden should keep 10% more of customs taxes.
The main elements of the Presidency compromise presented on Thursday at the European Council are:
Competitiveness for growth (research and technological development, trans-European networks, education and training, competitiveness in the single market and agenda on social policy): the compromise provides a total budget (2007-2013) of EUR 72 billion from 2007 to 2013, compared to EUR 121.6 billion according to the latest Commission figures. The level of commitments proposed corresponds to annual growth in real terms of 7.5% compared to 2006.
The budget for research and trans-European networks would be reduced compared to the Commission proposal but, in the event of European Council agreement on the whole of the dossier, it is understand that the European Parliament may then review funding in these areas upwards at the time it gives its agreement on the dossier. In its negotiating document, the Presidency writes that the European Council invites the Council, together with the European Parliament as appropriate, to come to a timely agreement through the legislative procedure on the context and appropriate funding of the instruments pertaining to this sub-heading. In this context, it is generally recognised that a substantial enhancement effort agreed to by the EU in research, based on excellence, constitutes one of the driving forces of innovation and growth; the seventh framework programme, to which all Member States are expected to have equal and which will play an important role in attaining this objective.
Cohesion at the service of growth (structural and cohesion funds): to attain this objective of “ensuring economic and social cohesion in the enlarged Union, the level of financial commitment for 2007-2013 should reach 0.37% the EU27(s GNI, according to the presidency proposals: 306 bn euros (as opposed to 336 bn euros in the Commission's latest figures). The proposed distribution is as follows: 1) 82.30% of these funds (252.249 bn euros) will be allocated to the “convergence” objective, of which 24.56 % (61.953 bn euros) will got to cohesion funds and 4.84% (12.202 bn euros) for the regions and Member States in a phase that gradually gets rid of the aid; 2) 15.26% (46.758 bn euros) of these funds will go to objective “competitiveness and employment” of which 20.30% (9.494 bn euros) will go to the regions undergoing the gradual installation aid phase; 3) objective: territorial cooperation will have 2.45% (7.500 bn euros) directed to these funds.
The compromise confirms, the specific regime Spain benefits from: this country will see a reduction of cohesion funds over two years, the amounts for 2007 and 2008 represent 1.2 bn euros (68% of the 2006 level) and 0.8 bn euros (46% of the 2006 level) respectively.
Conservation and management of natural resources (agriculture, rural development, fisheries and environment): the document indicates that the amounts for market spending and direct payments correspond to those approved during the European Council of October 2002, adjusted to take into account the planned accession of Bulgaria and Romania. The amount for the new rural development instrument increased to 74 bn euros (88.7 bn according to the proposal of the Commission) and that for the new fisheries instrument will be 3.9 bn euros (as opposed to 5 bn euros in the proposal by the Commission).
Freedom, security and justice and other internal policies: the compromise includes 6.63 bn euros (annual increase of 15 % compared to 2006) for actions linked to creating the freedom, security and justice area (protection of citizens' rights, common asylum, immigration and border control approach, trafficking in human rights, terrorism and organised crime, promotion of fundamental rights and strengthening of judicial cooperation in civil and criminal matters, 4.37 bn euros (+4.5% of annual growth compared to 2006) for other internal policies (culture, youth, audiovisual questions, health and consumer protection. This makes up a total envelope of 11 bn euros, as opposed to 21 bn euros in the Commission's proposal.
The EU, world actor (pre-accession, stability, development and economic cooperation, European neighbourhood instrument and partnership, humanitarian and macro-financial aid): the level of commitments corresponds to annual growth in real terms of almost 4.5% compared to 2006, and is not expected to surpass, according to the presidency document, 50.1 bn euros (as opposed to 84.6 bn euros according to the Commission). Cooperation with ACP countries will see allocations of 22.682 bn euros for 2008-2013, but this is outside the EU budget and is based on a contribution key explained in the annexe.
Own resources: the presidency suggests that the decision on own resources is modified according to the following: - VAT call-in rates are frozen at 0.3%; - the mechanism currently used for calculating budgetary correction in the United Kingdom is replaced by a system in which the nominal budgetary correction amount of this country, from 2007, corresponds to its nominal average calculated during the previous seven year period before the most recent enlargement (1997-2003); - for 2007-2013, the VAT call-in rates for Germany, Netherlands and Sweden is set at 0.15 %; - the Netherlands and Sweden are allowed to conserve, over the period 2007-2013, an equivalent supplementary amount of 10 % (35% instead of 25%) of revenue paid to the EU budget from customs and agricultural taxes.
The presidency proposes that “Any modification of the level of budgetary correction in the United Kingdom after 2013 will depend on the evolution of market spending and direct payments in agriculture”. The Commission has also been asked to present a general re-examination in 2011 of the system of own resources, which includes opportunities for changing the structure of own resources by creating own autonomous resources.